Thursday 30 June 2016

Thursday, June 30, 2016 Posted by Hari No comments Labels:
Brexit vote shows need for reform of executive pay, says top fund manager
A senior executive at Hermes Investment Management, which manages £24bn of funds and advises 42 investors holding almost £170bn, said runaway executive pay had probably contributed to the alienation felt by many people in marginalised parts of Britain who voted for Brexit. The average FTSE 100 chief executive earns £5m, compared with £27,600 for all UK workers, a pay gap that underscores wider divisions between the populace and the elite, Hans-Christoph Hirt, co-head of Hermes’ stewardship arm, Hermes EOS, said. Hirt said: “There is a big gap between people on the street and the people who do voting on remuneration and that is not sustainable. Fund managers are waking up to the fact that they work for pension funds and the man on the street.” He added: “There is a similarity between the two situations. The pay gap is growing and growing and it is comparable to the situation in north-east and east England where people feel out of touch and not represented.” The Resolution Foundation said on Tuesday that weak income growth and rising housing costs had caused living standards to stagnate for low- and middle-income families over the past decade. The squeeze on living standards helped spur disillusionment with the political and economic status quo, the foundation said. Hermes’ comments expand on a warning from another big British fund manager, Standard Life, which said on Tuesday that Brexit underlined the dangers posed by the gap between the rich and poor. It said the effect would be felt in the US, where populist resentment of political elites has risen, as well as in the UK. “The vote has highlighted deeper fault lines in the global economy. Increasing income inequality over recent decades has fostered populist anger across many economies. A failure to address these challenges raises the risk of these types of political shocks,” Standard Life said. Brexit also prompted the US financial houses Bank of America and Pimco to turn their attention to inequality. Bank of America, the second-biggest US bank, said Britain’s economic recovery had been unequal and that the vote to leave the EU was the biggest rejection so far of the age of inequality. Pimco, the $1.5tn (£1.12tn) fund whose advisers include Gordon Brown, said if populist or nationalist parties did not come to power, Brexit would still increase pressure on governments to address inequality and adopt protectionist policies. GUARDIAN

Energy bills U-turn: plans for blanket ceiling on how much firms can charge is ditched
The competition watchdog has overridden the concerns of one of its key experts by ditching plans for a temporary cap on how much energy firms can charge, opting instead for helping customers switch to cheaper deals. A final report – two years in the making – on energy market reforms has also rowed back on its estimates for the scale of overcharging by the big six suppliers, but still believes it amounts to £1.4bn annually. The Competition and Markets Authority report gives only a tiny footnote to the fact that the panel was divided over one of the most important issues, whether to impose a price cap on all energy bills. Instead, the ceiling will only be imposed for those on pre-payment meters. A raft of independent suppliers and industry experts reacted with anger to the final review, saying the CMA had “completely missed the mark” and wasted a golden opportunity to properly restructure the industry. The CMA has also recommended the dismantling of a system under which suppliers could only offer four tariffs, only introduced in January 2014, that was meant to stop confusion for customers. Darren Braham, founder of First Utility, the largest of the new independent suppliers, complained: “Rather than acting quickly to make the market simpler and fairer for customers, the opposite has happened. With the remedies proposed, we are in real danger of being back where we started 10 years ago. This means a baffling array of tariffs, even more exploitation by the big six [energy companies] and customers continuing to pay much more than they need to.” Centrica, the owner of British Gas and the largest of the big six suppliers, welcomed the final CMA recommendations. It said: “We have reviewed the executive summary of the final report and believe many of the remedies will further enhance the market and benefit customers.” GUARDIAN

Nurofen TV ad banned over painkilling claims in landmark ruling
The ruling by the UK’s Advertising Standards Authority follows a separate action by Australia’s Federal Court which fined Reckitt Benckiser, the manufacturer of Nurofen, A$1.7m (£940,000) for misleading customers by claiming its products targeted specific pains, such as migraines. The ASA received 18 complaints about an ad for Nurofen showing a woman who fixed her back pain by taking its Nurofen Joint and Back product. The complainants argued that it was misleading to imply it could specifically target back pain. “Viewers were likely to infer that the product had a special mechanism or contained an active ingredient which made it especially effective for back and joint pain in comparison to other painkillers,” said the ASA. “We understood the product was absorbed by the stomach and distributed to sources of pain wherever they may be located around the body via the bloodstream, and that there was no mechanism by which the product actively sought out the source of pain in a user’s back or joints.” The ASA banned the ad in a landmark ruling that is likely to set a precedent that will see a crackdown on the large number of pharmaceutical products in the market that are advertised as being able to target specific pain ailments, when in fact they are just general painkillers. GUARDIAN

Poor pupils 'are still let down', warns Ofsted boss
Ofsted boss Sir Michael Wilshaw warns of the widening gap between poorer pupils in northern England and those in the South, but he will also highlight how disadvantaged pupils in wealthy areas are being let down. "Through no fault of their own, many simply aren't aware of what is possible. Why should they be? Few of them have had access to the life-enhancing opportunities a good education brings... Middle-class children always have a head start. Their cultural hinterland is usually rich. Their parents are usually well educated... They tend to do well in school. And when they don't, their parents can always hire a tutor." In a speech at the Festival of Education, at Wellington College, Sir Michael said the failure to improve the educational chances of the poor "disfigures" England's school system. "The needle has barely moved... In 2005, the attainment gap between free school meal [FSM] and non-FSM pupils in secondary schools was 28 percentage points - it is still 28 percentage points now," he said. BBC NEWS

UK consumer borrowing rises at fastest rate in more than a decade
The amount of credit extended to borrowers, which includes credit cards, personal loans and overdrafts, rose by 9.9% compared with a year earlier. This was the fastest annual rate in more than a decade and up from 9.6% in April. Over the month consumer credit rose by about £200m to £1.5bn in May. The figures suggest the appetite among British consumers for borrowing money – and the willingness of banks to lend – was strong as the 23 June referendum on Britain’s membership of the EU drew closer. Economists warned, however, that Britain’s decision to leave the EU would weigh on lending in the coming months amid uncertainty over the country’s economic and political future. Consumers’ appetite for borrowing on plastic has picked up markedly since the months after the financial crisis, when borrowing slumped and on some occasions repayments outstripped new debt. The Bank of England data showed net borrowing on credit cards rose by £418m over the month in May, and outstanding debt on cards is now £1.3bn more than at the beginning of 2016. The figures, published exactly 50 years after the first credit card was issued in the UK, are likely to concern debt charities. Mike O’Connor, chief executive of StepChange Debt Charity, said: “Although credit cards can be a cost-effective way to borrow, for many people they have become very expensive, long-term debts.” He added: “The average credit card debt we see is now at £8,403, about half our clients’ average annual take-home pay, and there is a clear need for change.” GUARDIAN

VW owners in US to get up to $10,000 in emissions deal
Last year, US regulators discovered that some VW cars were fitted with software that distorted emission tests. The German giant subsequently said 11 million cars worldwide were affected. The total compensation deal will cost Volkswagen $14.7bn. It is expected to spend up to $10bn on buybacks and compensation, and will put a further $2.7bn into an environmental fund operated by the Environmental Protection Agency (EPA), as well as invest $2bn over the next decade into zero emission technology. Separately, the car firm has agreed to pay $603m to 44 US states, the District of Columbia and Puerto Rico to resolve existing and potential state consumer protection claims. However, it is still facing billions of dollars more in potential fines with lawyers currently working on settlements for 80,000 three-litre diesel engines. The huge settlement will affect 475,00o owners of the 2009 to 2015 Volkswagen diesel models of Jettas, Passats, Golfs and Beetles as well as the TDI Audi A3. Customers can choose to sell back their vehicle to Volkswagen, for its price last September before the scandal was revealed, or terminate their lease without incurring any penalty charges. They can also choose to have their vehicle modified free of charge and keep it. Customers who select any of the options will still receive compensation of between $5,100 and $10,000. They would also still be able to decline the VW offer and sue the firm on their own. Last September, the EPA found that many VW cars being sold in America had a "defeat device" - or software - in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results. The German car giant has since admitted cheating emissions tests in the US. Some models could have been pumping out up to 40 times the legal limit of the pollutant, nitrogen oxide, regulators disclosed. The provision VW made for the scandal pushed the car maker into its biggest ever annual pre-tax loss of €1.3bn for 2015, compared with a profit of €14.7bn the previous year. BBC NEWS

Aldi sale adverts banned for being misleading
Two TV adverts compared a weekly shop at Aldi with the likes of Tesco, Asda, Sainsbury’s and Morrisons.  It claimed that a weekly £70 Aldi shop would cost £98 at the big four grocers, an increase of nearly 40 per cent. The small print at the bottom of the page included text that stated: “Comparison of Aldi products vs products shown. Morrisons may sell ‘own brand’ products at different prices.” Morrisons and two members of the public said the price comparison was misleading as Aldi’s did not make clear it compared its own-brand products and branded products as opposed to the supermarkets own-brand products that are likely to be cheaper. Aldi disagreed saying that consumers who saw the commercials were likely to interpret the comparison as intended. The supermarket added that it had demonstrated this with small print shown on screen and at the bottom of the printed adverts. But the watchdog ruled that the commercial was misleading as consumers would understand that by swapping from shopping at their usual big supermarket to shopping at Aldi they could make significant savings. The combined share of discount retailers Lidl and Aldi has hit a record high of 10.5 per cent, with each holding 4.4 per cent and 6.1 per cent of the market respectively. INDEPENDENT

Regulator to investigate accountants PwC and KPMG over BHS and HBOS failures
The regulator that monitors UK financial reporting is to investigate two of the big four accountancy firms over their role in the failures of the retailer BHS and the banking group HBOS. The Financial Reporting Council, responsible for overseeing UK accounting standards, began an investigation into PricewaterhouseCoopers over its audit of the collapsed high street chain BHS when it was owned by Sir Philip Green. It has begun a parallel investigation into whether KPMG should have signed off on the accounts of HBOS, which was bought by Lloyds as the banking crisis gathered pace in September 2008. BHS fell into administration in April, with the loss of 11,000 jobs, 13 months after Green’s Arcadia group sold it to the businessman Dominic Chappell for £1. The chairman of the Commons Treasury committee, Andrew Tyrie, said: “The HBOS report exposed the staggeringly poor quality of HBOS’s loan book. The role of the auditors – for years left unexamined – is to be subject to thorough investigation. Not before time.” HBOS was among the first British casualties of the UK banking crisis and was bought by Lloyds for £12bn in September 2008 to prevent it from collapse. The government eventually had to spend £12bn on bailing out Lloyds, partly because of toxic loans on the HBOS balance sheet that it acquired in the deal. The FRC’s decision to investigate PwC intensifies scrutiny of the stewardship of BHS before Green sold it to Chappell, a former racing car driver with no previous retail experience who has been declared bankrupt three times. GUARDIAN

Monday 27 June 2016

Labour Party rebels blaming Jeremy Corbyn for BREXIT bring to mind an emotionally inept spouse trying to work out why his angry partner threw a teapot at him

The ninny obsesses about what his spouse had against the smashed teapot. Was it the colour? Did the nozzle drip? Would a new teapot make everything better? He is far too self-obsessed to see the problem is himself.

Labour MPs rebelling against Jeremy Corbyn are so distant and self-obsessed they can’t hear what the people they claim to represent are saying. 

"Blessed are the cheesemakers!" the bovine MPs hear, taking this as clear confirmation they should rebel. "The Greek will inherit the Earth" sends them scurrying looking for whoever is bearing the nicest gifts.

So inept are the Labour rebel leaders that they staged a drip-drip of shadow ministerial resignations over several daysConfirming to ordinary Labour Party members the whole rebellion was rehearsed like a school production of a Gilbert & Sullivan comic opera: long on planning, short on talent.
We Resign, TaranTara!
Or perhaps it was simply the later the resigner left their announcement indicated the measure of their cowardice in waiting for safety in numbers? 

In fact both the main political parties, like many other reptilian species, periodically slough off their skins. The Tories with Thatcher in 1975, and Labour with Blair in 1994. What is unusual is in 2016 the Tories and Labour do it together. Writhing like two mating rat snakes. No romance, no empathy, just the need to spawn and survive.

BREXIT was a protest against a politics that cut the many adrift, leaving the few to prosper. Corbyn and his supporters seem to be the only mainstream leaders who understand this.

Perhaps Corbyn’s role is to block the Labour Leader’s seat to keep it from the Blairistas. Like the ancient Roman Horatio, Corbyn is holding the bridge to the leadership until an ambitious and suitably talented politician emerges from the Left.

Britain needs strong parties of all complexions, from Left to Right. Whoever that ambitious and capable Leftie is, its about time you stepped forward. 

Until then, Corbyn should continue his Rope-A-Dope strategy, and let the rebels come out punching until they get bored with themselves.

Sunday 26 June 2016

Sunday, June 26, 2016 Posted by Jake 6 comments Labels: , , , , , , , ,

Those still puzzling why Britons voted to leave the European Union (EU) in June 2016 should look to what's wrong in Britain and not to Europe. 

Naturally there will be many different individual reasons, but the dog whistles blown by both BREXIT (xenophobia) and BREMAIN (punishment) were not the decisive cause of the result.

Britons voted to protest that even if the European Project made Britain richer, if the riches the went to the few and they didn't get a share, then they didn't want to stay anymore. A protest that "the few" were surprisingly oblivious to.

Britons voted for BREXIT because of chronic Inequality and Inequity in Britain, not because of immigration. Data from the Electoral Commission shows that out of 382 regions, 263 had a majority for BREXIT. London, which has by far the highest proportion of immigrants, voted strongly for BREMAIN. 

For evidence, look to the data:

a) Office for National Statistics migration data shows the areas that voted for BREXIT in England have lower levels of immigration than those that voted for BREMAIN. London, which came out strongly to BREMAIN has the greatest percentage of non-British population:

b) On the other hand, the areas that voted from BREXIT are, apart from Northern Ireland, significantly poorer than those that voted for BREMAIN

c) Other ONS data shows the extraordinary degree London has taken the lion's share of the UK's economic success.

d) A report by Inequality Briefing showed for Northern Europe London is the richest region, but 9 out of the 10 poorest regions were also in the UK.

Jeremy Corbyn has to be admired for his insouciant "rope a dope" strategy to deal with Labour MPs calling for his resignation. MPs whose slithering up the greasy pole has resulted in it slipping their minds who they are supposed to be representing.

Inspite of all his opponents' trash talking Corbyn should be confident the crowds of ordinary party members are behind him. 
Perhaps Corbyn doesn't really want to be, or is not suited to be, Prime Minister. But for Labour to avoid returning to "Tory-Lite" mode, he needs to hold fast. Eventually it will dawn on an ambitious and capable Labour politician the path to Number 10 is to the left.

Corbynistas should take heart:
a) 24 hours after two Labour MPs tabled a vote of no confidence, a petition on 38 Degrees had more than 140,000 members of the public voting their Confidence in the man:

b) The EU referendum turnout was higher than any General Election since 1992. This was because a clear alternative was offered: In or Out. Something that hasn't happened since 1997 from when the electorate has been offered Tory-Lite (New Labour) or Tory-Tory (Tories).

Corbyn needs to offer a clear alternative, then the usual non-voters will come. 

Farage, Gove and Johnson may actually believe their "Once more unto the BREXIT" rhetoric caused Britons to head for the Exit. The real impetus came from decades of chronic inequality regardless of Labour or Tory governments:

Farage, Gove and Johnson may believe themselves cast in the Churchillian mould. But going in the same direction doesn't mean being led. The idea the economically disadvantaged were led by rightwing Tory luminaries Gove and Johnson is risible. BREXITEERs were punishing the political class, especially rightwing Tory luminaries.

Just because Britain voted to BREXIT didn't mean they believed what the BREXIT camp told them. Remember, a chap being followed closely by a bull is more likely to be being chased by it than to be leading it.


Friday 24 June 2016

Friday, June 24, 2016 Posted by Hari 1 comment Labels: , , ,

Thursday 16 June 2016

Thursday, June 16, 2016 Posted by Hari No comments Labels:
FTSE 100 giants with vast pension black holes hand billions to shareholders
Britain's blue chips are dishing out billions more in dividends to shareholders despite a crisis in their pension funds. Analysis by investment group AJ Bell shows that 54 companies in the FTSE 100 index have handed out £48billion to investors in the last two years – despite having a £52billion pension black hole. And 35 have been paying out more in dividends than the total size of their pension deficit. Oil giant Royal Dutch Shell, for example, last year handed £8billion to shareholders despite figures showing it had a £6.7billion funding gap in 2014. Drug company AstraZeneca had a £1.9billion deficit in 2014 but threw off £2.4billion of cash last year. Fellow pharmaceuticals firm GlaxoSmithKline handed out £3.9billion in 2015, despite a £1.7billion gap for the previous year. AJ Bell investment director Russ Mould said: ‘Insufficient contributions to the pension fund could leave the company with hefty liabilities which could drag on future performance and ultimately lead to staff receiving lower pensions if the business runs in to difficulties and enters administration.’ It came as official figures revealed pension funds have plummeted almost £25billion further into the red. It means the 5,945 large schemes watched by the Pension Protection Fund (PPF) had a combined deficit of £294.6billion at the end of May – £24.4billion higher than a month earlier. The Pensions Regulator has issued a similar warning in the past. Andrew Warwick-Thompson, executive director of regulatory policy, said: ‘It is important that employers treat their pension scheme fairly. 'We expect trustees to question employers’ dividend policies where debt recovery contributions are constrained.’ Experts have warned Britain faces a looming pension crisis. Huge deficits mean around 600 pension funds are certain to collapse in the next decade, according to the Pensions Institute at Cass Business School. It says another 400 are also at risk. These funds have combined deficits of around £45billion – a figure which could potentially overwhelm the PPF rescue fund, which acts as a backstop in cases of disaster. DAILY MAIL

Passion and drive come first: 70% of small businesses say degrees aren't important
A huge 69 per cent of the online small businesses looking to expand this year that were questioned in the eBay Employee Skills Index survey say it isn't particularly important to them that candidates have a university degree. Instead, they place more importance on skills such as a strong grasp of social media, computer coding, and marketing. Half of those surveyed said finding employees with a university degree was 'not at all important' to them - and one in four said the same about GCSEs. Instead, the results indicate that practical skills gained through hands-on experience, and proficiency with technology are valued more highly than academic accomplishments. More than half of SMEs said it was important that a prospective employee has digital skills, and 41 per cent looked for candidates who could code and build computer programmes. Meanwhile, a considerable 61 per cent of respondents said they favoured candidates who had a strong grasp of marketing and advertising, One in three of the small businesses surveyed said they were planning to hire this year. And while the sorts of skills they are looking for are generally thought of as being the preserve of younger people, 41 per cent of prospective employees said age was 'not at all important' to them - which makes sense, as there are 900,000 more 50-64 year-olds in work now than in 2010. DAILY MAIL

Rigging the Energy Market: Price comparison sites to be investigated by competition watchdog
The investigation will examine whether websites agreed not to compete with each other when consumers searched on Google for the best deals. The Competition and Markets Authority said: “The CMA is investigating a suspected breach of competition law by some price comparison websites that offer energy tariff comparisons in relation to paid online search advertising.” Ofgem said it found that two or more of the comparison sites had, since 2010, “been parties to an agreement or concerted practice relating to bidding and/or negative matching for search advertising which have as their object or effect the prevention, restriction or distortion of competition.” These practices included “agreements not to compete in relation to particular search terms used for the purposes of online search advertising”. Negative matching is when an advertiser indicates to a search engine operator such as Google that it does not want its website to appear in the search results for specific keywords. In a bizarre twist, the issue was handed to the CMA after an initial investigation by the industry regulator Ofgem was at risk of being compromised by actions of Ofgem staff. Ofgem found its staff had, before the formal investigation begun, been in contact with the websites now under investigation, encouraging them to change their behaviour when it came to buying advertising on search engines such as Google. Once the investigation began, Ofgem realised its earlier activities could call into question the regulator’s own impartiality. GUARDIAN

M&S criticised for ditching antisocial hours pay to offset wage rise
The retailer plans to increase basic pay for its 69,000 shop-floor workers by 15% from next April to £8.50 an hour but has offset the cost of doing so by cutting special pay rates. The changes, announced last month, will give a boost to the majority of staff but long-serving workers – who previously enjoyed premiums for working after 9pm and on Sundays and bank holidays – will lose out. Labour MP Siobhain McDonagh said some staff members would lose up to £2,000 a year as a result of the changes. “This is not just any pay cut. This is a big fat M&S pay cut,” she said. M&S said the planned pay rise would give its staff one of the highest hourly rates in UK retail alongside one of the best benefits packages. All staff affected by the change are to get a one-off compensation payment to ensure they are not financially affected for the first two years of the change. The government faces pressure to crack down on companies offsetting rises in basic pay by removing other benefits. In recent months, a string of firms, from fish factories in Grimsby to coffee shops in central London, have withdrawn overtime, Sunday pay, bonuses, free food and paid breaks in order to keep the wage bill down. Major retailers including Tesco, Morrisons and B&Q have faced protests over implementing cuts to benefits alongside increases in basic pay. David Cameron said he had not seen details of the pay changes at M&S but wanted to see the “national living wage”, a new minimum wage for over-25s, feed through into “higher take home pay, not lower take home pay … We would urge all companies to make sure that is the case,” he said. GUARDIAN

'Cash beats shares!' BBC journalist Paul Lewis challenges conventional investing wisdom in study covering 21 years
Saving in best buy cash accounts over the past two decades beat putting your money in a FTSE 100 tracker the majority of the time, according to research by BBC Money Box presenter Paul Lewis. The high profile financial journalist has carried out a huge study which challenges the conventional wisdom that investing in stocks is more rewarding than saving if you stick with it over the long term. Lewis compared returns from the top one-year deposit account each year since 1995 to the money made on a simple tracker fund cloning the performance of the top 100 shares listed on the London stock market. This 'active cash' beat the tracker in 57 per cent of 192 rolling five-year periods from 1 January 1995 onwards. And cash did even better over longer periods, beating the tracker fund 96 per cent of the time in the 84 rolling 14-year periods since 1995. Lewis also highlighted that the tracker fund lost money up to a third of the time over investment periods ranging from one to 11 years - whereas cash savings will always grow. The research took into account dividends reinvested in the tracker and any interest earned reinvested in cash savings, so gains from compounding were included in both cases. Over the whole period shares did win out but by a small margin that is small enough for savers to question whether the risk was worth it. Lewis says money invested in best buy cash over the whole 21-year period from 1 January 1995 to 1 January 2016 would have produced an average annual compound return of 5 per cent, while the tracker would have produced a compound annual return of 6 per cent. That 1 per cent difference is far lower than the 3-8 per cent typically quoted as the ‘risk premium’ of investing in shares rather than cash, explains Lewis. DAILY MAIL

Why IS Barclays letting pushy salesmen flog £100 diet pills in its branches? Controversial US health schemes set up stalls in banks and pounce on customers
Salesmen from controversial health schemes are setting up stalls in Barclays branches and pouncing on people waiting to be served. Customers are being flogged expensive face creams and diet pills — and asked to become part-time sales staff themselves. Most of the companies involved are U.S.-owned and notorious for pushy sales tactics. They have hijacked a Barclays community programme that was designed to give small local businesses a cost-free way of reaching High Street shoppers. Barclays set up its scheme allowing small businesses to operate pop-up stands in its branches in 2014. You can apply to a local branch to put up a stall and the bank makes no money from the arrangement. However, Money Mail has discovered that instead of helping local entrepreneurs, the spaces have been seized on by big overseas businesses. The revelation has sparked concern that elderly customers who depend on branches are at risk of being targeted. Witnesses say salesmen are telling elderly customers that the products, which include £100 diet pills, energy bars and £30 herb-infused face creams, can ease ailments such as arthritis. Stay-at-home mothers are being told they can make an 'easy' £300 a month if they sign up to become saleswomen. Yet most of those lured in will be unaware of the dubious health benefits of the products. And those recruited as agents can face enormous pressure to sell — and stinging costs if they fail to hit monthly targets. Forever Living, Arbonne and Herbalife all appear to be regular fixtures in Barclays branches. They are dubbed 'multi-level marketing schemes' because they work by signing up customers to flog expensive cosmetics or health products to friends, family and neighbours. Typically, recruits work as and when they want — as they're technically self-employed — to supplement household income. Often they're promised promotions and extra cash if they regularly sign up new sellers. Critics have accused the companies of having a similar selling style to pyramid schemes — illegal businesses that promise staff rewards for enrolling others, as opposed to offering income for selling products. DAILY MAIL

BHS collapse: Sir Philip Green's reputation and knighthood depend on pension offer, say MPs
Sir Philip Green will have to make a generous offer to rescue the BHS pension scheme if he wants to save his reputation and knighthood, MPs have warned after a fiery six-hour hearing with the billionaire retail tycoon. Green promised to resolve the problems facing the pension scheme and apologised for the collapse of the department store chain during an extraordinary parliamentary meeting that ran from just after 9am until 3pm. The tycoon, who declined to provide details about his rescue plan, repeatedly clashed with MPs during the hearing, castigating Richard Fuller, the Conservative MP, for staring at him in a “really disturbing” way and accusing committee chairman Iain Wright of being “really rude”. MPs are now planning to call Green’s wife, Lady Green, to give evidence. Monaco-based Tina Green owns the family’s business interests, including Arcadia, the parent company of Topshop, Wallis and Dorothy Perkins. BHS is being wound down after administrators failed to secure a rescue deal, putting 11,000 jobs at risk and leaving it with a £571m pension deficit. Green controlled BHS for 15 years until March 2015, during which time the tycoon and other investors collected more than £580m in dividends, rent and interest payments. Green sold BHS to Dominic Chappell, a three-time bankrupt whose consortium, Retail Acquisitions, extracted at least £17m from the retailer. However, while insisting the demise of BHS was “my fault”, Green also pointed the finger at the pension trustees, the Pensions Regulator, Goldman Sachs and Chappell’s advisers, Grant Thornton and Olswang. GUARDIAN

350,000 renters put at risk of eviction, according to report
More than 148,000 renting households – equivalent to 350,000 people – were put at risk of losing their home in the 12 months to April, according to a new analysis of government figures by housing charity Shelter. People renting in the London boroughs of Enfield, and Barking and Dagenham faced the greatest risk of eviction, the charity said. In each of these boroughs, one in 23 rented homes were “under threat” during the period in question – which worked out as 2,314 households in Enfield, and 1,647 in Barking and Dagenham. Shelter also reported that the volume of people facing eviction who were approaching the charity for advice “was getting higher and higher”. A spokeswoman said: “In the past year alone, over 9,800 people facing eviction have called the Shelter helpline for advice, and 500,000 people have visited the Shelter website’s eviction advice pages.” GUARDIAN

Thursday 9 June 2016

Thursday, June 09, 2016 Posted by Hari No comments Labels:
Middle-class savings squeeze: a third of ABC1 families borrow to pay an unexpected bill of £500
According to a new YouGov survey, 31% of ABC1 workers, which includes junior managers and professionals, would struggle to pay an unexpected £500 bill. The figure rises to 46% for manual workers and the unemployed. Overall, 14% of those questioned could not pay a bill of just £100 without borrowing. Although inflation is currently low, many workers have not had pay rises for years. The Bank of England said last month that it expected inflation to increase in the second half of the year, which could put more pressure on some households. Women were less likely to have spare cash than men, while almost half of those aged 18 to 24 would not be able to find £500, compared with 23% of those aged 65 and over. The Money Advice Service has found that four in 10 UK adults have no more than £500 in savings, while a survey by ING bank suggested that 28% had nothing at all in their bank account. Family debt stood at an average of £13,520 at the start of the year due to the availability of cheap credit, according to Aviva. The figure had jumped by £4,000 in just six months to the highest since the summer of 2013, the insurer said. The Aviva report suggested that the typical family had a savings pot worth £3,150. BBC NEWS

Mike Ashley admits his Sports Direct staff were not paid minimum wage
Mike Ashley’s Sports Direct is facing a multimillion-pound bill in fines and back pay after the billionaire admitted his company had broken the law by failing to pay staff the national minimum wage. The concession, which was made as Ashley appeared in front of MPs investigating his firm’s treatment of its workers, confirmed the findings of a Guardian investigation last year. Ashley, who could also face being disbarred as a company director because of the breach, admitted that at a “specific time” Sports Direct effectively paid workers less than the minimum wage because they were held back at the end of their shift and searched by security before leaving the company’s warehouse. The practices contributed to many staff being paid an effective rate of about £6.50 an hour against the then statutory rate of £6.70, which potentially saved the FTSE-100 firm millions of pounds a year at the expense of some of the poorest workers in the UK. While the admission that the company was breaching employment law was the main headline, the MPs also extracted a string of revelations, with Ashley telling them that: it was “unacceptable” for the company’s workers to be docked 15 minutes of pay for being one minute late for work; he is struggling to control the company he founded and in which he still owns a majority stake; he would review the use of the controversial “six strikes and you’re out” policy under which workers are sacked for six black marks within six months. But Ashley added: “I’m not Father Christmas, I’m not saying I’ll make the world wonderful.” Union officers from Unite said there had been 110 ambulance callouts to the warehouse, including 38 times when workers had complained of chest pains. Five ambulances had been called to Sports Direct’s warehouse in birth and miscarriage-related matters, including one worker who gave birth in the toilets. MPs also heard that some staff received their wages through a pre-paid card. Staff were charged £10 to get a card, plus a £10-a-month management fee, 75p to use it at an ATM machine, and 10p when they got a text message confirming they had used it. Unite warned that any compensation for breaking the minimum wage laws will likely only benefit the 200 warehouse employees, not the 3,000 temporary workers. GUARDIAN

Unfairly fired: Rogue trader who lost his bank £3.8bn in one of the biggest trading scandals in history awarded £350k damages
Jerome Kerviel was fired by Societe Generale in 2008 and jailed after racking up a record trading loss of £3.8billion at the bank. But yesterday the Frenchman won a claim for unfair dismissal at an employment tribunal in Paris – and £350,000 in damages from Societe Generale, including a £234,000 bonus for his work in 2007. The court ruled that Kerviel, 39, had been fired ‘without genuine or serious cause’ despite bringing the bank to its knees. It said the bank had known about Kerviel’s dodgy trades long before he was shown the door, adding that he was dismissed not for his actions but for their consequences. Kerviel’s lawyer, David Koubbi, said the ruling ‘tore apart the story which Societe Generale has presented from the beginning’. While Societe Generale has sought to pin the blame for the losses entirely on Kerviel, the former trader has claimed his bosses were happy to turn a blind eye so long as his trades were profitable. The bank lost £3.8billion in a matter of days in January 2008 as it rushed to close out £39billion of trading positions taken by Kerviel. He was found guilty of a breach of trust, forgery and computer abuse in 2010 and sentenced to five years in prison, with two years suspended. He was also ordered to repay the money lost by the bank – something he is fighting. DAILY MAIL

BHS executives brand owner Dominic Chappell 'a liar'
The former owner of BHS, Dominic Chappell, has been accused of being "a liar" who had his "fingers in the till" by top BHS managers. The claims were made to MPs at a hearing into the collapse of the firm. In a scathing attack, the ex-chief executive of BHS, Darren Topp, alleged Mr Chappell threatened to kill him during a row over company money. Mr Chappell described that claim as "absolute rubbish" in a comment to a reporter after he had given evidence. Mr Chappell’s Retail Acquisitions bought BHS for £1 last year. Earlier, Mr Topp said he initially took Mr Chappell's claim to be a turnaround specialist and property expert at face value. When Mr Chappell's promises "unravelled", rather than "putting money in" he had "his fingers in the till," Mr Topp said. Former BHS financial consultant Michael Hitchcock was similarly scathing of Mr Chappell and his team. He told MPs: "I think I was duped. I think the technical term is a mythomaniac. The lay person's term is he was a premier league liar and a Sunday pub league retailer. At best." There are questions over Mr Chappell’s decision to transfer about £1.5m out of the company to Sweden. Mr Topp said his initial reaction to hearing of the transfer was to call the police. During a heated phone call, Mr Topp told MPs, Mr Chappell threatened to kill him. "If you kick off about it, I'll come down there and kill you," Mr Chappell is alleged to have said. Meanwhile, Mr Hitchcock said he was forced to change the company's bank mandate to "stop any chance of money flowing outside of the business". Mr Chappell also said he was looking at launching a legal suit against Arcadia and Sir Philip over a BHS property sale by the tycoon to his stepson. He claimed that BHS missed out on £3.5m because of it. The BHS pension scheme, fully funded a decade ago, now has a £571m pension deficit and negotiations over plugging these liabilities formed a key part talks to rescue the retailer. The Business, Innovation and Skills Committee and the Work and Pensions Committee are hearing evidence into the collapse of the 163-store group, which resulted in up to 11,000 jobs losses and left a huge hole in the pension fund. BBC NEWS

One-third of WPP investors revolt over Sir Martin Sorrell's £70m pay
Sir Martin's pay is the largest received by the boss of any British publicly listed company and has increased from the £44m he received last year, when 22pc of shareholders protested against the company's remuneration report. WPP, the world's biggest advertising group, reported an 11pc rise in yearly sales to £4.2bn in the first four months of the year. Standard Life Investments, which holds 17 million shares comprising just under 2pc of the company, voted against WPP's remuneration report, repeating its opposition to Sir Martin’s pay and influence in the boardroom that it had raised at last year's AGM. Euan Stirling, head of stewardship at Standard Life, said: “We clearly move closer to the day that a new chief executive will need to be recruited." He said the money Sir Martin receives could be better used to recruit someone with the “redoubtable talents of Mr Sorrell”. Asset manager Hermes, a 1.2pc shareholder, said before the vote that it would not be supporting the remuneration package, citing concerns about the “remuneration committee’s apparent lack of vigour and stress-testing”. The non-binding vote mirrors recent bust-ups over executive pay at BP, where chief executive Bob Dudley’s £14m remuneration package attracted opposition of 59pc, while Anglo American’s boss Mark Cutifani faced a 42pc “no” vote against his £3.4m compensation last April. TELEGRAPH

Victory for buy-to-let landlords: Court rules building society unlawfully hiked mortgage rates when base rate had not moved
Landlords who took West Bromwich Building Society to court after it raised tracker rates in December 2013 have won an appeal this morning arguing the move was unlawful. Tracker mortgages are meant to rise and fall with any movement of the Bank of England base rate, which has been glued at a historic low of 0.5 per cent since March 2009. However, West Brom argued that in the smallprint of its buy-to-let contracts – the fact it said it could change the rate 'to reflect market conditions' - it was allowed to raise rates despite no movement on base rate for nearly five years. As a result, it bumped up rates by two percentage points. For many, this doubled their monthly repayments. The case went to the Financial Ombudsman who found in favour of the mutual. It stated regulatory capital requirements had changed and funding costs had gone up, meaning the move was reasonable. It then went to court after 400 landlords launched a legal battle in March 2014. It was led by retired mortgage broker Mark Alexander of Shipdham, Norfolk, who argued he was unfairly asked to pay more for a buy-to-let mortgage because the West Bromwich Mortgage Company classed him as an 'investor' not a 'consumer'. They were dealt a blow in January 2015 when a High Court judge ruled in favour of the mutual – but were allowed to appeal. And this morning the group won at the Court of Appeal. It will result in 6,250 borrowers getting a refund. West Brom says it will cost its savers and borrowers £27.5million. The Court of Appeal decided the mutual was not entitled to vary its rates and could not call in the loans at short notice. Some affected landlords have more than one property with a West Brom buy-to-let mortgage, meaning far higher bills. Mr Alexander said the case win sets a precedent for others with tracker mortgages. Lawyer Mark Smith, who represented Mr Alexander, estimated that around 15,000 West Bromwich customers are affected and as many as a million people in total throughout the UK. DAILY MAIL

Wednesday 8 June 2016

Wednesday, June 08, 2016 Posted by Hari 1 comment Labels: , , , ,

By tax specialist Jolyon Maugham QC at
Twitter @JolyonMaugham

This year we’ll collect a little less than £170bn of income tax, roughly a third of all tax receipts. We’ll also forego through reliefs about £30bn of income tax.

Spread evenly amongst the population that £30bn would deliver to every man, woman and child almost £500 a year.

But it isn’t. It goes overwhelmingly to those who need it least. And that’s not mere happenstance. It’s the inevitable consequence of two deliberate policy choices: to distribute that £30bn through the tax system. And to fail to monitor what good it does.

Let me give some specifics.

Last year we spent £480m per annum rewarding those who earn more than £54,000 per annum and make gifts to charities. We spent nothing rewarding those who earn less.

This year we’ll spend £2.6bn per annum encouraging saving in ISAs. But the average ISA holder with annual earnings of more than £150,000 will get – through higher savings relieved from income tax at higher rates – well over 6 times as much tax relief as her equivalent earning between £20,000 and £30,000 per annum.

In 2013/14 the highest earning 1% of taxpayers made almost 13% of all contributions to pension schemes. Pension scheme relief costs £21bn in income tax foregone. But that 1% of taxpayers – roughly 0.5% of adults – will get even more than 13% of that £21bn because we give them a larger tax bonus than those who earn less.

HMRC doesn’t publish much data on how the benefit of these reliefs is distributed between rich and poor. By and large you have to stitch the statistics together.

But HMRC does track one particular sub-set of reliefs: “Allowances given as tax reductions”. It comprises, in particular, Venture Capital Tax Relief, Enterprise Investment Scheme Relief and Seed Enterprise Investment Scheme Relief. Remarkably Additional Rate Payers – those earning over £150,000 – receive 69% by value of those reliefs. That figure has risen every year since 2010/11.

More striking still, the highest earning 15,000 taxpayers – an almost homeopathic 0.05% of all taxpayers – netted 5.5% of total deductions and reliefs. Most will have seen six figure reductions to their income tax bills.

Why is this? Should we be concerned?

It’s hard to find sense in it.

Take pension tax relief as an example.

The more you earn, the more likely you are to have surplus income. Because you have surplus income you’re less in need of incentives to save for your retirement. But the tax system gives you more.

That’s not sensible policy. It’s a wasteful bung.

We can make the same argument for ISAs. If a couple can afford to save what the median household earns (after direct taxes and benefits) – and that’s what the annual ISA limit for a couple represents – why do we spend money giving them incentives to save? If there’s money to be spent, surely we bolster the position of those who struggle to save rather than those compelled to by surplus income.

We don’t need to reward the wealthy for making donations to charity. The impulse to donate is a civic responsibility. It doesn’t need to be greased. Only the wealthy win, and the causes they prioritise. Good for Opera Houses; Youth Clubs, not so much.

These – I can put it no politer than ‘anomalies’ – have two related causes.

First, we deliver these reliefs through the tax system. It must be this that has led us unthinkingly to give most generously to those who have the highest earnings and so pay the most tax. But to achieve the public ends these tax reliefs serve does not require that we forego the most from those who pay the most.

That brings us to the second. We have no mechanism for assessing what public good we achieve with this £30bn. The absence means our political class need not confront the question. And what they can pretend they don’t know they can pretend they needn’t remedy. This state of affairs is convenient to them. Because the noise made by the losers from tax decisions tends to drown out the applause from those who’ve won.

But there is an answer. And a precedent.

Interest rates decisions were once heavily politicised. Were they still, now, in the hands of the Government the UK would be a more dangerous place. After seven years of near zero interest rates could any Government hold the line between depositor pensioners and the borrower working age population? But, devolved to the Bank of England, the political heat has simply evaporated.

As it was with interest rate decisions, so it could be with tax reliefs. Value for money assessments, decisions around functioning, decisions around shape; all these could be devolved to an independent body such as the Office for Budget Responsibility. Over time, and insulated from political heat, it could reshape tax reliefs to operate in the public interest.

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