Christmas Debts 'Won't Be Cleared Until June'

The average family is going to take on debts this Christmas that will take until June to pay off, it has been claimed.

The Trades Union Congress has carried out research that shows that the typical family will add £685 to its borrowing by the time the festive season is over.

That will take a family on an average income 24 weeks to pay off, the labour organisation claims.

Last Christmas, one in six families borrowed money to pay for food, drinks and presents, with households borrowing an average of £654 per adult (Men £1,000, women £547).

Using average weekly earnings and savings data the TUC estimated that it took average-income earners 20 weeks to pay off this debt.

This year, consumer debt has increased by 4.9 per cent. The TUC's calculations estimate that it will take four more weeks for an average-income earner to pay back the extra debt burden they will take on.

If a minimum wage worker were to borrow the same sum it would take them an entire year working full-time to pay it off.

The TUC says the findings underline how ordinary people are not benefiting from the recovery and are instead facing a bigger struggle to pay off their debts.

The study has emerged on the day when the Bank of England has warned of the scale of the debt burden weighing on British families.

According to the TUC, British workers are currently suffering the longest real-wage squeeze since the 1870s, with inflation rising faster than wages for the last 42 months.

It says the government needs to make fairer pay rewards a priority.

Nicola Smith, head of economic and social affairs at the TUC, told Sky News: "It's to do with the fact that is an expensive time of the year for everybody, and with wages hardly having kept up with prices for the last four years, with family incomes under historic pressure, just meeting the basic costs of Christmas is going to mean a lot more people having to rely on credit."

She said the problem was that most growth in the economy was being provided by consumption and because pay was not keeping up with prices, the extra money people had to spend on buying goods was coming from borrowing.

"People are having to borrow to make up the extra spending that is driving growth in the economy," she said. "It's really worrying that that does not provide us with a sustainable basis for a recovery going forward."

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16.01 | 0 komentar | Read More

UK GDP: Economy Growing Faster Than Expected

Britain's economy has grown faster than expected, despite fears there is underlying fragility.

The Office for National Statistics said British gross domestic product (GDP) grew by 0.8% in the third quarter, confirming previous estimates.

Annual GDP grew by an upwardly-revised 1.9% in the third quarter or three months up to the end of September, compared with output a year earlier, the ONS added on Friday. The prior estimate had stood at 1.5%.

At 0.8%, the quarter-on-quarter rate marked the fastest pace for more than three years.

The data came at the end of a week in which Britain announced a larger-than-expected drop in unemployment.

Also on Friday, the ONS said the government's public sector net borrowing requirement, excluding taxpayers' money used to rescue banks, rose to £16.5bn in November compared with £15.6bn a year earlier.

Ahead of the data, Standard and Poor's confirmed its top AAA credit rating for Britain, noting the government's commitment to reducing its budget deficit even if the deep austerity measures continue to slash public sector jobs.

Offsetting these losses has been a pick-up in jobs created by the private sector.

But the growth data comes as a jittery retail sector slashed prices ahead of Christmas, suggesting it fears the public's ability to spend is being restricted by wages that have yet to rise.

Howard Archer, chief European & UK economist at consultants IHS Global Insight, said: "Markedly rising employment and a robust housing market will likely underpin consumer spending over the coming months.

"If the recovery is to be sustained at a healthy pace, it really does need a marked, extended pick up in business investment and for exports to improve markedly."

The growth rate will be hailed as good news for the Chancellor amid sustained concerns over the pressure on living standards from families' static incomes.

A Treasury spokesperson said: "Today's data show that the recovery has been stronger than previously thought and that the government's long-term economic plan is working.

"But risks remain and the job is not done, so the government will go on taking the difficult decisions needed to deliver a responsible recovery for all."

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Christmas Shoppers To Spend £12bn In Four Days

By Emma Birchley, Reporter

Shoppers are expected to spend £12bn in just four days as they make the most of slashed prices and promotions, according to retail forecasters.

The deals are being offered as a fierce battle for sales rages both on the high street and online.

Alan Dadswell relies on Christmas to keep his shop Toys 'N' Tuck in Southend-on-Sea going. And offering discounts is crucial.

He said: "To get people to spend the money they have got to feel they are getting a bargain and we have got to give them a bargain. We have to hunt with our suppliers to do good deals to get people in to the store."

A sluggish autumn has put added pressure on retailers.

But with 74% of shops offering deals, 13 million people are expected to shop on the high street on the last Saturday before Christmas.

And it will help that many people finished work for Christmas on Friday, leaving extra time to spend.

Offering discounts at Toys 'N' Tuck in Southend-on-Sea is crucial

But Diane Wehrle, from the shop footfall monitors Springboard, says shoppers are getting increasingly canny.

She said: "Tactics definitely come into it. Shoppers are becoming much more savvy than they used to be. They understand that retailers are slashing prices. They understand they are doing one-off specials and they wait for them.

"So they perhaps go window shopping before the Christmas trading period starts, look out for what they want to buy and then buy them when they are on offer."

Lizzy Clarke, armed with bags of gifts in Southend, has made the most of the offers.

"They've got some great deals ... 75% off in some stores and I've just bought some jumpers that cost me £30 last week and this week have cost me £7," she said.

But Rob Antoniazz, who is unconvinced, said: "The decent items in good shops are never up for sale because the demand is there to buy them."

Tesco's distribution centre in Erith, Kent, has gone into overdrive

Half of the money being spent in the four days to the end of Monday will be on food, with £900m going towards online groceries.

Tesco has sold twice as many turkeys over the internet than last year. At its distribution centre in Erith, Kent, staff are working around the clock preparing orders.

Simon Belsham, the managing director of Online Grocery for the chain said: "This is a really busy time of year for us. It really reflects that customers are looking for more and more convenient ways to shop for their Christmas presents and Christmas food."

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Serco Agrees To Repay £68.5m Overcharge

Disgraced firm Serco has agreed to repay the Government £68.5m for overcharging for tagging criminals.

Both Serco and G4S were found to have charged the taxpayer tens of millions of pounds too much for monitoring criminals in a contract dating back to 2005.

The Serious Fraud Office (SFO) opened a criminal investigation after it emerged G4S and Serco overcharged the Government for electronic tagging of offenders, some of whom were found to be dead, back in prison or overseas.

Serco agreed to pay the sum to the Government to reimburse money owed on the contract and for other costs incurred, such as the investigation, at the end of a broader review into Serco and G4S contracts, Justice Secretary Chris Grayling said.

The Government has already rejected a £24m offer from G4S, which came under fire for its poor handling of the Olympics security contract, and officials vowed to "pursue all possible avenues" to recoup more taxpayers' cash.

Discussions on repayment are continuing.

Serco chief Alistair Lyons has apologised

In addition to the investigation it is already facing, G4S has been referred to the Serious Fraud Office a second time after the Ministry of Justice uncovered further problems with two contracts for facilities management in the courts.

Mr Grayling said that while Serco had been willing to allow a further forensic audit to establish what had happened in the overcharging scandal, in July G4S had refused the request.

Francis Maude, minister for the Cabinet Office, which led the review said: "It's good news for taxpayers that Serco has agreed to recompense £68.5m for overcharging.

"We are confident that the company is taking steps to address the issues which our review has identified.

"Since day one this Government has been working to reform contract management and improve commercial expertise in Whitehall."

As revealed by Sky News City Editor Mark Kleinman on Wednesday, both G4S and Serco have withdrawn from bidding for lucrative probation office contracts.

However, the Government has left open the possibility of either firm playing a supporting role, working with smaller businesses or voluntary sector providers.

The remainder of their contract for monitoring criminals has been transferred to rival firm Capita.

Serco non-executive chairman Alistair Lyons said: "The contract issues that were identified should never have happened and we apologise unreservedly for them.

"We are doing everything in our power to make sure that such issues cannot reoccur anywhere in our business around the world."

A statement from G4S said: "G4S places the highest premium on adherence to its company values, including customer service and integrity."

Last month the boss of G4S, Ashley Almanza, admitted to MPs that the company had failed to "tell the difference between right and wrong", while Mr Lyons told the Commons Public Accounts Committee it was "ethically wrong".

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16.01 | 0 komentar | Read More

Mortgage Misery For Millions If Rates Go Up

By Ed Conway, Economics Editor

Around four million families would not have enough cash to pay their mortgage if interest rates rose to barely half the rate they were before the crisis, according to Bank of England research.

The warning from the Bank comes amid growing speculation that it may begin to consider lifting the cost of borrowing within months.

Research published in the Bank's Quarterly Bulletin sketches out a worrying picture for UK households in the event of an increase in the cost of borrowing.

The Bank's statistics show that if rates rose by 2.5% to a level of 3%, more than half of the eight million families with mortgages would not have enough in their monthly budgets to afford the increased interest payments.

They would be forced to cut their spending or work longer hours.

However, the Bank said that if families' incomes increased by 5% in the coming years, then the proportion of mortgage-holders struggling to manage their payments would be around a third.

Insiders also pointed towards the fact that at present investors only expect interest rates to reach 1.7% by the end of 2016 - significantly lower than the 3% level in the Bank's scenario.

The shock would not be limited to those with mortgages. The Bank's report also found that almost 5% of small businesses in the UK faced a 50% or greater chance of defaulting if interest rates rose by four percentage points.

However, the report also found that for many families the current debt burden decreased over the past year.

The proportion of mortgagors struggling to pay for their accommodation remained relatively unchanged; the share of households worried about their debt levels dropped from 46% to 39%.

The most strain over the past year was felt by those who rent their home. The Bank's research shows that the number of renters who face credit card and unsecured loan interest bills of more than a fifth of their incomes has risen from 800,000 to 1.1 million this year.

The worry is that the households most exposed to debt problems are those who are renting, are unable to rely on the capital value of their home, and who have had to take out large loans to sustain their lifestyles.

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Ban Payday Loan Ads On Kids' TV, MPs Say

Payday lenders should be banned from advertising on children's television to stop young people believing that getting money is "easy", MPs have urged.

The Business, Innovation and Skills Committee (BIS) recommended stopping advertising on programming aimed at children after hearing fears that the next generation is being "groomed" towards borrowing money.

Recommendations by MPs also included tackling nuisance emails and texts to people who are "at their lowest ebb", forcing lenders to contribute cash towards debt advice and improving the way they share information.

Wonga says it does not advertise on children's TV channels

The committee heard evidence from consumer campaigners who warned that "cartoon puppets" used on payday lenders' adverts suggested that taking out a loan can be fun.

Martin Lewis, founder of consumer website MoneySavingExpert.com, said: "From our own research, we know children ask their parents to get a payday loan to buy them toys.

"Whilst parents have the power to say no, it's evidence that kids see this dangerous type of niche borrowing as part of everyday life."

Wonga, one of Britain's most high-profile payday lenders, is well known for its TV ads featuring a trio of elderly puppet characters named Betty, Joyce and Earl who explain the process of taking out a short-term cash loan to viewers.

But a Wonga spokeswoman said: "The idea that Wonga advertises on children's TV channels or programmes is a myth.

"We have a strict, long-standing policy not to advertise in this way."

The Consumer Finance Association (CFA), whose members include The Money Shop, Quick Quid and Cash Converters, also said its members do not advertise on children's TV channels.

Committee chairman Adrian Bailey said: "It is worrying that our children are being exposed to such an extent to adverts that can present payday loans as a fun, easy and appropriate way to access finance.

"Children's programmes are simply not an acceptable place for payday loan adverts."

The rapid expansion of the payday firms and a rocketing number of calls for help being made to charities by people drowning in debt are "not unrelated", he said.

The committee called for a levy paid by payday firms, under regulatory requirements, to be ringfenced by the Money Advice Service. This money could be used to boost the provision of debt advice to struggling borrowers.

The estimated size of the payday loan sector has doubled over a five-year period to be worth around £2.2bn.

Payday lenders have come under intense criticism this year, with the Office of Fair Trading (OFT) referring them to the Competition Commission for a report due out in 2014.

The Government announced plans last month to place a cap on the total cost of a payday loan.

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16.01 | 0 komentar | Read More

Serco And G4S Braced For Investigation Outcome

By Mark Kleinman, City Editor

The two outsourcing giants at the centre of a scandal over the delivery of Government projects are braced for more bad news on Thursday as they fight to start bidding again for major Whitehall contracts.

Sky News understands that G4S and Serco will be informed in the coming hours about the outcome of a cross-Government probe of their work following the discovery that they had overcharged tens of millions of pounds in fees for monitoring prisoners on their release from jail.

Ministers are said to have decided that while the two companies have embarked on genuine attempts to rebuild their relationship with the Government, they have not yet done so sufficiently to enable them to be considered for significant contracts in the short term.

An announcement about the outcome is expected on Thursday although it could be delayed, say people close to the situation.

Whitehall insiders said on Wednesday that a settlement being thrashed out with the two FTSE-100 companies will include the repayment of well over £50m of fees that the Ministry of Justice (MoJ) had decided had been wrongly paid.

One source added that fees relating to other contracts handled by the two companies may also have to be repaid, although the scale of these was unclear.

The financial impact is understood to be larger for Serco than the City is expecting. Last month, it said it had incurred £27m of costs relating to the electronic monitoring, or tagging, contract, as well as another for providing Prisoner Escort and Custody Services.

Serco, which is without a chief executive following the departure of Chris Hyman, added that the MoJ had "calculated that their interpretation of the difference on billing totalled low tens of millions of pounds since the contract commenced in 2005. Any such potential repayment and any other directly-related incremental costs, would be charged as further exceptional items."

A person close to the situation said Serco's repayment would be less than £100m but higher than shareholders had been led to anticipate.

The MoJ inquiry has been run in tandem with the Cabinet Office. It was unclear whether the former would make a separate announcement on Thursday, although it is understood to have discovered further shocking examples of charging irregularities as part of its review.

Ministers reacted furiously during the autumn when it emerged that G4S and Serco had billed Whitehall for tagging prisoners who had died, were in prison or were living abroad. Earlier this week, Capita was handed the electronic monitoring contract in their place.

The effective barring of G4S and Serco from bidding for new Government work has highlighted the dearth of companies able to provide key public services.

A Serious Fraud Office probe into the two companies is ongoing, although the Government's settlement with them is unlikely to include additional financial penalties beyond the repayment of the overcharged fees, one insider said.

G4S and Serco executives are understood to have been locked in meetings on Wednesday to negotiate the outcome of the Government's review of their work.

Serco is due to update the City on its performance in a pre-close trading statement on Thursday.

Restoring good relations with Whitehall is a priority for Ashley Almanza, G4S's new chief executive, who is attempting to protect about £700m in annual revenues flowing from a client that accounts for roughly 10% of the company's entire global turnover.

He took the helm of a business still reeling from the reputational crisis triggered by its failure to deliver enough security staff at last year's London Olympics.

"Our reviews into G4S and Serco's contracts are rigorous and extensive," Francis Maude, Cabinet Office Minister, said in November. "But when they report, and we are satisfied full health has been restored, we will move on quickly."

G4S, Serco, the Cabinet Office and the MoJ all declined to comment.

16.01 | 0 komentar | Read More

MPs Demand Crackdown On Payday Lender Ads

By Mark Kleinman, City Editor

Payday loan companies should be barred from advertising during children's television programmes, MPs will demand in a hard-hitting report this week.

Sky News has learnt that the Business, Innovation and Skills (BIS) Select Committee will say on Friday that payday lenders should be restricted from buying media space during specific programming segments.

People familiar with the MPs' report said that it would also urge Ofcom to conduct a review of the use of cartoon-style characters in payday lenders' advertising.

However, they will stop short of calling for an overall ban on ads during daytime TV programmes despite the exhortations of some committee members.

The call for fresh restrictions will follow the disclosure last week by Ofcom, the media regulator, that children watch on average 70 TV ads each year for payday lenders.

The MPs are also expected to call for a limit on payday lenders allowing one extension to loans for borrowers who choose not to repay, an insider said.

If a clampdown on ads was to result from the report, it would affect the now-ubiquitous TV campaigns of companies such as Wonga.

Ofcom's research showed that payday loan advertising had grown to the extent that it now accounted for 7.3% of all finance ads on TV and more than 90% of all advertising linked to personal loans.

Ofcom added that on average 80% of children's TV viewing took place before 9pm, although nearly 6 per cent took place between 11pm and 3am the following morning.

Last month, George Osborne, the Chancellor, announced a u-turn when he said that the Government would limit the cost of payday loans.

Earlier this year, the sector was referred to the Competition Commission amid political anger about the activities of some short-term lenders.

In 2014, the industry will come under the remit of the Financial Conduct Authority, and the City regulator will have powers allowing it to ban advertising and impose a cap on interest rates charged by lenders.

In remarks published on its website this year, Wonga said that since 2007 it had "responsibly lent over £2bn and we now have over a million customers.

"We've done that despite declining three quarters of all first loan applications and ensuring a principal default rate (money lent that we don't get back) of around 7%. This is comparable to other forms of short-term credit, such as credit cards.

"We work hard to lend only to the people who can pay us back, and our mainstream services for individuals and businesses are now available across three continents."

A spokesman for the BIS select committee declined to comment.

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16.01 | 0 komentar | Read More

HMRC Failing To Pursue Big Business, MPs Warn

By Gerard Tubb, Sky News Correspondent

The tax man is too keen to chase small businesses for unpaid tax and is not doing enough to prosecute multinational firms, according to MPs.

The Public Accounts Committee claimed Her Majesty's Revenue and Customs (HMRC) does not know how much tax is lost through aggressive tax avoidance and said it should be more willing to pursue prosecutions.

The committee's chair, Margaret Hodge MP, said: "HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full."

She accused the department of allowing the Tax Gap, the theoretical amount that is not collected, to grow by £1bn in 2011/12 and of not doing enough about it.

She said: "HMRC holds back from using the full range of sanctions at its disposal.

"It pursues tax owed by the smaller businesses, but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations."

The committee's report said inspectors should be "more willing ... to test the boundaries of the law".

"HMRC has not attempted to gather intelligence about how much tax revenue is lost through aggressive tax avoidance schemes," it claimed.

The focus on tax avoidance follows on from high-profile cases like Starbucks - which was revealed last year to have only reported taxable profit in the UK once in 15 years.

The company has since promised to pay £20m.

In a statement a spokesman for HMRC said it "strongly disputes the conclusions in the Public Accounts Committee report and challenges the committee's selective and misleading use of figures".

The department said it had secured more than £50bn of additional tax from compliance work since 2010, including £23bn from large businesses.

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16.01 | 0 komentar | Read More

MPs Demand Crackdown On Payday Lender Ads

By Mark Kleinman, City Editor

Payday loan companies should be barred from advertising during children's television programmes, MPs will demand in a hard-hitting report this week.

Sky News has learnt that the Business, Innovation and Skills (BIS) Select Committee will say on Friday that payday lenders should be restricted from buying media space during specific programming segments.

People familiar with the MPs' report said that it would also urge Ofcom to conduct a review of the use of cartoon-style characters in payday lenders' advertising.

However, they will stop short of calling for an overall ban on ads during daytime TV programmes despite the exhortations of some committee members.

The call for fresh restrictions will follow the disclosure last week by Ofcom, the media regulator, that children watch on average 70 TV ads each year for payday lenders.

The MPs are also expected to call for a limit on payday lenders allowing one extension to loans for borrowers who choose not to repay, an insider said.

If a clampdown on ads was to result from the report, it would affect the now-ubiquitous TV campaigns of companies such as Wonga.

Ofcom's research showed that payday loan advertising had grown to the extent that it now accounted for 7.3% of all finance ads on TV and more than 90% of all advertising linked to personal loans.

Ofcom added that on average 80% of children's TV viewing took place before 9pm, although nearly 6 per cent took place between 11pm and 3am the following morning.

Last month, George Osborne, the Chancellor, announced a u-turn when he said that the Government would limit the cost of payday loans.

Earlier this year, the sector was referred to the Competition Commission amid political anger about the activities of some short-term lenders.

In 2014, the industry will come under the remit of the Financial Conduct Authority, and the City regulator will have powers allowing it to ban advertising and impose a cap on interest rates charged by lenders.

In remarks published on its website this year, Wonga said that since 2007 it had "responsibly lent over £2bn and we now have over a million customers.

"We've done that despite declining three quarters of all first loan applications and ensuring a principal default rate (money lent that we don't get back) of around 7%. This is comparable to other forms of short-term credit, such as credit cards.

"We work hard to lend only to the people who can pay us back, and our mainstream services for individuals and businesses are now available across three continents."

A spokesman for the BIS select committee declined to comment.

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11.09 | 0 komentar | Read More