This is Money Blog

Moneysupermarket was always a risky investment

It maybe a cliche but it's a commonsense one and one worth repeating over and over: You don't put all your eggs in one basket. But that's what the comparison service Moneysupermarket.com appears to have done after it emerged yesterday that 75% of its secured loans business (FT) was tied up with the Carol Vorderman-endorsed loans arm of Barclays, Firstplus, which announced it was closing its doors to new business. The announcement prompted a surprise profits warning from Moneysupermarket and saw its share price plummet by more than 30%. Ouch.

It is a blow for investors who were tempted to buy in at last year's '£1bn' flotation. But the warning signs have always been there. It was, said City commentator David Buik of spread betting firm Cantor Index at the time:  'A huge valuation for a company with a limited track record - however, profitable at the moment.'

You only had to take a look at the prospectus to understand that.

Download Prospectus.pdf

There were 22 pages dedicated to risk factors. These were the headlines:

Risks relating to the Business   

   Inability to attract a sufficient level of traffic at a reasonable cost.   

   Visitors to the Group's websites not completing revenue-generating transactions.   

   Significant decline in the number and quality of the Contracted Providers. 

   Failure to promote and reinforce consumer trust in the Moneysupermarket.com brand, or negative publicity regarding the Group.   

   Changes to search engines algorithms or terms of business, that cause the Group's websites to be excluded from or ranked lower in search results.   

   Failure to introduce innovative products and services.   

   Significant increase in traffic acquisition costs.   

   Failure to adapt to rapid technological change.   

   Failure to generate high quality consumer leads and interest from financial intermediaries.   

   Failure to prevent or detect and remove fraudulent clicks.   

   Capacity constraints on the Group's software and hardware systems.   

   Failure or interruption of the Group's information technology and communications systems.   

   Failure or interruption in the services provided by bandwidth providers, data centres or other third parties used by the Group.   

   Failure to protect confidential information against security breaches, or a reluctance from consumers to use the Group's services because of privacy concerns.   

   Failure of third party technology used by the Group to develop and operate key aggregation and other technologies.   

   Inability to protect the Group's intellectual property rights.   

   Intellectual property rights claims against the Group.   

   Liability for information on the Group's websites.   

   Inability to achieve the Group's strategic growth objectives.   

   Certain key providers or advertisers terminating their contracts or ceasing to offer competitive rates.   

   Fluctuations in the Group's results of operations and the effects of seasonality.   

   Misstatement of key performance measures.   

   Inability to attract and retain capable management, and key development, technical, operating, sales and marketing personnel.   

   Failure to manage the current growth in the Group's business and operations.   

   Exposure to greater than anticipated tax liabilities.   

   Tax risks relating to the uncertainty of e-commerce.   

   Identification or integration of future acquisitions.   

   Damage to any or all of the buildings comprising the Group's headquarters.   

   Adjusted EBITDA and Adjusted Operating Profit may not be indicative of the Group's financial performance. 

Risks relating to the Industry   

   General economic, political and market conditions.   

   Competition from content, product and service aggregators, from direct providers and potential new entrants.   

   Inability to support the increasing use of the internet by consumers, providers and advertisers.   

   New technologies blocking the Group's ability to aggregate data used in its online comparison services.   

   New technologies blocking advertisements from appearing on a user's computer screen, harming the Group's relationships with advertisers. 

   Privacy-related regulation of the internet limiting the ways the Group currently collects and uses personal information.   

   Regulation of the Group's business, including its advertising and customer solicitation and by various governmental authorities.   

   Incompatibility of the Group's services with devices other than personal computers to access the internet.

Risks relating to the Global Offer and the Shares

   The price of the Shares may be volatile and investors may not be able to sell their Shares at or above the price they pay for them.   

   The interests of the Company's current principal shareholders may differ from those of other shareholders.   

   Future sales, or the possibility of future sales, of a substantial number of the Shares.

   Inability to exercise pre-emption rights. 

Comparison services proved in the early years to be one of the most innovative, useful and exciting tools on the Web and while Moneysupermarket.com has plenty of diverse services in its virtual aisles, few if any are as lucrative as the commssion from secured loans. And that revenue stream is drying up.

At flotation, the company was valued at £840m, way off the £1bn it hoped for. At the time of writing, its value is around the £300m mark. Given the risks, whether or how far Moneysupermarket.com shares can recover is impossible to measure. But judging by the plunging share price and by the comments on our recent piece, Can you trust price comparison websites?, the novelty seems to be wearing off.

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Related

Find articles about Carol Vorderman's relationship with FirstPlus

Richard Browning

The end of food as we know it?

These photographs show where our food comes from. Some of it at least; the perfectly formed year-round tomatoes, cucumbers and other fruit and veg we take for granted in our supermarkets. If you haven't seen the pictures before (courtesy of Google Earth) it's a pretty amazing site - and sight.

Click on the first and you will see an area west of Almeria on the south coast of Spain - about the size of the Isle of Wight - much of which is covered with fields. And in the close-up you'll see that those fields are in turn covered almost entirely with plastic polytunnels - 100 square miles of them.

On the face of it, this is an enterprising use of part of one of Europe's driest areas. Desert basically. But underneath the plastic sheeting and out on the motorways of Spain trouble is brewing.

Concerns were raised years ago by environmentalists that the water used to grow the crops [tomatoes and cucumbers take a lot of water] was in limited supply. It was being drawn from deep bore holes, some of them illegal, and this same water was being used to supply the area's new golf course and sprawling urban developments that were springing up as they had done in other parts of Spain for decades. It doesn't rain in this part of Spain.

Luckily there was a plan, and today a series of desalination plants convert sea water into fresh water suitable for drinking and watering. It's an expensive solution but nonetheless brilliant. Or would have been were that the end of it.

By last year there were 10 golf courses in the region with 25 more being planned and the populaton was expanding, all adding to the strain on the water supply. The fruit and veg producers had seen the cost of watering their crops rise by more than three times from 24cents a cubic metre from the bore holes to 90cents from the new factories. It was simply too expensive and to compensate the farmers began to mix the new water with the old, putting further strain on the limited underground supply.

Separately, salt is reportedly contaminating the natural water supply but even if we ignore that and we ignore other environmental issues about pesticides and ignore claims that up to 80,000 illegal workers are employed to pick the stuff, it still all adds up to one thing: the price of our fruit and veg is going to rise. But that's not the end of it.

For the last three days the Spanish drivers of the lorries that thunder across the continent transporting all this produce are on strike over the rising price of, not water, but oil. And it's spreading. Supermarkets in Spain are reporting empty shelves, planes are being grounded because there is no fuel. Gibralter has run dry. Latest predictions about the price of fuel are potentially ruinous.

However these crises pan out and if this region can remain viable as Europe's greenhouse, we will be paying a lot more for our food - and that's if they're able to get it out of the country in the first place.

That's why I welcome the news today that the biggest greenhouse in Britain is under construction. It's a mere 91 hectares, compared to Almeria's 40,000, but it's a start and is likely to be the first step towards reducing our dependence on oil, on foreign politics and on foreign weather. At least weather is something we have here in plentiful supply.

Richard Browning, This is Money

Related

How to invest in rising food prices

Food and oil prices may be high for years

The true cost of food anyone?

My local market has a tray of strawberries for £1.

My local supermarket, Sainsbury's, has the same size tray for 'Half price'. Not £2.99 but £1.49.

For my maths, that makes Sainsbury's 50% more expensive not 50% less.

Any cynic will tell you that the recent hike in food prices is not reflected in the official inflation figures but the reality is not helped by the marketing departments at supermarkets whose job is to pull the wool over their customers' eyes even more.

I think we need to prepare for a lot more of these kinds of ruses over the coming months.

Here's some reasons why...

City focus - rising cost of food

Food prices rise fastest in 14 years

What is the real level of inflation

See what our readers think about the inflation figures

Tips for cutting your food bill

How I caught Tesco on a 2for1 sham

Tesco accused of sham 'half-price' veg

And from December 2006
Inflation 'four times' official rate

Richard Browning

House prices peaked in 2003 - expect them to return there

The shine is starting to come off the housing market. For me, the only issue this raises is a question: why didn't it happen a long time ago? The idea that house prices could continue rising for ever is an absurd proposition but one that has been palpable in the minds of far too many people for far too long. The question now is: how low can they go?

We can all pontificate and speculate using economic models, historic similes and fancy jargon. But I want to tell you a little story.

In the first few months of the new millennium I was working on a major web launch and we were looking for themes that summed up the state of the nation. News, fashion, sport, celebrity, the usual suspects, but there was something missing. We needed to tap further into the zeitgeist than B-list celebrities and football. Checking the mailbag it became obvious. People were starting to seriously worry about their debts. Brilliant. We'd launch with a big get-out-of-debt campaign. That was in early 2000.

Now, for various reasons the web project was shelved - along with our debt campaign. But that didn't matter any longer because within a year the mood of the country had changed. The Bank Rate (formerly the Base Rate) remained steady in 2000 but by early 2001 it began its steady decline. Money was becoming cheaper and cheaper. Previously rational people were drawn into a crazy borrowing binge, egged on by brokers, banks and other lenders and goaded into taking more and more credit by self-appointed money experts.

Suddenly, it seemed that everyone where I live had gone out and bought a new car or two. Other people were having new kitchens and Roman-style bathrooms installed like they were going out of fashion, which incidentally, they now are. Builders were adding extra rooms to homes, where previously they would have been deemed illegal. It became impossible to get a plumber to visit unless you were looking to install an entire new central heating system.

But pay wasn't rising by anything much above inflation. So where was the money coming from? From house prices, of course.

By now I was development editor of This is Money, working not at head office with the other journalists but in the development hub in 'new media land'. It was exciting and we were creating things that had never been done before with a talented young team, staffed by college leavers and other, well, let's call them first-time buyers.

Being the only person from the money team in the building, conversations often turned to money-related issues. It was great to see people taking an interest in such matters. But increasingly the conversations were not about the stock market and interest rates but about debt. Not about how to get out of it, but how to get more.

The country's collective attitude to debt had completely changed. Never mind that it could take a lifetime to clear a £30,000 credit card debt and that anyone with common sense should try to live within their means, that was irrelevant for people leaving university with up to £15,000 debts to show for their education.

Over the next couple of years, some of these youngsters had not only bought their first flat but within six months of doing it had remortgaged to buy stuff and go on holiday on the back of the rise in its value.

It wasn't just youngsters, of course; everyone seemed to be at it. But what happened next would affect the youngsters most and by 2003 they were in a fix.

The credit boom was over. House prices had peaked. The cost of a one-bedroom flat was now out of reach of the average first-time buyer on the income multiples that sensible lenders were prepared to offer. It was time to settle down and wait for wage inflation to close the gap and breathe life back into the market.

But it didn't happen that way. Word soon spread around the office that someone had secured a loan with Standard Life Bank (it could have been any of the banks but this is how it happened). It was a loan based not on income but perceived affordability. It didn't take long for everyone trying to break into the housing market to contact Standard Life or a mortgage broker to try to get hold of bigger and bigger loans.

By now even the local newsagent was advising his customers on how they could get into the housing market as a first-time buyer and as a buy-to-let investor - a sure sign that the boomtime was over. But it wasn't.

Estate agents were pricing homes on a see-what-we-can-get-away-with basis. And with lenders willing to lend just about anything to just about anyone - even the unemployed and people prepared to lie about their incomes - the boom continued for five years.

And so here we are now, in March 2008, and it's over. The loans made to people without a hope of paying them back were packaged up as investments and sold off by bankers (an even greedier element of the financial system than any estate agent or unscrupulous mortgage broker). And no one knows the extent of the impending damage we're about to face. What we do know is that personal debt is off the scale and it's pay-back time.

How far house prices will fall as a result of this recklessness is anyone's guess. I'd say any gains made since 2003 on a property's 'value' are a bonus that we should expect to lose. And to borrow a phrase much quoted by those people who believed that house prices were going to keep on rising for ever: 'This time it's different.'

Yes, you're right. This time it is different. This time it's carnage.

Richard Browning

Related

Financial crisis puts crunch on home loans

Estate agent reveals dirty tricks

Brokers banned for false mortgage applications

Please note: Yes this is one-sided. It is my opinion. Here's one I wrote two years ago:

Doomwatch: house price storm is brewing

Top 10 dirtiest hotels in Britain

A great bit of viral marketing by Trip Advisor, the travel forum. You can't not click on this:

Top 10 dirtiest hotels in Britain

My favourite is the Europa in Crawley. When you click through to the site you'll see it's the 24th most popular hotel in the town. Out of 25. So there's another hotel in Crawley that though cleaner than one of the country's dirtiest is even less popular. Welcome to Britain.

Richard Browning

More travel...

>> Cheapest travel insurance

>> Half price 'Center Parcs'

>> 20,000 victims of holiday fraud

Sort your life out in your lunchbreak

If this here internet fad is getting you down because of the sheer amount of second-rate and down-right irresponsible information and advice from time-wasters, scammers, spammers, self-appointed experts, money-grabbers, marketeers, spin doctors and, oh, the list is as big as the internet itself... fear not because today we have launched the This is Not Work blog.

It's primarily aimed at working parents but anyone who never seems to have the time to sort out the paperwork or who just wants a better deal is equally as welcome.

It will feature one quick tip a day to help you get your life and your finances back on track.

And if you miss a day simply click on the calendar and... sort your life out in your lunchbreak.

It's not work.

Richard Browning

Now go here...

>> This is Not Work

>> About This is Not Work

The new barometer of High Street misery?

The recent turmoil in the financial markets and this week's plunging Marks & Spencer share price has reminded me of an oft-forgotten adage that goes something like this: don't invest in what you don't understand.

It's basic commonsense advice that the morons in the banking industry who have taken the Western economy to the brink by creating collateralized debt obligations and other instruments of credit crunch would have done well to adhere to.

And it's a rule that I try to live by, which is why I would never invest in retail shares.

I don't understand retailing. Why anyone would choose to go into a shop and buy things is a concept that is simply beyond my comprehension.

I hate shops. And I hate shopping. My former local butcher was a rude ruddy-faced misogynist with few manners and missing chromosomes - and he had knives. What's the motivation for anyone to enter an establishment for verbal abuse and sausagemeat? I don't get it.

Unfortunately, you cannot get through life and avoid shops entirely. I tried that one.

On the plus side, this simple fact makes retailing an easy sector for investors to follow. To get a snapshot of a company's health you can wander in off the street and see whether it's full of happy people buying stuff. Or not...

Increasingly, people are running out of the credit that has sustained the shopping boom of the past few years and, as Marks and Spencer has found, people aren't buying like they used to.

Walk into a store now and what you see are not legions of happy shoppers but whole private armies of security personnel charged with preventing now-penniless customers from trying to feed their addiction for off-the-peg clothes and food - without paying for it.

It's a phenomenon that has led me to consider and now create a new barometer for measuring the state of the High Street: the Security Quotient.

Now, I like security guards. A bit. For two reasons. First, behind the uniform there often stands a proud person who has been led on a fascinating journey through life before reaching their destination: the door of that shop. Second, a security guard once apprehended a would-be car thief who was trying to hotwire my Ford Escort 1.6.

But, I sense the industry is getting out of control and is only going to get worse. Bring on the new barometer.

If I had used Security Quotient I could have easily predicted that M&S shares were heading for a serious tumble. If you walk through the store close to our office (admittedly it is a popular shortcut for the Tube station) you face a gauntlet of armed* warriors trained and primed to tackle the slightest social misdemeanour like looking at the racks of old ladies' clothes in the wrong way. That's the sign of a worried company. Security Quotient: 8. Shares down almost 23% this week.

Sainsbury's on the other hand has relaxed its ludicrously over-the-top security presence at my local branch, Quotient 4, sales up over Christmas. Sales were also up at Asda, Quotient 3, which has always appeared less keen than rivals to treat customers like criminals.

You can't invest in Boots. It's just as well. I was chased around the store all the way from the antiseptic creams to hot water bottles by a security man keen to make sure I never go in the store again. I swear he was tugging a Rottweiler. But that might have been my festive head playing up. Quotient 9.

Tesco is peculiar. The Kensington store has a guard right by the door but they've thoughtfully provided him with a big telly to watch all day rather than the customers. This offsets the over-the-top presence on the lower floor. Quotient 6, sales up.

And so finally to PC World. I've saved the best till last.

The guard at the Kensington branch of PC World has his own stage, on which I believe the 02 arena was moulded. From here he controls eight million spy cameras and oversees a series of electronic gates. I wouldn't be surprised if they scan your iris as you enter. I would be surprised if anyone ever shops there.

PC World can, therefore, proudly lay claim to a full Quotient of 10. A feat backed by the performance of shares in its parent company, DSG International, now down more than 60% over the last year.

This may all be rather frivolous stuff but next time you're in store check the Security Quotient then check the share performance. I may be on to something.

Richard Browning, This is Money

Now read this

Retail woe gives shares the jitters

or this

Bloodbath and boom of the High Streets

and, of course

PC World's adventure shopping experience

*armed with walkie talkies

Credit card crunch the Spitting Image of 1990s

If anyone needed reminding - and sadly an awful lot of people seem to - when you need to use your credit card to survive the month you're in trouble.

And when you need to use your credit card to meet the mortgage repayments you're in serious trouble.

But according to research from housing charity Shelter that is the reality for around 1m people in Britain.

Credit cards are Satan's panacea. And in the wrong hands they are the ultimate con.

Unfortunately, the idea that you can play the credit card system, even make money from it, entered the national consciousness about five years ago. And suddenly having a wallet full of plastic became acceptable.

From the comments on This is Money a lot of the blame is being laid at the doors (No. 10 and No. 11) of Gordon Brown. But lest we forget - and for those of us with short memories - here's a clip from Spitting Image from the last time we were in this mess, when easy credit came into its own and led to a near decade of recession and repossessions.

My credit card rules are quite simple

You should never need more than one credit card.

And you should pay off the entire balance every month.

Remember: credit card companies aren't stupid. They are, however, after your money and are extremely adept at getting hold of it. They are not your friend. And are not to be played with.

If you are in trouble or think you might be in trouble get in touch with your local Citizens Advice office now.

Richard Browning - This is Money

The credit crunch chronicles

Negative equity: it's back, it's instant and we're heading for a property

The Northern Rock loan for 80 year olds with a job

Northern Rock and the Picture of Modern Britain

Listen now: 'We're heading for a property slump'

British Gas joins the conmen in our hall of shame

The country's greatest financial sleuth, Tony Hetherington (right), writes for the Financial Mail on Sunday and This is Money. His weekly column is a hall of shame that should be on everyone's 'must-read' list.

>>Check the archive

This week he shines his spotlight on serial conman Simon Hill, aka Simon Johansson, whose decade of deception has finally led to justice - not for him but for one of the men he worked for, Richard Dompier, who has just been jailed for ten years in the USA. Britain is criminally behind-the-times when it comes to dealing with its white-collar crooks.

Simon Hill is not a household name. But it is a name worth remembering as are so many of the names in Hetherington's files.

One thing I find particularly alarming about the exposure of scams and rip-offs is just how often our supposedly trusted household names come under investigation.

After the near collapse of Northern Rock it is becoming increasingly difficult to know who to trust. For example, Marks & Spencer was recently in the spotlight over the wording of its advertising. Trivial by comparison, you may say? But I don't agree.

Big companies that spend fortunes on PR and advertising that don't live up to their claims are the scourge of our lives. Who can forget the empty promises from ING Direct? But which is the worst company in these stakes over the past year?

Talktalk is up there with the worst of them. But my money is on British Gas, which gets another mention from Hetherington this week over yet more billing errors and legal threats.

Personally I would not do business with this company. Here's a few more reasons why:

• Hounded for nine years by British Gas
• When will British Gas bungles end?
• Hetherington: British Gas bullying and travel insurance failures
• Has British Gas fixed me up?
• British Gas messes up 45,000 direct debits
• Wooden spoon for British Gas
• British Gas: awful on every level
• Is British Gas really cheapest?
• British Gas swamped by billing complaints
• Billing errors? British Gas again
• British Gas household share plummets
• British Gas fined £5,000

And from the blog (don't forget to read the comments)

BLOG: British Gas - institutionally moronic
BLOG: My British Gas nightmare: customer services hell
BLOG: Would British Gas make you leave the country?

And finally

Switch your gas bill supplier now

Richard Browning, This is Money

Negative equity: it's back, it's instant and we're heading for a property slump

What a fine bunch of money lenders they are at the Abbey. There I was trying to find evidence of negative equity for a blog on house price crashes and the former building society does the legwork for me - with the launch of its 125% mortgage.

OK, so it's not the only lender that is offering buyers the chance to ruin their lives with one phone call.

Our friends at Northern Rock have the romantically charged 'Together Mortgage' that seems to sell the idea of instant negative equity as though you've just won a prize you'll be able to boast about for years to come. Don't worry, you will.

If you are lured into this honey trap and borrow more than your home is worth, you are asking for trouble. The myth behind the loan is that house prices will keep rising when the opposite is fast becoming the case. The rational view is that they will fall.

Here's some maths. You buy a £200,000 house with a £250,000 (125%) mortgage at a mere 6%. That will cost you £1,610 a month every month for 25 years. If the rate went up to 8% - a modest estimate in the current climate - it would suddenly cost £1,930 a month. If you cannot afford that, then your only option is to sell.

Assuming you can get the same price you paid - probably unlikely - you will, with moving and legal costs, walk away with no 'mortgage' but still have a loan of £55,000-£60,000 to repay.

Maybe that's why the Alliance & Leicester calls its 125% mortgage the PlusMortgage.

The problem with Abbey's foray into this hateful, irresponsible world of providing crippling debt to the naive and vulnerable is the timing - bang in the middle of the biggest banking crisis for nearly 150 years, matched with an overheated property market that makes the heady days of Thatcher's boom and recession look like a squabble over small change at the greengrocer's.

If you're too young to remember the 1990s, which it seems the whole country has, the final throw of the dice before it all went wrong and the banks stopped lending altogether was the 125% mortgage.

If you're too young to remember the 1970s - as I am - listen to this chat between eminent City commentators Mickey Clarke and Anthony Hilton of the Evening Standard. Because that's where we're headed.

City briefing (6mins 19 seconds):

'After several years of easy money and a lot of speculation on property the botttom line is too much money invested in property with too high debts. The only way to repay the debt is by selling the property and prices will fall. There will be a property slump.' 
- Anthony Hilton, Monday 24 September 2007

• Listen now (streaming) >>
• MP3: listen / download
• Windows Media: listen / download

Thank you Abbey.

Richard Browning This is Money

Abbey under fire for 125% mortgage
Warning of 1990s-style property crash
Housing market is heading for a fall
Property asking prices take £6,000 tumble
Will Northern Rock chaos hit mortgages?

House prices fall for the first time in two years
The Northern Rock fallout - how this mess affects you
Can the UK avoid a house price crash?
Mortgage rates soar as credit crunch bites
My buy-to-let dream cost me everything

Don't panic over higher mortgage costs
Abbey fails relatives of deceased customer
Abbey tops list of rip-off bank charges
Investing: Abbey's habit is a poor one
A sting in the tail of Abbey's new account

And one from a year ago
House price storm is brewing

The credit crunch chronicles

Negative equity: it's back, it's instant and we're heading for a property

The Northern Rock loan for 80 year olds with a job

Northern Rock and the Picture of Modern Britain

Listen now: 'We're heading for a property slump'

The Northern Rock loan for 80 year olds with a job

OK, financial meltdown at the Northern Rock is no laughing matter. But I am forced to ask myself just how many 'not unemployed' 80 year olds have been lured into taking out this loan of theirs?

Of course, if there were takers I'm sure that the Rock staff would do all they could to ensure the sensitive handling of any fallout were their customers suddenly unable to make the repayments through death, ill health or economic redundancy caused by the, um, Northern Rock.

Just as soon as they get back from the freebie in the sun, that is...

...Northern Rock bosses hit the beach as savers panic

   

Northern Rock - news, tips and advice
Northern Rock share price
Northern Rock - advice for savers
Northern Rock - advice for investors

Northern Rock SOS came six weeks ago
Why are customers always the last to know?

Richard Browning - This is Money

The credit crunch chronicles

Negative equity: it's back, it's instant and we're heading for a property slump

The Northern Rock loan for 80 year olds with a job

Northern Rock and the Picture of Modern Britain

Listen now: 'We're heading for a property slump'

Northern Rock and the picture of modern Britain

I've found it!

The picture that sums up the state of Britain in 2007.

I'd always thought football was the universal metaphor, what with Leeds United trying to buy success with money they couldn't pay back before being found out and relegated, calling in the administrators and having points docked. But that's old news.

Here is the picture that says it all about the current mess we're in...

It's a pint.

Well, no it's not a pint. It's supposed to be a pint but it isn't. It's the kind of short-measure that we're being served these days in almost every walk of life.

There are vague guidelines in place for the acceptable amount of head on a pint and bar staff are urged to fill the glass with good nature if the customer asks for a top up.

It's not illegal but it's pretty unsavoury to short measure a pint and the publicans and brewers blithely line their pockets while the customers are left paying something for nothing.

In this case, we asked for a top up and were told in eastern European to 'zxyx off'.

Since the Government interfered with the pub trade with a smoking ban that ruled out even designated smoking pubs, if you lift the lid on the average pub around here now, there's nothing there. Everyone's outside on the street, smoking, while the insides are merely hollow versions of what they used to be.

Lift the lid on the events unfolding at Northern Rock and you'll see something very similar. Where's the substance Adam Applegarth (chief executive of Northern Rock)? The business model was flawed. The bank has been lending money it basically doesn't have to people who are increasingly likely to be unable to pay it back.

A 100% loan at up to five times salary is a pretty short measure by any standards if the housing market collapses and the 'homeowner' faces a decade of negative equity.

The customers are outside on the streets, fuming, emptying the bank before the seemingly inevitable happens. They don't trust it. 

The Government has stepped in with a promise of a bail out with taxpayers' money. It had to. But will it step in to ban the sharp practices of the greedy morons who pressure the gullible and ignorant to take loans they cannot afford? Like hell. Expect some urgent vague guidelines coming to a bank near you very soon.

If you can't trust your local pub, it's a pretty sorry state of affairs.

If you can't trust your bank, we're zxyz-ed.

Richard Browning, This is Money

The Northern Rock Crisis
Northern Rock share prices
Chancellor guarantees Northern Rock cash
Chancellor kicks City watchdog
Housing market 'is heading for a fall'
Savers' Q&A: The Northern Rock fallout
Best savings rates
Northern Rock reaped what it had sown
So who is Adam Applegarth? (pictured below)

The credit crunch chronicles

Negative equity: it's back, it's instant and we're heading for a property slump

The Northern Rock loan for 80 year olds with a job

Northern Rock and the Picture of Modern Britain

Listen now: 'We're heading for a property slump'

ING savings rates: how low can they go?

Another rise in the Bank Rate and another refusal by ING Direct to put up its savings rates by a corresponding amount.

Just how much more of this can customers take?

In my inaugural SCUM-watch I looked at ING's increasingly desperate attempts to justify the cuts in the rates it pays customers. It followed confident claims by ING that its initial headline-grabbing and suspiciously attractive rates were sustainable and not just a marketing ploy. Claims that have proved unfounded over and over again.

Read today's story for the latest explanation>>
ING fails to pass on rate rise

One can only assume that the spokespeople for ING Direct are paid an awful lot of money to go public with these, I think, risible excuses. How do they sleep at night?

Why not judge for yourselves. Here's the ING spokesman defending another recent faux pas from the bank on BBC's Money Box a couple of weeks ago.

Download ingdirect.wma

(Should start playing if you have Windows Media Player installed.)

Richard Browning, This is Money

And now, some more related stuff...

Top savings accounts now pay 6.3%
is it any wonder that... Angry ING savers pull £3bn
now see... The best (and worst) cash Isas
and enjoy Listening to the boss of First Direct trying to explain why pregnant women should pay more for their banking
and then ask yourself why... 20,000 leave First Direct
and if you missed SCUM-watch part one: ING Direct savings rates

or join one of the ING savings rates debates on This is Money

Something fishy about that chicken?

Have you ever opened a pack of supermarket chicken breasts only to be assaulted by a smell from somewhere between High Heaven and the drains at the colostomy clinic?

I have.

Three days ago to be precise.

Which, if you look at the label from the pack, pictured, was three days before its use-by date (today).

Apparently this is not uncommon. You are, I'm told, supposed to freeze chicken on the day of purchase and not leave it in the fridge for two days as I did.

But if this is correct, why doesn't it say so on the label?

This isn't the first time that I've sent chicken to landfill because it's gone off before it says it should and it got me thinking. What exactly does it say on the label?

Well, with a little help from Google, I attempted to find out.

1. Asda.
Big supermarket, Britain's cheapest. Started in Yorkshire now owned by American giant Wal-Mart. Named after founding Asquith family and the word Dairy, according to Wikipedia. Wikipedia is not always reliable. Wal-Mart's industrial relations record is often debated.

2. Fresh British Chicken
Blimey. There's a whole other world out there. A world of chicken marketing. 'Sporting legend Sally Gunnell, who still holds the 400m hurdles world record, is a big fan of British chicken.' Nice one Sal. Your chicken clearly doesn't whiff of sewage.

3. British chicken breast fillets
Although I'm reluctant to search for 'breasts' from my work computer (I like my job) it turns out the phrase returns Waitrose in the top slot. Waitrose chicken breasts cost £5.99.

4. £4.00
This pack of three big chicken breast seems very cheap to me. At the local butcher this would set me back three times more than that. Turns out you're allowed to inject chicken with water and beef so long as the ingredients list it. There are no ingredients listed and no mention of any beef. So we're OK. But how come it's so cheap?

5. UK 4633 EC
4633 is the name of 20cm pothole in York, a ray of sunshine watch, and the starting salary for a teaching assistant in Tameside. What it's got to do with meat is not immediately obvious.

6. L317107:09
317107 relates 'to the DPE deficit and unallocated resources of £9,707 from other Highways Revenue Budgets' in Cumbria. It's also the Barnes & Noble sales rank of The most critically acclaimed of all of Dr. Frank H. Netter's works, Musculoskeletal System: Developmental Disorders, Tumors, Rheumatic Diseases, and Joint Replacement. What this number is or has to do with dead poultry is not clear.

7. 5.88
This is the heading of a chapter in a document on the definition of dangerous weapons in Dublin and outdoor vending rules in Sacramento. It's also the price of an audio Sherlock Holmes book. Here, it is of course the price per kilo of my chicken breasts. £5.88/kg. This compares to waitrose, which sells at £11.98/kg. More than twice the price. Organic chicken breasts are more than £18 a kilo. How does Asda do it?

8. 680g
This is the weight of a jar of vegetarian tortoise food, a type of coaxial car speaker and the subject of a not-very-popular discussion in foreign on airbot.net. It is also the weight of my chicken breasts. That's heavy chicken, man. At Waitrose, the average weight of FOUR chicken breasts is 530g. At Asda you get THREE for 680g. Wow.

9. Use by HDY
HDY is the stock exchange code for Hyperdynamics Corporation, an offshore oil and gas exploration and exploitation company in Guinea and Louisiana. It's the official code for Hat Yai airport in Thailand. But I'm guessing in this context it's probably a shortform for Hadaway, a bit of Geordie slang for 'get away'.  I can find no other explanation.

10. Fresh Class A
Class A is 'ecstasy, LSD, heroin, cocaine, crack, magic mushrooms, amphetamines (if prepared for injection)'.

11. Packaged in a protective atmosphere
This means the air's been sucked out to prolong the shelf-life. There's some serious science going on here. Protective atmosphere means the packet's full of nitrogen. There's a website called Chicken Yoghurt.

12. 'Produced in the UK', and the red tractor logo
'The red tractor logo guarantees that the food you are buying has been produced to high standards from the farm right through to the supermarket shelf to ensure you are buying quality fresh food.' So that's OK.

Must be my fridge that's dodgy. 

Richard Browning This is Money

More...

Asda / Tesco telephone prank
Asda under fire over cheap roses
Asda guilty of anti-union bribes
Is Wal-Mart getting it wrong?
Asda showdown with unions
Asda milk ads banned from kids TV
Caring consumer

And finally...

A calculator to see when fruit is available in the UK

Eurotunnel is dead. Long live Eurotunnel.

On the day that Eurotunnel shareholders must vote whether ...

• a. to give up their generous travel concessions and save the business
• b. to keep their generous travel concessions and watch the business sink into a black hole, albeit with a railway line running through it

... it seems that shareholders are going to lose their generous travel concessions.

And, says I, it's about time too - if that means an efficient and respectable railway company will be borne from the ashes.

Anyone investing £10,000 (or thereabouts) in the project in 1987 was 'guaranteed' an unlimited number of crossings at £1 a throw. And in 20 years, anyone with that kind of deal should have had their money's worth by now.

And whatever the ethics, investors must accept that an investment is a gamble on the state of the balance sheet and not the availability of perks. It was an attractive perk but the honeymoon is over. Now there's just the simple matter of a divorce.

Eurotunnel owes £6bn. To pay that off at say 6% annual interest by 2082, when the concessions are due to expire, requires a monthly payment of more than £30m. That's a lot of £1 trips.

By rights, Eurotunnel should be an integral part of the future of European infrastructure.

In reality, it's a company saddled with unmanageable debt and where corporate buffoonery takes precedence over customer service. Summed up very nicely by Frank Kane, then of the Observer business section.

And take the latest offering from the Eurotunnel commercial department, emailed to customers at the end of last month.

Illegal lottery

'To celebrate the 15th anniversary of Disneyland Resort Paris, Eurotunnel...' has launched an illegal lottery.

To enter, simply 'Book a Eurotunnel ticket online...'

No, no, no, no no.  Under the Lotteries and Amusements Act 1976 it is unlawful to run a competition  in which success does not depend to a substantial degree on the exercise of skill. (Hence, those dumb questions you get on GMTV every morning: 'What's the capital of Peru? a. Lima, b. Lama, c. Slough.)

And since Eurotunnel revamped its website not even making a booking requires the requisite level of skill it once did. It is, therefore, a lottery and lotteries - with a few minor exceptions - are illegal.

What is legal, however, is a prize draw - but only if no purchase is necessary to enter, which ruled out this one because you had to book and pay for a ticket to enter.

It took Eurotunnel more than a week before it realised its error and send out a withering apology with some hastily rewritten terms and conditions. 

It's typical of the company.

Hopefully today will mark the start of a new beginning.

- PS. You can enter the competition here. This is one occasion in which there's nothing to lose.

Richard Browning - This is Money

More corporate buffoonery...

SCUM-watch - ING Direct savings rates

Virgin Media's new mission statement?

First class squirming from the First Direct boss

PC World's adventure shopping experience

No Ryanair charges for NOT taking a bag

SCUM-watch part one: ING Direct savings rates

'I think', blasts ING Direct on giant billboards across the capital's rail network, 'finance should be clear.'

And so do I, ING. So do I. That's why I'm proud to work for This is Money, where we keep constant tabs on the increasingly outrageous behaviour of the financial services industry.

And why today I launch my new acronym, Spectacular, Cynically Unrepresentative Messages - or SCUM for short - and my new sporadic blog category: SCUM-watch.

Part one: ING Direct

OK. Let's look at the evidence and see just how clear ING is about finance - in ING's own words.

12 May 2003 (Bank rate, formerly base rate: 3.75%)
ING promises high interest account
We said: 'Global banking group ING has launched in the UK with a direct savings account that pays interest of 4.22% whatever the size of your balance.'
ING (Lindsay Sinclair, chief executive of ING Direct UK) said: 'This is not an introductory rate. We have low overheads and no branches and this saves us money. We pass those savings directly to our customers in the form of high interest rates.'
I say: If it looks too good to be true it usually is.

15 July 2005 (Bank rate: 4.75%)
ING announces it is to cut its savings rate to 4.75%
We said: 'ING Direct is to cut the rate it pays to savers from 1 August. The annual equivalent rate is being clipped by 0.25% from its current 5% before tax to 4.75%.'
ING said: 'ING Direct remains totally committed to providing its customers with a permanently good rate.'
I say: Oh, really?

1 August 2005
ING's new lower rate of 4.75% is introduced
We said: 'Critics warned it was a ploy when ING bank launched its flagship savings account with a chart-topping interest rate. Customers would be lured, they said, then the rate would be cut... ING's rate, always higher than the Bank of England base rate and substantially higher than most rivals' offerings, attracted hundreds of thousands of customers within its first weeks... But the cut from 5% to 4.75% means the account will vanish from the best-buy charts. ING's rate will for the first time equal the Bank's base rate.'
ING said: It was responding to competition and was committed to offering competitive rates.
I say: yada yada yada.

13 December 2005 (Bank rate: 4.50%)
ING Direct cuts rate to 4.5%
We said: 'ING Direct is to cut its savings rate from 4.75% to 4.5%, despite the Bank of England keeping rates on hold last week. The cut also follows an advertising blitz featuring the 4.75% rate and urging customers to sign up. More than 1m savers have an ING Direct savings account.'
ING (Lindsay Sinclair) said: 'Decisions like these mean we can run our business in a way that will allow us to continue to offer all our customers a consistently good savings rate - while avoiding withdrawal penalties, or short-lived headline-grabbing rates for new customers, as some banks do.'
I say: Oh please.

27 November 2006 (Bank rate: 5.0%)
Blow to ING Direct savers
We said: 'More than a million customers of ING Direct have been told their savings rate will not be changing, despite the hike in rates from 4.75%; to 5.0%.'
ING said:  'While some people may be willing to follow headline-grabbing rates, we know from talking to our customers that the majority prefer their savings to be earning consistently and want to relax knowing they don't have to constantly check best-buy tables.'
I say: Yawn.

29 November 2006 (Bank rate: 5.0%)
Has ING Direct lost its edge?
We said: 'ING Direct has turned its back on its 'no hidden catches' policy by launching two savings accounts for existing customers that do not allow you to access your money without penalty'
ING said: Its philosophy is 'to offer consistently great value for everyone with no catches and no hassle. We aim to make our products as straightforward as possible so you can make the most from your money with the minimum of fuss'.
I say: Lah, lah lah, lah, lah.

1 February 2007 (Bank rate: 5.25%)
ING Direct keeps rate at 4.75%
We said: 'Millions of ING Direct savers suffered another blow today when the bank announced it would not raise the rate on its original savings account in response to last month's bank rate rise.'
And we added: 'This is a disappointing move by ING Direct. When the bank entered the online savings market it consistently topped the best-buy tables for its high rate and was praised for providing an account with no hidden catches. However, having built up a solid customer base, it appears to be relying on the apathy of savers to stick with it and not switch to a different bank where they will earn a higher rate.'
I say: There's really not a lot of point asking ING to comment.

20 April 2007 (Bank rate: 5.25%)
ING Direct slashes savings rate
We said: ING Direct is dropping the rate on its Websaver account [a new account created for existing customers to prevent an exodus] to 5.5% from 5.65%, just a fortnight before the Bank of England is expected to raise interest rates to their highest level for six years.
ING said: 'We need to price our rates at a level that we can sustain.'
I say: Oh stop it. That's enough.

16 May 2007 (Bank rate: 5.50%)
For a bit of balance I should mention that ING is now increasing the rate on its instant saver account from 1 June to a still-below-Bank Rate 5% and has in the meantime launched a 6% cash Isa and a fee-free no-nonsense flexible mortgage. But with a track record like theirs what can I say?
I say: Nothing.

But on the subject of acronyms - I wonder what ING really stands for? Anyone...

Richard Browning - This is Money

Related stuff
Find the genuine best savings rates - our unique service
Virgin Media's new mission statement?
Should you trust ICICI Bank?
First class squirming from the First Direct boss

ING update...

16 May 2007
Angry ING savers pull £3bn
We said: Customers at ING Direct removed £3bn from the savings giant after it failed to pass on base rate increases, figures showed today.
ING said: 'Are there better rates out there? Yes there are.'

The new Virgin Media mission statement?

Virgin's takeover of NTL was always going to be a rough ride. You had a broadband/ mobile provider with a generally pretty decent reputation getting into bed with another one that, erm, didn't.

A £25m rebranding later and the newly named Virgin Media has so far managed to shed nearly 50,000 of its customers.

That's not bad going - about £500 of marketing money spent for each lost customer.

So how heartening it is to see slapped across the back of their installation vans what I can only assume is the new and painfully accurate mission statement.

'Virgin Media,' it blurts, 'Forward, back, back a bit more. Stop!'

Brilliant.

Richard Browning - This is Money

More virgin stories