By the next election one million working people will depend on housing benefit to afford rent

Work and Pensions Secretary Iain Duncan Smith has done the sums...

National Housing Federation says by next election one million earners will be dependent on welfare to afford rent. Government says "under our reforms those on housing benefit can still afford up to a third of homes on the local rental market." - GUARDIAN

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Liebrary: Are energy companies really forced to raise prices due to high wholesale prices?

We notice that energy company spokesmen defend price hikes on television, radio and in print by claiming to buy all their energy on the wholesale market. (You can also read our more detailed post on this from 2011).

The fact is the retail energy companies, who bill domestic consumers, buy their wholesale gas and electricity from...you guessed it...themselves. The generating companies, who take the coal and gas from the Earth and generate the wholesale electricity, are the retailers’ own conjoined twins. Each of the ‘big six’ are now able to supply virtually all their own needs. The graph below from OFGEM shows above the zero line how much energy the retail companies' generation twin can generate, and below the zero line how much energy the companies sell to the likes of you and me and the businesses that employ us. All six are more or less in balance – they can supply their own demands. [In the graph, RWE is the owner of nPower, SP is Scottish Power]

Since 2004 the energy industry has simply moved its profits from the retail side of the business to the wholesale generation business. This can be seen from the soaring OFGEM graph below showing the Value Chain Profitability. Profits from generation were small until 2004, after which they boomed as did overall profits:

Energy companies' wholesale arms sell at a high price generating profits. Their  retail arms buy wholesale energy at a high price, allowing their retail arms to blame wholesale prices for them hiking our bills. This applies whether they buy from themselves, or they buy (i.e. swap) wholesale energy at a high price with one another. This allows them to state with a straight face that they are making tiny margins on their retail business. It keeps their wholesale profits hidden - even from the spineless regulator OFGEM.

Do you think no civilised executive would condemn fellow Britons to fuel poverty, with many thousands dying in the cold? The Tory MP, Colonel Bob Stewart, said in parliament in 2011:

"I am shocked that between 20,000 and 25,000 pensioners a year in this country are said to die from hypothermia. In my constituency, I am told, an average of 30 old people die of cold each winter, which is shocking."

Could anybody be so nasty? Remember how many decades tobacco companies sent out executives who looked you straight in the eye and said smoking did not cause cancer. Having convinced lobbyists, lawyers and untold millions to believe and even support their fibs, the tobacco industry eventually came clean. Energy companies, for now, are sticking to their guns.

Read More

Liebrary: Are energy companies really forced to raise prices due to high wholesale prices?

We notice that energy company spokesmen defending price hikes on television, radio and in print are claiming to buy all their energy on the wholesale market. (You can also read our more detailed post on this from 2011).

The fact is the retail energy companies, who bill domestic consumers, buy their wholesale gas and electricity from...you guessed it...themselves. The generating companies, who take the coal and gas from the Earth and generate the wholesale electricity, are the retailers’ own conjoined twins. Each of the ‘big six’ are now able to supply virtually all their own needs. The graph below from OFGEM shows above the zero line how much energy the retail companies' generation twin can generate, and below the zero line how much energy the companies sell to the likes of you and me and the businesses that employ us. All six are more or less in balance – they can supply their own demands. [In the graph, RWE is the owner of nPower, SP is Scottish Power]

Since 2004 the energy industry has simply moved its profits from the retail side of the business to the wholesale generation business. This can be seen from the soaring OFGEM graph below showing the Value Chain Profitability. Profits from generation were small until 2004, after which they boomed as did overall profits:

Energy companies' wholesale arms sell at a high price generating profits. Their  retail arms buy wholesale energy at a high price, allowing their retail arms to blame wholesale prices for them hiking our bills. This applies whether they buy from themselves, or they buy (i.e. swap) wholesale energy at a high price with one another. This allows them to state with a straight face that they are making tiny margins on their retail business. It keeps their wholesale profits hidden - even from the spineless regulator OFGEM.

Do you think no civilised executive would condemn fellow Britons to fuel poverty, with many thousands dying in the cold? The Tory MP, Colonel Bob Stewart, said in parliament in 2011:

"I am shocked that between 20,000 and 25,000 pensioners a year in this country are said to die from hypothermia. In my constituency, I am told, an average of 30 old people die of cold each winter, which is shocking."

Could anybody be so nasty? Remember how many decades tobacco companies sent out executives who looked you straight in the eye and said smoking did not cause cancer. Having convinced lobbyists, lawyers and untold millions to believe and even support their fibs, the tobacco industry eventually came clean. Energy companies, for now, are sticking to their guns.

Read More

Richard Murphy on why HMRC’s tax gap calculation still makes no sense

By Richard Murphy

Adviser to the Tax Justice Network and the TUC on taxation and economic issues. He is also the director of Tax Research LLP.

I admit I have not the time or energy just now to spend a lot of time on HMRC’s new tax gap data.

The ‘tax gap’ has three major components:

1. Tax lost to tax avoidance, which is defined here as seeking to minimise a tax bill without deliberate deception (which would be tax evasion or fraud) but contrary to the spirit of the law;
2. Tax lost to tax evasion, which is the illegal non-payment or under-payment of taxes, usually by making a false declaration or no declaration to tax authorities, resulting in legal penalties if the perpetrator is caught. Tax evasion includes fraud, error and neglect by the taxpayer;
3. Non or late payment of tax declared to be due but not paid on time, i.e. late payments and bad debts suffered by HMRC.

I’ve already explained that the mysterious decline in this tax gap over the last three years – the majority of which is explained by revisions to the basis of calculation - does not look credible. But let me offer just a little commentary now on some of the figures in this year’s data, which looks like this:

So let’s just make a few observations on why these look implausible.
First, because HMRC choose to ignore it none of the tax avoidance by Google, Amazon, Apple, Starbucks, Facebook and others is in here: that’s done with official sanction so it’s not going to be counted even though the world at large can see what’s happening. If you want the clearest example of why the numbers are wrong, this is it.

Second, throughout the report you get the feeling that many of the falls in the tax gap are not because of any real change. No, they’re because less is being done by HMRC to tackle the tax gap. So, for example, it is said with regard to corporation tax:

The number of LBS (Large Business) Corporation Tax avoidance risks and technical risks subject to litigation has decreased by around 16 per cent between 2007-08 and 2008-09, from 342 to 288.

Why did the number of cases fall? I’d suggest because there simply aren’t resources to chase them, not because the cases aren’t there. In fact, they admit they are, saying of the above:

The effect on the tax gap is offset by an increase in average tax under consideration (TuC) per risk from £8.2 million to £9.5 million.

That, in itself is an amazingly small number (do they really mean million?) but the message is clear: the case work is not being done and the tax gap is not being measured as a result.

Third, let’s consider the likelihood that tax avoidance by people on PAYE costs just £400 million a year. You mean all those bankers on all that pay only avoid £400 million? Oh please, pull the other one. Or just simply note the number of aggressive tax avoidance schemes being litigated, some involving billions, and realise this is not credible.

Fourth, let’s note that this tax gap loss records nothing at all resulting from the maybe 1 million or more personal service companies in use in the UK at the moment, even though they have been subject to much scandal of late. HMRC does not recognise this as tax avoidance so the several billion lost due to avoided employer and employee NIC and tax lost due to income shifting to partners and spouses all misses this estimate. Amazing, despite the political scandal attached.

And just for now let’s note that HMRC officially think that although maybe 35% of all companies asked to make a tax return in the UK each year fail to do so none of this results in tax evasion. Which is, respectfully, just plain daft.

To put it another way, these numbers are manipulated to show a wholly distorted view. For a better one, see here.

Read More

Starbucks, Google, Facebook, Amazon, IBM and Apple pay UK tax rates of just zero to 0.54%

Chris, Fee and KJ try to come to terms with the bad news about our favourite companies...

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Not just Starbucks! Google, Facebook, Amazon, IBM and Apple pay UK tax rates of just zero to 0.54% 
Starbucks’ CEO Howard Schultz claims its British operation makes losses and therefore owes no tax here. True? There are legal methods multinationals use to "increase" UK costs and move actual profits into a tax haven: charging the UK operation “royalty fees”; push profits around their global supply chain; loading UK subsidiaries with high-interest loans. DAILY MAIL
(“I was so shocked I spat into my own latte, to save them the bother,” said one Starbucks customer.)


By the next election one million working people will depend on housing benefit to afford rent
The National Housing Federation reports an alarming rise of in-work recipients of housing benefits. The number has more than doubled to 903,440 in under four years. Planned cuts to housing benefit go against government claims that they are on the side of hard working people.  But the government replied, “Under our reforms those on housing benefit can still afford up to a third of homes on the local rental market." GUARDIAN

(A third = the bathroom and one bedroom. But not the living room, kitchen, or anything else as two other hard working families will be sleeping there!)

Unsophisticated investors were the 'golden prize' at Goldman, says former employee
Goldman Sachs employees deliberately sold the most complex financial product to the least sophisticated investors, according to a scathing insider account of life at the Wall Street bank. Goldmans dismissed the book as bedtime reading for conspiracy theorists. TELEGRAPH
(...but essential "how to" reading for new recruits at Goldman Sachs.)

Banks face thousands more "rate swap" mis-selling claims, say the Clydesdale and Yorkshire banks
The Clydesdale and Yorkshire banks have decided to widen the products on which they will consider paying out compensation. 40,000 complex interest rate derivatives were mis-sold to small businesses, pushing them to the verge of ruin. Now that number may double. Compensation estimates range from £10bn to £20bn. TELEGRAPH

Women win equal pay compensation fight against Birmingham council
More than 170 women who worked in low paying jobs for Birmingham City Council claimed they were paid less than their male colleagues. The Supreme Court has ruled they can now have their discrimination case heard in the courts. This means that equal pay disputes, against any empoyer, can be heard in the civil courts and not just employment tribunals. Claims can now go back 6 years instead of six months of someone leaving their job. INDEPENDENT

David Cameron: "prisoners will not get the vote under this government"
David Cameron has promised prisoners will not get the vote on his watch, despite a ruling from the Europe that an outright ban is illegal. TELEGRAPH
("Prison? Criminal record? Shame? It was the sheer terror of losing my vote that put me right back on the straight and narrow," said nobody at all.)

Fewer car crashes but more whiplash claims

Police figures show a 20% decrease in number of accidents involving injuries since 2006, yet a 40% increase in third party injury (TPI) claims, most of which are for whiplash. Whiplash claims are prone to fraud because they are virtually impossible to disprove. Claims management companies are blamed for talking people into making bogus claims. TELEGRAPH
("If the banks won't give back all the money they've stolen from us, we'll steal it back ourselves," said one man cradling his flopping head unconvincingly.)

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Cameron is tough on crime, but what of the rehabilitation of offenders?

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A British politician, the Prime Minister no less, promises to legislate that Britons must not be ripped off!

Something truly remarkable happened in Parliament on 17th October 2012. A moment so rare we should give it a name – "Bloomingheck Day". 

A British prime minister, not covered by a shower curtain singing into the spray before breakfast but in full view of parliamentary television (19 minutes 15 seconds into the video), promised to legislate uncompromisingly against a long running rip-off. 

So clearly, so concisely, so undeniably that we reproduce his words directly from Hansard (Parliament’s minutes):

“I can announce, which I am sure the hon. Gentleman will welcome, that we will be legislating so that energy companies have to give the lowest tariff to their customers—something that Labour did not do in 13 years, even though the Leader of the Labour party could have done it because he had the job.”

For clarity as well as suspension of disbelief this was said by David Cameron, Prime Minister of the United Kingdom of Great Britain and Northern Ireland, during Prime Minister’s Questions on 17^th October 2012 shortly before lunch (thus presumed sober).

That was it. It was not followed with weasel words on how the best deal is not always the cheapest, or how the best deals need only be "offered" (in the knowledge that people don't trust "offers" from companies, and so ignore them). 

Crystal clear, no smoke, no mirrors, say it again: “We will be legislating so that energy companies have to give the lowest tariff to their customers”.

It soon became clear that Cameron had kept this promise secret from his team of politicians and hangers-on. Even his own cabinet minister responsible for energy policy hadn’t heard of it. To get this into the legislative programme Cameron evidently had to smuggle the policy into Parliament under his jumper. The easily confused Labour Party, reacting with the drooling predictability of a Pavlovian dog, unthinkingly condemned the statement as "something out of the Thick Of It". 

People of all odour, of all complexion, of all persuasion: don't tell Cameron he is a confused ninny and hand him the Asperger's defence on this. Reassure him he is quite lucid and make him get on with it!

A politician fighting for the common good? Confusion abounded around the kingdom. The head of the Confederation of British Industry has said:

“I'm not quite sure where the prime minister was coming from."

And the appalling Angela Knight, formerly excuse-mistress for the bankers, now head of ducking-and-diving for the energy companies, said:

"We need to understand the detail of what's being proposed by the Prime Minister"

We must take a moment to congratulate Ms. Knight on her seamless move from CEO of the bankers’ club (British Bankers Association) reappearing as CEO of the energy companies’ cabal Energy UK. Her career brings to mind that of Bela Lugosi, the 1930’s film star, who also followed a terrifying career as Dracula with a scary stint playing Frankenstein. Different role, same objective.

But savour the moment when a British Prime Minister had the nerve to act in the best interests of all Britons, rather than just his pals and donors. Close your eyes, breathe deeply, slowly count to ten, and savour. It happens just once or twice in a lifetime, like true love.

Do not underestimate this thunderous event. Particularly in a country where 'ripping off' is seen to be as natural as a wolf eating a lamb: messy and painful but the way of the world. Britain has a long history of officialdom protecting rip-offs:

• OFGEM, the energy regulator, doesn't want transparency. OFGEM rejected all the recommendations for greater transparency made in their own 2012 report for greater visibility on energy company profits.
• The British Bankers Association (BBA), blind to years of LIBOR rate setting fraud.
• The Office of Fair Trading allowing banks to promote scams such as 'teaser' rates which can be quietly dropped to nothing, and rip-off overdraft charges. The OFT's investigation into teaser rates concluded: "After considering the evidence, we did not find any information suggesting there is substantial harm caused by firms offering temporary bonus rates of interest. We do not consider it appropriate to require cash ISA providers to transfer consumers to identical accounts with higher interest rates automatically."
• HMRC provides tax avoidance loopholes for privileged citizens and companies to march through arms akimbo riding camels. This results in rises in taxes and cuts in services for those Britons who can't afford a crafty accountant, private healthcare, and public school fees.
• Train companies touting tickets designed for maximum complexity, with some fares cheaper if you buy multiple tickets for a single journey. Buy London to York, and then York to Durham - you save money quite legally even though you stay in the same seat for the whole journey.

Ripping off Britons is enshrined in our consumer protection law. The law only requires companies to not rip off the 'average consumer', leaving the other 50% as fair game. Most of these rip-offs depend on confusion and secrecy. When the deception is revealed, as it was with Payment Protection Insurance, we see the multi-billion scale of the scams.  Latest reports state the PPI compensation bill is going to top £15billion. 

Don't knock Cameron's courageous proposal: support it. Set a precedent, so essential service providers who charge differently for providing precisely the same goods and services must by law give their customers the 'best deal'. As well as train operators, what about

• phone; broadband; cable tv;
• savings accounts; ISAs;
• pension annuities;
• etc.

It is clear the highest in the land have no compunction about looking you straight in the eye and lying. Generals have lied to the face (and on camera) to either their potential clients on their willingness to peddle influence, or to the public on their unwillingness to peddle influence at the MOD. Politicians have fibbed on what they said to police officers; whether they were secretly backing private companies they were supposed to be supervising; how dodgy the dossiers leading to war were; whether they aided kidnapping and rendition to torture countries; and much more.

Those with responsibility for the actions of others - Newspaper magnates, government ministers, archbishops and cardinals, BBC handlers of celebrities -have casually dissembled about what their staff get up to. When their dissembling is finally exposed they admit to "no fault responsibility" for the misdeeds of their underlings. "no fault" = no need to scold, sanction, or sack them. They want to draw a line, forgive and forget, and move on. 

They do this because they know for a rip-off to work it is not necessary to fool all the people all the time. You just need to fool most people for the length of their attention span. It's not that we believe them, just that we can't be bothered to do anything, believing anything would be futile.

But this is different. Don't let Cameron allow his promise to drift away. Don't accuse him of confusion, don't give him that escape route. Take him at his word, and hold him to it:

“we will be legislating so that energy companies have to give the lowest tariff to their customers”

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Amazon makes £7bn in sales but pays no UK corporation tax

KJ, Fee and Chris work out what it costs us...

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Wonga caught advertising on Talking Ginger children's game
The Talking Ginger smartphone app, which teaches children how to get ready for bed, has been carrying adverts for Wonga and online casinos. App users can only remove the adverts if they pay for "virtual toothpaste" – 69p gets a user 100 squirts of toothpaste and no more adverts. The game teaches kids that a foul smell means you’ve not been brushing your teeth. GUARDIAN

(...or you've stumbled into the offices of Wonga and Talking Ginger.)

George Osborne: Workers of the world unite... and give up your rights
Companies to give people shares worth as little as £2,000 in exchange for worker rights. But employers will then be allowed to hire people under contracts that exempt them from the right to claim unfair dismissal, a redundancy pay off if the firm goes under, and any right to demand flexible hours or time off for training. The idea has been widely condemned by employers. "When I pay someone, I want them to get on with the job, not worry about all the complicated and unforseen consequences," complained one employer. TELEGRAPH
("Likewise," said one Tory party donor as he wrote out another £1m cheque.)

PPI: claims continue to rise, and it's not due to fraud

The Financial Ombudsman Services (FOS) has taken on 66,882 new complaints about payment protection insurance (PPI) in the last three months. Banks say many claims are down to bogus claims resulting from the modern trend towards "compensation culture". But the FOS dismissed fake claims as the reason for the rising number. TELEGRAPH
(Meanwhile the Oxford Dictionary has updated its definition of "compensation culture" to include 'shameless demands by fat cat bankers for massive bailouts for a crisis they caused themselves.')

Amazon: £7bn sales, no UK corporation tax
The online retailer's British operation is "owned" by a company in Luxembourg which receives all payments for books, DVDs and other goods. The total tax dodged could be around £100m. GUARDIAN
(£100m is the unit of measurement in the corporate tax dodging world, otherwise known as ‘a hospital.’)

Starbucks: £1.2bn sales, no UK corporation tax
Over the past three years Starbucks has reported no profit and paid no income tax on sales of £1.2bn pounds in the UK. It has been telling investors the business was profitable, while consistently reporting losses to the taxman. This tax avoidance sheds light on perfectly legal tactics used by multinationals the world over. Starbucks stands out because it has told investors one thing and the taxman another. REUTERS

Economy boost as unemployment falls again. But most new roles are part-time and half are in London
The unemployment rate is down to 7.9% of those eligible for work, 0.2 points lower than the previous period, leaving 2.53m Britons unemployed. But pay rises remain below the rate of inflation. Also, there are 355,000 fewer full-time workers than 2007, before the credit crunch hit, and 724,000 more in part-time roles. Total unemployment is still 883,000 higher than before the crisis. Said one business owner, “The only way out of this deep recession is through employment, not by sacking people." DAILY MAIL
(...unless it's the Chancellor!)

Government's pension pot-switching scheme could cut pot value by a quarter

'Pot follows member' funds can move from well-run, low-charge schemes into higher-charging, poorly-run schemes, losing money in bank fees. A better solution would be to automatically pool small pots in large-scale, low-cost pension plans that are not tied to the workplace. But the pensions minister said the existing overly complex system had gone on too long and needs a big shakeup to make it safe, cost-effective and easy to move your pension pot around. GUARDIAN

(...and around and around... until all your savings are lost in bank fees!)

Whisper it, why pensions can be a waste of time
For hundreds of thousands of low-paid workers, pensions of any description are bad advice. Many of the people whose pay is now being docked through forced saving will not be £1 better off for every £1 they put in. TELEGRAPH

David Cameron vows to crackdown on rip-off energy tariffs

In an announcement that took the regulator Ofgem and even his own energy department by surprise Mr Cameron promised that the big six providers would be forced to charge their customers at the lowest rate for their type of use. INDEPENDENT

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Beware of George Osborne's "shares for rights" scheme

There's been lots of criticism, even from the business community. But what has history to teach us?...

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Tories propose you give up your Employment Rights in exchange for a bunch of shares - a repeat of the Manhattan Scam?

Apart from doing that Bullingdon thing the Chancellor George Osborne also studied Modern History at Oxford University. Some may be surprised to learn that "Modern" history starts from the 16^th Century straight after the Middle Ages. One of the lessons Osborne would have learned from this period is how the island of Manhattan in New York was given up by its Native American Indian inhabitants for a handful of glass beads. Clearly an example of how one party misled the other on two things:

a)     the relative values of a handful of glass beads and Manhattan, and

b)     the implications of "give up"

George is trying the same trick with your Employment Rights. He proposes that you surrender your right to claim unfair dismissal in exchange for shares in your employer worth between £2,000 and £50,000. This is in spite of the fact that Britons are already the third most easily sacked people in the developed world. 

Presumably the idea is that you too can get richer from your own sacking by the boost to your employer’s share price and the dividends that come from getting rid of you. Making getting fired worthwhile!

As you will appreciate, this is closely modelled on the Manhattan Island scam. So we provide you with some basic facts to avoid any confusion on

a)     the relative value of a handful of shares and your employment rights, and

b)     the implications of “give up”

In March 2012, the Chartered Institute of Personnel and Development published a report titled “Counting the cost of the jobs recession”. The report provides stark figures on the effect on the economy of unemployment.  

The report's figures on the continuing lost GDP, e.g. 9.1% lost in 2011 alone, throws a light on the fact that although the banks may claim to have stopped stabbing us in the back (though we doubt this), and claim to be reforming (we doubt this too), it is clear that we are still bleeding. It also provides other grim facts for the sacked:

• The number of people working part-time because they can’t find a full-time job doubled from 0.67 million to 1.34 million between spring 2008 and the end of 2011.
• Two-thirds of people who are made redundant and who then return to work are paid less in their new job. On average, the pay penalty is 28%.

An earlier CIPD report, from January 2009, “A False Economy? The cost to employers of redundancy”, found that in terms of the amount of redundancy money paid:

• The average redundancy payment is found to be £10,575, though a quarter of employers pay less than £5,000. The average payment ranges from £7,629 in the voluntary/not-for-profit sector to £8,891 in the private sector and £17, 926 in the public sector.

So on a middling salary of £2,000 per month, assuming you can get a new job you are likely to be paid £560 per month less (the average pay reduction of 28%). Without a new job you would be on nothing but benefits of a few hundred pounds and falling as the benefits axe continues to cut.

The Chancellor suggests between £2,000 and £50,000 of shares in return for your employment rights. Private sector companies are unlikely to hand their staff shares worth more than the average redundancy payment of £8,891. But lets say they feel generous, and offer £9,000 worth of shares. How much income would that bring you each month, assuming you hold on to the shares to benefit from your own sacking?

This becomes clear from a snapshot, taken in October 2012, of the dividends paid by FTSE100 companies. The graph, showing the monthly income if you took the annual dividend in 12 instalments, reveals how paltry this would be:

• Just one company would pay more than £50 per month in dividends
• Three more companies would pay more than £20 per month
• Fourteen more companies would pay more than £10 per month
• Forty nine companies would pay less than £2 per month

If you were worried that the Tories are unthinkingly legislating Britain into a medieval world of cornucopic plenty for some and abject poverty for many, with the poor forced to supplement their meagre livings with a bit of thieving, you’d be quite wrong. As well as promises to slash benefits, salaries, pensions and employment rights, the Tories promised to legalise beating up burglars to a disproportionate but not grossly disproportionate degree. 

When asked by the BBC what would not be allowed, the Justice Secretary Chris Grayling said that stabbing an unconscious burglar was not allowed. Will the Tories be promoting a bag of golf-like clubs for this purpose? Allowing you to select a club to inflict a disproportionate but not grossly disproportionate beating?

And shall the courts have a ‘swing weight’ chart to judge the line between disproportionate and grossly disproportionate? One weight for adults, another for children, with a discount for the degree of burglar incapacitation?

http://www.golf-components.com/swing-weight-chart-woods.html

The October 2012 Tory Party Conference was specific on determined cuts to benefits, but totally vague on "the rich paying their fair share". We wonder whether the Tory leadership is deeply cynical, or just grossly ignorant about the real world. With both the PM and Chancellor's life experience limited to Eton, Oxford, and Tory politics (Cameron's stint in PR for a television company counting as 'Tory politics') - never having had a real job, nor ever having to worry about paying the next electricity bill - perhaps they really believe by adding a few shares to ones portfolio one can get by. No doubt they don't need their salaries, being well provided for by dividends, capital growth, and other unearned income. 

When the US presidential candidate Mitt Romney brought ridicule on himself by suggesting the average income in the USA is a quarter of a million dollars, it seems that he wasn't being cynical but really believed this. Could it be that Tory politicians really believe that making the rich even richer benefits everyone? And losing a few thousand pounds a month income doesn't really matter? Cameron's great-great grandfather made a fortune trading grain, and Osborne's father proved successful selling wallpaper. Do the Prime Minister and Chancellor, who are able to live on income they have not earned, not understand the tribulations of those who depend on their jobs for their livings?

This also raises a question about another non-Tory leader, Nick Clegg of the Liberal Democrats. With fixed term parliaments now law David Cameron can no longer decide when to dissolve Parliament (a tactic repeatedly used by previous prime ministers to time elections to their best advantage). Has Nick realised he is now, by withdrawing his support for the coalition, one of only two people who can force an early general election? The other is HM Queen Elizabeth. 

Poor Nick was caught between the Scylla of Gordon Brown and the Charybdis of David Cameron. One a known bully, the other a probable bully. At that time Clegg had no option but to sail into coalition - to do otherwise would have been cowardice. Was Clegg's entering into the coalition government with Cameron a brilliant strategic masterstroke giving him this near unique (shared only with the Queen) parliament-ending power? Or is he going down in history as the fall guy he appears to be, taking his party into the fall with him? Will the real Nick Clegg now step up?

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British Gas raises energy bills for winter

Fee knows what we all know about the Big Six energy suppliers, British Gas, SSE, Npower, Eon, EDF and Scottish Power...

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Rip-off News round-up. Our pick of the last week's media (Thu 11th October)

'Low food prices are gone for good': experts blame bad weather and market speculators
Experts blame the current rises in grocery prices on a combination of terrible weather, bad harvests and speculation. Meanwhile, 'political drift' on the issue meant any solution to the problem in the longer term was unlikely. DAILY MAIL

Pensions in 'freefall' due to Bank of England's money-printing
Annuities – which you buy with your pension pot when you retire - determine a savers annual income for the remainder of their life. However their value has plunged by 7% in just three months, a result of the Bank of England's "quantitative easing". With another round of money-printing being considered, annuity rates could fall even further. TELEGRAPH

'Wonga is targeting our bankruptcy capital': Blistering attack on payday lender's £24m Newcastle Utd sponsorship
As many as 35.2 adults per 10,000 are insolvent in the North East – home to Newcastle United – compared to just 17.5 in London and 29.6 in the neighbouring North West. The deal also includes naming rights for the club's stadium although Wonga will restore the Sports Direct Arena to its traditional name, St James' Park. Wonga is the leading high interest, short-term "payday" loan company. Newcastle United will now be sponsored by the money of deprived people up and down the country. DAILY MAIL
(If you can't afford to buy one of their wildly overpriced football shirts, you can always take out a Wonga loan... It's all starting to make sense!)

Tory conference: Lord Young slams government's small firm start-up scheme

The new Seed Enterprise Investment scheme incentivises investors to invest in small businesses by giving them tax relief. But Lord Young described the scheme as "ridiculously generous". Venture capitalists can get up to 78% tax relief by using the new scheme. BBC NEWS

("Be realistic, Lord Young. This has to compete with the 100% tax relief they get from all the other loopholes they're using," shouted one wag from the audience.)


Tory chairman Grant Shapps: the Government is a shambles
David Cameron has presided over a shambles for the last six months and struggled to create a "top notch" Government, the new Conservative Party chairman has admitted. TELEGRAPH

Quarter of Tory MPs are buy-to-let landlords
More than a quarter of Tory MPs are private landlords. They are too self-interested in keeping house prices high to legislate to help first-time buyers get a foot on the housing ladder. 12.5 per cent of Labour MPs own rental property portfolios and 15 per cent of Lib Dem MPs. FINANCIAL TIMES

Tory conference: Burglary 'over-reaction' to be allowed

Householders who overreact when confronted by burglars are to get more protection in law. However, Justice Secretary Chris Grayling said that stabbing to death a burglar who had already been knocked unconscious would still break the law. But between 1990 and 2005 there were just 7 prosecutions for people tackling intruders in their homes. Critics say the law change is simply a sop to right wingers. BBC NEWS

(If that includes thefts by rip-off banks, energy firms, water suppliers, rail operators, telecoms, etc. etc... then we're talking!)

Scottish Tories claim that nine in ten Scots 'living off state's patronage'

Almost 9 out of 10 Scottish households take more from the public purse than they contribute in taxes thanks to a “rotten system” of state patronage, says the leader of the Scottish Conservative Party. But according to the most recent figures, Scotland contributed 9.6% of Britain’s tax take and accounted for 9.35 of public spending. The Scottish Tories' statement has been taken as an insult by many Scots. TELEGRAPH
(NEWS LATEST! Research by the Scottish Tories reveals that 10 out of 10 Scottish households can't stand the Scottish Tories' guts.)

Taxman suffers bloody nose in fight against tax avoidance by banks 
Swiss bank UBS had avoided paying income tax and national insurance on £92m in bonuses to 400 staff by paying the money via a Jersey based "avoidance vehicle." A first court ruling that the blatant tax dodge was bullshit has been overturned in favour of UBS. CITY WIRE

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George Osborne to cut another £10bn from welfare

Tax benefits, allowances,,, is nothing safe?

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With predatory companies on all sides, it costs an awful lot of money to be poor

Her Majesty's Revenue and Customs (HMRC), responsible for tax collection in the UK, recognises certain special needs. HMRC provides tax deductions and allowances for being old and married, for being old and divorced, and for being blind. These are well targeted allowances that are deliberately not intended for younger and sighted people.

However, none of these special needs is more generously provided with tax deductions and allowances than the special need of “being rich”. Nor are any other deductions nor allowances more ruthlessly and meticulously targeted to ensure the "not being rich" can benefit from them. These allowances for "being rich" are known collectively as "tax avoidance". Accountants will rush to tell you tax avoidance is quite legal, so long as you have the glitz to persuade a bank to lend you millions of gilts for a few days, or find someone to trade offshore dividends on your behalf, or tuck away a 'sideways loss' for a rainy taxy day.  However, as the litany of rich celebrities dodging taxes to fund their special need of "being rich" continues, it is easy to forget how extremely expensive it is to be poor. The fact is, the poor pay higher prices for the same goods and services than averagely and better off people. So, for the purposes of this post, let's lay off the poor rich and focus on the poor poor.

Office of National Statistics Figures

We have pointed out in an earlier post that companies have good reason to rip off the poor. The reason is, in the words of Slick Willie Sutton the bank robber, (and perhaps a little surprisingly) "because that's where the money is". The rich have the wealth (which is why they are so against a wealth tax), but while they may live in it, sail it, eat off it, look at it, or just horde it, they rarely spend it. The actual flow of cash mainly runs through the hands of poor and ordinary people. Why is this? Because there are so many more ordinary people, and they have to spend all the cash they have to pay their bills. By the way, this is another reason why trying to grow the economy by giving more money to the rich is so grimly fatuous - the rich don't go out and spend it, they just stack it away. While giving more to the poor - improved minimum wage, lower VAT, or even (say it softly) an increase in benefits - would see the cash circulate back into the economy and generate real spending and growth.

As a direct result of these rip-offs it becomes exceedingly expensive to be poor. The charities Save the Children and Family Action produced reports in 2010 and 2011 detailing how the poor pay more for the same stuff. One of the regrets we at Ripped-Off Britons have is these reports appear in a flare of publicity and are then forgotten. So we reproduce extracts here, which we will retweet lest we forget.

It is a shocking injustice that the poorest families in the UK pay higher prices than better-off families for basic necessities like gas, electricity and banking. The costs that poor families bear in acquiring cash and credit, and in purchasing goods and services, can amount to a ‘poverty premium’ of around £1,000 – 9 per cent of the disposable income of an average-size family.

Policy-makers expend considerable amounts of time and energy exploring the most effective ways to get more money into the pockets of low-income families.Yet they spend little time considering the unequal way in which that money comes out of those families’ pockets. We know that when poor families’ incomes rise, parents spend those gains on essentials for themselves and their children. Imagine the gains in terms of basic necessities, clothes, food, social activities, savings and many other areas that an extra £1,000 a year would bring to poor families. 

In a separate report from 2010, Family Action investigated the cost of "christmas club" hampers, comparing club prices with the price of the same goods bought from Tescos. These savings clubs take what most of us would consider small amounts from their customers each week or month over the year and deliver a hamper in time for Christmas. (All prices are from Christmas 2010, when the Family Action report was written)

Politicians of all parties assiduously court the wealthy, providing favours that help them get anything; from government contracts to handshakes from well connected deal-makers, to knighthoods. The wealthy are the source of funding for the party as well as supplementary jobs as consultants and non-executive directorships for the MPs to top-up their parliamentary pay. Not to mention building relationships while successful that may provide rewarding employment after their parliamentary careers end, as they all do, in failure. Politicians are understandably wary of biting the hands they hope will feed them by raising and dealing with these issues.

However they, as well as us ripped-off Britons, should not forget the wealthy don’t patronise politicians because they smell so good. They do it for political favours, which can only really be delivered when in power. And to get into power politicians need the votes of us ripped-off Britons - 90% of whom have been stagnating for decades through Labour and Tory governments alike.

http://g-mond.parisschoolofeconomics.eu/topincomes/#Database:

To support their campaigns please visit

www.savethechildren.org.uk/endchildpoverty 

and www.family-action.org.uk

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