Tuesday 30 October 2012

Tuesday, October 30, 2012 Posted by Hari 4 comments Labels: , , , , , , ,
Work and Pensions Secretary Iain Duncan Smith has done the sums...

Sunday 28 October 2012

Sunday, October 28, 2012 Posted by Jake 11 comments Labels: , , ,
We notice that energy company spokesmen defend price hikes on television, radio and in print by claiming to buy all their energy on the wholesale market. (You can also read our more detailed post on this from 2011).

The fact is the retail energy companies, who bill domestic consumers, buy their wholesale gas and electricity guessed it...themselves. The generating companies, who take the coal and gas from the Earth and generate the wholesale electricity, are the retailers’ own conjoined twins. Each of the ‘big six’ are now able to supply virtually all their own needs. The graph below from OFGEM shows above the zero line how much energy the retail companies' generation twin can generate, and below the zero line how much energy the companies sell to the likes of you and me and the businesses that employ us. All six are more or less in balance – they can supply their own demands. [In the graph, RWE is the owner of nPower, SP is Scottish Power]

Since 2004 the energy industry has simply moved its profits from the retail side of the business to the wholesale generation business. This can be seen from the soaring OFGEM graph below showing the Value Chain Profitability. Profits from generation were small until 2004, after which they boomed as did overall profits:

Saturday 27 October 2012

Saturday, October 27, 2012 Posted by Jake 4 comments Labels: , , ,

By Richard Murphy

Adviser to the Tax Justice Network and the TUC on taxation and economic issues. He is also the director of Tax Research LLP.

I admit I have not the time or energy just now to spend a lot of time on HMRC’s new tax gap data.

The ‘tax gap’ has three major components:
  1. Tax lost to tax avoidance, which is defined here as seeking to minimise a tax bill without deliberate deception (which would be tax evasion or fraud) but contrary to the spirit of the law;
  2. Tax lost to tax evasion, which is the illegal non-payment or under-payment of taxes, usually by making a false declaration or no declaration to tax authorities, resulting in legal penalties if the perpetrator is caught. Tax evasion includes fraud, error and neglect by the taxpayer;
  3. Non or late payment of tax declared to be due but not paid on time, i.e. late payments and bad debts suffered by HMRC.

I’ve already explained that the mysterious decline in this tax gap over the last three years – the majority of which is explained by revisions to the basis of calculation - does not look credible. But let me offer just a little commentary now on some of the figures in this year’s data, which looks like this:
So let’s just make a few observations on why these look implausible.

Friday 26 October 2012

Friday, October 26, 2012 Posted by Hari 1 comment Labels: , , , , ,
Chris, Fee and KJ try to come to terms with the bad news about our favourite companies...

Thursday 25 October 2012

Thursday, October 25, 2012 Posted by Jake No comments Labels:
Not just Starbucks! Google, Facebook, Amazon, IBM and Apple pay UK tax rates of just zero to 0.54% 
Starbucks’ CEO Howard Schultz claims its British operation makes losses and therefore owes no tax here. True? There are legal methods multinationals use to "increase" UK costs and move actual profits into a tax haven: charging the UK operation “royalty fees”; push profits around their global supply chain; loading UK subsidiaries with high-interest loans. DAILY MAIL
(“I was so shocked I spat into my own latte, to save them the bother,” said one Starbucks customer.)

By the next election one million working people will depend on housing benefit to afford rent
The National Housing Federation reports an alarming rise of in-work recipients of housing benefits. The number has more than doubled to 903,440 in under four years. Planned cuts to housing benefit go against government claims that they are on the side of hard working people.  But the government replied, “Under our reforms those on housing benefit can still afford up to a third of homes on the local rental market." GUARDIAN
(A third = the bathroom and one bedroom. But not the living room, kitchen, or anything else as two other hard working families will be sleeping there!)

Unsophisticated investors were the 'golden prize' at Goldman, says former employee
Goldman Sachs employees deliberately sold the most complex financial product to the least sophisticated investors, according to a scathing insider account of life at the Wall Street bank. Goldmans dismissed the book as bedtime reading for conspiracy theorists. TELEGRAPH
(...but essential "how to" reading for new recruits at Goldman Sachs.)

Banks face thousands more "rate swap" mis-selling claims, say the Clydesdale and Yorkshire banks
The Clydesdale and Yorkshire banks have decided to widen the products on which they will consider paying out compensation. 40,000 complex interest rate derivatives were mis-sold to small businesses, pushing them to the verge of ruin. Now that number may double. Compensation estimates range from £10bn to £20bn. TELEGRAPH

Tuesday 23 October 2012

Tuesday, October 23, 2012 Posted by Hari No comments Labels: , , , ,
The Prime Minister works out how to make Britain safer on a tight budget...

Sunday 21 October 2012

Sunday, October 21, 2012 Posted by Jake 2 comments Labels: , , , , ,
Something truly remarkable happened in Parliament on 17th October 2012. A moment so rare we should give it a name – "Bloomingheck Day". 

A British prime minister, not covered by a shower curtain singing into the spray before breakfast but in full view of parliamentary television (19 minutes 15 seconds into the video), promised to legislate uncompromisingly against a long running rip-off. 

So clearly, so concisely, so undeniably that we reproduce his words directly from Hansard (Parliament’s minutes):

I can announce, which I am sure the hon. Gentleman will welcome, that we will be legislating so that energy companies have to give the lowest tariff to their customers—something that Labour did not do in 13 years, even though the Leader of the Labour party could have done it because he had the job.”
For clarity as well as suspension of disbelief this was said by David Cameron, Prime Minister of the United Kingdom of Great Britain and Northern Ireland, during Prime Minister’s Questions on 17th October 2012 shortly before lunch (thus presumed sober).

That was it. It was not followed with weasel words on how the best deal is not always the cheapest, or how the best deals need only be "offered" (in the knowledge that people don't trust "offers" from companies, and so ignore them). 

Crystal clear, no smoke, no mirrors, say it again: “We will be legislating so that energy companies have to give the lowest tariff to their customers”.

It soon became clear that Cameron had kept this promise secret from his team of politicians and hangers-on. Even his own cabinet minister responsible for energy policy hadn’t heard of it. To get this into the legislative programme Cameron evidently had to smuggle the policy into Parliament under his jumper. The easily confused Labour Party, reacting with the drooling predictability of a Pavlovian dog, unthinkingly condemned the statement as "something out of the Thick Of It". 

People of all odour, of all complexion, of all persuasion: don't tell Cameron he is a confused ninny and hand him the Asperger's defence on this. Reassure him he is quite lucid and make him get on with it!

Saturday 20 October 2012

Saturday, October 20, 2012 Posted by Hari No comments Labels: , , , , , ,
KJ, Fee and Chris work out what it costs us...

Thursday 18 October 2012

Thursday, October 18, 2012 Posted by Jake No comments Labels:
Wonga caught advertising on Talking Ginger children's game
The Talking Ginger smartphone app, which teaches children how to get ready for bed, has been carrying adverts for Wonga and online casinos. App users can only remove the adverts if they pay for "virtual toothpaste" – 69p gets a user 100 squirts of toothpaste and no more adverts. The game teaches kids that a foul smell means you’ve not been brushing your teeth. GUARDIAN
(...or you've stumbled into the offices of Wonga and Talking Ginger.)

George Osborne: Workers of the world unite... and give up your rights
Companies to give people shares worth as little as £2,000 in exchange for worker rights. But employers will then be allowed to hire people under contracts that exempt them from the right to claim unfair dismissal, a redundancy pay off if the firm goes under, and any right to demand flexible hours or time off for training. The idea has been widely condemned by employers. "When I pay someone, I want them to get on with the job, not worry about all the complicated and unforseen consequences," complained one employer. TELEGRAPH
("Likewise," said one Tory party donor as he wrote out another £1m cheque.)

PPI: claims continue to rise, and it's not due to fraud

The Financial Ombudsman Services (FOS) has taken on 66,882 new complaints about payment protection insurance (PPI) in the last three months. Banks say many claims are down to bogus claims resulting from the modern trend towards "compensation culture". But the FOS dismissed fake claims as the reason for the rising number. TELEGRAPH
(Meanwhile the Oxford Dictionary has updated its definition of "compensation culture" to include 'shameless demands by fat cat bankers for massive bailouts for a crisis they caused themselves.')

Amazon: £7bn sales, no UK corporation tax
The online retailer's British operation is "owned" by a company in Luxembourg which receives all payments for books, DVDs and other goods. The total tax dodged could be around £100m. GUARDIAN
(£100m is the unit of measurement in the corporate tax dodging world, otherwise known as ‘a hospital.’)

Monday 15 October 2012

Monday, October 15, 2012 Posted by Hari No comments Labels: , , , ,
There's been lots of criticism, even from the business community. But what has history to teach us?...

Sunday 14 October 2012

Sunday, October 14, 2012 Posted by Jake 8 comments Labels: , , , , , , ,
Apart from doing that Bullingdon thing the Chancellor George Osborne also studied Modern History at Oxford University. Some may be surprised to learn that "Modern" history starts from the 16th Century straight after the Middle Ages. One of the lessons Osborne would have learned from this period is how the island of Manhattan in New York was given up by its Native American Indian inhabitants for a handful of glass beads. Clearly an example of how one party misled the other on two things:

a)     the relative values of a handful of glass beads and Manhattan, and
b)     the implications of "give up"

George is trying the same trick with your Employment Rights. He proposes that you surrender your right to claim unfair dismissal in exchange for shares in your employer worth between £2,000 and £50,000. This is in spite of the fact that Britons are already the third most easily sacked people in the developed world. 

Presumably the idea is that you too can get richer from your own sacking by the boost to your employer’s share price and the dividends that come from getting rid of you. Making getting fired worthwhile!

As you will appreciate, this is closely modelled on the Manhattan Island scam. So we provide you with some basic facts to avoid any confusion on

a)     the relative value of a handful of shares and your employment rights, and
b)     the implications of “give up”

In March 2012, the Chartered Institute of Personnel and Development published a report titled “Counting the cost of the jobs recession”. The report provides stark figures on the effect on the economy of unemployment.  

The report's figures on the continuing lost GDP, e.g. 9.1% lost in 2011 alone, throws a light on the fact that although the banks may claim to have stopped stabbing us in the back (though we doubt this), and claim to be reforming (we doubt this too), it is clear that we are still bleeding. It also provides other grim facts for the sacked:
  • The number of people working part-time because they can’t find a full-time job doubled from 0.67 million to 1.34 million between spring 2008 and the end of 2011.
  • Two-thirds of people who are made redundant and who then return to work are paid less in their new job. On average, the pay penalty is 28%.
An earlier CIPD report, from January 2009, “A False Economy? The cost to employers of redundancy”, found that in terms of the amount of redundancy money paid:
  • The average redundancy payment is found to be £10,575, though a quarter of employers pay less than £5,000. The average payment ranges from £7,629 in the voluntary/not-for-profit sector to £8,891 in the private sector and £17, 926 in the public sector.

Friday 12 October 2012

Friday, October 12, 2012 Posted by Hari 1 comment Labels: , , , , ,
Fee knows what we all know about the Big Six energy suppliers, British Gas, SSE, Npower, Eon, EDF and Scottish Power...

Thursday 11 October 2012

Thursday, October 11, 2012 Posted by Jake No comments Labels:
'Low food prices are gone for good': experts blame bad weather and market speculators
Experts blame the current rises in grocery prices on a combination of terrible weather, bad harvests and speculation. Meanwhile, 'political drift' on the issue meant any solution to the problem in the longer term was unlikely. DAILY MAIL

Pensions in 'freefall' due to Bank of England's money-printing
Annuities – which you buy with your pension pot when you retire - determine a savers annual income for the remainder of their life. However their value has plunged by 7% in just three months, a result of the Bank of England's "quantitative easing". With another round of money-printing being considered, annuity rates could fall even further. TELEGRAPH

'Wonga is targeting our bankruptcy capital': Blistering attack on payday lender's £24m Newcastle Utd sponsorship
As many as 35.2 adults per 10,000 are insolvent in the North East – home to Newcastle United – compared to just 17.5 in London and 29.6 in the neighbouring North West. The deal also includes naming rights for the club's stadium although Wonga will restore the Sports Direct Arena to its traditional name, St James' Park. Wonga is the leading high interest, short-term "payday" loan company. Newcastle United will now be sponsored by the money of deprived people up and down the country. DAILY MAIL
(If you can't afford to buy one of their wildly overpriced football shirts, you can always take out a Wonga loan... It's all starting to make sense!)

Tory conference: Lord Young slams government's small firm start-up scheme

The new Seed Enterprise Investment scheme incentivises investors to invest in small businesses by giving them tax relief. But Lord Young described the scheme as "ridiculously generous". Venture capitalists can get up to 78% tax relief by using the new scheme. BBC NEWS
("Be realistic, Lord Young. This has to compete with the 100% tax relief they get from all the other loopholes they're using," shouted one wag from the audience.)

Tuesday 9 October 2012

Tuesday, October 09, 2012 Posted by Hari No comments Labels: , , , ,
Tax benefits, allowances,,, is nothing safe?

Sunday 7 October 2012

Sunday, October 07, 2012 Posted by Jake 8 comments Labels: , , ,
Her Majesty's Revenue and Customs (HMRC), responsible for tax collection in the UK, recognises certain special needs. HMRC provides tax deductions and allowances for being old and married, for being old and divorced, and for being blind. These are well targeted allowances that are deliberately not intended for younger and sighted people.

However, none of these special needs is more generously provided with tax deductions and allowances than the special need of “being rich”. Nor are any other deductions nor allowances more ruthlessly and meticulously targeted to ensure the "not being rich" can benefit from them. These allowances for "being rich" are known collectively as "tax avoidance". Accountants will rush to tell you tax avoidance is quite legal, so long as you have the glitz to persuade a bank to lend you millions of gilts for a few days, or find someone to trade offshore dividends on your behalf, or tuck away a 'sideways loss' for a rainy taxy day.  However, as the litany of rich celebrities dodging taxes to fund their special need of "being rich" continues, it is easy to forget how extremely expensive it is to be poor. The fact is, the poor pay higher prices for the same goods and services than averagely and better off people. So, for the purposes of this post, let's lay off the poor rich and focus on the poor poor.

Office of National Statistics Figures
We have pointed out in an earlier post that companies have good reason to rip off the poor. The reason is, in the words of Slick Willie Sutton the bank robber, (and perhaps a little surprisingly) "because that's where the money is". The rich have the wealth (which is why they are so against a wealth tax), but while they may live in it, sail it, eat off it, look at it, or just horde it, they rarely spend it. The actual flow of cash mainly runs through the hands of poor and ordinary people. Why is this? Because there are so many more ordinary people, and they have to spend all the cash they have to pay their bills. By the way, this is another reason why trying to grow the economy by giving more money to the rich is so grimly fatuous - the rich don't go out and spend it, they just stack it away. While giving more to the poor - improved minimum wage, lower VAT, or even (say it softly) an increase in benefits - would see the cash circulate back into the economy and generate real spending and growth.

As a direct result of these rip-offs it becomes exceedingly expensive to be poor. The charities Save the Children and Family Action produced reports in 2010 and 2011 detailing how the poor pay more for the same stuff. One of the regrets we at Ripped-Off Britons have is these reports appear in a flare of publicity and are then forgotten. So we reproduce extracts here, which we will retweet lest we forget.

It is a shocking injustice that the poorest families in the UK pay higher prices than better-off families for basic necessities like gas, electricity and banking. The costs that poor families bear in acquiring cash and credit, and in purchasing goods and services, can amount to a ‘poverty premium’ of around £1,000 – 9 per cent of the disposable income of an average-size family.

Saturday 6 October 2012

Saturday, October 06, 2012 Posted by Hari No comments Labels: , , , ,
Chris and his wife find out the hard way...

Thursday 4 October 2012

Thursday, October 04, 2012 Posted by Hari No comments Labels:

RBS trader sent mocking messages as he tried to rig Libor, court told
The Libor determines interest rates on $350 trillion globally, from home loans to credit cards. Online chats between colleagues contained boasts such as 'our six-month fixing moved the entire fixing hahahah'. The evidence also shows an RBS trader describing Libor as a "cartel" and claiming that hedge funds would be "kissing" a colleague if the rate was reduced. GUARDIAN
(RBS emails saying "let's all do an honest day's work" and "stop rigging these rates, we've all made enough money already" were dismissed as obvious fabrications by the court.)

Families face sharp rise in winter energy bills

Profits from each household will rise from £45 to £65 by Christmas, prompting claims that large energy companies are profiteering. Up to 300,000 businesses could be forced to fold if energy prices continue to rise. But energy supplier SSE said “Our margin is equivalent to most other essential commodity providers like food and water, and substantially less than things like mobile phones, Sky and others.” TELEGRAPH
("But substantially more than six massive energy firms operating in a properly functioning and competitive market," they didn't add.)

Payment Protection Insurance complaints soar to 2.2 million. Overall, Barclays is the worst
Barclays Bank received more customer complaints than any other UK financial institution in the first half of 2012, with 442,266 disputes recorded. Barclays said that if PPI complaints were stripped out of its figures, overall complaints would have fallen by 9%. MSN NEWS
("And if rampant mis-selling were stripped out of our core strategy, we'd be out of business completely," they didn't add.)

Ryanair boss bemoans own airline's baggage fees
Michael O’Leary, Ryanair’s famously opinionated chief executive, has dismissed holidays as “a waste of time” and says flying with his own airline costs him "a fortune in excess baggage”. TELEGRAPH
(A spokesman for the Union of Satirists said "Michael O'Leary's latest statement shows he is a ruthless man who will not rest until every satirist is out of a job.")

Tuesday 2 October 2012

Tuesday, October 02, 2012 Posted by Hari No comments Labels: , , , , , , ,
Ed Miliband isn't telling...

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