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Bassetlaw Citizens Advice has a number of ‘Cost of Living’ and Energy Saving advice facilities here...

Confused about Government debt, deficits, etc? Read on...

Some thoughts on the current economic climate. If you’ve got some views on this topic - do get in touch; use our Contact us page giving your message the subject ‘Your money’.

It is worth noting that a Google search for national deficits reveals a far more complex picture than our politicians would have us believe. Also, that UK national ‘debt’ is far from exceptional in the modern, developed world. This raises the question, why do Conservative politician’s choose to focus on ‘cutting the deficit’? Could it just be a cover for their fundamental belief in ‘small government’ which tends to equate to ‘privatise’?

Here we pick just a few of the current media pre-occupations and, maybe, provide a different take on their deliberations.

1. The Bonus Culture: What is the benefit to a company of having its senior management on a salary+bonus remuneration package? To a layman (or woman) recent examples (Bob Diamond/Barclays springs to mind) suggest that the notion that a ‘bonus’ rewards outstanding performance is far from the truth. For a fairly deep review of the so-called bonus culture, have a look at Peter Day’s BBC Radio 4 analysis of the situation here. The short answer to this runaway express that led to so much economic pain for the majority seems so simple: fixed term salary contracts! Make them competitive but just that - a salary for the job; if the targets are achieved, by all means include a clause for automatic renewal, but if the targets are not achieved, then position is lost (used to be known as ‘the sack’!); no multimillion pound ‘pay off’, no enhanced pension - yer get’s yer millions for taking the risks!
A related issue is the tendency for corporate remuneration decisions to be made by a relatively small group of directors in an ‘I sit on your board, you sit on mine!’ arrangement. The position of large fund managers (such as pension funds) in this situation seems remarkably opaque.

2. The housing market: For nearly three years now we have listened to ‘experts’ from the housing market (Building Societies, Estate Agents, etc) that the market remains ‘flat’ - in other words, house prices have essentially remained unchanged. Who are they kidding? That the market is ‘flat’, they also blame on banks unwillingness to lend. Is that the root of the issue? Evidence from recent local sales suggests that prices have fallen very significantly (well over 20%).

Could it just be that a) house prices have been over-inflated since the property boom of the early 2000s when banks went almost into sub-prime mode - offering 100% mortgages with no deposits; b) that realistic mortgage lending is reverting to more historic levels of 2 or 3 times annual salaries and a significant cash deposit, and c) everyone is looking over their shoulders at mortgage interest rates that can only go up (remember the 1980s when rates were into the teens?)

The unfortunate truth is that many find themselves in a ‘negative equity’ trap with no obvious way out. To focus on first-time buyers as a solution to this complex situation seems rather too simplistic.

3. Government action (or inaction) following the 2007 Crisis:
Has our government actually done anything significant to address the underlying issues? Is our government trapped in a mind-set that believes London’s financial centre remains number one in importance? Has no one in Whitehall noticed that, increasingly, Frankfurt figures in international markets discussions. A few decades ago the notion that Frankfurt rivalled London would have been ridiculous - what will the scene be like by 2020? Someone needs to move with the times!
And then there is the issue of bankers’ bonuses and the whole notion of percentages. Why should someone doing an honest day’s work get a cut of the cake based on how big the deal was, when the work actually transacted took just the same effort as another deal worth much less? Did I, as a teacher, get a bonus based on the challenge that my students made on me - or the salary from their first employer? Ridiculous? So what about a percentage bonus for an investment banker who is using someone else’s money?

And finally, if bonuses are to continue - what about negative bonuses? If a top executive is worth a bonus when the company does exceptionally well, why not a negative bonus (loss of pay!) when the same company makes a loss?