Financial Review

Growing children, rocketing costs
The cost of bringing up a child to the age of 21 has rocketed to £227,266, according to new figures. The rising cost of childcare, child benefits cuts and the increasing cost of living are behind the increasing expense, contributing to a £5,000 increase in the last year alone.

Education and childcare remain the biggest elements, amounting to £73,803 and £66,113 respectively. Parents sending their child to a private school can expect to add another £117,357 to the bill.

The costs are so high that one in five parents is now delaying having another child, according to the report from insurance company LV. The rising expense also means one in 10 parents choose to have a smaller family, the report says.

Best year since 2007 for the economy

The pace of economic recovery slowed at the end of 2013 but the UK economy still had its best year since 2007. The National Institute of Economic and Social Research said gross domestic product rose by 0.7% in the final three months. That was down from 0.8% in the third and second quarter, and the economy is still 1.2% smaller than before the recession.

This meant the economy grew overall by 1.9% in 2013, which is still well below the peak of 3.4% in 2007, just before the recession changed the global financial map.

Quango bosses earn more than the pm
More than 800 mandarins and quango bosses earn over £100,000 each, costing the taxpayer more than £100 million a year, according to official figures. Data released as part of the Government’s transparency drive shows that 819 civil servants and officials are earning up to £330,000 a year.

The figures confirm that the number of high earners in Whitehall and in quangos is four times higher than previously thought, with 234 earning more than the Prime Minister’s £142,500 a year salary.

Meanwhile it has emerged that the chief executive of a taxpayer-funded scheme that leases cars and scooters to disabled people earned £850,000 in pay and perks last year. Mike Betts received this as boss of Motability Operations, a not-for-profit company funded by the Government.

Four other senior directors at the business also earned large sums, taking home more than £2m in total in 2012.

Rural Tories warn of ‘absurd shortfall’

Cuts in local government spending could drive voters in Conservative heartlands to the UK Independence Party (UKIP), ministers have been warned. Rural Tories say plans to reduce the level of funding to local authorities will leave an ‘absurd’ shortfall in rural communities.

They warn that rural councils will be penalised by the Government’s spending settlement for the next financial year, and say urban local authorities will receive 40% more funding.

The Rural Services Network, representing 119 councils – many of which are Conservative-led – said the funding gap was patently unfair and could turn local residents against Conservative councillors presiding over cuts to services. Conservative councillors say they fear that UKIP will be able to seize on cuts to services to grow their power base in counties such as Lincolnshire, Norfolk, Suffolk and Hampshire.

Customers pick up phone to vote for BT

BT was the unfortunate runaway winner of the Daily Mail’s Wooden Spoon award for poor customer service. This was based on a public vote and almost a third of negative comments were about BT, with its offshore call centres. BT in fact received twice as many negative comments as the runner-up in the poll, npower.

HMRC, which topped the list of shame last year, was in third place this time. Others in the top 10 from which the final vote was taken include British Gas, Sky and Orange. The top company for consumer service was John Lewis, -followed by First Direct Bank and Nationwide.

Welfare cheats and errors cost £300m
More than £3.5bn has been lost in benefit fraud and error, despite the Government’s promise of an uncompromising crackdown.

Repeated announcements about efforts to catch welfare cheats and curb bungling by officials have led to no change in the amount of money lost. In fact, since the Coalition came to power in 2010 the amount written off has risen by £300m. The Department for Work and Pensions insisted it was “fixing the welfare system”.

But the National Audit Office has warned that the scale of the losses – up by more than 9% in the last year – are unacceptable. Of the £3.5bn lost last year, £1.2bn was the result of fraud, £1.6bn was attributed to error by benefits claimants and £800m was lost by officials paying out too much.

In 2010-11, the first year of the Coalition Government, £3.2bn was lost in fraud and error, leading David Cameron to promise a “tough and uncompromising” strategy to deal with the problem.

Dancer is shaken after tax demand
A belly dancer has been ordered to pay more than £50,000 in tax, after a judge ruled her classes were recreational rather than educational. Audrey Cheruvier, of the Fleur Estelle Belly Dance School, had believed her company was exempt from VAT because it was taught as a sport.

Her representatives had argued that belly dancing was a serious and systematic course of study and that she should be given the same VAT exemption as tutors in more mainstream subjects.

Rules from the HMRC say that registered businesses supplying certain sporting and physical education activities, including dance, can be exempt from VAT. But a tribunal has ruled the tuition she provided was recreational and she will have to pay £52,921 in VAT for income dating back to June 2009.

Rules to be dropped to help businesses
Thousands of rules that affect business are to be scrapped or amended, David Cameron has told a Federation of Small Businesses conference. More than 3,000 rules will be dropped or changed, saving more than £850m a year, according to the Government.

Agriculture was taken by the PM as a prime example of bureaucracy, with a commitment to scrap 640 pages of cattle movement guidance, 286 pages of hedgerow regulations and 380 pages of waste management rules.

Mr Cameron said he wanted to “get out of the way of small business success”. He claimed that his government would be the first in history to end a term in office with fewer regulations on the statute books than when it came into power.

“We need to be a country that celebrates enterprise and backs risk takers,” he said.

Many not looking after the pennies
You may want to check coat pockets and the bottom of handbags for loose change as it could add up to more than you think, a new ASDA study suggests.

Over the course of an average week, families leave around £10.20 in loose change lying around the house or car. As many as 60% said they have put away loose change, only to lose or forget about it. A fifth of parents say their spare change can be found down the back of the sofa, another fifth in the glove compartment, and more than half of women say they often find cash at the bottom of their handbags.

Despite rising bills and stagnant wage growth, as many as a quarter admitted they are not saving any of their unused small change. Indeed 4% admit to chucking away their coppers rather than carrying them around. However some are putting this cash away, with one in five mothers putting loose change aside for their children’s pocket money.

The UK is top of the savings league
Despite facing record low savings rates, more British savers grew their financial nest eggs than their European neighbours last year.

An improving British economic outlook, including rising house prices and falling unemployment, boosted household saving, according to Dutch bank ING. It found that a third of British savers put away an increasing amount of money last year. This was more than any of the other 12 countries surveyed – and higher than the European average of 21%.

Although the UK topped the league for growing savings pots it did not save the most. People saved an average e1,016 (£840) in the last three months of 2013 – fourth behind Luxembourg, Germany and, surprisingly, recession and unemployment-hit Spain, but higher than the European average of e836 (£691).

The UK was rated fourth in terms of ‘savings comfort’ with 35% saying that they felt happy with the funds in place. However, a third have only enough savings to support them for three months, if needed, while more than a quarter have no savings at all.

A villa in Spain, or money down the drain?
Spain is the favourite country for Brits wanting to buy property abroad, research suggests, despite a Spanish property crash.

Reasons for moving overseas include better weather and less stress, the Rightmove Overseas survey of 3,000 people found.

Around one million illegal homes, however, are estimated to have been built on protected land in Spain by crooked developers over the past 10 years. Up to 100,000 villas and apartments were bought by expats conned by unscrupulous builders and estate agents. Many of these properties are now empty or are set to be demolished.

Even though Spain is the Brits’ choice of place to buy a property abroad for holidays or investments, France is still said to be the most popular place to emigrate to.

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