Rip-off News round-up. Our pick of the last week's media (Thu 31st January)

OFT clears oil firms on petrol prices, despite experts' claims that they quickly rise but fall too slowly
Competition is ‘working well’ at the petrol pump and price rises over the past decade are largely due to increases in tax and the cost of crude oil - and not because of sneaky retailers cashing in - the Office of Fair Trading (OFT) reported this morning. It says it found ‘very limited’ evidence pump prices rise quickly when wholesale prices go up but fall more slowly when it drops. As a result, it will not be launching a full investigation into the market. The watchdog failed to implement a measure called for by motoring organisations that would have seen wholesale petrol prices published, so that customers could easily see whether the price at the pump was fairly rising and falling. DAILY MAIL

Britain’s biggest multi-national companies oppose Cameron's call for tax disclosure 
Most FTSE100 businesses have warned David Cameron to abandon plans which will expose corporate tax dodging. They say it threatens to undermine the economic recovery. The PM said that firms have a moral duty to pay tax - in comments which angered global business leaders meeting in Davos, Switzerland. TELEGRAPH
(“It’s that word tax that makes us furious. And moral. And duty and pay, for that matter,” said our global business leader insider.)

Minister says UK pension charges pass the 'baked bean test' despite them being among the highest in Europe

Pensions minister Steve Webb says there is no need for price controls in the "vibrant" pensions market. Asked about the possibility of a cap on charges,  he said: "Why doesn't the Government set a price cap on a tin of baked beans? We don't need to because there's a vibrant market, people have lots of choice." Many workers and employers with little previous experience of pension saving will invest in poor value deals, say critics. TELEGRAPH

(Do you really think the pensions market is fine, minister? Or is that just the baked beans talking?...)

HMRC helpline keeps 16 million people hanging on the telephone, and paying for it

MPs attack HMRC for keeping helpline callers on hold for more than five minutes. Last year HMRC’s 0845 helpline cost callers £136m through delays in answering calls. HMRC has promised to move to a cheaper number. GUARDIAN

(We reckon HMRC should start using an offshore phone provider. They are always the cheapest, for reasons HMRC understand better than any of us.)

Libor rigging: US regulators may chase RBS on criminal charges

RBS is already expected to be fined £500m by US and UK regulators for its role in the rigging of the $300tn Libor market. Swiss bank UBS was fined £940m and pleaded guilty to felony. Despite the imminent fine, RBS’s bonus payout may still exceed £250m. Unions warn that paying the RBS fine may result in the bank cutting ordinary bank jobs without penalising the “fat cats.” GUARDIAN

1,000 postgraduates a year 'too poor' to take up Oxford place
About 1,000 students a year turn down a postgraduate place won at Oxford on academic merit because of the financial demands of study there, university figures suggest. This amounts to 15% of the 7,500 students offered a place. It only makes financial sense to take on student debt if you are sure you can get a good enough job to repay it. But in the current climate around 40% of university leavers are in non-graduate jobs two years after graduation. GUARDIAN
(Too poor, or too smart?...)

Speaker John Bercow tells David Cameron not to block MP salary rise to £86,000
John Bercow, the Commons Speaker, has warned David Cameron not to “appease” public opinion by blocking large rises in backbench MPs’ “ordinary” salaries. Submissions to the Parliamentary review by MPs suggest that members believe their salaries should rise by a third to more than £86,000. Bercow said that MPs “resent” moves by independently wealthy party leaders like the Prime Minister to prevent increases in their pay. TELEGRAPH
(“Cameron is totally blind to the hypocrisy of it all,” said Bercow, totally blind to the hypocrisy of it all.)

Ministers accused of “bending” the new high-speed rail line to avoid George Osborne’s affluent constituency

The Government faced claims of hypocrisy after it emerged that the northern section of the new HS2 rail network would include a £600 million “detour” around parts of the Chancellor’s seat of Tatton in Cheshire. TELEGRAPH
(...and a £600m “detour” around all principles of fairness and justice.)

Bank of England’s £375bn QE a 'monumental mistake', pensions experts say

A committee of MPs were told Quantitative Easing has reduced the value of pensions. This forced people to put more in their pension pots, thus squeezing their spending, and forced companies to divert cash to pension funds rather than investing. Also, by pumping money into the system, QE also drives up prices, which hits consumer demand. The Bank of England has created £375bn (Quantitative Easing) to help banks lend over the credit-crunch. GUARDIAN

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Government 'Buddy' scheme to give more multinationals access to ministers

The government officially allows big corporates to meet ministers "to improve coordination." The dates of the meetings are publicly available, but what was said is not! Don't worry, Cameron will save us...

SOURCE GUARDIAN 'Buddy' scheme to give more multinationals access to ministers
The controversial "strategic relations" initiative was launched in July 2011, giving 38 companies, including oil, telecoms and pharmaceutical giants, a direct line to ministers and officials. That number will now be extended to 80. The 38 companies – more than two-thirds of which are based overseas – have collectively had 698 face-to-face meetings with ministers under the current government, prompting accusations of an over-cosy relationship between corporations and ministers. The full degree of contact between the chosen companies and the government is not known as the content of telephone calls, emails, and meetings with officials are not recorded.

OUR RELATED STORIES:

Nothing is done to stop the "Big 4" accountancy firms that make tax dodging happen

Are MPs taking revenge for being caught? MP Expenses Committee disbanded and replaced

Read More

As Osborne's Austerity (Os-terity) pushed Britain towards a triple-dip recession, differing unemployment rates around Britain show we are not all in it together.

As official GDP data showed Britain flirting with a 'triple dip recession', we take yet another look at whether we are really 'all in this together'. 

For this post our focus is on how the Tory party's policy of 'austerity' is reflected in the unemployment rates in parliamentary constituencies around the country. Data from a report by the House of Commons Library, released in January 2013, shows that vast swathes of the country have low unemployment. Austerity is not so hard if you have a job. A wage freeze is far less austere than moving from a salary to the dole. So with all the vast swathes of low unemployment, where is the high unemployment and who is actually paying the price of austerity?

The data in this report reveals the unemployment rates in each parliamentary constituency. This shows just 10 Tory MPs and 4 Lib-Dem MPs have unemployment rates higher than 5%. While the unemployment rate is higher than 5% in 137 Labour MPs' constituencies.

(In the graph above,for example, the 11th Tory constituency has an unemployment rate of 4.8%)

The talk of 'one nation' being 'in it together', combined with the reality that the debts of the country are being paid by those with the least, piles injury on insult.

The Insult: 

Claims that our financial services industry gave Britain a special economic boost, deserving massive pay&bonuses, even more massive subsidy, and inane regulation, are simply not true.

Comparing the GDPs of France, Italy, and Germany (who did not proudly boast a bloated financial sector) with the UK shows that far from the Financial Services industry powering Britain ahead of our competitors, we just meandered along with the rest of them until disaster came. 

What our dependence on banks meant, together with the hollowing out of our other industries, was that when the crash came we crashed faster and further and harder.

The Injury:

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

The benefits of the growth that did happen were not shared with 90% of Britons, whose incomes stagnated for two decades. These same Britons are now required to bear the brunt of austerity. So the wealthy, who took the lions' share during the good times, can have their taxes cut and avoid a new wealth tax. (It is worth noting that it was a Labour government in charge for over a decade starting in 1997 when the 90% were denied a share in the 'good times').

In truth 'austerity' is a wealth protection scheme, designed to avoid those who took wealth out during the reckless boom having to put it back during the ensuing crisis. Austerity means those who necked the champagne don't have to pick up the tab.

This policy of austerity is being inflicted by the Conservative party, who failed to win the last election having gained the votes of less than one in four registered voters. (The maths:  Conservative party took 36.1% of votes cast. Turnout in 2010 was 65.1% of voters.  Conservatives took 0.361 x 0.651 = 23.5% of registered voters, less than one in four).

The government survives because of the support of the Liberal-Democrats. If the Lib-Dems walk away then the government falls and an election will follow:

2010 UK Parliament Election Results http://en.wikipedia.org/wiki/File:Parliament2010UK.svg

Sadly, far from withdrawing support the Lib-Dems have played Mr.Christian to the Tory Captain Bligh of "Mutiny on the Bounty" legend (much maligned though Bligh was). "Mr.Christian" Lib-Dem ministers are sent out to apply austerity to the backs of ripped-off Britons, leaving their Tory masters in their cabins plotting their courses. With the stern earnestness of men on the verge of a panic attack Lib-Dems push austerity on television, radio, and all other public platforms. Their best defence for posterity will be that they didn't understand what they were saying. After all, they never expected to be in the front seat let alone the driving seat. They should take this rare opportunity in power to note they are not only by the steering wheel, but also the handbrake.

David Cameron does not have the power to dissolve Parliament even if he wanted to. The Queen has too much sense to use the power she has to dissolve Parliament. The only person who has what it takes to precipitate a new election is Nick Clegg.

Clegg certainly has the look of Mr.Christian about him. Of course, ejecting Captain Bligh didn't end well for the historical Mr.Christian either. While Bligh continued on with promotion, honours, and a governor's mansion.

Mr.Christian

Vice Admiral Bligh

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National lottery ticket price to double

Can KJ change Fee's mind?..

SOURCE GUARDIAN: National lottery ticket price to double
Camelot said the payout for the average Saturday jackpot would increase from about £4.1m to £5m. It defended the change, saying that charities, retailers selling tickets and government coffers would all benefit from the price rise. Around 60% of UK adults play the Lotto regularly, and annual sales across the lottery products account for more than £6bn annually. Charities and other good causes get 28% of lottery revenue, while 12% is paid to the Treasury. Small shops, which pocket 5% of sales, will also benefit. The lottery is a voluntary tax on low income households, say critics.

OUR RELATED STORIES

Parliament quietly ditches Financial Literacy in Schools bill

The IMF says it's time to end austerity strategy 

Read More

Rip-off News round-up. Our pick of the last week's media (Thu 24th January)

NHS staff crisis: Hospital pays £1,800 a day for agency nurse

The bill for temporary workers has risen by more than 20% in just one year, with private agencies receiving more than seven times the rate paid to nurses on the pay roll. The use of temporary staff has become endemic with almost every trust in the country now relying on private agencies to plug gaps in staffing. The total bill for temporary nurses is set to reach £450 million - a 21% rise on the previous year. Official figures show there are 6,000 fewer nurses working in the NHS since May 2010. TELEGRAPH

(...and what are the odds that, miraculously, there are 6,000 more nurses working for agencies!)

'Buddy' scheme to give more multinationals access to ministers

The controversial "strategic relations" initiative was launched in July 2011, giving 38 companies, including oil, telecoms and pharmaceutical giants, a direct line to ministers and officials. That number will now be extended to 80. The 38 companies – more than two-thirds of which are based overseas – have collectively had 698 face-to-face meetings with ministers under the current government, prompting accusations of an over-cosy relationship between corporations and ministers. The full degree of contact between the chosen companies and the government is not known as the content of telephone calls, emails, and meetings with officials are not recorded. GUARDIAN

("Why 'Buddy'? An alternative word was put forward but did not survive a successful court challenge for defamation by the Association of British Prostitutes," said our government insider.)

Gas market whistleblower who accused firms of price fixing is sacked

Seth Freedman, the whistleblower at the centre of energy market manipulation allegations, has been sacked by his price reporting agency, ICIS Heren. Freedman's concerns about unusual movements in the wholesale gas trade triggered investigations by the regulators. ICIS said it removed him because he had lost the trust of price reporting agencies (PRAs) and his colleagues. Freedman said his "victimisation" may make other ICIS staff too scared to speak up. GUARDIAN

(“Don’t worry. We have now made it clear to all staff that their concerns about market manipulation will be dealt with swiftly and effectively. A P45 can usually be issued in minutes,” said our ICIS insider.)

Watchdog gives banks final warning over staff incentives that lead to mis-selling

20 out of the 22 firms the FSA investigated had features that increased the risk of mis-selling. Managers face a conflict of interest as they have to oversee standards, yet get rewarded if sales increase. Despite the failings it has found, the FSA said it does not want to ban incentive schemes. DAILY MAIL

(“You simply cannot protect customers if you are always rewarded for making the banks more money. And I should know,” said former FSA boss Sir Hector Sants, who got his knighthood and a £3m job at Barclays within months of leaving the utterly useless FSA.)

FSA snubs banks' call for PPI deadline
The banks want a cut off date for claims on their mis-sold Payment Protection Insurance. But the financial regulator said it will not put a deadline without a full public inquiry. TELEGRAPH

IRSA rate swap scandal: mis-selling bill to top £1.5bn
The cost of compensating up to 40,000 small businesses for the mis-selling of complex derivative products is to double to more than £1.5bn across the UK's major banks. TELEGRAPH

Cuts in food safety checks mean that horsemeat scandal could happen again

Local authorities are having to make cuts to essential services, and find innovative ways of saving money. The number of public analyst laboratories has fallen from 31 in 2000 to 17 now, while the number of analysts themselves is down 61 to 32. Meanwhile, because of the discovery of traces of horse meat, an estimated 10m budget beefburgers have been removed from supermarket shelves. INDEPENDENT
(...and what are the odds that, because of tightening local authority budgets, 10m budget beefburgers have mysteriously appeared in school dinners?)

Pension firms hide how charges eat away at your pension

Pension companies are not obliged to show these charges in a standardised form. Instead, a percentage fee, rather than the exact cost in pounds and pence, is shown. This makes it very difficult to understand how much of your pension is disappearing in charges. A pension fund worth almost £250,000 with no charges would be reduced to just £174,556, after 40-years, with a 1.5pc annual charge. By increasing the annual charge to 2.5pc, this reduces the value of the fund to £139,986. TELEGRAPH

HMV will accept gift vouchers after all

Deloitte, the administrators of the failed HMV, have said that the music and DVD retailer will start accepting £7m of unspent gift vouchers. Deloitte had previously said that gift cards could not be redeemed in stores, leading to anger among many customers. HMV were accused of selling vouchers over Christmas to tens of thousands, knowing that bankruptcy was around the corner. BBC NEWS

National lottery ticket price to double

Camelot said the payout for the average Saturday jackpot would increase from about £4.1m to £5m. It defended the change, saying that charities, retailers selling tickets and government coffers would all benefit from the price rise. Around 60% of UK adults play the Lotto regularly, and annual sales across the lottery products account for more than £6bn annually. Charities and other good causes get 28% of lottery revenue, while 12% is paid to the Treasury. Small shops, which pocket 5% of sales, will also benefit. The lottery is a voluntary tax on low income households, say critics. GUARDIAN
(“…and a 1 in 14 million chance of hitting the jackpot is the best investment return for any saver on a British high street since 2008,” say Camelot, accurately.)

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Poll shows 58% think new benefits cap is unfair

Surely Cameron can commission another poll giving a different answer...

SOURCE GUARDIAN: ICM asked voters to choose between two views of the chancellor's headline proposal for a 1% cap on benefit rises. Just 36% agreed with the coalition's argument that "squeezing benefits is fair, seeing as wages for workers are also being squeezed", whereas 58% inclined to the case made by the opposition that squeezing benefits and tax credits "is unfair, seeing as it will hurt the vulnerable, including many who people who do work hard for low pay".



OUR RELATED STORIES

Are the unemployed (a) Skivers and (b) A cause of the ballooning benefits bill? ONS and DWP figures show they are not

Cutting benefits will push the work-shy into employment? Actually benefits subsidise the low wages of millions of working Britons

Read More

How did the FSA miss this? 5 years of "extensive and widespread" misconduct across three continents!

You can tell how much miscreants respect authority by the effort they put in to hiding their misbehaviour. Shoplifters in a well guarded store take great care, preparing themselves with voluminous bags and outer-wear providing space to stuff misappropriated stuff. British prisoners of war took the most elaborate precautions to avoid the notice of their jailers when trying to dig themselves out of prison camps. 

On the other hand, where the guardians are either incompetent, complicit, don't actually give a damn, or have been ordered to turn a blind eye, the miscreants have no need to take precautions.


The contempt the Financial Services Authority (FSA) is held in by those they pretend authority over is evident from the stunning openness of their wards' frauds. To know this you have to look no further than the FSA's own reports, such as that into LIBOR rigging by the bank UBS. Undisguised extensive, widespread, open and shamelessly documented rigging occurred over several years and several continents before the FSA's pips squeaked. The traders made scant effort to disguise their misconduct which the FSA describes as "extensive and widespread" involving "At least 2,000 requests for inappropriate submissions [that] were documented – an unquantifiable number of oral requests", and occurring in "various locations around the world including Japan, Switzerland, the UK and the USA".


The financial services industry contempt for the FSA is well founded:
a) They know they are unlikely to be caught.

b) Even if they are caught, the fines - even those that run into hundreds of millions of pounds - are a small fraction of profits.

c) Fines are paid by shareholders. The individual staff who perpetrate the misdeeds hardly ever pay any meaningful penalty.


To detail the brazen behaviour banks get up to, contemptuous of their regulators, we need do little more than quote directly from the FSA:

"Between 1 January 2005 to 31 December 2010 the misconduct included:

• UBS’s traders routinely making requests to the individuals at UBS responsible for determining its LIBOR and EURIBOR submissions to adjust their submissions to benefit the traders’ trading positions. 
• Giving the roles of determining its LIBOR and EURIBOR submissions to traders whose positions made a profit or loss depending on the LIBOR / EURIBOR fixes. This combination of roles was a fundamental flaw in organisational structure given the inherent conflict of interest between these two roles. 
• Colluding with interdealer brokers in co-ordinated attempts to influence Japanese Yen (JPY) LIBOR submissions made by other panel banks.  Corrupt brokerage payments were made to reward brokers for their efforts to manipulate the LIBOR submissions of panel banks. 
• Colluding with individuals at other panel banks to get them to make JPY LIBOR submissions that benefited UBS’s trading positions. 
• Adopting LIBOR submissions directives whose primary purpose was to protect the bank’s reputation by avoiding negative media attention about its submissions and speculation about its creditworthiness.  

The misconduct was extensive and widespread.  At least 2,000 requests for inappropriate submissions were documented – an unquantifiable number of oral requests, which by their nature would not be documented, were also made.  Manipulation was also discussed in internal open chat forums and group emails, and was widely known.  At least 45 individuals including traders, managers and senior managers were involved in, or aware of, the practice of attempting to influence submissions.  The routine and widespread manipulation of the submissions was not detected by Compliance or by Group Internal Audit, which undertook five audits of the relevant business area during the relevant period.

Even when the trading and submitting roles were split in Autumn 2009, UBS’s systems and controls did not prevent traders from camouflaging their requests as “market colour”.   Given the widespread and routine nature of the requests to change LIBOR and EURIBOR and the nature of the control failures, the FSA found that every LIBOR and EURIBOR submission, in currencies and tenors in which UBS traded during the relevant period, was at risk of having been improperly influenced to benefit derivatives trading positions.

The misconduct occurred in various locations around the world including Japan, Switzerland, the UK and the USA. "

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Financial Literacy in Schools private member's bill bites the dust

The 18th of January 2013 was the date for the second reading of the Financial Literacy in Schools bill. Being greatly interested in the progress of this bill we invested in a packet of ginger snaps and settled down with a mug of Tetley's to watch Parliament TV.

As it turned out this eagerly awaited debate lasted a minute (at 14.02) and would fit into a tweet. We therefore reproduce the debate in its entirety:

"Financial Literacy (Curriculum) Bill, Second Reading"

"Not moved"

And so this much heralded legislation seems to have faded away. The time, 14.02 (two minutes past two in the afternoon) is important, as House rules state:

"Note: If proceedings on the first Bill end before 2.30 pm, the second Bill and, possibly, subsequent Bills may be debated in the time remaining. After 2.30 pm, only those Bills which are unopposed may make further progress."

Being prior to 2.30pm, this bill had a right to be read even if it was opposed. So why wasn't it read?

The bill's sponsor, the Labour MP Thomas Docherty, said the reason for not debating this bill was the filibustering time wasting of the Conservative MPs, the members for Shipley (Philip Davies), Plymouth (Oliver Colville), Rosendale (Jake Berry) and Bury (David Nuttall) who droned on about a bill relating to the Antarctic.

"I am sure many people are disappointed that we have not had the chance to debate energy tariffs or financial literacy. I hope that those Members who are now slinking out of the Chamber, such as the hon. Members for Shipley (Philip Davies), for Plymouth, Sutton and Devonport (Oliver Colvile) and for Rossendale and Darwen (Jake Berry), will reflect, particularly in this weather, on the fact that we did not have the opportunity to discuss a measure that would help thousands of their constituents because they filibustered it out. I hope that their voters are made aware of that.  On a more positive note, I thank the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Newbury (Richard Benyon), for the productive way in which his Department has engaged with this [Wild Animals in Circuses] Bill."

Thomas Docherty MP, 2.02pm Friday 18th January 2013

MPs of all complexion suffer from chronic verbal diarrhoea. The question that occurs to us is why Docherty decided he didn't have time to discuss Financial Literacy, and then went on to spend more than half an hour on his next bill concerning "Wild Animals in Circuses", to ban the use of wild animals in circuses.

Now we at Ripped-Off Britons have as soft a spot as the next man for elephants and the like. But it seemed a strange choice of priorities in this current era of rampant financial scams by the nations banks, insurers and investment managers. We would have thought the children would have come first.

Perhaps someone could enlighten us? Please do let us know (email us at financialeducation@rippedoffbritons.com)

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Tesco beef burgers found to contain 29% horse meat

Chris is suspicious...

SOURCE TELEGRAPH: Tesco beef burgers found to contain 29% horse meat
Horse meat has been found in burgers on sale in British supermarkets. Tests on beef products sold in Tesco, Lidl, Aldi, Iceland and Dunnes Stores uncovered low levels of the animal’s DNA.

OUR RELATED STORIES

Supermarket sales tactics may be rip-offs, but they are legal says the Office of Fair Trading

“Consumer Protection from Unfair Trading Regulations” - the law that legalises ripping-off in Britain

Read More

Rip-off News round-up. Our pick of the last week's media (Thu 17th January)

Seven in ten MPs on £65k believe they are underpaid
A majority of MPs said they deserve a 32% pay increase to £86,250. The survey by the Parliamentary Standards Authority (Ipsa) also found that more than a third of MPs believe they should keep generous final salary pensions. Unlike in other parts of the public sector, Ipsa is not proposing to introduce performance-related pay, regional pay or to take outside earnings into account. Facing accusations of hypocrisy, the Ipsa chairman Sir Ian Kennedy said his consultation was open to the public “and I would urge people to get involved in this debate.” TELEGRAPH and IPSA
(...Get involved in the debate? Isn’t that an incitement to riot? Someone call the police!)

Seventeen NHS hospitals have dangerously low numbers of nurses

The warning coincides with an imminent report on the scandal at Stafford Hospital, where up to 1,200 patients died needlessly while managers slashed their budgets and staff numbers in pursuit of NHS foundation trust status. At Queen’s Hospital in Romford, Essex, women in labour were exposed to unnecessary risk because there were not enough staff. At Milton Keynes, patients with dementia were left unable to reach call bells, tables, drinks and warm clothing. TELEGRAPH

(...and in Whitehall ministers with blind right-wing myopia were left unable to see the storm brewing among an angry electorate who consider the NHS our most treasured institution...)

Taxpayer-owned RBS to be fined for rigging Libor market 
In 2012 banks were caught rigging Libor, affecting $300 trillion of trades worldwide, causing losses for ordinary savers and investors. The RBS fine is expected to exceed the £290m fine paid by Barclays but not the £940m fine paid by UBS. It is not clear whether bankers will lose their bonuses. BBC NEWS
(“We’re now all in a panic and have truly learnt our lesson,” said our RBS insider, barely audible above the sound of wrists being slapped...)

Major defence projects are hit by delays and £6.6bn overspend

Despite last year’s promise by the MoD that costs are under control, the National Audit Office found costs of the 16 largest projects had risen by £468m and slipped in timescale by 11 years. Overall, project costs have risen by £6.6bn. Delays to a £32m Falcon communications system for Afghanistan mean it will not now be ready until after British troops have withdrawn in 2014. Defence Secretary Philip Hammond compared improving efficiency at the MoD to "turning around a super tanker," with fuel inflation and other factors outside of the department's control responsible for three-quarters of the cost increase over the past year. BBC NEWS

(...the ‘super tanker’ of other factors being the infamously corrupt deals with the military-industrial complex and foreign governments, perhaps?..)

Tesco beef burgers found to contain 29% horse meat
Horse meat has been found in burgers on sale in British supermarkets. Tests on beef products sold in Tesco, Lidl, Aldi, Iceland and Dunnes Stores uncovered low levels of the animal’s DNA. TELEGRAPH
(And that’s why I always buy my burgers from Fortnum & Masons. They're contaminated with veal, venison and sometimes lobster. Much better...)

Bank account fees 'are next PPI scandal': Millions could be entitled to compensation after mis-selling
Around a third of customers with a packaged account, which cost up to £300 a year, cannot use benefits such as travel insurance, mobile phone cover and breakdown policies that come as part of the deal. Pensioners discoved they are excluded from the travel cover, and drivers found they have simply duplicated insurance they already have. Cancer sufferers were unable to claim on insurance because the key exclusions that rule out people with health problems have not been explained. DAILY MAIL

Pension reform to net Treasury £9bn
Reform of the basic state pension will yield the Treasury an annual windfall of more than £9bn from 2017 as the government phases out reliefs to employers that were aimed at encouraging more generous private provision. FINANCIAL TIMES

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High street banks teach financial education in schools

It could be formalised by September 2014, but it already happens...

SOURCE TELEGRAPH  Disgraced high street banks 'to be welcomed into the classroom to teach children lessons in financial education'
Banks included Royal Bank of Scotland, Barclays and Lloyds may be given permission to use branded material and make presentations in English schools from September 2014. Lessons would include calculating the cost of a loan. Teaching unions and campaigners have warned that schools would need to ensure banks did not treat lessons as potential marketing exercises. Some banks have already been providing teaching materials to schools on a more informal basis and deny it is a commercial exercise. Staff from RBS and Natwest have given lessons in about 1,200 secondary schools over the past 18 years as part of their MoneySense for Schools programme.

OUR RELATED STORIES:

Compulsory Financial Education in Schools - can the government continue to dodge its responsibility?

Financial Education in Schools - with predatory companies and pusillanimous regulators, we must educate the children

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Liebrary: Are the unemployed (a) Skivers and (b) A cause of the ballooning benefits bill? ONS and DWP figures show they are neither.

We are told not to be harsh on bankers because most bankers are not reckless rogues (just the ones in the board rooms and on trading desks). Having crashed the World economy in 2008, the bankers promised to behave better, lend more to businesses, and accept new rules to reduce the risk of them going bust. They didn't behave better (e.g. LIBOR rigging); they screwed businesses (e.g. IRSA scams); and now they have wriggled out of the tighter rules (generous bank lobbying has resulted in liquidity requirements being greatly relaxed). Banking robbers dodging weak kneed regulators: not much of a surprise here.

We are told not to despise MPs because some of them didn't fiddle their expenses. They have continued to fiddle (e.g. they can't claim the cost of mortgages on their flats anymore so they swap them and claim rent that they pay to one another); in December 2011 they argued for an extra £20k in allowances; and in January 2013 they dumped their expenses regulators. In a survey of MPs done by IPSA and published in January 2013 "69% of MPs questioned think they are underpaid and, on average, they suggest a MPs’ salary should be £86,250.", a 32% payrise. Pompous MPs patiently manoeuvring for a big payday: not much of a surprise here.

With all this forgiveness for greedy bankers and grasping MPs, we are told it is necessary to punish the unemployed because while the rest of us trek to work of a morning the sofa-surfing-skivers are eating hot buttered toast dunked in cheap gin.

The debate about benefits cuts has been focussed on the "Strivers and Skivers". With the "Skivers" allegedly pocketing vast amounts of taxpayers' money to fund their skiving. The government has decided that by getting the money out of the skivers, they can afford to cut the top rate of tax (already done) and not impose a wealth tax (determinedly not imposed). 

The lie is exposed by figures from the Office of National Statistics and the Department of Works and Pensions that show less than 1% of all benefits spending is paid to possible "Skivers". And yet it is the whipped up contempt for the skivers that is used as a smokescreen to attack all benefits and deflect the public's attention from handouts to the very wealthiest.

So, lets look at the figures:

a) Are the unemployed "Skivers"? 
Answer: The Office of National Statistics figures on duration of unemployment shows that fewer than 1 in 5 claimants have been unemployed for more than 24 months. 7 in 10 have been unemployed for less than a year. 

Duration of unemployment jumped after 2008, due to the banker induced crisis. Skiving among the unemployed no doubt happens. But no more than skiving among the rest of us. And at work we can have free cups of tea and colleagues to chat with.

b) Is Job Seeker's Allowance or is Incapacity Benefit a significant part of the overall benefits bill?

Answer: The Department of Works and Pensions figures show that Job Seeker's Allowance is about 3.5% and Incapacity Benefit is about 2% of the total expenditure on benefits in 2011/12.

So Incapacity Benefit plus Jobseeker's Allowance added together make up 5% of the benefits bill.  And even making the ridiculous and offensive assumption that anyone unemployed for over 24 months is "skiving", even then just 1% of benefits go to pay "skivers" to be unemployed. And yet "skiving" is the incitement to justify cutting benefits. Pay for the deficit, created by reckless bankers, by making cuts to the poor. In the words of the Governor of the Bank of England, Mervyn King:

"The price of this financial crisis is being borne by people who absolutely did not cause it…..Now is the period when the cost is being paid, I'm surprised that the degree of public anger has not been greater than it has."

Mervyn King, Governor of the Bank of England, in evidence to the UK Parliament’s Treasury Select Committee, March 2011.

Although greedy bankers and incompetent regulators crashed the World economy we are told to go easy on them. Although MPs disgraced themselves with fraudulent expenses and the subsequent failed cover-up we are still expected to regard them as "honourable" and "right honourable". Although we are required to forgive the bankers and politicians, the 1% of benefits going to skivers is an excuse to attack all benefits!

The economic crisis is being used as a smokescreen to erode the economic position of the 99% increasing the share of the 1%. Employment rights; pension rights; right to free health and education; pay levels... The debt levels of this country are historically unremarkable. The debt could be paid off by a tax on the wealth that accrued to the 1% during the various booms. 

(ONS data for "Breakdown of aggregate wealth" available here and here).

Austerity is a smokescreen to erode the share of the nation's wealth of all us ripped-off Britons.

With the attack on benefits the government is following the advice on eating whales: do it one bite at a time.

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The predatory practices of major accountancy firms

Despite the evidence of fraudulent schemes, no firm has ever been disciplined by any professional accountancy body
By Prem Sikka, 
Professor of Accounting, University of Essex 

George Osborne's attack on organised tax avoidance is a huge disappointment. Her Majesty's Revenue and Customs (HMRC) is investigating some 41,000 tax avoidance schemes, but there is still no investigation of the industry that designs and markets aggressive tax avoidance schemes.

In contrast to the UK, reports by various US Senate committees have been critical of the predatory practices of the major accountancy firms (for examples, see here, here and here). KPMG was fined $456m(£284m) for facilitating tax evasion and a number of its former personnel have been sent to prison, as have some of the former personnel of Ernst & Young.

Now the public accounts committee (PAC) chair Margaret Hodge has PricewaterhouseCoopers PwC, Ernst & Young, KPMG and Deloitte in her sights. The PAC should investigate the role of these firms in organised tax avoidance. An earlier internal HMRC study estimated that these four firms "were behind almost half of all known avoidance schemes".

Some of the evidence about their predatory practices is on the public record. In November 2012, a tax tribunal threw out an Ernst & Young inspired scheme that enabled Iliffe News and Media to create a new asset – newspaper mastheads. This asset was created for a nominal sum of £1. It was leased back to its subsidiaries who paid the parent company over £51m in royalties and thus reported lower profits. No cash left the group but the companies now sought tax relief on royalty payments to reduce their corporation tax bill. The company's board minutes stated that Ernst & Young, who audited the company's financial statements as well, confirmed that the use of the scheme would also "significantly lessen the transparency of reported results".

PricewaterhouseCoopers devised a scheme to enable a rich entrepreneur to avoid capital gains tax on profits of £10.7m. A tax tribunal heard that the scheme involved a series of circular and self-cancelling transactions resulting in the creation of assets and disposals which somehow managed to generate a loss of £11m and thus cancelled out the profit. The scheme was thrown out by a tribunal, and in August 2012 by the court of appeal. The presiding judge said that "there was no asset and no disposal. There was no real loss". This scheme was sold to 200 entrepreneurs and if successful, would have enabled them to avoid capital gains tax on profits of around £1bn.

KPMG devised a scheme for an amusement arcade company to avoid paying VAT on its operations. The scheme was not developed in response to any request from the company; KPMG cold called the company. Its presentations were subject to a confidentiality undertaking being given. A 16-page report cited by the tribunal said that by using Channel Islands entities, the company's profits could improve by £4.2mn. KPMG charged £75,000 plus VAT for an evaluation report and counsel's opinion, and a fee of 25% of the first year's VAT avoided, 15% of the second and 5% of the next three year's VAT avoided. KPMG felt that the UK tax authorities would regard the scheme as "unacceptable tax avoidance" and would challenge the arrangements, but still sold it. The case subsequently went to the high court and the European court of justice and the scheme was quashed.

We are all suffering from the bankers' follies. But Deloitte devised a scheme to enable bankers to avoid income tax and national insurance contributions on £91m of bonuses. More than 300 bankers participated in the scheme, which operated through a Cayman Islands-registered investment vehicle. A tax tribunal threw out the scheme and the presiding judge said that "the scheme as a whole, and each aspect of it, was created and coordinated purely for tax avoidance purposes".

The above only provides a tiny glimpse of the predatory practices of major accountancy firms. They create sham transactions, phoney losses and phantom assets to enable their clients to dodge taxes. Despite the evidence, no accountancy firm has ever been disciplined by any professional accountancy body. Despite spending millions of pounds to quash predatory schemes, the UK Treasury has never sought to recover the legal costs from the promoters of the schemes. Instead, the big accountancy firms continue to receive taxpayer funded contracts.

No government will be able to effectively tackle tax avoidance without shackling the designers and enablers. It is hoped that the public accounts committee will investigate the role of the big accountancy firms in tax avoidance.

This article was first published in the Guardian.



For those of you interested in further details of mischief by the "big four", we recommend you read this paper by Professor Sikka and Austin Mitchell MP titled "The Pin Striped Mafia: How Accountancy Firms Destroy Societies".

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Probation service 'revolution' means wholesale privatisation

KJ, Fee and Chris wonder what will happen if G4S take over...

SOURCE: GUARDIAN Probation service 'revolution' means wholesale privatisation
The justice secretary, Chris Grayling, wants the wholesale outsourcing of the probation service. Private companies and voluntary sector organisations will take over the rehabilitation of the majority of offenders by 2015. He denied that it was a quick-fix to save money. The public probation service will be scaled back to deal with only with the most dangerous offenders. The majority of services will be contracted out on a payment-by-result basis. “It creates a world where innovation will flourish,” said Grayling.

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