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History > 2006 > UK > Economy (I)
Work until 68
and save or face a time bomb
Hutton plans
to link basic state pension to
earnings
and rein in means testing
Friday May 26, 2006
Guardian
Phillip Inman
The government yesterday unveiled ambitious plans to overhaul the retirement
system including proposals to make people work until they are 68 and encourage
them to save in an effort to defuse a future pensions time bomb.
In a statement to the Commons, the pensions
secretary John Hutton said he plans to make the basic state pension more
generous by re-establishing the link with earnings within the next parliament.
The means tested pension credit, which has come under attack for excluding an
estimated 1.6m pensioners on low incomes, would be restricted.
Proposals for a low cost savings scheme with automatic enrolment for staff and
compulsory employers' contributions would further encourage private saving.
Mr Hutton said the changes, published in a white paper Security in Retirement:
Towards a New Pensions System, met the challenges posed by increasing life
expectancy, an overly complex state system and a lack of private saving. "I
believe it can lay the foundations for a lasting solution to the pensions
challenge we face."
Government figures show that spending on pensions and pensioner benefits
accounts for 6.3% of national income. By 2050 reforms will take the total to
7.8%.
The white paper is the government's response to Lord Adair Turner's pensions
commission. In three reports the commission examined the pensions system and
made recommendations for reform. Initially Lord Turner was asked to advise on
how to encourage private saving, but he quickly widened the scope of his study
to include the state system, which he said provided disincentives to save
through complex means testing and regulation.
The commission concluded that unless the state pension was overhauled and
private savings boosted, millions were headed for poverty. A recent study showed
that workers on average faced a drop in income of 60% when they retired.
The Treasury initially claimed Lord Turner's proposals were unaffordable. But
pressure from unions, backbench MPs and some sections of the business community
persuaded the chancellor that he needed to side with Lord Turner.
Lord Turner welcomed the government's proposals, saying it planned to implement
95% of his recommendations. The main recommendations are for the state pension
age for men and women to increase to 66 in 2024, to 67 in 2034 and 68 in 2044
and for the basic state pension to be tied to earnings rather than prices;
In addition the government will end contracting out from the earnings related
state second pension for 3m workers in occupational schemes.
The move will provide savings now on contributions the government would
otherwise have given to occupational schemes. Workers will receive the benefit
from the government in the future rather than their employer. Contrary to some
reports, the government said no-one would lose out by this measure
The lifeboat scheme for workers who lose their pensions when their employer goes
bust is also to be expanded. Mr Hutton said the three year limit - which
provides compensation for people three years from retirement - would be extended
to 15 years, giving a boost to an estimated 30,000 workers.
Mr Hutton said the proposals would promote personal responsibility for
retirement savings, be simple, affordable fair and sustainable. But critics said
the plan would be rejected by large numbers of workers.
Ros Altmann, a former pensions adviser to No 10, said the reforms still left an
overly complex system that most people would find difficult to understand.
The basic state pension would continue to rely on accumulating national
insurance contributions rather than switching to a simpler residency test
preferred by most pensioner groups and the Liberal Democrats. She said means
testing would remain a significant factor in calculating whether it was worth
workers on low incomes saving in a private pension.
Tom McPhail of financial adviser Hargreaves Lansdown said the government would
still need to persuade large swaths of middle England that saving more and
working longer was a viable option when many of them had accumulated large debts
and were in danger of bankruptcy. A report this week said 1 million people were
in danger of becoming bankrupt after taking on large mortgages and loans.
Work
until 68 and save or face a time bomb,
G,
26.5.2006,
https://www.theguardian.com/money/2006/may/26/
politics.lifeandhealth
Mortgage lending hits April record
Friday May 19, 2006
Guardian Unlimited
Hilary Osborne
April saw the highest level of mortgage
lending on record for the fourth month of the year, according to figures
released today, suggesting that consumers still have a high level of confidence
in the housing market.
It was the sixth month running that records
had been broken, the Council of Mortgage Lenders (CML) said.
The council said that £25.1bn was advanced to homebuyers and remortgagors during
April, 16% more than in the same month in 2005.
However, the figure did mark a 12% fall from March, when gross lending totalled
£28.4bn.
The CML said the drop was likely to have been caused by the timing of Easter,
which meant that while there were only 23 working days in April, but 27 in
March. When this was taken into account, average daily lending was actually
higher in April than in the previous month.
Michael Coogan, the CML's director-general, said there was evidence that the
value of mortgages paid out would remain around their present level unless the
cost of borrowing increased.
"The record figures we have witnessed over the past six months illustrate that
the market is in robust shape. Even so, the level of new mortgage approvals has
stabilised in recent months, and we do not expect the underlying level of
lending to rise from recent levels," he said.
"In the past couple of months the interest rate picture has changed and
financial markets are expecting the Bank of England to raise rates this summer,"
Mr Coogan said.
"If this happens, housing and mortgage market activity is likely to slow down
from the recent high levels as the year progresses."
However, Adrian Coles, director-general of the Building Societies Association
(BSA), said seasonally adjusted figures for mortgage approvals showed that April
had been the second busiest month in two years, while mortgage advances were
running at higher levels than in any month last year.
"Concerns at the end of last year that the housing market would slow right down
in 2006 now seem misplaced. Instead, it looks like we are in for a busy summer."
The figures support the finding of a BSA survey of building society chief
executives, which showed that the majority expect house price rises to outstrip
inflation this year.
Although most chief executives in January were predicting an annual increase of
2% in 2006, they were now forecasting price inflation of 4 to 5%.
Figures from the British Bankers' Association (BBA) showed a increase in
non-mortgage borrowing in April.
The amount borrowed on personal loans, overdrafts and other forms of consumer
credit rose by £33m over the month, compared with a fall of £239m in March.
Credit card borrowing also picked up, growing by £277m in April and more than
reversing March's £186m fall.
David Dooks, BBA director of statistics, said the increase should be viewed with
some caution.
"Although credit card lending was stronger, that has to be viewed against the
rare net repayment seen in March," he said. "Overall, the trends in consumer
lending appear stable."
Mortgage lending hits April record,
G, 19.5.2006,
http://money.guardian.co.uk/news_/story/0,,1778900,00.html
4.30pm
Sterling hits new high against US dollar
Friday May 5, 2006
Guardian Unlimited
Charlotte Moore and agencies
Sterling hit a new high for the year against the US dollar today as
disappointing employment data from America gave traders an excuse to sell.
The pound rose to more than $1.86, the highest level seen since May 2005.
Sterling has strengthened against the greenback over the course of the week as
strong economic data in the UK heightened expectations that the Bank of England
would increase interest rates before the end of the year.
However, the bank's monetary policy committee kept rates unchanged at 4.5%. The
rate has remained the same for the past nine months.
One of the US economic indicators that sparked today's sell-off of the dollar
was a poor result for non-farm payrolls. They rose by 138,000 in April, but
analysts had been forecasting 200,000.
Geraldine Conagh, an economist at AIB Group Treasury in Dublin, told Reuters:
"The payrolls numbers have disappointed and this has helped sterling to bounce
higher."
Earlier in the week, the euro reached its highest levels against the dollar in a
year as comments from the European Central Bank suggested that rates in the
euro-zone might increase once more next month. The rate i presently 2.5%.
Sterling hits new high against US dollar, G, 5.5.2006,
http://business.guardian.co.uk/story/0,,1768709,00.html
Irish spend billions
in UK property spree
Post-ceasefire investors
buy up chunks of
England and Scotland
Sunday April 9, 2006
The Observer
Henry McDonald, Ireland editor
It's the second Irish invasion of Britain. The
descendants of the Irish workers who built the housing estates, the roads, the
airports and the shopping centres of postwar Britain are taking over. In the
last 18 months, billions of pounds have been spent by Irish investors, many of
them from post-ceasefire Northern Ireland, buying up vast quantities of
commercial and residential property in England and Scotland.
According to Irish banks and leading property
consultants on the island, Ireland's entrepreneurs have taken on and beaten
foreign investors like the Saudis and the Germans in the acquisition war across
the Irish Sea.
The properties that have fallen into Irish
hands over the last year and a half include:
· Blackpool and Wolverhampton airports, bought
for £15m.
· Twenty shopping centres throughout England, Scotland and Wales, costing a
total of £1.55bn.
· The high-profile Wolseley restaurant, near the Ritz in central London, for
which a private individual from Northern Ireland paid £11m.
A new report by the property consultants
BTWshiels has found that Northern Irish investors have become 'aggressive' in
buying up properties across mainland Britain.
It discovered that almost one fifth of all
property investors in the UK are now Irish, compared with only three years ago
when the figure was just 10 per cent. Keith Shiels, of BTWshiels, puts the surge
in Northern Irish investment into Britain down to post-ceasefire prosperity.
'The market over here has hit a ceiling. Those
that acquired property in the last six years of boom here don't want to sell it.
There is virtually no turnover any more in Northern Ireland, unlike in Great
Britain. That's why the local investor is looking eastward across the Irish
Sea.'
Among the buyouts BTWshiels has overseen for a
Northern Ireland investor has been the Fosse Retail Park near Leicester. It cost
£360m last year - the largest property deal by an individual in the UK. Another
setpiece sale, Greenlanes Shopping Centre, in Barnstaple, Devon, cost a private
Northern Ireland investor £43m in 2004. Last year he sold it for £57m.
One of those who have invested millions in
commercial property on the other side of the Irish Sea is Belfast property
developer Adam Armstrong. He was back in Britain this weekend attending the
Grand National at Aintree. The horse Armstrong co-owns, Monty's Pass, won the
world famous race in 2003. Armstrong has also gambled and won on the British
commercial property scene.
'My partners and I bought Blackpool and
Wolverhampton airports 15 months ago for around £15m and already the investment
is paying off,' he said.
'Since we bought Blackpool from the local council, Ryanair and Jet2.com have
established a presence at the airport. There are now 17 new routes into Europe
with the airlines operating from there.'
Armstrong also owns 500 acres around Blackpool
airport, which could be the location for the UK's first Super Casino if the
government grants the licence to the Lancashire coastal resort.
The largest lender to Northern Ireland
investors in Britain, the Bank of Ireland, described the eastward investment as
being 'on an exponential curve'. David Service, head of property for the Bank of
Ireland in northern England, said the business has handled up to £2bn pounds in
property deals in Britain.
Across the Irish border in the Republic the new investors into mainland Britain
are not just the millionaire property tycoons, but ordinary homeowners and even
first-time buyers.
A month ago Edinburgh-based Lara MacMillan set
up a website aimed at selling properties in the Scottish capital, including to
Irish people who can't afford to buy a house or an apartment in Dublin.
MacMillan, a former Dublin-based property
journalist, said: 'Since the website was launched we have had enquiries from
around 250 people, which is an incredible response. Many of them cannot afford
to buy in Dublin but can acquire a property in Edinburgh instead, which they
will be able to use for rental income.
'We have also had calls from parents whose
children are looking at going to university in Edinburgh. Their parents often
have untapped equity on their homes in Ireland which they want to release and
help their children as well.'
The BTWshiels report's authors also predict
that the Irish money currently flowing by the billions into the British market
will head further east over the next year.
A poster on the front window of a local mortgage shop on Belfast's Ormeau Road
on Friday appeared to confirm this suggestion. It read: 'Dream Homes and
Investments in Bulgaria.'
Irish
spend billions in UK property spree,
O, 9.4.2006,
http://observer.guardian.co.uk/world/story/0,,1750059,00.html
12.45pm
Dixons
to become internet-only operation
Wednesday April 5, 2006
Guardian Unlimited
Mark Tran
The electrical goods store Dixons is
abandoning the high street for the internet, the company's owner announced
today.
All 190 existing Dixons stores will be rebranded "Currys.digital" to offer a
wider range of products and services, including major and small appliances,
while keeping a strong focus on digital technology.
"The Dixons brand will focus exclusively on e-commerce operations to deliver a
leadership position in specialist electrical e-tailing," a spokesperson said.
DSG, the owner of Dixons, Currys, PC World and the struggling mobile phone chain
The Link, said the makeover is expected to cost around £7m and deliver annual
savings of around £3m.
Experts said Dixons' move was unusual and represented a gamble. "It's a huge
surprise and a very interesting move," said Glenn Drury, managing director of
Kelkoo, a shopping search engine. "They are going away from the conventional
wisdom of creating as many links to your business as possible - online, phone or
shops. The competition online will be even more intense, but they do have a
strong brand, which is still very important in the online world."
The initial conversion of existing Dixons stores to Currys.digital is expected
to start in early May. All staff currently working at Dixons stores are expected
to transfer to Currys as part of the process.
John Clare, the DSG chief executive, said: "Customer buying behaviours are
developing with the growth in broadband usage and, as a group, we constantly
adapt and innovate to support how our customers shop."
Dixons' existing e-commerce operation has recorded on average more than 50%
year-on-year sales growth over the last four years, but its high street store
sales have been slipping.
Dixons closed 106 loss-making shops two years ago, cutting its high street
presence by a third. The company also sought to stem its high street problems by
trying new formats such as stores outside town centres.
DSG insisted that Dixons was making the move online to Dixons.co.uk, which gets
a million visitors a month, from a solid base.
"Our trading statement in January showed 8% sales growth, but we feel this is
the right time to move into the fast-growing online market," said Chris
Matthews, the director of marketing and business development. "We are doing this
from a position of strength."
But DSG believes a high street presence is still critical, so it is converting
the Dixons shops into Currys. Despite the rapid growth of online shopping, half
of electricals purchases still take place on the high street.
Internet retailers such as Amazon have made big in-roads into bricks-and-mortar
retailers, who are also feeling pressure from supermarkets.
Soon after HMV revealed dire Christmas trading figures, Alan Giles, the
chairman, admitted he had underestimated the threat from the internet and
announced plans to step down by the end of the year.
The six Dixons stores in the Republic of Ireland are unaffected by the
rebranding, as are Dixons' 21 tax-free airport stores.
Dixon's total sales for last year were £688m.
Dixons to become internet-only operation, G, 5.4.2006,
http://business.guardian.co.uk/story/0,,1747242,00.html
Amnesty on illegal immigrants
is 'worth
£6bn to UK'
Published: 31 March 2006
The Independent
By Nigel Morris, Home Affairs Correspondent
A vast hidden army of illegal immigrants
ensures that each day thousands of offices and homes are cleaned, streets are
swept and drinks are served in Britain's pubs and clubs.
From London's building sites to farms in East Anglia, and from late-night
takeaways to the treacherous sands of Morecambe Bay, they generally fill the
jobs deemed too menial or too hazardous by UK nationals. If discovered, they
face deportation. But according to a radical new study published today, an
amnesty on their status could be worth up to £6bn to the economy.
By giving the hundreds of thousands of illegal immigrants in Britain a promise
that they will not be deported, at least £1bn a year would be raised in taxes,
the Institute for Public Policy Research (IPPR) has calculated. The left-leaning
think-tank, which has the ear of Downing Street, also warns that government
plans to tighten restrictions on bona fide migrants could have the perverse
effect of driving more "illegals" underground.
The most recent Home Office estimate suggested there could be between 310,000
and 570,000 unauthorised migrants in Britain, with ministers admitting it is
impossible to be more precise.
The IPPR says most are "likely to be doing jobs that could be characterised as
dirty, difficult and dangerous", including work in construction, agriculture,
cleaning and residential care. It concludes that deporting hundreds of thousands
of "irregular migrants", as it describes them, is "simply not feasible".
Citing the success of immigration amnesties in the US and Spain, it urges the
British Government to "regularise their work status". It contrasts the estimated
boost to the public coffers with the potential £4.7bn cost of deporting all of
them.
The IPPR also warns that a new government drive to give priority to skilled
foreign workers "may provide incentives for those ineligible under the proposed
system to migrate without permission". It argues that tighter controls on the
US-Mexico border could have had the unintended effect of keeping in the US
migrants that it wants to shut out.
Nick Pearce, the director of the IPPR, said: "We need proper border controls and
managed legal migration. But immigrants also need to be given a chance to play
by the book. There are thousands of people in Britain who work day in, day out,
in often atrocious conditions for pitiful pay. They would love to pay taxes,
earn the minimum wage and travel in and out of the country legally. London's
economy in particular rests on their labour.
"It is inconceivable that these people will all be deported, even in the wildest
fantasies of the anti-immigration right. The Immigration Service has more than
enough on its hands policing our borders and removing newly arrived failed
asylum-seekers. To go round the country finding, detaining and then deporting up
to half a million people who don't have regular status simply will not happen."
Its report came after Home Office figures suggested racial tension is growing in
several parts of the country. The number of racist incidents recorded by police
in England and Wales jumped by 12 per cent to more than 59,000 last year, with
even sharper rises in shire counties such as Hertfordshire, Hampshire and North
Yorkshire. Many of the attacks take place against a backdrop of relentlessly
negative coverage of migrant workers, portrayed as "spongers" on the British
state.
The Joint Council for the Welfare of Immigrants backed calls for an amnesty for
workers who were making a positive contribution to the nation.
Habib Rahman, its chief executive, said: "As long as migrants' presence and
contribution is not officially recognised, they are without rights and without a
stakehold in society. As events at Morecambe Bay have demonstrated all too
tragically, this leaves them open to exploitation."
Tony Woodley, the general secretary of the T&G union, said: "Workers worried
about their immigration status are among the most exploited in our workplaces.
Global criminal operations extort their money, while in the workplace
unscrupulous employers can intimidate them without fear of reproach.
"The only way to end this exploitation is to end the isolation these workers
experience."
Tony McNulty, the Immigration minister, said: "Illegal immigration is not
something the Government is simply going to accept and is taking steps wherever
possible to tackle this issue." He said the Government's points-based approach
would be "robust against those seeking to abuse the system, while welcoming
workers who have the skills needed to benefit the UK economy".
Immigration: The facts we are never told
* There are between 310,000 and 570,000
illegal immigrants in the UK, according to Home Office estimates
* If allowed to live legally, they would pay more than £1bn in tax each year
* Deporting them would cost £4.7bn and leave acute shortages of cleaners, care
workers and hotel staff cIf allowed to stay, the net benefit of nearly £6bn
would pay for 300 new schools, 12 district hospitals or 200,000 new nurses
* Nearly 50% of foreign-born immigrants leave Britain within five years
* Migrants fill 90% of low-paid jobs in London and account for 29% of the
capital's workforce. London is the UK's fastest-growing region
* Legal migrants comprise 8.7% of the population, but contribute 10.2% of all
taxes. Each immigrant pays an average of £7,203 in tax, compared with £6,861 for
non-migrant workers
* There were 25,715 people claiming asylum last year. If allowed to work, they
would generate £123m for the Treasury
'We have been betrayed, cheated and robbed'
* "Charles", a nursing assistant from Brazil,
came to Britain to visit his mother.
Once here, he paid £500 for fake Portuguese identity papers enabling him to
work. He said: "These are made in London very quickly." He travelled to
Leicester, bought a false national insurance certificate for £100, and signed up
with an employment agency with arelaxed attitude to false paperwork. A
gangmaster posing as a supervisor was given another £200 and Charles soon landed
a job producing salad, fruit pies, fruit juice and jellies for high- street
stores. He worked six days a week, getting up at 3.30am to catch the agency bus
which took the "illegals" to work. He was paid £4.50 an hour.
He was picked up in an immigration raid. "Our supervisor had denounced us, and
the agency washed its hands. We were locked in cells. We have been betrayed,
cheated and robbed," he said. He has recently been deported.
* "Alfred" left his family behind in Nigeria five years ago. He arrived on a
student visa but stayed on after it ran out.
Instead of studying for a degree, he took work involving cleaning up after
undergraduates at a well-known London college.
Although Alfred and his fellow workers - many of whom were also in Britain
illegally - were paid the minimum wage, they worked in appalling conditions and
suffered routine verbal abuse.
His patience finally ran out and he started protesting about their treatment.
A friend of Alfred's said: "Everyone was being exploited, whether they were
legal or not.
"When he started to make a fuss, he was told that if he didn't keep quiet he
would be reported to immigration."
Alfred left the job soon afterwards and has since disappeared.
Amnesty on illegal immigrants is 'worth
£6bn to UK' , I, 31.3.2006,
http://news.independent.co.uk/uk/this_britain/article354784.ece
Study reveals
financial crisis of the
18-40s
Tuesday March 28, 2006
Guardian
Patrick Collinson
An official government study into Britain's
personal finances reveals a lost generation of 18- to 40-year-olds unable to
cope with debts and soaring house prices, with alarmingly low levels of savings
and little hope of building a decent pension.
The study, by the Financial Services Authority
(FSA) and Bristol University, published today, is the biggest of its kind
undertaken in Britain. It paints a picture of a generational divide fuelled by
higher education costs and the collapse of company pension schemes - with 42% of
adults now with no pension and 70% with no meaningful savings.
The FSA will call today for a new national strategy to improve Britain's
financial capability, including workplace-based financial seminars targeted at 4
million employees; making personal finance more prominent in the national
curriculum from 2008; and "money doctor" packs which will be sent to 1.5 million
new and prospective parents each year.
FSA chief executive, John Tiner, said: "There is an urgent and serious need to
help the young. They are the first generation to be leaving college with massive
debts, and while housing has always been a challenge, it's become extremely
difficult for young people in parts of the country. Yet at the same time the
young have become serious consumers. It was difficult for an 18-year-old to get
a credit card 20 years ago but today it is relatively easy."
Around one-quarter of adults aged 20 to 39 have fallen into financial
difficulties over the past five years, compared with 5% of over 60-year-olds,
said the report.
It highlights a striking generational gap with regard to credit; 24% of young
adults are currently overdrawn, compared to 11% of over-50s and just 4% of over
60s. The study blamed financial problems among 18- to 40-year-olds not on low
incomes but on rapidly changing economic and social trends presenting young
adults with greater challenges than their parents. "Even after lower incomes and
limited experience are taken into account those in the 18 to 40 age group are
less financially capable than their elders," said Mr Tiner.
In a simple quiz on money matters, young adults scored particularly badly. Over
40% of 18- to 20-year-olds failed a question on interest rates and percentages,
compared with 14% of people aged 50 and above.
The education secretary, Ruth Kelly, said the report highlighted the need to
make personal finance education "more explicit in the national curriculum" and
promised support for teachers "to bring this to life in the classroom". But Help
the Aged criticised the report which, it said, ignored the needs of older
people.
The worsening outlook for pension provision highlighted in the report is likely
to fuel demands for a higher basic state pension, as recommended in the recent
Turner report but fiercely resisted by the chancellor, Gordon Brown. It is also
likely to spark fresh debate about introducing compulsory pension saving.
The report said 81% of people of pre-retirement age think the state pension
would not provide sufficiently for their old age, yet four out of 10 people are
not paying into an occupational or personal pension to top up their state
pension.
Worries over Britain's £1 trillion debt mountain may be overstated. The report
found that only 1% of over 18-year-olds - equal to 500,000 people - have severe
financial problems, although 6% of people (around 2m households) face a
"constant struggle" to keep up with commitments.
Bristol University conducted more than 5,000 45-minute long interviews at home
with respondents across the UK as part of the FSA research.
Study
reveals financial crisis of the 18-40s, G, 28.3.2006,
http://money.guardian.co.uk/news_/story/0,,1741079,00.html
Financial Budget report 2006
The Guardian Budget
Report
p. 7 23 March 2006
Brown taunts the Tories:
we invest, you cut
taxes
Education and environment made priorities
but no more for health
Thursday March 23, 2006
Guardian
Patrick Wintour and Larry Elliott
Prime minister in waiting Gordon Brown used
his 10th budget yesterday to sharpen the political battle lines with David
Cameron's Conservatives, by unveiling a package of extra funding for teachers,
school buildings, IT and science, designed to start closing the spending gap
between the state and private sectors.
The chancellor signalled that education would
be given top priority in a tough spending round next year and contrasted
Labour's desire to invest the proceeds of economic growth in public investment
with Tory ambitions for tax cuts.
Reflecting government confidence that education would prove a trump card for
Labour, one cabinet minister said there had been "fear in the eyes" of the
opposition frontbench as the chancellor laid out his plans for education.
Mr Brown revealed, however, that the cost of extra investment in schools would
be a zero real increase in spending for Charles Clarke's Home Office over the
three years from 2007-08, and that spending would be cut by 5% a year at the
Treasury, Revenue and Customs, the Department for Work and Pensions and the
Cabinet Office.
Although the chancellor insisted that both the economy and the public finances
were on the mend, the squeeze on the exchequer was underlined by his
announcement that pay increases in the public sector would average only 2.25%,
with only nurses getting more.
Mr Brown also announced plans to sell off a number of state assets, including
part of British Energy, to raise money for the next spending round.
Labour MPs were cheered by the chancellor's desire to close the gap between
spending on pupils in the state and private sectors. By 2011, he said, capital
spending on buildings and equipment in the state sector would rise by 50% to
£8bn a year, so that spending for each pupil would reach £1,000 - the same as in
private schools.
Mr Brown admitted, however, that he could put no timescale on his long-term aim
of raising overall spending on schools from £5,000 a pupil to the £8,000 in the
private sector, thereby allowing similar pupil-teacher ratios across the board.
"To improve pupil teacher ratios and the quality of our education, we should
agree an objective for our country that stage by stage, adjusting for inflation,
we raise average investment per pupil to today's private school level."
As a down-payment, Mr Brown said each primary school headteacher would receive
£44,000 direct from the government next year, up from this year's £31,000. In
the secondary sector, the average school would see its allocation go up from
£98,000 this year to £150,000 in April and £190,000 next year.
The chancellor said investment in education was vital to meet the challenge of
globalisation; he unveiled plans for 3,000 extra science teachers and free A-
level tuition for those aged under 25 who had left school lacking the right
qualifications for the modern workforce.
The shadow education secretary, David Willetts, derided Mr Brown's promise to
lift spending on state pupils to that of privately educated children: "The
chancellor has offered us an aspiration with absolutely no means of achieving
it."
Mr Brown's £440m for education was part of a £2bn package of extra spending,
which included an additional £800m for Ministry of Defence operations in Iraq
and Afghanistan and £100m to double the number of community support officers to
back up the police.
In an hour-long address, Mr Brown also targeted Mr Cameron's green credentials
by introducing a new top-rate car tax on petrol guzzlers of £210, and raising
the climate change levy for the first time in five years, the one green tax
already ruled out by the Conservative leader.
He claimed that Mr Cameron's promise to share the proceeds of growth already
meant that the Tories were committed to £17bn less in public spending. The
shadow treasury secretary, Theresa Villiers, rejected the figure, but
surprisingly admitted that Tory plans would mean less spending on schools and
hospitals.
Treasury plans to raise pension credit aimed at the poorest pensioners were
fought off by the prime minister and the work and pensions secretary, John
Hutton, who insisted that all big decisions on pensions must await the pensions
white paper in six weeks' time. Mr Brown was allowed, however, to announce £250m
for off-peak free national bus travel for every pensioner and disabled person.
Pensioners' groups attacked him for failing to repeat the £200 council tax
subsidy to those over 65, claiming Labour would pay a heavy price in the May
local elections.
Overall, Mr Brown summed up his thinking: "The budget's choice is to invest
more, not less, in schools and families, to strengthen the new deal, not to
abolish it, to maintain the climate change levy and not remove it, and instead
of cutting investment, to hold firm and not waiver, on the principles that have
given Britain stability."
Mr Cameron called the chancellor the roadblock for reform and "a figure from the
past". He said: "We wondered whether we could get a budget or a leadership bid,
and we did not get much of either. Cut through all the rhetoric, billions
raised, billions spent, no idea where the money has gone. With a record like
that, the chancellor should be running for Labour party treasurer."
The Tories pointed out that taxes overall in the budget were rising by £5.5bn,
and argued that the proportion of the tax-take drawn from green taxes was
falling. "In a carbon-conscious world, we have a fossil fuel chancellor," the
Tory leader said.
Brown
taunts the Tories: we invest, you cut taxes, G, 23.3.2006,
http://society.guardian.co.uk/publicfinances/story/0,,1737637,00.html
Graphic of the week
Blow by blow The Guardian
Work p. 2
11.3.2006
Unemployment rises
at fastest rate since
1990s
· Claimant count measure rose 14,600 last
month
· Rise in jobless total almost exclusively among women
Thursday March 16, 2006
Guardian
Ashley Seager
The number of people drawing unemployment
benefit has risen at its sharpest rate since the recession of the early 1990s,
figures revealed yesterday.
The figures, which provide the latest indication of a softening labour market,
came a week ahead of Gordon Brown's 10th and possibly final budget. They provide
an uncomfortable backdrop for a chancellor who has made the restoration of full
employment a key plank of policy and follow news that economic growth in 2005
came in at its lowest since 1992.
The Office for National Statistics said the claimant count measure of
unemployment rose by 14,600 in February, more than reversing the 1,100 fall in
January. The claimant count has risen for 12 of the past 13 months and stands
102,000 higher than a year ago at 919,700, although that only gives a jobless
rate of 2.9%, such has been the extent of the falls in unemployment over the
last decade.
The ONS also said the government's preferred labour force survey measure of
joblessness - which picks up those who are unemployed but not claiming
jobseeker's allowance - showed a rise of 37,000 in the three months to January,
taking it to 1.53 million, or 5% of the workforce. Statisticians said the rise
in unemployment was almost exclusively among women, although it gave no reason
for this. Economists said it could show that job losses in the flagging retail
sector are hitting women disproportionately hard.
John Philpott, economist at the Chartered Institute of Personnel and
Development, said: "The number of women in work has fallen as the consumer
slowdown has adversely affected employment in consumer services sectors, notably
the distribution and hotel and restaurant sectors which joined manufacturing in
shedding substantial numbers of jobs last year."
The ONS figures showed that employment fell slightly, by 7,000, to 28.8 million.
But that remained close to its all-time high and was 178,000 higher than a year
ago, mainly due to the increase in the size of the working population.
There was another record high for "economic inactivity" which includes students,
the long-term sick and people looking after their families. This rose to just
under 8 million, although the ONS cautioned that this was mainly due to a rise
in student numbers. Mr Philpott added that the slowdown in the retail sector,
which had pushed up unemployment among women, was probably also contributing to
the rise in inactivity.
Margaret Hodge, employment minister, said the figures showed that the
fundamentals of the labour market remained strong. "Employment is up on the
year, vacancies up again this quarter and redundancies at historically low
levels."
She acknowledged that the claimant count was up but said latest Department of
Work and Pensions figures showed falls in numbers of people claiming other
benefits. She pointed in particular to incapacity benefit claimant numbers,
which have fallen 58,000 over the past year.
"But we must do more to tackle worklessness and break the cycle of poverty and
benefit dependency. That is why we set out proposals in January's green paper to
reform the welfare system and give people increased support in return for a
greater responsibility to look for work." Not all was doom and gloom as the
figures revealed that the number of retired people finding work had risen by 10%
over the past year to a record 1.12 million.
The ONS figures also showed little for the Bank of England to worry about in
terms of wage inflation. The Bank has been watching carefully for any upward
pressure caused by the rising price of oil and gas.
Average earnings growth remained at 3.5% in the three months to January compared
with a year earlier. Earnings continued to grow faster in the manufacturing
sector than in the service sector even though manufacturers have shed more than
100,000 jobs over the past year, taking employment in the sector to a record low
of just over three million.
The monthly house price snapshot from the Royal Institution of Chartered
Surveyors powered to its highest level since June 2004. The RICS survey showed a
balance of 28% of surveyors - up from 10% the month before - reported house
price rises rather than falls. The RICS said: "Buyer confidence has returned to
the market with the number of new purchase enquiries rising yet again, despite
diminished hopes that interest rates will fall again."
Unemployment rises at fastest rate since 1990s, G, 16.3.2006,
http://business.guardian.co.uk/story/0,,1731623,00.html
The Guardian
Work p. 2
25 February 2006
The Guardian
Work p. 12
18 February 2006
Boom and Bust Britain, 2006
City bonuses hit a record £7.5bn,
3,000
workers given at least £1m,
Sales of penthouses, fast cars and champagne
at
all-time high, House repossessions up 70%
to highest level since the 1991 crash,
Mortgage arrears up 21%,
Record 70,000 go bankrupt,
a 51% rise
Published: 04 February 2006
The Independent
By Philip Thornton,
Economics Correspondent
and Terry Kirby, Chief Reporter
A stark image of divided Britain was revealed
yesterday as it emerged that a record number of people were made bankrupt, even
as a tiny elite of City of London bankers were looking forward to £1m-plus
bonuses.
The Government's own figures yesterday showed that more than 20,000 people were
forced to file for bankruptcy in the three months running up to Christmas after
being overwhelmed by their debts. The total of 20,461 was a 51 per cent jump on
the previous year and the highest number for a three-month period since records
began in 1960. The total for 2005 was almost 70,000, 57 per cent more than 2004.
Families struggling to make ends meet will take little comfort from a report by
a leading think tank showing that City traders are set to share a staggering
£7.5bn bonus pool after a bumper year for share prices and company takeovers.
Some 3,000 people are on track for a seven-figure bonus, the Centre for
Economics and Business Research (CEBR) said. Many lenders foreclosing on debts
will be owned by the same financial giants that are paying individual employees
up to £10m.
"The contrast between the financial situations of these groups of people is
shocking," said Vince Cable, the Treasury spokesman for the Liberal Democrats.
"While those in the City worry about whether they have chosen the trendiest
location for their skiing holiday those recently insolvent will be worrying
about how they will put food on the table.
"These figures demonstrate the hollow nature of Gordon Brown's rhetoric on
social justice."
The jump in personal failures was accompanied by a surge in mortgage
repossessions, triggering fresh fears that households were buckling under the
weight of mounting debts and rising interest rates.
The number at least three months behind on their mortgage payments is up by 21
per cent. More than 10,200 people lost their homes last year - a 70 per cent
increase on 2004.
"The underlying theme is the strain from high debt levels and high debt service
payments," said Michael Saunders, a UK economist at Citigroup, the American
banking giant.
Households are currently labouring under a record £1.16 trillion of mortgage and
unsecured debt - credit cards, bank loans and overdrafts and HP deals. Although
there are tentative signs that consumers are reining in their unsecured
borrowing, experts believe that the number of personal failures will increase.
"The bankruptcy bubble is getting bigger but seems unlikely to burst for some
time yet," said Steve Treharne, the head of personal insolvency at the
accountancy firm KPMG. "The levels and availability of credit have been
increasing for some time and recent figures from the Bank show that this trend
is continuing. The more people use credit, it is inevitable this will be
followed by increases in personal insolvencies."
Citizens Advice said its bureaux had seen a 26 per cent surge in the number of
people seeking help over their debts, to 1.23 million last year. The latest
figures, combined with bumper bonuses for top bankers, will fuel calls for a
crackdown on profits made by high-street banks.
A spokeswoman for Citizens Advice said: "Our evidence shows that lenders are
selling products without properly checking whether the borrowers can afford it."
She said that the majority of cases were among the lowest income group. But Mike
Gerrard, a personal insolvency expert at Grant Thornton, said: "We are also
seeing greater numbers of individuals earning good salaries but borrowing
proportionally more than people on lower incomes."
He said the "now culture" - people of all ages expecting things now and no
longer wanting to save to buy them - was generating the highest volumes of
insolvencies.
The figure was distorted by a doubling - 117 per cent - in the number of
individual voluntary arrangements (IVAs), a recently introduced procedure to
take the shame out of bankruptcy.
At the other end of the scale, £7.5bn in bonuses is due to be earned by City
workers this winter, according to the CEBR, a 16 per cent increase over past
year. The rise is due mainly to a 10 per cent rise in stock market trading and a
20 per cent surge in mergers and acquisitions.
At the top end, about 3,000 people, usually at boardroom level at such companies
as Goldman Sachs and Morgan Stanley, will get bonuses of more than a £1m, with a
handful nudging £10m. This includes people such as Michael Spencer, 50, chief
executive of ICAP, the world's biggest money broker, who is said to be getting
£5m this year, and Crispin Odey, 46, a hedge fund manager, said to be due £8.8m.
But there are also 330,000 City workers, usually traders, brokers and dealers,
who are also getting bonuses, ranging from a few hundred pounds right up to the
magic £1m figure; the average is around £23,000. Even relatively lowly workers
on £35,000 might expect to double their salaries in their first year.
The art lover with a £5m bonus to spend
Michael Spencer, chief executive, 50
The British chief executive of the world's
biggest money broker, Intercapital (ICAP), Michael Spencer, isestimated to have
made a £5m bonus this year, which, if he continues his tradition of hospitality,
may be partially spent on a party. Last year, he spent £1m to bring Robbie
Williams over to his pad in St Tropez and sing to the 300 guests who had joined
him for his fiftieth birthday.
"I'm the sad person you see reading the FT on the beach," he says. But it has
paid off - Mr Spencer has homes in Holland Park, St Tropez and New York and is a
collector of modern art with a penchant for Picasso and Jack Vettriano. He
earned around £4.5m last year and has an estimated personal wealth of around
£372m. His company operates from 26 offices across the globe and employs 2,900
staff to handle daily transactions of $1trillion. He lives with his wife
Lorraine and three children. Mr Spencer got a taste for trading when he made a
£300 profit dealing in GKN shares while at Oxford studying physics. He now
controls 22 per cent of Icap.
Geneviève Roberts
The bankrupt forced to give up his home
Robert Power, 26
After the death of his father, Robert Power
went "off the rails". He had a £43,000-a-year sales job, with a £40,000
inheritance. In two years he spent it all. He went bankrupt on 1 April 2004,
having racked up a further £42,000 of debt.
"I used to be very frugal," said Mr Power, 26. "I think dad dying sent me over
the edge. I lost sight of the future and saw it as my own money to spend. I went
out to have fun knowing I had tens of thousands of pounds in my pocket.
"But it got out of control. You get calls and letters every day chasing you. I
used to go and sit in the bus stop for an hour with my head in my hands."
Bankruptcy brought it to an end. He has to pay half of his disposable income -
about £400 a month - to creditors until April 2007. Mr Power says his finances
are back under control.
"There is no longer so much stigma attached to bankruptcy, but it is
humiliating. I used to live on my own in a nice flat in Canary Wharf; now it is
a grotty house with three other people in north London. I have less self-worth.
But the calls have stopped."
Oliver Duff
Boom
and Bust Britain, 2006, I, 4.2.2006,
http://news.independent.co.uk/uk/this_britain/article343102.ece
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