Rip-off News round-up. Our pick of the last week's media (Thu 23rd October)

Chair of the US Federal Reserve Janet Yellen says income inequality is un-American

Yellen suggested that such a trend, unaddressed, was contrary to the founding principles of the United States. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity,” she said. She also cited the “Great Gatsby curve,” – “the finding that, among advanced economies, greater income inequality is associated with diminished intergenerational mobility”. Yellen’s comments dovetail with concerns about inequality among other global central bankers. Yves Mersch, the governor of the central bank of Luxembourg, took a stand this morning against massive stimulus measures from the Federal Reserve and the European Central Bank, on the reasoning that they widen the gap between the rich and poor. Separately, Treasury Secretary Jack Lew recently encouraged the World Bank to address inequality in developing economies. The strong tone of Yellen’s speech adds to the increasing discussion around economic inequality that was first popularized by the Occupy movement and then crystallized in the blockbuster success of Thomas Piketty’s Capital in the 21st Century, which posited in part that invested and inherited wealth will always accumulate faster than general economic growth. Yellen cited Piketty’s book and his other work with his frequent research partner, Emmanuel Saez. GUARDIAN

Institute of Directors backs TUC claim for higher wages

Christian May, head of campaigns at the IoD, said: “We have sympathy with the TUC’s argument because it remains the case that too many people are still feeling the effects of the recession more keenly than the benefits of the recovery.” “When the TUC protests about the pay gap between bosses and workers, remember they are not talking about business in general, but about a tiny number of people who run the world’s biggest firms. The boards of these companies can no longer be deaf to public opinion,” said May. He said pay rises were “on the cards” for employees of small- and medium-sized businesses. The IoD said that the majority of the lobby group’s members earned £100,000 a year. While this was a “significant amount” it was “nothing like the astronomical sums paid to some of the very top bosses”, said May. The average annual pay of a FTSE 100 chief executive, according to a recent study by Incomes Data Services, is now £3m. GUARDIAN

Pay protests bring tens of thousands onto UK city streets

Leaders of some of the UK's biggest trade unions criticised the government, saying pay had fallen despite the economic upturn. The TUC says average wages have fallen by £50 a week in real terms since 2008. Dave Prentis, general secretary of the Unison union, said "Our members didn't cause this recession, our members didn't cause the failures of the banks." Len McCluskey, general secretary of the Unite union, said Labour should support workers by offering a "clear socialist alternative" to the Conservatives at the next election. "I say to Labour - stop being scared of your own shadow. Don't shrink what you offer the British people," he said. Public sector workers including teachers, nurses, civil servants and hospital workers were among those taking part in the protests, alongside rail and postal workers and others from private firms. The marches come after industrial action by health workers on Monday - the first strike over pay in the NHS since the 1980s and the first time midwives had ever taken action. The government says pay restraint has safeguarded jobs and services. BBC NEWS

We'll sue if you flout crackdown on bankers’ bonuses, EU tells Bank of England

The European Banking Authority’s most senior executive, Adam Farkas, raised the prospect of court action after the Deputy Governor of the Bank of England described the European Union’s bonus cap as ‘the wrong policy’. All of Britain’s leading banks have attempted to sidestep the European rules by offering senior staff extra payments, called either allowances or ‘role-based’ payments. Now the decision of the EBA on Wednesday has effectively ruled that these are bonuses under another name. The European Union passed a directive earlier this year requiring banks to cap bonuses at 100 per cent of a banker’s salary or 200 per cent if they can get prior approval from shareholders. Chancellor George Osborne opposed the directive from the start and is challenging the law in the European Courts. All the major UK banks are now paying their staff allowances. HSBC boss Stuart Gulliver gets £1.7 million a year in shares quarterly, on top of his pay and annual bonus. Barclays calls its allowances ‘role-based pay’ and is handing £950,000 in this form to boss Antony Jenkins this year. Barclays executives get this quarterly in shares. More junior staff receive cash sums monthly. Lloyds boss Antonio Horta-Osorio was awarded a fixed allowance of £900,000 for 2014, which he will receive in share awards over the next five years. RBS’s chief executive Ross McEwan is the only major bank boss to not receive an allowance this year – but his bank will still pay other executives and dozens of other senior bankers in the new format. The British Bankers’ Association estimates that 35,000 of Europe’s bankers will be affected by the bonus cap, two-thirds of them in the UK. DAILY MAIL

Bank of England tells bankers to get used to lower pay

Bank of England deputy governor Jon Cunliffe said banker pay had failed to adjust sufficiently since the crisis. "It is unlikely that we will see, or want to see again, the returns on equity that we saw before the crisis. In the new world, paybills may well have further to adjust," he said. Mr Cunliffe said banking staff had been receiving "a larger share of a smaller pie" relative to shareholders. At global banks, profits attributable to shareholders averaged 60% of the pay bill in 2007, but by 2013 this had fallen to around 25% of the pay bill, he said. It is important, he said, that in seeking to restore returns, "banks and investors do not think in terms of 'back to the future'". BBC NEWS

US crackdown on corporate “inversion” tax dodge means AbbVie withdraws bid for Shire

The US drugs group AbbVie has pulled out of its proposed $54bn (£34bn) takeover of Britain’s Shire after the Obama administration introduced rules to clamp down on overseas acquisitions driven by tax avoidance. The Chicago-based company had planned to shift its tax base from the US to Britain as part of the deal to cut its corporation tax rate from 22% to 13% by 2016. The deal is the biggest to be scuttled by the White House’s clampdown on so-called tax inversions by US companies buying overseas to secure a lower tax rate. US Treasury officials unveiled new rules last month to make it harder for US companies to complete tax inversion deals. The measures bar companies from using cash held overseas to fund such takeovers. Burger King’s planned $11bn purchase of Canadian coffee and doughnut chain Tim Hortons reignited the furore over inversions, which Barack Obama has said are unpatriotic. Other US companies looking to redomicile abroad to save tax include Pfizer, whose £69bn attempt to buy AstraZeneca, Britain’s second-largest pharmaceutical firm, failed in May. GUARDIAN

Price comparison sites hiding best energy deals, claims rival

The Big Deal has written to the five websites - uSwitch, Compare the Market, MoneySuperMarket, Go Compare and Confused.com - to complain. It said all five use a mechanism on their site that asks consumers if they want to switch immediately. By clicking "yes" to that question, all the deals that do not earn the company a commission are filtered out. Only if a consumer clicks "no" are they shown other deals, which can be cheaper. Overall it said that almost a third of energy deals get hidden in this way. The Big Deal has also written to complain to the Competition and Markets Authority (CMA), which is already carrying out a review of the energy market. Most of the websites involved told the BBC that they also adhere to Ofgem's Consumer Confidence code, designed to protect people switching. However Ofgem said it was already working on plans to change its code, so that customers are able to view all the tariffs, regardless of the commission the website will earn. BBC NEWS

Cost of dying sees biggest jump in six years to £8,427

The average cost of dying has soared by 10.6% to £8,427 – seven times the rate of inflation and the biggest jump in six years – according to the latest annual research for an ongoing major study. The analysis from insurance company Sun Life Direct of death-related costs – which include the expenses of a basic funeral, probate and memorials such as headstones – also reveals that almost half of bereaved families are opting for DIY estate administration in order to save money. Almost half (48%) are now choosing to do it themselves, compared to just 39% in 2013. Saving money was a key motivation cited by respondents. While the cost of the funeral has risen sharply at more than twice the rate of inflation to £3,590 – a rise of 3.9% since 2013 and a staggering 87% higher than in Sun Life’s first survey carried out eleven years ago – it nevertheless accounts for less than half (43%) of the total cost of dying. GUARDIAN

UK deficit balloons £48bn above 2010 forecast as Treasury is hit by £25bn hole in income tax receipts

The figures follow a warning by Office for Budget Responsibility (OBR) chairman Robert Chote who earlier this week warned that a mix of low wage growth and a large number of people employed in low paid jobs meant tax income receipts were going to be lower than expected despite a rise in employment. The OBR said the forecasts from 2010 were over-optimistic because it did not consider the effect of lower wages and salaries as well as a higher levels of tax-free personal allowance on income tax. National Insurance contributions were also £7.4billion below forecast. Increasing the tax-free allowance has been a key Coalition policy and earlier this month Prime Minister David Cameron outlined plans to increase the level below which no tax is payable to £12,500. The OBR figures comes a day after data from the Office for National Statistics showed workers' weekly earnings edged up by a meagre 0.7 per cent in the three months to August, still behind the rate of inflation, which dipped to a five-year-low of 1.2 per cent in September. A shortfall of £8.5billion from corporation tax - as City firms shifted balance sheet losses to offset liabilities - and a hole of £5.9billion from North Sea oil and gas receipts also contributed to the larger deficit sum. DAILY MAIL

The great miles per gallon con: How car firms cost you hundreds a year by using crafty tricks to bump up fuel economy figures

Last week, research by Emissions Analytics, a vehicle data company based in the UK, found that cars on average get 18 per cent fewer miles per gallon than is advertised. And that’s just the average. The really bad news is that if you have a small car with an engine size of less than one litre, then your fuel economy is a staggering 36 per cent lower than the manufacturers’ claims. Most small cars claim to travel 60mpg, but the true figure is just under 39mpg. As the engine sizes get bigger, the discrepancy lessens. With cars of engines of two to three litres, the difference is around 15 per cent, which is still significant. The biggest tricks the car firms use to improve the figures include: taping up doors, disconnecting alternator and driving DOWNHILL; keeping temperature at fuel-efficient - and decidedly un-British - 29C. DAILY MAIL