Dear Dave

 

Dear Dave

 

I can’t say I’m your biggest fan……or a fan at all to be honest. I’m pleased you got re-elected for the simple reason that the alternative looked scary. But there are some things that you have to address far closer to home than the ongoing shenanigans across the water in Euroland.

 

There are key changes to the tax, pensions and welfare regimes I would like my Prime Minister to make. I believe if you do, UK plc will be economically stronger, more equal, more motivated and more productive. That can’t be a bad thing surely?

 

1. Lower The State Pension Age For Manual Workers

A whole generation of manual workers face a bleak future as the state pension age increases. A later state pension age is fine if you are in a relatively easy, white-collar role……but manual workers face the potential of real hardship, working in physically demanding jobs until their 70s if the current trends continue. Is this really fair?

 

2. Introduce Fairer Wealth Taxes

Please reconsider the automatic exemption from capital gains tax on profits from the sale of main residences. Ridiculously high gains should be capped at an appropriate allowance. This addresses the current market impact of wealthy properties sold in London providing huge gains for their owners, who move to cheaper areas without paying a penny of tax on their substantial gains. It’s all about addressing inequality, division of wealth and addressing balances.

 

3. Amend Regulation So The Less Well-Off Have Easier Access To Advice

Much of the recent regulatory changes are welcome and overdue……delivering professionalism and stability. However, it has gone too far when it prices so many people out of basic advice. The Government need to sponsor advice for the poorest to help beat poverty for good……or simply allow a tax break so that all can get the advice they need. It’s in UK plc’s best interest after all!

 

4. Introduce A Living Wage By Statute

The minimum wage is no longer enough for those at the bottom in terms of living standards. It is time to introduce a living wage. We are not a third world country……we are one of the world’s powerhouses with an economy to envy. Let’s get the standard of living right for far more……that should be a pre-requisite in 2015 UK surely?

 

5. Invest In Lifelong Training & Development of the Workforce

In the UK, an investment in people will lead to more transferable skills and greater productivity in an economy that is currently fracturing between the wealthiest and the rest. Productivity is still declining, even as the economy recovers. This will take its toll on long-term growth……affecting us all.

 

Just a few very basic, yet very obvious thoughts Dave on where you might want to channel your energies rather than the obvious spin we will all hear leading up to the Budget on 8 July 2015.  

 

Kind regards

 

A Concerned UK Citizen  

Greek Tragedy

With the subject of Greece dominating most news mediums, I am getting asked ever more for my comments from the increasingly worried. With this in mind, here is some perspective that will hopefully help the nerves.

 

Background

Following the European debt crisis in 2011, some Eurozone countries were given bailout loans, including Greece from the European Central Bank (ECB) and the International Monetary Fund (IMF). Some of these loan repayments are due in June, July and August and Greece doesn’t have the financial means to meet these repayments.

 

As the repayments can’t be met, Greece has been forced to renegotiate different loan terms. The Greek Government wants a new loan on better terms to repay their existing loans (why wouldn’t they!). While the ECB and IMF are willing to consider this proposal they want Greece to commit to new spending cuts in order to reduce the risk of another problem like this in the future.

 

And that is the crux of the issue……the Greek Government is unwilling to implement public spending cuts (they were elected earlier this year on the back of promising this – the anti-austerity party!).

 

Options / Outcomes

There are 3 main potential options and outcomes:

1. Agree a last minute deal with the ECB / IMF and make public spending cuts in Greece (expect a civil war in Greece with this option)

 

2. No deal is reached and a short term solution is agreed to buy all parties more time so that they can deal with it ‘later’

 

3. Greece defaults on its loan repayments and is forced to leave membership of the Eurozone (Grexit).

 

What Is Likely?

In theory the EU could easily withstand a Greek exit as the country contributes less than 2% of the collective Eurozone economic output……in other words, Greece is quite a small country economically and so this loss would be minimal.

 

Financial markets though are likely to experience short term volatility as the market expectation was that a deal would be reached. A sudden Grexit does not appear to be seriously factored into the markets yet.

 

The bigger potential problem is ‘contagion’. The remaining European leaders will secretly want Greece to publicly experience problems if they leave the Eurozone. If this doesn’t happen and Greece faces no issues after leaving there is a risk that other indebted countries (such as Italy) could elect an anti-austerity Government, default on loan repayments, leave the EU and be better off. While the EU could withstand Greece leaving it is less able to withstand multiple countries leaving and defaulting on its loan repayments.

 

Of course Greece does not have to leave the Eurozone but it will almost certainly have to make concessions from its current negotiation stance. The next few days and weeks will be vital in determining the future face of Greece and the European Union.

 

So there you have it……a little clarity amongst the confusion.

'Selective' Austerity

Whether we like it or not, we are in times of austerity. The first round of cuts hit the Public Sector hard. But in comparison to what is still to come……that was nothing.

 

Which makes the news last week that MPs are to receive a pay rise from £67,060 to £74,000 all the more baffling, infuriating and downright greedy. But it’s not just the salary that they will pick up each year……they also have exceptional pensions (pretty much as good as it gets) linked to how much they earn. The more they earn……the better the pension……the more they cost taxpayers.

 

Whether austerity will work in the long term remains to be seen……but that is the side issue. The real issue is that it is a difficult sell to taxpayers to see Public Sector services cut yet at the same time see those that make those decisions, funded by us to represent us, receive a 10% pay rise.

 

Exactly which other Public Sector employees (1 in 4 people work for the Public Sector in the UK) do you think will receive a 10% pay rise this year?

 

Perhaps my biggest gripe is the total cost of MPs to taxpayers in the first place.

 

In the UK there are 650 MPs for a population of 64 million. This is equates to 98,461 people per MP.

 

In India there are 545 MPs for a population of 1.25 billion. This is equates to 2,300,000 people per MP.

 

Dare I suggest that we have too many MPs for the size of our tiny island? It is austerity after all.

                                

Just a thought Westminster.  

 

 

INTERESTing

It’s fair to say that if you are a saver, you have endured many frustrating head scratching years battling to find an interest rate worthy of the effort. Interest rates have been at historically low levels for many years and are set to continue well into 2016.

 

I get asked about where to find higher interest rates all the time and there is no magic formula. However, hopefully the following might just over a glimmer of light in an otherwise very dark room.

 

1. £300.00 Lump Sum:

 

Bag a return of £124.53! 

 

For those with a small lump sum, one of the best deals on the market is the HSBC Loyalty Cash ISA, which pays £10.00 a month for up to 12 months on top of the 1.5% interest rate. To open the account you need to be a customer of HSBC's Advance Current Account, which requires a monthly payment of at least £1,750.00 a month (which does put the account off limits for lower earners). However, if you put the minimum lump sum of £300.00 into the account, you'll get a return of £124.53 (£42%) after 12 months.

 

 

2. £300.00 Monthly Saving:

 

Returns of £93.00 (+ £100.00 if you're a new customer)

 

Savers who can put away up to £300.00 a month could consider opening a First Direct 1st Account to access its regular saver account, which has a top rate of 6% for 12 months. If you're a new customer you'll also get a bonus £100.00 for opening a 1st Account.

 

You can pay as little as £25.00 or as much as £300.00 a month. If you save the full amount of £3,600.00 over the year you'll get a total return of £93.00 in interest after tax - or £193.00 (5.4%) if you count the opening bonus .

 

However, you can't make any withdrawals during the 12 months or else the top interest rate is lost. So the account is only for those who know that they won't need to access their cash for a year.

 

 

3. £5,000.00 Lump Sum:

 

Get £162.37! 

 

If you have a savings pot of between £1,000.00 - £5,000.00, the Club Lloyds current account pays a rate of 4% on the balance. This amounts to £162.37 after tax (3.2%).  The account is fee-free if you pay in at least £1,500.00 a month.  

 

 

4. £20,000.00 Lump Sum:

 

Earn £473.32!

 

If you have a larger lump sum, the Santander 123 current account is a good option. It pays 3% on balances over £3,000.00, which would give £242.66 on a £10,000 balance after a year and after tax (2.4%). However, you'll need to factor in the current account fee of £2.00 a month to give a total of £230.66 (2.3%).

 

If you keep the full amount of £20,000 in the account for a year, you'll get a return of £485.32 (after tax) and £473.32 after deducting the account fee (2.4%).

 

It's worth noting that you can also earn cashback of up to three per cent on direct debits, which have not been factored into this equation.

 

 

So there you have it……hopefully a few gems that might just help in finding a little interest in an otherwise very dry savings market.