The recession

Drive down your car insurance costs

Martin Lewis — Mon, 22 Oct 2012 08:59:19 +0100

Due to a new equality law that comes into play in December, many women face huge car insurance hikes, some as high as £2,000. Yet there is still time to beat it — just.

On 21 December, the European Court of Justice gender equalisation ruling gcomes into effect. From that date, insurers are not permitted to discriminate by offering different prices based on whether someone is a man or woman — gender is no longer a factor. So, all other things being equal, you would pay the same.
The current situation however, is far from that. According to Gocompare, at the end of August, men paid an average £315 — or 41 per cent — more than women. Men under 20 paid up to £2,000 more, as young women drivers have a far better safety record than their stereotypical boy-racer equivalents.

No one knows for sure what will happen, even now, although we have known about this ruling for over a year. This is because insurers are playing a waiting game to spot what their competitors will do — so they can nip in and gain advantage one way or the other.
It is possible men’s prices could drop to that of women’s (fat chance). More likely, women will face monumental hikes and men’s come down a touch.

Act now to beat it
The younger you are, the more this is likely to have a full-scale price catastrophe impact, as this is where the biggest differences are. Under-35s are likely to be affected and under-25s, hit hard.

If your renewal is due now, great
Ensure you get a cheap policy that effectively locks in at current discriminated prices for a year.
However, if your renewal date is closer to the law coming into effect, you are at risk. This isn’t a case of all change on 21 December — insurers can bring it in, or at least start to move prices in that direction, earlier. The one way out is to consider whether you can cancel your current policy and sign up for a new 12-month one now. Many providers, if you haven’t claimed, will refund you for the part of the policy that is unused. However, they will probably charge an early exit fee, and it is also worth bearing in mind that you are unlikely to get a no-claims bonus for that year. So before you do anything, it is worth checking to see what the score is.

If there are costs to cancelling, then it is a punt as to whether it is worth it or not. There are no hard or fast rules here. The best thing is try to find a better value policy than what you currently have that can cover these early leaving fees.

Compare to find the best car insurance deal
If you don’t have an unusual insurance history, the easy way to get a cheap price is by using comparison sites. Yet do not just look at one, combine a few, as they don’t all search the same companies. This way you get a wider spread of quotes without adding much time.
My current top three for range are: MoneySupermarket.com, Confused.com and TescoCompare.com. If you have an atypical situation, consider getting one-on-one help from an insurance broker.

Check the biggies that comparisson sites miss
Not all insurers are on comparison sites: the two most notable exclusions are Aviva and Direct Line.
Plus, if you are in a home with more than one car, it is worth also checking out the Admiral MultiCar policy as comparison sites can’t factor that in.

Add in a responsible second driver
If you are a young driver, see if you can cut the cost by adding a second driver to your policy, even if they will rarely drive the car.
As it reduces the average risk, it can cut your cost. It won’t always work, but it can make a big difference.

Third party is not always the cheapest option
Counter-logically you may pay more as opting for lesser third-party cover can statistically indicate to insurers that you are a higher risk. So don’t assume it is the cheapest option — check comprehensive prices too.

Consider in-car telematics policies
Young drivers who are struggling to get cheap insurance using the techniques above could also try telematics, where your driving is monitored by a box in the car, and your insurance price reflects this.
For a full rundown of these, see www.moneysavingexpert.com/U25carinsurance.

Check for cashback
Once you have found your cheapest deal, see if you can also get some cashback on it via a cashback website such as Topcashback.co.uk or Quidco.com to bring the cost down further.

Market Crashes are like Brain Seizures

Candice Krieger — Thu, 11 Oct 2012 09:16:19 +0100

Seizures in the financial markets can be compared to seizures in the brain that happen during epileptic fits says PhD student, Dror Kenett.

The 31-year-old physicist has been involved in a unique research project focusing on the study, analysis and modelling of financial systems. He works within the arena of “econophysics” — a field of physics that applies theories developed by physicists to solve economic problems. The research study was headed by Tel Aviv University’s Professor Eshel Ben-Jacob and Dr Gitit Gur-Gershgoren, chief economist of the Israel Securities Authority.

Their findings show that the collective way in which stock markets behave during a crisis resembles the way in which a brain behaves during a seizure.
Dr Kenett explains: “You can think of different regions of the brain as different economic markets. Each region has its own dynamic and behaviour. Yet once a brain seizure starts, all the regions start acting together — just as when there is a crash in the markets.”

He says that in epilepsy, one part of the brain takes over and interferes with normal brain activity. The brain falls under the influence of one single focus of correlation. The same dysfunction can be seen in the financial markets. “The excessive dominance of the financial sector distorted healthy activity in other sectors, leading to ‘market stiffness’. This ‘market stiffness’ was demonstrated in the emergence of ‘market seizure’ behaviour. In epilepsy, there is the over dominance of the epileptic focus on the functioning of all other regions of the brain. This can result from excess activity or from a lack of inhibition.

“And this is what we see in the markets; when the markets start to go down, the correlations between the different stocks and companies become stronger and stronger, keeping this downward momentum going.”
So, analysing the financial crisis is about more than just the banks borrowing too much then? “Yes, it is much more than that,” says Dr Kenett, who has devoted most of his academic career to applying methods and theories from statistical physics to financial and economic systems. He believes that a new way of looking at financial systems is needed in order to prevent future economic crises.
“Economics as a science is mainly driven by theories, and many of the leading economic theories are based on the physics of 100 years ago, particularly the notion of equilibrium. But physics has really evolved over the past 100 years — and systems are actually not always in equilibrium.”
He explains: “In 2008, before the crisis, there was a report by the chairman of the US Federal Reserve, which noted that the markets would return to equilibrium. But there is no such thing. Physicists realise this and are trying to export this understanding to economics.”

What’s more, he says: “There is a view that traders have access to all the market information enabling them to make a rational decision, but obviously this is not the case in real life, and physicists are now coming up with new tools to deal with this. Changing prices of stocks and shares are not ‘normally’ distributed, as was thought in the past. We are working on creating tools to deal with these non-linear behaviours of the markets.
“Technology for trading is becoming more and more advanced, and increasingly different from the previous ruling economic market theories. These past theories are becoming obsolete.”
He cites comparing financial fluctuations to earthquakes as an example of using physics to gain a current insight into how the markets react.
“Some studies have managed to identify the similarities between markets after a crash and what happens in aftershocks following a major earthquake.”

Dr Kenett is currently a research associate at the Center for Polymer Studies, Department of Physics at Boston University, working under influential physicist Professor H Eugene Stanley.
He has also been working with Professor Ben Jacob and the Kiel Institute of World Economy in Germany, on a market “seismograph”. A type of weather map for the markets, it measures the interconnections between the major stock markets across the globe (the UK, China, US, India, Germany and Japan) and could, says Dr Kenett, help each country predict when a financial crisis is imminent. “We wanted to give a different perspective on how these markets are interconnected.

“This allows us to look at financial contagion and how events can spread from one market to another. Of course this is extremely important today.

“We focus not on the index prices in an individual market but on the average correlation of countries’ stock markets against one another and whether their markets are related. It is possible to observe that as things go bad in the economy, the correlations become stronger — people act collectively, leading to a spread of financial decline.”

The idea is to monitor the “well-being” of all markets separately and then, to quantify the interaction between these markets to understand how the events in one market will affect all the other markets.
Their findings show, for example, that changes in correlations in the UK can predict in some ways, changes in Germany. Dr Kenett says this methodology will enable countries to better foresee a crisis, allowing policy makers to implement strategies that will protect them from becoming dangerously intertwined with struggling markets. Like Greece? “Yes. You need to know when your interaction with a different market is dangerous. Germany could n’t afford for Greece to go down. It’s a very problematic situation. This could have been prevented with the right tools.”

Born in the US, Dr Kenett grew up in Israel obtaining three different physics degrees from the Tel Aviv University. His father, Ron Kenett, who he cites as his role model, is a professor of statistics and president of the Israel Statistics Association. He teaches at the Torino University in Italy, and is research professor at New York University Polytechnic Institute

Children suffer as families face mounting debts

Simon Rocker — Thu, 26 Jul 2012 10:46:40 +0100

Norwood, the family services agency, has reported a 20 per cent rise in its caseload since last year as economic conditions increase the strain on Jewish homes.

The London- based agency says that it is now supporting around 600 children and their families — with around two-thirds of cases related to the consequences of marital breakdown.

Chief executive Elaine Kerr said that it had taken time for the effects of the financial collapse of 2008 to filter down. “We didn’t see the rise at the start of the recession,” she explained.

“Families who were affected got on with it, finding means to carry on with the support of family and friends, taking out loans and borrowing with credit cards.

“But if a father loses his job and then a new job doesn’t materialise, that could lead to a range of problems —family break-ups, domestic violence, poverty, parents becoming depressed, which has an impact on the children.”

According to the charity, there are 54 Jewish children who are officially classified as “at risk” by local authorities — children who are in danger of physical, emotional or sexual abuse or neglect.

But Mrs Kerr said that Norwood was dealing with more children who could be similarly at risk where it was struggling to get support from local authorities.

“Over the last few years, local authorities have cut their expenditure, reduced services or raised their thresholds for opening new cases,” she said. “There are cases where the local authority would have been willing to work with us but because of their workload, we are finding the door being shut in our faces. We believe this has led to increased pressure on Norwood.”

Mrs Kerr said that it was not only rising numbers but also the greater complexity of cases that the charity was having to cope with, leading to it having to remain involved with families in difficulty for a longer period than before.

“Where short-term interventions in the past may have been sufficient, now we are seeing more long-term problems, where families may have been struggling for a considerable time before seeking help,” she said.
“If a family is experiencing difficulties, it is best to be seen quickly as it is the preventative work we do that stops the problem getting worse. We are talking about children who need the best start in life. They are carrying around difficulties that could affect them for the rest of their lives. We are trying not to let that happen.”

Tami, six, and Miri, nine, (not their real names) are thriving again. But two years ago their home was anything but happy. Their father lost his job and turned to alcohol and gambling and, as things went from bad to worse, the girls would often see their parents screaming at each other.

After threats of violence, their mother moved out with the girls, taking refuge at the home of a relative. But a teacher at school noticed that both girls had become withdrawn and unable to contribute in class.

At the school’s suggestion, their mother sought help from Norwood. The girls had art therapy and counselling to help them overcome the shock of no longer having their father around. Their mother received counselling both alone and with her children.

They are now more settled at school and the mother is better equipped to see to all their wellbeing.

(Not) working nine to ﬁve in the Jewish community

Mon, 02 Jul 2012 17:32:02 +0100

In the last meeting that I had with my director before leaving for holiday, I was given my bonus and told that I was "flying". Reassured by this news, my wife and I loaded the family on to an aeroplane for our highly anticipated Pesach trip to Israel.

Two weeks later, mildly sun-blushed and with renewed energy, I walked into the office, raring to go. When I arrived, I picked up on a coldness that unnerved me. My wife told me that I must be imagining this supposed and unusual atmosphere.

On day two of being back, I had my first meeting with my director since leaving for holiday. It was to be a "post-holiday catch-up". I have since learnt that in the corporate world a "post-holiday catch-up" can actually mean "we're sorry but you no longer have your job". Clearly, when he said that I was flying he must have meant flying away from the company.

I have spent recent weeks reacquainting myself with my CV and meeting various recruitment agents - most of whom appear to get on quite well without feeling the need to actually concern themselves with placing potential candidates. A particular highlight in my first week off was the announcement that the country is yet again in recession. The hype surrounding this was bound to rustle up positivity in the boardrooms and set the powers-that-be into an employment frenzy.

CVs went off, calls were made and meetings were met. Then the wait began.

In my career, managing property portfolios, I have witnessed first-hand the difficulties faced by families who are suddenly hit with a P45. So how are we handling it now that the bills are still around but the job that paid for them is not?

General life in the Jewish suburbs of London is very expensive, from the increased costs of petrol to utilities, insurance, and the rising price of the weekly Ocado delivery that we all love to moan about at dinner parties.

In addition, there are the costs associated with living an active Jewish life, which can often be the final straw in these cash-strapped times. There is the butcher's bill; the baker's bill; the kosher grocer's bill; the shul fees; the voluntary contributions to the school and finally, just in case this list becomes all-encompassing, burial fees.

In these unprecedented times I have found myself in good company and, in my experience, there no longer appears to be a stigma attached to having lost a job.

Still, it remains one of the last taboos; a topic that is circumnavigated, like miscarriage and illness. I have found that only once I am open about my experience do people begin to talk about theirs. It appears that almost everyone has a direct relationship with someone who has been a victim of job cuts.

I have loved being able to do the school run and spend quality time with the kids at times other than the "suicide hour" just before bed time. My sons, on the other hand, are over the novelty. They tell me that "mummy must take us to school" and "it's not a treat when you do it all the time". What I have noticed during my now-regular visits to the playground is that the mothers who I see daily assume that I'm supposed to be at work. One joked to me "day off; unemployed?" while another commented: "I didn't realise that you were so rich that you don't have to go to work any more."

Luckily, I have an appetite for the ridiculous and have been able to laugh off these potentially embarrassing insights. I can see how it could leave other people reaching for the vodka and paracetamol, though.

I am hopeful for the future. This surprise time away from the office has given me the opportunity to do what I have always wanted to and try to set up on my own. I have become aware of the amazing facilities and advice that the Jewish community has to offer. Particularly impressive is TrainE-TraidE, an organisation which offers career and training advice as well as support for fledgling businesses.

Despite the stress, the joys of daily life go on as normal. So we've been dealing with a hit and run in the Brent Cross car park, a suddenly-squinting six-year-old and a baby who will not sleep.

After many hours of deep conversation, my wife and I have found reasons for our current situation in everything from the state of the economy to bad karma from a particularly hostile former au pair. We have come to the conclusion that this is just how it is… and it's going to be good.

Martin Lewis: Earn £1000s in One Day

Martin Lewis — Thu, 17 May 2012 10:01:46 +0100

Taking a day to work through your finances could be the most lucrative day of the year. So here are my top ten things to try:

● So you wash your work uniform?
If you wear a uniform to work, and that means anything from a branded polo shirt to full nurse’s attire, but have to pay to wash, repair or replace it yourself, you may able to reclaim cash in tax overpaid over the past six years. Often we are talking about £60, but it can be much more. See www.mse.me/uniforms.

● Switch to a top customer service bank
Firstdirect.co.uk pays £100 if you switch to it. As it has been the clear winner in every customer service poll that I have ever done, that is a corker. It is only for those with £22,800+ salaries or you will pay a fee. It is also possible to get an extra £25 on top. See www.mse.me/bankaccounts.
Alternatively, the new Santander 123 account charges £2 a month (plus you must pay in £500 a month), but pays one-three per cent cashback on bills like council tax, phone and utilities. Plus if you have enough in it, gives up to three per cent interest. This can add up to a serious amount for many, though, sadly, it regularly comes last in customer service polls.

● Reclaim PPI for FREE
The swamp of adverts on television may make you think you need a company to reclaim missold payment protection insurance on current or old credit cards, store cards or loans, but you can do it yourself and for free.
If you are not sure whether you had it, have lost the documents, or need help, both my PPI Reclaiming guide at www.moneysavingexpert.com/ppi and www.which.co.uk have free template letters to send off and FAQs.

● Act now to slash the cost of summer spending abroad
Most credit and debit cards add a hidden three per cent load, so spend £100 worth of euros and it will cost £103. However the extra isn’t broken down on your statement. There are four load-free credit cards: Halifax Clarity, Post Office, Saga (over 50s) or Select (for Nationwide FlexAccount holders only) that give perfect rates worldwide. So pocket one of these for spending abroad, pay it off in full and you get perfect exchange rates.
If you fail to repay each month (not worth bothering with if you will), you will be charged between 11.9 and 16.9 per cent representative APR depending on the card.

● Reclaim £1,000s of forgotten savings, investments and
premium bonds
There are billions of pounds sitting in forgotten accounts. For old bank accounts, savings and premium bonds, use www.mylostaccount.org.uk. For pensions, The Pension Service; unit trusts, the Investment Management Association; and investment trusts, The Association of Investment Companies.

● Cut credit card interest to 22 months 0 per cent
If you are racking up interest, get a new card balance transfer. It pays off other debts so you owe it instead, at a lower rate. The longest 0 per cent deals right now are Barclaycard and Halifax, both offering accepted new cardholders 22 months 0 per cent, though Barclaycard’s fee is lower at 2.9 per cent of the amount transferred, compared with Halifax’s 3.5 per cent. See www.mse.me/bts.
Always clear the debt or shift it again before the 0 per cent period ends or the rates jump to 17.9 per cent representative APR. Never spend on these cards and never miss a monthly repayment.

● Get £1,000s council tax rebate
Up to 400,000 homes in England and Scotland are in the wrong bands. If you successfully challenge it, you could be due big money. To check, first compare your band to a neighbour’s in identical or similar properties to see if it is higher. Then work out roughly what your house was worth back in 1991, as that is what the bands depend on.

● Try the back of the sofa
Research says over £40 million may be down the back of our sofas. So have a spring clean rummage and see what you find.

● Easy £250 saved on gas and electricity
A typical home on standard bills pays £1,320 a year, the same on cheapest tariff £1,020 — so switch. Go to a consumerfocus.org.uk-approved comparison site to find the cheapest price.

● Reclaim £100s in lost Tesco vouchers
It is easy to claw back unused vouchers and only takes a couple of minutes. Go to Tesco Clubcard online and enter your details to access your account. Click on “Your vouchers” on the left-hand side column and you should see a table listing the vouchers you still have to spend. These can be printed off for used in-store or online.

How can we boost British business and entrepreneurship? We asked Sir Martin Sorrell, Lord Fink, Lloyd Dorfman and other experts

Candice Krieger — Tue, 08 May 2012 14:40:32 +0100

The participants:

MS: Sir Martin Sorrell, founder and chief executive of WPP
LF: Lord Fink, chief executive of ISAM fund manager and Conservative Party treasurer
SG: Stephen Grabiner, former head of global media at Apax Partners;
LD: Lloyd Dorfman, founder and chief executive of Travelex
NL: Nick Leslau, chairman of Prestbury Group and director of Max Plc
DS: Daniel Seal, chief executive of UK Israel Business
KM: Karen Mattison, founder of Women like Us and Timewise
SW: Shai Weiss, founding partner of the Virgin Green Fund
BH: Brent Hoberman, co-founder of lastminute.com

Chaired by Alilister Heath,
Editor, City A.M.

AH: The purpose of this forum is to have a broad round-table discussion about some of the big economic issues that concern everyone here. Credit conditions remain an issue and there is a double dip starting to happen in the Eurozone with indicators showing contractions, and that is obviously going to affect people with operations over there.

What is happening to the UK economy?

AH: Sir Martin, what do you think the situation is in the UK at the moment? Do you think growth is starting to return?

MS: We (WPP) had a very good year last year. The company as a whole was up by five or six per cent like-for-like and the UK was up nine per cent. So it was almost like an emerging or, as people would call it, fast-growing market. But I would say it was a bit slower for us at the start of the year here but still relatively okay. But we have got some events coming up; the Olympics and the European Football Championships.

This is not an ad for the Coalition or the Conservative Party or the LibDems but I do think that on balance the government has actually done the right thing, which is to try and address the deficit, which the Americans have not done. The trouble is that it is now blowing back on them. I worry about the government not having a plan.

AH: Not having a growth plan?

MS: Yes. They have done the hard stuff on the costs - they have reduced the rate of increase of cost, certainly in nominal terms, but they haven't really come up with a growth plan. Post-Budget it has been pretty tough for them, either because of their own design or through making mistakes. I think it was a mistake to lower the rate of tax at this particular point in time. And the way they released the Budget - they told everybody else what they were going to say.

AH: They told us everything apart from the things that then blew up in their face.

AH: Nick, what is your take on the current state of the UK economy? Are we coming out of some of the problems or are credit conditions still very bad because of new regulations?

NL: I think that is the issue. The lack of bank debt is starving the economy because it is the oil that keeps the motor running. There is still this lack of ability for SMEs to borrow money to expand their businesses. You can't persuade or force the banks to lend money but what you can do is put the brakes on the regulators a little bit and say: "For goodness sake regulate, that is fine, but don't regulate during the worst time in an economic recovery. Delay it until we are on an upward stretch." So I do think that the lack of bank debt is the issue, and not just in relation to property because property is a function of occupational demand and occupational demand is a function of many things including not even the cost of debts but the availability of debt. Real estate falls into two categories: the prime, which means you don't need bank borrowing to buy it so it is sovereign wealth. It is institutional. It is high net worth and that market is steaming but it is a very narrow-defined market and principally London-based. And then there is the rest for which there is no transparency. There is no transactional evidence and the biggest owner of real estate in the country is the banks.

AH: Do you mean by default?

NL: Exactly. Property is a very loose industry. It isn't really an industry at all because it is just an asset class and it is going to take a very, very long time to recover.

AH: I suppose one of the fundamental questions, which is a bit hidden because no one wants to talk about it, is how massive is the property as controlled by banks implicitly or explicitly and what is the real state therefore of banking balance sheets? What is the genuine state of things market-to-market, rather than everyone pretending that things are better than they are?

NL: The problem with lack of transparency is that there is no market-to-market because you don't know what the market is and no one really wants to try it.

AH: Lord Fink, what is your take on things from a more financial perspective?

LF: I think dealing with the deficit wasn't an option. The scale of the deficit was mind blowing. The government was borrowing £1 in every £4 it was spending so our actual financial situation was worse than Greece's. So if action hadn't been taken, Britain's credit rating would have plummeted. It was only the credibility and the fact that the Coalition or the Tories were ahead in the polls that kept Britain's credit rating where it was. I actually also agree with a lot of the comments that were made by Nick about bank lending being very important, and probably one of the best things one could do is to stop the new onslaught of legislation on banks, because the truth is although they are telling the government that they are lending to SMEs, I think they are doing less than they are saying. Getting credit moving is very important. Credit easing should help but it affects the price of credit more than the availability. I think it is actually the availability of credit that is the issue.

AH: But the new rules are pretty crazy when it comes to things like how much capital you have got to put aside for SME lending. Incidentally it is quite clear that what I think is another recession in the Eurozone has been clearly caused by massive retrenchments of banking balance sheets.

MS: It is the big political issue. The big thing that is going to govern the airwaves is that the Americans haven't pursued an austerity approach - or the Northern European or Western European approach of austerity. The problem is that the Americans will not deal with the problem. They kick the can down the road. They haven't done Simpson-Bowles (deficit reduction commission). The President decommissioned Simpson-Bowles and then ignored it completely and didn't even enter into a dialogue about it. So the issue for the Americans, and what really worries me, is not what we are going through now. It is what happens in 2013 because the Americans will have to deal with their deficit. That is when I think their chickens will come home to roost.

AH: Karen, what is your take on the state of play in the UK more generally?

KM: I can speak as an owner of a small business and we do business-to business recruitment. On a grass roots level we are finding that we are recruiting for small businesses who have, over the past few years, been really nervous about taking on new people but are more recently they are feeling more confident to grow.

AH: Are most of the operations UK-centric rather than global?

KM: Yes. We are completely UK-centric.

AH: Do you feel there is some growth now in London?

KM: Our particular area is part-time recruitment and we are finding that more and more businesses are turning to part-time because they are understanding that they can get the skills and experience they need to grow the business but not necessarily on a full-time basis.

AH: So that is almost saying that actually things aren't that great out there and they have got to be more careful and they can't hire people full-time?

KM: No. What they are saying is they would rather get part-time senior people and people with experience to help them grow than make more cautious decisions and keep junior people.

Is now a good time to be an entrepreneur?

AH: Brent, from an entrepreneurial perspective, how are business conditions in the UK at the moment?

BH: Well, when you talk about entrepreneurs it is such a micro-world, particularly in the digital space, so I am not sure how reflective it is of the whole economy, but obviously it is a very buoyant time for entrepreneurs. Valuations are very hot. We are getting back to the point where taxi drivers are talking to you about business ideas, which is very 2000. Because of the unpopularity of banking and finance, more and more people are looking at entrepreneurship as a career choice.

AH: I suppose the taxi drivers aren't talking about property any more. That is probably quite a good thing.

Why is there no uk facebook?

AH: What do people in the room think is the real state of play when it comes to entrepreneurial Britain and Tech City? Daniel, why aren't there any UK Facebooks? There is clearly a lot going on in parts of London in the new areas but there seems to be some problem when it comes to growing businesses to a major global size.

DS: I think entreprenurial Britain has to evolve. If you look at Silicon Valley or Israel, the tech landscape has evolved over time. You can't think: "Okay, we are going to create digital roundabouts" and expect everything to happen immediately. Certainly I see that people among my generation don't see banking and management consulting as a way forward. I think the government needs to to encourage entrepreneurship and not just say: "We are going to create a digital Britain" but provide the right frameworks, such as going back to the education system and teaching coding in schools. It is also access to capital. You do need quite a bit of capital to start a business now.

AH: But clearly there is a lot of business creation in the UK but only seven per cent or so of these become gazelles and then how many becomes genuine major global brands?

BH: Scale is obviously a big issue.

AH:: In the sense that the UK market is too small?

BH: One obvious point is a single pan-European digital market, which is something that the EU are trying to work on. It should be very easy to create pan-European digital success stories but I don't think there is the conviction among the UK government to do it. There are some EU conferences on this but it is just talking at the moment. One example is MoneySupermarket. Why is it not pan-European? It is a great British success story but it is not a pan-European one. It should be.

AH: But why does it need to be pan-European rather than global?

BH: It is still early for Brazil and India. You want to win in Brazil in the internet in five years time. Today it is still not big enough. It is the same with India. It is exciting and buzzy but there are only a few billion-dollar companies in the internet space in those markets.

AH: What about the UK?

BH: I think it is a bigger issue than the government wants to accept. Does it matter that every company I can think of that is doing well in the internet is becoming American? Yes it does.

I would like to see the government help UK success stories become pan-European very quickly, before they are copied.

SM: But what is it about America that does it? What is it that we need to do? We have got Silicon Fen around Cambridge University but what else is it that we have to do?

BH: The businesses that are getting huge valuations are platform businesses and the platform businesses start where there is scale. The other point is that the skills we have got here are packaging skills: creativity and user interface, and user interface in the web business is now the new gold dust so why is it that we are not able to leverage those user-interface skills into more global businesses? I think there are barriers.

AH: But what strikes me as quite interesting about all of this is that you have got existing companies that seem to have become very good technology companies, but the difficulty is creating new ones.

BH: We have some. Betfair, which succeeded because of regulatory arbitrage. A big point is that people sell out too early. SecondMarket lets you create a private market for shares so it stops you having to go public to de-risk things, and I don't why Barry Silbert, who runs SecondMarket, hasn't come over here. VCs are also changing their attitude. In America the venture capitalists are happier for the entrepreneurs to take money off the table as they scale.

AH: What about VCs in the UK?

BH: There is a more relaxed attitude - that the entrepreneur will still remain motivated even if he has taken 10 per cent of his stake off the table. From the entrepreneur's point of view that is pretty essential because if you put your whole life in one basket you need to hedge your risks.

What should government be doing?

AH: Lord Fink, what do you think is the solution in terms of policy changes?

LF: I don't think there is a single silver bullet. There are certain things that government can do well. First of all, focusing on education. It is important that we turn out kids from primary school who are literate and numerate. Then we have got to get the kids used to technology in school - and technology used smartly. Also improving digital broadband speeds throughout Britain. Government has announced major investment in improving broadband speeds, which will mean that most people do have access to better broadband which gets them used to the power of the internet. But then there is the question of whether to encourage companies to grow without trying to pick winners, which is a mistake made by the previous governments. Do you actually just try and reduce some of the barriers to businesses expanding? This is something I think you should do selectively. I think we need to help companies to move from Britain to Europe.

AH: But why is Europe the answer in this instance?

LF: I think if you are having to travel and move people physically, Europe is just much closer geographically so people can get on a plane, go to Europe and back in the same day. Now with the demise of Concord, if you are going to the States, it does involve a two or three day trip for a face-to-face meeting. And face-to-face meetings are still required. Video conferencing has replaced a lot of meetings but if you are meeting a stranger for the first time it is normal to have a physical meeting.

MS: And hasn't the UK become rather imbalanced? The economy is heavily dependent on financial services. I am not saying it is a bad thing. I am not saying it should be discouraged. It should be stimulated if anything. But it is imbalanced geographically. We are sitting here in the middle of London but go a few miles outside of London and it is a totally different picture. You mentioned education. It is about technology and infrastructure. It is about broadband. It is not just the hardware. It is not just about airports and runways. It is about immigration policy. It is about taxation policy. I find the argument about whether it should be 50 or 45 per cent of complete irrelevance. If you want to stimulate the entrepreneurial industry you are not going to do it by income tax. You do it by Capital Gains Tax.

AH: But why can't there be a really radical change?

MS: You are in the newspaper industry. If you have got a legacy newspaper business and you are trying to compete with new young internet companies which are judged on totally different criteria, it is very difficult - you have these structures. Mario Monti tries to introduce reform of the labour laws in Italy and gets blocked. In Spain it is a struggle to do what they are doing. In Holland they try and make some changes and get turfed out. So it is very difficult to change these structures. It is the same thing for companies and it is the same thing for countries.

SG: In terms of entrepreneurship there might be something happening. If you talk to the young people, particularly the well-educated ones, you begin to get a sense that they are going to take things into their own hands, and actually they are looking around saying: "What you guys benefited from over the past 10 years is not going to happen any more. We recognise that. We recognise that there aren't necessarily jobs for life. Actually we don't even particularly want to be lawyers because in 10 years time we will work out that it is no fun being a lawyer." There are the beginnings of the re-engineering of an entrepreneurial culture. Young people are beginning to say: "I want to go and do this myself because that is the only option I have".

NL: But you need a framework for that to happen and I think whether it is the TMT sector (telecommunications, media and technology) or any other sector, as a country we are very very short-termist. Whether it is VC, equity or institutional equity, it is unbelievably short-term and we do nothing politically to encourage long-term investment. The politicians can't do very much but they can change the framework. I wish George Osborne had stayed in bed on Budget day because he has done so much damage to the Conservative Party that he should have done nothing. But "rich" is now a horrendously sinister word. There is "uber-rich" and "rich" and it is all about "rich" and how much money people have got and "aren't they morally repugnant?" The fact is, rich should be celebrated. Wealth creation should be celebrated and we are in a society now where it is the opposite.

MS: I don't think that is entirely fair. The criticism is heavily on payment for failure, which I think we would all be sympathetic with. In terms of criticism of payment for success, I would agree with you. I am not going to apologise that WPP had a record year last year and neither should I. The issue was the bad bankers and the banker-bashing and that has since migrated. The real problem lies with this movement towards capping absolute levels.

NL: It was the Labour government that introduced taper relief. It actually was one of the clever things they did. If you invest for 10 years you pay 10 per cent tax and actually, we need far more of that. We need far more encouragement. Instead the vernacular surrounding the rich and wealth creation has made it something that is not good to aspire to, whereas we should be investing in employment, trade and TMT.

MS: But you have got to have some sympathy with that argument. The tax payer bails out the banks and becomes the owners and we are pumping more money in and profits are being inflated and any mug can do it. They are not doing the SME investments that we want them to do. They are not providing the liquid engineering for internet companies or SMEs. I have some sympathy with the argument.

NL: What is the argument?

MS: The argument is that you have to do something about rewards and returns for failure.

NL: I am talking about wealth creation outside of the public arena, outside of the state-owned banks. All of us around this table who have some money to invest, we either want to invest it or give it away. Certainly giving away is now being challenged. So we want to invest, so encourage us to invest.

MS: But I am talking about your thinking that rich is bad. There is a variation of that argument. In terms of the argument that we got ourselves into the problem with the banks, something should be done about that. Payment for failure is wrong. I am talking about the payment for success where I agree with you.

SG: Nick, it is really interesting because you set out a set of really Jewish values. You set out values that say the market is okay but actually you want to encourage it to work and this is the best way to generate wealth creation. But actually the State and the people around the table have a responsibility to ensure that some of that success goes back in to support other people in doing it and it requires us not to be continually looking over our shoulder saying: "This is what happened with Lehman." It actually requires us to demand some sort of sensible long-term planning. I am sure the success that is coming from WPP now come out of things that you (WPP) were doing four and five years ago and our government doesn't seem to be able to take that in.

AH: Lloyd, what is your take on entrepreneurial Britain?

LD: I think Stephen is right. I think this climate is actually conducive to entrepreneurial desire and growth because the safe options are no longer there. I don't think there are comfortable jobs any more. I think young people have a problem: whether they go to university or don't go to university, how are they going to earn a living? You get a sense that young people think about these things more and more. People have been saying that Europe is important. I have to tell you, I found Europe really difficult to build businesses in. It was easier to build business in the US, Australia and the Middle East than it was in Europe. I don't know if anybody has ever employed people in Europe. You have got to put your bullet-proof underwear on and just hope and pray that you get through it. It really is tough. Philosophically I think we lean more to the United States. Wasn't it a Brit who invented the world wide web? What happened to that? Wasn't it a Brit who designed the iPod? What happened to that? We have been a seafaring trading nation. We have always punched above our weight. We have built enormous global businesses in the past. Why are we sitting here like little worried Englanders. To Nick's point, I think he is absolutely right. Would any half-talented, reasonably clever person want to take on a job heading up a bank today? What would you want that for? We need to stimulate entrepreneurship, celebrate success and encourage people to invest. Austerity in the short-term is important but like any business you can only go so far cutting costs. At some point you have to grow the top line and as a country we have got to find a way to do that. The banks have made a complete mess of the situation. And now they are so busy shrinking their balance sheets and screwing their remaining solvent customers to get themselves out of it that we are not seeing the SME lending that we need to achieve for growth.

BH: There are actually quite a lot of things the government are doing, which smart people who follow this stuff don't know about. What puzzles me is that for a country that is skilled at packaging stuff, why is the government lacking a coherent narrative?

AH: Also, I would say the austerity narrative is actually harder than people understand because the government is constantly saying they are paying down the debt and they are not paying down the debt. Theirs is increasing at a very fast rate. They are only slightly reducing the deficit and the massive cuts aren't that massive, meaning that we might still be in another fiscal crisis one or two years down the line.

MS: Nominal spending has increased.

AH: And if growth doesn't materialise in two or three more quarters then all of the deficit numbers would be up again and the whole thing will have to change again. So I think that is much more precarious than people realise, but this growth narrative is a major problem.

LF: I want to talk about the argument that is used about communicating the narrative. To be honest I expected a slump in the government's poll rating to happen a year ago but actually at that point Cameron and the cabinet were playing a pretty good game and didn't make many mistakes and Labour were scoring a few own goals. So the slump in my view was always going to come at the end of the honeymoon period. The honeymoon lasted a bit longer than I expected. One of the reasons we have for not getting our policy across is that traditionally, the government was one of the biggest advertisers in the UK and one of the biggest areas of cuts that has been made is advertising.

MS: But is was their own choice.

LF: It was but it was a large sum of money. It was an easy save.

MS: But it is not a communications point. It is a planning point, a strategy.

LF: Spending money on communications and advertising is one way you can guarantee to get your message across but this budget was cut. We also face a press that is being hit by a Leveson Inquiry and will be pretty grumpy for the next year or so because the inquiry is going to drag on. So I think that whatever the message is, it is actually quite difficult to get it across unless you pay for it. So I do think the government has a general communications issue because it can't pay for it. It isn't paying for the advertising and it can't rely on the goodwill of the press in the short-term while the press is reeling from Leveson.

MS: So it is all the media's fault...

LF: I didn't say that.

MS: You sound like one of our clients when they get into trouble: "It is all the media's fault."

LF: I didn't say it was the media's fault. I was just trying to explain the practicalities of life. I don't think the press and media barons are enjoying being hauled in front of the courts. That is not a nice experience for them. I am being pragmatic.

SW: I have been in the UK for over 15 years and I find it odd that the discussion on growth is really being pushed back to the government. In the US, Facebook doesn't sit around discussing government policy. I am very cynical about government policy to really move the growth narrative. People are changing their outlook on failure, willing to take on risks and bear the consequences. There are some very good UK businesses which the UK can do more of. The signals are clear but it is not the government that is really going to make it happen. It is the people who are going to make it happen.

MS: But didn't people criticise Obama? Less so as we get towards the election but didn't they criticise Obama very heavily in the first two or three years for his lack of policy? Having been pro-Obama broadly, even the East-Coast Jewish democrats who voted for him changed their mind.

With all due respect Stanley, I don't think you can blame Leveson. I mean, it may not help but the fundamental thing is a strategic issue. When you speak to the Chancellor for example, he says events have prevented them from dealing with the basic strategic issues, one of which you highlighted which is education. And it is infrastructure and it is technology and it is apple pie and motherhood.

NL: Going back to my point about short-termism, we treat a trader who makes £100 million on a trade the same way as we treat an investor who invests for 10 years, creating jobs and wealth, and to me there is something inherently wrong with that.

Making that sort of wealth is not a crime but you should pay 80 per cent tax on a short-term trade and pay no tax on a 10-year wealth employment-creating investment. So I don't think governments can change markets but they can change frameworks within which markets can become more productive. I think our emphasis is wrong. I am a Conservative but I do think there is a kind of blind spot about things like that.

LF: The problem is that we live in a global market so if you applied 80 per cent to short-term trade profit globally, then it may or may not have the desired effect but if we apply it unilaterally in Britain, as we have tried to apply other rules, it simply means that our hedge-fund community will disappear to Geneva. I do think that the 45 per cent help sets a tone about going below the 50 per cent barrier that does appeal to people. I know people who have divorced wives and if they get away with paying the wife 40 per cent they feel they have done okay but if they have to pay 50 per cent they feel they have been screwed. It is just a psychological thing.

Where are the growth markets?

AH: Martin, as someone who is making worldwide asset allocation decisions, where are you putting your resources?

MS: WPP's asset allocation is in new markets - the BRICs (Brazil, Russia, India and China) and the Next 11 (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam). It is new media and digital. I was in Russia over the weekend and despite all the corruption issues, I am very bullish about Russia. I was in Brazil and Argentina a few weeks ago. It is very strong. Argentina is going to run into trouble but it is still very strong. So all those markets, that is where we are investing. That is where we are growing. America is in the twilight zone a bit because we have to wait and see what happens next year. American numbers have been better in the past few months. People running international companies have to take a more longer-term view than politicians.

SG: Lloyd, do you have the same view?

LD: I endorse what Martin is saying. I think the UK has been a little bit harder this year than it was last year. The US has been good for us so we are seeing growth there. We made a poor acquisition in Brazil. We are investing in China. We are looking at India. The Middle East, actually for all the unsettled things there, has been good for us. We watch the euro with great interest. I suppose you have got to be careful what you wish for but there will be lots more currencies again.

AH: You may well see at least one or two over the next couple of years.

LD: You may see one or two. I think we have got to understand that there is a problem with the "one size fits all" notion of the euro.

AH: Are you exposed to the Eurozone yourself?

LD: We have got important businesses in Europe. Continental Europe is not as big a part of our business as the UK is. But for us we are investing further afield. Asia, Brazil, the Middle East are important territories for us.

MS: I can't think of a chief executive that we deal with who is bullish and wants to invest in capacity in Western Europe. It is simply the reverse. I can't think of a chief executive who hasn't said what Lloyd just said and isn't willing to put money into the BRICs, Next 11 and the new G8, or however you describe it.

LD: Why would you?

NL: Absolutely, and I can't think of a private equity limited partner or a fund of private equity that isn't saying: "We are not interested in Europe any more. We don't want to put money in Europe. We want to put it elsewhere."

MS: But there is a contrary view which is that Western Europe is big - you have got five economies which are $2 or £3 trillion dollars each. Add them all up. When I was in Brazil I met with Jorge Lemann (co-founder of 3G Capital) and he always takes a contrary view. He bought Brahma in Brazil when Brazil was in the pits and when Brahma was in the pits. He bought Burger King, again, contrarian, and they are involved in the financing of Coty for Avon, again, a company that is out of favour. So he always goes on contrarian views, so there is something there.

AH: But the other contrarian view of course is that there may be some problems with China, for example a re-credit bubble or re mis-allocation of resources. You don't agree?

MS: Soft landing.

AH: I am just saying that is a contrarian view which is linked in a way, being the pole opposite of the Eurozone discussion. Shai, what is your take on all of this? Obviously you are in a growth area?

SW: Yes. We are in a growth area - in renewable energy and resource efficiency. I must say that in Western Europe and the US, it is receding dramatically and the capital doesn't want to go there any more. There is a sense that in a recessionary environment or just difficulties, governments will change their opinion, even retrospectively, which they have done and this causes alarm for investors who want stable frameworks. In terms of the emerging markets, you cannot stop finding money for emerging markets. We have just found a big pool of capital in Russia. Russia wants to change its economy. It is the worst economy in terms of efficiency of energy and resources. They will put a lot of money into this area because they have it and they want Western expertise. For us that is kind of the conundrum - Western-focused teams that need to migrate very quickly East, the broader East being the BRICs and the Next 11 and so forth, so it is a very interesting period which is not easy for our type of business.

What do you want for growth?

Brent Hoberman: The EU helping businesses to expand.

Nick Leslau: A major government initiative supporting long-term investment for job creation.

Stephen Grabiner: A venture fund that gives young people very small amounts of money to go out and try and fail if they needed to.

Karen Mattison: Sponsorship, rather than mentoring, from the kind of people around this table, to help create a sense entrepreneurship

Shai Weiss: A tax regime that benefits long-term investments.

Lord Dorfman: SME lending.

Sir Martin Sorrell: A plan.

Lord Fink: SME lending.

Daniel Seal: Getting government initiatives actually to people, and not just as tokens

Tillman's Aquascutum goes into administration

Jessica Elgot — Wed, 18 Apr 2012 10:02:12 +0100

Aquascutum, the clothing company owned by Jewish businessman Harold Tillman, has gone into administration putting 250 jobs at risk.

Fashion businessman Mr Tillman, the former chairman of Jaeger, bought the luxury British brand, which dressed Winston Churchill and the Queen Mother, from its Japanese owners in 2009.

Mr Tillman became chairman of the British Fashion Council in 2008 and is a member of Highgate Synagogue.

The administration came after Mr Tillman sold his stake in Jaeger, whose operations were tied in with those of Aquascutum.

Aquascutum was founded in 1851 by tailor John Emary. It was named after the Latin for water shield after it developed the first waterproof wool. In its early days it was best known for a style of trenchcoat worn during the First World War. The business's clothes have been worn by Lady Thatcher, Humphrey Bogart and Cary Grant.

Mr Tillman and Ms Earl bought Aquascutum despite it making losses of around £24 million. Over the last three years, shareholders have invested around £30 million in the company.

Goldman Sachs banker and Maccabiah star quits with public attack on bank

Jennifer Lipman — Wed, 14 Mar 2012 11:02:44 +0000

A Goldman Sachs executive director has resigned from the bank, declaring that he was more proud of his involvement in the "Jewish Olympics" in Israel than any of his work at the company.

Greg Smith, who has spent 12 years at the firm in the US and London, explained his decision in a devastating piece in the New York Times. He said the current environment was "as toxic and destructive as I have ever seen it" and said he felt ill when he heard "how callously people talk about ripping their clients off".

Although he said he had no evidence of illegal behaviour, he said that what was best for the client was being sidelined and that he could not longer "in good conscience say that I identify with what it stands for".

Mr Smith said that the workplace culture – which was about more than making money - was once an integral part of Goldman Sachs's success

"The culture was the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years," he said. "I look around today and see virtually no trace of the culture that made me love working for this firm for many years.

"I truly believe that this decline in the firm's moral fibre represents the single most serious threat to its long-run survival," he added. "It astounds me how little senior management gets a basic truth: If clients don't trust you they will eventually stop doing business with you. It doesn't matter how smart you are."

The South-African born Mr Smith, twice represented South Africa twice at the World Maccabiah Games in Israel, which he referred to as the "Jewish Olympics". He said: "My proudest moments in life - getting a full scholarship to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel - have all come through hard work.

"Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn't feel right to me anymore."

Greek Jews pledged £630k aid

Jennifer Lipman — Thu, 01 Mar 2012 15:12:17 +0000

An emergency fundraising campaign has been launched to help the thousands of Greek Jews who have been badly hit by the financial crisis.

The Jewish Agency has pledged to send £630,000 in aid to the 7,500-strong community, as well as to set up a fundraising drive to ensure future support. Soaring numbers of Greek Jews are unemployed and are struggling to exist below the poverty line, while 70 elderly members of the community are reliant on donors for food and shelter.

In addition, the Jewish Agency plans to dispatch educators to teach Hebrew at Greece's Jewish school and holiday programmes.

The country's economic collapse has left communal organisations unable to pay their bills and has put the future of Greece's synagogues and burial societies at risk.

Natan Sharansky, chairman of the Jewish Agency, said: "The funds will enable communal institutions to continue their operations, including programmes to strengthen the community's ties with Israel and the development of unique aliyah tracks for those members of the community who wish to emigrate to Israel."

Greek Jews suffer in financial crisis

Thu, 23 Feb 2012 16:03:06 +0000

Being a Jew in Greece already has its difficulties.

One faces prejudice on a regular basis, and any reference to the Jewish community as a whole usually involves conspiracy theories about how Jews are responsible for every evil or great event happening in the world.

The financial crisis just added another problem to the list. Soaring taxes and rocketing unemployment has hit the country's 7,500-strong Jewish community as hard as other Greek citizens.

Members of the Jewish community in Athens are used to helping each other out, and their institutions rely heavily on their donations. So dropping contributions have meant that standard community services are being starved of cash.

Benjamin Albala, president of the Jewish Community of Athens, says: "Funerals, weddings and other such simchot have been reduced since our members ask to pay less for these services."

Donations and the payment of membership fees to synagogues, burial societies and other community institutions have fallen by 50 per cent - and they are still falling.

"There are many members who refuse to pay their annual subscription, which is meant to support religious, spiritual and educational practices of the community," says Rabbi Izaak Mizan.

Meanwhile, the number of members who cannot make ends meet as a result of the crisis keeps on rising, and many are turning to ask for help from their synagogues and other community bodies.

The main reason for the tanking incomes of Athens community members is that many rely for business on the property market, which like elsewhere in Europe, has come crashing down. Rents have tumbled along with property prices. "Tenants ask for a 30 per cent reduction in rent and many leave, breaking the contracts, since their business has gone bankrupt," says Mr Albala.

The extreme levels of unemployment among young people is also a source of huge anxiety to the community. "The community has created a list of unemployed young people and we are trying to help them find jobs," says Mr Albala.

The official unemployment rate in Greece is about 20 per cent, but actual unemployment is thought to be much higher.

Meanwhile, as the government struggles to pass the structural reforms that Europe's politicians require in order to release the latest multi-billion bailout, the Greek far-right appears to be making inroads into mainstream politics.

Two members of the far-right Popular Orthodox Rally (LAOS) have resigned and are about to run in the upcoming elections under the banner of the poll-leading New Democracy Party. Adonis Georgiadis and Makis Voridis decided to resign from LAOS when asked by their party not to support the austerity bill.

The two voted in favour of the package of reforms and few days later they announced their move. In the past they have both made antisemitic statements.