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Labour and Tories confirm income tax squeeze

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Mitchell Labiak,Business reporter, BBC News

Getty Images Man with glasses looking at letter from HMRC Getty Images

Both Labour and the Conservatives will keep income tax thresholds frozen until 2028 if they win the general election, meaning taxes will rise for many.

Both parties intend to stick with the threshold freezes – amounting to an effective tax rise because of pay inflation – introduced in response to Covid, for the next three years.

Mr Hunt has said the freeze will end after that. Labour has said it will stick to Tory plans.

The Institute for Fiscal Studies has warned this would bring 4.5 million more people into higher income tax thresholds by 2028.

It comes during the second week of a campaign where the Conservatives, Labour and the Lib Dems have all sparred over taxes.

The income tax threshold is different to the income tax rate.

The threshold refers to the amount of money people need to earn before they begin paying tax or, for those already paying tax, the amount they need to earn before paying a higher rate of tax.

The income tax rate refers to the percentage of a person’s income that is paid in tax.

The threshold usually rises with inflation, but in 2021 the Conservative government froze most bands in response to Covid. The effect is known as “fiscal drag” as it drags more people into paying tax in the first place, and others into higher tax bands.

‘Two giant shocks’

Speaking on the BBC’s Today programme, Mr Hunt said that “a future Conservative government will not increase income [tax] rates and VAT”.

However, when pressed about whether the income tax threshold would stay frozen, Mr Hunt confirmed it would be for the next three years.

“The tax rises that happened as a result of the pandemic and the energy shock — these two giant shocks — will stay for their allotted time period.

“I took the very difficult decision, yes, to increase taxes. And now, in my Budget and in the Autumn Statement last year, I’ve started to bring them down,” he added.

“Have I been able to cancel out all those tax rises? No, but I had to make that commitment. So I can absolutely undertake that the threshold freeze that we introduced until 2028 will not continue after that.”

Later on Thursday, Labour’s shadow chief secretary to the Treasury, Darren Jones, told BBC Radio 4 twice that a future Labour government would freeze income tax, national insurance, and VAT thresholds.

A Labour source has since clarified that Mr Jones meant rates, not thresholds.

The source added that the party intends to follow Tory plans to freeze tax thresholds through to 2028.



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Hurricane Beryl hits Texas after going into record books as earliest category five storm

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Hurricane Beryl became the earliest hurricane on record to develop into a category five storm, as warming oceans fuelled destruction across the Caribbean and Mexico’s Yucatán peninsula, before it reached Texas on Monday as a category one event.

Beryl was expected to bring winds of 80mph to parts of the Texas coast on Monday, with flash flooding expected along the Gulf coast and eastern Texas, the US National Hurricane Center said.

The hurricane left a trail of devastation as it moved north west across the past week, after beginning last week with maximum sustained wind speeds of about 160mph at its peak.

It reached north-east of the Mexican coastal resort of Tulum with maximum winds near 110mph on Friday, bringing strong winds, dangerous storm surge and heavy rain. After weakening as it travelled through the Caribbean it then gained strength again as it approached the Gulf coast.

The Hurricane Center said Beryl was expected to weaken to a tropical storm as it moved inland in Texas on Monday and then further slow into a tropical depression by Tuesday.

The storm centre was tracking towards Houston, and forecast to bring heavy rain and potential flooding, with 2mn homes and businesses without power by mid-morning on Monday, according to website poweroutage.us.

Beryl first made landfall last Monday on Carriacou, an island that is part of Grenada, as well as hitting St Vincent and the Grenadines, causing widespread damage and several deaths, before battering Jamaica’s southern coast and sweeping past the Cayman Islands.

Simon Stiell, the head of the UN’s climate change arm who is from Carriacou, said his homeland had been “hammered by Hurricane Beryl”.

“It’s clear that the climate crisis is pushing disasters to record-breaking new levels of destruction,” he said, urging countries to set more ambitious plans to tackle global warming.

“This is not a tomorrow problem. This is happening right now in every economy, including the world’s biggest — disasters on a scale that used to be the stuff of science fiction are becoming meteorological facts, and the climate crisis is the chief culprit.”

Scatter plot of Atlantic storms that have made landfall between 1983 and 2004, showing that Hurricane Beryl is the earliest category 5 Atlantic storm in decades, according to data from the U.S. National Oceanic and Atmospheric Administration. 82% of storms were between August and November.

The Alliance of Small Island States, a group of about 40 low-lying countries threatened by rising seas across the Caribbean, Pacific, Africa, Indian Ocean and South China Sea, said the hurricane highlighted the urgent need for finance to help them deal with the effects of climate change.

While the “full extent of the losses and damages are yet to be ascertained, lives have been lost, homes have been ground to nothing, shelter, security, memories, history — all gone”, said Aosis chair Fatumanava-o-Upolu III Dr Pa’olelei Luteru.

Beryl is the second named Atlantic storm this season, following Alberto in June.

In May, the US’s National Oceanic and Atmospheric Administration warned that there was an 85 per cent higher chance of an above average hurricane season in the Atlantic this year.

The agency said it expected 17 to 25 named storms bearing winds of 39mph or higher this season. Between eight and 13 of those storms were expected to become hurricanes with wind speeds of 74mph.

Noaa said the rise in storms was linked to a “confluence of factors” that favoured tropical storm formation, including record-breaking ocean temperatures, the expected shift to the naturally occurring La Niña weather phenomenon across the Pacific and reduced Atlantic trade winds that allowed hurricanes to grow in strength without the disruption of strong wind shear.

“Human-caused climate change is warming our ocean globally and in the Atlantic basin and melting ice on land, leading to sea level rise, which increases the risk of storm surge,” Noaa warned.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here



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Asda scraps physically exhausting 4-day workweek, revealing critical factor in its failure

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Asda is scrapping plans to introduce a four-day week as complaints from exhausted staff highlighted a vital misstep in successfully implementing shortened working patterns.

The supermarket chain launched a trial to see employees work their 44-hour week over four days instead of five for the same pay. That translated into 11-hour shift patterns for labor-intensive work.

Inevitably, the idea of fulfilling the same weekly hours in a shorter timespan had adverse consequences for Asda employees. Staff described the shifts as “physically demanding,” while the early starts and late finishes left those depending on public transport in a bind.

Parents who work at Asda also faced issues coordinating childcare and school pick-ups and drop-offs under the 11-hour shifts.

The group decided not to continue with the condensed four-day workweek, but is trialing a flexible 39-hour week over five days.

“We will continue to test different flexible working patterns to assess how these can benefit our colleagues and our business,” a spokesperson for Asda told Fortune.

Asda isn’t the only company that has faced fitness issues from staff after trying to introduce a condensed working pattern. 

The insurance company Domestic & General introduced a similar condensed working week but also faced complaints from staff who were left psychologically exhausted.

“Half the team absolutely loved it, half of the team didn’t like it at all—it makes for a longer day, it’s a bit more intense,” Crummack told The Telegraph. “For them, spreading the work across five was easier to manage psychologically,” 

Last year, Crummack told Bloomberg that companies implementing a four-day week tend to lose “flexibility” and inevitably force workers to pick up extra work on the fifth day anyway.

How to successfully bring in a 4-day week

Asda’s and D&G’s announcements came just days before South Cambridgeshire council hailed the resounding success of its four-day week trial.

The council’s 450 employees carried out the biggest-ever public sector trial of a four-day workweek.

Among the benefits was a 39% reduction in staff turnover, which helped save the council £371,500 ($476,000), thanks to lower staff agency costs, The Guardian reported.

At the same time, the council said it processed 15% more major planning applications, while household planning applications were completed a week and a half earlier, indicating a huge productivity boost.

“We know we cannot compete on salary alone and have needed to find bold new ways of tackling our recruitment and retention issues,” John Williams, the lead South Cambridgeshire council member for resources, told The Guardian.

Four-day week trials have increased in recent years, with varying results showing success isn’t guaranteed.

The most successful trials tend to see employees shorten their hours for the same pay, as with South Cambridgeshire Council. While increasing retention rates, several studies 

A four-day week trial saw more than 60 companies and nearly 3,000 employees in the U.K. experiment with the 100:80:100 model, where staffers received 100% of their pay for 80% of their time while delivering 100% productivity. 

A year after the trial’s completion, Autonomy found that 89% of companies were still implementing a four-day week after employees saw burnout drop significantly and employers enjoyed a fall in attrition.

However, the latest results from Asda and D&G suggest that the benefits of an extra day off are canceled out if employers try to make their employees work the same number of hours in fewer days.

While U.K. companies and public organizations experiment with increasing their employees’ leisure time, Greece is taking the opposite approach in search of productivity gains. 

The country has relaxed labor laws in some industries, allowing companies to hire workers who work 48-hour weeks.



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Danish brewer Carlsberg to buy soft drinks maker Britvic

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A can of Carlsberg AS pilsner and a Britvic Plc apple drink arranged in London, UK, on Friday, June 21, 2024. 

Hollie Adams | Bloomberg | Getty Images

LONDON — Soft drinks maker Britvic has agreed to a sweetened takeover bid of £3.28 billion ($4.2 billion) from Carlsberg, the companies said Monday.

The deal agreed offered 1,290 pence per share for Britvic, with a small dividend that gives shareholders 1,315 pence per share.

Britvic in June refused an improved cash takeover bid from Carlsberg offering 1,250 pence per share of the British soft drinks maker. It said at the time that the proposal “significantly undervalues Britvic, and its current and future prospects.” Carlsberg’s previous June 6 offer price of 1,200 pence per Britvic share was also declined.

Ian Durant, the non-executive chair of Britvic, said the proposed deal “creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors.” He also namechecked Carlsberg’s agreement with PepsiCo which, he said, provides the “combined group with a strong platform for continued success.”

Carlsberg CEO Jacob Aarup-Andersen said in the same statement that the deal combines “Britvic’s high-quality soft drinks portfolio with Carlsberg’s strong beer portfolio and route-to-market capabilities, creating an enhanced proposition across the UK and markets in Western Europe.”

PepsiCo is key to the deal, as Britvic bottles and distributes PepsiCo brands in the U.K. and Ireland. Carlsberg and PepsiCo earlier this year agreed to waive a “change of control clause” in the bottling contract.



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