Monthly Archives: November 2015

Weekly Round-up, 27th November, 2015.

Exceeding Expectations.

In its latest Autumn Spending Review the government have announced it will borrow £8 billion less than forecast. Because of the improvement in the public finances, the proposed changes to tax credits have been withdrawn as the government introduces universal credit later in the life of the parliament.

A new Help to Buy equity loan scheme for London will be introduced to give buyers 40% of the home value from early 2016, as opposed to the current 20%. This is in addition to the schemes already in place including Help to Buy and Shared Ownership designed to help people get on the housing ladder.

The bad news for landlords which runs alongside the new tax changes already announced by the Chancellor is that from 1 April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty.

From 2020, people with suspected cancer will be diagnosed or given the all clear within 28 days of being referred by a GP, potentially helping to save up to 11,000 lives a year.

To make it harder for people to claim compensation for exaggerated or fraudulent whiplash claims, the government is ending the right to cash compensation. This means that annual insurance costs for drivers could fall by between £40 to £50 a year.

Happy Christmas.

Parents spend £3,186 on Christmas presents for each child, on average, up to the age of 18, according to the latest research from Halifax. The average spend on each child is £177. Half (49%) of parents buy their children between six and 15 presents at Christmas, spending an average of £177 per child per year, an increase of £14 (8%) in the last year. More money is spent on 10 and 13 year olds who receive £228 worth of gifts from their parents. Unsurprisingly, one year olds have the least spent on them by parents, an average of £109.81.

On average, children receive £120 in cash at Christmas from parents, friends and relatives, up almost a third, from £88 in 2014. 17 year olds receive the most Christmas money – an average of £170. One in six (16%) children save all their Christmas money, but the majority (44%) spend some and save some. One in four children (26%) spend all of their Christmas money.

A quarter (24%) of parents believe that if given the option, their children would prefer money over presents at Christmas, more so for girls (25%) than for boys (22%). The age of their children also impacts on parents’ opinions of what their children would prefer as a Christmas gift. While just a quarter (24%) of parents of 14 year olds say they think their children would prefer money, almost twice as many (44%) parents with children aged 15 think this would be the gift of choice. Overall, two thirds of (67%) of parents remain confident that their children would prefer presents.

Almost a fifth (19%) of children use their pocket money to buy Christmas presents for other people and almost the same amount (22%) get their parents to buy Christmas presents for them to give to other people.


The Council of Mortgage Lenders and Which? Have launched a new “tariff of mortgage charges” that will introduce a standard format for how lenders communicate their fees, to make it easier for customers to understand charges and compare deals.

Different lenders will now use the same names for fees, and each will list fees in the same order, and with the same descriptions, to make it easier to compare between lenders.

The new tariff has been tested on consumers, and results show that consumers found it much easier to understand and compare costs than when they used existing versions. Lenders representing 85% of the market have already committed to introducing this tariff and putting it on their website by the end of the year, and the CML anticipate that other lenders will also choose to adopt it.

The CML and Which? have submitted a joint report to the Chancellor of the Exchequer, outlining the work on the new tariff as well as progress towards making it easier for people to compare the total costs of different deals over different deal periods. The CML will continue to work together to help consumers and plan to agree a standard comparison method early next year for lenders to adopt in 2016.

£100 per month.

One in three people would have to stop paying essential bills, borrow from family or would fall into debt to deal with a £100 drop in their monthly income, reveal new figures from Citizens Advice. The ‘financial security’ study shows that a monthly loss of £100 is enough to undermine the stability of household finances. It also highlights that people would struggle to increase their income due to caring commitments, or their employer not being able to offer more hours or more pay. Those who believe they can increase their income say it could take up to a year to make this happen.

Four out of five (82 per cent) people with an income of between £15,999 and £29,999 said it would be difficult or very difficult to cope with this reduction, compared to almost half of those on an annual income of over £30,000 (47 per cent).

And finally…£616 per hour to park in London?

A man was charged more than £3,700 for parking in Central London for six hours. Manish Wadhwani, 32, received the bill from National Car Parks (NCP) after he took his wife, Risha, and their three-year-old son to the Winter Wonderland festival in Hyde Park.

The organised father-of-one had pre-arranged a £5 deal at an NCP car park which meant he could stay for up to 12 hours for just £5 as long as he pre-booked the place. But when the family returned to their car six hours later on Sunday afternoon – inside their 12-hours allowance – they were hit with a £3,731 bill.

Mr Wadhwani, of Watford, Herts, said: “The first thing I thought was that it couldn’t be true – this is absolutely ridiculous. I spoke to an operator at the car park and he was helpless. The only thing he could do was register a case for me and that somebody would pick it up.”

The parking ticket charge was down to an earlier trip in to London on August 23rd when a mistake led to Mr Wadhwani never being registered as leaving the car park, amounting to the equivalent of a three month parking stay. He had used the same £5 parking deal then as he had on Sunday. NCP have since processed a refund, but Mr Wadhwani is still waiting for the process to be complete.


The secret of success.

So the report that has been 7 years in the making, cost us £7million to produce, and runs to 417 pages has concluded that Halifax Bank of Scotland was a “creature of its time”, born from the backdrop of almost uninterrupted economic growth over a significant period – which included the rapid development of financial markets.

Its over-optimistic board concluded that the gravy train would never pull into a Bisto station and that they must carry on riding the crest of a consumer wave of confidence. Or, to put it in the words of the regulator, HBOS failed to set an appropriate strategy and to challenge a flawed business model that placed inappropriate reliance on continuous growth without due regard to the risks involved.

Of course it wasn’t just the HBOS Board who were over excited – the 2001 merger of Halifax and Bank of Scotland had yielded double-digit profit growth in all but one of the years up to end-2006, so even analysts’ and brokers’ views were positive, at least until early 2007 which meant those in the know didn’t know and were happy to see the share price rise.

So the Government said no more boom and bust, the bank thought life would only get better, the regulator was enjoying the lighter side of the touchy touchy feely feely relationship, and the bright sparks gambling with investors’ money could only see the upside – no wonder we had the financial crisis.

The conclusion of the report is really irrelevant as we know – that was then, this is now. Both the population and those that like to feed us with goods and services have learnt that if it feels too good to be true, it probably is. Just because you can doesn’t mean you should, and that you should always think of the children, or the next generation anyway in terms of the legacy that the past 7 years will have left them.

We have moved so far from the dark days of 2007 into a world where we need to be more ‘Marvin’ in our outlook – Marvin is the robot from The Hitchhikers’ guide to the Galaxy who, even when life was good, found a way to be depressed about a potential downside. So round the Board table we must all stop talking in two word phrases such as “how can” or “why not” and replace them with “what if” and “could it” and don’t forget “should we”. With the rise and rise of scenario planners across the financial services world, the demands of stress testing by the regulator and treating customers fairly or delivering great customer outcomes at the heart of all our businesses, I’m sure the lessons of HBOS have, on the whole, been understood and embedded – if not in the share price of Lloyds Banking Group. At some point we have to move on, after all, we have to keep thinking of the children.

Neil Hoare, Commercial Director

Weekly Round-up, 20th November, 2015.

Exceeding Expectations.

The Council of Mortgage Lenders (CML) estimates that gross mortgage lending reached £21.8 billion in October – 8% higher than September’s lending total of £20.1 billion. In addition to the month-on-month rise, lending rose 19% year-on-year, from £18.4 billion in October 2014. This is the highest monthly figure since gross lending reached £23.6 billion in July 2008.

The trade body representing the vast majority of lenders in the UK highlighted that as lending in the regulated mortgage space picked up over the summer months, the pace of recovery has improved. The CML anticipates that this trend looks set to continue over the closing months of the year with the factors helping support this recovery continuing to be low inflation, strong wage growth, an improving labour market and competitive mortgage deals.

As a result lending this year is likely to exceed their earlier forecast of £209 billion, though affordability pressures may limit business volumes for first-time buyers and movers meaning that the CML think the market has only modest further upside potential over the short-term.

Pricing up.

According to the Office for National Statistics (ONS), UK house prices increased in price by 6.1% in the year to September 2015, up from 5.5% in the year to August 2015. House price annual inflation was strongest in Northern Ireland (10.2%) with England second (6.4%), followed by Wales and Scotland who had the same growth figure (1.1%).

Annual house price increases in England were driven by an annual increase in the East (8.4%) and the South East (7.4%). If you exclude London and the South East, UK house prices increased by 5.0% in the 12 months to September 2015 and on a seasonally adjusted basis, average house prices increased by 0.8% between August and September 2015. The challenge for those looking to get their first foot on the housing ladder continues with September 2015’s figures showing prices paid by first-time buyers were 4.3% higher on average than in September 2014.

Checking UK Health.

Aviva’s latest Health Check UK Report has highlighted that three in five (61%) of UK adults fear they won’t be able to pay the bills if they become ill with cancer.

More than half (55%) of UK adults say they do not have any savings to cover their bills or childcare if they were to become ill with cancer. According to the research women (60%) are more likely to be in this position than men (50%): this lack of savings, combined with typically lower salaries, could leave women particularly exposed to the financial impact of the disease.

Almost half (47%) of the 55-64 year old group said they did not have any savings to help relieve the financial pressure created with a cancer diagnosis. Aviva said “this is particularly concerning” as 53% of all cancers are diagnosed in adults aged 50-74. Around three quarters (74%) said they were concerned that they would not be able to access all the cancer drugs they need.

Just 14% of those who have received treatment for cancer said the NHS did not provide all the cancer drugs and treatments available to help their condition.

Generation Poor.

Wealth among working-age households increased on average by more than inflation over the late 2000s, despite the financial crisis. This was driven by increases in pension wealth which, on average, more than offset the declines in housing wealth resulting from falling house prices. However, younger cohorts are on course to have less wealth at each point in life than earlier generations did at the same age – unless the rate at which they are accumulating wealth picks up.

These are among the findings of a new report published this week by the Institute for Fiscal Studies (IFS), funded by the IFS Retirement Savings Consortium and the Economic and Social Research Council.

The IFS researchers explored changes in household wealth and individuals’ attitudes towards saving over the period 2006–08 to 2010–12. They used detailed data covering the whole of Great Britain from the Wealth and Assets Survey.

Some of the main findings on how households’ wealth holdings changed over this period suggest that for virtually all age groups, average property wealth fell in real terms over the period due to declines in house prices. The exception is households aged 25–34, among whom average property wealth increased as some moved into home ownership.

The rate of increase in real wealth over the four-year period 2006–08 to 2010–12 suggests that younger cohorts are on course to have lower real wealth on average at each age than earlier generations.

And finally…Flame Grilled.

Police were called to a village pub after a customer refused to pay for her steak – because it was overcooked. Nicola Kendal, 42, ordered her 16oz T-bone to be cooked ‘medium’ but when it arrived she was herd to say it was “very well done and tough”.

Kendal got the Rump and complained to staff and told them she wouldn’t be paying for the meal but, when the bill came, she had been charged £10 for the £18.95 dish which did not meat her expectations.

When she was bullish about refusing to pay, an argument started and secretary Kendal claims she was threatened with arrest if she did not pay up. Staff then moo’ved to press a panic button, hidden under the bar, and police arrived to sort out the dispute.

The pub was placed on lockdown and Kendal claims two police cars and a “riot van” arrived at the pub shortly after 9:30pm last Thursday, November 12. A spokesman for Avon and Somerset police confirmed a car and a “response van”’ attended the pub after staff complained customers were “acting aggressively”, but the officers in the larger vehicle stayed outside – a possible steak-out situation?

Weekly Round-up, 13th November, 2015.

Live long and prosper.

In 2012–14, life expectancy for newborn baby boys was highest in Kensington and Chelsea (83.3 years) and lowest in Blackpool (74.7 years). According to the latest figures from the Office of National Statistics, for newborn baby girls, life expectancy was highest in Chiltern (86.7 years) and lowest in Middlesbrough (79.8 years).

When this series first began (1991–93), East Dorset had the highest male and female life expectancy at birth. Two decades later, baby boys in Blackpool and girls in Middlesbrough can still expect lower life expectancy. In contrast, baby girls in Chiltern, and boys in Kensington and Chelsea, can expect to live 4 to 5 years longer.

The most rapid increases in life expectancy at birth over the last two decades were in London (7.0 years), the North East (6.0 years) and the North West (5.8 years), while the East (5.4 years) and South West (5.3 years) experienced the slowest increase. Consequently, regional differences in life expectancy at birth have reduced.

For men at age 65, life expectancy was highest in Kensington and Chelsea (21.6 years) and lowest in Manchester (15.9 years). For women at this age, life expectancy was highest in Camden (24.6 years) and again lowest in Manchester (18.8 years).

Taking Stock.

The value of the UK’s private housing stock in August 2015 is estimated at £5.1 trillion according to new research from the Halifax. This compares with £3.3 trillion in 2005; an increase of £1.8 trillion – or 53% – over the past decade.

The increase of £1.8 trillion since 2005 is equivalent to £76,316 per household in the owner-occupied and private rented sectors. The value of the UK private residential housing stock has grown at a faster rate than consumer prices, with the retail price index up by 35% in the past decade. In the past year, the value of private housing stock grew by £262 billion, mainly reflecting average house price growth of 4% in the year to August.

The value of mortgage debt has also grown, rising by 35% since 2005 from £942 billion to £1.28 trillion. Nonetheless, the value of the private housing stock has grown by over five times as much as outstanding mortgage debt; £1.8 trillion compared with £334 billion. As a result, housing equity has increased by £1.4 trillion (60%) over the decade from £2.4 trillion in 2005 to £3.8 trillion.

Regionally, there is a wide variation in the level of housing equity, with a higher balance in the south compared to northern areas. The highest is in London where housing equity is estimated at £798 billion, which is equivalent to £305,749 per household. The next largest is South East (£722 billion, £223,197 per household), and the East (£461 billion, £212,263 per household).

Outside southern England, the highest equity levels are in the North West (£283 billion £109,043 per household), West Midlands (£251 billion, £128,703 per household) and Scotland (£241 billion, £124,679 per household).

According to new research from retirement expert LV=, a quarter of generous grandparents (25%) who have already given away money to their grandchildren have taken the funds from their pension. A further one in six (16%) plan to use their pension for this reason once they reach retirement age.

Open-handed grandparents are willing to give away substantial amounts to their grandchildren, whether from their pensions, savings or wages, with the average grandparent having already spent £1,633. More than one in twenty (6%) have given gifts of more than £10,000.

The generosity shows no sign of stopping, with many grandparents (56%) planning to give away even more money in future. The average grandparent expects to give away £2,938 in the coming years, with charitable grandmas expecting to give away £173 more than granddads on average.

Pension savings are used to help with a wide range of things, from helping grandchildren get on the housing ladder (21%) and other high-ticket items like university fees (20%) or cars (17%). A similar number would help out with more day-to-day expenses like bills (21%) and hobbies (19%).

Grandparents often view the financial gifts they make as a ‘living inheritance’, with more than a third (37%) wanting to be around to see their grandchildren enjoy the money.

Ten by Mouth.

Oral cancer is now the tenth most common cancer in men according to new figures released by Cancer Research UK this week. This latest data shows around 7,300 people were diagnosed with oral cancer in the UK in 2012 and twice as many men than women diagnosed with the disease –around 4,900 males and 2,400 females.

It is the fifteenth most common cancer in women.

Over the last decade, cases of oral cancer have risen from around 4,500 back in 2002. The incidence rate of the disease has increased by a third over ten years, rising from 9 per 100,000 people in 2002 to 12 per 100,000 in 2012. There are around 2,300 people who die from oral cancer in the UK every year, around 1,500 men and around 770 women.

Oral cancers include cancer of the lips, tongue, mouth (gums and palate), tonsils and the middle part of the throat (oropharynx). Around nine out of 10 oral cancer cases in the UK are linked to major lifestyle and other risk factors. For example, an estimated 65 per cent of oral cancers in the UK are linked to tobacco smoking. The human papilloma virus (HPV), drinking alcohol and having a diet low in fruit and vegetables have also been linked to oral cancer.

Higher smoking rates in men are largely responsible for the greater number of cases in men and an estimated 70 per cent of oral and pharyngeal cancers in males in the UK are linked to tobacco smoking.

Cheque in the Attic.

Stanley Gibbons, an investment business has launched its first edition index. The index is designed to help guide investors and collectors looking to build a rare book portfolio as part of a long-term investment strategy.

For those people disappearing quickly into the loft or into dusty cupboards, they should be looking for first editions including Ian Fleming’s Casino Royale and Live and Let Die, which are valued at £24,000 and £8,000 respectively; J.R.R. Tolkien’s The Hobbit, valued at £65,000; while F. Scott Fitzgerald’s The Great Gatsby is the highest at £247,000. George Orwell’s Animal Farm has experienced significant value growth according to auction data, rising from £190 to £5,100.

Overall the index has shown 398% growth, an 8.8% annual growth for the last ten years.

It is important when finding a copy and thinking it’s time to buy that Lamborghini that the book needs to be investment grade, and have the ‘dust jacket’ still intact. According to the Investment Company there is a book in everyone, but probably not one worth a quarter of a million.

“November Inflation Report 2015″, a thriller by Mark Carney

So the publication is out just in time for Christmas – yes, it’s the November Inflation Report 2015 by the thriller writer Mark Carney.

Will he, wont he? The book addresses the moral dilemma of the leader of a group of people locked in Old Mansion House as they decide on the horror story that could affect the financial security of a nation. Haunted by the past, the group go through the gambit of emotions, as they decide whether to return to what many call normal or, as written in blocks of text, the ‘para’ ‘normal’. Can the team stay together as one wants out (or up) with the rest looking to stay calm as over their shoulders there’s emerging markets, consumer confidence and market reaction to control.

Looking at the report it has started to move away from stating specifics about when the base rate might move and onto the probability that the base rate might move. So there is a 60% chance that the base rate might move in 2016, or a 40% chance it might not, either way if it does or doesn’t the chart will be right. Of course when the rate does move, will there be anyone left in the industry who can remember where the field is on computer systems that say “insert base rate here”?

I remember in the early noughties that every Friday there were newspapers carrying rate change adverts as per the terms and conditions of savings accounts – I wonder how many have stated they will notify customers of a change through an advert in the News of the World? And of course the world has moved on – the first ipad was released on April 3rd, 2010 and at a time when the rate was sitting at a “temporary” half per cent. Have terms and conditions been changed to allow a base rate change to be passed on via a notification on a tablet where the graphs displayed in the Inflation Report look so colourful? I’m also sure there are many banks running training sessions on what will happen when the base rate changes with so few people in the industry that can say “I was there” when the last rise happened in July 2007. The impact of a base rate increase, well the share prices of printing companies may rise as new savings flyers are ordered, those with savings will feel that they are back in favour again and pricing teams will be able to get back onto their spreadsheets and remind themselves how to increase and not reduce the size of their numbers. Perhaps, then, the inflation report will start to make interesting reading.

Neil Hoare

Commercial Director

Weekly Round-up, 6th November, 2015.

House prices rising.

According to the Halifax, house prices in the latest three months (August-October) were 2.8% higher than in the preceding three months (May-July). This is an increase in the quarterly rate of change, September was 2.0%; a little above the 2.5% average over the first nine months of the year. Prices in the three months to October were 9.7% higher than in the same three months a year earlier. This was higher than September’s 8.6%, and the highest since August 2014 (9.7%).

House prices rose by 1.1% between September and October. This followed last month’s fall of 0.9%, continuing the volatility seen in recent months. The quarter on quarter change is a more reliable indicator of the underlying trend. According to the Bank, over two-thirds (68%) of Britons expect average property prices to be higher in 12 months’ time with just 5% expecting it to be lower.

One in Five.

More than one in five (23%) people with savings say they wouldn’t last longer than a couple of months if they were unable to work, yet less than one in twenty protects their income, according to new research. The study from Scottish Widows revealed that six in ten UK working adults with savings said they would last no longer than six months if they became unable to work, while fewer than one in ten (8%) said they would manage less than a month.

Despite a 7% increase over the past twelve months in the average amount people are saving, fewer than one in twenty (4%) have income protection cover. The research highlighted the existing gap between awareness and prioritisation for this type of insurance, with more than 80% of the 5,000 people polled saying they have heard of life insurance, income protection and critical illness cover, while the figures plummet to less than one in ten (8%) who have a critical illness policy, compared with almost half (48%) who have taken out home insurance.

This disparity raises concerns over UK households’ financial resilience, as one in seven have been affected by critical illness, and more than a third (37%) rely on two incomes. Out of those affected by critical illness, 42% said they had to make lifestyle changes in order to cope with the financial impact, while only one in twenty had a policy in place. Out of those questioned who said they had to reduce outgoings or build extra money for extra living expenses in the past 12 months, more than a quarter (27%) chose to cut down on gifts for family and friends, 27% said they avoided putting the heating on, while one in five have sold items online (e.g. Gumtree or ebay) to generate extra cash.

Back of the sofa.

New research from TSB has found the average person loses track of more than £150 a month, despite the vast majority (93%) claiming they know what their biggest expenses are.

The new research shows that more than three fifths (62%) of adults say they spend money they cannot account for without checking their bank account statement and almost a quarter (23%) are left scratching their heads come payday about where their money has gone. Women seem to be marginally better than their male counterparts with an unaccounted £137 come pay day, while men ‘lose’ nearer to £200 per month.

Unsurprisingly, food is usually the biggest culprit when it comes to ‘lost’ money with almost two fifths (39%) of respondents claiming they splash out on eating out (20%), takeaways (16%) and lunches (13%). And while losing a few pounds here and there might not seem like a big deal, the research also found that a third (34%) of people over 35 years old do not know how much interest their current account pays. This figure rose to almost half of UK adults aged 18-34 (47%).

Shop till you drop.

Consumers are much more likely to shop around for insurance than for a new bank account, mortgage, phone contract or energy supplier, a survey of over 2000 people by Populus has revealed.

Over three quarters (77%) of customers buying motor insurance shopped around, compared to two thirds (61%) buying a mobile phone contract. The survey shows that consumers are actively engaged when buying insurance products and recognise the value of shopping around. Those people surveyed who considered 5 or more alternative suppliers when buying an insurance product included 36% for motor insurance, 30% for home buildings or contents insurance and 28% for travel insurance.

This is much higher than buying other personal finance products. Those surveyed who looked at 5 or more alternative providers was only 9% when buying a new mobile phone contract, 12% for those looking for a current account and 16% when it comes to buy a mortgage or personal loan.

Words don’t come easy.

Thanks to some tortuous cliff-hangers, puzzling ‘who-done-its’ and another rainy British summer – ‘Binge-watch’ has been revealed as the 2015 Collins Word of the Year.

Talk of ‘binge-watching’ is up some 200% on 2014 with the days of missing an episode or having to wait a week for the next are now long gone. Luckily, ‘clean-eating’ also made an impact as one of the Collins Words of the Year, saving us all from full couch potato status. With guide books like ‘Eat.Nourish.Glow’ and ‘Clean Eating Alice’ showing us how to spiralize our veg and juice our fruits being lost on some people – we now have ‘dadbod’ – a term that was grabbed by men across the world to claim that their absence of abs made them attractive in a whole new field.

For those academics August was all about ‘Corbynomics’; the optimistic policies from Jeremy Corbyn that are supposedly to lead the UK to huge economic growth. The next print of Collins Dictionary is due in 2018, so they’ve got to keep up the ‘binge-watching’, continue spiralizing their veg and wait and see if ‘Corbynomics’ will, in fact, save the economy. Imagine the dadbod getting excited about that!