Graphs at a glance: ONS stats show 47% of those who graduated in the last 5 years are doing non-graduate jobs. The second biggest destination of new graduates in 2012 was catering, waiters, and bar staff.

Office of National Statistics (ONS) figures show a strong correlation between having a degree and being wealthy. However, 'correlation' does not prove 'causation'. i.e. just because two things happen together doesn't prove that they actually cause each other. Daffodils bloom in spring before tulips, but blooming daffodils aren't the reason why tulips bloom.

A degree doesn't cause wealth. Those who have the discipline to work hard academically to get a degree are more likely to have the discipline to work hard in their career to get wealthy. The key common factor is having the discipline and the work ethic.

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Rip-off News round-up. Our pick of the last week's media (Thu 28th Aug)

Workers in the UK are CHEAPER to hire than in Spain or Italy as stagnant wages erode British pay packets

The average cost of employing someone in the UK remained unchanged at 20.90 euros an hour last year – significantly below the EU average of 23.70 euros. Meanwhile the cost of employing someone in Spain is higher at 21.10 euros and higher still at 28.10 euros in Italy, according to official figures from the EU's statistics office Eurostat. The average hourly labour cost in Norway is more than double that of the UK at an eye-watering 48.50 euros an hour. Meanwhile Labour costs in Germany are now around 50 per cent higher than in the UK – 31.3 euros an hour versus the UK’s 20.9 euros. Labour costs in France are even higher at 34.3 euros an hour. In fact the UK is among just five countries that saw wages fall or stay the same between 2008 and 2013, including Poland, Hungary, Croatia and Greece. Wages are expected to grow by just 1.25 per cent this year, which amounts to a drop in real terms as inflation is currently at 1.6 per cent. A weak pound throughout the economic downturn may also have helped widen the gap between the UK and its EU neighbours. DAILY MAIL

High energy bills? Blame Ed’s price freeze threat says the boss of Npower

So far this year, wholesale gas prices, which make up nearly half of energy bills, have fallen by more than 50 per cent. But the boss of one of the biggest energy companies has said it would be too risky to cut prices ahead of winter because of Labour’s threatened price freeze. Paul Massara, head of Npower, said the firm had not reduced fuel bills despite a slump in wholesale prices – as an election victory for Ed Miliband would see them forced to stick with the new tariffs for 20 months. Last September, Mr Miliband said he would freeze gas and electricity bills in the UK for 20 months if he wins the general election in May next year. Charlie Elphicke, Tory MP for Dover and Deal, said: ‘Clearly Ed Miliband’s policy has backfired and is driving up energy bills today at a time when people can least afford it. Instead of making things easier, they are making them worse. Labour’s energy spokesman Caroline Flint defended its policy, saying: ‘All the energy companies have 101 excuses about why they won’t cut their prices, but if Npower are publicly admitting that they are keeping their prices artificially high and the Government is doing nothing about it, that shows exactly why we need reform of the energy market.’ DAILY MAIL

Food poverty: Faculty of Public Health issues malnutrition health warning

More people are suffering from malnutrition as a result of worsening food poverty, experts have warned. The Faculty of Public Health said conditions like rickets were becoming more apparent because people could not afford quality food in their diet. Data from the Health and Social Care Information Centre showed the number of those admitted to hospital in England and Wales had risen from 5,469 to 6,520 over the past year. Vice president of the Faculty of Public Health, John Middleton, said food-related ill health was getting worse "through extreme poverty and the use of food banks". The faculty recently claimed that UK food prices had risen by 12% since 2007. It also noted that in the same period, UK workers had suffered a 7.6% fall in wages. The main symptom of malnutrition is rapid weight loss - usually 5-10% within a few months. Other signs include: weak muscles, constantly feeling tired, an increase in illnesses or infections, children will not grow as quickly, and will show changes in behaviour becoming irritable, sluggish and anxious. Meanwhile, Durham Police and Crime Commissioner Ron Hogg told BBC Radio 4's Today programme some people were resorting to committing crime "simply to live". "The evidence shows that shoplifting and theft in general is rising exponentially and there must be a reason for that," he said, adding that it was important to address the causes of such crimes. Health Minister Dan Poulter said the government had "given local authorities a £5.4bn budget over two years to help them manage public health issues, including malnutrition, in their areas." He also said the rise in malnutrition could be partly due to better diagnosis and detection by health professionals of people at risk. BBC NEWS

EDF to pay £3m for mishandling complaints from vulnerable customers

EDF has been ordered to pay out £3 million to benefit “vulnerable customers” after an investigation by the energy industry watchdog Ofgem found that the big six supplier had breached complaint handling rules. The payout is the latest in a series of punishments meted out to the dominant energy suppliers and came just a day after Labour promised to strip any provider of its operating licence if it mistreated customers by repeatedly breaking the rules. The inquiry into EDF, a French state-owned firm, came after it recorded an increase of more than 30 per cent in the levels of complaints during the introduction of a new IT system in 2011. All the big six energy providers have been fined for similar reasons, as well as mis-selling. For example last October, Scottish Power agreed to pay £8.5 million to its customers after an investigation by Ofgem found it gave misleading information during sales. In March, the regulator found that the big six collectively owed more than £400 million to 3.5 million former customers who have switched supplier or moved house in the previous six years. It demanded that they make sure the money is returned. INDEPENDENT

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The Faculty of Public Health says rickets has returned as malnutrition rises

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What Has Happened To Our Pensions?

Is the 'pensions crisis' really our own fault? Caused by us not saving enough, and not dropping dead soon enough? Is it because we fail to build up our pension pots in the good times, when we are working, to fund our modestly comfortable retirements? 

This post by our guest author, Dr. Ros Altmann CBE, explains how our pension funds have been raided since the 1980s by successive governments seeking taxes, and by employers taking "contribution holidays" and legally diverting money from the staff pension funds into their companies. Raids that were justified by the accountants and actuaries who declared our pensions were in surplus and could actually afford to shed money!

Dr. Altmann is an independent expert on consumer finance, pensions, retirement, care funding and economic policy. She is an advisor to governments, corporations and industry bodies. In July 2014 she was appointed as the UK Government's Older Workers Business Champion.

We used to have a pension system that was the envy of the rest of the world. This system is now crumbling and companies are moving away from final salary occupational pension provision. Not only this, but many thousands of people, who thought they had a 'guaranteed' pension and had been relying on their employer's pension promise, have suddenly found that this pension has disappeared.

The Press have been trying to blame Gordon Brown's removal of Advanced Corporation Tax (ACT) relief in 1997 for the problems, but this is simply not true.

There are many, many reasons why our pension schemes are in trouble. It is not possible to point to just one or two factors. Responsibility is widely spread.

The Tory Government, under Nigel Lawson's Chancellorship, made a big mistake when it decided to tax pension fund surpluses in the late 1980's. These surpluses should have been allowed to build up, in order to cover schemes for times when markets turned down and/or when more and more people retired and needed to receive pensions from the scheme. Essentially, we have failed to let the surpluses build up and they are just not there when we need them.

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Rip-off News round-up. Our pick of the last week's media (Thu 21st Aug)

Academies run by favoured 'superhead' received advance notice of Ofsted checks

Academies run by a superhead praised by the government for producing schools that "outperform the rest" of the state sector had secret advance notice of Ofsted inspection dates. Evidence uncovered by this newspaper suggests that three schools in Norfolk, all overseen by Dame Rachel de Souza, knew of impending visits by inspectors days, and sometimes weeks, before Ofsted arrived. One school was even able to draft in teachers who had never previously taught there to perform in front of inspectors, according to whistleblowers. Another, keen to make good on the advantage, was said to be a "hive of activity" in the days directly leading up to the inspection. By law, schools can only be given half a day's notice of an inspection. De Souza, a favourite of Tory ministers who was made a dame in the New Year honours for services to education, became an Ofsted associate inspector earlier this year, although the inspectorate denies this part-time role would have given her access to schedules of upcoming visits. The revelations raise questions about the credibility of Ofsted, which has come under attack in recent years for becoming overly associated with the political goals of the government, including the promotion of the academy model, where schools are outside local authority supervision. Labour peer Baroness Morgan was removed as chair of Ofsted in May to be replaced by David Hoare, a trustee of the UK's largest academy chain, AET. GUARDIAN

SFO probes banks accused of duping small firms over new government loan scheme

Banks are accused of misusing the Enterprise Finance Scheme set up to provide government-backed loans to small companies who cannot get access to traditional credit. The Serious Fraud Office (SFO) is looking at claims that banks have used the scheme to pass companies’ risky loans onto the taxpayer instead. It is also reviewing allegations that banks mis-sold these loans by duping customers into believing that they would only be liable to pay 25 per cent of the debt if their company failed. Launched in 2009, the Enterprise Finance Guarantee Scheme is designed as a lifeline for small and medium sized firms who lack the security to get a bank loan. Under the initiative, the Government guarantees to pay the bank 75 per cent of the loan if the borrowing business fails – making it less risky for the bank by transferring the risk to the taxpayer. But companies claim they were persuaded to take out these loans on the basis that the guarantee also covered 75 per cent of their own losses if their business failed. Firms which also had an overdraft and therefore should not have qualified for the scheme say they were persuaded to take out a government-backed loan on this basis - with the catch that their bank overdraft was cut or removed. DAILY MAIL

Employment tribunal cases drop 80% following new fees of up to £1,200, designed to end “frivolous claims”

Last year the government introduced fees of up to £1,200 for claimants to pay for tribunal hearings. But a TUC report says it has resulted in a 79% fall in overall claims taken to employment tribunals, with women and low-paid workers the worst affected. Their analysis of government figures shows there has been an 80% fall in the number of women pursuing sex discrimination claims, with just 1,222 women taking out claims between January and March 2014 compared with 6,017 over the same period in 2013. The number of women taking pregnancy-discrimination claims fell by 26%. Race discrimination cases have dropped by 60% over that period, while disability claims have fallen by 46%. There has been a 70% drop in workers pursuing claims for non-payment of the national minimum wage and an 85% drop in claims for unpaid wages and holiday pay. A Ministry of Justice spokesperson said: "It is not fair for the taxpayer to foot the entire £74m bill for people to escalate workplace disputes to a tribunal, and it is not unreasonable to expect people who can afford to do so to make a contribution. For those who cannot afford to pay, full fee waivers are available." But Bristol and Strathclyde university researchers say the system is complex and claimants have found it hard to establish whether they are eligible. GUARDIAN

Workplace Pension fees merry-go-round: April 2015’s fee cap could save us £1bn, but pension providers threaten to recoup it through other charges, passed on by employers as lower salaries and dividends

The 0.75pc a year cap on charges will apply to workplace pensions linked to the stock market. It is a Government initiative to tackle “rip-off” levies that deplete customers’ savings. Ministers initially said this new ceiling would transfer £200 million from insurance company profits “into the pockets of savers”. But Royal London, which has 11m customers, calculated that the sum passed to savers by the industry would be “monumentally higher”. Phil Loney, CEO of Royal London, said: “We estimate the total reduction in long-term insurer income may well reach £1 billion.” Pension companies such as Royal London take annual fees for managing money saved into company schemes. The charges can range from below 0.5pc a year to more than 2pc. Reducing the higher charges to 0.75pc will allow savers’ funds to grow more quickly to the detriment of pension providers. But Mr Loney said the charges cap could do more harm than good, indicating that Royal London and similar providers might hit employers with supplementary fees. These would fall outside the 0.75pc government cap, which relates specifically to the management charges paid by staff. Tom McPhail, head of pensions at financial services firm Hargreaves Lansdown, said: “There could be a sort 'money-go-round’ where insurers put extra charges on employers, who pass these on to staff in the form of lower pay rises and to shareholders in the form of smaller dividends. If that happens there will be little overall benefit to the people the Government is trying to help.” Gina Miller, a campaigner for fairer investing and founder of wealth manager SCM Private, said: “The charges cap must include all implicit and explicit costs or it will be misleading”. TELEGRAPH

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From January 2015, rail fares will rise by 3.5%. That’s up 25% since 2010

Can KJ, Chris and Fee find a silver lining?...

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Graphs at a glance: East Coast Mainline. Why is the government so quiet about one of its greatest success stories?

You would have thought a company delivering record levels of cash to the taxpayer would have something to boast about. Surely its bosses would want to crow about how they turned around a failing franchise that had been abandoned by the previous two franchisees. You’d think they would use this laudable fact to justify a round of plump bonuses and a topping payrise. 

And yet they are strangely silent. If you thought they were hoping nobody would notice their successes, you’d be right. To be more precise, their owner doesn't want anybody to notice their successes.

This secretive organisation is the East Coast Mainline Company Ltd (East Coast). East Coast is the government owned Train Operation Company (TOC) that took over the nationalised East Coast Mainline after that franchise was abandoned by the private sector, first by GNER (2007) and then by National Express (2009). It is a company celebrated in the Guardian and the Daily Mail for returning a whopping £1billion to the taxpayer since the franchise was nationalised in 2009. And yet its bashful bosses box on, according to their annual report, on their modest Civil Servant salaries (East Coast CEO earned £224.8k in 2013. Peanuts compared to CEOs of similar sized companies (FTSE250 CEO average pay = £1.3 million) and with no bonuses and no share options .

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Rip-off News round-up. Our pick of the last week's media (Thu 14th Aug)

London gets 24 times as much spent on infrastructure per resident than north-east England

Figures derived from a research report by IPPR, show Londoners receive £5,203 more per head on capital investment than people in the north-east – a discrepancy sure to reignite a long-running row on whether London’s growth is coming at the detriment of the rest of the UK. One third of planned infrastructure spending in London is the £14.5bn earmarked for Crossrail with line upgrades on the Tube receiving the second most at £8.2bn. The biggest rail project currently set to specifically address the needs of those in the north of England is the delivery of a range of products including improvements to the journey time on the Manchester Airport through the Ordsall Chord, which will cost £498.1m (3.4% of the cost of Crossrail). The UK chancellor George Osborne has endorsed a £15bn plan to improve infrastructure in five northern cities. Although he did not commit to any funding, Osborne said the overall aim was: “To end the imbalance in the UK economy so our success is not wholly dependent on the global city of London, so we have across the north of England individual cities that are better connected, have a better quality of life, and are able to create.” GUARDIAN

Office cleaners face underpayment, non-payment, mistreatment and abuse, says Equality and Human Rights Commission

Commercial cleaning staff, usually women and migrant workers, complained of being frequently mistreated by employers, who often ignore obligations to provide holiday and sick pay, according to the new study by the Equality and Human Rights Commission (EHRC). The report also cites disturbing examples of abuse of cleaning staff by agency bosses, and notes that often cleaners feel unable to report problems for fear of losing their jobs. It cites examples of workers who were sacked for complaining about not being paid in full and on time. The study, which focuses on the non-domestic sector, looked at cleaners working in offices and in the health, retail, transport and leisure sectors. The wholesale outsourcing of office cleaning to agencies from the 1970s (when most organisations had in-house cleaners) has led to downward pressure on wages and working conditions. "Contracts often place cleaning firms under enormous pressure to deliver a high-quality service at the lowest cost possible. This often has a negative impact on employment practices, affecting pay, the intensity of work, job security, training and working hours," the report finds. The cleaning sector contributes more than £8bn to the British economy, and consists of around half a million workers. Cleaners interviewed reported pay rates for private sector contracts ranging between £5 and £7.50 an hour, indicating that some are paid below the national minimum wage of £6.31. While the study conceded that those who were underpaid were the minority, researchers found "a significant number of workers are not paid in full, or do not receive the holiday or sick pay they are entitled to". GUARDIAN

Osborne’s “cashing in” shakeup may lose pensioners £3.6bn in taxes, and cause new wave of mis-selling

In the last budget, Osborne said he would "remove all remaining tax restrictions" and give pensioners "complete freedom to draw down as much or as little of their pension pot as they want, anytime they want". But the tax implications of cashing in pension pots have only emerged in detail since the budget. Figures compiled by Hargreaves Lansdown indicate that someone with a £100,000 pension pot will pay £34,500 in tax if they take the money as cash on retirement. The Treasury is estimating that around 130,000 pensioners at retirement will take advantage of the new flexibility, with the pensions minister, Steve Webb, claiming that savers will be free to blow the lot on a Lamborghini, if they wish. Detailed figures released after the budget reveal that this “tax trap” for many pensioners will boost the Treasury coffers by £3.6bn between 2014 and 2020. Critics are now predicting a wave of mis-selling from April 2015, as pensioners are encouraged to cash in their pension pots to invest in buy-to-let property, unaware of the huge one-off tax charge they face. GUARDIAN

RBS bosses pocket disputed windfall: Bank hands out £3.5m in new fixed ‘allowances’ to top directors in a bid to beat bonus cap

Like its rivals, RBS has introduced fixed annual allowances – paid in two instalments – to swerve a cap on bonuses introduced by the European Commission at the start of the year. This bumps up basic pay packages, which are not subject to the restrictions. The EU-wide cap prevents banks from paying more than one year’s salary, rising to twice salary if shareholders approve. RBS was blocked by the Treasury from applying the higher limit. Deborah Hargreaves, chair of the High Pay Centre, said: ‘This goes against spirit of the rules, if not the letter... When RBS’s major shareholder – the Government – has voted against them paying twice their salary as a bonus it doesn’t seem right that they should be paying fixed allowances to get around that.’ Ten senior executives shared the windfall but the biggest winner was Rory Cullinan, the boss of the ‘bad bank’ set up at the start of the year to manage some £38billion of the most toxic assets. He was awarded £534,000 in shares for the first eight months of the year. Some £251,046 worth of shares were sold immediately to pay his taxes. The remaining award will be released over the next five years. Chief administrative officer Simon McNamara, head of conduct and regulatory affairs Jon Pain and chief risk officer David Stephen all received £400,000 before tax. Chief executive Ross McEwan has already waived his allowance. RBS made an £8.2billion loss last year. DAILY MAIL

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Why do the Tories want to privatise the successful state-owned East Coast Mainline? The clue is in the question

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Graphs At A Glance: The poorest two income deciles are the real 'property owning classes'

Well, I have to say this one surprised me when I first saw it. The lowest two deciles by income have the highest proportion owning their homes outright, with no outstanding mortgage.


There are many ways to rationalise this:

• Poorest slowly pay off their mortgage over decades, and stay put.
• Poorest inherit from parents, and don't move on.
• Poorest live in cheaper areas, requiring lower mortgages that can be paid off.
• Poorest deciles include pensioners on low incomes, but who own their homes outright.
• Wealthier more aspirational people stay in a spiral of mortgages to move to bigger places

Perhaps I am being patronising. Whatever the reason, it is still surprising. And the data provides a clue who Help To Buy is not aimed at.

For the ONS data, see Table15 hosted HERE.

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Rip-off News round-up. Our pick of the last week's media (Thu 7th Aug)

Publicly-owned East Coast Mainline successfully pays taxpayers “dividend” of £1bn, sparking fresh reprivatisation fury

The east coast mainline paid a record £235m back to the government in its final full year as a state-owned company, a 12% increase on the previous year. That means the franchise, run by Directly Operated Railways (DOR), has returned more than £1bn to the public purse over the past five years, sparking renewed calls for it to remain in public ownership. The RMT transport union said the figures made "a mockery of the government's plans to bulldoze through a reprivatisation before the next election, ignoring the financial and operational success of DOR and the catastrophic impact of two previous private sector failures on the line". The London to Scotland rail franchise has been under the control of the Department for Transport since the previous private sector operator, National Express, pulled out in 2009. In 2007, another private company GNER also ceased its east coast operation after its parent company Sea Containers ran into financial difficulties. The Department for Transport said the decision to return the line to private sector ownership was final. GUARDIAN

Tax inversions: US Treasury explores moves to block major corporate tax dodge

The US Treasury Department is exploring ways to unilaterally block a surge of U.S. companies shifting their headquarters overseas in search of major tax savings. The new escalation of the White House battle against corporate tax inversions came as a key congressional Democrat circulated a draft of potential legislation that could make it more difficult for U.S. companies to re-incorporate overseas. The Treasury action takes aim at a trend that has seen 47 U.S.companies move their tax-reporting address abroad during the last decade, according to Congressional Research Service data. Roughly 12 more are pursuing or researching potential shifts, including Illinois-based pharmaceutical giant Medtronic. President Obama has criticized the exodus, contending the departing firms are "gaming the system" while eroding federal tax collections and forcing other American taxpayers to make up the shortfall. House Democrats in May introduced anti-tax inversion legislation similar to the proposal in Obama's fiscal-year 2015 budget. However, Republican leaders contend that the best way to keep U.S. firms from leaving is an overhaul of the U.S. tax code that includes a reduction of the 35% top tax rate on businesses. USA TODAY

Government admits staff cuts contribute to compensation claims delays for military veterans

The Ministry of Defence said delays were down to a rising number of cases and because there were fewer staff dealing with the claims. One veterans' group said waiting times for claimants had increased from 82 days in 2010 to 219 days in 2014. The government said the 12,000 redundancies made in the armed forces since 2011, as well as the "rising claiming culture", had led to more people putting forward cases. Veterans dismissed this, saying the claims reflected a genuine need. The government also said the Boyce review that evaluated the process for military compensation in 2010, was partly responsible as it had diverted resources. But Lord Boyce said it was difficult to envisage how a review carried out several years ago had resulted in the current delays. Madeleine Moon, an MP who sits on the defence select committee, said it was "offensive" for the government to talk about a "claiming culture" being responsible for the backlog. She said: "If people are injured, if people's lives are changed that dramatically that they need financial compensation to be able to deal with the day-to-day grind of living with an injury, they should have the financial help that we as a nation have covenanted to provide." BBC NEWS

Credit and loan agreement errors likely to trigger payouts approaching £1bn

An epidemic of errors in credit and loan agreements is the latest expensive scandal to hit the banking sector, with the cost already approaching £1bn. It affects some personal loans, credit and store cards, and hire purchase agreements. It has nothing to do with the payment protection insurance (PPI) scandal. Many of Britain's banks and building societies have discovered that some of the annual statements, arrears notices and other correspondence sent to customers did not comply with the Consumer Credit Act because they did not give all the information that people were entitled to by law. Under the law, borrowers are not liable for interest or default charges relating to a period when a lender has not provided the information, even if the original documentation was fully above board. One common error is that loan statements failed to include the original amount borrowed. The law requires such statements to contain the sum borrowed, plus the opening and closing balance. The problem first came to light in December 2012 when it emerged that 152,000 people who have, or had, a personal loan from Northern Rock would each receive a windfall averaging £1,775 because of a paperwork glitch. The taxpayer picked up the £270m bill because the error happened when Northern Rock was in public ownership. GUARDIAN

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No joke. The promised upturn in house building has now run into a shortage of building materials!

Fee and KJ wonder if anyone is surprised...

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Graphs at a glance: Are the improving unemployment figures all they seem to be? Dig a little deeper into the stats and see what you will find.

Wages in the UK continue to fall in real terms (rising slower than inflation) in spite of an improving labour market.

So are these falling unemployment figures really all that encouraging? 


Office of National Statistics (ONS) Labour Market Statistics count "anybody who carries out at least one hour’s paid work in a week" as "being employed". Which means the self-employed and those on zero-hour contracts need only get one hour's work a week to be taken out of the unemployment statistics. However, put that gloomy thought to one side and the year between the summers of 2013 and 2014 saw a sharp fall in the unemployment rate.

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