Beware of George Osborne's "shares for rights" scheme

There's been lots of criticism, even from the business community. But what has history to teach us?...

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Tories propose you give up your Employment Rights in exchange for a bunch of shares - a repeat of the Manhattan Scam?

Apart from doing that Bullingdon thing the Chancellor George Osborne also studied Modern History at Oxford University. Some may be surprised to learn that "Modern" history starts from the 16^th Century straight after the Middle Ages. One of the lessons Osborne would have learned from this period is how the island of Manhattan in New York was given up by its Native American Indian inhabitants for a handful of glass beads. Clearly an example of how one party misled the other on two things:

a)     the relative values of a handful of glass beads and Manhattan, and

b)     the implications of "give up"

George is trying the same trick with your Employment Rights. He proposes that you surrender your right to claim unfair dismissal in exchange for shares in your employer worth between £2,000 and £50,000. This is in spite of the fact that Britons are already the third most easily sacked people in the developed world. 

Presumably the idea is that you too can get richer from your own sacking by the boost to your employer’s share price and the dividends that come from getting rid of you. Making getting fired worthwhile!

As you will appreciate, this is closely modelled on the Manhattan Island scam. So we provide you with some basic facts to avoid any confusion on

a)     the relative value of a handful of shares and your employment rights, and

b)     the implications of “give up”

In March 2012, the Chartered Institute of Personnel and Development published a report titled “Counting the cost of the jobs recession”. The report provides stark figures on the effect on the economy of unemployment.  

The report's figures on the continuing lost GDP, e.g. 9.1% lost in 2011 alone, throws a light on the fact that although the banks may claim to have stopped stabbing us in the back (though we doubt this), and claim to be reforming (we doubt this too), it is clear that we are still bleeding. It also provides other grim facts for the sacked:

• The number of people working part-time because they can’t find a full-time job doubled from 0.67 million to 1.34 million between spring 2008 and the end of 2011.
• Two-thirds of people who are made redundant and who then return to work are paid less in their new job. On average, the pay penalty is 28%.

An earlier CIPD report, from January 2009, “A False Economy? The cost to employers of redundancy”, found that in terms of the amount of redundancy money paid:

• The average redundancy payment is found to be £10,575, though a quarter of employers pay less than £5,000. The average payment ranges from £7,629 in the voluntary/not-for-profit sector to £8,891 in the private sector and £17, 926 in the public sector.

So on a middling salary of £2,000 per month, assuming you can get a new job you are likely to be paid £560 per month less (the average pay reduction of 28%). Without a new job you would be on nothing but benefits of a few hundred pounds and falling as the benefits axe continues to cut.

The Chancellor suggests between £2,000 and £50,000 of shares in return for your employment rights. Private sector companies are unlikely to hand their staff shares worth more than the average redundancy payment of £8,891. But lets say they feel generous, and offer £9,000 worth of shares. How much income would that bring you each month, assuming you hold on to the shares to benefit from your own sacking?

This becomes clear from a snapshot, taken in October 2012, of the dividends paid by FTSE100 companies. The graph, showing the monthly income if you took the annual dividend in 12 instalments, reveals how paltry this would be:

• Just one company would pay more than £50 per month in dividends
• Three more companies would pay more than £20 per month
• Fourteen more companies would pay more than £10 per month
• Forty nine companies would pay less than £2 per month

If you were worried that the Tories are unthinkingly legislating Britain into a medieval world of cornucopic plenty for some and abject poverty for many, with the poor forced to supplement their meagre livings with a bit of thieving, you’d be quite wrong. As well as promises to slash benefits, salaries, pensions and employment rights, the Tories promised to legalise beating up burglars to a disproportionate but not grossly disproportionate degree. 

When asked by the BBC what would not be allowed, the Justice Secretary Chris Grayling said that stabbing an unconscious burglar was not allowed. Will the Tories be promoting a bag of golf-like clubs for this purpose? Allowing you to select a club to inflict a disproportionate but not grossly disproportionate beating?

And shall the courts have a ‘swing weight’ chart to judge the line between disproportionate and grossly disproportionate? One weight for adults, another for children, with a discount for the degree of burglar incapacitation?

http://www.golf-components.com/swing-weight-chart-woods.html

The October 2012 Tory Party Conference was specific on determined cuts to benefits, but totally vague on "the rich paying their fair share". We wonder whether the Tory leadership is deeply cynical, or just grossly ignorant about the real world. With both the PM and Chancellor's life experience limited to Eton, Oxford, and Tory politics (Cameron's stint in PR for a television company counting as 'Tory politics') - never having had a real job, nor ever having to worry about paying the next electricity bill - perhaps they really believe by adding a few shares to ones portfolio one can get by. No doubt they don't need their salaries, being well provided for by dividends, capital growth, and other unearned income. 

When the US presidential candidate Mitt Romney brought ridicule on himself by suggesting the average income in the USA is a quarter of a million dollars, it seems that he wasn't being cynical but really believed this. Could it be that Tory politicians really believe that making the rich even richer benefits everyone? And losing a few thousand pounds a month income doesn't really matter? Cameron's great-great grandfather made a fortune trading grain, and Osborne's father proved successful selling wallpaper. Do the Prime Minister and Chancellor, who are able to live on income they have not earned, not understand the tribulations of those who depend on their jobs for their livings?

This also raises a question about another non-Tory leader, Nick Clegg of the Liberal Democrats. With fixed term parliaments now law David Cameron can no longer decide when to dissolve Parliament (a tactic repeatedly used by previous prime ministers to time elections to their best advantage). Has Nick realised he is now, by withdrawing his support for the coalition, one of only two people who can force an early general election? The other is HM Queen Elizabeth. 

Poor Nick was caught between the Scylla of Gordon Brown and the Charybdis of David Cameron. One a known bully, the other a probable bully. At that time Clegg had no option but to sail into coalition - to do otherwise would have been cowardice. Was Clegg's entering into the coalition government with Cameron a brilliant strategic masterstroke giving him this near unique (shared only with the Queen) parliament-ending power? Or is he going down in history as the fall guy he appears to be, taking his party into the fall with him? Will the real Nick Clegg now step up?

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British Gas raises energy bills for winter

Fee knows what we all know about the Big Six energy suppliers, British Gas, SSE, Npower, Eon, EDF and Scottish Power...

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

'Low food prices are gone for good': experts blame bad weather and market speculators
Experts blame the current rises in grocery prices on a combination of terrible weather, bad harvests and speculation. Meanwhile, 'political drift' on the issue meant any solution to the problem in the longer term was unlikely. DAILY MAIL

Pensions in 'freefall' due to Bank of England's money-printing
Annuities – which you buy with your pension pot when you retire - determine a savers annual income for the remainder of their life. However their value has plunged by 7% in just three months, a result of the Bank of England's "quantitative easing". With another round of money-printing being considered, annuity rates could fall even further. TELEGRAPH

'Wonga is targeting our bankruptcy capital': Blistering attack on payday lender's £24m Newcastle Utd sponsorship
As many as 35.2 adults per 10,000 are insolvent in the North East – home to Newcastle United – compared to just 17.5 in London and 29.6 in the neighbouring North West. The deal also includes naming rights for the club's stadium although Wonga will restore the Sports Direct Arena to its traditional name, St James' Park. Wonga is the leading high interest, short-term "payday" loan company. Newcastle United will now be sponsored by the money of deprived people up and down the country. DAILY MAIL
(If you can't afford to buy one of their wildly overpriced football shirts, you can always take out a Wonga loan... It's all starting to make sense!)

Tory conference: Lord Young slams government's small firm start-up scheme

The new Seed Enterprise Investment scheme incentivises investors to invest in small businesses by giving them tax relief. But Lord Young described the scheme as "ridiculously generous". Venture capitalists can get up to 78% tax relief by using the new scheme. BBC NEWS

("Be realistic, Lord Young. This has to compete with the 100% tax relief they get from all the other loopholes they're using," shouted one wag from the audience.)


Tory chairman Grant Shapps: the Government is a shambles
David Cameron has presided over a shambles for the last six months and struggled to create a "top notch" Government, the new Conservative Party chairman has admitted. TELEGRAPH

Quarter of Tory MPs are buy-to-let landlords
More than a quarter of Tory MPs are private landlords. They are too self-interested in keeping house prices high to legislate to help first-time buyers get a foot on the housing ladder. 12.5 per cent of Labour MPs own rental property portfolios and 15 per cent of Lib Dem MPs. FINANCIAL TIMES

Tory conference: Burglary 'over-reaction' to be allowed

Householders who overreact when confronted by burglars are to get more protection in law. However, Justice Secretary Chris Grayling said that stabbing to death a burglar who had already been knocked unconscious would still break the law. But between 1990 and 2005 there were just 7 prosecutions for people tackling intruders in their homes. Critics say the law change is simply a sop to right wingers. BBC NEWS

(If that includes thefts by rip-off banks, energy firms, water suppliers, rail operators, telecoms, etc. etc... then we're talking!)

Scottish Tories claim that nine in ten Scots 'living off state's patronage'

Almost 9 out of 10 Scottish households take more from the public purse than they contribute in taxes thanks to a “rotten system” of state patronage, says the leader of the Scottish Conservative Party. But according to the most recent figures, Scotland contributed 9.6% of Britain’s tax take and accounted for 9.35 of public spending. The Scottish Tories' statement has been taken as an insult by many Scots. TELEGRAPH
(NEWS LATEST! Research by the Scottish Tories reveals that 10 out of 10 Scottish households can't stand the Scottish Tories' guts.)

Taxman suffers bloody nose in fight against tax avoidance by banks 
Swiss bank UBS had avoided paying income tax and national insurance on £92m in bonuses to 400 staff by paying the money via a Jersey based "avoidance vehicle." A first court ruling that the blatant tax dodge was bullshit has been overturned in favour of UBS. CITY WIRE

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George Osborne to cut another £10bn from welfare

Tax benefits, allowances,,, is nothing safe?

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With predatory companies on all sides, it costs an awful lot of money to be poor

Her Majesty's Revenue and Customs (HMRC), responsible for tax collection in the UK, recognises certain special needs. HMRC provides tax deductions and allowances for being old and married, for being old and divorced, and for being blind. These are well targeted allowances that are deliberately not intended for younger and sighted people.

However, none of these special needs is more generously provided with tax deductions and allowances than the special need of “being rich”. Nor are any other deductions nor allowances more ruthlessly and meticulously targeted to ensure the "not being rich" can benefit from them. These allowances for "being rich" are known collectively as "tax avoidance". Accountants will rush to tell you tax avoidance is quite legal, so long as you have the glitz to persuade a bank to lend you millions of gilts for a few days, or find someone to trade offshore dividends on your behalf, or tuck away a 'sideways loss' for a rainy taxy day.  However, as the litany of rich celebrities dodging taxes to fund their special need of "being rich" continues, it is easy to forget how extremely expensive it is to be poor. The fact is, the poor pay higher prices for the same goods and services than averagely and better off people. So, for the purposes of this post, let's lay off the poor rich and focus on the poor poor.

Office of National Statistics Figures

We have pointed out in an earlier post that companies have good reason to rip off the poor. The reason is, in the words of Slick Willie Sutton the bank robber, (and perhaps a little surprisingly) "because that's where the money is". The rich have the wealth (which is why they are so against a wealth tax), but while they may live in it, sail it, eat off it, look at it, or just horde it, they rarely spend it. The actual flow of cash mainly runs through the hands of poor and ordinary people. Why is this? Because there are so many more ordinary people, and they have to spend all the cash they have to pay their bills. By the way, this is another reason why trying to grow the economy by giving more money to the rich is so grimly fatuous - the rich don't go out and spend it, they just stack it away. While giving more to the poor - improved minimum wage, lower VAT, or even (say it softly) an increase in benefits - would see the cash circulate back into the economy and generate real spending and growth.

As a direct result of these rip-offs it becomes exceedingly expensive to be poor. The charities Save the Children and Family Action produced reports in 2010 and 2011 detailing how the poor pay more for the same stuff. One of the regrets we at Ripped-Off Britons have is these reports appear in a flare of publicity and are then forgotten. So we reproduce extracts here, which we will retweet lest we forget.

It is a shocking injustice that the poorest families in the UK pay higher prices than better-off families for basic necessities like gas, electricity and banking. The costs that poor families bear in acquiring cash and credit, and in purchasing goods and services, can amount to a ‘poverty premium’ of around £1,000 – 9 per cent of the disposable income of an average-size family.

Policy-makers expend considerable amounts of time and energy exploring the most effective ways to get more money into the pockets of low-income families.Yet they spend little time considering the unequal way in which that money comes out of those families’ pockets. We know that when poor families’ incomes rise, parents spend those gains on essentials for themselves and their children. Imagine the gains in terms of basic necessities, clothes, food, social activities, savings and many other areas that an extra £1,000 a year would bring to poor families. 

In a separate report from 2010, Family Action investigated the cost of "christmas club" hampers, comparing club prices with the price of the same goods bought from Tescos. These savings clubs take what most of us would consider small amounts from their customers each week or month over the year and deliver a hamper in time for Christmas. (All prices are from Christmas 2010, when the Family Action report was written)

Politicians of all parties assiduously court the wealthy, providing favours that help them get anything; from government contracts to handshakes from well connected deal-makers, to knighthoods. The wealthy are the source of funding for the party as well as supplementary jobs as consultants and non-executive directorships for the MPs to top-up their parliamentary pay. Not to mention building relationships while successful that may provide rewarding employment after their parliamentary careers end, as they all do, in failure. Politicians are understandably wary of biting the hands they hope will feed them by raising and dealing with these issues.

However they, as well as us ripped-off Britons, should not forget the wealthy don’t patronise politicians because they smell so good. They do it for political favours, which can only really be delivered when in power. And to get into power politicians need the votes of us ripped-off Britons - 90% of whom have been stagnating for decades through Labour and Tory governments alike.

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

To support their campaigns please visit

www.savethechildren.org.uk/endchildpoverty 

and www.family-action.org.uk

Read More

With predatory companies on all sides, it costs an awful lot of money to be poor

Her Majesty's Revenue and Customs (HMRC), responsible for tax collection in the UK, recognises certain special needs. HMRC provides tax deductions and allowances for being old and married, for being old and divorced, and for being blind. These are well targeted allowances that are deliberately not intended for younger and sighted people.

However, none of these special needs is more generously provided with tax deductions and allowances than the special need of “being rich”. Nor are any other deductions nor allowances more ruthlessly and meticulously targeted to ensure the "not being rich" can benefit from them. These allowances for "being rich" are known collectively as "tax avoidance". Accountants will rush to tell you tax avoidance is quite legal, so long as you have the glitz to persuade a bank to lend you millions of gilts for a few days, or find someone to trade offshore dividends on your behalf, or tuck away a 'sideways loss' for a rainy taxy day.  However, as the litany of rich celebrities dodging taxes to fund their special need of "being rich" continues, it is easy to forget how extremely expensive it is to be poor. The fact is, the poor pay higher prices for the same goods and services than averagely and better off people. So, for the purposes of this post, let's lay off the poor rich and focus on the poor poor.

Office of National Statistics Figures

We have pointed out in an earlier post that companies have good reason to rip off the poor. The reason is, in the words of Slick Willie Sutton the bank robber, (and perhaps a little surprisingly) "because that's where the money is". The rich have the wealth (which is why they are so against a wealth tax), but while they may live in it, sail it, eat off it, look at it, or just horde it, they rarely spend it. The actual flow of cash mainly runs through the hands of poor and ordinary people. Why is this? Because there are so many more ordinary people, and they have to spend all the cash they have to pay their bills. By the way, this is another reason why trying to grow the economy by giving more money to the rich is so grimly fatuous - the rich don't go out and spend it, they just stack it away. While giving more to the poor - improved minimum wage, lower VAT, or even (say it softly) an increase in benefits - would see the cash circulate back into the economy and generate real spending and growth.

As a direct result of these rip-offs it becomes exceedingly expensive to be poor. The charities Save the Children and Family Action produced reports in 2010 and 2011 detailing how the poor pay more for the same stuff. One of the regrets we at Ripped-Off Britons have is these reports appear in a flare of publicity and are then forgotten. So we reproduce extracts here, which we will retweet lest we forget.

It is a shocking injustice that the poorest families in the UK pay higher prices than better-off families for basic necessities like gas, electricity and banking. The costs that poor families bear in acquiring cash and credit, and in purchasing goods and services, can amount to a ‘poverty premium’ of around £1,000 – 9 per cent of the disposable income of an average-size family.

Policy-makers expend considerable amounts of time and energy exploring the most effective ways to get more money into the pockets of low-income families.Yet they spend little time considering the unequal way in which that money comes out of those families’ pockets. We know that when poor families’ incomes rise, parents spend those gains on essentials for themselves and their children. Imagine the gains in terms of basic necessities, clothes, food, social activities, savings and many other areas that an extra £1,000 a year would bring to poor families. 

In a separate report from 2010, Family Action investigated the cost of "christmas club" hampers, comparing club prices with the price of the same goods bought from Tescos. These savings clubs take what most of us would consider small amounts from their customers each week or month over the year and deliver a hamper in time for Christmas. (All prices are from Christmas 2010, when the Family Action report was written)

Politicians of all parties assiduously court the wealthy, providing favours that help them get anything; from government contracts to handshakes from well connected deal-makers, to knighthoods. The wealthy are the source of funding for the party as well as supplementary jobs as consultants and non-executive directorships for the MPs to top-up their parliamentary pay. Not to mention building relationships while successful that may provide rewarding employment after their parliamentary careers end, as they all do, in failure. Politicians are understandably wary of biting the hands they hope will feed them by raising and dealing with these issues.

However they, as well as us ripped-off Britons, should not forget the wealthy don’t patronise politicians because they smell so good. They do it for political favours, which can only really be delivered when in power. And to get into power politicians need the votes of us ripped-off Britons - 90% of whom have been stagnating for decades through Labour and Tory governments alike.

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

To support their campaigns please visit

www.savethechildren.org.uk/endchildpoverty 

and www.family-action.org.uk

Read More

The OFT says insurers are inflating costs for repairs and hire vehicles by £225m a year

Chris and his wife find out the hard way...

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

RBS trader sent mocking messages as he tried to rig Libor, court told
The Libor determines interest rates on $350 trillion globally, from home loans to credit cards. Online chats between colleagues contained boasts such as 'our six-month fixing moved the entire fixing hahahah'. The evidence also shows an RBS trader describing Libor as a "cartel" and claiming that hedge funds would be "kissing" a colleague if the rate was reduced. GUARDIAN
(RBS emails saying "let's all do an honest day's work" and "stop rigging these rates, we've all made enough money already" were dismissed as obvious fabrications by the court.)

Families face sharp rise in winter energy bills

Profits from each household will rise from £45 to £65 by Christmas, prompting claims that large energy companies are profiteering. Up to 300,000 businesses could be forced to fold if energy prices continue to rise. But energy supplier SSE said “Our margin is equivalent to most other essential commodity providers like food and water, and substantially less than things like mobile phones, Sky and others.” TELEGRAPH

("But substantially more than six massive energy firms operating in a properly functioning and competitive market," they didn't add.)

Payment Protection Insurance complaints soar to 2.2 million. Overall, Barclays is the worst
Barclays Bank received more customer complaints than any other UK financial institution in the first half of 2012, with 442,266 disputes recorded. Barclays said that if PPI complaints were stripped out of its figures, overall complaints would have fallen by 9%. MSN NEWS

("And if rampant mis-selling were stripped out of our core strategy, we'd be out of business completely," they didn't add.)


Ryanair boss bemoans own airline's baggage fees
Michael O’Leary, Ryanair’s famously opinionated chief executive, has dismissed holidays as “a waste of time” and says flying with his own airline costs him "a fortune in excess baggage”. TELEGRAPH
(A spokesman for the Union of Satirists said "Michael O'Leary's latest statement shows he is a ruthless man who will not rest until every satirist is out of a job.")

Car insurance industry to face Competition Commission investigation
Insurers are inflating costs for repairs and hire vehicles by £225m a year. A large part of the premiums motorists pay is down to insurers inflating the costs of providing replacement vehicles to not-at-fault drivers following an accident. In some cases the cost of these is more than £1,000 above the going rate. But insurers denied the accusation, insisting that lower premiums may mean not-at-fault drivers will have to "catch a bus." GUARDIAN

("Or hire a cab with the money we've saved, you thieving crooks," said tens of millions of helpless car owners.)


Co-op Bank ditches sales targets for customer service bonuses
The Co-operative Bank, which bought hundreds of Lloyds Bank branches, will focus employees’ attention on helping their customers by linking bonuses to customer service and not sales targets. The financial services sector scooped a third of the UK's entire £37bn bonus pool in 2011/12, even though just 4% of all employees work in that sector. Banks offer massive bonuses "as the only way to ensure this vital part of the nation's economy hires the right sort of people." WORKPLACE SAVINGS & BENEFITS MAGAZINE
(...otherwise known to the nation in question as "the wrong sort of people.")

Virgin Media's 'bye-bye to buffering' ad nuked by watchdog - AGAIN
The Advertising Standards Authority upheld complaints, questioning whether a TV ad featuring ex-Doctor Who star David Tennant had exaggerated Virgin's service by suggesting that buffering was entirely absent. The actor was shown destroying the "buffering" symbol on screen with a baseball bat. THE REGISTER

Sainsbury's "Brand Match" campaign is misleading, says watchdog
Advertising Standards Authority blocks new Sainsburys adverts. As is typical with supermarket promotions, there are reams of small print. You have to spend a minimum of £20 and your basket must include at least one item that is identical (same size, flavour etc.) to one available in Asda or Tesco. Coupons must be redeemed within two weeks and the maximum you can get back is £10. Online shopping is not covered, nor are smaller Sainsbury's Central and Local stores. Electrical products and clothing are also not included. GUARDIAN
("Look. It's a very simple calculation only an idiot would not understand," said a supermarket insider. "Can we run the ads for long enough to rip off customers before the ASA stop us. The answer is always yes.")

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What will Labour really do to save the economy?

Ed Miliband isn't telling...

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