Expansion of university places failing to benefit the poor

Research shows that teenagers from middle-class homes have benefited the most from the expansion of higher education over the last 15 years. According to figures, the proportion of children from relatively well-off backgrounds getting on to degree courses has increased twice as quick as for pupils with working-class parents. Prof Peter Elias, from Warwick University, who co-wrote the report, said the findings partly reflected a decline in manual occupations and an increase in white-collar jobs over the last 40 years. But he added: “Nonetheless, given the remarkable increase in the participation of young people in higher education that has taken place over the last 20 years, the brief analysis presented here reveals little evidence that the much-vaunted policy ambition – to provide better access to higher education to those from less-privileged backgrounds – has been successful.” The study, published by the Institute of Social and Economic Research, based at Essex University, analysed the social backgrounds of almost 34,000 adults aged 22 to 34 and 37 to 49. The older group would have been eligible for university places before 1992 – prior to the major expansion of higher education from the mid-90s onwards. The younger group was able to take a degree between 1996 and 2009. The findings show that among 37 to 49-year-olds, just over a quarter – 25.7 per cent – had a degree. This rose to more than a third – 34.3 per cent – for those aged 22-to-34, a rise of 8.6 percentage points.

Small business losing faith in economy

Confidence among smaller businesses has tumbled to levels not seen since the global financial crisis, with worries about fuel costs, cash flow and interest rates weighing on sentiment. Less than one-fifth, or 19 per cent, of small-to-medium business owners and managers said they expected the economy to improve in the next 12 months, according to the MYOB business monitor report for March. That was the lowest level in the survey since March 2009, when the economy was still recovering from the initial impact of the financial crisis. Chief among the concerns for SMEs was the ‘‘extreme pressure’’ on businesses created by rising fuel prices, which 14 per cent of the survey’s 1043 respondents cited as a problem. Since February the average weekly retail petrol price has risen 10 cents to nearly $1.52 a litre, amid global supply constraints, speculation and geopolitical tensions. Cashflow issues were the second biggest worry for SMEs with 11 per cent of those surveyed flagging them, followed by interest rates, a source of worry for 10 per cent of those polled. ‘‘These results paint a stark picture of the financial and emotional challenge facing small to medium business owners, their families and their staff over the next year,’’ MYOB chief executive Tim Reed said. ‘‘They will need significant support from their networks and the government in order to swim strongly through these challenging times.” In a sign of the slowing growth for the business sector, data released by the Australian Bureau of Statistics yesterday showed the value of business loans dropped 8.4 per cent in February, following a 1.1 per cent slide in January. The official data underscores the weakness filtering through business in recent months. In the MYOB survey, one-fifth of businesses saw revenues rise last year, but almost double that amount – 38 per cent – reported revenue falls. Thirty-nine per cent said they saw no change in revenues in the past year. While the Australian economy continues to expand – driven largely by the mining boom, the strong dollar and the RBA’s relatively high interest rates of 4.25 per cent – there has been a dampener on activity in the domestic economy. In the MYOB survey 46 per cent of construction and trades businesses reported lower revenue, while 45 per cent of manufacturing and wholesale enterprises reported the same. Since the survey was conducted, SMEs were dealt another blow in the form of an out-of-cycle rate rise on small business loans by ANZ Bank, which lifted their cost by 6 basis points late last week. Analysts now forecast other banks may follow ANZ’s lead in pushing through more rate rises.

Insolvency figures hide true picture of debt in the UK

The number of people declared bankrupt has risen for the first time in a year, according to new figures published by the Insolvency Service today. This is the first quarterly rise for a year amid concerns that rising mortgage rates could see this trend continue. Bankruptcies rose by 5.5 per cent on the previous three months to total 9,132. The number of debt relief orders also increased by 7.3 per cent to reach 7,897. But the number of personal insolvencies bucked the trend to post a small decline of 1.2 per cent. This was caused by a drop of 10.4 per cent in individual voluntary arrangements (IVAs), down to 11,694. Meanwhile personal insolvencies for the first quarter of 2012 totalled 28,723, a drop of 4.7 per cent on the same period last year. Chris Nutting, Director of personal insolvency at KPMG believes the cost of going bankrupt as opposed to entering an Individual Voluntary Arrangement (IVA) may be influencing the figures. He said: “Today’s figures illustrate that the number of people entering consensual insolvency agreements – specifically DROs and IVAs – is increasing, in stark contrast to the dramatic drop in the number of people being made bankrupt. It may be that the cost of obtaining a bankruptcy order is deterring both creditors and debtors from using this procedure for personal insolvency.” The number of companies in England and Wales who had to call in the receivers rose by ten per cent to 1,290 compared to the previous quarter. However, the rise in company liquidations was minimal, up by just 0.2 per cent to 4,303. However, some debt analysts believe the official figures do not tell the whole story. Bev Budsworth, managing director of The Debt Advisor, said: “Today’s figures only cover formal insolvency plans such as Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs). However, the figures do not tell the real story that far more people opted for an informal debt management plan – a figure not reported today. “There are approximately 732,000 debt management plans in existence, and it’s estimated that 165,000 people sign-up to a plan each year. When you look at the numbers on formal plans, around 120,000, it’s clear to see that the real number of people in debt remains well hidden.” David Birne, an insolvency partner at HW Fisher & Company believes banks are reluctant to shut down businesses but are also reluctant to lend. He said: “Banks are showing remarkable levels of forbearance, sometimes even with the firms that are dead from the neck up – and with little prospect of clearing all their debts. “But the banks’ continued reluctance, or inability, to lend even to viable companies, is hampering the economy as a whole.” The Consumer Credit Counselling Service (CCCS) expects personal insolvencies to rise over the next 12 months as job losses, stubborn inflation, higher mortgage payments and welfare benefit changes combine to push more individuals and households over the edge. Delroy Corinaldi, director of external affairs at the CCCS, said: “It is crucial that anyone who is struggling to repay their debts, or even worried about their debts, should seek free advice and support.”

Are you overpaying for international money transfers?

With more people living and owning property abroad, transferring money internationally is becoming increasingly common. Whether it is buying a holiday home in the sun or sending money back to the UK to meet financial commitments here, many of us will need to transfer money overseas at some point. In 2006, an estimated 5.5 million Britons were living abroad, according to the Institute for Public Policy Research (IPPR). Australia was the most popular destination for British expats, the study found, followed by Spain, the US, Canada and Ireland. The IPPR also found that about 1 million British pensioners were living abroad in 2006 and this number is expected to rise to 3.3 million by 2050. In addition, about 2 million Brits own a holiday home or investment property overseas, and regularly make international money transfers for reasons that include mortgage payments and rental income repatriation. Banks dominate the money-transfer market and research suggests many Britons are overpaying for international money transfers. Last year, currency exchange firm Travelex reported that Britons are needlessly paying more than £300m a year in bank fees and charges when transferring money overseas. For many people, their bank is their first port of call when making international money transfers. But regardless of where you live in the world and what types of bank accounts you have, most banks offer poor exchange rates and levy charges. So it pays to shop around for the best deal. Brian Friedman, founder and CEO of the Forum for Expatriate Management, a news and information service for expats, says increasing numbers of expats are using online payment services. “We are seeing a trend towards using currency specialists for online payments rather than your normal bank,” he says. “Currency specialists can be better value, particularly for payments of more than £200, such as mortgage payments.”