Rip-off News round-up. Our pick of the last week's media (Thu 1st Dec)

UK living standards squeeze 'will be worse than after global crash' over next 5 years

Analysis of Wednesday’s autumn statement by the Resolution Foundation thinktank suggests average earnings are set to grow only half as rapidly as in the austerity years after the economic crisis. At the same time, living standards will be undermined by higher inflation and ongoing welfare cuts. While the squeeze of the last parliament affected workers across the income spectrum, the foundation says low-paid households are set to be hardest hit over the next five years, because they are particularly affected by planned welfare cuts. The chancellor, Philip Hammond, announced a modest softening of cuts to universal credit in the autumn statement, but a £3bn cut in the “work allowance” claimants can earn before their benefits are withdrawn will go ahead. His predecessor George Osborne also previously announced a four-year cash freeze in most in-work benefits, which will go ahead. The foundation’s director, Torsten Bell, said: “Unlike the last parliament, it will be low- and middle-income households who feel the tightest squeeze this time round.” The foundation cites forecasts from the Office for Budget Responsibility (OBR), which predicted a challenging fiscal climate in the face of Brexit and wider international economic uncertainty. GUARDIAN

Bank governor Mark Carney warns on rising household debt

The governor of the Bank of England, Mark Carney, has said that consumers were borrowing more on their credit cards and other unsecured debt. Figures from the Bank this week showed that credit card lending is at a record level, up by £571m in the last month. Overall unsecured debt - which includes overdrafts - is rising at its fastest pace for 11 years. The Bank's Stability Report showed that the overall ratio of household debt to income was 133% in the second quarter of 2016. The Bank said that was high by historical standards, although it was not as high as in the financial crisis. In general the outlook for UK financial stability after the Brexit vote "remains challenging", said the Bank's report. It said stability was dependent on an orderly exit from the European Union, while it would take time to clarify the UK's new relationship with the EU. Otherwise the greatest risks to UK financial stability are slowing growth in China and the eurozone, the report said. UK banks are particularly exposed to events in Europe. They provide more than half of debt and equity issuance by continental firms, and account for more than three quarters of foreign exchange and derivatives activity in the EU, it noted. BBC NEWS

National Living Wage 'has not hit employment' says government monitor

The Low Pay Commission said it had found "no clear evidence" of changes in employment or hours since the higher minimum wage was introduced in April. It said employment had continued to rise even in sectors most obviously affected, such as cleaning, hotels, horticulture and retail. The finding contradicts warnings from economists over the wage's impact. On Tuesday, the Organisation for Economic Co-operation and Development said the UK should be careful with plans to raise the National Living Wage, warning it could affect employment. The think tank's stance echoes the widespread claims of business organisations in the 1990s that the introduction of the UK's national minimum wage - which started in 1999 - would lead to widespread job losses. Those fears proved to be groundless, with the number of people in employment rising from 27 million then to nearly 32 million now. The Low Pay Commission warned that "in some cases" employers may have reduced other staff payments or perks to fund the higher basic wage, but said it had found "no significant change" in levels of overtime and the higher hourly rates paid for working on Sundays or bank holidays. The commission also said that the higher National Living Wage could "present challenges" for the social care sector, with many providers facing losses. The National Living Wage came into effect in April this year, and was set at a rate of £7.20 an hour for workers aged 25 and over, with the aim of increasing it to £9 an hour by 2020. BBC NEWS

Government outlines plans to make companies justify high levels of executive pay

Among the measures under consideration are pay ratios, which would show the gap in earnings between the chief executive and an average employee. Shareholders would be handed more powers to vote against bosses' pay, but the government will not force companies to put workers on boards. Prime Minister Theresa May has made tackling corporate excess a priority. Her Conservative government is "unashamedly pro-business", but big firms must earn and keep the public's trust, she said in the consultation plans. Chief executives of FTSE 100 firms now have a median pay package of £4.3m, which is 140 times that of the average worker, according to the High Pay Centre. "There may be some circumstances where that is defensible, but it should be for the boards of companies and executives to justify that," Business Secretary Greg Clark told the BBC. He said the UK was not alone in targeting pay ratios, with the US set to report them at the start of next year. However, businesses have warned it would be difficult to compare pay ratios across companies. By comparing pay gaps, Goldman Sachs will look like a more equitable company than John Lewis thanks to the very high pay of the average banker, which is around £400,000. Other suggestions from the government include more frequent binding votes by shareholders on chief executive's pay packages. "The right thing is to give greater powers to shareholders to do their job in holding executives to account," Mr Clark said. The proposals form part of the government's Green Paper on corporate governance reform, which aims to increase public trust in business. The paper also includes measures on: Ensuring the "voice" of employees and customers is better represented on company boards; Holding privately-held firms to the same corporate governance standards as publicly listed companies. BBC NEWS

Government starts review of low pay 'gig' economy

A team of four experts is preparing to tour the UK to explore how the "gig" economy is affecting workers' rights. Mathew Taylor, chief executive of the Royal Society for the Arts, was appointed last month to lead the review into the impact of "disruptive" businesses such as Uber and Deliveroo. New technology combined with new business models has led to a rise in workers doing short-term, casual work. Many are not eligible for the minimum wage, sickness or maternity pay. The review will address questions of job-security, pension, holiday and parental leave rights. It will also look at "employer freedoms and obligations". Mr Taylor will be joined by the entrepreneur, Greg Marsh, who founded onefinestay, a company which helps upmarket home-owners let their properties to visitors, Paul Broadbent chief executive of the Gangmasters Licensing Authority and employment lawyer, Diane Nicol. The team will be talking to businesses and workers across the UK, including in Maidstone, Coventry and Glasgow. It will look into practices in manufacturing and rural economies as well as the "gig" economy. The government's Autumn Statement earlier this month indicated how the "gig economy" is also beginning to affect budget revenues, as self-employment and casual work reduce the amount of tax being paid. The Office for Budget Responsibility (OBR) estimated that in 2020/21 it will cost the Treasury £3.5bn. BBC NEWS

RBS fails Bank of England “stress test”

The toughest stress test yet assessed how the UK’s seven biggest lenders would cope with hypothetical scenarios including a recession, a housing crash and a halving of the oil price. RBS, which is still 73 per cent owned by the government after its bailout in 2008, has emerged as the worst hit in the annual health check of the banking system. This means the lender must take action to protect itself against a sharp slump in the economy. RBS has issued a plan intended to bolster its financial strength by an estimated £2bn, which has been accepted by the BoE. Barclays and Standard Chartered also struggled under the test, however neither was required to submit a revised capital plan. The test also covered HSBC, Lloyds Banking Group, Santander and Nationwide.They did not reveal any capital inadequacies in the test, the BoE said. Britain's banking system underwent a severe real-life test in June when markets and sterling plummeted in response to Britain's vote to leave the European Union. Banks could be required to change their business models to make them more sustainable as they face a prolonged period of low interest rates and uncertainty over Britain's future relations with the EU after it leaves the bloc. INDEPENDENT

FCA may introduce price cap on rent-to-own goods possible, following success of payday loan cap 

Up to 400,000 people use rent-to-own firms to buy household appliances, paying the money back over three years. After interest, they can end up paying three times the original price. It follows a call for a cap from Citizens Advice, which said restrictions imposed on payday lenders two years ago had been a success. Citizens Advice also said there was a lack of affordability checks in the industry, meaning that people signed up to agreements they could not afford. And it said that rent-to-own firms did not always take a flexible approach when shoppers got into debt. However, BrightHouse, the biggest rent-to-own firm, accused Citizens Advice of producing a "misleading" and "inaccurate" report. The FCA said that it would be prepared to consider a cap in the rent-to-own market, but added that in the case of the payday loan sector it had been a "last resort". "The price cap is very much the thing we do when all other price measures don't look very promising," Andrew Bailey, chief executive of the FCA, told the BBC. Since January 2015, the FCA has imposed a cap on the amount that payday lenders are allowed to charge their customers. Loan repayments are limited to no more than 0.8% per day of the amount they borrowed, and in total no one should pay back more than twice the original sum. Since the introduction of that cap, Citizens Advice says that the number of people with payday loan debt problems has halved. So it wants similar controls on the rent-to-own market. Mr Bailey told the BBC that catalogue lending and pawnbroking would also be considered. It is important that people can still have access to credit, but the FCA wants them to have it "on terms that are fair to them", he said. BBC NEWS

Line rental prices up 41% in just six years while wholesale costs fall by a quarter. Is it finally time to clamp down on price hikes?

Households are being ripped off when it comes to landline rental prices, damning evidence from Ofcom suggests. Telecoms providers have been rising line rental prices consistently since 2010 largely blaming 'infrastructure costs' - but the watchdog says wholesale costs have actually fallen by a quarter in that period. As a result, it has finally today launched a review into the monthly cost faced by anyone who wants broadband, even if they don't use the landline telephone. The watchdog says line rental prices have risen between 28 and 41 per cent in real terms since 2010 – this, despite providers such as BT, Sky, TalkTalk and Virgin Media benefiting from a 25 per cent fall in the wholesale cost of providing a landline service. The rise in rental prices have particularly hit those who rely solely on landlines, such as the elderly and vulnerable, the watchdog says. Ofcom adds that the elderly and vulnerable are more likely than most to have stayed with the same phone company all their life. They also do not benefit from strong competition in the market for 'bundled' communications – where landline, broadband and pay-TV services are packaged together. DAILY MAIL