Saturday 29 March 2014

Saturday, March 29, 2014 Posted by Jake 3 comments Labels: , , , , , , , , ,

Winston Churchill said of America:

“You can always rely on America to do the right thing once it has exhausted all the alternatives”

Sadly, the same can’t be said of Britain.

London and New York have fought for the top “Global Financial Centre” spot for years. According to the March 2014 “Global Financial Centres Index” produced by Z/yen, who describe themselves as “the City of London’s leading commercial thinktank”:

“New York is now the leading centre, although its lead over London is statistically insignificant – two points on a scale of 1,000.”

What is it about crusty old London that keeps it head-to-head with glitzy New York? According to a puff-piece by the City of London Corporation the key elements to a Global Financial Centre are:

  • Critical Mass; Connectivity; People; Regulation; Domestic Market Infrastructure; Business Environment

Six solid gold attributes that New York and London can both offer. But London offers something even more valuable! In March 2014 the Financial Times reported that the total fines paid since the Banking Crash by banks to US regulators hit the US$100 billion mark:

"Wall Street banks and their foreign rivals have paid out $100bn in US legal settlements since the financial crisis, according to Financial Times research, with more than half of the penalties extracted in the past year."

Figures show that in 2008 both UK and US regulators were fining banks a similar amount - reflecting the fact that the US regulation was then just as spineless as the UK. But by 2013 UK regulatory fines were only one fiftieth US fines.
Exchange rate US$1.6 = £1

Friday 28 March 2014

Friday, March 28, 2014 Posted by Hari No comments Labels: , , ,
Fee, KJ and Chris wonder what will happen next to the "Big 6" energy firms...

Thursday 27 March 2014

Thursday, March 27, 2014 Posted by Hari No comments Labels:
Defaults mean student fees hike likely to cost more than the system it replaced
New official forecasts suggest the write-off costs have reached 45% of the £10bn in student loans made each year. The 48.6% mark is the threshold at which experts calculate that the government will lose more money than it would have saved by keeping the old £3,000 tuition fee system. The coalition's decision to introduce higher fees of £9,000 shortly after it formed led to rioting on the streets and forced a dramatic decline in the Liberal Democrats' poll ratings, from which the party has never fully recovered. Lower pay for young adults, an over-supply of those with degrees and the worsening economic outlook have all contributed to the revised civil service forecasts which conclude that far fewer graduates will earn enough to pay back their loans over their working lives. Four months ago Willetts notified parliament that the rate had risen to 40% from 35%. In 2010 the estimate was 28%. GUARDIAN

Big Six energy firms face full-scale probe as watchdog finds profits QUADRUPLED to more than £1billion in three years
The Big Six energy companies face a full-scale competition investigation amid widespread public distrust of the industry, soaring profits and evidence of possible ‘tacit’ coordination. Months of building distrust and debate around the energy market came to a head this morning as the regulator Ofgem announced the market will face a full investigation. The investigation would be the first full-scale competition probe into the energy market and would see the UK’s biggest suppliers come under an unprecedented level of scrutiny, with the threat of being broken up. Despite the rising profits, the damning report from the regulator said there was ‘no clear evidence of suppliers becoming more efficient in reducing their own costs’ and that further evidence would be required ‘to determine whether firms have had the opportunity to earn excess profits’. DAILY MAIL

Tory, LibDem and Labour MPs approve annual welfare cap in Commons vote
Welfare spending, excluding the state pension and Jobseekers allowance, will be capped next year at £119.5bn. The idea, put forward by Chancellor George Osborne in last week's Budget, would in future see limits set at the beginning of each Parliament. With Labour supporting the idea, the measure was approved in the House of Commons by 520 to 22 votes. However, eleven Labour backbenchers defied their leadership by voting against the plan. Diane Abbott, one of the Labour rebels, said the cap was a blunt mechanism that would not take into account changes in people's circumstances and economic factors such as rising rents. BBC NEWS

Cameron: You may have to pay for your own social care if you cash in your pension early
Prime Minister David Cameron has warned those who choose to cash in their pension early under Government reforms that they could end up paying more for their care later in life. It comes after George Osborne announced in the latest Budget that savers would be allowed to withdraw money from their pension pots as they wish when they retire. Osborne said his shake up of the pension annuity market was to end the stranglehold the insurance industry has on people’s pension savings. But anyone who has assets worth more than £118,000, including their own homes, will have to pay for their own social care. Cashing in your pension may push you above that limit. DAILY MAIL

Tuesday 25 March 2014

Sunday 23 March 2014

Chancellors of her Majesty's Exchequer are programmed to produce fists full of lolly in the year before an election. John, Norman, Ken, Gordon and Alistair did it. George Osborne was no different in the 2014 Budget. Chancellors in the year before an election produce lolly like the Child Catcher from Chitty Chitty Bang Bang.

The biggest lolly George is handing out in the 2014 Budget is our pension pots. Up until this brightly wrapped idea we were required to give at least 75% of our pension pots to pension companies, by buying an annuity. Now Osborne says we can take the money ourselves and do the right thing with it for our old ages.

This is of course a change of heart from Osborne. In the 2012 Budget Osborne thought pensioners were just simple souls. He said:

“We should also simplify the age related allowances - which the Office of Tax Simplification have recently highlighted as a particularly complicated feature of the tax system…The National Audit Office points out that many pensioners don't understand them."

Osborne's idea of ‘simplifying’ the age related allowances was to scrap them completely. A move Ros Altmann, the pensions expert, described as follows:

So why has Osborne decided that pensioners who are befuddled by a "tax doesn't have to be taxing" self-assessment form are astute enough to set up an investment programme to provide an income for themselves for the remainder of their lives? It is undoubtedly true that pension companies have been ripping off pensioners for years with rotten annuities. The financial services regulator the FCA reported in 2014 that pension companies swipe £230 million a year from pensioners in this way. But that scam has persisted because successive governments have allowed it to, having skipped every opportunity to legislate and sanction. 

Does Osborne think the best way to get the pension company wolves away from the pensioners’ doors is to take away the doors?

Saturday 22 March 2014

Saturday, March 22, 2014 Posted by Jake No comments Labels: , , , , , , , ,

“Find the pea” is a favourite street hustler trick. A pea is openly placed under one of three walnut shells, the shells are shuffled, and the pea reappears where it wasn't before.

“Find the tax” works in the same way. You are shown the tax, then it disappears to return somewhere unexpected. A Taxpayers’ Alliance report produced in January 2013 stated the Conservative-LibDem government has implemented 2.5 times more tax rises than cuts since it came into power in 2010 (299 rises and 119 cuts). These include everything from cutting the highest rate of income tax from 50% to 45%, to adding VAT on to the rental of a chair in a hairdresser’s salon. (As the report was published in January 2013, subsequent tax changes aren’t included).

It is evident from these 479 tax shuffles that George Osborne is a pretty adept hustler. He knows it is best to do some things openly so people don't look too hard for the things he does under cover. He openly stated the VAT rise would bring in an additional £13 billion a year (a regressive tax, hitting the poor harder than the wealthy). 

He was more-or-less open with his speedy cut to the 50% top tax rate. A cut made in time to enable the people affected to shift their income – moving it before and after the year of the 50%. A report by HMRC shows that billions of the “affected group’s” income disappeared in 2008-09 to reappear in the year before and the year after the life of the 50% rate.

Somethings George does with curtains drawn and the lights switched off. The much trumpeted increase to £10,500 before people start paying income tax was the shuffle covering a doubling in the tax rate for people earning over £42,285. It had been the custom, between 2004 and 2010, for the threshold for higher rate tax to rise a bit faster than inflation. 
"Inflation Linked" means the threshold if the 2004-05 level had increased with inflation.

Friday 21 March 2014

Friday, March 21, 2014 Posted by Hari No comments Labels: , ,
KJ, Fee and Chris get their heads round annuities...

Thursday 20 March 2014

Thursday, March 20, 2014 Posted by Hari No comments Labels:
FirstGroup to be handed Great Western mainline on the cheap
FirstGroup looks set to run the Great Western mainline until the next decade without facing a franchise competition – having earlier handed back its contract to avoid hundreds of millions of pounds in premium payments to the government. Last September the government sparked outrage by awarding first a six-month extension and then a two-year direct award to First for rail services west of London for an annual sum of £32m – a fraction of the £800m due under the terms of the original franchise. The shadow transport secretary, Mary Creagh, said the deals would leave a £300m hole in the DfT's finances. She said: "Ministers have now quietly announced another sweetheart deal with First Great Western Group, no doubt at rock-bottom prices, in stark contrast to their unwanted refranchising of the east coast line, run by a not-for-profit public operator which last year returned £191m to taxpayers." GUARDIAN

UK Statistics Authority says Government claim that Legal Aid barristers earn £84,000 is 'misleading'
In a critical letter to the Ministry of Justice, Sir Andrew Dilnot said the government ignored lower estimates to justify £220m cuts to the legal aid budget in England and Wales. The government figure was published days before a protest by barristers in January. The government said it stood by its figures. On Tuesday, Sir Andrew - who leads the body which monitors the integrity of official statistics - wrote to Legal Aid minister Shailesh Vara and courts saying the report did not specify how the government figure was reached. He said the sum was "potentially misleading" as it was not made clear barristers would have to pay costs and tax out of this. Using a different way of calculating the figures would have produced a lower average, he added. The Criminal Bar Association (CBA) disputes the claim, saying barristers actually earn an average of £37,000. BBC NEWS

Income inequality leads to slower economic growth - IMF economists
Income inequality can lead to slower or less sustainable economic growth, while redistribution of income, when measured, does not hurt and can even help an economy, IMF staff found in a research study. Although the study by International Monetary Fund economists does not reflect the Fund's official position, it is another sign of a shift in its thinking about income disparity. "It would still be a mistake to focus on growth and let inequality take care of itself, not only because inequality may be ethically undesirable but also because the resulting growth may be low and unsustainable," according to the study. It has traditionally advised countries to promote growth and reduce debt, but has not explicitly focused on income inequalities. But in the past year, IMF Managing Director Christine Lagarde has said that creating economic stability is impossible without also addressing inequality. REUTERS

Osborne plans to take 'pay now, argue later' approach with rich tax avoiders
More than £5bn in disputed tax liabilities will be dragged out of the bank accounts of tax avoiders and restored to Treasury coffers, the chancellor claimed. George Osborne hopes a tougher "pay now, argue later" approach to more than 30,000 of the richest and most sophisticated tax avoiders in Britain will help HM Revenue & Customs deal with its costly backlog of dispute cases, while generating revenues to fund measures announced elsewhere in the budget. Among the highest profile avoidance schemes in HMRC's sights are so-called film partnership investments – popular with celebrities, footballers and investment bankers – which generate losses which can be offset against income. GUARDIAN

Tuesday 18 March 2014

Tuesday, March 18, 2014 Posted by Hari No comments Labels: , , , , ,

Saturday 15 March 2014

Saturday, March 15, 2014 Posted by Jake 1 comment Labels: , , , , , , , , ,
The Financial Conduct Authority (FCA, previously the FSA) and OFGEM are the pantomime twins of regulation in Britain: Tweedle-dumb and Tweedle-dumber. 

The FCA waving its Vorple Sword is regarded by the banks as no more threatening than a cheer-leader wielding a furry pom-pom. The litany of bankers' interest rate rigging; pension annuity scams; insurance scams etc. goes on with no sign of any banker swapping his pure wool pinstripe suit for an acrylic stripey prison jersey.

At least the FCA can claim it is getting tricked by different scams all the time. OFGEM, evidently the dumber of the twins (it must be truly mortifying to be dumber than the FCA!), has managed to be deceived for years by one central fib: the soaring wholesale price of energy. 

For years energy companies have blamed consumer price hikes on World energy markets. Data published by OFGEM in October 2013 (why did it take them so long to do something so obvious?), and by NPower in January 2014 (why did they do it at all?) show wholesale prices simply have not been shooting up.

Combining this data from OFGEM and NPower, and retail prices from Consumer Futures reveal:
a) Using NPower's figures (in real terms) since 2007, customer bills have increased by 18% in 2013, and predict a 40% increase by 2020, while wholesale costs have actually fallen. In this NPower report instead of blaming wholesale prices NPower blames everything else except profits:

Friday 14 March 2014

Friday, March 14, 2014 Posted by Hari 1 comment Labels: , ,
Fee, KJ and Chris try to figure out the logic...

Thursday 13 March 2014

Thursday, March 13, 2014 Posted by Hari No comments Labels:
The NHS has lost nearly 4,000 senior nursing posts since 2010
The drastic cuts are putting patient care at risk, warns the Royal College of Nursing (RCN). The NHS is in the middle of a tough drive to save £20bn by 2015. The government has claimed this can be achieved through efficiency savings and the frontline should not be harmed. But the RCN disagrees. The RCN says that hidden within wider nursing workforce cuts are a significant loss and devaluation of skills and experience. Dr Peter Carter, chief executive and general secretary of the RCN said: "As more patients require complex care from specialist nurses, letting so many years of skills and experience vanish from the NHS is an utterly reckless policy... These cuts are a short-term attempt by trusts to find efficiency savings, yet they will lead to a very serious and very long-term crisis in our health service." BBC NEWS

E.On UK energy supply profits leap 26% to £296m
German-owned electricity and gas supplier says cold weather and cost-cutting boosted its UK supply profits but power plant earnings fell 34%. But it immediately faced criticism from Labour politicians for the "out of order" profit increase, which followed a 9pc price hike for consumers at the start of 2013. E.On's pre-tax profit margin almost doubled, from 2.3% in 2012 to 4% last year. All the “Big 6” energy suppliers have faced huge criticism of their profits and price rises. Tony Cocker, E.On UK chief executive, defended the supply profit increase, but reiterated calls for regulator Ofgem to refer the energy sector for a full competition inquiry. "The questions that still hang over the sector show more than ever that now is the time for a full Competition Commission Investigation," he said. TELEGRAPH

G4S agrees to repay £109m for overcharging on tagging contracts
The private security firm G4S has agreed to repay £109m plus VAT for overcharging the Ministry of Justice for the electronic tagging of offenders – but still remains barred from bidding for fresh contracts. The repayment follows a similar £70.5m settlement with the outsourcing group Serco. The two companies have now agreed to repay nearly £180m for overcharging on tagging and prisoner escort contracts, indicating that the scale of the scandal is 10 times larger than previous estimates of £15m to £20m. In November justice ministers rejected an offer by G4S of a £24m "credit note" after it admitted overcharging on its electronic monitoring contract had been going on for years. The MoJ has said the overcharging practices stretched back at least to 2005. Both companies are still facing a criminal investigation by the Serious Fraud Office into their operation of tagging contracts. GUARDIAN

Councils using lie detector tests that "don't work" to catch benefit fraudsters
More than 20 councils have used or plan to use controversial lie detector tests to catch fraudulent benefits claimants, despite the government dropping the technology because it was found to be not sufficiently reliable. Leading experts in linguistics at Stockholm University said that VRA "does nothing. That is the short answer. There's no scientific basis for this method. From the output it generates this analysis is closer to astrology than science. There was very good work done by the DWP in the UK showing it did not work, so I am surprised." But a number of councils – Redcar, Middlesbrough, West Dorset and Wycombe – said they were convinced of VRA's merits and were considering using it in the future. GUARDIAN

Tuesday 11 March 2014

Tuesday, March 11, 2014 Posted by Hari No comments Labels: , , , ,

Saturday 8 March 2014

Saturday, March 08, 2014 Posted by Jake 6 comments Labels: , , , , , , ,
Figures from the Office of National Statistics show that while the cost of housing benefit has jumped four-fold in real terms in the thirty years between 1983 and 2013, the actual number of housing benefit claimants has hardly changed.  

Sly references by government ministers to Housing Benefits claims in excess of £50,000 a year gloss over two facts: 

Friday 7 March 2014

Friday, March 07, 2014 Posted by Hari No comments Labels: , , , , Chris discovers from a top bank exec...

Thursday 6 March 2014

Thursday, March 06, 2014 Posted by Hari No comments Labels:
David Cameron promises 2015 election tax cuts for low-income workers, funded by hikes for higher earners and budget cuts
The tax cut, first advocated by the Liberal Democrats, is targeted at the low-income households who will decide the outcome in marginal seats at next year’s general election. However, the Chancellor George Osborne has funded his cuts by lowering the threshold for the 40p higher rate of tax, forcing more workers into the higher band. Around 5 million workers are expected to pay 40 per cent tax in 2015/16, up from 2 million in 1997. The Prime Minister also promises to further reduce the size of the state. Mr Cameron’s speech is the latest sign that the Conservatives will attempt to fight the next election on a tax cutting platform. That plan has started a row within the Conservative Party, as MPs demand more help for the growing number of middle-class professionals being dragged into the 40p tax band. TELEGRAPH

Lloyds bank boss handed £900,000 in shares to sidestep EU bonus cap
Controversy over the EU bonus cap escalated on Wednesday when bailed out Lloyds Banking Group handed its chief executive £900,000 in extra shares to sidestep the attempted clampdown on pay and Barclays prepared to do the same for its boss. António Horta-Osório – whose total pay in 2013 was £7.5m – is receiving the shares on top of his £1.1m a year salary to ensure he does not suffer a fall in his earnings as a result of the cap, which restricts bonuses to 100% of salary, or 200% if shareholders approve. Other executive members of the board are also receiving the extra allowances of shares, along with up to 75 other top staff. The government owns 33% of Lloyds shares. GUARDIAN

Tax property millionaires more heavily to cut the average household's council tax bill by £280 a year, says think-tank
The Joseph Rowntree Foundation suggested replacing the current outdated system with a new progressive national property tax that would see the wealthiest households pay a higher share. The move would mean 63 per cent of households would see bills fall by more than ten per cent, while just 22 per cent would see a hike in their rates. Kathleen Kelly, policy and research manager at JRF, said: ‘Politicians need to start planning for the long-term replacement of council tax. Council tax was a hasty replacement for the hated poll tax 25 years ago’. The current council tax structure is based on a banding system, founded on the value of properties in April 1991 in England and Scotland and April 2003 in Wales. However the banding values are seen by some as outdated, as house prices have risen at different rates across the country. Kelly added:  ‘The design of the council tax means it taxes a higher proportion from cheaper properties than expensive ones, so is regarded as being both unfair and inconsistent, and certainly in need of long-term reform.’ DAILY MAIL

Bank of England employee suspended amid £3tn forex rigging investigation
The Bank of England suspended a member of staff in connection with its own review of the £3tn a day forex market and began a formal inquiry into whether its staff knew about potential market rigging. The Bank took the unusual step of releasing minutes of meetings held over six years between Bank officials and a group of foreign exchange traders. The meetings were held at restaurants across the City and attended by the major foreign exchange traders from 10 or so major banks. At one meeting in April 2012 a senior trader had made notes showing that Bank of England officials did not believe it was improper to share customer orders. London accounts for 40% of the trade in the foreign exchange market. GUARDIAN

Wednesday 5 March 2014

Wednesday, March 05, 2014 Posted by Jake No comments Labels: , , , , , , ,
There is nothing like a government to prove the old adage of "lies, damn lies, and statistics". 

In March 2014 a BBC Newsnight programme reported that the Tories were holding back a government report that would expose as untrue a key statistic being used to rouse a rabble of votes with tough talk on immigration. The report is said to show Tory claims that "for every additional 100 immigrants… 23 British workers would not be employed" were a gross exaggeration.

Get Adobe Flash player

The Tories were criticised in July 2013 by the Office of National Statistics for misusing statistics to back a claim that the benefits cap was pushing people back into work. In February 2013 Andrew Dilnot, chairman of the UK Statistics Authority, criticised the government for being economical with the truth about the UK economy's debt and deficit figures.

The Advertising Standards Authority has long since washed its hands in relation to political fibbing. They regard Political Advertising as beyond their control:

"For reasons of freedom of speech, we do not have remit over non-broadcast ads where the purpose of the ad is to persuade voters in a local, national or international electoral referendum. Complaints about political advertising should be made directly to the party responsible for that advertising."

The key to statistics is not so much what they say, but who is saying it. The Office for National Statistics - still not privatised at the time of writing this post - provided an interesting statistic in its report on "Measuring National Well-Being - Governance 2014". The report shows that over the last 10 years fewer than 1 in 3 of us actually believe what the government tells us.

Tuesday 4 March 2014

Tuesday, March 04, 2014 Posted by Hari No comments Labels: , , , , ,

Sunday 2 March 2014

Sunday, March 02, 2014 Posted by Jake No comments Labels: , , , ,
Women are bearing the brunt of all the belt-tightening in more ways than just cuts to public services. 

In March 2014 the Sunday Times reported that female ministers have smaller offices than their male peers. 

"A survey of ministerial offices has found that female members of the government have offices that are on average 230 sq ft smaller than those of male counterparts. 

The disadvantage even extends to cabinet ministers. Half the female secretaries of state have offices that are smaller than those of their male underlings."

A graph from the Organisation of Economic Co-operation and Development (OECD) shows how this lack of respect for the efforts of our female brethren in Britain extends from the topmost (well, according to the Sunday Times apparently not quite the topmost) office to the most humble operative. 

A common excuse for low pay is it is the reward for lower skills. The OECD report, "OECD Skills Outlook 2013", shows that in Britain this is in fact not a fact.

It shows the average British female employee does a higher level of brainwork than the average male employee. The gap is greater in Britain than in any other OECD nation

In spite of the greater intellectual demands, women in the UK are paid on average 15% less than men. A bigger gap than in any other OECD nation other than Austria; the Czech and Slovak Republics; Korea; Japan; Estonia.

Saturday 1 March 2014

Saturday, March 01, 2014 Posted by Jake 3 comments Labels: , , , , ,
In 2013 the average (median) weekly wage in London was £658 per week.  43% higher than Northern Ireland, where the average weekly wage is the lowest at £460 per week. Not particularly surprising, with London being the heart of the finance, legal, and political professions.

However these weekly wage figures tell only half a story. A cartogram by the Office of National Statistics grotesquely illustrates what a combination of high working population (including commuters travelling in from other regions) and high pay produces.

The cartogram below illustrates how much is paid in a particular region, by taking the average wage and multiplying it by the number of full time jobs. No regions are more bloated than the City of London and Westminster, the centre of finance, law, and politics.

Britons are ripped-off by poor regulation and inequality. With lawmakers, regulators, and the regulated all supping from adjacent tables London is less a beating heart than an engorged stomach.

Share This

Follow Us

  • Subscribe via Email

Search Us