Category: Press Releases

The press release issued by PWC on 20 July 2023.

Estimates from the Crime Survey for England and Wales (CSEW) for the year ending March 2023 showed that there were 3.5 million fraud offences. This was not a significant change compared with the pre-coronavirus pandemic year ending March 2020 (3.7 million offences), but represents a significant increase on pre pandemic levels.

Alex West, Director in PwC’s Restructuring and Forensics team, comments:

“Today’s data shows there were 3.5 million fraud offences for the year ending March 2023, highlighting that fraud continues to be a major societal challenge in the UK as it is elsewhere in the world. Behind the numbers are traumatised victims, individuals that have lost life changing sums of money and businesses struggling to recover from fraud losses.

“Fraud threats are constantly mutating and the nature of fraud 10 years ago is very different from that of today. The statistics show that fraudsters continue to be highly adept at exploiting human and business vulnerabilities. Fraudsters are increasingly using new technologies such as GenAI and deep fakes to scam victims and we all need to better understand fraud threats and improve our personal level of defence. Businesses need to be equally quick at spotting potential fraud vulnerabilities and in their use of technologies like AI to improve fraud prevention and detection. 

“Statistics continue to be driven by organised crime groups embracing fraud as a lucrative and relatively low risk form of crime. We expect the cost of living crisis to increase pressures on businesses and individuals, incentivising people to take risks, which is likely to lead to an increase in fraud in the coming years, a trend that already seems to be evident in money mule levels.

“Encouragingly, levels of focus on counter-fraud activity, across the public and private sector alike, are the highest we’ve ever seen. Public attention on fraud is driving many organisations to reevaluate their defences – something every organisation should do on a regular basis. The government’s National Fraud Strategy and other upcoming legal and regulatory changes have also brought new focus and resources to counter-fraud measures. We also see cross-sector collaboration increasing, which will be key to driving the whole-society response that will be needed to tackle fraud. While there is clearly a need for further activity to push down fraud rates, change is happening in the right direction.”

The press release issued by PWC on 13 July 2023.

• The UK ranks 21st in the OECD, a club of rich economies, on PwC’s Golden Age Index. New Zealand, Iceland and Japan rank the highest and are among the world’s leaders at the inclusion of older workers in their labour force
• In the UK, nearly a quarter of a million more older workers remain economically inactive compared to before the pandemic, marking it as an outlier among the G7 bar Italy 
• Increasing the number of older workers in the labour force could help to alleviate inflationary pressures in the UK
• Over 55s in South East England are more likely to continue working than those in other regions due to less physically demanding jobs
  

People in the UK aged over-55 are more likely to have left work and not returned than those in other G7 countries, according to the latest edition of PwC’s Golden Age Index, which measures how well countries are harnessing the power of their older workers.

The Index, based on most recently available data from 2021, finds that the UK’s ranking of 21 out of 38 OECD countries remains unchanged to its position in 2016, as it struggles to close the gap on how well it includes older workers in its labour force relative to other economies. The UK is an outlier among the G7 as economic activity level among older workers has not recovered to pre-pandemic levels, with over 55s driving three-quarters of the rise in total economic inactivity since the pandemic.

High house values, investment income and poor health are the primary reasons for the UK’s deteriorating employment rate for older workers, as New Zealand, Iceland and Japan top the rankings for the highest proportion of economically active over 55s in the labour force.

Barret Kupelian, chief economist at PwC, says:

“Post-pandemic, the UK economy has struggled to grow the supply side of its economy. In terms of the labour market, there are one million vacancies and the unemployment rate is relatively low. Some of the shortage in the labour force can be explained by the economic inactivity rate, which is higher than during the pandemic, and driven predominantly by almost 244,000 older workers, equivalent to the size of Portsmouth, who withdrew from the labour force during the pandemic and have not returned. While this has undoubtedly been a choice for many – driven by relative prosperity of this age group taking early retirement – it is also clear that ill health is part of the story which explains this trend.

“Understanding the cause of these labour force trends is crucial for the UK, as convincing older workers to return to work could help businesses deal with labour shortages fast with experienced staff, ultimately helping to alleviate domestic inflationary pressures. It’s vital, therefore, that businesses and policymakers focus on designing policies to support those who want to continue to work, as well as help to incentivise older workers to return to work if they want to.”
Workforce health

The report also identified workforce health as a key factor which influences the employment rate of older workers. The ONS for example has found that a third of over-50s who quit their job during the pandemic are on NHS waiting lists.

The report highlights that reversing the trend in long-term sickness amongst the population could be one of the key policy levers to bring workers, and particularly older workers, back into jobs. PwC’s survey of 1000 people (conducted as part of the Golden Age Index) showed that the age cohort that is suffering the most from long-term sickness is the 35-44 age group followed by the 55-64 and 65+ age groups – meaning health-related concerns and issues are holding back both the current and future generation of golden age workers.

In separate research by PwC for The Times Health Commission, two in five businesses (38%) have seen an increase in the number of employees taking long term sick leave due to mental health related illness since the pandemic.

The Golden Age Index also notes the role house prices and investment income could have had during the pandemic to lower the employment rate of older workers. Specifically, the analysis suggests that historically a 10% increase in house prices has been associated with a 0.1 percentage point fall in employment rates for 55-64 year olds, all things remaining equal. This indicates that positive wealth effects from the rapid appreciation of house prices of more than 20% during the pandemic could have contributed to a reduction in the post-pandemic employment rate of older workers in the UK.
Regional disparities

There is significant regional variation in the employment rate of older workers in the UK, ranging from around 57% in the North East of England, to 68% in the South East. This is important when considering the number of workers – for example, if the North East of England recorded the same employment rate for the 55-64 age group as the South East, an additional 40,000 jobs would be created.

Divya Sridhar, economist at PwC, says:

“Our analysis shows that if all regions of the UK absorbed older workers into the labour force to a similar extent as the South East, it would translate to an additional 320,000 jobs. This is equivalent to around one third of UK vacancies. However, older workers in the South East are more likely to work in sectors which allow more flexibility in terms of locations and hours, such as financial and professional services, while those in the North East are more likely to work in the education, health and manufacturing sectors account, which are generally more physically demanding and require more on-site presence. It’s therefore important that future policies for older workers are tailored to reflect the unique industrial mix of each region.”

The press release issued by PWC on 10 July 2023.

Sustained heat, floods and heavy rainfall could also see insurers hit with further increased costs, with subsidence related insurance costs swelling to over £1.9bn by 2030 according to new analysis by PwC.

The fresh analysis shows that subsidence related insurance will see significant  impact if levels of sustained heat continue. The findings reflect the impact record temperatures can have on insurance claims, with a global increase in unusually hot summers.

In addition, the extreme winter weather from 2019 to 2020 saw economic losses of £333 million due to flooding and this figure could soar to £500m in 2050 assuming that flood-management approaches and expenditure remain unchanged.

Mohammad Khan, General Insurance Leader at PwC UK, said:

“Our model attempted to put a numerical figure on the impact extreme weather will have on insurance claims. With repeated very hot summers, we are seeing a rise in subsidence cases. Given the already dry soil and further hosepipe bans, we could see a significant spike in subsidence, which causes the ground beneath a building to sink and potentially pulling the foundations down with it.

“We are also seeing other property damage claims related to fires starting in nearby open areas that then spread to homeowners’ gardens and result in fence, garage and decking fires.

“Extreme weather events like this can result in some insurers taking drastic action, such as exploring the risk/cost benefit of giving cover in certain circumstances. This can result in cover for some risks becoming unaffordable or simply unavailable for home-owners in the worst affected areas.

“It’s clear that ongoing impact on climate change will significantly shape how the sector will choose to manage and absorb risks, and our new modeling proves that potential costs could be the deciding factor as to whether a household receives vital cover or not.

“Scenario modelling is an important step towards understanding climate change losses and managing its impacts on the future cost and availability of insurance and should be seen as more than a reporting exercise”

PwC modelled the insurance impact on increased weather related losses under the high end of the range of future pathways (Shared SocioeconomicPathways 5-8.5).The findings from the model showed that:

• The economic losses from the winter 2019 to 2020 flooding, which were about £333 million, could increase to close to £500m under this climate change scenario, assuming flood-management approach and expenditure remain unchanged and before allowing for inflation
• The expected cost of subsidence for insurers could increase to £1.9bn by 2030
• The economic cost of flooding in the UK could increase up to 18% for fluvial flooding and 43% for coastal flooding, on average by 2050

The press release issued by PWC on 6 July 2023.

The funding status for the 5,000-plus corporate defined benefit (DB) pension schemes in the UK continues to show a strong surplus of £330bn, according to PwC’s Low Reliance Index. This assumes schemes invest in low-risk, income-generating assets like bonds, meaning they are unlikely to call on the sponsor for further funding.

Meanwhile, the PwC Buyout Index recorded a surplus of £155bn in June, with a drop in gilt yields driving a reduction of £45bn compared to the previous month. This shows that on average schemes have sufficient assets to ‘buyout’ their pension promises with insurance companies, despite an increase in the estimated buyout cost over June.

With surpluses looking healthy, there is an increasing focus on whether more of the assets held in pension schemes can be invested in productive UK assets that could help drive economic growth.

John Dunn, head of pensions funding and transformation at PwC, said:

“Despite continued turbulence in the gilt markets, UK DB schemes remain well funded. Given the resilience of the surplus and asset values holding up, we are seeing significant encouragement for DB schemes to invest more within the UK.

“This can be seen through the discussions the government is having with the pensions industry, with plans for ‘GB superfunds’ expected to be revealed in the Chancellor’s Mansion House speech next week. Just focusing on unlocking the c.£330bn surplus in UK defined benefit schemes would provide a lot of investment firepower. Although there are challenges to achieving a ‘GB superfund’, particularly answering the question ‘why would a fully funded DB scheme take more risk than needed?’ However, if done in a way which balances the interests of all stakeholders, there is a potential win-win-win scenario; with surplus funds available to invest in UK business, potential higher returns for pensioners and a boost to the UK’s economy.”

Laura Treece, pensions actuary at PwC, added:

“Around half of the assets held by UK private sector DB schemes – about £700bn – are currently not invested in the UK, with about £200bn held in overseas equities. Investing even a proportion of this to support the UK could boost economic growth, while enabling pension schemes to make sure that they are generating the positive real returns needed to pay benefits for their members.

“But this might not be right for all schemes. For example, UK infrastructure is a long term illiquid asset; schemes looking to transfer to the insurance market in the short-term may not want to lock in to an asset they might not be able to pass to an insurer. However for others, if the new funding regime allows, investing in productive UK assets could be mutually beneficial for members, businesses and the wider UK economy.”