Shadow secretary of state for Northern Ireland, Owen Paterson, explains: “The Conservative Party has been saying for some time that a radical, long-term strategy is required to end Northern Ireland’s dependence on the public sector and to boost private sector investment.  Northern Ireland faces some economic challenges that are unique within the United Kingdom. 

“That’s why Conservatives and Unionists are currently looking at ways in which we could turn Northern Ireland into an enterprise zone should we win the election.  Obviously given the terrible state of the public finances, any changes must be affordable.  But we will look closely at [recently published] proposals [from the Northern Ireland Economic Reform Group] which will help to inform our strategy for reforming corporation tax.”

While the strategy would presumably attract greater inward investment, the UK Government’s annual subvention to Northern Ireland would be cut, probably by around £200m a year.  This is on top of what the Department of Finance and Personnel calls ‘pressures’ of £367m on departments’ revenue budgets for 2010/11 alone, which arise in part from the impact of an equal pay settlement and departments improving financial controls, so reducing underspends that usually provide financial flexibility.  But over £200m arises from the decision not to implement water charges, the revenue from which had been factored into government budgets.

As well as this, UK public expenditure will fall and that will feed into reduced support for Northern Ireland.  Richard Ramsey, chief economist of Ulster Bank, explains: “The UK will see public expenditure cuts of about 10% in total from 2011/12 for three years.  That is a real term cut of about 3% per annum.  That would translate in Northern Ireland to a 10% cut in about half of Northern Ireland expenditure – because only half of expenditure here is under Northern Ireland control.  That would mean £500m to £750m in cuts over and above the current cuts the Executive is dealing with at the moment.  There will be a significant squeeze going forward up to 2020.”

Ramsey argues this requires radical action.  “You need strategies that provide tailored solutions for regional problems,” he suggests.   “The merits of having regional public sector pay and regional social security benefits need to be openly debated.  Regional public sector pay would be an extremely powerful economic development tool for the Executive and is also attractive from a public expenditure viewpoint, particularly if NI could retain the savings to be invested elsewhere.

“NI must also look at new sources of revenue.  If you introduced a public sector pension levy in Northern Ireland, as you have seen in the Irish Republic, could  NI keep that and invest that in an infrastructure fund?  Social security benefits are set at a national level, whereas pay rates in NI are one of the lowest of any UK region.  The gap between the two is narrower in NI than any other UK region: as a result the disincentive to work is greater here than elsewhere.  If we introduced regional social security payments, would we be able to keep the savings to pay for schemes to get the long-term unemployed and economically inactive back to work?”

The construction sector is in line for a second severe blow, following the collapse of private sector house building.  “A lot of Strategic Investment Board plans going forward to 2020 were predicated on asset sales, which now have to go back to the drawing board,” says Ramsey.  “The original ISNI [Investment Strategy for Northern Ireland] plans can’t be delivered in my view.”

Until now, some construction activity has been maintained through the building of roads, the Fermanagh Hospital, schools and social housing.  When this slows down, then chartered surveyors and the business services sector will suffer, as well as the construction industry itself, predicts Ramsey.

PricewaterhouseCoopers believes that the severity of the impact on most public services depends in part on whether the Executive ring-fences health spending.  If it does, says PwC chief economist in Northern Ireland, Esmond Birnie, “the other departments – roads, schools, universities, social housing, environment and culture – face brutal spending cutbacks of between 10% and 20%”. 

The impact on businesses of public sector retrenchment is already being felt.  Capita has warned that 65 jobs in Belfast are at risk relating to its contract to recruit staff for the NI civil service.  With a temporary freeze on some staff recruitment, there is less need for recruitment support.

Jackie Henry, an associate partner in Deloitte Belfast, suggests that the experience of Capita is a sign of what may be felt across the wider private sector.  “This was one of the first [NI public sector] outsourcing contracts”, she points out.  “That is really just the tip of the iceberg.  We have not seen what all the rebalancing of the books will do.  The main impact for the private sector to date has been a slowness in public sector decision-making, rather than actual cuts.”

Henry points out that there are commercial opportunities from the crisis.  As public bodies struggle to make ends meet, the attractions of contracting-out shared services to private companies will grow if this cuts costs.  “There are positives for the private sector in this,” she says. 

PwC’s Birnie agrees.  “When a spending ice age descends, the entire public sector needs to be subjected to ‘zero based accounting’,” he says.  “Instead of trying to justify individual cuts in service delivery, you take every item of public spending and ask, ‘Should government be doing this at all?’, and, even if it should, ‘Can it be done and delivered in a better way’.”

But, warns Henry, the Executive has little time to make up its mind about how to balance the books.  “Those decisions will have to be made,” she says.  “They can’t be avoided.”

This should be no surprise.  Savings rates are low and will remain so following last week’s decision by the Bank of England that the base rate are staying at 0.5%.  Yet rates charged on personal loans, credit card debts and mortgages are much higher than this, so it makes sense to use spare cash to pay down debt.

Savers deserve sympathy in this low interest environment.  Retired people in particular who rely on income on savings to support state and occupational pensions are having a tough time.  The good news is that opportunities for tax-free income on savings are improving.

From 6 April, higher limits for tax free savings come in for ISAs – Individual Savings Account.  Savers will be able to put £5,100 a year into cash ISAs, plus another £5,100 in equity ISAs.  This will give the whole population the same savings opportunities that have been available to the over 50s since October.

Take-up of ISAs is much lower than policy-makers would like.  According to a study by the National Savings & Investments, part of the reason is the lack of knowledge and understanding of ISAs: a mere 15% of people know about the new savings limits.  And more than a third of those who do know do not intend to take advantage of them because of the low interest rates available.

Better than nothing

Yet ISAs offer much better returns than some other savings products.  While many ordinary savings accounts offer a mere 0.1% interest, the average rate on a variable rate cash ISA is 1.28%.  Not great, but much better than the worst savings accounts. 

Fixed rate ISAs provide some of the best returns, with the highest at 3% - offered by the Post Office, Britannia, Clydesdale Bank, Yorkshire Bank, Newcastle Building Society, Mansfield Building Society and Julian Hodge Bank, according to Moneyfacts. 

Despite the low interest rate environment, returns on fixed rate ISAs have increased in recent months as competition hots up for the new ISA season.   Darren Cook of Moneyfacts says: “A fixed rate ISA has become the providers’ preferred growth area, with the number of available fixed rate ISA deals doubling from 41 a year ago to 84 today.”  But, he warns, before transferring from one ISA provider to another it is important to check that you will not be penalized by your existing bank for doing so.

Another problem, highlighted by many readers, is the often slow and bureaucratic procedures to transfer ISA accounts between providers.  Any delays in ISA transfer that are not fully compensated should be followed by complaints to the banks in the first instance and subsequently, if not successful, to the Financial Ombudsman Service.

Cash ISAs can pay more

Unusually, at present the best instant access cash ISA pays slightly more than the best fixed rate ISA.  The best cash ISA is offered by Santander at 3.5% (the same product is also offered by its Alliance & Leicester subsidiary): although this has a variable rate, this is guaranteed to stay at least 3% above base rate.  Other attractive instant access ISAs include 3% from the Newcastle Building Society and First Direct and Nationwide Building Society at 2.75%.

But there are problems with obtaining the best possible ISA rates.  The market leading rate from Santander is only available to existing Santander savers and new customers – not for transfers from other ISA accounts.   However, First Direct’s ISA does allow transfers from other accounts.

It is easy to overlook the benefits of fully utilizing an ISA allowance, but is important to do so.

Kevin Mountford, head of banking at Moneysupermarket.com explains:  “Consumers that can afford to save should be looking at ISAs, no question.  Even though rates are low, the benefits of a tax-efficient wrapper should not be overlooked.  Savers who have funds in older ISA accounts should remember that in most cases they are able to transfer these funds to their new ISA without losing the tax free status. With many older ISA accounts now paying a pittance it is important to transfer your funds to make the most of this pot.”

Question of Finance

Q.  I want to ensure that my savings are invested safely.  In particular, I want to maximize my protection under the Financial Services Compensation Scheme.  I believe that if I put money into two banks that are part of the same group of companies they are treated as if they are just one bank.  How do I maximise my protection?

A.  Banks and other financial services companies regulated by the Financial Services Authority are guaranteed under membership of the FSCS.  But that protection is limited to £50,000 per saver, per institution.  This is confusing because some banking groups operate under separate brand names and may not obviously part of the same bank.  Examples include Alliance & Leicester, which is part of the Santander group.  A saver who has £50,000 in Alliance & Leicester and another £50,000 in a Santander (formerly Abbey) account would have protection limited to just £50,000.  Other examples of banking brands that are part of larger groups include First Trust Bank, which is part of the AIB Group; Britannia is part of the Co-operative Group; the Cheshire and Derbyshire building societies are now owned by the Nationwide Building Society; and MBNA Savings is owned by the Yorkshire Building Society.  Although Ulster Bank is part of the RBS group, it is separately registered with the FSA so has a separate £50,000 protection limit.  Similarly, while Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance are all now part of Lloyds Group, all are actually registered under Bank of Scotland.

A recent policy statement from the Conservative Party on ‘Broken Britain’ grabbed the headlines. In some of the country’s most deprived areas, half of all teenage girls were pregnant or already mothers.

It was a shocking symbol of a serious problem. Except only in one sense. A Tory researcher had got the decimal point in the wrong place and the figure was actually 5.4%. So in fact not only not really surprising, but actually pretty good. In fact, this is better than the rate in Victorian Britain, when, self-evidently, Victorian values were dominant.

What the gaffe actually illustrated was the extent to which the Conservatives are vulnerable to accusations of amateur policy-making. A junior researcher made a mistake, which should have been picked-up immediately. One of the policy team should have said, ‘that can’t be right’, but no one did. As I say, policy amateurism.

The mistake was not unique – and is troubling, because the Conservatives are in pole position to win the General Election. It is in no one’s interests for a governing party to seek to implement half-baked policies. The question for our movement is whether the Conservative’s proposals on reforming public services through the widespread use of workers’ co-ops to run them is also 30 IQ points short of intelligent.

An interview by shadow Chancellor George Osborne on the Today Programme increased my worries. Faced by the question of what if a public service workers’ co-op decided to sack a respected manager and replace him or her with a less demanding boss, Osborne waffled. It sounded as if it were a question he had never thought about – so exactly how do shadow ministers prepare for key media interviews?

There has been considerable discussion in recent years about the role of co-ops in public service reform, so you would have thought everyone engaged in the debate would be confident and able to anticipate awkward questions. In fact, it is not only the Tores that are on difficult terrain. As the Financial Times said, the Conservative’s proposal ‘wrong footed’ the Labour Party.

The Co-operative Party also did not convince me with its line. General secretary Michael Stephenson responded: “George Osborne ’s comments show the Tories are completely clueless on co-operatives. Public sector mutuality is about giving communities a say in how services are run.  That is about more than involving workers, it is about people running services as a community asset.  The Tories don’t have co-operative values…… George Osborne’s plan for employee-run public services fails to balance the needs of consumers, the public, with the interests of the public-sector workers themselves.”

The sound-bite ‘completely clueless on co-operatives’ has a pleasing alliteration. But in essence it is misleading name calling. The Co-op Party knows perfectly well that there are different styles of co-operative that deliver control to different groups of people. It is legitimate, of course, to argue that public service co-ops should not be worker-controlled. But the point can be raised more intelligently and in ways that are less dismissive of a key part of the co-operative movement. If workers’ co-operatives are unsuited to running public services, which other parts of the economy are they safe to run – and why are these different, or less important?

It is fair to recognise the issue of ‘producer capture’ – that producer interests can come before those of service users. The practical problems of this are often that members of the local government unions may dominate Labour Party branches and constituencies and can play a self-interested role in determining local party policy. This may subsequently translate into the policy of the Labour group on the local authority.

Yet the experience of Greenwich Leisure – and the many other social enterprises, which deliver about 30% of councils’ leisure services – seems very different. It appears that the reality is the opposite – that clear contract agreements between the council and the worker-led service provider actually improve service standards and employee satisfaction.

It should remembered that it is Labour councillors up and down the country that have been engaged in transferring services to worker-led social enterprises such as Greenwich Leisure. So I think we should understand exactly how the Conservatives’ latest proposals differ in substance from those of the Labour Party nationally and locally.

Labour policies that use co-operatives and social enterprises to improve public service delivery are now strongly ingrained. There is a workers’ right to choose to form a social enterprise across much of the NHS, backed by a social enterprise unit in the Department of Health that provides practical support. In practice, the level of interest by workers is limited.

Foundation trusts are also supposed to be connected to the co-operative movement, through a membership structure that encourages patients and other local citizens to join. While foundation trusts have helped drive-up standards and improve financial management standards, the actual engagement by patients and other citizens has not been great and has probably contributed little to the drive for reform.

Given this policy backdrop, it is difficult to regard the criticism from the Labour and Co-operative parties entirely seriously. To be fair, the Labour and Co-op MP and minister Ed Balls at least demonstrated that he has a grasp on the fundamentals. The Conservative’s proposal “is a really good one” he said, but one which they copied from the Government. He gave as an example the success of co-operatives providing out-of-hours cover to GPs.

Balls added: “I went… to see a children’s place where they were providing out-of-hours childcare for children before and then through primary school, it was run by the workers in that children’s centre, but the Conservatives are saying that they are going to cut the funding to those children’s centres and for that kind of out-of-hours care.”

Criticising the concept of co-operative public services as a means of cost-cutting – or a strategy likely to be undermined by other Conservative policies - is far more sensible than trying to claim an underlying policy difference that does not exist. Balls, however, will have studied the issue in more depth than some other commentators.

One of Cameron’s previous policy commitments was to create in government a new generation of ‘co-operative schools’, set-up and run by parents. In this they seem to be close to the concept of public service co-operatives that Michael Stephenson has in mind. But, as Balls pointed out, Cameron seems to have moved onto other ideas.

Policy analysis just published by the London School of Economics helps to explain why. It suggests that the attempt to copy the Swedish school system is probably mistaken. “Importing the Swedish model may not make very much difference to the UK’s educational status quo,” suggest the researchers. Moreover, it could be financially difficult at a time of precious little public funds. “Creating new schools will be expensive if large capital outlays are required and ‘bad’ existing schools remain open,” they say.

None of this means that the Conservatives are actually wrong in what they say – merely that there must be a strong suspicion that the opposition’s shadow ministers and their researchers have not fully thought through their policies. They are also guilty of some very grand rhetoric. “This is the biggest shift of power from government to people since the right to buy your council house in the 1980s,” claimed George Osborne.

Of course, for many people in the co-operative and trade union movement, merely being on the same side as the Conservatives is deeply uncomfortable. This is nothing new. Norman Tebbitt once praised workers’ co-ops as an excellent idea as they would force workers to moderate pay claims. That did nothing to help trade unions accept and support workers’ co-ops.

Today the unions have reacted unhappily to the proposals for public service co-ops – but unions are often uncomfortable with any device that makes employer-employee negotiations more complex and nuanced.

Dave Prentis, general secretary of the main public sector Unison, argues the ideas are “a recipe for confusion”. “This is just another Tory Party plan to break up public services, plunge them into confusion and then let the private sector ‘pick over their bones’,” he says. “How are we to ensure that our schools and hospitals maintain high standards if there is no one to monitor or take responsibility when things go wrong. There would be enormous problems for staff too, with the breakdown of national pay bargaining and confusion over pensions.”

In fact, the point over pensions may be highly significant. There are widespread anxieties in the public sector that an incoming Conservative government might severely curtail staff entitlement to public sector pensions. Conservatives may consider that putting forward positive policies for public sector workers could sideline negative speculation on pensions.

But the strongest and most angry criticism of the Conservatives’ co-operative proposals comes from the Unite union. It is already engaged in a dispute with the NHS in Tower Hamlets over a proposal to convert some health services to the employees in the form of a social enterprise. Unite describes the Tower Hamlets’ move as “semi-privatising the most deprived” and a breach of a government commitment to keep the service within the NHS. The union warns that after the social enterprise is set-up, the service could be re-tendered and the contract won by “a North American private healthcare company in five years time, jobs could be lost and services to the public could become fragmented”.

Unite takes a similar view on the Conservatives’ proposals. “David Cameron is using the language of socialism to mask a break-up of public services,” says Gail Cartmail, Unite’s assistant general secretary for the public sector. “He is mangling the English language to advance his anti-state ideology.” She adds that the union fears for what the proposals might mean for employment conditions in the public sector.

It is a reasonable anxiety, even if also wrapped-up in rhetoric. But what we need now is a bit more reason – and rather less rhetoric.

Q. We purchased a laptop online on 1 January 2009 from Portable Universe.  In October we experienced problems with the laptop screen and contacted the company. It issued a returns number and an address to send it.  The computer was still operational - the screen flickered occassionally - and as we are teachers and use the laptop for work we decided to send it back in early December, near the end of term.  On 8 December Portable Universe experienced a fire at its premises and all business ceased.  When I called in early December to enquire about sending our faulty laptop back an answering service told us to email their support service.  I emailed the company twice, but no one replied.  The company did not start conducting business again until the first week of January, by when our warranty had expired.  I sent the laptop back at the beginning of January explaining our situation and understood the warranty would be extended.  We have now been been told the laptop will not be repaired under warranty, although the firm has had it for over four weeks. The only way to get our laptop back is to pay the £120 repair charge. Their staff have been unpleasant and condescending on the phone.  BK, Leicester.

A. Portable Universe rejects your version of events, saying the laptop was only received by them on 18 January, despite issuing the returns authorisation on 9 October. It says that while there had been a fire, this only disrupted business for one day and did not affect customer returns. The company sales manager Peter Weller says he is “sorry if [the reader] regards our explanation as rude and condescending”. However, given the circumstances Portable Universe has agreed to repair the laptop free of charge as if it were still within the warranty period.

Q. We had a cash ISA and children’s ‘Kidzone’ savings account with the Bradford & Bingley, which paid competitive interest rates over many years. When I decided to check current interest rates I had difficulty because B&B had been taken over by Santander and I could not fine the rates displayed online. We visited our Santander branch to find that both accounts now pay a miserly 0.1 per cent interest.  We immediately closed the children’s account and moved the ISA to a Santander account. Is there an obligation on banks to actively communicate to customers when interest rates on accounts become uncompetitive? GT, Barnard Castle.

A. Santander argues that it provides customers with transparent information on current interest rates via its website. In a statement, the bank said: “We can confirm that during the move of Bradford & Bingley accounts to Santander, a link from the Santander website allowed customers to view interest rate changes. Due to global market conditions, interest rates have been falling on savings.  As rates can change frequently, we are unable to inform customers individually of changes.  Therefore, we ask that customers check the rates on their savings regularly, via advertisements on our website, branch literature and national financial press.”

Liverpool’s year as European Capital of Culture earned the city around £800m in extra income – half of which came directly from tourism. If Londonderry becomes the first ever UK City of Culture in 2013, the economic benefit will not match Liverpool’s – but should be substantial nonetheless.

As part of the bidding process, the city council and Ilex made estimates of the likely economic impacts if the bid succeeds. They calculate that City of Culture status should generate an 18% growth in residential visitors and a 20% growth in day trippers in 2013 and 2014. The council says that it wants to use the bid as a means of growing the city’s creative sector by 25%, with an additional 15,000 sq ft of space made available for the knowledge and creative sectors.

The council and its partners want to develop the strategy further by attracting additional private sector investment into tourism and leisure provision and by growing higher and further education provision in the city.

A spokeswoman for Derry City Council says: “The substantial range and variety of programmes and venues along with creativity, important links with education and business creates a hub for culture that is expressive and entrepreneurial. There is an energy surrounding culture: we’ve a very young and talented population in the city and region. The City of Culture is the right way to harness this creativity and energy for the city and Northern Ireland.

“There are many benefits for the city in pursuing this bid. We must ensure we leave a legacy for younger people. It’s about restoring pride in the city and encouraging the wider public to have confidence in the city, as a place to be proud of. It also strengthens our appeal to local people, visitors, and investors among many international audiences.”

The opportunity to bid for UK City of Culture came along with perfect timing – 2013 is the 400th anniversary of the Plantation of Ulster and the building of the city’s walls. It is also a neat fit in terms of the pre-existing strategy for local economic growth and regeneration based around culture, closely following an investment programme which saw the refurbishment of the Playhouse and the Waterside Theatre and the building of An Gaelaras (an Irish cultural centre), and with the development of a new heritage quarter underway at the former Ebrington Barracks.

Mo Durkan, spokeswoman for Derry’s urban regeneration company Ilex, explains: “Arts, culture and tourism will form a growing force in the economic regeneration of the city. One of the key economic drivers is tourism, which includes arts and culture. There has been very serious capital investment in culture in recent years.”

Garvan O’Doherty, one of Derry’s most successful entrepreneurs, whose company owns a range of hospitality and property businesses, believes the City of Culture bid builds on an existing strength. “The tourism opportunities from cultural activities are already well established, for example through the annual jazz, drama, comedy and Irish cultural festivals in the city,” he suggests.  “They all bring significant income to Derry.

“But if Derry actually becomes the UK City of Culture - and I really believe this is possible - then it takes the earnings potential and economic benefits for the city to another level.  The most exciting likely outcome is that it would boost the tourism infrastructure of the city beyond the tipping point, so that we start getting exponential growth in tourism earnings.  Of all the contenders, Derry would derive greatest benefit as UK City of Culture because it would accelerate the development of the beautiful city and a much more meaningful substantive impact on achieving its potential for citizens and visitors alike.”

This message is echoed by SDLP Foyle MP Mark Durkan. “Achieving City of Culture status would bring enormous benefits to our city,” says the MP.  “It would not only attract tens of millions of pounds in spending throughout the year itself, attracted by the energy and vitality of the types of events which are proposed, but there will be tremendous spin-offs in the preparation for the year.  The legacy of that investment will also provide a rolling contribution to the North West economy.

“While the tourism, culture and arts industries and communities will benefit most directly there will be wider accruals to Derry’s economy.  The prospectus heralds exciting opportunities for growth in growing sectors such as the digital economy, not least in digital media where we have a strong platform already.”

A similar view is put forward by enterprise minister Arlene Foster who says the whole of Northern Ireland stands to benefit if the city’s bid is approved. “It would provide a wonderful platform for attracting new visitors and create opportunities to market Northern Ireland to new audiences,” she says.

Jim Sammon, president of the Londonderry Chamber of Commerce, is also very upbeat. “The tourism sector will hugely benefit in terms of increased business for hotels; this may mean even the construction of new hotels and will certainly see increased sales of roomnights and hospitality,” he argues. “This in turn should create new career opportunities, training and jobs.

“Our cultural offering, which is already strong, will be underpinned and boosted as word spreads about the richness of visual, verbal and performing arts. Our Walled City will welcome thousands of new visitors. Our schools and university will benefit from new ideas, new demands, new opportunities. New business start-ups will happen as people will gain a new confidence. Existing businesses will do better – more work for taxis, shops and cafés will see the difference.”

But despite the momentum that now exists behind the proposal, it could yet fall apart through local political disagreements. The initial proposal submitted by the city council and Ilex had all party political support at the council, including from the council’s second largest group, Sinn Fein.

When the news of the short-listing was announced, the city’s mayor, Sinn Fein’s Cllr Paul Fleming, welcomed it, saying: “This is a great statement of confidence in the city’s cultural wealth and an endorsement of the commitment and effort so far. We look forward to building partnerships to progress through to the final stage.”

However, Sinn Fein representatives declined to comment for this article on whether they still support the bid given that it is a competition restricted to UK cities. It is understood that the party has yet to reach a final decision on supporting the bid. The period of waiting now begins – and not just for the judges’ verdict.

The latest figures on financial services complaints make interesting reading – and should concern financial services companies and consumers.

Complaints to the Financial Ombudsman Service - which can require finance firms to compensate consumers for monetary loss or poor service – rose by18% in the second half of last year. The grim economic conditions have made banks, insurers and other finance companies less willing to settle consumer grievances, leading to more complaints going to FOS.

A FOS spokesman explains: “We find that businesses in a recessionary environment are more likely to take a more strictly legalistic point of view in dealing with consumers’ complaints. And consumers are more likely to pursue a complaint as they feel the effects of the recession.”

Half complaints upheld

The complaints figures are disturbing. Just over half the complaints are settled in favour of the consumer. But complaints against some companies are much more likely to be upheld.

At the top of the list is Ocean Finance – which promotes itself heavily on daytime tv. Every single finalised complaint in the latest period was resolved in favour of the consumer. Ocean Finance told us it could not comment in the time available.

Welcome Financial Services also has a very high level of complaints found against it: 92%. It failed to respond to a request for an explanation.

MBNA had 85% of its complaints found in favour of the consumer, plus 91% of those against its subsidiary, Loans.co.uk, which no longer trades. An MBNA spokesman says: “Overall, our complaint numbers are falling; we have seen a drop of around 16.5% since the last publication of FOS complaint data some six months ago…… Our figures are broadly in line with those of our competitors…. the complaint levels reflect a tiny fraction of our customers.”

Another company with a high level of cases found against it is the Shop Direct Group, whose brands include Littlewoods, Great Universal, Marshall Ward, Kays and Additions Direct. Its three finance arms had 87%, 88% and 91% of complaints resolved in favour of the consumer.

A spokeswoman responds: “We are fully compliant with all FSA Treating Customers Fairly principles and we receive a very low number of complaints in relation to the 10.5 million customer accounts we hold. We resolve the vast majority of these complaints for our customers within a short timeframe and only a very small proportion of complaints are ever referred to the FOS.”

Of the big banks, Barclays comes out worst. Some 65% of complaints against the bank were resolved in favour of the consumer and 87% of those against its subsidiary, Firstplus Financial, which provides secured loans.

A Barclays spokesman says: “Customer satisfaction is key and the majority of our customers are very satisfied with their banking relationship with us, but we realise things can sometimes go wrong, which is why we have dedicated teams in place to identify and fix problems as quickly and efficiently as possible.”

Working to reduce complaints

But the bank concedes: “Barclays are working closely with FOS to see how we can address the volumes of customer complaints we are receiving and improve analysis to identify route causes.”

The Northern Ireland banks have a better record than the industry average. Only 20% of complaints against AIB/First Trust were resolved in favour of consumers; 37% of those against Northern Bank; 38% against Ulster Bank; and 40% against Bank of Ireland.

But FOS is concerned that many consumers in Northern Ireland do not realize they can complain to it to get bad service corrected, or obtain compensation. A FOS spokeswoman explains there is less awareness of it here than in any other country or region within the UK. She adds: “Financial capacity across the board is lower in Northern Ireland than elsewhere.”

It is something that FOS is keen to put right. So if you are unhappy, start complaining!

• The Financial Ombudsman Service can be contacted by phoning 0845 080 1800, or via its website, www.fos.org.uk.

 Q.  My daughter and son-in-law are having difficulty in finding a mortgage provider.  They are buying two plots of land on which they intend to build their own home.  One plot costs £95,000 and the other £30,000.  Both are professionals in good jobs.  They are looking for a mortgage of about £80,000 to complete the purchase of the more expensive site.  They have planning permission on the property, which lapses in 18 months.  The only mortgage offer they have is from a building society that requires planning permission to last at least five years.  Can you suggest an alternative mortgage provider?

A. Ray Boulger, senior technical manager at mortgage brokers John Charcol, says: “I am puzzled by the restriction from the building society. What I would expect the lender to do is to include a condition in the mortgage offer that building work must be commenced by the 18 month deadline. That would automatically mean the offer lapsed when the planning permission did. If your reader’s application to the lender did not make it clear that funds are not required to purchase the land it may be able to reconsider.

“One building society which specialises in self build is The Ecology, and they do lend in Northern Ireland.  The Progressive Building Society and Bank of Ireland (NI) will also consider self -build applications. In addition, I would suggest contacting Build Store, which is not a lender but a company specialising in the self-build market. It has special deals with several lenders, all of which allow funds to be drawn down at the various stages in the build process without the normal requirement to have a re-inspection (valuation) done each time, which saves time and money.”

Q. We booked a holiday in September last year through Expedia, flying EasyJet. The outward flight from Luton to Krakow with EasyJet was fine. We stayed in Krakow for five nights. We were worried that heavy snow might cause our return flight to be cancelled, so we checked the EasyJet website and found our flight was not listed. We checked our itinerary on the Expedia website and there were no changes. When we arrived at Krakow Airport we found that the flight had left two hours earlier: the flight time had been changed and we had not been told. We were unable to contact anyone from Expedia. We contacted EasyJet, which said the flight time had been changed three months earlier, in October and that Expedia should have informed us. We had to buy new flights at a cost of £471 and the total cost to us including accommodation was about £785. Neither EasyJet nor Expedia will cover the cost of this. As far as I am aware, Expedia did not inform us of any flight change. Expedia says it emailed us in November with the information, but it has yet to send me the promised copy of this email. It has sent me a copy of a Word document with the information that should have been sent to me, but this is not proof that it was emailed to us. LC, by email.

A. After we contacted Expedia, it contacted you agreeing ‘as a gesture of goodwill’ to repay £550 of your additional costs, while not accepting liability for the problem. Expedia says: “We are very sorry for the disruption that the rescheduling of [the reader's] flight caused to her trip. We always email notification of flight schedule changes to our customers as soon as we receive the information from the airlines and we are in the process of ensuring that online itineraries are also updated.”

Q. I am having terrible problems with Dabs.com, an internet electricals retailer.  On 2 November I bought an Acer Timeline 8471 notebook from them for £420.44.  When I tried to set it up to use it I found the wireless networking to be intermittent and often non-functional.  Frequently the machine fails to connect to networks that our other laptops connect to - even at close range to the access point.  I have spent a lot of time seeking technical advice from Acer and my university’s IT department, unsuccessfully, but this was time consuming.  I then contacted Dabs.com on 22 December to arrange a return.  The item was returned back to me on 13 January with an engineer’s report stating there was “no fault found.”  I am a medical student and need the laptop for my studies- it has already been away for 28 days on repair over the holidays leaving me computerless.  Now I feel helpless and don’t know what to do. Dabs aren’t answering my emails and they don’t have phone support. What can I do? TB, Norwich.

A. Dabs.com is a subsidiary of BT, with whom we took up your complaint. BT says: “When the test engineers at Dabs examined the item they set it up to wireless, connecting without an issue. Over the course of four hours they restored software to eliminate software issues and could not find any hardware fault. The wireless connected and stayed connected for more than four hours and they at no time managed to replicate the customer’s fault. As such, the returns department were satisfied that the item was not faulty and that was why it was returned it to the customer. Nevertheless Dabs has refunded the customer in full.”

Dungannon & South Tyrone Borough Council has avoided any rise in either category, while Moyle District Council has increased domestic rates by a mere 0.03% and non-domestic by just 0.01%

The highest increase is at Magharafelt District Council, where domestic rates are going up by 8.40% (8.37% non-domestic).  Belfast City Council rates are rising by 7.80% (7.81%).  Rates in both categories are also rising by over 7% in Ballymoney and Limavady borough councils.

Limavady has the highest domestic rate charge in Northern Ireland, at 0.4034 pence per pound of rateable value. The council has suffered exceptional high costs in rates repayments for Ministry of Defence military bases after a successful appeal and in subsidising a ferry link with the Irish Republic.

Environment Minister Edwin Poots said: ‘I commend those councils that have kept increases to a minimum. The disparity between the lowest and highest rates in Northern Ireland by councils would indicate that a number of them should be seeking to deliver high quality services more efficiently.’

Rates bills sent to householders and businesses in Northern Ireland comprise two elements: local rates set by district councils and regional rates, set by the Northern Ireland Executive. The regional rate accounts for over half the total rates bill, but has been frozen for domestic ratepayers for three successive years.

Iceland may not have changed everything as far as local government investment policies are concerned. But the collapse of the country’s three banks certainly had a big effect on councils, their finance directors and elected members, who have no intention of being caught-out the same way again.

CIPFA responded to the Iceland-related crisis by revising guidance for investment policy, which was published in September. CIPFA’s assistant director local government, Alison Scott, says that councils have made important changes in policy and practice since the crisis hit. “There is greater member scrutiny than before,” she explains.

“Certaintly we have now engaged with members much more in terms of treasury management,” adds Scott. “It has moved much higher up the agenda. There is a much better understanding of what treasury management can achieve, but also what the risks are.”

Councils are now looking to a wider range of information sources to help them make their investment decisions, including in the pages of the Financial Times and by reference to credit default swap rates, says Scott. Local authorities have become concerned with exposure to particular countries. Many councils had investments in all three Iceland banks: now the lesson, for example, is not to have multiple exposure to Irish banks.

“Initially there was a massive flight to the Debt Management Office,” adds Scott. “That has now slightly come back from that position as more authorities see the cost of doing so.”

One of the hidden realities exposed not just by the Icelandic crisis, but also by the collapse of Lehman Brothers, is that local authorities were often engaged in strings of transactions, where it was unclear who all the counterparties were. That counterparty risk exposure has been made much more transparent in recent months, says Scott.

John Simmons, Kent County Council’s cabinet member for finance – himself an ex-banker – reports significant change to investment policy and practice in his authority since the Iceland banking crisis put £50m of taxpayers’ money at risk.

“We are a large authority and at most times we have £400m in funds available,” says Simmons. So investment policy practice is very important to the council. Yet in the immediate aftermath of the Iceland crisis the authority moved its balances to the Debt Management Office, where it received a mere 0.25% to 0.30% interest.

One of the messages absorbed by Kent County Council was not merely the fact of the collapse of the Iceland economy and the country’s banks, but that the global systemic failure was such that the potential investment losses could have been much greater. “There but for the grace of God could have gone RBS and Halifax,” suggests Simmons.

As Kent drew-up its revised investment policy, the council considered the revised CIPFA guidance. It also carefully evaluated its counterparty exposure. “One thing we have put in place that was not there before is country exposure,” says Simmons. Another is “group banking exposure – who owns what”. A further consideration is “reputational risk”, with the Financial Times and other sources read more carefully to obtain a variety of perspectives on market risks.

“Previously we had relied on the credit ratings agencies,” continues Simmons. “When push came to shove, the ratings system was found not to be the flexible beast we would have wished it to be. The advice did not perhaps keep pace with what was happening in the market.”

Questions are now more likely to be asked about how much exposure a bank has to a particular asset class, such as property. There is also a smaller list of institutions in which the council will place its money – these are limited to the Government’s Debt Management Office, Abbey National, Barclays, HSBC, Lloyds, RBS and, just added to the list, the Nationwide Building Society.

As well as restricting the number of institutions in which funds are placed, there are stronger limits on the size of deposits – the limit is now a strictly observed £40m maximum per counterparty – and a maximum investment period of six months.

With a shorter investment time frame, Kent is now much better placed to respond to any changes in the credit rating of institutions and governments. And that, explains Simmons, includes the UK’s own rating. After recent experience, Kent is not in the mood to take any chances.

Often the best business ideas come from trying to overcome challenges that seem to have no existing commercial solution. This was the case with Shane Meehan, founder and partner of Newry’s Media Lightbox.

“I was working in marketing at the time and the idea came from a problem we had in finding images and distributing them,” explains Shane.

His department had to send images on a continual basis to newspaper and magazine editors and others to produce marketing brochures and promote events. But those images might have been retained by a photographer – who could be difficult to contact and who might have deleted photos that were now required. Alternatively, the images might be on the office computer, cds or stored by the designers – but finding the files was another difficulty.

Shane realised there were other difficulties, too. Sending editors high resolution images could take an age, might block the recipient’s email box and frequently bounced because their file size was too large for the recipient’s system. But sending low res images often led to requests to re-send them as high res.

The solution, realised Shane, was to set-up a web-based system on which all the images were stored and managed. When artwork was needed by a newspaper, magazine or a colleague, the link to the file could be emailed, with the option of downloading the resolution that was appropriate. And the solution for his own business could work equally well as a service to an array of clients.

Media Lightbox was consequently set-up to provide clients with a file storage and retrieval facility, designed by Shane, but organised by his partners – Anthony Kieran and Cecil Hetherington – who had the technical capacity to translate the ideas into practice.

The business only started operating three years ago, but now has six employees has grown rapidly and customer numbers have risen exponentially since the website – Medialightbox.com – was launched last September as a direct marketing tool to potential clients.

Now Medialightbox.com has a solid base of clients in the marketing, PR, graphic design, photography, architecture and engineering sectors – the system can store any type of files including pdf, images, artwork and video. Key features include file approval, file history and secure access control. A personal client is charged £10 a month, a business client £60 a month and an ‘enterprise client’ £180 a month – for which 25+ employees can access the system.

High profile clients have signed-up, including Cisco Systems and Comic Relief. Vodafone is a client in order to protect its brand image – use of the system ensures that all staff in all departments can only use the latest publicity material.

Nokia used Medialightbox.com for its worldwide launch of the Ovi store – its equivalent of iTunes. For Nokia, the use of a single website that stored all the files required by its’ marketing teams around the globe meant a much quicker and less labour-intensive process for contacting newspapers and magazines and reduced problems with the e-mail delivery of large media files.

With that initial success, the firm now expects to go a long way. “We want to be one of the biggest players in the storing and sharing of files online,” Shane explains. “We want to get 100,000 users by the end of next year.”

It may sound like a grand ambition, but the firm has made a strong start in achieving it.