Rip-off News round-up. Our pick of the last week's media (Thu 4th December)

Autumn Statement: George Osborne to shrink the State to its smallest since the 1930s

-TELEGRAPH The Chancellor's spending plans mean the public spending relative to the whole economy would be the smallest in 80 years, the Office for Budget Responsibility (OBR) said. The OBR, the independent government forecaster, said that Mr Osborne's tax and spending policies will require an austerity programme in the next Parliament much bigger that the one implemented by the current Government. That will mean far-reaching new reductions in "day-to-day" public services, including those provided by local councils, the forecasters said. It calculated that between 2009-10 and 2019-20, spending on public services and central government will fall from £5,650 to £3,880 per head in 2014-15 prices. Around 40 per cent of these cuts will be delivered during this Parliament, with around 60 per cent to come during the next, the OBR estimated. With major items of spending like the NHS and the state pension protected from cuts by political promises, independent economists say that the scale of the cuts that would be required in unprotected areas would be unprecedented and potentially leave the State unable to deliver some of its current services. The budget for Whitehall departments, not including health and education, would fall from £188 billion at the start of this decade to £86 billion in 2020, the OBR suggested. If Mr Osborne's plans are realised, public spending in 2019/20 will be 35.2 per cent of gross domestic product. It currently stands at 40.5 per cent. The lowest level achieved by Margaret Thatcher's governments was 37.3 per cent in 1988/89. The current post-war low was set in 1957/58 towards the end of an economic boom that led Harold Macmillan to declare that "most of our people have never had it so good." Mr Osborne has suggested that the Conservatives would try to find many of the post-election cuts from the welfare budget. He also promised to find £10 billion of savings in public sector “efficiency.” He gave few details of how the £10 billion will be found, but signalled it would mean at least another two years of pressure on public sector wages. Matthew Whittaker, an economist at the Resolution Foundation, said that none of the parties has been candid with the electorate about “just how much more fiscal pain there may be to come after the election.” 

Successful publicly owned East Coast Mainline gets the chop: Stagecoach and Virgin joint-venture wins franchise

Unions have condemned the reprivatisation of the service, which has performed well in public hands over the last five years, recording strong customer satisfaction scores while returning all profit to the Treasury – making payments of £1bn in total. The state-owned company, Directly Operated Railways (DOR), stepped in to rescue the London-to-Edinburgh route from National Express in 2009, because it could not deliver the payments it had promised in its contract. The arms-length operator paid £225m to the government in the last financial year. The transport secretary, Patrick McLoughlin, said DOR could not bid, because having the company owned by the Department for Transport running the line was always a “stop-gap measure”. But critics point out that about three-quarters of Britain’s railways are run in full or part by subsidiaries of foreign, state-owned rail firms, including Deutsche Bahn’s Arriva, the Dutch-owned Abellio and Keolis, 70%-owned by SNCF. The government is also preparing to sell its stake in Eurostar, almost certainly to SNCF, the majority owner. GUARDIAN

Lloyds promises to ditch sales targets in bid to snuff out mis-selling and overhaul the bank's tarnished image

Head of Retail, Alison Brittain, described it as a ‘step change’ for the state-backed lender, which has racked up an £11.3bn bill for mis-selling payment protection insurance and was fined £28m last December for its high pressure sales culture. Lloyds were notorious for giving its most prolific salesmen bottles of champagne and ‘grand in the hand’ bonuses. Describing ditching sales targets as an ‘overwhelming symbol of a different way of thinking and running a business’, she said: ‘We’ve managed all the risk out. We knew we were running a clean bank, but this last symbolic gesture says to everybody who works all the way through the line that it’s just about the quality of the conversation you have with the customer, not about sales.’ But the new regime will still open up Lloyds to criticism as it will impose strict targets on salesmen to meet a certain number of customers. A senior personal banking adviser, who asked not to be named, said: ‘The directors always paint a false picture to cover their own backs. Any person knows the sales culture at Lloyds is appalling. Earlier this year the bank increased sales targets and last year the FCA fined Lloyds for mis-selling protection policies.’ The High Street giant said that it will introduce its ‘radical’ new regime at 2,249 Lloyds, Halifax and Bank of Scotland branches from January 1. DAILY MAIL

£50m tuition fees loan scam? Thousands of ‘fake’ students discovered at new private higher education colleges

The report by the National Audit Office (NAO) was prompted by a Guardian investigation into the sector which found that lecturers were teaching to empty or near-empty classrooms. Students and staff alleged that bogus students who were barely literate were using colleges as a “cash point” to access taxpayer-subsidised loans they believed they would never pay back. The new breed of private higher education colleges can charge students £6,000 a year in fees. For two of the largest of these new institutions – London School of Business and Finance, and London School of Science and Technology – the dropout rate rose to about five times the average. By comparing data on those claiming student fees with those registered with exam board Pearson/Edexcel, the spending watchdog identified 2,963 students – 20% of the total studying HNDs – who accessed student funding in 2012-13 without ever being registered to sit exams. This figure excluded students who dropped out that year. In total those students could therefore have accessed over £50m. The auditor found that another group of 5,500 undergraduates from the EU have been unable to prove they were either living in the UK or entitled to public funding. A separate internal government inquiry found that 1,000 of these students, most of whom come from Bulgaria and Romania, were definitely fraudulent and had already claimed £5.4m in student loans before being found out. The government has been able to recover just 7% of that money so far, the NAO said. GUARDIAN

Battersea affordable homes: Mayor Boris attacks 'gloomadon poppers' in row over whether Londoners can afford them

Of the 3,500 homes being built as part of the Battersea Power Station development, 550 will be affordable, though 150 may not come until the final stage in 2025. Mayor Boris Johnson claimed 60 per cent of the homes would go to UK passport holders. Johnson said: “All the gloomadon poppers and those inclined to be negative about that aspect of this wonderful scheme will put that in their pipe and smoke it.” But Labour members of the London Assembly condemned the drive to sell the flats to wealthy foreigners, saying they were “a million miles from affordable to ordinary Londoners”. Asked later by the Standard if he was sure the UK passport holders actually lived in London, Johnson said: “I can’t tell you where their passports were issued.” Estate agency Savills said £7 billion of international money flooded into London for high-end homes last year, with two thirds coming from investors rather than owner-occupiers. Lower down the market, new buyers are being priced out and high rents are squeezing even middle earners. EVENING STANDARD

Trunk and disorderly: tree grows inside squalid, illegally converted house

An illegally converted house in south London with a tree growing through the wall of one room may have been earning a rogue landlord £40,000 a year, according to the council that has repossessed it. The three-bedroom terraced property in Clapham had been transformed into a rental home with eight rooms, each likely to cost around £100 a week at market rate. The house is one of 1,200 “shortlife” properties that were let to housing associations and co-operatives in the 1970s when Lambeth council could not afford bringing them up to a letting standard. Although they were meant to be sublet for only a short time, four decades on the council is still reclaiming them, with more than 40 yet to be recovered. Some fell into the hands of individuals after the original deals were made. Following a court order to the landlord in the latest case, the council repossessed the property last week and workers were astonished to find a tree growing into one of the rooms where a first-floor extension had been built around a branch. An electrical cable passed through a hole drilled into the branch. There were no proper emergency exits and the eight occupants shared a single bathroom. The council is considering taking legal action against the landlord. On Friday, a government-backed bill designed to prevent landlords evicting tenants for complaining about poor condition of homes fell down when not enough MPs turned up to vote. GUARDIAN

Bribery worse in the west than in developing countries, finds OECD

An examination of 400 cases shows 57% of bribes were paid to win public procurement contracts, with most occurring in wealthy countries. Almost two-thirds of cases occurred in four sectors: mining (19%); construction (15%); transportation and storage (15%); and information and communication (10%). More than a quarter of the bribes were promised or given to employees of state-owned companies and a further 11% involved customs officials. Heads of state and ministers were bribed in 5% of cases but received 11% of total bribes. In most cases (57%), bribes were paid to win public procurement contracts, followed by clearance of customs (6%) and attempts to gain preferential tax treatment (6%). In 41% of cases, management-level employees paid or authorised the bribe, whereas chief executives were involved in 12% of cases. Intermediaries were involved in three out of four cases. Contrary to public perceptions, most bribes were to win contracts from state-owned or controlled companies in the west, rather than in the developing world, and most bribe payers and takers were from wealthy countries. “Most international bribes are paid by large companies, usually with the knowledge of senior management,” the study said. The report also revealed it took seven years to conclude corruption cases compared with two years in 1999. “This may reflect the increasing sophistication of bribers, the complexity for law enforcement agencies to investigate cases in several countries or that companies and individuals are less willing to settle than in the past.” The complexity and concealed nature of many deals meant its findings revealed only “the tip of the iceberg”. GUARDIAN

Families spending less than in 2006, says ONS

Family spending rose to £517.30 a week last year - but remains below pre-crisis levels when inflation is taken into account, official figures show. Average household spending stood at £539.80 in 2006. The divide between rich and poor is also clear, with the lowest-earning 10% of households spending an average of £189.80 a week. This compared with an average of £1,119.50 a week for the 10% of highest-earning households in the UK. The Family Spending Survey is compiled every year by the ONS. Housing costs, such as rent and fuel, were top of the expenditure list, ahead of transport costs. It shows that £74.40 a week was spent on average on housing, fuel and power in 2013. This equates to 14% of household spending. However, this figure excludes mortgage interest payments, British council tax or domestic rates in Northern Ireland. A rise in gas and electricity prices pushed this category to the top of the household spending list in 2013, the ONS said. A previous big hit for family finances was transport, which was second on the list last year at £70.40. Nearly half of this was the cost of running a car, namely petrol, diesel, repairs and servicing. Transport remained a significant expense for families in rural areas of the UK. In these areas, it cost £85.50 a week. BBC NEWS