Help To Buy Changes

As the bells ring out the old year and ring in the new, they will also be ringing out the Help to Buy guarantee scheme and ringing in the Help to Buy ISA and Lifetime ISA. More accurately the Help to Buy scheme is due to come to a close at the end of this year and at this point it can probably be assumed that if the government had intended to extend it, it would have announced its intentions by now. The Help to Buy ISA is already in place and accounts can be opened until 30th November 2019. Accounts will be able to accept contributions until 2029. The Lifetime ISA is due to roll out in April 2017 and to continue indefinitely.

What exactly is the Help to Buy scheme?

The original Help to Buy scheme is actually two schemes. There is the Help to Buy equity loan and the Help to Buy mortgage guarantee. The equity loan is only available on new builds and buyers required a (minimum) 5% deposit. The government then lends up to 20% of the remaining purchase price (40% in London) and the buyer takes out a mortgage for the rest. The mortgage guarantee scheme is exactly that. Supporters of the schemes argue that they provided essential support for first-time buyers and those on lower incomes. Opponents argue that they simply encourage house price inflation. Likewise now the scheme is coming to a close the Bank of England has stated that it believes the Guarantee scheme is no longer necessary, while the Intermediary Mortgage Lenders Association has stated the exact opposite. Only time will show who is right.

What exactly is the Help to Buy ISA?

The Help to Buy ISA essentially allows first-time buyers of any age to save up to £12K (including interest). The government will then add a 25% bonus up to a maximum of £3K. This money must be used to purchase a house and the funds are only paid upon completion. In other words, if mortgage lenders require an upfront deposit (as is often the case), the buyer needs to find it from other funds.

What exactly is the Lifetime ISA?

The Lifetime ISA was introduced to help those aged 18 to 39 to buy a house and/or to save toward their retirement. They can be opened at any point between those ages and holders can continue to pay into the accounts until they reach the age of 50. Savers can contribute a maximum of £4K per year and will receive a 25% bonus. Hence, in principle a saver could contribute £128K and receive a bonus of £32K for a total of £160K. At this point it is unclear whether the government will allow savers to continue to make contributions after this age without the bonus (or even with the bonus).

Accounts must be held for a minimum of 12 months before any money can be withdrawn for any purpose or the bonus is lost. Any money withdrawn before the age of 60 has to be paid directly to a conveyancer or the bonus is lost. In practical terms this means that the funds can only be used for an exchange deposit rather than an up-front mortgage deposit. There is an exception for people diagnosed with a terminal illness, who can withdraw all their funds after their diagnosis. After the age of 60 the whole fund can be withdrawn, tax free.

From the point of view of home buying are there any important differences between the ISAs?

The Help to Buy ISA can only be used to purchase property up to a value of £250K (or £450K in London), whereas the Lifetime ISA can be used to purchase property up to a value of £450K anywhere in the UK.

Your home may be repossessed if you do not keep up repayments on your mortgage

The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances.

The value of your investments and any income from them may fall as well as rise and is not guaranteed. You may get back less than you invest.

New State Pension Rules

If you’re a man born after 6th April 1951 or a woman born after 6th April 1953 then you are, or will be, receiving the state pension under the rules introduced in April 2016. Admittedly the younger you are, the likelier it is that these rules could be changed before you reach pension age, but for now here is a quick guide to what to expect from the new state pension.

Payments are still based on NI contributions, but, in principle, only contributions from the claimant

Under the old system, married women were able to pay a reduced rate of NI contributions. This right stopped in 1977, but those who had already opted in were allowed to continue to pay the lower rate. This means that women aged in their mid-fifties or older could still be paying the pre-1977 rate, possibly having forgotten that they chose to do this in the first place. Women in this situation may wish to seek professional advice or at least contact an organisation such as The Pensions Advisory Service since you may be able to increase your level of State Pension based on your husband’s NI contributions, but there is a complex set of rules around this. 

Payments are based on NI contributions alone, the Additional State Pension has ceased to exist

Those who have already paid extra contributions towards an increased state pension will find these contributions honoured but the level of extra payment they will receive will depend on various factors. Likewise those who opted out of the additional state pension may find that they receive less state pension than they expected. Again, the rules governing this transition are somewhat complex and so it may be worth speaking to a professional or other competent adviser.

The NI clock was reset on April 6th 2016

Basically for state pension purposes, your NI contributions prior to this date were converted into a “starting amount”, which should be at least equal to what you would have received under the old system. If your starting amount is higher than the full new state pension, you will receive the payment you have already accrued but will not be able to continue to increase your pension by making further contributions. If it is the exact same as the full amount of the new state pension then your pension will be frozen at its current level. If it is less, you may be able to make up the difference so that you receive the full state pension, for example by paying extra, voluntary, NI contributions.

You need 10 years’ worth of payments to qualify for the new state pension and 35 years’ of payments to receive the full amount.

Anything in between this will see your state pension increased on a pro-rata basis. Again, if you are worried about having less than you expected, you may be able to increase the amount of new state pension you receive by paying extra, voluntary, NI contributions.

If you have lived and worked overseas then it may be possible to use the NI contributions you made abroad as part of the qualifying period for the UK new state pension. This would typically apply in the EEA/Switzerland, the Channel Islands/Isle of Man and the U.S.A as well as a handful of other countries with reciprocal arrangements with the UK. The actual payment you receive would, however, still usually be based on your UK contributions. For example if you worked for 10 years in the U.S.A. and 5 in the UK, then your 10 years’ of U.S. contributions would see you qualify for the new state pension, but the payment would be based on your 5 years of UK contributions.

Deferment is still possible, albeit less attractive

Under the old system, for each year you deferred your state pension, it was increased by 10.4%. The new state pension offers a much less generous 5.8%. Additionally the government has withdrawn the option to take your deferred pension as a lump sum.

Autumn Statement

The chancellor has spoken and we now know where we stand, at least for the next 6 months (until the full budget). Possibly the most surprising news from this Autumn statement is that it was the last of its kind and next year’s Spring statement will likewise be the last ever. From now on the UK will have annual Autumn budgets and make Spring statements. The least surprising announcement was that the proposed rise to fuel duty has been scrapped. Given that this is the 7th consecutive year the government has frozen fuel duty, this was probably widely expected, but will still probably be welcome news to many people, particularly those who travel frequently. The rest of the budget was arguably a mixed bag. Here is a summary of the three most important areas.

The Economy

It’s understandable that debate on the economy was overshadowed by Brexit, particularly since, at this point in time, there now seems to be a question mark over whether it will actually happen at all, let alone when and how and what effect it will have. Philip Hammond, however, is essentially obliged to work on the basis that it will and is therefore proceeding with caution. The government has ended its commitment to return to a budget surplus by the 2019-2020 financial year. Instead debt will rise and is forecast to peak in 2017-2018.

Personal Finances

Pensioners may have raised their eyebrows at the chancellor’s commitment to maintain the triple lock system for this parliament. The triple lock system refers to the practice of increasing the state pension in line with average earnings, the consumer price index or 2.5%, whichever is highest. While it is undoubtedly reassuring to pensioners, it is also expensive and was recently criticised by the Work and Pensions Committee as being both unsustainable and unfair. The fact that Philip Hammond set a deadline on this commitment may be a hint that the government will look to drop it in the next parliament. Interestingly Philip Hammond also suggested a new bond for savers of all ages, paying 2.2% interest. No further details of this were given, but at first glance it sounds like a similar idea to the “pensioner bonds” of 2015 and may be intended to cushion the blow of removing the triple-lock guarantee.

For working adults, the chancellor raised the National Living Wage (formerly known as the minimum wage) to £7.50 (from April 2017). He raised the income tax threshold to £11,500 (also effective next April) and committed to raise the higher rate threshold to £50,000 by the end of this parliament. At the same time, he removed the tax benefits on salary sacrifice/benefits in kind schemes, but notably exempted schemes relating to childcare and pension saving along with schemes linked to ultra-low emission cars and the cycle-to-work scheme.

Infrastructure

The headline-grabbing announcement that the taxpayer would fund repairs to Buckingham Palace was made before the budget and Philip Hammond was also notably silent on the matter of repairing the Palace of Westminster (otherwise known as the Houses of Parliament). He did, however, manage to find a relatively modest £7.6 million to fund repairs to Wentworth Woodhouse, known to Jane Austen fans as the probable inspiration for Mr Darcy’s home of Pemberley. He also committed £2.3B to provide 100,000 new homes in areas of high demand as well as £1.4B for 40,000 affordable homes. The chancellor also promised almost £1.5B to fund various transport projects. The vast majority of this went to improving local transport networks in England with £220M to combat traffic pinch points and £110M for East West Rail. The digital economy was not forgotten with a commitment of £1B to improve broadband access. This is in addition to 100% business rate relief for spending on new fibre infrastructure.

Pre-Christmas Planning

Going by TV commercials, the official countdown to Christmas starts right after Remembrance Sunday. In terms of financial planning, now is really the deadline for getting your Christmas in order so that you avoid going into the New Year with a financial hangover. There is one top tip, which we would like to emphasise ahead of everything else.

1. Plan your Christmas to suit your budget, rather than the other way round

Christmas is supposed to be about peace and goodwill, not about spending until your credit card screams. If something is too expensive for the amount of cash you have available, then it is too expensive, end of story. This goes for gifts, food, socialising and everything else connected with Christmas. If people really care about you, they’ll accommodate your financial situation. They may even be relieved at your honesty taking a strain off them. If you’re worried about receiving expensive gifts when you’ve only bought cheaper ones, then start setting expectations now, particularly for children.

2. Be firm with your budget and flexible with your shopping

The first point to remember about any form of Christmas shopping is that anything which has an obvious connection with Christmas is going to carry a premium price tag. Look for ways to avoid or work around this. For example, you could avoid the typical roast-meat-and-all-the-trimmings dinner and enjoy food which is non-typical but still special, whether it’s poached salmon or curry. Likewise, you could pass on traditional Christmas cake and just go for a normal cake or other dessert.

3. Remember the power of packaging

Christmas is a time when manufacturers bring out their most attractively packaged products and many shops offer gift-wrapping services. There is, however, absolutely nothing to stop you taking items in ordinary packaging and making them look beautiful yourself. What’s more, this can often be done very easily. For example it would probably work out much cheaper to buy a pretty, empty tin off eBay and fill it with sweets than to buy a special Christmas tin of the same sweets out of a shop. Likewise many gifts can be put into pretty baskets and will look just fine without being covered in cellophane. This is an excellent solution for toiletries. Basically it’s a safe bet that any kind of pre-packaged gift set can be recreated more cheaply without any crafting skills being necessary.

4. Give creative IOUs instead of shop-bought (or crafted) gifts

In spite of what the internet might suggest, crafting can work out just as expensive as shop bought and that’s even before you factor in the reality that your time also has a value. Even if you have a craft hobby which you enjoy, are you really going to want to commit to making all your presents when there is generally so much else to do this time of year? There is, however, one DIY gift, which, literally, anyone can make in minutes and which can also work perfectly for any one of any age. It is the gift of IOU vouchers. For example, instead of giving your child the current, must-have, toy, give them a voucher to stay up an extra hour on Fridays, Saturdays or school holidays. Make a voucher single use, or multi-use (just make sure multi-use vouchers have a way to track how often they’ve been used).

5. Practice saying no

Whatever your views on Christmas, it’s hard to argue that it’s become increasingly commercialised over the years, to the point where people can feel under pressure not only to spend more than they can afford on their nearest and dearest, but also to give gifts or at least cards to an ever-widening circle of people and then, of course, there is the growing practice of the Secret Santa. On top of all this, there may be pressure to attend events you would prefer to avoid. Practice saying no. It saves both money and stress.

It’s the economy

“It’s the economy, stupid” has been taken as a fundamental truth in modern politics. Brexit therefore left political commentators stunned as a slim majority of the electorate voted in favour of a decision which the commentators believed defied all economic sense. Economic data is often presented in the form of pie charts. In real life, some people get huge slices of the pie, while others survive on crumbs. Those who get the biggest slice of the pie tend to be the happiest with the status quo; those who get the crumbs are the likeliest to want change. Trump, ironically rather like Obama, was elected on a platform of change. One of the changes Trump’s voter base wants to see is an economy where there is enough pie for them to get at least a small slice rather than just crumbs. The question now is – can Trump deliver? His plan for economic growth essentially rests on three pillars: cut taxes, remove red tape and withdraw from international agreements (particularly trade agreements). How do these stack up in reality?

Tax cuts

Ultimately taxes are what pay for government spending. Even though governments can borrow money, the basic idea behind this is that they will ultimately pay the loans back through tax revenues. Therefore, cutting taxes reduces the amount of money governments have to spend and increases the amount of money left in the hands of companies and private citizens to spend (or save) as they wish. Trump takes the free-market point of view that keeping taxes to a minimum encourages private investment and private spending and will therefore stimulate economic growth.

Remove red tape

The U.S. presidential election took place on the same day as news broke that a woman from California faced a year in jail selling home-made food through a Facebook group a couple of times a month. Her arrest came after a year-long investigation and a home-visit from an undercover officer. The prosecutor, Kelly McDaniel’s comment on why this case was being pursued is essentially “the law is the law”. This case has made headlines in the U.S. and while some do agree that it was inappropriate for the woman to accept payment for food made in premises without any form of hygiene certification, many are questioning the severity of the sentence and the fact that additional misdemeanour charges were added after the woman asserted her right to a public trial. Red tape is the bane of small businesses and private individuals everywhere and cases such as this do little to inspire confidence in the idea that such regulations are intended to protect consumers from unscrupulous businesses rather than to protect established and larger businesses from incoming competition. This case may help Trump push through a process of deregulation, which could potentially allow smaller companies to flourish.

Withdraw from international (trade) agreements

It is probably this last part of Trump’s economic policy, which is most likely to send shivers down the spines of business owners and governments around the world. Although Trump has indicated that he intends to withdraw from climate-related agreements, economists will probably be more concerned by the fact that he also intends to withdraw from/refuse to enter into trade agreements, including the North America Free Trade Agreement and the Trans Pacific Partnership. Presumably he will also be unwilling to enter into the Transatlantic Trade and Investment Partnership, although given the controversy behind this agreement; this may be welcome news to some on this side of the Atlantic. In simple terms, Trump believes that these agreements make it too easy for companies to employ workers outside of the U.S. to produce goods (and indeed offer services) which are then sold to people in the U.S. While his approach flies in the face of the trend towards globalisation, it’s a very open question as to how much globalisation has benefitted the majority of people who voted for Trump.

Contactless & Mobile Payments – Do You Feel Safe?

Payment cards have been around for decades now and have transitioned from being read on manual imprinters and validated by signature to being read from a microchip and validated (generally) by PIN. They have now moved into the next stage of their development and can now support contactless payments in which customers literally just tap and go. At the same time, mobile operators and handset makers have caught on to the fact that smartphones are an essential part of everyday life and are attempting to use them to get into the payment market. Apple has launched ApplePay and its Android counterpart is known as Android Pay (although Android giant Samsung has its own version of it called Samsung Pay). The basic idea behind them is the same as for contactless payments, consumers just tap and go. While this is indisputably convenient, questions have been asked about whether or not it offers the same sort of level of security as chip-and-PIN (or signature) transactions.

Contactless and mobile payments cannot be as secure as chip-and-PIN payments

In the most basic of terms, the short answer is no. There is simply no way a form of payment, which removes the need to verify the identity of the cardholder can be as secure as one which does. A more relevant question, however, is whether or not contactless and mobile payments offer enough security for their intended purpose.

Contactless and mobile payments are intended for low-value transactions

Contactless and mobile payments are being promoted as a way to speed up high-volume/low-value transactions at places such as fast-food outlets, coffee shops and such like. Basically they are being presented as being a win for both merchants and cardholders neither of whom are likely to enjoy dealing with queues. At current time, the limit for contactless transactions is £30 per transaction and card-issuing banks are able to set their own limits regarding, for example, how many contactless transactions are permitted before the card has to make a chip-and-PIN transaction to confirm that it is being used by the legitimate cardholder. Mobile payments work along similar lines and can offer an additional level of security through the fact that access to the relevant service requires access to the mobile handset, which can be secured through various means, for example Apple now has a level of biometric authentication with fingerprint recognition.

Dealing with accidental payments and deliberate fraud

Whether or not you class accidental payments on contactless cards as a security issue is a matter of opinion but it is a matter of fact that they can happen. Contactless cards and mobile payments essentially broadcast the relevant card details over a very short distance. This means that, in principle, if you happen to have one or more cards in the vicinity of a card reader, their details could be picked up and you could be charged. In this case, it might be possible to have the merchant cancel the transactions or use a chargeback scheme. There are also some wallets available which claim to be able to block the signal between the card and the reader, meaning that users have to take their cards out physically in order for them to work. As yet, it remains to be conclusively proven how efficient these are. This then leaves the issue of deliberate fraud. The consumer association Which? carried out a study, which indicated that it was technically possible to skim data from contactless cards and use them to make online transactions. These kinds of transactions would, in theory at least, probably be a matter for a chargeback scheme.

Were Your Parents Right When They Told You to Budget Your Spending Better?

Budgeting is the skill of making sure that your pay lasts the whole month, ideally with a little left over. Nobody ever said it was necessarily going to be easy, let alone fun, but it’s essential for peace of mind. Here are five signs that you may need to work on your budgeting and why they matter.

You frequently need to “borrow” money (or get other help) from family and friends

Life happens and sometimes getting help from your nearest and dearest is the only option, sometimes it’s just a far more attractive option than getting a commercial loan. If, however, you find yourself regularly needing financial (or other) help from those close to you, then it’s time to look closely at your budgeting to see how you can put a stop to this, even if you are managing to pay the money back (eventually). If you’re becoming dependent on financial gifts, or not paying back loans, then you owe it to those you love and to yourself, to sort yourself out. Even if the people concerned can afford it, they need to take care of their own future and living to a ripe and happy old age can be expensive.

You’re only making the minimum payment on your credit card(s)

The minimum payment is a limit rather than a target. The longer you carry a balance on a credit card, the more likely it becomes that you could wind up paying more in interest than you actually borrowed in the first place. Even if it doesn’t get that far, the simple fact of the matter is that credit cards (and other forms of high-interest credit) are a really expensive way of borrowing money and should generally be paid off as quickly as possible. If you’re only making the minimum payment each month, then you need to take a hard look at your budget to see how you can increase the repayment.

You continually find yourself relying on your overdraft

Overdrafts can have their uses, particularly for those whose income varies from one month to the next, but ideally they should be used as safety nets for occasional emergencies rather than being used month after month. Another danger of relying on overdrafts is that an unforeseen expense or a bill you’ve forgotten could tip you into unauthorised overdraft, which often carries penalty fees and interest charges. A few of these can add up to become uncomfortably expensive.

You have nothing left over at the end of the month

Even if you don’t actually have any debt, even if, in fact, you do actually have some savings, running down to zero by the end of the month is generally best avoided if at all possible. There are many reasons for this. One of them is that if you have any sort of unexpected expense, then you’ll have to dip into your savings to pay for it and then how will you replace those savings?

You’d be hard-pressed to say where your money is actually going

The main purpose of budgeting is to make sure that you’re managing your money appropriately. Its usefulness is probably most obvious to those with little money who need to make sure that they cover all their essential expenses and see if they can possibly squeeze out a little extra to put aside for emergencies. It is, however, still useful for those on higher incomes for whom getting from one pay packet to the next is less of a concern. Basically you can only know whether or not you’re making best use of your money if you actually know where your money is going in the first place.

Will pension freedom leave you unable to manage your money?

Whatever criticisms can reasonably be made about annuities, they do have one great benefit. They are simple. You make a one-time purchase in return for which you get an income for life. Unfortunately that income may not be anything close to what you hoped it would be. In recognition of this, the government brought in pensions freedoms, which essentially give today’s generation of retirees the ability to keep their pension funds invested and draw an income from them instead of having to buy an annuity. While this idea sounds attractive in principle, it’s worth thinking about whether or not it could feasibly work for you in practice.

The background to pensions freedoms

While none of the main political parties has yet to make any serious move to abolish the state pension, the fact of the matter is that it is a significant drain on government funds, particularly in view of longer life expectancy. With that in mind, there has been general agreement across the main parties, that people should be encouraged to save for their later years. The problem was that recent decades have seen a perfect storm in the pension market. Defined benefits (final salary) schemes have been largely eradicated from the private sector. Their place has been taken by defined contributions schemes in which the eventual pay-out is based on investment returns rather than pegged to an employee’s salary. The Equitable Life and Mirror pensions scandals shook confidence in private-sector and employer-based schemes respectively. To crown it all, the restrictive nature of annuities was a source of frustration for modern retirees, who wanted more flexibility than the product was designed to offer. In an attempt to push forward the principle and practice of individuals saving for retirement, the government offered new pensions freedoms designed to address the needs of today’s generation of pensioners. One of these freedoms was the ability to use a pension fund in essentially the same way as any other form of investment capital, with all the potential for risk and reward this entails.

Having a right does not mean that it is a good idea to make use of that right

With freedom comes responsibility. In this case, the responsibility for ensuring that a pension pot lasts a lifetime is shifted from the annuity provider to the private individual. Unless the person in question has a guaranteed income from another source, they are in essentially much the same position as a professional gambler. Their income is entirely dependent on the performance of their investments. Now, there are people who make a lot of money as professional gamblers but it is unarguably a risky profession and one which requires commitment in terms of time, energy and mental strength. Some older people may enjoy this slightly edgier lifestyle, while others may have alternative incomes (such as buy-to-let or income from part-time businesses), which mitigates the risk, but for everyone else the potential rewards on offer thanks to pensions freedoms has to be weighed up carefully against the potential risks. Older people also need to be aware of and realistic about their chances of succumbing to age-related conditions such as dementia and Alzheimer’s disease.

What options are available?

Arguably anyone with any sort of financial responsibility should have measures in place to ensure that their financial business can be managed easily in the event of their becoming incapacitated and wound up easily in the event of their death. Those entering the later stages of life should certainly take care of this while they are still able. They should also think clearly about the different stages of aging and be realistic about how they are going to cope with them. One approach might be to ease into retirement and to keep working to some extent in order to minimise the need for pension income, while keeping the pension pot invested and, hopefully, growing. They can then buy an annuity at a later date, when its simplicity becomes more appealing and the rate on offer is likely to have increased as the individual will be older at the time of its purchase.

The value of investments and any income from them can fall as well as rise. You may not get back the amount
originally invested.

Service Industry Puts Recession Fears To Bed

The Markit/CIPS purchasing managers’ index (PMI) is a monthly survey which is eagerly watched by those with an interest in the financial health of UK PLC. This month, the August data for the crucial service sector showed healthy growth.

A trampoline or a dead-cat bounce?

As Harold Wilson is said to have remarked, a week is a long time in politics. It is now two months and counting since the historic Brexit vote and while the jury is still out on what that vote actually means in reality, in the real world of the high street and online, the dust appears to be at least starting to settle. The July data for the PMI showed a decline, hence at least part of the increase this month is simply regaining the lost ground, but it is still growth rather than decline. It should also be noted that August is an unusual month in that it contains extended school holidays as well as a bank holiday (in much of the UK). It is therefore a time when the leisure, entertainment and hospitality industries would be expected to be pretty much in full swing. Economists are therefore likely to be watching eagerly to see if this strong performance continues over the run-up to Christmas and beyond.

Financial services in a fragile state?

While the service sector has many components, it’s hard to dispute the importance of the financial services sector and there are still jitters in this area, some of which may be connected with Brexit. It was only shortly after the Brexit vote that Lloyds announced job losses in the UK. It is, however, unclear just how much, if any of these announced cuts, was actually due to Brexit itself. While the UK could, in principle, lose its right to act as a clearinghouse for Euro transactions, the jobs which are currently being lost have nothing to do with this area. They relate to branch closures and the harsh reality is that as customers have moved to online banking, the need for physical branches has been reduced, hence their vulnerability to cost-cutting measures. This has nothing to do with Brexit; it is a reflection of changing consumer habits. Lloyds has also admitted to being under investigation by the Financial Conduct Authority due to its behaviour towards customers who were having difficulty paying their mortgages and could feasibly have more potentially costly skeletons rattling in its cupboards. It also has to consider how an extended period of ultra-low interest rates could affect its profitability (and indeed business model). Other banks will have their own strengths and weaknesses and while none may be overjoyed by Brexit, it remains to be seen in what way and to what extent it will affect them.

Will manufacturing benefit from Brexit?

While the service sector plays a crucial role in the UK economy, it’s worth remembering that the manufacturing sector also contributes. As with so much to do with Brexit, it’s still very early days, but a weak pound could be great news for UK manufacturing. Even though it will mean that the import of raw materials becomes more expensive in real terms, it can help to make UK exports more affordable on the international market. It can also help to reduce the cost of employing workers in the UK as compared to those in lower-wage economies. The outlook for UK manufacturing may also depend on global oil prices since manufactured goods need to be physically transported from the factory to the retailers. Low oil prices benefit companies which want to transport goods over long distances, such as between Asia and Europe. If oil prices increase, then transport costs can become more of an issue, which makes it more attractive to manufacture goods closer to their intended destination.

Have You Got The Right Home Insurance Policy?

Even without the Euros, insurance arguably ranks well behind football in terms of fun topics of conversation; nevertheless, getting the right home insurance can make a big difference both to your peace of mind and your finances. Here are some helpful tips on making the right decision.

1. Consider buying buildings insurance and contents insurance from the same provider

Basically this will eliminate the possibility of two insurance companies bickering over who is responsible for paying out in the event of a claim, leaving you trapped in the middle.

2. Understand what is and isn’t covered

In terms of buildings insurance make sure you are clear on whether the potential pay-out is the rebuilding value of your home (the value of the bricks and mortar) or the purchase price of your home. There’s a good chance it’s the former, which means that if you base your cover on the latter, you could end up paying a whole lot more than you need to for cover which is much less than you think it is. In terms of contents insurance, in addition to the overall level of cover, pay particular attention to any exemptions, limitations or specific requirements for particular items, typically ones which are very much targeted by thieves. Common examples of these include certain electronics (such as mobile phones), jewellery, money and bicycles. In some cases it may actually be worthwhile excluding these items from your home insurance and getting specialist insurance instead. For example, you could exclude bicycles from your main home insurance and get a specialist policy which covers you for theft from inside and outside the home, plus public liability in the event that you have an accident. You also need to be clear on where you stand with regards to items kept in outbuildings such as garages and sheds.

3. See if you can reduce the cost of your home insurance by improving security in your home

Insurers are likely to demand home-owners guarantee a certain level of security as a condition of their cover. For example this could include having a certain standard of locks on doors and windows. You may, however be able to reduce the cost of your cover by taking additional measures such as installing a proper home safe. Even if this does not reduce the cost of your cover, it may still be the best place for irreplaceable items such as jewellery with sentimental value.

4. Be clear on the type of cover offered

There are basically two types of contents cover. New-for-old cover is essentially what it says. If an item is damaged, it will be replaced with an equivalent item (or the cash value thereof). With indemnity cover, you are compensated for the estimated value of the item at the time it was damaged (or destroyed). This takes depreciation into account and therefore may not be nearly enough to purchase an equivalent item new.

5. If you do any work from home make sure you’re covered for it

Insurance companies have long since caught onto the idea that these days many people have some sort of home office, even if it’s just for managing the household finances and perhaps doing a bit of work from home now and again. If, however, you are doing anything more than that, then it is strongly recommended to check where this leaves you in terms of your policy. In particular, if you are actually running a business from home, then, as a minimum, your insurers will probably want to know about it. If your business essentially involves you working alone at a computer then it is unlikely to make much of a difference to your premiums, but if you are using expensive and/or specialist equipment and/or receiving clients or other visitors, then it is very likely to have an impact as insurers will probably perceive it as a higher risk.