What recovery? Households are no better off than during recession as incomes flatline and essential costs soar
Confirming what cash-strapped families have known for some time, the Office for National Statistics reported that real household disposable income has changed little since 2009, despite cumulative real GDP growth of 4.2% since then. Meanwhile, the cost of essentials such as housing, energy and water has soared. The definition of “real household disposable income” is the money households have left over after tax and benefits, adjusted to take into account inflation. The ONS said that the share of this money families spend on basic essentials has jumped from 19.9% in 2003 to 27.3% in 2013. Most of that squeeze is accounted for by housing, which now takes up 20.6% of disposable income compared to 14.7% ten years ago. The share taken up by gas and electricity has jumped 72% in ten years, despite us not using any more than we used to. DAILY MAIL
Energy firms 'overcharge by £3.7bn a year'
Some of Britain's biggest energy companies have been accused of raising households bills for no reason and systematically overcharging customers by £3.7bn a year, as they were grilled by MPs over their soaring prices and profits. The Big Six energy firms were also challenged by Stephen Fitzpatrick, the chief executive of small supplier Ovo Energy. As part of his evidence, he said: "When a customer calls their supplier and says I'm going to leave, they say hold on a moment, we've just found out we can save you £160. British Gas seems to be the most active, with a dedicated win-back team whose sole job it is to call people up and there's a terrible mistake, we've been overcharging you all this time and now we can cut your bill. When this kind of behaviour is allowed to go unchallenged, this ex-monopoly advantage by the Big Six goes unchallenged by Ofgem, we'll never get effective competition." GUARDIAN
British Gas rakes in £20m profit from overestimated bills, says whistleblower
A whistleblower said that £20m-worth of "credit balances" was put into the annual accounts of British Gas in one recent financial year. Under the current system, energy companies can estimate customers' future usage and charge accordingly. If less energy is used han was estimated, credit is built up which can be reclaimed or used to offset higher-than-expected future bills. However, if the customers change supplier and leaves, the existing supplier is supposed to return the credit; British Gas appears to have kept the money for themselves. GUARDIAN
HMRC’s £35bn estimate of tax dodging is 'tip of the iceberg'
HM Revenue & Customs is failing to make Google, Amazon and others pay up, says Margaret Hodge, chair of the MPs' public accounts committee. The committee accused HMRC of being too cosy with the tax dodging industry. Edward Troup, tax assurance commissioner at HMRC, was then asked if he really once wrote an article which said: "Taxation is legalised extortion." He confirmed that he had written it but said that it was in the 1990s. GUARDIAN
Pension fees cap plan unveiled by government
Pensions Minister Steve Webb said the government will launch a "full frontal assault" on pension fees. Management fees charged by pension providers could be capped between 0.75% and 1%, according to proposals being set out by the government. Some older schemes set up more than a decade ago have been charging up to 2.3% a year in management fees. With a 1% charge someone who initially saved £1,200 in the first year and worked for 46 years could lose almost £170,000 from their pension pot, and more than £230,000 with a 1.5% charge. So a saver with a 0.75% annual charge could end up £100,000 better off than if they had been charged a rate of 1.5%. This is part of an ongoing review of pension fees. Other fees exist on top of the management fee, which can take even more from your pension pot. BBC NEWS
Barclays in market manipulation investigation that could match scale of Libor scandal
Barclays is involved in the new investigation by global regulators into the potential manipulation of the £3tn-a-day currency markets, in a fresh setback for the bank as it attempts to clean up its reputation in the wake of the Libor rigging scandal. Barclays is joining a number of other banks – including Royal Bank of Scotland, Deutsche Bank and UBS – in co-operating with the authorities and also shedding light on the nature of the investigation by regulators in the UK, the US and Asia. GUARDIAN
Barclays plans new pay package to circumvent EU banker bonus cap
Barclays is sounding out investors about a new structure for staff pay that would circumvent rules from Brussels. In addition to the existing components, a non-pensionable sum would be determined each year based on an individual's responsibilities. Paid each month in cash, this would supplement the employee's base salary but not be allowed to count towards the basic pay from which annual bonuses would be calculated. Under one scenario outlined by a leading Barclays investor, a senior executive in its investment bank could be paid a basic salary of £750,000, a maximum bonus - with shareholder approval - of £1.5m, and a sum running to hundreds of thousands of pounds paid in monthly instalments. SKY NEWS
PPI compensation payouts have given a better return than the stock market!
A financial journalist’s mum was mis-sold PPI by both the Halifax and the Co-op. She has now received her compensation: the premiums, plus interest paid on the premiums at 8% per year. Because she chose to pursue the claim herself rather than through a claims-management firm, she will keep the lot and has done better out of being mis-sold PPI than she could have done if she had invested the cash in the stock market or placed it into even the best-paying individual savings account. INDEPENDENT
