Is Royal Bank of Scotland wrecking small businesses?
A committee of Members of Parliament accused the bank of deliberately forcing small businesses into liquidation, and making a profit with this process.
Small businesses which had loans from the bank would be looked at by the bank to see if they could be rescued from their problems; or could be “turned around”. If the decision was that such a turn around was not likely, then the business would be removed from the main bank and placed in a “Global Restructuring Group”. Then the business would be forced into liquidation, presumably by calling in the bank’s loans.
The bank could then buy the business at a bargain price, as the business would be seen as bankrupt. The bank could then sell the business on at a profit; and some entrepreneur would get a good deal. As to what happens to the business next was described as “opaque”.
A possible defence for the bank is that the government’s insistence on large reserves to be held by the bank to avoid another financial crisis, implies reducing risky loans. However the Bank of England has rejected this defence, claiming that there is no justification for “predatory restructuring”.
The right level of reserve for a commercial bank is disputed by economic experts. But the opaque nature of this bank’s decision making is clear. On what criteria does a business with bank loans facing difficulties get placed into a Global restructuring Group? Who decides? Is the small business a partner to this decision making, or not?
These are difficult questions for the bank, but it has many years of experience in allocating loans. Indeed making loans is it’s central business! All this argues for even closer control of banks.
Royal Mail Strike: Cancelled or Postponed?
Yesterday the above strike planned for 4th November was called off by both the union and the new employer. A joint statement agreed legal protection for employees beyond the current 3 year offer. This is a gain for the union as only one year was offered previously.
An improved pay offer, and pensions agreement, was also a union gain. But there is no detail. An alternative dispute resolution process is offered. But again there is no detail. Further, why is there no mention of ACAS resolution expertise over many years?
An agreement on “aligning resources to workload” sounds both vague and a gain for the employer. An agreement on values and principles sounds like more vagueness, but should be easy for both sides to sign up to. Finally, all of 9 separate points must be agreed within 2 weeks, or the agreement falls. This is easier for management to deliver; the union may have consult with all its members. This could take much longer.
Protecting wages and conditions is obviously the correct tactic, irrespective of recent privatisation. The ballot for a strike, supported by a 4 to 1 majority, is extended to 20th November. This extension is a significant union gain, as it will not have to do another ballot. The real fear by the union was the introduction of franchising, zero hour contracts and variable contracts. This may well be the stumbling block that produces a strike.
Nonetheless this is a union climb down; similar to another union climb down over Grangemouth in Scotland. It is difficult not be pessimistic for the union in this national political climate. But there are real gains for the union so far in their negotiations with a newly privatised management. Future details will allow a better analysis. In particular wages and conditions details are crucial.
Finally, note there was no discussion of a no-strike deal; indeed the possibility of a strike after 20th November has been agreed.
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Royal Mail Strike: Opening preparations.
Royal Mail decided about 3 weeks ago to privatise on 11th October, in order to be a privatised company before the union called a strike for 23rd November. This meant that the union was put in a weak position as it was objecting to a privatisation that had already happened in law. Reversing this change was neigh impossible.
In a way this made the union’s intention to still call a strike redundant. But the fact that the sale by the government was under valued by 48%, and so lost the taxpayer £600 million, may grant some support to the union. Further, the government paid over £20 million to Goldman Sachs and other banks for advice; including advice on the right price at which to sell.
Now the chief executive of Royal Mail has written to all employees offering £300 pounds to anyone who does not go on strike! Her justification for this provocative move is that she has apparently spoken to some of her employees, who are concerned that if they do not cross picket lines to enter the workplace they will lose the £300 pounds they are owed for not going on strike.
This is a new tactic. But are there practical difficulties? How will one worker prove that they did not cross a picket line; especially, if as is possible, some do cross picket lines. What evidence is required? Photos of oneself in scuffles taken at the picket line? Is it allowed to simply remain at home on strike days? This will make interesting court cases, as each side tries to avoid public blame for disrupting deliveries.
The chief executive has asked “what sort of protections do we need as a company from our people?” The answer seems to be, to pay this £300 as a sort of protection against a strike happening. But how successful will this tactic be? If the majority of the union has opposed privatisation by 96% already, how many are likely to accept the £300?
Finally, showing a need to get protection from her own employees almost shows a real desire for industrial conflict.
Rolling strikes to Christmas are promised. The employees seem determined to get something despite their inability to reverse privatisation. Higher wages?
How many employees are on Zero Hours Contracts?
The latest estimate of this number is about one million. But there is much unclarity about this figure.
Firstly, 38% of contracted workers see themselves as being full time, as they are working 30 or more hours per week. In fact, they are on zero hours contracts. This instantly throws doubt on any estimate of the total number on zero hour contracts. Indeed, any estimate is probably too low.
Then why this ignorance? Is there wilful obfuscation on the part of the employer? Is the employee so grateful for work under any condition, that they fear to ask for clarity about their contract? Are these contracts so worded as to be unclear to anyone without a legal training?
Secondly, the evidence suggests that there is rather more zero hour contracts in the voluntary and public sectors, than in the private sector. The figures are: Voluntary Sector 34% Public Sector 24% Private Sector 17%.
Thirdly, 14% of those on zero hours contracts do not get enough hours to afford a basic standard of living. Further, under some contracts one has to ask permission to get other work, from another employer!
The defence for this treatment of human beings is that many actively want, and even enjoy it. The list includes parents of young children, carers, students, and others who want to fit work around their home lives. All these people do exist, but this list hides the uncertainty over one’s weekly income. This is because of the uncertainty about being offered work on any one day. The domestic budget may soon be in chaos. For some part time workers this may bring advantages; especially if one has alternative forms of self-employment, or savings. But for employers there is a real advantage. The wage bill, or “cost base”, is sharply reduced. Profits may well increase. Please see my website at: whyworktoday2967
Wonga and the Archbishop.
Competing with Wonga could be a good idea. But hinting that any local Anglican church could be an office for an alternative credit union downplays the real possibility of opposition from within the church.
That apart, one needs to know how much experience the church has with credit unions. How well does the church know the local poor, as opposed their regular congregations? Will the level of interest charged compare with other credit unions; or will it be higher? Where will the church get it’s starting capital from; and at what level of interest? Does the church have trained personnel to administer loans? How much support will the church be able to give to it’s debtors when they get behind with their payments?
Despite these doubts, the increased use of church buildings during the week is a very good use of space. And debt advice could be offered along side the many crèches the churches now run. The possibilities for helping citizens in a large number of ways starts to become visible.
If this were to work it might even increase the size of the Sunday congregations!
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Falkirk: The Wrong Battle
I think it was Lenin who said that the communist party should always be with the trade unions, because that is where the workers are.
Similarly, that is where the Labour Party should be. One of the many difficulties here is that there are many Labour voters who are not in trade unions. How many? I do not know. But the sharp decline in union membership from nearly 14 thousand members in 1979, to less than half that today, is another way of looking at this difficulty.
Put differently, should the Labour Party be looking for non unionised workers support; or even just for adult citizens? With low party membership the Party should look everywhere for its support and votes.
The problem then becomes where to put the parties time and resources at election time. Under Blair the party looked everywhere, but not especially at unions. So, to win in 2015 the current party should redress this past practice. But how?
A fraternal relationship with unions is essential. Allowing the Falkirk incident to escalate is dangerous. The police are now involved. There may be charges against individuals. The responsibility of the party is to tighten up detailed rules; but in con junction with all the unions. Then, just possibly, the party might again be where the unions are.
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PPI Misspelling Scandal: Evidence at last.
There have been some problems with Payment Protection Insurance for some years; but little evidence, and few court cases. This insurance was particularly important if one’s employment was insecure. Now The Times, using an under over reporter, has revealed that Lloyds Bank contracted Deloitte to run a complaints unit. Deloitte sub contracted to Momenta, a City recruitment firm. Momenta used a “Lighthouse Guide” to train new recruits to assess complaints from Lloyds customers.
Deloitte claims that it cannot comment due to client confidentiality. Momenta claims it’s role was limited to hiring staff for Lloyds PPI complaint handling process.
Momenta spent 5 hours grilling the applicants for complaints handling. Then it was explained that there was a box which had to be ticked to opt into PPI. This box had been ticked by the salesman during, or after, a phone call to a customer. The customer did not know of this opting in process.
The applicants were trained to always assume that the salesman had not forged these documents. The customer may claim that they did not tick the box, but the applicants have written evidence, on their screen, that the box was ticked, and that the customer had signed the document. It was explained that discussion with a claimant can be morally difficult.
However, on receiving a rejection of their claim, about 90% of claimants would not pursue the claim. Others were only trying out the claim to see if it was accepted. Others still sought professional advice. This advice involved getting the bank to communicate with the professional advisers; and not directly with the claimant. The applicants were told to ignore this and go directly to the complainant on the phone. They were to ring only during the morning or afternoon. If the phone was not answered, they reject the claim. Yet others went to the Ombudsman, who accepted 84% of the claims. The bank then paid out.
Momenta is not only hiring, but training. This training used the “Lighthouse Guide”. This guide could not be removed from the room, or the building. The source of this document is unclear. The newly employed workers were given targets and bonuses. Some worked 7 day a week, some earned £10,000.00 per month.
Although Lloyds sub contracted this work to a third party, the new Financial Conduct Authority stipulate that Lloyds remains responsible for any misconduct.
Will the Financial Conduct Authority conduct a serious investigation?
Is there enough evidence from the Times for criminal charges?
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