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Morale booster poses real risk



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IN POLITICAL terms, Chancellor Alistair Darling's £2.7 billion tax cut yesterday may have succeeded in lifting battered Labour morale, disarming Frank Field and shooting the Tory fox – and all this ahead of a critical by-election being held next week.
To help quell the back-bench revolt over the abolition of the 10p rate, he said he would raise personal tax allowances by £600. It means anyone earning up to £40,835 will gain £120 this year.

Some 22 million people on low and middle incomes will...



The full article contains 990 words and appears in The Scotsman newspaper.
Page 1 of 1

  • Last Updated: 13 May 2008 8:50 PM
  • Source: The Scotsman
  • Location: Edinburgh
 
1

Jwil,

14/05/2008 14:34:43
I am not sure why you cam say it has "disarmed" Frank Field. It was Frank who disarmed the Labour party, big time. With 1 million low paid people still being relieved of some of their income it is not an ideal solution. I think it would have been within Frank Field's right to continue his rebellion on that basis, and he seems to have done the Labour Party a favour by backing off.

Will it do Labour any good in Crewe and Nantwich? I doubt it. They have burned their boats.
2

Oldcynic,

Edinburgh 14/05/2008 15:06:05
You say that "Those on higher earnings will have nothing to cheer." They, of course, have already done their cheering at the beginning of April when they gained when the 10% rate was removed and the 22% band reduced to 20%. This recent U-turn was to benefit those who suffered under that change and was nothing to do with giving cheer to higher earners.
You also sate that "middle-income households will be discomfited by the lower threshold for higher rate tax".

I think you will find if you take the trouble to do the calculations, you will find that anyone who is moved into the higher 40% tax band by these recent changes will not in fact be paying a penny more total tax.

A bit more fact please; a bit less opinion
3

Samoyed,

Costa del Menie 14/05/2008 18:16:16
Newspaper firm Johnston Press has been forced to raise £212m through a deeply discounted rights issue to prevent it breaching debt covenants following a downturn in advertising.

Malaysian investment firm Usaha Tegas will also take a 20 per cent stake in the Edinburgh-based company, through a share subscription and the acquisition of a further 10 per cent of Johnston Press from the group's family trusts.

The news sent shares in the group, which owns The Scotsman down 10.9 per cent to 121p by 07.49am.

On a like-for-like basis, advertising revenues were down 7.1 per cent for the 17 weeks to April 26 on last year, due to declines in advertising on property, employment and motoring.

This compared to a decline of 4.2 per cent for the first 8 weeks of the year.

The group said it planned to raise the money through the issue of approximately £320m new ordinary shares at a price of 53 pence per share, representing a 61 per cent discount to the closing price on Tuesday.

"Given the recent reduction in consumer confidence, and deteriorating economic forecasts, the board believes that the prudent action is to raise equity capital in order to reduce debt," the group said.

"Given the more challenging environment, the group is working hard on managing its cost base and, providing there is no further deterioration in the advertising environment, expects to deliver a satisfactory result for 2008 in very difficult circumstances."

Chief Financial Officer Stuart Paterson told reporters on a conference call that the group had considered several options including selling assets and were forced to act due to the volatility in the advertising markets.

"We reached the view that the level of debt in the business was probably inappropriate but it is important to state that we weren't expecting to breach our covenants at the end of June at all," he said.

"But with the outlook as it is ... we decided to enter a fundraising period."

Analysts were concerned by the n
4

Samoyed,

Costa del Menie 14/05/2008 18:17:07


Analysts were concerned by the news.

"A deep discounted rights issue at a 61 per cent below the current market valuation says a lot about the group's financial position and the market's tolerance for balance sheet building as opposed to business expansion fund raising exercises," Landsbanki analyst Andrew Walsh said in a note.

"The stress in the group's current capital structure and deterioration of advertising revenues are beyond our and the market's expectations.

"We expect to confirm a profits downgrade after the analysts' meeting today (5 per cent plus). We suspend our Buy rating for now with the blended price suggesting a post rights price of 90-95 pence."

Ralph Marshall of Usaha Tegas said, with its links globally in telecommunications and media, the company planned to be a supportive shareholder and make contributions on a continuing basis where appropriate.

He said Usaha Tegas believed in the potential of Johnston Press and said the investment would help the group develop new media opportunities.

Johnston Press, which is one of the largest local and regional newspaper publishers in the UK, had net debt of £700m. The rights issue has been fully underwritten by Deutsche Bank as sole bookrunner.


 

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