Sunday 30 September 2012

Sunday, September 30, 2012 Posted by Jake No comments Labels: , , , , , , , , , ,
Money has been devalued. I do not refer to inflation here. Money has been devalued because people don't value the things they can get too easily. 

The people who control our economy - the top politicians and businessmen - have served themselves extremely generously over the last few decades, and now for them money is commonplace. Because it is of little value they carelessly give it to some (themselves and their associates) and thoughtlessly take it away from others (the rest of us Britons). They do this with no more concern than casting a shadow.

People with vast amounts of money think people with merely lots of money are poor. In a campaign speech Mitt Romney, an American presidential candidate, said he thought the average American earned a quarter of a million dollars. Presumably he regards $250,000 a year as a very modest amount. Thus he and his ilk blindfold themselves to the consequences of their actions with the assumption that the poor only have lots of money, rather than pots of it, allowing their consciences to let them rip off an extra few hundred pounds with an increase in ticket prices and utility bills. And rip off another extra few hundred pounds with freezes in pay and cuts in benefits and pensions. Money isn’t important, they tell themselves, therefore it isn’t important if I help myself to some more of it.

But just as people don’t value the things they have in plenty, they do value what they have little of. For 90% of Britons, whose income has stagnated in real terms for decades, money does have value. And when it goes, it hurts.

Britain is going through some painful changes. One of which is a public intolerance of lying and cheating. Vilification is everywhere: bankers (for a compendium of dodgy activities that have come to be known generically as ‘banking’); media moguls (phone hacking, bribing officials, etc.); suppliers ripping off the government (MOD paying £22 for 65p lightbulb, etc.); insurers (inflating repair costs to hike premiums, etc.); MPs (fiddling expenses; lying about anything including swearing at cops; providing commercial favours; complicity in kidnapping and rendition, etc.). Pity the banker/MP/mogul who now find themselves in deep doo-doo for doing precisely the same thing they were openly doing when they were fêted as ‘leading citizens’. Pity? Perhaps not.

Bankers have been manipulating LIBOR for years, an open secret that was shouted across trading floors with bankers offering one another a choice of rates like sweets from a tin of Quality Street. Strawberry Delight or Orange Crunch, up a little or down a lot? Fabulous profits tumbled in from the Payment Protection Insurance scam, insider trading, grotesque charges on pensions and investments. All these scams were hardly a secret to an insider or an insider’s friends or his friends’ friends, their spouses, paramours and personal trainers. The perpetrators of these scams were not just quietly indulged, but were proudly trumpeted as the jewels in the British industrial crown. To keep them, we are told, we must pay them generously and regulate them pusillanimously.

Unimpeded and celebrated dodgy behaviour became an open secret that spread like a flu virus infecting the upper echelons of Britain. Ripping off clients, customers and constituents was in order to harvest as much money as the bankers. Confusing rewards with merit, they proved their ‘excellence’ by the amount of money they could grab. And then justified the amount of money they could grab by their ‘excellence’. Even our sainted family doctors got in on the act with a 58% pay increase over 4 years for doing less work. British culture itself went through a sarcastic period, Sarc-Art, when unmade beds, stuffed sheep, lights going on and off, and crumpled pieces of paper were selling for ludicrous prices to people with too much money to value it. As soon as our Brit-Artists realised that their sarcasm was profitable, perhaps they too believed in their own excellence?

Friday 28 September 2012

Friday, September 28, 2012 Posted by Hari 1 comment Labels: , , , , , ,
KJ and Fee discuss the report by consumer expert and boss of Cooperatives UK...

Thursday 27 September 2012

Thursday, September 27, 2012 Posted by Hari No comments Labels:

The poorest in society pay on average £1,289 a year more than those on average incomes for financial goods and services
The investigation, commissioned by the Labour party, estimated that consumers 'lose £11bn a year' in financial scams and rip-offs.  The most common complaints related to poor quality of service and defective goods. But the three big rip-off areas are banking and utilities, as well as vehicle repairs.  GUARDIAN
("We are ashamed and humbled to discover our members are as thoroughly wicked as that well known bunch of shafters," said the Association of Dodgy Garage Owners)

'I was refused a payout because I was dying too slowly'
Scottish Provident withheld  a total of £240,000 from Mr Onyett (who had terminal motor neurone disease) and his family. The small print in the two policies meant it only paid out to someone with less than 12 months to live. The relevant clauses were buried in two documents: one 25 pages long and the other 24 pages. DAILY MAIL
("Honestly, when they pointed it out in the small print, it was a complete revelation to us," said a roomful of Scottish Provident salesmen)

Pension firms warned to end hidden fees or face sack from industry's regulator

The fees typically wipe more than £100k from the value of a middle-class worker’s pension. Trust in pensions is at an all-time low: only 2.9m private sector workers now save into a workplace pension, the lowest level since 1954. The Pensions Regulator added they ideally prefer the industry to regulate itself. TELEGRAPH

Tax evasion cases investigated by HM Revenue & Customs drops by 25%

This seems to go against promises of clamping down harder on tax evasion. But a much tougher approach is being taken by HMRC... if you are a plumber. Melvyn Careswell, a plumber, was jailed for 12 months for tax evasion after failing to register his earnings for five years. A £50,000 tax evasion case used to be subject to civil prosecution, but now it is criminal. GUARDIAN
(Tax dodging plumbers everywhere are shaking in their boots. The economy is saved!)

Monday 24 September 2012

Monday, September 24, 2012 Posted by Hari 1 comment Labels: , , ,
He'd better watch his language...

Sunday 23 September 2012

Sunday, September 23, 2012 Posted by Jake 4 comments Labels: , ,
Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Dickens' wisdom, from the mouth of his literary creation Mr.Micawber, would suggest that British train companies have had a surfeit of happiness in the last decade. 

Companies seldom admit they put up prices to fatten their executives' pay or to boost dividends to their shareholders. They'd far rather claim they are forced to take more money from us for our own good. Energy companies justify price hikes asserting, dubiously, that they pay for 'greening' their output. Train companies justify rocketing fares with the claim they are investing in track and trains. A cleaner country and better commuting. Who wouldn't pay for that, they assert.

The reality, exposed in their own rail industry reports, is that in the last decade the train operating companies have been growing their income while reducing their expenditure on improvements. Yet rail bosses still plead the need to increase fares, apparently demonstrating their Micawberish tendencies in their puffing pursuit of personal happiness. 

If that is not the case, where is the money going?

According to the Office of Rail Regulation (ORR) everything about the railways has been steaming upwards for a decade except for one thing that has been falling like a lump of coal: investment by the private sector train companies back into the industry. 

We are told repeatedly, by rail company directors and government transport ministers, that fares need to go up to pay for renewing our railways. However, statistics from the ORR show private investment, excluding the track owning Network Rail, halved between 2006 and 2010. And the rise in 2011 has only brought it back to 70% of 2006 spending. 

In contrast to this precipitous fall in investment, ORR figures show that Ticket Prices have soared by upto 50% since 2004
(If you thought that the big fall in 'Advance' tickets in 2009 was generous, be aware that according to a Department of Transport report in 2012 these constitute just 4% of all tickets).

Again, in stark contrast to the fall in investment, total ticket revenues have increased 97% since 2002, and gone up over 40% since 2006:

Thursday 20 September 2012

Thursday, September 20, 2012 Posted by Jake No comments Labels:

Lloyds Bank's secret "bonus list" rewards hard sell sales culture among 'advisers'
Leaked document shows how many points each member of Lloyds staff 'scores' if they sell certain products. If they hit targets they win bonuses. But this can result in customers not getting the 'best advice.' DAILY MAIL
("We totally deny these allegations" said Lloyds in a hurriedly called press conference that nobody really asked for, during which they tried to sell absolutely everyone some pet insurance)

UBS trader 'gambled away' £1.4bn

A City trader "gambled away" £1.4bn ($2.3bn) of his firm's money and caused "chaos and disaster", a jury has heard. The prosecutor said that at one point "Mr Kweku Adoboli was betting the entire bank on the toss of a coin. He was a greedy banker out of control and out for himself." The fraud began in 2008, after the start of the banking crisis. BBC NEWS
("But had the fraud taken place before 2008, he'd be Chief Executive by now. Makes you think..." said defending counsel)

Payday lender Wonga trebles earnings as recession worsens

Short-term loan provider benefits from surge in applications. The number of loans it provided in 2011 quadrupled to 2.5m, and its income rose 225%. The CEO denied they were legalised loan sharks. He explained that most of the loans are small, and paid off soon after. GUARDIAN
("...although we keep receiving a £50bn loan application from a Mr G Osborne. As a responsible lender, we always turn him down," he added.)

Homeless families in B&B accommodation up by 44%
20 councils warned their insufficient budget meant they had to house families in B&Bs for an 'unacceptably long time'. But the housing minster insisted councils had sufficient funding to provide a perfectly adequate safety net. GUARDIAN
(When asked what he meant by a safety net, he replied "You know..., one of those things made of string.")

Tuesday 18 September 2012

Tuesday, September 18, 2012 Posted by Hari No comments Labels: , , , , , ,
Fee takes a Wonga employee to task over its lending criteria

Sunday 16 September 2012

Sunday, September 16, 2012 Posted by Jake 3 comments Labels: , , , ,

In the midst of the usual summer silly season, rumours went round that the UK government was thinking of fully nationalising the Royal Bank of Scotland

What a good idea we say. Because far more than further appeals to bankers' decency and threats of regulation, this actually could have saved the soul of the financial services industry.

When it rescued RBS in 2008-09 the government bought 84% of a pig-in-a-poke. With no time to look in the bag, £45 billion of taxpayer money was hurriedly handed over. Ministerial hopes to unload this embarrassing porker, that kept on snouting down bonuses in spite of continuing dismal performance, may lead to the government breaking up and selling the beast as chump chops. Already September 2012 saw RBS putting its Direct Line subsidiary on the block. If this continues, the taxpayer will be left with just the pig's squeal - which would suit the bankers just fine.

Royal Bank of Scotland share price, London Stock Exchange

Bankers and their political helpers assert that if we put a stop to excessive pay and lax regulation they would leave. And thus, they assert, Britain would have no banks. They want us to believe that the alternative to dodgy banks is no banks. A nationalised RBS could prove that the alternative to dodgy banks is actually not dodgy banks, run by people paid sensibly with their customers' interests at heart.

Friday 14 September 2012

Friday, September 14, 2012 Posted by Hari No comments Labels: , , , ,
Chris, KJ and Fee discuss HMRC's attempt to crack down on tax avoidance

Thursday 13 September 2012

Thursday, September 13, 2012 Posted by Jake No comments Labels:

Health and safety inspections cut in regulation curb

Plans to exempt thousands of businesses from health and safety inspections are to be announced by ministers. "We have identified the red tape and now we are going to cut it," said Business Minister Michael Fallon. BBC NEWS
(Mr Fallon was speaking whilst standing under a poorly secured 500kg chandelier. Held up only by a piece of red coloured tape. Which someone promptly cut.)

Planning rules on building extensions to be relaxed 'to boost economy'

The government wants to get planning officers "off people's backs." But the Local Government Association says such red tape is a "myth." It released figures showing a backlog of 400,000 prospective homes which have planning permission but have not yet been built. BBC NEWS

HMRC's special tax unit nets extra £500m from Britain's richest

The High Net Worth Unit has investigated 5,000 of the wealthiest taxpayers, each with assets exceeding £20m, and exceeded its collection targets. The unit achieved this with only 380 staff. GUARDIAN
("It's so profitable we're going to outsource this unit to the private sector," said the Minister for Outsourcing Everything Profitable to the Private Sector)

Blair snaps up a nifty million bucks brokering Glencore's new 'take it or leave it' £22.5bn bid for Xstrata

After an 11th hour intervention from Tony Blair that earned him £625,000, the long-running saga of the Glencore-Xstrata mining merger looked to be entering its final chapter. DAILY MAIL

Tuesday 11 September 2012

Tuesday, September 11, 2012 Posted by Jake 1 comment Labels: , ,
Guest post by James Newhouse who works alongside

When it comes to business gas or business electricity suppliers, there is a serious pitfall that both SME and larger organisations can become victim to – the ‘rollover’. Many do not realise when their business energy contract is up for renewal and do not realise that if they do not act to renew their contract or change supplier at the end of their contract, it can be ‘rolled over’ automatically at less than competitive rates. In fact, in a lot of cases, a rolled over contract can result in a 40% price hike or more according to this parliamentary report:

Average Prices:               Current Price                Rollover Price                 Switching Price
Business Electricity       9.3p/kWh                           14.25p /kWh                         10.15p/kWh
Business Gas                  2.5p/kWh                            4.5p /kWh                              2.9p/kWh

The average SME spends £2580.67 per month on their business energy electricity bills if the average unit price for an SME is 9.3p/kWh with an average standing charge of 22.35p per day – the standing charge accounts for £670.50 of this. If this contract is rolled over onto "out of contract" rates, there could be a monthly spend of £2926.87 on electricity alone, not including the increased daily standing charge. That’s already a 13.4% increase for electricity without even considering the gas hike. 

And even though you rolled into this new contract without intending to, you will be locked in until the next renewal / expiry date (12 months or more) unless you want to pay a hefty mid-contract termination fee. Businesses are therefore inadvertently committed to the increased rate until the end of new contract.

In order to avoid your contract automatically rolling on, you need to renegotiate your contract or transfer to a new supplier before it is too late. The biggest complication for any business is knowing the restrictions your current contract can have on switching. It is essential you are aware of all of the terms and conditions of your current energy provider.

Ofgem have released advice for firms on how to understand business energy contracts, warning that it is vital to understand them to keep in control of business energy spending. Ofgem’s business energy contract guidelines include hints and tips such on how to avoid being ‘rolled over’ including:
Tuesday, September 11, 2012 Posted by Hari No comments Labels: , , , ,
KJ and Fee consider an alternative future for HMS Ark Royal

Saturday 8 September 2012

Saturday, September 08, 2012 Posted by Jake 11 comments Labels: , , , , , , , ,
Updated September 2016

The former chancellor, George Osborne, has finally admitted that the Bank of England's quantitative easing (effectively printing money) made the rich richer. He was silent about that fact when he was chancellor. 

On top of that, interest rate cuts hurt savers. So, speaking from Washington in an interview with Bloomberg TV, Mr Osborne said: “We need to offset the very necessary loose monetary policy and the distributional consequences that it is having. Essentially it makes the rich richer and makes life difficult for ordinary savers.” He added: “There’s a role for government policy not in stopping that monetary policy which keeps the economy strong but in mitigating its impact. I think all of us who believe in free markets need to work harder to find an answer to the anger that people clearly feel out there.” What he couldn’t bear to say was that the only way to do that is to increase welfare and benefits, which he cut.

The Bank of England’s Quantitative Easing (QE) programme (which means printing money to buy UK government bonds) props up the nation’s asset prices. For it to help the real economy, it needs to – you’ve guessed it – trickle down. That’s because most financial assets are owned by the top 10%. Half of us have no financial assets at all.

How much QE has there been? The UK created £375bn ($550bn) of new money in its earlier QE programme between 2009 and 2012. August 2016 brought a fresh injection of £60bn of QE. 

Did it trickle down? The banks are supposed to invest this new money in businesses. They didn’t. Almost all of it went straight into the financial markets and stayed there.

So, August 2012 threw up another howling hypocrisy in the “we are all in it together” mantra:

  • The Bank of England admitted that the wealth enhancing benefits of its Quantitative Easing (QE) money printing exercise had gone to the wealthiest – giving them an estimated £600 billion boost to their wealth.

To put this in perspective, HM Treasury figures show the UK National Debt passed £1,000 billion in the same year, 2012. Just the £600 billion increase to the wealthy resulting directly from QE would have paid off well over half of the national debt.

However the government prefers to pump QE money into inflating the wealth of the wealthy by £600billion, and pay off the debt by cutting jobs, salaries, services, and pensions for everyone else.

The amiable Tory MP Bernard Jenkin dismissed the notion of a wealth tax as the "politics of envy", advising  not to 'strangle the goose that lays the golden egg'.  Jenkin overlooks that while this particular goose ate all the corn, it hasn't produced anything from its nether regions that brought benefit to 90% of ripped-off Britons whose incomes have stagnated for decades.

And in spite of all the exertions of the corn-fed honkers, half of us have absolutely no assets according to Bank of England figures:

Thursday 6 September 2012

Thursday, September 06, 2012 Posted by Hari No comments Labels:

Save the Children say poorest UK children are now not getting regular hot meals and clothing

The charity says the UK's poorest children are bearing the brunt of the recession. The charity said: "It is shocking to think that in the UK in 2012, families are being forced to miss out on essentials like food or take on crippling debts just to meet everyday living costs." BBC NEWS

Squatting is now a criminal offence, punishable with jail or a fine
Ministers said it would offer better protection for homeowners and "slam shut the door on squatters once and for all". The maximum penalty will be six months in jail, a £5,000 fine, or both. But campaigners warned the new law could criminalise vulnerable people and lead to an increase in rough sleeping. BBC NEWS
("We simply will not allow people to live for free off the assets of others," said the government as yet another £50bn was injected into propping up the housing market.)

OFT launches review of "profiteering" by petrol retailers
Motorists have been offered the hope of cheaper petrol and diesel by the launch of an investigation into the fuel industry. When crude prices rise, so do pump prices. But when crude falls, the pump prices get trimmed at best. TELEGRAPH
("We do our best to smooth out oil price volatility. We start with smoothing out the troughs. Then we stop." said our contact in the petrol retail industry.)

FSA to crack down on incentives for bank sales staff

Report blames recent mis-selling scandals on dysfunctional staff incentive schemes, which fail to offer consumers the best deal. But the FSA has ruled out getting rid of incentive schemes altogether. GUARDIAN
("Calling the products 'Super', 'Super Duper' and 'I'm Rich, I'm Rich' had nothing to do with it," said some idiot at the FSA)

Sunday 2 September 2012

Sunday, September 02, 2012 Posted by Jake 1 comment Labels: , , , , ,

Company executives justify their magnificent pay with the ‘global war for talent’. Like so many wars, there are two fronts, one facing the enemy and the other at home:

  • Enemy: Compete against other employers to recruit and then hold on to the talent.
  • Home: Compete against the employee’s innate indolence, to ensure they work hard, don’t slack, and try their very best.
Two appointments in the summer of 2012 show the futility of using pound coins as shrapnel in this ‘war for talent’:

The first is that of Ross McEwan, who was poached by Royal Bank of Scotland (RBS) from the Commonwealth Bank of Australia (CBA). McEwan took the job of Head of Retail Banking at RBS, which was the same post he held at CBA. According to a report by the Guardian, at CBA McEwan earned
  • Salary A$1.25 million
  • Bonus A$647,657
  • Equal to £1.2million for the year
For ditching CBA and moving to RBS, McEwan was paid a ‘golden hello’ of £3.2 million on top of his undisclosed pay package. RBS claim this £3.2m is what McEwan forfeited by leaving CBA. 

So much for ‘holding on to talent’: CBA’s golden handcuffs turned out to be a very portable pair of golden cufflinks.

The second is Antony Jenkins, CEO of Barclays. We haven't managed to spot what Jenkins was paid in his previous role as Barclays’ Head of Retail Banking. According to a report in the Daily Telegraph “Barclays paid a multi-million pound sum by way of compensation” to Jenkins for not getting the seat on the executive board that had been promised when he joined from Citi, an American bank, in 2005. However his new pay package is reported by the FT to be:

“worth up to £8.6m – a base salary of £1.1m, an annual bonus of up to £2.75m, a long-term incentive plan worth up to £4.4m and a cash allowance of £363,000 in lieu of pension.”

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