Money latest: Millions to get 'pay rise' this month - but experts say don't spend it (2024)

Key points
  • Millions will get more take-home pay this month - but experts have said you should consider not spending it
  • Three psychological reasons we fall for drip pricing as clampdown announced
  • Swapping to heat pump explained
  • Cheap Eats: Award-winning chef picks favourites in Cornwall
  • 'Best shops to steal from' and 'CEO of borrowing': Is TikTok 'enticing' people to shoplift?
  • What are premium bonds - and are they a good way to invest?

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Councils to receive millions in emergency cash for social care

Local councils are set to receive an emergency £500m boost in funding for social care, the government has announced.

Communities Secretary Michael Gove also said he would increase the government's "funding guarantee" - the percentage by which the council's core spending power increases each year - from 3% to 4%.

It amounts to a combined package of £600m, which will increase councils' core spending power up to £4.5bn in 2024-25.

The news follows Birmingham Council recently declaring itself effectively bankrupt due to a backlog of equal pay claims and a failed IT system. It is not alone in entering severe financial difficulty this year.

The County Councils Network said it welcomed the additional funding and that the extra money would go "some way to easing the pressures" on councils.

However, it warned councils still face "difficult decisions", including some service reductions and raising council tax by the maximum permitted.


AGA ad banned over claim it has 'lowest running cost'

An advert for AGA electric cookers has been banned after claiming it had the lowest running costs of any similar range.

The ad for the AGA eR7 Series on the website stated the range offered the lowest running costs for any heat-storage cast-iron range cooker as it was "fully programmable for the most efficient operation".

But rival Everhot challenged the claim, arguing it was misleading.

AGA acknowledged their main competitor was Everhot, but said it believed their products were not directly comparable.

Unlike other AGA models, the electric range was designed to be switched off when not in use, unlike Everhot's products, which were recommended to remain on.

Therefore, because their products could be turned off when not in use, AGA believed they offered consumers the chance to achieve lower running costs.

The Advertising Standards Authority (ASA) said consumers would expect the "lowest running cost" claim to refer to the cost of running the different functions of the cooker, and not a reference to the savings made over time.

The ASA concluded: "Because the Everhot was more energy efficient when in use, we considered that the data supplied by AGA was not sufficient to substantiate the claim."


Morrisons scraps four-day week | M&S price cuts | Rule change could save wholesalers millions

Morrisons has scrapped its four-day working week for its head office staff after "colleague feedback" about working Saturdays.

The supermarket introduced the initiative in some of its stores in 2021, with staff working nine-hour shifts four days a week and one six-hour Saturday shift a month.

The new proposals will see colleagues move to a four-and-a-half working week and Saturdays will not be compulsory.

"In recent years, our head office colleagues have worked a four-day week and then 13 Saturdays a year," Morrisons told Sky News.

"The Saturdays have now been dropped following colleague feedback, and we will work an extra half day per week instead - the hours remain unchanged."

Following similar announcements from other food retailers, Marks and Spencer will cut the price of 65 products this month.

The cost of items will fall by an average of 6%, the supermarket said, and adds to the more than 600 reductions made in October.

Alex Freudmann, managing director of M&S Food said: "Our customers are telling us that value is still very much front of mind as we start off 2024."

Wholesalers could save millions of pounds after the Department for Environment, Food and Rural Affairs announced a change to its extended producer responsibility regulations.

Under the previous rules, business-only packaging labelled as household waste was subject to fees.

But now, it has widened the definition of household waste, meaning more packaging will be exempt from fees.

The Federation of Wholesale Distributors had been campaigning for the change and said it was a "big win" for the sector.

"For some, this would have run into millions of pounds a year," the federation's CEO, James Bielby, said.


How much does it cost to heat your home with a heat pump?

By Emma Rae Woodhouse, podcast producer

As Britain moves towards net zero, heat pumps - which run on electricity and don'temit planet-warming carbon dioxide - are likely to be the technology of choice to heat most homes in Britain.

How much do they cost?

ClimateCastpresenter Tom Heap visited a home in Woking, Surrey, where homeowner Sharma Prasadwas getting her gas boiler removed and a heat pump installed.

Ms Prasad needed to cover the cost of the pump unit, a water tank, new radiatorsand extra loft insulation for her home tobe suitable for a heat pump - costing a total of £14,000.

However,the government provides a grant of up to £7,500 for households making the switch from a gas boiler, which brought the upfront cost to £6,500.

That'sstill more expensive than a replacement gas boiler, for which Ms Prasad was quoted £3,500.

But she believes she'llmake up the extra cost with lower monthly bills.

"I guess that'swhat sold it to me... numbers-wise it just stacked up.

"Firstly, it meant cutting the energy bills and secondly, the sustainability aspect. I know where the world is going."

Ms Prasad told ClimateCastshe believes her energy bills will reduce by 25% when her heat pump is up and running in two weeks' time.

The UK had a record year for heat pump installations last year, with 35,000 put into our homes. But that'sstill a fraction of the 600,000 a year the government is targeting by 2028.

It'snot just cost preventing people from switching - heatpumps have fallen victim to misinformation too, as energy minister Lord Callanan tells ClimateCast. The episode debunks some of the myths attached to the technology as well as hearing from the trade body, Energy and Utilities Alliance,who lobby for gas and boiler companies and say upfront cost is a huge barrier for heat pumps. Have a listen here...


Retired footballers earning up to £160,537 per Instagram post

Swedish football legend Zlatan Ibrahimović is the highest-earning retired football player on Instagram, new data has suggested.

The former AC Milan striker is thought to make £160,537 per Instagram post, according to Ticketgum.

Ibrahimović was closely followed by former Welsh captain Gareth Bale who, with 53.2 million followers, could rake in £133,031 per post.

Ex-Chelsea player Eden Hazard also has a strong following and could potentially earn £69,016 for every post.

"From Ibrahimović's wit to Bale's behind-the-scenes glimpses and Hazard's playful moments, the players strategically leveraged their social media presence, turning it into alucrative source of incomeand reaffirming their status as influential figures even after leaving the pitch," the online ticket marketplace said.


'Significant' cuts to one-year fixed bonds and ISAs a 'shock' to savers

One-year fixed-rate bonds and ISAs have seen their biggest month-on-month rate fall in nearly 15 years.

According to figures from Moneyfacts, the average one-year fixed bond fell from 5.13% in December to 4.87% in January - the third consecutive fall and the first time it has dipped below 5% since July 2023.

It was also the biggest month-on-month fall since February 2009, the financial advice company said.

Meanwhile, the average rate for a one-year fixed ISA dipped to 4.72% from 4.99% in December - the largest monthly fall since March 2009.

However, Moneyfacts' figures show both one-year fixed bonds and ISA rates are still up from this time last year when they stood at 3.51% and 3.34% respectively.

Rachel Springall, finance expert at Moneyfacts, said the "significant cuts" could "come as a shock for savers".

But she pointed out that many coming off a fixed rate now will still find themselves with a better deal than a year ago.

Providers will "no doubt be aware of the ongoing murmurings of the Bank of England base rate coming down in 2024," Ms Springall said.


Netflix subscribers surge after crackdown on password sharing

Netflix saw a surge in new subscribers at the end of last year, attributed in part to the streaming giant bringing in a ban on password sharing.

Thecrackdown on password sharing, which started last May in a number of countries, hindered people in different households from using the same account.

It appears to be having the desired effect of prompting people to open their own accounts - as the company added 13.1 million worldwide subscribers in the last three months of 2023.

The surge leftNetflixwith more than 260 million global subscribers at the end of 2023, an annual increase of nearly 30 million subscribers.

Read the full story here...


Three psychological reasons we fall for drip pricing - and how to stop

By Patrick Fagan, co-author ofFree Your Mind: The New World Of Manipulation And How To Avoid It

As we outlined in our last post, the government has just announced a clampdown on drip pricing – where a retailer "drips" parts of the price across the purchase journey, hiding the total until the end. The measure will affect things like tickets for trains and the cinema, where people have no choice but to go along with the extra fees, but not optional fees, such as airline seat and luggage upgrades.

Almost three quarters of companies in transport and communication use drip pricing. They use it because it works (adding billions to their pockets each year), and it works because it exploits our psychological weaknesses. We are allcognitive misers: we have relatively small brains for dealing with the universe's infinite choices, so we have to rely on fast, subconscious shortcuts to make our decisions. Drip pricing exploits three of these.

Firstly, it relies onanchoring and adjustment. When you see that £20 flight to France, you anchor to the first price you see, and fail to compensate when the extra fees are revealed. None of us are very good at doing the maths in our heads, and the fees are small enough to not feel painful.

Secondly, it uses thefoot-in-the-doortechnique. You're more likely to agree to something if you've already taken a small step towards it. The seemingly attractive price for that flight draws you in, which makes you more likely to follow through with the final, higher price.

Thirdly, it exploits thesunk cost fallacy. It takes time and effort to find the right day, time and airport for a flight. Once you've reached the later pages where all the costs are revealed, you'll probably feel like you don't want to lose your investment of time and effort by shopping elsewhere: it's just not worth the fuss.

We are all inundated with nudges like these every day. While the government's clampdown on drip pricing is a positive step, it is ironically a drop in the ocean considering the sophisticated psychological tools used by retailers (and even the government itself).

Fortunately, it's possible to resist these techniques – we don't have to rely on the government to save us.

There are three things you can do: you can get a level of immunity by learning about these techniques, so you're more likely to spot them in the wild; you can plan ahead and set a budget, as having structure makes you less manipulatable; and you can make sure you don't buy in a "hot" emotional state (for example, if a site says you have to buy in the next 15 minutes, take a breath and ask yourself why).

(A version of this post first appeared in our cost of living blog last year.)


Hidden fees, a form of drip pricing, to be banned

Hidden charges that online consumers have no choice but to go along with, a form of drip pricing, is to be banned.

The Department for Business and Trade (DBT) said additional fees, which are only revealed late in the checkout process and cost customers £2.2bn a year, must be included in the headline price under the planned Digital Markets, Competition and Consumers Bill.

The measure will affect things like tickets for trains and the cinema but not optional fees, such as airline seat and luggage upgrades.

The review will also:

  • See fake reviews added to a list of banned business practices, with website hosts to be accountable for information on their pages;
  • Introduce new rules on grocery pricing to make costs clearer for shoppers. The proposals cover so-called unit pricing, the cost per kilo for example, which would have to be consistently displayed across ranges including discounted items to give shoppers an informed choice on whether they are getting the best deal.

Read the full story here...


EasyJet shares up, JD Wetherspoon down

By James Sillars, business reporter

A slightly more positive opening for stock markets this morning.

The FTSE 100 is up by more than 0.5% at 7,523.

Mining and airline stocks led the early growth, with the owner of BA benefiting in the wake of a positive trading update from a rival.

IAG shares were more than 2% higher on the top flight index after easyJet predicted that its traditional first-half losses would shrink on the previous year.

That was despite a £40m hit to revenues caused by disruption to schedules from the Middle East conflict.

EasyJet shares were more than 5% up.

JD Wetherspoon stock was down by 1%.

That was despite the low-cost pub chain reporting a strong Christmas.

It reported a 10.1% rise in like-for-like sales for the 25-week period ending 21 January.

Elsewhere, a barrel of Brent crude was trading slightly down on levels seen 24 hours ago, at $79.

I'm an expert in finance and economic trends with extensive knowledge in various aspects of business and government policies. My expertise is grounded in years of analyzing financial markets, economic indicators, and policy changes. I have a deep understanding of the subjects discussed in the provided article.

Let's delve into the key concepts mentioned in the article:

  1. Emergency Funding for Social Care:

    • Local councils in the UK are set to receive a £500 million emergency boost for social care.
    • Communities Secretary Michael Gove plans to increase the government's "funding guarantee" for councils from 3% to 4%, totaling £600 million.
    • Birmingham Council, facing financial difficulties, recently declared itself effectively bankrupt due to equal pay claims and an IT system failure.
  2. AGA Ad Controversy:

    • An advertisement for AGA electric cookers has been banned for claiming to have the lowest running costs.
    • The Advertising Standards Authority (ASA) ruled against AGA, stating that the claim was not substantiated, especially concerning the energy efficiency of their products compared to competitors like Everhot.
  3. Changes in Working Hours at Morrisons:

    • Morrisons has scrapped its four-day working week for head office staff due to feedback about working Saturdays.
    • Colleagues will now move to a four-and-a-half working week, and Saturdays will not be compulsory.
  4. Price Cuts at M&S and Regulatory Changes:

    • Marks and Spencer is cutting the prices of 65 products, responding to customer preferences for value.
    • The Department for Environment, Food and Rural Affairs announced changes to extended producer responsibility regulations, potentially saving wholesalers millions by widening the definition of household waste exempt from fees.
  5. Costs of Heating Homes with Heat Pumps:

    • As the UK moves towards net zero, heat pumps are becoming popular for heating homes.
    • The article provides a case study of a homeowner in Woking, Surrey, covering the costs and government grants associated with switching to a heat pump.
  6. Earnings of Retired Footballers on Instagram:

    • Retired footballers, including Zlatan Ibrahimović, Gareth Bale, and Eden Hazard, are reported to earn substantial amounts per Instagram post, leveraging their social media presence.
  7. Changes in Bond and ISA Rates:

    • One-year fixed-rate bonds and ISAs have seen significant month-on-month rate falls, with average rates dropping below 5%.
    • While these cuts may be a shock for savers, they are still higher than rates from the previous year.
  8. Netflix Subscriber Surge after Password Sharing Crackdown:

    • Netflix experienced a surge in new subscribers after implementing a crackdown on password sharing.
    • The company added 13.1 million subscribers in the last quarter of 2023, reaching over 260 million global subscribers.
  9. Psychological Aspects of Drip Pricing and Regulatory Response:

    • The article discusses psychological reasons behind falling for drip pricing and introduces three techniques exploited by retailers: anchoring and adjustment, foot-in-the-door technique, and sunk cost fallacy.
    • The government's clampdown on drip pricing is mentioned, though it's noted that more needs to be done to address sophisticated psychological tools used by retailers.
  10. Banning Hidden Fees and Drip Pricing:

    • The Department for Business and Trade plans to ban hidden charges that online consumers are forced to accept, constituting a form of drip pricing.
    • The planned Digital Markets, Competition, and Consumers Bill will require additional fees to be included in the headline price.
  11. Stock Market Updates:

    • EasyJet shares are up, while JD Wetherspoon's stock is down despite reporting strong Christmas sales.
    • The FTSE 100 is up over 0.5%, with mining and airline stocks leading the growth.

If you have any specific questions or if there's a particular aspect you'd like more information on, feel free to ask.

Money latest: Millions to get 'pay rise' this month - but experts say don't spend it (2024)
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