Category Archives: History

Election-watch: the business of politics

The old joke used to be that the Church of England was the Conservative Party at prayer. Almost as true, the Confederation of British Industry (CBI) was once the Conservative Party at work. No longer: “Theresa May’s Conservatives” – the manifesto’s brand – has retreated from business. The party’s proposals include:

  • A corporation tax rate of 17% in 2020 (already in legislation).
  • A simplification of the tax system which “…remains too complicated”.
  • “…longer-term reforms” to, and “a full review”, of, the business rates system, including an exploration of “self-assessments in the valuation process”.
  • Action “to ensure that the interests of employees on traditional contracts, the self-employed and those people working in the gig economy are all properly protected”.
  • Giving the Pensions Regulator “the right to scrutinise, clear with conditions or in extreme cases stop mergers and, takeovers or large financial commitments…” There will also be an “update (to) the rules that govern mergers and takeovers, with a focus on overseas takeovers.
  • Executive pay packages will be “subject to strict annual votes by shareholders and listed companies will have to publish the ratio of executive pay to broader UK workforce pay”.
  • A doubling of the Immigration Skills Charge to £2,000 a year, alongside widespread tightening of immigration controls. The CBI labels the immigration approach as the manifesto’s “Achilles’ heel”.

Labour’s business proposals are more immigration-friendly, but other aspects are not:

  • A staged increase in corporation tax to 26% (21% small profits rate) by 2020/21.
  • An “efficiency review” of corporation tax reliefs, expected to yield £3.8 billion a year.
  • “A package of reforms to business rates…exempting new investment in plant and machinery”. Longer term, there would be a review of “the entire business rates system” and possibly a land value tax.
  • A new “Ministry of Labour”, the strengthening workers’ rights and empowerment of their trade unions.
  • Amending the takeover rules “to ensure that businesses identified as being systemically important have a clear plan in place to protect workers and pensioners” on takeover.
  • Introducing an “Excessive Pay Levy”, payable by employers, on total compensation exceeding £330,000.

The Liberal Democrats’ proposals are a blend of the other two parties’ ideas, including:

  • Corporation tax would rise to 20%, backed up with “tough action against corporate tax evasion and avoidance”.
  • A review of business rates and their possible replacement with a Land Value Tax.
  • “Modernise employment rights to make them fit for the age of the ‘gig economy’.
  • A requirement for “binding and public votes of board members on executive pay policies”.

If all that sounds unappetising from a business viewpoint, then remember, another truism: businesses do not have a vote…


Brave new world? Waking up to a Trump presidency


So today Donald Trump, the President Elect as he’ll be known until the inauguration, will visit Barack Obama in the White House. Those are words that I, like many, many others, never thought they’d be writing. (Full disclosure here – I voted for the other candidate).

It’s been a rollercoaster 48 hours. The world’s media has expended millions of words trying to explain how the former host of the US Apprentice has managed to leapfrog conventional party politics into the most powerful job in the world. And online, commentators as well as ordinary people people have engaged around the clock in what has been probably the first social media election of the age.

Amid the wall to wall coverage, we’ve focussed on some areas that seem most relevant to our sector. Our sister publications here at Centaur Media have covered investment, advice and marketing insights that we thought might prove useful and insightful.

Our colleagues at Money Marketing yesterday looked at a round-up of adviser reaction to the Trump victory. The mood was one of urging clients to stay their investment courses. The overnight reaction of markets, which seem to have heeded the ‘keep calm and carry on’ mantra, would appear to bear them out.

Over at Corporate Adviser, the focus is on division between economic analysts over the effect a Trump presidency has promised to revive the US economy and improve prospects, but there are contradictions inherent in his plans?

Much has been made on both sides of the Atlantic of analogies between the Trump victory and the Brexit vote. Marketing Week looks at the wider implications of the uncertainties surrounding the Trump ascendency for business and brands.

And finally leading on from the social media point above, Marketing Week published an interesting piece looking at just how the Trump campaign has changed the rules of political communication with its appeal to emotion over reason. It’s a tactic that has more than paid off.

While we all take stock of what the next four years might look like, the one certainty is that there will be much more discussion and analysis yet to come.

Welsh land transaction tax

Wales flag - silk texture

Wales is hankering to raise its own taxes for the first time in nearly 800 years. 

Earlier this week, the second of three assembly bills paving the way for Wales to establish a land transaction tax was published. This tax would replace stamp duty land tax in Wales from April 2018. Scotland have already split from the main UK rates on Stamp Duty and set the precedent on their own Land and Transaction Tax.

Welsh ministers are due to set the rate for the tax, raising around £250 million a year, in the autumn of 2017, and legislation for landfill tax, which is being devolved at the same time, will be published by the end of the year.

In addition, the Welsh government intends the Land Transaction Tax and Anti-avoidance of Devolved Taxes Bill to send a signal that it will be unacceptable to avoid devolved taxes collected by a new Welsh Revenue Authority.

This is big news for Wales and officials have said that the 220 page document is the longest piece of legislation Welsh ministers have produced and it’s expected to receive Royal Assent in spring 2017.

With tax devolution and the Scottish having the right to set their own income tax rates, next year’s tax tables could start to look more complicated…

An all time low since 1694 – interest rate highlights

Bank of England

The Bank of England

Yesterday the Bank of England finally cut base rate to 0.25% – an all-time low. That phrase sparked our curiosity, so we’ve had a look at some highlights from the long history of the base rate.

How to pay for a navy – 1694

Established as the Governor and Company of the Bank of England through the Tonnage Act in 1694, the Bank pre-dates the Act of Union of 1707 and is the second oldest central bank after Sweden’s.

Its initial purpose, as a private enterprise, was to raise enough capital to lend to the government to build up the navy after the Nine Years War with France. An initial loan requirement of £1.2 million was raised in 12 days and half was spent on the navy.

The inaugural rate was 6%. This changed twice over the next five years to settle at 4.5% in 1699. In 1716 this dropped to 4%, then rose again 1719 to 5%. Where it remained for over 100 years.

Steady as she goes


‘The Headlong Fools Plunge into Sout Sea Water’

The 5% rate rode through the 1720 South Sea Bubble, the great economic scandal of the 18th century. Similar to the Wall Street Crash of 1929, businesses were ruined and bankruptcies rife. There were suicides, rioting bankers in Parliament and the expulsion and imprisonment of the Chancellor, among others, for his part in the disaster. Even the King’s mistresses (there were two) had invested and were jeered by crowds of angry Londoners.

The rate held even through the protracted American War of Independence and the Napoleonic Wars – by when the navy was in more than good shape.

Industry, war and crashes – new highs

The industrial revolution increased the need for capital and accelerated rate changes from the 1820s.

During the 1850s and 1860s the interest rate yo-yoed monthly, even within months. During the Crimean War the Bank went back to its roots to raise money to back the conflict, with the result that a peak rate of 10% was reached in November 1857.

This was only matched again in May 1866, a year which saw 15 different interest rate changes, four in May alone. The collapse of the London bank Overend, Gurney and Company owing £11 million led to the only previous run on a British bank until the Northern Rock crisis in 2008.


The Barings debacle.”Same old game” The Old Lady of Threadneedle Street “You’ve got yoursleves into a nice mess with your precious ‘Speculation’! Well – I’ll help you out of it – for this once!!”

In an effort to avoid a similar disaster, in 1890 the Bank bailed out Barings Bank which had suffered heavy losses from its investments in Argentina. The “too big to fail” precedent was set.

In the run up to war in August 1914, the rate once again peaked at 10%, as small investors tried to replace their notes with gold. The rate didn’t last, falling back to 5% for most of the war years.

Twentieth century blues

Much blame for the recession of the 1920s has been placed on a failure to aggressively cut interest rates after the war. By 1933 it was down to 2%, where it remained through the Second World War barring a brief rise again, in August, of 1939.

After the 1945 election, the Bank, along with much else, changed when it passed from private ownership to nationalisation in 1946.

By the 1970s, the minimum lending rate saw a return to the mid-19th century frenzy of rate changes and unheard of highs.


Cars queuing for petrol 1973

The world oil crisis in 1973 saw the rate finish on 13% after 11 rate changes, but worse was to come: 14 changes in 1976 saw a high of 15% in October. 1977 saw this halved to 7% after 19 changes over the year. The high watermark of interest rates was reached in 1979 at 17% during the early months of the Thatcher government.

The Black Monday, Tuesday and Wednesday of the late 1980s and early 1990s saw Chancellors grappling with stock market crashes and the collapse of sterling. In 1997 Labour Chancellor Gordon Brown handed control of interest rates back to the Bank of England.

It all looks fairly exhausting. But we are now in uncharted waters. We’ve seen the peaks over time: the latest trough is quite a new phenomenon.

Now what? Our handy round-up of the Brexit financial fallout

British newspaper frontpages following Brexit vote result

The last few days have certainly been momentous for the UK and it seems that nobody really knows what’s going to happen next. It is clear, however, that the country’s departure from the European Union will have an impact on everyone’s finances.

The financial services industry has already been one of the first to see the effects, with dramatic falls in share prices as the markets reacted to the outcome of the referendum. Providers, fund groups and banks have all taken a hit. As with any major change, there will be winners and losers so who will they be? Our colleagues on Money Marketing and Fund Strategy provide in-depth round ups. Tax is a major concern, obviously, and some of the main issues are set out on Accounting Web.

What is the Financial Conduct Authority saying?

Much of the financial regulation currently applicable in the UK comes from EU regulation and this will remain applicable until any changes are made (by the government and Parliament). Firms must therefore continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect. Consumers’ rights and protection are unchanged by the referendum. Of course, uncertainty is flavour of the month (or perhaps longer) and the longer term impacts of leaving the EU on the overall regulatory framework will depend on the future relationship the UK has with the EU.

What is the Governor of the Bank of England (BoE) saying?

Mark Carney has said that we can expect an inevitable period of uncertainty and adjustments following the referendum result, but there will be no inital change in the way our people can travel, and in the way our goods and services can be sold. He has also said that it will take time for the UK to establish new relationships with Europe and the rest of the world, which will result in some market and economic volatility. Mr Carney has sought to reassure the public that the BoE is well-prepared for this through contingency planning, beginning with ensuring that the core of the UK’s financial system is well-capitalised, liquid and strong.

What is the government saying?

Not an awful lot. But this is one thing the British people agree on whichever way they voted: they need to say something soon.

On an interesting note Marketing Week provides an in-depth look at the brand effectiveness of the campaigns.


Taxbriefs Chancellors – 5 Norman Lamont 1990-93


Norman Lamont took over as Chancellor in November 1990 under John Major’s premiership. His term as Chancellor was dominated by the fallout from the ‘Lawson boom’: when he entered office inflation was running at over 10%, base rate was 14% and a recession was underway.

Lamont held office when the UK was forced to leave the European Exchange Rate Mechanism (ERM – a precursor to the Euro) on Black Wednesday (16 March 1992), just two years after joining during Major’s tenure as Chancellor.

What he did

  • In his first (March 1991) Budget he announced:
    • An increase in VAT from 15% to 17.5%;
    • The abolition of higher rate relief for mortgage interest and, as a slight quid pro quo, an above-inflation increase in the basic rate band;
    • That all profit related pay up to £5,000 would be tax-free, rather than the 50% that had previously applied;
    • A flat £200 tax charge on something that he described in his speech as “what I regard as one of the greatest scourges of modern life…. the mobile telephone.” He went on to hope that “as a result of this measure, restaurants will be quieter and the roads will be safer.”
  • By the time of his second Budget in March 1992 (a month before a general election won by the Conservatives), base rate had fallen to 10.5% and inflation was abating. Lamont allowed the deficit to double for the coming year, allowing for some pre-election sweeteners:
    • An increase in inheritance tax reliefs for unquoted shareholdings;
    • The end of the £3,000 cap on unit trust investment in a PEP: 100% unit trust PEPs for the full £6,000 maximum became possible, giving a new lease of life to Mr Lawson’s creation and setting the shape for today’s ISAs.
    • Creating a 20% starting rate tax band, £2,000 wide, as a move towards 20% basic rate. At the time basic rate was 25%.
  • In his final Budget in March 1993, Mr Lamont followed the post-election tradition of raising taxes to control the deficit:
    • The rate for mortgage interest relief was cut from 25% to 20%;
    • From 1994/95 the tax relief rate for the married couple allowance was set at 20% rather than marginal rate.
    • Dividend tax was reformed (sound familiar?) with the rate of tax chargeable and accompanying reclaimable tax credit cut to 20% from 25%. This set the precedent for Mr Brown and, eventually Mr Osborne to further reduce dividend tax credits.
    • The zero rate of VAT on electricity and gas was replaced with an 8% rate in 1993, rising to standard rate the following year.

After a dire by-election result, Lamont was fired in May 1993 and John Major replaced him with Ken Clark. After losing his seat in 1997, Norman Lamont was made a life peer. He has recently been vocal in favour of Britain leaving the EU.

What he said

“Rising unemployment and the recession have been the price that we have had to pay to get inflation down. That price is well worth paying.” May 1991

“…what we are seeing is the return of that vital ingredient – confidence. The Green shoots of economic spring are appearing once again.” October 1991. Statistics later proved him right, but at the time the comment was widely criticised as fantasy.

“Je ne regrette rien” In April 1993 Lamont was asked at a press conference whether he regretted claiming to see “the green shoots of recovery”. He replied by quoting the Edith Piaf song a comment that went down well with the press corps, but not the UK public.

Budget soundtracks

The recession of the early 1990s saw music culture stuck between the end of punk and rise of Britpop and the Spicegirls. In July 1991 Bryan Adam’s ‘Robin Prince of Thieves’ theme song broke the record set in 1955 for longest time at No 1 at 16 weeks.

March 1991 The Clash ‘Should I Stay or Should I Go’
March 1992 Shakespeare’s Sister ‘Stay’
March 1993 2 Unlimited ‘No Limit’

Life begins at 40…


Danby Bloch, co-founder and former director of Taxbriefs, reflects on 40 years of delivering Budget Summaries and Tax Tables to professionals in the financial services industry.

Forty years ago I became a mass ghost writer and have been doing it continuously ever since. Nowadays we would be called content producers for multiple users but then we didn’t know any better.

Back in the early ‘70s, large firms of accountants and a few other financial players rushed to publish their thoughts on the Budget after the Chancellor’s speech. In 1976 I had a eureka moment that we could provide a service that would allow other firms to match their larger rivals – at low cost and with little effort. We set up the company and Taxbriefs was born on 5 March 1976.

Quite simply, we at Taxbriefs would do the hard work for our clients by writing and delivering personalised Budget summaries for each firm and then they would send them out to their clients and get the kudos. In those days, they weren’t allowed to advertise – it wasn’t considered professional, old boy. We got a response of well over 10% on our initial mailing – so it looked like we were on to a good thing. On the back of the success of our Budget summaries, we then turned to creating personalised newsletters and tax tables.

Over the years the Budget changed and so did the technology for producing our summaries. Nowadays much of the output is online.

1970s Budgets were different from the current events. Budget secrecy was much more important – so there were very few of the Treasury-derived rumours that are now used to manage the nation’s expectations. Tax changes applied more or less immediately – with Budgets in March and all the allowances and rates of tax applying a few weeks later.
HM Revenue & Customs’ computerised systems would now make such an idea impossible.

Although it happens every year, there’s still an excitement about the Budget 40 years later and there’s always something new – and sometimes something very surprising. Mass ghost-writing carries weighty responsibilities; after all, what we write will be published under other people’s brands and as always at this time of year, the Taxbriefs team is deep in pre-Budget preparation. I’m not sure I’ll manage another 40, but I am looking forward to finding out what the Chancellor has up his sleeve for my 46th Budget on 16 March.