Financial Review September 2015

Revenue keeps taxpayers hanging on the telephone
Taxpayers trying to call HM Revenue and Customs (HMRC) can be kept waiting for more than three-quarters of an hour. A study by Citizens Advice, shows that over the past year 11,500 frustrated callers have turned to Twitter to complain. On average, those who tweeted had to wait 47 minutes before their call was answered.

HMRC said the survey was unscientific and out of date. The official waiting time is supposed to be 10 minutes, but other reports have suggested this is not being achieved. This has been blamed on staff cuts at the call centres handling enquiries.

France remains ‘the sick man of Europe’
France was the only country in the EU not to grow over the spring as it lived up to its billing as ‘the sick man of Europe’. The French economy stagnated in the second quarter of the year, despite growth in every other country, including Germany, Britain, Italy, Spain and even crisis-torn Greece.

The figures from Eurostat, the European Commission’s statistical agency, underline the malaise in France where unemployment is 10.4% and nearly a quarter of under 25s who want a job cannot find work. Concerns have been expressed about France’s competitiveness and the size of its public sector. Gross domestic product (GDT) or total economic output rose by 0.4% in both the EU and the 19 countries in the eurozone. While France stagnated the Spanish economy grew by 1%, Greece by 0.9%, Germany by 0.4% and Italy by 0.3%.

Interest rate rise threat starts credit time bomb ticking
Households are sitting on a £173 billion debt time bomb after being lured into a spending spree by banks and credit card companies. There has been a big rise in credit-based spending on new cars, televisions, conservatories and home improvements. Now with a rise in interest rates likely for the first time in more than eight years, fears are growing that many will be left struggling with repayments.

An analysis of debt levels shows the amount taken by homeowners remortgaging to pay for home improvements hit £477 million between April and June, a five-year high. The sum owed on mainstream credit cards is increasing by 5.2% a year and has reached £41.4bn. Much of this is due to a boom in long-term interest-free deals, that let borrowers transfer balances from another card or not pay any money on purchases for as long as 40 months. Estimates suggest the amount owed on credit cards is now increasing by £45 a second.

‘Help to buy’ scheme helps rich buy homes
More than 1,750 couples earning over £100,000 a year have been given government loans to buy a house. Under the Government’s ‘help to buy’ scheme, anyone who saves a 5% deposit on a property will get a 20% loan from the Government so they can get a mortgage. The programme was brought in to help first time buyers struggling to save enough cash to get on the property ladder. However, the scheme is helping some of the wealthiest families in the country, the Government’s own figures show. Almost 500 of the couples earning over £100,000 given government help already owned a property.

Officials maintain, however, that the scheme is working well, pointing to figures showing almost half the loans to first time buyers went to those earning £40,000 or less. Yet this masks the fact that more than 30,000 loans were to households earning more than £40,000 a year – which puts them in the richest 30% of earners in the country.

‘Mumpreneurs’ boost UK economy
Businesses run by mothers with children aged 18 or under are thriving, generating around £7.2 billion in sales last year and supporting 204,000 jobs. A report from the economic think tank Development Economics evaluated the contribution of ‘mumpreneurs’ and found the sector is growing at an unprecedented rate. These enterprising women increased their economic value added to the UK economy by 30% between 2011 and 2014, boosting the number of jobs supported by their businesses by 23%.

By 2025, the report claims that the mum economy will generate £9.5 billion for the UK. The most popular business sectors for entrepreneurial mothers are within retail, entertainment, management consultancy and care home management.

744,000 workers are now employed on zero-hours contracts
There has been a 6% rise in the use of zero-hours contracts by UK businesses in the last year, data from the Office for National Statistics (ONS) shows. It said businesses used 1.5 million zero-hours contracts to employ staff in January this year, compared with 1.4m a year earlier.

Zero-hours contracts do not guarantee a minimum number of hours of employment and many argue they offer greater flexibility in working patterns. It is estimated that 744,000 people, or 2.4% of those in employment between April and June 2015 were employed on zero-hours contracts. This was up from 2% for the same period a year earlier. Of those working on zero-hours contracts, 54% were women.

Polymer notes mean soon all spending will be ‘on the plastic’
The £50 note will be the only banknote made out of paper within a few years. The Bank of England has announced that the next design of the £20 note will be made of plastic. Entering circulation in 2020, it will follow the polymer £5 and £10 notes.

Consumers will be able to get their hands on the new plastic £5 note, the first in the polymer series, from 2016. It will feature the image of Sir Winston Churchill.
The Bank says polymer notes stay cleaner and are more secure than cotton paper notes, which have been used for more than 100 years. On a more practical level, the plastic or polymer notes will survive a spin in the washing machine.

Consumers are now slightly better off
People are better off than they were last year and more are putting the extra money aside thanks to rising disposable incomes. Once taxes and essentials have been paid for, savers had on average 9.7% of their salary, or £240 a month based on an average salary, to spend on extras and savings in the three months to the end of July. This is a 1.5% increase compared with the same time last year.

Households seem to be making the most of the windfall by opening up their wallets in shops, but 6.6% more people have put money aside into savings and investments.

British second to the French as the world’s tightest tippers
British holidaymakers have been voted the world’s second worst at tipping during their travels, just behind European counterparts in France, based on a survey of bar and restaurant staff. Nearly one in three said tourists from France are the worst at tipping, with British holidaymakers coming in second.

One in five voted those from the UK the least generous tippers. Italian tourists came third in terms of stinginess. At the other end of the scale, holidaymakers from the United States were voted as the most generous tippers, followed by Germans and then Russians.
The index found the average tip received by bars and restaurants is 11%, while the British give a typical tip of 7%.

Tax costs could see cash dispensers go
People could see many free cash machines disappear or turn into fee-charging ATMs after shop owners warned they have become too expensive to maintain. ATMs situated outside shops and supermarkets that are managed by third party operators, such as LINK, incur an extra tax bill. This is because they are deemed a separate business by the Revenue. There are about 10,500 of these cash machines outside high street shops, large supermarkets and convenience stores, according to the Valuation Office Agency (VOA), the body that assesses business rates.

The rates for ATMs are usually paid by shop owners. An individual cash machine can attract a business rates charge from £2,500 to more than £15,000 a year for each machine. The industry as a whole is facing a combined charge of up to £500 million. Rates vary according to how much cash it supplies a year.

The rule about taxing cash machines outside shops as separate businesses was introduced in November 2013 by the VOA, which also ruled to backdate charges to 2010.
Retailers including the Co-operative Group, Spar and Costcutter, have called on the Government to make free to customers ATMs outside shops exempt.

Nuisance call blocker hoist by its own petard
A firm that promised to block all nuisance calls has been fined by the Information Commissioner for making nuisance calls itself. Point One Marketing, trading as Stop the Calls, was said to have operated in a “bullying and aggressive way”. The company claimed it was an official service to stop nuisance calls, but it was not, and was fined £50,000 following hundreds of complaints.

Some people said they had been shouted at when they asked the company not to call them again; one woman, who suffered from dementia, was persuaded to hand over her credit card details. The official way to stop nuisance calls is through the free Telephone Preference Service.

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