Wednesday, 24 July 2013

Live in Dorset and live longer

There's a 10 year gap in life expectancy, depending on where you live, says the ONS.
  • In 2009–11, male life expectancy at birth was highest in East Dorset (83.0 years); 9.2 years higher than in Blackpool, which had the lowest figure (73.8 years).
  • For females, life expectancy at birth was also highest in East Dorset at 86.4 years and lowest in Manchester where females could expect to live for 79.3 years.

Thursday, 18 July 2013

Are Social Fund changes driving families towards payday lenders?

Here's an example of how changes to the way Social Fund money is doled out might be coinciding with some desperate families resorting to payday lenders and getting into financial trouble.

It's the issue raised today by the Children's Society.

A week ago I was speaking to a young mum, whom I can't name. She had been homeless and her council had put her in a flat.

Soon after, the washing machine broke down and she asked for a replacement.

But the local authority didn't have the budget for that. It suggested she tried to get a loan from the Social Fund - but of course, as the Children's Society has highlighted, that's not so easy any more.

Sure enough, the loan was refused. So the woman borrowed £50 from a payday lender, combined it with her total savings of £15 and bought a second-hand washing machine.

Maybe she should have gone to the launderette, because she couldn't pay back the £50.

The debt grew to £120 and at the latest count it had spiralled to £180.

In former years, the Social Fund was a sort of state alternative to loan sharks or payday lenders. More than two million people were given Crisis Loans from the Fund in 2011-12.

The commercial lenders charged thousands of per cent in interest. The Social Fund charged nothing - and if the borrower paid the money back, the money could be re-lent.

Social Fund changes driving people to loan sharks

The Children's Society has warned that changes to the Social Fund which used to provide emergency funding for families are putting some of Britain's poorest families in danger.

It says that loans and grants have been cut and there is a postcode lottery for support after responsibility was passed to local authorities.

The Social Fund provided discretionary Crisis Loans for families with acute and immediate needs and Community Care Grants to people who had moved out of care.

From April this year the budget was transferred to local authorities. So, while over 2 million people collected crisis loans in 2012, it's not clear how many are getting them now.

The Children's Society says the funding has been cut by 46 per cent since 2010 - that's a figure calculated by taking account of price rises over the last 3 years.

Councils have adopted different approaches, some providing only vouchers and pre-paid store cards and others requiring claimants to prove that they can't borrow from friends or on a credit card. 

Most no longer offer the interest free loans the Social Fund was known for.

The Department for Work and Pensions has defended the changes, saying that since last year the money allocated for the loans has been maintained in cash terms at £178m. And councils have been given extra money for administration. 

It adds that help is now being targeted at applicants affected by flooding, fire or gas explosions.

But the Children's Society, backed by the Archbishop of York John Sentamu, warns that poor families will be driven towards loan sharks and payday lenders.

Tuesday, 16 July 2013

Swinton £55 payouts to thousands

Hundreds of thousands of Swinton customers could be compensated after the High Street insurance broker was fined for mis-selling policies.

Swinton has had to write to 650,000 people who may have been affected, offering them a full refund. So far 34,000 have replied asking for the money and received an average of £55 each.

However, to get hold of the compensation, customers need to have replied to the Swinton letter and made a claim.

The financial watchdog, the FCA, says customers who think they may have been mis-sold should make a complaint to Swinton, whether or not they can remember receiving a letter.

Swinton has set aside £11.2m for the payouts. If all the 650,000 claimed successfully, the bill would climb to around £35m, based on the average payment so far of £55.

The FCA has fined Swinton over £7m. It says the company used aggressive sales tactics over the the telephone to persuade people to buy add-ons to their car and home policies.

Those extras included breakdown cover, emergency assistance in the home and personal injury cover, sold from 2010 to 2012.

In some cases Swinton did not even tell customers that the add-ons were optional, according to the FCA.

Swinton is Britain's largest High Street insurance broker, with 500 branches and 3,000 staff. It is part of a French mutual insurance group called Covea.

Monday, 15 July 2013

JustGiving defends online giving

The leading online giving company, JustGiving, is trying to reassure the UK's army of sponsored runners, swimmers, and other fundraisers after a rival online donations site hit the financial rocks.

The Charity Commission suspended on Friday after a shortfall of at least £250,000 was identified in the funds it should have passed on to charities.

Zarine Kharas, founder and chief executive of JustGiving, said: "It couldn't have happened to us because the monies owed to charities are 100% ring-fenced."

JustGiving operates a trust account for donations, which can only be accessed with the independent consent of three top managers.

Any funds in the account would not be available to administrators or liquidators if the firm went under.

Zarine Kharas is calling for all online giving websites to be made secure.

"I think similar safeguards to solicitors and accountants should be put in place," she says.

There's concern that the problems at, which handled £100,000 a week, could put off donors and fundraisers just as charities are struggling to maintain their incomes.

£250,000 donations missing

The Charity Commission says at least £250,000 of charitable donations may have gone astray at the online donations website,

The Commission suspended the website on Friday, after installing an interim manager to deal with serious financial problems.

Online giving has become popular because of the ease of donating, simply through the click of a mouse.

However, it appears that a major shortfall appeared in recent weeks at, between the sums donated and the money passed on to charities.

The site had been handling donations of around £100,000 a week.

The Charity Commission believes that thousands of people staging charity runs and other events could have been affected.

In a statement it said: "The interim manager will now undertake an urgent, detailed review of the charity's finances to establish the extent of the shortfall and which charities and donors are affected."

Cutting pension tax relief

The Pensions Policy Institute and Age UK are floating the idea of cutting pension tax relief for higher earners and introducing a flat rate of 30%.

In other words, whether you paid 20% income tax or 40% or 50%, you would get a tax refund in your pension plan equivalent to 30% tax.

The PPI presents this idea as revenue neutral, for the Treasury, and as potentially incentivising lower earners to save more in pensions.

There are two ways in which this idea could be of major interest to George Osborne:

1. The big problem with auto-enrolment, under which workers are being automatically signed up for company pensions and having money deducted from their pay, is that the resulting pensions for most will be tiny.

So boosting the value of contributions at the lower end, makes auto-enrolment look more viable.

2. The Chancellor could save as much as £16bn a year.

The PPI calculates that a 30% flat rate would cost the same as the current system: £35bn. However, restricting tax relief to the basic rate of 20% would reduce the annual cost to £19bn-£22bn. It could be tempting to grab some or all of that £16bn difference - in the name of fairness, of course.

Higher rate taxpayers have a big advantage in the pension game. So far the Coalition has steered clear of removing some or all of that advantage.

But this research gives a little extra push to the argument that this is a cherry ripe for the picking.

Wednesday, 10 July 2013

Payday lenders throw in towel

The Office of Fair Trading says since March, 9 payday lenders have handed in their licences, 3 have had them revoked and 3 are under investigation.

The OFT produced a damning report on payday lenders back in March saying there was "widespread irresponsible lending" and wrote to 50 leading players warning they could be stripped of permission to trade.

Last month they were referred to the Competition Commission.

Warranty comparison site

New comparison site for extended warranties now provided by Dixons, Argos and others - as mandated by the Office of Fair Trading, after big concern over people paying too much for (sometimes unnecessary) warranties.

Stores will still be able to sell the warranties at the till so it'll be up to you to check the website on a smartphone while in the shop.

The OFT pints out that most electrical purchases are now made online, so you can have the website in a window to help you while surfing and shopping.

On the other hand, you can't click through from the website to the best deals - so it's a bit clumsy.

It covers 75% of the market for warranties, so there could be a cheaper deal elsewhere.

Monday, 8 July 2013

Money lessons in school

From next year, children in secondary school will be taught about debt, insurance, savings and taking risks with their money, according to the new curriculum for England published today.

There's been increasing concern that young people are ill-equipped to deal with financial challenges they are are coming up against out of school.

The new emphasis on Personal Finance in the English curriculum is the result of a long-running campaign to improve financial skills - a need which has looked even more acute since the onset of the financial crisis.

There was already a plan to include the instruction in Citizenship lessons, but the curriculum published for consultation today goes into more detail.

From September next year 11 to 14 year-olds in Key Stage 3, as well a learning about budgeting, will be taught about managing risk - for instance which places are safest to keep their cash.

14 to 16 year-olds, Key Stage 4, will explore income and expenditure, credit and debt, insurance and savings and pensions.

Friday, 5 July 2013

Twitter's tax

Much of the recent outcry over corporate tax avoidance erupted on the rapidly expanding social media site, Twitter, with tax campaigners, MPs and financial experts rushing to compose their 140 word tweets to stir up argument and debate over the tactics used by Google, Amazon and Starbucks.

So it is ironic that Twitter itself is remarkably coy about how much tax it pays and where.

Twitter submitted a brief set of UK accounts this week and by looking at them you can deduce that it declared profits of £92,000 in the UK in 2012, up from a mere £16,000 the year before.

Worldwide its advertising sales are expected to top $1bn or around £660m in 2014, mainly from charging advertisers to promote their tweets on the website.

There's not much more detail, because Twitter is a private company, though it gives an assurance that it pays all relevant taxes as set out by HM Revenue and Customs including corporation tax, VAT and all applicable payroll taxes.

What will tickle the interest of tax geeks is that San Francisco-based Twitter has located its European headquarters in Dublin, along with the majority of its international sales, finance and legal staff.

Google was condemned as "evil" by the chair of the House of Commons Public Accounts Committee, Margaret Hodge, for booking UK sales through Dublin, thus bypassing the need to pay UK corporation tax on the business.

Twitter declined to comment on whether it accounts for sales to UK customers in Ireland. It has 100 staff in Dublin and 60 in London.

Of course, it is important to point out that none of these companies is breaking the law in the way they structure their operations or declare profits for tax.

Google, for instance, has said it complies with all British tax rules and that it is up to politicians to change the law if they are unhappy with the outcome.

Live to 100!

Girls born this year will have an average life expectancy of 94.3 years and an over 39 per cent chance of living to 100, while boys will have a life expectancy of 90.9 and just under 33 per cent chance of living to 100.

Says DWP.

Wednesday, 3 July 2013

More names for banknotes

Barbara Hepworth
Margot Fonteyn
Rosalind Franklin
Audrey Hepburn
Amy Johnson
Iris Murdoch
Violette Szabo
George Eliot
Virginia Woolf
Mary Shelley
Jacqueline du Pre

And there are even more names suggested by the public to the Bank of England.