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Weekend reading: The land where time stood still

Weekend reading: The land where time stood still post image

What caught my eye this week.

Another week in the time-warp that is Brexiting Britain. Don’t hold your breath if you’re waiting for Star Trek.

First we had prime minister Theresa May’s ‘Brexit vision’ in Florence.

While almost devoid of content, I thought May delivered a pretty rousing speech.

Unfortunately it was almost 18 months too late.

True, it wouldn’t have convinced me Brexit was a good idea back in May 2016. But I would have doffed my cap to her for making a stirring case.

But this wasn’t a wishy-washy Vote For Us campaign speech. This was a speech given more than a year after the UK voted to leave the EU! In a Referendum where many apparently thought we’d be more than halfway to the exit by now.

And it’s ever more abundantly clear that there is/was no idea of the scale of the challenges, no plan, no progress – just barely concealed panic.

The only content in this curious piece of should-be historical reenactment? An admission that – of course – there will be a transition period and – of course – the UK will continue to pay into the EU during it.

Both are entirely obvious requirements to anyone but the politicians on the Leave stump last June, and to a sizeable cohort of their voters.

You might consider May vaguely acknowledging these realities is progress, but it wasn’t delivered in a grown-up or rational way. Rather she offered a deeply couched acceptance to soften up the Brexiteers for the inevitable. It was in the same way flummoxed parents promise to the kids in the back of the car that there’ll be ice creams later but first we have to go to B&Q. Miserable.

Uber stupid

Meanwhile back in London – shining capital of a bold new Brexit Britain or Wiley Coyote running over a cliff-edge, depending on your point of view – we had Transport for London announcing it would not be renewing Uber’s licence to operate, potentially cutting off a service enjoyed by three million people at a stroke on 30 September.

True, Uber won’t just cease operations – there will be an appeal. An appeal I suspect they’ll win. We might be tending towards mob rule in the UK, but the mob wants Uber and I think they’ll keep it.

But to try to cut the service down at a stroke seems a Draconian way to do business in 2017.

Why not big fines? Why not notice periods? I’m not an expert on taxi cab licensing, so perhaps my thoughts are wide of the mark. But to me it seems like a return to 1970s-style local politics and protectionism, and emblematic of the irrational way we’re making decisions these days.

Uber is a far from perfect company, but the world and its dog knows that. The founder has been replaced. The internal culture is getting an overhaul.

Yes, there have been some horrible crimes committed by Uber drivers. If it has dragged its feet bringing them to light, it should be punished.

But those celebrating Uber’s apparent cessation in London should think about the bigger picture.

Firstly, as is often the case with capitalist innovations, it’s easier to overlook the massive way the company has improved life, just because it happens to make a profit.

Uber has facilitated millions of journeys in London – especially late at night or to out of the way places – that made living in this often difficult city easier. We’re talking tens of millions of hours of lives better lived.

Then there are the attacks and similar. Nobody wants to write “yes, but” and consider the bigger picture when it comes to such things – but that’s exactly what we should do.

Over the past two decades I have seen numerous friends – most often younger and arguably more vulnerable women – get into literally random cars on the street, despite my protests, for various financial and perceived safety reasons. Horror stories about rogue mini-cab drivers were ubiquitous until Uber arrived on the scene.

Are Uber-haters considering the alternative of going back to 2010 – many more people walking home late at night or getting into unlicensed cars at 3am drunk or similar because they can’t find/afford a black cab or even a mini-cab?

I agree Uber has not been the greatest company culture-wise and they need to upgrade their practices. But the technology is revolutionary and it has transformed late night London. The fact that all Uber journeys are logged and linked to a user makes it far safer than most alternatives. TFL should be working to roll this out everywhere, not seeking to roll it back.

Uber should have been fined or put on some sort of official notice or similar. They should not exist outside of regulation. But there’s no use being sentimental about it. Black cabs are as dead long-term as red phone boxes.

Let’s hope this decision isn’t the canary in the Brexit coal mine that Tyler Cowen at Bloomberg fears:

The new Britain appears to be a nationalistic, job-protecting, quasi-mercantilist entity, as evidenced by the desire to preserve the work and pay of London’s traditional cabbies. That’s hardly the right signal to send to a world considering new trade deals or possibly foreign investment in the U.K.

Uber, of course, is an American company, and it did sink capital into setting up in London — and its reputational capital is on the line in what is still Europe’s most economically important city…

Unfortunately, the U.K. is in a position where it can’t afford too many more mistakes. It just made one.

  • You can petition against TFL’s decision here.

From Monevator

How online retirement calculators can mislead you – Monevator

From the archive-ator: Become your money hero – Monevator

News

Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1

UK credit rating downgraded over Brexit uncertainty [Search result]FT

The silly pension lifetime allowance of £1m is starting to hit – Telegraph

Cars over 40-years-old will not need an MOT – Telegraph

The young are not ready for mortgage rates to rise – ThisIsMoney

The £230-a-year marriage allowance you could be missing out on – Guardian

Britain falls to 25th in the best buy-to-let destinations in Europe – ThisIsMoney

Ros Altman blames the rise of populism on QE [Letter] – via Twitter

Chart showing how UK households are saving more than thought after ONS revised data

UK consumers are in better shape than most people think… – Woodford Funds

…oh no they’re not, they’re primed to blow – Guardian

Products and services

Coventry Building Society launches Best Buy 1.05% Easy Access ISA – ThisIsMoney

Advert boasts of ‘safe’ 15% returns: Should I invest? [Um…]Telegraph

The true cost of zero-rate credit card deals [Search result]FT

How Standard Life is changing the investments of 1m savers – Telegraph

Fix your mortgage before rates rise – ThisIsMoney

How to borrow interest-free for three and a half years – ThisIsMoney

ETFStream is a new site about… well, have a guess – ETFStream

Car financing continues to speed down a dangerous road – The Value Perspective

How to choose the ‘best’ (not the cheapest) investment platform – Telegraph

Remember Thriva, the sci-fi blood test dashboard solution? (Work with me here.) Not only will you get £10 off your first kit with the following link, you can use the code BLOOD50 at checkout to get a further 50% deduction – Thriva

Comment and opinion

Bet with Buffett on index funds, not against him – Barry Ritholtz

The lie of averages – Flirting with Models

Workplace pensions shouldn’t be this much work [Search result]FT

Social proof in the markets – A Wealth of Common Sense

ESG investing: Don’t let the perfect be the enemy of the good – Abnormal Returns

Paranoid and deranged behavioural algorithms – Tony Isola

Emerging markets may be due for their comeback – Bloomberg

One spouse, two cars, three houses, four jobs – Financial Samurai

Why David Gardner invests in rule-breaking companies [Podcast]Invest Like The Best

The humbling of former hedge fund star Hugh Hendry – E.S. [& me from 2009]

Back-testing Meb Faber’s Trinity portfolio (Lite) – Allocate Smartly

Seek not to be entertained – MrMoneyMustache

Bitcoin has become about the payday, not the potential – The Mission

Who will look after you in your old age? – SexHealthMoneyDeath

Larry Swedroe: Dividend strategies fall short – ETF.com

Why cashing out of a short position the day before the 1987 stock market crash was actually a great trade – What Works On Wall Street

Off our beat

Make your point and get out of the way – Morgan Housel

What a computer has to say about writing a best-selling novel – Guardian

Immigrants are a boon to the US, not a burden – Bloomberg

And finally…

“Everyone thinks Goldman is so fucking smart,” he railed. “Just because Goldman says this is the right valuation, you shouldn’t assume it’s correct just because Goldman said it. My brother works at Goldman, and he’s an idiot!”
– Andrew Ross Sorkin, Too Big To Fail

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{ 48 comments… add one }
  • 1 Mike September 23, 2017, 1:13 pm

    On the subject of Uber, it seems obvious to me that TFL are, at least in part, acting on behalf of the black cab lobby in the next of protectionism.

    However, that isn’t to say that Uber doesn’t have significant problems with the way it operates. It does not “make a profit” as suggested in the article, as far as I know, and the business model to keep fares so low is to subsidise quite heavily out of the pockets of investors.

    Add to that their obvious hatred of any form of regulation (and the crazy lengths to which they go to avoid it) the real issues that their laissez-faire approach to reported crime, driver licencing and so on, and I do think TFL have grounds to escalate what is presumably an ongoing battle with Uber.

    This won’t have come out of thin air. I think their last licence extension was fairly short, and probably predicated on promises of improvement. The authorities should be using the levers at their disposal.

    Of course, there’s the other picture, where black cabs are replaced by Uber drivers, who are in turn replaced by driverless cars. Where, eventually, do people find these entry-level jobs?

  • 2 Neverland September 23, 2017, 1:18 pm

    Über is a company with a corporate policy of breaking the law and then lobbying to have the law changed retro-spectively to its advantage

    They deliberately avoid calling their employees as employees and cheat on their taxes

    (There is a nicely worded employment tribunal decision on the subject)

    We should follow the lead of our fine French friends and arrest their executives

  • 3 David September 23, 2017, 1:21 pm

    I don’t know much about taxi cab licensing either, but I think there are much wider issues at play with the Uber decision, and I personally hope this becomes the first of many occasions when we stand up against appalling corporate behaviour.

    There’s a growing perception that a handful of global companies are making billions for their overseas owners with total disregard for corporate social responsibility in the local regions where they operate. Many of these businesses pay a fraction of the tax that appears to be morally due (there is a VAT case ongoing against Uber for example), and this is one obvious reason that they can charge less than the local established ones.

    Security concerns were cited as a factor in the TFL decision. It’s been reported in at least one newspaper this week that bomb making kits are for sale on Amazon, while Google have been criticised for not taking down dangerous content like videos explaining how to make bombs in your own home. Does the UK government have to threaten to block Google before they take the issue seriously? Uber journeys may be tracked, but TFL claim their Greyball software is used to prevent the authorities from accessing data. A bit like the debate about WhatsApp encryption I suppose.

    None of this applies solely to London or the UK, as tempting as it may be to link it to Brexit and denounce the decision as rabble rousing. Uber have been banned in numerous cities around the world over the last few years.

    I personally think it comes down to fundamental questions around democracy and regulation of the richest 0.1%. When a corporate behemoth starts a petition you could argue they’re straying into the dangerous territory of a political campaign.

    I’m all in favour of capitalism and technological progress – hopefully the process of creative/destructive capitalism will either force Uber to change their behaviour, or replace them with somebody else.

  • 4 ermine September 23, 2017, 7:05 pm

    Blimey. OK, I’ve never used Uber, but treating your drivers/employees/non employees/whatever the heck they call them like absolute crap counts for nowt on the other side of the balance? I’m sure slavers made the case that it was essential to reduce the costs of sugar for the end customers, but at some point the balance has to be drawn between the yuman rites of the customers and of the ZHC grunts that make it happen.

    A similar movie seems to be playing at Ryanair. Maybe there’s something I’m missing here, but the world seemed a little kinder when there was a little bit of commitment between employer and employed (to whatever Uber call its grunts these days). As for that petition, it looks to me like the snowflakes throwing a hissy fit at not getting their subsidised personal transport from the Chiltern Firehouse to their Zone 5 pads. I thought the Tube runs all night these days 😉

  • 5 The Investor September 23, 2017, 8:24 pm

    @ermine — I don’t believe 40,000 people worked for Uber in London and were treated “like absolute crap” anymore than I believe the 3m people who signed up with Uber and regularly took trips with it felt they were taking their life into their hands with these (relative against 40,000) handful of drivers the media dig up who were dangerous, couldn’t speak English, or whatnot.

    All parties were doing it because it is in many cases better than the alternatives.

    Perfect? No, of course not, not close. The model is pretty perfect from a customer point of view — the company clearly a lot less so. But most of the complaints beyond specific bad practices (which of course should be punished) and individual criminal drivers (who should go to jail) I don’t put much weight behind.

    To me it sounds like people in the 1950s complaining that rock-and-roll is corrupting their daughters.

    In 10-20 years few of us anywhere a city will still own cars and in 15-30 years very very few people will still drive them. How we get there remains to be seen, but blanket bans and other heavy handed approaches only move London to a slower lane in the meantime. We can do without that right now.

  • 6 hosimpson September 23, 2017, 10:33 pm

    “Black cabs are as dead long-term as red phone boxes.”
    Agreed.
    Having said that, I don’t have an Uber account. A couple of years ago I created one, had one ride, and the next day my account was hacked. First I got a notice that my phone number was changed to a number with a Russian country code, then my email was changed to something else with a “.ru” domain extension. Bloody Russians. After that I was no longer able to log in. I blocked the vendor on the card immediately (I might add that the lady at Amex sounded highly unsurprised by my story about the hacking of my Uber account) and then I contacted Uber with a request to sort that shit out. They did, eventually, though it took a little over a week.
    I don’t know how it is now, but back then the only support Uber had was online and in the US, so with the time difference and their checks, etc., they ended up taking their time.
    Unfortunately by the time this got resolved I had lost all faith in the service and as soon as I was able to access it, I shut the account down.
    Personally I don’t think they will win the appeal. I think they will sort themselves out (or at least will have a letter that’ll say they have done so) and re-apply for the license in a few months. Which will be granted and followed with a popular sigh of relief.
    They should have reported those sex crimes. I mean, FFS. Unlicensed cabs are one thing, and I imagine only a tiny minority of those people are criminals. Uber operate under a cloak of legitimacy that unlicensed cabs do not have, and a tiny minority of Uber’s people are criminals, too. It sounds like there’s a chance a drunk bird will get assaulted regardless of which option she chooses, so what’s the point of the license then?

  • 7 Vanguardfan September 24, 2017, 9:28 am

    I’m firmly in the camp that is glad that, due to whatever confluence of interests, someone has actually stopped a company doing what the f*** it chooses. Just because something is popular doesn’t mean it’s right. The unfettered free market can damage both workers and consumers, if allowed to get away with it. Sure, capitalism is a great engine for economic prosperity and, sometimes, human advancement, but it should not be beyond scrutiny or the rule of law. It’s supposed to serve people, too often at present it feels like the other way round.

  • 8 UK Value Investor September 24, 2017, 10:12 am

    It’s unlikely that London will go back to the stone age just because Uber has been banned. There are many alternative and similar services. Perhaps 10 years from now we’ll all be glad that Uber was banned because the alternatives turned out to be so much better once they were allowed to flourish.

  • 9 arty September 24, 2017, 10:32 am

    The Uber issue seems pretty simple to me – we have regulations int the industry, mainly put in place for good reasons of public safety, etc. Uber totally disregards the regulations so the regulator cracks down on them. Can’t see a problem there- all they need to do is obey the damn regulations.
    Had to laugh at all the whining about how poor Londoners will no longer be able to travel about their city – as if poor people aren’t in fact using the bus/train/tube rather than taxis.
    I think there’s also a wider issue about huge companies trying to engineer a monopoly position, not through greater efficiency (the evidence seems to show that Uber aren’t in fact more efficient), but through subsidising customer prices with enormous amounts of investor money, which they then hope to gain back once a monopoly or near monopoly position is established. In the long run, this behaviour isn’t good for an economy, for investors, or for the customers.

  • 10 Gaz September 24, 2017, 1:12 pm

    I’m not sure how anyone can blame Uber for the situation they’re in. TfL makes it perfectly clear what the regulations are, and not only did Uber fail to comply with them, they ACTIVELY tried to avoid the authorities with Greyball. I’m not sure TfL has the power to fine Uber (and even then, I think when they take utility companies to court over roadworks the max fine is £5k) so a tiny fine won’t make Uber change. The *threat* of a ban will (Uber will continue operating while they sort it all out), which in turn will make it better for drivers and customers. It’s a win-win.

  • 11 William III September 24, 2017, 1:15 pm

    We’ve got two fairly extreme versions of government and market failures clashing here.

    Government failure: there is a clear case of regulatory capture and rent seeking by the black cab cartel, which throws up silly barriers to entry with its tests and hand in licence control. Not dissimilar to lawyers, utilities, banks and fossil fuel companies mind; it just looks even more outdated and irrelevant than those, because of technological advancements.

    Market failure: Uber offers better cars and, by and large, capable drivers – but certainly has an unappealing race to the bottom culture, trying to squeeze out profits in areas where the market fails to price externalities relating to decent working conditions and violation of human rights, including those of women in its HQ. It’s also questionable to what extent we should allow cheap liquidity from the US chase assets elsewhere to desperation – capital market discipline is great to an extent, but at current interest rates we’re increasingly looking at surging ‘unproductive entrepreneurship’ in the form of bloated IPOs, sweat equity, unfriendly takeovers by consortia driven by asset stripping PE firms, and of course Uber’s cut throat corporate responsibility-despising competition disguised as technological progress through its ‘app’.

    I am allergic to rent seekers such as the black cabs, but also to the kind of capitalism that Uber is practicing today. If it hasn’t, TfL should seek a different brand of engagement with, and regulation of, Uber to allow consumers to benefit from digital innovations. But (and I suspect, @TI, that this is the case) the firm has willfully acted without regard for the rules despite TfL’s best efforts to get to grip, and assuming those rules are flexible enough to facilitate some degree of innovation in the industry, then fair play for pulling a red card.

  • 12 Pinsticker September 24, 2017, 1:59 pm

    Uber…..”just because it happens to make a profit.”
    If you confuse making stonking losses with profit then perhaps you should take the sage advice of your colleague and move into passive investing in order to save yourself from yourself!

  • 13 dearieme September 24, 2017, 2:02 pm

    “there is a clear case of regulatory capture and rent seeking by the black cab cartel”: indeed.

    “Not dissimilar to lawyers”: yes
    “utilities”: presumably
    “banks”: yup
    “and fossil fuel companies”: what do you have in mind?

  • 14 Scott September 24, 2017, 2:52 pm

    @TI, looks like you’re in a minority with your views on this one, at least when compared with your readers!

    As others have said, it seems likely that Uber will sort out the issues that are currently preventing the licence being renewed, so likely to be a storm in a teacup.

    Also, a BBC article states that the law in England and Wales allows a passenger to book a private hire vehicle from anywhere (e.g. outside London) as long as the licensing and booking processing are all carried out under the same authority, so as Uber can, technologically, switch their processing anywhere they hold licenses, Londoners will still be able to use the service even without it being licensed in London.

  • 15 William III September 24, 2017, 5:56 pm
  • 16 Matt September 24, 2017, 10:08 pm

    This is definitely a generational issue – I notice most people who seem to be the most fanatically anti-Uber tend to be over 50, and often have never actually used Uber, at least not regularly… For many Londoners it is literally a life changing service… Without debating all the pros and cons of the company in too much detail and corporate misbehaviour, the App and the experience it provides has enhanced a lot of peoples’ lives in the capital – particularly the young… Saying “oh but there are other similar Apps out there” is missing the point, Uber is that much better than anything else… It’s a global international platform that can be utilised in many countries in the world… The clock can’t be put back on innovation…

  • 17 ermine September 24, 2017, 11:55 pm

    @Matt

    For many Londoners it is literally a life changing service… Without debating all the pros and cons of the company in too much detail and corporate misbehaviour, the App and the experience it provides has enhanced a lot of peoples’ lives in the capital – particularly the young…

    Fair cop on the demographics in my case, but ‘the end justifies the means’ has taken humanity to some pretty dark places. Those pros and cons matter, is it so unreasonable to expect Uber to obey the law of the land, or do they consider themselves to be ubermensch so beyond all that? As others have said, they seem to be thinking about sorting it now they’d taken this shot across the bows and the service hasn’t been ceased yet.

    As for innovation, what Uber needs is self-driving cars to run it out of town ASAP.

  • 18 The Investor September 25, 2017, 8:19 am

    As for innovation, what Uber needs is self-driving cars to run it out of town ASAP.

    I strongly suspect Uber (or someone) will own the self-driving cars. I think it’s pretty unlikely most people are going to being paying tens of thousands for a car when, with self-driving, they can travel 10-20 miles for peanuts. (Couple of quid I imagine).

  • 19 The Rhino September 25, 2017, 9:18 am

    for sure, my understanding is that uber are fully invested in the self-drive bit – its a no brainer for them. A lot of their problems go away when the cars drive themselves.

    I have wondered whether I may have bought my last car already..

  • 20 pulpo September 25, 2017, 9:35 am

    @ Matt @ ermine
    – ‘Fair cop on the demographics in my case’
    – me too – I’m over 50 and live in London and have never used Uber. I rarely use black cabs on the grounds of cost, on the rare occassions I need a mini cab I call one, but mostly I just use the tube or walk (heard of that?).
    All these soon to be unemployed Uber drivers will presumably just go back to being mini cab drivers and normal service will be resumed without the gadgetry. One less use for the smart phone is simply a bonus.

  • 21 Bastiat September 25, 2017, 9:56 am

    So we need to stop innovation to protect our jobs. Now where have I heard that one before?
    https://en.m.wikipedia.org/wiki/Luddite

  • 22 Kraggash September 25, 2017, 9:56 am

    Why Uber?
    Sometimes there is a reason for a monopoly, like Facebook (it is much more useful to be on the platform that everyone else uses) or even possibly Amazon (massive background infrastucture) but taxi/ride sharing? I dont think so.

    This is a prime area where competing companies should be encouraged, as long as they conform to legitimate rules (not protectionism). It is how capitalism should work: government sets some minimally acceptable bar as regards safety, polution etc, and companies innovate to provide better services.

    Handing all cities over to Uber and shutting out competition from similar companies, with apps that may not be quite a good yet, is not a great idea long term.

    I understand that TfL gave Uber 4 months to clean up the areas that they objected to, before this latest step, and Uber addressed none of them.

  • 23 The Investor September 25, 2017, 9:56 am

    @pulpo — In around 25 years of living in London I’ve never owned a car, have (obviously) regularly used the tube and as for walking, my daily average over last year was 3-5 miles a day.

    Rarely take black cabs on grounds of cost and being lectured by driver, and also unavailability when required. (Very easy to get a black cab outside a tube/train station…)

    Have got the odd mini-cab. Mixed bag.

    Uber (and its ilk) are revolutionary. Shake your fist at smartphones if you like but they are not going anywhere.

  • 24 ermine September 25, 2017, 11:29 am

    @Monevator @Rhino isn’t Uber’s USP that they outsource all the vehicle capital risk to the owner drivers? Sure the self-driving cars/cabs will be owned by someone, after all TfL already have self-driving trains on DLR. Perhaps that will be the car companies if the trend to PCP and the way corporate fleets are leased in the UK is anything to go by. Capitalising that lot would certainly change Uber’s business model in a big way.

    There’s nothing wrong with smartphone invocation of personal pod-based transportation options if that’s what the market wants, as long as you pay your dues to the stakeholders which is why we have regulation. Because otherwise monopolies crap on as many stakeholders as possible to boost the bottom line, Uber’s mistake has been to get caught doing that. I’m sure they can fix it if they want to hard enough, and if not somebody else can have a bash.

  • 25 tom September 25, 2017, 11:33 am

    The technology and facilities of Uber are undeniable – the best example for me is that women on their own at the end of a night out no longer have to worry about finding a cab.

    However I don’t think this gives it a get-out clause to ignore ethics, culture and the law. Put it like this, there’s no way in hell I’d invest in Uber currently (given the option). Management’s stewardship is a key factor for me.

    It’s naive to be partisan about this issue – I have no doubt that part of TfL/Khan’s reasons are regrettably political/protectionist. But I do think Uber need to reform.

    Incidentally the latest research suggests that taxis will be a regional play, look at Didi Chuxing, Go-Jek etc. so we may yet get a home-grown one. Competition is important, right?

    And it’s easy to forget that all this technology in its infancy – maybe Uber will turn out to be a ‘Friendster’.

    p.s. Let’s also not forget myTaxi – i.e. Uber with black cabs (so obviously more expensive).

  • 26 David September 25, 2017, 11:38 am

    @ ermine

    Smartphone invocation of taxis – love the idea of this, which reminds me of Arthur C Clarke’s “Any sufficiently advanced technology is indistinguishable from magic.”

    Hope SLS will be making a comeback now the nights are drawing in? The last 3 months have been barren…

  • 27 pulpo September 25, 2017, 12:05 pm

    @The Investor

    – “and being lectured by driver” – yes! I catually gave up on black cabs after being charged £95 to go from Heathrow to Battersea. A mini cab is £35.

    I don’t mind smartphones, I even have one, but life is perfectly manageable without one and too often these apps purport to solve problems that didn’t really need solving.

  • 28 Factor September 25, 2017, 12:08 pm

    On self-driving vehicles, I look forward with “eager anticipation” to the software that will attempt to surplant the civilised and good-natured custom, here in the rural West Country and in similar locations, where one driver must defer to another and reverse back to the “nearest” farm gate, in the mirror-pinging narrowness of the hedge-bounded lanes which are very often the norm hereabouts.

    Can a smile and a hand wave of thanks be rendered in binary code?

  • 29 TommyTank September 25, 2017, 4:06 pm

    Not about Uber!

    The silly pension lifetime allowance of £1m is starting to hit – Telegraph

    Are there any articles on here about how best to approach LTA – when the testing occurs – any specific examples?

    Tom

  • 30 The Investor September 25, 2017, 4:47 pm

    @TommyTank — We haven’t written about that yet. We might soon (would welcome reader input / guest article if anyone has experience to share?)

    @all – Re: Uber, well as suspected the true colour of TFL’s non-renewal decision is becoming clear:

    data released under the Freedom of Information Act in July shows that inspectors found nothing amiss during the ten times they visited the company over the last four years. The only issue that arose came in 2016, which the TfL said was outside of Uber’s control and that the firm took “all reasonable steps” to address the problem.

    https://www.techspot.com/news/71110-uber-passed-london-regulator-inspections-ten-times-before.html

  • 31 Egremont September 25, 2017, 9:46 pm

    Question:

    Say I want to set up a SIPP and own vanguard funds 60% equities 40% bonds. If I own just lifestrategy 60% equities, income on my 40% bond allocation will be taxed as dividends. If I own lifestrategy 40% or 20% equities, income on both components will be treated as interest (and I could buy other vanguard pure equity funds to attain my overall 60/40 ratio). I assume that in a SIPP you want income to look like interest, not like dividends. Is that right and is it worth gaming the choice of vanguard funds to maximise interest-like income?

    If it matters, I am late 50s but see myself accumulating rather than extracting for at least the next few years.

  • 32 ermine September 25, 2017, 11:15 pm

    > I assume that in a SIPP you want income to look like interest, not like dividends.

    Why? It’s tax privileged until you draw it, it’s the bottom line that matters AFAICS.

  • 33 The Austrian September 26, 2017, 9:37 am

    Ros Altman is spot on in her letter to the FT. The irony is so bitter it hurts – ‘Generation Rent’ has completely lost faith in markets, profit and saving thanks to the extraordinary, anti-free-market activities of central banks, govts and regulators post-2008, to whom not one scintilla of blame will be attached. We will now have years of centrally planned madness (from the right and left) as a result: price controls, Help to Buy, Poujadism, stimulus, consumption passed off as ‘investment’, special loans and tax rates for favoured client groups, etc etc. As though nobody had ever tried all this before.

  • 34 Fremantle September 26, 2017, 9:49 am

    Interestingly, no one has mentioned the plight of 40,000 drivers who are now going to have find alternative employment so that we can protect their rights.

    I’m guessing if they had alternative, better paid jobs on offer, they’d be doing them, if that’s what they wanted. Or maybe some like to dip their toes in an out of working as a driver.

    It doesn’t really matter their reason for working for Uber, because unless there is a change in decision from TFL or the courts, they’ll be unemployed and if it is their car and in debt because of it, in hock as well.

  • 35 Mike Rawson September 26, 2017, 12:00 pm

    I’ve written about the LTA:
    The Lifetime Allowance

    Happy to write a guest article tailored to Monevator readers’ issues.

    Mike

  • 36 Egremont September 26, 2017, 1:10 pm

    @ermine if they treat a 60% fixed int/40% equity fund as all fixed interest does that not mean they are going to gross up dividends as though 25% income tax needed to be added back to them? which is a better deal than you get on dividends even if they are protected in a SIPP.

  • 37 ermine September 26, 2017, 4:51 pm

    @Egremont to the best of my knowledge the only grossing-up that happens in a SIPP is grossing up the money you put into the SIPP. The source of money can only be from that tax year’s employment (or self-employment) income*, though retirees like me who don’t have employment income can put up to £3600 p.a. into a SIPP.

    You don’t get any grossing up on money you make and receive as cash within the SIPP, which is how I read your question. On the upside you also don’t pay the new dividend tax on what’s in your SIPP.

    *There are some technical exceptions contributions being from that tax year such as carry-forward, but the general case is only earnings from the same tax year as the contribs

  • 38 Egremont September 27, 2017, 11:12 am

    Are you sure? my impeccable source (http://monevator.com/bonds-and-bond-funds-taxed/) says
    “Bond funds registered as OEICs or Unit Trusts pay interest with 20% tax already deducted.

    So a basic rate taxpayer has no more to pay. (Yay!)
    A higher rate taxpayer owes another 20%.
    A non-taxpayer is due 20% back.
    If your bond fund is safely dunked inside an ISA or SIPP then you should automatically receive interest payments gross, but it’s worth a double-check email to your provider.”

    A SIPP is effectively a non-taxpayer surely?

  • 39 TommyTank September 27, 2017, 12:07 pm

    @Mike Rawson

    Exactly what I was looking for, many thanks, will read your posts.

  • 40 YoungGun September 27, 2017, 1:00 pm

    As a young (ish) female Londoner, I am incredibly irritated by the refusal of TFL to grant Uber a new licence. As a compliance professional, I am baffled! If its true that they were audited 10 times by TFL and passed an annual compliance audit in April then I can’t understand why the new licence wasn’t granted.

    There are plenty of competitors – Gett, Addison Lee, Kabbee etc but there are reasons Uber is so popular and I (and my friends) have never used any of these. I use Uber regularly and often use the ‘inform a friend when you’ll arrive’ feature, especially when travelling late at night. On the two instances I have experienced awful driving, I’ve left a negative review and been contacted by customer services at Uber the next day. They take the time to understand what happened and take it up with the driver directly. Contrasted with expensive, rude, non-card-accepting black cabs and unregistered dirty minicabs, I know which I’d rather use.

    Agree with Matt about it being a generational issue – my mum always tells me not to use Uber despite never having actually used them herself… Also agree the company evidently has organisational problems but wonder why TfL not (publicly anyway) working with Uber to resolve. Maybe I’m just dumbly believing Uber’s rhetoric but will be interesting to see the appeal play out.

  • 41 ermine September 27, 2017, 4:14 pm

    @Egremont I wouldn’t want to go against Monevator 😉 However the difference is in perspective, perhaps I was looking at it differently.

    In a similar example I have REITs in an ISA and none outside. The distribution comes as a dividend plus a smaller lump labelled eg Tax Credit BRTSH LND which is about a quarter of the divi

    Perhaps if I held the REITs outside the ISA I wouldn’t get the tax credit. The article you point to implies for bond funds something similar applies, so it’s an argument for holding a bond fund in a SIPP or an ISA rather than unwrapped. As the article says

    If your bond fund is safely dunked inside an ISA or SIPP then you should automatically receive interest payments gross,

    What I was pushing back on was the idea that for tax reasons you should favour bond funds in a SIPP over say shares in a SIPP yielding the same amount which is how I read your OP when you said

    > I assume that in a SIPP you want income to look like interest, not like dividends.

    Your bond funds only get paid gross in a SIPP or ISA. Other dividends are paid gross inside or outside a tax wrapper. Being given back what got taken away on a bond fund doesn’t make it a better selection that where nothing’s given back because it wasn’t taken away 😉

    I think the general argument for holding investments wrapped as opposed to unwrapped is carried and our host exhorts us to do that and Osborne’s 2015 tax changes put the kibosh on the old argument “I’m a basic rate taxpayer so an ISA doesn’t give me any benefit”

    So yes, you may get the bond funds paid gross which you wouldn’t do outside an ISA or SIPP wrapper. But it doesn’t make them preferable per se in a SIPP compared to investments normally paid gross – it’s simply that these funds are paid net outside a wrapper and the wrapper levels the playing field with equity funds for tax treatment. It does mean if you have bond funds then you should hold them in a tax wrapper, but that’s a particular form of the general rule “hold everything in a tax wrapper if you possibly can”.

  • 42 John B September 27, 2017, 7:59 pm

    Uber aren’t interested in their drivers as they just want to get market share before they can roll out self-driving cars, and they have very deep pockets to achieve this, driving out other players like Hailo (now MyTaxi) which a friend was CTO for. They are cheap more because they are buying market share than by being more efficient/evil. I doubt 40000 people will become unemployed, I suspect many were only part-time, and while the market might shrink a bit with the removal of a low cost operator, I expect the hundreds of other mini-cab firms will just pick them up.

    I’ve no skin in this game, as in my last 9 years living in London, I’ve used a cab twice.

  • 43 John B September 28, 2017, 7:37 am

    A LTA article by Mike would be great. One aspect to cover is whether the extra tax is punitive, or just recovering the tax relief. Considering £100 earned at basic rate tax and earning 5% interest for 10 years

    ISA £80 * 1.05^10 grows to £130
    unsheltered £80 * 1.04^10 (20% tax on interest each year) gives £118
    SIPP £80 boosted to £100 then * 1.05^10, grows to £162, taken as income taxed at 45%, you get £89

    This sounds punitive, but ignores the fact that in the SIPP case you had 10 extra years use of personal allowances, worth about £1 a year, and the personal allowance on the income in the first year, worth £20

    I’m sure Mike could write a more elegant analysis 🙂

  • 44 The Rhino September 28, 2017, 2:25 pm

    Does anyone here read the HL Investment Times freebie mag?

    It always follows the same format – a surprisingly interesting/sensible opening article, followed by a several pages of active fund guff with an interesting guest piece to finish.

    This months opener was by HLs own mark dampier pointing out UK could be a good contrarian bet in the brexit gloom

    he pointed out:

    1. we’re not in recession
    2. record numbers employed
    3. job vacancy rates are high
    4. July was 1st budget surplus in 15 years indicating healthy tax take – not indicative of a struggling economy
    5. Inflation nowhere near as high as predicted and set to fall over next 12 months
    6. Interest rates likely to remain low

    I think he may have a point?

    The closing article was MSW explaining why she believes taxes will rise (and therefore why you should use ISAs and pensions)

  • 45 AAJ September 29, 2017, 9:49 am

    I wonder if Uber were simply a 3 man outfit that maybe the rules would be applied the same and their licence revoked. Is it because they are large that they should be treated differently? I also realise that a lot of people want Uber back, but these are probably the same people who also want cheap clothes made by children working in a condemned factory in Taiwan.

    As soon as we have (electric) self driving taxi’s the better.

  • 46 David September 29, 2017, 11:35 am

    @ The Rhino

    Me too – I just read the first and last article and ignore the ones promoting their recommended funds.

    I thought it was interesting that Peter Hargreaves, who used to write some of those articles before he retired from Hargreaves Lansdown, was a big Brexit supporter as well as an expert on financial markets. With so much of the establishment against us leaving the EU for economic reasons, it was good to see the other side of the argument from someone who also knows a thing or two about making money.

  • 47 Justin Time October 2, 2017, 5:02 am

    I’ve used Uber regularly, although not in London, and the service has been outstanding compared to local taxis – will never use them again if I can help it.

    Here there is no established, famous and possibly tourist-pleasing sight such as the Black Cab. As said above there are other apps available to London locals, I can see that being an argument to safeguarding Black Cab drivers’ future in London whilst still allowing Londoners (who are in the knowledge, b’dum tish) to get home late etc,

  • 48 Simon October 5, 2017, 8:46 pm

    I have no sympathy for Uber. Part of the taxi business is compliance and safety. They appear to have thought they could away with being a tech company and letting the compliance and safety go hang. Uber got what it deserved.

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