Almost a million young people have yet to access savings contained in Child Trust Funds (CTFs), according to a report by Parliament’s Public Accounts Committee (PAC).

The PAC said over £1.7 billion is waiting to be claimed by a million young adults, at an average value of £1,900 each.

It says ‘failure in long-term planning’ by HMRC means 42% of eligible 18-20-year-olds have not drawn on their savings.

The PAC says that given CTFs are not reaching many of the people they were designed to help, HMRC should be doing more to find and contact young people who have not claimed their savings.

According to the PAC, many young adults don’t know about their savings or have lost track of them. It found that CTF providers are charging fees for passively managing accounts but are not doing enough to link these accounts to their owners.

Dame Meg Hillier MP, Chair of the PAC, said:

‘The aims behind CTFs are laudable – for young people to come into a pot of money on reaching 18, with the promotion of financial literacy and good savings habits. But many young people are unaware that they have money waiting to be claimed.

‘In an ongoing cost of living crisis, our young people need every bit of support we can give them. HMRC still has time to make sure that CTFs are given the chance to be the boost to young people’s futures which they were designed to be.’

Internet link: Parliament website

South Yorkshire has been named as the UK’s first Investment Zone by Chancellor Jeremy Hunt.

The status could bring £1.2 billion in funding and see up to 8,000 new jobs created in the area, according to the government.

In March, Mr Hunt said 12 new UK Investment Zones would each receive £80 million in government cash. The money could be spent on infrastructure, training and tax relief over seven years.

Beckie Hart, Director for Yorkshire and the Humber at the Confederation of British Industry (CBI), said:

‘This announcement will spur growth and bring other economic benefits in South Yorkshire – and the whole of Yorkshire.

‘The government is right to pursue an Investment Zone that builds on the University of Sheffield’s world-leading Advanced Manufacturing Research Centre, which is recognised globally as a major economic cluster with strong research and innovation capabilities that capitalises on the expertise of the region’s universities.

‘Our members look forward to benefitting from the Investment Zone to build on South Yorkshire’s advanced manufacturing strengths, develop new industries that will create jobs and bring prosperity to the area as we seek to build a net zero economy.’

Internet link: HM Treasury press release CBI website

The largest overhaul of alcohol duty in 140 years sees drinks taxed by strength rather than category from 1 August.

It also sees the introduction of Small Producer Relief, which aims to help small businesses and start-ups create new drinks, innovate and grow.

There will be lower taxes on lower alcohol products – those below 3.5% alcohol by volume (ABV) in strength.

The number of main duty rates for alcohol is being reduced from 15 to six, to make it easier for businesses to grow and operate.

According to the government, the duty paid on drinks on tap in pubs will be up to 11p lower than at the supermarket.

However, the Wine and Spirit Trade Association (WSTA) warned that for spirits there will be at least a £1 increase on a bottle of gin or vodka and a bottle of wine will go up by £1 when VAT is included.

Miles Beale, Chief Executive of the WSTA, said:

‘Ultimately, the government’s new duty regime discriminates against premium spirits and wine more than other products.

‘Wine from hotter countries – like new trade deal partner Australia – will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines.

‘Nor can the alcohol in full strength spirits be reduced for products such as gin, vodka and whisky where a minimum strength prescribed by law.’

Internet link: HM Treasury press release WSTA website

The voluntary and community sector will be able to apply for grants from HMRC to support their work with taxpayers who need extra assistance with their tax affairs.

Eligible organisations need to bid for the funding, worth £1.8 million a year from 2024 until 2027, up from the current annual grant of £1.66 million, through HMRC’s voluntary and community sector grant funding programme.

Bids can be submitted between 24 July and 21 August 2023, with successful organisations being announced in October, ready for the new funding to start from 1 April 2024.

This is the 12th round of funding HMRC is awarding as ‘part of its commitment to help everyone get their tax right’.

The programme has been ongoing for over a decade and previous beneficiaries included Citizens Advice Bureaus, TaxAid, Tax Help for Older People and Gingerbread.

To be eligible for grant funding from HMRC, an organisation must be a registered charity, voluntary and community sector organisation, social enterprise, mutual or a co-operative.

RNIB’s Sight Loss Advice Service is one of 12 organisations previously awarded under the grant programme.

Director David Newbold said:

‘RNIB is extremely grateful to HMRC for its generous support, ensuring blind and partially sighted people can access the advice, information and practical help they need to deal with their tax affairs and HMRC.’

Internet link: HMRC press release

The UK’s rate of inflation fell to 7.9% in the year to June while the country’s economy shrank in May, according to the latest Consumer Prices Index (CPI) published by the Office for National Statistics (ONS).

The inflation rate is currently at its lowest annual rate since March 2022, the ONS said.

Price rises have slowed by more than experts anticipated. According to the ONS, falling fuel prices helped the rate of inflation to drop, and food prices rose less quickly when compared to June 2022.

Core inflation also fell from 7.1% to 6.9%, the data showed.

Meanwhile, the UK economy contracted by 0.1% in May following growth of 0.2% in April, ONS data showed.

The rising cost of living and higher interest rates have been squeezing households and businesses, the ONS said.

It said the manufacturing, energy and construction sectors fell in May, along with sales at pubs and bars.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said the figures provide ‘further evidence of the precarious state of the UK economy’.

He added:

‘While businesses have been incredibly resilient in stomaching multiple waves of economic crises, our latest Quarterly Economic Survey shows that most firms are still not reporting improved business conditions.

‘Positively, slightly fewer businesses report inflationary pressures, but interest rates have grown as a concern for businesses. We are starting to see more businesses report rising borrowing costs, but we are yet to understand the full impact of rising interest rates.

‘Businesses are operating in a climate with a high degree of uncertainty, and government and Bank of England policy both need to be very responsive to developments.’

Internet links: ONS June inflation data ONS May GDP data BCC website