- Insights
TBA’s latest news – 19th of February 2024
Train-leasing firms treble their yearly profits
Official figures show that the profits of private companies contracting the British railways have tripled in one year, with over £400 million paid out in dividends during 2022-23.
According to data from the Office of Rail and Road (ORR),train-leasing companies paid a total of £409.7 million in dividends to shareholders, with a profit margin rising to 41.6% from 2022 to 2023.
Other companies involved in the railway have in the meantime been instructed to implement large-scale layoffs, whilst also freezing wages. Taxpayer subsidies also remain at double what they were before the pandemic.
Trade unions have strongly demanded a windfall tax on huge dividends, and describe train financing arrangements as ‘extortion’, with no risk to leasing companies.
Financial analysis from the ORR shows that while the total leasing costs paid by railway operators last year slightly decreased to £3.1 billion, they are still nearly 30% higher than five years ago. Meanwhile, overall employee costs in the railway industry remain unchanged.
Investigations of ‘tax dodgers’ halved
According to the latest data, the number of civil investigationsconducted by HMRC’s Fraud Investigation Department into offshore accounts, companies, and wealthy taxpayers has decreased by more than half over the past five years.
Last month, The Observer revealed that HMRC has not brought charges against any companies under legislation aimed at combating tax evasion. Some activists have warnedthat HMRC’s failure to effectively utilise its criminal enforcement powers could weaken its ability to curb tax evasion.
According to the latest data obtained by the Bureau of Investigative Journalism, HMRC’s civil enforcement activities in fraud investigation services are also declining, along with a decrease in the use of criminal prosecution powers.
According to data provided by HMRC’s Fraud Investigation Department, the number of cases investigated has decreased from 1,417 in the 2018-19 tax year to 627 in the 2022-23 tax year.
HMRC states that their fraud investigation services focus on the highest value tax fraud cases, but these figures do not take into account overall compliance activities. It is claimed that during 2022-23, they conducted over 300,000 compliance ‘interventions’.
In recent years, HMRC has been facing scrutiny over offshore tax avoidance and evasion. According to data disclosed to the independent thinktank Tax Justice UK in September 2021, British taxpayers hold nearly £570 billion in assets in tax havens, including offshore funds.
New fixed-rate energy deal from British Gas offers 12% saving
British Gas has launched a new fixed-rate deal for natural gas and electricity, aiming to bring new options to the UK energy market, especially in the current plight.
This agreement offers a 12% discount compared to most existing price cap tariffs.
Over the past two winters, consumers often didn’t have to worry about finding the most cost-effective deal, as their suppliers typically offered standard tariffs with price cap protection.
However, in recent months, new charging schemes have emerged, mostly adopting fixed prices intended to lock customers in for at least a year.
British Gas’s new price pledge launched on May 25th is for a fixed 15-month period, offering a 12% discount compared tothe current price cap.
It then promises to be at least £1 per fuel cheaper than April’s price cap (based on typical usage). Customers will continue to pay the same fixed rate for the remainder of the contract until 1 May 2025.
On 1 January 2023, the price cap tariffs increased by 5%, reaching an average of £1,928 per year, the latest estimate suggests a 15% decrease in April this year. It is expected that capped bills will also decrease by 10% from July to September.
However, none of this is set in stone, and it depends on the trends in the spring and summer markets. Regulatory bodies set the energy price cap every three months, based on wholesale prices.
Citizen Advice objects to Sizewell C costs being paid with energy bill price hikes
Citizens Advice is urging ministers to take steps to protect consumers from the impact of rising household energy bills, which are intended to cover the costs of the proposed Sizewell C power station, as concerns mount over the escalating costs of nuclear projects.
The UK’s largest independent advice provider expressed concerns in a letter to the Department for Energy Security and Net Zero about the potential ‘value for money’ of the Suffolk project, and called for further clarification on its funding sources.
Estimates for the costs of the Sizewell C project vary greatly—from £20 billion to £44 billion—and efforts are currently underway to seek international investors to join the plans of the UK government and French electricity company.
Last month, the owners of the sister project to Sizewell C—EDF’s Hinkley Point C project in Somerset—stated that due to factors such as inflation, COVID-19, and Brexit, the project would be delayed until 2031, with costs potentially reaching £35 billion, or possibly £47.9 billion in the worst-case scenario. Last Friday, EDF announced that the project had already taken a €12.9 billion hit on them.
National Lottery operator urged to commit to increased donations
MPs are seeking assurances from the gambling regulatory body regarding the new National Lottery operator Allwynover concerns about its provision of a safer gambling environment, donations to charitable causes, and ownership structure.
The Gambling Commission announced in March 2022 that they had decided to grant Allwyn a lucrative 10-year operating license estimated to be worth up to £100 billion.
Six months later, a fierce three-way bidding war unfolded between media tycoon Richard Desmond and Camelot, the other license-holders since the weekly draws began in 1994.
A letter to the Gambling Commission has raised concerns from the All-Party Parliamentary Group (APPG) on gambling-related harm, calling for updates on regulatory demands for Allwyn to fulfil its commitments made during the bidding process. Throughout the prolonged bidding process, Allwyn pledged to double the funds raised compared to the previous licensee Camelot, from £17.9 billion to £38 billion.
Allwyn’s CEO, Robert Chvátal, later stated that the company ‘may get a headwind initially’ which could result in their initial growth targets falling short. However, Allwyn insists that they will still achieve the £38 billion target during the license period.
The APPG asks the regulatory body to explain ‘what action is being taken to ensure that returns to good causes are prioritised and increased under the new contract’.
