There's been wild talk today about the price oil leaping to $150 a barrel as a result of the terrible events in Libya and problems elsewhere.
That still looks far off, but what is the connection between the price of crude oil and the the cost of filling up with petrol or diesel in the UK?
Unleaded is at a record 128.97p and diesel at a record 134.34p and they're rising.
As a ready reckoner, assuming that exchange rates remain stable, some observers would pencil in a one penny rise in the price of fuel for each $2 rise in the price of crude.
So the current price of $110 for a barrel of Brent crude could already presage a rise in the price of petrol of several pence.
At the same time the Petrol Retailers' Association warns that duty increases in the Budget, in March, could add another 5p.
What happens in the Budget is a moot point at the moment, but that could take us close to 140p for a litre of petrol.
And if crude oil puts on another $30 or more, then 150p a litre comes in sight.
As I say, this scenario still seems far off, but it's scary and there seems little doubt that our fuel prices will rise higher even if the price of crude stays where it is.
Wednesday, 23 February 2011
Clampdown on costly executors
I've heard a number of cautionary tales from distressed viewers who discovered that a family member's estate was being horribly depleted, after a bank appointee filled the job of executor.
Now, there will be less danger of inheritances being squandered on expensive executors, after four of the biggest banks said they would change they way they helped customers with their wills.
Barclays Bank, HSBC, Lloyds Banking Group and RBS Group have all voluntarily agreed to review and improve the way they sell will-writing and executor services following discussions with the Office of Fair Trading.
Costs for a professional executor to administer an estate can be high and vary considerably. For an average estate, consumers can pay between £3,000 and £9,000. Failing to shop around for executor services could be costing UK consumers around £40 million a year, according to the OFT.
The four banks have agreed that consumers making a will should not be led to believe that appointing a professional executor is essential or the norm. Also, they should not be encouraged to appoint a professional executor unless it is clearly in their best interests.
Consumers appoint executors in their wills, to administer their estates after they die. They can appoint lay executors, such as friends or family members, if they want.
Now, there will be less danger of inheritances being squandered on expensive executors, after four of the biggest banks said they would change they way they helped customers with their wills.
Barclays Bank, HSBC, Lloyds Banking Group and RBS Group have all voluntarily agreed to review and improve the way they sell will-writing and executor services following discussions with the Office of Fair Trading.
Costs for a professional executor to administer an estate can be high and vary considerably. For an average estate, consumers can pay between £3,000 and £9,000. Failing to shop around for executor services could be costing UK consumers around £40 million a year, according to the OFT.
The four banks have agreed that consumers making a will should not be led to believe that appointing a professional executor is essential or the norm. Also, they should not be encouraged to appoint a professional executor unless it is clearly in their best interests.
Consumers appoint executors in their wills, to administer their estates after they die. They can appoint lay executors, such as friends or family members, if they want.
Mortgages are shrinking
DROP IN AVERAGE MORTGAGE
The value of the average new mortgage has dropped backed to its lowest level for nearly two years, as the housing market continues to stagnate. The drop reflects falling house prices and buyers having to save up for a larger deposit.
The British Bankers Association reports that the average mortgage was £135,200 in January, down from £143,300 the month before and sharply lower than the high of over £150,000 reached over the summer.
Lenders have already said that the average house deposit for first time buyers has risen to 23% in recent months. Lenders are demanding higher downpayments and buyers are saving for longer in order to qualify for better deals.
The value of the average new mortgage has dropped backed to its lowest level for nearly two years, as the housing market continues to stagnate. The drop reflects falling house prices and buyers having to save up for a larger deposit.
The British Bankers Association reports that the average mortgage was £135,200 in January, down from £143,300 the month before and sharply lower than the high of over £150,000 reached over the summer.
Lenders have already said that the average house deposit for first time buyers has risen to 23% in recent months. Lenders are demanding higher downpayments and buyers are saving for longer in order to qualify for better deals.
Tuesday, 22 February 2011
Planning slump
Sorry, that house you were hoping to move into - it won't be built.
We haven't even applied for planning permission.
That is the worrying message from the Home Builders Federation, whose members put up eight out of ten new homes.
The latest report from the HBF says that across Britain just 33,000 homes were approved for construction in the last three months of 2010.
33,000 was 9% fewer than the previous quarter and 22% fewer than the year before.
Social housing was hardest hit with only 5,500 approvals, a new low, and a small figure considering that 5 million people are languishing on council waiting lists for homes.
It is the third successive quarterly fall. Planning permissions are being granted at less than half the rate of four years ago.
What will cause most concern is that after permission is given, typically it takes up to three years to build the home.
So, sorry you don't have a place to rest your head. You won't get one for quite some time.
We haven't even applied for planning permission.
That is the worrying message from the Home Builders Federation, whose members put up eight out of ten new homes.
The latest report from the HBF says that across Britain just 33,000 homes were approved for construction in the last three months of 2010.
33,000 was 9% fewer than the previous quarter and 22% fewer than the year before.
Social housing was hardest hit with only 5,500 approvals, a new low, and a small figure considering that 5 million people are languishing on council waiting lists for homes.
It is the third successive quarterly fall. Planning permissions are being granted at less than half the rate of four years ago.
What will cause most concern is that after permission is given, typically it takes up to three years to build the home.
So, sorry you don't have a place to rest your head. You won't get one for quite some time.
Monday, 21 February 2011
Halifax payout for 300,000 mortgage customers
Lloyds Banking Group has revealed that its Halifax subsidiary will make goodwill payments to 300,000 customers who received mortgage offers between September, 2004 and September, 2007.
It has set aside £500m for the payments, which suggests an average of nearly £1,700 per customer. Some will receive a flat rate payment of £250, others a variable payment which could run into thousands, depending on the size of the mortgage.
The payments arise from potential confusion over a guarantee that its Standard Variable Rate for mortgages rates would not rise higher than 2% above Bank of England Base Rate. Halifax later changed this mortgage cap to 3% above base rate but now admits that the wording in its documents "had the potential to cause confusion".
Halifax will be writing to 600,000 customers to establish which of them is due the money. It says they do not need to take any action.
It has set aside £500m for the payments, which suggests an average of nearly £1,700 per customer. Some will receive a flat rate payment of £250, others a variable payment which could run into thousands, depending on the size of the mortgage.
The payments arise from potential confusion over a guarantee that its Standard Variable Rate for mortgages rates would not rise higher than 2% above Bank of England Base Rate. Halifax later changed this mortgage cap to 3% above base rate but now admits that the wording in its documents "had the potential to cause confusion".
Halifax will be writing to 600,000 customers to establish which of them is due the money. It says they do not need to take any action.
Friday, 18 February 2011
Inflation figures were wrong, says Bank of England
The Bank of England has calculated that inflation was 0.3% higher per year than the figures reported by the Office for National Statistics.
The under-reporting arose during the 12 years between 1997 and 2009, according to the Bank's statisticians, implying that prices ended the period nearly 4% higher than recorded in official figures.
Higher inflation could have resulted in bigger increases in benefits, salary-linked pensions and some investments.
However, the Department for Work and Pensions has told the BBC that it would not be recalculating any payments, even if people felt they had lost out.
"Had the inflation calculation been done correctly, many final salary scheme members would now find themselves entitled to a pension around 4% higher than their actual entitlement," said John Broome Saunders, a pension expert at BDO Investment Management.
It is rare for the Office for National Statistics to come under attack from the Bank of England.
The inaccurate figures arose from measurements of clothing prices during the period, according to the Bank. Price fluctuations can be hard to track as styles change, stocks are exhausted and the shelves are refilled.
The Office for National Statistics (ONS) "picked up seasonal falls in prices during the winter and summer sales, but did not fully capture the recovery in prices after sales had finished", states the Bank's latest Inflation Report.
The study looked at clothing prices in Euro-area countries and estimated the impact on the UK's Consumer Prices Index (CPI) if more accurate clothing prices had been included.
The discrepancy was "equivalent to adding 0.3 percentage points to aggregate annual CPI inflation". The Inflation Report suggested that there would have been an even larger impact on the other headline inflation index, the RPI.
The ONS improved its methods for monitoring clothing prices last year. It increased the number of clothing lines it followed and changed the times of year that prices were checked.
"But this certainly does not mean that there were measurement errors or misreporting in the past," an ONS spokesman told the BBC.
He added that improvements were often made and the weight given to different items of shopping in the RPI or CPI were reassessed every year.
"Certain improvements will increase inflation whilst others will reduce it," he said.
It is unlikely that members of the public could reclaim any lost money or ask for an increase in pension or benefit income.
The National Association of Pension Funds pointed out that pension increases are dependent on published inflation rates, which remain as they were.
"It's a theoretical argument," explained Ros Altmann, the Director General of the Saga Group, "You would have to prove that this is the only element of inflation that needed to be changed."
The policy of the Department for Work and Pensions is that it will only change benefit rates if the official inflation figure is recalculated and republished.
A spokesperson for the DWP said: "Inflation figures are determined by the ONS who regularly do work to improve their methods of calculation. Any changes in methodology do not mean that previous inflation rates were incorrect."
How British Gas nudges you into paying more
Are we too trusting, too gullible or too stupid?
Like many businesses, British Gas doesn't much care which word describes us best. It's just keen to take advantage.
Hence the message the company is sending out to customers who were on its Websaver tariff, which is guaranteed to be 6% lower than its Standard tariff:
"We would just like to remind you that your WebSaver 5 energy tariff is coming to an end on 28 February 2011. As a result, you will be automatically transferred on to our standard gas and electricity tariff so you don’t need to do anything."
Granted, they include a link which explains how much the average Standard bill will be, though not comparing it to yours. And, later in the note, there is a link which guides you to a comparison of all their tariffs.
But why not provide the comparison up front and show that your charges will rise to fill that 6% gap?
The point is that customers really do need to do something, and fast. The obvious move would be to renew the Websaver tariff or they could shop around.
Plenty of them will put in some research to discover the best deal but, inevitably, a number of customers will not. They will end up paying more for their gas and electricity for months or even years.
And British Gas's profit margin will get a little bit fatter.
Like many businesses, British Gas doesn't much care which word describes us best. It's just keen to take advantage.
Hence the message the company is sending out to customers who were on its Websaver tariff, which is guaranteed to be 6% lower than its Standard tariff:
"We would just like to remind you that your WebSaver 5 energy tariff is coming to an end on 28 February 2011. As a result, you will be automatically transferred on to our standard gas and electricity tariff so you don’t need to do anything."
Granted, they include a link which explains how much the average Standard bill will be, though not comparing it to yours. And, later in the note, there is a link which guides you to a comparison of all their tariffs.
But why not provide the comparison up front and show that your charges will rise to fill that 6% gap?
The point is that customers really do need to do something, and fast. The obvious move would be to renew the Websaver tariff or they could shop around.
Plenty of them will put in some research to discover the best deal but, inevitably, a number of customers will not. They will end up paying more for their gas and electricity for months or even years.
And British Gas's profit margin will get a little bit fatter.
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