Bitesize Blighty: January 19, 2018
- The collapse of Carillion, the UK construction and services group, has sent shock waves through British industry and prompted an investigation into how investors and ministers failed to spot the warning signs. The construction giant’s collapse, announced on Monday, has put thousands of jobs at risk across the UK. The resulting media storm has been brutal, with a lot of criticism focused on Carillion’s work on numerous private Finance Initiative (“PFI”) projects. The UK National Audit Office (“NAO”) published a report on Thursday 18 January which asserts that Britain has incurred billions of pounds in extra costs for no clear benefit by using PFI to build much of its critical national infrastructure (hospitals, schools etc.). Additionally, the NAO has noted that PFI projects will cost the taxpayer a further £199bn by the 2040s and that, as an example, a group of schools cost 40% more to build under PFI and a hospital 70% more to construct under PFI than if they were financed by traditional government borrowing. As the fallout continues, it will be interesting to see what else emerges...
- Brexit-backing MPs as well as counterparts from the remain campaign have backed a controversial measure to extend a tax break to referendum campaign donors, after several billionaire donors received large demands from HMRC. The amendment to the finance bill has been backed by prominent leave campaigners Charlie Elphicke, Jacob Rees-Mogg and Iain Duncan Smith, as well as Labour MPs and remain supporters Alison McGovern and Caroline Flint. HMRC’s demands hinge on inheritance tax rules that require tax to be paid upfront on large gifts. Party political donations, as well as donations to charities, are usually exempt, but HMRC has said that does not apply to individuals who donated to the referendum campaign.
- The UK’s inflation rate has fallen for this first time since June. The inflation rate dropped to 3% in December after a six year high of 3.1% in November, caused by a depreciation in the pound since the Brexit vote. The Office for National Statistics (ONS) have said that is too early to say whether this is a long-term reduction. The Bank of England have said that inflation will fall back to their target of 2% in 2018.