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Budget: How Office Workers Have Fared Best

Written By Unknown on Rabu, 18 Maret 2015 | 00.25

Had things worked out differently, George Osborne might have been running the family business these days, selling Osborne & Little wallpaper to fit the homes of the well-to-do around the country.

Instead, he is mid-way through another renovation job, attempting to turn the UK economy from a financial crisis damage case into a world beater.

How well is he doing? By some standards, surprisingly successfully.

Before coming into office Osborne confided in friends that he was likely to become the most unpopular Chancellor in history, given the scale of austerity necessary to bring Britain back into balance.

As things stand, he is one of the most popular UK finance ministers in recent times, comfortably more trusted than Ed Balls, according to polling by IPSOS Mori.

The underlying explanation for this, however, is that the austerity doled out by the Government has been far less tough than many expected.

In 2010 the Chancellor was promising the structural budget deficit would be eliminated in this Parliament – but this year it is still getting towards 4% of GDP.

In fact, the austerity imposed in Britain since the crisis (or, to put it in economic terms, the reduction in structural borrowing) has only been the seventh harshest among major economies.

While some conclude that this is because the Chancellor has changed his plans and cut by less than expected, in fact what happened is slightly different: the economy suffered another dip in 2012, the upshot of which was to increase the scale of necessary austerity to eliminate the structural deficit.

Rather than increase the cuts, Osborne stuck with original plans, even if it meant missing his initial aspiration.

And since then, the economy really has started to recover.

UK GDP is now comfortably above its pre crisis peak, and around 8% higher than in 2010.

The unemployment rate has fallen very sharply, down from a peak around 8% to below 6%; the employment rate has equalled the highest level on record – though some quibble that this is partly down to self-employed and part-time workers.

However, this strong employment picture has not been accompanied by an improvement in living standards.

Real wages have suffered their biggest slide in many years (the biggest fall since Victorian times, by one measure).

Those earnings levels have started to improve latterly, though the median real wage (eg adjusted for inflation) is still barely higher than in 2010.

That helps explain why the feelgood factor is still nowhere to be seen – though that might change when wages increase in the coming years, as they are expected to do.

Finally, the very composition of the economy has changed.

The manufacturing, production and mining sectors are now more than 1.5 percentage points smaller, as a share of total GDP, than in 2010; the share of the government, health and financial sectors have also shrunk by 1 percentage point each.

What sectors have expanded in the meantime?

Well, although real estate and transport have grown in importance, the fastest growing of all the economic sectors has been administration and IT.

Under George Osborne, it is not those who wear hard hats who have fared best, but the office workers who rarely get an official visit from the Chancellor.


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UK Helps Boost Car Sales Growth In Europe

Car sales in Europe have risen for the 18th month in a row with the UK seeing double-digit growth.

Figures from the Association of European Carmakers (ACEA) show sales were up by 7.3% in February with 924,440 new registrations.

All the major markets grew with sales in Spain up 26%, 13.2% in Italy and 12% in the UK.

But despite continued improvements in sales, the market has not yet returned to its pre-financial crisis peak.

The figures also reveal a shift in demand from no-frills makes to mass market brands.

Volkswagen saw an 11% rise in its sales and remains the market leader with quarter of the European market.

While sales of Skoda cars grew by 8%, this signalled a slowdown in demand from 21.5% in February last year. 


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Minimum Wage Boost 'To Give Britain A Pay Rise'

By Anushka Asthana, Political Correspondent

The minimum wage will rise by 20p to £6.70 an hour this October, benefiting 1.4 million low-paid workers.

David Cameron and Nick Clegg have announced the Coalition has accepted the 3% rise recommended by the Low Pay Commission (LPC) for all workers aged over 21.

The shift represents the largest real-terms increase in the rate since 2008 but is not enough to restore the rate to its value before the financial crash.

The Trades Union Congress said the low paid workers in line for an increase were also those who had been hardest hit by Coalition cuts.

Labour said it fell "far short" of the £7 hinted at by George Osborne as the level needed to put the minimum wage back on track in real terms.

The Chancellor did say at the time that it would be up to the independent LPC - made up of employers, unions and academics - to set the actual rate.

The Coalition has also accepted the commission's call to raise the level for younger workers over 18 by 17p to £5.30, and for 16 and 17-year-olds by 8p to £3.87.

But it has gone further when it comes to the pay of apprentices.

The LPC suggested a 2.6% increase to £2.80.

Instead ministers are increasing the level by 57p to £3.30 - which is the first step in an ambition to complete a £1 rise in the rate.

The minimum wage is a sensitive issue because of pressures from both the left and right.

When it made this latest recommendation, the LPC said: "We have carefully weighed the risk of doing too little to raise the earnings of the lowest paid against the risk of recommending more than business and the economy can afford."

For politicians the issue is clearly important because of the nearing election.

Labour has long criticised the Coalition for a situation in which inflation outstripped wages, but that trend has reversed more recently.

David Cameron has called on employers to "give Britain a pay rise" following the improved economic situation.

Today, he added: "At the heart of our long-term economic plan for Britain is a simple idea - that those who put in, should get out; that hard work is really rewarded; that the benefits of recovery are truly national."

Mr Clegg said it was one of many ways in which to create a "fairer society".

He said: "Whether you're on low pay or starting your dream career through an apprenticeship, you will get more support to help you go further and faster."

But Chuka Umunna, the shadow business secretary, said: "Ministers have misled working families who have been left worse off.

"Where under David Cameron we've seen the value of the minimum wage eroded, we need a recovery for working people."

Labour has promised that the level will rise to £8 by 2020, but there has been a suggestion that the real-terms rate could be higher than that by then.


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First Trader Banned In UK Over Libor Rigging

A former trader has become the first to be banned by the UK's City watchdog for manipulating the rate that banks lend to each other.

Briton Paul Robson, who worked at the London office of the Dutch-based lender Rabobank, has been barred by the Financial Conduct Authority (FCA) for lacking honesty and integrity in rigging Libor - the London inter-bank offered rate. 

The move comes after Robson was convicted of fraud in the US.

He pleaded guilty last year over his role in a conspiracy to manipulate Rabobank's Yen Libor submissions to benefit trading positions.

The ban is the FCA's first public action against a trader for manipulating Libor.

The interest rate is one of the most important in finance, being a benchmark against which around $450trn (£304trn) of financial products from mortgages to credit card loans are based worldwide. 

Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: "No excuse can be made for Mr Robson's behaviour, which was particularly serious.

"He was the primary submitter of Yen Libor at Rabobank for a number of years and experienced in the market.

"He knew what he was doing was wrong.

"This ban reinforces our expectation that individuals and firms take responsibility for ensuring market integrity and reminds them of the consequences if they fall short of our standards."

Robson, who was issued a warning notice by the FCA on 28 November, 2013, is due to be sentenced in the US in 2017.

The FCA action follows recent fines and bans for two former senior executives of Martin Brokers for Libor compliance failures.

To date the FCA has imposed seven fines totalling £426m on firms for misconduct relating to Libor.

It has also issued 14 warning notices to individuals for misconduct relating to interest rate benchmarks.

The potential for the manipulation of Libor was revealed in the wake of the financial crisis.


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Sainsbury's Records Another Fall In Sales

Supermarket giant Sainsbury's has recorded a fall in sales for the fifth quarter running.

And the retail chain has warned the market is expected to remain challenging for the "forseeable future".

Excluding fuel, Sainsbury's saw like-for-like sales fall 1.9% in the last quarter to March.

This is down on the 1.7% drop reported in the previous quarter.

Despite the fall in sales, shares rose nearly 2% as the figures were in line with City expectations. 

Chief executive Mike Coupe said: "The trading environment remains challenging and the decisions we have taken to improve our competitiveness are reflected in our quarterly performance."

He added: "We expect the market to remain challenging for the forseeable future.

"Food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue."

Sainsbury's and the other major grocery chains - Tesco, Morrisons and Asda - are locked in a fierce supermarket war amid gains being made by discount chains Aldi and Lidl.

Sainsbury's is due to report its full-year profits in May - the first since Mr Coupe took the helm -  which are expected to show the first fall after nine years of growth.

City analysts forecast a 17% drop to £659m.


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Coalition Promises v What They Delivered

A start-of-term promise can be a long way from an end-of-term reality but how has the coalition fared?

In the bright and sunny days of the shiny new coalition David Cameron and Nick Clegg wrote down their pledges in a Coalition Programme for Government.

Soon after came the 2010 Emergency Budget in which George Osborne said the deficit would have been eliminated by... now.

On Wednesday, George Osborne will deliver his last Budget before the General Election - but has he delivered for the country?

With the help of partner Nimesh Shah of chartered accountants Blick Rothenberg, Sky News examines what the Chancellor has had to offer.

:: Getting the deficit down

What they said: "We will significantly accelerate the reduction of the structural deficit over the course of a Parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes."

What they delivered: In the 2010 Emergency Budget George Osborne said the deficit would be eliminated by 2014/15. It is what the 2010 Office for Budget Responsibility figures showed.

It did not turn out that way.

The country is borrowing less (forecast to be £91bn for 2014/15). The Government says the deficit has been slashed by a third - but that is a long way from eliminated and far less rapid than had been promised.

:: Tax cuts for hard-working families

What they said: "We will further increase the personal allowance to £10,000, making real-terms steps each year towards meeting this as a longer-term policy objective. We will prioritise this over other tax cuts, including cuts to Inheritance Tax."

What they delivered: This was one for the Lib Dems and Nick Clegg has claimed he had to force the Tories to come good on delivering the personal allowance increases.

The coalition has exceeded its pledge here, increasing the allowance to £10,000 in 2014/15 and all indications will suggest Mr Osborne will increase it to £11,000 on Wednesday.

However, it should be noted more people have been dragged into paying tax at 40% since the coalition came to power.

:: Savers will get power over their pensions

What they said: "We will explore the potential to give people greater flexibility in accessing part of their personal pension fund early."

What they delivered: Budget 2014 saw George Osborne allow savers to get hold of their pension funds on retirement rather than forcing them to buy an annuity - annual payment plan.

He also gave pensioners greater freedoms to pass their pension funds down to future generations.

On Wednesday he intends to finish the job by allowing those with annuities to effectively cash them in.

:: Get married, get a tax allowance

What they said: "We will also ensure that provision is made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couple without prejudice to the coalition agreement."

What they delivered: Tories delivered on their word to the Lib Dems and on a married couple allowance. It's worth £212 a year, leading many to comment it was hardly an incentive to tie the knot.

The allowance, which applies only to those not on the higher rate, comes into effect in April.

:: No gain without pain - Capital Gains Tax increase

What they said: "We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities."

What they delivered: They were straight on this in the 2010 Emergency Budget when they increased the capital gains tax rate for higher and additional rate payers to 28%.

The level for basic rate taxpayers remained at 18%.

:: Untangle corporation tax system

What they said: "We will reform the corporate tax system by simplifying reliefs and allowances, and tackling avoidance, in order to reduce headline rates. Our aim is to create the most competitive corporate tax regime in the G20, while protecting manufacturing industry."

What they delivered: From 1 April 2015 there will be a single rate of corporation tax at 20%.

But the tax rules have significantly increased since the coalition has been in power - especially tax avoidance rules - and the UK is now believed to have one of the longest tax codes in the world.

:: We will be coming for the tax dodgers

What they said: "We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals."

What they delivered: A high-agenda policy, which has seen a number of measures introduced - most symbolically "Google Tax" or the Diverted Profits Tax (cash earned here, taxed elsewhere), which the Government estimates will bring in £360m a year by 2017/18.

HMRC has also taken to "naming and shaming" tax defaulters.

:: And we will hit the Non-doms

What they said: "We will review the taxation of non-domiciled individuals."

What they delivered:  A bit more than they promised, to the annoyance of many.

The review was immediate and the annual levy paid by those who live in the UK but choose not to be taxed on their income here increased from £30,000 to £50,000.

Despite Mr Osborne's promise there would be no further changes, in the 2014 Autumn Statement the amount was increased to £60,000 for non-domiciles who have lived in the UK for seven out of the last nine years and £90,000 for those who have lived here 17 out of the last 20 years.

Non domiciles pay nothing for the first seven years of living in the UK.


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E-Cigarettes Added To Inflation Shopping Basket

E-cigarettes, craft beer and Spotify have been added to the basket of goods and services used to calculate UK inflation.

The Office for National Statistics (ONS) released its annual review of the shopping basket items that make up its inflation calculations.

E-cigarettes have been added as a substantial number of smokers have switched to them, often in a bid to quit the habit, according to the ONS.

Speciality beers have also been introduced as these products are seeing an increase in both spending and the shelf space devoted to them.

Notably, sat navs have been removed because many motorists now use their smartphones to navigate or cars already have built-in devices.

With the decline in popularity of traditional media, music streaming services - such as Spotify - are being included for the first time, as are online console computer games subscriptions and headphones.

Other changes include the inclusion of protein powders, used by many gym-goers, and melons and sweet potatoes.

Meanwhile, foreign exchange commissions and yoghurt drinks are being removed.

The ONS uses the items in the basket of goods and services to calculate consumer price inflation.

There are currently 703 items that make up the CPI basket of goods and services, of which 13 are new this year.

Eight items have been removed, and 16 updated.

The ONS collects around 110,000 individual prices each month from 20,000 shops across the UK, as well as a further 70,000 prices online.

The "weight" of each item - its relative importance in calculating CPI - is based on survey evidence of people's spending gathered by the ONS and commercial market research.


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Apprentices Battle Sparks Training Group Sale

By Mark Kleinman, City Editor

One of the UK's fastest-growing apprenticeship providers is being groomed for a multimillion pound sale amid a battle among political leaders to pledge support for school leavers.

Sky News has learnt that the owners of Bristol-based Lifetime Training are in talks with prospective advisers about an auction of the company that could take place before the end of the year.

Sovereign Capital, which has owned a controlling stake in Lifetime since 2011, is expected to reap a handsome profit from a sale.

News of its plans comes on the same day that ministers announced that they were ignoring the advice of the Low Pay Commission and recommending a higher-than-expected 20% hike in the minimum wage for apprentices.

That disclosure sparked a hostile response from the CBI, the employers' body, but underlined the extent to which David Cameron is determined to demonstrate that the fruits of the UK's economic recovery are being enjoyed across Britain's labour force.

It comes just weeks after the Prime Minister urged companies to pass on the benefits of the falling oil price in the form of wage increases for employees.

Last month, the Labour leader Ed Miliband pledged 80,000 new apprenticeships for 18-year-olds who achieve two A-Levels or a similar vocational qualification.

Tim Thomas, head of employment and skills policy at the manufacturers' group, the EEF, said that changes to apprenticeship funding announced by the Government on Tuesday were "very welcome and an important step forward".

"To make sure it's effective ministers must avoid adding unnecessary red tape and give employers full control of apprenticeship funding as this will be key to providing high quality training.

"Without this, many employers will continue to be frozen out of taking on their first apprentice or deterred from expanding their current apprenticeship schemes."

Mr Thomas said of the increase in apprentices' pay that it was "the right thing to do for manufacturing".

A sale of Lifetime Training by Sovereign Capital will put one of the country's biggest vocational training companies in the retail and leisure sector on the market.

The company trains 15,000 people annually, and counts Greene King, the pubs operator, among its largest clients.

A spokeswoman for Sovereign Capital declined to comment.


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Osborne Criticised Over New Bank Switch Plan

By Mark Kleinman, City Editor

A Government-backed scheme to stimulate competition in one of the most concentrated areas of the banking sector is being launched prematurely in order for ministers to claim that they are helping consumers, the industry is warning.

Sky News understands that an online current account ‎tool that will enable consumers to compare the suitability of banks' products based on their transaction history will be far more limited than ministers had demanded when it goes live in the next few weeks.

Under an agreement announced a year ago, the UK's biggest current account providers, including Barclays, Lloyds Banking Group and Santander UK, have committed to participating in the MiData scheme, which could launch later this month.

However, it will get under way without a component that observers say will be critical to its effectiveness.

The British Bankers' Association is understood to be co-ordinating the involvement of the major high street lenders.

In the Autumn Statement in December‎, George Osborne said the price comparison site GoCompare would launch a current account tool under the MiData brand on April 1 this year.

Industry sources said, however, that the absence of a technical feature called Application Programming Interfaces (APIs) would make the service "clunky" and far more difficult for consumers to compare current accounts in a market featuring scores of complex products.

Bank customers will be forced to download their transaction data and then submit it to GoCompare in a process that experts say is likely to deter many people from using the service.

It will also be unavailable on mobile or tablet devices during the initial phase of its operation, the sources added.

The Treasury, which is expected to outline further details of the MiData current account launch in Wednesday's Budget, has set up a working group to look at APIs, the use of which would make information comparison much simpler.

The Chancellor hailed the initiative a year ago as "a major breakthrough in empowering consumers and increasing competition in high street banking".

"MiData, combined with seven-day account-switching, means that the Government is arming customers with the weapons they need to hold banks to account to make sure that they are getting the best deal," Mr Osborne added.

However, senior bankers said the scheme was "undoubtedly" being launched before it was ready.

"There will be big teething problems," said one.

The Treasury also announced last March that Martin Lewis, the founder of MoneySavingExpert.com and one of the UK's most prominent consumer campaigners, would develop a comparison tool for current accounts.

However, Mr Lewis told Sky News that the progress to date had not been sufficient to ‎justify his involvement.

"I think MiData is a wonderful opportunity but until we get agreement from banks to provide an easy interface to provide the data it is never going to be a mainstream tool for consumers.

"We hope it will fully come together within the next year or so. This announcement is likely a bit of a PR stunt to claim credit for the move before the general election."

Some consumer groups have also raised concerns about the effective protection of customer data within the MiData initiative, which has also encompassed energy companies and credit-scoring firms since its launch in 2011.

Last week, the City watchdog said that the seven-day current account switching service (CASS)‎ was working effectively for consumers who had used it.

The Financial Conduct Authority (FCA) said, however, that there was insufficient awareness of CASS's existence, and suggested that full current account number portability would make it likelier that many consumers and small businesses would change providers.

The banking industry has argued that full portability would cost billion‎s of pounds and that it has already taken significant steps to improve competition.

The BBA declined to comment.


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House 'Crisis': Campaigners Rally In Westminster

By Afua Hirsch, Social Affairs Editor

Housing in Britain is in crisis, campaigners say, as 2,500 people attended a rally in Westminster calling on politicians to take urgent action.

The protest, which includes housing associations and charities as well as major developers, cites the lowest housebuilding levels since the 1920s as evidence that demand for homes across the country is far outstripping supply.

The problem is particularly affecting younger, first-time buyers, they say, who are increasingly delaying or being squeezed out of owning a property.

"It's really sad, the fact that not everyone can buy their own property," said Katy Popiol, 28, a first time buyer in West London.

"It's frustrating to say at least. It would be great to see more people my age to be pretty much the owner of their own property."

Britain needs 245,000 new homes a year, but there are currently only 125,000 a year being built, according to the Housing Federation, which convened the rally.

Recent figures also shed light on the measures young people are willing to go to in order to raise the money needed for a deposit.

Of those aged 18 to 34, 14% are considering living with parents, while 15% are considering delaying having a family or getting married.

One in 25 are thinking of taking part in medical trials in order to get on the housing ladder.

Although all three main political parties have acknowledged the need to build more homes, none are pledging to build at the level campaigners say is needed to immediately meet demand.

The Conservatives and Labour have committed to developing 200,000 new homes by 2020, and the Liberal Democrats have said they will build 300,000.

Campaigners say it is not enough.

"Politicians need to pull their heads out of the sand and realise that housing has become a major general election issue," Henry Gregg, of the National Housing Federation, said. 

"We are calling on all the political parties to end the housing crisis within a generation and build the homes that young people desperately need."


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