Tuesday 29 November 2016

Tuesday, November 29, 2016 Posted by Hari 2 comments Labels: , , , , ,
There is one thing that all major parties are, and have always been, in unanimous agreement on. Fixing the never-ending housing crisis.

The benefits would cascade into other big vote winners. Take these three. Sensible house prices leave more money in everyone's pockets to boost the rest of the economy. Being low paid will hurt less. And a major house building programme away from London and the south east would underpin a big-picture coordinated regeneration of the regions.

So why hasn't the problem been swept away to the deafening cheers and applause of all sides of the house? Because of the political and "economic" reasons for never doing so. Let's walk this one through.

Why are those rents and house prices so high?
This is being fixed, right? Wrong!

Of all the problems we face, surely this is the one that will be fixed first and fastest. Why? Because the TV news is full of politicians promising to solve the housing crisis with the same solution: build more homes. Politicians, of every party, in every election, with no exceptions.

So, that’s a good start. After all, the UK has some of the highest rents and house prices in the world.
The average renter in England is spending 43% of their household income on rent. Most economists will tell you that a maximum of a third of income, a much lower figure, is what is reasonable.

As for buying a house, latest figures show the average household today takes 24 years to save for a deposit to buy a house. Back in the 1990s it was only 3 years.

Image result for property

We shouldn’t even be calling it a “housing crisis”, because the word “crisis” gives the impression that this is an unexpected and temporary problem. It’s the wrong word to use. It’s clear this has been going on for decades.

Yet despite all the promises to fix it, the problem just isn’t going away.

Why are high house prices and rents a problem?
It’s not, for some. That’s why it’s not being fixed

If a problem doesn’t go away, you can be pretty sure that someone doesn’t think it’s a problem at all!
It’s a well known joke among the property-owning classes that most dinner parties end up with everyone discussing their property prices. Correction: their rising property prices. And these aren’t super-rich property moghuls. These are mostly ordinary folk. In the UK around two-thirds of us are home owners. Most will be over 40, who bought when properties were more affordable. Some will have got financial help from well-off parents. Either way, it means they’ll have got on the property ladder without needing binoculars to see the bottom rung, and a rope and grappling hook to get on it [cartoon?]. Then there are the millions of landlords. Obviously, they like rents that comfortably cover the loan (mortgage) used to buy the property in the first place. The rents keep rising, but the cost of that loan doesn’t. So it’s a no-brainer to them.

That makes a lot of people who, when they vote, vote for parties that mouth off about fixing the problem but can be relied upon never to do so.

And let’s not forget that almost a third of MPs are landlords, letting out houses or flats.

But it is an awful state of affairs for tenants and people trying to buy. And there are a lot of them too. So it’s tenants versus house owners and landlords. What can break this deadlock? How about a closer look at how it’s a huge problem for the economy as a whole. Oh, and simple fairness.

Money should be spent on things that “add value.” In other words, the customer is getting something new, something more, or fixing something broken. If you spend more on furniture, you get more or better furniture. But rapidly rising rents and house prices are delivering the same old houses. That’s just bad economics.

An efficient economy rewards effort and risk. But landlords and house-owners are making money with little effort or risk. Very inefficient, as well as unfair!

And this all causes deeper problems for the UK economy, to do with spending and saving. Every nation needs its citizens to both spend (to live today) and save (to spend in old age). The spending keeps the economy ticking today. The savings don’t just sit there, but get invested in infrastructure and innovation for the future. Both are essential. Get the balance wrong, and one or other takes a dive and we’re all in deep trouble. Normally, younger people spend much more than they save. Older people, earning more, do most of the saving. That’s normally. But rising house prices have got older people into a bad habit. Why save for your old age when you can, when the time comes, sell your over-priced house? It’s one reason why since the early 1990s Brits have steadily been saving lessIn effect, this generation of home owners are getting the young to do their saving for them, by getting them to save up to buy their overpriced house some time in the future. 
Image result for property site:rippedoffbritons.comWhich means the next generation are forced to pull the same trick on those following behind them. And on and on. So here’s a warning to young people: when your indulgent parent tells you “Darling, my money is your money,” they’re not kidding.

So that’s the nation’s savings screwed up. What about spending? Money spent on over-priced rents and houses is money not spent on the high street. So it’s bad for business and job creation. Yes, landlords spend too. But 60% of all properties in the private rented sector are owned by landlords that rent out more than one property. Half of them, around 30%, are owned by landlords that own 10 or more dwellings. This changes the pattern of the nation’s spending – how much, and crucially on which high street - when all those tenants cut their spending to hand over higher and higher rents to their landlord. Three tenants need three haircuts. One landlord just needs the one. And what if he’s bald?! We shouldn’t joke, or some housing minister will promise subsidised hair transplants to bald landlords, in another pathetic attempt to put another sticking plaster on the disastrous side-effects of the housing crisis. Yes, landlords will spend their profits on other things too, but not on your high street. Yes, older home owners will ultimately sell up and spend some of it. But the same applies. The tenant’s pound – which should have been spent on their high street – goes to the landlord. The landlord spends some of it – on his or her high street, wherever that is! – and likely uses the rest to bid on another house, pushing property prices up further.

Every government makes a promise to build enough new homes
Then promptly breaks it

In 2015 the housing minister said the government aimed to see one million new homes in England over this Parliament (2015-2020). That’s 200,000 a year. He was one of a long list of ministers over the decades who has made such promises. By November 2016 the (new) housing minister admitted the target would be missed.

200,000 a year? The last time England hit that figure was 1980. Since then it’s typically been 150,000 or below.

[Graph from the National Audit Office]

But that 200,000 won’t be enough. The National Housing Federation (NHF) said even more - about 245,000 new homes - are needed each year in England to stabilise prices.

Nothing near that number is being built. The NHF’s figures showed only 457,490 were built between 2011 and 2014. The NHF estimate 974,000 homes were needed during that period.

So, at the current rate, we’re not even half way there. That failure guarantees continued crazy rent and house price inflation, with no end in sight.
To make matters worse, London has got itself a reputation throughout the world for being a place where property prices only ever rise. So even rich overseas investors are buying properties, pushing prices up further.

There are other problems. They make things worse, and need to be fixed. But they should not be allowed to take attention away from the big problem: not enough houses. One example is empty houses and empty rooms. In many cases, some of the richest landlords don’t even bother to rent out their properties, and leave them empty, so sure they are that their “investment” will make plenty from prices that keep on rising. Angry politicians have upped the taxes on empty properties, and rightly so. But only around 200,000 properties across the whole of the England are ever empty for more than six months, so a tax on them is just another sticking plaster over a minor wound, while the major surgery needed is postponed again.

Next. Seven in 10, or 16 million, households in England and Wales have at least one spare bedroom, with eight million homes having two or more. It’s partly down to older parents, whose kids have left, staying in their family houses rather than downsizing and putting the profit in a pension. That’s what happens when rapidly rising property prices are a better investment than a pension. It’s also partly down to people just wanting a spare room. Talking some of these people (by the way, there’s little talking involved. It’s either through a benefit cut threat or a tax break bribe) into swapping a large home for a smaller one, or renting out the spare room, will help but it’s not likely to significantly change the total number of homes available.

What’s stopping house building?
The “green belts”? Or the divisive, corrupt, stupid, and cowardly

People want houses where their jobs are. That means cities and towns. But building more homes often means building on “green belts”. These are, as the name suggests, fields, parks and forests that the locals already enjoy for recreation. The locals don’t want buildings there. Better to build on “brownfield” sites. This is land that has previously been used for industrial and commercial purposes and is now derelict. And doesn’t have people in wellies and flowers in their hair chained to the trees and shouting “go build your faceless grey concrete monstrosity someplace else”. But even here planning regulations slow the process down. And even when there is some land available somewhere in the cities and towns, it is never enough.

What of the land that’s got the planning permission? The ‘big developers’ have ‘a stranglehold on supply’, said Sajid Javid, the Communities Secretary, and are ‘sitting on land banks’, while ‘delaying build-out’. Basically, big developers like a housing shortage, because they can sell their houses for more. Since 2008, the average time lag between a housing unit being granted permission and the home appearing on the market has risen from 21 to 32 months. They get away with it because there’s no real competition. The three biggest players build more than a quarter of all new homes. The top eight account for half. A House of Lords report said the industry “has all the characteristics ofan oligopoly”.

But there are other reasons that have nothing to do with space or profiteering big developers, and everything to do with politics.

Property owners don’t want their house prices to fall, which is what would happen if there were easily enough homes for everyone. Politicians fear property owners will not vote for them if they put an end to rapidly rising house prices. Remember, two in three households are property owners.

Governments have become addicted to the mirage effect our dysfunctional housing market has on the nation’s balance sheet. They can sit back, do nothing, and pass rising house prices off as wealth-creation. Look at it this way. Let’s say house prices stabilised, and people therefore get to spend more and more on furniture. The total value of the nation’s furniture doesn’t get measured! And furniture falls to pieces after a good few years. But house prices get measured. Now, you’d think that cheaper homes, but hundreds of thousands more of them (that’s what’s stabilised the house prices), would result in the same total amount of national housing asset wealth. You’d be right. But the foolish status quo allows our cowardly governments to steer clear of fights with those existing property owning voters. But it’s plain stupid to forego real wealth creation (stable house prices yet many more houses, leaving households with more money to spend on other things) for fake wealth creation (same old houses, just more expensive).

Image result for property site:rippedoffbritons.comStabilising house prices stops you using your house as your pension. You’d have to start using your pension as your pension! Now that’s crazy talk! Because it would need our pensions system to be fixed. Every decade has scandals over company pension pots disappearing, banks charging exorbitant fees for managing your pension, or governments changing the law so that your pension pays out less than what you expected. Hands up which government has seriously confronted the companies, banks and their own selves over our crummy pensions? None. Our governments clearly have little faith in pensions, so no wonder ordinary people don’t either. So no wonder so many are relying on cashing in their houses, instead of having a decent pension.

In the 1950s, 60s and 70s, we built new houses like crazy, averaging over 300,000 a year for twenty years. After that we built the bare minimum. So it’s divisive, corrupt, stupid, and cowardly. And unfair. It can’t be fair that young adults have to work so much harder than older generations to have the same housing. 

Prices in London and the south east are crazy. Why not live somewhere else, somewhere cheaper?
You can’t live where the jobs aren’t

You need to live near where your job is. There are always cheaper houses and rents somewhere, but not where jobs are being created. The midlands and the north are parts of the country that used to thrive – the engine room of the empire! But since the 1950s most job creation has happened overwhelmingly in London and the south east, whilst many big industries of the north (manufacturing, in particular) have shrunk.

We should be less focused on building new homes in London, and invest and create jobs outside the south-east of England.

Image result for property site:rippedoffbritons.comFor a start, the rest of the UK has the space for the new houses. The worst of the “green belt” problem goes away – the only good reason for not building a house.

There are other massive benefits. High housing costs in London and the south east make all the other costs of doing business high. Not just business rents. Staff need higher pay to cover their own housing costs, and those rising wages make everything else – cups of coffee, doctors and nurses, transport, everything – more expensive.

House building outside London is easier and cheaper than in London. Think of all the pipes and cables you need to lay, running to new utility plants. Then there are the new schools, hospitals, and other essential services.

The bigger problem is the creation of the jobs. In Manchester, Liverpool, Leeds, Newcastle etc. We’d need to get public and private services and businesses to move to where they had no plans to go. And their staff.

It can be done. Even that stick-in-the-mud the BBC relocated 1,800 jobs away from London to Salford, near Manchester, and backed the creation of MediaCityUK. Many BBC staff were dismayed. Some resigned rather than move. But by 2015 the BBC employed 2,500 there, with other media organisations employing thousands more.

Creating jobs outside the south east would be a big vote winner. The rest of the UK would be delighted by any government that created jobs in their region, rather than in the usual place: London. All it needs is for the number of these voters to exceed the number who want property prices to keep rising. And a strong, visionary and eloquent national leader who can explain that the current system is unjust, punishes hard working people who have to rent and can’t get on the property ladder, prone to cartel behaviour by the builders, and fools the whole economy into creating fake wealth instead of the real thing.

[SOURCE GUARDIAN: London gets 24 times as much spent on infrastructure per resident than north-east England]

Thursday 24 November 2016

Thursday, November 24, 2016 Posted by Hari No comments Labels:
Virgin Care wins £700m contract to run 200 NHS and social care services
The contract, which was approved on Thursday, has sparked new fears about private health firms expanding their role in the provision of publicly funded health services. Virgin Care has been handed the contract by both Bath and North East Somerset NHS clinical commissioning group and Conservative-led Bath and North East Somerset council. It is worth £70m a year for seven years and the contract includes an option to extend it by another three years at the same price. It means that from 1 April Virgin Care will become the prime provider of a wide range of care for adults and children. That will include everything from services for those with diabetes, dementia or who have suffered a stroke, as well as people with mental health conditions. It will also cover care of children with learning disabilities and frail, elderly people who are undergoing rehabilitation to enable them to go back to living at home safely after an operation. NHS campaigners warned that the history of previous privatisations of NHS services in other parts of England may mean the quality of care patients receive drops once Virgin takes over. “In too many instances outsourced healthcare has resulted in care being compromised to cuts costs. Patients need secure services that they can trust and rely on,” said Paul Evans, co-ordinator of the NHS Support Federation, which monitors NHS contracts being awarded to firms such as Virgin. The collapse of the £725m UnitingCare contract in Cambridgeshire meant Virgin’s newly acquired contract would be the most lucrative ongoing deal for providing NHS care, he said. GUARDIAN

90% of appeals upheld against Concentrix, hired by HMRC to cut tax-credit payments
Concentrix was hired to help cut tax-credit fraud and overpayment, but has been accused in recent months of incorrectly withdrawing tax credits from hundreds of claimants. The BBC's Victoria Derbyshire programme has previously reported the case of Nicola McKenzie, a teenage mother who had her child tax credits stopped by the company after she was wrongly accused of being married to a 74-year-old dead man. Between 14 September and 15 November 2016, 24,219 claimants have now had their tax credits reinstated. Tax credits - the child tax credit and the working tax credit - are government payments made to households on low incomes. Catherine Smart Ekpenyong said she had been "elated" to learn her tax credits would be reinstated after they had been cut in August. "I cried, I shook, I was pinching myself," she said, adding that she would now be able to "do a normal food shop" and afford to travel to hospital to receive post-cancer treatment and check-ups. SNP MP Tasmina Ahmed-Sheikh called on the Chancellor to ensure compensation was available for all those affected. "Some are receiving it, but some aren't," she said. "There are paltry sums like £20 in some cases... it doesn't even cost the cover of the phone calls or the postage of sending documents again and again to be reviewed by Concentrix." HMRC has already announced the US company, Concentrix, will not have its contract renewed. In October, HMRC announced it would take on the work being done by Concentrix. BBC NEWS

Want affordable housing? Then force property developers who are sat on land to build homes or get out, say estate agents
Property developers who cling on to sites with planning permission for housing should be forced to construct homes within three years or sell up, a group says. 'Speculators who are sitting on land only to sell at a profit' are clogging up much-needed space for new homes, the Royal Institution of Chartered Surveyors said. More brownfield sites and unused land should be freed up to create affordable homes and councils need to speed up planning applications, the findings added. The government's Department for Communities and Local Government recently revealed that the number of affordable homes built in England in the past year fell to its lowest level for 24 years. There were 32,110 built, compared to 66,600 in the previous year, according to the government body's figures. With optimism in the market falling, over 80 per cent of respondents to RICS' latest survey said they were not expecting to market any starter homes in the next year. Jeremy Blackburn, head of policy at Rics, said: 'However, we must be clear that not all starter homes will be affordable homes... Building more starter homes is a help, but it is only one way to tackle the huge social problem of the lack of affordable housing.' DAILY MAIL

Three arrested amid Panama Papers insider trade inquiry
More arrests are planned in the joint-investigation by the Financial Conduct Authority (FCA) and the National Crime Agency (NCA), Bloomberg News reported. The Chancellor told the Commons that HMRC’s Panama Papers Taskforce had “identified a number of leads relevant to a major insider trading operation”. A team of HMRC officials has been combing through the millions of ­documents leaked earlier this year from the Panamanian law firm Mossack Fonseca. Their collaboration on the investigation recalls Operation Tabernula, Britain’s biggest insider dealing investigation yet, in which the NCA carried out covert surveillance. Among five Operation Tabernula convictions to date, earlier this year Martyn Dodgson, a former Deutsche Bank corporate broker received a four-and-a-half-year prison sentence. In a separate case, last week Mark Lyttleton, a former BlackRock fund manager, pleaded guilty to two charges of insider dealing. As well as leads on insider dealing, Philip Hammond said the Mossack Fonseca trove had prompted criminal investigations of 22 suspected tax evaders and identified the hidden owners of 26 suspicious offshore companies used to hold UK property, among other breakthroughs for investigators. TELEGRAPH

Big Six energy firms 'making six times more profit than they say', according to leaked PWC report
The suggestion is based on a report for Energy UK by respected accountancy firm PWC, according to the Sun newspaper. The paper said it obtained an original copy of the report which is said to show that the cost of supplying a home with gas and electricity "falls well below" what families pay with the Big Six energy firms. Energy UK cites on its website calculations by industry regulator Ofgem that operating margins in 2015 were equal to around 4% of a bill. It says that the Sun's figure does not accurately reflect costs across all tariffs, as to calculate actual profit margins across all deals offered by every supplier wouldn't be possible. But the paper accused Energy UK of cherry-picking parts of the report to put on its website which failed to include details of the profits. Energy Secretary Greg Clark said he would summon Energy UK for a meeting "to discuss the report's findings". "This report appears to confirm my concern that the big energy firms are punishing their customers' loyalty rather than respecting it," he said. SKY NEWS

Energy bills mislead with phantom savings offers
People have been told of savings of up to £200 that never materialise. Up to a third of households could be affected. One EDF customer in Norwich found such an offer on the front of her November bill, under the heading "Our cheapest overall tariff". "Over the next year you could save £42.08 by choosing Blue+Price Protection Nov17 with Direct Debit, our cheapest fixed electricity and gas tariff available for your meters," the message on her bill said. But if this customer took the offer up and switched tariffs, the BBC’s Money Box calculated her true saving would be just £4. Phantom savings can even turn into real losses. In one example analysed by Money Box, a £47 projected saving with Npower would actually lead to the customer paying £147 a year more than they now do. How does it happen? A methodology stipulated by Ofgem and known as the personal projection lies at the heart of the problem. The personal projection is a forecast of the amount a customer would spend on energy in the year ahead if they fail to switch when their current fixed term tariff expires. A failure to switch means customers are automatically put on their supplier's usually much more expensive standard variable tariff (SVT) reserved for people who rarely or never change suppliers or tariffs. So a customer nine months into a cheaper one-year tariff will have a personal projection made up from the remaining three months on their current tariff plus nine months on their supplier's SVT. This is stated, in part, on the bill. The result is a personal projection which is usually much higher than the amount someone on a fixed tariff is actually paying. Voltz and MoneySavingsExpert are among a handful of energy price comparison sites which, along with, have found ways to stop using Ofgem's personal projection methodology. They now simply compare the cost of proposed tariffs with what customers currently pay. BBC NEWS

Taxpayers may be liable for £75bn North Sea decommissioning bill, says GMB
The GMB's Scotland secretary, Gary Smith, told BBC Radio Scotland that the costs of decommissioning were "far more than was originally projected". He said the total bill could be "north" of £100bn and taxpayers may have to fund between 50 and 75% of that. He said: "The reality is we have got foreign owned oil and gas companies that are going to enjoy huge tax breaks at our expense and they are taking vital decommissioning work abroad... That's what's happened with the Janice platform, the Maersk platform which is going to Norway, and of course we had the rig which washed up on Lewis on its way to be decommissioned in Turkey... So Scotland is losing out on this vital work because of a lack of investment and because of a failure and dishonesty and dithering on the part of the UK and Scottish governments." Lang Banks, director of environmental group WWF Scotland, backed the union's report. He said: "Having made hundreds of millions of pounds in profits over the past few decades, the costs for decommissioning old rigs and restoring the marine environment should be being fully covered by the companies themselves." BBC NEWS

Lettings agent fees will be banned
Lettings agents in England will be banned from charging fees to tenants "as soon as possible" under plans announced in the Autumn Statement. Tenants can be charged fees for a range of administration, including reference, credit and immigration checks. Chancellor Philip Hammond said shifting the cost to landlords will save 4.3 million households hundreds of pounds. The worry is that agents will simply charge the landlord, who will pass the full cost onto the tenant. But the new law should spur competition as landlords, unlike tenants, can shop around for the cheapest agent. In Scotland, lettings agency fees to tenants have already been banned. Fees vary widely, with costs in some big cities much higher than elsewhere. The latest English Housing Survey shows fees typically cost £223. However, Shelter research in 2012 found that one in seven tenants pays more than £500. The charity said renters had no choice over the agent they dealt with after finding a house or flat. Landlords, on the other hand, were able to choose between agencies to act for them when renting out their property. Overall, along with rent in advance and a deposit, the average upfront costs faced by renters using a letting agency are more than £1,000 nationally and over £2,000 in London, according to Shelter. BBC NEWS

Thursday 10 November 2016

Thursday, November 10, 2016 Posted by Hari No comments Labels:
Families set to lose £100 a week under 'chilling' new benefit cap
The annual limit on welfare payments to unemployed households drops from £26,000 to £23,000 in London and £20,000 outside the capital. Around 20,000 families are currently capped by an annual limit of £26,000 (or £500 a week) on total household benefits, introduced in 2013. But the new lower caps are set to bring an explosion in the numbers affected to around 64,000 households. Nearly two thirds of those affected are single mothers, according to the general union GMB. For single people without children the cap will fall at £15,410 in Greater London and £13,400 across the rest of the UK. According to the Department for Work and Pensions, the 23,500 households who previously had their benefits capped have moved into work since 2013. But analysis by the Institute for Fiscal Studies suggests that "the majority of those affected will not respond" to the tougher cap by moving into work or moving house. "For that majority it is an open question how they will adjust to the loss of income," it said in a report. The move comes amid warnings that the poorest half of households face flat or falling incomes over the course of the Parliament.  Lower wage growth and higher inflation could reduce typical earnings by around £1,000 a year by 2020, the Resolution Foundation warned. INDEPENDENT

Google pays €47m in tax in Ireland on €22bn sales revenue
Google’s controversial advertising sales business in Dublin earned revenues of €22.6bn (£20.1bn) from Europe, the Middle East and Africa last year but paid just €47.8m in tax, according to company filings in Ireland. Revenues at Google Ireland Limited rose 23% in 2015, to €22.6bn, and were equivalent to a third of the search group’s global income. Of this Irish income, more than $7bn (£5.6bn) is thought to have come from transactions with advertisers in the UK. Google has continued to route its sales from British advertisers through Ireland, despite efforts by the former UK chancellor George Osborne to crack down on multinational tech groups that “abused the trust of the British people”. Almost no information is made public about Google Holdings Ireland, which is an unlimited company. It is registered to the address of a law firm in Dublin, but is thought to pay no tax in Ireland as it is tax-resident in Bermuda. Because it is unlimited, Google Holdings Ireland is not required to file accounts, under Irish company law. However, Bermuda does not charge corporation tax, so the billions of dollars of income Google is able to move into Google Holdings Ireland each year go untaxed. Google has told investors that, at the end of last year, it had amassed an offshore cash pile of $42.9bn. Other US tech companies that have made use of “double Irish” tax avoidance structures include Facebook, Microsoft and Apple. Under pressure from world leaders, Ireland agreed two years ago to start phasing out the tax benefits of such structures. However, Irish ministers have awarded generous “grandfathering rights” which ensure Google and others are able to pour income into their offshore tax havens up until 2020. GUARDIAN

Government blocks attempt to ban unpaid internships
Draft legislation put forward by Conservative MP Alec Shelbrooke was designed to ensure that anyone working as an intern would be paid the minimum wage, which depends on the age of the worker. Speaking in parliament he described internships as “the acceptable face of unpaid labour in modern Britain today”. He added, they “should have no place in a meritocratic country that aims to work for the many and not the privileged few”. He added that his bill was designed to end “a new rise in the class society that means only those from a wealthy background can gain a privileged leg-up”. However, the bill was “talked out” and blocked by Conservative colleagues. Instead, the business minister, Margot James, said that the government would ask Matthew Taylor to include unpaid internships in his review of employment practices. The former adviser to Tony Blair is investigating the impact of the UK’s growing gig economy on workers’ rights. The campaign group Intern Aware said two-thirds of businesses backed a four-week limit on unpaid placements, and just 12% opposed such a cap. Internships are also controversial because they are perceived as biased towards the children of well-off professional parents who live in London. They are able to tap into their parents’ contacts to get valuable work experience and can also afford to take unpaid roles. GUARDIAN

Whitewash! It ruined lives and is being sued for £2bn, yet RBS is cleared of deliberately forcing small businesses under
Furious small business owners have accused the City watchdog of a whitewash after it cleared Royal Bank of Scotland of deliberately destroying their companies. The Financial Conduct Authority dismissed claims that bailed-out lender RBS sank small firms so it could seize their assets to shore up its ailing balance sheet. However, it did find the bank was guilty of poor communication, shoddy procedures and unfair complaints-handling when struggling businesses fell into its turnaround unit. RBS has finally bowed to pressure to compensate entrepreneurs whose livelihoods were destroyed after their firms dropped into the infamous global restructuring group (GRG). But campaigners dismissed the FCA's findings as a stitch-up and said the £400million compensation on offer was not enough. They have vowed to pursue RBS through the courts for an estimated £2billion. Jeremy Roe, of the activist group Bully-Banks, said: '[The FCA] is more interested in protecting the bank than providing justice. This is yet another whitewash. The £400million figure is a joke.' The seeds of the scandal were sown in 2009 as the financial crisis took hold and small companies struggled to pay back their loans. Firms which passed into the hands of the unit were told it would help them improve their finances and battle back to health. But instead, many claim they were ordered to pay more than they could afford as the bank's influence on their operations grew. When companies' finances collapsed, administrators were called in and RBS took control of their land and assets. Many entrepreneurs lost their homes and saw their marriages destroyed as a result. The RBS compensation scheme will give the 12,000 companies that were in the GRG between 2008 and 2013 an automatic refund of any complex fees charged at the time. DAILY MAIL

Household debt hits a record high of £1.5 TRILLION as Britons rack up £30k on mortgages, credit cards and loans
Britons are racking up debts at the fastest pace since before the financial crash, with the average adult owing £30,000 on average, a new report suggests. The Money Charity said the figure is set to rise and has expressed concern that households could struggle to honour their repayments if interest rates are to rise from current rock-bottom levels. Household debt including mortgages, loans and credit cards hit a new record high of £1.5trillion at the end of September, an extra £52billion compared to last year, according to the report. This translates into an extra £1,046 per adult on average a year, for a total of £30,000 per person, in what is the fastest increase since before the 2008 crash. Private debt is now 82 per cent of what the entire UK economy produces in a year and 113 per cent of average earnings, the Money Charity said. Most private debt is made of mortgages, which account for 87 per cent of the sum, or just over £26,000, although borrowing on credit cards has risen substantially. Unsecured debt including credit card debts and personal loans make up the rest. This has also risen in the past year, with UK adults on average owing an extra £247 each, bringing the total to £3,737 per person at the end of September. Credit card debt, which rose to £65.7billion, is the biggest chunk of unsecured debt, with the average household owing £2,400 on plastic. Last week the Bank of England said it expected inflation to rise to 2.7 per cent next year. This could trigger a rise in interest rates, which in turn would mean higher interest to be paid on mortgages, loans and credit cards. The Office for Budget Responsibility in July forecast that household debt would reach £2.55trillion in five years – £1trillion more than the current figure. The Insolvency Service last week warned that Britons were entering 'a new period of problem debt' as 20 per cent more people became insolvent during the third quarter of this year than in 2015. DAILY MAIL

After Uber case, UK union pushes for pay deal at Deliveroo
A trade union is seeking recognition from British food delivery firm Deliveroo to allow it to negotiate a collective pay deal for its drivers, in the latest push for greater employment rights that could hit the flourishing 'gig economy'. The move comes barely two weeks after a tribunal ruled that taxi app Uber [UBER.UL] should pay its drivers sick and holiday pay as well as the minimum wage - a verdict that could affect tens of thousands of people across Britain. The Independent Workers Union of Great Britain (IWGB) wants Deliveroo, which is valued at more than $1 billion (80 million pounds), to recognise it as a union in the Camden area of north London, in the first stage to boosting pay and conditions. With their distinctive black and teal jackets, Deliveroo riders have become a familiar sight on London streets since the firm started trading in 2013, delivering food from restaurants. In August, Deliveroo started paying riders per delivery rather than per hour, which was described as a piecemeal "Victorian system" by the opposition Labor Party and sparked opposition from some of its riders. Deliveroo later apologized and said its riders could opt out of the new system, although the trials are continuing in areas such as Camden. "We want to force Deliveroo into a collective bargaining agreement with the union so that we can negotiate pay and terms and conditions for our members," said IWGB General Secretary Jason Moyer-Lee. The gig economy - where individuals work for multiple employers day-to-day without a fixed contract - relies on the self-employed, who generally do not receive rights such as the 7.20 pound hourly minimum wage. In a letter to Deliveroo, seen by Reuters, Moyer-Lee gave the firm 10 days to respond to the union's request. REUTERS

Further increasing the income tax threshold will benefit wealthier households more than the UK's lowest earners
A think tank chaired by the former Tory cabinet minister David Willetts claims the bulk of the £2bn tax break promised by former chancellor George Osborne will go to wealthier households. David Cameron promised in 2014 that a Conservative government would raise the threshold for income tax to £12,500 by 2020, taking a million low-paid workers out of income tax altogether. The move would also cut tax bills for 30 million more people. At the same time, Mr Cameron said the Tories would raise the level for the 40p upper income tax rate to £50,000. But the Resolution Foundation, which claims to campaign to improve the living standards of low and middle-income households, says that poorer families would instead benefit more from making the Government's new and controversial Universal Credit more generous. It also claims "unaffordable, unfair and unwise" tax giveaways by Mr Osborne have prevented the Government from meeting its targets to eliminate the UK's budget deficit. The Resolution Foundation says that despite his austerity rhetoric, Mr Osborne lavished massive amounts on a series of expensive tax cuts during his time at the Treasury. Together, the giveaways are worth £32bn this year, more than matching the £30bn budget deficit which Mr Hammond is projected to face for 2016/17, it says in its report. Without them, Mr Hammond would be on course to deliver a surplus in 2018/19. SKY NEWS

Thursday 3 November 2016

Thursday, November 03, 2016 Posted by Hari No comments Labels:
Pensions Regulator begins legal proceedings against Sir Philip Green
The Pensions Regulator has begun formal legal proceedings against Sir Philip Green and Dominic Chappell that could force them to fill the £571m deficit in the BHS pension scheme, marking a dramatic escalation of the scandal surrounding the demise of the high street chain. The regulator said that after a “complex investigation” and months of talks with Green about a rescue deal for the pension scheme it was sending warning notices to the billionaire tycoon, Chappell and their companies. Lesley Titcomb, chief executive of TPR, said it was yet to receive “sufficiently credible and comprehensive offer” to bail out the BHS pension scheme, which has more than 20,000 members, despite Green pledging to fix the problems facing it. BHS collapsed into administration in April, leading the loss of 11,000 jobs and leaving a pension deficit of £571m. Green controlled BHS between 2000 and 2015, during which time his family and other shareholders collected more than £580m. Green sold BHS in March 2015 to Chappell, a serial bankrupt with no retail experience, for just £1. Retail Acquisitions collected an estimated £17m from BHS despite owning it for just 13 months until it fell into administration. Last month the House of Commons voted unanimously to strip Green of his knighthood, which was awarded a decade ago for services to retail. During a fiery debate in parliament, Green was lambasted and described as a “billionaire spiv”. GUARDIAN

HMRC chasing £1.9bn tax from UK's richest people
The National Audit Office said HMRC's specialist unit recovered £416m in 2015 from 6,500 "high net worth individuals" with wealth of more than £20m. But efforts are ongoing to recover an estimated £1.9bn, the NAO said. Each one of the group of 6,500 is assigned their own HMRC official to liaise with over their tax bill. The £416m is in addition to tax the wealthy individuals voluntarily declare, which totalled more than £4.3bn in 2014-15. They often have complex tax affairs involving different countries. The £1.9bn figure of tax that is "at risk" of not being received, is an estimate and not all of it will be owed once each case has been examined in detail, the NAO said. According to the NAO, HMRC is criminally investigating 10 high net worth individuals in relation to illegal offshore tax evasion, although just one has been prosecuted since 2010. It is aiming to increase the number of prosecutions to 100 by 2020. The specialist unit recovers £29 for every £1 spent on staffing costs, the NAO said. HMRC is also investigating the huge leak of records from law firm Mossack Fonseca, known as the Panama Papers, which revealed how the rich and powerful use tax havens to hide their wealth. According to the NAO report, tax officials have identified 40 of the wealthiest group in the leaked data and are deciding whether their files warrant further investigation. The report also found that 137 of the country's richest who had undisclosed assets in Liechtenstein used an agreement with the tax haven in 2009 to admit their liabilities in return for less harsh penalties, with an average settlement of £1m per person. BBC NEWS

Death of the payday loan? Lending plunges by 70 PER CENT as watchdog crackdown bites
Around 1.8million loans were issued last year, down from ten million just three years earlier, according to the chief executive of the Consumer Finance Association Russell Hamblin-Boone. The majority for firms offering high-cost short-term credit have moved out of the market altogether, with just 60 authorised firms remaining where once there were 240, analysis of FCA figures from the industry body suggest. ‘Margins are very small now and we have seen a reduction in the market as a result of the regulation and price control,’ he said. Stringent controls were placed on payday lenders in 2014 and 2015, in an attempt to protect borrowers from eye-watering fees and debts spiralling out of control. The new rules mean that borrowers incur no additional charges over and above 0.8 per cent interest per day. The maximum penalty that a lender can charge a customer who misses a payment is £15 over the length of the loan. The loan cost cannot escalate in interest beyond 100 per cent of the amount borrowed in the first place. Loans still incur very high levels of interest. However lenders are obliged to make sure that their customers can afford them and are treated fairly if they fall into difficulties. The new rules mean that for many firms operating in this area, offering payday loans was no longer profitable. Speaking to the Financial Exclusion Committee at the House of Lords, Mr Hamblin-Boone pointed out that people who take out this type of loan are ‘from all walks of life – in senior positions in industry to those on zero contract hours in catering and cleaning’. The average income of a borrower is £25,500, compared to the UK average of £26,000, while they are more likely to be working full time than the population as a whole, he said. The FCA crackdown saw several lenders issued with large fines and demands to pay compensation to customers. In 2014, Wonga was ordered to pay £2.6million to around 45,000 customers for unfair and misleading debt collection practices. CFO Lending, which traded under names including Payday First and Money Resolve, had to repay almost £35million to nearly 100,000 customers after the watchdog found evidence of ‘unfair practices’. DAILY MAIL

A third of money that banks make from customers comes from overdraft interest and charges. Watchdog to probe fees
Despite the huge cost, customers are rarely aware of what they pay and even more rarely switch accounts to pay less. As a result, the Financial Conduct Authority says it will take action to improve competition in the current account market. It follows a series of recommendations proposed by the Competition and Markets Authority in August as part of its investigation into retail banking. Data from information website Moneycomms shows that the Halifax reward account, NatWest/RBS select and TSB classic typically have the highest annual fees for slipping into the red. The average cost of a high street bank overdraft is now six times higher per month than it was seven years ago, rising from £2 monthly in 2008 to £12 today. More than half of UK adults incur a fee from spending over their limit. DAILY MAIL

Payday and car finance loan sharks forced to wipe off £414m of unpaid debts for more than 500,000 people
Motormile Finance, which bought debts from payday lenders including Cash Genie, Mr Lender, Lending Stream and WageDayAdvance, was found to have unfairly pursued customers. Now the Financial Conduct Authority has forced it to wipe out £414million of unpaid debts, and repay £154,000 to more than 2,000 affected customers. It said Motormile had been unable to provide evidence that the outstanding debt amounts were correct, leading to 'poor treatment of customers'. Online customer forums highlight a catalogue of complaints against Motormile, with borrowers claiming it added default notices to their credit histories even when they had not borrowed money. Others said they had been hounded by emails and house visits from debt collectors. Another person said Motormile had contacted her workplace, and provided personal details to her manager. 'The message stated they were sending an agent to my work,' she added. 'I got called into the office to ask if I was in any trouble and it was very embarrassing.' Yorkshire-based Motormile also trades as MMF, MMF Debt Purchase and MMF UK. In a statement chief executive Denise Crossley apologised to affected customers. Motormile is owned by Neil Petty, 52, and Barnaby Page, 46, who were paid £1.5million in 2014, and £530,000 last year, according to documents filed at Companies House. It collected £12.3million from debtors last year, and in 2014, it said it owned debt worth £808million. DAILY MAIL

Buying a home ‘cheaper than renting’ in two out of three towns
Website Zoopla compared rents being asked for twobedroom homes in 50 locations with average mortgage premiums and a 10 per cent deposit – the size often put down by first-time buyers. It found that in 60 per cent of towns and cities, buying was more cost-effective than renting. The proportion has increased since April, when buying was cheaper in 48 per cent of places. Owners in Glasgow fare particularly well, the research suggests, parting with an average of £450 per month, while renters fork out an average of £596. Owning in Birmingham and Bradford was also found to be particularly cost-effective. But renting often works out cheaper in southern England where house prices can be particularly high. In London, renting can work out £1,118 cheaper per month than a mortgage, while the difference in Cambridge can be £549 per month. The research assumed that a mortgage holder would be on a 25-year repayment deal with a fixed interest rate of 4.5 per cent. Lawrence Hall, of Zoopla, said: “Whereas back in April it was cheaper to service a monthly mortgage than pay rent in just under half of Britain’s big [towns and] cities, buyers are now offered better value in nearly two-thirds of these locations.” EXPRESS

Buy-to-let and second homes made up a QUARTER of all property sales this summer
Despite typical stamp duty costs tripling for second home buyers in April, HMRC data shows that 56,100 of 235,000 property purchases in the third quarter included the additional surcharge. As a result, this stamp duty hike clawed in an extra £440million for the taxman in the three month period of July to September. In total, HMRC has creamed an additional £670million from the move since April. The statistics show in the three months of April, May and June, a slimmer 30,300 of 207,900 purchases were for second properties, indicating investors had already rushed to beat the 1 April hike. This data indicates that despite the extra costs and the EU referendum decision, appetite for buy-to-let remains robust. The stamp duty surcharge on second homes was introduced by Chancellor George Osborne who announced it in his Autumn Statement in November 2015. As well as investors and holiday home buyers, it has hit buyers in a raft of scenarios, including parents buying for children. On top of the stamp duty hikes, landlords are losing one of their major tax breaks next year. A tax relief change will curb the amount of mortgage interest landlords can offset against tax on their property investments and could mean buying and renting out property is no longer viable for some. Some experts believe that as a result of the moves, rents could rise or tenants could be evicted as landlords look to sell before they are phased in. DAILY MAIL

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