Underwhelming Election

With just over a week until we vote (again), the General Election feels like the most low key (and dare I suggest) underwhelming build up in memory.

In truth, the Manchester atrocities have (rightly) dominated media resources. But even before the truly awful terrorist attack, there was an almost apologetic and lethargic build up to, what should be, a significant event. Perhaps we are simply showing voter fatigue with the last General Election, Scotland Independence and then Brexit votes all feeling like they were just a few months ago. Maybe we are just uninspired by the political party leaders on offer. Or it could be that we see Brexit and the commencement of negotiations as the bigger issue this year. Or perhaps it is a mix of all of the above.

Regardless, here is an overview of the key policies of the 3 main parties manifesto:

Conservatives:

• Real increases in NHS spending reaching £8 billion extra per year by 2022 / 2023
• Scrapping the triple-lock on the state pension after 2020 (replacing it with a double-lock)
• Means test winter fuel payments - taking away £300 from wealthier pensioners
• Raising cost of care threshold from £23,000 to £100,000 - but include value of home in calculation of assets for home care as well as residential care
• Scrap free school lunches for infants in England but offer free breakfasts across the primary years
• Pump an extra £4 billion into schools by 2022
• Net migration cut to below 100,000
• Increase the amount levied on firms employing non-EU migrant workers

Labour:

• Scrap student tuition fees
• Nationalisation of England's nine water companies
• Re-introduce the 50p rate of tax on the highest earners (above £123,000)
• Income tax rate 45p on £80,000 and above
• More free childcare, expanding free provisions for two, three and four year olds
• Guarantee triple lock for pensioner incomes
• End to zero hours contracts
• Hire 10,000 new police officers, 3,000 new firefighters
• Moves to charge companies a levy on salaries above £330,000
• Deliver rail electrification

Liberal Democrats:

• Second EU referendum on Brexit deal
• 1p in the pound on income tax to raise £6 billion for NHS and social care services
• End the 1% public sector pay cap
• Invest nearly £7 billion extra in education
• Ban the sale of diesel cars and small vans in the UK by 2025
• Scrap the planned expansion of grammar schools
• End imprisonment for possession of illegal drugs for personal use
• Reinstate university maintenance grants for the poorest students
• Job-sharing arrangements for MPs
• Increase maximum sentence for animal cruelty from six months to five years and a ban on caged hens
• Extend free childcare to all 2 year olds and introduce an additional month's paid paternity leave for fathers
• Reverse cuts to work allowances in universal credit and housing benefit for 18-21 year olds
• Levy up to 200% council tax on second homes
• £300 million for community policing in England and Wales

So there you have it……plenty to ponder and plenty to consider. Perhaps the bigger and wider issue that will have the biggest impact to day-to-day life is which party you want in power to negotiate a successful exit from the EU……Brexit negotiations will start within 20 days of the General Election.

Over to you!

 

Happy voting.

 

Taxpayer Tab Settled

 

Lloyds Banking Group has finally settled its tab with the taxpayer. The Government has confirmed its remaining shares in Lloyds Banking Group have been sold, 8 years after pumping in £20 billion to save it.

 

At the height of the financial crisis taxpayers owned 43% of Lloyds. Today, the share sales represent a profit of around £500 million for the Government. However, don’t expect the Government to be making a song and dance about the Lloyds sale……it is far too emotive a subject that will divide opinion. Especially leading up to a General Election!

 

The louder voice being bellowed currently in the media is one of wasted opportunity……what else and how else the UK could have benefited from £20 billion. What growth / jobs / profit / services / etc. could have been developed with that money. It’s amazing how good ‘hindsight commentators’ think they are!

 

However, we have got our money back and made a profit……but this was never an investment - it was the rescue of a bank that was drowning. And that is the point that the hindsight commentators are missing……it wasn’t an investment. Interestingly, nobody seems able to give a figure on the financial blackhole that would have been created if we hadn’t made the £20 billion rescue.

 

A return of £500 million has not excited many……but it looks a long way better than the substantial losses we could make by selling the taxpayer’s 73% stake in Royal Bank of Scotland (which is still losing money all these years later).

 

You win some, you lose some. Bag the £500 million and move on.

Debt Deliberations

 

Debt is a bit of a tricky one in the UK.

 

On the one hand……our economy is very reliant on consumer spending and the Government would ideally like us to spend our money and also money that we don’t have as well.

 

On the other hand……spend too much of what we don’t have and the whole system comes tumbling down and has a negative impact on the economy.

 

It’s about getting the balance right……and we are reliant on the Banking Sector to get it right by making the right judgement on who gets credit and how cheap it is. And there lies the problem……we are having to trust the Banking Sector.

 

Fear not though as we have the Financial Conduct Authority (FCA) keeping a close eye on things……which makes the regulator’s comments all the more concerning currently. FCA chief executive Andrew Bailey said “there has been a big increase in consumer borrowing, such as loans, overdrafts, credit card debt and car finance. Personal debt levels are high enough to merit the whole sector coming under the microscope.”

 

Clearly, the Government will be happy that cheap and very accessible debt from the Banking Sector is fuelling economic growth. Economic prosperity is always a nice story to tell for a political party leading up to a General Election.

 

Forget the political spin though……at what point do we reach the tipping point again?

 

Can we trust the Banking Sector to identify it?

 

Can we trust the regulator to identify it when the Banking Sector doesn’t?

 

Interesting times.

Pausing Property

 

A couple of interesting reports have been issued recently that give plenty to ponder on the property front.

 

Firstly, Halifax (the UK’s largest lender) has issued its quarterly housing report and has summarised that prices fell by 0.2%. This is the first quarterly fall since November 2012.

 

Secondly, Legal & General’s annual survey has revealed that the ‘Bank of Mum & Dad’ is the tenth biggest UK lender as buyers increasingly rely on financial support from their parents. Parents will lend around £6.5 billion in 2017 and be involved in 26% of all UK property transactions (up from £5 billion a year ago).

 

Property is a big deal in the UK and politicians are only too aware of the emotional relationship and reactions to housing……which in turn impact the economy greatly. When prices are rising, consumer spending and borrowing increases due to a perceived increase in financial confidence (and vice versa).

 

However, with house prices stalling, it suggests that housing valuations may be peaking in the short term and could have a detrimental impact on the UK economy. This could be driven by general uncertainty regarding the General Election and (of course) Brexit but the biggest issue is that the average first-time buyer requires a deposit of around £26,000.

 

A deposit of that size is always going to have a detrimental impact on buyer demand and there is only so far the ‘Bank of Mum & Dad’ will stretch.

 

Housing is a big topic and one that so many can relate to emotionally. It will be interesting to see what stance and pre-election giveaways are promised by the different political parties in the run up to polling!

Lowballing - Part III

I wrote about this in 2013 and then again in 2014……yet there are new developments.

 

March 2013: Lowballing  http://stevesmithlive.blogspot.co.uk/2013/03/lowballing.html

 

March 2014: Lowballing Low Point  http://stevesmithlive.blogspot.co.uk/2014/03/lowballing-low-point.html

 

Lowballing was essentially another banking scandal involving banks fraudulently (shock!) manipulating the interbank Libor lending rate for their own financial gain. This wasn’t policed properly by the regulator, an opportunity was found by the banks to make money illegally and (quelle surprise) money was made. To date, UK banks have been fined more than £6 billion for the fraudulent manipulation and custodial sentences have been applied to three bank officials.

 

3 years on and there is a further twist…… the Bank of England is now implicated.

 

Evidence now exists that the Bank of England repeatedly pressured commercial banks during the financial crisis to push their Libor rates down. Or to put that another way, the Government agency put pressure on banks to artificially rig Libor. And the Bank of England’s response…… “Libor and other global benchmarks were not regulated in the UK or elsewhere during the period in question.”

 

I’m sick of it all. Banks acting fraudulently for their own gain……encouraged / pressurised by the Bank of England to do so……and all intertwined with the UK Government.

 

Scarily, it took a TV programme to unearth this as Government inquests have failed to find this. What a mess.

 

The banking sector, Bank of England and Government blame anything but themselves. Take accountability for your actions. You can take all the credit in the world for the things you do right as long as you also take responsibility for the things you do wrong. It must be a balanced equation. You don’t get it one way and not the other. You get to take credit when you also take accountability.

 

Time for accountability please.