2m enrolled in pensions

More than 2 million workers have begun saving into a workplace pensions scheme as a result of automatic enrolment, according to figures released today by The Pensions Regulator.

Automatic enrolment began in October 2012, when supermarkets and other large employers led the way. 

Eventually 9 million people will be signed up - though they can opt out if they want to.

3,500 employers have joined so far but tens of thousands more will start signing up staff next year as medium-sized companies get involved.

All employers, including charities and the public sector, will have to enrol eligible workers into a pension scheme.

Who's doing better: old or young?

Given that there is yet more comment today on how much better older people have been doing in financial terms -- supposedly -- than everyone else, it's worth having a a closer look at the figures.

The "elderly have done best in the austerity years" mantra is an important one, because it is likely to be used in the debate over whether all pensioners should carry on getting Winter Fuel Payment and free bus passes -- and, crucially, whether the Triple Lock should continue.

The Triple Lock is the guarantee that the state pension will be raised each year in line with average earnings, inflation or 2.5%, whichever is higher.

The latest ding-dong over this was prompted by official figures showing that while the typical incomes of working households have fallen sharply in real terms during the downturn, retired households have actually enjoyed an increase.

Here are the numbers: retired households up 5.1% between 2008 and 2012, working households down 6.4%. (Note, there's a fall because the income figures are adjusted for inflation or price increases.)

It's a big contrast. However, and weirdly, when this trend is highlighted, there is seldom any mention of how much money pensioners are actually getting -- or how little.

So let's look at some data in yesterday's Family Spending survey, which includes an analysis of the disposable incomes of different households and age groups. Disposable income is what you have after tax and National Insurance are taken off.

Non-retired households with two people received an average of £748 a week last year, retired households with private pensions and some work got £501 and those mainly dependent on the state pension had £295 a week.

The matching numbers for one person households were £336, £285 and £174.

If you look at household disposable income by age, it was nearly £700 a week on average where the homeowner or renter was between 30 and 64 years of age, but £478 for those between 65 and 74.

What's particularly interesting is that income falls with age through the years of retirement years. The figure for households with someone aged 75 and over is just £341 a week.

The reason for the decline is that the older people get, the less likely it is that someone in the house is carrying on with some form of paid work and the more dependent the household becomes on the state pension.

Of course, this is the reason why campaigners for the elderly point out that 1.5 million pensioners live in poverty. And they would say it is one reason for having the Triple Lock.

So the situation is:

*incomes of retired people have been rising faster

*but their incomes are lower to start with

NB Here are the household income tables. A37 and A38 are the relevant ones.

Earnings eaten up by inflation

Typical weekly earnings have failed to match the general increase in prices for the fifth year in succession -- and women's earnings dropped further behind those of men.

Official figures show that the April figure for median, or middle of the range, earnings was £517, up 2.2 per cent from last year.

But that was a slower rate of increase than inflation as measured by the Consumer Prices Index, or CPI, meaning that workers found that their pay didn't go so far.

The gap between male and female earnings increased to 10 per cent from 9.5 per cent last year. That's the first time it has widened since April 2008.

The figures come from the Annual Survey of Hours and Earnings from the Office for National Statistics.

£100m set aside by Lloyds

There's a rumour that Lloyds has set aside £100m to cover conduct issues, including the compensation payments due to customers as a result of today's record fine for unacceptable sales incentives.

What's definitely true is that it is sales to 692,000 customers to check whether or not they lost out, or if they were sold an insurance or investment product they didn't need.

Within that number 11,000 cases are being prioritised. These are the ones where the behaviour of the advisers was most questionable.

Earlier payday cap?

Labour wants the cap on the cost of credit from payday lenders to be implemented 3 months earlier than the government is planning.

Ministers have promised that the financial watchdog, the FCA, will have a duty to impose a cap and that the launch date should be not later 2nd January, 2015.

Today Labour has proposed an amendment to the Banking Reform Bill, which would require the FCA to apply the cap from 1st October, 2014.

It wants the upper limit on interest and other charges to come in before shoppers go on a borrowing spree before Christmas next year.

There is expected to be a vote on the amendment in the Lords tonight.

Here's the amendment, followed by the original government amendment bringing in the cap.

********************************************************************

22*

Line 19, leave out “2 January 2015” and insert “1 October 2014”

After Clause 123

********************************************************************

20

Insert the following new Clause—

“Duty of FCA to make rules restricting charges for high-cost short-term credit

(1)   In section 137C of FSMA 2000 (FCA general rules: cost of credit and
duration of credit agreements), after subsection (1) insert—

“(1A)    The FCA must make rules by virtue of subsection (1)(a)(ii) and (b)
in relation to one or more specified descriptions of regulated credit
agreement appearing to the FCA to involve the provision of high-
cost short-term credit, with a view to securing an appropriate
9degree of protection for borrowers against excessive charges.

(1B)   Before the FCA publishes a draft of any rules to be made by virtue
of subsection (1)(a)(ii) or (b), it must consult the Treasury.”

(2)   In Schedule 1ZA to FSMA 2000, in paragraph 11 (FCA’s annual report), in
sub-paragraph (1), after paragraph (h) insert—

“(ha)   any rules that it has made as a result of section 137C during
the period to which the report relates and the kinds of
regulated credit agreement (within the meaning of that
section) to which the rules apply,”.

(3)   The FCA must ensure any rules that it is required to make as a result of the
19amendment made by subsection (1) are made not later than 2 January 2015
and apply (at least) to agreements entered into on or after that date.”

NatWest website problems

RBS/NatWest's meltdown on Monday had nothing to do with hacking or suchlike, the bank said then.

But today's problems with NatWest's website ARE being blamed on outside forces.

An RBS spokesperson said:
"Due to a surge in internet traffic deliberately directed at the NatWest website, customers experienced difficulties accessing some of our customer web sites today. This deliberate surge of traffic is commonly known as a distributed denial of service (DDoS) attack. We have taken the appropriate action to restore the affected web sites. At no time was there any risk to customers. We apologise for the inconvenience caused."

Pension delayed

As many as ten million people in their late 30s and mid 40s will have to wait an extra year to before they start receiving the State Pension, after changes announced in the Chancellor's Autumn Statement today.

This group would have expected to qualify for their pensions at the age of 67, but they will now have to wait until they reach 68, as the date for raising the pension age is brought forward by about ten years.

Pension analyst Tom McPhail, of Hargreaves Lansdown, has estimated that 10 million will be affected on the basis that around 1 million people are likely to be retiring each year.

The pension age is being increased in stages as life expectancy rises, with a pension age of 66 starting in October 2020 and 67 being phased in between 2026 and 2028.

The move to 68 had been pencilled in for people retiring from 2044, but George Osborne said the date would be brought forward to the mid-2030s.

It will rise to 69 in the "late 2040s", he added.

Mini-budget: Will he, won't he?

George Osborne delivers his Autumn (or is it Winter?) Statement tomorrow.

So will he or won't he..

Clobber wealthier pension savers by limiting what they can take from their fund as a tax free lump sum?

Fiddle with stamp duty thresholds to soften the impact on people buying lower value homes?

Let people do more with tax free ISAs, to encourage savers?

Give a cast iron promise to freeze fuel duty until 2015?

Curb buy-to-letters by axing the tax break they get on mortgage interest?

Charge foreign property owners Capital Gains Tax when they sell up in the UK?

We'll find out at 11.15 in the morning.

Pound on the rise

The pound's value measured against a basket of other currencies, including the dollar and the euro, has reached its highest level for more than 4 years.

The trade-weighted index stands at 85.0. It was last at that level on 5th August 2009, during a rally as the financial crisis and recession began to take hold.

The pound has been surging ahead amid growing hopes about the scale of the economic recovery.

The called the trade-weighted index, called the effective exchange rate by the Bank of England, shows the pound's value in comparison to the currencies of our main trading partners.

The index was based at 100 in January, 2005. It fell to 74 in late 2008.

Retired incomes have suffered least

Official figures published today add to evidence that older households have suffered least in financial terms from the impact of the financial crisis and austerity.

Working households saw their typical incomes fall by 6.4 per cent between the financial year ending in April 2008 and April 2012.

However, the incomes of retired households grew by 5.1 per cent.

The ONS has taken the median, or middle, figure for incomes and reduced them to take account of rising prices over the four year period.

While wages have come under severe pressure, ministers have protected pensioners by promising annual increases linked to inflation or average earnings, with a minimum of 2.5 per cent.

Since the start of the economic downturn, typical household income for the overall population has fallen by 3.8 per cent after adjusting for inflation.

Oops! We've borrowed £1.43 trillion

Borrowing by UK households has reached a new record, as consumer credit bounces back in the recovery and mortgage lending continues to grow.

Total borrowing by individuals stands at £1.43 trillion, according to the Bank of England, very slightly higher than the previous peak reached in September 2008, just before the effects of the financial crisis and the recession began to bite.

The precise figure for UK household debt is £1,429,624,000,000.

Most of the debt is in mortgages, which have been rising steadily.

Other lending, including personal loans and credit cards, dropped sharply in the recession and has started to recover.

The rise reflects the willingness of British consumers to borrow again as a more solid recovery comes into sight.

However, the figures may also show the extent to which credit is fuelling the upturn - and how, in some cases, families are having to borrow to deal with the higher cost of living and make ends meet.

The Bank of England points out that incomes have been rising as well, so the ratio of debt to income has actually been on a downward trend.

Where will a cap on payday lenders be set?

Look at Wonga's website and you'll see  it admits to an APR on its short terms loans of 5843%.

Wonga's line is that this rate is unfair because it assumes customers borrow for a year -- which it says they don't -- and it includes lots of extra charges.

It says its interest rate is actually 365% a year.

But how would that compare to a possible cap on the cost of credit in the UK?

France, Germany, Japan and Poland all have caps of around 20%, even less in Germany's case.

Florida has an 11% upper limit.

These rates would surely represent a huge challenge for the likes of Wonga.

In his comments today, the Chancellor referred to Australia as an instructive example, so we should take particular notice of that.

Australia has a 20% cap on up front charges and a 4% cap on monthly interest.

My calculator tells me that 4% a month is the equivalent of 60% a year. A lot, but still well below the Wonga rate.

However, Australian payday lenders are also allowed to charge 200% of the loan in default charges, if the customer has trouble paying back, plus additional debt recovery costs.

So the total bill for the borrower can still escalate.

It is being left to our watchdog, the FCA, to decide an appropriate upper limit for the total cost of credit.

Its worries are:

*set the cap too high and some lenders will actually raise their charges

*set it too low and some might leave the market, pushing desperate customers to illegal loan sharks

Where will it end up: somewhere in the middle? Will the FCA sanction charges which could still add up to hundreds of per cent?

The watchdog is unlikely to want to be seen as a soft touch -- so expect some frantic lobbying from the lenders.

Changes afoot with stamp duty?

Here are the stamp duty rates, from HMRC.

Some Tory MPs are calling for the starting rate to be raised to £500,000.

Scotland is considering moving to stepped rates from 2015, so higher percentages will only be charged on amounts over the relevant threshold.

Residential land or property SDLT rates and thresholds

Purchase price/lease premium or transfer value	SDLT rate
Up to £125,000	Zero
Over £125,000 to £250,000	1%
Over £250,000 to £500,000	3%
Over £500,000 to £1 million	4%
Over £1 million to £2 million	5%
Over £2 million from 22 March 2012	7%
Over £2 million (purchased by certain persons including corporate bodies) from 21 March 2012	15%

If the value is above the payment threshold, SDLT is charged at the appropriate rate on the whole of the amount paid. For example, a house bought for £130,000 is charged at 1 per cent, so £1,300 must be paid in SDLT. A house bought for £350,000 is charged at 3 per cent, so SDLT of £10,500 is payable.

£2 million threshold for wholly residential property

From 22 March 2012 SDLT on residential properties over £2 million is charged at 7 per cent It does not apply to non-residential or mixed-use properties.

Half per cent interest rates for longer?

"It is perfectly possible that, as time moves on, the right thing to do will be to keep the Bank Rate at ½ per cent even when unemployment has dropped below our seven per cent threshold," said Martin Weale, a member of the Bank of England's rate setting committee, the MPC.

He was trying to explain the Bank's interest rate policy to A Level students this afternoon: no easy task!

It adds to the Bank governor, Mark Carney's statement this week that:

“One can imagine a scenario where the unemployment threshold is reached, and that the best policy choice for the Monetary Policy Committee in that period of time is to keep rates at current levels, because the trade-off between output and inflation is attractive because we can keep inflation on target and can grow the economy further.”

All this is in the context of Forward Guidance, the Bank's attempt to give us fair warning about when it might raise interest rates. The threshold for considering a rate hike, we had been told, was a fall in unemployment to 7% of the workforce.

Despite acknowledging that the economy is recovering much fast than the Bank of England expected, they clearly want to keep us anchored to the view that they might stick to rock bottom rates if they see fit.

Will fixed rate energy customers get reduced bills?

Update here.

There's a big debate over who should foot the bill for insulation and energy-saving measures under ECO (the Energy Company Obligation).

Up until now the suppliers have had to pay, passing the cost to customers -- adding around £90 to the energy bill.

But after the recent outcry over energy prices, those same suppliers now expect the Chancellor to shift the cost to taxpayers, with the news expected in 5th December's Autumn Statement (shouldn't it be the Winter Statement?).

EDF put up its prices by less than the others, saying it was assuming the Chancellor would lighten the burden. Other companies have said they'll scale back the price hikes they have already announced.

But millions of customers are on fixed price deals. The prices they pay are not supposed to change, raising the risk that they might not benefit from the heralded cut in bills.

Well, I hear from npower today that they will pass on any price reductions to fixed rate customers, even though -- according to the small print -- they don't have to.

Will the other suppliers do the same? They won't want to look like Christmas Scrooges, will they?

Post Office financial boycott

The postal union, the CWU, has said that its members will boycott sales of financial services in main post offices for nine working days from 21st November to the 30th.

There are the 372 Crown post offices, which tend to be the principal offices in the town.

The action WON'T affect the operation of bank accounts, foreign exchange or when customers in and ask directly for a service.

The boycott means that if someone comes in to post a parcel, for instance, staff will not try to cross-sell a financial service, such as insurance.

The biggest sellers at the moment are life assurance for the over-50s and credit cards. And there's travel insurance, of course.

Extinction beckons for quality pensions

The number of salary-linked workplace pensions will fall to zero unless action is taken to make the schemes cheaper for employers, the Pensions Minister Steve Webb warned today.

The government has unveiled proposals to remove legal obligations to gold-plate traditional salary schemes and to improve the lower grade pension arrangements which most companies are moving to instead.

Only 1.7 million private sector employees are contributing to a scheme which promises to pay a proportion of salary on retirement, compared with over 5 million in 1995.

Under new laws employers would no longer be required to give pensioners annual inflation increases. Nor would they be expected to provide pensions for spouses after the former staff member has died.

Pension rights already earned would be secure. But the hope is that by giving bosses the flexibility to cut back future benefits, some of the remaining salary-linked schemes will survive and remain open to new employees.

The legislation could be in place before the next election in 2015, according to Mr Webb.

Millions of workers are being enrolled automatically in new workplace pension arrangements, but for the most part these are not linked to pay.

In many cases the contribution levels are so low that the eventual pension income is likely to be disappointingly meagre.

The forthcoming legislation will encourage companies to provide income guarantees in these schemes, in the hope that people will regard pensions as less of a gamble and contribute more.

The government is also planning to change the law to to allow "Dutch-style" pensions. Employers would be able to band together to offer large-scale schemes which targeted a particular level of pension income.

Ministers have been persuaded that these "Collective Defined Contribution" schemes would be cheaper to run and could provide savers with more certainty about their retirement.

Energy bills have more than doubled

A typical dual fuel gas and electricity bill was £610 a year in 2004.

That figure has now risen to £1,320 -- and more than £1,400 for many after the latest round of price increases, including Scottish Power today.

Of that the so-called green levies account for about £112.

So bills have doubled in less than a decade, even if you lop off the green levies.

The £112 is set to rise to £194 in 2020.

It includes £47 from the ECO -- the obligation on suppliers to insulate some people's homes and renew their boilers -- and £11 from the Warm Home Discount, a scheme to reduce bills for low income customers.

See this from DECC on page 78 for the breakdown of the green charges which David Cameron says he is going to roll back.

Cameron moving on energy

What David Cameron actually said at Prime Minister's Questions today on energy prices:

I do believe in intervening in the energy market that is why we are legislating to put customers on the lowest tariffs.

Bills in this country have reached an unacceptable level and we need to take action on that. We need to help people to pay their bills and we need to help people to get their bills down.

We need to roll back some of the green regulations and charges. There are the wholesale prices which are beyond our control, there are the costs of transmission and the grid, which are difficult to change, there are the profits of the energy companies and there are the green regulations.

And it is those last two that we need to get to grips with.

We will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be more competitive. I want more companies, I want better regulation, I want better deals for consumers. But yes we also need to roll back the green charges.

We want a more competitive market. We need an annual audit of competition to make this market more competitive.

Co-op loses most of its bank

The chief executive of the Co-operative Group, Euan Sutherland, has confirmed that the mutual organisation will lose overall control of the Co-operative Bank as a result of a rescue deal.

The Co-op has been negotiating with big investors, led by US hedge funds, to provide extra capital for its bank, without having to turn to the taxpayer for a bail out or leave small investors nursing serious losses.

It hatched a plan in June under which it would retain control, but the hedge funds have stood in the way, seeking to take ownership of Cooperative Bank themselves.

Today Mr Sutherland conceded in a statement that the Group would be left with just 30 per cent of the bank, though he argued that he would keep "effective control" because no other shareholder would own a larger stake.

He said there was agreement in principle on the deal and more details would be released in the coming days.

Petrol down, gas up

It's a puzzle for anyone used to seeing prices for the various types of energy we use moving backwards or forwards hand in hand.

The cost of filling up the car accelerated ahead but now it's gone into reverse. Well, slightly, by 5 and a half pence a litre.

But the gas price bubble just seems to grow bigger and bigger. More than 8% bigger with British Gas's latest price increase.

One explanation is that petrol prices are affected by movements in the dollar/pound exchange rate, because crude oil and refined petrol are both priced in dollars.

The pound has enjoyed a significant recovery against the dollar in recent months, jumping from about $1.50 in value to around $1.60.

So while crude oil hasn't moved much in world markets, the cost to us in the UK has gone down.

Gas, on the other hand, is traded in sterling in the UK. There is less of the currency effect.

Not everyone in the energy market believes there has been enough of a rise to justify the price increase.

But British Gas says the cost of getting hold of gas and electricity accounts for a third of the jump in bills.

Will the petrol drop compensate for the gas hike?

If you fill up the car once a week, you are likely to gain more than you lose.

However, occasional drivers will still have cause to shiver from this week's energy news.

The petrol benefit will be outweighed by the cost of keeping warm.

Some of your responses on twitter:

@immaggi

Shhh, don't say it out loud or they'll hike the petrol up too!

@seeperry

Lack of gas storage is a partial explanation.

@GoodfishLtd

Because #Milliband warned the #energy companies that #Labour would cap their charges, so they're all rushing to the counter now!

‏@graemeburton

real-reason-why-energy-prices-are-spiralling-out-control Basically, the reason is policies intro by @Ed_Miliband that the coalition won't reverse.

@Shinsei1967

Petrol Fuel Duty frozen and petrol co's don't need tens of billions of new investment in plant and distribution.

@obotheclown2m

different raw materials. Duh.

Pension fraud crackdown

The National Crime Agency has closed down ten websites designed to to deceive members of the public into losing much of their pension savings.

It is the latest move in on ongoing effort to crack down on pension liberation fraud, under which savers and persuaded to hand over their pension pots in exchange for instant cash.

The transfer can result in significant losses and a substantial tax charge.

The government has warned against companies which prey on people in financial distress using hard-sell techniques.

In May the City of London Police raided a suspected organised crime gang believed to be cold-calling and text messaging pension holders across the UK.

The NCA said people trying to look at the websites will be redirected to a page on the Action Fraud website providing information on identifying and reporting pension liberation fraud.

Nearly £3 on the pension

The state pension is likely to increase by nearly £3 a week next April, in line with the latest figure for average price increases, announced today.

The rise would take the pension from £110.15 a week to more than £113 -- most likely £113.10.

The government has promised that pension increases will be governed by a triple lock, with the annual rise set according to the highest of September inflation, average earnings or 2.5 per cent.

The September Consumer Price Index rose by 2.7 per cent, so -- with earnings increases still very low -- it will be the rate used for the calculation, as long as the Chancellor doesn't change his mind.

Although the exact increase would be £2.97 taking the pension to £113.12, the government usually rounds the weekly pension figure to the nearest 5p, which implies a rise to £113.10.

Of course, if he chose to, George Osborne could round the number upwards and give pensioners a full £3 extra.

Carers Allowance and some disability benefits are also increased in line with September's CPI.

Green things in your energy bill

Government says that its energy and climate change policies account for 9% of the average 2013 gas and electricity bill, as of March this year.

The policies include support for renewables like wind power, insulating homes and carbon taxes.

The 9% is £112 out of the average bill estimated then at £1,267.

nPower puts the cost of "policy and regulation" at 15% of the bill, or £185 of £1,247 - rising to 22% or £329 by the end of the decade.

This includes 5% VAT, though: £57 this year.

Ofgem says environmental costs typically comprise about six per cent of an average household gas bill and 11 per cent of an average household electricity bill over the course of an entire year.

The total includes energy-saving, emissions reductions, other climate change policies and social programmes like the Warm Homes Discount.

British Gas says the typical 2012 dual fuel bill of £1,188 had £112 attributable to environmental and social policies, so just over 9%.

Taxes were £72 or 6%.

Here's what British Gas tells its customers: "government obligations and taxes" take 11% of gas bill and 20% of electricity bill.

Again, they add in VAT.

RBS boss pledges change

The new chief executive of taxpayer-owned RBS, the New Zealander Ross McEwan, has pledged to transform customer service at the once-stricken bank and to pay back taxpayers who rescued it 5 years ago.

RBS had to be bailed out in the financial crisis. During its painful rehab period it has faced a series of embarrassments including involvement in mis-selling scandals and last year's breakdown of cash machines and payment systems.

On the day he replaced Stephen Hester at the helm of the bank, Mr McEwan told RBS staff:

"We are just too difficult to deal with in too many situations. I've seen that in the retail bank where the systems and lack of training and development have really hindered. We need to take those barriers away so we can start to serve out customers well."

"Five years ago the people of the UK put their hands in their pockets through the government to save us. We should never forget that obligation. That means that we have a higher standard that we have to live by than any other bank in the UK."

"We need to be part of the recovery and we need to repay the taxpayers for their faith in this organisation. They have massive expectations. So the grizzling and the problems that we see that they through at us are actually their frustrations with us. They are the frustrations that we haven't paid the money back, that we haven't done a good enough job for them as customers."

Payouts for 22,000 Clydesdale borrowers

More than 22,000 people with mortgages from Clydesdale and Yorkshire Banks are to be compensated for having too much taken in monthly payments.

The refunds will average £970 but range up to £18,000, the financial watchdog the FCA has said.

The FCA is also imposing a fine of £8.9m on Clydesdale, which includes the Yorkshire Bank brand and is owned by National Australia Bank, for treating customers unfairly when trying to put right their own error.

Clydesdale had installed a new computer system which undercharged borrowers for four years until the mistake was discovered in 2009.

The bank then adjusted payments to make up for the missing money, without telling 22,000 customers with shortfalls that they might not be obliged to to pay it back.

A further 20,500 who paid too much, some of whom paid off their mortgages early, may be able to claim compensation as well.

Clydesdale said the compensation and fine would cost it £42m.

The bank has apologised for episode and said 14,000 of the customers will receive full redress within 48 hours, in many cases reducing the amount they owe.

235,000 risking Child Benefit fine

235,000 Child Benefit claimants on higher incomes need to register with HMRC by midnight on 5th October or face fines.

After that they will need to fill in self-assessment tax returns, to be returned on paper by the end of October or by 31st January 2014 if submitted online.

HMRC says that 1.1m were caught by the new policy of removing Child Benefit progressively, through a tax charge, from those on between £50,000 and £60,000 a year and completely from those on over £60,000.

405,000 have simply opted out of the benefit. Others are already caught up in the self-assessment process or have recently registered.

But 235,000 have only 11 days to register or risk fines ranging up to 100% of the extra tax they owe. As Radio 4's Moneybox highlighted over the weekend, the fines could be many hundreds of pounds, in theory.

Child Benefit is paid at the rate of £20.30 a week for the first child and £13.40 for each subsequent one, so a family with two children receives £1,752 a year.

In reality, HMRC is only likely to impose 100% fines on deliberate tax-dodgers.

And there is a way to redeem yourself, even if you fail to register by the 5th October deadline.

If you still pay the extra tax due, through the self-assessment system, the penalty is likely to be offset against your tax - in other words, it reduces to zero.

Here's the government website which tells you how to register. It's a simple process - the tax forms come later.

Unpaid interns

If you're fizzing with fury about being taken on as an intern when you believe you should be paid a proper wage, here is the official write-up of the rules:

Rights for interns

What is a worker?

What is an employee?

Beware mortgages with built-in increases

Beware of mortgages which look cheap now but get expensive later.

That's the danger in the current splurge of so-called cheap mortgages which could bite back once interest rates and house prices jump higher.

For example, the Post Office is pushing "Another great mortgage rate" today which is 1.98% fixed for two years then a more daunting 4.49%. The later rate is variable, so it's likely to go higher.

And this is only for those who can muster a 25% deposit.

I've got nothing against the Post Office. It is good to see them in the mortgage market and there are worse rates out there - this is, in fact, one of the lowest of its type.

However the next two to three years are a slam dunk as far as interest rates are concerned. Mark Carney at the Bank of England says he wants to keep his base rate down at 0.5% until 2016.

Even if he fails, rates are going to be low for a while.

So the first point is that you need to think about the period after that. A mortgage, after all, is usually a 25 year commitment and most people aren't canny enough to switch providers at the drop of a hat.

There are five year fixed rates, for instance, which are well below 4.49%.

And -- second point -- you should think very carefully about how much you are borrowing at what could turn out to be significantly higher interest rates in the years to come.

Bank switching boom

People are doing 15 times as many internet searches for switching bank accounts than they were last year.

This intriguing information comes from Experian Hitwise - and suggests that the publicity around the new Current Account Switch Service is already having an impact.

1.       UK Internet searches for switching bank accounts have increased by 160% month-on-month comparing July 2013 with August 2013.

2.       Year-on-year there were 15 times more searches for switching bank accounts in August 2013 than in August 2012.

3.       Of all searches for switching bank accounts made in August 2013, 11% resulted in a click to news website.

4.       1 in 5 search clicks went to a price comparison site from a search for switching bank accounts in August 2013.

Experian adds that applying for a new bank account can have implications for your credit rating.

It's worth considering that the bank might not want you!

Be vigilant on house prices says Carney

The governor of the Bank of England has told MPs how he might react if the recovery in the housing market turns into an unsustainable boom.

Asked in the Treasury Select Committee what could be done if house prices got out of hand Mark Carney said "we do need to be vigilant" and he would start with "more intensive supervision of mortgage lending".

Banks would have to make sure that there were appropriate limits on how much housebuyers could borrow in relation to their incomes or the value of the homes.

"There would be guidance to do with loan to income and loan to value," he said, though these would only have the force of recommendations.

And he warned that banks could be forced to set aside more capital to discourage them from reckless lending.

"You can extend all the way to sectoral capital requirement, additional capital required that banks would have to hold for mortgage lending," he said.

Today saw further evidence of a housing market revival, as lenders reported that lending to first time buyers was up 41 per cent compared with last year.

However, Mr Carney commented that the recovery needed to be put in context because activity was still at "two thirds or three quarters of pre-crisis levels".

"There are big pockets of the country where there has not been any meaningful recovery," he added.

Will low unemployment trigger higher interest rates?

So this is an interesting point arising from the evidence Mark Carney is giving to the Treasury Select Committee. If unemployment drops to his threshold of 7%, does that automatically mean interest rates will be pushed up by the Bank's Monetary Policy Committee?

Perhaps not.

Because he's told them: "The 7 per cent threshold is a staging post. When we get there we have to evaluate what has happened to productivity, what are the broader labour market indicators."

On the one hand the Bank is saying it will take 3 years to get down to 7%. On the other, City econimiosts are saying the threshold might be reached in just a year or two.

But the MPC does have to move as soon as the threshold is reached. Carney has reiterated that 7% is the point at which the " MPC will consider tightening".

Carney stick with low interest rates

The governor the Bank of England, Mark Carney, has stuck firmly to the Bank's new policy of keeping interest rates low until unemployment falls to 7 per cent. He was answering questions from MPs in the Treasury Select Committee.

In an approach known as forward guidance, the Bank's Monetary Policy Committee has made it clear the rates will be kept down at the historic low of half of one per cent until the unemployment threshold is reached, most likely for three years.

He acknowledged there were forecasts in the financial markets that interest rates might end up being raised later next year or in 2015, saying "On average the view of the market is that the threshold will be achieved sooner."

But he gave no signal that the bank was changing its stance, adding "What's important is that this about the conditions when the MPC will consider tightening. That is summarised by the the 7 per cent threshold."

Challenged on the plight of savers, still destined to put up with paltry interest rates for a long time to come, he said he had "tremendous sympathy for them".

He said "They've done the right thing, they've set money aside."

"With growth will come higher interest rates for those savers. Our job is to make sure this economy reaches escape velocity and can sustain higher interest rates."

Live in Dorset and live longer

There's a 10 year gap in life expectancy, depending on where you live, says the ONS.

• In 2009–11, male life expectancy at birth was highest in East Dorset (83.0 years); 9.2 years higher than in Blackpool, which had the lowest figure (73.8 years).
• For females, life expectancy at birth was also highest in East Dorset at 86.4 years and lowest in Manchester where females could expect to live for 79.3 years.

Are Social Fund changes driving families towards payday lenders?

Here's an example of how changes to the way Social Fund money is doled out might be coinciding with some desperate families resorting to payday lenders and getting into financial trouble.

It's the issue raised today by the Children's Society.

A week ago I was speaking to a young mum, whom I can't name. She had been homeless and her council had put her in a flat.

Soon after, the washing machine broke down and she asked for a replacement.

But the local authority didn't have the budget for that. It suggested she tried to get a loan from the Social Fund - but of course, as the Children's Society has highlighted, that's not so easy any more.

Sure enough, the loan was refused. So the woman borrowed £50 from a payday lender, combined it with her total savings of £15 and bought a second-hand washing machine.

Maybe she should have gone to the launderette, because she couldn't pay back the £50.

The debt grew to £120 and at the latest count it had spiralled to £180.

In former years, the Social Fund was a sort of state alternative to loan sharks or payday lenders. More than two million people were given Crisis Loans from the Fund in 2011-12.

The commercial lenders charged thousands of per cent in interest. The Social Fund charged nothing - and if the borrower paid the money back, the money could be re-lent.

Social Fund changes driving people to loan sharks

The Children's Society has warned that changes to the Social Fund which used to provide emergency funding for families are putting some of Britain's poorest families in danger.

It says that loans and grants have been cut and there is a postcode lottery for support after responsibility was passed to local authorities.

The Social Fund provided discretionary Crisis Loans for families with acute and immediate needs and Community Care Grants to people who had moved out of care.

From April this year the budget was transferred to local authorities. So, while over 2 million people collected crisis loans in 2012, it's not clear how many are getting them now.

The Children's Society says the funding has been cut by 46 per cent since 2010 - that's a figure calculated by taking account of price rises over the last 3 years.

Councils have adopted different approaches, some providing only vouchers and pre-paid store cards and others requiring claimants to prove that they can't borrow from friends or on a credit card. 

Most no longer offer the interest free loans the Social Fund was known for.

The Department for Work and Pensions has defended the changes, saying that since last year the money allocated for the loans has been maintained in cash terms at £178m. And councils have been given extra money for administration. 

It adds that help is now being targeted at applicants affected by flooding, fire or gas explosions.

But the Children's Society, backed by the Archbishop of York John Sentamu, warns that poor families will be driven towards loan sharks and payday lenders.

Swinton £55 payouts to thousands

Hundreds of thousands of Swinton customers could be compensated after the High Street insurance broker was fined for mis-selling policies.

Swinton has had to write to 650,000 people who may have been affected, offering them a full refund. So far 34,000 have replied asking for the money and received an average of £55 each.

However, to get hold of the compensation, customers need to have replied to the Swinton letter and made a claim.

The financial watchdog, the FCA, says customers who think they may have been mis-sold should make a complaint to Swinton, whether or not they can remember receiving a letter.

Swinton has set aside £11.2m for the payouts. If all the 650,000 claimed successfully, the bill would climb to around £35m, based on the average payment so far of £55.

The FCA has fined Swinton over £7m. It says the company used aggressive sales tactics over the the telephone to persuade people to buy add-ons to their car and home policies.

Those extras included breakdown cover, emergency assistance in the home and personal injury cover, sold from 2010 to 2012.

In some cases Swinton did not even tell customers that the add-ons were optional, according to the FCA.

Swinton is Britain's largest High Street insurance broker, with 500 branches and 3,000 staff. It is part of a French mutual insurance group called Covea.

JustGiving defends online giving

The leading online giving company, JustGiving, is trying to reassure the UK's army of sponsored runners, swimmers, and other fundraisers after a rival online donations site hit the financial rocks.

The Charity Commission suspended charitygiving.co.uk on Friday after a shortfall of at least £250,000 was identified in the funds it should have passed on to charities.

Zarine Kharas, founder and chief executive of JustGiving, said: "It couldn't have happened to us because the monies owed to charities are 100% ring-fenced."

JustGiving operates a trust account for donations, which can only be accessed with the independent consent of three top managers.

Any funds in the account would not be available to administrators or liquidators if the firm went under.

Zarine Kharas is calling for all online giving websites to be made secure.

"I think similar safeguards to solicitors and accountants should be put in place," she says.

There's concern that the problems at charitygiving.co.uk, which handled £100,000 a week, could put off donors and fundraisers just as charities are struggling to maintain their incomes.

£250,000 donations missing

The Charity Commission says at least £250,000 of charitable donations may have gone astray at the online donations website, charitygiving.co.uk.

The Commission suspended the website on Friday, after installing an interim manager to deal with serious financial problems.

Online giving has become popular because of the ease of donating, simply through the click of a mouse.

However, it appears that a major shortfall appeared in recent weeks at charitygiving.co.uk, between the sums donated and the money passed on to charities.

The site had been handling donations of around £100,000 a week.

The Charity Commission believes that thousands of people staging charity runs and other events could have been affected.

In a statement it said: "The interim manager will now undertake an urgent, detailed review of the charity's finances to establish the extent of the shortfall and which charities and donors are affected."

Cutting pension tax relief

The Pensions Policy Institute and Age UK are floating the idea of cutting pension tax relief for higher earners and introducing a flat rate of 30%.

In other words, whether you paid 20% income tax or 40% or 50%, you would get a tax refund in your pension plan equivalent to 30% tax.

The PPI presents this idea as revenue neutral, for the Treasury, and as potentially incentivising lower earners to save more in pensions.

There are two ways in which this idea could be of major interest to George Osborne:

1. The big problem with auto-enrolment, under which workers are being automatically signed up for company pensions and having money deducted from their pay, is that the resulting pensions for most will be tiny.

So boosting the value of contributions at the lower end, makes auto-enrolment look more viable.

2. The Chancellor could save as much as £16bn a year.

The PPI calculates that a 30% flat rate would cost the same as the current system: £35bn. However, restricting tax relief to the basic rate of 20% would reduce the annual cost to £19bn-£22bn. It could be tempting to grab some or all of that £16bn difference - in the name of fairness, of course.

Higher rate taxpayers have a big advantage in the pension game. So far the Coalition has steered clear of removing some or all of that advantage.

But this research gives a little extra push to the argument that this is a cherry ripe for the picking.

Payday lenders throw in towel

The Office of Fair Trading says since March, 9 payday lenders have handed in their licences, 3 have had them revoked and 3 are under investigation.

The OFT produced a damning report on payday lenders back in March saying there was "widespread irresponsible lending" and wrote to 50 leading players warning they could be stripped of permission to trade.

Last month they were referred to the Competition Commission.

Warranty comparison site

New comparison site for extended warranties now provided by Dixons, Argos and others - as mandated by the Office of Fair Trading, after big concern over people paying too much for (sometimes unnecessary) warranties.

Stores will still be able to sell the warranties at the till so it'll be up to you to check the website on a smartphone while in the shop.

The OFT pints out that most electrical purchases are now made online, so you can have the website in a window to help you while surfing and shopping.

On the other hand, you can't click through from the website to the best deals - so it's a bit clumsy.

It covers 75% of the market for warranties, so there could be a cheaper deal elsewhere.

Money lessons in school

From next year, children in secondary school will be taught about debt, insurance, savings and taking risks with their money, according to the new curriculum for England published today.

There's been increasing concern that young people are ill-equipped to deal with financial challenges they are are coming up against out of school.

The new emphasis on Personal Finance in the English curriculum is the result of a long-running campaign to improve financial skills - a need which has looked even more acute since the onset of the financial crisis.

There was already a plan to include the instruction in Citizenship lessons, but the curriculum published for consultation today goes into more detail.

From September next year 11 to 14 year-olds in Key Stage 3, as well a learning about budgeting, will be taught about managing risk - for instance which places are safest to keep their cash.

14 to 16 year-olds, Key Stage 4, will explore income and expenditure, credit and debt, insurance and savings and pensions.

Twitter's tax

Much of the recent outcry over corporate tax avoidance erupted on the rapidly expanding social media site, Twitter, with tax campaigners, MPs and financial experts rushing to compose their 140 word tweets to stir up argument and debate over the tactics used by Google, Amazon and Starbucks.

So it is ironic that Twitter itself is remarkably coy about how much tax it pays and where.

Twitter submitted a brief set of UK accounts this week and by looking at them you can deduce that it declared profits of £92,000 in the UK in 2012, up from a mere £16,000 the year before.

Worldwide its advertising sales are expected to top $1bn or around £660m in 2014, mainly from charging advertisers to promote their tweets on the website.

There's not much more detail, because Twitter is a private company, though it gives an assurance that it pays all relevant taxes as set out by HM Revenue and Customs including corporation tax, VAT and all applicable payroll taxes.

What will tickle the interest of tax geeks is that San Francisco-based Twitter has located its European headquarters in Dublin, along with the majority of its international sales, finance and legal staff.

Google was condemned as "evil" by the chair of the House of Commons Public Accounts Committee, Margaret Hodge, for booking UK sales through Dublin, thus bypassing the need to pay UK corporation tax on the business.

Twitter declined to comment on whether it accounts for sales to UK customers in Ireland. It has 100 staff in Dublin and 60 in London.

Of course, it is important to point out that none of these companies is breaking the law in the way they structure their operations or declare profits for tax.

Google, for instance, has said it complies with all British tax rules and that it is up to politicians to change the law if they are unhappy with the outcome.

Live to 100!

Girls born this year will have an average life expectancy of 94.3 years and an over 39 per cent chance of living to 100, while boys will have a life expectancy of 90.9 and just under 33 per cent chance of living to 100.

Says DWP.

More names for banknotes

Barbara Hepworth
Margot Fonteyn
Rosalind Franklin
Audrey Hepburn
Amy Johnson
Iris Murdoch
Violette Szabo
George Eliot
Virginia Woolf
Mary Shelley
Jacqueline du Pre

And there are even more names suggested by the public to the Bank of England.

Mortgage borrowers vulnerable to higher rates

Bank of England Financial Stability Report's "significant" worries about UK borrowers:

"A significant cohort of UK borrowers could experience financial difficulties if interest rates were to rise during a period of subdued income growth.

"...households accounting for 9% of mortgage debt would need to take some kind of action — such as cut essential spending, earn more income (for example, by working longer hours), or change mortgage — in order to afford their debt payments if interest rates were to rise by just 1 percentage point...

"This would rise to 20% of mortgage debt if interest rates were to rise by 2 percentage points. Provided borrowers are able to take actions in order to afford their debt payments, then this may not lead to significantly higher losses for banks.

"The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), with other Bank staff, should provide an assessment to the FPC (Financial Policy Committee) of the vulnerability of borrowers and financial institutions to sharp upward movements in long-term interest rates and credit spreads in the current low interest rate environment. They should each report back to the FPC in September 2013."

2.5% for lending to Mr Osborne

Interesting that the current ructions in the markets mean that investors can earn 2.5% by lending their money to the government.

That compares to 1.76% for the best easy access savings accounts. One of those is the government's National Savings, ironically.

The best easy access Individual Savings Accounts are about the same.

Accounts where you have to give several months' notice pay 2%.

Tying your money up for 5 years, you can achieve the dizzy heights of a 2.9% return.

So lending to the government by buying what we call Gilts (they're government bonds or IOUs), might be getting more attractive if you've got £1,000 or more to stash away.

Gilts are virtually risk free, because they depend on the solvency of the state EXCEPT for one thing.

You're guaranteed to get the underlying amount of the loan back at the end of the term, but the price can fluctuate along the way - because Gilts like other bonds are traded in the financial markets.

The 2.5% is for 10 year Gilts, though you're not committed for 10 years.

You can buy or sell via brokers or from the Bank of England's Debt Management Office which has lots of other info.

Savings rates cut in half

Interest rates for savers have plummeted since the Bank of England started to channel cheap money to banks and building societies last August through the government's Funding for Lending Scheme.

The point was to cut the price of mortgages and that seems to be working (boosting lending to small businesses has been a bit more of a problem).

But the Bank of England's latest figures show that the average Individual Savings Account (ISA) is paying just 0.69%, half the level of last summer.

The ones with first-year bonuses have dropped to 1.4% from 2.6%.

Normal savings accounts (not tax free ISAs) haven't dropped so much, but they tend to pay lower interest rates anyway.

Banks just don't need to attract your savings. They can get their funds elsewhere.

Pay is higher but it buys less

Pay's gone up much less than prices, as well all know.

Today's figure of £447 as the average weekly regular pay, compares with £392 six years ago, in 2007, before the financial crisis.

14% more.

In comparison, prices measures by the Retail Prices Index or RPI are up 21.5%.

No corp tax flowing from Thames Water

Another company pays no corporation tax. This time it's Thames Water during the 2012-13 tax year.

Here are the numbers:

Turnover £1.8bn
Operating profits £549m (that's after business costs)
Pre-tax profit £149m
Corporation tax: Nil

Thames Water's explanation is that it has invested nearly £1bn in new water infrastructure and there are tax breaks for investment.

In exchange for spending money on new pipes and drains, they can defer paying tax until future years.

But it's also important is that it has huge borrowings, incurring £405m in interest during the year.

Like every other business, Thames can lop of the cost of interest from its operating profit to calculate its taxable profit.

It's net debt is a colossal £8.4bn.

Bank agree to axe fees

The financial watchdog, the FCA, is making banks take full account of the money customers pay into their accounts each day, even if it arrives after direct debits and standing orders have been paid out.

Previously banks made £200m a year from penalty fees on items which were unpaid because there were insufficient funds in the account.

The FCA decided this was unfair on customers because regular deductions, such as direct debits, tend to be removed first thing in the morning.

Now 7 of the biggest banks - including Barclays, HSBC and RBS -- have agreed to operate a retry system in the afternoon, probably between 3pm and 4pm, which takes accounts of new credits, salary payments and cheques which have cleared during the day.

Lloyds Banking Group has also signed up, but says as yet it's unable to retry all payments in the afternoon.

Until its systems are updated, any Lloyds customer who incurs a late payment charge because money hasn't been properly credited will be able to claim a refund.

Stop the card and PIN thieves

Tips for evading the cash machine con merchants.

What they often do is look over your shoulder, usually the left shoulder, to see you tapping in your PIN - that's why it's called shoulder-surfing.

Then they dodge round to your right hand side and distract you when the machine gives you back your card. And they take it.

Distraction techniques include: shoving a leaflet in front you and above the card slot, engaging you in a spurious conversation, telling you that you've dropped something.

So what can you do?

1. Shield your PIN, with your other hand or with something you can hold.

2. Make a habit of using cash machines inside branches. They're safer.

3. Choose a more difficult PIN, one that is hard to take in at a glance.

4. It still has to be easy to remember - so you never feel the need to write it down.

5. Consider including numbers in the bottom right-hand corner of the keypad, such as 6,8 and 9, because they're harder to see if a thief is looking over your left shoulder.

6. If people are hanging around the cash machine, go and find another one.

Beggar-thy-neighbour over tax?

"The stated intention of Fiat Industrial to relinquish its Italian tax residency (tax rate around 30%) and move to the UK (tax rate 20% from 2015) demonstrates the effectiveness of the UK’s strategy to tempt international business with the lowest tax rate in the G20."

"This also reveals the hypocrisy of UK politicians who seek to establish the UK as a future tax haven while reviling overseas companies for tax planning which has in the past allegedly extracted taxable profits from the UK."

Not my view but an interesting one from George Bull, tax expert at Baker Tilly.

How low can savings rates go?

Interest rates for five year fixed rate mortgages are at a low of 3.61% at the moment, partly the result of the government's Funding for Lending scheme to make cheap money available to banks and building societies.

But the consequence is that savings rates have continued to suffer.

Instant access accounts pay an average of 0.98% in interest. That's including the annual bonuses some accounts offer.

And tax-free ISAs, excluding bonuses, are giving you just 0.81% a year.

Both of these average rates are plumbing new depths.

These are Bank of England's figures on quoted interest rate. The 5 year fixed rate mortgage number goes back to 1995, when it stood at 9.44%. Remember that!

Shares have returned over 50%

The FTSE share index has stepped up to its highest closing level for nearly 13 years, since September 2000 in fact.

What does it mean? In purely index terms, it looks like a very grim decade for share investors.

They still haven't reclaimed the ground reached in December 1999 when shares reached their all time peak, with the FTSE touching 6930, compared with 6755 today.

But the index number doesn't reveal the whole story, because anyone owning shares receives dividends - as long as the company is doing OK.

If those dividends were reinvested in the stockmarket as soon as they were received, the total return, as it's called, looks much healthier despite the credit crunch and financial crisis.

According to Adrian Lowcock from Hargreaves Lansdown, the total return since 1999 is 52.97%, even though the index is 2.98% lower.

Mind you, consumer prices have risen by 35% over the same period - but that's another story.

Why inflict RPI on students?

Further to Jeff Prestridge's piece suggesting that the vast majority of students will never be able to pay off their loans...

Let's ask again: Why is the interest rate on these loans now set at RPI plus 3%?

RPI is the retail prices index. Some people like it, some don't.

But the point is that it's usually higher than the other measure of  inflation, CPI.

And the authorities have done their best to discredit it.

And the measure used to calculate increases in benefits and public sector pensions has been switched from RPI to CPI.

Remember what the National Statistician said on 10th January when she rubbished RPI:

"the formula used to produce the RPI does not meet international standards"

and "the arithmetic formulation [of the RPI] would not be chosen were ONS constructing a new price index"

The UK Statistics Authority agreed, saying "the current formulation of the RPI fails to meet international standards"

and on 14th March "RPI statistics will no longer be designated as National Statistics".

If there's a decent explanation for carrying on inflicting RPI on students, let's hear it.

Public sector pensions cut by a third

Nurses, teachers and other public sector staff will see a reduction of a third in the value of their pensions as a result of the Coalition's reforms, according to the Pensions Policy Institute.

Four million workers in the NHS, teaching, local government and civil service are in schemes which promise many of them a pension based on salary when leaving, or final salary.

But in future the pensions will be based on average salaries, members will have to contribute more and the retirement date will be aligned with the State Pension Age.

Typically the pensions are worth an extra 23 per cent on top of pay, according to the Institute, which is an independent research body.

That benefit will be cut to 15 per cent as a result of the reforms, though anyone anyone already retired or retiring within the next nine years won't be affected.

The findings don't mean that actual pension payments will be cut by a third. It's the combined effect of some pensions being lower, of people receiving them for a shorter period and of having to pay in more while working.

The Institute also forecasts that the long term cost of public sector pensions will fall as a percentage of the economy as a result of the reforms, from 1.1 per cent to 0.8%.

There has been heated debate about public sector pension schemes, because most private sector workers have to make do with much less generous provision.

Public sector workers have already seen annual increases in their pensions restricted to a lower rate of inflation, the CPI.