Thursday 19 May 2016

Thursday, May 19, 2016 Posted by Hari No comments Labels:
Posted by Hari on Thursday, May 19, 2016 with No comments | Labels:

High pay for bosses hurting economy says Bank of England's top economist
Excessive pay for top bosses is holding back economic growth in Britain, the chief economist of the Bank of England, Andy Haldane, has warned. Mr Haldane, who has earned a reputation as one of the central bank’s most radical minds, highlighted in a speech in Westminster the fact that FTSE 100 bosses are now paid 150 times the average UK worker. Mr Haldane, in a speech to the annual dinner of the reformist New City Agenda think tank, added that the damage done to social capital by the bad behaviour of banks in the run-up up to the financial crisis was one of the reasons the economy’s recovery has been so disappointing by historical standards. “A lack of trust in finance potentially hobbles both economic growth and financial stability” he said. “Unaddressed, that jeopardises future wealth and well-being”. Social capital refers to trust and relationships in a society and Mr Haldane argued this matters “every bit as much to wealth and well-being” as financial capital such as stocks and shares and other such assets. So far in 2016 there have been major pay revolts by shareholders at the oil giant BP, the mining group Anglo-American and the engineering company Weir, all over the level and structure of proposed remuneration packages to chief executives. A focal point of protest next month is expected to be the annual general meeting of the advertising conglomerate WPP where the annual pay of its chief executive and founder Sir Martin Sorrell is expected to soar to £70m. But Mr Haldane, who is paid £215,627 a year by the Bank of England, was sceptical about the efforts of shareholder groups, alone, to rein in top pay since their votes were often non-binding on managements. “With very few exceptions, no differences were made to executive compensation packages as a result of investor action” he said, referring to pay insurrections in recent years. Instead, he suggested politicians should consider reforming the 2006 Companies Act, and requiring managements to place more weight on the interests of employees and customers alongside shareholders. “The shareholder-centric model may have become a recipe for depleting long-term company wealth-creation and, thus, societal well-being” he said. INDEPENDENT

George Osborne'S 2003 pledge to scrap 'very unfair' tuition fees comes to light
A letter by a young Conservative MP called George Osborne, in which the writer criticises the introduction of university tuition fees, describing them as very unfair and a “tax on learning”, has been discovered by a former constituent. Violinist Rosy Williams was looking through a box of old papers on Monday when she came across the letter, written in 2003 on House of Commons-headed notepaper. In it the up-and-coming MP for Tatton - now chancellor of the exchequer – thanks her for responding to an earlier letter seeking her views, and those of other young people in Cheshire, on national issues. He writes: “It is clear from the hundreds of replies I had that one of the issues that most concerns people your age is university tuition fees. It is hardly surprising... When I was at university 10 years ago, my education was free. Since then, the government has imposed fees, which mean that most students today pay more than £1,000 a year to go to university. Now they want to go further and introduce so-called ‘top-up fees’, which will mean students paying £3,000 a year for their education. To my mind, this is a tax on learning and is very unfair.” Osborne goes on to say that with the abolition of grants, students faced leaving college with debts of around £18,000. “There is lots of evidence that it is this fear of going into debt that most puts people from poorer backgrounds off going to university … As a result of listening to students and their families across the country, I thought you would be interested to know that the Conservatives have just announced that we will scrap tuition fees altogether when we are next in government. Education will once again be free for students.” At that time Osborne was toeing the party line – the Conservatives opposed tuition fees, which were first introduced by the Labour government in 1998 at £1,000, and subsequently raised to £3,000. Williams discovered the letter the day the current Conservative government’s latest thinking on tuition fees was published in its higher education white paper. It announced that from next year universities will be allowed to increase annual fees above the current £9,000-a-year cap in line with inflation. GUARDIAN

Britain's second biggest energy firm SSE posts profits of £1.5bn despite losing 370,000 customers
Profits from SSE’s retail business, which sells direct to families, were £455.2m. This was virtually identical to the year before, despite the loss of 370,000 customers, most of whom switched to cheaper deals with rivals. The fact the company was able to protect its profits while losing customers provides further evidence of unfair prices, according to critics. All the ‘big six’ energy companies have been accused of bolstering profits by failing to pass on sharp falls in the wholesale cost of gas and electricity over the past two years. SSE confirmed its profit margin per customer last year was 5.2 per cent, which was up from an average of 4.1 per cent for the past four years. Mark Todd, the co-founder of price comparison site Energy Helpline, said: ‘SSE has lost customers yet is making the same amount of money as last year. This is not a magic trick, it’s a cunning trick. SSE has simply passed on price cuts as slowly as possible and has made more money per customer.’ SSE, which also trades under the names Southern Electric and SWALEC, has 8.2m customers, making it second only to British Gas. Yesterday it revealed adjusted profit before tax of £1.5bn for the whole company during the 2015/16 financial year, which was down marginally on the year before. DAILY MAIL

Company pension black hole inquiry: After BHS crisis, MPs will quiz FTSE bosses over multi-billion deficits
Blue chip firms such as BAE Systems, Tesco and BT have all run up massive deficits due to an underperforming stock market and what some have described as over-generous schemes. It follows the crisis surrounding the BHS pension scheme which has a £571m black hole. Although the firm had been taking steps to add extra money, it has been criticised because it would have taken 23 years to clear the deficit. Experts warn the country is now on the brink of a pension crisis, with some schemes facing collapse unless urgent action is taken. Senior MP Frank Field has pledged to launch an investigation into the issue. His influential Work and Pensions Committee will examine the private pension system and could recommend a change in the law. It will particularly focus on schemes which have large black holes – meaning the amount of assets they hold is far less than the pensions they have promised to pay savers. Bosses of firms with major deficits could be hauled into Parliament to explain how they plan to ensure that workers get the pensions they saved for. Worst on the list was defence giant BAE Systems, which had a £5.4bn deficit – more than a third of the total size of the £15bn company. It has around 125,500 current and former employees with savings in the scheme. BT is also high up on the list. Its £7bn deficit was nearly a quarter the size of the £30bn company. There is more than 308,000 people in its pension scheme. Tesco’s deficit stood at £3.2bn, or 12 per cent of its £26.5bn value. Its scheme has around 350,000 members. BP’s worldwide deficit was £5.5bn, or 7 per cent of its £75bn value. A spokesman said he didn’t know how many people were in the oil company’s various schemes. Britain’s largest water company, Thames Water Utilities, has run up a £250m black hole in its pension pot since it was taken over by a consortium led by Australian bank Macquarie which extracted at least £1.6bn in dividends and interest. DAILY MAIL

Ryanair revolt takes off as more than 5,000 disgruntled customers join court case against rip-off admin fees
Online firm CaseHub is looking for people stung with charges of up to €70 (£55) to check in or replace a boarding card and €160 (£126) to amend documents. CaseHub argues that these fees are illegal under EU rules and that passengers who have paid them should be refunded. Another 70,000 passengers need to sign up before the case will be heard. Casehub will take 35 per cent of any cash won as a fee. Ryanair says it does not comment on ‘speculation’. Casehub is bringing a separate law suit against other airlines including British Airways, Virgin and Monarch over excessive fees for reclaiming Air Passenger Duty. You only pay this tax — which costs up to £73 for economy trips — if you board a flight from the UK. If you miss your flight or it’s cancelled, you can reclaim it, but the admin fees can swallow up the refund. A BA spokesman says it is ‘clear during the booking process’ that a fee may apply. Monarch says the charge reflects the cost in making refunds. Virgin says it charges, as making the refund is a ‘manual procedure’. DAILY MAIL

PPI victims 'should have got £5bn more'
£5bn is the total amount that claims management companies charged clients to process their complaints. MPs on the Public Accounts Committee (PAC) said they were disappointed the money did not go to the victims of the scandal. Their report said this amounted to "a failure of regulation and redress". Consumers can complain directly to the Ombudsman free of charge - yet so far, 80% of those who have done so, have chosen to go through claims management companies, which take up to a third of any money paid out. Since April 2011, more than £22bn has been paid out in compensation to those who were sold the insurance policies by banks, but did not necessarily need them. Members of the PAC were critical of the role of the regulator, the Financial Conduct Authority (FCA), and the Treasury. It said they, and others, were too slow in taking responsibility for the situation and "too passive in allowing it to happen". The committee said it was also concerned about future potential mis-selling - for example, with people who have accessed money from their pension savings. BBC NEWS


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