SOUTHERN DISCOMFORT

CITYAM.COM
TUESDAY 9 AUGUST 2016
NEWS
13
New Labour members win right to
vote after court battle with party
Sugar tax will hit jobs
and cost UK economy
JAMES NICKERSON
@nickersonjw
JEREMY Corbyn was given a boost
yesterday after five Labour members
won a court case against the party
over new members’ right to vote in
the leadership election.
The case was sparked after
Labour’s National Executive
Committee (NEC) decided that full
members could not vote in the
leadership election between the
party’s leader and Owen Smith if
they had not had at least six months’
continuous membership up to 12
July, the “freeze date”.
However, more than 125,000
Labour members will now be able to
take part in the election after the
court ruling.
It is thought most of the party’s
newest members joined to support
Corbyn.
Smith said: “I have always
welcomed growth of our party and
wider movement. Now many more
members will have the chance to
vote in the leadership election, I am
today calling for an extension of the
timetable.”
The Labour party will appeal the
High Court ruling.
Shadow chancellor John
McDonnell hit back yesterday over
the party’s move to appeal the
ruling: “This is a deeply
disappointing decision by a small
clique of people behind closed doors,
many of whom have openly
expressed their opposition to Jeremy
Corbyn’s leadership.”
FRANCESCA WASHTELL
@fwashtell
THE SUGAR tax will put more than
4,000 UK jobs at risk and will cost the
economy £132m as a result of lower
sales, research from global forecasting
group Oxford Economics has found.
The levy on soft drinks, which was a
surprise announcement in the March
Budget, will have the biggest impact
on the hospitality sector and smaller
retailers once it is introduced in April
2018.
The report estimated the levy could
raise £504m in tax revenue for HM
Treasury, though this figure was
below its own forecast of £520m. The
industry is estimated to support a
£6.4bn contribution to UK GDP and
provide jobs for 233,000 people.
It will have a cost saving of just five
calories per person, per day, the study
found. This is equivalent to one bite of
an apple and echoes figures produced
by the TaxPayers’ Alliance based on
data from a similar soft drinks tax in
Mexico.
MPs take next
step in wider
pension inquiry
HAYLEY KIRTON
@HayleyLEK
MPS YESTERDAY issued a call for evidence
for an inquiry on the state of defined
benefit (DB) pensions, with the
roles of the pensions watchdog and
lifeboat in particular thrust under the
microscope.
The inquiry by the Work and Pensions
Committee was sparked by its recent
investigation into the pensions
situation at BHS. The retailer had a
blackhole in its pension schemes
worth £571m when in collapsed.
Yesterday’s call for evidence is, in
particular, looking for further details
about DB pensions regulation by The
Pensions Regulator, the sustainability
of the Pensions Protection Fund (PPF)
and the fairness of the PPF levy system.
Frank Field MP, chair of the committee,
said: “The lessons of BHS must be
learnt. This may mean strengthening
the powers and resolve of the pensions
regulator to act early, quickly
and firmly with those who seek to
avoid their pension responsibilities.
“It is important, however, that businesses
that are run reputably and responsibly
are not put under undue
restriction. Ultimately, defined benefit
schemes must be placed on a sustainable
footing.”
The report the MPs recently published
into BHS’ struggles set out
plans for this new inquiry into DB
pensions regulation on a wider scale.
“The future of occupational pension
schemes is perhaps the greatest challenge
facing longstanding British
businesses,” the report read. “In an environment
of rising longevity, interest
rates close to zero and intense international
competition, defined benefit
pension liabilities accumulated in a
different age can appear burdensome
and unaffordable.
“It should not be forgotten that
these liabilities are promises of deferred
pay to employees.”
Both the Pensions Regulator and the
PPF did not respond to City A.M.’s request
for comment.
The JLT Employee Benefits Index recently
revealed pension deficits at UK
private companies reached a record
high of £390bn at the end of July.
Meanwhile, Kate Smith, head of pensions
at Aegon, described the inquiry
as “timely given the spotlight on
growing pension blackholes and the
BHS debacle”.
Twenty per cent of youngsters hope to win the lottery to help repay student loans
Millennials rely on promotions
and lottery wins to pay off debt
REUBEN PINDER
ALMOST three quarters of millennials
in London are relying on a one-off
event to help them repay their
student debt, new research from
Aviva reveals.
More than a third are hoping for a
promotion, while 20 per cent are
awaiting some form of family
inheritance and another 20 per cent
are hoping to win the lottery. Eight
per cent are hoping the housing
market collapses.
A higher percentage of millennials
in London, or 72 per cent, are relying
on a one-off event to repay their debt
than across the rest of the country.
Nearly two thirds of millennials in
the capital receive financial help
from their parents, 15 percentage
points higher than the average for
millennials nationwide.
Millennials in the capital,
however, estimate that it will take
them only eight years to repay their
debt, compared to the average for all
millennials (11 years), due to the
possibility of higher earnings in
London.
Micro-business
facing £22m of
pensions fines
WILLIAM TURVILL
@wturvill
UK MICRO-businesses are
collectively facing fines of up to
£22m due to a lack of
understanding around autoenrolment
pensions, a new report
has warned.
The Pensions Regulator estimates
that around 262,000 microbusinesses,
defined as firms
employing between one and four
people, are set to “stage” – or be
required to set up a workplace
pension – this year and next.
The Pensions Regulator has said
that 21 per cent of micro-employers
still have a limited understanding
of their auto-enrolment duties in
the weeks before they stage.
Paycircle has estimated that,
because of a lack of knowledge,
micro-businesses could collectively
face £22m of fines in 2016 and
2017. It said the onus should be on
the regulator and all workplace
pension providers to help.
“The Pensions Regulator has
done a huge amount to raise
awareness of auto-enrolment
responsibilities among the UK’s
smallest businesses,” said Catherine
Pinkney, co-founder of Paycircle.
“Yet despite this comprehensive
marketing and educational push, a
sizeable chunk of micro-employers
is still very much in the dark as to
what to actually do as their staging
date descends on them.”
Labour leadership challenger says
action required to avoid recession
JAMES NICKERSON
@nickersonjw
LABOUR leadership contender Owen
Smith has said Britain is the “sick
man leaving Europe” under the
Conservatives, adding that the
country is too dependent on the City
and financial services.
Smith said that action taken by
the Bank of England last week shows
the British economy is on a cliff edge
of another recession, requiring a
response from the government.
Smith said: “We face the prospect
of our country being the sick man
leaving Europe – unless urgent
action is taken by government.
“It would be wrong to give Liam
Fox, Boris Johnson and David Davis a
blank cheque to set the terms on the
future of our economy, workers’
rights and environmental
protections.”
The contender went on to say that
the UK’s manufacturing base needs
to be expanded: “Successive
governments have allowed our
economy to be too reliant on
financial services and the creation of
insecure, low-skilled, and low-paid
jobs.”
Smith also used the speech to hit
out at Corbyn, stating he is a leader
who “didn't deliver” on promises
made.
Owen Smith doesn’t want Boris Johnson to decide the UK’s economic future