UK News
Insights from the UK and beyond
The reform that breaks the camel’s back?
Trade union leaders have been warning for some time now that it would be pensions reform — not pay freezes or job cuts — that could prove the trigger for widespread public sector strikes this year.
Now activists, eager to punish the Conservative-Liberal Democrat coalition government, have all the ammunition they need in the Hutton pension review.
Few can argue that pensions do not need to be reformed. People in Britain are living longer, making it more expensive for the government and taxpayer to fund pension payments.
And private sector workers have long grumbled that the public sector has it too good when it comes to retirement.
Hutton’s recommendation to remove the final salary scheme was expected and hardly surprising.
But its consequences could be huge.
If the government adopts the suggestions of this former Labour minister, do not expect the unions to take it lying down.
from The Great Debate UK:
Rubbish rates – what is a saver to do?
-Rachel Mason is PR manager at Fair Investment Company. The opinions expressed are her own.-
The base rate is going to be stuck at 0.5 percent for years to come, according to experts, so where does that leave savers?
Yes, the base rate needs to be low for any real economic recovery, and many mortgage holders can't believe their luck, with many seeing their payments plummet. But there is always a flipside, and with a low base rate comes low savings rates.
With inflation up at 5 percent (as measured by the Retail Prices Index) it is impossible to get a savings account that even maintains the value of your money, let alone increases it, so what should savers do in such a low rate environment?
Well, unfortunately, since National Savings and Investment's withdrawal of its tax-free index-linked certificates, virtually all savings accounts are paying interest rates below RPI inflation.
So what can you do? Well, if you are looking for a purely cash account, realistically, the only way of securing a relatively reasonable rate on your savings is to go for a fixed rate savings account - the best ones at the moment are offering around 3.15 percent, when fixed for one year, and 4.90 percent when fixed for five years.
With a fixed rate, you know where you are for the entire term, whereas often with variable rate accounts, providers offer what seems like a good deal but they can pull the rate at any point, so you may only get the advertised rate for a few months. If you can afford to leave your money alone for a few years, it may be well worth fixing for a longer period of time, because analysts are predicting interest rates to stay low for some time.
Satisfied bank customer?
We’re wondering who is.
We see bailed-out banks returning to profit at the same time as headlines about others still refusing to lend. The personal finance pages are bristling with stories about mortgage famine . Big businesses may have been overcharged for banks’ services in raising new equity capital; lending to smaller businesses is down, and the interest offered on savings is so derisory, would-be savers are being pushed into taking more risk to try to preserve their capital.
What are we missing? What is the magic ingredient that makes you as a customer happy with your bank? Or are we right in thinking “customer satisfaction” is a figment of executive imagination? Tell us your stories.
I am satisfied with my but then again I work for them. I’m a typical worker and actually do Business Lending to small business as part of my role. Few insights from one who is not through and through corporate:
I am seeing a lot of new Businesses form but few are looking for initial capital from us, significantly less than say 3 years back. Recession is an excellent way ofsorting the wheat from the chaff; there were too many badly managed businesses where the owners just borrowed and pent their income on big salaries/divis etc to pay for pointless lifestyles. I have warned against this and lo and behold, these are the businesses crying for more money or have gone to the wall.
What are we to do? The government says ‘lend money’. The Government-run FSA says ‘no lending unless it is nailed on and your customers jump through multiple hoops or we’ll fine you and remove your licence’. Rock and a hard place if ever I saw one.
AS to making 15% on loans, this is incorrect or at least a case of statistics and sensationalism. For small loans a high APR is required just to get past the cost of setting them up. You can really only lend the money you have in term deposit and most of them are paying 3-5% and even then the savers complain…again, rock and hardplace.
Banks are businesses and are meant to make money. If you don’t like your bank, vote with your feet. Write and complain if it is a genuine case but bear in mind whatever happens, we, the banks, lose. We are responsible for the recession (not those who lied to get self-cert mortgages etc..), we are responsible for people not being able to manager their money and flouting limits and abusing cards. It’s our fault that the aforementioned cannot get the credit they crave.
You cannot force M&S to stock suits, you cannot make ASDA sell beans. The market will dictate and loans will be available to most who need them. The nature of risk is that some of those who do and would repay them will be missed; some of those who do get them will not repay.
What do you think of the bank charges ruling?
Banks have won a two-year court battle, dealing a major blow to hundreds of thousands of customers seeking to claim back billions of pounds of what they say are unfair overdraft charges.
The new Supreme Court found that the Office of Fair Trading cannot use customer protection rules to investigate whether the fees were levied unfairly.
The landmark ruling in favour of seven banks and one building society overturns two previous rulings that said the OFT had the power to investigate the unauthorised overdraft fees because the charges fell under the scope of consumer contract law.
The Supreme Court, however, said the charges form part of the fees for current account services and could not be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations.
Consumers now face the choice of giving up their claims or taking on the might of the banks through individual claims, which could prove costly. To read more on how the decision affects you, read this guide from moneysavingexpert.com
What do you think of the ruling? Have the banks behaved unfairly and therefore have been made to pay the money back, or is it right that consumers should pay the price for breaking the terms and conditions of their current account?
My belated thoughts regarding this issue. In this world today, you can not proceed without a bank, this is how we have now evolved financially.
Banks do need to make money, but this needs to be in a Fair and Proper manner. If you go overdrawn and dare I say most people do at some point, then a charge needs to be levied accordingly.
This debate, as I understood it, was about the amount charged. I do think that Banks have an almost FREE HAND on how they run. The amounts they charge are discretionary to them and in their favour. A serious control needs to be taken with the Banking world as they have almost brought the Globe to its knees because they have been able to do as they please. A Bonus from a Bank can make you a Millionaire!
Now, some months later, interests are at an all time low, 0.5%, yet most High Street banks are charging in excess of 4% on mortgages and more than 9% on personal loans. Who is saving money now? Who is making money now? what can we, the people of the country, land and world do about it? Nothing. Because we need Banks to survive.
So was the decission correct? For me, No it was not. Bank Charges should be capped and subject to amounts involved. Banks should not feel they have the ability to do as they please.
My anger and disappointment comes from recent news of RBS making £3.5billion LOSS and yet feel it correct to pay out £1.5 billion in Bonuses.
If you were £10k overdrawn, could you inform your bank that you are going to withdraw a further £1,500.00 without question?
And add your future Taxes to this question too.
Merry Christmas, Unhappy New Year
It may be the longest recession in history, but for many Britons it hasn’t felt too bad.
Unemployment has risen and the days of easy credit are gone. But for those people still in employment, there’s been a big fall in mortgage costs, and food and energy prices have come right back down.
Monthly surveys from grocer Asda have shown a steady rise in disposible incomes and so it is hardly surprising that retailers are starting to feel the benefit.
Marks & Spencer beat first-half profit forecasts on Wednesday, while rival clothing chain Next topped third-quarter sales expectations.
The signs are that Christmas, the biggest spending season of the year, will continue the positive trend and will not be a repeat of last year’s frenzy of discounting and business failures.
The Centre for Retail Research forecast earlier this week that retail sales would rise 1.9 percent to 44.7 billion pounds in the last six weeks of the year, not far short of the average outcome in the nine years before last year’s decline.
But the improvement is unlikely to continue.
from The Great Debate UK:
Budget boost for savers
--Fay Goddard is chief executive of the Personal Finance Society. The opinions expressed are her own.--
As predicted, Budget 2009 was heavy on figures and forecasts and hard on the highest earners. Unsurprisingly it is the latter that the press has picked up on. We all knew that there would be a new top rate of income tax – though some were taken by surprise at the rate of 50 percent and the speed at which it will be introduced.
This wasn’t the only hit taken by those on big salaries with restrictions on pension tax relief for those on over £150K and personal allowances for those earning over £100K. These changes will be of concern and mean that financial advisers will need to review the position of their affected clients. However, advisers will have breathed a sign of relief as the rumoured removal of all higher rate tax relief on pensions did not materialise.
There was better news though for savers. The rise in ISA limits is a welcome move and will be available immediately for those over 50, with everyone else having to wait until next year. Whilst I assume this is aimed at providing some immediate assistance to those who rely on their savings to generate income, with interest rates so low, the increase will not deliver much benefit. At least some pensioners will also receive additional tax credits though.
Help for families came in the form of increased child tax credit, and for those who lose their job in these troubling times statutory redundancy pay has been increased.
Those looking to buy houses under £175K will continue to benefit from the stamp duty holiday – this was extended by a further six months until the end of the calendar year but there was little else to stimulate the housing market.
OK so the budget sucked, we knew that all along.
Just on the point of the VAT cut though, two retailers that I use almost daily – Thorntons and EAT seem to have reverted back to pre VAT prices. Has anyone else noticed this and it is possible to find out what retailers have and haven’t passed on the saving or renaged on their promise to pass it on?
Seems like yet another case of Gordon & co talking a tough story and then doing nothing to police it properly.
from The Great Debate UK:
The devil will be in the Budget detail
-- Fay Goddard is chief executive of The Personal Finance Society. Any opinions expressed are her own. --
Though it’s a cliche to say that a budget is eagerly awaited you can be forgiven for saying so this time around. This year all eyes and ears will be focused on the Chancellor’s economic figures and forecasts. The big question is how will he balance the books – cut public spending or raise taxes? In the run up to an election cuts are ideal but needs must. What will it mean for personal finances?
One of the big questions being asked is whether Chancellor Alistair Darling will do anything to help the plight of savers. Some of the hardest hit by the drop in interest rates have been pensioners relying on savings generated income. It seems likely they will receive some support with whispers suggesting an increase in the pensioners’ tax allowance but this will do little for the majority affected. There is also speculation that the ISA limit of £7,200 will be raised in an effort to attract more savers. Action savings is a delicate balancing act as the Chancellor is understood not to want to reduce consumer spending in such a way that it slows the recovery.
from The Great Debate UK:
Deflation? It’s inflation you need to watch
-- David Kuo is a director at the financial Web site The Motley Fool. The views expressed are his own. --
What are consumers supposed to make of the latest inflation numbers? Do we have inflation, deflation or a bit of stagflation?
Truth is, it depends on who you are and what you do with your money. The Retail Prices Index or RPI tells us that prices today are exactly the same as they were a year ago. The Office for National Statistics reported that RPI was unchanged at 0%.
But be very careful when bandying around the term “prices”. The RPI includes elements of housing costs. So it is better to talk about the cost of living rather than prices. Prices have risen compared to a year ago, but the total cost of living as measured by RPI has fallen because of the disproportionately large drop in mortgage costs as a result of lower interest rates.
The proof, if proof was needed, that prices have risen from a year ago, can be seen from the Consumer Prices Index (CPI). Instead of 0%, as measured by the RPI, prices as measured by the CPI are 3.2% higher. The CPI does not include housing costs, so it is a better measure for people on fixed-rate mortgage deals, and also for people in rented accommodation.
The upshot is that if you have taken on mortgage debt and chosen to spend rather than save, then you are worse off as a result.
However, it’s worth bearing in mind that both the RPI and CPI are broad measures of inflation. Consequently, the extremely large basket that is used to gauge inflation may not necessarily reflect the true changes in the cost of living that you may experience. Put another way, if we don’t buy exactly the same things that the ONS puts into its basket then we will experience a different rate of inflation.
How to make the most of discount car prices
The motoring industry has been hit hard by the recession (as demonstrated by the cancellation of the 2010 British Motor Show) and consumers have struggled to secure the credit they need to buy a new car. But for those in a position to make a move, there has never been a better time to do a deal.
Car buying website Parker’s has named March 23 as the best car buying day of 2009. Price cuts, stock availability and dealers desperately chasing bonuses make it the optimum time to buy a car before prices on new and used vehicles start to go up again in the summer.
If you are getting revved up at the thought of some of the discount deals on offer, then here are some useful web tools and articles to help you finance and get the best deal on your new set of wheels.
Moneysavingexpert.com highlights the fact that, although you may get your hands on a cheap car, the rate at which it will lose its value is truly frightening. To help you cut costs, it has this guide to researching the best price, how to haggle your way to a further discount and, most importantly, how to finance the deal (including some dealer tricks to watch out for).
Parker’s website is a great source of independent car reviews and has this excellent tool that allows you to search prices of new and used cars. And, of course, you can start searching for your perfect new motor.
There are of course multiple ways to buy a car, from auctions to independent dealers. Times Online’s Buying Guide includes a useful run through of the available options so you can work out which is best for you.
Buying a used car is fraught with risks; one in three cars has a hidden history such as outstanding finance repayments, undeclared damage – it could even be stolen. For a small fee you can research a car’s track record at Autocheck, which could end up saving you big in the long run.
Little advice…
If there are offers out there they are usually for either 0% finance or $$$ off, dealerships have to offer one or the other providing you qualify.
And in most cases the 0% finance is a better deal, providing you qualify. But dealerships make more money on the financing, so are less likely to give you a discount themselves. You may also want to be aware that dealerships make absolutely nothing-zero- on 0% financing.
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The Wall
The private sector have suffered these pension cutbacks already, and they, as the Union Leaders say in this defence, had no part or choice in the making of the financial situation we are now in.
Their argument does not hold water and will only aggravate those in the private sector who will suffer considerably for the proposed strikes.
Some realism please, why should 12 million public sector workers be benefit protected against the rest of the UK workforce.