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Budget day is looming. Are there scary times ahead?
Is there a subtle message hidden in the fact that that Labour is delivering its first budget in almost 15 years on the day before Halloween?
Prime Minster Keir Starmer has predicted of a ‘painful’ budget which will pull on the purse strings of many individuals and businesses to plug the “black hole” in the country’s finances, inherited from his predecessors.
What will be the impact on the working people of Britain, the rich and famous, businesses large and small and on the insurance sector?
Getting out of a big black hole
As well as ensuring the £22 billion black hole in public finances doesn’t get any deeper, the chancellor will be under pressure to boost economic growth, bolster housebuilding and address skills and staff shortages. These priorities will undoubtedly have knock-on implications for the insurance industry.
According to the Institute of Directors, the government could implement various labour market interventions that will help improve the number, availability and calibre of workers in the UK.
But behind every silver lining there is a cloud. According to the Health and Safety Executive (HSE), workers are as likely to have an accident in their first six months at work as during the whole of the rest of their working life. This raises the concern that we may experience a spike in employers’ liability claims.
Biba calls time on taxing times ahead
Insurance premium tax (IPT), a tax on the price of an insurance product which functions as an indirect tax on consumers and businesses is collected by insurers and then paid to HMRC. The current rate of 12% is a considerable financial burden on households and businesses.
BIBA believes that this is a tax on the poor and vulnerable – and on businesses at a time when they should be investing more in risk management, not hidden insurance costs, so that they can take considered risks to ensure business growth.
In its submission to the Treasury, Biba called for the new government to cut the rate of IPT from 12% to 10% and to implement exemptions such as cyber insurance products to increase take-up from SMEs.
Biba has also reiterated the need for government to commit to long-term investment in flood defences and other climate related impacts to reduce the adverse effects of flooding on people, businesses, communities and insurance premiums.
In the broker space, the threat of an increase in capital gains tax could lead to an exodus in small and medium sized brokers looking to retreat from the sector before changes force them out.
Have you got broad shoulders?
Starmer has even warned that things will have to get worse before they get better. He also hinted that the biggest burden would be borne by those with the ‘broadest shoulders.’
But who do these shoulders belong to that should be afraid of Chancellor Rachel Reeves and her Halloween Budget?
Not the ‘working people’ of Britain. The government pledged not to increase taxes for this demographic suggesting that Income Tax and National Insurance are expected to remain unchanged.
Similarly, SMEs should be reassured by Labour’s commitment to providing stability and certainty over taxation policies with predications that corporation tax will be capped at 25% for the duration of the current Government’s term in office.
Reeves is also expected to introduce a business roadmap outlining changes to corporation tax reliefs and capital allowances for the next five years. This will help business owners make more informed decisions about investing in staff, training, NPD, premises and equipment.
But large corporates, non-doms and high earners who are rich in profits, property, shares and assets beware.
Your broad shoulders are likely to be burdened with hikes in capital gains tax, inheritance and dividend tax changes plus the possible elimination of business assets disposal relief.
If you have children at private school, the blow will be even harder.
Better protection for fire protection businesses
Working with our partners at Commercial Express and SP Insurance Services, Irwell provides specialist liability insurance for businesses involved in the installation and maintenance of sprinkler protection systems and contractors within the fire protection industry including:
• Active Fire Protection Contractors who detect and alert, stop or contain a fire.
• Passive Fire Protection Contractors who prevent the spread of fire throughout a building.
• Sprinkler and Fire Suppression Engineers that install and maintain fire suppression and sprinkler systems designed to detect and extinguish fires in the early stages and to prevent fire growth and spread.
Helping to keep businesses fire-proof
Of the 22,000 workplace fires recorded every year on average, 25% are caused by faulty or misused electrical equipment.
But it’s not just buildings and people that are affected by fires in the workplace. The stress and financial implications for a business can also be profound.
According to UK Government figures, the average cost of a fire to businesses is around £78,000. That’s before preventative costs or damages incurred through punitive actions following the blaze are accounted for.
If there is a fire on your premises and you are found non-compliant with The Regulatory Reform Fire Safety Order 2005, there is no maximum legal recompense or compensatory damages cost, and you could even find yourself with a custodial sentence.
Specialists in Legal Expenses Insurance
Running a business or managing commercial and residential properties can come with many unforeseen legal risks. From an employee dismissal or injury to tenant disputes, data breaches or property damage.
Legal disputes can arise when you least expect it – from a supplier or contractor, an ex-employee or tenant and even HMRC. Whatever the cause and however big or small the dispute, the costs involved in defending or pursuing legal issues can soon escalate.
With over 30 years’ experience, Irwell’s Legal Expenses cover provides the right protection to suit unique business needs.
Our legal expenses insurance policies also include access to a FREE LEGAL HELPLINE provided by our partners at Irwell Law.
Return this great nation to the service of working people
From a ban on fire and re-hire to workers’ rights from day one. What does Labour’s pledge mean for your clients?
Specialists in Commercial Liability and Legal Expenses
Every organisation and every sector face unique business critical risks.
From SMEs and sole traders to larger corporates, we understand the associated risks and rewards of running these businesses. That’s why we are best placed to protect them.
Liability, legal and health and safety experts at your service
Are your terms and conditions fit for work?
Labour promised to make work pay. They promised to overhaul the employment legislative landscape to get better pay and conditions for the UK’s 33.09 million employed workforce.
They meant business.
Many of their planned reforms hit the headlines. From banning unpaid internships and zero hours contracts to employees having the right to request flexible working arrangements from day one. The latest radical plan to introduce a 4-day working week for full time employees is also big news.
But what other reforms can we expect in the last quarter of 2024 that haven’t quite made the front pages?
Irwell’s Senior Class Underwriter in Legal Expenses, Billi Cobley summarises seven changes employers should be prepared for to avoid exposing themselves to the risks of costly, stressful and time-consuming tribunals.
1. Stable and predictable contracts
Workers with unpredictable working hours, or a fixed-term contract of less than 12 months, will have a right to request a more stable and predictable contract after 26 weeks of service.
2. Fire and re-hire
A new statutory code of practice will set out a procedure for employers to follow when considering dismissals for employees who do not agree to changes to their terms and conditions.
3. Harassment and bullying
A duty requiring employers to proactively prevent sexual harassment by taking “reasonable steps” will be introduced.
The Bullying and Respect at Work Bill proposes a statutory definition of bullying and will allow employees to bring a standalone claim in a tribunal.
4. Pensions
Under proposed pension auto-enrolment rules, the lower earnings threshold will be removed and those aged under 22 will be in scope of the scheme.
5. Gender pay gap
Regulatory exemptions from gender pay gap reporting will be extended to businesses with fewer than 500 employees.
6. Paternity leave
Legislation will be introduced to allow employees to take paternity leave within the first year after the birth and also split the leave into two blocks as long as they give 4 weeks’ notice of the dates when they wish to take the leave.
7. Neonatal care leave
Under the Neonatal Care (Leave and Pay) Act 2023, parents of babies who are admitted to hospital before 28 days old for at least one week will get a maximum of 12 weeks paid statutory leave in addition to their maternity or paternity leave.
Tribunals on the rise
In 2023/24, employment tribunal receipts and disposals increased by 7% and 16% year-on-year. Meanwhile, open cases increased by 3% to 653,000 over the same period.
This rise in cases underscores the need for an appreciation of employment legislation, having preventative measures and HR policies in place – and legal expenses protection that can ease the burden should a legal issue arise.
Source
Keeping the food and drink sector better protected
Working in the hospitality sector can be a rewarding business but working in bars, cafes, restaurants and pubs come with many unique sector risks. Keeping employees and the public safe and ensuring food hygiene standards are met are vitally important. And protecting those Tripadvisor reviews and food hygiene ratings.
But for many hospitality owners or managers, the first time they find out that they are under-insured or non-compliant with health and safety regulations is when it’s too late – following an accident, a claim or an enforcement visit.
Reforming the UK’s rental market
Irwell’s Senior Class Underwriter, Bill Cobley looks at what the new government’s initiatives mean for private tenants and landlords.
The UK’s rental market is in crisis. Plagued by substandard housing standards, an imbalance between supply and demand, soaring costs, arrears on the rise along with the uncertainty of Section 21, the new Government has a lot to tackle to rebuild the rental market.
Labour is selling itself as the party of “wealth creation”, vowing to improve living standards for working people. Within Labour’s legislative programme, two aspects stand out which will impact landlords and renters alike.
Firstly, the Planning and Infrastructure Reform Proposal sets out to accelerate the quantity, and improve the quality, of the UK’s housing stock.
Meanwhile The Renters’ Rights Bill will address the insecurity and injustice that many renters and landlords experience by fundamentally reforming the private rented sector and improving the quality of housing in it.
Ending the bad housing pandemic
Government statistics around bad housing make difficult reading.
There are 3.5 million households in England that fail to meet the Decent Homes Standard.
2.3 million households are living in a home with at least one Category 1 hazard.
935,000 households are living in a home with damp problems.
Almost one quarter of private rented households (23%) live in a home that fails to meet the Decent Homes Standard.
The government’s ‘Decent Homes Standard is defined as homes that are overcrowded or housing which is damp, cold, infested or lacks modern facilities or is in need of substantial structural repairs.
This unacceptable trajectory cannot continue and must be addressed by all stakeholders.
How does the Government plan to improve substandard housing conditions?
With one in six UK homes at risk of flooding and the UK 9% wetter than 50 years ago, the insurance sector has experienced a surge in unprecedented flood insurance claims in recent years. Fuelled by the housing and climate crisis, Labour pledges to ‘Get Britain building’, as they seek to accelerate the delivery of high-quality homes and communities.
The Planning and Infrastructure Reform Proposal aims to create 1.5m new homes in areas with minimal risk of flooding and will implement measures to tackle resilience to climate change by improving building standards.
The proposal should result in properties that are fit for the future and can withstand flooding, extreme temperatures, high winds and subsidence, as well as improving fire safety and energy efficiency.
How does the Government plan to improve the private rental market?
The new Government is determined to transform the experience of private renting by levelling the playing field between landlord and tenant.
The Renters’ Rights Bill will end Section 21 ‘no fault’ evictions to give renters more rights and protections to stay in their homes for longer.
Meanwhile fair landlords will enjoy robust grounds for possession where there is good reason to take their property back.
However, unscrupulous landlords take heed, the Bill will crack down on those who exploit, mistreat or discriminate against tenants with poor practices such as ‘bad housing’, unfair rent increases or bidding wars intended to force tenants out.
This greater stability will allow renters to build lives in their local communities without the fear of eviction or homelessness and give landlords continuity of rental income.
How can landlords better protect their business?
Research by The National Residential Landlords Association (NRLA) found that almost one fifth of UK homes are now privately rented resulting in over 4.6 million rented properties. Demand for rental properties has more than tripled compared with the demand before the COVID pandemic.
However, 12% of landlords said they sold property in the third quarter of 2023 and 28% of respondents said they plan to cut the number of properties they rent out over the next 12 months*.
With this rental property shortfall, rent arrears on the rise and new legislation reforms imminent, it pays for private landlords to be prudent.
If landlord-tenant disagreements arise, legal costs can quickly escalate, and some landlords may not have the resources to pursue potentially lengthy and expensive legal proceedings against a tenant. That’s where Irwell can help.
Irwell’s landlord’s legal expenses protection allows clients to pursue or defend their legal rights and provides invaluable legal advice throughout proceedings. Likewise, if you become involved in a dispute with the tenant relating to the owning or letting of the property or if a tenant has damaged the property, our insurance covers the associated legal costs.
For residential clients, our policy can extend to include rent guarantee for added reassurance, whilst the landlord is using the policy to obtain repossession of their property.
*www.nrla.org.uk/news/monthly-bulletin/202312/rented-housing-demand-triples-say-landlords