£1.9bn tax error

HM Revenue and Customs has come under fire from the National Audit Office, and from an influential committee of MPs, for exaggerating its performance in squeezing more revenue out of tax avoiders.

In a report on the tax office's 2013-14 accounts the head of the National Audit Office, Amyas Morse, said he was concerned "that an error of as much as £1.9 billion in HMRC's baseline calculation led it to report the trend in its performance in a way that inadvertently exaggerated the improvement since 2010-11".

The error did not affect the amount of tax collected but made it appear that tax compliance targets had been exceeded by a significant margin.

Margaret Hodge, the Labour MP who chairs the House of Commons Public Accounts Committee has called HMRC officials in to give evidence later this month.

She said, "It is truly depressing that HMRC's failure to take appropriate action has led to its unwittingly misleading Ministers, Parliament and the taxpayer".

There are a lot of red faces at the Revenue, where I understand officials are "penitent" at the shambles over targets.

HMRC has said: "We regret an historic error made in 2011 when we wrongly calculated the baseline against which our performance was measured. 

"We have corrected this error and even against the corrected baseline we have still exceeded our targets. We will work closely with the NAO to prevent this happening again."

28 = worst age

28 years old has been the worst age to be during the financial crisis, according to official figures, which show that those in their twenties have felt the tightest squeeze on pay.

Experts have looked at the hourly wages in 2009, at the height of the financial crisis, and compared them with last year, adjusting for the impact of rising prices.

Those in their twenties were being paid 12 per cent less last year -- that's effectively the buying power of what they were getting.

But the biggest impact of low pay and rising prices has been on 28 year olds: in 2009 28 year-olds were earning nearly 18 per cent more than the inflation-adjusted figure for 2013.

The Office for National Statistics says those in their 30s suffered a 9 per cent squeeze and those in their fifties were 5 per cent down.

Police meeting over Wonga

It has emerged that City of London Police representatives are meeting regulators for discussions about Wonga, the payday lender which is embroiled in controversy over letters sent to customers.

Wonga sent letters from non-existent law firms to customers in arrears between 2008 and 2010.

Last week, the the City regulator the FCA said the company had agreed to pay £2.6m in compensation to about 45,000 customers - an average of about £50 each.

The police then confirmed  that they would "be reassessing whether a criminal investigation is now appropriate."

Previously they had ruled it out, saying the case should be left to the regulator.

Today's event -- at the FCA -- is thought to be an initial, exploratory meeting and is unlikely to be followed by announcements on future action.

City of London Police would not comment on the meeting or confirm that it was taking place.

Free calls for child maintenance

The government has bowed to pressure from campaigners to make sure that parents don't have to pay to telephone for help with child maintenance.

Although the Child Maintenance Options helpline -- run by G4S -- is an 0800 number and free to phone from landlines, mobile calls can cost up to 41p per minute.

Now the Department for Work and Pensions says it has struck a deal with two providers, 'Virgin' and '3', to remove the charges from next month, with the taxpayer picking up the bill.

Discussions with the other major mobile companies are "ongoing".

Separated parents have to phone the number in order to make an application for support using the new Child Maintenance Service.

Gingerbread, which campaigns for single parents, called the move a U-turn and "an important victory for families for whom every penny counts".

The industry regulator, Ofcom, has introduced new rules which will make calls to 0800 numbers free for all, including mobile users, but these will not come into force until June 2015.

£11 on your mortgage

Millions of mortgage borrowers with variable rate loans face an earlier hike in their monthly payments after Mark Carney, the Bank of England Governor, said the first hike in rates "could happen sooner".

A likely 0.25 per cent rise would put at extra £11 a month on the average mortgage of £87,000.

After the Governor's speech the City of London is speculating that the increase will come before the end of the year, rather than next spring.

More than 7 million homeowners have variable rate mortgages, which track the Bank's base rate or the lender's Standard Variable Rate or SVR.

That's 65 per cent of all mortgage borrowers. The rest, on fixed rates, wouldn't be affected until their mortgage deals expire.

Some of those paying SVR might also be protected for a time, if their lenders decide not to pass on an increase.

Mortgage experts are also warning that new fixed rate deals could soon become more expensive as the financial markets begin to anticipate an earlier rise in rates.

Cash machine freedom

A million people with basic bank accounts at RBS and NatWest will be able to use the full UK network of cash machines after the banking group reversed a decision to restrict them to its own machines.

Lloyds says it will also give cash machine freedom to its basic bank account customers.

The accounts provide a stripped-down service, with no cheque book or overdraft.

The RBS Group has 8,000 cash dispensers and Lloyds, including Bank of Scotland and Halifax, has 6,500.

Adding the whole LINK network will mean customers will have access 67,000 machines which most current account account customers can use.

The U-turn at RBS comes as the new chief executive, Ross McEwan, tries to win back customer confidence.

It restricted access for basic bank accounts in 2011, saying the service was unsustainable because of the cost.

RBS chief executive Ross McEwan said: "We looked at this and decided it just wasn't right. 

"You don't make life harder for those who need your help most. We need to rebuild trust with our customers."

Lloyds will start sending out new cards to customers from July, allowing them full cash machine freedom.

RBS will implement the change by the end of the year.

Is Cable pre-historic?

Should we go back to limiting home buyers to borrowing 3 to 3.5 times their income, as Vince Cable suggested on BBC Radio this morning?

It's what he calls a "stable level" compared with the multiples of 5 times which some borrowers have been getting.

Here are some responses from the mortgage industry to show you the other side of the argument:

*"You would disappoint around half of first time buyers" because the average income multiple for first timers is 3.42 at the moment, so large numbers are having to borrow more than that.

*"He's pre-historic" because he's harking back to a time (in the late 1980s, early 1990s) when people had to budget for zig-zagging interest rates which could be 15%. You  don't have to do that now, although lenders are stress-testing household income for a jump to 7% rates.

*"It's nonsense", because the regulator, the FCA, has forced lenders to move away from strict income multiples, to detailed affordability checks. For some 5 times income is affordable, for others 3 times income is unaffordable.

*Cable doesn't appreciate that the market in London has already gone "off the boil".