Phishers jump on PAYE bandwagon

Posted by John Stokdyk in Tax, Technology.

The media firestorm surrounding the PAYE under- and overpayment letters that went out to 45,000 taxpayers this week has provided an ideal opportunity for scammers, according to Sophos security experts.

In his blog, Sophos security consultant Graham Cluley published an example spam message now circulating, which arrives with the subject line, “You Have An HMRC Refund”.

The email explains: “Following an upgrade of our computer systems and review of our records we have investigated your payments and latest tax returns over the past years, our calculations show you have made over payments of 317.66GBP.”

A file called Refund-Form.zip is attached to the mail containing an HTML form with HMRC branding asking for credit card details, date of birth, and mother's maiden name.

“If you do make the mistake of filling in the form,” Cluley warned, “your confidential data is uploaded to a Chinese server. You're not going to receive a windfall because of this form - you've just been phished.”

HMRC will not be contacting people about rebates or tax owed either by email or telephone. Nor will it ask for bank details. HMRC's security page contains advice about scams like this, and clearly states that they would never inform customers of a tax rebate via email, or invite them to complete an online form to receive a rebate of tax.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Coalition government - the first 100 days

By Laura Kuenssberg
Chief political correspondent, BBC News channel

Only one person is ever in charge at 10 Downing Street - but what is decided behind the famous black door is now the responsibility of two men, and two parties.

The two men in question, David Cameron and Nick Clegg, barely knew each other 100 days ago.

Their two parties, the Conservatives and the Liberal Democrats, knew each other only too well.

Apart from a few isolated examples in local government, they had been at each other's throats for years.

So, as this most unlikely of political alliances reaches its symbolic 100-day milestone, should Mr Cameron and Mr Clegg be celebrating the successful birth of a new kind of politics, symbolised by their joint press conference in the Rose Garden at Downing Street on day one?

Or letting out an exhausted sigh of relief that they made it this far?

The chaos and calamity some, including the Conservative Party in a general election broadcast, warned would result from a hung Parliament has not yet come to pass.

But there are still formidable hurdles to clear before this experiment in coalition government - the first at Westminster since World War II - can be judged to have been a success.

'Further and faster'
Top of the coalition's list from day one was getting to grips with the deficit, the gap between what the Treasury takes in tax revenue and how much taxpayers' cash the government spends.

At the general election, the Liberal Democrats continually questioned the Conservatives' commitment to go "further and faster" than Labour was already planning.

But in the days after the election, it became clear to political insiders that the Lib Dem leadership was shifting its position.

Senior Conservative John Redwood, who was concerned about working with the Lib Dems, credits their change of heart with allowing coalition to get off the ground in the first place.

He told the BBC: "I argued the case immediately after the election that we should try for Conservative minority government, with the Liberal Democrats allowing us support in motions of confidence and to get through the main parts of the budget, because I didn't think at that point that the Liberal Democrats would buy into the kind of Budget we were recommending.

"When I discovered that the Liberal Democrats were coming around to the view that we needed a tougher and tighter Budget, then it was was clear you could go further than just having a minority government."

'Peas in a pod'
So, even from day one, in the light-filled Downing Street garden, the message was less sunny.

Like Labour, the coalition believed major reductions in public spending would be necessary to deal with the public finances.

But the pace and scope of cuts would be faster and deeper - the coalition's ambition is to eradicate the deficit completely by the end of this parliament. Coalition ministers presented a united front on the need to act now, and act boldly.

Indeed, when it comes to those seated around the cabinet table or in junior government roles, the two parties have gelled surprisingly well.

One cabinet minister, describing the body language between Clegg and Cameron, told me they were like "peas in a pod".

It probably helps that there are 23 Lib Dem ministers - including nearly half of the parliamentary party - scattered around various government departments, with the deliberate intention of embedding the party in the administration.

But for all that many of the Lib Dems and Tories with government jobs appear to be thriving, in recent weeks there has been a tacit admission that they have not done as well as they might have in selling their core message to the public, many of whom are nervous about the impact of the squeeze on spending.

Lib Dem anxiety

There has been anxiety over the Academies Bill, a flagship Conservative policy, that will reform education in England.

There has been nervousness about the scale of the reforms to the NHS in England - a plan that was not in the coalition deal thrashed out in the aftermath of the election.

It should be noted some of the other tensions in government are traditional disagreements between departments, not coalition clashes - differences between the Treasury and the MoD over who pays for Trident for example.

But, equally, it is true to say that anxiety about the coalition runs deeper among Liberal Democrats than it does among Conservatives.

Many harbour a fear about losing their identity; being swallowed up by the party that outnumbers them at a rate of more than five to one in the Commons.

Their dip in the opinion polls does not do much to bolster Lib Dem confidence either.

Internal discomfort
Former leader Sir Menzies Campbell has warned Nick Clegg about entering into any kind of electoral pact or deal with the Conservatives, as some have suggested could be the answer and which would see the Lib Dem candidates not fielding candidates against Tories in areas where they could not win, and vice versa.

Sir Menzies said it should be a matter for local parties, not the leadership, to decide: "He might issue an exhortation but he could not issue an instruction.

"Every Liberal Democrat leader will tell you that [backbenchers] find the carrot a much more attractive instrument than the stick."

As the two parties move from their first 100 days shackled together in coalition towards the party conference season, there will be an inevitable focus on relationships inside the parties.

Both David Cameron and Nick Clegg are understood to be having to spend more time than ever before cajoling and soothing egos, keeping their MPs and activists on board, using the "carrot" to the best of their ability.

But that internal discomfort could well be dwarfed by the public's reaction when the cuts announced in the Budget and October's spending review begin to bite.
The speed at which Chancellor George Osborne wants to balance the nation's books is just one source of nerves for Lib Dem MPs - particularly among those who remain on the back benches, without a government position.



Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Pension tax relief may be cut further

By Ian Pollock, Business reporter, BBC News


Government plans to restrict pension tax relief for the higher paid may be even more aggressive than those put in place by the previous Labour administration.

The coalition is planning to replace the big tax changes that Labour had put in place, starting next April.

These would have raised an extra £4.6bn by 2014-15.

However a Treasury consultation paper suggests a range of options, one of which might raise even more - £5.3bn.

The alternative proposals being put forward by the Treasury were welcomed by the National Association of Pension Funds (NAPF) which said they would be "less damaging" than Labour's plans.

"It's a simpler approach that that will encourage higher earners to stay in their workplace pensions, so helping protect pensions saving for all staff," said Joanne Segars of the NAPF.

Coalition plans
The Treasury suggests that each taxpayer's annual pension allowance - the amount their pension pot can grow tax free - should be slashed from the current £255,000 a year to between just £30,000 and £45,000 a year.

Under the Treasury plan, a £40,000 limit to the annual allowance - after which an extra tax bill would be generated - might be exceeded by someone whose pension entitlement in a final salary scheme had risen by just over £2,000 in a year.

Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA) said the coalition's plans might catch more people in the tax net who were considerably lower paid than those targeted by Labour.

"It is still likely that many earning a lot less than the £130,000 could be affected where they are in a defined benefit (final salary) scheme," he said.

"This will depend on the valuation method and length of enrolment in the scheme but could affect even those on half the £130,000 especially if they make additional voluntary contributions (AVCs)," he warned.

Pay rise impact
To work out the increased value of someone's pension pot if they are a member of a defined contribution scheme is easy.

They are given an annual statement each year of the value of their pension investments.

However membership of a traditional final-salary scheme involves using a formula in which the rise in someone's accrued pension is multiplied by 10.

Thus a pay rise, perhaps due to promotion, which had the knock-on effect of increasing someone's pension entitlement by £4,000 in a year would currently fall within a £40,000 limit.

However the Treasury is suggesting that this annual accrual should be multiplied by much more, perhaps by 15 or even 20.

More tax
The Treasury consultation document illustrates the possible effects of the new approach.

Its figures suggest that by 2012-13, a £45,000 annual pension allowance would raise a similar amount to that expected under Labour's plans - in the region of £3.6bn.

But a lower £30,000 annual allowance would raise £4.8bn - £1.2bn more than Labour intended.

By 2014-15, an annual allowance of just £30,000 would raise an extra £5.3bn in tax while a £45,000 annual allowance would raise £3.9bn by that year.

Those estimates take into account the possibility that some taxpayers might tweak their pay arrangements to avoid breaching the new lower allowances.

Raj Mody of the accountancy firm PwC said it was possible that twice as many individuals in final salary pension schemes would breach the new limit.

For example, a 50-year-old employee in a typical final salary scheme earning £80,000 a year who, through promotion, got a 20% pay rise, could find themselves with an additional tax bill of over £10,000, he said.

"An unintended consequence of the new regime is therefore likely to be a continued shift of employers and individuals away from final salary schemes to defined contribution plans," Mr Mody added.

Labour's plans
With the highest rate of tax now at 50%, Labour had planned to restrict the amount of tax relief available to the highest paid.

It had calculated that in 2008-09 a quarter of all pension tax relief, worth £28.4bn that year, was going to the tiny minority of tax payers who earned more than £150,000 - worth an average of £20,000 a year each.

To rein in the new 50% tax relief now available on top earners' pension contributions, Labour put in place two changes due to start next April.

The first was that tax relief would be tapered away from 50% down to 20% as people's incomes rose above the £150,000 level.

The second and more profound change affected those with incomes of more than £130,000.

If the value of their employer's pension contributions, when added to their personal income, took their gross income over £150,000, then they would start to be taxed on the value of those employer contributions at a rate of as much as 30%.

This approach was widely criticised as far too complex.

Many experts suggested that the coalition, if it still wished to rein in tax relief for higher earners, should simply restrict the amount by which anyone's pension pot could grow each year before it started to lose tax relief.

That is the plan on which the Treasury is now consulting.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Clegg rejects MPs' call for AV referendum date change

Posted on www.bbc.co.uk/news/uk-politics

Deputy Prime Minister Nick Clegg has rebuffed calls backed by 44 Tory MPs for the date of the referendum on voting reform to be moved.
Elections for the Welsh Assembly, the Scottish Parliament, the Northern Ireland Assembly and some English councils are all also due for 5 May.

The MPs fear differing turnout across the UK and overshadowing of the debate.

Mr Clegg said it was "disrespectful" to suggest voters "could not make two different decisions at the same time".

He said everyone in Scotland, Wales and Northern Ireland, plus 80% of people in England were already due to vote on 5 May 2011, so it would save them having two trips and cut costs by £17m.

But senior Tory backbencher Edward Leigh told Mr Clegg as he took deputy prime minister's questions, that the referendum should be on a different date so there could be a "proper debate" about the issue.

Earlier a Downing Street source had called reports of a revolt against electoral reform "a little exaggerated".

ormer cabinet ministers Peter Lilley, John Redwood and Sir Malcolm Rifkind have signed a Commons motion of complaint about the referendum date.

Also among the signatories to the document, tabled by Tory MP and former defence spokesman Bernard Jenkin, is former shadow home secretary David Davis.

'Odd result'
Mr Jenkin suggested ministers had room to change the date as it was not part of the coalition agreement itself.

"Therefore it is of less status than, for example, a point of principle," he told BBC Radio 4's World at One.

The choice of date, he said, should not be determined by the cost of staging the referendum but on whether it would provide a "true and fair test of public opinion".

Holding it on 5 May could lead to an "odd result" because of wide variations in turnout in different parts of the country, he added.

"One has the suspicion that Nick Clegg wants it on this date to disguise the fact that, out there, there is an awful lot of apathy about changing the voting system."

Under the post-election agreement reached by the Conservatives and Liberal Democrats, the coalition is committed to hold a referendum on adopting the "alternative vote" (AV) system.

This allows voters to rank candidates in their constituency in order of preference.

Anyone getting more than 50% of first-choice votes in the first round is elected, otherwise the candidate with the fewest votes is eliminated and their backers' second choices allocated to those remaining. This process continues until a winner emerges.

Prime Minister David Cameron, who opposes getting rid of the current "first-past-the-post" system, will campaign against such a change. His deputy, the Lib Dem leader Nick Clegg, will push for the reform.

It is feared the issue will cause inter-party strife.

The motion submitted by the 44 Tory MPs argues that referendums on issues of national importance should be held "in isolation", as turnout would be "artificially inflated" in parts of the country where elections are being held.

It urges the Electoral Commission - which has said a referendum is "deliverable" on 5 May but there are some "risks" attached to the date - to make the final ruling.

My personal view is that opponents are worried about a higher vote in favour. Perish the thought!

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

HMRC uncovers untaxed money in grave

Posted on Accountancy Age Written by Saffron Johnson
businessman planned to leave £140,000 in his aunt’s grave for 20 years to avoid tax.

Tax inspectors were tipped off and obtained permission from the priest to recover their £50,000 share. The unnamed man was going to leave the money in the grave up to the time limit for tax investigations, reported The Sun.
Dave Hartnett, permanent secretary for tax, said: “Tax evasion isn’t a victimless crime. But we’re getting better at catching cheats. It’s not worth the risk.”

It was disclosed in April that the HM Revenue & Customs has paid informers £437,000 in return for tip-offs since 2007, and prosecutes around 200 people a year for tax evasion.

Investigators announced a crackdown on middle-class professionals earlier this year, with doctors already under greater scrutiny.

I know they sat there's nothing more certain than death and taxes but...

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

India unveils prototype for $35 touch-screen computer

Posted on BBC News South Asia

The Indian government has unveiled the prototype of an iPad-like touch-screen laptop, with a price tag of $35 (£23), which it hopes to roll out next year.

Aimed at students, the tablet supports web browsing, video conferencing and word processing, say developers.

Human Resource Development Minister Kapil Sibal said a manufacturer was being sought for the gadget, which was developed by India's top IT colleges.

An earlier cheap laptop plan by the same ministry came to nothing.

The device unveiled on Thursday has no hard disk, using a memory card instead, like a mobile phone, and can run on solar power, according to reports.

'Manufacturer interest'

It would cost a fraction of the price of California-based technology giant Apple's hugely popular iPad, which retails from $499.

Mr Sibal said the Indian tablet, said to run the Linux operating system, was expected to be introduced to higher education institutions next year.

The plan was to drop the price eventually to $20 and ultimately to $10, he added.

Unveiling the gadget, the human resource development minister told the Economic Times newspaper it was India's answer to the "$100 laptops" developed by the Massachusetts Institute of Technology in the US.

"The solutions for tomorrow will emerge from India," Mr Sibal said, reports news agency AFP.

Last year, one of the ministry's officials announced it was about to unveil a $10 laptop, triggering worldwide media interest.

But there was disappointment after the "Sakshat" turned out to be a prototype of a handheld device, with an unspecified price tag, that never materialised.

To develop its latest gadget, the ministry said it had turned to the elite Indian Institute of Technology, and the Indian Institute of Science, after a lacklustre response from the private sector.

Mamta Varma, a ministry spokeswoman, said the device was feasible because of falling hardware costs.

Several global manufacturers, including at least one from Taiwan, had expressed interest in making the device, she said, although no deals had been agreed, and she declined to name any of the companies.

The project is part of a government initiative which also aims to extend broadband to all of India's 25,000 colleges and 500 universities.

In 2005, the Massachusetts Institute of Technology (MIT) unveiled the prototype of a $100 laptop for children in the developing world, although it ended up costing about double that price.

In May, Nicholas Negroponte - of the MIT's Media Lab - announced plans to develop a basic tablet computer for $99 through his non-profit association, One Laptop per Child.


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Tax system 'to be simplified to encourage investment'

www.bbc.co.uk/news posts:

The "spaghetti bowl" of UK tax law is to be simplified to cut the burden on business and attract foreign investment, George Osborne has said.

The chancellor is setting up an Office for Tax Simplification to streamline the 11,000-page tax code.

He said Britain had "one of the most complex and opaque tax codes in the world" and it needed to be simplified.

Labour said it backed more simplicity but claimed ministers were bringing in complex new taxes at the same time.

The new body will initially conduct two reviews - the first looking at all 400 tax reliefs, allowances and exemptions in the system to see how they can be streamlined, and the second finding ways to simplify the tax system for small businesses, including finding a simpler alternative to the controversial IR35 code.

Announcing the new body at a press conference, Mr Osborne said his "dream" was "that people might actually understand the tax laws which they were being asked to comply with".

It will advise ministers where the tax system is too complex but it will not look at tax credits, which Mr Osborne said he considered part of the benefits system.

'Economic boost'
The chairman of the body will be former Conservative MP and Treasury minister Michael Jack and its director will be John Whiting, formerly of PricewaterhouseCoopers, who is tax director at the Chartered Institute of Taxation. Neither will be paid.

The government says the tax system became a "hindrance" to business under Labour, and that by simplifying it and making it more competitive for small firms it would stimulate economic growth.

In a speech, Treasury minister David Gauke said: "The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated.

"We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal."

The OTS's remit covers UK taxes and duties administered by HM Revenue and Customs, but it will not deal with tax credits or taxes administered by other bodies nor will it have any influence on setting tax rates.

Shadow Chief Secretary to the Treasury Liam Byrne said he welcomed the thrust of the government's plans to simplify the tax system, but he said "today's announcement, I'm afraid, sounds rather more like an attempt to grab headlines than real evidence of a push to improve legislation".

He called on the government to scrap plans to "complicate the tax system by introducing a marriage tax allowance, all for the sake of sending an ineffective £3 a week signal of what his party thinks a family should look like" and what he said was a "more complicated stamp duty system when it comes to energy conservation for housing".

And he asked how the new body fitted with Mr Osborne's "push for a bonfire of the quangos" and demanded to know how much it would cost to set up.

Mr Gauke said the OTS would be paid for out of existing budgets.

No 'overnight miracles'
The TUC union body said it was concerned the OTS could become a "softening-up exercise for tax cuts for the rich".

But its launch was welcomed by business chiefs.

Richard Baron, of the Institute of Directors, said it was "a brilliant idea" but that it would be judged by its results.

David Frost, director general of the British Chambers of Commerce, said it was "a necessary and long overdue response to the relentless chop and change of tax law".

Tax lawyer Robert Macro, a partner at Dawsons LLP, said the new system would not provide any "overnight miracles" in terms of cuts as the UK tax system was "fit to bursting".

In his first Budget last month, Mr Osborne set out plans to reduce the headline rate of corporation tax by 28% to 24% over four years in an effort to show Britain was "open for business".

But this will be partly paid for by cuts in capital allowances, which provide tax breaks to firms investing substantially in operational assets such as machinery. Critics say this will penalise small and medium-sized manufacturing firms.

In May the government set up the Office for Budget Responsibility, to provide the government with independent forecasts of UK economic growth and public deficits.

I just ask you don't hold your breath. This may well turn out to be more nightmere not dream!

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Millions more to wait until 68 for pension Read more: http://www.thisismoney.co.uk/pensions/article.html?in_article_id=509490&in_page_id=6&ito=1565#i

thisismoney.co.uk correspondent James Chapman posts:

More workers will have to wait until they are 68 to claim their state pension as the Government speeds up plans to raise the retirement age.

In an interview with the Daily Mail today, Work and Pensions Secretary Iain Duncan Smith says the move will save billions of pounds.
Labour set out plans to increase the retirement age to 66 by 2024 and 68 by 2046 to reflect growing life expectancy.

Before the election, the Tories suggested that it should rise to 66 sooner - by 2016.

But Mr Duncan Smith said workers would have to accept even quicker increases as Britain tightens its belt. The Government's timetable suggests that the retirement age is likely to reach 68 by 2038, meaning millions more - those born after 1970 - will be forced to wait for their pension.

This would, however, ensure that the state pension is more generous.

'We have to make the argument for it sooner,' he said. 'The truth is deferment of one year will add 1% to GDP (national output) and it will add up to 10% on your pension pot.

'The current plan to raise it to 68... we think could be accelerated. It seems silly to wait.'

Mr Duncan Smith also revealed that the Government is aiming to get 1.5m off incapacity benefit, more than half the 2.6m total claimants.

It is the first time that ministers have set a target for the number they want to get into employment or back-to-work schemes. Tough measures including testing 10,000 claimants a week have already been introduced to weed out cheats.

More than half of those assessed have been taken off higher-rate benefits because they are considered capable of doing some work.

'Every single one of them will be properly assessed for their level of incapacity,' Mr Duncan Smith said. 'We've started the job already. Those who can work will be given all the support to make sure they do just that. I intend to remove 1.5m off incapacity benefits.

'We will do everything to help people back in to work - retraining, help with interview - but in the end we expect people who can work to take the jobs that are offered them. If they don't their benefits will be incrementally cut.'

Mr Duncan Smith has suggested the age at which people can claim the state pension could be 'indexed' to increasing life expectancy, a reform pioneered in Denmark.

After the Second World War, the state pension age was set at 65 for men, at a time when life expectancy for a man was 66.4 years and for a woman 72.5 years.

By last year, life expectancy had risen to 77 years for a man and 82 years for a woman in England - but the pension age has remained the same. The latest estimates suggest that by 2056, the life expectancy for a man and woman living in England will be 84 and 89 years respectively.

The Labour government passed a Pensions Act in 2007 which means that for those born after April 6, 1959, the state pension age will increase from 65 to 68 between 2024 and 2046.

The Tories said in the general election campaign that they would increase the state pension age to 66 for men by 2016 and for women by 2020, faster than Labour planned, to help plug the massive black hole in the public finances. The Government has now launched a review to determine details of the policy.

The coalition also insists that workers should no longer be forced to retire at 65. People would not be forced to work beyond that age, but they would have the option and could even stay on into their 70s or 80s.

But business leaders have attacked the idea of an end to the statutory retirement age, insisting companies need some sort of 'cut-off point' when older workers must retire. There are concerns that companies would be forced to sack 'bed-blocking' older workers if they insisted on staying on year after year.

Paul Kenny, general secretary of the GMB union, said: 'The Government knows that manual workers in the industrial regions of the UK do not enjoy anything like the same life expectancy as professionals or other classes of employee.

'To force someone who has done a lifetime of toil on building sites, farms or in factories to work until they are 66 is completel y unacceptable.'

But James Elles, a Tory Euro MP, said: 'Should life expectancy be expected to reach 85 for men by 2050, should we not be planning for the pension age to be closer to 75?'

Mr Duncan Smith's plans for pension reform are one of a host of cost-cutting measures being submitted to the Treasury by Government departments as the coalition battles to rein in the unprecedented £149bn budget deficit left behind by Labour.



Something has to be done. People living longer and the baby boomers beginning to retire from February 2011 in increasing numbers. It only makes sense to work longer. This has been a ticking time bomb which successive governments have chosen to ignore! What do you think?

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Double delight as Cheltenham firm wins two Queen's awards

As posted on SouthWaestBusiness.co.uk

A CHELTENHAM firm which has become a world leader in the production of tractor units for towing aircraft was presented with two Queen's Awards for Enterprise last week.

Douglas Equipment at Arle achieved the unusual double, taking Queen's Awards for both innovation and international trade.

Last week the county's Lord Lieutenant Sir Henry Elwes was welcomed to the firm by chief executive officer David Weil and managing director Lee Brewis before being given a guided tour and meeting some of the 120 employees.

Sir Henry was shown the Douglas RAM Handler, which secured the Queen's Award for Innovation.

Developed for the Royal Navy and subsequently marketed to other navies, it has cut the aircraft deck handling time from seven minutes to just 50 seconds. More than 80 per cent of the company's products are now exported worldwide.


Other products seen in production were from the 'DC' (Douglas Conventional) range of aircraft towing vehicles and the 'TBL' (towbarless) fleet, which connect with the nose wheel of aircraft and have capacity to pull up to 600 tonnes.

Sir Henry was told that the ultimate destinations for these orders included Vietnam, Egypt, China, Korea, the UAE and an eight machine order for the Italian airline, Alitalia.

Douglas Equipment was presented with the Queen's Award for International Trade in recognition of substantial growth in overseas earnings and outstanding commercial success. Major overseas markets for Douglas include Europe, Scandinavia, North America, Middle East, North Africa, Russia, Asia, China, Far East and Australasia.

These markets are accessed by direct sales activity, a network of overseas agents, and through military attaches at embassy level.

Presenting the Queen's Awards Sir Henry Elwes said: "Once again the ingenuity and commitment of the Gloucestershire workforce has been demonstrated by Douglas Equipment, whose longstanding success is clearly evident."

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

House prices may not rise for a decade, experts warn

By Sean O'Grady, Economics Editor, The Independent

Decades of stagnant or falling house prices have been predicted by one of the nation's leading accountancy firms, as estate agents and mortgage lenders also warn that the next year will see a marked weakening in the property market.

PricewaterhouseCoopers says house prices are "still likely to be below 2007 levels in 2015 in real terms" – with a risk that almost a fifth of property will have lost real terms value by that time. It adds: "Even in 2020, after five years of relatively steady growth, there is a 50 per cent chance that real house prices in 2020 could be below 2007 levels."

Sluggish growth in households' disposable income thanks to tax hikes and modest pay growth, gradually rising interest rates and the weak economic environment are blamed for keeping real-terms prices (that is allowing for inflation) depressed. PWC says that even if house prices in 2010 are on average 5 per cent higher in cash terms than last year, this still implies "fairly flat house prices" in the second half of this year given earlier increases, and little movement in real terms.

Falling property values are, although rare, not unprecedented: house prices last declined in real terms in the early 1990s and the mid-1970s. It suggests that much of the impact of the trebling in house prices between 1997 and 2007 will effectively be reversed. It carries serious implications for homeowners, buy-to-let investors and speculators who intend to treat their real estate as a pension plan. Levels of negative equity – where the value of the mortgage exceeds the property's worth – are likely to rise sharply.

John Hawksworth, head of macroeconomics at PricewaterhouseCoopers commented: "Although the average UK house price overvaluation of around 25 per cent in mid-2007 is now down to around 5 to 10 per cent despite the market rally since March 2009, our analysis suggests that house prices remain vulnerable to setbacks.

"The possibility of a renewed fall in house prices over the next few years, particularly in real terms, cannot be ruled out as mortgage interest rates rise again. While it can be argued that house price changes have little effect on overall UK wealth, our econometric analysis suggests that an unanticipated future fall in house prices could have a significant impact in dampening the speed of the recovery in consumer spending in the medium term."

The dramatic predictions come as the Council of Mortgage Lenders (CML) reported an increase in mortgage lending – up 2 per cent in May – but warned of worse to come. The CML said: "With the challenging economic backdrop, government spending cuts and forthcoming tax increases the positive trend is likely to tail off in the second half of this year. Monthly comparisons with a year earlier will probably be near zero or modestly negative over the coming month". About 42,000 home loans worth £6bn were advanced in May. The caution was echoed by the Royal Institution for Chartered Surveyors (Rics). In its latest survey, the Rics found demand for property fell since the latter part of 2008, while the net balance for new instructions rose to the highest level for three years, "impacting on sentiment for future price rises". Ten per cent more chartered surveyors reported a rise than a fall in house prices – down from 22 per cent in May. Part of the increase in supply is said to be due the abolition of Home Information Packs (Hips).

A Rics spokesman, Jeremy Leaf, said: "With supply of property beginning to outstrip demand there is a risk of some modest slippage in prices during the second half of the year."

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Nick Clegg 'told Brown to quit as PM' - Lord Mandelson

news.bbc.co.uk comments:

Liberal Democrat leader Nick Clegg told Gordon Brown he had to leave office as the price of any coalition deal with Labour, it has emerged.

The revelation, from former Business Secretary Lord Mandelson, comes in the Times' serialisation of his memoirs.

He says Mr Clegg told Mr Brown it was "not possible to secure the legitimacy of a coalition" unless he stood down as prime minister in "a dignified way".

The story has been confirmed by Mr Clegg's spokeswoman.

Lord Mandelson was with Mr Brown in the negotiations that took place in the days after the general election in May.

He describes a secret meeting at which the now deputy prime minister told the PM to his face he would have to go, if there was to be any hope of a Lib Dem-Labour coalition deal.

r Clegg is quoted as saying: "Please understand I have no personal animosity whatsoever... but it is not possible to secure the legitimacy of a coalition and win a referendum unless you move on in a dignified way."

Lord Mandelson says Mr Brown did not give a clear answer at the time, but soon afterwards left Downing Street to inform the Queen he was quitting.

A spokeswoman for the deputy PM told the BBC: "Nick Clegg did feel that given the general election result, it would be incomprehensible to the British people if Gordon Brown remained as prime minister and he did make that clear to him."

Lord Mandelson claims Mr Brown went as far as drawing up a proposed Lib-Lab cabinet featuring Mr Clegg, Vince Cable and Lord Ashdown.

But he says former prime minister Tony Blair also told his successor he could not be part of any coalition.

"Tony told him and me that the public would simply not accept Gordon remaining," he writes.

He adds that Mr Brown eventually accepted he would have to quit, but did not want it to look like he had been forced out.

Lord Mandelson quotes him as saying: "I have been humiliated enough."

'Egotistical factionalism'
Lord Mandelson's memoirs have already proved controversial.

Ahead of the publication of his book, The Third Man, the peer told the Times Mr Brown believed that the two of them, and Tony Blair, had "killed each other" with their internal feuding.

Lord Mandelson also claimed that allies of Mr Brown showed "unbridled contempt" for Mr Blair which was "very destructive".

Mr Brown's former aide, Charlie Whelan, hit back at the allegations, but Labour leadership hopeful Andy Burnham told the BBC on Sunday that infighting and plotting had damaged the party.

The former health secretary said he wanted to offer a "complete break" from "egotistical factionalism" at the top of Labour.

Elsewhere on Monday, Mr Clegg and Prime Minister David Cameron have given a show of unity by writing a joint newspaper article proclaiming their coalition is about shared principles of giving more power to people.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Usain Bolt snubs London meeting over tax laws

Triple Olympic champion Usain Bolt has announced he will not compete at August's Aviva London Grand Prix because of Britain's tax laws.
The 100m and 200m world record holder may not now compete in the UK again until the 2012 Olympics.
New regulations mean the 23-year-old Jamaican could lose more money than he would earn from competing at the Crystal Palace Diamond League event.
"I am definitely not going to run [in London]," Bolt told a news conference.
Crystal Palace organisers had hoped to stage a three-way showdown between Bolt and his sprint rivals Asafa Powell and Tyson Gay.
Athletes competing in the UK are liable for a 50% tax rate on their appearance fee as well as a proportion of their total worldwide earnings - which for Bolt, who earns millions from endorsements, could be hugely costly.
HM Revenue & Customs won a case in 2006 brought by tennis star Andre Agassi. It successfully argued that as well as the prize money he accrued, a proportion of Agassi's worldwide sponsorship income was also earned during his time in the UK and was therefore taxable.
HMRC bases its tax charge on the number of UK events athletes compete in. For example, if Bolt were to take part in 10 meetings worldwide, with one in the UK, the HMRC could tax him on one-10th of his worldwide earnings.
The UK's tax laws have proved a handicap to the country's chances of hosting events. Uefa admitted in 2008 that Wembley missed out on the 2010 Champions League final for that very reason.
The Government has since agreed to waive the rule so London can host the 2011 final, and competitors in the 2012 Olympics are also exempt.
Golfer Sergio Garcia has admitted in the past that he limits his appearances in the UK because of tax laws.

This does seem crazy given the lost potential revenue not just from the athletes but from all the other revenue stream from those that could benefit!

What's your view?

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David Miliband says public lost trust in Brown's Labour

vid Miliband has criticised Gordon Brown's record in office, saying Labour's failings worsened under him.
Mr Miliband said the former Prime Minister had failed to demonstrate the "moral seriousness" he had promised.
The shadow Foreign Secretary said that by the time of the election in May Labour had lost the people's trust.
Mr Miliband, who is running to succeed Mr Brown as party leader, was giving a lecture in memory of Labour founder Keir Hardie in south Wales.
Mr Miliband told the audience in Mountain Ash, Cynon Valley, that he had completely agreed with Mr Brown when he took over from Tony Blair.
Pledges failed to materialise
He said: "I supported and voted for him. I agreed that we needed greater moral seriousness and less indifference to the excesses of a celebrity-drenched culture.
"I agreed with him when he said that we needed greater coherence as a government, particularly in relation to child poverty and equality.
"I agreed with him on the importance of party reform and a meaningful internationalism that would be part of a unified government strategy.
"I agreed that we needed a civic morality to champion civility when confronting a widespread indifference to others.
"But it didn't happen."

en he was foreign secretary to the then prime minister, although many observers suspected he harboured leadership ambitions.
In his speech he said Labour's problems had got worse after Mr Brown became leader.
By the time of May's general election Labour had "lost the trust of the people - and in a democracy that's a very big problem," Mr Miliband said.
"It was not just more of the same. Far from correcting them, failings - tactics, spin, high-handedness - intensified, and we lost many of our strengths - optimism born of clear strategy, bold plans for change and reform, a compelling articulation of aspiration and hope.
"We did not succeed in renewing ourselves in office - and the roots of that failure were deep not recent, about procedure and openness, or lack of it, as much as policy," he added.

Eh tu Brute?

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Nick Clegg outlines plans for electoral reform

Deputy PM Nick Clegg has unveiled plans to have fewer MPs and hold a referendum on the voting system before the next election.

In a statement which included plans for fixed-term parliaments, he said UK democracy was "fractured", with some votes counting more than others.

He also changed the number of MPs required to vote to dissolve Parliament from 55% to 66%, after heavy criticism.

Labour attacked boundary changes as "gerrymandering".

'Uniquely placed'
In a wide-ranging statement, Mr Clegg confirmed the government planned to introduce legislation for five-year fixed term parliaments and to hold a referendum next May on changing the Westminster voting system from first-past-the-post to the Alternative Vote (AV), where candidates are ranked in order of preference.

If plans get through Parliament, it would mean the next general election would be held on 7 May 2015 and the number of MPs would be reduced by 50 to 600.

The Boundary Commission would be asked to redraw the constituency map, so each has roughly the same number of voters, by the end of 2013 - allowing new constituencies to be used in the 2015 general election.

New constituencies would be set within 5% of a target quota of registered voters - apart from in Orkney and Shetland and the Western Isles which were "uniquely placed given their locations" - something welcomed by the Scottish National Party.

Mr Clegg told MPs: "Together, these proposals help correct the deep unfairness in the way we hold elections in this country.

"Under the current set-up, votes count more in some parts of the country than others, and millions feel that their votes don't count at all. Elections are won and lost in a small minority of seats.

"We have a fractured democracy, where some people's votes count and other people's votes don't count."

Boundary changes
The proposal to "equalise" constituencies was in the Conservative manifesto - while the Lib Dems are committed to changing the voting system.

The coalition deal between the two parties saw an agreement for a referendum on changing the voting system to AV, but Tory MPs will be able to campaign against a change.

But Labour, which had also planned a referendum on switching to AV, attacked plans to link the referendum with proposed boundary changes and reducing the number of MPs, something Mr Clegg said would save £12m a year.

hadow justice secretary Jack Straw said he backed a referendum on AV but added: "What we are not going to allow is for that support to be used as some kind of cover for outrageously partisan proposals in the same Bill to gerrymander the boundaries of this House of Commons by arbitrarily changing the rules for settling boundaries and by an equally arbitrary cut in the number of MPs."

He argued there was a "huge problem" of 3.5 million people who were eligible to vote but not on the electoral register - to which Mr Clegg hit back that Labour had done nothing about it for 13 years.

Other Labour MPs also stood up to complain that plans to change the constituency boundaries amounted to "gerrymandering".

'Synthetic fury'
But Mr Clegg accused them of "synthetic fury" on the issue, adding: "Members on all sides will see the proposal to cap the number of MPs at 600 is a sensible one."

Tory MPs were also annoyed at the prospect of a referendum on AV being held on the same day as elections in Scotland, Wales and Northern Ireland, which they argued would "skew" the result because turnout would differ across the UK. Plaid Cymru, the DUP and SNP have also complained about the date.

Campaign group Unlock Democracy welcomed the plans for a referendum on AV and for fixed-term parliaments. Spokeswoman Alexandra Runswick said: "These new proposals are stronger than those initially announced and far more likely to stand the test of time."

Mr Clegg also announced he was changing plans on giving MPs the power to dissolve Parliament before the fixed term is expired, following heavy criticism by Labour and some Tory MPs.

The power is linked to the coalition government's plans to introduce five-year fixed term parliaments, under which the prime minister would lose the power to dissolve parliament at a time of his or her choosing.

The government had said the threshold for dissolving Parliament would be 55% - high enough to stop either of the governing parties triggering an election without the other.

But both parties together have just over 56% of MPs and would still have been able to whip their MPs to trigger a dissolution.

Mr Clegg said they had "listened carefully" to MPs' concerns and had raised the threshold to two thirds, or 66% - the threshold used in the Scottish Parliament - which he said would make it impossible for any government to "force a dissolution for its own purposes".

And he stressed that the existing threshold for a no-confidence vote would remain as a simple majority of 50% plus one.

If a government lost a confidence vote, and no new government could be formed within 14 days, Parliament would automatically dissolve and a general election would be called, he said - insisting the changes would "strengthen parliament's power over the executive".

For Labour, Mr Straw said it was "the first major U-turn of this government and in less than two months".

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Government spends thousands on iPhone apps

Posted on news.bbc.co.uk

I didn't realise the government had so many websites; 820! I thought this report was so funny I had to post it.

BBC News has learnt that the Government has spent tens of thousands of pounds developing iPhone applications.

A Freedom of Information (FOI) request revealed that development costs ranged from £10,000 - £40,000.

These included a travel advice app from the Foreign Office and a jobseekers' tool.

But the Home Office declined the FOI request for information on its iPhone apps, saying security concerns "prevent us from supplying information".

The information comes just a few weeks after the government announced it was to conduct a review of all 820 of its websites.

A report by the Central Office of Information has revealed that the government spent £94m on website development and running costs and £32m on web staff in 2009 - 2010.

The most expensive application was a proposed Driver and Vehicle Licensing Agency (DVLA) app that provides "a masterclass for changing your wheel".

Documents seen by the BBC reveal that the DVLA Motoring Masterclass app would cost £40,000 and would also work out fuel mileage, act as a hazard light and track RAC patrols.

A spokesman for the DVLA told BBC News:

"We want to make it as easy as possible for motorists to renew their car tax, tell us about a change of address or update their driving licence, meaning they stay safe and legal to drive.

"This would also bring benefits for DVLA, for example by reducing the number of reminders that need to be sent out.

"We considered how an application could help with this but no final decisions have been taken and the app, for now, is still in development," he added.

It is not known how much of the total £40,000 budget has been spent or how far the app is from completion. At present, the spokesman said, further development is "on hold".

Underemployed
By the end of May there were over 53,000 downloads of the Jobcentre Plus app, although critics have asked why someone who can afford both an iPhone and the expensive running costs would need a Jobcentre Plus app.

There are also reports that it will not work with Apple's new iOS4, which Mark Wallace, campaign director for the Tax Payers' Alliance, found a little ironic.

"It seems many Government bodies have given in to the temptation to spend money on fashionable gimmicks at a time when they are meant to be cutting back on self-indulgent wastes of money", he told BBC News.

"It is ridiculous not only that they are commissioning these apps but that some of them are supposedly secret on grounds of national security.

"Someone who is faced with losing their home because of high tax bills, or whose life is being ruined by crime isn't going to get any reassurance from knowing there's an app for that," he added

However, a number of government departments said they had no plans to develop iPhone applications, including the Department for Culture. Media and Sport, HM Treasury, Northern Ireland Office, Scotland Office, Government Equalities Office, Ministry of Justice, the Cabinet Office and the Department for International Development.

A statement by the Cabinet Office to BBC News said: " The government recently announced a freeze on all marketing and advertising spend for this year and this includes iPhone applications.

"Future spend on iPhone development will be subject to strict controls: only essential activity, approved by the Efficiency and Reform Group, which is chaired by the Minister for the Cabinet Office and the Chief Secretary to the Treasury, will be allowed".
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Ministers Are Told to Plan for 40% Spending Cuts

Reported on Bloomburg Businessweek By Eddie Buckle.

July 5 (Bloomberg) -- U.K. government departments have been told to plan for spending cuts of as much as 40 percent as Chancellor of the Exchequer George Osborne seeks to narrow a record budget deficit.

The Treasury has ordered most ministers to draw up scenarios for spending reductions of both 25 percent, the average figure specified by Osborne in last month’s budget, and 40 percent over four years, Transport Secretary Philip Hammond said on BBC 1 television’s “Andrew Marr Show” yesterday.

Prime Minister David Cameron’s coalition of Conservatives and Liberal Democrats is proposing expenditure cuts and tax increases totaling 113 billion pounds ($172 billion) to slash a deficit of 11 percent of economic output. Osborne is due to set budgets for each department in a spending review in October once ministers have made their own proposals.

“What we’re not going to do is slice 25 percent off every department,” Hammond said. While no department will have to reduce spending by the full 40 percent, “some departments may see cuts a bit higher than 25 percent,” he said.

Education Secretary Michael Gove will today announce a reduction of as much as 3.5 million pounds in the schools budget, the Guardian newspaper reported. That will mean freezing plans to rebuild about 700 schools, the newspaper said.

Education, Defense

Under the Treasury plans, Gove and Defense Secretary Liam Fox have both been asked to prepare proposals for budget cuts of 10 percent and 20 percent. The only departments exempted are health and international development.

“We are determined to tackle the record budget deficit in order to keep rates lower for longer, protect jobs, and maintain the quality of essential public services,” the Treasury said in an e-mailed statement. “These planning assumptions are not final settlements.”

The opposition Labour Party’s home-affairs spokesman, Alan Johnson, told the BBC that the idea such large-scale spending cuts could be made without harming services such as policing was “fantasy land.”

Ministers agreed to draw up the plans when the Cabinet met in Bradford, northern England, last week, the Treasury said.

Business Secretary Vince Cable’s department will have to set out how it can reduce its spending to as little as 11.5 billion pounds by 2015 from 19.2 billion pounds in the current fiscal year. Gove’s officials will need to draw up a blueprint to cut the education budget to 40.7 billion pounds from 50.9 billion pounds.

Job Losses

The Institute for Fiscal Studies, a London-based independent research group, said the cuts to public spending would be the deepest since World War II and some departments would face reductions of a third. There will be 610,000 jobs cut in the public sector over the next five years as the spending squeeze is implemented, the government’s new Office for Budget Responsibility said last week.

Ministers will meet civil-service union officials today to discuss possible changes to the compensation terms for those who lose their jobs, the BBC reported.

“They want to bring redundancy arrangements into line with the private sector but not do anything about pay,” Mark Serwotka, the general secretary of the Public and Commercial Services union, told BBC Radio 4 this morning. “There’s no argument for any cuts in public services at all at the moment.”

Hammond said that as far as his own department was concerned, “we will not have so much money to spend” on road and rail projects. “We will have to look at our priorities,” he said.

“It is crystal clear that modernization and upgrade works will be axed,” Bob Crow, the general secretary of the Rail, Maritime and Transport union, said in an e-mailed statement. “With cuts of up to 40 percent in the transport budget we are looking at thousands of job losses amongst the staff who operate and maintain services with dire consequences for passenger safety as corners are cut.”


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PM and goal-line technology firms dispute Fifa claims

By Daniel Emery
Technology reporter, BBC News

The prime minister has backed calls for video and goal-line technology (GLT) to be used in football matches.

David Cameron's call echoes that made by makers of ball-tracking systems, along with a number of managers.

"I'm a keen follower of cricket and tennis and I think the third umpire has been a great thing... that's something football could now have a look at," said Mr Cameron.

Fifa has consistently refused to entertain the idea of using GLT.

Manufacturers of ball-tracking systems say England's disallowed World Cup goal just emphasised an ongoing problem with the sport.

Hawk-Eye and Cairos, which make rival GLT systems, say Fifa needs to rethink its current position.

"We are using technology that is 100% accurate and adds fairness to the game," Christian Holzer of Cairos told BBC News.

"Technology should not enter into the game. It was a clear statement made by the majority of the IFAB (International Football Association Board)," said Fifa general secretary Jerome Valcke in March.

But not everyone agrees. There have been calls from players, managers and coaches for a number of years, prompted by a series of controversial refereeing decisions.

British based Hawk-Eye, which uses a camera detection system, and German firm Cairos, which utilises chip technology inside the ball, both say that new technology would assist referees and make their job easier.

"The decision was unfair to the English team. Had it gone 2-2 at half-time, it would have been a very different match," said Mr Holzer.

The issue of GLT has dogged Fifa for more than a decade.

The rules of football are determined by IFAB, which consists of eight voting members. England, Scotland, Wales and Northern Ireland each have one vote, with "the rest of the world" (ie the Fifa executive) holding the remaining four.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Landlords warned not to disguise property profits

Buy-to-let landlords have been warned not to disguise their profits from the taxman after selling their properties.

Accountancy firm UHY Hacker Young says tax officials are increasingly trawling through Land Registry records to check the accuracy of tax returns.

If a property is not a seller's main residence then capital gains tax (CGT) may be payable on the profit.

Hacker Young said special investigators were raising £10,800 for each special enquiry, up by 79% in two years.

The amount of money raised from each investigation rose despite the fact that the number of special enquires actually fell - down by 31% from 9,900 in 2007-08 to 6,800 in 2009-10.

"This is a massive increase in capital gains tax from enquiry work, particularly as the [total] amount of CGT payable has collapsed as asset values slumped during the recession," said Roy Maugham, tax partner at UHY Hacker Young.

"It shows just how aggressive HM Revenue & Customs [HMRC] is becoming in tackling tax evasion in this area."

Bigger effort
The increased cash being found by the tax authorities was revealed by Freedom of Information Act requests lodged with HMRC by Hacker Young.

They reveal that in 2007-08 the special investigation teams of the Revenue raised £60m in extra CGT while two years later they raised £74m - an increase of 23%.

The work was conducted by teams of special investigators set up in the past three years in the regional offices of HMRC.

Their establishment has come alongside the Revenue's widely publicised campaign to uncover people who are hiding taxable income in offshore bank accounts.

"We risk assess returns using a variety of methods, as well as cross-matching database information, both our own and external," said an HMRC spokesman.

"Enquiries into the disposal of second homes is just one area we look at," he added.

Buy-to-let
CGT is payable on the sale of most assets, not just property.

But Roy Maugham explained that in his firm's experience, a few buy-to-let landlords seemed prone to flouting the rules.

"It is something we are seeing, especially where they do not use an accountant," he said.

"There are quite a number of people who won't have reported it [the sale of their property] in the first place.

"They think they can get away with it," he added.

About 130,000 people paid capital gains tax in 2008-09.

The rules
The profit made on selling a property is liable to CGT unless it is someone's main home at the time of the sale, or was their main home at any time in the three years before.

Sellers also have an annual tax-free allowance of £10,100 to set against any CGT bill.

Even if there is still CGT to pay, a landlord can reduce the bill by offsetting:

the cost of buying the premises, such as stamp duty, legal and surveyor's fees
the cost of selling the property, such as legal or estate agent's fees
the cost of any enhancements at any time in the period of ownership, such as a loft extension or garage or conservatory.
Roy Maugham said it appeared that HMRC investigators were increasingly challenging "enhancement" claims on tax forms because they were really for things like painting and decorating.

Such items do not qualify for tax exemption as they are not capital expenditures.

"The landlords sometimes feel they have had the costs but can't prove it, because they haven't kept the necessary paperwork," Maugham said.

"Many HMRC investigations lead to disagreements over whether some costs are repair costs or enhancement to the property.

"HMRC often challenges the records for expenditure going back 20 years or more," he warned.

Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk

Ministers ask public sector staff to suggest savings

Voice your opinion

Six million nurses, police officers and other public sector workers have been asked to suggest options for cuts as Budget debate has intensified.

David Cameron and Nick Clegg contacted staff to ask them to find "fair" cuts, a move condemned by unions.

Meanwhile senior Lib Dem Simon Hughes warned coalition colleagues against making cuts to benefits for pensioners.

But he backed away from earlier suggestions that he might seek to change the Budget to make it "fairer".

Mr Hughes, the party's deputy leader, said there would be "trouble" if the government sought to "unpick" aspects of the coalition agreement between the Conservatives and Lib Dems - such as guarantees to protect the winter fuel allowance.

And Labour leadership contender Ed Balls told the BBC's Question Time programme, to be broadcast later on Thursday, this was the "most unpleasant Budget for a very long time".

Labour say proposed 25% average cuts in departmental budgets, which will be determined in an spending review in October, are reckless and will hurt vital services.

As part of the spending review process, ministers are asking public sector workers to suggest services they believe are non-essential, how services can be better targeted or provided more effectively by private and voluntary groups.

'Serious' ideas
Deputy PM Nick Clegg said the coalition government was "prepared to look at any innovative idea, however bold, however radical, however off the wall it might seem to people" if it could save money in a way that was fair and protected "frontline services".

He said that all "serious" ideas would be passed on to officials for consideration and that workers would be invited to discuss their suggestions face-to-face with civil servants.

In their letter, Mr Cameron and Mr Clegg say they want workers "to help us find those savings so we can cut public spending in a way which is fair and responsible".

But Mr Kenny, general secretary of the GMB union, said: "Cameron and Clegg have a damned cheek in asking public sector workers to co-operate in sacking thousands of them. It is an utter outrage."

He said unions were "perfectly capable of speaking up on their behalf" and would be resisting "savage cuts in public services".

'Big differences'
Meanwhile research by the respected economic think tank the Institute for Fiscal Studies which said "progressive" reforms in the Budget had largely been announced by the previous Labour government and the new tax and benefit changes were "regressive overall".

But Mr Clegg said that excluded measures that were being introduced. He told BBC Radio 4's Today programme: "The top earners make a much bigger contribution than anybody else."

He said "very exceptional measures" were being taken to instil "fairness" into the Budget - pointing to the raising of the income tax personal allowance, which is estimated to take 800,000 low paid people out of income tax altogether, and a £150 increase in child tax credits for 1m low income families.

"These are big measurable differences which will help people who are on low pay."

Critics have questioned whether cuts of the scale outlined in the Budget are achievable.

Chancellor George Osborne is already coming under pressure to find more savings from the welfare budget, in addition to the £11bn earmarked in his Budget statement, to minimise the impact on budgets for the police and schools.

Mr Clegg said the number of people on disability benefit had tripled and added: "I think there are some areas of welfare where it is totally right to ask ourselves whether we can spend money more effectively to help people most in need."

Fairness agenda
Amid talk of Lib Dem dissent over the Budget, Simon Hughes - the most senior Lib Dem MP who is not a member of the government - said he backed the Budget but suggested he might seek to table amendments to make it "fairer".

Speaking in Parliament, he warned ministers against any further cuts which would breach the coalition agreement between the two parties.

"There cannot be any unpicking of items in that deal," he said. "Otherwise the whole thing risks falling apart.

Although there was "no suggestion" this was the case, he added: "The deal has to be that we go down the committed road we have signed up to... And if there is any suggestion that it changes there clearly would be trouble."

Mr Hughes later issued a "clarifying" statement, saying that he had "no plans" to try and amend the Budget while stressing the public spending review must be "driven by fairness".

'Economic madness'
The BBC's Deputy Political Editor James Landale said Mr Hughes' comments were a warning that although Lib Dem MPs were on board at the moment, their support could not be taken for granted.

Shadow Business Secretary Vince Cable said the coalition would "stick together" in the face of criticism over the Budget. He said the cuts were "tough and unpleasant" but defended them.

"We have a economic emergency," he told the BBC's Question Time. "It is very, very serious. It has had a massive impact on the public finances which have to be sorted out."

Labour say the cuts are based on an ideological desire to reduce the scope of the state, rather than sound economic reasons, and have challenged uneasy Lib Dem MPs to vote against it.

"Cutting spending now, and this deeply, while raising taxes will lead to more unemployment, slower growth and higher borrowing," Ed Balls said.

"It is back to the 1930s, back to Thatcherism for the 1980s and I can't understand why progressive Liberal Democrats can go along with this economic and social madness."

We asked those of you working in the public sector for suggestions on how to cut costs. Please find a selection of your comments below.

Voice your opinion

I am a midwife working on the front line in clinical practice and one of the biggest costs is the rise in recent years of caesarean sections and the implications of this. There are the costs of extra time and staff and longer stays in hospital. As for the structure of the NHS itself, it is extremely heavy with hierarchical management and has far too many layers in most areas. I don't wish anyone to lose their jobs especially in the economic crisis that continues to face us all, but the general structure of the NHS does need reviewing. Whilst I may not agree with all that the government is suggesting, I do respect them for sticking to their guns and doing what is extremely difficult and unpopular. All working within the NHS are equally responsible in reducing costs and wastage where possible.

Jackie Reszko, Deeping St Nicholas

So let's get this right - they're cutting my pay for two years, taking away a pension I have paid 11% of my wages into for 26 years, cutting 25% of my employers' budget and now they want me to tell them which colleagues I recommend they sack?!

Mike , Nottingham

I work in the NHS and the amount of waste that I see is criminal. There are also plenty of perfectly decent people working here who, for all they do, are frankly a waste of taxpayers' money. There is too much pointless form filling. Trying to get anything done is like wading through treacle. This has mostly come about under the last government. If the NHS was run properly, it could probably have its budget slashed without affecting frontline services. I'm pretty sure the organisation could manage perfectly well without me!

Andrew, Lancashire

It is very, very wrong in my opinion for the government to ask public sector workers where they think cuts should happen. Not only does this reek of deferral of government responsibility - as it is they who should decide where the cuts will occur since they have been charged by the people of the country to do so - but it is like asking someone what they would like to have amputated, an arm or a leg? Very, very wrong.

Roy , UK

I have worked across a number of public sector bodies as a senior interim manager and it strikes me that there is incredible amount of money wasted operating the procurement process. Quite often the internal cost of operating the procurement process is far higher than the cost of the items procured. Items and services that are procured often cost more than buying off the shelf and also take significantly longer to procure wasting both time and money. Often the end product that is procured doesn't meet the actual business requirement of the organisation ending up with the procured item/service not being used. I can list examples of all of these elements that run into many millions of pounds, that I have seen within multiple public sector organisations.

Allan Hinchliffe, Chelmsford

As an NHS employee, I would say that communication needs to be improved first and foremost, closely followed by greater scrutiny of the decisions made about contracting out third parties for services. We see departments and the "higher ups" making decisions independently, which don't always knit together very well and lead to problems. The wrong equipment is bought, or it's fitted in the wrong place, or an IT department is moved into a refurbished office before the network points are set up and lose a day of productivity. More care needs to be taken about the prices paid to contractors and the backhanders and nepotism that is no doubt involved. These decisions should be audited with sound justification for the decisions made. I'd like to see more stuff done in-house - the NHS is big enough after all.

Laura , Birmingham

I am an ICT teacher in a community secondary school. I find it staggering how much money is wasted on LEA Advisors - basically former teachers who now work for the LEA and go into schools to advise teachers and organise local meetings. They get paid a hell of a lot and also get the same holidays as teachers. Considering what I get paid and the amount of money spent on my training, surely I can now be expected to be able to decide what to teach and how to teach it without these advisors? Every single local authority has these advisors and there are quite a few of them, including some that specialise just in Assessment for Learning or Behaviour. They spend their days popping into schools offering their advice and if no one wants it they basically sit about for a few hours drinking tea and having a chat. The subject advisors get to spend their time creating resources and teaching materials, reading about new initiatives and preparing themselves for a return to teaching, which they are all after doing and hope for a position higher than they were in before. It's an absolute joke. If we have them, why on earth do we now have Advanced Skills teachers and Excellent Teachers?

Vikki Dodd, Chorley, Lancashire

I work in a local doctor's surgery and the amount of drugs that are requested but not needed by people who do not pay for these items, usually on a repeat prescription, is unbelievable. I know some elderly people, instead of checking what they need, just tick all the boxes and end up stockpiling these drugs. It goes on all over the country, wasting thousands of pounds. I would suggest a nominal amount per item for everyone right across the board. This would mean low paid and part time workers, who actually pay into the system, do not have to pay so much and it would be fairer for all.

Brenda Jameson, Sunderland, Tyne and Wear

I work for a company that supplies the government. The amount of waste on stupid things like food, drinks, entertaining, travel and hotels is scandalous. But if they all made an effort to treat government resources as they do their own money, looking for the best travel deal for example, they would save billions overnight. And what about sourcing hospital food locally? In Nottingham, it saved the NHS Trust £6m a year - think of the savings if that were replicated nationally?

Anon, UK

As a low paid council worker who has already taken an 8.5% pay cut this year due to "job evaluation", placing my salary on just £14,500 PA, my view is that councils are top heavy with management, all earning far more than they are worth. Councils should be looking at cutting back on the number of management jobs instead of frontline staff, many of whom like myself work hard and are on very low salaries.

Graham , Ayrshire

I work in an office for the NHS and we have several people undertaking a professional qualification that is costing £10,000+ per person. Whilst the person is attending college and not in the office, they are paid. Other staff at the same level do not get these benefits as it is not offered to everyone, and now those staff who have not been given the opportunity are being redeployed. If you ask me, people shouldn't be paid for the days they are not in work - why should the rest of us suffer so they can get ahead?

Anon, Merseyside

As a police officer, I have made financial sacrifices to pay 11% into my pension, increased the size of my mortgage and put in place all manner of savings plans to ensure that, on retirement, I can clear my mortgage and assist both my children with further education. This has been financial prudence, yet the government now want me to sacrifice that for a worldwide banking crisis that happened due to the USA sub-prime mortgage fiasco. It beggars belief and is simply unfair.

Tony Abigail, Norwich

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