The Scottish independence campaigners have a long list of grievances. But they ARE treated equally

...as KJ explains to Fee..

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Rip-off News round-up. Our pick of the last week's media (Thu 27th February)

Government accused of suppressing the damning report that its flagship welfare reforms are forcing ever more people to turn to food banks

The report was finally published by the Department for Environment and Rural Affairs today morning amid suggestions that it had been “slipped out” while the floods were still in the news. It concluded that there was “growing demand” for emergency food because of increased need. This directly contradicts the position of Work and Pensions minister Lord Freud, who claimed last summer that the expansion of charities such as The Trussell Trust had driven the demand. INDEPENDENT

Atos seeks early exit from fit-to-work tests contract

Staff carrying out work capability assessments for Atos have received death threats online and in person, according to the Financial Times. In a statement, Atos pledged to carry on undertaking the tests until a new company was in a position to take over. But the government said that standards at Atos had declined unacceptably. Disability campaigners have described the work tests as "ridiculously harsh and extremely unfair". BBC NEWS

Atos awarded contract for NHS records

The beleagured firm Atos has been given the contract to extract patient records from GP surgeries as part of the controversial NHS data sharing scheme. MPs expressed concern when Max Jones, director of information and data services, for the Health and Social Care Information Centre, disclosed that the contract to extract data from GP records will be held by Atos, a firm which has attracted previous controversy. Mr Jones said that once data has been extracted from GP surgeries, it would be held in a “safe haven” held by the centre. Select committees raised fears that the disclosure could further damage public confidence in the NHS data scheme, raising fears that personal medical data would be passed to those assessing benefit claims. TELEGRAPH

IMF study finds inequality is damaging to economic growth

The International Monetary Fund has backed economists who argue that inequality is a drag on growth in a discussion paper that has also dismissed rightwing theories that efforts to redistribute incomes are self-defeating. The Washington-based organisation, which advises governments on sustainable growth, said countries with high levels of inequality suffered lower growth than nations that distributed incomes more evenly. Backing analysis by the Keynesian economist and Nobel prizewinner Joseph Stiglitz, it warned that inequality can also make growth more volatile and create the unstable conditions for a sudden slowdown in GDP growth. And in what is likely to be viewed as its most controversial conclusion, the IMF said analysis of various efforts to redistribute incomes showed they had a neutral effect on GDP growth. This last point is expected to dismay rightwing politicians who argue that overcoming inequality robs the rich of incentives to invest and the poor of incentives to work and is counter-productive. GUARDIAN

RBS to reignite bankers' pay row with bonus pot of £550m set to be revealed amid £8bn annual loss

RBS, which is just over 80 per cent owned by the Government, is thought to be heading for an annual loss of close to £8billion for 2013 after it stunned the City last month by revealing a string of scandal-related financial charges worth more than £3billion. Its latest round of provisions include £1.9billion to cover mainly US penalties over mortgage-backed financial products, an extra £465million to payment protection insurance (PPI) compensation and another £500million for mis-selling of interest rate swaps to small businesses. The bank was already facing bad debt write downs of up to £4.5billion in the creation of an internal 'bad bank' to wind down toxic loans. DAILY MAIL

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ATOS exits from fit-to-work testing. Did they fail? Or just do their job: make us think vast numbers are faking disability

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Graphs at a glance: the little fibs that provide cover for the Tory policy of cutting benefits

February 2014 saw a spat on morality between Catholic and Anglican bishops on the one side and Conservative politicians on the other. While the angels may have been with the bishops, the angles were clearly with the Tories. In response David Cameron wrote a piece for the Daily Telegraph titled  

"Why the Archbishop of Westminster is wrong about welfare: Our plan for Britain is not just about saving money, but about doing what is right".

Apparently the Tories are very confident that the electorate back their welfare cuts. In his letter to the Telegraph Cameron trotted out some of the key angles used to keep us voters onside. We take a closer look at these.

1) Benefits claimants are raking in over £60k a year in handouts:
Cameron wrote:

"in London there were people claiming truly astonishing sums of £60,000, £70,000, £80,000 a year."

The reality, shown in a report done for the Department of Works and Pensions in 2011, is that only 160 people out of 4.8 million benefited from a handout of more than £50,000 for housing benefit. That is fewer than 1 person in 30,000. 96% of claimants received less than £10,000 per year.

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It’s not only food banks. 5,000 were admitted to hospital with malnutrition in the last year

Chris, Fee and KJ take a step closer to understanding Cameron's moral compass...

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Rip-off News round-up. Our pick of the last week's media (Thu 20th February)

Unpaid intern sues British fashion house Alexander McQueen for wages

The fashion house founded by the late designer Alexander McQueen is being sued by a former intern who worked unpaid for four months. Rachel Watson – not her real name but the one her lawyers want used – is claiming up to £6,415 in "lost wages" and says the fashion house broke the law by not paying her the national minimum wage. Watson's internship in 2009-10 included drawing artwork for embroidery, repairing embellished clothing, and dyeing large quantities of fabric. GUARDIAN

More than one million workers face the axe in 'largest public sector cull for 50 years'

As many as two in every five public sector workers could face losing their job over the next five years if the government goes ahead with its planned cuts. However because the government has ringfenced cuts to the NHS and schools, the rest of the workforce, in areas such as policing, defence and public administration, faces an even higher ratio of job cuts. The cuts would dwarf cuts of 350,000 seen in the early 1990s. The increase of 600,000 in the public sector seen under the Labour governments of the first decade of this century would be more than reversed. The impact of the decline in public sector employment will vary in different parts of the country, and dramatically changing the nature of the UK labour market. The percentage of workforce in the public sector is largest in Wales, Scotland, Northern Ireland and the North East and smallest in London, the West Midlands and the South East. DAILY MAIL

Over 2.6m households spend more on bills than they earn - and their monthly shortfall has doubled in a year

Figures from Legal & General show that one in eight homes (12.6 per cent) are struggling to cover their bills – up from one in ten last year. Households who struggle to pay their bills suffer a shortfall of £85, up by over 50 per cent in the last year. In some regions the average shortfall is considerably higher. The dire findings by Legal & General’s 'Moneymood survey' comes despite the fall in inflation to 1.9 per cent, which is likely to ease the strain on household's disposable incomes. But although inflation dipped to a low last seen in November 2009, the number of people who don't have enough cash for their bills has shot up by 756,000 to 2.6million up from 1.9million last year. The cost of gas and electricity has been one of the largest contributors to inflation over the last 27 months. DAILY MAIL

SFO charges three ex-Barclays bankers over Libor rigging

The charges were announced by the SFO and takes the total number of individuals facing criminal proceedings over allegation linked to Libor-rigging to six. The SFO is continuing to investigate the manipulation of benchmark interest rates and further charges are expected. David Green, director-general of the SFO, described the investigation into Libor as "enormous" and said he was "sure" more individuals would be charged in connection with the allegations. The three charged men, Peter Johnson, Jonathan Mathew and Stylianos Contogoulas, were among a list of 104 current and former Barclays bankers who last year attempted to keep their identities anonymous as part of a legal case brought against the bank by a care home operator that claims it was defrauded into buying interest rate hedging products. Barclays declined to comment. TELEGRAPH

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So the Giant NHS Database Care.Data has been postponed. Is that a good thing?

The "Care.Data" national health database has been postponed because in spite of the NHS apparently sending leaflets to every household in England (I can't remember receiving one) most people don't know about it. As, according to the BBC, there is a 66% chance you don't remember either, we will help you out.

For balance, we offer you two videos at the bottom of this post:

1) From the NHS explaining what Care.Data is and why it is a good idea

2) From a YouTube video, forwarded to us by an old friend, explaining why it isn't. (This video starts off in a foreign language, but after 40 seconds moves into English).

The key issue is whether our personal data will remain confidential. What do we think? Well, confidentiality of this data will be maintained so long as you trust politicians

a) to stand up to the generous lobbying of those who would like to intrude into our confidentiality. 

b) not to use the database to further cut public spending by filtering and selecting which of us will and won't get the benefits of public services and allowances.

There are those who will swear misuse of the data will never happen. But in February 2014 the Department of Health proposed that a patient's economic value should be taken into account when deciding on healthcare. Sir Andrew Dillon, head of the National Institute for Healthcare and Excellence (NICE, who set national healthcare budgets and priorities), disagreed saying:

"What we don't want to say is those 10 years you have between 70 and 80, although clearly you are not going to be working, are not going to be valuable to somebody.

Clearly they are. You might be doing all sorts of very useful things for your family or local society. That's what we are worried about and that's the problem with the Department of Health's calculation.

There are lots of people who adopt the fair-innings approach; 'you've had 70 years of life you've got to accept that society is going to bias its investments in younger people."

Sir Andrew may resist. But you only have to look as far as the Department of Education's defenestration of the chair of OFSTED to see how easy it is to replace the Sir Andrews of this world.

Saving money by limiting healthcare for older people is easy - it's hard to hide your age. Will Care.Data make it hard to hide your aches from NHS accountants?

But we wouldn't want to influence you, so we won't tell you what we think. Just see the videos:

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Cutting benefits will push people into work? There are 5 seeking work for every 1 available job!

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Graphs at a glance: What else will be washed away in the flood of public spending cuts?

It has to be said that David Cameron had a heavy dose of bad luck with the floods in the first part of 2014. If only the flooding had waited another two years then his party's performance at the 2014 local elections and the 2015 General Election would have been better.

Cameron's government took the bet that cutting spending on flood defences would not be noticed during his term in office. Rather like a man who reckons he won't get caught driving without insurance so long as he doesn't get into a crash. 

A gambling man would say it was a good bet. A gambling man would look at the statistics from the Met Office to see there hasn't been such a deluge in over 60 years since the 1940s. Chances were it wouldn't happen, but chancers usually get caught out in the end.

Cameron, in a Louis XV of France "Après moi, le déluge" moment, gambled on the deluge coming only after he had gone. Louis XV's prediction came true after he had handed over to his son Louix XVI who lost his head in the French Revolution. For Cameron the deluge came early.

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Graphs at a glance: Why does top pay keep soaring? See how corporate lions and donkeys keep scrambling up the pay escalator.

Does Great Pay come with Great Performance? In our earlier post we showed evidence from Verum Financial that the link between pay and performance doesn't actually exist. 

Which explains why ordinary executives get extraordinary salaries.But that in itself doesn't explain why salaries of the top 1% have been booming away while pay for the 90% has stagnated.

Paris School of Economics http://g-mond.parisschoolofeconomics.eu/topincomes/

The Verum report also sheds light on this. Their analysis shows that pay for poor performance has a more insidious effect than simply giving extraordinary pay to ordinary people. The undeserved pay bonanza doesn't only annoy us ordinary Britons, it also annoys the real high performing executives who see the low performers getting rewarded for lowly performances.

The graph below shows that the variation in bonuses of high performing executives and the herd is much less than the variation in their performances. In plain terms the donkeys get paid not much less than the lions.

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Graphs at a glance: By lunchtime on the third working day in January the average FTSE100 director has pocketed what the average Brit earns in the whole year. Are top executives paid for performance? The evidence suggests not

[UPDATED JAN 2017: No change! High Pay Centre stats show those bosses are still obscenely overpaid. READ ON...]

According to the High Pay Centre, by lunchtime on the third working day of the year the average FTSE100 company director had earned as much as the average Briton will in the whole of 2014. At this rate of pay, the average FTSE100 boss earns in a year what an average Briton earns in a lifetime. Is s/he worth it?

Apologists for excessive pay assert that pay is set by the market, and that high pay rewards high performance. Is that true? Or is it actually a case of executives capturing the company revenue stream and diverting it into their pockets?

A report titled "An Analysis of FTSE 100 Company Director Pay" by Verum Financial Research provides evidence contradicting the 'pay for performance' assertion. The report  looks at the statistical correlation between pay and a series of executive performance measures. It finds that there is a moderate correlation between pay and two of the more manipulable (i.e. dodgy) measures: Profit After Tax and Return On Equity. The report finds that correlation with three more meaningful measures are actually negative (i.e. the worse your performance the more you get paid): Cash Return On Invested Capital (CROIC); Operating Cashflow; Cash As A Percentage Of Profit.

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The Floods! We should all help pay for this national disaster. Although not everyone will agree...

Fee has it all explained by KJ...

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Rip-off News round-up. Our pick of the last week's media (Thu 13th February)

Floods: Environment Agency frontline staff hit by cuts, whistleblowers reveal

Deep government cuts to the EA budgets means it will have shed a quarter of its staff by October and senior insiders have told the Guardian that hundreds of staff, including those work with the fire and police services and those issuing flood warnings, are being cut. One whistleblower said at the same time that frontline staff were being put onto 24/7 duty rotas, managers were being asked to cut staff by 13% across all regions of the country. Lord Smith, chair of the EA, said last month: "An absolute red line for us is that we have to be able to maintain our ability to respond to flooding emergencies wherever they are happening. Our response to flooding emergencies must be protected and will be protected." GUARDIAN

Bank of England to 'stress test' banks in case a house price crash requires another bail out

A ‘stress test’ will examine whether banks will need bailing out if prices plunge. A recent Nationwide Building Society survey showed house prices had risen by 8.8 per cent since January 2013. The high-profile examination by the Bank could highlight the gulf between Bank of England boss Mark Carney and Chancellor George Osborne over the housing market. Bank officials are keen to use whatever tools they can to prevent a price bubble, with Carney drawing attention last year to the relatively small number of new homes built. Osborne’s Help to Buy scheme offering Government-backed mortgages has been blamed by some for helping to inflate the market. DAILY MAIL

Average earners 'need to double their salary' just to keep up with the effect of soaring house price inflation

Property values are totally 'out of sync' with wages, says the leading housing charity Shelter. Their results found average earners would need to be paid £29,000 more to keep up with soaring house prices. In some parts of the country, this figure is far higher: In the London borough of Hackney for example, the average annual salary would need to increase by more than £100,000 to be in line with astronomical increases in property values in East London. The Shelter report echoes recent Office of National Statistics data, which showed how through boom and bust house prices in Britain have largely risen far faster than wages. Since 2003 the average house price has gone up by £100,000, whereas the average annual salary has risen by just £6,570. Even removing London and the South East out the average home has risen by £73,000. DAILY MAIL

Bedroom tax: With no smaller homes to move to the housing benefit changes are 'unworkable'

Since last April, people deemed to have one spare bedroom have had their housing benefit reduced by 14%, while those with two or more spare bedrooms have seen reductions of 25%. The government argued the measure would help control the billions spent on housing benefit and free larger properties for those who needed them the most. But the NHF said: "We know there aren't enough smaller homes in England for these families to move into." Without the smaller homes, and no money to pay the rent, people are facing eviction. 72,000 housing association tenants – two thirds of the total affected by the bedroom tax  - were in rent arrears because of the policy and, by last October, 15% of households affected by the cuts had received letters warning them they were in danger of being evicted. BBC NEWS

Jackpot! Bookies avoid £1bn in taxes

Bookmakers and casinos have avoided paying around £1bn in UK tax on bets placed by British people by routing them through subsidiaries based in overseas tax havens. Football, racing and poker betting operators are estimated to be saving around £250m a year by offshoring online gambling – more than the highly publicised recent cases of tax avoidance by Starbucks and Amazon. Although William Hill and Ladbrokes are UK Plcs with hundreds of high street branches, bets placed on their websites and phone lines are regulated and taxed in the British overseas territory of Gibraltar. Other big names such as Betfair, PaddyPower and 888 – which heavily market their games in the UK – also avoid paying British tax on "remote" betting and gaming. INDEPENDENT

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Graphs at a glance: KPMG's report reveals executive pay breakdown between salary and incentives for a FTSE100 boss. For them a 'bonus sacrifice' is not much of a sacrifice.

Every now and then, generally to quell public outrage, directors give up their bonuses. 

Bankers including Stephen Hester (former CEO of RBS) and Bob Diamond (former CEO of Barclays) gave up theirs in the face of public outrage over incompetence and skullduggery. Energy boss Sam Laidlaw (CEO of Centrica) gave up his bonus because of public outrage over price hikes. His peer at NPower, Paul Massarra, refused to give up his bonus saying it was just a gimmick. 

The entire board of RBS declined their bonuses due to an £8billion loss and £3.1billion cost of legal fees and fines. Anthony Jenkins (CEO of Barclays) turned down his bonus, citing "very significant costs which have been required to address legacy litigation and conduct issues in 2013" (i.e. Barclays getting caught being very naughty indeed). 

Did Jenkins throw his own bonus under the tram to provide cover for hiking to £2.4 billion the bonuses paid to his Barclays bankers, inspite of profits falling by nearly a third? To paraphrase Saint John: "No greater love hath any man than to give up his bonus for the bonuses of his staff."

But don't get too teary for these multimillion pound sacrifices. According to a report by KPMG, for your average FTSE100 boss bonuses only form a small layer of icing on a very fat cake:

http://www.forfactssake.org/

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Cutting for cuts sake: What was the government thinking when it came to power and cut £100m from the flood defence budget?

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Graphs at a glance: How do banks pay their taxes? UK banks Payment Protection Insurance (PPI) compensation fund reaches £20billion. A swindle big enough to pay all their Corporation Tax for years.

[UPDATE DECEMBER 2016: The total compensation paid by the banks reached £40bn as of October 2016, and will no doubt rise further. That means the banks swindled as much out of customers through PPI alone as they paid in corporation taxes between 2005 and 2013. It's as if they got us suckers to pay their taxes for them.]


We are told by by bank lobbyist from the industry and from politics that banks must be kept free of effective regulation because they provide vital tax revenue to the country. Standing in the economic ruins immediately after the 2008 crash, Boris Johnson said of financial regulation, with as straight a face as he can manage:


“Sensible taxes, light regulation and reasonable employment law will mean businesses are able to pay the taxes for the things we need to do.”

So how do the banks get the money to pay these taxes?

In February 2014 Lloyds Bank increased its PPI mis-selling compensation fund by £1.8 billion. This took Lloyds' total for this scam to £10 billion, and the UK banking industry's total to about £20 billion as at February 2014. This total may well continue to rise over time.

Figures from HMRC show that this £20 billion, swindled out of their customers, is the same amount as the total taxes paid by the banks since 2008 in Corporation Tax, Bank Levy, and Bank Payroll Tax. Note that this £20billion of ill-gotten gains doesn't include other swindles such as Interest Rate Swaps, LIBOR rigging and others.

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What are the private sector skills outsourcing companies bring to the public sector other than a) slash pay; b) hike costs

The graph below from a report by the Good Work Commission shows that it is not just unskilled occupations that are in decline. 

People who invested in their skills as traders and as machine and transport operators are also losing their jobs.

One result of the drop in demand for certain occupations is an excess in supply of workers for those jobs, driving pay downward.

This is a key driver of ‘outsourcing’. Organisations find themselves contractually and morally unable to slash the wages of their own staff, so they outsource all the unpleasantness. Which, ironically, can also help the organisations claim to be ‘good employers’, by getting rid of employees they were being ‘bad’ to.

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Industrial action is in the air. Bloody hell! Should we limit the right to strike?

Fee explains it all to KJ. Or maybe it's the other way around...

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Rip-off News round-up. Our pick of the last week's media (Thu 6th February)

Office for National Statistics confirms that wage slump since 2010 is the greatest since records began in 1964

Average wages have fallen by 2.2 per cent a year since the start of 2010, after inflation is taken into account - meaning that the standard of living has been consistently falling. Household finances have been squeezed by subdued wage rises or even pay freezes at a time when the cost of essentials such as food and fuel has soared. Living standards look set to be a key political battleground between now and the general election in May 2015 with ministers hoping that the worst may now be over. But the ONS said it is ‘difficult to conclude that there has yet been a break from the trend of falling real wage growth’ following a drop of 1.5 per cent between the third quarter of 2012 and the same period of 2013. It followed a report by the Institute for Fiscal Studies showing the average family has an income today which is lower than it was 13 years ago. DAILY MAIL

Financial Ombudsman Service “Consumer Champion” Natalie Ceeney swaps sides to work for HSBC bank

The former boss of the Financial Ombudsman Service who made her name slamming the banks for mis-selling payment protection insurance has joined one of her main antagonists, HSBC. Her move, along with other top civil servants, will raise questions over whether enough is being done to ensure public officials do not abuse sensitive knowledge in their private sector jobs. Last year HSBC recruited chief spook Jonathan Evans, previous head of domestic security service MI5, to help tackle fraud after its billion pound fine for laundering cash for Mexican drug cartels. Rival Barclays hired Hector Sants, the head of the Financial Services Authority, as head of compliance. The most astonishing appointment was when Dave Hartnett, the former head of HM Revenue and Customs, agreed to work for accountancy giant Deloitte, which specialises in tax avoidance. The former taxman, whose ‘sweetheart deals’ allowed Starbucks and Vodafone to avoid billions in payments, sparked fury by switching sides to work for the  firms’ accountants. DAILY MAIL

New inquiry into bank rigging of foreign exchange: allegations 'as bad as Libor', says regulator

The Libor interest rate scandal led to banks paying $6bn in fines. Martin Wheatley, the head of the Financial Conduct Authority (FCA), told MPs that 10 banks were now helping with its investigation into the rigging of the foreign exchange markets. Traders are alleged to have colluded in setting certain key exchange rates in the £3bn-a-day forex market. Wheatley revealed that the FCA's probe had now widened, and "a number of other benchmarks that operate in London" were being investigated "because of concerns that are being raised with us". Other regulators around the world are also investigating possible manipulation of foreign exchange rates, but London's position at the centre of the market makes the FCA's investigation particularly significant. Several banks, including RBS and Barclays in the UK, have launched their own internal investigations and already suspended foreign exchange traders. Mr Wheatley told the committee of MPs that it was unlikely that the FCA's investigation would reach any conclusions this year. "I hope that we will next year... We are still in the investigation phase." BBC NEWS

Labour says spending cuts hit most-deprived areas hardest

According to Labour, between 2010/11 and 2015/16 the percentage cut in spending will be 10 times greater in the most deprived areas than in those least deprived. But the government says the most-deprived councils still have £1,000 more per household to spend than those where deprivation is lowest. The 10 most deprived areas, which include Liverpool, Hackney, Manchester and Middlesbrough, face an average reduction in spending power of 25.3%, according to Labour. The party says the 10 least deprived areas, which include St Albans, Elmbridge, Waverley and Wokingham, are dealing with an average cut of just 2.54%. Deprivation is measured using indices previously published by the Department for Communities and Local Government. The measure includes income, employment and health deprivation, as well as disability, crime, education and barriers to housing and services. BBC NEWS

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Where is the growth happening? 80% of new private sector jobs are being created in London

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Graphs at a glance: How workers driven from full-time to part-time jobs saved the UK Govt's blushes in the unemployment stakes

How miraculous is Britain's 'jobs miracle'? 

Since the start of the Banking Crisis, Britain has been able to boast a less ghastly unemployment rate than the rest of the EU according to the Office of National Statistics. 

How did our leaders manage that? Or did they??

The truth is revealed in another ONS report, "An Examination of Falling Real Wages, 2010-2013". The percentage of people who lost their full-time jobs during the banking crash around 2008 were matched by the same percent moving into part-time jobs. Many of these people, as a result of the cut to their incomes, will require "benefits" to top up their low pay.

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Graphs at a glance: the destruction of Manufacturing jobs during the last Labour government

The Tories are a pretty unsavoury bunch. But those who hope for a return to the last Labour government should be careful what they wish for. 


This graph from the Office of National Statistics report "An Examination of Falling Real Wages, 2010 - 2013" offers a startling insight into how Manufacturing jobs withered away under Labour between 2000 and 2010:

The cumulative effect of this has been the loss of one third of manufacturing jobs between 2000 and 2010. Much of this loss happened during the 'boom' years before the banker induced crash. The graph also shows that the vaunted 'boom' in the service industries (from bankers in financial services to waiters in restaurants) was more of a gentle hiss.

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