Oil price crashes, but Big Six energy firms failed to pass on massive savings to consumers
The Big Six energy firms have been accused of overcharging consumers by the watchdog. Ahead of the results of an eagerly-anticipated Competition and Markets Authority investigation, Ofgem chief executive Dermot Nolan yesterday told the BBC: “The market is not working as competitively as it should be.” He was reacting to growing anger about energy giants’ not passing on large cuts in wholesale prices to consumers. A report from comparison site Energyhelpline showed that wholesale gas prices dropped 51 per cent while electricity prices fell 33 per cent over the last two years. "This could have been passed through as price cuts of around 25 per cent on gas and 11 per cent on electricity for UK households, yet all customers have seen is an average of 5 per cent off gas bills and nothing off electricity bills," pointed out Mark Todd from the comparison site. In fact British Gas was the only big six energy giant to reduce prices when wholesale costs fell last summer, and then it was just 5 per cent off gas bills. The other big six firms firms EDF, E.on, Npower, Scottish Power and SEE decided against passing on any savings to their customers. INDEPENDENT
“Smash and grab raid”: Holland & Barrett accused of squeezing its suppliers
In a letter this month, seen by the BBC, the high street
retailer says it wants a reduction of costs of at least 5% from all its
suppliers. It also wants suppliers to pay for £3m worth of security tags and
CCTV. The Forum of Private Business (FPB) has described it as a
"smash and grab raid" on the supply chain. Ian Cass, Managing
Director of the FPB, said: "Many of their suppliers are small firms who
have helped the retailer increase their margins and have been unable to put up
prices themselves over the last few years... Sometimes it is helpful to
suppliers to offer discounts to retailers in return for product placement or
increased marketing of their products, which is beneficial to both parties, but
this needs to be agreed by both sides, not a unilateral decision as in this
case." Holland and Barrett is owned by the American private equity
company, The Carlyle Group, and has 735 shops in the UK and Ireland. Last year
its profits increased by 12% to £146m. In its letter, the company said that it
increased turnover thanks to a range of new initiatives and internal investment
but that suppliers were not contributing proportionately to the growth of the
business. The letter has been greeted with dismay and anger by one small
supplier, who did not want to give his name for fear of losing his contract. "What
they will gain is a 5% increase in profits and dividends for their shareholder
for nothing. What they have done to their suppliers is abhorrent," he said.
The (FPB) said it would be writing to the company to make clear its concerns. It
has a hall of shame of other companies it has accused of mistreating suppliers.
Companies include Carlsberg, Mars, Halfords, GlaxoSmithKline, Debenhams, Premier
Foods, Monsoon and many others. BBC NEWS
IMF says refugee influx could provide EU economic boost
The recent influx of refugees into Europe is likely to raise economic growth slightly in the short term – mainly in Austria, Germany and Sweden – and could deliver a bigger long-term economic boost to the EU if refugees are well integrated into the job market, according to the International Monetary Fund. The number of asylum seekers arriving at EU borders is unparalleled in recent times – in the first 10 months of last year, 995,000 first-time asylum applications were submitted to EU countries, more than twice the number over the same period in 2014, the 50-page report said. The fund said this is likely to result in a “modest increase in GDP growth” in the short term, due to higher state spending on housing and benefits for asylum seekers, as well as a boost to the job market from the newcomers. GDP in the EU as a whole could be lifted by 0.05%, 0.09% and 0.13% in 2015, 2016 and 2017 respectively. The IMF estimates the largest impact in Austria, with GDP rising by 0.5% by 2017, followed by Sweden (0.4%) and Germany (0.3%). In the long run, the economic impact could be larger, but will depend on the integration of refugees into the labour market. Assuming this is successful, by 2020 the level of GDP could be 0.25% higher for the EU as a whole, and between 0.5% and 1% higher in Germany, Austria and Sweden. “Rapid labour market integration is key to reducing the net fiscal cost associated with the current inflow of asylum seekers. Indeed, the sooner the refugees gain employment, the more they will help the public finances by paying income tax and social security contributions,” the report said. The IMF noted that the Swedish introduction programme, which includes language training, employment preparation and basic knowledge of Swedish society, has helped refugees achieve high rates of employment, although it is a lengthy process. Confounding widespread fears, the IMF said most immigration studies showed that the effect of new arrivals on domestic workers is usually small, possibly because they are in different segments of the job market or because of a rise in investment in response to a sudden surge in workers. Enrica Detragiache, one of the report’s lead authors, said: “By and large the negative effects tend to be short-lived and temporary.” GUARDIAN
IMF says refugee influx could provide EU economic boost
The recent influx of refugees into Europe is likely to raise economic growth slightly in the short term – mainly in Austria, Germany and Sweden – and could deliver a bigger long-term economic boost to the EU if refugees are well integrated into the job market, according to the International Monetary Fund. The number of asylum seekers arriving at EU borders is unparalleled in recent times – in the first 10 months of last year, 995,000 first-time asylum applications were submitted to EU countries, more than twice the number over the same period in 2014, the 50-page report said. The fund said this is likely to result in a “modest increase in GDP growth” in the short term, due to higher state spending on housing and benefits for asylum seekers, as well as a boost to the job market from the newcomers. GDP in the EU as a whole could be lifted by 0.05%, 0.09% and 0.13% in 2015, 2016 and 2017 respectively. The IMF estimates the largest impact in Austria, with GDP rising by 0.5% by 2017, followed by Sweden (0.4%) and Germany (0.3%). In the long run, the economic impact could be larger, but will depend on the integration of refugees into the labour market. Assuming this is successful, by 2020 the level of GDP could be 0.25% higher for the EU as a whole, and between 0.5% and 1% higher in Germany, Austria and Sweden. “Rapid labour market integration is key to reducing the net fiscal cost associated with the current inflow of asylum seekers. Indeed, the sooner the refugees gain employment, the more they will help the public finances by paying income tax and social security contributions,” the report said. The IMF noted that the Swedish introduction programme, which includes language training, employment preparation and basic knowledge of Swedish society, has helped refugees achieve high rates of employment, although it is a lengthy process. Confounding widespread fears, the IMF said most immigration studies showed that the effect of new arrivals on domestic workers is usually small, possibly because they are in different segments of the job market or because of a rise in investment in response to a sudden surge in workers. Enrica Detragiache, one of the report’s lead authors, said: “By and large the negative effects tend to be short-lived and temporary.” GUARDIAN
Balfour Beatty admits
liability, pays £137k to whistleblower over dodgy £18.5m public contract
Nigel McArthur, from Devon, claimed he was hounded out by
his bosses after he made a protected disclosure about an £18.5m office building
project in Cardiff. The Welsh government awarded a contract to Balfour Beatty
to construct a building in Callaghan Square as part of a regeneration on a
vacant site. The project was later halted but the firm was paid about £600,000
for work carried out. The whistleblower said the firm's true sub-contract costs
had been hidden, and raised its profit margins from an agreed 3.3% to 7.34%. Pre-construction
manager Mr McArthur, 56, from Exmouth, said he reported his findings to his
line manager but "was told that he should not have investigated the costs
or alternatively that he should not be concerned about it". His solicitor,
Terry Falcao, of Stephens and Scown, said the claim was brought in February
2015, and was met with denials until last November, just two weeks before a
full five-day hearing was due. The company paid £137,000 before the case was
due to be heard at a tribunal. Balfour Beatty admitted liability with the
caveat that it had not carried out criminal activity or breached legal
obligations. It said it regretted that it "failed to properly support our
employee following concerns they raised". It added it also "provided
full disclosure to the Welsh Assembly who were satisfied with our
approach". The Welsh government did not comment. BBC NEWS
NHS funding is falling further behind European neighbours' average
The UK is devoting a diminishing proportion of GDP in health and is now a lowly 13th out of the original 15 EU members in terms of investment, according to research by the King’s Fund. Ministers highlight that they are giving the NHS in England an increasing share of overall government spending, ringfencing its budget and handing it annual increases totalling £8.4bn in real terms by 2020-21, despite very tight public finances. But the Kings Fund’s chief economist Prof John Appleby also found that the government’s decision to increase the NHS’s budget by far less than the anticipated growth in GDP meant the service would miss out on what would have been an extra £16bn by 2020. The latest OECD data shows that the UK spent 8.5% of its total GDP on healthcare in 2013, though that includes a small amount of private spending, such as private medical insurance. “This placed the UK 13th out of the original 15 countries of the EU and 1.7 percentage points lower than the EU-14’s level,” Appleby said, referring to the EU 15 without the UK. “If we were to close this gap solely by increasing NHS spending, and assuming that health spending in other UK countries was in line with the 2015 spending review plans for England, by 2020-21 it would take an increase of 30% – £43bn – in real terms to match the EU-14’s level of spend in 2013, taking total NHS spending to £185bn.” GUARDIAN
62 richest people own
as much as half of the world's population put together
Oxfam's publication also reveals that the wealthiest one per
cent, around 73million out of the 7.3bn people in the world, now own the same
as everyone else put together. As recently as 2010, the combined wealth of the
388 richest people was needed to equal that of the poorest half of the world,
but that number has since plummeted to 80 last year and 62 now. The total
wealth of the poorest half of the world fell by a trillion US dollars (£694bn)
since 2010 even though the actual number of people in this group rose by 400
million, said the report, “An Economy for the 1%”. Meanwhile, the wealth of the
super-rich 62 rose by more than half a trillion dollars over the same period to
1.76 trillion (£1.22trn). This equates to an average of around £20 billion for
each of the 62. Although the number of people living in extreme poverty halved
between 1990 and 2010 globally, the average annual income of the poorest 10 per
cent has increased by less than three dollars (£2.08) a year over the past 25
years. Globally, the super-rich are estimated to have a total of 7.6trn dollars
(£5.3trn) stashed in offshore accounts, depriving governments around the world
of 190bn dollars (£132bn) in tax revenues each year, said the report. As much
as 30 per cent of all African financial wealth is believed to be held offshore,
costing 14 billion dollars (£9.7bn) in lost tax revenue each year - enough to
save four million children's lives a year through improved healthcare and
employ enough teachers to get every African child into school. The new findings
have been released ahead of the annual World Economic Forum (WEF) of global
political and business leaders in Swiss ski resort Davos. Nine out of ten WEF
corporate partners have a presence in at least one tax haven and it is
estimated that tax dodging by multinational corporations costs developing
countries at least 100 billion dollars (£69bn) a year, said Oxfam. Corporate
investment in tax havens increased almost quadrupled between 2000 and 2014. DAILY MAIL
Apple may owe $8bn in
back taxes after European commission ruling
Apple may owe $8bn in back taxes from its use of potentially
illegal tax shelters in Ireland. This is not the first time Apple has been
investigated for its accounting practices in Ireland. Executives including Cook
appeared before the US Senate in 2013 to testify about whether it had
renegotiated Ireland’s 12.5% corporate tax rate down to 2%. The company denied
any wrongdoing. Matt Larson, litigation analyst for Bloomberg Intelligence,
calculates that the company would owe $8.02bn at that rate. The European
commission has been cracking down on US companies trying to negotiate
sweetheart deals with individual EU member nations for the last several years.
Starbucks’s operations in the Netherlands and Amazon and McDonald’s in
Luxembourg have all been subject to similar investigations. The commission
found that Starbucks owed Dutch authorities upwards of $22m, and a ruling from
Belgium this week determined that 35 companies across the EU owe the equivalent
of $760m in back taxes. Apple has already said it would appeal against a ruling
against the company; CEO Tim Cook called the investigation “political crap.” GUARDIAN
Excessive pension
exit fees to be capped, says government
The Treasury has confirmed that "excessive" exit
fees charged by some pension providers will be banned. The precise level of the
cap will be set by the Financial Conduct Authority (FCA), after a public
consultation. The chancellor, George Osborne, told the House of Commons that as
many as 700,000 people faced such penalties. "The government isn't
prepared to stand by and see people either being ripped off or blocked from
accessing their own money by excessive charges," he told MPs. The Treasury
said that 66,000 people over the age of 55 face currently face charges worth
more than 10% of their pension pots. Since April 2015 anyone over the age of 55
has been free to withdraw as much money as they like from their pension pot (subject
to income tax). But such investors are being advised to consider holding back
on withdrawals until the reforms are in place. However, it could be as much as
two years before the new law is passed. Pensions minister, Baroness Altmann, said
that such policies would never have been sold, had customers understood the
hefty exit penalties. "In some cases these penalties can run to hundreds
or even thousands of pounds," said Tom McPhail of Hargreaves Lansdowne. Baroness
Altmann has previously said that up to 40% of a pension's value can be lost in
all the different fees applied over a lifetime’s saving. BBC NEWS
