Half don't know they've been paying for advice

Oh dear! You thought you were getting something for free and now you discover you were paying through the nose all along.

Paying as much as 8% of the money you put in.

We so want to believe that we are getting a bargain, that we don't ask questions and don't read the small print.

A third of people think that financial advice is free, even though a chunk of  the money tucked away by investors and pension savers gets slipped back to adviser by the investment company as commission.

That's according to market research from the Financial Services Authority, based on questions to over 2,000 members of the public.

Even worse than that, half of those who were actually getting financial advice thought it was free.

From today, commission on selling investments and pensions is banned. (Although see this comment from one pension expert who says there's a loophole.)

In theory, the new system forces advisers to be open about their charges, negotiating a fee with the customer before the transaction.

So you'll know where you stand stand - and there's less chance of being sold the wrong investment or pension, just because a provider pays more commission.

But investors will still need to watch out. The new fees can be paid in a variety of ways, by instalments for instance, and they could still be large.

It'll be vital to research what a reasonable fee might be and to try out different advisers, or financial planners.

High cost of tax calls

We lost £33m last year waiting on the phone to tax call centres operated by HMRC.

The calls can cost over a pound a time if you're held for more than 10 minutes - as 6.5m callers were in the first six months of this financial year.

Often it's via an 0845 number, though HMRC says tax credit calls are now dealt with on an 0345 number.

So what's the difference?

0845

Calls are typically charged at between 1p and 10.5p per minute depending on the time of day for landline customers, and often include a call set-up fee.
Calls from mobile phones generally cost between 12p and 41p per minute.

0345

Calls cost no more than calls to geographic numbers (01 or 02) and must be included in inclusive minutes and discount schemes in the same way.
Calls from landlines are typically charged between 2p and 10p per minute; calls from mobiles typically cost between 10p and 40p per minute.
Calls from landlines and mobiles are included in free call packages.



Full call charges guide from Ofcom

£millions for sole traders

Thousands of sole traders could benefit from a new initiative to allow savers to offer them loans directly via an internet website.

The business secretary, Vince Cable, is expected to announce today that he will invest £10 million in the online savings and loans firm, zopa.com, to help it launch a service builders, decorators, and other small businesses which aren't limited companies.

"There are 3 million sole traders and they find it really difficult to borrow money," says Giles Andrews, one of Zopa’s founders, "No one specialises in them."

Traders will be able to raise thousands of pounds to pay for vehicles and equipment, at a time when bank funding is hard to come by.

Zopa is a new peer-to-peer lender, which enables savers to offer their money directly to borrowers over the internet.

They earn more than they would expect to get from a bank or building society, though without the absolute guarantee that their money will be returned.

The firm has concentrated on consumer borrowers so far but will launch the sole trader service in the New Year.

Vince Cable is also likely to put £20 million of taxpayers’ money into another peer-to-peer lender, Funding Circle, which specialises in limited companies. Other providers of alternative finance will benefit as well.

Giles Andrews expects to offer loans of between £1,000 and £15,000 at slightly higher rates than his best borrowers enjoy, because of the higher level of risk.

He will match the government money pound for pound with cash from savers. All the state funding will be paid back after two years.

The growth of peer-to-peer lending has been impressive. Zopa is on course to lend £90 million this year and hopes to get close to £200 million of loans in 2013.

On the face of it the model is risky for savers, but their money is spread between hundreds of borrowers to reduce the chance of making significant losses.

Jacob Rothschild, from the well known banking dynasty, revealed in the last few days that he had bought a stake in Zopa, saying "alternative forms of credit will be developed on a significant scale".

Lord Rothschild wouldn't reveal the size of the investment.

£270m for Northern Rock customers

The taxpayer will have to pay £270m to customers who have personal loans with Northern Rock Asset Management, which has been in public ownership since the financial crisis.

152,000 Northern Rock customers will receive an average of £1,770 each because bank staff failed to include key details on annual statements, including the original amount which had been borrowed.

The problem arose with personal loans of less than £25,000, many of which were provided on top of Northern Rock's Together mortgage which was popular before the credit crunch and allowed homebuyers to borrow more than their homes were worth.

The failing arose as a result of an investigation by UK Asset Resolution, which looks after rescued banks for the government.

The Treasury said that it had commissioned an investigation from the consultancy firm, Deloittes, which would report early in the New Year.

It adds that UK Asset Resolution has the financial resources to cover the payments to customers.

How the £270m will impact on the public finances will be decided by the ONS, but it is likely to increase Public Sector Net Borrowing in 2012/13.

Thousands get mortgage compensation

Thousands of mortgage borrowers who fell into arrears are to be compensated after the City watchdog, the FSA, decided that they were treated unfairly.

They were customers of Cheshire Mortgage Corporation Limited, which is being fined £1.2 million for failing to treat customers fairly in the sale of mortgages and arrears handling from October 2004 to the end of 2009.

2,000 borrowers will receive an average of £1,000 each.

The FSA says the company didn't check properly whether some borrowers could afford their loans.

If they fell into financial difficulty, they faced unfair charges for handling their arrears and for the use of debt collection agencies.

Staff at Cheshire Mortgage Corporation, which is based in Cheadle, were paid bonuses to motivate them to collect arrears.

We're buying more cars

If you want to measure the state of family finances, don't lose sight of what people are buying.

The biggest expense for most people, after buying a home, is buying a car. In fact, getting wheels ranks right up there as a major decision along with getting married, getting a mortgage and having children.

Unsurprisingly, car sales took a serious knock during the financial crisis. But now they are going up.

In fact they have risen every month since March.

UK buyers bought 15,000 more cars in November than a year ago and, so far this year, they've bought nearly 100,000 more cars.

Car traders expect they'll post their biggest sales total since 2008 this year at over 2 million cars, with private buyers showing the most significant increase.

Ironically, the acceleration in car-buying has skewed our trade figures, which look pretty bad today. Part of the reason is that we are buying more cars from the continent, while hard-pressed citizens of other EU countries are buying fewer cars from us.

Average earners hit by pension limit?

How could someone on an average wage be hit by a reduction from £50,000 to £30,000 in the amount that can be saved each year into a pension scheme?

Well, it could happen but most would escape.

Take, for example, an employee on an average wage of £25,900 with 15 years in a nice final salary pension scheme.

That means the pension is a proportion of final salary, possibly building at 1/60 of salary for each year worked. The tax office multiplies each year's gain by 16 to see if it exceeds the annual allowance - the one which could drop to £30,000.

Our example would have to gain more than £1,875 in a year to breach the limit.

Unlikely? Yes, but say the person was promoted to a management job on £35,000. In that case there would be a sudden gain in pension entitlement achieved in just one year.

By my calculation it would be £2,858.

Our employee would have to pay a tax charge the part of the gain which exceeded the annual limit. In this case it would be a charge of £196.

BUT - and this is a big BUT - everyone is able to deploy unused annual allowance from the previous three years.

Those on medium and even many on higher wages are likely to have plenty of allowance to spare. In which case they could escape the tax charge.

Nowadays, more people on being signed up to pensions which aren't guaranteed by their employers. All that happens is that the employee and the company put in some money in a pension fund each month - and the pension you get at the end just depends on how well the fund does.

The situation is a lot simpler for these employees. Their contributions, including company contributions, would have to exceed £30,000 a year, which isn't likely to worry most of them.

PPI costs hobbling banks

The mushrooming cost of paying  compensation to victims of Payment Protection Insurance mis-selling is leaving banks with inadequate resources to absorb possible future losses.

The Bank of England's governor, Sir Mervyn King, warned today that banks needed to raise more capital, partly because of the PPI bill which has reached nearly £13bn and is expected to rise higher.

A statement from the Bank's Financial Policy Committee said UK banks have "underprovisioned for costs for conduct redress, notably for payment protection insurance mis-selling."

"In 2012, the number of identified conduct issues has grown and it seems likely that banks could face additional sizable costs."

The Committee said that likely losses on bad loans and over-optimistic calculations of capital adequacy were also to blame for the fact that banks had too little set aside to be sure of coping with future financial problems.

Double the Cash ISA limit

The UK's biggest building society is calling on the Chancellor to allow a huge increase in the amount of tax-free cash that savers can put in Individual Savings Accounts.

There is no tax paid on the interest earned from ISA savings.

In the run-up to the Chancellor's Autumn Statement next month, Nationwide Building Society says the annual cash ISA limit should be doubled to £11,280.

Along with other building societies, Nationwide believes that a big boost to cash ISAs would allow first-time buyers to build up larger deposits - and it would help savers, especially pensioners and those close to retiring, who are worried about paltry returns on their savings.

Currently, you can save £5,640 a year in a tax-free cash ISA, but you can put aside twice that -- the full £11,280 -- in a stocks and shares ISA.

Nationwide said it is renewing it's call for equal treatment of cash savings, because many people prefer the security and flexibility of standard savings accounts to the unpredictability of stockmarket investments.

More info on Cash ISAs.

You can stay with Lloyds

The 4.6m Lloyds customers who are having their accounts moved lock, stock and barrel to the Co-op are likely to be pretty confused about their options.

They'd be hard put to work out from the letters and leaflets being sent out to most of them from this week that they can opt out if they want to - and stay with Lloyds.

All they are told about that in the letter is:

"If you’d like to speak to someone about these changes, please call us on 0800 028 0428 – lines are open from 8am to 8pm Monday to Friday and 9am to 5pm on Saturdays and Sundays – or ask in branch."

And in the accompanying leaflet:

"If you think that you could be adversely affected by this change, you can send formal written objections – known as lodging written answers – to the Court at Parliament House, Parliament Square, Edinburgh EH1 1RQ, United Kingdom. If you wish to send a formal objection, we recommend you seek independent legal advice. Any objections you have must be lodged with the Court by 22 February 2013."

In fact, as I understand it, Lloyds TSB customers who ring up or go into a branch to object will be able to put themselves on a register of people who want to opt out.

Then, some time early next year, when the sale to the Co-op is closer to being signed and sealed, they'll be told about a formal mechanism to keep their business with Lloyds, even though their branch is being sold.

So why isn't Lloyds up front about this? It seems straightforward enough. If you don't want to be shovelled into another bank, surely that ought to be your choice?

The reason is likely to be that under the rules of the sale, laid down by the European Commission, Lloyds must not encourage its customers to stay.

If a large number objected, Lloyds would keep too big a share of the market and the branches would be worth less to the buyer.

And of course, both Lloyds and the Co-op must be concerned that once customers start to think about which bank they prefer, they might decide to switch to yet another bank.

But there is a serious danger that a misunderstanding will arise. Some people may think they don't have a choice when, in truth, they do.

Millions of Lloyds customers on the move

Millions of customers of Lloyds TSB will start receiving letters from the bank from tomorrow morning, telling them that their accounts will be moved to a new bank owned by the Co-op. It's the result of an order from the European Commission requiring Lloyds to hive off hundreds of branches.

Three and a half million Lloyds TSB customers will receive the letter between now and Christmas. Although the deal was announced in the summer, it's the first time they will have been told officially by their bank that their accounts are to moved.

They'll stick with the same branches in a new banking operation to be called TSB, but owned by the Co-operative Bank which will become a more more significant player in financial services. Their account numbers and interest rates will stay the same.

In the letter the customers will be told that they can register their wish to stay with Lloyds, either by phone or in the branch. However, they won't need to make a final choice until next year.

The hiving off of 632 Lloyds TSB and Cheltenham & Gloucester branches, along with a total of 4.6m customers, was required by the European Commission after Lloyds benefited from a bailout from the taxpayer during the financial crisis and emerged from the turmoil with a huge share of the market.

How Lloyds describes the timetable:


Step 1
Branches, accounts and customers that will be part of the new bank are selected.

Step 2
We are here.
Legal move to Lloyds TSB Scotland plc – the branches and accounts that are included will be brought
together under one banking licence.

Step 3
If you have debit and credit cards, another step in the preparation is to send you new ones – they will
still be Lloyds TSB cards and work in the same way.

Step 4
When everything’s together under one licence, the business will be renamed as TSB Bank plc.

Final step
By the end of 2013 TSB Bank plc will transfer to a new owner.

For more info and list of branches affected, look here.

Rainy day fund for floods

The flood fund - how it would work.

Insurers are proposing that the government should back a special insurance fund to cover flood-related home insurance claims from the 200,000 properties at greatest risk.

These are the homes they warn will not get insurance from July next year unless ministers agree to a deal.

It would be the ultimate rainy day fund, to include:

*a levy which matches the amount currently creamed off from everyone's household policy to pay for flood victims, perhaps £8 each from up to 25 million homes - so roughly £200m a year.

*an additional premium from the 200,000 most risky homes, whose owners pay more for cover - each additional £500 brings in an extra £100m.

*a guaranteed interest-free overdraft from the government to cover crisis years, when there isn't enough in the fund

The first two elements can be imposed by insurers. It's the last one which is the big sticking point with the government.

The fund is a bit like a sinking fund and at the moment it's been sunk  - not just because there is a potential bill for the taxpayer but because that bill could be open ended.

Why? The reason is that if we have more years like 2007 when insurers had to fork out £3bn to deal with flood damage, the fund itself would be inundated and overwhelmed.

How could the overdraft be paid back then? It would hard to hold homeowners to ransom with swingeing extra premiums, so the state might be forced to meet the bill.

If that happened, there would be pressure to move directly to an openly state-guaranteed safety net, as they have already in the United States and some other EU countries.

So, while insurers argue that any overdraft in the fund would be returned over time, it seems the idea is seen in Whitehall as a slippery slope.

Remember that it's hard, and usually impossible, to get a mortgage on a property which doesn't have insurance - including cover for flooding.

So, unless a deal is struck, there's a danger that hundreds of thousands of homes could became unsellable except to cash buyers.

New pension ideas "full of holes"

Britain needs new-style pensions which cut costs for employers but provide workers with guarantees on the retirement income they're likely to get, according to a discussion paper from the Department for Work and Pensions.

It suggests that companies which have offered generous salary-linked schemes might cut out annual inflation increases for future members, remove benefits for spouses, or limit pensions for employees who leave for a job somewhere else.

On the other hand, employers who provide the most basic schemes, which provide no promise of a particular level of pension income, could look at confidence-building improvements. They could guarantee that members would at least get their contributions back or guarantee a level of return, in exchange for a fee.

From this autumn, the government is forcing companies to enrol staff in workplace pensions, but the Pensions Minister, Steve Webb, said people's trust in the system needed to be restored so they don't opt out and they "get the most out of what they put in".

But one leading pension consultant who has looked at the ideas commented that they are "full of holes".

John Ralfe said there was "no magic money tree and no fantastic solutions". 

In his view the paper misleads people by suggesting they can buy a guarantee for their savings returns and that this guarantee would cost very little. 

Companies, also, would baulk at the cost of providing any extra guarantees.

He added that people had to reconcile themselves to working longer, retiring later and saving more.

Lowest pay in Britain

Torridge in Devon has the jobs with the lowest pay in Britain, according to this year's snapshot of earnings from the Office for National Statistics.

Typical pay in Torridge was £348 a week for full time work in April, 3.5% higher than last year.

It compared with £917 in the highest paid area, the City of London - where pay had fallen 5%..

In Scotland, lowest median pay was in East Renfrewshire, at £398 a week, and the highest was £574 in the centre of the North Sea oil industry, Aberdeen.

Highest in Wales was £503 in Flintshire and the lowest: Blaenau Gwent with £382 a week, down nearly 4% on last year.

Savings rates collapsing

Savings rates have started to "collapse" as a result of a government scheme to encourage lending, according to the financial information service, Moneyfacts.

The £80bn Funding for Lending Scheme (FLS), which allows lenders to borrow from the government at cheap rates, has reduced their need to raise funds from savers.

"The immediate knock-on effect has been the collapse of savings rates across easy access, notice accounts and fixed bonds," according to Sylvia Waycott from moneyfacts.co.uk.

"And the devastation hasn't been limited to just the providers who have joined the FLS."

The highest paying instant access savings accounts for someone depositing £10,000 is down from 3.2% in August to 2.5% now, with the average rate dropping below 1%.

Moneyfacts says that the average one year fixed rate account is down half a per cent to 2.24% since August. Average interest rates for Cash ISAs and notice accounts have fallen as well.

No further interest rate cut

The Bank of England's interest rate setting body, the Monetary Policy Committee, has ruled out a further cut in the Bank's base rate "in the foreseeable future".

This is from the minutes of the latest MPC meeting:

"37 The Committee also discussed the likely effectiveness of reducing Bank Rate to below 0.5%.Over the past few months, Bank staff had consulted with the FSA and the Building Societies Association on the possible consequences.  In the light of that, the Committee had re-examined in detail the desirability of such an option.  While it would be beneficial for some existing borrowers, there were concerns that a cut in Bank Rate might prove counterproductive for aggregate demand as a whole.  Staff analysis had concluded that a further cut in Bank Rate would be likely to cause a reduction in the profitability of some lenders, especially building societies, because of the prevalence of loans with interest terms contractually or closely linked to Bank Rate.  That would weaken their balance sheets and they might have to respond by increasing other loan rates or restricting lending. Viewed against the backdrop of the Funding for Lending Scheme (FLS), and the potential for building societies to play a material role in increasing lending, the Committee judged that it was unlikely to wish to reduce Bank Rate in the foreseeable future."

Thanks to Save Our Savers for pointing this out...

8 payday loans, £7,000 in debt

The Office of Fair Trading says payday lenders aren't checking whether customers can afford to pay the loans back. Here's an example...

Meggan is 21 and £7,000 in debt to payday lenders. She first started taking out payday loans when she was just 19. She's had 8 and is still trying to pay off 4 of them.

Why did you start taking out payday loans?
"I felt I wasn't getting paid enough from work. I didn't have enough money left over at the end of the day to go out with friends, to go shopping, day trips, holidays...so I took payday loans to cover the cost."

How easy was it?
"Really easy, just go online. I just sit on my phone half the time, just type into Google: payday loans. Just click on each one, find out the one where you pay back the least, hopefully, then just apply. Bank details, passport number, driving licence, that's it.

I spent half the year with a really bad credit rating and they obviously didn't check because I had the money within an hour sitting in my bank account."

What were the signs with you that they shouldn't have been lending to you?
"Defaults mainly, missed payments, late repayments of credit cards, storecards."

They should have seen all of those things?

"Mobile phone contracts, late payments on those - they should have all shown up.

I think they should have done further background checks just to make sure, checked your employment, checked your bank status, just generally check your credit rating to see that you do pay back and to measure the amount that you've got going in and coming out by the end of the month.

It was quite hard, it was difficult opening all the letters, threatening defaults, threatening to take me to court, threatening  bailiffs. It was quite scary, being quite young as well, not always being at home, being away with the job. I would come after being away finding letters from 3 or 4 weeks, opening them and saying I don't want to read these."

You borrowed the money, didn't you?

"I borrowed the money so it is fully my responsibility to pay the money back. However, the contract's not always as clear as it might be and they're popping up on TV adverts here and there just making you think I'll just have a look, just apply, it can't do any harm. But you don't read the interest rates - the interest is sky high."

How badly does it affect you?
"The stress is quite hard, obviously opening the letters, and worrying constantly. Sometimes I'd go to sleep and think oh no I got to pay this one and that one and I've got to borrow money to pay that one. You just lay there late at night worrying  - what if a bailiff comes round, what if I get a CCJ? Where am I gonna get the money from, what will I do on payday?

There should be harder credit checks, especially for a young person as well. Not many young people are earning a good wage to be able to take payday loans out here, there and everywhere. So they should be credit-checking properly, thoroughly, as well as full background checks. It shouldn't be instant within an hour. 60 minutes isn't enough to check on somebody that they're worthy of borrowing anything from £100 to £1,000."

If you need help dealing with with payday loans, National Debtline is a good place to start.

Gongs for giving

Business people should have to prove that they have given significant sums to charity in order to qualify to be considered for honours, according to a business group which has been asked by ministers for ideas on increasing charity donations.

It would mean that honours such as OBEs and knighthoods for senior business figures would become directly dependent on individual charity giving.

The proposal is that business men and women would have to give time or money to charity consistently to be considered for honours, and their nominations would have to be backed by a letter from a senior person in the charity concerned, such as the chief executive.

At the moment there's no requirement to show a record of personal donations, although in some cases the company's track record of giving is used to try to justify receiving an honour.

The business group behind the idea, called Legacy 10, was asked by ministers for recommendations to encourage people to give to charity in their wills - and they've already persuaded prominent business figures including Richard Branson and Charles Dunstone, the Vodafone founder, to pledge support.

The hope is that if entrepreneurs and industrialists are prompted to give regularly, they'll be more likely to make legacies to charity as well.

Multinationals and UK tax

In the light of  all the fracas over Starbucks, Google and Amazon paying minimal corporation tax, it's interesting to read how the tax people at HMRC justify their record on collecting tax from multinationals - and acknowledge how Amazon, for instance, is simply exploiting the current rules by accounting for its huge UK sales in Luxembourg...

"Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works.

Most major economies operate corporation tax in the same way as the UK, so UK-resident companies are treated in a similar way in other countries. In other words, UK companies do not pay corporation tax to another country on the profits from sales in that country, unless they trade through a branch based there. Instead, they pay corporation tax in the UK."

Farepak complaint

A formal complaint has been filed against the international accountancy firm Ernst & Young and one of its auditors in connection with the collapse of the Christmas hamper company, Farepak, in October 2006.

The disciplinary body for auditors, the Financial Reporting Council, alleges that Ernst & Young failed properly to consider the effect of certain "post balance sheet events" after it signed off the company's 2005 accounts in early 2006.

It also alleges that the firm failed properly to consider Farepak's ability to continue as a going concern, amongst a number of charges.

Ernst & Young will have a chance to answer the allegations at a tribunal hearing next year.

The firm said "We obviously take these matters extremely seriously, but it would be inappropriate for us to comment further before the Tribunal".

The FRC can take disciplinary action against its members but the case will not directly affect the amount of compensation paid to Farepak customers.

Card insurance mis-selling

This is the really sneaky part of the mis-selling of card protection policies by insurance firm CPP, with the apparent connivance of certain leading banks - known as CPP's "business partners".

Here's extract from the FSA's findings:

3.12.
Some business partners “introduced” their customers to CPP by affixing a sticker to the new credit or debit cards sent to their customers. The sticker prompted the customer to call a number (which was actually CPP’s) either:
(1)
to activate the card, known as “card activation”; or
(2)
to confirm that the customer had received the card, known as “safe receipt”.
3.13.
When the customer did call the number CPP also used the conversation to offer Card Protection and/or Identity Protection.

CPP sold the policies directly to hundreds of thousands of people, the banks to several million (making 4.4m policies in all).

If you're worried that you might have been mis-sold a card protection policy or identity theft insurance, either by CPP or by your bank, you could wait to be contact by them.

CPP is about to start contacting the the ones it sold to directly.

Or you could make a complaint directly to your bank or to CPP. Then they'll have to deal with it.

Cold weather = high gas profits

Felt cold in the spring and early autumn? That's one reason why SSE (formerly Scottish & Southern) turned in a higher profit.

This is what they say in their half year results:

"Earning a sustainable profit in Retail

• Return to profit in Energy Supply mainly due to significantly higher household gas consumption arising from colder weather

· Average GB household gas consumption up 27.9%; electricity consumption up 2.8%

Operating Profit in Retail, 6 months to 30 September
2012                                                                      2011
Energy supply £48.7m                                           (£133.7m)
Energy-related services £27.0m                              £32.3m
Retail segment operating profit  £75.7m                 (£101.4m)

The increase in consumption was in response to below average temperatures during the six months to 30 September 2012 compared with the same period in 2011, when the temperatures were above average.  According to the Met Office April in 2012 was the coldest since 1989 and September in 2012 was provisionally the coldest since 1994."

SSE's latest price increase kicked in during October, so didn't affect these profit figures.

Stamp rises on the way?

When will the price of a stamp go up again?

When asked about putting up the price of First Class stamps today, Royal Mail's chief executive, Moya Greene, said: "It would be improper of me to give assurances on price."

The point is that Royal Mail now has the freedom to set whatever First Class price it wants. It went up from 46p to 60p in April.

Ofcom still controls 2nd Class, 50p at the moment, and has laid down that this can't rise above 55p (plus inflation).

Royal Mail's return to UK profit today lifts the pressure to raise prices a bit.

On the other hand a business with £3.6bn in revenue over just six months will be looking to make even more than the £99m operating profit reported for the half year to September.

The fact that a public sale of Royal Mail is pencilled in for next year will only spur them to boost income, to try to make the business look more attractive.

So brace yourselves for more stamp prices rises in the spring.

Daily postbag shrinks

The number of letters delivered each day by Royal Mail has shrunk by 4 million since last year.

The drop comes as email extends its hold, and families have to contend with higher stamp prices and financial pressures.

The daily postbag contains 54 million items, down from 58 million this time last year.

The figures emerged as Royal Mail revealed its financial results for the six months to September.

They featured a turnaround from UK losses of £41m in the UK last year to operating profits of £99m this time.

The total volume of letters of the six months fell by 9%, though letter revenue was up 2% - or £44m - following April's rise in stamp prices.

First class stamps went up from 46p to 60p, second class from 36p to 50p.

As genuine letters decline, junk mail is taking over the typical postbag. Marketing mail is approaching half of all letters.

The number of unaddressed letters and fliers has actually been rising.

Not so keen to take your home

The number of home repossessions has fallen to the lowest level since before the financial crisis, in 2007, the result of lenders keeping families in financial trouble in their homes.

A total of 8,200 properties were taken into possession by mortgage lenders in the three months to September, down from 8,500 in the second quarter and 9,600 at the same time last year.

A hallmark of the credit crunch and economic downturn has been the willingness of lenders to show forbearance with their customers.

It means banks and building societies can put off the heavy cost of dealing with a repossessed home and families can stay put.

Some survive by paying only the interest on the loans. In other cases the lender extends the length of the lending period or allows a payment holiday.

While repossessions have fallen, the number of homeowners in serious arrears, worth 10 per cent or more of the loan, is running at nearly twice its pre-crisis level.

The City watchdog, the FSA, has warned that the extent of forbearance could be disguising the scale of problems experienced by families under financial stress.

It's estimated that between 5 and 8 per cent of all mortgage borrowers could be benefiting from forbearance.

It is one reason why repossessions are running at an annual rate of around 35,000, compared with over 75,000 during the slump in the housing market in the early 1990s.

House prices plummet 33%

Let's face it: house prices are down by a third.

That's good for first time buyers and people looking to trade up.

Not so good if you're using the housing market as a way to make a profit or as a substitute for a pension scheme.

The Halifax reports that the average house costs £158,426.

At the peak in August 2007, the average was £199,612, so the drop in cash terms is 21%.

But we've had lots of inflation since 2007. So there is a double impact: your house is worth fewer pounds and your pounds are worth less in the shops.

Adjust the 2007 house price for the change in the Retail Prices Index and you'll see that the real drop is even greater.

It's 33%.

Is pay 62% higher?

Do you feel like you are being paid 62% more?

That's the claim from the latest official stats which relate that the average hourly wage is 62% higher in real terms than in 1986.

Cash wages are more than three times as much - the percentage rise form the ONS is arrived at by adjusting for the impact of prices rises or inflation.

But whether you were already in work then, or started later but compare yourself to workers of the time, few of us feel that much better off, do we?

There are several explanations for the "we're paid paid more but it doesn't feel like it" effect.

One is that the years we remember best, the most recent ones, have been tough and wage-sapping.

Most of us are being paid less in real terms than before the credit crunch and financial crisis - in other words, since about 2007.

Inflation has outstripped wage increases and some people's wages have stood still or fallen in cash terms.

Another reason is that we spend more on things which seem necessary now but were deemed luxuries in 1986 or hadn't even been invented yet.

I'm thinking holidays, but also pay TV, mobiles and computers.

A typical family might have several mobile phones. That's a totally new cost.

Of course, all this new spending and new goods and services have expanded the economy as well. The whole thing is bigger. It makes us look like a richer country.

Finally, you can slice and dice these numbers in different ways and get different results.

The Office for national Statistics gets to 62% by using the Consumer Prices Index or CPI, the headline measure of inflation, to show the real buying power of wages in different years.

Well, why not? It gives a nice heart-warming result.

The more traditional measure, the Retail Prices Index or RPI, tends to be higher. So adjusting for RPI would have the effect of reducing the real increase in wages over 25 years.

Interestingly, the ONS is consulting on a different way of calculating RPI which would produce a lower figure - but that's another story.

Pay gap widens

Earnings increases for higher paid professions such as pilots and engineers have outstripped the lower paid by a wide margin since 1986, although workers have seen increases across the board.

Official figures show that the top ten per cent of employees have benefited from an 81 per cent rise in earnings, adjusting for the impact of price rises, while the bottom ten per cent have seen their wages rise by 47 per cent, widening the gap between the highest and lowest earners.

The very highest paid, the top 1 per cent, have enjoyed a rise of 117 per cent in real terms.

The Office for National Statistics says the average hourly rate of pay was £3.87 in 1986. In April 2011 it was £12.62, more than 3 times as much. But it emphasised that, taking price rises into account, average wages were up by 62%.

The minimum wage has improved the situation for the lowest paid - such as waiters and bar staff - who have seen their wages go up by 51 per cent since 1998, compared with 30 per cent for the richest earners.

£1bn blow to small businesses

Thousands of small businesses could find it impossible to buy new vehicles and equipment after a market leader in providing finance announced it would pull out of the UK.

The Dutch bank, ING, has decided to close down Surrey-based ING Lease UK, which had been pumping over £1bn a year into the British economy.

Farmers, office-based firms and transport companies have been turning to leasing contracts, as bank loans and overdrafts have become harder to obtain.

ING is the leading source of leasing finance via brokers. Its withdrawal removes as much as 40% of this money at a stroke.

Under a lease arrangement, the broker arranges the purchase of the equipment, which is owned by the leasing company. All the business has to do is keep up the regular payments.

ING has already announced the sale of its UK savings business, ING Direct, to Barclays. It has been off-loading assets to repay the Dutch government for aid received during the financial crisis in 2008.

But the withdrawal from leasing also shows how banks across Europe are being prompted to slash some activities because of new rules forcing them to hold more capital in reserve.

The 300 staff at ING Lease's HQ in Redhill were told last week that half of them were likely to lose their jobs in the near future, with the remainder kept on to help run down the business.

This year 31% of total investment in new machinery and equipment has been paid for through leasing contracts, so the ING closure will cause months of disruption. It is likely to put a squeeze on this sort of finance for a great deal longer.

Competitors, including Investec Bank, Aldermore and Close Brothers, have promised to do what they can to fill the gap. But insiders say the best hope is that they will come up with half of the money needed.

Last year the leasing business provided £22bn to help keep British industry running, many of the deals done direct between banks and large companies. On that measure, ING Lease accounted for 5% of the market.

However, it specialised in the smaller end of the business: farms and young firms which got in touch via specialist brokers.

It's these customers, wanting essentials such as tractor attachments, computers, desks and commercial vehicles, which will bear the brunt of the loss.

Astonishing PPI figures

Many are saying that the mis-selling of Payment Protection Insurance or PPI has turned into the biggest financial scandal in UK history.

The figures are staggering: £12.7bn is already set aside by banks and other firms to compensate their customers, but there are predictions that this will rise to £15bn or even higher.

So what is actually happening out there?

By a rough calculation, banks are sending out 10,000 payments or cheques a day, with typical payments averaging around £2,750.

That means nearly £30m is being shelled out daily to the growing ranks of customers who lost out and have made a claim.

At that rate it would still take a further 9 months to distribute all the compensation money which has been set aside.

If the claims keep coming in and banks have to provide more money, which seems highly likely, it will take more than a year.

The number of customers who have been paid compensation has probably already risen above 2.5 million.

Who knows what impact this will have?

It's welcome news for anyone who gets a payout. Some will save it, some will spend it.

Not so brilliant from the taxpayer's point of view, though, because two of the biggest PPI offenders (Lloyds and RBS) are partly state-owned.

And potentially it's not great for people and businesses looking for loans. The less banks have in their coffers, the less they can lend out.

Energy price "concern"

A senior official from the energy regulator, Ofgem, has voiced concerns about government plans to make sure gas and electricity customers benefit from the lowest prices.

Andrew Wright, Ofgem's senior partner for markets, told MPs that "Not all consumers will be in positions where they will necessarily want to be moved onto the cheapest deal with their supplier."

The Prime Minister said on 17th October that he would legislate so that energy companies "have to give customers their lowest tariffs".

Suppliers were shocked by the remark, which implied that they could be forced to switch customers to their standard tariffs.

But later David Cameron clarified the policy saying that the coming Energy Bill would "ensure that customers get the lowest tariffs".

Today Mr Wright explained Ofgem's worries, saying: "It would be a concern if someone who was paying a modest premium for a green tariff, for example, was automatically switched onto the standard tariff."

He added: "Similarly the choice between fixed term and variable is one where a consumer may choose to pay a higher price in the short term in order to get the stability in the longer term."

He said he understood that the government was fully aware of the concerns and he expected any policy proposals which emerge would recognise that.

Andrew Wright to the Energy & Climate Change Committee:

"It would be a concern if someone who was paying a modest premium for a green tariff for example was automatically switched onto the standard tariff and similarly the choice between fixed term and variable is one where a consumer may choose to pay a higher price in the short term in order to get the stability in the longer term.

"Not all consumers will be in positions where they will necessarily want to be moved onto the cheapest deal with their supplier. My understanding is that the government is fully aware of that and I would expect any policy proposals which emerge would recognise that.

"One way in which that could be guarded against is providing customers with the opportunity of opting out of any automatic switch, that does give a safety valve."

Big jump in retirement incomes

Who's incomes have done better over the last quarter of a century: working people or those who have retired and are, mostly, depending on pensions?

According the Office for National Statistics, pensioners have done better by quite a wide margin,

Retired people's disposable household incomes are more than two and a half times larger, in real terms, than they were in 1977.

Average real incomes for the non-retired have risen as well. They've more than doubled - so a big increase, but not so substantial.

It is worth emphasising that these figures are adjusted for rising prices and wage inflation. In a growing economy, incomes have improved substantially in real terms.

But there are some other points to note from the ONS pension stats today:

*There's still a big drop in household income when you retire, the average drops from £35,008 to £17,674.

*There are still large numbers on low incomes: 45% of single pensioners have pension incomes below £10,000 a year.

*The more generous workplace pension schemes are being axed, so the outlook for retirement incomes isn't nearly so good.

That's what called the "pensions time bomb" - the result of the good schemes falling away and people saving less.

And it's why the government is forcing companies to enrol staff automatically in workplace schemes.

Big business for Nationwide

Nationwide Building Society reckons it can become a significant player in businesses banking and it could get a major boost if it manages to buy a large chunk of RBS, as I explain.

So how would the banking landscape look if  Nationwide did launch a successful bid?

Bank branches if Co-op completes purchase of 632 Lloyds branches and Nationwide snaps up 316 RBS and NatWests...

2,100     Lloyds Banking Group
1,758     RBS Group
1,614     Barclays
1,400     Santander
1,225     HSBC
1,100     Nationwide
1,000     Cooperative Bank

1.5m second homes

1.5m people in England and Wales have a second address. In the vast majority of cases, according to the Office for national Statistics, it is the result of students having an address at university or families splitting up.

The figures show that 165,000 have a holiday homes and 23,000 homes in Cornwall are second addresses.

£2.69 on state pension

A £2.69 a week increase in the state pension is on the cards from April next year, taking it to £110.14.

The extra money will be little more than half the increase handed out to pensioners this year.

The Chancellor has promised that the pension would rise by the highest of CPI inflation, average earnings and 2.5% - the so-called triple lock.

The September inflation rate, reported tomorrow, is the figure used for pension and benefit uprating. It's expected to be 2.2% or lower, while average earnings have been rising at just 1.5%. So the 2.5% guarantee is likely to be called upon - resulting in the extra £2.69.

The Chancellor tends to confirm increases in pensions and benefits around the time of the Autumn Statement, which he'll deliver in early December.

By that time pensioners and others will be having to cope with the latest round of price increases from gas and electricity suppliers.

CPI inflation could well start rising again, so the £2.69 increase from the current £107.45 a week could look like a big disappointment.

Especially if you compare it to this year's £5.30 or 5.2% jump.

Real incomes rebounding

Average household income rose by £69 in real terms from April to June in real terms, that's stripping out the effects of inflation.

It's reached the highest level for a year and a half.

Average second quarter real income after was £4,510 after tax, up 1.6% from the previous quarter and 2.8% higher including inflation.

The ravages of high inflation, driven by rising oil and food prices, and higher VAT, have put a huge strain on family budgets - while incomes seemed adequate in cash terms, they bought less and less.

Real incomes dipped to their lowest level for more than 5 years at the end of 2011, but they have been rising slowly since then as inflation has fallen back.

The figures from the Office for National Statistics include wages, pensions, investment income and benefits, along with an additional element which estimates the value to families of education and healthcare.

Why our energy bills are stupid

British Gas's 6% price rise has highlighted an absurdity about the way in which we are charged, and pay for, gas and electricity.

The point is that prices will continue to go up over time, almost inevitably. Hence, we need to reduce consumption, both to hold down our bills and to reduce carbon emissions.

Yet the pricing structure we are faced with actually encourages consumers and businesses to use more.

Most tariffs have a daily standing charge or they start high and then go down once you have burned up a certain amount.

Low users tend to pay the most per unit.

Why not turn the system on its head: start low, then impose higher tariffs if you use more, rising to penal rates?

That wouldn't be in the suppliers' interests, because they're in the weird business of trying to sell more energy, while having to fly the flag for energy conservation.

But it would cut usage of gas and electricity - and protect people and businesses who did their best to remain within reasonable consumption limits.

There's a hint today from British Gas on can be achieved.

It says that despite hefty price increases in recent years, customers bills have only gone up in line with inflation, because they are using less.

One reason is that people simply can't afford to turn on the heating.

Wouldn't it be better if they paid less for what they really needed, but a higher charge for wasting energy?

Most of us are spongers now!

That's the implication of a report from the free market think tank, the Centre for Policy Studies, which says that 53% of us are receiving more in benefits than we pay in taxes.

It is certainly a startling figure, quoted in the Times today, and it is derived from genuine numbers from the Office for National Statistics.

One wonders how the country in which this happens can survive. It's like the animal which eats itself.

Let's take a closer look, though.

The 53% takes into account not just the normal benefits you would expect (like housing and council tax support and child benefit) but also state pension and the perceived value of education and treatment from the NHS.

So if you send your children to school and go to the doctor or a hospital, or draw your pension, you are officially a leach on the state.

I have always thought it was weird that the State Retirement Pension was classed as a benefit. After all, you only get it in full if you have made sufficient National Insurance contributions.

You get it because you've earned it.

The CPS admits that stripping out the growing numbers of pensioners, the proportion receiving more in benefit (still including education, health etc) falls to 39%.

But this figure, they say, has risen from 29% in 2001. In other words, sponging is getting worse anyway.

What else has changed since 2001, I wonder?

Well, there are 1 million more people unemployed, for starters. I imagine most of them are claiming one sort of benefit or another and earning very little.

Ahh!

Buying first home at 33

As David Cameron said, the typical (meaning the median not the average) age of someone buying a home for the first time, without help from family or friends, has gone up from 30 to 33 in recent years.

The typical age of the first time buyer, assisted or unassisted, has stayed remarkably steady at 29.

Which suggests that parents and others are being called on to give more help.

Here is the latest analysis on the subject from the Council of Mortgage Lenders.

Food price rises

Extraordinary stats on the impact of rising food prices, culled from the government's Food Stats Pocketbook, thanks to @ProfTimLang.

Food prices have risen in real terms by 12% over the last five years, following a long period in which they fell.

*All foods have risen in price since 2007, with rises ranging from 17% to 36%.
*Processed foods have risen the most since June 2007, with a 15% rise in the year to June 2012.
*Fruit prices have risen the second most, by 34% since June 2007, rising steadily each year

Falling income (after housing costs) and rising food prices produced a double effect, reducing food affordability by over 20% for lowest income decile households. Households saved an average of 4% between 2007 and 2010 by trading down to cheaper products.

The main response to higher food prices by low income households has been to buy less. The calorie content of their food purchases (excluding alcoholic drinks) dropped by 9% (quantity in grams by 11%) between 2007 and 2010.

Between 2007 and 2010 low income households bought: 26% less carcase meat, 25% less fruit and 15% less vegetables.


But it's better here than in most of Europe...

*Based on purchasing power parities food and non-alcoholic drinks were 4.4% cheaper in the UK than in France in 2011.
*Alcoholic beverages were 35% more expensive in the UK than in France, with prices in the UK highest in the EU apart from Ireland and the Scandinavian countries.
*Fish was particularly cheap in the UK in 2011 compared to other countries, and 25% cheaper than in France.
*Fruit and vegetables including potatoes were 22% more expensive in the UK than the EU average and 5.8% more than France.
*Within the EU, only Germany, Ireland, Austria and Sweden eere more expensive than the UK for fruit and vegetables.

Barclays gobbles up ING Direct

Barclays taking over ING Direct

Highlights for customers:

*Barclays promises to honour ING terms and conditions. But long term Barclays will be setting the interest rates. Savers will need to shop around.

*Mortgage customers reverting to Standard Variable Rate (SVR) would face a higher rate at Barclays: 4.99% rather than 3.99%. My understanding is that Barclays won't want them to suffer but policy to be confirmed.

*Deposit protection goes up to £85,000 from £80,000 because savers will be protected under the UK not the Dutch system

*Transfer won't happen until the 2nd quarter of next year, then there will be a 2 year transition after which the ING name is like to be dropped

*Customers should make sure ING has their correct address so they receive all the info about the transfer through the post

*1.5m customers affected, just 70,000 mortgage borrowers so virtually all savers. Average deposit is £8,300, average mortgage £80,000.

Here's more information on the ING page.

Nothing to show for our oil?

The purchase by Norway's £400bn oil fund of a half share in Sheffield's Meadowhall shopping centre raises yet again the question of whether the UK has squandered the riches of the North Sea.

Why is Norwegian oil money being deployed to buy prize assets here while we have no oil money to spend in Norway?

In simple terms, during the oil boom our governments spent their North Sea winnings on cutting national borrowing and keeping down taxes. Whatever came in went straight into the day-to-day budget..

In contrast , for the last 16 years Norway has squirreled away its North Sea money in a national oil fund. Today it uses the income from the fund -- just the income, mind -- to cover 11% of its national spending.

And, ironically, now that we are buying Norwegian gas in large quantities, we too are contributing to Norway's colossal nest egg, one of the biggest sovereign wealth funds in the world.

The £348m purchase of 50% of Meadowhall is the result of a new policy of buying into property round the world. It comes after a £452m investment in London's Regent Street last year.

Norway is the biggest investor in shares across Europe, so its holdings took a knock during the financial crisis. Now, like Middle Eastern sovereign wealth funds, it is picking up trophy properties.

"The purchase gives us exposure to one of the largest and most dominant shopping centres in the UK," said Karsten Kallevig, chief investment officer for real estate.

So the taxpayers of Norway will be saying a big "Thank You" to the shoppers of Sheffield. By spending in Meadowhall, they will help local stores pay their rent and Norwegians will pocket a share of the rental income.

The oil fund's official name is the Government Pension Fund, but the word "Pension" in the name is a bit misleading. The benefit for Norwegians isn't restricted to pensions.

What happens is that 4% of the fund, or £16bn currently, is diverted each year to subsidise government spending. Effectively, it keeps hospital beds open and helps pay for benefits.

The fund keeps growing, though, because levies on oil and gas production and on oil companies bring in an extra £30bn annually. As the oil carries on gushing and oil prices stay high, the Norwegian nest egg can't stop getting bigger.

In the UK the Callaghan government of the 1970s flirted with the idea of setting up an oil fund but, in a time of mounting economic crisis, it was too tempting just to grab the money. And it has been ever since.

Norway started on the same route but had second thoughts after the oil price collapsed in the 1980s. The idea of its fund was to try to smooth out the bumps from fluctuating prices and preserve the gains from the oil bonanza for future generations.

Professor Alex Kemp, an oil expert from Aberdeen University, says the British public has missed out because a fund wasn't set up here in the 1980s.

"We could have introduced a fund and that would have been the right time because these revenues were extremely high," explains Professor Kemp.

"We didn't do it because the Treasury wanted the funds to reduce the public deficit. We broadly speaking consumed the benefits rather than invested them."

To be fair, the Norwegians had more money to play with: their oil production is higher and the proceeds are enormous in comparison to the country's population of just 5 million.

Could we have done it? Well, the Shetland Islands did.

When oil started arriving at Sullom Voe and ships docked nearby, there was a flood of cash. The council set up an oil fund which still stands at £185m today, even after upgrading roads, ferry terminals and local swimming pools.

In Scotland, the SNP's Alex Salmond has long advocated setting up a special fund supported by North Sea oil revenues. However, it is unclear when that could happen, given the pressure on the Scottish government's budget.

Now that North Sea oil is well past its peak, there's little prospect of ever amassing a fund in the UK like Norway's.

UPDATE: Just for the record, Orkney has an oil fund too. It's worth £171m. Annual withdrawals are supposed to be no more than £4.7m, but the council can take out more if it wants - and has done in the past.

Blackouts + higher prices

If you want to get alarmed about the squeeze on electricity supply and the possibility of power cuts today's report from the energy regulator, Ofgem, will give you plenty of ammunition.

The risk factor is rising rapidly. Blackouts affecting up 1.5m households are rated as a one in 3,300 year event at the moment (i.e. close to no risk at all), but as a one in 12 year event in 2015/16.

This is because of the decommissioning of coal power stations, in line with environmental rules, something successive governments have been well aware is set to happen.

It's not just your electricity supply which is at risk, the squeeze will cause prices to jump yet again, according to Ofgem.

"Tough environmental targets and the closure of ageing power stations would increase the risk to consumers’ energy supplies and could lead to higher bills," says Ofgem in its statement.

Santander mortgage rise

Santander mortgage customers on Standard Variable Rate face a hike in their payments from today.

The typical customer will have to shell out and extra £26 a month.

They're not the only ones: Co-op Bank, Halifax, Bank of Ireland and the Yorkshire and Clydesdale banks have all imposed similar increases this year.

But Santander's rate is already pretty high. Now it'll be 4.74%, compared with Halifax's 3.99%.

Here are more details from BBC Online.

And here's how the Co-op blames interest-hungry savers for the round of SVR increases.

Fears about the state pension

"We can't rely on the state pension any more..."

While I was in Redcar recently, asking people for their opinions on saving for a private pension, I was struck that this thought came up again and again - on the street, in shops and elsewhere.

There's a genuine fear that the State Retirement Pension will be downgraded, allowed to wither or otherwise knocked about so it is not worth as much as in the "old days".

It's a worry expressed both by people who are saving and those who expect to rely on the state in retirement.

Where does it come from? I sense it is:

1. People banging on in the news about how to limit annual increases in state pension.

2. Publicity encouraging workers to celebrate being auto-enrolled into a workplace pension scheme. There are multiple warnings about how inadequate the state pension will be.

3. Attacks on other benefits and spending cuts, alongside dire predictions that the country won't be able to afford the bill for pensions in decades to come.

4. Suggestions that the Winter Fuel Payment and free TV licenses could be axed for some.

So despite the "triple lock" (a government guarantee that annual increases will be maintained at a higher level than other benefits) and the promise that we'll get a flat rate pension of £140 or more a week, large numbers of people simply don't trust the government over the state pension.

Clearly some question whether we'll have a universal state pension at all, looking far into the future.

Although that seems far-fetched, perhaps it's a measure of the growing gloom and pessimism about paying for ourselves during retirement and old age.

iPhone users more likely to be in debt

The debt advisers at the free advice organisation Payplan claim to have unearthed an odd fact about iPhone users.

It's that there are more likely to be in debt and need help with financial problems than users of other mobiles - that's according to Payplan.

They can't resist new technology, they're vulnerable to internet marketing on smart phones and they have lower incomes.

Interesting, YouGov made a similar claim last year, suggesting that iPhone users were more likely to be overdrawn.

So it might be a good idea to have a quick look at the state of your bank account before looking at the new iPhone 5.

Workplace pension -- who's for it?

How many people will start saving in pensions because of the new policy of auto-enrolment which kicks off on 1st October?

And how many will exit the scheme as soon as they have the chance?

Remember, it's a staggered start. Only companies with over 120,000 staff have to sign up their staff from that date. Other firms will be included, gradually, over the next 5 years.

Steve Webb, the Pensions Minister, expects that 600,000 employees will be on board by Christmas. That's after at least 200,000 have opted out.

His department, the DWP, projects that 4.3m more people will be saving by May 2015, just before the next election.

Eventually, 11m will be auto-enrolled. Mr Webb thinks between 6m and 9m will stick with it and carry on saving for a workplace pension.

In percentage terms, those figures imply that between 18% and 45% might withdraw, which is a big range.

The point is that everyone who is forcibly enrolled in a workplace pension from next month has the right to opt out. They stop building up the pension, but they don't have to make the monthly payments.

And one of the big questions hanging over auto-enrolment is how many will do just that. If it's too many, the policy will look like a failure.

Which is why it makes good political sense for Mr Webb to talk conservatively about a fairly large opt out rate of 33%, when he is asked what will happen. It reduces the scope for disappointment.

What does he think would be a good overall outcome?

The Pensions Minister responds that if 7.5m stay enrolled, or just over two thirds, he'd be happy.

Ration mortgages to stop booms

The Chancellor is looking at giving the new City regulator, The Financial Policy Committee (FPC), the power to restrict how much you can borrow to buy a home.

The reason? To stop booms and busts.

As it says in a Treasury consultation today, the idea would be to deal with...

"over-exuberance in the upturn of the economic cycle being exacerbated by systematic under-pricing of risk, leading to asset bubbles, stretched balance sheets and other unsustainable expansionary trends. When the bubble bursts, this effect is switched around, with generalised pessimism leading the financial sector to over-price risk and be reluctant to lend, which can slow the economy’s recovery. This underlines the importance of containing the upswing."

In other words, house prices going mad and then crashing. It's too easy to get a loan, then it's too hard.

The answer is to impose "loan to value (LTV) and loan to income (LTI) restrictions," when the property shows signs of getting out of control.

These are "restrictions on mortgage financing based on the ratio of the size of the loan to the value of the property or the borrower’s income."

It would be up to the FPC to set the limits of what you can borrow. Here are the arguments:

"5.10 The Government notes that other countries’ experiences of tightening mortgage terms and conditions (including setting maximum LTV/LTI ratios) suggest this had been a somewhat effective way to limit financial instability. However, this tool has rarely been implemented in isolation from other measures, such as mortgage insurance. The Government also notes that this type of requirement can prevent borrowers who would otherwise be considered creditworthy from receiving mortgage financing."

So, in a worrying boom, you might suddenly be told that you can't have the mortgage you expected to be offered, just in case there's a bust.

Treasury fails taxpayer over Northern Rock

Treasury "slow off the mark" in nationalising Northern Rock.

The most senior civil servant at the Treasury has told MPs that the government should have acted more quickly to take Northern Rock into public hands after the run on the bank in 2007.

Sir Nicholas Macpherson was answering questions from the Public Accounts Committee, which is investigating claims that taxpayers will end up losing £2bn from the collapse and rescue of Northern Rock.

Customers started queueing in large numbers to pull out their money in mid-September, 2007, but it was not until the following February that the Chancellor Alistair Darling nationalised the stricken bank.

Sir Nicholas said that the Treasury was "slow off the mark in addressing the problem" and "we should have nationalised it earlier".

"There was a five month period of drift," he added, "And that made it quite likely that we would lose money on Northern Rock."

Officials spent the time assessing the state of Northern Rock and looking at the possibility of a rescue from one of several potential bidders, including Sir Richard Branson's Virgin Group.

After nationalisation Northern Rock was spilt into a so-called Good Bank, including customer deposits, branches and some mortgages, and a Bad Bank with billions pounds of problem mortgages.

Virgin Money ended up buying the Good Bank from the government last November.

A National Audit Office report earlier this year suggested that the taxpayer would lose £2bn once all the mortgages were paid back.

The chair of the Public Accounts Committee, the Labour MP Margaret Hodge, said there was "A big question mark" over whether the public had received the best value .

Sir Nicholas explained that estimates of the scale of the losses depended on forecasts of interest rates over a number of years, but that Northern Rock's borrowers were proving more reliable.

"These people are generally paying their mortgages and the money's coming in," he said.

Sir Nicholas Macpherson was already Permanent Secretary to the Treasury during the financial crisis. The role makes him, effectively, the Chancellor's chief policy adviser.

He admitted to MPs that officials had failed to anticipate the seriousness of Northern Rock's crisis in the summer of 2007.

"There was a monumental collective failure of which the Treasury was part," he told the committee.

Wonga payday loans soar

Whatever you think about payday lenders, the latest figures from Wonga show how this new method of lending, often over the internet, is catching on.

Wonga's loans quadrupled last year to nearly 2.5 million, despite the fact that it turns down most applications.

And its profits soared at a similar rate, to £46m.

Yet Wonga is just one player, albeit a big one, in a burgeoning industry.

Just to remind you, it lends small amounts, with a £400 maximum, for a few weeks at rates which can be made to look sky high if they are annualised.

The official APR or Annual Percentage Rate which Wonga has to show on its website is 4,214%.

(Wonga "explains" that it doesn't lend for 12 months and , even if it did, the true rate would be more like 360% - though that still sounds like a lot to me.)

So why the success?

People like the convenience and simplicity of payday loans, despite the cost. Many can pay it back easily, others are desperate.

Some are finding it harder to get short-term money elsewhere. Credit card providers and lenders are more choosy.

And new technology, along with the internet, means that the loans can be made available almost instantly - and customers can be assessed ultra-quick.

No business can carry on growing at these rates forever, but there's no sign yet of the payday lending boom coming to an end.

Boost for property websites

Property websites which help people sell their homes privately could be given a boost at the expense of traditional estate agents, after the government confirmed proposals to exempt them from a raft of regulations.

The Department for Business said it would repeal the Property Misdescriptions Act and allow agents to bypass rules in the Estate Agents Act if they simply put buyers and sellers in touch with other .

The Consumers Affairs Minister Jo Swinson said removing the "red tape" would "cut through bureaucracy and allow people to buy and sell more easily".

However, the Royal Institution of Chartered Surveyors (RICS) warned that home buyers could lose out from the change.

"Consumers could, perhaps unknowingly, be left responsible for undertaking their own detailed sale negotiations without the advice and guidance of a property professional," warned Peter Bolton King from RICS.

He said that buyers and sellers would find it tricky to tell the difference between genuine estate agents and websites which simply offer a list of homes, putting them at significant risk.

To fill the gap left once the Property Misdescriptions Act has been axed, the Office of Fair Trading has issued new guidance laying down how estate agents should behave.

Drawing on the Consumer Protection from Unfair Trading Regulations, the guidance explains how property details should be accurate, how agents should include important information to help buyers make decisions and how consumers should not be put under undue pressure to complete a transaction.