Tag Archive | "government"

Thomas Cook’s Accountancy Practice’s Flying Under the Radar

It was reported last week that the Chair of the UK Government’s Business, Energy and Industrial Strategy (BEIS) committee has accused the accounting industry of being somewhat complicit in the recent collapse of Thomas Cook. 

Calling for even greater reforms and regulation in the industry, MPs had senior figures from Thomas Cook auditors PrIcewaterhouseCoopers and EY under the microscope, looking for potential conflicts of interests with other services that they had offered the company whilst acting as auditors for the firm.

The issue at hand, MPs believe, is that auditors should only be allowed to well, actually audit firms, and not actually provide any other services, such as consultancy and non-auditory financial advising, to avoid any conflicts of interest. Ironically, one of the non-auditing projects that PwC worked with Thomas Cook on was setting and awarding executive pay – something that many of the 9,000 disgruntled and now redundant employees will doubtless be delighted to hear about, especially considering that many of those who have lost their jobs are complaining openly about how there has been scant support for them, no established emergency hardship fund, counselling or emotional advice given.

During the questioning, one MP rightfully pointed out that the positive presentation of the company’s financial position, especially considering the millions in debt it was during the last 12 months before its’ collapse ‘defied common sense,’ when it was still being presented as a going concern with ‘substantial goodwill’, despite the fact that there was, by then, nothing left in the company’s assets, to reduce its debts without becoming insolvent.

If that wasn’t enough, to further muddy the waters, the PwC audit team also received shares in the PwC profits of the teams who were consulting on the other areas of the Thomas Cook business. With shares and bonuses dependent on raising revenue and getting results could it possibly mean that it may have been easy to run a blind eye to some of the more, erm, creative advice that they presented to Thomas Cook?

While the accounting forms in question defended themselves by agreeing that morals and transparency (not to mention newer stricter rules) would mean that they would never put themselves in such a position in future, that they had, they argued, in fact, not done anything wrong. It was in fact the fault of the system that people are unhappy. They allege that it was simply the lack of transparency which meant that it could be perceivedthat they had possibly behaved less-than-ethically. Not that they actually hadbehaved unethically, of course. 

And you thought running your business was tough. 

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Government Scrap Plans to Make Tax Digital

Just when you thought things couldn’t get any more crazy over there at government HQ, well this week they did, after a shock announcement.

Regular readers of this blog will be only too aware of the “Making Tax Digital” scheme that has been in the works for months now, and how when it came into play then contractors would have to do an online tax return 4 times a year instead of once.

Some contractors liked the idea, while others thought it was stupid. Personally, I can see both the pros and cons, and was at least ready to give it a chance.

Well, it seems that it probably won’t be happening after all, at least not anytime soon, as the government now appear to have lost interest in the idea.

That’s right. After spending millions of pounds and hiring some of the top financial experts in the country, and then using up thousands of hours worth of working time (that could have been spent elsewhere of course), they have now decided that making tax digital just isn’t worth it. That is what it looks like anyway.

Many pundits were expecting the making tax digital scheme to be included in a recent Bill that would have to pass through Parliament. Once accepted, it would have become law, with many people expecting it to be introduced in 2018, before being introduced to all self employed workers by 2020.

However, when the Bill was handed into reception at Parliament, much to the surprise of many politicians in the building that day, there was no mention of making tax digital. Maybe there had been a mistake? This is what some people thought, but it doesn’t look that way.

Underground sources have gone on to confirm that the government have basically given up on the idea, for now at least, and that is why we probably won’t be doing a tax return 4 times a year any time soon.

Some claim that the upcoming general election has something to do with it, while others have mentioned that it just wasn’t a very popular idea all around, both with government staff and the self employed.

I’ve been getting many contractors sending me emails over the last year or two, basically saying they were not looking forward to making tax digital and having to send in a tax return quarterly While I could see where they were coming from, my answer was always the same…”give it a chance.”

It now looks like we won’t get to give it a chance, although who knows exactly what is going to happen. The government might do yet another U-Turn, or even come out with something completely new.

The one thing that I do know is that every contractor out there should have a good accountant, no matter if you have to send in 1 or 4 tax returns a year.

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77% Say – “Tax the Wealthy!”

A recent survey of the UK public gave us some interesting insights, with the average man and woman making their thoughts clear…”tax the wealthy!”

In the survey, which took place on the streets around our nation, the public were asked if they thought a return to the 50% income tax rate for people earning over £150,000 a year was something they would like to happen.

Well, 77% said “yes,” which just goes to show you that not everybody is in favour of less tax for all.

Many believe that by taxing higher earners 50% of their wages, it would go a long way in balancing the books and helping the government get their finances in order.

I agree that many in the government need to do more to sort out the financial state of this country, especially with Brexit just around the corner, but is more tax really the way to do this? In my opinion, no.

It was only recently of course that Philip Hammond announced his plans about more tax for the self employed in his budget speech, only to then back track a few days later after public outrage.

I think there is people out there who should be taxed more, such as those Billionaires who get out of paying tax altogether while relaxing on their luxury yachts, but I don’t think that hard working people who just happen to earn more should be punished.

Many people seem to believe that there is some kind of balancing act when it comes to tax, and that if those who are wealthier are taxed more, then workers on lower wages will pay less. This isn’t the way it works though.

The problem is quite simple…the government are not very good at using the tax they get. The solution is not to tax more, it is to better manage what is already going through the system.

Taxing 50% to workers who earn £150,000 a year or more isn’t going to make any difference at all, and although it makes a good headline it doesn’t really change anything.

I don’t think we are going to hearing about any tax changes for the wealthy in the near future, as I reckon the Chancellor is going to stay away from that subject for a while.

If you are a contractor who earns £150,000 or more a year, then my best advice is to invest in a contractor accountant.

Don’t listen to the general public and their surveys and think you are obliged to pay more tax for the good of the nation. No way. Instead, get a contractor accountant and see what they can do for you.

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Accountants to be Responsible for Tax Avoidance

Tax avoidance is definitely a problem, mainly among the super rich who setup tax havens and offshore holdings that mean they pay little, if no tax at all.

Well, new plans have suggested maybe it should be the accountants that help these tax dodgers who should be held responsible.

Let’s face it, they are, in many cases, the architects so to speak, and if it wasn’t for their knowledge many of these millionaires and billionaires wouldn’t be able to get away with paying so little.

The proposals have called for accountants to be fined 100% of the tax that was avoided. In other words, if a court says Mr Billionaire didn’t pay 5 million in tax last year, then his accountant will no doubt be out of business pretty quickly.

These rules would be designed to stop tax avoidance right at the foundation, and although it might seem a bit harsh, and will no doubt cause a lot of debate, both in the UK and abroad, there is no denying that if accountants were held responsible then tax avoidance would not be costing the government billions of pounds a year.

While I think the plans do have merit, in reality I don’t really see how this can move forward successfully.

Maybe on a smaller level, but surely accountants couldn’t be held responsible for the actions of someone else…could they? Only time will tell, but my initial reaction is that it would be very difficult to bring forward and enforce.

Just to be clear, the new plans are not talking about accountants who help their clients avoid paying tax legitimately. This is completely legal and is one of the main jobs of an accountant, because ultimately everyone wants to pay less tax.

What we are talking about here is accountants who come up with schemes and illegal ways for their clients to avoid paying the tax they owe.

I know one thing: it will definitely get harder for individuals to dodge tax in the future, as the government really are looking to do everything in their power to to stop offenders.

Even the new PM has pledged her support, recently saying “tax is the price we pay for living in a civilised society.”

She is right of course, and even if you are a company like Google or Amazon then you should have to pay tax on all income while a registered UK company.

Now, these kind of companies can afford the best accountants out there, but these new plans will certainly make a lot of them think twice about doing anything that could be considered against the rules.

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Is it time for a Contractor Ambassador?

Last week the Prime Minister David Cameron announced he was appointing twelve Conservative MPs as “Small Business Ambassadors”, who would be charged with “helping promote and represent small businesses across the country and government.”

The MPs are evenly spread geographically – an odd choice given the increased density of businesses of all sizes in the South East – and none are assigned specifically for London, either.

This, combined with the Government’s other ongoing small business support schemes, might make contractors, freelancers and the self-employed a little bit downhearted. One man band companies are amongst the fastest-growing groups on the UK business scene, and depending on who you speak to we number anywhere from 1.6 to 3 million in total. Despite this weight of numbers, there are very few support schemes aimed at us specifically. We’re lumped in with the small business crowd, despite a rather specific set of needs and issues.

In fact one of the only pieces of legislation specifically targeted at contractors is, of course, IR35, which only serves to make life more complicated.

Common small business problems such as increasingly late payments from large corporates are only magnified for the self-employed, whose shallow pockets can often mean a long overdue invoice is the difference between making or missing a mortgage payment.

It’s high time the Government gave more recognition to UK freelancers and contractors – perhaps in time we could even have our own Ambassadors to represent us at Government level!

Jon Norris is Web Editor at Crunch Accounting

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Who said we need to import skills to ensure success…?

I was somewhat taken aback this week to read that someone in government had had a fit of the vapours and said something sensible. Even more confusing was that this was from the Labour side of the House. Although, just to restore my faith in human nature, he’s been shouted down by the rest of his side.

This was Lord Glassman, who has said that we need to put a freeze on immigration. Not a cap or a phased reduction, but a total stop, with the sole exception of the small number of skilled people we actually need to encourage to come over.

Of course none of this would be an issue if we had a better history of controlling who’s coming in, but we are where we are. At least we have some much more effective rules in place to bring a bit of sanity to the ICT system these days, which is the bit that really concerns us IT people. And for which, let us not forget, we owe a debt to the work the PCG has been doing over the years.

But as usual, nothing is as it seems.

There’s a bit of a debate going on about the new rules, centring of all stupid things on payable expenses, that well known fiddle factor beloved of the umbrella companies and assorted MPs…

But I digress. The rules set a minimum salary for the ICT candidate. However, with the usual stunning clarity of purpose, they haven’t actually defined how that salary should be made up. So you can include, for example, the costs of bringing your worker over here and giving them somewhere to live while they’re here.

Then we get into the Kafkaesque realms of do we include expenses paid for travel and accommodation while working somewhere else? I mean, let’s just think about that for a moment. You ship someone into the country, pay for their accommodation and give them a living wage. Then they have to go somewhere else on your behalf, for which you are paying the bills (or damned well ought to be). So how can that be part of their gross salary? Because I’m willing to bet that they never see any of it; if they did, their payslips wouldn’t be subject to the same level of secrecy as those nice people at GCHQ.

And just to pile on the ineptitude, the rules are being arranged so that “the taxpayer is not disadvantaged”. Excuse me? Taxpayer? The taxpayer, to the man on the Clapham omnibus, is someone who has a life here, a permanent address, is known to the gentlemen at HMRC. He’s not just popped over to perform a limited engagement (much of which seems to be to learn how to do the job so he can take those skills back home). And since his prime purpose is to take away work that could be done by someone who does live here, I’m afraid I’m not all that minded to be fair in how he gets paid.

Other countries have twigged this. Canada, for one, is taking positive action. How typical of our team that we try to treat them fairly and actively assist them in their efforts, less we tread on someone’s toes.

Talking of treading on toes, let’s give a small Hurrah for the PCG. Actually no, let’s make that a very large one. They have won not one but two trade awards, for electronic communication and membership success, against some much bigger (and older) organisations. Bearing in mind this is a very small team, the impact their work is having where it matters is out of all proportion.

Who said we need to import skills to ensure success…?

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited

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It’s time we started pushing our own agenda rather than everybody else’s

Sometimes you really do have to ask yourself if you really understand what’s going on in some people’s minds. And just how much the people in charge of some fairly major institutions really understand the impact of their decisions.

Firstly DVLA, that government outpost at the far end of the M4 whose desirability as a posting is apparently only exceeded by the Commonwealth War Graves Commission. They have just awarded a £100m contract for a new Vehicle Excise Duty system to Capita. That is not an issue in itself, of course, but Capita re one of those who use a lot on non-EU resources to deliver their projects to keep their costs down. All well and good, but this is our money they’re spending, and even my shaky grasp of macro-economics says that it must be better to spend it within the UK if we are to grow the UK economy.

This also flies in the face of a recent survey by SOCITM, looking at the long term costs of outsourced projects, that shows that “when comparing the costs for any service, most elements will be more expensive if outsourced.” Which is something some of us uninformed IT professionals have been saying for years; framing a deal that delivers a genuine saving over a long term is very difficult indeed. Quality invariably suffers, and the savings are rarely delivered.

But hey, it looks good on the balance sheet, and who cares about what happens in ten years, it’s this year’s budget we have to worry about.

The other undesirable monolithic institution making worrying noises is the Scottish Parliament. Their beloved leader Me Salmond, (aka “Wee ‘Eck”, although my own epithet would be rather more punchy) recently came up with the slightly deranged idea that he wants to allow unlimited immigration into Scotland to overcome the lack of skilled workers.

Luckily the immediate response from the real Government down in London was fairly unequivocal. They didn’t quite say “Don’t be such a blathering fool” but they got about as close as you can get in politician-speak. Although one possible outcome should Salmond succeed in his plan would be border posts between Scotland and England. Now there’s an idea.

But I digress. The key point is that neither of the above examples takes any notice at all of the long-term health of the country. DVLA presumably tendered for a solution to the problem of marrying tax discs and insurance policies – on the face of it a trivial IT exercise, but I don’t know the detail and it may well be vastly more complicated to do. But that doesn’t mean that whoever came up with the solution is the best supplier to implement it. HMG keeps saying that it wants 25% of procurement to go to UK SMEs, and the DVLA seems not to be interested in that approach.

As for Salmond, we can allow for the fact that he’s a politician and hence only interested in next week, but if his country hasn’t got enough skilled workers, how about training the ones you have rather than shutting them off from any opportunities for all time by importing a new workforce over their heads? I suspect he could find a lot of people willing to work for £24,000 a year hiding in the highlands if he looked.

It really is time we started pushing our own agenda rather than everybody else’s.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited

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Government should focus on using IT more effectively

IT contractor accountants may want to tell their clients about a new report from Deloitte, which suggests that the public sector should make use of online channels of service in order to cut costs and improve levels of quality and support.

The government austerity measures are so severe that the public sector must encourage people to find cheaper and more efficient ways to conduct their business.

The report points out that there are some individual successes, such as encouraging people to file self-assessment tax returns online, but the coalition must do a lot more if it wants to cut costs in the long-term.

Deloitte’s public sector director, Joel Bellman, said the public sector tends to think of digital services as add-ons to telephone, paper and face-to-face contact rather than an alternative. Therefore they are only achieving a fraction of the possible savings.

Bellman went on to say that a range of new digital services will be launched in such sectors as benefit payment, education, environment, health, local government and social care.

The report ends up by saying that the coalition needs to adopt a clear strategy for the adoption of online alternatives.

The Chartered Institute for IT (BCS) is also urging the government to focus on using IT more effectively.

At the beginning of the year, the BCS put forward a range of proposals on how to get the most out of its IT infrastructure. At the time, the Institute said that an effective implementation policy had to be done in collaboration with academia and the private sector.

The BCS argued that the government needs to define core standards across all aspects of IT and information management. Effective governance will only come about if the government centralises fiscal and managerial authority and technical leadership, BCS’s chief executive, David Clarke said.

In order to adapt to the austerity environment, it will be necessary to invest in new IT and keep abreast of new technological developments. More government IT professionals should also follow a clear career path so that senior people will be equipped with the necessary skills to manage delivery and relationships, Clarke concluded.

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680 people apply for 440 voluntary redundancies!

440 jobs are to be lost at Official Receiver offices throughout the UK, according to the Public and Commercial Services Union.

What might surprise you is that 680 people have applied to take voluntary redundancy since the cuts were announced to staff. That would suggest that at a large portion of the workforce is dissatisfied! This theory seems to be backed up by the high percentage of absenteeism last year.

There are 36 Official Receiver offices in the UK that deal with bankruptcies and company liquidations. The department expects to see a decrease in bankruptcies this year but personal insolvency experts disagree saying they will remain at record levels as the government spending cuts take effect.

The latest headcount at the Insolvency Service, taken at the end of last March, was 3,132 including agency workers and contractors.

Meanwhile, R3, the insolvency trade body, has condemned the government for not taking action against company directors who are guilty of dishonest and fraudulent activities. The number of disqualified directors has dropped by 25% in the past eight years.

R3 claims that insolvency practitioners submitted in excess of 7,000 reports to the Insolvency Service in 2010 and yet fewer than 1,400 of these resulted in a director’s disqualification. It is therefore calling on the Insolvency Service to increase its efforts to weed out dishonest company officials.

The trade body blames a lack of government resources for the service’s failings and expressed concern that more complex cases could be overlooked. Steven Law, the president of R3, said the trade body would like to help the Insolvency Service implement an effective system that ensures all cases are pursued.

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That was the year that was

And, I have to say, quite a successful one, perhaps unexpectedly given where we started from. Speaking strictly as a freelance contractor of course, I thought it appropriate to round off 2010 with my slightly biased view of how the year has gone. So here goes with a very personal summary of the key events.

The main one, of course, has to be the replacement of Gordon the Glum with a real person. You may not like CallMeDave but you have to agree he’s an improvement on his predecessor: OK, not if you’re Ed Balls or Piers Morgan of course, but who listens to them anyway…?

We’ve gone from a Government that was totally and utterly convinced they knew best how to spend your money to one who was perfectly happy to let you spend it how you wanted. Of course, there wasn’t all that much to spend and they were going to have to hang on to even more of it than before. But let’s not be picky; at least we know why they’re being so mean.

So let’s look at the good things…

ICTs and the abuse thereof. Something I may have mentioned once or twice before? Leaving aside the wider question of uncontrolled immigration, there is a clear intent by HMG to cut down the number of workers coming in to the country to undercut the local workforce. Of course we are never going to stop companies using the cheapest labour they can find, that’s all part of capitalism and globalisation, but at least someone is trying to make it a bit harder to get us to train them how to do take our jobs away and kill off the industry at its source. Which, ultimately, has to be a good thing?

We still labour (geddit, geddit…?) under the Damoclean threat of IR35 of course. I never shared the conviction of some that a Tory government – oops, sorry, a Coalition led by the Tories – would instantly delete IR35 from the statute book. That was never going to happen; there is a political justification for IR35 that, while utterly barking, is not going to be reversed in any meaningful way.

Obviously the establishment of the OTS, and its very clear directive to look at IR35 as a priority was highly welcome. Even more welcome was the PCG gaining an influential seat on the Consultative Committee of the OTS looking at small business taxation. An organisation with 20,000 members and a 10 year lifespan gaining such access and respect at that level is something that simply cannot be underestimated. The OTS is working to some impossible deadlines, but fingers crossed, progress is being made.

The job market certainly seems to be picking up. I’m seeing hugely more jobs in my scope that I saw this time last year. Of course, 95% of them I won’t bother going for because the hirers are demanding impossibly tight lists of skills, industry knowledge and qualifications. The agencies are still incapable of challenging them and offering alternatives. For example I’ve been tracking a discussion on LinkedIn about how to use shared services and/or outsourcing to save money in Local Government. Good idea and one that may well work. Sadly, the consensus is that it won’t happen because the hirers put Local Government knowledge well ahead of any business experience that means you might actually understand how to do it properly. You see the same thing in Finance, which is a real shame since that’s where the work is. And don’t get me started on Security Clearance.

Oh, and I nearly forgot. St Vince of Cable has shown himself to be every bit as incisive, astute and intellectually superior as I always thought he was…

Personally it’s not been a bad year. I’ve worked most of it and actually banked a profit, which is nice. There is certainly reason to be optimistic about next year. The PCG continue to make great strides forward which is a source of pride, even from my marginal input to that progress. And I’ve had some nice comments about this blog, which proves that at least people are reading it, even if they don’t agree with me.

So roll on 2011. I think it could be an interesting year. I’ll see you there…

Alan Watts can found at LinkedIn.
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Could public sector cuts benefit small businesses?

It’s not all doom and gloom in the business sector. In fact some firms believe that they will profit from the government austerity measures.

Admittedly many businesses are going to lose public sector contracts, but the job losses could well create outsourcing opportunities. Last week, the government announced that £236bn of public sector contracts would be made more accessible to SMEs. In a bid to ensure that 25% of public sector contracts do in fact go to smaller businesses and limited company contractors, all government departments will be required to publish details of all the contracts they award, and how many go to small firms.

The coalition is also looking into a more open framework to tackle the closed procurement system which generally means contracts are awarded to preferred bidders which are usually bigger organisations.

Other good news came recently when figures were released showing the economy grew at twice the expected rate in quarter 3. Experts say a double-dip recession is less likely as data from the ONS showed the economy is growing at the fastest rate for 10 years.

However, these figures do not take into account the public spending review and the impact it will have on the country.

Nevertheless, the better than expected picture could encourage investors to start thinking about expanding their portfolios. The stock market can seem to be contradictory in times of economic crisis. In 2009, the UK was in recession and yet the stock market rose by around 30%.

Before contractor accountants rush out and pile all their money into stocks and shares, they may want to consider talking to a specialist financial advisor.

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Makes you laugh, doesn’t it?

Do you ever get the feeling you don’t really understand what’s going on? Reading the news over the last week, I kept getting this horrible feeling that I was in an episode of Reggie Perrin.

Perhaps I’m working too hard, but if we’re trying to save as much money from the public purse as we can, why are we promising to give everyone the maximum pension possible? Why is the Mayor of London up in arms about ethnic cleansing in Streatham? And why will I have to take money out of my company to provide a pension fund for my staff – of whom there is precisely one – when the money that I deliberately leave in the company is meant to be to help fund my pension…?

The world really has gone slightly mad.

There have been flashes of sanity though. The Institute of Directors has written to the new Office of Tax Simplification pointing out that there is a tax measure they really need to look at. One that causes great confusion, that is counter-productive and actually costs money to implement since almost all attempts to charge it result in failure. You might have heard of it; it’s called IR35

Errm, hullo, IOD? Aren’t you about 10 years late? Some of us – about 20,000 to be precise – have been beating that drum for quite a long time. Now, finally, it’s on the agenda for reassessment and, dare we hope, possible abolition, and the IOD have realised it’s a bad thing. Keep up at the back, chaps.

Actually what I thought was quite amusing was that they used the same arguments and most of the same statistics that PCG have been generating over the years. So perhaps there was a grain of truth in what we’ve been saying all along.

We’ve also been saying things about abuse of the visa system and the importing of non-EU workers to undercut the local variety, many of whom are now out of work. So it was with a degree of amusement that I read a survey has shown that a quarter of Tier 1 visa holders are working in non-skilled jobs.

Say what? Tier 1 are the people who can stand on their own two feet, who will make a positive contribution to the country and who, after two years, are supposed to be earning at least £35k a year to keep the visa. Granted people can work for whoever they want, at whatever they want, but if being a supermarket cashier is the height of your ambition, you really do have to wonder why they came in the first place.

I also read that someone in government has had a bit of an inspiration. When discussing the proposed cap on immigration and its reputedly monstrous impact on some companies’ ability to bring in staff, it was suggested that perhaps using up the ones they had applied for might be a way out of their dilemma.

And I’m sorry, but I still refuse to take St Vincent of Cable seriously.

Still, some things brought a smile to these grumpy old lips. The better than expected growth figures and the retention of our AAA rating prove that some think we’re going about things the right way. The Coalition’s spending review contained a lot of solid common sense, something politics has been lacking for quite a while (about 13 years, to be precise) although I still don’t quite get that thing about non-aircraft carriers. And I loved Osborne’s parting shot when announcing the programme, that the total cuts added up to 19% of government spending, which is precisely one percent less than the 20% that Labour had said was the most we could afford and what they would have done had they been in power.

So a confusing week in some ways, but not a bad one, all things considered.

Alan Watts can found at LinkedIn.
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Who needs an IT industry anyway?

I’ve written before about the confusion in the debate about immigration and the constant refusal of government and the press to separate genuine immigration from abuse of the system, especially the misuse of the ICT programme. That debate has been raging for a while now and remains unresolved, although we did think we might be getting the message across.

Then, all of a sudden it seems we have a major triumph. We, via our fiends (sic) in Brussels, have just signed a trade agreement with India. Nothing much wrong in that by itself, we need to trade and India is a growing economy. But look a little deeper…

In exchange for India relaxing its import rules so the EU can sell into that market, we have apparently agreed to give their engineers, IT workers, project managers and other skilled trades virtually unlimited access to our market. OK, so it’s a free world and we all have to get work where we can at the best rate we can. But given that India’s official language is English, and there aren’t that many English-speaking countries in the EU – even if you count Scotland – I somehow get the feeling that the traffic in this direction will be rather heavily biased in our direction.

Again, not a problem, except that, as with the ICT scam, these aren’t likely to be long-term immigrants. Some will no doubt be here for a long time, and some will genuinely contribute to the UK economy. But I have a nagging feeling that an awful lot of them will be here to learn how to do the job we’re doing for ourselves and then move it back home where the labour rates are considerably cheaper. That might cut the bottom line but it is a horribly short-term view of things. It won’t take too long before all the real work in IT, for example, is offshored and our service economy – once one of the world’s strongest – has gone the way of the Dodo.

So if this is good news, I would really hate to see a tragedy.

And what really annoys me is that one part of Government is talking about limiting immigration, another part is making positive noises about ICT use and abuse while another part is selling us down the river. Well thanks, guys, great job.

And let’s be clear here. I have absolutely no problem with India or the Indians and never have done. I have no objection to skilled people coming into the country and benefiting us as a whole. I don’t even have a problem with the ICT system, which allows the simple transfer of key staff for shot term purposes.

But I do have a problem with our government doing all they can to close down the industry I’ve been working in for the last 35 years.

Someone has got this badly wrong. And I don’t think it’s me…

Alan Watts can found at LinkedIn.
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Spending cuts hit the Treasury

The Treasury is set to lose around 25% of its workforce due to the Chancellor’s spending cuts.

The good news for the existing Treasury workforce is that this will be achieved by natural wastage with no further recruitment, as opposed to mass redundancies.

By the middle of this month, George Osborne will have settled the budgets for some of the government departments, including culture, environment, justice and transport, as well as scaling back the role his own department and the financial services function play. He’s even proposing to move staff to smaller desks in order to squeeze more people into his HQ thus saving money on rent.

Over the next four years the Treasury department will lose about 350 staff members through natural attrition bringing the number down to 1,000.

The Chancellor’s willingness to impose cuts in his own department should strengthen his hand when it comes to negotiating with other departments.

One of George Osborne’s colleagues said they would be focusing on macro analysis and spending control rather than attempting to second guess the moves of other departments.

The comprehensive spending review will cut between 25% and 40% from the majority of other government departments. The biggest challenges facing the Chancellor will be defence and welfare. Transport could also be a problem as Boris Johnson, the Mayor of London, is battling with Philip Hammond, the Transport Secretary over Crossrail and upgrades to the Tube. Hammond also wants to see a cut in the £1 billion that subsidises free travel for children, the unemployed and injured war veterans.

Meanwhile, a treasury spokesman said the department would not get drawn into the spending review negotiations of individual departments; each of which have been told to reduce their admin costs by about a third over the next four years.

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