21st November 2022
On Friday I wrote to inform a few of the changes that came out of last week’s budget. But I said therein that the devil is in the detail (in what is unsaid as well as said), and in the interplay of different taxes.
On top of that we had a budget delivered, as it always, is by a politician, received and responded with opprobrium by the opposition party. We then have journalistic bias reporting on the same.
We are steered to focus on certain aspects of the budget by this, by our own paradigms, and by social media… although the influence of the latter being reduced as the Twitter employment headcount falls as well as, in inverse proportion to, the cost of being verified as Twitter Blue, as it ceases to be free to all.
I recognise though as I start this article, that I too will have my own bias; and so, I thought that I should note what that bias against each of the aspects that I raise.
I thought I would like to raise SDLT. “Stamp Duty” as many still call it. Despite a solicitor telling me in August 2016… “It is called SDLT now, Adrian”. I take the view that it is called what our clients understand it as being.
Why raise this? Well, I think it is important to understand the effect on people as a result of, the budget and other economic factors. That is the bias that I want to convey.
Secondly, geography and how perception varies. I listened to the budget in my North Shropshire home village, drove via Market Drayton then Stoke (A route more enjoyed in reverse with the latter in the mirrors – I lived there – I am allowed to criticise Stoke! – It isn’t as nice as it sounds by the way) before arriving at Alderley Edge: House lights, cars and charity shops are my illustration.
Thirdly, The National Living Wage: my bias here being two-fold. As an employer and then secondly with respect to clients who employee at that level, and their scope to pass costs on to other employers who do too: the latter being restricted by price pressure in the market.
And finally, in what is unsaid: one positive; and one negative. [CGT and fuel duty]
Above all though, we have been through a period of uncertainty. Again: COVID and now the economy. Confidence and certainty are need which is something I have written about several times before. Confidence needed please | CBSL Accountants (cbslgroup.com)
We may not like all of what is announced. But at least we now know the rules of the game and can plan accordingly.
This is one aspect that very clearly shows how monetary and fiscal policy can affect people in different ways. And also shows how the former has a bigger effect on your wealth than the latter.
The mini budget had the effect of increasing mortgage costs dramatically and ongoing. And for all with a mortgage. The stamp duty relief is just for a select few, and temporary. It may help people onto the housing ladder. I fear that the monetary snakes will be more damaging though, and that the stamp duty cut is a being used a political tool for virtue rather than economic benefit.
Or when I did a degree in it, it was called Human Geography. A 2ii I shall have you know! A Desmond; worse than a Geoff Hurst, but a Gentleman’s degree.
Arriving in Alderley Edge, the budget had not been received too badly. Curtains were not drawn against the cold; lights ablaze in all rooms. “Shall we take the Bentley to dinner darling?” They did but it looked, passe, against the Rolls (poor Mr Royce ever subservient to his business partner). But both cars scowled at the Lamborghini Urus; shy and retiring in its lime green paint.
Pouts were on show in the busy restaurants, but perhaps cosmetically intended rather than at outrage against the 5p rise in the £, that the automotive introvert with £200k+ car can probably not lose too much sleep over.
I accept the argument of the rich bearing the heaviest tax burden, but when that is only the same as a Thursday evening dinner and a couple of bottles of Pavillon Rouge, the shoulders that bear the most may have been mis-measured.
We have shopped in two charity shops over the last week. The dress branded as “St Michael” came with its own long service medal. In the Alderley Edge branch we secured a shirt and jeans (by DKNY and Calvin Klein, don’t you know!)
Travelling back to North Shropshire and to number three on my list I believe that the increase in National Living Wage, presents me with a quandary. Not because of the increase per se, in NLW, but in how that is passed on; and I am thinking mainly here of food industry.
Particularly farmers supplying directly or via third parties to supermarkets. Soft fruit and salad crops were at the forefront of my mind, but on Sunday morning, as it is now, I read in the Times, of egg producers, making a loss of 29p per dozen.
Will the supermarkets accept an increase in prices from producers, who will need to pay an extra 9.7% as a result of the NLW rising to £10.42? Note, the same supermarkets will also have to pay their staff 9.7% more.
The increase in NLW does not of course just apply to lower paid workers? How can employers justify a lower rise to say Sandra in middle management when Colin who is picking raspberries, has got an increase of 9.7%? They cannot and so wage spiral inflation is likely.
Some of you may remember in February Andrew Bailey of the BoE telling MPs that there was a need for restraint on pay rises applies to everyone from bankers to care home workers: was just 9.7% the figure he has in mind? Indeed, does he drive a lime green Lamborghini?
And finally, CGT and fuel duty. I have listened lots of budgets that have grandstanded how fuel duty has not been increased… This year ssshhh not a mention. Just the 12.4p per gallon.