Spending still a bit squeezy

September 29th, 2014 No Comments By Ian Wade

clothes shop 300x225 Spending still a bit squeezyThe British consumer looks like they have another three years of spending squeezes.

The annual wage growth is likely to remain well below the 4.5%-to-5% rises seen before the financial crisis struck in 2008, according to a EY Item Club survey.

Median pay in real-terms is forecast to fall from £18,852 in 2008 to £17,827 by 2017, the survey suggests.

The Item club, a non-governmental forecaster that uses HM Treasury’s model of the UK economy, believes that record numbers of people in work – currently 30.6 million – will act as a brake on wage rises.

Their report expects the gradual pace of consumer spending to be around 2% in the next two years, as opposed to the 3.7% it was last decade, pre-all the hassle.

Martin Beck, the EY Item Club’s senior economic adviser said “Total household incomes have strengthened because more people are in work, but individuals do not have extra money in their pockets,”

“Real wages are being held back by strong growth in the supply of workers and the fact that firms are facing increased non-wage costs, such as new pension schemes,” he added.

Mr Beck also believes the so-called “squeezed middle” – the charming name awarded to households containing neither highly-skilled nor low paid workers – will continue to see limited growth in disposable income as pay rises remain below the rate of inflation – currently 1.5% – and competition for jobs remains strong.

BitPay orking-way ith-way eBay

September 26th, 2014 No Comments By Ian Wade

BitPay logo 300x158 BitPay orking way ith way eBayBitPay has announced that they’ve been working with eBay to accept Bitcoin payments.

Bitcoin’s payment processing solutions department confirmed its partnership with the eBay-owned firm, which indicates that the comedy currency is likely to be accepted at the online shopping portal at some point in the future.

The deal will see PayPal users, in ownership of a Bitcoin wallet, capable of using Bitcoins to purchase games, music, videos, news, ebooks, and other digital content.

Obviously, the service will be rolled out first in North America before being subsequently expanded worldwide.

Scott Ellison, senior director of strategy at PayPal, said excitedly: “PayPal is excited about all the innovations taking place in payments these days. More choices in how people create value, share it, buy, sell and trade it, that’s exactly what PayPal is all about.”

“We believe Bitcoin offers unique opportunities as more people and businesses experiment with it. PayPal is excited to work with BitPay to offer new experiences and the trusted service our customers expect. We hope to do more together as the Bitcoin ecosystem continues to evolve.”

This comes after eBay subsidiary Braintree – BRAINTREE, AS IN BRAINTREE IN ESSEX. HAS NO ONE THOUGHT THIS THROUGH? – announced earlier this month that it will also activate Bitcoin payments in the coming months.

What could possibly go wrong?

branson ice cube 300x292 Billionaire suggests people should work when they likeRichard Branson, the perma-grinning billionaire who invented Mike Oldfield and a terrible train service, has come out and echoed what every sane non-billionaire person has been harping on about since time began – that everyone should be able to take time off work – whenever they want.

In an excerpt in his new book called ‘The Virgin Way: Everything I Know About Leadership’, which he’ll no doubt be handing out free because he’s so “yeah”, the bearded one (pictured here in ICE LIKE A MYTHICAL GOD) writes: “It is left to the employee alone to decide if and when he or she feels like taking a few hours a day, a week or a month off,”

It’s something he’s introduced into Virgin offices in both the US and UK, where employees are given the responsibility of taking leave, only if they feel their absence won’t damage the business.

Branson reckons he got the idea after reading an article about the Netflix business model, and how they do not track vacation time.

“I have a friend whose company has done the same thing and they’ve apparently experienced a marked upward spike in everything – morale, creativity and productivity have all gone through the roof.”

Doesn’t mention team-leaders guilt-tripping staff, which you know damn well happens. He does waffle on and suggests that he gave Steve Jobs the idea for iTunes.

“On April Fool’s Day 1986 I gave an interview to a big-name music publication and told them that Virgin had been secretly developing a ‘Music Box’, on which we had stored every music track we could lay our hands on, and from which music lovers would, for a small fee, be able to download any individual song or album they wanted,” he told the i paper.

“Many years later Steve Jobs told me he had been utterly taken in by the idea. While we will never know for sure, I have always wondered if the April Fool’s prank triggered the birth of iTunes and the iPod – which ironically contributed to the death of our Virgin Megastores and changed the entire music industry.”

He no doubt laughed as he said it, while buying a planet to, like, ‘hang out’ on.

Debt management firms to be kept a closer eye on

September 23rd, 2014 No Comments By Ian Wade

Credit Card Debt Collectors 300x200 Debt management firms to be kept a closer eye onCity news now, and regulators are investigating several debt management firms, and are warning that the industry needs to get its act together and help those vulnerable by financial difficulty.

The Financial Conduct Authority, who took over running things in this area in April, issued its warning as it prepared to authorise up to 200 debt management firms from next month.

The FCA aren’t going to give away any names or dish out any figures as to how many companies are under investigation, however two firms have already had their applications refused and seven others have had their bank accounts frozen to protect money from clients.

Victoria Raffe, director of authorisations at the FCA, said: “These firms are advising consumers who have often reached rock bottom, so it’s important that firms get it right. Many firms are falling well short of our expectations and they will need to raise their game if they want to continue operating”.

Debt management companies are paid by customers in financial palavers, and act as an intermediary and help pay off the customer’s bills, depending on the needs and repayment programme set out.

The FCA wanted to be sure that the advice being given by firms wasn’t being driven by bonuses or other such incentives. It also wants fees charged to be clear and transparent. This was previously part of the duties of the Office of Fair Trading, but under a change in the rules the FCA is now responsible for consumer credit.

So now, the regulator has also taken control of regulation of payday lenders,  and is proposing a cap on lending rates so that no one is taking the piss.

Wetherspoons: tax-free boozing on Wednesday

September 22nd, 2014 5 Comments By Ian Wade

pint of beer 300x180 Wetherspoons: tax free boozing on WednesdaySeveral Wetherspoon pubs will be dropping their prices by 7.5% on Wednesday.

The pubs will taking part in national Tax Equality Day, which highlights how everyone would benefit from a VAT  reduction in the hospitality industry.

It’s been part of an ongoing palaver between the company and the Government over their tax battles.

More than 900 Wetherspoon pubs are taking part in the campaign.

The company paid out £275.1m in VAT last year, which took their total tax bill to £600.2m, which is 43% of the company’s sales.

On average, each Wetherspoon pub pays £12,700 a week in tax.

UK supermarkets pay no VAT on food, whereas pubs pay 20%. The company said this economic disadvantage has contributed to the closure of many thousands of pubs.

You can see their point.

While this may be a political point by the pub chain, you don’t need to be interested in this jostling. Basically, head to your local Wetherspoons this Wednesday and enjoy a cut-price piss-up. Hurrah!

Directors bonuses must now be justified

September 17th, 2014 No Comments By Mof Gimmers

fat cat rich man 300x300 Directors bonuses must now be justifiedAre you one of those people on the internet who likes hitting out at ‘fat cats’? Like griping about those who make loads of money because you  can’t stop mentioning your socialist leanings down the pub, much to the mild irritation of your pals?

Well, get this – all companies (so, not just banks) will have to be able to prove that director’s bonuses are linked to their performance thanks to a new City code.

You see, there’s a review of the corporate governance code and it has been decided that companies are going to have to provide more information for shareholders. This will include all manner of performance things, as well as details on the risks being run and details about how long a business would be able to run for under their current financing arrangements.

Unbelievably exciting isn’t it?

The Financial Reporting Council (FRC) have told the City that the next review is going to tackle diversity in the boardroom and they’ve got two years to make some changes.

“Diversity can be just as much about difference of approach and experience. The FRC is considering this as part of a review of board succession planning and will consider the need to consult on these issues for the next update to the code in 2016,” it said.

More pressing changes ask for an extension of clawback arrangements which bankers are already working to. Basically, this new code says that companies should have arrangements to allow them to “recover or withhold variable pay when appropriate to do so”. It’ll also require companies to look at how long a director should wait before receiving any bonuses and that any extra pay should be link to performance.

“The changes to the code are designed to strengthen the focus of companies and investors on the longer term and the sustainability of value creation,” said Stephen Haddrill, chief executive of the FRC. ”The changes on remuneration also focus companies on aligning reward with the sustained creation of value rather than, as before, simply on retention – a focus that has tended to promote pay escalating and leap-frogging.”

So, from now on, companies will make two statements: One will be based on accounting rules and the other will require directors to assess their ability to stay in business for more than 12 months. Could play havoc with our Deathwatch articles, but there you go.

Either way, those ‘fat cats’ are going to have to justify their bonuses now, which they inevitably will be able to, much to the chagrin of those who can’t abide these upwardly mobile swine.

traintrack 300x225 Rail fares are still going up   the North gets hammeredRail fares are going up by 2.5% in January and waxy old George Osborne has capped the ticket prices for the second year running, so it’s slightly better news than the feared 3.5% – 5.5% increases.

He also announced that he was scrapping the ‘flex’ system where train companies could cheekily raise some fares by up to 2% above the permitted average.

It will cost the Government £100 million though, so they’ll claw that back from you elsewhere no doubt.

As if pre-programmed, Mr Osborne trotted out his: “Support for hard-working taxpayers is at the heart of our long-term economic plan.”

“It’s only because we’ve taken difficult decisions on the public finances that we can afford to help families further.”

However, rail passengers in the north of England are not going to be feeling very supported for their hard work and tax payments, as new rules mean that passengers in Greater Manchester and parts of Yorkshire won’t be able to buy off-peak return tickets for travel between 4pm and 6.30pm. That basically means that, because they’ll be buying ‘peak’ or ‘anytime’ tickets, it’ll cost them 40-50% more than off-peak fares.

So, if you’re catching a train from Rochdale to Wigan, it’ll now cost you £11 when it would’ve cost you £4.20.

Martin Abrams of the Campaign for Better Transport isn’t happy: “The DfT’s extension of peak fares on Northern is part of an incoherent strategy to make existing passengers pay more for outdated services instead of investing in better quality rail for the future across the region.”

highst 300x199 The economy? We were all moaning about nothing apparentlyThe 2009 recession wasn’t as bad as everyone thought it was!

That’s technically the drift behind new official figures, which also detail that the recovery since 2010 has also been stronger than first thought too.

Due to some changes in the methodology that Office for National Statistics, now show that the downturn after that lovely crash in 2008 was less than previously assessed with GDP shrinking by around 6%. Less than the original estimate of 7.2%.

Each year’s growth from 2009 to 2013 has been revised by 0.4%, due to faster growth in investment.

Everyone still suffered though, right?

It also flies in the face of the claims that George Osborne’s austerity package isn’t quite what it’s all claiming to be. Massive surprise there.

Yet Labour’s former chancellor Alistair Darling was responsible for a less disastrous crash. Which helps Labour maintain and prove that living standards have deteriorated under the current administration despite the improved recovery.

These new revisions to the ONS are part of a bigger deal where they must now comply with international standards in measuring GDP and national accounts.

Co-op offload more business to raise cash

September 3rd, 2014 No Comments By Ian Wade

Sunwin Hero managedSecurity 300x148 Co op offload more business to raise cashIt’s ‘Oh God, what’s going on with the Co-op now?’ time again and the troubled group (putting it mildly) have been offloading businesses in a bid to raise cash.

It is selling off its Sunwin security services operation (illustrated here, by one of it’s ‘heroes’), and it’s already been snapped up by US cash machine operator Cardtronics for a handy £41.5 million.

Sunwin’s role in the Co-op consisted of running the transporting of cash to the group’s ATMs.

Now the 1,800 cash machines will be run by Cardtronics, who already do this for other companies in the UK.

Cardtronics will start operating the cash machines by January 2016, after the Co-op’s agreement with the Co-op Bank ends. However the US company said it could start installing new machines immediately.

This is the latest sell-off for the Co-op following its farms and pharmacy chains in a bid to sort out its £1.4 billion debt.

Tesco: woes continue

September 1st, 2014 5 Comments By Ian Wade

tesco bag 300x187 Tesco: woes continueIt’s been a rum few days for Tesco.

One of their key shareholders, Harris Associates, has sold nearly two thirds of its stake in the beleagured supermarket.

The American investment fund Harris Associates, had been Tesco’s seventh largest shareholder.

Chief exec David Herro told the Sunday Telegraph “We have sold, in the last month, probably two thirds of our position

“With so many unknowns … those risk factors are just too high to justify a big position.”

This comes after Tesco issued its second profit warning in two months, and estimating that annual profits are more likely to be 25% lower than last year. Continuing a three year decline.

It’s probably not the ideal welcome for Dave Lewis, who takes over the top job today, a month ahead of what had been planned.

Tesco, who has lost the bulk of their business to up-and-coming budget retailers such as Aldi and Lidl, also slashed its dividend by 75% to give Lewis greater flexibility to revive the world’s No.3 retailer.

Can it catch up on lost ground? Who knows? Should they break themselves up in a bid to stay in the game?

Russian bank actively encouraging pussy riot

August 29th, 2014 No Comments By Ian Wade

cat chart 300x200 Russian bank actively encouraging pussy riotForget toy meerkats and some ephemera, as a Russian bank has upped the ‘free gift’ stakes, by handing out cats.

Actual cats!

Yes, anyone who takes out a mortgage with Sberbank (which if you say in a certain way, sounds a bit like ‘spermbank’, arf!) gets the choice of ten pussies.

The bank showcases the felines on the website, and once selected, they’re delivered to the home.

Unfortunately, the cats must be returned to Sberbank after a few hours once they’ve mooched around the new property and no doubt took a leak on the sofa and dragged half a raven into the kitchen ‘as a gift’.

A popular Russian superstition maintains that it is good luck if cats are first to enter a new home.

Wonders never cease.

RBS fined £14.5m over lousy mortgage advice

August 27th, 2014 No Comments By Mof Gimmers

rbs RBS fined £14.5m over lousy mortgage adviceThe Royal Bank of Scotland has been fined £14.5m by the Financial Conduct Authority (FCA) after they failed to ensure that they were giving good mortgage advice to customers.

The FCA said: “Two reviews of sales from 2012 found that in over half the cases the suitability of the advice was not clear.”

The could’ve said: ‘As if there wasn’t enough reasons to loathe them.’

Of course, RBS was quick to apologise, with chief executive Ross McEwan saying that these failures are “unacceptable and should never have happened”.

After their investigation, the FCA discovered that RBS and their NatWest buddied had failed to take the full extent of a customer’s budget into consideration when they were making a recommendation.

On top of that, the banks didn’t give proper debt consolidation advice as well as completely failing to advise customers which mortgage term was best suited for them, according to the watchdog.

“Only two of the 164 sales reviewed were considered to meet the standard required overall in a sales process,” the FCA added.

RBS chief executive Ross McEwan said: “Taking out a mortgage is one of the biggest moments in our lives, and our customers have every right to expect the very best service when making this decision. It is clear that in the past the bank just didn’t get this right, this was unacceptable and should never have happened.”

“When I joined the bank we completely overhauled our processes, and took all our mortgage advisers off the front line for an extensive period of time to get the training required.”

Looks like they didn’t give the advisers enough training when it comes to treating customers fairly in a financial agreement that could potentially be for life, and indeed, ruin a family financially. Considering that taxpayers own 80% of the bank, thanks to previous bad behaviour from RBS, you’d hope that at some point, they’d try and up their game.

RBS have already mis-sold loads of insurance (to which they’ve put £3.2bn aside for when that bites them on the arse) and were hit with a £390m fine for their role in the Libor rate fixing affair.

BT to ruin your Christmas

August 26th, 2014 6 Comments By Ian Wade

bt logo BT to ruin your ChristmasBT are raising their prices in December. Merry Christmas!

That’s right. The telco have announced that they are to raise the prices of their phone and broadband by 6.5%

The price rise has been – surprise – defended by BT, claiming that most customers are on inclusive packages, and that bills have actually decreased by 14% in the last half decade.

It will increase the line rental for direct debit customers by 6.25% to £16.99, and the rate for calling UK landlines by 6.44%.

And also, set-up fees for landline calls, residential calls, to the speaking clock and call return charges will also increase for some or all customers.

BT’s option for low-incomes, BT Basic, will stay the same at £5.10 a month with a call allowance.

Of course, they’re not nearly as keen to have an option where you can get a fibre optic broadband connection without the need for a landline (as a lot of people just rely on their mobiles these days), but there you go.

Interest rates: no need for rise

August 20th, 2014 No Comments By Ian Wade

British high street 300x180 Interest rates: no need for riseThanks to supermarket price wars and sales on the high street this summer, there’s been no need for the Bank of England to go ahead with early interest rate rises. Hurrah!

The consumer prices index, or CPI, went from 1.9% to 1.6% last month, which means it is still below the Bank’s 2% target for the seventh month on the trot.

The Office for National Statistics reckon this is down to a third month of falling food costs, which is due to the supermarkets scrambling for what customers they can get with all manner of discounts and offers.

The July RPI figure, which they use to set next year’s regulated rail fares, came in at 2.5%, which hopefully is good news for commuters expecting a massive price increase in the new year.

The City was a bit freaked out by the drop in CPI. Experts said the lack of evidence of inflation would stay the hand of the Monetary Policy Committee from a first rate since 2007.

There’ll no doubt be more exciting news like that when the Bank publishes the minutes of its August meeting, but otherwise that’s all quite optimistic news isn’t it?

Please say it is.

pensioner 242x300 You can benefit from next years pension changes even if youre retiring nowThey don’t make old people like they use to do they? Once upon a time they were all hunched over and angry, and now they’ve all got tracksuits and dancing lessons.

Either way, if you’re old and planning to collect your pension next year, you’ll have more options than ever to take your cash and run. If you’re retiring this week, you can also benefit from the new rules that are coming in next year.

There’s a relaxation in pension rules from next April, which means it is easier for old people to take their entire pot in cash (income tax pending, naturally). If you’re retiring before April you can still take advantage if you rest your cash in a ‘capped drawdown’ scheme until next year.

What’s that when it’s at home?

Well, capped drawdown pays out income from a pension based on the GAD rate set by the Government Actuary’s Department (GAD) and at the moment, allows retirees to take 150% of the equivalent annuity rate.

A company called Hargreaves Lansdown has launched a simplified capped drawdown plan called ‘retirement bridge’ (don’t worry, there’s not many steps for you to walk up) which provides you codgers access to your money, with a 25% tax-free lump sum and access to income if you need it (that’ll be taxed though).

Tom McPhail, head of pensions research at Hargreaves Lansdown, said there were many people retiring who want to take advantage of next year’s flexibility, but didn’t want to buy a pricey drawdown product or short-term annuity.

“There are relatively few ways for people to access some, or all, of their pension now,’ he said. “Insurers have come up with temporary solutions [such as short-term annuities] but in the main you need to go through an independent financial adviser and the costs of doing that are not insignificant.”

“I am quite concerned that a lot of people are hitting retirement today who are not being offered this option,” he said. “They think their options are either annuity or [full] drawdown, which will be complex and expensive. There are a huge number of people just treading water who are not sure what their options are. Some people do need to access the money… and others are waiting to see what happens and are reluctant to commit until they know what the rules are.”

Check the charges though – if you have a smaller pension, drawdown might not be the thing for you.

You should check your pension contracts before moving your money around though. Some older pensions have guarantees that can offer good annuity rates or the ability to take more than 25% tax-free cash, which you might lose if you move your money.

Always check your old policies before doing anything and phone up your provider and ask them if you can have the tax-free cash and leave the balance of your pension in scheme.