However, the concept has appeared under threat in recent years, with a crackdown on the amount banks can charge in overdraft fees leading to warnings from some quarters that they will need to recoup the money made in that way through other means – possibly by charging for accounts.
And this week Lord Turner, chairman of the Financial Services Authority, added his weight to the argument, claiming free banking actually harmed customers by discouraging new entrants into the current account market and encouraging lenders to mis-sell other financial products.
Because standard current accounts are a loss-leader for banks, he told the Treasury Select Committee yesterday, they must try to cross-sell other, more profitable services to their customers instead.
The banks have attempted to move more customers to a charging structure with the growth of so-called ‘packaged’ current accounts, which offer additional services in return for a monthly fee. But such accounts have been criticised as offering poor value with the services either not used by many customers, or available more cheaply elsewhere.
While some customers would undoubtedly benefit from, for example, a modest monthly charge replacing the current high charges on overdrafts, those who consistently keep their current accounts in credit are likely to end up worse off – the same frugal customers who may already be suffering due to low interest rates.
If any one bank introduces such a charge, it may see a wholesale exit of its customers elsewhere, but if charges are introduced across the board, account holders may be left with no choice – and sensible account holders may be aggrieved that they are left paying more for no apparent reason.
For more information, please visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3 / 240 )The proposed level of the government’s proposed cap on immigration from outside the EU is set to be announced today, as it aims to bring the overall level down from the ‘hundreds of thousands’ to ‘tens of thousands’.
This follows a pledge to that effect in the Conservative Party manifesto but what may on the face of it seem to be a simple change has proved more difficult to implement as many businesses have expressed concern that it will prevent them from recruiting the skilled staff they need.
At a time of rising unemployment, this may seem an odd argument, but large firms in fields such as engineering or finance argue there are not the right number of staff in the UK with the appropriate skills and if they cannot recruit here, they will simply go elsewhere.
Universities and colleges are also likely to be affected, with the sector warning the government that a knock-on effect of the new rules is likely to be a reduction in the number of lucrative foreign students coming to the UK.
However, it appears now that some compromise is on the cards – the cap is likely to be at the higher end of what was expected and, crucially, intra-company transfers involving employees earning over £40,000 are set to be excluded, meaning multinational firms can move their own staff around without falling foul of the cap.
It is understandable that the government wants to ensure as many jobs as possible are available for British workers, but with businesses increasingly mobile, it could not afford to drive employers away. Hopefully the arrangements which are revealed today will be enough of a compromise to prevent any serious problems.
For more information, please visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3 / 178 )David Laws’ careers as number two at the Treasury did not last long due to problems over his expenses claims, but he was back in the news this week, calling on the government to ensure it cuts taxes for middle-class householders within five years.
The Liberal Democrat MP argued that, while middle earners were prepared to accept some pain, in the form of higher taxes and lower public spending, in order to rescue the wider economy, they would be expecting some return on their sacrifices in future.
And while the Lib Dem pledge on an increase in the personal allowance – the level at which people begin to pay income tax – to £10,000 has been adopted as a long-term aim by the coalition, Mr Laws argued that there would be a ‘strong case’ for then doing something to help those a little further up the income ladder.
He said that if the government succeeded in its pledge to eradicate the deficit within five years, the scope for tax cuts would become clear at that stage.
However, he also urged the Prime Minister to keep a close eye on the effect of spending cuts on public services, to ensure they did not deteriorate as a result – illustrating the difficult balancing act the government must still perform.
Mr Laws is certainly correct that those across the income spectrum have taken their share of the pain as the government has battled to bring the budget deficit down – but in order to keep the public onside, they must ensure those on low to middle incomes that they have not been forgotten.
For more information, please visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3.1 / 187 )The government’s enterprise adviser, Lord Young, found himself swiftly slapped down by his new boss David Cameron yesterday after appearing to downplay the impact of the recession and suggesting the majority of Britons have ‘never had it so good’.
Echoing a quote from 1960s Prime Minister Harold MacMillan – which received a similarly mixed response – Lord Young’s argument was that the drop in mortgage rates had left many people better off, while the proposed job losses as a result of public spending cuts were ‘within the margin of error’ in a labour market of 30million.
It is certainly true that this recession has differed from previous downturns which were often characterised by rocketing interest rates and inflation – while this time rates are at record lows and inflation, while above target, has remained under control.
But that does not necessarily mean everyone feels better off. Not everyone is a homeowner, and not all of those who are have benefited from falling interest rates. Anyone who took out a tracker deal before the credit crunch is in a very advantageous position, but new deals are far less generous and a slowing property market means people who may need to move are not in a position to do so.
Furthermore, public spending cuts are likely to affect people directly – if they lose their job – or indirectly through loss of purchasing power both by public bodies and by those who worked for them.
There is a fine line between looking on the positive side and being insensitive to the plight of others and it is to Lord Young’s credit that he quickly apologised. Hopefully lessons have been learned and those in authority will be more careful how they choose their words in future.
For more information, please visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3 / 173 )There’s a lot to be said for flexibility in the working world. Many businesses depend on staff willing to work shift patterns involving unsocial hours and others get the job done thanks to employees regularly coming in a few minutes early, not clocking out on the stroke of 5pm or skipping a lunch break from time to time.
From the employees’ point of view, flexible working can be invaluable. Being able to drop the kids off at school without worrying about being late or leaving early to give an elderly parent a helping hand, so that they can carry on living independently in their home home, can be great motivating incentive to give 110 per cent to the job.
Home Secretary Theresa May, in her role as Minister for Women and Equalities, yesterday gave a speech in which she said that flexible working should be an option for all employees, not just parents and cares.
She said some of Britain’s most innovative and successful SMEs were already showing that flexible working was good for their businesses as well and pledged: “We will extend the right to request to all, helping to shift behaviour away from the traditional nine to five model of work that can act as a barrier to so many people and that often doesn’t make sense for many modern businesses.”
All of which sounds pretty sensible, you might think, in a world that has come a long way from the tradition of jobs for life and where balancing home and work commitments can require the skills of a contortionist. Employees who would welcome the same right to request flexible hours as parents and carers are unlikely to feel that way because they are lazy or workshy: there’s going to be a good reason for them wanting to work in a way that’s a bit out of the ordinary or might even see them losing out financially due to reduced hours.
So some workers might find the reaction of the Institute of Directors (IoD) to Mrs May’s comments a tad disappointing. Alistair Tebbit, the IoD’s spokesman, says Mrs May should let businesses decide for themselves how they manage their staff rather than creating new employment rights.
He adds: “The people running businesses have a vastly better idea of how to manage their employees than any government minister. A government truly committed to being pro-enterprise would be thinking about abolishing the existing right to request flexible working.”
Fighting talk, Mr Tebbit, and no doubt there are many businesses out there that would firmly agree. Some of these will also probably be the employers that expect a great deal of flexibility from their staff without much going back the other way.
Perhaps the answer is for employers and employees to work together to find the working arrangements that suit them best. In today’s tough times, there are many people so glad to have a job that they’ll put up with rigid working arrangements and an old school management style. But when the economy is back on track and workers have a few more options, bosses that fail to be flexible might just find their staff voting with their feet.
For more information, please visit www.glazers.co.uk
[ add comment ] ( 5 views ) | permalink |
( 3 / 191 )
Random Entry
