Number of cash transactions rises for first time in a decade


The number of payments made with cash rose for the first time in a decade in 2022, according to data published by UK Finance.

According to UK Finance, the total number of payments made last year increased to 45.7 billion from 40.4 billion in 2021. 50% of all payments in the UK were made using debit cards, and the number of cash payments rose to 6.4 billion.

The data also showed that almost a third of all adults in the UK are registered for at least one mobile payment service and 86% of individuals use remote banking.

Businesses’ payments accounted for 13% of all payments made in the UK during 2022, and consumers made 87% of all payments.

Adrian Buckle, Head of Research at UK Finance, said:

‘During 2022 we saw increased use of contactless, online banking and mobile payments, although cost-of-living challenges meant that some people preferred to use cash to help with their budgeting.

‘Changes to shopping and travel habits, particularly related to the rise of hybrid working, led to a big jump in the volume of transactions made. Debit cards remain the most popular way of paying, with them now accounting for half of all payments made in the UK.’

Internet link: UK Finance website

Government slow to recover over £1 billion Covid grant fraud


The government has been slow to recover losses of £1.1 billion from fraud and error in Covid grant schemes, according to MPs in the Public Accounts Committee (PAC).

The latest PAC report found that after spending £22.6 billion on business support schemes during the pandemic, the government had only recovered £20.9 million of the estimated £1.1 billion in fraud and error losses by May 2023.

The Department for Business and Trade (DBT) said it would take until the end of 2025 to recover the losses from fraudulent claims and estimated that it would be ‘very expensive’ to check the veracity of every claim.

The Covid grant scheme ran for two years from March 2020 to March 2022, and local authorities handled applications from businesses.

PAC Chair, Dame Meg Hillier MP, said:

‘The government must not wait for the conclusions of the Covid inquiry to learn the lessons laid out in this report. Never again should a national emergency find policy being written as we go along, without firm planning and good local data, with local authorities not properly funded to work in partnership on the support required.

‘The next emergency must find the government rigorously prepared with an understanding of the optimal means to support businesses through difficult times.

‘The lack of planning from government also meant that a door was left wide open in these schemes to fraudsters who took shameful financial advantage of schemes that were designed with national solidarity in mind.’

Internet link: Parliament website

Firms looking to Autumn Statement for help with rising operating costs


Small firms will look to the upcoming Autumn Statement for signs that the government understands their operating concerns, says the Federation of Small Businesses (FSB).

The business group said that UK businesses need urgent action to help stem the issue of late payment. It says that large corporates use late payments to offset interest rate rises by ‘demanding, in practice, free credit from their supply chains‘.

The FSB is also urging Chancellor Jeremy Hunt to overhaul the business rates system and has called for an extension of the 75% business rates discount for small and medium-sized enterprises (SMEs) in the retail, hospitality and leisure sectors, as this discount is set to expire in April 2024. It said that these sectors have been ‘acutely affected’ by falling confidence levels and economic headwinds.

Martin McTague, National Chair of the FSB, said that the recent decision by the Bank of England not to raise interest rates will ‘give firms breathing space’.

He continued:

‘[The] unexpectedly large drop in GDP is a sign that the painful interest rate rises we have endured are acting as predicted, and we urge the Bank to allow time for the lag between rate hikes and the full effect on spending to be fully observed, so that there is less risk of overshooting and causing unnecessary economic damage.

‘Small firms need some respite, and now will look to the Autumn Statement for signs from the government that it’s listening and understands their concerns. As a nation, we urgently need action to stem late payments, which are used by large corporates to offset interest rate rises by demanding, in practice, free credit from their supply chains.’

Chancellor Jeremy Hunt will deliver the 2023 Autumn Statement on 22 November.

Internet link: FSB website GOV.UK

Interest rates held as inflation falls


The UK’s base rate of interest was held at 5.25% in September as the rate of inflation fell to 6.7% in the year to August 2023.

The fall in the rate of inflation surprised economists, who expected it to rise. The Consumer Prices Index (CPI) fell from 6.8% in July to 6.7% in August.

Slowing food price increases helped drive the fall, the Office for National Statistics (ONS) found, particularly prices for eggs, milk and cheese.

Alpesh Paleja, Lead Economist at the Confederation of British Industry (CBI), said:

‘Inflation fell again in August, defying expectations of a slight uptick. We expect inflation to continue falling over the rest of this year, but the recent uptick in global oil and domestic fuel prices means that the path back down may now be bumpier.’

Following the fall in the rate of inflation, interest rates were left unchanged at 5.25% by the Bank of England’s Monetary Policy Committee (MPC).

The MPC had previously raised rates 14 times in a row to tame inflation, leading to increases in mortgage payments but also higher savings rates.

Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), said:

‘Businesses will be giving a cautious welcome to today’s decision by the Bank of England to hold the base rate at 5.25%. Constant hikes in the cost-of-borrowing have had a hugely detrimental impact on the firms we represent.

‘Companies need reassurance that decisions on interest rates are not knee-jerk reactions to the most recent inflation data.

‘We need clear direction from decision makers, creating a roadmap for business that really boosts confidence and investment.’

Internet link: Bank of England website ONS website CBI website BCC website

National Living Wage to rise from April 2024


The National Living Wage (NLW) will rise to at least £11 an hour from April 2024, Chancellor Jeremy Hunt has confirmed.

The Chancellor confirmed the increase in a speech to the Conservative Party conference and said the rise will benefit two million low paid workers. People aged 23 and over are eligible for the NLW.

The Treasury stated that as a result of successive increases, a full-time worker on the NLW will be more than £9,000 better off than they would have been in 2010.

Katherine Chapman, Director of the independent Living Wage Foundation, said:

‘A rise in the statutory NLW from next April is welcome news for low paid workers, but may fall short of the real Living Wage next year, the only rate that is independently calculated based on the cost of living.

‘Our research … showed that 60% of people earning below the real Living Wage had used a foodbank in the past year and nearly 40% were regularly skipping meals.’

Internet links: GOV.UK Living Wage Foundation

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