It was the week of the Spring Statement which got extra attention because of the cost-of-living crisis. The Chancellor Rishi Sunak did not get rave reviews. We look at that a little later, but turn to the other news first.
The Private Office is hit by a cyberattack from potential scammers, arguably an adviser firm’s worst nightmare as FTAdviser reports. An adviser’s email appears to have been hacked, and a scam message sent to some clients. Prompt action was taken but it is a cautionary tale.
Money Marketing recounts a sorry story of administrative and service issues at Clerical Medical alerted by terrible reviews on Trustpilot.
The FCA says it will be reforming the PRIIPs regulation to make it more consumer-friendly with the FCA signalling one of the first examples of the FCA “confirming UK divergence from EU rules following Brexit”.
Among other changes, the regulator wants to see "comparable information at the point of sale, facilitating better product understanding, and reducing unsuitable purchases”.
Russian debt exposure stings Carmignac Patrimoine as the fund firm was unable to unwind its positions swiftly enough and hedges not offering enough protection.
The People’s Pension has called for an increase in workplace pension contributions over concerns people are not contributing enough to their pensions and will lose out in retirement.
Money Marketing considers what the Spring Statement means for clients with lots of shifts in tax rates and thresholds this year and out to 2024, but the bigger issue may be fiscal drag from last years' two budgets.
The thinktanks were rather fierce in their criticism.
The IFS’s Paul Johnson is particularly scathing on the tax front. He said: “There are two paradoxes at the heart of today’s statement. The Chancellor has managed to announce tax cuts without reducing the planned tax take from previous plans. And by saying nothing about spending, he is reducing the real-terms generosity of his plans for spending on public services. That’s what inflation does.
“The cuts to income tax and National Insurance are effectively paid for by increasing revenues as a result of fiscal drag. The freezing of the income tax personal allowance and higher rate threshold turn out to be much bigger tax rises than first intended. As a result, almost all workers will be paying more tax on their earnings in 2025 than they would have been paying without this parliament’s reforms to income tax and NICs, despite the tax cutting measures announced today.”
The slightly more left-leaning Resolution Foundation is intensely critical for a lack of support for the less-wealth off and has put together a neat list of concerns recounting an economic story of high costs and low growth.
“Families face £1,100 income losses. The scale of the cost-of-living squeeze is such that typical working-age household incomes are to set to fall by 4 per cent in real-terms next year (2022-23), a loss of £1,100, while the largest falls will be among the poorest quarter of households where incomes are set to fall by 6 per cent.
“Absolute poverty rises by 1.3 million. The scale and distribution of the cost-of-living squeeze, coupled with the lack of support for low-income families, means that a further 1.3 million people are set to fall into absolute poverty next year, including 500,000 children – the first time Britain has seen such a rise outside of recessions.
“Tax rises for seven-in-eight workers. Considering all income tax changes to thresholds and rates announced by Rishi Sunak, only those earning between £49,100 and £50,300 will actually pay less income tax in 2024-25, and only those earning between £11,000 and £13,500 will pay less tax and National Insurance (NI). Of the 31 million people in work, around 27 million (seven-in-eight workers) will pay more in income tax and NI in 2024-25.”
It is interesting that the Chancellor has decided to retain more of the tax rises – through fiscal drag – so less has gone to public services than might have due were inflation taken into account. It eventually funds tax cuts to a degree. But this does not seem to have a very popular budget even from a perusal of adviser social media accounts.
There is also speculation that the Chancellor’s star may fall dramatically as a result so that he no longer appears to be the natural successor to Boris Johnson. Time will tell.