Thursday, 18 August 2016

Thursday, August 18, 2016 Posted by Hari No comments Labels:
Inheritance tax, and how the Dukes of Westminster avoid it on their £9bn fortune
Clever use of trust structures enable the Grosvenor family - whose head is the Duke of Westminster - to pass assets down the generations without attracting inheritance tax, accountants say. The Grosvenors' property fortune is estimated at £9bn. Yet the death of Gerald Cavendish Grosvenor, the sixth Duke of Westminster, and the inheritance of his title by his son Hugh, is not expected to trigger vast death duties. This is because successive generations are "trustees" rather than direct owners of the assets. According to the Grosvenor Estate's own description of its structure, the six trustees (of whom the late Duke was chairman) "hold the assets of the group for the benefit of current and future members of the Grosvenor family". Income and other benefits can be paid out to beneficiaries, who may or may not include the trustees, and who will be taxed on them as normal. Peter Legg, a chartered tax adviser and founder of IHT Planning Matters, said: "Here it would appear that shares in the businesses are owned by family members as trustees, not as individuals." This puts the assets at arms' length and effectively eludes death duties. The Grosvenor property empire includes swathes of London's most prestigious streets and squares, in Mayfair, Belgravia and Chelsea. TELEGRAPH

Takeaway firm Deliveroo abandons plan to force ‘absurd’ new contract for staff
Deliveroo riders have been celebrating after the company confirmed it would not force them to sign new contracts agreeing to a trial pay scheme that could see them earn barely half the National Living Wage. The takeaway firm offered concessions in its pay dispute with workers after staff staged a protest and politicians waded into the row. Deliveroo confirmed it will allow riders to work under their previous pay agreements instead of participating in a trial pay scheme, which pays  £3.75 per delivery rather than the current terms of £7 an hour and £1 per delivery. Riders who have already signed the new contract terms will no longer be bound by it, the union said. The new voluntary trial scheme is due to start on Wednesday. Employees who participated in the six-day strike were also told that there would be no threats of job losses or other victimisation against workers who demanded a guaranteed hourly wage, according to the Independent Workers Union of Great Britain (IWGB). “This strike has exposed Deliveroo and their disingenuous methods for what they really are. A week ago Deliveroo were forcing us to sign a new contract under the immediate threat of losing our jobs, and on the false pretence it was a trial," Tom Hobbert, a Deliveroo courier who took part in the strike, said. Final decision on pay will be taken at the end of the trial scheme on 14 September. At this stage 280 of the 3,000 Deliveroo riders in London are participating in the trial. On Sunday, the Department for Business, Energy and Industrial Strategy insisted Deliveroo employees must be paid the national living wage of £7.20 an hour unless a court or HM Revenue and Customs defines them as self-employed. The National Living Wage of £7.20 for everyone aged over 25 years old – hailed as the new minimum wage – was announced by the former Chancellor George Osborne in April this year. Yet nearly 200 employers have been recently named and shamed for failing to pay that minimum wage to their workers. INDEPENDENT

Tax avoidance: Accountants face tougher penalties
Accountants or advisers who help people bend the rules to gain a tax advantage never intended face tougher fines under new penalties proposed by the Treasury. A fine of up to 100% of the tax that was avoided - including via off-shore havens - has been suggested in the new rules, published for consultation. Currently those who advise on tax face little risk, while their clients face penalties only if they lose in court. The rules would "root out" tax avoidance at source, the Treasury said. The avoidance it's trying to root out involves bending the rules to gain a tax advantage that Parliament never intended, an abuse which costs nearly £3bn a year. The new rules come after the government set up a new task force to investigate allegations of tax-dodging and money laundering in light of the Panama Papers leak, which lifted the lid on how the rich and powerful use tax havens to hide their wealth. Following the Panama Papers scandal the five largest economies in the European Union, the UK, Germany, France, Italy and Spain, agreed to share information on secret owners of businesses and trusts. Richard Murphy, a chartered accountant and academic at City University, told the BBC it was unlikely that cases would come to court, but that the threat of fines would act as an "amazing deterrent" to advisers which would prevent them offering advice on tax avoidance. He said this was partly because it could put at risk their ability to get professional indemnity insurance, which they need to continue their work. "Lawyers and accountants will not take the risk of selling these schemes," he said. "There's a risk of a 100% fine so they'll think they can't afford to do it. Every honest accountant will be jumping for joy this morning that those who have been selling these schemes will be put out of practice." He said that the tax system loses around £10bn per year as a result of tax avoidance, well above the £3bn a year the Treasury says is lost. BBC NEWS

Sports Direct warehouse workers to receive back pay
Thousands of Sports Direct warehouse workers are set to receive back pay totalling about £1m after the retailer admitted breaking the law by not paying the national minimum wage. The sportswear chain and its employment agencies are also facing fines of up to £2m imposed by the Department for Business, Energy and Industrial Strategy (BEIS) after they were found to have been underpaying some of the country’s lowest-paid workers for four years. The move, which follows an undercover Guardian investigation last year that exposed how Sports Direct workers were being paid less than the legal minimum, is to include payments backdated to May 2012 and could be worth up to £1,000 for some workers, trade union officials estimate. The agreement, which is understood to have been struck between the union Unite, the retailer and HM Revenue & Customs, includes about 200 workers directly employed by Sports Direct and around 3,000 staff hired through temporary employment agencies. Two agencies, The Best Connection and Transline, provide most of the labour in the company’s warehouse in Shirebrook, Derbyshire. Those familiar with the deal, however, say that 1,700 Transline agency workers may initially receive just half the back pay they are owed when payments begin from the end of the month. This is because the agency is refusing to refund unpaid wages from before it took over contracts from a rival agency, Blue Arrow, two years ago. Steve Turner, Unite’s assistant general secretary, said: “Investors and customers alike should not be fooled into thinking that everything is now rosy at Sports Direct’s Shirebrook warehouse. Transline, one of the employment agencies involved, is disgracefully still trying to short-change workers by seeking to duck its responsibilities.” GUARDIAN

Two in three families are left stuck on high energy bills after energy watchdog let power giants off over £2bn rip-off
After a two-year investigation, Ofgem announced a crackdown that was supposed to tackle power firms’ poor treatment of loyal customers. But the reforms, all of which were suggested by the powerful Competitions and Markets Authority (CMA), will only curb high prices for four million customers with prepayment meters, who will see their costs fall by around £75 a year from next April. Britain’s remaining 24 million households were instead told they would benefit from a range of measures to boost competition between suppliers. Yet energy experts said the new rules would only make matters worse. They said that one of the proposals - giving firms access to a database of households who don’t switch deals - would only lead to customers being bombarded with junk mail. And they warned that households were in danger of being baffled by hundreds of new offers under plans to remove a ban on each supplier offering more than four tariffs. Price comparison websites are also expected to be given the green light to push customers towards some deals, while hiding others that earn the site less in commission. According to the report, 66 per cent of households are on their supplier’s most expensive deal and overpay by as much as £300 a year. DAILY MAIL

Brexit bazooka: Bank of England cuts interest rates to record low of 0.25% and puts £170bn behind emergency cash for financial system
The Bank of England cut interest rates for the first time in more than seven years to 0.25 per cent today - and delivered another £60billion of quantitative easing, a funding scheme that could amount to £100billion and £10billion of corporate bond buying. The widely-expected rate cut was voted for unanimously by the monetary policy committee and will deliver a boost to borrowers through cheaper mortgages and loans but hit savers who are already suffering from historically low rates. Christopher Metcalfe, investment leader, UK Equities, Newton Investment Management, warned: 'The price of credit for firms is already low and it is difficult to imagine if businesses are scared or unwilling to invest in the wake of Brexit at 0.5% interest, whether a further to 0.25% will induce them to invest.' Policymakers also decided to pump extra money into the economy through the Bank's government bond-buying quantitative easing programme, now totalling £425bn, and also buy up to £10billion of UK corporate bonds. A new Funding for Lending style scheme worth up to £100billion was also announced. DAILY MAIL

Watchdog's banking tech reform 'not enough'
A shake-up in UK retail banking has been criticised by consumer groups and economists as not going far enough. The Competition and Markets Authority (CMA) concluded that new phone-based apps could show customers which banks may offer the best account. Banks will also have to set maximum monthly fees for unarranged overdrafts. The CMA decided against a cross-industry cap, leaving individual banks to set their own charges. Alex Neill, director of policy and campaigns at Which?, said: "It is disappointing that the monthly charge cap is not actually a cap and banks will be allowed to continue to charge exorbitant fees for so-called unauthorised overdrafts, rather than protect those customers that have been identified as among the most vulnerable." Andrew Tyrie MP, chairman of the Treasury Select Committee, said: "The CMA is relying on the rolling out of new technology to do the heavy lifting on competition. But many customers will not have the tools or skills to do this. Customers are also - understandably - wary of the data-sharing required for this to be effective." Diane Coyle , Professor of Economics at the University of Manchester, questioned whether the new measures would increase the rate of switching. "There's a lot of reliance being placed on more information, but consumers will need to give all of their transaction information to third-part providers, and there's the trust question ... do you really want another party to be able to see all the transactions that you make in your bank account and be able to tell other potential competitors about that?" she told the BBC. BBC NEWS

Thursday, 4 August 2016

Thursday, August 04, 2016 Posted by Hari No comments Labels:
Student debts wipe out most graduate pay premiums
Politicians should stop using a "carrot of higher graduate earnings" to justify raising student fees or freezing repayment thresholds, say campaigners. Those who do "should be charged with gross mis-selling", says Angus Hanton, co-founder of the Intergenerational Foundation (IF) lobby group. Having to pay back student debts will wipe out any graduate premium for most professions, claims the IF in a report. The report points out how successive governments have used the graduate "pay premium" to justify them. The premium is the amount of extra money it is estimated a degree can help graduates to earn over the course of a lifetime. The report says that in 2002, ministers put it at £400,000, but recent estimates have been more modest at about £100,000. There are wide variations between the sexes and between subjects and institutions, it adds. It argues that, while for somebody who gets an Oxbridge first, the premium figure of £400,000 "may still hold true", it is much lower for non-Oxbridge graduates. "The increasing number of graduates... is further undermining the value of a degree," it adds, with some previously low-to-median paid posts now requiring degrees. "Our research proves that the current £100,000 graduate earnings premium so often touted equates to an 'annual bonus' of just £2,222 over 45 years of work and is wiped out once National Insurance and income tax are taken into account. "Furthermore, the premium is simply not enough to cover the interest accruing on the average loan. "The current system is fuelling a self-perpetuating debt-generating machine which short-changes young people," argues Mr Hanton. The authors say a graduate who borrowed the maximum for tuition fees and maintenance would, with interest, owe £53,000 after three years. In addition, unlike most ordinary loan agreements, the terms and conditions of student loans can be changed "at any moment without debate and without notice", they add. They point out that the government has already broken a promise that the income threshold for repayments would increase with average earnings from April 2017. Instead, it will be frozen at £21,000 for five years, then Chancellor George Osborne announced in November 2015. BBC NEWS

Councils must resume house building role, says LGA
Councils should be given the chance to resume their "historic role" as house builders to ease an affordable housing crisis, their lobby group says. The fall in home ownership among the young and rising rental costs has led to some calls for councils to step in to increase the supply of homes with a new building programme. Between the late 1940s and late 1950s councils built more homes than the private sector. Local authorities were building 100,000 homes a year up to the late 1970s, but the election of Margaret Thatcher's Conservatives in 1979 led to a fall in housebuilding by local authorities. In the year to the end of June, local authorities built 1,500 homes in England out of a total of 131,370 - that is just over 1%. The need was even greater following the economic uncertainty caused by the UK's vote to leave the EU, the Local Government Association (LGA) said. Peter Box, LGA housing spokesman, said: "The private sector clearly has an important role to play but the reality is that it cannot build the homes we need on its own, and will likely be further restricted by uncertainties in the months and years ahead." A separate report from the Centre for Economics and Business Research suggests that "tremors" from the vote to leave the EU will not prevent the average UK home costing about £40,000 more in five years' time. This would push up the average UK house price from £194,000 in 2016 to £234,000 in 2021, it predicted. BBC NEWS

IMF admits disastrous love affair with the euro and apologises for the immolation of Greece
The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory. This is the lacerating verdict of the IMF’s top watchdog on the fund’s tangled political role in the eurozone debt crisis. The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000pc of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the fund between 2011 and 2014. In an astonishing admission, the report said its own investigators were unable to obtain key records or penetrate the activities of secretive "ad-hoc task forces". “Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located. The IEO in some instances has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff," it said. A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced to cut. The result is that nominal GDP ended 25pc lower than the IMF’s projections, and unemployment soared to 25pc instead of 15pc as expected. “The magnitude of Greece’s growth forecast errors looks extraordinary,” it said. The injustice is that the cost of the bailouts was switched to ordinary Greek citizens  – the least able to support the burden  – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report.  “If preventing international contagion was an essential concern, the cost of its prevention should have been borne – at least in part – by the international community as the prime beneficiary,” it said. TELEGRAPH

Maintenance grants scrapped for poorest students
From Monday, the grants, worth about £3,500, will be replaced with additional loans that will have to be paid back at the end of an undergraduate course, once graduates earn more than £21,000. Sorana Vieru, National Union of Students (NUS) vice president, told BBC Breakfast: “It’s a disgraceful change that basically punishes poorer students simply for being poor, so they have to take a bigger loan than those students from privileged backgrounds. The change, announced by the then chancellor, George Osborne, in 2015, was opposed by Labour, which said it would hit those from low-income homes the hardest. Speaking in January, Jo Johnson, the universities and science minister, said the maintenance grant change “helps balance the need to ensure that affordability is not a barrier to higher education, while ensuring that higher education is funded in a fair and sustainable way”. GUARDIAN

Home ownership falling in major English cities
The proportion of home owners dropped from 72% in April 2003 to 58% this year in Greater Manchester, it said. West Yorkshire, the metropolitan area of the West Midlands and outer London have also recorded double-digit falls. Explaining the falling rates of home ownership, Matthew Whittaker, chief economist from the Resolution Foundation, told the BBC's Today programme: "What we particularly have seen since 2002-03 is that incomes simply haven't kept pace with house prices, so it's not just that house prices have gone up.” The average first time buyer paid just under £30,000 for their new home in the 1980s compared with more than £150,000 now, the think tank said. The report follows recent data from the government's English Housing Survey showing the total number of buyers has fallen by a third in 10 years, and those who do buy their first home increasingly rely on the bank of mum and dad for help. The Resolution Foundation's analysis of the LFS found that home ownership in England peaked in 2003 at 71% of the population and had now dropped to just under 64%. The think tank also confirmed that the fall in ownership corresponded with a rise in renting from private landlords. The proportion of private tenants rose from 11% in 2003 to 19% last year, it said. In Greater Manchester, the move was more pronounced - rising from 6% to 20% over the same period. While accepting that home ownership was rather a national obsession, it pointed out that those in the private rented sector spent more of their income on housing than their owners, and there was more insecurity in short-term tenancies. BBC NEWS

Carphone Warehouse ad claiming 'UK'S LOWEST PRICES - WE CHECK SO YOU DON'T HAVE TO' is banned
Carphone Warehouse has been forced to pull an advert for its monthly 4G mobile tariff packages, after the UK's advertising watchdog branded it 'misleading.' The Advertising Standards Agency said the small print contradicted the advert's claims, which it found could not be substantiated. Under the advert, the small print said: 'UK's Lowest Price on pay monthly is based on new connections on selected networks on 4G tariffs. UK's Lowest Price correct at time of print and it applies to published prices ... Excludes all online retailers without high street presence and other promotional offers ....'. Text next to a number of phones pictured alongside the advert stated 'AT THE BEST PRICE' and 'AT THE BEST PRICE WE'VE CHECKED.' Further small print at the bottom of the advert said: 'If you find an upgrade or pay monthly deal for less at O2, EE or Vodaphone, we'll match it and pay the equivalent of your first month's standard line rental ....' The offer excluded 'all online retailers without a high street presence', so shoppers were 'likely to be misled' by the advert, the ASA said. The price promise also only applied to three competitors, namely O2, EE and Vodafone, so the advert 'contradicted the overall impression that Carphone Warehouse prices were better than all other retailers', the ASA said. DAILY MAIL

Goldman Sachs fined $36.3m over use of “improperly obtained” confidential documents
The Fed said Goldman Sachs had used documents, obtained by a former Fed employee, to brief clients during presentations. Goldman Sachs has already paid New York regulators $50m over the same incident. The case has highlighted the issue of staff moving between big banks and the agencies that regulate them. According to the Fed, a former Goldman Sachs senior banker Joseph Jiampietro, asked a new, junior employee Rohit Bansal to obtain confidential documents from the Fed, where Mr Bansal had previously worked for eight years. Those documents were then used to advise small and medium-sized banks on the Fed's decision making in 2014. Both Mr Jiampietro and Mr Bansal were sacked after another colleague reported the incident to the compliance department. BBC NEWS

Luxury property tycoon says lavish gifts to brother were for 'love' not tax evasion
Christian Candy has insisted he gave his brother Nick gifts worth more than £200m out of family affection and respect for the dying wishes of their late father — and not as part of an alleged plot to evade tax. The largesse Christian handed to his business partner brother include a penthouse apartment at One Hyde Park, where Nick lives with his pop singer wife Holly Valance; the couple’s future family home, a grade II-listed mansion in Chelsea; and £10m in cash. Loans from Christian’s business empire have also been used, in part, to help Nick buy a £26m, 60-metre Italian yacht called 11-11. The multi-millionaire brothers, who are Conservative party donors, have been forced to provide a rare glimpse into their relationship — both business and personal — as part of a bitter legal dispute over a loan to another property developer, Mark Holyoake. They say Holyoake is making allegations about tax evasion to force settlement of his claim and detract from business problems of his own. Witness statements from Nick and Christian Candy were submitted to the high court in London after questions were raised about how Nick came by his personal fortune, and the role he played in his brother’s CPC Group. A highly profitable property empire, CPC — which takes its name from Christian’s initials — is best known for super-luxe London developments such as One Hyde Park, where the sale of apartments brought in £2bn. GUARDIAN

Thursday, 21 July 2016

Thursday, July 21, 2016 Posted by Hari No comments Labels:
Firms back Theresa May's attack on runaway executive pay
Business leaders have given a resounding endorsement of Theresa May’s proposals to shake up corporate governance and put pressure on runaway levels of executive pay. In a new poll by FTI Consulting, seen exclusively by City A.M., 81 per cent of senior figures from small, medium and large companies backed a tougher government stance on how the UK’s largest companies are run. Theresa May pledged last week to put big businesses under the microscope as prime minister, announcing her intention to introduce completely binding shareholder votes on executive pay and force companies to publish their pay ratios — the difference between the salary of the average worker and the top earner. In further departure from previous Conservative policy, she also signalled support for employee representation on boards and stricter controls over foreign takeovers of UK firms. CITY AM

Millennials to become first generation to earn less than their predecessors
The Resolution Foundation found that under-35s earned £8,000 less in their twenties than Generation X workers. The thinktank defines Generation X as those born between 1966 and 1980 and millennials as those born between 1980 and 2000. If wages for millennials follow the same path as Generation X, average career earnings will be about £825,000. That would make them the first generation to earn less than their predecessors over the course of their working lives. Its research found that some of the pay squeeze was due to under-35s entering the job market as the recession hit, but it also concluded that generational pay progress had ground to a halt even before the financial crisis struck in 2007/8. Torsten Bell, director of the Resolution Foundation, said: "We've taken it for granted that each generation will do much better than the last - earning more and enjoying a higher standard of living. But that approach risks looking complacent given the realities of recent years and prospects for the future." The research comes as Prime Minister Theresa May warned last week of a growing divide between a "more prosperous older generation and a struggling younger generation". The think-tank also found that millennials will have spent £44,000 more on rent by the time they reach 30 compared to the baby boomers, and £25,000 more than Generation X. BBC NEWS

PM urged to launch inquiry into low pay of "self-employed" Hermes couriers
Frank Field MP, chairman of the powerful House of Commons work and pensions select committee, said the government should review HM Revenue and Customs (HMRC) criteria that allow companies to contract work to self-employed individuals rather than hire them as employees. Referring to Theresa May’s first speech as prime minister, in which she said she would legislate for “families who are just managing” and people who “have a job but … don’t always have job security”, Field said: “This is a really good chance for [May] to start this new approach. This [issue with self-employment] is undermining government policy which is to raise wages at the bottom.” The Guardian obtained information about the earnings, hours and expenses of couriers for Hermes, which delivers parcels for retailers including John Lewis, that indicated some were earning below the national living wage of £7.20 per hour for people aged 25 and over. However, because the couriers are self-employed and not covered by the national living wage, the arrangement is legal. The general secretary of the TUC, Frances O’Grady, has also called for reform. “This isn’t just one company,” she said. “The rise of bogus self-employment is hitting people’s incomes and job security across the country.” Field’s call came as the Citizens Advice Bureau revealed a marked increase in the number of people coming forward with concerns about self employment and employment status. One case involved a childminder who worked set hours, five days a week but was hired on a self-employed basis and told she needed to start saving up for her own holiday pay and sick pay. Another case involved a pub employee whose landlord had told him his work was finished unless he switched to self-employment. The man was worried he would no longer receive holiday and sick pay or a steady wage and working pattern. The UK’s self-employed workforce has grown by 800,000 to 4.7 million since 2008, according to official figures. As many as two-thirds of self-employed workers in the transport sector, which includes couriers, delivery drivers and Uber taxi drivers, now earn below the national living wage. GUARDIAN

Uber faces legal challenge from drivers demanding basic rights including holiday pay, sick pay and minimum wage
Two test cases, brought by drivers James Farrar and Yaseen Aslam at Central London Employment Tribunal and supported by the GMB union, argue they should be entitled to holiday pay and receive at least the national minimum wage. Uber claims it is a technology company rather than a taxi firm, and allows people to be their own boss and work flexibly. In his statement Mr Farrar said Uber claimed it had paid him £13.77 an hour on average for the hours he has logged in the app. But he said his earnings for August last year after expenses came to just £5.03 an hour - below what was then the national minimum wage of £6.70 for those over 21. David Reade QC, representing Uber, argued drivers have a choice about their work, there is nothing to force them to work exclusively for Uber, and they are free to work with other private hire operators. But Mr Farrar said Uber controls him 'very, very carefully', logging him out of its system if he ignores two bookings - which Mr Reade said only happens if a driver dismisses three consecutive jobs - and puts him in a 'penalty box' for 10 minutes, also sending him warnings if he does not take jobs, all of which he said would make doing extra work for another company unrealistic. Mr Farrar also explained he had to be 'very, very careful' about deciding whether to take jobs: he had been physically assaulted twice, racially abused once and verbally attacked many times while working as an Uber driver. But he said that even if drivers cancel jobs over safety fears they are penalised. He told the tribunal: 'Sometimes you have to choose between your own safety, your own life sometimes, and doing this job.’ DAILY MAIL

First-time buyers half as likely to be single as 20 years ago
Figures from the latest English Housing Survey show that in 2014-15 just 14% of first-time buyer households were made up of single people, compared with 29% in 1994-95. The change comes despite growth in people living alone, which the Office for National Statistics said accounted for 29% of UK households in 2015. Over the same 20-year period, the share of the market that comprised couples rose from 63% to 80%, and the proportion of couples with children increased from 20% to 31%. The remaining 6% of buyers were loan parents or those buying in larger groups. The majority of first-time buyers were aged between 25 and 34, but the average age increased from 30 to 33, and the proportion of new buyers aged between 35 and 44 almost doubled – from 11% to 20%. The increase in average ages may also mean that people are more likely to be in a couple before they buy. The survey shows that the number of first-time buyers dropped from 564,000 in 1994-95 to 300,000 in 2014-15 despite an increase in the number of households in the same period. First-time buyers were especially hit by the credit crunch in 2008, with banks and building societies withdrawing mortgages for those with small deposits, but they have come back into the market since the government’s help-to-buy scheme was launched in 2013. The housing charity Shelter said: “More and more people on ordinary incomes have no choice but to face a lifetime of expensive, unstable private renting, unless they’re lucky enough to have help from friends and family.” GUARDIAN

Rail minister Claire Perry quits after admitting she feels 'ashamed' about chaotic train delays
Claire Perry quit the Government today just two days after admitting she felt 'ashamed' to be in charge of Britain's railways because of the chaotic delays hitting London commuters. She resigned from her post at the Department of Transport before new Prime Minister Theresa May had time to sack her. Mrs Perry, MP for Devizes, has been the public face of anger over delays at crisis-hit Southern Railway. She has repeatedly refused demands to strip Govia Thameslink Railway of owning Southern Railway despite services being hit by high levels of staff illness, crew availability, walkouts by the rail union RMT and bitter disputes over guards' responsibilities. Commuters have reported losing their jobs and missing out on seeing their kids, as a result of the chaos - which saw the embattled operator cancel at least 341 services every day. They staged a protest earlier this week after Ms Perry appeared to reject their calls to renationalise the line. The beleaguered rail operator introduced its emergency timetable yesterday – axing 341 services a day to avoid ad hoc cancellations – as it struggles to cope with a union dispute and a series of 'sickie strikes'. DAILY MAIL

U.S. charges two British HSBC executives over $3.5 billion forex scam
Mark Johnson, HSBC's global head of foreign exchange cash trading in London, and Stuart Scott, its ex-head of cash trading for Europe, the Middle East and Africa, were charged in a criminal complaint filed in federal court in Brooklyn. Both men were charged with wire fraud conspiracy, in a case that a person familiar with the matter said was the first against individuals to flow out of a U.S. Justice Department probe of foreign-exchange rigging at global banks. Prosecutors said Johnson, 50, and Scott, 43, misused information provided by a client who had hired HSBC to convert $3.5 billion to British pounds in connection with a planned sale of one of the unnamed company's subsidiaries. The two British citizens then used their insider knowledge to engage in a process called front-running in which they made trades ahead of the December 2011 transaction, resulting in a spike in the price of the currency that was detrimental to HSBC's client, prosecutors said. "Ohhh, f---ing Christmas," Johnson told Scott in a recorded call the day the transaction went through, the complaint said. In total, HSBC earned $3 million from trades its FX traders placed and earned $5 million executing the transaction, the complaint said. "The defendants allegedly betrayed their client's confidence, and corruptly manipulated the foreign exchange market to benefit themselves and their bank," Assistant Attorney General Leslie Caldwell said in a statement. The case was, according to a source, related to a years-long Justice Department probe that has led to four banks last year pleading guilty to conspiring to manipulate currency prices. The charges came a day after the Federal Reserve Board said it was banning Matthew Gardiner, a former FX trader at Barclays and at UBS, from participating in the banking industry for manipulating pricing benchmarks. HSBC was not among the four banks that pleaded guilty, but in 2014 agreed to pay $618 million to resolve related probes by U.S. and British regulators. The Justice Department has continued to investigate, and HSBC has set aside $1.2 billion to cover various forex-related probes, according to a regulatory filing. REUTERS

Sunday, 17 July 2016

In his first tweet after being sacked as Chancellor of the Exchequer, George Osborne chirped "Others will judge - I hope I've left the economy in a better state than I found it".

It so happens two weeks earlier the excellent Andy Haldane, executive director at the Bank of England, made his judgement. The date is important, as Osborne was still sitting confidently on his stool in the Treasury, so Haldane wasn't simply knifing a political corpse. Haldane was speaking truth to power, as so many others who should be doing so had long since ceased.

Haldane's speech in June 2016, titled "Whose Recovery?", should be essential reading in particular for the revolting Labour MPs. The speech offers them an insight into why the ordinary Labour Party membership backed Jeremy Corbyn. And why the Labour Party actually is a party of protest, both in Government and in Opposition. 

The Golden Rule states "Whoever has the Gold makes the Rules". Whether in Government or in Opposition, the Labour Party should represent those without the Gold, and should act as a counterbalance to those who make the Rules even when it is in Government. Because when the Labour Party was not a party of protest, it became the de facto Tory Party (a.k.a. "New Labour"). In truth, had Tory leaders during the Blair years been brighter they could have more quickly undermined Blair by supporting, not opposing, his policies.

Britain needs strong parties of all complexions, from left to right. Regime change in the Tory Party is done with ruthless corporate efficiency, while in the Labour Party it is done with all the blood and broken noses of a pub brawl. Both methods are fine, so long as both emerge representing their members.

Haldane, a product of state school and redbrick university, whether he is in an oak panelled room or in a whitewashed community centre listens to what he hears and  he sees what he looks at. Listening and seeing are talents sadly missing in the revolting Labour MPs. 

In his speech Haldane says:
"I began by speaking about the UK’s economic recovery.  I never got as far as the improvement in the jobs market or surging confidence.  I was stopped in my tracks by a forest of furrowed brows and a phalanx of probing questions, not all of them gentle.  “What exactly do you mean by recovery?” one asked.  “My charity is dealing with 50% more homeless people than three years ago.”   Every other charity in the room had similar stories to tell.  Whether it was food banks, mental health problems or drug addiction, all of the numbers were up.  The language of “recovery” simply did not fit their facts."

We leave it to Haldane to explain whether Osborne left the economy better than he found it, and why ordinary Labour Party members support Jeremy Corbyn:

1) Haldane points out that the UK economy as a whole can improve by making the rich slightly richer and the poor much poorer:

2) Regional income inequality has widened.
Haldane says:
"Another notable pattern in regional income gains and losses is that the largest gains have come in regions where income was already high – London (incomes more than 30% above the UK average) and the
South-East (14% higher). Contrarily, some of the larger losses have been in regions where income was already-low – Northern Ireland (18% lower than the UK average) and Yorkshire and Humberside (14% lower). Put differently, since the crisis the regional distribution of incomes has widened."

3) In recent years the rich have been given more and the poor have been made poorer. Haldane says: 
"in a subjective well-being sense, there may have been no recovery in the UK over the past few years"

He states:
"aggregate GDP figures may over-state somewhat the impact of the recovery on societal well-being: gains by the already-rich boost well-being by less than equivalent losses by the already-poor. To demonstrate that, Chart 12 plots an illustrative measure of “social welfare”. "
3) The recovery from the 2008 recession has been the slowest in decades:

4) By 2015 GDP per person was only 1% above pre-crash levels.
5) The GDP figure includes all UK income, including that which is sent overseas. Office for National Statistics figures show over half of UK quoted shares are owned by the 'rest of the World'. Illustrating how boosting company profits by holding down wages isn't good for Britons.
% of UK stock market owned by "rest of the World"
Haldane states that in terms of GDP per head that is actually kept in the UK there has been no recovery:

6) The "jobs recovery" has not been a "wages recovery". Noting that more people are in poorer paying jobs, Haldane states: 
"Although the recovery of the past few years has been jobs-rich, it has been notably pay-poor."
Haldane goes on to say:
"This is the longest period of flat or falling wages since at least the middle of the 19th Century". 

7) Bank of England and Office for National Statistics figures for 2015 show that in fact only London and the South East have passed their pre-crash peak. Haldane says:
"For example, in Northern Ireland GDP per head remains 11% below its peak, in Yorkshire and Humberside 6% below and here in Wales 2% below."

8) When it comes to Wealth, Haldane says:
"If we turn from income to wealth, the picture is much the same...This has risen across all regions. But the pattern is again uneven, with the largest gains in London (47%) and the South-East (25%), whereas in Wales the gains are smaller (8%) and in the North East there has been a small fall in wealth. 
"..these gains have come principally from rises in property and pension wealth. In other words, the gains have been skewed towards those in society who own their own home or who have sizable pension pots."

Andy Haldane says in this speech:
"The rising economic tide has not lifted all boats. Indeed, a sizable fraction of households have seen no recovery in their disposable incomes, a rise in job insecurity and at best modest rises in their wealth. For them, the “recovery puzzle” may not be so puzzling. These data also suggest that distributional factors may be important when understanding “whose recovery”. "
"This has been an uneven economic recovery, looking across regions, income and age cohorts. Large parts of the UK – many regions, those on lower incomes, the young, renters - have not experienced any meaningful recovery in their incomes or in their wealth."

The revolting Labour MPs desperately hope to cling to their well compensated jobs. The poor things have invested years sucking up to one set of leaders, only to find them chucked out and replaced by Jeremy Corbyn of all people! Probably Corbyn has so little support among the MPs because nobody had bothered licking their spittle onto him.

Labour MPs need to emulate Andy Haldane. Instead of cloaking themselves in self-importance, convinced that only they can "save the Party", they need to go out and see what they look at, and listen to what they hear.  

Labour MPs must stop peeping out of the windows of their Westminster Chambers, demonising their own party members. 

Instead of plotting engrossed in their Westminster mutual admiration society, they need to understand the reasons why Labour Party Members around Britain overwhelmingly supported Jeremy Corbyn.

Friday, 15 July 2016

Friday, July 15, 2016 Posted by Hari No comments Labels: , , , , , , ,
KJ and Fee know who and what is to blame...

In safe seats odds are firmly stacked against any voters looking for change. The average constituency last changed hands between parties in the 1960s, with some super safe seats having remained firmly in one-party control since the time of Queen Victoria. That means, at every election, the majority of seats can be predicted because of Westminster’s broken First Past the Post electoral system. As consituencies are small and only elect one MP, rival parties often don’t stand a chance of winning in hundreds of seats across the UK. Even if they have significant support it counts of nothing if they lose. As the loss of safe seats is rare, parties target their resources on a small number of floating voters in marginal seats – meaning they give up on millions of voters across the country. Four weeks away from the 2015 election we could predict the results for over half of the total constituencies.


More votes shifted left than right at GE2015. That's where the Labour party needs to be. See the stats

It's constituency boundaries wot won it: The Tories won more swing seats. But more people shifted their votes left

Apathy? Since the 1970s Brits vote less. But they take part in community, charity and civic activities more

British Election Study shows UKIP voters are well to the left of the Tories and even the LibDems

Every democracy, including ours, needs a left and a right party. Politicians who shift too close to their opposition are putting their careers before the nation

Most MPs vote the way they're told by the party. Many have second jobs earning tens of thousands. Half sit in safe seats they never lose. It's tough being an MP!

British Social Attitudes Survey: Tories & Labour are losing their core supporters

In 1997 the percentage of young people not voting shot up. Under 55- year-olds too

Since 1979, Labour or Tory, inequality rose whilst economic performance remained the same

"It's the economy, stupid" means the economies of individual families, not just UK Plc

Hope you didn't vote for anyone who helps pump up house prices

Lest we forget: all policies are pointless unless the banks are reined in

Thursday, 14 July 2016

Thursday, July 14, 2016 Posted by Hari No comments Labels:
National Living Wage has not led to job losses, survey says
Employers have responded to the new National Living Wage (NLW) by raising prices or reducing profits rather than cutting jobs, according to a survey from the Resolution Foundation. The wage, which requires employers to pay staff aged 25 and over at least £7.20 an hour, was introduced in April. This report is the first snapshot of how firms have reacted to the NLW. It comes after the Office for Budget Responsibility predicted it would lead to 60,000 job losses by 2020. Five hundred companies, covering a range of UK businesses, were questioned just before the referendum on Britain's membership of the European Union, of which 215 said that the new NLW had impacted their wage bill. Some 36% of those affected by the NLW said they had put up their prices to compensate for the higher wage cost, while 29% said they had reduced their profits. Despite reports of some employers cutting back on staff terms and conditions, the survey found that only 8% had cut paid breaks, overtime or bank holiday pay. The policy was announced in last summer's Budget by Chancellor George Osborne, in what he said was a move to create a higher-wage, lower-welfare economy. Workers aged 21 to 24 continue to be paid the National Minimum Wage of £6.70 an hour. A spokesman for the Department for Business said: "The government wants to move to a higher wage, lower tax and lower welfare society and the National Living Wage is a crucial part of achieving this. It is encouraging to hear that employers are investing in training and technology which will help to improve productivity. BBC NEWS

HSBC escaped US money-laundering charges after Osborne's intervention
On Monday, a US congressional report published letters and emails from Osborne and Financial Services Authority (FSA) officials to their US counterparts warning that launching criminal action against HSBC in 2012 could have sparked a “financial calamity”. The US government subsequently decided not to pursue criminal charges against HSBC for allowing terrorists and drug dealers to launder millions of dollars. The report said the FSA was “problematic”, “weighed in very strongly” and caused a “firestorm”, which led the then attorney general, Eric Holder, to overrule the advice of his own prosecutors and not pursue criminal action. Instead of pursuing a prosecution, the bank was made to pay a record $1.92bn (£1.4bn) fine. The House report said Holder “misled” Congress about the justice department’s reasoning for declining to prosecute. It said the department had enough evidence to pursue criminal charges against HSBC and pointed out that the bank had already admitted to the US government that it broke money laundering rules. If HSBC had been found guilty of the potential charges, the US government would have been required to review and possibly revoke its charter to do business in the US. The UK’s FSA repeatedly warned that even the threat of possible charter withdrawal could have caused a fresh global financial crisis. The 2012 settlement detailed how Mexico’s Sinaloa drug cartel and Colombia’s Norte del Valle cartel laundered $881m through HSBC and a Mexican unit. In some cases, Mexican branches had widened tellers’ windows to allow big boxes of cash to be pushed across the counters. HSBC also violated US sanctions by working with customers in Iran, Libya, Sudan, Burma and Cuba. GUARDIAN

Government is letting VW off the hook over emissions scandal, say MPs
In a scathing report, the transport select committee said the Department for Transport had been far too slow and ambivalent over taking any action in the wake of the diesel emissions scandal, while industry regulators had “shown little interest” in whether the law had been broken. Customers in the United States will be compensated after VW admitted last September that 482,000 of its diesel vehicles in the US were fitted with “defeat devices” to pass emission tests, reaching a $15bn settlement last month with federal authorities. But it has not offered any similar redress to UK consumers – a position that the committee described as “deeply unfair”. Although VW said 1.2m UK cars were affected, it has disputed whether the same software is illegal in the EU. Although the then transport secretary, Patrick McLoughlin, said that VW could face action from the Serious Fraud Office, the Competition and Markets Authority (CMA) and under his own powers, the report found: “In practice little action has been taken.” GUARDIAN

Greedy currency firms cash in on falling pound with deals well BELOW market rate in exchange rate rip-off
Furious MPs criticised 'rip-off merchants' for taking advantage of the public's lack of financial knowledge to offer rock-bottom exchange rates. And consumer experts warned that families heading abroad – already suffering from the fall in the pound – were being hit by a 'double whammy' of costs. Following the EU vote, sterling fell 10 per cent against the euro – and to a 31-year low against the dollar. On the night of the referendum – June 23 – £1 was worth 1.31 euros or $1.50. After the result, rates tumbled to 1.22 euros and $1.34 per pound. And the market rate for sterling has since fallen to around 1.173 euros and $1.30. But in the worst cases, tourists are receiving less than a pound per euro, once they have paid commission. On top of this firms typically charge commission fees if customers do not buy their currency online, meaning holidaymakers receive less than a euro per pound. According to online currency firm FairFX, Moneycorp was offering just 1.0002 euros per pound at Bristol Airport on Thursday when the market rate was 1.17504 euros. The firm also charges £4.99 commission on orders below £300, meaning customers receive about 95 euros from £100. Holidaymakers flying from Doncaster Robin Hood Airport receive just 1.02 euros per pound from Travelex. With a £4.99 fee, that means less than 97 euros back from £100. According to the FairFX figures, currency firms have increased their profit margins sharply since the referendum. Before the Brexit vote, the gap between the exchange rates some firms offered and the market rate was much smaller. In mid-April ICE had offered 10 per cent less than the market rate, compared to 14 per cent at Edinburgh Airport on Thursday. DAILY MAIL

France's Hollande joins critics of Ex-European Commission chief Barroso, as he is hired by Goldman Sachs
French President Francois Hollande on Thursday became the most senior critic to date of former European Commission chief Jose Manuel Barroso's decision to take a job at the investment bank Goldman Sachs. Hollande noted that Barroso was running the European Union's executive arm at the time of the U.S. subprime home-loans crisis, which has been blamed for the 2007-2008 global financial crisis. He said Goldman Sachs was "one of the main institutions" involved in selling subprime debt, and also noted the U.S. bank's role helping Greece establish credibility about its finances in the early 2000s. Worries about Greek debt later rocked the currency bloc. "It's not about Europe, it's about morality," said Hollande in his annual interview to mark Bastille day, France's national day. "Legally, it's possible, but morally, it's about the person, it's morally unacceptable." Barroso was hired 20 months after stepping down, shortly after an 18-month "cooling off" period when ex-commissioners must seek clearance for new jobs to avoid conflicts of interest. Earlier this week the French government called on Barroso to walk away from the job and the European Ombudsman called for the EU to tighten rules on commissioners taking appointments on leaving office. REUTERS

Whistleblowers say RBS is desperately selling loans and mortgages ahead of Williams & Glyn re-launch
Staff at a flagship Royal Bank of Scotland branch in the heart of the City of London are being pressured to flog loans and mortgages, according to claims made by whistleblowers. They say branch staff have to cold call customers every day and are bullied into filling managers' diaries – failure to do so means staying late and eventually the stress of being put on a performance contract that puts their job under scrutiny. This particular branch, in Threadneedle Stereet, is set to be re-branded as Williams & Glyn, a bank which is yet to receive its licence from regulators. It means any customers who open a loan or mortgage or other product via this branch will be shifted over to Williams & Glyn once the re-brand happens. The whistleblower says the pressure has started in the past couple of months – and believes it could be to make the branches look good ahead of the move over to the Williams & Glyn brand. 'Staff are very stressed and scared to say anything as the managers will put them on a performance contract and eventually drive them out,' he said. RBS has been forced to break away part of its business as part of its bail out in the aftermath of the financial crisis. RBS said in November last year that it had scrapped sales targets for staff, in a move designed to ensure customers know they are only being sold products in their best interests. Retail banks in general have cracked down on sales targets, after the industry was forced to pay compensation of over £20bn for selling payment protection insurance to customers who did not need it. At the end of last year, the FCA quietly shelved plans for an inquiry into the culture, pay and behaviour of staff in banking. It had planned to look at whether pay, promotion and other incentives had contributed to scandals involving banks in the past. In November 2015 RBS chief executive Ross McEwan announced that bonuses for staff will be scrapped in an attempt to avoid future mis-selling scandals and there will be no sales targets for staff. DAILY MAIL

Thousands of Post Office workers forced to take pension benefits cut
About half the Post Office’s 7,000-strong workforce is being forced to shift from a final salary pension scheme to a defined contribution scheme, a move that unions say could cut retirement benefits by 30% or even more in some cases. The planned pension cuts were announced just days after the Post Office said it would be looking to put 20 more Crown offices into private hands, taking the total this year to 85 in a process opposed by unions who see it as a form of backdoor privatisation of the service. The Post Office was already facing criticism after agreeing to hand over up to 61 branches to WH Smith in April including some of the 39 Crown offices flagged up to be put into private hands in January. Before that, 50 Crown offices, which are run directly by the Post Office, had been franchised or otherwise offloaded since 2013. Andy Furey, a CWU official, said: “CWU is completely opposed to the closure of the Post Office defined benefits pension scheme. This is another cost-cutting exercise to prop up their balance sheet at the expense of staff. The scheme itself is in rude health, carrying a surplus. We will be balloting our members for strike action over this attack on their quality of life after retirement along with our opposition to the company’s dogged pursuit of closures, privatisation and up to 2,000 job losses.” GUARDIAN

Share This

Follow Us

  • Subscribe via Email

Search Us