Retirement Age Change A Potential Pitfall For Employers 
With the announcement yesterday that 20 year-olds are three times more likely to reach 100 than their grandparents and that by 2066 there will be half a million people aged 100 or more, ministers and employment experts are warning that pension reform is vital.

Add in that the default retirement age will be abolished this Autumn and you have a potentially crippling bill for some employers who are not prepared for the changes.

An employment survey has found that, of the businesses currently offering death in service benefits or private health cover, some 57 per cent did not realise that the cost of providing these would probably soar for those employees aged over 65. And 54 per cent said they would no longer honour those staff benefits if costs rose, leaving staff reaching 65 having to accept potentially worse pay and conditions in order to stay in work.

And a report out earlier this week, written by Lord McFall of Alcluith, the former chairman of the Treasury select committee, said that millions of people face a “bleak old age” when they retire, due to a low level of savings and the “complex, costly and inefficient” pensions system.

Business experts have been so concerned about this that they have already urged the Government to delay the planned changes, warning that firms face “huge uncertainty” and a greater risk of unfair dismissal claims.

However, the law stands that, as of October 1st, requiring an employee to retire because of their age will potentially be both unfair dismissal and age discrimination. Employers can safeguard their position by maintaining a compulsory retirement age for all employees and by being ready to defend this as ‘objectively justified’ in an Employment Tribunal.

A number of other bodies, such as unions and the Chartered Institute of Personnel and Development (CIPD) welcomed the change however.

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Overhaul of Copyright Laws Will Help Private Business 
The Government announced plans yesterday to support economic growth by modernizing UK intellectual property (IP) laws. Recommendations to do so were made in May this year by Profesor Ian Hargreaves in his report entitled ‘Digital Opportunity: A review of intellectual property and growth’.

Business Secretary Vince Cable said: "The Government is focused on boosting growth and the Hargreaves review highlighted the potential to grow the UK economy. By creating a more open intellectual property system it will allow innovative businesses to develop new products and services which will be able to compete fairly in the UK's thriving markets for consumer equipment.”

"We are accepting the recommendations and will now set about reforming the UK's intellectual property systems. Opening up intellectual property laws can deliver real value to the UK economy as well as the creators and consumers,” he added.

Key points in the review include:

• Bringing copyright law into “the real world” by introducing limited private copying, such as copying CDs to a computer.
• Allowing research scientists to perform ‘text and data mining’. Currently people like medical researchers are hampered from working on data without the permission of copyright owners.
• Establishing licensing and clearance procedures for material with unknown copyright owners. This would open up a range of work currently unavailable for consumer or research purposes.

The CBI broadly welcomed the review where it would bring IP law in line with modern day realities, although it warns the Government against “action that will undermine genuine patent clusters”.

However, organizations such as the Coalition for a Digital Economy (Coadec), and the British Interactive Media Association (BIMA, believe that the Review represents a milestone for the UK digital economy, recognising that the nation’s intellectual property laws, and in particular copyright law, must adapt to change.

Jeff Lynn, Chairman of Coadec said: “... we look forward to working with the Government on the detail of each of the forthcoming proposals and consultations.

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UK Recovery Slower Than Expected 
In its latest forecast, published today, the National Institute of Economic and Social Research (NIESR) has warned that weaker economic growth and consumer spending will mean that public sector borrowing will shrink less than the Chancellor hopes.

Similarly to the International Monetary Fund’s (IMF) assessment this week, NIESR says that the UK economy will grow by just 1.3 per cent this year and by 2 per cent in 2012. It had predicted growth of 1.4 per cent in April but the figure for next year remains unchanged.

However, unlike some analysts, it is slightly more optimistic about inflation and predicts that this will fall from 4.2 per cent this year to 1.9 per cent in 2012.

Like the IMF, NIESR says that the biggest risks faced by the UK’s economic progress come from abroad, and the eurozone in particular, as “a disorderly default in Greece, or the need for debt restructuring in other euro area countries, cannot be ruled out”.

Unlike the IMF, which is broadly in favour of the Government’s plan for recovery, NIESR calls on the Chancellor to slow the pace of reform in order to give the economy a short-term boost. Measures the think-tank suggests include targeted income tax breaks for those on lower wages.

Some of its bleakest predictions centre on unemployment, calling the current rate a “permanent scar” on the UK economic landscape. If structural unemployment settles at 6.2 per cent, as it forecasts, then 300,000 more people would be permanently unemployed than before the crisis.

However, NIESR also predicts that unemployment will peak at just 8.3 per cent next year, which is lower than its April forecast of 8.7 per cent. This is much better than the 10 per cent experienced in the last two recessions.

Overall, NIESR’s prediction is that it will not be until 2013 that “the recovery takes hold”.


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SMEs To Access Equity Finance 
As of yesterday, two deregulatory amendments to the EU prospectus Directive have been brought into effect to help small businesses access equity finance more cheaply and effectively.

According to Mark Hoban MP, Financial Secretary to the Treasury, bringing these measures into force a year early is a demonstration of the Government’s commitment to help UK SMEs access the finance they need.

Small firms will now be able to raise equity finance up to €5m before a costly prospectus must be produced. This rate has been doubled and the number of investors allowed to be targeted has also gone up from 100 to 150.

Mr Hoban said: "I’m delighted to announce that the UK is taking the lead in Europe by introducing these deregulatory measures early, saving UK SMEs £12 million per year. Reducing the regulatory burdens faced by business is vital in making the UK the best place in Europe to start, finance and grow a company."

"In order to play their part in the wider economic recovery, small businesses have to be able to access the finance they need - that includes making it easier for such businesses to tap into capital markets,” he added.

The news has been welcomed by business owners and analysts alike. And John Walker, National Chairman of the Federation of Small Businesses, said:

"We welcome the fact that the Government is leading the way in Europe by making it easier for small business to access finance. More small firms should look at equity finance as an alternative route to accessing credit, and these simple changes will help firms who are looking to grow and invest."

"Extending the number of investors and increasing the prospectus value will help more small businesses access equity finance and show there are more options than just going to the bank for credit. What’s important is that small businesses are aware of the alternative routes to finance," he added.

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Head of HMRC Apologises For Poor Performance 
Chairman of Her Majesty’s Revenue & Customs (HMRC) Mike Clasper, apologized to taxpayers last week after the Treasury Select Committee uncovered a raft of problems with the service in 2010.

The apology came following the release of the ‘Administration and Effectiveness of HM Revenue & Customs’ report, which concluded that there was a “serious risk” that if communicating with HMRC became too time-consuming, difficult or expensive, “respect for the tax system and, with it, voluntary compliance, may be undermined”

MPs slammed HMRC’s performance and found a list of problems including bad management and demoralized staff. MPs also attacked HMRC for scrapping printed tax advice leaflets and putting all the information on-line.

Other problems highlighted in the report included unacceptable waiting times for replies to letters, over 50 per cent of telephone calls going unanswered and callers regularly being given incorrect information by inexperienced call centre staff.

The report said that “HMRC's delivery of services to the general public has fallen to unacceptable levels in several areas. There is considerable dissatisfaction among the public and tax professionals with the service provided by the department.”

The Committee also noted that the “flawed implementation” of the PAYE system had done “significant damage' to the public perception of HMRC and the general tax system.”

Amongst recommendations made to HMRC to improve its service are improving its telephone system, looking into an alternative to 0845 numbers and offering alternatives to on-line communication.

Mr Clasper admitted that HMRC had not been good enough in 2010 but added: “In 2011 we've been working very, very hard to improve things. We're handling the calls immediately much more frequently than we did in 2010 and as far as individual customers are concerned you know the post levels have dropped in half. That's not where we want to be but it's a lot better than where we were in 2010.”

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