Monday, 29 April 2013

House Price Divide

Middlesbrough  -16.5%
Oldham             -12.2%
North Lincs        -7.9%

Hammersmith & Fulham +13.1%
Kensington & Chelsea    +12.2%
Camden                         +11.2%

From Land Registry

Universal Credit guides

The Universal Credit pilot starts today - eventually all working age benefits will change.

Here are some useful guides:

BBC News

Zacchaeus 2000

Citizens Advice


Sunday, 28 April 2013

How do you give back benefit?

Interesting to hear Iain Duncan Smith's call for wealthy pensioners to give back benefits they don't need, such as Winter Fuel Payment and free TV licences.

I'd like to hear him explain how this is done!

In the case of the TV licence you have to apply for the free version, but universal benefits like Winter Fuel are paid automatically.

As far as I remember there isn't an easy mechanism for returning benefit to which you are entitled, although you can get them to bill you for overpaid benefit.

Has anyone managed to give the money back?

Of course, there are schemes for donating Winter Fuel Payment to charity, including the Surviving Winter campaign which runs every year.

Wednesday, 24 April 2013

Shares for TSB customers?

The collapse of Co-op's purchase of 632 Lloyds TSB branches throws up an intriguing new possibility - that the 4.6m customers of these branches could now become shareholders in their own bank.

And I wonder if they'll be offered shares at a discount or even as a windfall.

Why? The reason is that the route of selling the branch business, to be re-branded as TSB, to a rival has turned out to be a blind alley.

Instead, Lloyds says it will hive off  TSB as a free standing company and sell shares in it to City institutions and the public.

The share sale or Initial Public Offering (IPO) was always a backstop but now it's the favoured option. It has to be because there's nothing else very attractive on the table.

How will the shares be offered? Well, dangling some of them, on give-away terms, in front of the noses of customers could turn out to be an cunning way of rallying them behind the sale and the new bank.

The Lloyds TSB customers affected by the divestment have a right to feel disgruntled about the whole process. 3.5 million have already been sent letters telling them that their bank is changing.

No one likes being treated like baggage. Lloyds says very few have opted out of the transfer so far, but they could get disenchanted once the real changes begin over the summer.

So why not offer the 4.6m cut-price shares in their own bank?

And remember, when the original TSB was demutualised and sold off in 1986, people who bought the shares were given a loyalty bonus after 3 years of 1 extra share for every 10 held.

Lloyds says it's too early to say how the sell-off will be organised, but giving new TSB customers something to celebrate when the day comes could be a canny tactic.

Monday, 22 April 2013

We'll all be pensioners...

One day, with any luck, we will all become pensioners.

Some people talk about pensioners as if they are another species, or gender, or race.

Today we read the Fabian Society suggesting curbs on pensioner incomes.

They amble around the familiar ground of curbing Winter Fuel Payment, free bus travel and TV licences.

They suggest state pension increases should be less generous.

More importantly, they pull out of the undergrowth that old, rotting chestnut of charging pensioners National Insurance.*

All this in the cause of "inter-generational" fairness.

But the softer tax regime for people who have reached pension age is something we shall all enjoy, at a time when we are at risk of becoming less able and have a diminished ability to earn more money.

There is no us and them about being a pensioner.

One argument deployed to justify chipping away at pensioners' incomes is that typically they have been going up, while everyone else's income has been suffering.

That rather ignores the fact that our pensioners (that's all of us, at some point!) have lower incomes than those in many other industrialised countries - the US, Japan, Germany, Austria, Canada and more.

They also survive on less, compared to the working population, than those in the vast majority of OECD countries.

And, while we are on the subject, they depend heavily on private pensions to supplement our state pension, which has been comparatively low.

Because of the UK's pensions crisis -- employers slashing pensions, people saving less -- private pensions could be much less of a prop in future.

Hence, the government's desperate efforts to get all employees to salt away more through auto-enrolment in workplace pension schemes.

I think when we all become pensioners, we shall need all the help we can get!

*Pensioners pay income tax but do not pay 12% National Insurance on either their pension income or earnings from work.

Friday, 19 April 2013

Compensation for 30,000 Santander borrowers

30,000 Santander mortgage customers could be eligible for compensation, after the bank failed in December 2008 to tell them they they would be able to cash in their mortgages without penalty.

The bank had changed the terms of the mortgages, to allow itself to keep interest rates higher - but didn't inform borrowers clearly that they had 3 months to switch to another lender if they wanted.

Santander would not give details on the extent of the compensation. It's likely that payments will range from several hundred to several thousand pounds, depending on the size of the mortgage.

The bank set aside £232m at the end of last year to cover this issue along with several others.

Santander is writing to write to 270,000 customers with mortgages under the Abbey brand that they may not have been given adequate information about their rights.

It'll, then be up to the customers to complain if they think they might have lost out.


Santander had fixed rates with an Early Repayment Charge (ERC) which extended across the fixed rate period and into the time afterwards when the loan turned into a Standard Variable Rate (SVR) mortgage.

So, for example, you might have 2 yrs fixed and 2 yrs on an SVR with an ERC. Those terms look pretty surprising since it is common practice for SVR mortgages NOT to have the repayment penalty.

They had a limit on how high the SVR could rise above the Bank of England's base rate, what they called the SVR cap margin.

In December 2008, they raised the SVR cap margin from 2.5% to 3.75%, while also cutting the SVR because Bank base rate was on the way down.

It's complicated, I know. The result was that the SVR was reduced but by less than it would have been under the old terms.

SVR fell from 5.44% to 4.94%, rather than to a maximum of 4.5% under the old terms.

So the unwitting borrower was paying more and might not have realised that there was a 3 month window in which the affected customers could switch to a better deal from another lender, without penalty.

The 3 months kicked in during the SVR or, if you were still on the fix, once it turned into an SVR. That might have been after December.

Home ownership gone sour

Home ownership is down and renting is bouncing back - though it's still less than half the level of nearly a century ago.

A new study from government statisticians paints a picture of a decades-long love affair with home ownership which has gone sour.

Home ownership rose steadily from the 1950s in England and Wales and was given a boost during the Thatcher years and the introduction of "Right to Buy".

But its decline set in just after the dawn of the new millennium.

Only 23% of households owned their own homes in 1918, a measure which reached a high of 69% in 2001, then fell back.

The drop was the result of rocketing house prices and, later, of mortgages becoming much harder to obtain.

By 2011 home ownership had fallen to 64%.

77% rented back in 1918. Renting reached a low of 31% in 2001, before rising to 36% in 2011 as buy-to-let investors cashed in on the lack of affordable homes to buy.

The recent slide in home ownership was documented in Census data published in December last year.

However today's study from the Office for National Statistics compares the Census information with government records on households since the end of the First World War.

The figures also show dramatic changes in the numbers renting from councils, housing associations and other social landlords.

Just 1% of households were social renters nearly a century ago. As councils started to build homes the proportion rose to 10% in 1939, peaking at 31% in 1981 before dropping to 18% two years ago.

Thursday, 18 April 2013

Tax avoidance "a problem" says Carney

The future governor of the Bank of England, Mark Carney, has commented that tax avoidance is "demonstrably a problem" in the UK and other countries.

Mr Carney currently heads Canada's central bank but will take the helm at the Bank of England in July.

Speaking in Washington, he said:

"If there's an ability of companies or individuals to persistently avoid tax, then the burden of fiscal adjustment falls on those who pay their fair share.

"They end up paying more than their fair share."

Wednesday, 17 April 2013

Npower strikes back

The chief executive of npower has taken a lot of stick for the fact that his company paid no, or virtually no, corporation tax for 3 years. That 2009, 2010 and 2011.

He was criticised by MPs, was in my piece on Radio 4 news last night and got a mauling in the papers.

So here's Paul Massara's defence.

Friday, 12 April 2013

What's included in the benefits cap?

Benefits that count towards
the cap
• Bereavement Allowance
• Carer’s Allowance
• Child Benefit
• Child Tax Credit
• Employment and Support
Allowance (except where
it is paid with the support
• Guardian’s Allowance
•Housing Benefit whether
paid direct to you or to
your landlord (but not
including Housing Benefit
paid for Supported Exempt
• Incapacity Benefit
• Income Support
• Jobseeker’s Allowance
• Maternity Allowance
• Severe Disablement Allowance
• Widowed Parent’s Allowance
• Widowed Mother’s Allowance
• Widow’s Pension, including
the Age-Related component

Source: DWP

Fewer hit by benefit cap

The Department for Work and Pensions says its estimate of the numbers likely to be hit by the government's benefits cap has been reduced from 56,000 to 40,000.

Couples and lone parents will have their benefits limited to £500 a week and people on their own to £350 a week, although those on Working Tax Credit or disability benefits will be exempted.

Those affected are likely to £93 a week each on average.

The DWP says many have already found work or moved to smaller homes.

Tuesday, 9 April 2013

Deadline for tax evaders

Tax evaders who have hidden money and investments in Jersey, Guernsey or the Isle of Man are being given three and a half years -- until 30th September, 2016 -- to own up or face prosecution.

HM Revenue and Customs has announced details of the new voluntary "disclosure facilities", which were promised after the three Crown Dependencies agreed to start handing over the names of people with offshore accounts.

The Chancellor revealed in the budget that he hopes to realise £1bn in extra tax from the islands over a 5 year period.

Tax evaders manage to skirt around UK income tax and capital gains tax by parking their assets in overseas accounts and investment schemes.

Those who ignore the opportunity to come clean could face criminal prosecution, significantly bigger penalties, and having their names published.

Even people who own up in time could face penalties ranging from 10% to 40% of the sum owed, depending on the behaviour of the tax cheat.

Penalties for those who fail to come forward could rise to 100%, doubling the amount to be paid.

The new disclosure facilities come after a similar arrangement was drawn up to encourage tax evaders with accounts in Liechtenstein to come forward.

Monday, 8 April 2013

Inclined to speak my mind, occasionally to nag

Mrs T. quotes from first speech to Tory Conference as leader 12th October, 1979

We did not become the workshop of the world by being the nation with the most strikes.

Our people seem to have lost belief in the balance between production and welfare. This is the balance that we have got to find. 

Conquering inflation, controlling public spending and cutting taxes are the first three stages of a long journey...

(Europe) We are a committed member of the Community. But that does not mean that we are content with the way all its policies work. 

The hard-pressed British taxpayer will not stand for paying still more in order to reduce the tax bills of our wealthier Community partners.

Apparently I am inclined to speak my mind, even occasionally to nag.

A nation is an extended family. Families go through their hard times; they have to postpone cherished ambitions until they have the means to satisfy them.

Credit boom of Thatcher years

Credit cards more than tripled to 30 million in the ten years to 1990.

Consumer credit doubled in real terms.

Controls on hire purchase were removed.

Homeowners borrowed £114bn against their homes, just for spending money.

Source: Demos

Crackdown on claims firms

The Ministry of Justice has announced a new measure to stop unscrupulous claims management companies from cashing in unfairly on the billions being paid to people who were mis-sold Payment Protection Insurance.

The firms will have to get written agreement from clients before pursuing a lucrative PPI claim and charging a fee.

Many have been randomly phoning and texting possible mis-selling victims, then signing them up on the basis of a verbal agreement and - in some cases - charging substantial amounts up front.

The Ministry of Justice has confirmed that it will implement a crackdown on the practice this summer.

Claims management firms will need to obtain customer signatures on contracts before charging for assistance over financial mis-selling and personal injury complaints.

Firms have been breaching regulations by cold-calling potential customers without prior permission. 260 were stripped of their licences by the Ministry of Justice in the latest financial year.

3,000 firms are licensed to pursue claims, many of them charging fees of 30% of the compensation paid.

PPI payouts to victims average just under £3,000. The total being paid out by the banks responsible for the mis-selling is expected to exceed £15bn.

Thursday, 4 April 2013

Doorstep wolves should never have been unleashed

Here's a shocking case of door-to-door sales reps tricking and pressurising unsuspecting customers into switching gas and electricity suppliers.

They use false claims about prices, bribes and straightforward blarney to hoodwink people.

Some victims are switched without their knowledge, using information about relations who have died or details obtained from the electoral register to fill out supplier transfer forms.

Quite rightly the company is fined millions of pounds.

Ofgem, the energy regulator, says: “Mis-selling causes great confusion and distress for individuals, often those who are most vulnerable."

"It also damages customers’ confidence in switching suppliers which means that they may not be benefiting from consumer choice as they should."

Familiar? No this isn't SSE (Scottish & Southern Energy) in 2013. It is London Electricity, including Virgin Energy, in 2002.

How quickly we forget. It's as if energy companies only just started ripping off customers.

No one has any sympathy for SSE, punished by Ofgem yesterday for its nasty selling tactics.

But why was this still happening between 2009 and 2012, as Ofgem describes in horrendous detail?

Sadly, there is more to this long-running tale of mis-selling, exploitation and profiteering than the predatory methods of several companies.

You see, the scene was set by government reforms and regulators. They actually wanted those doorstep sellers to be on the streets, knocking on doors and ringing bells.

Gas was privatised in 1986, electricity in 1990. Then gas was opened up to competition in 1996 and electricity two years later.

The dogs of competition were unleashed. The authorities thought they would be sheepdogs, herding customers towards better prices.

In fact, they were wolves.

And because the received wisdom was that most customers would pay less if they switched supplier, not much was done.

They may have been wolves but they were doing God's work, so to speak.

It was a very damaging situation:

*It was wrong for people to be hoodwinked

*It was wrong for the industry to be allowed to get away with it for years

*People lost out. Once they'd saved money by switching the first time there was a real danger that the next time they would end up paying more.

Now, the main suppliers have pledged to stop selling on the doorstep when they haven't been asked to make a visit.

The fact is, they should never have been allowed to do it in the first place.

Tuesday, 2 April 2013

Raising minimum Wage?

There's a campaign to raise the Minimum Wage to a higher Living Wage, but also speculation that the government might freeze or cut it.

How generous is our minimum wage, currently £6.19 an hour for those aged 21 and over, compared to other countries? In fact we're in the top third of the league in the EU.

The European Commission comparison is here, everything converted into euros.

It says Luxembourg, Belgium, the Netherlands, Ireland (8.65 euro) and France are above us. But Spain, Portugal, Greece and the East European countries are below - along with the United States.

There's no statutory minimum wage in Germany, Austria, Italy, Sweden or Norway.

File:MW EUR January 2013.png
Source: European Commission

Here's the Low Pay Commission's guide to the UK minimum wage.