Category: Politics

And The Consumer Rip Off Gathers Pace

And The Consumer Rip Off Gathers Pace

Inflation is increasing, meaning that month on month, prices for everyday goods and services that we need to live are increasing. Many people are finding that the wage that they receive is buying them less goods and services, and that each month they have less money left over, if any. But why are prices increasing? What’s happening?

Here are couple of ideas;

The energy sectors profits have escalated due to their pricing, the first company that springs to mind is BP. Between April and June of this year, they made nearly £7bn of profit. That is their second highest profit on record. Pretty much, all of the other energy companies are doing the same. And they’re sending a lot of these billions of profit to their shareholders. In a nutshell, the price that you pay for petrol and diesel, gas and electricity are linked to companies like BP. That’s why your fuel, gas and electricity are getting so expensive.

An interesting statistic is that according to experts at the UCL (University College London) and LSE (London School of Economics), over the last 50 years, the oil and gas industry globally has delivered £2.3bn a day in pure profit. It was put that the industry could have the power to “buy every politician, every system”. It may give an idea as to why we are where we are financially, and environmentally.

The thing that is particularly sickening about BP is the fact that it used to be owned by the UK Government, but was sold off in 1979 for £7.25bn. Imagine how all of that profit since could have been retained by the UK Government and used to reduce the tax burden on us all. Or even reduce our energy bills. It was sold for a song.

The energy sector profits are so obscene, the UN Secretary General, Antonio Guterres referred to them as ‘immoral’ and stated that they were ‘being made on the back of the poorest people and communities and at a massive cost to the climate’.

That’s one big chunk of the inflation problem.

In UK, the majority of households use a supermarket for their day to day groceries. The big supermarkets have been doing particularly well, take the ubiquitous Tesco, for example. To the year end of February 26th 2022, their pre-tax profits trebled from £636m to £2.03bn. Every little helps, right? Well, a lot helps them. A lot. Another chunk of the inflation problem.

Still on the supermarkets, this time petrol prices. Last week, the RAC said said at the start of the week, the average petrol price at the big four supermarkets, Tesco, Asda, Sainsbury’s and Morrisons, was £1.74 per litre. Diesel was £1.86. Meanwhile the average for the delivered wholesale petrol price last week was £1.24, while diesel was £1.38.

After factoring in VAT, fuel duty and a “generous” retailer margin of 10p per litre, the RAC said “forecourts should soon be selling unleaded for no more than £1.62”. A couple of weeks later, here we are, it’s still not happening.

There’s a recurring theme here, prices are up, profits are up by record levels for the big companies. In fact, there was a brilliant segment on the Jeremy Vine Show in July where Eddie Dempsey from the RMT (you can watch it here) pointed out that the FTSE 350 top companies profits have gone up by 73% since 2019. To use his phrasing “The people at the top of the economy, they’re having a disco, and everyone else is being told that they’ve got to tighten their belts and carry the can. It’s not on”. Quite.

So, the main drivers of inflation are summarised above.

Back in February 2022, the Governor of the Bank of England Andrew Bailey said he wanted to see “quite clear restraint” in wage demands from employees to prevent an inflation spiral. I guess what he was saying was okay, prices are increasing, but hey, just suck it up and put up. In the meantime, UK households are taking an enormous financial hit, probably the biggest for almost four decades.

As I’ve blogged before, Andrew Bailey earns £570,000.

Any wage increase you’re going to receive is unlikely to make a difference to the inflation figures, only to your ability to be able to afford to live, or even exist.

Britain is broken.

Water Doesn’t Work

Water Doesn’t Work

In the South of the UK we have a drought, we have hosepipe bans. The provision of water is a complete mess, we’re all being told to conserve water, and that we can all do our bit. The BBC are currently running a headline “England Drought: Everyone Must Rethink Their Water Use, Experts Say”. Unfortunately, they haven’t opened it to user comments, instead, on their news homepage, the only article listed as being open for comments is “Forest hold on to beat Hammers as Rice Penalty saved”. Really. They avoided allowing users to have their say regarding “Saudi oil giant breaks profit record with $48.4bn” or “Postcode search: How will climate change affect your area?”. Even “Green spaces across England parched in the heatwave”. No comments allowed.

Locally to me, Southern Water discharges raw sewage into the sea at will without challenge or penalty, without making public announcements very clear. It’s the height of summer and bathers are becoming ill, then realising that something is wrong with the seawater, then are making enquiries only to be told by Southern Water that “have a look at our app”, here’s one account; Couple who swam in sea at Herne Bay after nearby Southern Water sewage release suffer sickness and diarrhoea (kentonline.co.uk).

I thought that they were only supposed to discharge sewage in the event of flooding and we’ve not had any rain for weeks…..

On average, across all of the water authorities, they lose somewhere in the region of 20% of the water they collect; they lose billions of litres of drinking water every year due to their lack of investment in maintenance and infrastructure. They have dividended their shareholders somewhere in the region of £20 billion since 2010, and are still ripping the backside out of it to this day. They are saddling their companies with an awful lot of debt too, which is an extremely curious phenomena.

Rather than landing the consumer with the burden of water shortage by asking them to restrict their usage, maybe the impotent regulator (OFWAT) could turn its attention to the elephant in the room. Namely the problem caused by decades of profiteering and dividending, lack of investment, climate change (would that really be a surprise to you if you were in the business of supplying water, no? Well it certainly is to our water “authorities”), and an absolute contempt for the consumer, and for the environment.

The interesting thing here is that when you look on social media, and particularly The Daily Mail articles and subsequent user comments regarding the drought, even their normally pro-privatisation, pro-government die hard supporters are turning against them. Here’s a couple of the top rated comments that basically sum up the issues that we are facing;

I blame lack of investment in infrastructure and pure greed on the part of the directors. Modern infrastructure should be able to withstand dry weather ffs.

In answer to the headline “Water leaks DOUBLE during heatwave with firms blaming underground damage caused by earth drying out as drought continues to hit UK supplies 

Funny how gas mains haven’t been bursting all over the place despite routing through the same dry/heaving soil. Water companies have diverted our money to their management and owners pockets instead of investing in new pipes. BT invested in new network whilst being forced to cut their prices – how come Ofwat lets water companies put prices up without similar investing – incompetence or something else more ‘iffy?

Ouch.

How about these top responses to the headline “£3bn bonanza for fat cats: How investors (including the Chinese) took out cash that firms could have used to fix Britain’s creaking water network”

Its called Selling England by the pound, and its been going on for years and years. Hardly news

and;

To be fair this wasn’t a privatisation as there is zero competition – it was a sell off of state assets. The companies have continually failed to plan for the future and have acted short term in the interests of their shareholders. Renationalising them at enormous cost isn’t the answer I’m afraid – what they do need is new laws to oversee exactly what they do and how they operate and that they serve the consumers and the country failing which they should pay huge penalties.

That sort of brings me to a conclusion.

I can’t see that the government and the regulators are going to bring the water companies to heel, so that leaves another option; re-nationalisation. That could explain why the companies have been pulling so much money out and saddling themselves with debt. The good old UK taxpayer picks up the debt again.

A decade ago, I would have considered this situation impossible, but, looking at it now and if you look at the way that our government has spent our money over the last three years….. watch this space.

One question to myself…. how long do ‘they’ seriously think that they can get away with this? By this, I mean the transfer of money from the less well off to the incredibly rich in terms of overcharging for water, fuel, energy, food, all of the basic essentials required to exist. This last three years has seen the biggest transfer of wealth from the working classes to the rich that I’ve ever witnessed.

Something has got to give.

Bank of England Chief – “Sod you lot, I’m alright, Jack”

Bank of England Chief – “Sod you lot, I’m alright, Jack”

Okay, Andrew Bailey didn’t quite say that, but I think that is the essence of what he said.

In a nutshell, he’s gone on record warning about inflation; energy prices, food prices etc. And he’s also said again that workers shouldn’t request pay increases to help dampen the inflation increases. By this, he means you need to suck it up and suffer in silence.

I guess this is another one of those “We’re all in it together” moments. Except we’re not. We’ve already seen that.

MP’s received a 2.7% pay increase last month, this is approximately £2,200 per year and was done after the first time that the Bank of England asked workers to not request sizeable pay increases.

2.7% of the average wage as at February 2022 is £780. Quite a difference. So, Joe Average would get £1,420 less than an MP with the same percentage increase.

Oh, and Mr Bailey earns £570,000.

Michael Gove on BBC News With A Liverpudlian Accent

Michael Gove on BBC News With A Liverpudlian Accent

I had to share as I didn’t believe it myself until I had seen it. Probably not long before Boris Johnson goes on record claiming it’s a deep fake.

Words fail me, I’d hope that he’s not intoxicated, but it would appear that he is. Just after 07:30am. Wow.

This is a government minister on our National Broadcaster.

This should be a moment that causes his political career to tank. But this is the Conservative Party 2022. And we know it doesn’t happen like this. Promotion, maybe?

The Word On Everyone’s Lips; Inflation

The Word On Everyone’s Lips; Inflation

I’ve been meaning to put my two penneth in for a few months now, but events keep happening, things keep changing, I’ve been busy. It’s pretty dynamic out there, but the one thing that is certain, the price of everything is on the up, it’s just a matter of how much. Different things are increasing by different rates for different reasons; there’s the direct costs or input costs for the physical product, there’s distribution costs, there’s scarcity which pushes the cost up, and in the worst cases, a combination of all of the factors.

At work last week I tried to order a couple of boxes of plain copier paper, each box comprises of 5 reams, and a ream is 500 sheets. I’ve been buying these for the last decade for somewhere in the region of £10 plus VAT per box and the last time I purchased was December 2021. This time the cheapest I could get was £21.50 plus VAT, a jump of over 100% in five months. The supplier has largely attributed that increase to scarcity and a quick check with other suppliers revealed the same.

We’ve all seen the jump in the fuel prices in the UK with diesel in the £1.70-1.85 range on average, this is despite the government cutting fuel duty and the barrel price of crude dipping.

We’re being warned that domestic energy prices are likely to jump again by another 40% in October 2022 just in time for the cold weather and dark evenings. I’ve noticed that the wholesale gas price has decreased, so I cannot work that one out – further investigation required.

For those of you with mortgages and other debts, interest rates are on the up and show no sign of stopping; the rate of increase is currently around 0.25% per month and members of the Bank of England Monetary Policy Committee (MPC) that set the rates are starting to lean towards higher monthly increases. Only this month three of the nine members wanted to increase rates by 0.5%. To put this into perspective, if you had a £250,000 standard variable mortgage and the interest rate is currently 2%, your monthly interest payment for that debt is £417. Now, if that interest rate increases by 0.5%, the monthly interest is now £520 a month, an increase of over £100 per month, or £1200 per year. And that increase could take place in a month. And on several months in a row.

Regarding rented accommodation, I’m starting to hear a lot of anecdotal accounts of landlords increasing rents as their tenancy agreements allow. One local case that I’d heard of recently was of a mother with three children in a three bed house renting for £950 per month being told by the landlord that the market rate for the property was £1450 and that this would be the new rate of rent. That’s an increase of over 50%.

Food pricing is concerning too. Around 80% of the UK’s food is imported which makes us particularly susceptible to global price changes, supply chain disruption and scarcity. Farming UK is a consortium that represents many of the UK’s farmers. Its inflation index showed a 22% increase in input costs to September 2021, and 23% to March 2022. These increases have not yet fed through to the consumer, so that is yet to come.

I’ve been concerned for a while that we’re heading into a perfect storm, things are already horrible for so many currently and it looks like things are going to get far, far worse.

When peoples disposable income reduces or disappears completely because they cannot afford to meet the cost of living, whole industries will start to collapse – hospitality, entertainment. With this, unemployment will spike, there’s increased automation of jobs, it’s looking awful and I cannot comprehend that magnitude of what’s about to happen. There are too many variables and I just cannot process it.

And all the time that this has been unfolding (and if it’s been abundantly obvious to me and many others), our government has either been sleep walking into the situation, or wilfully ignorant of it. Or should that be criminally negligent? I don’t suppose it matters too much, whatever they do, whatever label we apply, they are wholly unaccountable and appear to more non-stick than Teflon Tony himself.

Be safe, be kind and look after one another. The government certainly won’t look after you and it’s going to be awful out there.

Will Tesco Put Their Money Where Their Mouth Is?

Will Tesco Put Their Money Where Their Mouth Is?

John Allan, Tesco Chairman was speaking today (10th May 2022) on Radio 4 regarding the cost-of-living impact on customers and how some customers were asking checkout staff to stop scanning items when the shop got to a particular value. Staff were being asked to stop at £40, for example as they didn’t want to spend any more than that.

He then went on to detail an “overwhelming need” for a windfall tax on the energy companies and for the money to be diverted to help the public. I couldn’t agree more.

Great sentiment and whilst that’s being worked on, let’s have a look at Tesco themselves;

To the year end of February 26th 2022, their pre-tax profits trebled from £636m to £2.03bn which is pretty impressive. In fact, they haven’t done bad at all during this COVID malarkey and out the other side.

When these profits were announced in April 2022, the Chief Executive Ken Murphy said, “Against a tough backdrop for our customers and with household budgets under pressure, we are laser-focused on keeping the cost of the weekly shop in check – working in close partnerships with our suppliers, as well as doing everything we can to reduce our own costs.”

He added that Tesco was keeping the rise in cost of living “a bit under the number for the overall market”.

Let’s break down his statement a little, he’s acknowledging the difficulties that his customers are experiencing, which is nice, he concedes that prices need to be kept low, good. Now, considering Tesco’s historical reputation of poor treatment of its suppliers, and its sharp practices the “working in close partnerships with our suppliers, as well as doing everything we can to reduce our own costs.” is a bit concerning. I wouldn’t want to be a supplier to Tesco, I think that I’d end up being squeezed and feel the pinch far more than they would. Somehow, I think they’ll (Tesco) find a way to maintain their margins.

And what if Tesco do this? Then just apply a windfall tax on their profits, John Allan is already on board with the concept for the energy companies, I’m sure that he won’t mind if it’s applied to his company for the greater good.

And for the other supermarkets? We’re watching you.

£200 Energy Bill Discount?

£200 Energy Bill Discount?

I’ve not really been keeping up with the news too much of late, all I know is that Boris Johnson has still not resigned. Unbelievable.

I received the following Whatsapp over the weekend;

“There is something very wrong about this ‘loan’ from the energy sector:
‘RE: imposed £200 loans for energy bills. Thanks to Richard Else – I have just reworked and generalised a message he has written to his energy provider and to the Cabinet Office (and I’ve cc’d my MP, who is in the Treasury)… Feel free to copy, adapt and send to suit your purposes… ‘

“To whom it may concern,
With regards to the recent news that all customers of energy companies in England will be given a £200 loan from the Government to be repaid over following years.
I would like to state that I do not want this loan. I have not asked for this loan and I certainly do not want the government interfering in my finanical affairs. I do not wish my energy company to transfer the loan to my account, nor take repayments from my account in the future, and I shall be writing to them to this effect.
I have several reasons for this decision.

  1. I have not given the Government permission to provide me with a loan. Legal requirements within the Consumer Credit Act require both the lender and the applicant to accept the written terms and conditions relating to specific transactions. I have not received contractual paperwork and would not sign an agreement, should I be provided with one. Without such an agreement, I believe the imposition of a compulsory loan would be unlawful.
  2. Since the most vulnerable in society are much more likely to be using pre-payment meters for their energy supplies, this loan scheme is completely misguided. Such people do not receive or pay bills, so cannot be helped through this proposed plan. Please reconsider and change this.
  3. Since I am a customer on a fixed rate tariff my unit costs for energy will not rise in April when the government removes its cap. Therefore I do not need a loan to help me.
  4. Within my contractual agreement with my energy company, there is no reference to the provision of credit from third parties without the consent of the customer. If the government continues with this course of action, it could cause contractual problems for the energy companies.
    This imposition is of great concern.
    For the Government to create a situation where they can enforce financial debt upon citizens, then control their personal finances – through their energy account – to repay a debt they have neither wanted nor authorised, is a worrying authoritarian development in the relationship between the state and the citizens of this country.”

Okay, if any of this is true, it’s quite troubling, so I immediately forwarded it onto a friend and tagged at the end that it looks like I need to read about the proposal and his response was;

“You do, I think that covers it.
It’s also a loan that is forced to play the market.
And it’ll be managed by who?”

This is starting to sound a little sinister.

Some reading reveals that the discount is in actual fact a loan for £200 which will be applied to this years bill as a credit to the account, and then be repaid at £40/year from 2023 to 2027.

The process is that the UK government loans the money to the energy suppliers, and they distribute it from there.

The reason for this is that energy bills will be going up for users on standard rate variable tariffs from April 2022 to the tune of 54% if you are on an account or prepay meter.

You have absolutely no say as to whether you have the loan or not, it will be applied to your account regardless; the loan is being forced upon you. If you do not have an energy account, i.e. you are on a prepay meter, you will receive a voucher or cheque.

If you don’t currently have an energy bill of your own, such as you’re living with parents and you miss receiving the loan, if you then move out and into your own place, you will then have to make the repayments at the £40/year between 2023 and 2027 for the loan that you never had!

There are so many questions bouncing around in my head, I just cannot think of where to start.

I think the best point is to look at other European countries. The jump in energy prices is affecting the entire continent, so what are the governments doing there?

In France, the government is forcing EDF to limit the increase to 4% this year, this means the company will take a financial knock to the tune of around £7bn. I’d say that this was fairly effective at protecting the consumer.

In Spain, the government there is applying a windfall tax on the electricity and gas producers that doing rather well out of the escalation in prices to distribute to people in need. How this manifests itself and how the consumer will be benefit will need to be seen.

In Germany, their government has cut green surcharges on bills. This is a start.

And in the UK……the government indebts the population, regardless as to whether they want the money or not, and will recover the money from them, whether they have had it or not.

And the amount of money that we are talking about is a paltry £200. This will barely touch the jump in bills for this year alone.

So, the energy producers and suppliers in the UK will continue to be allowed to make huge profits from something that is essentially costing them the same as it did before the increase in prices, and to add insult to injury, most are foreign owned and the suspicion is that they are using the profits from their UK operations to subsidise their home ones.

UK Government Deletes Net Zero Research Paper

UK Government Deletes Net Zero Research Paper

I meant to cover this at the time, in October 2021, the government published a research paper with a number of considerations and recommendations, which it quickly deleted.

The paper was produced by The Behavioural Insights Unit, which is also known as the Nudge Unit according to the paper itself. This is the same unit that was responsible for the design of the sugar levy.

It mentioned shifting dietary habits away from meat and towards plant-based foods, taxing producers or retailers of high-carbon foods such as sheep and cattle meat to incentivise take up of plant-based and local food diets.

Another area it touches on is implementing stronger carbon taxes for flying and shifting social norms to make international flights a sign of immoral indulgence or embarrassment.

Have a read, the paper is available here thanks to Alex Chapman at the New Economics Foundation.

If the link ceases to work, please let me know; I’ve downloaded a backup copy.

The Cesspit That Is The British Establishment

The Cesspit That Is The British Establishment

Wow. What a start to 2022. We’ve got Prince Andrew in increasingly hot water for something to do with a young teenage girl, we’ve got known liar Boris Johnson having parties at Number 10 during lockdown and spinning and deceiving the the House of Commons on the subject, there’s a load of laws making their way onto the statute books in April that will further erode our democratic freedoms that are going unreported in the UK media, we’ve got Tony Blair still getting his knighthood despite a petition being signed against it by over a million people. It just goes on and on and shows no sign of letting up soon. I can only wonder what is next to come.

For years, we’ve all known that the establishment and ruling elite have complete contempt for the underlings, but never has this been more apparent than now. There is an air of “stuff you, what are you going to do about it?” floating around, and it stinks.

Most of stuff I highlighted in the first paragraph is making front pages around the globe, from the Far East to the States passing through Europe. We have become a complete laughing stock, and we are being derided globally. Yet, the Boris house parties and the new laws seem to be getting buried by our news outlets pretty quickly. Considering Boris’ attempt at an apology in the Commons yesterday was a pretty big thing, it has now been superceded in the newspapers by concerns about a Chinese spy infiltrating the labour party.

As I type, there is breaking news that the Queen has possibly revoked Prince Andrews HRH title, so he may have to face the music as a private citizen. At least the Queen can be trusted to read the room and act with decisive dignity. Shame the rest of the establishment can’t.

News was breaking today that one of Boris’ immediate family had tested positive for COVID and as such would be unlikely to be seen in public as a result. Self isolation for contacts of coronavirus cases is no longer mandatory, his spokesman said he would heed guidance to limit outside contacts as much as possible for seven days after the test. Convenient that, no? It’s meant that he has dodged a scheduled visit to a vaccination centre in Lancashire today where he would have had to face the media for the first time since his attempt at an apology yesterday.

You know what, I have a feeling that Johnson is going to get away with this and remain in post. It’ll be interesting to see where he is in six months time……

Vodafone, HMRC, Harnett and the Whiff of Impropriety

Vodafone, HMRC, Harnett and the Whiff of Impropriety

Over the last couple of years we’ve become increasingly used to people in positions of power in the UK government doing naughty things and not being held to account. There’s one incident that goes back over a decade that really gets me upset and if you are a UK taxpayer, then it should do the same to you. There’s a lot more detail than I am going into here, but this should give a fair idea of what has gone on;

Vodafone is one of the darlings of the FTSE and has often been in the news for its tax dealings. It is a client of an accountancy firm called Deloitte. There is one incident that I’m going to focus on and this happened in 2010 when a man called Dave Harnett was the Permanent Secretary for Tax at HM Revenue and Customs.

Vodafone owed over £7bn in tax at this point, which is of course a considerable amount of money. To put that into perspective, according to the ONS, the mean gross annual salary for full time employees in the UK for 2010 was £25,879. From that figure £6,097 tax and national insurance would due (this is deducted at source, the worker has no choice in the matter), and the employer has to pay £2,580 on top of this; a tax for employing the worker. So, for each person earning this wage, theirs, and their employers contribution totals £8,677. Vodafone’s tax bill is due on profits earned, and is equivalent to the contribution of 806,730 average UK wage earners tax contribution based upon my quick calculation. That is a considerable amount of people.

Now this is where things take a turn for the worse if you are one of those people that lose approximately 20% of their earnings to tax and national insurance at source without having any say in the matter. Vodafone play by a completely different set of rules, and it appears that they are assisted by the very people paid to stop them avoiding their tax bill.

During the 2000’s Vodafone was locked in a long running dispute with HMRC regarding the amount of tax that it owed, in April of 2007, the Director of HMRC’s Large Business and Customer unit was a man called John Connors, he defected to Vodafone in a move that stunned his colleagues leaving many feeling betrayed.

Dave Harnett and John Connors used to work closely together at HMRC, and as the dispute evolved, Harnett changed the HMRC team working on the Vodafone case, instead installing a team that he deemed to be more flexible. This team negotiated a settlement with Connors in 2010 whereby Vodafone would only pay £1.25bn instead of the £7bn.

In July 2012 Harnett retired from HMRC, and less than a year later started working for Deloitte (Vodafone accountants, see second paragraph above) in a very lucrative deal. At the time, the Prime Minister, David Cameron approved his appointment subject to six caveats, one of which was that Harnett did not draw on privileged information from his time at HMRC. I don’t really think that this is the problem, the damage had already been done.

Deloitte commented at the time that Harnett will work as a consultant to them advising foreign governments and tax administrations, primarily in the developing world as he has significant experience in advising such countries on the development of effective tax regimes.

That’s a bit of a giggle, really, isn’t it?

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