Below are our top 10 stories that you need to know about. Be sure to check our twitter page for regular posts of important headlines. Click on the links for full stories.
Opinion articles of the week:
The Chancellor George Osborne announced the introduction of sugar tax. City A.M’s Chris Snowdon calls the tax “pathetic”. Click here for the debate.
Some analysts are claiming that the government’s economic growth plans would be severely jeopardised following a Brexit. Click here for more.
China’s ruling Communist Party has unveiled an incredibly ambitious plan that it says will serve as a blueprint for the country’s economic and social development for the next five years. Will this plan reinvigorate the Chinese economy? Click here for the debate.
1. BUDGET 2016
George Osborne has delivered his eighth Budget as chancellor. Some the main points of the budget included; a new “sugar tax” on soft drinks, introduction of the “help to save” initiative for lower income savers, £2,000 increase in the 40p tax threshold and £1bn worth of tax cuts for the oil and gas industry.
One of the most controversial points was the £4.4bn worth of cuts to disability benefits which was the cause of Iain Duncan Smith’s resignation. (The Guardian)
Click here for all the key points of the budget. (The Guardian)
2. IAIN DUNCAN SMITH RESIGNS
Iain Duncan Smith has quit the Cabinet as he branded proposed cuts to disability benefits in George Osborne’s Budget as indefensible.
Announcing his resignation in a letter, the Work and Pensions Secretary complained of pressure to “salami slice” welfare and an unwillingness to spread the burden of spending cuts.
“I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled and the context in which they’ve been made are, a compromise too far,” he wrote. (Sky News)
Here are 10 key points to take away from his resignation. (Sky News)
3. TAMPON TAX
EU leaders have agreed a deal that will allow the UK to scrap the so-called “tampon tax”, British officials say. Two options have been put forward that would permit a zero rate of tax on sanitary products. It comes amid the threat of a backbench rebellion following the Budget from Eurosceptic MPs over the tax, currently at the lowest rate allowed by EU law.
Chancellor George Osborne said the government “heard people’s anger over paying the tampon tax loud and clear”. VAT is currently charged at the reduced rate of 5% on sanitary products – but more than 300,000 people have signed a petition calling for sanitary items to be exempted from tax altogether.
Mr Osborne had pledged to spend the proceeds of the tax on women’s charities.
“We said we’d use the money to benefit women’s charities and we’ve already distributed £17m to good causes across the country,” he said. “It just shows how Britain can make a case for a reform that will benefit millions as a powerful, confident voice inside a reformed EU.” (BBC News)
4. INTEREST RATES
UK interest rates have been held at 0.5% once again by the Bank of England.
All nine members of the Bank’s Monetary Policy Committee (MPC) voted to keep rates at their record low, where they have now been for seven years.
The decision to freeze rates comes amid worries about global growth and uncertainty ahead of the EU referendum. The Bank said uncertainty in the run-up to the referendum on EU membership – to be held on 23 June – had hit sterling, and that UK economic growth could slow. (BBC News)
5. IRAN OIL EXPORTS
Iran’s oil exports climbed to the highest in 22 months in January when sanctions against its economy ended, opening the way for higher shipments to Asia and new sales to Europe and Africa.
Exports rose to 1.55 million barrels a day in January, the highest since March 2014 and 9.2 percent higher than the month before. Production climbed to 3.37 million barrels a day, the most since February 2014.
Iran aims to increase production to 4 million barrels a day before it will consider joining oil producers in a proposal to freeze output. That would be the highest since October 2008. The nation was OPEC’s second-biggest producer before sanctions were stepped up in 2012.
The country last month shipped its first cargo to Europe since 2012. National Iranian Oil Co. has signed contracts for the sale of about 400,000 barrels of crude a day to European refiners, even if all cargoes for that entire amount haven’t shipped because of financial restrictions that remained in place, two company officials said Wednesday. (Bloomberg)
6. SAINSBURY’S ARGOS TIE UP
Sainsbury’s has confirmed a final offer for Home Retail Group, which will value the parent of Argos at £1.4bn, after rival suitor Steinhoff backed away this afternoon.
The supermarket’s bid is a combined shares and cash offer, of 0.321 new Sainsbury’s shares per HRG share and 55p a share in cash.In addition, shareholders will receive a special dividend of 27.8p per HRG share, of which 25p will be taken from the £200m return to shareholders from the Homebase sale, and a further 2.8p will be given in lieu of a final dividend.
Sainsbury’s said the offer, for a total of 173.2p per share, “represents a compelling opportunity to accelerate Sainsbury’s existing strategy, with numerous expected strategic and financial benefits” including creating a “leading food and non-food retailer”. (City A.M)
7. ARRIVA LONDON OVERGROUND CONTRACT
Arriva Rail London has won a £1.5bn contract to operate the London Overground line, Transport for London (TfL) has announced.
The firm, which is owned by German rail group Deutsche Bahn, will operate the line for the next seven-and-a-half years, with an option to extend the contract for a further two years. Arriva will take over operation of the rail network in November. It has promised to modernise stations and provide more frequent services.
Arriva beat bids from five other competitors, including Go-Ahead Group and MTR Corporation, with which Arriva currently runs the line as a joint venture.
TFL said that London Overground had seen passenger numbers rise by 400% since 2007 and that the network had become one of the most reliable in the UK. Arriva will be expected to deliver sustained improvements in performance levels. It will also have to meet tough performance targets. If those are missed, it will face new financial penalties, even for incidents caused by Network Rail, train and freight operators. (BBC News)
8. NEW BANK SURCHARGE TAX
The FT has reported that smaller “challenger” banks are disappointed by the Competition and Markets Authority determination that the UK government’s plan to phase out the existing bank levy and introduce a new surcharge tax on bank profits is not anti-competitive. This decision follows months of lobbying from challenger banks to change the new surcharge tax.
In January 2011, the UK government then introduced a “bank levy”. A tax on UK banks’ global balance sheets (assets and liabilities) above £20bn. It is payable even when a bank is unprofitable. Because of the £20 billion threshold it only affects large banks.
The bank levy is collected alongside corporation tax (which applies to all UK companies) and was designed to demonstrate to tax payers that financial institutions are contributing to the UK economy in accordance with the financial risks they present. The levy proved particularly unpopular with HSBC and Standard Chartered Bank as the majority of their business is outside the UK. Both banks have publicly considered re-domiciling (moving their headquarters) away from the UK as a result of the levy.
The government’s new plan to phase out the levy and re-focus it only on UK balance sheets by 2021 has been welcomed by the large banks. However, the plan to replace the revenue generated by this tax with an additional surcharge tax on banks’ UK profits above £25 million is very unpopular with smaller “challenger” banks, who argue the tax disproportionately affects them and discourages competition.
For more on the new levy click here. (The Lawyer2b)
9. TFL PRIVATE HIRE REGULATIONS
Transport for London has approved a new plan to modernise and improve London’s private hire industry. It is the first significant amendment to private hire regulations since they were first introduced following the surge in the number of private hire vehicles in the capital after the meteoric rise of Uber.
The private hire vehicles will now have to have “hire and reward” insurance in place for the duration of the licence, which TfL says will improve passenger safety.
Meanwhile, all drivers will have to speak English to a minimum standard.
The Mayor had come under increasing pressure to crack down on the exponential growth of private hire vehicles, given a 25,000-vehicle strong Uber. But Steve McNamara, general secretary of the London Taxi Drivers’ Association (LDTA), said the changes did not go far enough. (City A.M)
10. RBS INTRODUCES AUTOMATED SERVICES
RBS is to cut around 550 jobs in the UK as it moves away from offering face-to-face advice to automated services. Some 220 jobs will be lost as RBS introduces an online investment platform, more than 250 jobs will go from its insurance services division, as well as 80 administrative support staff.
Face-to-face investment guidance will only be available for people who have £250,000 or more to invest. Other customers will have to use an automated platform, which will launch later this year. Protection advice, for example when arranging life insurance, will no longer be available in person, but over the phone instead, resulting in around 250 job losses. The bank blamed a fall in the number of customers using its insurance services for the move to a phone-only service.
This comes as the Financial Conduct Authority (FCA) said automated advice would be more cost-effective, engaging and accessible for customers and called for help in bringing such automated models to the mass market. RBS said it was rolling out human-like artificial intelligence, known as Luvo, to help staff answer queries from small business clients.
The bank which is still 73% owned by the taxpayer, recorded a £2bn loss for 2015, its eighth consecutive annual loss. (Sky News)