Consumers will pay for national insurance rises, employers say
A closely watched measure of business sentiment in the UK compiled by S&P Global found that just under 50 per cent of firms surveyed said they would absorb the rise in national insurance tax this year by passing on the cost to consumers.
Some 36 per cent said they would reduce headcount in response and only 9 per cent said they were planning to cut wages as a result of the NICs change, which came into force from April this year.
The findings will concern the Bank of England, which is monitoring how firms react to climbing payroll costs as it decides how far and fast to cut interest rates. If taxes are passed through to consumers, this risks inflation staying above the central bank's 2 per cent target.
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Telegraph
30 minutes ago
- Telegraph
Cash use to be tracked amid ‘two-tier society' fears
The Bank of England will monitor the use of cash payments amid fears that vulnerable groups risk being excluded in a 'two-tier society'. Threadneedle Street officials are set to intervene after MPs warned more checks were needed to ensure people can still pay with cash in public places, such as coffee shops, leisure centres and on public transport. There are currently no legal requirements in the UK for businesses or organisations to accept cash, fuelling fears that pensioners and people with disabilities could be shut out. Dame Meg Hillier, chair of the Treasury select committee, welcomed the move by the Bank and said it was a 'positive first step'. It comes after the committee revealed earlier this year that vulnerable groups were having to pay higher prices for essential goods amid an increase in the number of shops not accepting cash. However, it also said there were significant obstacles in assessing the true level of cash acceptance across the UK. A study by Link, the UK's cash machine network, in 2024 found that half of those surveyed had been to a business or organisation in the last eight weeks that did not accept cash or discouraged cash use. Yet 98pc of small businesses said they accepted cash when polled by Savanta. A lack of consistent evidence makes it challenging for the Government to determine how widespread the issue of cash acceptance is in the UK. There are concerns that a decline in cash acceptance will lead to the exclusion of vulnerable groups such as the elderly, people with learning disabilities, and domestic abuse victims. Dame Meg said that the Government 'consistently agrees' with the Treasury committee's view 'that action needs to be taken to avoid financially excluding vulnerable groups'. In response to the committee's findings, Emma Reynolds, the economic secretary to the Treasury, said: 'Ensuring individuals have access to the appropriate financial products and services they need is a key priority for the Government.' The Treasury is due to publish a financial inclusion strategy later this year, 'which will examine the barriers consumers face to accessing products and what more industry and government can do to support them'. ATM decline When appearing before the Treasury committee in January, Ms Reynolds said the Government had 'no plans to regulate businesses, big or small, to compel them to accept cash'. Yet the committee has argued that ministers may have to legally mandate cash acceptance in the future if a 'two-tier society' arises. Worries of a decline in cash acceptance have emerged alongside a significant fall in the number of free ATMs. The number of cash machines in the UK fell by 5pc year-on-year to 46,182 in 2024, according to Link. Since the pandemic, there has been a rise in the number of businesses that call themselves cash-free, with others stating that they prefer customers to accept card or contactless payments. Over the last decade, there has also been a significant decline in the number of cash transactions. Cash accounted for just over half of all payments in 2013, but that fell to 12pc in 2023 as the popularity of card and digital payments increased. Blackouts in Spain and Portugal earlier this year prevented the public from making card payments. The committee highlighted the importance of physical cash in emergency situations, warning that alternatives must be in place in the event of a major technological failure or a state-sponsored cyber attack.
Times
33 minutes ago
- Times
Britain is broke: how inflation-linked debt costs us £60bn
Britain is broke. That was the depressing conclusion of the Office for Budget Responsibility's annual report on the future of the public finances published this week. Of course the fiscal watchdog did not choose those exact words. Instead it used 65,000 other words, but if you were to distil the overall message, it's hard to come to a different conclusion. The watchdog chose to focus its report this year on the ruinous cost of the triple-lock pension promise and the strain that net zero will place on the public purse. But in Westminster, all the talk is about how a little-known policy decision made decades ago is putting the government in an uncomfortably tight fiscal straitjacket. That decision was to start promising investors who lent money to the government that their cash would be protected from the ravages of inflation. Or in more technical language, the government started issuing index-linked gilts that were tied to the retail prices index (RPI) measure of inflation. This innovation meant investors could lend the government money safe in the knowledge that if inflation rose, the amount of interest they would receive and the amount returned at the end of the term of the loan would rise so the real value of their investment would never fall. Conventional gilts offer no such protection. The lender is just paid a fixed amount of interest each year, and a fixed amount of cash is returned at the end of the term. The consequences of this policy for the public purse are only now beginning to be felt because of the higher levels of inflation since the pandemic. The numbers are stark. In 2020 the government spent £25 billion a year on debt interest, but in the last tax year it spent £105 billion. By comparison, it spends £60 billion on schools, £55 billion on defence and £20 billion on the police. So who is to blame and how did we get here? The short answer is politicians. The long answer is more complicated. Decisions on the type of debt to issue each year are made by the chancellor but they are informed by officials and subject the demands of the market. The record shows that particularly high levels of index-linked gilts were issued under the chancellorships of Gordon Brown and George Osborne. However, the policy itself was first introduced by Geoffrey Howe, who was chancellor in 1981. Howe made the decision in part because the early Thatcher government was struggling to borrow what it needed after the economic crises of the 1970s, but also because it signalled that the Treasury was serious about cracking down on inflation. By promising to protect the real value of money lent to the Treasury, investors were reassured that the new government would not repeat the reckless and inflationary policies of the previous decade. There was also strong demand for this type of government debt from the pensions industry because it helped to fund the inflation guarantees in final salary schemes. • OBR rings alarm on pensions, climate change and the fiscal rule In the decades that followed, index-linked gilts, or 'linkers' as they became known, were hailed as a clever innovation because they met this demand and actually saved the government money. The reason was that investors would accept a lower rate of return on index-linked loans than conventional gilts because of the inflation protection they offered. Provided the RPI rate remained low — and over the next few decades it generally did — the government benefited by having to pay less interest on its debts. Indeed, an official analysis in 2023 found that the Treasury cumulatively saved £158 billion by issuing linkers in place of conventional gilts between 1981 and 2022. However, the equation dramatically shifted in 2022 when inflation surged to a high of 14.2 per cent. Suddenly, the amount the government had to pay to service its debts ballooned. Britain's public finances were hit uniquely hard because over the preceding decades the UK government had issued so much more index-linked debt than anyone else. By 2022, nearly 25 per cent of Britain's outstanding borrowing was index-lined, more than twice as much as any other G7 country. Italy has the next highest holding at 12 per cent but US debt has only 7 per cent and Germany less than 5 per cent. This meant that between 2019 and 2022, debt interest costs increased faster in the UK than in every other OECD country. The proportion of this increase that is down to linkers is subject to debate because the pandemic greatly increased government borrowing generally and the interest rates on conventional gilts also increased. However, an analysis by The Times of RPI rates and the stock of outstanding government debt, suggests the decision to issue linkers over conventional gilts cost the Treasury £62.8 billion in higher interest payments during 2022 and 2023. To put this in perspective, a penny on income tax raises only about £6 billion. These higher borrowing costs are set to continue for years to come as linkers mature and are repaid. It is one of the main reasons why the annual bill for servicing the nation's debt is set to hit £132 billion by 2030, according to the OBR. Whatever the exact cost of linkers, there can be no doubt that they have severely constrained Rachel Reeves's ability to enact meaningful policy, or borrow to invest in Britain's creaking public services. To make matters worse for the chancellor, investors in the gilt markets are acutely aware of the government's inflation-based debt problem so they scrutinise her every policy decision. Any move that suggests Labour might abandon fiscal responsibility rapidly raises the interest rates they demand to lend to the government. That is a major problem when the Treasury needs to borrow more than £250 billion this year and why these investors have been nicknamed the 'bond vigilantes'. The bond market really is an ever-present sword of Damocles hanging over the government. Anyone who doubts its power should remind themselves what happened to Liz Truss following her disastrous mini-budget. Perhaps understandably, no one is jumping to the front of the queue to take the blame for creating this situation. A Treasury source said that successive chancellors had to decide between the 'short-term attraction' of index-linked gilts and the longer-term risk. The 'red hot' demand from the pension industry made those decisions harder. However, the source admitted that, in hindsight, the issuing of index-linked gilts 'went too far'. While no politicians have publicly blamed the officials who advised them, questions have been asked about the role of civil servants. The principal official responsible for advising the government through the Brown and Osborne period was Sir Robert Stheeman, who was chief executive of the Debt Management Office (DMO), a Treasury agency created in 1998 when the Bank of England became independent. The DMO took on the bank's role of issuing and servicing gilts, with an objective to 'minimise financing costs over the long term, taking account of risk'. While there is no public record of Stheeman, who was earning £145,000 a year when he left in 2024, explicitly calling for more linkers, he did repeatedly describe them as a 'key part of the UK financing programme' and emphasised their cost advantages under certain market conditions. Last year, his replacement, Jessica Pulay, noted the markets' robust demand for index-linked gilts. However, ascribing any blame to officials at the DMO is tricky because they have no decision-making role and are only there to advise and execute government orders. So as successive chancellors were making merry in the bond markets, drunk on the illusion that inflation was a historic problem, did anyone raise the alarm? The short answer is very few. There were some warnings but they were muted. For example, in the mid 2010s, the House of Lords economic affairs committee highlighted that the UK's large share of inflation-linked debt made the public finances unusually vulnerable to inflation shocks — however it was presented only as a theoretical risk. Given the extended period of low inflation the country had benefited from, few took much notice. It was only when the OBR raised the alarm in 2017 that the Treasury decided to act. In the 2018 budget, Philip Hammond announced the government would gradually reduce the proportion of index-linked gilts it issued. Over the next five years, the share of government borrowing raised using linkers fell from 23.5 per cent to 12.4 per cent. However, it was too little, too late. Decades of much higher levels of issuance, and the fact that the inflation uplift on these debts kept their value rising, meant that by 2022, when inflation surged, more than 25 per cent of all outstanding gilts were still index linked. Rumours in Westminster suggest that for years the Treasury did not want to address the risks because linkers were considered a useful tool to constrain excessive departmental spending and the profligacy of No 10. The theory is that having a high proportion of index-linked gilts meant that large increases in public spending would be inflationary and therefore prohibitively expensive. Whether that theory is true, remains to be seen. However, what cannot be disputed is that Britain's debt experiment will handicap chancellors for years to come.
Telegraph
an hour ago
- Telegraph
How to flog your wares at a car boot sale, and maximise your profits
If you're looking to clear out clutter and make a bit of extra cash, setting up a stall at a car boot sale can be a surprisingly effective way to do it. However, turning the things you no longer want into treasure for a buyer takes more than simply spreading a boot full of products and on to a table. Timing, pricing, presentation and negotiation skills all play a part in how much money you can make. Here, Telegraph Money explains the steps to take to get started, how to set the right price for your items and what to do if something goes wrong. What preparation do you need to do? Are there any tricks to laying out your stall? How do you price your items? Do you need insurance? What if someone tries to return something they think is faulty? FAQs What preparation do you need to do? Take the time to prepare properly. Start by sorting through what you plan to sell, such as toys, books, game consoles, clothing and garden equipment, making sure that they are in good working condition and old batteries have been replaced. 'If they're dusty, give them a quick wipe over with a cloth. If you're selling clothes, iron them. A little effort makes items look cared for, not like neglected junk,' said Kayleigh Davies, auctioneer and auction expert at Auctionet. It's also important to consider practical details, such as checking the weather forecast, bringing a cash float and arriving early to secure a good pitch. Ms Davies said: 'Tarpaulins are useful for covering everything in case of rain. Make sure you have plenty of change, as you may lose sales if you can't finish a transaction. And bear in mind that serious buyers arrive early, so you should be even earlier.' It is also worth checking whether there are any limits on what you can or can't sell at your chosen venue or if there are specialist sales more suited to your items. For example, if you are only selling clothes, it could be worth finding a clothing fair to sell at. Are there any tricks to laying out your stall? When it comes to setting up on the day, presentation is key. Use a trestle table with a tablecloth, and bring a clothes rail with you if you're selling clothes. 'Think about your setup from a shopper's perspective,' said Shannon Murphy, accredited professional organiser and founder of Simpl Living Co. 'Rummaging on the floor feels much less pleasant than browsing through clothes on a rail or walking alongside neat tables. Grouping your items by category is also helpful. Keep books together, children's toys in one spot and homeware in another, so people can quickly find what interests them.' If some of your items look a little tatty, don't be tempted to hide them at the back of your stall. 'If you have a lot of low-value items, think about making an 'everything 50p' or a '3 for £1' box. A clearly labelled bargain box can draw people in. But your most interesting or attractive items should be in a prominent place to draw attention,' said Ms Davies. How do you price your items? Do some research on sites like eBay or Facebook Marketplace to help give you an idea of how high to price your items, keeping in mind that if you've paid a pitch fee (the price to sell at a car boot), you'll want to earn more than this back. However, remember that since it's a car boot sale, people will be expecting bargains. Wayne Hemingway, co-founder of The Classic Car Boot Sale, said: 'If you don't have anything rare or valuable and you don't want to take stuff home, then price to sell and enjoy the ride.' If you have any higher-value items, you might decide to leave these unpriced to encourage conversation and haggling – but be aware this could put some buyers off. 'If items aren't priced, shy buyers might walk away, so if you're not using price labels, be prepared to notice when someone is gazing longingly at something so you can start with a hello or ask if they need help,' said Ms Davies. Decide beforehand the minimum price you're prepared to accept, and if items aren't shifting, consider bundling them to make them more attractive – this can work particularly well for items such as clothing of the same size or books by the same author. If you later realise you've undersold something, unfortunately, there's not much you can do about it. 'If you've undersold something, look on the bright side: one of your goals was to de-clutter and you've still done that, for a price you were happy to accept at the time' said Ms Davies. Do you need insurance? If you're a casual car boot seller, you probably won't need to take out insurance. However, it's best to check with the event organiser to be sure – they may have an insurance policy that covers all stallholders. On the other hand, if you're a regular trader and running car boot sales several times a year, consider buying public liability insurance. This will cover you against customer injury – if a customer trips over your stall, for instance – as well as damage to their property. If you're selling handmade items, you should also apply for product liability insurance. This will protect you in the event a customer makes a claim because of a faulty product you sold that caused injury or damage. What if someone tries to return something they think is faulty? Unless you're selling handcrafted items, you have no obligation to refund a customer, and many car boot sale sellers choose to clearly display signs saying 'no refunds'. Although these signs are not legally binding, they inform customers that you're not prepared to accept returns. However, it's important that you do not mislead customers or sell unsafe goods, so don't say that something works when it doesn't. If a customer asks to return an item, be polite and hear them out. If the issue is genuine, you might decide to accept the return as a gesture of goodwill, particularly if you're likely to come back to the event in the future. But if the item was accurately described, you're within your rights to decline. FAQs Can I just turn up on the day? The rules differ from sale to sale, but it is common for car boot sales to let you turn up on the day, secure a pitch and start selling. There will usually be a seller arrival time and a buyer arrival time, so make sure you're prepared to get there early. It is rare, but some locations – such as Peckham in London – have high demand, which can mean that there is a booking system, so it is worth checking in advance so you're not disappointed on the day. How much does it cost to attend? The cost of a pitch will depend on the car boot sale you choose and the size of your vehicle or, in some instances, the amount of things you want to sell. However, as a rough guide, pitches usually start at around £10 and rise to about £30 if you are bringing a van on the day. There is no official database of car boot sales, but websites such as Car Boot Junction have a wealth of information on local events, so you can find ones near you. Do I need a car? No, despite the name, you do not necessarily need a car for a car boot sale. Walk-in sellers can often buy a smaller pitch on the day and use a table or rails to display their items. However, policies differ, so it's worth consulting the rules at individual events before attending.
