Charles Dickens' A Christmas Carol. Adapted for our troubled times

Our 6-cartoon Christmas Special. Starring Cameron, Clegg, Thatcher, Osborne, and Duncan Smith, with cameos by the Great British Public...

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

Christmas victory for New Era residents' campaign: rent-hiker Westbrook finally sells London estate to fair-rent charity

The 93 families’ battle against eviction by an $11bn US investor has finally been successful. Months of protesting, marching and petitioning has forced the millionaire executives of Westbrook Partners to sell the estate, abandoning plans to evict families and triple rents. Some tenants of the estate, just north of the City of London, had faced rents tripling from £800 a month for a two-bedroom flat to about £2,400 if Westbrook’s plans had gone through. The new owner was announced as the Dolphin Square Foundation, a charity dedicated to providing affordable homes for low and middle income Londoners. It instantly pledged to keep rents at their current low rates not just this Christmas but next Christmas too. The deal means Westbrook has sold an estate it bought nine months earlier for an estimated £20m to a relatively small housing group that says it is committed to delivering low-cost rented homes to Londoners on low to middle incomes. Jon Gooding, the chief executive at Dolphin, said: “We are serving people who are not on benefits but are earning £25,000 to £60,000, but we are setting rents that are realistic in relation to their net income. We will work to understand in detail the financial circumstances of our tenant group and we will then formulate a rent policy that is demonstrably fair.” Lindsey Garrett, an NHS worker and one of three women who spearheaded the campaign, said: “We beat a multibillion-dollar investment company. Who would have thought three single mothers from Hoxton could have done that?” Outside the Stag pub where choruses of “We are the champions” rang out, Coleen O’Shea put it more bluntly to another of the campaign’s leaders, Lynsay Spiteri. “Well done girl, you did it,” O’Shea said. “You shot them up the arse.” GUARDIAN

Cost of ministers' special advisers hits £8.4m

There are now 103 "spads" employed to give advice over and above the work carried out by civil servants, up from 98 last year. They include a total of 26 working for David Cameron in Downing Street and 20 working for Nick Clegg. The government said it reflected the "nature of coalition" and that their average pay was higher under Labour. Labour said the figures showed that the overall numbers of special advisers had risen inexorably under the coalition. This year’s total salary bill is over a million higher than the £7.2m spent in 2012-13. The Coalition Agreement said the government would "put a limit on the number on special advisers" but the pay bill and numbers have increased over the past few years. BBC NEWS

Forex manipulation: First banker arrested in $5.3 trillion fraud investigation

A London banker is believed to be the first person arrested in relation to the criminal investigation into rigging the $5.3 trillion a day foreign exchange market. The Serious Fraud Office confirmed that a man was arrested in Billericay, Essex, on Friday. No other details about the arrest were given. The SFO opened an investigation into foreign exchange manipulation in July, and last month six banks were fined £2.7bn related to currency rigging. Dozens of bankers have been suspended or fired in relation to forex manipulation, but this is believed to be the first arrest. Chat logs published by the Financial Conduct Authority last month showed how traders at Royal Bank of Scotland, HSBC, Citibank, UBS and JP Morgan, using nicknames such as “the A-team”, collaborated to rip off clients. After the fines, George Osborne wrote to the SFO saying it would be given a blank cheque to investigate wrongdoing. In the other major rigging scandal, Libor manipulation, one criminal conviction and 13 charges have been made. TELEGRAPH

Pre-payment meters: The poorest cannot spread their winter energy bills like most customers

Most households can spread their payments throughout the year. But pre-pay customers must spend twice as much on winter gas bills as in the summer, often plunging them into debt. Citizens Advice said all suppliers should allow pre-pay customers to pay off winter debts in the summer period - when their bills are lower. One supplier - Scottish Power- said it had already introduced a scheme last year. "A debt holiday would be a Christmas bonus for pre-pay customers," said Gillian Guy, the chief executive of Citizens Advice. It might also prevent pre-payment customers being forced to turn off their central heating. Delaying payments for debts will take the pressure off those people struggling to afford heat and light, or cutting back on food and other essentials. An analysis of figures from the regulator, Ofgem, shows that 80% of households having payment meters installed are already in debt. BBC NEWS

Expelled ‘Love Activists’ RBS squatters succeed in offering Christmas lunch to London homeless

A group of squatters, known as the “Love Activists”, have provided an uncooked Christmas lunch to homeless Londoners on the pavement outside a former RBS bank they had been occupying, after they were evicted from the premises on Christmas Eve morning. They have vowed to continue their protests. The group of 20 activists occupied the imposing grade ll listed building on the corner of Charing Cross Road and the Strand that previously housed an RBS bank, in the early hours of Saturday morning, saying they found an open fire escape door. All say they are homeless and occupied the building to raise awareness about the epidemic of homelessness in London especially amongst young people. There were 6,437 people sleeping rough in London last year, an increase of 8% on the figure two years previously. Many of those, like the Love Activist team, are young people. The prime site building is owned by Greencap Ltd, a company registered in Jersey and which, according to the accounts it filed earlier this year, is valued at just £9. Until June 2013 it was leased to RBS. Greencap had obtained an emergency, no-notice injunction to remove them from the premises. GUARDIAN

Science A level practicals face axe despite barrage of criticism

The plans face almost unanimous opposition from organisations such as the Royal Society and the government’s own Council for Science and Technology, said Andrew Miller MP, the chair of the Commons science and technology committee. Ofqual, the exams watchdog, has decided to remove lab experiments from A-level assessments in favour of a practical exam that will count towards a separate qualification. It will be possible for students to receive the highest A* grade in a science exam even if they fail the practical certificate. The first of the revised exams are to be taken in 2017. About a quarter of A-level courses in physics, biology and chemistry are made up of practical work. The plans from Ofqual, which will be extended to GCSEs too, aim to deal with alleged malpractice, where cheating and generous marking from teachers see students scoring much higher in their practicals than in their written exams. Nick Gibb, the minister for school reform, said he would not try to stop Ofqual. “The responsibility for how performance in qualifications is assessed lies with Ofqual. It is important that the Department for Education does not undermine that independence,” he wrote. But Miller argues that Ofqual’s reforms will fail to solve the problem. “I have no doubt that these changes will clean up the grade distributions in science A levels, but the concerns of malpractice among teachers have been side-stepped rather than addressed,” he said. “I am most concerned that students will now be forced to do science practicals that both they and their teachers know will have no value as far as qualifications go. There is no point going on about doing more practicals if the recognised value of those practicals is vastly reduced,” he said. He continued: “I have deep concerns about ministers who fail to listen to the wider community and appear to hide behind the decisions of independent bodies claiming that they have no influence. Ministers are there to provide democratic accountability not just to rubber stamp the decisions of regulatory bodies.” GUARDIAN

LuxLeaks global tax dodge: World unites to decry prosecution of whistleblower behind Luxembourg scandal

More than 70 politicians, academics, union heads and charity leaders around the world have come out in opposition to the decision by Luxembourg to prosecute the 28-year-old accountant accused of sparking the LuxLeaks tax scandal. Antoine Deltour, who spent two years as a junior auditor at PricewaterhouseCoopers before quitting in 2010, was this month charged with a string of criminal offences: theft, violating Luxembourg’s professional secrecy laws, violation of trade secrets, and illegally accessing a database. The charges stem from an official complaint brought by PwC. He could face jail and a heavy fine. For months, Luxembourg has refused to hand over further tax ruling information sought by the commission, disputing the legality of such requests. Last week, however, ministers performed a U-turn in the wake of the scandal, agreeing to provide documents sought by state aid investigators so long as similar requests were made of other EU member states. Explaining the volte-face, Luxembourg’s finance minister Pierre Gramegna  described the LuxLeaks affair as a “game changer” that had transformed the way European regulators were scrutinising tax rulings granted to multinationals. Politicians from Germany, France, the UK, the US and Australia were among the signatories to the letter opposing the prosecution of Deltour, which was organised by a handful of media groups including the Guardian. The majority of political signatories were from parties of the left, but there was also support from among Liberal Democrats in the UK and from the centre-right UMP in France, led by Nicolas Sarkozy. In an open letter they argued that the leak had been “manifestly in the public interest, helping to expose the industrial scale on which Luxembourg has sanctioned aggressive tax avoidance schemes, draining huge sums from public coffers beyond its borders”. GUARDIAN

Rail commuters petition government: Irate passengers take action as half Govia’s trains run late

Govia — a joint venture between listed Go-Ahead Group and French state-owned Keolis — has been running the Bedford-to-Brighton line since taking over from FirstGroup in September. But latest figures show that on some weeks, barely half (53.5%) of trains arrived at their destination on time between November 9 and December 6. The Office of Rail Regulation’s target for on-time arrivals is 89.8%. Govia is set to pocket £1.2 billion in annual revenues when it merges the Thameslink line with the Southern franchise next summer to become “Thameslink, Southern and Great Northern”. But commuters on the route — which is one of Britain’s biggest and one of the first to be handed over by the Government since the franchising collapse over the West Coast line fiasco — are petitioning the Department for Transport to “force Thameslink to improve their service”. The petition to ministers reads: “Govia Thameslink won the bid to run our trains by vowing to cut costs; it appears they have done this by reducing staff and foregoing essential maintenance work. Every day trains are delayed because of ‘staff shortages’, ‘broken down trains’ and ‘signal failure’. This company should not be allowed to continue providing such terrible service.” EVENING STANDARD

The cost of understaffing: Prison officers 'sent more than 200 miles to plug staffing gaps'

Nearly 250 prison officers are being bussed across the country to fill gaps at other jails because staff shortages are so acute this Christmas, according to leaked documents. The distances included travelling from Exeter to Swaleside, Kent - 227 miles; from Garth, in Lancashire, to London's Wormwood Scrubs - 218 miles; and from Frankland, County Durham to Woodhill - 228 miles. All of the staff being sent to Woodhill are being taken away from other category A jails. The attachments often involve prison officers being put up at hotels for a fortnight at a time. Frances Crook, chief executive of the Howard League for Penal Reform, said: "The prisons are in complete meltdown as a result of government policy, so they have to move people round in order to deal with that emergency. "It's very costly and very disruptive. People are fetching up to a prison who don't know where anything is." One former prisoner, who asked for anonymity, said staff shortages had had a big impact on life behind bars. "There were a lot of vulnerable prisoners, particularly some young prisoners, who were subject to quite severe physical assaults, even sexual assaults... I think there was a general feeling, because of the shortage of officers in particular, that bullying was on the rise, extortion, what's called taxing in prison, where prisoners basically have to pay protection money to those cons who are controlling wings.” The Ministry of Justice insisted "most prisons are appropriately staffed". It said a recent rise in the prison population was being managed "through sensible and proportionate measures". It is attempting to recruit 1,700 new officers to ease the difficulties. BBC NEWS

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Financial Services Regulators' heads and bonuses roll, punished for suggesting they might Regulate Financial Services.

Standing watch over the British Consumer

"No good deed ever goes unpunished": A cautionary tale from the Financial Conduct Authority (FCA) for Christmas and beyond. 

In December 2014 FCA heads rolled and FCA bonuses were cancelled. Was it due to a failure to show adequate Authority over a firms' Financial Conduct? To find out, we travel ten months back in time.


In February 2014 the FCA published a review of the pensions annuities market. It had noticed there was something rotten going on, and it thought it was about time it thought about looking into doing something about it. But more of this later.

On 27th March 2014 the FCA briefed newspapers, about another insurance industry scam saying:

“We want to find out how closed-book products [products that are no longer being sold afresh but still have existing customers, such as long term investment products] are being serviced by insurance companies, as we are concerned insurers are allocating an unfair amount of overheads to historic funds. 

As firms cut prices and create new products, there is a danger that customers with older contracts are forgotten. We want to ensure they get a fair deal. As part of the review we will collect information to establish whether we need to intervene on exit charges.”

"Intervene on exit charges"!? The prospect of regulators actually doing something to protect consumers shocked the market. There is a sacred covenant in the financial industry that regulation in Britain is the thin end of a thin wedge. Was the covenant being broken? Fearing for their dividends, investors started selling and insurance company share prices plummeted. 



Or did they? The Daily Mail showed a graph of the FTSE350 Life Insurance Index plunging and recovering on 28th March, and reported:

"fears that insurance companies could lose customers and be hit with huge compensation claims caused their share prices to plunge, knocking around £3billion off their value in several hours."

Now, if you take a look at this FTSE350 Life Insurance Index for the two weeks before the fateful report you would see it was tumbling in any case. And two weeks after the FCA's hasty retraction it was below the low of 28th March:

Anyway, heads rolled and bonuses were cancelled. But not the heads nor the bonuses of rogue insurance executives whose naughtiness might have required FCA intervention.

The day after the newspaper reports on 27th March the FCA had a hurried meeting. The meeting starting at 5pm, ending after only 45 minutes. The Chairman thanked the board for attending at short notice. Martin Wheately, FCA CEO, cut to the chase. The meeting minutes state:

"the story was widely reported that day (Friday 28 [sic] March) and the share prices of a number of listed insurance firms decreased significantly. The FCA had issued a statement clarifying the detail of the review in the afternoon. The relevant shares then recovered to a large extent (although not to the previous day’s levels) but some issuers had asserted that there had been a disorderly and false market in their shares for much of the day."

The FCA immediately commissioned an inquiry by Simon Davis of the law firm Clifford Chance (fee £2.04 million, excluding VAT). The inquiry was not to be into insurers and their rip-off exit charges but into the FCA itself for suggesting there would be a meaningful inquiry into insurers and their rip-off exit charges. Therefore the FCA retained another law firm to advise stressed FCA staff, Kingsley Napley (fee £1 million excluding VAT).

This "Davis Report" came out on 10th December. The report is not entirely unlike the US drama "24", which chronicles 24 hours of grisly mayhem in the life of a US secret agent, culminating in the gruesome deaths of innocent and guilty alike. The Davis Report chronicles 37 days of genteel tut-tutting by the FCA, culminating in the events that months later culminated in the gruesome terminations of several senior careers. It's worth a read if you ever need proof of that old saying "No good deed ever goes unpunished". And provides a detailed blow-by-blow framework for a great piece of theatre (BBC Drama Commissioners please take note).

Two days before the Davis Report was released on 10th December 2014 several senior FCA executives mentioned in the report announced they would leave. Clifford Chance stated in its weekly UK Regulators newsletter:

"On 8 December, the FCA presaged the publication of the [Davis] report setting out the findings of the Davis Review by announcing changes to its strategy, structure and senior management team. It has announced that Director of Supervision Clive Adamson, Director of Communications and International Zitah McMillan and Director of Authorisations Victoria Raffe will leave the FCA in January."

It was reported elsewhere that surviving members of the FCA leadership, including the CEO Martin Wheatley, had lost their bonuses.

Coming back to the state of those Annuities we started this post with: On 11th December 2014 the FCA's "provisional findings and proposed remedies" report came out regarding those rotten annuities. The report stated that 79% of Standard annuities and 91% of Enhanced annuities were not the best deals:

"Enhanced Annuities" are intended for those with ailments that shorten their life expectancies. They allow such pensioners to draw on their pensions more quickly, because they won't be drawing them for so long. The FCA report found insurance companies were failing to offer Enhanced Annuities where appropriate. It is a peculiarity of the Annuity system that when a pensioner dies the insurer gets to pocket what remains of the fund - so an early demise saves the insurer money.

This useful graph from SharingPensions.Co.Uk shows how much a 65 year old can get with £50,000 to purchase a basic single life level (no annual increase) annuity:

• "Lowest Standard" = worst value standard annuity
• "Highest Standard" = best value standard annuity
• The others are what you can get with a selection of illnesses, compared with the "Lowest Standard"

http://www.sharingpensions.co.uk/pension_annuity3.htm

In December 2014 Ros Altmann, the pensions expert and government advisor, wrote that mis-sold annuities in the last 10 years alone have ripped-off £8.5 billion from pensioners, made up as follows:

• £5.4 billion: Potential loss to those who bought standard annuity but could have had enhanced rate
• £2.65 billion: Potential loss to those who bought single life but would have needed joint life
• £0.45 billion: Potential loss to those who could have trivially commuted
• £8.5 billion: TOTAL POSSIBLE COMPENSATION

Pensions are for the long term. If £8.5 billion represents just 10 years of mischief, then compensating all pensioners could be a debacle on the same scale as the banks' Payment Protection Insurance (PPI) scam.

As for its intended remedies, the FCA courageously said they would "propose", "recommend", "work with", and "continue to monitor". But they weren't going to actually require nor enforce anything. The BBC reported:

"The FCA's investigation has stopped short of exposing historical pensions mis-selling, which some in the industry had been expecting."

Ros Altmann said:

"[it is] truly shocking that the FCA’s review uncovers what seems clear evidence of mis-selling, yet is not proposing immediate action to stop it happening any more". 

The executives of the FCA may be ineffectual, but they aren't stupid. They had learned the bitter lessons of the rollickings, bonus snatchings, and defenestrations since the events of March 2014. After all, what's the point of having a parapet if you are going to raise your head above it?

In December 2014 yet another report done for the FCA by the imaginatively named "Independent Project Board" highlighted how the insurance industry rips off savers with high management charges. The greatest victims are those with small savings pots:

"Savers with low fund values are potentially exposed to the very highest impact of charges. The majority of the AUM [Assets Under Management] potentially exposed to charges over 3% (£0.7bn out of £0.9bn) is held by savers with pots of less than £10,000. Of this, over 90% is held by paid-up savers and savers who have stopped contributing. For such savers the impact of monthly fees can result in very high impacts from charges."

When David Cameron piously claimed his 'moral mission' of cutting benefits will make people stand on their own two feet, he made himself ridiculous.

"For me the moral case for welfare reform is every bit as important as making the numbers add up: building a country where people aren’t trapped in a cycle of dependency but are able to get on, stand on their own two feet and build a better life for themselves and their family."

Cameron's statement is ridiculous because the vast majority of people on welfare are not the unemployed, but are pensioners and the working poor. They depend on welfare because they don't have enough money. Money that is snatched from them by a myriad of scams. Not just by insurance companies with their dodgy investment and pension products, but also by the energy companies, the banks, low paying employers etc.

If Cameron actually wanted to do something about the level of dependency, he would do something about the blue-chip rip-offs that cut the ground from under people who genuinely strive "to get on, stand on their own two feet and build a better life for themselves and their family".

To be fair, no British prime minister, not Cameron nor any of his predecessors in successive Labour and Tory governments, has thought it would be a good 'moral mission' to stop ordinary Britons being Ripped-Off even of their pensions in the final years of their lives. Politicians don't have the will because they know it would be more than their jobs were worth.

As to the cautionary tale above, using Ros Altmann's figures on annuities alone, £8.5 billion that should be being spent by Britain's pensioners is safely holed up in the coffers of Britain's insurance companies. And FCA staff have been taught a harsh lesson that they are not allowed to intervene.

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Luxembourg to prosecute a tax dodge accountant!.. but not for dodging any taxes

KJ learns how the world really works from Fee and Chris...

SOURCE GUARDIAN: Luxembourg tax dodge whistleblower charged with theft, says he acted out of conviction

28-year-old Antoine Deltour has been charged in Luxembourg with a string of criminal offences including theft, violation of professional secrecy, violation of trade secrets and illegally accessing a database. Deltour joined PwC from business school in 2008 and resigned two years later. He said: “Normally auditors are a bit like regulators. It is a useful profession, we verify the accounts of companies... But I wasn’t feeling at home in that environment [at PwC]. Bit by bit I discovered how extreme the system was in reality – it was a massive tax optimisation practice. I didn’t want to be part of that.” Last month the Guardian and more than 20 news media around the world, in conjunction with the International Consortium of Investigative Journalists (ICIJ), published detailed investigations into the tax affairs of several multinationals, based on leaked tax rulings secured by PwC for large clients. Luxembourg’s finance minister Pierre Gramegna has described the affair as “the worst attack Luxembourg has experienced in its history”. But his counterparts in France, Germany and Italy suggested the revelations had brought Europe to an “obvious … turning point” in the international debate on unfair tax competition. “Since certain tax practices of countries and taxpayers have become public recently, the limits of permissible tax competition between member states have shifted,” they said in a letter to Pierre Moscovici, European commissioner with responsibility for tax. “This development is irreversible.” The Guardian and other media working with the ICIJ had this month published more revelations and further confidential tax rulings secured by Ernst & Young, KPMG and Deloitte.

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

British household debt is £1.7 trillion: we are living further beyond our means than at almost any time in the last 20 years.

The head of the Office for Budget Responsibility (OBR), Robert Chote, told a panel of MPs that consumers have been upping their spending, which in turn helps improve the growth of the economy. But the increased expenditure does not mean that households have more cash to spare – they are just using their savings. He added: ‘We have assumed that it is not plausible [that this could continue].’ Consumer spending grew by 2.1 per cent in the first nine months of this year, even though wages continued to stagnate, figures from the OBR show. The economists estimate that the huge gap between earning and spending is the second largest since the mid-1990s. Total household debt stood at £1,670billion as of the second quarter of this year. The OBR has increased its forecast of unsecured household debt as households continue to spend beyond their means. The forecasts come as debt experts warned that as many as one in four credit card customers are paying the minimum every month or struggling to pay at all. One in five respondents with a credit card said they only made the minimum payment in October, while a further one in 20 said they made no payment or paid off less than the minimum. DAILY MAIL

Luxembourg tax dodge whistleblower charged with theft, says he acted out of conviction

28-year-old Antoine Deltour has been charged in Luxembourg with a string of criminal offences including theft, violation of professional secrecy, violation of trade secrets and illegally accessing a database. Deltour joined PwC from business school in 2008 and resigned two years later. He said: “Normally auditors are a bit like regulators. It is a useful profession, we verify the accounts of companies... But I wasn’t feeling at home in that environment [at PwC]. Bit by bit I discovered how extreme the system was in reality – it was a massive tax optimisation practice. I didn’t want to be part of that.” Last month the Guardian and more than 20 news media around the world, in conjunction with the International Consortium of Investigative Journalists (ICIJ), published detailed investigations into the tax affairs of several multinationals, based on leaked tax rulings secured by PwC for large clients. Luxembourg’s finance minister Pierre Gramegna has described the affair as “the worst attack Luxembourg has experienced in its history”. But his counterparts in France, Germany and Italy suggested the revelations had brought Europe to an “obvious … turning point” in the international debate on unfair tax competition. “Since certain tax practices of countries and taxpayers have become public recently, the limits of permissible tax competition between member states have shifted,” they said in a letter to Pierre Moscovici, European commissioner with responsibility for tax. “This development is irreversible.” The Guardian and other media working with the ICIJ had this month published more revelations and further confidential tax rulings secured by Ernst & Young, KPMG and Deloitte. GUARDIAN

It’s expensive being poor: Poorest households face fastest cost of living rise

The Office for National Statistics (ONS) said that households in the bottom 10% of the income scale had an average annual inflation rate of 2.9% each year from January 2003 to October 2014. This compared with an inflation rate of 2.6% among the wealthiest 10% of UK households. Caroline Abrahams, charity director at charity Age UK, said: "Because older and lower income groups spend a greater proportion of their income on essentials such as food, fuel and energy, they are far more vulnerable to the price increases we have seen to these items since 2003... With 1.6 million pensioners living in poverty and a further one million just above the breadline, many are struggling to afford the basics, let alone anything else." When categorising households by how much they spend, rather than their income, the top 10% of households saw prices rise, on average, by 2.3% over the same period. This compared with 3.7% among the 10% of households which spent the least. Households with children saw the cost of living rise by 2.4% on average each year, compared with 2.7% for those without children. Non-retired households saw prices rise on average by 2.5%, compared with 2.8% for retirees. BBC NEWS

The average UK property price rose more in 2014 than the average worker earns in a year – and London is the worst

The average worker took home £27,271 this year, having seen their wages grow just 0.6 per cent – or £169 - compared to 2013, the study by the Centre for Economics and Business Research for the Post Office found. Yet steep property inflation means the average house price now stands at £272,952, up £29,339 from £243,613 last year. Therefore, more than three in five workers earned less than the average house price rise. To give some examples, starting salaries for junior hospital doctors, graduate nurses, teachers, police officers and soldiers are all less than £23,500. Homeowners in the East, South East and London saw their homes earn far more than average wages in the area. Property values in London, for example, have added an average of £80,452 - almost twice the average salary of £41,095 earned in the capital. In fact, booming property in London earned more than the average fully qualified doctor. Elsewhere, estate agents Marsh and Parsons predicts a slowdown of growth when it comes to prime London property next year, but says London rents will soar by around 10 per cent during the course of 2015. DAILY MAIL

Have you checked your pension recently? Officials reveal companies are charging some savers FOUR TIMES the recommended cost to manage their pot

Some pension companies take more than 3 per cent of savers' money each year as a fee, potentially reducing retirement incomes by tens of thousands of pounds. The charges compare to the capped 0.75 per cent fee that applies to schemes taking in new members under the Government's automatic enrolment policy. The audit of pension charges was made by the Independent Project Board, which was set up after the Office of Fair Trading found evidence in 2013 that savers were not getting value for money from their pensions. The report found that of £67.5billion held in relevant schemes as much as £25.8billion is potentially subject to charges above 1 per cent, accounting for 1.5million savers. Around half of this is could be exposed to charges above 1.5 per cent, between £5.6bn and £8.0bn is exposed to charges above 2 per cent and around £0.9bn exposed to charges above 3 per cent. The report found 38 different types of charge being levelled by schemes, and 291 different combinations of these charges being applied. Some schemes impose penalties as high as 10 per cent of the fund's value if savers want to switch to a better scheme. Others apply monthly cash fees on top of annual percentage ones. This not only takes more money from savers, it can distort the charges so that a scheme with a lower annual charge can work out more expensive than one with a higher fee - depending on how much the saver contributes. The report related to 'defined contribution' pension schemes, which take money from workers and their employer and invest it in order to build a retirement fund. It did not include final salary plans, which are part of defined benefit schemes that guarantee workers a set income in retirement, with firms taking responsibility for this. Tom McPhail, head of pensions research at Hargreaves Lansdown, said: 'Long-standing loyal investors shouldn’t be penalised by getting a worse deal than new customers. This audit has revealed that billions of pounds of investors’ life savings are still languishing in poor value products, and worse still, 407,000 have joined poor value schemes in the last 3 years”. DAILY MAIL

Germany’s Amazon workers strike as Christmas orders peak

Labour union Verdi said almost 2,300 workers joined the action at five of Amazon's nine distribution centers in Germany, and that the action would be extended to a sixth on Tuesday - the most warehouses hit by a strike in the long-running dispute. Amazon itself said that only a small minority of workers had joined the strikes, with around 19,000 employees working normally. Verdi has organized frequent strikes at Amazon since May 2013 as it seeks to force the retailer to raise pay for workers at its distribution centers in accordance with collective bargaining agreements across Germany's mail order and retail industry. Amazon has repeatedly rejected the union's demands, saying it regards warehouse staff as logistics workers and that they receive above-average pay by the standards of that industry. The U.S. company has previously said the long-running dispute has not affected deliveries as the vast majority of workers in Germany have not joined the strikes and it can draw on a European network of 28 warehouses in seven countries. Germany is Amazon’s second largest market after the US. REUTERS

Amazon refuses to compensate sellers for 1p website price glitch

Amazon’s selling partners have lost tens of thousands of pounds after a software glitch led to their stock being sold for 1p. But the company, which had sales of more than $74bn (£48bn) last year, has emailed sellers to tell them that “as of now Amazon will not be providing any reimbursements for this issue”. RepricerExpress, the third-party company behind the faulty software, has also not offered compensation. The Derry-based company has said it is “truly sorry for the distress this has caused our customers”. Daniel Pizzey, who said his baby clothing company Baby Best Buy has lost £25,000-£30,000 as a result of the glitch, said: “I am totally disgusted at the way Amazon has dealt with this matter”. Pizzey said his company was swamped with 30-40 orders a minute during the 1p glitch on Friday night. “Customers were ordering like 40-50 of the same items and just paying 50p for it. Surely Amazon would have picked up on this and questioned it before sending it out?” The Amazon email to Go2Games, which estimates it lost £10,000 as a result of the glitch, signs off with “have a nice day”. GUARDIAN

£10.5bn order for new trains could have left taxpayers ‘badly ripped off’, say MPs

Two fleets of trains ordered for £10.5bn by inexperienced officials at the Department for Transport have put taxpayers’ money at risk, sown confusion in the rail industry and could mean higher fares, a report from MPs claims. Margaret Hodge, who chairs the public accounts committee, said the DfT’s decision to buy the trains itself – rather than keeping with its previous approach of leaving it to rolling stock companies and train operators - had left the taxpayer bearing all the risk. “The department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5bn,” she said. Hodge explained that this transferred risk away from the rail industry back to government. If passenger forecasts are wrong and fewer new trains are needed, taxpayers will have to pick up the bill. In addition, the report finds the Intercity Express programme was poorly managed and could have cost billions more without a review in 2010, after Hitachi had already secured the work. Following that review, the manufacturer submitted a bid 38% cheaper than its original offer. Hodge said: “Had it not been for the review the taxpayer could have been badly ripped off. The department had begun the procurement without a clear idea of how many trains would be needed, which routes they would run on and what form of power would be required.” Rail unions backed the MPs’ critical report. Mick Cash, the RMT general secretary, said the committee was “shining some light on the murky racket of train procurement” and “drawing attention to the need to defend and develop train building capacity in this country”. Aslef’s leader, Mick Whelan, said: “A failure to put any long-term strategy for the rail industry in place has once more led to additional burdens, and risk, for the British taxpayer.” GUARDIAN

Energy minister Davey tells 'Big Six' energy suppliers he wants them to lose customers to smaller rivals

Ed Davey said it was a 'fantastic success story' that the Big Six - British Gas, npower, Scottish & Southern Energy, EDF, E.On and Scottish Power - have seen their market share slip this year, with smaller suppliers such as First Utility and Ovo Energy sweeping up customers. Independent energy suppliers' market share has doubled this year to nearly 10 per cent as energy users move away from the incumbent 'Big Six' providers in protest against poor customer service and high bills. He added: 'I want to go further and see them have a 30 per cent market share by the end of the decade,' First Utility is the largest of Britain's independent suppliers, holding 3.1 percent of the dual-fuel market, while others including Ovo Energy and Utility Warehouse, owned by Telecom Plus, make up the rest. The affordability of energy bills rose to the top of the political agenda a year ago when the opposition Labour party promised to freeze energy prices if it wins power in next May's election. The competition watchdog is currently carrying out an in-depth investigation into whether the Big Six have displayed any anti-competitive behaviour, a probe that could lead to the break up of some companies. The Big Six has face long-standing accusations that it raises and lowers prices en masse so that customers have nowhere to go in order to find a cheaper deal. The Big Six have always maintained that retail profit margins are modest at around 5 per cent, but critics say the 'vertical' model for energy - where large retail suppliers also own energy generation arms which make profits - means it is difficult to find out profit levels. DAILY MAIL

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Graphs at a glance: OECD report shows greater inequality is bad for growth. So why are the Tories pushing up inequality by cutting back the welfare state?

J.P.Morgan, in his time a successful banker, said:

“A man always has two reasons for doing anything. The good reason, and the real reason”.

“Doing”: The Tory led government is squeezing benefits by freezing, cutting and capping them.

They claim “the good reason” is to push the feckless unemployed off their dependency on benefits into jobs. Make them economically productive, thereby boosting their own incomes as well as our national GDP.

Now we at Ripped-Off Britons like to think the best of people. It is just about plausible that Tory policy makers actually don’t realise that benefits go mainly to the low paid not the unemployed. Benefits are far more a subsidy to low paying employers than a subsidy to the unemployed. But for this post let’s not go there – we go there in other posts.

For now we take a closer look at whether cutting benefits actually does improve the prospects of the poor and boost Britain's GDP. The Organisation of Economic Cooperation and Development (OECD) published a report in December 2014 which provides a helpful insight.

Benefits are paid by taxes. It is a transfer of money from the richer to the poorer, and therefore reduces the income inequality gap. Office for National Statistics (ONS) figures show UK inequality is reduced by these transfers from a Gini of over 50 (like Brazil, Bolivia, Botswana) to under 35.

ONS Figures

This leaves us less unequal than the US, but more so than France and Germany:

OECD Report

The OECD report shows far from boosting economic growth, high levels of inequality have a significant negative impact:

"Drawing on harmonised data covering the OECD countries over the past 30 years, the econometric analysis suggests that income inequality has a negative and statistically significant impact on subsequent growth."

Interestingly enough, the report shows that it is precisely the people the "Good Reason" claims to be good for that are hurt most. Their graph below shows the impact of inequality on numeracy for three categories of people, based on Parental Educational Background (PEB):

• Low PEB: Neither parent has attained upper secondary education (beyond GCSEs). The report states this constitutes about 5% of the population in the UK.
• Medium PEB: At least one parent has gone beyond GCSE, but not continued beyond secondary school.
• High PEB: At least one parent has attained qualifications beyond secondary school, e.g. a degree.

OECD Report

Greater inequality has no impact on the Numeracy Score for people of High PEB, and a modest negative impact on Medium PEB. But has a strong negative impact on people of Low PEB.


In terms of kids climbing up the ladder and attaining Tertiary (post secondary school) qualifications, the effect is even more startling. Higher inequality actually improves the attainment of those of Medium PEB, has no impact on those of High PEB, but is a disaster for those of Low PEB:

OECD Report

The OECD report states:

"The estimated coefficients imply that lowering bottom inequality by half of a standard deviation (which is the same as changing bottom inequality in the UK to be like that in France, or that of the US to become like that of Japan, or Australia) would increase average annual growth by nearly 0.3 percentage points over the subsequent 25-year period, with a cumulated gain in GDP at the end of the period in excess of 7 per cent."

Evidently trying to starve the poor into being rich doesn't work, neither for the poor nor for the British economy. 

So if the "Good Reason" is in fact b****s. What is the "Real Reason"?

Read More

Graphs at a glance: OECD report shows greater inequality is bad for growth. So why are the Tories pushing up inequality by cutting back the welfare state?

J.P.Morgan, in his time a successful banker, said:

“A man always has two reasons for doing anything. The good reason, and the real reason”.

“Doing”: The Tory led government is squeezing benefits by freezing, cutting and capping them.

They claim “the good reason” is to push the feckless unemployed off their dependency on benefits into jobs. Make them economically productive, thereby boosting their own incomes as well as our national GDP.

Now we at Ripped-Off Britons like to think the best of people. It is just about plausible that Tory policy makers actually don’t realise that benefits go mainly to the low paid not the unemployed. Benefits are far more a subsidy to low paying employers than a subsidy to the unemployed. But for this post let’s not go there – we go there in other posts.

For now we take a closer look at whether cutting benefits actually does improve the prospects of the poor and boost Britain's GDP. The Organisation of Economic Cooperation and Development (OECD) published a report in December 2014 which provides a helpful insight.

Benefits are paid by taxes. It is a transfer of money from the richer to the poorer, and therefore reduces the income inequality gap. Office for National Statistics (ONS) figures show UK inequality is reduced by these transfers from a Gini of over 50 (like Brazil, Bolivia, Botswana) to under 35.

This leaves us less unequal than the US, but more so than France and Germany:

The OECD report shows far from boosting economic growth, high levels of inequality have a significant negative impact:

"Drawing on harmonised data covering the OECD countries over the past 30 years, the econometric analysis suggests that income inequality has a negative and statistically significant impact on subsequent growth."

Interestingly enough, the report shows that it is precisely the people the "Good Reason" claims to be good for that are hurt most. Their graph below shows the impact of inequality on numeracy for three categories of people, based on Parental Educational Background (PEB):

• Low PEB: Neither parent has attained upper secondary education (beyond GCSEs). The report states this constitutes about 5% of the population in the UK.
• Medium PEB: At least one parent has gone beyond GCSE, but not continued beyond secondary school.
• High PEB: At least one parent has attained qualifications beyond secondary school, e.g. a degree.

Greater inequality has no impact on the Numeracy Score for people of High PEB, and a modest negative impact on Medium PEB. But has a strong negative impact on people of Low PEB.


In terms of attaining Tertiary (post secondary school) qualifications, the effect is even more startling. Higher inequality actually improves the attainment of those of Medium PEB, has no impact on those of High PEB, but is a disaster for those of Low PEB:

The OECD report states:

"The estimated coefficients imply that lowering bottom inequality by half of a standard deviation (which is the same as changing bottom inequality in the UK to be like that in France, or that of the US to become like that of Japan, or Australia) would increase average annual growth by nearly 0.3 percentage points over the subsequent 25-year period, with a cumulated gain in GDP at the end of the period in excess of 7 per cent."

Evidently trying to starve the poor into being rich doesn't work, neither for the poor nor for the British economy. 

So if the "Good Reason" is in fact b****s. What is the "Real Reason"?

Read More