Thursday 18 December 2014

Thursday, December 18, 2014 Posted by Hari No comments Labels:
Posted by Hari on Thursday, December 18, 2014 with No comments | Labels:

British household debt is £1.7 trillion: we are living further beyond our means than at almost any time in the last 20 years.
The head of the Office for Budget Responsibility (OBR), Robert Chote, told a panel of MPs that consumers have been upping their spending, which in turn helps improve the growth of the economy. But the increased expenditure does not mean that households have more cash to spare – they are just using their savings. He added: ‘We have assumed that it is not plausible [that this could continue].’ Consumer spending grew by 2.1 per cent in the first nine months of this year, even though wages continued to stagnate, figures from the OBR show. The economists estimate that the huge gap between earning and spending is the second largest since the mid-1990s. Total household debt stood at £1,670billion as of the second quarter of this year. The OBR has increased its forecast of unsecured household debt as households continue to spend beyond their means. The forecasts come as debt experts warned that as many as one in four credit card customers are paying the minimum every month or struggling to pay at all. One in five respondents with a credit card said they only made the minimum payment in October, while a further one in 20 said they made no payment or paid off less than the minimum. DAILY MAIL

Luxembourg tax dodge whistleblower charged with theft, says he acted out of conviction
28-year-old Antoine Deltour has been charged in Luxembourg with a string of criminal offences including theft, violation of professional secrecy, violation of trade secrets and illegally accessing a database. Deltour joined PwC from business school in 2008 and resigned two years later. He said: “Normally auditors are a bit like regulators. It is a useful profession, we verify the accounts of companies... But I wasn’t feeling at home in that environment [at PwC]. Bit by bit I discovered how extreme the system was in reality – it was a massive tax optimisation practice. I didn’t want to be part of that.” Last month the Guardian and more than 20 news media around the world, in conjunction with the International Consortium of Investigative Journalists (ICIJ), published detailed investigations into the tax affairs of several multinationals, based on leaked tax rulings secured by PwC for large clients. Luxembourg’s finance minister Pierre Gramegna has described the affair as “the worst attack Luxembourg has experienced in its history”. But his counterparts in France, Germany and Italy suggested the revelations had brought Europe to an “obvious … turning point” in the international debate on unfair tax competition. “Since certain tax practices of countries and taxpayers have become public recently, the limits of permissible tax competition between member states have shifted,” they said in a letter to Pierre Moscovici, European commissioner with responsibility for tax. “This development is irreversible.” The Guardian and other media working with the ICIJ had this month published more revelations and further confidential tax rulings secured by Ernst & Young, KPMG and Deloitte. GUARDIAN

It’s expensive being poor: Poorest households face fastest cost of living rise
The Office for National Statistics (ONS) said that households in the bottom 10% of the income scale had an average annual inflation rate of 2.9% each year from January 2003 to October 2014. This compared with an inflation rate of 2.6% among the wealthiest 10% of UK households. Caroline Abrahams, charity director at charity Age UK, said: "Because older and lower income groups spend a greater proportion of their income on essentials such as food, fuel and energy, they are far more vulnerable to the price increases we have seen to these items since 2003... With 1.6 million pensioners living in poverty and a further one million just above the breadline, many are struggling to afford the basics, let alone anything else." When categorising households by how much they spend, rather than their income, the top 10% of households saw prices rise, on average, by 2.3% over the same period. This compared with 3.7% among the 10% of households which spent the least. Households with children saw the cost of living rise by 2.4% on average each year, compared with 2.7% for those without children. Non-retired households saw prices rise on average by 2.5%, compared with 2.8% for retirees. BBC NEWS

The average UK property price rose more in 2014 than the average worker earns in a year – and London is the worst
The average worker took home £27,271 this year, having seen their wages grow just 0.6 per cent – or £169 - compared to 2013, the study by the Centre for Economics and Business Research for the Post Office found. Yet steep property inflation means the average house price now stands at £272,952, up £29,339 from £243,613 last year. Therefore, more than three in five workers earned less than the average house price rise. To give some examples, starting salaries for junior hospital doctors, graduate nurses, teachers, police officers and soldiers are all less than £23,500. Homeowners in the East, South East and London saw their homes earn far more than average wages in the area. Property values in London, for example, have added an average of £80,452 - almost twice the average salary of £41,095 earned in the capital. In fact, booming property in London earned more than the average fully qualified doctor. Elsewhere, estate agents Marsh and Parsons predicts a slowdown of growth when it comes to prime London property next year, but says London rents will soar by around 10 per cent during the course of 2015. DAILY MAIL

Have you checked your pension recently? Officials reveal companies are charging some savers FOUR TIMES the recommended cost to manage their pot
Some pension companies take more than 3 per cent of savers' money each year as a fee, potentially reducing retirement incomes by tens of thousands of pounds. The charges compare to the capped 0.75 per cent fee that applies to schemes taking in new members under the Government's automatic enrolment policy. The audit of pension charges was made by the Independent Project Board, which was set up after the Office of Fair Trading found evidence in 2013 that savers were not getting value for money from their pensions. The report found that of £67.5billion held in relevant schemes as much as £25.8billion is potentially subject to charges above 1 per cent, accounting for 1.5million savers. Around half of this is could be exposed to charges above 1.5 per cent, between £5.6bn and £8.0bn is exposed to charges above 2 per cent and around £0.9bn exposed to charges above 3 per cent. The report found 38 different types of charge being levelled by schemes, and 291 different combinations of these charges being applied. Some schemes impose penalties as high as 10 per cent of the fund's value if savers want to switch to a better scheme. Others apply monthly cash fees on top of annual percentage ones. This not only takes more money from savers, it can distort the charges so that a scheme with a lower annual charge can work out more expensive than one with a higher fee - depending on how much the saver contributes. The report related to 'defined contribution' pension schemes, which take money from workers and their employer and invest it in order to build a retirement fund. It did not include final salary plans, which are part of defined benefit schemes that guarantee workers a set income in retirement, with firms taking responsibility for this. Tom McPhail, head of pensions research at Hargreaves Lansdown, said: 'Long-standing loyal investors shouldn’t be penalised by getting a worse deal than new customers. This audit has revealed that billions of pounds of investors’ life savings are still languishing in poor value products, and worse still, 407,000 have joined poor value schemes in the last 3 years”. DAILY MAIL

Germany’s Amazon workers strike as Christmas orders peak
Labour union Verdi said almost 2,300 workers joined the action at five of Amazon's nine distribution centers in Germany, and that the action would be extended to a sixth on Tuesday - the most warehouses hit by a strike in the long-running dispute. Amazon itself said that only a small minority of workers had joined the strikes, with around 19,000 employees working normally. Verdi has organized frequent strikes at Amazon since May 2013 as it seeks to force the retailer to raise pay for workers at its distribution centers in accordance with collective bargaining agreements across Germany's mail order and retail industry. Amazon has repeatedly rejected the union's demands, saying it regards warehouse staff as logistics workers and that they receive above-average pay by the standards of that industry. The U.S. company has previously said the long-running dispute has not affected deliveries as the vast majority of workers in Germany have not joined the strikes and it can draw on a European network of 28 warehouses in seven countries. Germany is Amazon’s second largest market after the US. REUTERS

Amazon refuses to compensate sellers for 1p website price glitch
Amazon’s selling partners have lost tens of thousands of pounds after a software glitch led to their stock being sold for 1p. But the company, which had sales of more than $74bn (£48bn) last year, has emailed sellers to tell them that “as of now Amazon will not be providing any reimbursements for this issue”. RepricerExpress, the third-party company behind the faulty software, has also not offered compensation. The Derry-based company has said it is “truly sorry for the distress this has caused our customers”. Daniel Pizzey, who said his baby clothing company Baby Best Buy has lost £25,000-£30,000 as a result of the glitch, said: “I am totally disgusted at the way Amazon has dealt with this matter”. Pizzey said his company was swamped with 30-40 orders a minute during the 1p glitch on Friday night. “Customers were ordering like 40-50 of the same items and just paying 50p for it. Surely Amazon would have picked up on this and questioned it before sending it out?” The Amazon email to Go2Games, which estimates it lost £10,000 as a result of the glitch, signs off with “have a nice day”. GUARDIAN

£10.5bn order for new trains could have left taxpayers ‘badly ripped off’, say MPs
Two fleets of trains ordered for £10.5bn by inexperienced officials at the Department for Transport have put taxpayers’ money at risk, sown confusion in the rail industry and could mean higher fares, a report from MPs claims. Margaret Hodge, who chairs the public accounts committee, said the DfT’s decision to buy the trains itself – rather than keeping with its previous approach of leaving it to rolling stock companies and train operators - had left the taxpayer bearing all the risk. “The department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5bn,” she said. Hodge explained that this transferred risk away from the rail industry back to government. If passenger forecasts are wrong and fewer new trains are needed, taxpayers will have to pick up the bill. In addition, the report finds the Intercity Express programme was poorly managed and could have cost billions more without a review in 2010, after Hitachi had already secured the work. Following that review, the manufacturer submitted a bid 38% cheaper than its original offer. Hodge said: “Had it not been for the review the taxpayer could have been badly ripped off. The department had begun the procurement without a clear idea of how many trains would be needed, which routes they would run on and what form of power would be required.” Rail unions backed the MPs’ critical report. Mick Cash, the RMT general secretary, said the committee was “shining some light on the murky racket of train procurement” and “drawing attention to the need to defend and develop train building capacity in this country”. Aslef’s leader, Mick Whelan, said: “A failure to put any long-term strategy for the rail industry in place has once more led to additional burdens, and risk, for the British taxpayer.” GUARDIAN

Energy minister Davey tells 'Big Six' energy suppliers he wants them to lose customers to smaller rivals
Ed Davey said it was a 'fantastic success story' that the Big Six - British Gas, npower, Scottish & Southern Energy, EDF, E.On and Scottish Power - have seen their market share slip this year, with smaller suppliers such as First Utility and Ovo Energy sweeping up customers. Independent energy suppliers' market share has doubled this year to nearly 10 per cent as energy users move away from the incumbent 'Big Six' providers in protest against poor customer service and high bills. He added: 'I want to go further and see them have a 30 per cent market share by the end of the decade,' First Utility is the largest of Britain's independent suppliers, holding 3.1 percent of the dual-fuel market, while others including Ovo Energy and Utility Warehouse, owned by Telecom Plus, make up the rest. The affordability of energy bills rose to the top of the political agenda a year ago when the opposition Labour party promised to freeze energy prices if it wins power in next May's election. The competition watchdog is currently carrying out an in-depth investigation into whether the Big Six have displayed any anti-competitive behaviour, a probe that could lead to the break up of some companies. The Big Six has face long-standing accusations that it raises and lowers prices en masse so that customers have nowhere to go in order to find a cheaper deal. The Big Six have always maintained that retail profit margins are modest at around 5 per cent, but critics say the 'vertical' model for energy - where large retail suppliers also own energy generation arms which make profits - means it is difficult to find out profit levels. DAILY MAIL


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