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Sunday, 17 September 2017

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Writing off student debt can cost £10bn, not £100bn, says IFS
The figures are well below the £100bn quoted by the universities minister, Jo Johnson, and other members of the government this year as they sought to push back against suggestions by the Labour leader, Jeremy Corbyn, that his party would end tuition fees and “deal with” existing student debts. As the IFS pointed out, the £100bn is the total for all student loans, including those for maintenance, for students from outside England, and for those incurred after fees were introduced in 1998 but before they were raised to £9,000 a year in 2012. If only post-2012 debt for tuition for students from England was scrapped, the policy would increase government debt by around 1% of national income by 2050, or around £20bn in today’s terms. The IFS also calculated that delaying the decision until the end of the current parliament in 2022 would raise that bill from £20bn to £60bn. A cheaper alternative would be to write off tuition fee debt above the £3,465 level of undergraduate fees charged before 2012 – which would add £10bn to government debt. The analysis also cautioned that the main beneficiaries of wiping out the debts would be high-earning graduates, given that they pay back a higher percentage of their loans than other graduates. That is because student loan debt that is not repaid after 30 years (i.e. by low-earning graduates) is anyway going to be forgiven. Therefore the government could pay for the additional debt with a “modest increase” in the top rate of income tax, the IFS suggested. Earlier this year the IFS calculated that young people from the poorest 40% of families entering university in England for the first time this year will emerge with average debts of around £57,000. GUARDIAN

One in ten British adults now a second-home owner, leaving millions of properties empty
The figures published by the Resolution Foundation show that the number of people with multiple properties rose from 1.6m to 5.2m between 2000 and 2014 - a 30 per cent increase in the proportion of adults who owned more than one home. The analysis also suggested that most of these owners are not landlords, with just 3.4 per cent of adults letting property out. This would mean that 6.6 per cent of adults, or 3.4m people, have extra properties that they leave empty as an investment or use as holiday homes. Laura Gardiner, senior policy analyst at the Resolution Foundation, said that properties not being used for rental could include "holiday homes, flats that adult kids live in for free, empty properties they’re speculating on, MP’s with London flats and constituency houses, people who’ve inherited their recently deceased parent’s home and haven’t worked out what to do with it yet". The think-tank examined data from the British Household Panel Survey and the Office for National Statistics to find that while overall home-ownership has plummeted, second home-ownership has risen dramatically. The proportion of adults owning any property rose to a high of almost 66 per cent in 2002 but has since fallen to just over 60 per cent. The majority of those owning second or third homes were based in the wealthiest areas of the UK, the report added. Almost six in ten landlords are based in the South East or South West, the East of England and London. "This is where the young people are struggling to get on to the property ladder which is why towns are banning holiday homes," said Paula Higgins, of pressure group the Homeowners Alliance. "These people have had years and years of benefit from a rising housing market - but you shouldn't be making more money off your house than you do from going to work." Last year the Cornish town of St Ives voted to ban the building of second homes. The town, dubbed Kensington-on-Sea because of its popularity with well-heeled west Londoners, held a referendum last May after figures revealed that one in four new properties were being used as second homes. TELEGRAPH

Majority believe public sector pay cap has been unjustifiable and now is the time to end it, new poll says
Asked about the restraints on public sector pay since 2010, 51 per cent of those polled said they have been unjustified while just 26 per cent said the Government had been justified in using the austerity measures. A larger majority – 62 per cent – said now is the “right time” to lift the restraints on workers’ pay in the public sector with just 14 per cent agreeing with the statement “it is not the right time”. But the poll also highlights that the Prime Minister has limited political capital to gain from lifting the cap, with more people interpreting the end of the contentious policy as a victory for the Labour leader. Downing Street said earlier this week that the seven-year public sector pay cap is to be scrapped, unveiling a 1.7 per cent hike for prison officers and improvements totalling 2 per cent in policy pay for 2017-18. It is expected that ministers will announce further rises for other workers in the public sector at the Chancellor’s Budget in November. INDEPENDENT

National Audit Office points finger at Government welfare reforms over steep rise in homelessness
The latest report by the National Audit Office (NAO) on homelessness states that the number of households living in temporary accommodation in England has increased by 60 per cent — to 77,240 — in the six years since March 2011. These households now contained 120,540 children: an increase of 73 per cent in the same period. Since 2011, the Department for Work and Pensions has introduced a series of welfare reforms designed to reduce overall welfare spending and provide incentives for benefit recipients to take up employment. This included lowering the benefit cap on household incomes. “At the same time,” the NAO says, “rents in the private rented sector in much of the country — London in particular — have increased faster than wage growth. All of these factors appear to have contributed to private rented properties becoming less affordable, which in turn is likely to be contributing to homelessness caused by the ending of an assured shorthold tenancy.” The proportion of households accepted as homeless by local authorities “due to the end of an assured shorthold tenancy” increased from 11 per cent in 2010 to 32 per cent this year, it says. In London, the proportion rose from ten per cent to 39 per cent. In the mean time, the number of households placed in temporary accommodation over the border in another local authority that recorded them as homeless increased by 248 per cent to 21,950. Homelessness, defined as having no accommodation or being unable to continue to occupy any given accommodation, currently costs the public sector £1.1 billion a year. More than three-quarters of this (£845 million) was spent on temporary accommodation last year, of which three-quarters (£638 million) was funded by housing benefit. The NAO also counted 4134 rough sleepers on a single night last autumn: 134 per cent higher than a similar count in autumn 2010. The charity Housing Justice said: “...there is a pragmatic reason for rethinking the underlying policy drivers here, Homelessness costs the taxpayer £1 billion a year, the government has been cutting housing benefit only to fund more expensive temporary accommodation further down the line. Not only does this fail to deliver cost effectiveness for the taxpayer it also creates chaos and misery in the lives of thousands of people forced in to homelessness.” CHURCH TIMES

Universal Credit wait a key factor in rent arrears, says DWP report
New figures published by the Department for Work and Pensions showed that around one in four new claimants waited longer than six weeks to be paid. Of those Universal Credit claimants who fell into arrears on their rent, the majority said it was the first time they had fallen behind on their payments in their current accommodation. Earlier in the week, Citizens Advice said its research showed that those under the Universal Credit system were more likely to struggle with priority debts. The publications, ahead of a major acceleration in the roll-out of Universal Credit, has prompted debate among MPs and calls for a rethink. Labour said the system was in "total disarray", while Tory MP Heidi Allen told the BBC that the government "should slow down a little bit and get it right". Universal Credit combines existing benefits such as tax credits, housing benefit, income support, Jobseeker's Allowance, and employment and support allowance. By 2022, more than seven million households will receive Universal Credit - at least half of which will be in work. A major rollout of the scheme begins soon, following a series of delays. The system was originally scheduled to be fully in place this year. Citizens Advice is calling for a suspension in the roll-out. But the government said monthly payments reflected the way many working people were paid. BBC NEWS

'Digital-token investors should brace for total loss' says FCA
The City regulator, the Financial Conduct Authority (FCA) has warned consumers of the dangers of investing in digital tokens issued by firms. So-called initial coin offerings can raise millions of dollars for firms and consumers can make a gain if the new crypto-currencies then go up in value. But the FCA says investors also stand to lose their entire stake in the high-risk investments. In an initial coin offering (ICO), a firm sells digital tokens, or "coins". These are often in exchange for a more established crypto-currency such as Bitcoin or Ethereum. The new coins issued by the firms can represent a voucher for some kind of future services, or a share in the firm, or they may simply have no discernible value at all, the FCA said. For example, Wild Crypto, an online gambling business which is developing a crypto-currency lottery, sold almost 34 million "Wild coins" to investors. Consumers got no stake in its operations for their cash, but invested in the hope that the Wild coin lottery tokens would take off in popularity. Companies can raise many millions of dollars in this way. US identity verification firm Civic recently raised $33m (£26m), while blockchain technology firms Bancor and Tezos raised more than $350m. Regulators around the world are becoming increasingly concerned with the popularity of ICOs. Last week China banned initial coin offerings, calling them "illegal fundraising". In July the US Securities and Exchange Commission warned of the risks of ICOs, and regulators in Singapore, Hong Kong and Canada have also pointed out some of the dangers. BBC NEWS

PR company Bell Pottinger collapses following claims it ran a 'racially divisive' campaign in South Africa
Disgraced public relations company Bell Pottinger has collapsed after it failed to find a buyer to save it from administration, in the most spectacular fall from grace ever to hit the industry. The firm collapsed after it orchestrated a ‘fake news’ campaign on behalf of the Gupta family, one of South Africa’s wealthiest dynasties. Lord Bell, who is famed for his willingness to represent dictators such as the late Chilean leader General Pinochet, admitted he was instrumental in bringing in a lucrative £100,000-a-month contract from a company called Oakbay, controlled by the Guptas. Bell Pottinger fanned flames of outrage when it embarked upon a campaign to divert attention from the Guptas’ ties with South African president Jacob Zuma. To do so, it branded the president’s opponents as the agents of ‘white monopoly capital’, despite the fact these included other big Bell Pottinger clients such as luxury goods giant Richemont. Industry body the Public Relations and Communications Association expelled Bell Pottinger for at least five years, saying its actions were likely to inflame racial discord. Henderson said this weekend he plans to start again in the PR business once the dust has settled. Lord Bell, who is accused by his enemies of conniving in the downfall of his former company, said he will not receive any more instalments on the seven-figure payment he agreed when he left the firm. About 270 employees will lose their jobs. One consultant said: ‘There are a lot of young people working here who are entirely blameless and now have an uncertain future.’ DAILY MAIL

Social media stars face crackdown over money from brands
Instagram’s popularity with young people, and women in particular – in April it reported 700 million members – has led to a roaring trade between marketers and so-called influencers with large and engaged followings. Members of the Kardashian family, who promote a range of products from “detox” tea to waist-training corsets to their tens of millions of followers, can reportedly command as much as $500,000 (£370,000) per post. But even lower-profile celebrities can make a profit from the photo-sharing app owned by Facebook. Elizabeth Olsen, who plays an influencer in the forthcoming film Ingrid Goes West, has attracted 745,000 followers since she joined Instagram for the first time in May, telling the LA Times: “Financially, it’s a brilliant opportunity. I was only hurting my opportunities by not participating.” With many paid-for promotions not disclosed, the blurry line between advertisements and heartfelt recommendations has led consumer protection bodies to take action against influencers for pushing brands they have received payment from. In the UK, influencers have had to identify advertisements with the hashtags “#ad” or “#spon” (sponsored) since 2014. In April, the UK’s Advertising Standards Authority (ASA) found the makeup blogger Sheikhbeauty to have breached the CAP Code for non-broadcast advertisements by failing to clearly label a post about a herbal detox tea brand as an advertisement. This week the ASA ordered the reality television personality Sophie Kasaei to remove her own photo of the Flat Tummy Tea she had shared with her 1 million-plus followers in March. Last week the US Federal Trade Commission (FTC) asked a number of high profile social media influencers to clarify specific posts that had been identified as potentially non-compliant with their rules. Reuters reported that the models Naomi Campbell and Amber Rose and actors Lindsay Lohan, Vanessa Hudgens and Sofia Vergara were on the FTC list. Analysis of the 50 most-followed celebrities on Instagram by the US marketing firm Mediakix in May found that 93% of posts promoting a brand were not compliant with the FTC guidelines. GUARDIAN

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