- NAO calls for government to act on problem debt
- Chequers plan ‘dead’
Stat of the day
54.3 – The IHS Markit/CIPS Purchasing Managers’ Index for services in August, up from 53.5 in July and stronger than expected (Reuters online).
NAO calls for government to act on problem debt
Problem debt costs the UK economy almost £900 million a year, as the government “lags behind” the private sector in its collection processes, a report from the National Audit Office (NAO) has found. Outstanding debts to the government and utility providers, including council and income tax arrears plus unpaid rents to local authorities, total an estimated £18 billion according to NAO calculations, greater than all other loans combined (Daily Telegraph, B8, £).
The level of debt costs taxpayers £248 million a year through increased use of public health services and housing benefits, with the impact on the wider economy rising to £897m, the NAO said. Amyas Morse, head of the NAO, called on the Treasury to “understand the scale and nature of people’s debt problems and how it is impacting their lives and the taxpayer so it can effectively resolve the problem” (The Guardian, p31).
The Treasury said it was increasing funding for the Money Advice Service to over £56 million and providing “breathing space” to help people “get their lives back on track”. UK Finance has backed calls for the credit industry’s current breathing space arrangements to be matched by other sectors.
Chequers plan ‘dead’
The government’s Chequers Brexit plan is “dead”, the EU’s chief negotiator, Michel Barnier, is reported to have told a group of MPs during a meeting in Brussels (The Guardian, p19). The Labour MP Stephen Kinnock said Barnier “made it crystal clear the Chequers deal is totally unacceptable to the EU”.
Kinnock made the revelation as Dominic Raab, the Brexit secretary, appeared in front of the European scrutiny committee yesterday. During the session, Raab said he had written to the European Commission to step up talks over a “no-deal deal”, in order to “ensure we are ready for all eventualities” (The Times, p16, £).
Meanwhile, the pound strengthened yesterday amid speculation that the UK and Germany were willing to give up several key Brexit demands in order to strike a deal. Bloomberg (online) reported that both countries were prepared to accept a less-detailed agreement on the UK’s future relationship with the EU.
There is also speculation that ‘Brexiteer’ politicians have planned a series of announcements next week to lay down an alternative to the Chequers plan (BBC, online).
Latest from UK Finance
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News in Brief
The head of the IMF, Christine Lagarde, has said male domination of the banking industry made the collapse of Lehman Brothers more likely and has called for further reforms to prevent a repeat of the financial crisis it triggered (The Guardian, p31).
Frankfurt’s bid to replace London as the centre for euro clearing has received the backing of the German Chancellor Angela Merkel (Financial Times, p2, £).
The City Minister, John Glen, has told City AM (p1) that he intends to ramp up efforts against Russian dirty money channelled through the UK’s financial system.
The Home Builders Federation (HBF) said Help to Buy had been an “unmitigated success” as it published a report that showed the number of homes built annually had soared 74 per cent since the scheme was launched in 2013 (Daily Telegraph, online only).
Jim Al-Khalili, professor of physics at Surrey University and incoming president of the British Science Association has warned that Artificial Intelligence (AI) is the most serious issue humanity faces and will create a backlash from the public unless researchers and companies make a much greater effort to engage society in its development (Financial Times, p4, £).
What the commentators say
International Business Editor Ambrose Evans-Pritchard writes in the Daily Telegraph (£, B2) that the EU’s Michel Barnier has overplayed his hand by so strongly criticising the Prime Minister’s Chequers plan and promoting the idea of a Canada-style trade deal. He writes that this has emboldened eurosceptics such as David Davis, who is set to publish an Alternative Brexit Plan based on mutual recognition that, unlike Chequers, would take the UK out of the EU’s regulatory structure. He suggests one solution being considered by MPs is to try and adopt the ‘Norway’ model and remain in the European Economic Area (EEA) as a “temporary safe haven”, which would preserve passporting rights for the City. This could then allow the UK to take its time and negotiate a long-term Canada style trade deal with the EU.
In the Evening Standard (p43), Jim Armitage comments on the ongoing speculation relating to the departure of the Governor of the Bank of England, Mark Carney. He argues not keeping Mr Carney would be weak, inflexible, and illustrate a box-ticking approach to succession planning that could serve against the wider interests of the country. He also asks why should we jettison a man with unparalleled international standing at a time when Britain needs all the foreign friends it can get, when we don’t have to?
- FCA consultation on its proposed package of remedies from the Retirement Outcomes Review closes.
For a full list of upcoming UK Finance statistics releases, please click here.