Select committee claims ministers are failing millions of vulnerable families and demands urgent action on fuel poverty

The government was today urged to offer more help to the millions of families in fuel poverty due to rising energy prices.

The Environment, Food and Rural Affairs select committee said ministers had failed to meet statutory obligations to end fuel poverty and called on them to set up an action plan to help people struggling with energy bills as a matter of urgency.

It warned the resources available for tackling fuel poverty were “inadequate and getting worse”. Anyone spending at least 10% of their income on heating and lighting their home is deemed to be living in fuel poverty. In a series of recommendations, the select committee called for the winter fuel payment to be no longer given to people paying higher-rate tax. Instead it wants the money to fund energy efficiency programmes aimed at helping the fuel poor and vulnerable households.

It also called on the government to consolidate its range of energy efficiency programmes into one comprehensive scheme to upgrade all homes in England, with the improvements delivered by local authorities.

Committee chairman Michael Jack, said: “We need action and clarity – not further consultation – to tackle the three elements that drive fuel poverty: prices, income and energy efficiency levels.

“The government must act swiftly to bring forward practical measures before next winter, using technologies that are already well understood, to help the millions of households that remain in fuel poverty.”

The committee said the Warm Front programme, the government’s main scheme to help vulnerable households cut their energy bills, should have its budget increased and that it should be extended to include all hard-to-treat properties.

It recommended a central budget be created into which energy companies pay their carbon emissions reduction target contributions, so the cash could be pooled with money from other programmes to fund home upgrades.

Energy regulator Ofgem should be ordered to ensure energy companies tell customers about social tariffs and who is eligible for them, to help increase competition for certain customers, such as those who use pre-payment meters, it said.

Jonathan Stearn, energy expert for Consumer Focus, said it was “outrageous” that there were still more than 5 million vulnerable households struggling to afford to heat and power their homes.

He added: “The government’s energy efficiency schemes are simply not up to scratch. Immediate investment is needed in a radical and co-ordinated action plan if we are to lift millions of the poorest pensioners, families and disabled people out of fuel poverty and cut carbon emissions.”

Michelle Mitchell, charity director for Age Concern and Help the Aged, said: “The report sounds a loud wake-up call for the government, whose strategy to tackle fuel poverty is miles away from reaching its targets.

“Ministers should immediately set out to implement the committee’s recommendations, reviewing the Warm Front Scheme and producing a new ‘road map’ to bring home a more ambitious energy efficiency plan.

“Focusing the winter fuel payment on fuel-poor households could give an edge to the government’s strategy to tackle fuel poverty, as long as the system required to implement it is simple and workable.”

Campaigners say the number of householders in fuel poverty has been one of Labour’s greatest failures. In March last year, its own advisers, the Fuel Poverty Advisory Group, said the government appeared to have given up trying to hit its legally binding target to reduce fuel poverty. The group criticised ministers for cutting the grants programme aimed at those in fuel poverty by a quarter during the comprehensive spending review.

This, it said, was despite the Treasury receiving significantly higher VAT receipts on the back of gas and electricity prices which have doubled in recent years.

]]> http://www.wisconsintroopshome.org/government-faces-heat-on-fuel-poverty/feed 0 http://www.wisconsintroopshome.org/mortgage-protection-could-become-mis-selling-scandal http://www.wisconsintroopshome.org/mortgage-protection-could-become-mis-selling-scandal#comments Tue, 09 Jun 2009 18:52:51 +0000 admin http://www.wisconsintroopshome.org/mortgage-protection-could-become-mis-selling-scandal Source: http://www.guardian.co.uk/business/2009/jun/09/mortgage-insurance-warning

Don’t cut protection in face of rising unemployment, regulator tells insurers

City watchdog Lord Turner attacked insurers today for threatening to water down unemployment protection on mortgages, warning he would investigate any attempt to push through price rises due to the recession.

The chairman of the Financial Services Authority warned the industry it risked repeating the mistakes of past scandals such as the mis-selling of endowment mortgages.

Concern has grown that insurers plan to increase prices for customers with mortgage payment protection insurance and restrict the scope of policies to reduce payout costs, ahead of an expected surge in unemployment in the second half of the year.

He told an audience of insurance executives at a conference organised by the Association of British Insurers that the industry would provoke an angry response from customers, which the regulator would need to take seriously.

“Whilst it is natural for the industry to respond to changes in risk, this raises issues with both unfair contract terms, disclosure and our ‘treating customers fairly’ principles,” he said.

“How many consumers would have taken up this cover if they had known that at the very time they needed the protection the most, the price of it could significantly increase or the amount of cover decrease?

“This is an area where insurers must expect us to intervene to address poor consumer outcomes. And more than that they must think strategically about the impact of their actions on the sector’s reputation.”

The warning is understood to follow moves by the Post Office to raise prices on its mortgage protection policies that cover payments during periods of unemployment or after accidents and during long-term sickness. In April the Post Office gave 30 days notice that it also planned to reduce the level of cover from a maximum £2,500 a month to £1,500. Claimants will also have to wait for 90 days after stopping work before they receive any money. The delay was previously 30 days.

Turner said he was aware the number of people with the insurance had fallen in recent years. In 2005 there were 2.5m policies covering just over a fifth of the 11.6m mortgages in the UK. By 2007 MPPI policies had fallen to 1.2m and 700,000 in 2008.

He said: “While mortgage payment protection insurance has not previously been a major focus of our concerns, it may become one in an economic downturn. As the likelihood of unemployment-related claims increases, some insurers are responding by increasing premiums or reducing cover for existing policyholders.”

The FSA and the Competition Commission have spent the last four years investigating accusations of profiteering by lenders that sell payment protection insurance on loans and credit cards. Last year the commission ruled that selling practices were so bad that it banned the sale of the most profitable product until at least a fortnight after the purchase of a credit card or loan. The industry appealed, but was unsuccessful.

Turner said he would not hesitate to repeat the enforcement measures on insurers that contravened rules on the sale of mortgage payment protection.

He said: “The recent problems may have been primarily in the banking industry and that is where the most significant changes are needed, but in an era of heightened public expectations that the FSA will identify and prevent major problems from recurring, we need to reinforce our capability across all high impact firms.

“And we need to respond to people’s expectations that we will be more forceful in pursuing enforcement against reckless or abusive practices which cause customers harm.

“We certainly need to ensure that our responses are proportionate and are focused on what matters: that they are outcome focused. And we will also continue to look for market solutions where they are available, such as in addressing contract certainty and commission disclosure.”

]]> http://www.wisconsintroopshome.org/mortgage-protection-could-become-mis-selling-scandal/feed 0 http://www.wisconsintroopshome.org/lloyds-to-close-cg-branches-2 http://www.wisconsintroopshome.org/lloyds-to-close-cg-branches-2#comments Tue, 09 Jun 2009 13:08:00 +0000 admin http://www.wisconsintroopshome.org/lloyds-to-close-cg-branches-2 Source: http://www.guardian.co.uk/business/2009/jun/09/lloyds-cheltenham-gloucester-close

• The latest round of cuts will see the demise of 1,600 jobs
• Unite condemns the move as ‘nothing short of disgraceful’

The entire Cheltenham & Gloucester branch network is to close by November, as Lloyds Banking Group cuts another 1,660 jobs after the merger with HBOS.

The bank, which yesterday began repaying its multibillion-pound loan from the taxpayer, confirmed this lunchtime that all 164 C&G branches will shut within five months. This will mean about 1,000 employees will lose their jobs.

Lloyds is also cutting 265 positions across its personal loans division, which will lead to job losses in Chester and Cardiff, with other jobs also going across its retail, personal finance and mortgage sales operations.

The Unite union attacked the move as “nothing short of disgraceful”. It will mean the end of the C&G name on the high street after more than 150 years, but the brand will continue to exist on mortgages sold through brokers.

News of the closures broke this morning, sending Lloyds scrambling to inform C&G staff of the plan and sparking fierce debate online.

One branch worker said that C&G customers should not panic, as “branches will not close for months”. From November, they will have to use one of Lloyds’ 1,800 remaining branches.

Lloyds said that compulsory redundancy would be “a last resort” if it could not find new roles for those affected.

“It is always difficult to make decisions about our business that affect our colleagues,” said Helen Weir, Lloyds’ group executive director for retail banking. “We will work through these changes carefully and sensitively and continue to consult closely with our unions throughout the process.

“Cheltenham & Gloucester is a very strong brand. The strategic focus for C&G from now on will be to further strengthen its intermediary and direct savings businesses. Another major priority for us is to ensure that we manage the closure of the C&G branch network so that it causes as little disruption as possible to our customers. We have a number of measures in place to achieve this.”

Lloyds has already eliminated about 3,000 positions since finalising the takeover of HBOS. Last week it announced 510 job losses across its retail banking arm. It has also decided to drop the Clerical Medical name, which was part of HBOS, with the loss of 300 jobs.

Lloyds employs 140,000 people, and City experts believe 25,000 jobs could eventually go once HBOS is fully integrated.

Unite had already called on Lloyds to end the uncertainty hanging over its workers. Its general secretary, Derek Simpson, warned this morning that closing the C&G network would “rip the heart out of hundreds of local communities up and down the country”.

“Hundreds of staff who have worked hard for years to make the C&G brand a success will view this news as a kick in the teeth,” he said. “UK taxpayers have not poured billions of pounds into this organisation just to see it sack thousands of hard-working people.

“Front-line staff in banks across the country are blameless for the mistakes of management which have brought the important finance industry to the point of collapse. Yet these workers now face an uncertain future as Lloyds abandons C&G’s high street branches. This is truly a dark day for the financial services sector in this country.”

C&G was founded in 1850 in Cheltenham, and was acquired by Lloyds in 1995.

Industry experts had predicted several months ago that Lloyds might drop C&G in favour of Halifax, which is the UK’s biggest mortgage lender and is perceived to be a stronger brand.

Alex Potter, banking analyst at Collins Stewart, believes the closure of the C&G branch network could be an attempt to prevent the European Commission blocking the merger. Shares in Lloyds plunged by a third on 20 May after the bank warned shareholders that it may be forced to slim down its business to win state aid approval from the commission.

“There are still antitrust concerns about the Lloyds-HBOS merger at commission level,” Potter told BBC Radio 4’s Today programme. “Perhaps this is a sop to the regulators.”

Lloyds launched its takeover of HBOS last autumn after the government said it would waive competition rules that would otherwise have made the deal impossible.

Cuts at RBS

Unite also said today that 500 staff at RBS have been told that they are at risk of redundancy.

“The closure of a cash centre in Glasgow impacting around 140 staff and 360 job losses throughout other UK locations will devastate staff. Unite is opposed to compulsory job losses and through continued consultation with the bank will seek to find suitable alternative employment for workers,” said Unite national officer Rob McGregor.

These cutbacks are part of the wide-ranging cutbacks announced in April by RBS, which plans to cut its UK workforce by 4,500.

]]> http://www.wisconsintroopshome.org/lloyds-to-close-cg-branches-2/feed 0 http://www.wisconsintroopshome.org/house-prices-buoyed-by-property-shortage-2 http://www.wisconsintroopshome.org/house-prices-buoyed-by-property-shortage-2#comments Tue, 09 Jun 2009 11:42:30 +0000 admin http://www.wisconsintroopshome.org/house-prices-buoyed-by-property-shortage-2 Source: http://www.guardian.co.uk/money/2009/jun/09/rics-house-prices

A combination of rising buyer inquiries and a shortage of homes for sale is supporting house prices, Rics says

Increasing interest from new buyers plus a shortage of properties for sale is helping to stabilise house prices, according to the latest housing market survey from the Royal Institution of Chartered Surveyors (Rics).

Rics’s members said buyer inquiries increased for the seventh month in a row in May, and at the fastest rate since 1999. Estate agents also saw a rise in sales, albeit from very depressed levels. The average number of properties sold over the past three months rose to 11.8, up from 10.6. Fewer surveyors also reported a fall in house prices.

At the same time new instructions have continued to fall: the average number of properties on estate agents’ books has dropped in the past month to 58.4 from 69.4, and by more than a third over the past year.

Rics said the lack of new supply coupled with the increase in activity is providing some support for house prices, but warned there could be further price falls to come. Spokesman Ian Perry said: “The housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising.

“However, it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. Moreover, with the economic backdrop still quite uncertain, unemployment set to continue increasing sharply and finance for first-time buyers still in short supply, there are a number of significant obstacles for the market to overcome over the coming months.”

The findings from Rics were supported by house price figures published today by the government’s communities department , which showed prices rose by 1.1% month-on-month in April, after dropping 1.3% in March. This means the year-on-year fall in house prices narrowed to 13% in April from 13.6% in March.

In London, the improving market is being driven by first-time buyers who have built up equity over the past two years, or who have been lent deposits by their parents, taking advantage of lower prices, according to estate agent Ludlow Thompson.

Director, Stephen Ludlow, said: “Sentiment has changed considerably – at the end of last year nobody could see a floor for prices. Whilst prices may not have reached the very bottom buyers are no longer worried that the market is still in meltdown mode.

“The pickup in demand in May was so sudden that it has been the lack of supply of properties actually on the market that caused the bounce in prices. We’ve had to move lettings staff on to sales to deal with the surge in activity.”

However, Howard Archer, chief UK and European economist for IHS Global Insight, said he remained sceptical that house prices had bottomed out.

“It is not uncommon for there to be months of rising prices when house prices are still trending down. Most recently, the Halifax reported that house prices rose by 2% month-on-month in January but then fell sharply during February-April before rising again in May.

“Housing market activity is still very low by past norms and at a level consistent with falling house prices, and despite markedly rising buyer interest we believe that the pickup in actual house purchases is likely to be gradual and fitful for some time to come.”

]]> http://www.wisconsintroopshome.org/house-prices-buoyed-by-property-shortage-2/feed 0 http://www.wisconsintroopshome.org/homebuyer-interest-up-while-retail-sales-drop http://www.wisconsintroopshome.org/homebuyer-interest-up-while-retail-sales-drop#comments Mon, 08 Jun 2009 23:05:12 +0000 admin http://www.wisconsintroopshome.org/homebuyer-interest-up-while-retail-sales-drop Source: http://www.guardian.co.uk/business/2009/jun/09/retail-sector-june2009-economy

Shop sales fell back last month in spite of growing optimism that the recession may be coming to an end, with retailers reporting that market conditions remain “extremely challenging,” the British Retail Consortium reports today.

The BRC’s latest monthly report shows that retail sales on a like-for-like basis – which excludes the effect of changes in floor space – fell 0.8% in May compared to May 2008, which was a strong month.

“Negative results show spring has been extremely difficult for most non-food retailers. The turnaround in sales of big-ticket items such as furniture and large electricals, which would indicate real change in the mood of customers, still eludes us,” said BRC director-general Stephen Robertson.

Helen Dickinson, head of retail at the report’s sponsors KPMG, said: “These figures may look disappointing after last month’s positive results were flattered by the timing of Easter, but extremely challenging market conditions – particularly for the non-food sectors – continue.

“We might have expected better figures as, while there are consumers struggling financially due to actual, or the prospect of, job losses, there are also those with greater disposable income due to lower mortgage payments, easing inflation and lower fuel costs. It remains to be seen when those who have cash to spare will feel confident to start spending again.”

The survey showed that clothing and footwear fell below last May’s strong sales while big-ticket homewares and furniture sales remained “difficult”.

Further evidence that the economy remains under pressure came from a survey by recruitment specialists Manpower showing that employers’ hiring plans have fallen to their lowest in 17 years, although the pace of decline has slowed.

Its quarterly survey of 2,100 firms show that the majority expect to maintain their staffing levels in the third quarter of the year, rather than reduce them further or increase them. This would explain why young people leaving school or university have found it so difficult to get a job.

The Royal Institution of Chartered Surveyors reports today that new house buyer interest rose for the seventh consecutive month in May. Sales also rose, albeit from very depressed levels, indicating that the increase in footfall of potential buyers is steadily improving activity in the housing market, RICS said.

The net balance of surveyors reporting a fall in house prices rose from a negative balance of 59% to 44%, the best result since November 2007. The survey still suggests prices are falling, though, in contrast to reports of rises from the Nationwide and Halifax for last month.

RICS spokesman Ian Perry said: “On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising. However it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. With the economic backdrop still quite uncertain, unemployment is set to continue increasing sharply and finance for first time buyers is still in short supply, there are a number of significant obstacles for the market to overcome.”

]]> http://www.wisconsintroopshome.org/homebuyer-interest-up-while-retail-sales-drop/feed 0 http://www.wisconsintroopshome.org/ikea-destroyed-my-credit-cards http://www.wisconsintroopshome.org/ikea-destroyed-my-credit-cards#comments Fri, 05 Jun 2009 22:50:13 +0000 admin http://www.wisconsintroopshome.org/ikea-destroyed-my-credit-cards Source: http://www.guardian.co.uk/money/2009/jun/05/ikea-credit-cards-policy

I lost my cards and arranged to collect them. So why did Ikea destroy them, costing me a fortune?

In early April I left my wallet, containing all my cards, in Ikea in Coventry. I?rang the store to see if the cards had been handed in. Thankfully they had, and I was told that I could come and collect them. I gave a date when I would next be in Coventry and Ikea told me where to collect it. But when I arrived at the appointed time, Ikea told me all my cards had been destroyed as I had not collected them within 24 hours. This was apparently “company policy”.

Ikea’s destruction of my property has cost me a fortune. Can you get it to make amends for the loss? CD, Oxford

Ikea’s destruction policy would be understandable if, after a week or so in its office safe, the wallet was unclaimed. But here, you made it clear when you could return to Coventry. Ikea’s local manager started to talk to Capital Letters­ but went silent when he realised I was not your partner. Its press ­office has since failed to communicate.

Besides the inconvenience of replacing bank and loyalty cards, you also lost a valuable train ticket and your driving licence. And when you returned, Ikea refused to refund two duvets you had bought because you no longer had the card.

Its £50 voucher offer is no help. Perhaps publication of this complaint will help Ikea’s head office remember that its obligations to customers should come ahead of whatever its internal rule book might say.

We welcome letters but regret we cannot answer individually. Email: capital.letters@guardian.co.uk Please include a daytime phone number

Overpay into your flexible account and spend the ‘available funds’ on anything you want – the problem is, all that saved money can be wiped out

Abbey was this week accused of “unfairly” slashing the value of homes, and using this as an excuse to “grab” thousands of pounds that its mortgage customers had stashed away for the future.

In the last few weeks, many Abbey flexible­ mortgage holders have received a bombshell letter telling them that ­because of falling house prices, the bank has reduced the estimated value of their property.

That has a dramatic impact on the way people use the mortgage. In some cases it means thousands of pounds paid into their account – which they were perhaps hoping to dip into at a later date – has suddenly been whipped away. That means they are unable to access this money, which they might have been planning to use for a holiday or new car. It is thought as many as 8,000 people have received letters telling them that some, or all, of this cash has been removed. Justin Cuckow is one; he claims the Spanish-owned bank has behaved “outrageously”.

By making a number of overpayments, he had built up £10,300 of what Abbey calls “available funds”, that he could use in future to take a payment holiday or pay less each month, or to spend on whatever he wanted.

He thought he was behaving prudently­ by shovelling in the extra cash. So he was shocked to receive a letter a few days ago telling him that, as part of a review of all Abbey’s flexible mortgage accounts, the bank had reduced the estimated value of his flat from £143,000 to £130,000. That automatically reduced his credit limit by a similar amount, “which reduces your available funds to £0.00″. The letter then rubbed salt in the wound: “Please note that if house prices increase in the future, we will not automatically increase your credit limit.”

In other words, the £10,300 that Cuckow had carefully built up has been removed at a stroke.

Abbey has around 200,000 flexible mortgage customers. These deals give you the freedom to overpay when you want to, then underpay or take a break from your monthly payments if your circumstances change. But with Northern Rock also tightening up the rules on its flexible mortgages, some of these deals are looking a lot less user-friendly now that the economic backdrop isn’t so rosy. Ray Boulger at broker John Charcol says if borrowers don’t have confidence that they can use these home loans in the way they expect, “it destroys the whole concept of having that type of mortgage”.

It doesn’t help that Abbey’s flexible loan is a pretty complex beast. It is made up of three parts – the mortgage loan, a savings pot, and your “available funds”. The available funds are the difference between what you’ve borrowed (ie, the loan) and the maximum you are allowed to borrow (your credit limit). Abbey describes this facility as like an overdraft; you can “draw down” funds up to the maximum as needed. If you overpay, you can put this money into your savings pot, which is offset against the loan, or do what Cuckow did – pay it off your mortgage,­ thereby increasing the available­ funds.

He was surprised to discover the new figure for what his one-bedroom flat is allegedly worth was an automated valuation­ based on Halifax’s house price index­, which Abbey said, “provides us with an updated estimate each quarter of the purchase price of properties in your region”.

After Cuckow complained, Abbey dispatched a surveyor to carry out a formal valuation, which put the value at £145,000 – some £15,000 more than the original valuation (and £2,000 more than he paid for it), and suggests the bank was wrong to swipe all his available funds.

“The basis they use for valuing properties is seriously flawed – it’s massively undervaluing,” says Cuckow, who lives in Horsham, West Sussex, and works in emergency planning for a local authority. He claims Abbey’s aim seems to be “to take the risk off their books by grabbing any available funds,” adding: “This mortgage has never been more affordable – it’s a tracker at 0.49% above base rate – and I’ve never missed a repayment.”

Abbey told us it regularly reviews people’s credit limits in line with house prices, to ensure the mortgage balance and available funds do not, together, amount to more than 90% of the property’s current market value.

“Where it does, we reserve the right – as clearly stated in the terms and conditions – to withdraw any available balance over the 90% LTV limit which is not being used,” its spokeswoman says. “This is a policy we have had for a number of years, and is in line with our prudent and responsible approach to lending. It protects the customer by ensuring they do not end up with negative equity.”

She added that in Cuckow’s case, “the payments he has made have been capital repayments, not money saved into his savings pot, and so has reduced the overall balance of his mortgage. We have, as promised, carried out a valuation of Mr Cuckow’s property … he understands that if he wants to make additional payments, he should make these to his savings pot and not as capital reductions.”

Cuckow’s mortgage account has now been rejigged to reflect the new valuation, and his available funds restored to their previous level. But he is taking no chances. “I’ve moved the full balance into a separate savings account where Abbey can’t get its hands on it.”

What is a flexible mortgage?

Many mortgages now come with flexible features, such as the ability to make overpayments, take a payment holiday or pay less each month. And some deals offer an “offset” facility, where you use your savings cash to reduce the amount of interest you pay on your mortgage.

Earlier this year, the Co-operative Bank issued figures showing that the number of home loan customers making overpayments had increased by 50% in the last year. Many had decided to pay more because their mortgage rate had plummeted as a result of Bank of England interest rate cuts. Low savings rates are another reason why it can make financial sense. In the past, when house prices have been rising, flexible mortgages were a controversy-free zone.

But Justin Cuckow’s experience indicates that if you have got a flexible/offset home loan, or are planning to get one, it is worth checking the small print to see if there is anything that could come back to haunt you if house prices were to continue falling.

Ray Boulger, at mortgage broker John Charcol, says: “In general, I would say any overpayments you are in a position to make, should always be paid into the linked savings or current account rather than into the mortgage.”

]]> http://www.wisconsintroopshome.org/abbeys-flexible-mortgage-slash-and-grab/feed 0 http://www.wisconsintroopshome.org/ethical-investments-profits-or-principles http://www.wisconsintroopshome.org/ethical-investments-profits-or-principles#comments Fri, 05 Jun 2009 22:50:00 +0000 admin http://www.wisconsintroopshome.org/ethical-investments-profits-or-principles

Twenty-five years ago Britain’s first ethical fund was launched. Patrick Collinson examines whether mixing money and morals works

It was 1967 and America was a nation divided by the Vietnam war. Peace campaigners, such as the Rev Dr Luther Tyson of Washington’s United Methodist Church, wanted nothing to do with companies profiting from the conflict. Could he invest his savings free from any connection to the war?

Tyson searched in vain for an ­”ethical” financial institution. So, along with another church official, Jack Corbett – and with little knowledge of high finance – they set up the world’s first ethical fund. Pax World came to the market in 1971 and attracted just £40,000 from socially concerned investors. ­In the early years, it was scorned by the highly conservative fund management­ industry. Corbett was co-founder of the US’s first handgun control organisation, the Coalition to Stop Gun Violence, while Tyson was concerned with peace issues. Wall Street had nothing to fear from liberal churchgoers whose tiny fund meant nothing to billion-dollar corporations.

Tyson died last year. But during his lifetime, Pax World grew from £40,000 to more than £1bn in assets spread over seven funds. It spawned an industry of ethical and socially responsible­ funds now worth around £7bn in the UK.

Ethical investing didn’t catch on in Britain until 13 years after the launch of Pax World. Twenty-five years ago this week Friends Provident, then a mutual insurance company with a strong Quaker heritage, unveiled its “Stewardship” fund, which promised to invest in the shares of UK companies “of long-term benefit to the community”.

Like Pax World, it struggled in the early days. In October 1984, five months after­ its launch, The Guardian’s business pages reported that its performance was trailing the FTSE All Share index and that it had pulled in just £760,000. Our report concluded that “you will generally find that ethical investment­ involves sacrificing some return on your money that a?purely commercially based investment strategy would produce”.

For more information about ethical investment you were directed­ to the one source then available: a booklet called “Alternative Investment Opportunities for Quakers”. There were, we added, a few copies left at Friends House on Euston Road, London.

Today, Stewardship has £450m in assets, and since Friends Provident demutualised, is now run by F&C Investments. But some things remain the same: the fund has fallen by 25% over the past year, and marginally trails the FTSE All Share index.

So is this long-term proof that ethical­ investing means you pay for your principles? Can you find better-performing ethical funds? And does investing really make any difference to the way corporates behave?

Does ethical investing have an impact?

There are few examples of ethical investment affecting corporate ­behaviour much before the mid-1990s. Ethical investors claim to have orchestrated­ the 1995 shareholder revolt against the then-British Gas chief executive Cedric Smith, but this was part of a wider concern at pay levels in denationalised companies.

The first major victory claimed by ethical investors – led by CalPers, the Californian pension scheme – was GlaxoSmithKline’s­ decision in 2003 to slash the cost of anti-Aids drugs in Africa.

Giant pension schemes have been better at arm-twisting corporates than smaller unit trusts. Norway’s $325bn (£200m) government pension fund, whose duty it is to preserve the country’s oil wealth for the future, is the biggest investor in shares in Europe. That gives it real financial clout – and, after adopting an ethical investing stance, it has made several high-profile “disinvestments” from companies where it has ethical concerns.

In 2005 it pulled out of Wal-Mart, citing concerns about labour practices, and in 2007 disinvested from British mining group Rio Tinto, worried about environmental damage. It has also excluded arms company BAE Systems and Serco, which maintains British nuclear weapons through the Atomic Weapons Establishment.

Do you pay for your principles?

Yes, says Mark Dampier at investment advisers Hargreaves Lansdown. “Why bother unless you are a paid-up member of the sandal brigade? Ethical investment has its moment in the sun from time to time, especially when small and mid-caps do well, but I can see little, if any, evidence of superior investment performance by investing ethically. Why restrict your investment universe?”

Dampier says that since Friends Provident Stewardship was launched in 1984, it has given investors a total return of 666%. That sounds good – until you compare it to the 3,901% return on Fidelity Special Situations and 1,465% on M&G Recovery over the same period.

No, says Mark Robertson of Ethical Investment Research Services (Eiris). “Some ethical funds have outperformed their non-ethical peers. As in any sector, there are good and bad performers.” He adds that ethical funds are no longer just restricted to equities and may now include other asset classes, including bonds.

Mark Hoskin of Holden & Partners, advisers specialising in ethical investing, acknowledges that over the past year ethical funds, as a group, have struggled more than their market-leading conventional peers in outperforming the FTSE 100. “But performance has not been too far from the market over this period. And those in the conventional market, who have misunderstood the finance crisis, have suffered badly.” Ethical funds, as a group, cannot go into defensive stocks such as tobacco, which have performed well during the recession.

Should I go for a green or ethical fund?

At first, ethical funds were about avoiding alcohol, gambling and munitions companies. Some just “screen out” stocks; others “engage” with management to root out poor practice. More recently, asset management groups have focused on the launch of climate change funds.

Hoskin says: “It is the environmental agenda which investors need to focus on over the next 10 years, and we can see already that climate change funds are outperforming the markets. To give two examples, Schroder Global Climate Change and Hendersons Industries­ of the Future have fallen over 11% less than the FTSE 100 in the last year. We believe this is, in part, because the companies these funds invest in are better protected from the downturn by legislation which is forcing­ consumers to change their purchasing­ behaviour.”

Would I make more money investing in ’sin’ stocks?

It’s the favourite taunt from the anti-ethical brigade: buy guns and liquor, and you’ll be in the money. One American group even set up the Vice Fund to do precisely that. And anybody who invested in it a year ago has lost 42.8% of their money. Swap guns for butter!

Where do I find advice on ethical investing?

Eiris has a financial adviser directory that will put you in contact with advisers­ specialising in ethical investment. If you are new to investing, read our guide.

]]> http://www.wisconsintroopshome.org/ethical-investments-profits-or-principles/feed 0 http://www.wisconsintroopshome.org/it-was-hard-living-off-100-a-week http://www.wisconsintroopshome.org/it-was-hard-living-off-100-a-week#comments Fri, 05 Jun 2009 08:10:00 +0000 admin http://www.wisconsintroopshome.org/it-was-hard-living-off-100-a-week

Leslie Wakinshaw was considering selling his house until he contacted Age Concern and Help the Aged, and discovered he was entitled to benefits

I’m a 90-year-old war veteran. I consider myself a Geordie, coming as I do from Tyneside, but I am a Sunderland supporter. I have never voted in my whole life and I don’t intend to do so now.

I am one of the last survivors of the second world war evacuation at Dunkirk. The Medway Queen, the paddle steamer that saved my life, rescued 7,000 British troops in several return trips across the Channel. If the Mary Rose is worth saving, then what we call “the heroine of Dunkirk” certainly is. Whenever I have a birthday, I don’t ask for presents, but I ask my family to dig deep in their chequebooks for the Medway Queen Preservation Society, to rebuild her and get her afloat.

I worked until I was over 80, running my own catering business. When I retired, I found it hard living off less than £100 a week, and my small nest-egg was slowly disappearing.

I had no idea I was entitled to anything until my daughter recommended I speak to Age Concern and Help the Aged. I was considering selling my house because I couldn’t afford to keep it. My boiler had broken down and my bedroom was damp. The staff at the charity helped me to claim pension credit and council tax benefit. For health reasons, I also receive attendance allowance – I call the nurses who come to my home to look after me “angels of mercy”.

Within a month, my weekly income had doubled to over £200. I also received backdated benefits. The charity put me in touch with Anchor Staying Put, who helped me with repairs to my home.

Thanks to my benefits and a family that supports me, I have a good standard of life.

I come from the older generation that worries about money all the time. Had it not been for Age Concern and Help the Aged, I would be struggling to get by. They have helped me return to my situation before I retired, what I call “poor middle-class”.

I go out every day meeting friends, playing bingo, going to the coffee shop and working men’s club. At home, I prefer listening to the radio. It means I can do other things at the same time. I have always been interested in big bands and dance music, and like to discuss music with my younger relatives.

As a matter of fact, I would like to be able to use a computer. Seeing my grandchildren use a laptop, it makes it look so easy – and they are able to keep in touch with our relatives in Australia via the internet. But I have difficulty even texting on my mobile.

To younger generations I would just say, enjoy life as well as you can and do unto others as you would want them do to you.

]]> http://www.wisconsintroopshome.org/it-was-hard-living-off-100-a-week/feed 0 http://www.wisconsintroopshome.org/recession-hit-pensioners-could-swing-to-tories http://www.wisconsintroopshome.org/recession-hit-pensioners-could-swing-to-tories#comments Thu, 04 Jun 2009 09:22:00 +0000 admin http://www.wisconsintroopshome.org/recession-hit-pensioners-could-swing-to-tories

Quarter of pensioners say they will change their vote as recession hits their savings income and shopping habits

Britain’s 11 million pensioners are feeling the pain of the recession and are threatening to vent their anger by punishing the government at the ballot box, according to a poll published yesterday.

A survey of more than 1,600 older people by the national campaigning paper and website Mature Times reveals millions of retired people in the UK are taking a financial hammering in the recession as returns on their savings dwindle. Nearly a quarter of them – 24.7% – said they were likely to switch votes to the Conservative party as a direct result.

A majority have changed their shopping habits as a result of the economic downturn, with nearly half spending less on fruit and vegetables and four out of five having switched to “value” brands.

As older people are far more likely to vote than the younger generations, the fall-out for Labour could be even more significant than recent polls – which looked at a broad spectrum of the voting public – suggest.

A quarter of the voters at the 2005 general election were aged 65 and above, and more than two in five were 55 or over, according to figures from Ipsos Mori. The survey was carried out before the worst of the expenses scandal was reported, so the switch from Labour to other parties could be even worse than indicated by this poll.

Two-thirds of respondents to the poll said they had switched some or all of their savings around in an effort to get better returns or to gain access to their capital. More than a third said they had made drastic or significant cuts in their spending, and this was reflected in their shopping patterns.

Some 11.1% are buying less meat, 43.6% are spending less on vegetables and almost four out of five said they were now more likely to purchase “value brands”. One-third say that they have changed their supermarket shopping habits. The biggest loser appears to be Tesco, and the biggest winners are the discount stores Aldi and Lidl.

Tony Watts, editor of Mature Times, said: “When you break them down, what the figures reveal is that certain sections of the older community are suffering significantly more than others.

“Over a fifth [21.1%] say that their savings and investments are ‘essential’ for day-to-day to living – and returns on those have plummeted in the last year, leaving many to eat into their capital to get by. That percentage can be extrapolated to assume that there are over 4 million older people in the UK who are really suffering, because their modest savings mean they will qualify for little or no help from the government.”

Cutbacks in spending will also hit the tourism and leisure industry. Around a third of respondents said they would be spending fewer days abroad (eight days fewer on average) and on holiday in this country (two days less). Some 13.3% are no longer eating out, and 27.6% are not buying new clothes.

Dick Stroud, a marketing expert and commentator in the 50-plus sector, said the research painted a complex picture of how pensioners are coping with the downturn.

“Large numbers of older people are suffering badly, but for many others the recession is having little or no impact. In fact the result show that 25% are able to provide financial help to their children. Marketers need to get smart at understanding the winners and losers of the recession – in that respect, the 50-plus consumer is no different to any other age group.”

He added: “There is often a very naive assumption on behalf of marketers and politicians alike that ‘older people don’t like change’. That’s just not true – this is the generation that has seen more change in their lifetimes than any other – and this survey shows that the volatile economy is making 20 million people reconsider where they spend their money and who will get their vote.”

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