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Thursday, 9 October 2014

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Posted by Jake on Thursday, October 09, 2014 with No comments | Labels:

Dept of Energy & Climate Change fails taxpayer: £16.6bn of Renewable Energy contracts awarded without competition
The government's decision to award billions of pounds of renewable energy contracts without a proper tendering process has left consumers out of pocket, said MPs on the Public Accounts Committee. The five offshore wind and three biomass project contracts were awarded without competition to avoid delays. But  MPs said Decc's own case showed no benefits to awarding contracts early. They added that it was not clear if the early contracts were needed in order to meet 2020 renewable energy targets. The contracts involved a guaranteed "strike price" that the renewable energy producers would receive for the energy that they produced. This strike price was linked to inflation, with consumers picking up the bill if inflation rose when the projects were completed. The MPs criticised the government for failing to challenge developers' claims that the projects would not go ahead without consumers taking on part of the risk. "By awarding contracts worth up to £16.6bn to eight renewable electricity generation projects without price competition, Decc failed to adequately secure best value for customers," said committee chairwoman Margaret Hodge. "Yet again, the consumer has been left to pick up the bill for poorly conceived and managed contracts." BBC NEWS

Supermarkets charge suppliers £80,000 just to get new products on store shelves, fuelling a third of profits
Supermarkets are making as much as a third of their profits from suppliers by demanding the type of charges that have led to the accounting scandal at Tesco. Tesco has admitted that it has overestimated its half-year profit by up to £250million and the overstatement is said to relate directly to the miscalculation of the commercial charges imposed on suppliers. The scale of such ‘commercial income’ – as it is known in the industry – is not spelt out in the financial results of supermarkets and its crucial importance has only begun to emerge in the wake of the Tesco fiasco. The fees include penalty charges for late or incomplete shipments, bonuses for hitting sales targets, refunds for promotional discounts and one-off payments for a multitude of reasons such as launching new products. The fees are lumped in on top of simple retail profits and they can grow to huge sums when large supermarkets are able to negotiate more lucrative deals with their suppliers. It has also come to light that Tesco was rapped at the end of last year by supermarkets watchdog the Groceries Code Adjudicator for unfairly using its size to demand that suppliers pay extra fees to secure the best positions on its shelves. Adjudicator Christine Tacon warned Tesco last December that it should not have been asking for such payments. The ruling followed a formal complaint from trade body the British Brands Group about the charges. A spokeswoman for the Adjudicator said eight out of ten suppliers complained they had experienced issues that could be in breach of the supermarkets’ code of conduct. Supermarkets could face hefty fines – as well as a huge fall in total profits – if widespread abuse is uncovered. DAILY MAIL

Wonga writes off £220m in debts for 330,000 customers
Wonga was required to write off the debts because the industry regulator, the FCA, found that it had granted the loans without checking people could afford the repayments. The checks were found to be so poor that many borrowers had no chance of ever repaying the loan because of their dire financial circumstances, with many living on unemployment or disability benefits. The company, which charges annualised interest rates of up to 5,853% a year and has been accused by MPs of “legal loan sharking”, said it would entirely wipe out loans to 330,000 people, and scrap interest and charges owed by a further 45,000 customers. Some of the loans are understood to be more than a year old and have ballooned from a few hundred pounds to thousands. Wonga’s new chief executive, Andy Haste - who has been brought in to overhaul the tarnished brand – apologised and said Wonga lacked experienced credit professionals and “lent to people we should not have lent to”, adding: “The checks were not sophisticated enough and not strong enough.” Haste replaced Wonga’s founder Errol Damelin, who quit the firm in June. Damelin described Wonga’s interest rate as a “great deal.” The lender, he claimed, used sophisticated algorithms to ensure it did not lend to people who couldn’t afford to repay. Damelin, who founded Wonga in 2006, had hoped to collect a £100m windfall from floating Wonga on the stock market at a suggested £1bn valuation. Sources at the company said plans for a float have been scrapped. Wonga warned investors, already reeling from a 53% fall in profits announced on Tuesday, that the changes will lead to “a material drop in the number of loans to new and existing customers”. GUARDIAN

British homebuyers at back of queue for local flats marketed in Hong Kong
They are just the type of starter homes many first-time buyers are looking for. Priced from £180,000, Galliard Homes is building studio and one-bed apartments minutes from local shops and only a half-hour tube journey from central London. But if you are British, you may find yourself at the back of the queue: Galliard put the flats on sale to investors in Hong Kong one week before they go on sale in the UK – despite a written promise by the developer to give British buyers at least an equal chance. In December 2013 Galliard, along with other major developers such as Barratt and Taylor Wimpey, signed a pledge that they would give UK purchasers an equal chance to buy, amid widespread concern about the number of developments pre-sold to investors abroad. Four months later Galliard – the second biggest housebuilder in London – stood shoulder-to-shoulder with mayor Boris Johnson, with a separate undertaking. “We commit to market the homes in our developments first or first equal to Londoners. New homes on every development by the undersigned companies will be available for sale to Londoners before, or at the same time, as …to buyers from other countries.” Overseas buying of UK apartments has ignited considerable political controversy at a time when critics say Britain is building fewer than half the number of homes it needs for an expanding population. In prime parts of London, almost eight in 10 newly built apartments are sold to overseas buyers, led by the Chinese, with many subsequently left empty. But the developers argue that foreign buyers have invested £2bn in London alone, helping to fund 14,000 affordable homes, 16,000 jobs and £129m in stamp duty payments. GUARDIAN

LIBOR fines allocated to help support 200,000 emergency services personnel and volunteers
The government is allocating nearly £10m to help support 200,000 emergency services personnel and volunteers, funded through LIBOR fines. This funding will be focused on mental health, physical recuperation and bereavement support. It is the first time that LIBOR funding has gone to support emergency services personnel. Over £8m of the funding will go to English charities, with the remaining £1.6m made available to the Scotland, Wales and Northern Ireland governments. The LIBOR fund has been raised through fines imposed on banks for misdemeanours and attempted manipulation of financial markets. This latest allocation builds on £35 million of LIBOR funding already given to military good causes in previous tranches, £60 million to support Armed Forces personnel, their families and veterans and a further £10 million per annum which has been earmarked from 2015 to support the Armed Forces Covenant. HM TREASURY

Motorists: huge fall in the price of oil fails to make it to the pumps
The slump in the price of crude oil – down 17 per cent in the past three months – has shattered recent forecasts that assumed rising turmoil in the Middle East would send oil prices soaring. But despite the worst excesses of Islamic State in Iraq and the conflict in Syria, the chaos has done little to interrupt fuel supplies. Motorists however could be forgiven for wondering whether they are benefiting. The average cost of unleaded petrol has dropped in the past three months, but only by 1.6 per cent from 130.79p to 128.5p. Petrol prices lag behind oil price falls, which is why the sharp drop in oil will not been seen at the pumps until this week, according to Brian Madderson, chairman of the Petrol Retailers Association, who predicted a 2p drop in average prices. But forecourt prices never fall at the same rate as oil because so much of the cost is accounted for by duty, fixed at 57.95p a litre. That figure was frozen by Chancellor George Osborne in 2011, with a pledge to leave it unchanged until May 2015. But with Treasury coffers still stretched, Madderson fears a future government of whatever colour will be tempted to unleash petrol duty rises again next summer. DAILY MAIL

HMRC uses psychologists and behavioural economics to inspire guilt in taxpayers
Following a trial with more than 100,000 people, HMRC said it had "pinpointed the exact words and concepts" which trigger people to pay, leading to an estimated £210m of additional income to the public purse each year. Phrases such as "nine out of ten people in the UK pay their tax on time", or "most people with a debt like yours have now paid it" have been added to the letters. Often, local comparisons were used to encourage people to pay up. Mentioning public services in letters also increased payments, especially for those with large debts. People with debts of £3,000 were found to be 20% more likely to respond to letters which mentioned public services than those which did not. As a result, the wording of thousands of letters from HM Revenue & Customs to tardy taxpayers has been "subtly altered" with the aid of psychologists to inspire guilt. The letters include statements highlighting how the "great majority" of people pay their taxes on time while also setting out the importance of taxes in funding public services. A similar "nudge" method is being used to encourage potential tax evaders to clarify their tax position and pay up any outstanding liabilities. Those who fail to respond will be the subject of a full-scale inquiry. ACCOUNTANCY AGE

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