Energy companies face grilling over further price rises

by MoneyDoctor Tuesday 24 June, 2008

blog_thermom A few of you reserve special hatred for energy companies and its easy to see why…

We have been writing about their pricing skullduggery for a while now and it was only recently we were asking Are the energy suppliers stitching you up?

And with rumours of a possible 40% energy price rise just around the corner, energy chiefs have been summoned by MPs who want them to explain why. 

Comparison website uSwitch.com said that our average household bill would rise by about 10%, (about £105) by late summer, with a further 15% (or £173) hike again in January 2009.

  • British Gas prices set to rise

For instance, Centrica, the owner of British Gas, warned it may have to take action after wholesale gas prices increased by 92% from a year ago, and wholesale electricity costs doubled.  Back in January, British Gas increased their gas and electricity bills by an average of 15% because of the rise in wholesale prices.

Centrica's chief executive Sam Laidlaw is just one of the senior industry figures due to appear before the Commons Business and Enterprise Select Committee on Tuesday.

  • Why another rise?

Energy industry sources suggest we could be paying up to £400 more a year for gas and electricity. The energy suppliers say they are merely reacting to the big rise in wholesale gas costs, which in turn have been triggered by a huge rise in the price of oil. Oil has just reached an all time high of nearly $140 a barrel. 

It’s no wonder that another rise in energy prices will anger many of you. Research from the energy industry has shows that wholesale gas prices have gone up by over 70% so far this year!

Uswitch Energy Calculator - find out what you can save on your bills today.

Uswitch link for saving on EVERYTHING – includes heating cover, loans, broadband, current accounts, water, car insurance, etc

  • Explanation needed

Because of the already massive rises in energy prices this year, MPs, who are looking into competition in the retail energy market, want to know what suppliers expect to happen to fuel bills this winter.

They will also grill energy chiefs on the extra help being given to low-income and disadvantaged families to help them with the impact of rising bills.

Energy regulator Ofgem, is investigating the energy market, revealed plans last month to share data on people on low incomes with energy companies to help people pay their fuel bills.  The proposals, (which need Parliamentary approval) are designed to ensure that financial help fuel payments are aimed towards the elderly and vulnerable.  

  • ‘Fuel poverty’ affects 10%

The Government estimates that over 2.5 million families are in ‘fuel poverty’ (defined as when more than 10% of household income is spent on fuel bills) but watchdog Energywatch says the number is over 4 million. 

The rumour is that any price rises will be announced in August, when energy bills are not at the forefront of our minds and in the hope that we won’t notice.

Naturally there is a huge reluctance in the energy industry to be the first to reveal a big rise, so the rises may be unveiled in stages.

However its done, a possible 40% rise in average fuel bills would be a massive kick in the teeth for those of us already struggling with higher food and fuel costs. 

Some analysts believe the increases will be closer to 25% and even though that won’t be welcome, it will be preferable to a 40% rise won’t it?

Are you already struggling with energy prices? How does another possible rise make you feel?

Why not let us know in the comments?

Uswitch Energy Calculator - find out what you can save on your bills today.

Uswitch link for saving on EVERYTHING – includes heating cover, loans, broadband, current accounts, water, car insurance, etc

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Housing market crash could last 4 years

by MoneyDoctor Tuesday 17 June, 2008

In the last couple of months, the credit crunch seems to be heading towards what could be termed a recession.

As a result, there has, quite naturally, been a lot of talk about what will happen to both the mortgage and housing markets!

Now, a wide-ranging survey of experts has now warned that house prices will take more than four years to rise above their 2007 peak.

This prediction was made by more than 60% of the Society of Business Economists (SBE) surveyed for the latest edition of ITV1’s Tonight programme. The survey showed that:

  • 56% of the economists believe that house prices could fall by up to 20% from the top of the market
  • 20% of them took an even more pessimistic view; they forecast that property values could slump by as much as 30%
  • More than half the experts from banks, building societies and industry said house prices would fall by between 6% and 10% in this year alone
  • 44% of those surveyed believed that the housing market will hit rock bottom in 2009.

If you are worried about the housing market crash and what it might mean for you then you should get some help:

Need some mortgage advice? Speak to an impartial adviser who can search all mortgage lenders, some you may never have heard of, to find the best deal for your situation.

Need help with your debt? You should speak free of charge to a debt adviser who can provide you with advice and solutions to help you resolve your debt and credit problems.

The SBE’s chairman, Bronwyn Curtis, also warned that recent home buyers could have to wait “a long time” to get their money back. She said:

“It doesn’t look like we’re going to see a fall, which is what we’re in the middle of, and a quick bounce back. It does look as though it’s going to go on, and we’ll have slow growth for some time.”

Recent figures from the Nationwide and Halifax building societies showed hefty price falls during May, while the number of homes changing hands also slumped to a 30-year low.

The downturn has been driven by a loss of confidence among potential buyers and a fall in the availability of mortgages as a result of the credit crunch.

Ms Curtis said that, just as house prices had previously been set too high, they would now ‘remain undervalued for a long time’.

But is a housing market crash necessarily a bad thing?

Think about it. With the free and easy access to credit that created the housing boom in the first place now gone, house prices will settle back to a level that genuinely reflects supply and demand. Surely that is a good thing for anyone seeking to buy a house?

What are your thoughts on the way the housing market is heading?

Why not let us know in the comments?

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You're past your financial best by 40

by MoneyDoctor Tuesday 17 June, 2008

There is the old adage that life begins at 40.

But when it comes to finances, that is clearly not the case, according to research by award-winning personal finance site Fool.co.uk.

Their evidence reveals that wage growth stalls 20 years before you reach retirement age.

And that does not bode well for those of us planning a comfortable retirement to some sunny spot with good sea views…

  • The roaring twenties

The study finds that the average wage of 16- to 20-year-olds climbs from £15,000, to £17,500 for those of us in our mid twenties.

Earnings then accelerate throughout your thirties, but flatten out at an average salary of £35,000 for 16 years once you hit forty. And it gets progressively worse after that.

This is certainly not good news if you are trying to balance a mortgage, credit cards, energy bills and the ever increasing cost of daily living.

If you are a woman, then your earnings reach their potential earlier, but with a whimper rather than a bang. Earnings plateau in the mid thirties and never reach the peak of £45,000 scaled by your male contemporaries.

This withering in wages coincides with a life stage that is typically more dynamic, making income stagnation a double blow. Around this age, 8 out of 10 of us (85%) own our own home, of which 3 in 10 (32%) are family dwellings.

Meanwhile 6 out of 10 of us (65%) support dependents, including both parents and children.

  • The snoring forties

If you are a typical 20 and 30 something, this is a cautionary tale, as these groups racked up a sixth of Britain’s total consumer debt in recent times.

However, credit that you cannot afford on your average £25,000 salary may be no more affordable ten years later, when the salary increases you hoped for fail to come about.

Need help with your debt? You should speak free of charge to a debt adviser who can provide you with advice and solutions to help you resolve your debt and credit problems.

Additionally, countless new costs such as school fees and caring for ageing relatives are likely to arise when you hit 40. There may even be panicked contributions to a still-empty pension pot.

But bear in mind, that at 40, you will need to be making contributions of more than £2,000 a year* will be necessary to support an average lifestyle at your retirement.

(*Annual contributions to achieve a pot of £200,000 at 65 years of age - based on a 10% return on investment)

David Kuo, Head of Personal Finance at Fool.co.uk, says:

“We all like to think that milestone birthdays lead to exciting turning points in our lives. But it seems we shouldn’t get too ecstatic about life beginning afresh and full of bounty when we hit 40.

“With average consumer debt of £21,450, and potential mortgage debt of much more, it seems those of us indelicately referred to as middle-aged should show some of the conservatism the term implies.

“No one should ever think they are over the hill at 40, but you will have a financial mountain to climb if you haven’t saved enough when you were still young and upwardly mobile.

“Consequently, optimistic career climbers need to plan their finances earlier. Tightening purse strings is obvious; but remembering that salary-wise they may never loosen is imperative.”

So, do you agree that you are past your financial best by the time you are 40 or do you think it happens earlier than that?

Why not let us know in the comments below?

© Fool.co.uk 2008

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9 cool jobs you could have

by Money Doctor Thursday 05 June, 2008

Naturally there is more to life than being cool; although that is what our parents consoled us with when nobody would invite us to parties when we were at school!

But when you're surrounded by beige walls at work, having to endure the 10 most annoying office habits and reading inane e-mails all day, there must be times when (just like us) you feel yourself wondering if there isn't a cooler job out there that will still put food on your table.

Good news! There are plenty of people are going to work every morning and having a lot of fun while doing it. That's not to say they don't work hard; these jobs are cool but id doesn't make them easy:

1. Brew master

To put it mildly, a lot of us like to drink beer. It's associated with many a good time, birthdays, sporting events and some form of late night public disorder...

(In fairness, it's also associated with hangovers the next day)

But who wouldn't want to be the creator of a tasty beer that will be imbibed by many a partygoer? Plus, you get to do taste-testing along the way, which is always fun!

2. Toy creator

Most kids dream of spending every waking minute in a toy store. Most adults aren't too keen on the idea of dealing with screaming children all day.

As a toy creator (also known as a "commercial and industrial designer") you get the best of both worlds: you get to use your imagination and play with toys without the hassle of noisy customers.

You also get paid to think of ideas for new toys, produce them and play with them to see if they're ready to go into production!

3. Food scientist

You might not have ever cared who creates all the different flavors of ice cream as long as the scoops keep appearing in your bowl.

Well, food scientists spend their days in laboratories developing and perfecting new flavours so that low-fat birthday cake ice cream tastes good and not, well, low-fat.

Ok so you might put on a little weight, but it's a small price to payfor making a living off of ice cream isn't it?

4. Doll fashion designer

Strictly for the girls we reckon; but if you've ever played with dolls, you know that their fashion accessories are no small matter. Barbeques, dinner parties, sailing; these dolls have to have outfits for every occasion.

Fashion designers, just like the ones who create the clothes you're wearing right now, decide what attire dolls need and come up with the best design to sell to the public.

It might sound like child's play, but consider that Barbie's wardrobe makes Mattel one of the world's largest clothing manufacturers!

5. Sommelier

Discerning diners know that the perfect meal isn't just about the entrée; it's also about the glass of wine that accompanies each course.

From the first taste of the salmon to the last bite of sorbet, the right wine can elevate any meal to a new level. Of course, if you're like many people, you don't know if a Riesling is the best match for fresh hake or if it's a faux pas that will send the chef into tears.

Fear not mere food mortals!

Sommeliers know everything about wines, from the vineyards they were pressed in to the best entrées to pair them with. They take courses and obtain certification to become bona fide experts on the subjects, so you never have to look at a wine list with panic in your eyes.

Also, as well as the social kudos of being in such a position, top sommeliers can earn £45,000 a year.

6. Sports trainer

Every sports team has an athletic trainer on hand to get athletes into shape and to prevent injuries. They know what stretches and exercises they need to get ready for a big game and how to treat any injuries that do occur.

It's a sweet gig for anyone who wants to be as close as possible to the action on the field without having to actually play the sport; (normally because they just aren't good enough)

7. Event planner

As an event planner you are responsible for finding convention and meeting sites, orchestrating enrollment and registration, possibly making transportation arrangements for attendees and negotiating prices for venues and hotels.

What makes this job cool is that, although you work hard ironing out the many wrinkles that big events entail (and they may seem never ending), you get to visit various sites and network with people of every imaginable industry, which means you're not stuck at a desk all day.

And that can only be a good thing.

8.Wardrobe stylist

If your friends and family come to you when they don't know what to wear (or you offer this advice even when they don't ask) then you are probably suited to be a wardrobe stylist.

You get to use your fashion sense to dress actors in commercials, TV shows and movies so that the characters' clothes match their fictitious lifestyle. For example, if you know how to dress a 20 year-old actress so she looks like a believable high school student or like a successful businesswoman, then this is clearly the job for you.

9. Concert promoter

On average, concerts are two hours of great entertainment, hopefully full of good music, a great atmosphere and a talented group or entertainer; at other times, it will be going to see Katie Melua or Westlife play.

However, making those two hours happen isn't easy work. Concert promoters decide which cities artists should visit, choose the venues they play and get sponsors for the tours.

Plus, all the logistics that come with the each show, such as security precautions and even the amount of bathrooms available for concert goer, are your domain; yes its tough work, but you get to see free shows and travel around the country.

So, which of the 9 cool jobs would you want to do?

Better yet, why not let us know what other jobs you consider cool and why?

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The worst of two possible worlds

by Money Doctor Thursday 05 June, 2008

UK interest rates have been kept at 5% following the latest meeting of the Bank of England's Monetary Policy Committee (MPC).

The decision to hold rates had been widely expected amid concerns about the pace of inflation. It is the second month in succession that the Monetary Policy Committee has chosen to sit on its hands.

Rising food and fuel prices pushed inflation up to 3% in April, well above the Government target of 2%. However, the slowing economy and falling house prices had led some to call for a cut in rates to boost spending.

Fool.co.uk commented on the Bank of England interest-rate decision, with David Kuo, Head of Personal Finance, saying:

"The Bank of England's decision to leave interest rates unchanged is not entirely unexpected, given that it is trying to slay inflation without butchering the economy at the same time.
"But by sitting on its hands, the Monetary Policy Committee is achieving neither. It must therefore decide what its priorities are. Perching on the fence is leaving many consumers confused as to whether the Bank is there to murder inflation or mollify the Government.
"As it stands, consumers are caught in the worst of two possible worlds. Rising household prices are steadily eroding disposable income, but without any boost being provided to savings.
"Fool.co.uk urges consumers to take control of their own finances because the Bank of England will need to tackle inflation sooner or later.
"Homeowners with mortgages should pay down as much as they can afford before interest rates are eventually hiked. Meanwhile, savvy savers can exploit some abnormally high savings rates as certain desperate lenders try to rake in as much cash as possible. Getting a high rate of interest on your savings will go some way towards protecting your money from inflation.
"However, savers should note that three out of five people would not trust a bank with more than £35,000 of their savings. So, when comparing savings accounts it's important to also ensure that you stay within the Financial Services Compensation Scheme limit of £35,000.
"The Bank of England may be having problems keeping a lid on inflation, but that will pale into insignificance if you lose your savings."
What do you make of today's decision? Were you expecting it?

Do you think the Bank of England should be doing more to help us out? Why not let us know?

© Fool.co.uk 2008

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