Archive for November, 2008

Highlights of Chancellor’s pre-budget report

Monday, November 24th, 2008

The Financial Times has published an excellent synopsis of Alistair Darling’s much anticipated Pre-Budget Report.

Highlights:

Chancellor says measures are designed to make sure the slowdown is “shorter and shallower” than otherwise would have been the case.

Bank of England estimates bank losses could total $3,000bn.

Sharp reduction in global growth across the world, including the eurozone, the US, India and China makes this an ”unprecedented crisis”.

Restoring and maintaining financial stability ”crucial” to dealing with the crisis.

UK to take lead tackling global financial crisis with presidency of G20 next year.

The Financial Services Authority is looking at banks capital requirements in the wake of the crisis.

The financial crisis has highlighted problems with tax havens, and a review of the regulatory arrangements surrounding them has been commissioned and will report in the spring.

UK to take lead to tackle bank compensation arrangements.

By next month, UK banks will have access £100bn in capital under the government’s capital guarantee scheme.

Rights issue review group to review process for raising capital and make it fast and simple.

Inflation expected to continue to fall.

Monetary policy can’t stimulate the economy on its own.

IMF forecasting output to fall next year in all advanced economies.

UK output to fall in the first 2 quarters of next year.

Chancellor forecasts UK growth to fall between 0.75 per cent and 1.25 per cent.

UK economy to grow between 1.5 per cent and 2 per cent in 2010.

Chancellor to outline fiscal stimulous package of £20bn by 2010 or 1 per cent of GDP.

Current crisis means significant falls in tax revenue in short and medium term.

Government sets ”temporary operating rule” allowing it to borrow in order to fund public spending, rather than borrowing only to invest under the terms of the so-called ”golden rule”.

Chancellor plans to balance budget by 2015-16.

Borrowing to rise to £78bn next year and £118bn in 2009, representing 8 per cent of GDP.

Stamp duty take down 40 per cent this year.

Net debt to rise to 41 per cent this year, then to 48 per cent in 2009/10; 48 per cent in 2010/11; 53 per cent in 2011/12, peaking at 57 per cent of GDP in 2013/14.

Government to find £5bn of efficiencies savings from civil service over next three years.

Public spending round to increase spending by 1.2 per cent a year in real terms.

£3bn of capital spending will be brought forward from 2010/11 to this year to invest in schools, energy efficiency and social housing.

VAT to be cut to 15 per cent from 17.5 per cent until the end of 2009, effective from next Monday, December 1.

Income tax personal allowance temporary tax cut on 10p band - to be made permanent - and increased to £145 a year from £120.

Ceiling on tax relief given to people with pension funds up to £1.8m maintained until and including 2015/16.

From April 2010 all NIC rates to be increased by 0.5 per cent for employers and employees.

Starting point of national insurance aligned with income tax, so no-one earning under £20,000 per year to pay higher rate.

Incomes over £150,000 will be charged at the new rate of 45 per cent from April 2010.

People earning over £100,000 to have personal tax allowances brought into line with those on middle incomes.

Personal allowances abolished for incomes over £140,000 from April 2010.

Exemptions for foreign dividends for large and medium businesses from 2009.

Small and medium sized businesses to be allowed to spread business tax payments to help ease cashflow and credit constraints.

For 2009/10, empty commercial properties exempt from business rates if they have a rateable value under £15,000

Government has agreed £4bn loan from European Investment Bank for UK banks to help small and medium-sized enterprises.

Government to offer credit to small businesses via a temporary finance scheme offering loans between £1,000 and £1m to help ease cashflow constraints.

Government to defer increase in small companies corporation tax

Small and medium sized businesses to be able to offset losses of up to £50,000 against profits made over the last three years.

UK to set out detailed proposals to reduce carbon emissions in summer 2009.

Air passenger duty reformed into four band tax duty.

£100m in new money to help provide insulation in homes.

Ofgem to monitor relationship between wholesale and retail energy prices.

Government considering statutory powers to lower energy bills.

Government to invest £535m into energy and transport savings to help bring down carbon emissions.

“Renewables obligation”, requiring energy generators to use greener methods of production, extended.

Government to take measures to increase the flow of new mortgages.

Government to take steps to avoid home repossessions.

Measures being considered to help those in work and facing financial difficulties to remain in their homes.

Major lenders have agreed to take at least three months before initiating steps to repossess properties.

Government to provide new funding of £15m for the provision of debt advice on a nationwide basis.

Limit on mortgage interest scheme raised to £100,000 from £200,000.

Mortgage rescue scheme to be extended to cover those with second homes.

Overall housing support package worth $1.8bn.

Extra £775m for new homes and modernisation programmes for social housing.

Redundancy support scheme to be extended to cover more employers than just the largest, to cut time it takes those out of work to find new jobs.

Extended employment support measures worth £1.3bn in total.

New bands for vehicle excise duty to be phased in at slower rates.

Most polluting cars to see increases of up to £30 and less polluting cars will see lower increases or falls up to £30.

”Saving gateway” to help people on low incomes to build savings to add 50p to every £1 deposited.

State pension up £4.55 a week to £95.25.

Pensioner credit increase from £124 to £130 for individuals and from £189 to £198 for couples, from January 2009.

Child benefit increase brought forward to January from April.

Every pensioner to get bonus of £60 on top of Christmas bonus and couples will get £120.

Children to receive one-off £70 payment for Christmas

Alistair Darling completed the delivery of his pre-Budget report at 4.24pm

ACCA grant for healthcare research

Monday, November 24th, 2008

ACCA’s Research Committee is to commission international, comparative research to help inform governments in meeting the policy challenges involved in improving health outcomes while containing costs.

As the global body for professional accountants, ACCA is seeking to develop an understanding of the future role of the accountancy profession in helping to meet these challenges.

Expressions of interest are sought from teams interested in undertaking a study relating to this broad theme. From these, a preferred bidder will be identified and invited to submit a full tender to undertake the study.

ACCA’s Research Committee is making £35,000 (or equivalent) available through this initiative to support both an internationally-focused research project and international travel for related dissemination activity.

The project is expected to begin in February 2009 and should meet the following requirements:

  • it has an international focus
  • it has policy relevance
  • it has the ability to produce recommendations for the accountancy profession
  • it will be completed within 12 months from February 2009
  • its output provides material and analysis capable of helping ACCA make informed policy recommendations to governments, policy makers and standard-setters, as well as the accountancy and finance profession as a whole.

VAT expected to fall to 15%

Monday, November 24th, 2008

It is has been widely reported that in an attempt to boost high street sales, Alistair Darling will announce later this afternoon that VAT will temporarily fall from 17.5% to 15%. It will return to current levels in 2010.

Efforts targeted at helping small businesses through the financial crisis are expected to dominate what has been billed Darling’s ‘emergency mini-budget’.

Among the other expected measures are an extension of the Small Firms Loan Guarantee Scheme and the postponement of the planned increases in small business corporation tax and vehicle excise duty.

It is also believed Darling will reveal he has instructed HM Revenue and Customs to give struggling businesses extra time to settle their tax and National Insurance bills.

In addition to deal with mounting concerns over high street bank’s withdrawal of small business finance, it has been predicted by business groups that the chancellor will announce the appointment of a dedicated ‘bank tsar’.

High profile PA role required to support FD.

Tuesday, November 11th, 2008

Here’s a hot job from accjobs.com, the accounting jobs website:

An excellent opportunity has arisen for an experienced and qualified accountant to join a successful expanding team.   A leading UK business seeks a high-calibre financial accountant to provide assistance to our Finance Director across a broad range of responsibilities, and deputise in his absence. Your exposure will be broad and encompass involvement with our accounting control systems, statutory and management accounts and other internal audits.

Interested?  Then, click here for more details:

Spam network generates around $2m USD p.a.

Tuesday, November 11th, 2008

The BBC website reports that US researchers have uncovered some of the economics of being a junk mailer.

The analysis suggests that such a tiny response rate means a big spam operation can turn over millions of pounds in profit every year.

The spam study was carried out in early 2008 by computer scientists from University of California, Berkeley and UC, San Diego (UCSD).

For their month-long study the seven-strong team of computer scientists infiltrated the Storm network that uses hijacked home computers as relays for junk mail.

“The best way to measure spam is to be a spammer,” wrote the researchers in a paper describing their work.

They created several so-called “proxy bots” that acted as conduits of information between the command and control system for Storm and the hijacked home PCs that actually send out junk mail.

The team used these machines to control a total of 75,869 hijacked machines and routed their own fake spam campaigns through them.

While running their spam campaigns the researchers sent about 469 million junk e-mail messages. The vast majority of these were for the fake pharmacy campaign.

“After 26 days, and almost 350 million e-mail messages, only 28 sales resulted,” wrote the researchers.

The response rate for this campaign was less than 0.00001%. This is far below the average of 2.15% reported by legitimate direct mail organisations.

“Taken together, these conversions would have resulted in revenues of $2,731.88—a bit over $100 a day for the measurement period,” said the researchers.

Scaling this up to the full Storm network the researchers estimate that the controllers of the vast system are netting about $7,000 (£4,430) a day or more than $2m (£1.28m) per year.

AIA speech encourages Corporation Tax debate.

Thursday, November 6th, 2008

A recent Association of International Accountants‘ article reports, Tax expert Richard Murphy, the keynote speaker at AIA’s Founders’ Lecture, stimulated a lively debate about the future of corporation tax when he called for an all-encompassing reform of the current ‘Cortina’ model of corporation tax system. Although the speech was made as long ago as 10 September, it is still proving news worthy, with Finance Week printing it in its entirety.

In the speech Richard said he believes that the existing single tax system is outdated and no longer works for all sizes of company. Instead, he proposes that corporation tax should be split in two with the introduction of a new small business tax and a separate one for large and multinational companies.

The speech can be read in full by clicking here.

CIMA publishes report on Business Intelligence

Thursday, November 6th, 2008

According to  a recent article on the CIMA website, business intelligence (BI – the structure of online data systems) can help transform the finance function by providing better reports and analysis to inform decision making and by releasing management accountants to provide the decision support that business needs.

This is more important than ever in the current economic downturn.

See www.cimaglobal.com/decisionmaking for a pdf of the report.

Decision making is becoming the basis of competitive advantage and superior performance. Leading global firms have already transformed their finance functions. The efficiency of their accounting processes gives them a cost advantage and they have deployed management accountants in decision support roles. Many companies have also woken up to the potential value in data as a strategic asset and have invested in BI to better inform decision making.

Elsewhere, too many finance transformation and BI projects have stalled and a great number of accountants in business are unable to provide the decision support business requires as they are still too immersed in producing traditional financial reports.

Indeed, until now, many accountants’ experience of BI has often been limited to departmental applications specific to accounting processes rather than realising the potential in BI to access a broader range of data and provide operational, management or strategic information to business users as appropriate to their roles.

BI is another step on the journey to free up accountants from costly overhead roles in producing accounting information to realise their full potential in supporting decision making to improve performance and enhance value creation; they need to engage closely with their colleagues in IT to weigh up the business case for implementing a company-wide BI strategy.

Charles Tilley, chief executive at CIMA, explains:

“As the finance function continues to evolve into a broader, more strategic role, changes are evident in the range and format of management information expected by decision makers, knowledge workers and operational staff. BI has become the newest strategic opportunity. Not only does it have the potential to help inform decision making but it also frees up management accountants to help input even further into their organisations’ strategic direction.”

Bank of England expected to cut interest rates.

Wednesday, November 5th, 2008

The Bank of England is expected to cut rates from 4.5% on Thursday as it tries to prevent a painful recession, says the BBC.

Figures released on Wednesday indicated that both the service and manufacturing sectors are continuing to struggle.

Some groups want the Bank to cut rates by one percentage point to 3.5%, which would be the biggest cut since 1993.

The Bank’s Monetary Policy Committee begins its two-day meeting on Wednesday and the interest rate decision will be announced at midday GMT on Thursday.

Digital journalism award for Accountancy Age

Wednesday, November 5th, 2008

Accountancy Age Young Professional editor Paul Grant was this week named digital journalist of the year at the Press Gazzette’s annual Magazine Design and Journalism Awards.

The judges called the monthly digital magazine for part and newly qualified accountants a ‘lively and visually stimulating site appropriate for its users’ and that ‘Grant’s work is accessible and well judged for his audience and streets ahead of the other competitors’.

Young Professional was also shortlisted for cross media project at last month’s Association of Online Publishers awards and business magazine website of the year at tonight’s British Society of Magazine Editors Awards.

Congratulations!