Sir Winston Churchill to be the next face on the five pound note

The Governor of the Bank of England, Mervyn King, shows the design to Cameron...

SOURCE INDEPENDENT: Sir Winston Churchill to replace Elizabeth Fry on the five pound note

GUARDIAN: Budget 2013: George Osborne concedes lack of progress in cutting deficit
Chancellor, who halved growth forecast to 0.6%, refuses to agree with OBR that his plan to cut borrowing has 'stalled'

OUR RELATED STORIES:

The IMF calls for UK to end austerity strategy

Outsourcing public services always saves money? False. Remember?!

History shows left/right policies grow the economic cake equally. The difference is only in how the cake is divided

Read More

Liebrary: Is Corporation Tax being cut to make us more competitive? Or is there another reason?

Adam Smith, the patron saint of capitalism, theorised that by everyone behaving selfishly the 'invisible hand' of all the selfishness will distribute the wealth of the nation as if "the earth had been divided into equal portions among all its inhabitants". Smith wrote: 

"The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society"

So why hasn't this beneficial outcome happened in Britain? Perhaps the flaw is it requires everyone to behave selfishly. Not just the wealthy, but also the rest of us. Just as the rich demand the gratification of their insatiable desires, for the 'invisible hand' to succeed ordinary Brits must demand as big a share as they can grab. Is it the fine balance of grasping that is the key? Is it all our fault, that although the wealthy are grabbing we aren't doing our bit?

During this time of 'austerity' appeals are made to the unselfishness of us Britons by political and business leaders claiming "we are all in this together". 

Are we ripped-off Britons too gullible, accepting wage freezes, benefits cuts, withdrawal of decent pensions, curtailment of employment rights? Governments have cleverly targeted minorities for their austere medicines. But as the scythe progressively cuts at one minority after another, we slowly realise that we are all minorities one way or the other: the disabled; the unemployed; the teachers; the public servants; the pensioners; the soldiers; the students; the nurses... 

The reality is those who make the appeals rely on the unselfishness of others as they selfishly feather their own nests. Cuts for all - with the biggest being tax cuts for companies, their top executives, and their owners.

For this post we focus on corporation tax cuts, and refer to some interesting graphs from the 2013 Budget Document:

a) Tax cuts announced in the Budget mean Britain will have the lowest corporation tax in the G7 and the G20. We now match those exemplary friends of business Saudi Arabia and Russia. Turkey, South Korea, Indonesia and China are also between us and the next G7 nation in terms of low corporation tax rates.

b) In terms of 'tax competitiveness', the loser by a long chalk is the USA. On the other hand, the UK in 2012 leaped down to the same depths as those paragons of tax probity Luxembourg and Switzerland.

The KPMG report states:

"This jump in the UK’s tax competitiveness is very encouraging. In KPMG’s view there are a number of factors. It is partly as a result of the reducing corporate tax rate. Respondents said this is the number one factor they look for. But reforms to the way in which foreign profits are taxed are also very important."

So let's take a glance at the way foreign profits are taxed: 
HMRC's own assessment of the changes is 

"The measure will remove some specific opportunities for corporation tax avoidance."

The accountancy firms beg to differ:

Grant Thornton: 

"Any company with overseas operations may now be able to pay lower rates of tax."

Baker Tilly: 

"Despite the Government’s best intentions to simplify the UK CFC [Controlled Foreign Companies] regime, there is now a myriad of exemptions from the new CFC rules"

So, how does economic growth compare between the scantily taxed UK and the USA where 'tax competiveness' has been thrown to the dogs? Is the US suffering? Actually we find the US outstripping the European economies. With Britain losing the wooden spoon for wretchedness only to Italy.

http://www.parliament.uk/briefing-papers/RP13-17

Of course, if the grotesque enrichment of the few actually did make us all richer perhaps that would be ok. So has the determined selfishness of the 1% of our fellow Brits made us all wealthier than ordinary citizens of other comparable nations? To know for sure take a look at our average (median) incomes, taken from the OECD's stats. 

OECD Statistics, http://stats.oecd.org/Index.aspx?DataSetCode=INEQUALITY#

For all the bluster of our leaders in politics and industry, claiming to have put the 'Great' back into Britain, we are actually poor relative to our peers.

It was Winston Churchill who advised never to waste a good crisis. You would expect Cameron and Osborne to be students of Churchill, so it is no surprise they are using the banking crisis as cover to roll back the share of the nation's wealth going to the 90%. 

We too should not forget Churchill's advice in regard to our youthful prime minister and chancellor:

“Show me a young Conservative and I'll show you someone with no heart "

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“Big 4” accountancy firms use knowledge gained from staff seconded to Treasury to help clients avoid taxes

"Scam": PricewaterhouseCoopers, Deloitte, Ernst & Young, KPGM... Fee tries to explain, but KJ and Chris get there in the end...

SOURCE: GUARDIAN
“Big 4” accountancy firms use knowledge gained from staff seconded to Treasury to help clients avoid taxes
In one example, KPMG advised on the development of "patent box" rules, and then issued marketing brochures titled "Patent box: what's in it for you." Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers have provided the government with expert accountants – free of charge - to help draw up tax laws. But the firms went on to advise multinationals and individuals on how to exploit loopholes in legislation they helped to write.

Read More

Rip-off News round-up. Our pick of the last week's media (Thu 25th April)

Famous academic paper used to make the case for austerity cuts contains major errors

Another surprise is that the mistakes, by two eminent Harvard professors, were spotted by a student. He'd spotted a basic error in the spreadsheet. The Harvard professors had accidentally only included 15 of the 20 countries under analysis in their key calculation (of average GDP growth in countries with high public debt). BBC NEWS
(“When the facts change, I change my mind. What do you do?” – JM Keynes c.1940. “I change the facts” – George Osborne c.2013.)

OFT accuses pharma giant GSK of 'pay-for-delay' deals to protect profits

GlaxoSmithKline has been accused of paying three other firms to delay the release of cheaper copies of its anti-depressant drug, Seroxat, in a bid to protect one of its best performing products. The introduction of cheaper “generic” medicines leads to strong competition on price, drives savings for the NHS, benefit patients and, ultimately, taxpayers. GSK said they had only just received the OFT objections and needed “time to carefully review it.”  TELEGRAPH
(“How much time? About the same time it takes to collect our paper trail of bribery, then shred it,” said our pharma insider…)

Big Six energy firms 'hide profits to dodge price controls' and cash in as household bills soar
Energy firms may be hiding their profits from energy regulator Ofgem and understating how much they make from consumers. Their accounting methods could be obscuring how much energy groups earn from UK households, making it harder for Ofgem to regulate pricing. It follows the revelation last week that many of the big six energy firms – RWE npower, ScottishPower, SSE, Eon, Centrica and EDF – pay little or no tax in Britain. DAILY MAIL

Shelter inundated as housing costs and benefit cuts bite
Housing benefit changes and soaring living costs mean growing numbers of tenants are struggling to pay bills. A series of welfare changes took effect this month, including a £26k/year cap on household benefit claims, begun in four London boroughs and to be implemented nationwide from 15 July. Also, the so-called bedroom tax, which will result in social housing tenants losing 14% of their housing benefit if they are deemed to have one spare bedroom, or 25% if they are deemed to have two.  GUARDIAN

Which? warns current energy strategy means households pay more
At present, 82% of people who believed they were on the cheapest energy tariff were paying more than they should. As part of a raft of proposals designed to protect consumers, the commons will this week hear proposals to help customers compare tariffs for energy, water and credit cards. But similar measures already aimed at the energy market were accused of adding to costs for consumers. One problem with energy billing formulae is the less you use, the more you pay per unit. DAILY MAIL
(“The less you use, the more you pay per unit?! A stupid formula for a scarce resource, and one that means poor low-use households subsidise the rich. Who’s keeping an eye on these cowboys?!” said OFGEM, without a hint of irony...)

Final salary pension members '£149,000' better off than those with the new standard schemes

Government figures show that the median worth of a final salary pension is £178,000 compared to just £29,000 for standard schemes. The wealth gap between those with gold-plated final salary pensions and the rest of the population is growing. 48% now have final salary “defined benefit” pensions, while 51% have the lower “defined contribution” pensions. However, the number with DC pensions is expected to rise sharply as more final salary schemes are closed: they will increase from 6.6m today to 16m by 2020. TELEGRAPH
(Forget about the threat to the status quo of UKIP. Wait until someone starts the UK Pensioners Party!)

Savers warned of expansion of £80bn "Funding for Lending"
The scheme promised to boost lending to smaller firms, but its main impact has been to reduce mortgage and savings rates. Critics say it's simply sustaining a property bubble and disincentivising savers: two causes of the credit crunch. Anna Bowes of the website Savingschampion.co.uk said: "Those who have done the right thing and prepared for their future by saving have been hammered and now there is little incentive for future generations to save; what message does this send out and what mess will we have to fix in years to come." TELEGRAPH

Read More

Every minister should spend a year living the life of the people their policies affect the most

Osborne and Cameron see the light?...

SOURCE BBC NEWS: Prime Minister defends plans to get trainee nurses to first work as healthcare assistants, washing and feeding patients. The Royal College of Nursing called the idea "stupid".

GUARDIAN: Iain Duncan Smith calls petition for him to live on £53 a week a stunt
Work and pensions secretary insists he has twice lived on breadline after online petition secures nearly 300,000 signatures

OUR RELATED STORIES:

What happened to all the Compassion?

Who should pay for the defence of the nation? The wealthiest, in the form of higher tax, or the poorest having their benefits cut?

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

Is the UK national debt at a historical high? Actually it's lower than it has been for most of the last 300 years

In numbers (+ a cool animation): Global tax evasion and money laundering

Read More

Liebrary: Are wages and employment rights being cut to make Britain more competitive? Or is there another reason?

Our leaders tell us we must be more competitive. So we can work ourselves out of the banker induced crisis. They tell us that to earn money to pay off the debts that came from the crisis we must compete with other countries to attract companies to Britain. 

To do this they tell us we must have a more flexible labour market (i.e. easier for companies to fire us), more competitive wage structure (i.e. pay us lower wages), and we must cut corporation tax for the companies (i.e. reduce companies' contribution to the public purse, paying for the NHS, schools, defence, roads and stuff like that).

So we thought we would look to see how uncompetitive we actually are in terms of wages, sackings, and tax at the moment:

a) Compare wages, and we see the UK average wage measured by the EU is well below other major European countries, and below the average of all the EU27 countries.

Statistics from the European Union, Europa.eu (As figures are in Euros, UK average wage rise is impacted by exchange rate of strengthening pound in this period)

b) Compare labour market flexibility measured by employment protection and how easy it is to fire us: We see UK worker protection is the joint second worst in the OECD:


c) Compare corporation tax rates, using this graphic produced by HMRC for the 2013 budget: We see corporation tax in 2015 will be well below that in the G7. Even before this cut, UK corporation tax is the lowest (main rate is 23% in 2013, and 21% in 2014).

The data shows we already have low wages, low employment protection, and low corporation tax. And yet Britain shows scant sign of recovery. Nothing but anaemic growth, with the worst recovery of any recession since 1920:




Fitch, the second agency to strip the UK of its AAA credit rating in April 2013, stated:  "The downgrade of the UK's sovereign ratings primarily reflects a weaker economic and fiscal outlook". If the government's objective is to strengthen our economy, then all the cuts in wages, benefits, pensions, employment rights, and even all the cuts in top rate income tax and corporation tax are not working. 

Is this failure incompetence? Or is it failure at all? Is it actually sublime competence, and we are simply missing the point?

We wonder whether all this cutting has nothing to do with encouraging more companies to come to Britain to employ us. And has everything to do with using the Banking Crisis as cover to further exclude 90% of Britons from a share of the national wealth. Austerity and competitiveness is being used to justify cuts to those not working - pensioners and the unemployed - and cuts to those who are working - salaries and in-work benefits. Keeping more for the top 1%. This rip-off has been happening to Ripped-Off Britons for decades (through both Labour and Tory led governments):

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

And the share of national income being paid to employees, as a percentage of GDP, has been dropping since the 1970's:

In spite of this fall in employees' share of GDP, leaving more with companies as profits, the government plans to virtually freeze the amount paid in corporation tax while increasing the amount paid in income taxes:



The government response to the stripping of our AAA credit rating by Fitch was:

"This is a stark reminder that the UK cannot simply run away from its problems, or refuse to deal with a legacy of debt built up over a decade. Though it is taking time, we are fixing this country's economic problems."

Thus we see George Osborne's logic:
Rating maintained = proof austerity and cuts work = more austerity and cuts.
Rating stripped = proof we need more austerity and cuts = more austerity and cuts.

What Osborne has forgotten, unless concentrating wealth in the hands of the few is his over-riding objective, as he takes from the 90% (wage freezes and benefits cuts) to give to the wealthiest (tax cuts) is most of the spending is done by ordinary people. Companies come to a country not just to employ people to make stuff, but also to sell stuff. According to government statistics, although the poorest 50% have virtually no wealth,  they do 30% of the spending. Although the richest 10% have over 70% of the wealth, they only do 20% of the spending.

As the Governor of the Bank of England in May 2011 told MPs:

"'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."

Read More

Big Six energy firms accused of being a 'cold-blooded profiteering' cartel, hiking prices and dodging tax

Chris meets an energy fat cat...

SOURCE GUARDIAN Big six energy firms accused of 'cold-blooded profiteering'Official figures showed the big six energy firms had more than doubled their retail (i.e. selling to households and businesses) profit margins over the last 18 months and were now earning an average of £95 profit per household on dual-fuel bills. Ofgem also said average margins in generation (i.e. extracting the oil and gas) across the big six increased from 18.4% in 2010 to 24.4% in 2011. Critics accuse energy firms of acting as a profiteering cartel, forcing poor households to either “heat or eat.”

GUARDIAN MP’s outraged that RWE, npower and others have paid little or no corporation tax despite significant profits rise
A spokesman for the energy sector defended them, saying they had spent tax-deductible billions on investment, and in any event paid proportionately more tax than other sectors compared to its contribution to GDP. But they are accused of hiding profits through the complex relationship between different divisions of the same company. Selling energy to consumers – the retail market – is separate from the business of energy generation, and they also have energy trading arms that buy and sell power daily in the "spot" and futures markets.

OUR RELATED STORIES:

Have regulators in other sectors learned the lessons of the bad bankers? OFGEM's piffling "record" fine on energy firm SSE for mis-selling suggests not

Liebrary: Are energy companies really forced to raise prices due to high wholesale prices? No!

SMEs, make sure you don't get rolled-over by your energy supplier

OFGEM misses another opportunity to control rip-off energy bills by improving energy price transparency

Read More

Rip-off News round-up. Our pick of the last week's media (Thu 18th April)

Welfare cuts to hit the north and regions up to five times as hard as the Conservative heartland southern counties
Blackpool, the hardest-hit town, will see an average loss of £914 a year for every working age adult, or 4.65% of household incomes. It is only 0.86% in Surrey. This will also make a Conservative majority at the next election more unlikely, as those are the areas where the Tories must win more seats. FINANCIAL TIMES

Royal Bank of Scotland should stay in public ownership for now, says poll

A YouGov poll reveals only 9% of voters think RBS should see a swift return to the private sector, while 66% call for bailed out bank bosses to return their knighthoods. The government is understood to be keen to kickstart the selloff of part of its 82% stake in the bailed out RBS before the general election in 2015, even though – on current prices – this would involve a loss of around £20bn. GUARDIAN
(66%? What did the other 34% want done to those bank bosses?..)

Big six energy firms accused of 'cold-blooded profiteering'

Official figures showed the big six energy firms had more than doubled their retail (i.e. selling to households and businesses) profit margins over the last 18 months and were now earning an average of £95 profit per household on dual-fuel bills. Ofgem also said average margins in generation (i.e. extracting the oil and gas) across the big six increased from 18.4% in 2010 to 24.4% in 2011. Critics accuse energy firms of acting as a profiteering cartel, forcing poor households to either “heat or eat.” GUARDIAN
(“Hey, we’re also faced with a choice that rhymes. Compete or cheat...” said our energy fat cat insider.)

MP’s outraged that RWE, npower and others have paid little or no corporation tax despite significant profits rise

A spokesman for the energy sector defended them, saying they had spent tax-deductible billions on investment, and in any event paid proportionately more tax than other sectors compared to its contribution to GDP. But they are accused of hiding profits through the complex relationship between different divisions of the same company. Selling energy to consumers – the retail market – is separate from the business of energy generation, and they also have energy trading arms that buy and sell power daily in the "spot" and futures markets. GUARDIAN

Homebuyers overpaying by tens of thousands of pounds because of widespread “errors” by estate agents in measuring floorspace

The FT analysed more than 200 London properties and found more than half have floorplans much larger in square footage compared with another agent selling the same property. The difference varied by as much as 300 sq ft. Several complaints have been made against Foxtons. It can have a big impact in the prime London market where it has become common practice to value property based on floorspace. Some in the industry blame poorly trained staff, and  rules that allow alcoves and stairwells to be included in the measurement.  FINANCIAL TIMES
(NEWS LATEST: A crisis meeting of the entire membership of the Association of Estate Agents, convened to rebut the FT’s findings, was abandoned when the conference room they hired turned out to be Foxton's broom cupboard…)

Staff fraud increases by 43% in 2012

The main reason for the overall increase is the surge in fraudulent attempts to gain employment, given the economic and employment uncertainty. Another common fraud is the theft of cash from either a customer account, or directly from the employer. Frauds where an organisation’s staff stole customer data for personal use have also increased. CIFAS

OFT opens investigation into 'free apps' that allow children to buy in-game content
‘Direct exhortations’ to children - a strong encouragement to make a purchase - are against the law under the Consumer Protection (from unfair trading) Regulations 2008. In one case five-year-old Danny Kitchen from Bristol racked up a bill of £1,700 on the game Zombies vs Ninja, downloaded from iTunes, in which players can purchase weapon upgrades for as much as £69.99 a time. The money was later refunded by Apple. Twice-capped England rugby union player Sam Vesty told BBC Radio 5 Live that his two sons had spent £3,200 in under three hours on the game Tiny Monsters, after 54 purchases of a “mountain of food” at £69.99 a go. INDEPENDENT
(...and it’s that old 99p trick again. ‘Cos no 5 year old would dream of spending £70 on a mountain of non-existent electronic food…)

Tenants and landlords to be given right to challenge rogue letting agents

The new laws require agents to sign up to ombudsman scheme while giving the OFT the power to ban those who act improperly. The changes have already received widespread support from estate agents, letting agents, the British Property Federation, RICS, Which? and Consumer Focus. Although the new rules provide welcome redress procedures, they don’t go so far as to outlaw the unfair practices in the first place, like hidden agents’ fees. GUARDIAN
(One lettings agent called in to congratulate the new legislation, saying it would separate the rogues from the honest agents. Then sent us a bill for cleaning his carpets…) 

Pauper's funerals soar as government refuses to pay
As the country gears up for a lavish funeral for Margaret Thatcher, the number of pauper's funerals has increased dramatically, as the government refuses half of all requests to fund a proper funeral. AOL MONEY/PA

Read More

Welfare cuts will hit the north as much as five times as hard as the Conservative heartland southern counties

Cameron ponders the implications with IDS, Osborne and his party...

SOURCE FINANCIAL TIMES: Cuts to welfare payments will hit the local economies of northern towns and cities as much as five times as hard as the Conservative heartland southern counties. The FT's research underlines the potential risks to economic regeneration and private sector business prospects in poorer areas where the local population faces the loss of a large slice of purchasing power. Small independent shops already faced tough competition from supermarkets and out of town centres and had gone through a hard time during the recession. Taking more money out of already struggling local economies may well exacerbate the problem.

OUR RELATED STORIES:

Don't be fooled. It was bank borrowing that caused the debt crisis, not consumer borrowing

Is the UK national debt at a historical high? Actually it's lower than it has been for most of the last 300 years

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

Read More

Britain tops Europe's fuel poverty league table

Chris, KJ and Fee v the "Strivers v Skivers" brigade...

SOURCE INDEPENDENT: Britain tops the fuel poverty league table
Most other European countries actually face higher energy prices than those of the UK (mostly due to taxes). But better-quality home insulation means our European neighbours pay less to heat their homes. One in five UK households are now in fuel poverty. The Government has cut fuel-poverty funding for families by 27% since coming to power. 

Mythbusters: Strivers versus skivers NEW ECONOMICS FOUNDATION

OUR RELATED STORIES:

Have regulators in other sectors learned the lessons of the bad bankers? OFGEM's piffling "record" fine on SSE for mis-selling suggests not

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

Read More

New pension scandal: employers add "consultancy" fees to the new automatic workplace pension schemes that can reduce your pension by 50%

From our guest author, the pensions expert Dr.Ros Altman: The FSA is allowing employers to pay huge fees to unauthorised 'advisors' with money taken from employee pension funds. All for advice that doesn't have to benefit the employees, and for fees that can reduce their pensions by half.

Workers' pension funds being raided to pay fees for employer advice: As millions of workers are being automatically enrolled into a workplace pension scheme, it has emerged that many employers can arrange for huge fees to be taken out of their employees' pension funds.  The money is deducted to pay for advice to the company, not to the workers who foot the bill.

The consultants are not even qualified or regulated properly: These fees are being paid to 'consultants' who are advising the employer on setting up their pension scheme. Although the consultants are paid out of the workers' pensions, the employees themselves usually get nothing for it. Worse still, because the advice is being given to a firm and not an individual, the usual regulatory protections do not apply.  These consultants are not even required to having any standard qualifications and are not covered by the normal regulatory protections.

Workers unaware of what is happening and regulator has not protected them:  There are hardly any controls on the amounts that can be deducted, workers will usually be completely unaware of what is happening and will trust their employer to choose them a good scheme. However, the FSAand Pensions Regulator are allowing this to continue and many people's pensions could be decimated as a result.

Mystery shopping study by Which? exposes extent of the scandal: Consumer group Which? has conducted a 'mystery shopping' exercise which exposes the real scale of this scandal. It posed as a 'consultant' and went to five insurance companies, offering to help them set up a pension scheme for an employer.

Workers have no control over the fees they are forced to pay: Members cannot stop this happening as charges are agreed between the employer and consultant, with insurance companies just agreeing to allow the deductions. It is up to the regulators to stop this immediately and control the amounts, if any, that can be deducted form auto-enrolment pension schemes.

Insurance companies agreed to allow consultants to charge workers, not employers:  The mystery shopping consultants asked the insurance company to pay them a fee for 'selling' their insurance product to the employer. Although they only ever see the employer, not the employees, the insurance companies agreed that these 'consultants' could charge huge sums to each employee and there are no proper protections in place for workers' money. For example, insurance companies agreed to charging each worker £400-£450 for the first year and then ongoing annual charges on further contributions each year, ranging from £5 a year to 7.5 per cent a year for the first five years. For a low earner, these kinds of fee levels could see their pension fund reduced by nearly half in the first year and they can do nothing to protect themselves.

Regulators should be protecting these workers, why does Which? have to expose it?Why is the regulator not on top of this? The government is automatically enrolling all workers into a workplace pension scheme. These schemes are supposed to be 'low cost' and ensure workers get more income in later life. If so much of their hard-earned money can merely be taken out of their funds to pay unqualified, unregulated consultants who do not even give them any advice, then something has gone seriously wrong with the system.

Employers do need help setting up auto-enrolment pensions, but it is just not fair to charge members for this: This must be stopped immediately and new controls on such charges must be put in place before it turns into yet another pensions scandal.  Surely we have had enough of those already.

Dr Ros Altmann is a pensions expert

Read More

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

Barclays’ tax avoidance division generated £1bn annually

Barclays ran a Structured Capital Markets department to enable its clients to avoid tax. Embarrassed, Barclays closed down this "industrial-scale tax avoidance" department, but the 100 staff were redeployed rather than sacked. GUARDIAN

(“Redeployed after retraining, mind you. Yup, we got the 100 staff to retrain the rest of us!” said our Barclays insider...)

Wealthy individuals stash as much as $32tn (£21tn) in overseas havens

Leaks expose anonymous companies in tax havens serving the super-rich. A woman runs 1,200 firms from a Caribbean rock. 'Sark Lark' former Channel islanders, now scattered around the world, take a fee to disguise the ownership of thousands of companies. The British Virgin Islands is now the world's biggest provider of offshore entities, yet the UK refuses to stop it. It only takes 3 bits of paper to create a “nominee” company for dodging tax. GUARDIAN

One in four of the UK's top companies pay no tax while we give THEM millions in credits

Many of them claim that the UK is not where most of their profits are made. The EU intends to force all corporates to lift the veil on their tax payment, country by country. Corporates that paid zero tax include TUI Travel, Tate & Lyle, and British American Tobacco. DAILY MAIL

(Wow! Where are those profits made and massive taxes paid? In China? India? “Errr... they smoke a lot of cigarettes in the Cayman Islands,” said our British American Tobacco insider...)

Veterinary drug bute found in Asda corned beef

Bute is banned from the human food chain. But the Food Standards Agency (FSA) said the risk from eating products containing contaminated horse meat was low. The government has been blamed for cutting the budgets of the FSA. Fears remain that the food regulators are simply incapable of monitoring our food adequately. GUARDIAN

(“And if horsemeat can slip into our food unnoticed, what else could have? Look at this I found. It’s got mustard on it. Pickled gherkins. Encased in bagel...” said our FSA expert...)

Britain tops the fuel poverty league table

Most other European countries actually face higher energy prices than those of the UK (mostly due to taxes). But better-quality home insulation means our European neighbours pay less to heat their homes. One in five UK households are now in fuel poverty. The Government has cut fuel-poverty funding for families by 27% since coming to power. INDEPENDENT

(“Can’t they just huddle up with their ten kids in front of the glowing warmth of their 100 inch plasma TVs?” said one gargoyle minister...)

HBOS chief voluntarily gives up knighthood and cuts his pension to £400k

The Parliamentary Commission's report on Banking Standards named Sir James Crosby as 'the architect of the strategy that set the course for disaster' at Halifax owner HBOS. Crosby was awarded the knighthood in 2006 for 'services to the finance industry', and becomes the first man for more than half a century to surrender the honour. Crosby said he was 'deeply sorry' for the disaster that unfolded at HBOS. Downing Street says 'consciences' of other HBOS chiefs should steer them to do the right thing. DAILY MAIL

(“...as our consciences steer us politicians. Onto the next fat cat job!” said one surprisingly honest minister helpfully...)

Five million households in debt to energy firms

Research by comparison site uSwitch found that UK consumers now owe an estimated £637m to energy firms, a 6% increase on last year. More than 5m households now owe their energy supplier money, compared to less than 4m in 2012. Following a series of price increases over the past six months, the average household energy bill is around £1,400. Prices have risen by around two-thirds in the past five years. TELEGRAPH

(“It’s a little idea we’ve got from our banker friends: plunge customers into unsustainable debt and call it profits, so we can keep shoving massive bonuses into our already rammed pockets,” said our drooling energy exec insider on behalf of all the others…) 

We did mis-sell, admits Lloyds: Customers flogged complex investments when a savings account would have made more money

Senior Lloyds executives accepted that Scottish Widows investments may have been widely mis-sold between 2007 and 2012. Cautious elderly savers were snared by the slick sales patter of branch advisers, who promised returns as high as 75% and complete capital protection. Instead, many who invested £40,000 five years ago have got back just £300 extra and now face hardship in old age. By contrast, the bank pocketed giant commissions of £2,000 on each £40,000. Had that amount been put in a basic savings account it would have earned £13,000 in interest. DAILY MAIL

(Our insider at Lloyds said: “Our salespeople are blooded by first pitching this toxic rubbish to their own grandparents. The ones who get the sale get the job. Wicked.”)

UK hourly labour costs have fallen nearly two euros (£1.7; $2.6) below the EU average
Data from the EU's statistics agency Eurostat show the EU average in 2012 was 23.4 euros hourly - and in the UK it was 21.6. The costs vary widely in the EU - from 3.7 euros in Bulgaria to 39 in Sweden. BBC NEWS

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Where are our conviction politicians now, Mr Cameron?

What can Cameron learn from Margaret Thatcher so the Tories win the next election...

OUR RELATED STORIES:

Under Margaret Thatcher inequality rose, stabilised under Major, then crept up again under Blair/Brown

Thatcher era began rise of the richest, without any improvement in growth

History shows left/right policies grow the economic cake equally. The difference is only in how the cake is divided

Outsourcing public services: a case of privatised profits, socialised losses

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Where are our conviction politicians now, Mr Cameron?

What can Cameron learn from Margaret Thatcher so the Tories win the next election...

OUR RELATED STORIES:

Under Margaret Thatcher inequality rose, stabilised under Major, then crept up again under Blair/Brown

Thatcher era began rise of the richest, without any improvement in growth

History shows left/right policies grow the economic cake equally. The difference is only in how the cake is divided

Outsourcing public services: a case of privatised profits, socialised losses

Read More

Have regulators in other sectors learned the lessons of the bad bankers? OFGEM's piffling "record" fine on energy firm SSE for mis-selling suggests not.

In the first week of April 2013 out came three reports two detailing naughtiness and incompetence in banks, Barclays and HBOS, and one in the energy supplier SSE. All three showed deeply ingrained recklessness in the pursuit of profit. While Britain has stood gobsmacked at the greed of bankers, are we missing the fact that what started in the City has infected other industries and professions?

Letting bankers off their leashes by deregulation in the 1980’s, leaving no effective restraint on rip-offs nor on remuneration, sent a strong message to all other sectors. The message was no matter what you did, if you were paid a lot you must be good. And there is no body in Britain who will stand in your way.

The dash for cash corrupted other industries and professions, even reaching our sainted GPs who took a dash of cash with a new pay deal in 2004

“Family doctors' hours have been cut and their productivity has fallen at the same time as some received up to 58 per cent salary increases" Commons Public Accounts Committee.

People were judged not by what they did, but by what they were paid. High pay justified how low you could go to snatch the pay. In his review of Barclays, published in April 2013, Anthony Salz (vice-chairman of Rothschilds, so no stranger to bonuses himself) said:

“If there are no other significant forms of recognition for good performance, bonuses for achieving financial outcomes will be seen as the major organisational response employees experience. Financial outcomes then become what employees believe the organisation values.” 

The ruined bank HBOS followed a reckless strategy that created a fountain of money for the directors and senior staff. The Parliamentary Commission on Banking Standards said:

The strategy set by the Board from the creation of the new Group sowed the seeds of its destruction. HBOS set a strategy for aggressive, asset-led growth across divisions over a sustained period. This involved accepting more risk across all divisions of the Group. Although many of the strengths of the two brands within HBOS largely persisted at branch level, the strategy created a new culture in the higher echelons of the bank. This culture was brash, underpinned by a belief that the growing market share was due to a special set of skills which HBOS possessed and which its competitors lacked.

This aggressive strategy boosted director pay in 2006 & 2007. Naturally pay dipped when HBOS burst into flames in 2008. But even in 2008, when HBOS crashed, the directors' pay was boosted by a 'biennial incentive plan' jackpot. This biennial bonus was invented by HBOS' remuneration committee to provide an additional bonus on top of the annual bonus, reflecting the longer term performance over 2 years. So, for 2007-2008 biennial the directors only pocketed half the bonus - just for 2007, such was their remorse for the catastrophe in 2008.

The biennial cash incentive 2007/2008 comprises only the element earned in 2007 but deferred and includes Peter Cummings £79,000 (2007 £172,000), Jo Dawson £72,000 (2007 £156,000), Mike Ellis £20,000 (2007 £nil), Philip Gore-Randall £19,000 (2007 £nil), Andy Hornby £121,000 (2007 £254,000), Colin Matthew £73,000, (2007 £160,000), Dan Watkins £54,000 (2007 £42,000), Former Directors £149,000 (2007 £311,000). The Directors waived their rights to any payment in respect of the 2008 element of the scheme.

The directors took a bonus for the catastrophic strategy they pursued before 2008, and "waived their rights" in respect of the 2008 element! We should not thank them for their abstemiousness. We should ask the Remuneration Committee what tortured bonus scheme formula even gave them bonus rights to waive in that disastrous year. 

Perhaps the most telling comment by the Banking commission in its report on HBOS was:

The Commission considers it a matter for profound regret that the regulatory structures at the time of the last crisis and its aftermath have shown themselves incapable of producing fitting sanctions for those most responsible in a manner which might serve as a suitable deterrent for the next crisis.

The FSA was famously supine. When Hector Sants as FSA chief executive said in 2009 "People should be very frightened of the FSA", the banks laughed. In spite of, or perhaps because of, all the laughing, Barclays Bank in December 2012 gave the same Hector Sants a job at a reported £3million per year. Perhaps the FSA was just the cowardly runt in the litter of regulators, and the others are much bigger scarier dogs?

Sadly not. Just as banker greed infected the other industries, FSA uselessness is woven into the DNA of the other industry regulators in the UK. Consider OFGEM's ‘record’ £10.5million fine on the energy company SSE for mis-selling domestic energy deals. SSE have, of course, apologised for their abject behaviour. The fact that the apology was extracted by the spineless OFGEM demonstrates that there was not even a whiff of smoke nor a wisp of a veil for SSE to hide behind. Not that SSE didn’t duck & dive for as long as it possible could. 

On the 10th May 2011 SSE stated:

"We want to reassure customers, and potential customers, that this case relates to sales aids used in February 2009, which are not in use today, and we are confident that our sales processes continue to be fair and responsible."  

A few days later, on 27th May 2011, having pointed an accusing finger at their “sales aids used in February 2009, which are not in use today”, SSE changed tack and decided that they had never done anything wrong:

“We are confident that our sales processes have been, and remain, fair and responsible and customers can be assured that we are committed to the highest standards in all aspects of service, including sales”

And yet the OFGEM report found that SSE actually continued its scams all the way into September 2012, with OFGEM stating:

"taken together, SSE’s contraventions extended over a significant period of time. Certain of the breaches began in October 2009 and a number of them did not conclude until September 2012. A number of specific contraventions extended beyond 1 year, some beyond 2 years, and one breach had persisted for some 3 years at the time of the Authority’s decision"

OFGEM found that SSE scams that included misleading sales scripts, and the fact that "in relation to doorstep sales, the main auditing was carried out by local managers who received commission on sales and therefore had a financial interest in not reporting misbehaviour" were not "accidental or inadvertent”, and so were presumably deliberate.

The Authority does not consider that the breaches in this case were accidental or inadvertent: in particular, establishing appropriate systems to monitor and remedy mis-selling was a matter which was entirely within SSE’s control and its failure to do so constituted a significant aspect of its breaches of its licence conditions.

So, let’s look at the £10.5million ‘record’ fine for this deliberate and extended scammy behaviour. Does it provide, in the words of the Banking Commission, "fitting sanctions for those most responsible in a manner which might serve as a suitable deterrent"? After all, in its report, OFGEM noted that it does have a fearsome stick to strike with:

the maximum cap on penalty, which is 10% of the turnover of the legal entity holding the relevant licence.

A quick look at the FT shows SSE's turnover in 2012 was in excess of £30 billion. 10% of turnover would be a £3 billion fine.

SSE Results 2008-2012

Even the banks haven't been fined so much, so perhaps this is too harsh? So let's forget revenue: how about 10% of profits? A quick look at SSE's own corporate statement shows profits in 2012 of £1,335.7 million.  10% of which would be £133.6 million.

So we see that OFGEM's £10.5 million fine is less than a pip squeaking. 

The OFGEM fine on SSE is 0.8% of profits, and 0.03% of revenue. 3 hundred times smaller than it could have been. 

Once again Britain's regulators have shown that ripping-off Britons is acceptable as taking water from a tap so long as you pay your water bills. Paying fines is just another cost of doing business.

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