Nick Forsyth asks “How much is enough” when it comes to concert ticket disbursements?

I’ve been buying tickets for over 30 years and in that time I’ve come to consider that I might have been abused more as each year passes. I know how much I’ve paid as I have a collection of programmes including ticket stubs and I can tell you that a Wembley Empire Pool concert cost £4 a ticket in 1978 and a heck of a lot more these days. What I find really disconcerting is not the price of the ticket but the add ons that seem to increase in both value and number as time passes.

At one time as I remember you would get charged a fee that then became a fee per ticket and then started to increase in value. You then had postage added onto the cost as a further extra and now you can add “to your door before the kettle boils” for another fiver.

Last night I bought tickets to see Billy Connolly with Ticketmaster and had two options, post for a fee or a link for the same fee. I chose the link and have received it by email. What this allows you to do is to print off your own tickets and take them to the concert. I’ve been involved in a concert with paper tickets and it is really scary. Some people have a normal looking ticket and you have a piece of A4 paper. I didn’t apply for them so when I was handed my piece of A4 I was ready to go home but we walked in without any trouble – in fact it was as easy as when I saw David Lee Roth at Hammersmith and we walked in through the main entrance – having paid a tout – without any tickets at all behind a member of the show security, making people with tickets wait whilst we got in, to stand in the stalls.

The more I think about it the more it occurs to me that the link is more effective but also close to a con. Surely I am using my own paper and toner cartridge to print this ticket and depending upon the colours it might cost me more to print it off than the fee I’ve paid. So it boils down to whether the link is cost effective? If its price mirrors the cost of postage then clearly not, but then again it is Ticketmaster so you expect premium pricing.

I’ve also noticed that certain ticket prices have shown a huge hike recently. Possibly because a lot of the artists I consider seeing are getting on a bit and their pensions aren’t doing too well on a 0.5% base rate but then again maybe not. Surely the industry wants to get its act together and look at setting a reasonable price for the event to include all these disbursements so that we the general public don’t feel cheated when buying tickets to see them.

The Car Scrappage Scheme – is it for you?

The car scrappage scheme was introduced at the last budget until 31 March 2010 in an effort to provide £300 million support to the car industry. It follows on from schemes that have been operating successfully in some European Countries. Essentially you can get £2,000 for trading in a 10 year old car that you have owned for at least a year for a new vehicle. £1,000 comes from the government and the balance from the vehicle manufacturer. With cars always being a touchy topic we asked Nick and Chris to put forward points in favour or against the scheme.

For: I’m no car enthusiast so for me the vehicle is designed to get one from A to B in the maximum of comfort. I am hopeful that the scheme produces increased orders and allows employment to be maintained within the car industry in the United Kingdom.

Safety is an important point. Whilst I look back warmly to travelling around the country in a Ford Cortina or a Hillman Hunter it does not mean I need to repeat the experience. Whilst classic cars look lovely I have to confess I don’t feel comfortable in them and even with the safest of drivers I am not convinced we will get round the next corner.  A 10 year old car might not necessarily present such a problem but we do forget that a previous car does not have the brakes that our current model has!

Comfort comes a strong second to safety in my book. If we spend time in our car surely we want to be as comfortable as possible. I am sure that the current model for the majority of cars is more comfortable and therefore preferable to the one being scrapped!

The green issue is also an important consideration. In the small car market I am sure that huge strides have been made in the last 10 years to make the engines more efficient and with car taxation being changed over from the old CC method to the new CO2’s continued efforts are being made to reduce the emissions that are harmful to the environment. What gets overlooked is the miles travelled to bring vehicles into the Country but this is a political hot potato, along with food miles, that will be debated more and more as time passes.

The majority of people want to drive the newest vehicle that they can. When I started driving you aspired to a new vehicle but knew it was a distant dream. Long journeys were planned with spare parts in mind or not even contemplated and starting the vehicle on cold winter mornings a lottery to say the least! Youngsters have never experienced these problems and there is no reason to suggest that they would want to start. Affording the vehicle and insuring it are the current problems but that’s another issue altogether!

Against: I look at the car scrappage scheme as a classic car enthusiast, someone who is concerned for our environment and as a Tax Partner of Lambert Chapman LLP. The three don’t mix. I recollect we were told the car scrappage scheme was to boost the UK car industry and take older vehicles off the road in favour of newer, safer and potentially greener cars.

Let me break down this sentence into the following:

“UK Car Industry”

I consider that the UK doesn’t have a car industry anymore, at least, not of the importance it once was. We used to be a world leader in the car industry but by a mixture of complacency, poor management and over enthusiastic union power, it was destroyed. The car scrappage scheme certainly brings newer cars onto the road and a lot of them are the small lower end market vehicles which, by the very nature of their manufacturers, means a lot of our money is leaving these shores. I recently saw a newspaper report that a certain Japanese manufacturer was having to get its work force to work overtime so they could build enough cars to ship to Britain in time for the new batch of UK registrations.

“Newer Cars”

Why do we have to love “newer cars”? Why don’t we look to having well built cars that last? We are preoccupied with fads and fashion.

“Safer Cars”

 I agree that if cars are poorly maintained they become unsafe so why not channel some of the money into resources to make sure the authorities can finance more rigid checking of more vehicles to ensure they are safe? A modern car is easier to drive than an old car but if the driver adapts their style an old car, driven correctly, is safe (maybe a purge on unsafe drivers is needed?)

“Greener Cars”

I am not convinced on this. I said I was a car enthusiast and my classic car is a 1972 Rover V8. People may say that it is a gas guzzler and not very green but I counter that argument by pointing out I am driving 37 year old metal. There hasn’t been the cost of using fossil fuels to destroy the old vehicle and refine metal to make a new vehicle (never mind the transport costs, etc of new vehicles). Our Government introduced, in April 2002, a 100% capital allowance relief on cars with low emissions. The 100% only applies to new cars so a second hand car doesn’t qualify for the enhanced relief. That is not green as it does not encourage recycling!

I don’t see the car scrappage scheme as really being the answer. I feel that the money could have been better spent in supporting industries that generate wealth for our country. There is also the impact on small businesses who rely upon making parts for old cars. Many of those businesses are in Britain and close to the old car manufacturing establishments. As at August 2009 it was reported that there has been over 35,000 new cars ordered because of the Government scrappage scheme. I am surprised at the number which means 35,000 less opportunities. If the green issue is to be addressed then why is there not a heavy charge on new luxury motor cars or why did they not use the car scrappage money as an incentive on new green vehicles that really are green and are being produced in the normal course of replacing cars?

Recently there was a report that some manufacturers have increased their car prices because of the car scrappage scheme so that they end up being in the same position. That is disappointing but from an economic point of view, who can really blame them?

On a final note, I know of a number of good classic cars that have gone into the scrappage scheme. The scheme means they must be destroyed so it is likely there have been some good, running and reliable old cars that provided transport to a family and the vehicle isn’t going to depreciate any more and could possibly be appreciating. Will the replacement cars depreciate? I suppose one way of looking at it is that the owners of similar models of cars that are in turn classics will find the value of their classic has increased. I could be one of them.

So there you have it – but what do you think?  If you wish to add your own comment at the foot of this article.

Top of the League – and having a laugh!

3 games down, 9 points and top of the League. Who’d have believed it? Not me for sure, 1 week down 25% towards the safety net points total and Birmingham City at home on Saturday. Last time they were up they took 6 points from us with a wicked 40 yarder that could have gone anywhere and a post Carling Cup win embarrassment by 4-1 at St Andrews. In that period we approached games with arrogance (having won a cup) and played without any at all – this time I hope we keep our feet securely on the ground.

Birmingham presents my first visit to White Hart Lane this season having been away for the Liverpool game. I may be wrong but I think it will be a great atmosphere on Saturday with us starting out top of the table. Over recent years – since Martin Jol was our manager – the atmosphere has continually improved at what used to be an apprehensive and quiet stadium and I have slight concerns that if the redevelopment plans go ahead that a lot of this will be lost. I also read Arsene Wenger’s thoughts about stadium redevelopments and have to admit that he has a point. With all clubs it is important to have a team to put into a brilliant new stadium as after it is built there is the risk that finances will be under pressure for a couple of years. Arsene pointed out a number of clubs now struggling in the lower leagues who had moved to new homes and it’s fair to say that without Champions League money of about £60 million a season Arsenal might have more worries on their broad shoulders.

After all it was only the early 1970’s when Chelsea built a fantastic new stand and bankrupted the club until Mr A stepped in and changed their finances all around. That stand helped Chelsea’s record against Tottenham to what it is today. When they were a regulation win for us the stand made sure they were in the second division and safe from Archibald, Crooks, Hoddle, Ardiles etc.

I appreciate that the Tottenham board think that we need more seats available at our ground and I do support this. But how many is the question? Firstly, we have to be mindful that a generation of new football supporters have chosen Arsenal, Chelsea and possibly Manchester United over Spurs because of their much better records since the mid nineties so can we sell out week in week out.. You might call this a bit defeatist but I well remember the financial crisis in 1990/91 at the club resulting in the sale of Gascoigne when “no club” might have been a possibility.

Then there is the issue of being a buying/selling club. If our form continues it certainly brings some of our star players into the spotlight and current Top4/Manchester City radar. Defoe might stay with Harry but will that be the case with Modric or Palacious? And then you are rebuilding the side and restricting your potential. What is true is that there will always be 36 to 40 thousand who will make the effort go to the games but after that you do need a team. As a Spurs member I can get tickets, for some games you have to put yourself out but not for all, so does this suggest that we can sell out a new stadium? Granted we may have lots on a season ticket list – but don’t most of them already go as members and if they don’t why will they go if they suddenly get the opportunity of season tickets. I’m not sure I understand it – maybe you can enlighten me?

 But for now let’s just enjoy being top of the table. Come on you Spurs!  

Do you know what your loan covenants are?

You can tell when bad times are upon us. Profits are down and cash may be in short supply and just when you think that things can’t get much worse you get a letter from the Bank suggesting you might be about to breach a covenant which you were not aware of…..

As an example Paul had a client who was reminded what his interest cover covenant was when the Bank discovered the annual accounts were being prepared. We also had a client who was told he would be charged a sum of money – equivalent to a parking fine – if the accounts were not provided within the covenanted period. If we add these to the proposed increases in rates that have been put forward when covenants have been breached then we can see a pattern emerging. Things are tight throughout all sectors of business.

The recent UK200Group survey indicated that Banks needed to try an do more to keep their customers onside and some of these issues above need to be handled sensitively, maybe more sensitively than they are at the present time. But what is your take on the situation? Please feel free to comment below or send a private email nick@lambert-chapman.co.uk if you would like a reply in confidence.

We are Tottenham: Super Tottenham

Last year it was joy, this year a tinge of sadness – but we did take Manchester United to penalties and kept a clean sheet over 120 minutes. True we rode our luck on occasions but then did their keeper not get the man of the match award? Chances were few but it was an enjoyable game to watch and one that was there to be won once we got our teeth into it.

As I’ve said before supporting Tottenham Hotspur is a rollercoaster ride and it is days like yesterday that make you scratch you head. If we played like that every week we would be in the upper reaches of the table and we would maybe not be desperate for Wilson Palacios to provide the tackles and midfield steel that we’ve been lacking. In our run up to last years final we tackled like tigers to beat Arsenal and approached Chelsea with similar vigour. Having won it we approached match after match as cocky world beaters and got shown the error of our ways week after week. Let’s hope this year we apply the effort and attitude we showed yesterday for the rest of the season to help get us out of trouble and up that Premier League table!

Nick Forsyth considers local prospects for 2009 following retail failures

It was a strange Christmas morning. “What did you get?” “Voucher!” “Where for? – right get down and spend that quick as they’re rumoured to be struggling!” Twice we had that but it would be rude to mention the stores concerned in this article but take it from me those vouchers were spent on Saturday!

 

I read on Saturday that four Essex Woolworth’s branches were to close on that day and Braintree was to be one of them. A sad day indeed for the town as Woolworths is one of the largest stores in the town centre and will be really difficult to fill. Braintree also has a Zavvi and today’s casualty Adams so it is likely that there will be some difficult holes to fill in our town centre. Local retail economies have taken a real pasting over recent years and the loss of these traditional names will do little encourage more people to shop in market towns. Braintree has always suffered at the hands of near neighbours Chelmsford and Colchester but they in turn are being hit by Lakeside and Bluewater. Apparently 6 out of 10 shoppers living in Mid and South Essex now travel to these venues for their shopping experience even when fuel prices were rapidly increasing.

 

Most retailers are under pressure. Shopping trends appear to be changing on a permanent basis and the purchasing power of the larger retailers has been dealing catastrophic blows to the smaller retailer for some time now. With the large players now hitting a brick wall and failing what does 2009 hold? Empty stores on the High Street will do nothing but help Internet shopping so stores need to put on an impressive show to bring in customers and make them spend.

 

The Government’s concern about deflation has them trying to encourage shoppers to spend by reducing interest rates to a 50 year low. But will it work? Certainly spending power is increased but concern over jobs and already burgeoning credit cards might discourage them in the short term. The next 6 weeks are traditionally quiet in industry and once the January sales draw to a close most retail businesses will be hoping for the support the Government has told the Banks to offer. Will it and can it be there – if businesses are losing money?

 

The Woolworth store in Braintree had been in Bank Street since 1929. Previously it had been the 8 bedroom house of Dr Harrison the one time coroner for East Essex. The house and garden stretched back all the way to what was Sandpit Lane and the corner of Quadrant stores opposite Stanley Tee’s office in Rayne Road. A massive site to develop and clearly an important national name when it first opened in the town. Over the years the business has had its ups and downs. No doubt pressure from Argos and Toys R Us placed the final nails in the coffin for this once great institution. As teenagers we surveyed the records on a regular basis as the options were Elvic in Fairfield Road (a musical instrument shop – now a Chinese Restaurant), Hannays in Bank Street and a shop opposite the fountain that sold record players too – now also a fast food takeaway. Then the arrival of Kellys and Parrot Records meant the need for Woolies departed and no visits for many years!

 

In many ways a bit like the ITunes store effect on stores like Zavvi; how can you compete with the 79p track and particularly in an era where the concept of the album is lost on many people. The days of reading lyrics inside a gatefold cover and listening to the whole album are of the past. As I say to my daughter, “the artist has spent many hours deciding which songs to include, which order to put them into, the concept of the cover art etc so please give it all a chance and not just the song the radio station is instructed to play.” It always meets with deaf ears of course and had we approached music in such a way would some of the great bands have had their longevity?

 

These national closures will have large repercussions upon town centres up and down the Country. In trying to retain a modern feel many towns have already changed their layouts leaving some businesses high and dry whilst putting others into a stronger position. Woolworths is a prime example of this. All of their stores would have been in a primary position at the time of opening but over years this may have changed. Braintree is such an  example. Primary positions were the High Street and Bank Street which moved towards the Market Place in the 1970’s with the building of the town centre Tesco store and then towards George Yard in the late 1980’s when the new precinct was developed. Those stores previously situated near to the traditional primary positions may have seen their locations lose foot fall with these changes and in the most recent the Post Office has relocated moving foot fall away from Rayne Road towards New Street.

 

Where Woolworths retain a primary position and the size of the store deems it empty for some time will this cause confusion in towns of similar size to Braintree having repercussions on local independent retailers? I fear it will but sincerely hope that I am wrong. Relocation is not a suitable option for many small businesses but if the geography of the town you trade in changes what are your choices. Will the Government help cover such eventualities to allow businesses to continue?

 

Over 20 years I have seen a number of small retailers lose their business due to changes in trading practices. The sale of newspapers in supermarkets and garages was an unforgivable act that put paid too many a family’s fortunes where a significant investment had been made to buy the business.  In all of this the supermarkets appear relatively unscathed unless they have invested too heavily into land on which they have debt. In fact if you look at the growth of these stores, having accounted for the majority of local fruit and vegetable businesses in the 1980’s, it has been into white goods, clothing, music, toys and other household items. Familiar items in terms of the names mentioned above that have entered administration. Might we see some Supermarkets increase their chains into some of the Woolworth stores?

 

What can be done? Well first I’m not sure I am right. I have a hunch, but your thoughts might provide a very different viewpoint. If I am correct Government needs to decide whether it thinks small independent retailers hold a place in the future. If they think it so, then some form of thought process is required to understand what this role should be and how far the supermarket chains should be allowed to develop in the future.

 

Let me conclude by saying the survival of the fittest is always important and no business has a divine right to survive. At the end of the day the owners or directors of every business have a responsibility to make sure that they have done everything in their power to give the business every chance of survival and success. If they have done this and customers do not materialise then if the business fails there can be no regrets. In the past some businesses have not been able to say they did absolutely everything. I think in 2009 without exception every board up and down the Country will need this as a motto for it promises to be a very difficult period indeed.  Not just for retail but for us all.       

Has Government considered the business cost of its actions?

With all the concerns over the economy and keeping people in work was now the right time fro the Government to cost business an estimated £300 million to be able to reduce the rate of Value Added Tax by 2.5% on 1^st December 2008? Having had some time to reflect on the Pre Budget Report Statement many retailers are thinking that the VAT reduction will not necessarily get passed onto shoppers at the till without negotiation and so is it all really worth the aggravation being caused?

 

This Government has been good at wasting resources. In its first term of office its obvious inexperience of being in Government led them to creating many costly talking shops whilst trying to reach the right answer on policy decisions. Laudable maybe in trying to discover the right answers but if Gordon Brown’s zig zagging method of being Chancellor has been mirrored across the board then a lot of right answers were not reached making the spend uneconomic.

 

Gordon’s last error; the 10p tax rate withdrawal (as if you didn’t know) has proved particularly costly to the Nation. By compensating all tax payers in the way they did the Chancellor issued another tax coding notice to every tax payer to every employed person with the new personal allowance on it. This cost the price of a stamp, an envelope, labour or machine costs to pack it and at least one sheet of A4 paper to produce it within HMRC.

 

Upon receipt there were the extra professional costs to check them to ensure accuracy. But how could they be wrong you ask as only 1 item changed; the personal allowance from one sum to another. Ah yes, but you have to consider that other tax codes had already been issued in many situations which had had things changed that were not correct. We had checked these and advised of the revisions. In many cases these had either not been processed or returned to the incorrect figures again meaning further amendments. Some clients we have had 7 or more tax coding notices this year!

 

And if this was not staggering enough we had to use our working together links to access a computer programmer to understand how the program worked so that we could telephone a Manchester tax office to explain how to use the software. I think this is called training and probably unaccredited training at that as we had never seen the software and so offered it in virtual way. “When a blind man cries” I think was the name of the Deep Purple song!

 

Trading in a difficult economy requires care and attention over the overheads to keep spending at a minimum. I think we need to see some appropriate care and attention from our Government to ensure that they do not cost their customers too much money and at the same time keep their own overheads to a minimum whilst offering an efficient and well trained service.

 

Now there’s a challenge for the New Year resolution!

Freedom of Portsmouth? Freedom of Tottenham more like!

We all learned recently that a week is a long time and much can happen from the Banking crisis but the last week has raced by. Late last Saturday there I was checking out team news on the BBC website and not really wanting to go to the Bolton game on the Sunday. I spot a story on the homepage about 1,700 runners being stranded at Honister Slate Mine near Keswick and telephone my parents to let them know, them being Keswickians and all that,  but they think I am joking so we put on our respective televisions to see if its on and then Mother says “Ramos has been sacked”. I’m then thinking she’s winding me up only to put on Sky Sports News and find out she is correct and that Harry Redknapp might be on his way. 10 minutes later he is on the telephone saying “I’m signing in the morning” and as they say the rest is history.

 

Poor Ramos? Well yes and no. He was given no more time that Jol to sort it out but like the end of Jol’s reign I – like many other Spurs fans – could not see where the next point was coming from and with 8 games played, 2 points, 7 more games against the top four so assume no points there, that left 23 games from which to raise the 38 points needed to reach the supposed safety margin total.   As a consequence we set out for White Hart Lane with renewed enthusiasm won the game though Bolton were poor and on Wednesday – courtesy of Bank of Ireland – Duncan and I saw the 4 – 4 great escape and I’ve just watched on http://livefooty.doctor-serv.com the Liverpool game and another Lazarus like comeback. Thank god Sid Waddell does not commentate on Spurs games he would suffer a cardiac arrest.

 

So Spurs may be back, the jokes will subside to some other team (I hope) and Harry will make us the world beaters that Juande was supposed to as Martin was before. Probably not. Clearly Harry’s man motivation skills are second to none and players that could not put one foot in front of the other can now compete for 94 minutes and not know when they are beaten. What does this say about their desire and discipline? Sadly not a great deal but it does show how important leadership on the pitch is. On Wednesday “Jol like” substitutions got Arsenal into trouble and lost them an important 2 points and today Keane’s withdrawal seemed to act as a pick me up for the Spurs team.

 

Robbie has not had the best of it so far at Anfield but his play today was good and reminded of his time at Spurs. For Keane we should now read Modric as he has shown this week that he may be able to take over that mantle in time. These days there are nearly as many subs on the bench as players on the pitch and you can use 3 so they do. Is it really necessary? Years ago we only had 1 sub and he was not slavishly used and certainly the strikers did not always get pulled from the action. A good striker will score with his first kick or his last – depending upon when the chance comes – but all too often the chance falls for someone else as he has come off to get a clap from the crowd? If Lineker had come off every game his goal tally would have been far lighter but these days it is accepted and I think Managers and Coaches should think that one through.

 

This week Spurs also announced the new 60,000 seat stadium. If it gets built fantastic because the atmosphere in the stadium would be worth 2 goals. Having been to The Emirates Stadium this week and seen the Arsenal fans up for the game I can tell you the atmosphere was electric and probably a bit intimidating for the Spurs players.  What’s more the view wherever you sit was excellent and it is certainly on a par with Wembley Stadium. If Spurs can get this built and adequately financed then it might make them the big club they crave to be and Harry suggests. Yes we have a great fan base but we only have a 36,400 capacity; about 2,000 more than West Ham who from Harry’s comments may not be as big a club. I’m sure they’ll let him know all about that when we play them next time and he might want to have a chat with Paul Ince about the reception he might now receive.

 

Until then he has a big job on to look at all the recent signings and decide what squad changes he needs to make. I wish him and our Chairman good luck with this as Harry is good at spending the transfer budget – as Portsmouth and West Ham might tell you – and our Daniel is going to have his wits about him come January that’s for sure.

 

Until then keep up the good work and Come On You Spurs!   

 

 

Lambert Chapman LLP’s Nick Forsyth asks “LPG: Is it right for you?”

In these times of rising fuel costs is it once again time to reconsider your fuel options. Previously many switched from petrol to diesel to obtain greater miles per gallon but in recent months we have seen a widening of the gap between unleaded petrol and diesel costs. Without considering other fuel types the opportunities to benefit are slim so is LPG a real alternative?

 

If you are not driving a diesel vehicle then the benefits look good. Granted there are conversion costs but for a business vehicle doing solid company mileage the repayment period might be 18 months. In Essex we have 9 Shell sites that provide autogas and the website www.autogas.ltd.uk sets out where the 1,300 countrywide sites are plus the approved dealers who convert vehicles. It also provides calculators for potential savings and case studies of businesses that have undertaken the exercise. One example quoted indicated that a business running 20 cars and 20 vans could save £93,200 per annum in running costs before conversion costs which would seem to indicate that further examination might be a good idea.

 

Initial feedback is, however, mixed. Cost of vehicles appears higher and the resale market at the end of life for first owner unproven. There is also evidence that the LPG technology can be temperamental leaving vehicles running on petrol this defeating the object. Because the number of vehicles using LPG is not growing as quickly as anticipated many dealers have a minority of mechanics trained in the technology so waiting lists for servicing and repairs can be long.

 

As a result good advice suggests that diesel may remain the most sensible option because it is the fuel most used in R&D by manufacturers. Drivers should be encouraged to look at prices before filling up, using supermarkets and avoiding motorway service stations at all times. Speed limiters and vehicle monitoring can also assist the business to only pay for its running costs at an efficient rate and lastly driver training can have a vital role to play teaching drivers how to use the pedals well and how things such as proper tyre pressures assist in fuel economy.

 

So there we have both sides of the argument. What we need now is anecdotal comment supporting one side or the other so that we all might make a considered commercial decision on this issue. I welcome your comments.

Lambert Chapman LLP’s Nick Forsyth sees Bank Rates rising

One of the early indicators of recession in the early 1990’s was the increase of the lending rate above base by the major clearers to its smallest businesses. Imagine the sinking feeling to discover that Barclays are to increase their rate margin from 6.8% over base rate to 10.8% above base. What this effectively means is that some Barclays customers will now be paying an interest rate to the Bank of 15.8% overall.

 

As you might imagine the Federation of Small Business were not impressed by this move and have suggested that the Bank are preparing themselves for requests for further advances come from existing customers. This may well be correct and it is a trend that the market will see over the coming months from all Banks as they price lending to customers at more commercial rates and higher than above margins on bank base rate. The reason for this is the movement of LIBOR rates which fluctuate outside the scope of a Countries bank base rates which remain fixed for periods. As an example on 30 September LIBOR stood at 6.87% against a bank base rate of 5%.

 

As a consequence the traditional close proximity between LIBOR and Bank Base Rate has slipped over the last 12 months and this means that to reflect pricing and profitability Banks need to price upwards deals to make them viable. I am not sure whether this point is understood by many economic commentators who consistently call for a drop in the base rate to stimulate demand. Whether this base rate fall takes place if LIBOR remains at current levels all that the fall will achieve is Banks wanting to renegotiate rates or increasing pricing on future deals so that they do not lose out.

 

I have not seen the letter sent out by Barclays to its affected customers but would be pleased to do so; my information came from the Sunday Newspapers. If you are affected or wish to comment on this announcement please feel free to do so.