Wednesday, 8 October 2008

Another bad day for Taxpayers

The 7 bedroom Ealing house which costs taxpayers £12,500 a month
Photo Copyright: News Group Newspapers

Today British taxpayers bailed out the banks to the tune of £50 billion. Inconceivable. Taxpayers also stumped up £4bn to compensate the savers of the Icelandic bank Icesave.

Even closer to my home BBC news reports that an Afghan mother and her 7 children has been housed at taxpayers expense in a 7 bedroom house in Ealing. The council has agreed a rent of £12,500 a month with the private landlord. Other homes in the upmarket street command rents less than half this. Ealing Council's website boasts its immediate priority is 'Value for Money'. What on earth has gone wrong - is it open season on taxpayer's cash?

At 8.45 tonight I emailed the Leader of Ealing Council Jason Stacey to express my dismay. Surprisingly and impressively he emailed back within the hour. He agrees this is 'not an acceptable situation' and forwards a copy of the Council's statement, issued after the Sun Newspaper broke the story.

It appears that changes in legislation mean that private landlords can now discover how much rent the Department of Work and Pensions will re-imburse and charge accordingly. With no other 7 bed properties available Ealing Council had no alternative but to pay the landlord's demand - £12,500 a month - or as the Sun puts it £170,000 a year in benefits for this one family. As Jason Stacey sums up 'the system in place does not reflect well on the Council, The Government and of course the taxpayer.'

It's been another bad day for taxpayers.

Tuesday, 7 October 2008

The Banking Crisis Gets Real

Icesave - the Internet only bank closes its virtual doors.
Will UK savers get their money back?

UPDATE 8.20am 8th October - The UK Chancellor Alistair Darling, speaking on BBC R4's Today programme, has just reassured UK savers they will get their money back - not from Iceland as they don't have the money, but from the UK.

I've been watching the financial crisis with increasing disbelief. Only this morning I told my partner that recent developments were so dramatic that perhaps now was the time to do something rather than simply watch. I'm working with some people who, like many, still think the meltdown is about city types, not you and me. Yesterday I tried to explain how it mattered.

That was then. Late this morning I noticed that Icesave had closed its Internet site down, so UK savers, of whom there are 300,000 can't get their cash. The Icelandic parent bank has gone into government receivership. One of my colleagues looked up from his work, his face pale. 'You're kidding' he said. His ISA is with Icesave. He'd previously researched how his savings were protected, but now he felt pretty insecure. Finally, for one of the most sceptical people among our team watching close by, the banking meltdown took on a human dimension.

Martin Lewis, the website moneysavingexpert has regularly tipped Icesave as a top interest payer. I was looking at his website this morning. Tonight C4's Jon Snow grilled him on his 'irresponsible' role. Unfair, but with 15,000 worried comments on his forum many of his readers must feel mugged. Elsewhere Martin makes the point that many of these accounts were ISAs. ISAs were set up by the Government to encourage people to save. The Government cannot afford to let them lose that money - whether the bank is in Iceland or the UK.

UK customers of Northern Rock and Bradford & Bingley had their savings safeguarded. This is the first time the banking guarantees have kicked in. If they don't work we'll all start wondering where to put our money. No government can afford a run on the banks - which is what happens when we lose faith in the banks and start stashing our cash under the mattress.

Monday, 6 October 2008

Tesco - Britain's Biggest Discounter

Tesco's latest shot at Asda - Full page Sun advert on Friday

Supermarkets are increasingly desperate to show their price-cutting credentials. Tesco has re-styled itself 'Britain's Biggest Discounter' in a swipe at the likes of Aldi and Lidl and I've noticed its begun to dedicate some of its instore shelf-edge price comparisons to showing how it matches or beats prices at its down-market rivals.

But last Friday's double page spread in the Sun newspaper defies any credit crunch logic. Attempting to prove Tesco is cheaper than Asda (and you get Clubcard points too) it reproduces two till receipts showing the weekly shop. Tesco's trolley of 62 items at £101.31 is £1.78 cheaper than the identical items at Asda.

But Tesco must be off their trolley if this is their idea of a recession sized shop. The imagined shopper has spent more than 10% of the weekly food budget on hair dye, one for him, one for her. I suppose it must be the worrying times...

Just for Men hair colourant (£5.47)
Nice n' easy extra light beige blonde 97 (£4.67)

Tesco beats Asda on 12 of its self-selected comparisons. The
biggest single difference is 35p for a bottle of Lea & Perrins Worcestershire sauce, followed by 26p for a Soft and Gentle roll-on deodorant, right down to a 1p difference on Wash & Go shampoo (they love hair care at Tesco).

Of course Tesco aren't really expecting us to digest the entire list of curious items (8 litres of Coca Cola £4.77 - almost 5% of the weekly shop) they just
want us to go away with the impression shopping that with them is cheaper than at Asda, oh and you get Clubcard points too - one pound and a penny worth in future savings. Many of these comparison ads prompt complaints from rivals to the Advertising Standards Authority who investigate and tell the supermarkets not to run them in that form again, by then the ad is long gone.

As the very small print at the bottom of P2 of the double page ad discloses Tesco only issues Clubcard Vouchers once the quarterly reward equals £1.50. So this single trip to Britain's Biggest Discounter would not produce the promised £1.01 saving unless followed by further spend. There you are Asda, perhaps some grounds for complaint...

Apologies for the recent break in posts following my US trip. Be assured my Adventures in Consumerland have continued. Shortly I'll post some surprising news about an extended warranty complaint...