Toxic Bio-fuels

It’s great being old or rather what I would have thought of as old when in my teens and twenties. My brother’s daughter is getting married so it’s over to Germany for the family gathering and as bro’s school term hasn’t finished yet, we are invited to an Open day. Germany is more keen generally on eco stuff than the UK and among the displays of class work is a project on bio-fuels which sadly for me is a bête noire. The advantages and disadvantages are listed and strangely the disadvantages list is longer? Using land for planting bio-fuels increases water usage and puts up food prices. OK for us maybe but not so good for the poorest people on this earth who live below the poverty line. Even worse is another story about the workers clearing the forest to make space for more bio-fuel crops encouraged by generous government subsidies. Entertainment in the jungle is pretty sparse but the local Indian women will do here, it seems – a classic example if there ever was one, of the law of unintended consequences.

Don’t expect many to protest here though. And a few thoughts for us if we ever have to start filling our tanks up with this wretched stuff. Does anyone really care what happens to the displaced indigenous tribes? Does anyone really care about the soil erosion which will happen in a few years’ time when the soil is depleted of nutrients? and who cares about a few Indian women being raped - we’re saving the planet.

Myths, myths and more myths

Related perhaps but in a more positive way is the power of some myths. One of the more endearing ones recalls a study done in 1953 at Yale or Harvard depending on where you heard it. Story goes that a university class was asked to write its goals. Many years later, the class members are tracked down and the 3 per cent that had clear written goals were worth more than all the rest. This example is used in motivational programmes by the likes of Zig Ziglar, Anthony Robbins and Brian Tracy but each one seems to think they heard it from one of the others….After posting this on ecademy sometime ago, there seems to be a definitive answer and the links are below. Usual bottle of plonk to anyone who can disprove or shed further light on this.

Raising the Bar on Retirement

Latest steps to sort out the UK’s pension mess have all the hallmarks of the early days of heart transplant surgery with widely varied opinions on the best way to do it. Raising the State Retirement Age is already on the cards with an increase to 66 planned for 2011 ahead of the already scheduled increases to 67 in 2024 and 68 in 2046. Now after different test cases which went one way then the other, compulsory retirement ages are to be banned from 2011 but with exceptions for the police and air traffic controllers. With life expectancy having increased so much since the introduction of the NHS in 1948, this makes sense but like many changes creates a whole new load of issues.

From my monthly pension surgeries, there have been two cases of employees wanting (having to) continue working which the employer has been happy to allow. But after 65, they no longer qualify for Death-in-Service benefit of 3x basic salary, nor do they get the other employee benefits like private medical insurance and permanent health insurance. Mentioned this briefly to an employment law solicitor who said that they were clearly disadvantaged compared to other employees. How long before the first test case?

Granny wants to help You!

Finally, an interesting referral from a colleague where a lady wants to do equity release – turn part of the value of her home into cash without selling it. She already has a small mortgage and would like to raise a capital sum on the remaining equity of her house. This would pay off the mortgage and leave something left over. Main driver here is that she wants to give the money to her four grandchildren now rather than wait until she is dead. But as she gets some state benefits, she may well lose these? Detailed knowledge of State Benefits is not something IFAs use much or bone up on. Nor is it something people generally go to IFAs for, especially with the slow but steady pressure to move away from commissions to fees, but I was able to think of some people who could help. Contact me for further info here.

George’s original blog  http://www.ecademy.com/node.php?id=88793

Stephen Kraus’s answer on the 1953 study: http://web.archive.org/web/20070511013702/www.realscienceofsuccess.com/YaleStudy.htm

Some jokes never go out of fashion: why is abbreviation such a long word? why is there an S in lisp? and why is there only ONE Monopoly Commission? While the Monopolies & Mergers Commission is now http://www.competition-commission.org.uk/ the Royal Commission on Long-term Care for the Elderly http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_4008520  which reported back in 1999 is about to be resurrected as Commission on the Funding of Care and Support (no website yet) which might prompt another question – why so many care commissions?

The previous one started its work in 1997 and after much consultation, came up with the cop out conclusion “Somebody else should pay for it” or care should be free for all. This helped nobody, not least the government which had hoped for some brighter ideas. The members of the latest Commission have been announced and the coalition is actually now looking at Labour’s previous proposal of a one-off £20,000 tax to pay for it. Ideas like this may sound plausible, but as taxes are rarely ring fenced for one particular thing, the revenue just disappears into the great government money black hole. What comes out in benefits, is anyone’s guess.

Staying with the tricky subject of long-term care, there are no pre-funded long-term care products in the UK now after Partnership Assurance (formerly Pension Assured Friendly Society) suspended its Care Prepared product last week after selling 21 policies in the previous year http://www.citywire.co.uk/new-model-adviser/partnership-shelves-last-remaining-pre-funded-care-product/a413056 Bit strange as these products are big business in the USA where care for over 65s is paid for under the Medicare program. For the uninitiated, pre-funded care plans are taken out while you are healthy and pay benefit for physical or mental disability with the assesment being done independently of the insurance company.

Immediate Needs plans which are basically a special kind of annuity, are still available and selling steadily as they enable you to cap and plan for the cost of care. Here you pay the insurance company a hefty lump-sum, and they pay a specified level or escalating amount each month to cover the cost of care, taking on the risk of how long the person receiving care will live. Just the sort of thing you have insurance companies for.

If benefit is paid direct to the care home, then this is tax-free and can save tax for the person in care. If they received money from their portfolio and then paid for care, their income would be taxed and they would have to pay for care out of net income.

The scenario of “What happens if they die after a few months?” can be insured separately at modest cost. This in turn enables you to do some financial planning with the rest of your money before it runs out. Sadly, this happens regularly as people sell their home, move into a care home, put the often six-figure sum on deposit and hope the money lasts longer than they do.

The bright side here almost becomes the dark side. People settle in to their new home but the cost of care tends to escalate at more than the rate of inflation and current interest rates. Capital dribbles away and the beneficiaries and family member wonder if there will be anything left to pass on. Once the assets are down to around £22,000 the local authority should start chipping in, but different councils apply the rules in different ways and the upper and lower “notional capital” limits are slightly different in the four parts of the United Kingdom

Worth mentioning the boundary here – in hospital the cost of treatment is borne by the local health authority. Pass through the hospital doors and care is the responsibility of the local authority who apply a means test before paying for anything. Exception here is if treatment continues outside the hospital. Care Home Selection could be a useful link here: http://www.carehomeselection.co.uk

For years, solicitors have had people marching in through their doors saying “I want to give my house away so the local council won’t get it!” People who have nothing, get their care paid for while better off people may not – until the assets have been used up. Care costs can also wipe out any Inheritance Tax liability. One hears of trust arrangements which will protect assets and life insurance bonds for example, are excluded. An insurance bond is technically a life insurance policy rather than an investment although it may contain a huge portfolio of investments. Hiding assets is called deliberate asset deprivation and is definitely a growth industry. The assesment questionnaire asks about disposals made in the previous 6 months, but case law suggests otherwise and disposals made years before have sometimes been ruled ineffective, so the picture can be almost as clear as mud.

Get the right advice from someone with specialist knowledge, and the chances are that the care needed for yourself or your loved one will be paid for in a home that they like, plus there will be something for the beneficiaries.

A major turn-off for people investing in private pensions, is having to buy an annuity and there are two good reasons behind this. Firstly, many people don’t know what an annuity is and the pre-retirement seminars I do as a www.pensionsadvisoryrservice,org.uk volunteer are being rewritten to address this. Another reason is that annuity rates are rubbish compared to income rates obtainable with other forms of investment.

For example,  if your pension fund is worth say, £100,000 when you take your benefits, then you can take £25,000 as tax-free cash - renamed under Pension Simplification rules as Pension Commencement Lump Sum!  YCMIU*. You cannot get your hands on the other £75,000. You can get the income from it but not the capital. In practice, what this means is that you sell the £75,000 to the insurance company that gives you the best rate.  In a recent example, the LEVEL annuity rate obtainable for a male aged 65 was 6.9 per cent p.a. so he would have got this money for the rest of his life but inflation would have eroded its value over time. The problem here is that this rate is only slightly more than what you can get via an IFA in a low risk income fund where you keep you capital. So if you have the choice of say, 5 per cent a year where you keep your £100,000 and 6.9 per cent a year where you lose your capital, which one would you choose?

The income from both is taxable, albeit in slightly different ways but that detail can be left for now.

But the good news? Annuity rates generally improve as you get older. Latest age for buying an annuity from a pension  is 75 which has been unchanged for decades. Life expectancy has probably increased by 10 years since it was first introduced. The tax rate payable upon death after age 75 for unused funds was an eye-watering 82 per cent under the previous government – generously reduced to 55 per cent with the coalition. A new consultative document is out for you to have your say on this rather important matter or you might wish to ask your own adviser what he/she thinks? http://www.hm-treasury.gov.uk/press_28_10.htm

You may be wondering why bother saving for a pension at all? Well there are still several good reasons:

1) If you are self-employed, your own pension pots are likely to be safe from creditors in the event of bankruptcy or having an IVA – Individual Voluntary Arrangement

2) the tax-free growth can be very valuable over the long term compared to a fund where the income/capital growth is taxable

3) your pension funds are not liable to Inheritance Tax. Unless you are daft enough not to nominate any beneficiaries – contact me or your adviser for an explanation here.

4) Accessibility to your pension funds can be a two-edged sword. Very tempting to dip into your pension pot to: have a second honeymoon, help your children, do a loft conversion or a hundred other worthy things.

If you think you home is your pension, go and lie down in a dark room until the feeling goes away. Eating your home is only practical IF your home is much bigger than you need when the children have flown the nest. After selling up and moving to a smaller home, you can then invest the lump-sum left over for income. Equity Release to give eating your home its proper name, is based on annuity rates which is where we came in. Unless you are in your 80s or in poor health, you may find the rates or terms offered disappointing.

* YCMIU = you couldn’t make it up

The Worst School in Britain

Suddenly there’s a rush with three www.thepensionsadvisoryservice.org.uk pre-retirement presentations in two days in Hackney. Second day finds me at http://www.mossbourne.hackney.sch.uk/ on Hackney Downs a brand new academy on the site of the former Hackney Downs School. The latter was originally founded in 1876 by one of the City of London’s Livery Companies, The Worshipful Company of Grocers. It became a grammar school for a while with some distinguished alumni including: playwright Harold Pinter, actor Michael Caine, tycoon John Bloom who brought us cheap washing machines in the 60s and darts professional Eric Bristow. Come 1974 this successful school went comprehensive and standards went down the toilet resulting in the school being dubbed “the worst school in Britain” by the government eventually forcing it to close in 1995.

Out of the ashes stands a brand new school in a very modernist building now a thriving sixth form academy and I am asked to give a pre-retirement presentation to about 90 teaching staff and afterwards, about 70 support staff. Everything is set up when I arrive in the huge auditorium which can seat 300 people. The audience is the largest I have ever presented to and the average age is by far the youngest. My gut instinct tells me that quite a few are ex-City people as they are a bright lot and the interaction is great fun.

Next presentation for the support staff is less interactive, easily visible from the passive body language. Many are foreign and English may not not be their first language. No point in using funny anecdotes if these go over their heads, so I have to simplify things a bit. Main point is that both the Teachers’ Pension Scheme and Local Government Pension Scheme are final salary schemes (or Defined Benefit Schemes) where the investment risk or cost of maintaining the value of the pension the employees earn is carried by the employer meaning government meaning the tax payer. The effective contribution to do this is around 18 per cent of earnings a year with a third from the employees and two thirds from the employer – ruinously expensive and unsustainable. For the members concerned, best make hay while the sun shines and earn these lovely pensions while they are available.

With both audiences, about one quarter are not receiving any benefit statements at all and one member had opted out as she completely misunderstood how the scheme worked. My talk apparently results is a rash of phone calls to the schemes offices and the above-mentioned lady opts back in.

Just Do It!

Plenty of questions after the presentations and it occurs to me that the school might benefit from a visit by someone from www.3Cscommunity.com as the school must include a few would-be entrepreneurs? One of the staff mentions that his son has done this already with  http://www.green-oil.net/ starting his eco-friendly bike lube business from a garden shed! Perhaps the Just do It! slogan now adopted by Nike helped here? Next 3Cs meeting is in September.

The Feeling is Mutual

An insurance company or in this case Friendly Society announcing that it is not taking in any new business is usually ominous especially when the society says it has “nothing to do with solvency”. This is about as believable as an obese person saying that their excess pounds are nothing to do with their diet. The coalition’s sensible early announcement to scrap Child Trust Funds http://www.childtrustfund.gov.uk/ has affected several Friendly Societies who depended on them for much of their new business. Largest of them is http://www.thechildrensmutual.co.uk/ formerly Tunbridge Wells Equitable Friendly Society with about a third the the Child Trust Fund market, announced this week that it is not taking any new business?

Friendly Societies are a bit of a relic from pre-Welfare State days and have the advantage that some of their funds grow tax-free. Even with this tax break, high charges make them expensive investments and not brilliant performers and since many are with-profit funds, even worse. With-profit funds have been poor performance for a while, even when the FT-SE 100 index has gone up by 40 per cent in a year. Friendly Society names throw an interesting light on our history. Some were respectable while some were not being basically drinking clubs where if someone was hard up, a hat was passed round and people put in what they could (see below). More history here http://www.historyshelf.org/shelf/friend/12.php but for me, the cutest one perhaps is http://www.shepherdsfriendly.co.uk/

An old Christmas song:

Please put a penny in the old man’s hat.

If you haven’t got a penny, a halfpenny will do,

If you haven’t got a halfpenny, then God bless you!

The day starts badly…

Friday comes, and all set up to work from home saving two hours of commuting, when the phone rings. It’s the office – have I read METRO magazine? Since you only get this free mag when travelling in on bus or tube, answer is negative. Was Gena a client of yours? Yes, but no contact for sometime. The article* is a report of the inquest after she threw herself off a train in February. Normally one would not make a feature of a suicide by a client, but if you are still reading this, it is thanks to her kindness and initiative.

Back in 2003 we were both members of BNI Islington where I cut my teeth as far as social networking is concerned. BNI more or less invented early morning networking and we would meet in Upper Street early Wednesday morning. Format of the meetings is that after a quick breakfast, we stand up in turn and give a 60 second pitch stating the kind of business we do and what we are looking for. Most 60 second pitches are awful as people seem ill prepared, nervous or mean. The philisophy is givers gain and the idea is that you give details of people that fit the referrals asked for. Best if the referror checks with the referree that a particular service is required. People who never give referrals tend to leave of their own account or are asked to leave – no one likes someone who takes and never returns.

A few 60 second pitches are good where people take the trouble to prepare, but many are not. Gena’s were probably the best ever as she used to sing them, not really surprising as here business was called Yes you can sing! Sitting next to her was great company but fatal from a presentation point of view, as it really was a case follow that! Stand up afterwards and do your bit and no one really noticed if you merely spoke. Having been in a very good choir as a child, I treated myself to a few singing lessons with her at her home in Islington. At  some point, we must have talked about writing a book – about swimming in my case, since I seemed to have a talent for teaching nervous adults and children. Months go by and she phones to tell me she has done the book http://yesyoucansing.com/books/ with the help of Tony Parry, formerly of Reuters and now a writing coach – I must call him, she said  http://www.coachwords.com/contact.html Cut a long story short, this happened in 2005 and here we are.

Gena’s entry into singing coaching was a direct result of 9/11. Being in New York at the time, the event was one of those moments when you ask yourself ”What am I doing with my life?” The penny finally drops when she realises that coaching people in singing is more fun than being a pop star, which she was with the band Colour Noise http://www.youtube.com/watch?v=h3qF4_VQ3wU 

* http://www.metro.co.uk/news/832700-singer-leapt-from-high-speed-train-to-her-death

How to deliver a great 60 second presentation

Your presentation has four parts:

Intro - Personal name, biz name (if applicable) and what you do (if not in the biz name)

Content – have four or five bullet points. DO NOT WRITE THE FULL SCRIPT. If you do, this will come out in  flat monotone unless you have had voice training or are an actor. Case histories are great, rather than saying “We do ******” every week. Get excited! It’s seven-o-clock in the morning. The two people who consistently delivered the best 60 second presentations were Keren Lerner at BNI Islington www.topleftdesign.com and Lewis Malka at BRX Bond Street http://www.joseph-sterling.com/about_us.html Another memorable contributor was litigator Paul Marmor http://www.sherrards.com/page_partnerprofiles11.asp whose deadpan delivery about the business of suing people was very entertaining. Putting this another way, a good 60 second presentation is basically a story.

Be Specific in the kind of business or introduction you want. The more specific, the more referrals you get and better quality too.

Outro – Personal name, biz name (if applicable) and what you do (if not in the biz name) – same as the Intro but very important, especially when it is a large meeting with 30+ people competing for your attention.

Public speaking is number one horror for many people, but 60 second presentations are the easiest way to start. Practise with your spouse or partner, who can be very helpful here. In my experience, most 60 seconds are only around 30-40 seconds so valuable time is often thrown away. With a huge meeting, the Chairman may reduce the available time to this amount so everyone gets a chance to deliver, but no need to throw away a third of your time in the spotlight, when you don’t have to.

Finally, to avoid the cardinal sin of social networking, don’t forget your business cards.

Things is quiet with the football, Wimbledon and occasionally warm weather. Nice then to have a change from emergency Budget changes and my next Foreign Legion reading with a compact memoir of a magistrate. Bow Street Beak by Ronnie Bartle is a rare look at the judges side of the bench or magistrates court in this case. Bow Street Magistrates’ Court opposite the Royal Opera House, dealt mainly with minor crime but also with extradition cases. In 2006 it moved to Horseferry Road now being known as City of Westminster Magistrates’ Court. The police as we know them basically started in Bow Street, with Henry Fielding (author of the novel Tom Jones) being crucial to this. Life in the old days must have been pretty grim and the forerunners of our own “Bobbies” the Bow Street Runners, made life a lot safer.

The human side in the book is very enjoyable to read but most memorable will be the cases of the Guildford Four and extradition of General Pinochet. These two sections deal with the technical/legal issues and not the merits of either side and unavoidably perhaps, are quite heavy going. All the same, it is sometimes difficult not to get worked up about it. Chilean support was crucial to victory in the Falklands and Gen. Pinochet visited Mrs Thatcher secretly during the conflict, Chile gave its former Head of State immunity from prosecution and Spain which wanted to extradite him has never prosecuted any of its own people who did just the same things that they accused the Chileans of doing. 

Fortunately, IFAs don’t have to learn about international or criminal law apart from when they read a crime novel. Most surprising is the suggestion that the oath which witnesses and defendants take, to “tell the truth, the whole truth etc” be abolished in its current form. A good stocking filler http://www.amazon.com/Bow-Street-Beak-Ronald-Bartle/dp/187232889X

The Greys have it

Mention the idea of an employment agency for the 60 plus, and you probably think of an agency with many on its books and few jobs. At The Really Caring 60+ Recruitment Company http://trcrc.com/ the opposite is the case with 12 well paid positions which have been unfilled for some time. Of these, 10 are part-time and there are 3 other self-employed opportunities as well. Largest sector is charities including Hospice nurses and skills tutors and 3 managerial/supervisory full-time positions have been filled in the past month.

Thought about mentioning this agency to a gentleman at one of my pre-retirement TPAS seminars as he is being made redundant, but at 55 he is too young!

It Pays to Shop Around

The importance of shopping around or rather getting independent advice was brought home this week in a referral from another recruitment firm. The friend’s father is 65, has mild health issues and wants to take the benefits from his remaining pension scheme. The 4 page underwriting questionnaire is sent to several insurers to see who will offer the best rate. The client wisely wants an escalating annuity where the income will rise at RPI each year and provide his wife a 50 per cent pension should she still be alive when he passes on.

Responses from the insurance companies take a few days. Two say the client does not qualify (isn’t ill enough) for an enhanced annuity so will only offer standard rates, while the other annuity incomes offered vary by over 25 per cent. Sad here to mention that about 40 per cent of people are unaware that you do not have to buy your annuity from the pension provider and think they are saving money by doing it all themselves. New so-called Third Way annuities offer more flexibility albeit with a slightly higher risk but this can be discussed at the time. If the fund is well into five figures, the commission offered by the insurance/pension company will probably pay for the advice. If the fund is big enough, you don’t even have to buy an annuity when you take your tax-free cash and can stay invested, but the issues are a bit long to deal with here.

I hate pensions department

Let me conclude with my answer to a question at one of my TPAS pre-retirement seminars. If you hate pensions, then what are the alternatives?

1) win the Lottery. Most Lottery winners have nothing left after two years.

2) inherit some money or rather enough to live on.

3) sell your business if you have one, but it needs to be profitable.

4) find a rich husband? Nice if you can get it, but plenty of competition!

One would think a long established insurance group with US$362 billion (£222 billion) assets under management would know which way the markets are going, but even the best of us make mistakes it seems and I am not talking about football or goalkeeping. A long standing client wanted to provide a sum for his children so that when they inherited, there would be some cash to pay the Inheritance Tax. Probate cannot be obtained until this tax is paid and the Executors of the will don’t have any authority until they have probate. Without insurance, this Catch 22 situation can be managed if:

 * the estate is liquid and cash used or investments sold to pay the Inheritance Tax or

* the executors borrow from a bank but this can be difficult

Client wanted a single premium policy to solve this and the best one around at the time was a single premium whole-of-life policy from General Accident. Plenty of regular premium policies for this sort of thing but single premium ones are quite rare – not the sort of business most IFAs do every week. Premium was about £14,000 with the six-figure sum-assured payable on second death (when both parents had died) with the sum-assured guaranteed for 10 years. These passed and the surrender value stayed about the same. Recently this dropped by 40 per cent and the client who works in the City asked why?  pointing out that markets were UP by about 40 per cent in the last 18 months or so. The problem is that once the surrender value has disappeared, then further premiums will be needed to maintain the cover. Life cover gets more expensive as you get older and premium increases when you are planning to retire soon are not helpful. Reasonable explanation might be just this (higher mortality cost) but this is not mentioned and would not explain a huge drop in the surrender value in one year. It really looks like a smash and grab raid on a long-standing customer.  

The complaint is quickly acknowledged but the answer talks of market falls over 18 months and fairness to other policy holders? Check my stats again and the markets have gone up over this period. Another letter to Aviva brings a reply three times longer than the first one but still refers to market falls? Sadly, this looks like a formal complaint to the insurer and then to the Financial Ombudsman Service http://www.financial-ombudsman.org.uk/ if Aviva won’t come clean here. The former looks like it might end up within the Financial Services Authority which in turn is going to end up as a subsidiary of our central bank – Bank of England. Looks like someone has been studying O level Economics, but at least things will then be the right way round.

Aviva is a collection of many insurance companies it has taken over down the years, with about 30 different with-profits funds in varying degrees of health and one has to wonder if someone is robbing Peter to pay Paul?  We shall see.

Feeling like some missionary, I find myself in Essex speaking to over 40 would be pensioners as a volunteer for TPAS The Pensions Advisory Service www.pensionsadvisoryservice.ork.uk  - not to be confused with another TPAS Tenant Participation Advisory Service www.tpas.org.uk Early arrival allows me to talk to the lady organiser but the PowerPoint slides have not been loaded and my memory stick is full, so George has to wing it. All goes well and I am told to stop talking after an hour having handled several questions. Feedback shows 17 people thought the talk was pitched at the right level, 16 thought it too advanced while 1 member thought it was too basic – probably the guy at the back of the room who glowered at me the whole time. These presentations are free to employers who if interested, should contact The Pensions Advisory Service (Paul Hays).

I nearly fell off my chair moment of the week is Jeremy Warner’s excellent piece on BP http://blogs.telegraph.co.uk/finance/jeremywarner/100006277/why-obama-should-be-thanking-bp-not-demonising-it/ Barack Obama should be thanking BP!

Recent Childcare scandals prompt the inevitable call for more rules but the recent Disptaches programme on Child Protection clearly shows what too much regulation can do. http://www.channel4.com/programmes/dispatches/ 

Each new social worker scandal prompts more reviews and rules with the obvious effect that more time is spent on paperwork in the office leaving less time to visit the children who are threatened. With sanctions on putting reports in late, it is pretty obvious what the priority of a social worker will be. Didn’t watch all the programme but recent tragedies have mentioned the huge number of files that some social workers have to handle. In one case the council’s own maximum was 30 files per social worker whereas one social worker had over 100.

If ever a situation cried out for a paperless system, social care is one. A similar situation exists still in financial services where in paper-based IFA offices, client data may have to be transposed up to 15 times in order to get policy on risk. Most obvious examples are where client’s name, address, contact details, date of birth etc is copied and copied and copied with the risk of error increasing each time. Insurance companies recognise this and offer enhanced commissions for life insurance where the IFA submits the application electronically. Tablet computers with built in wireless chips have been around for years in the private sector, but seem rare in the public sector. Anyone who thinks more regulation will solve any perceived wrongs in financial services is being naive.

After David Cameron’s speech, the cost of accumulated government debt will hopefully sink in, but this has only doubled since about 2002. At that time, government debt went down for a little while which probably gave the last government the excuse to spend, spend, spend with most of the debt being accumulated in the last two or three years. Makes me wonder if we are heading for a rerun of the 1950s where the greyness and dullness of those childhood years still haunts me.

Same day, different programme makes me think about Afghanistan. The Grenadier Guards have returned from Helmand and are due to lead the Trooping the Colour this month. Good to see the soldiers talking to the elders in a village, but talk of withdrawing in a couple of years does not help and only encourages the Taliban to wait. http://www.bbc.co.uk/iplayer/episode/b00sqrqy/For_Queen_and_Country/  There are some chilling parallels with the French conquest of Morocco where the mindset of the Berber people seems strikingly similar to the Pashtun people in the Afghan region. Prophetically, one tribesman tells the French when they first land in Morocco “If you come, come to stay. Then I will join you”. All this from the tome that I haven’t finished yet Our Friends beneath the Sands by Martin Windrow mentioned in previous blogs. Tribal squabbling is the norm. Instead of spears, it’s AK 47 rifles these days, cheap at about US$50 each apparently. One man one vote or elections as we understand them, are something quite alien, especially when the President cheats at election time.

Eventually Morocco was pacified. Most intractable were the Berbers from the mountains who were very good fighters carrying very little kit with them and always making their shots count. Prisoners and enemies suffered unspeakably. Defeat in battle of one tribe led to the loser seeking aman (peace terms) with the victor, after which the peace which might last for a few months or a few years. French persistance eventually won through after some enlightened leadership from General Lyautey, but it took years. Colonial ghettos where locals were not allowed were banned, and  marriage with the locals was encouraged. Harking back to regulation and bureaucracy, the French administration in Morocco was three times larger than the British equivalent in India where the population was forty times larger.

With no empire anymore, no one relishes the prospect of an Afghan war lasting a generation or more, but a passing visit will not win it. The Taliban are a direct result of the vacuum created after the Russians were defeated when America did not wanted to get send any troops - Vietnam was too recent a memory. Our very sensible self-interest in being in Afghanistan is no better expressed than by former soldier Paddy Ashdown http://www.independent.co.uk/opinion/commentators/paddy-ashdown-what-we-must-do-to-win-this-war-in-afghanistan-1755787.html This raises the thought, will my two grandsons end up fighting there in 20 years time? We shall see.

What’s the opposite of writers’ block? Should I stick to pensions, finance etc or why not write about spies? For a second I reach for my calculator but with the whole blogosphere available, go for both. Slightly surprised that I have not had any panicky messages from Higher Rate Income Tax payers (see last blog) who may have thousands of pounds of unclaimed Income Tax relief. On the other hand, perhaps I should not be surprised as two afternoons at a new group pension scheme client result in only one proper pension discussion even after two e-mails to over two hundred employees. Perhaps they are waiting until NEST, the Government’s new compulsory pension scheme starts in 2012, but with the coalition taking “a long hard look” at it, apathy rules.

People with unrealised capital gains would do well to consider making them now and paying 18 per cent rather than whatever the new tax rate might be after the 22 June Emergency Budget. Objections from the Tory right about raising the capital gains tax rate, miss the point. Why have different rates for capital gains, personal income and companies? This just encourages tax arbitrage where you structure your affairs for tax efficiency rather than good business – the (tax) tail wagging the dog.

Even more ironic is the LibDem insistence on a fixed four year term for the next election date. OK this is  a necessary part of the Conservative/LibDem deal but with the real pain of spending cuts yet to come, four years may not be enough. It may be near the peak of the pain making the government very unpopular. An election happens and the previous lot get back in? Why not a one-off fixed term of six years? That would at least allow the emergency measures to work, but I am not holding my breath.

But enough of this monetary stuff. As a child of the Cold War or Baby Boomer, spies and spy novels have always been a welcome distraction to school and professional exams and a Saturday afternoon walk starting at Piccadilly Circus provides some real life spy stories brightening up a drizzly day. Much of the content revolves around the Cambridge Five spy ring: Guy Burgess, Donald MacLean, Anthony Blunt, Harold (Kim) Philby and John Cairncross. Many of their haunts are in Mayfair so the walk can be looked as a guided walk around one of the smarter parts of London. Norfolk House in St James’s Square where the D-Day invasion was planned, is on the itinerary as are other flats where senior American spies lived.

Most outrageous of the Five was Guy Burgess who liked chewing raw garlic, told everyone who listen that he was working for the Russians. And when making his escape with a suitcase of secret documents, gave the answer “State Secrets” to a curious customs officer who asked about its contents!

The D-Day landings were of course in Normandy but the Germans had been hoodwinked into thinking that the main invasion would be across the shorter sea-route to Calais and that the Normandy one was a feint. At the start of hostilities, the 30 odd German spies in the UK were rounded up and given a stark choice – work for us, or the firing squad. Just after D-day, Rommell wanted to move reinforcements down to Normandy but one the UK’s best ever spies John Pujol Garcia with the then glamourous name of Garbo, stopped this. After WW2 he disappeared and was only discovered many years later in Venezuela. Having been awarded the Iron Cross 2nd class by Hitler for his service to The Reich, he was invited to collect an MBE from Buckingham Palace which he did in 1984.

Saddest statistic to come out of the tour is that Stalin’s death toll is now known to be around 27 million shown from files now seeing the light of day, making Hitler’s Holocaust efforts seem rather humble. For some reason, this brings back a memory from the late 1980s when I was in the property business. A rather drab dark green painted shop in Tufnell Park came up for sale. The shop sold lefty books and had never seemed very busy but the name The Bellman Bookshop was in fine gold copperplate lettering. Top floor contained a boardroom which had the atmosphere of a shrine. Here the floorboards were bare in contrast to the rather bourgeois shopfront lettering. At one end was the framed front page of The News Chronicle announcing the death of  Stalin from 1953. Why didn’t the owners take this relic with them? But I digress…

The real world of espionage is apparently quite mundane and it can take years to infiltrate someone into an organisation before they start producing anything of value. James Bond driving around in an expensive car would have attracted attention which real spies avoid.

The heading is a comment from author Ian Fleming who was still writing when the first Bond films were made and the end part is “He was no Sidney Reilly”. The latter was one of the UK’s greatest spies and responsible for Great Britain getting oil from Persia initially via the Anglo Persian Oil company. Persia is better known as Iran these days and busy trying to make its own nuclear weapons which the Americans and few others are trying to frustrate. One thought probably in the back of Iranian minds is that they were a superpower long before the British and Americans were. The Anglo Persian Oil company is still around but has got itself into a fine mess in America just now, where we all know it as BP – British Petroleum.

Spy Walk details here: http://www.walks.com/London_Walks_Home/Saturdays_Walks/default.aspx#12899 and Sidney Reilly stuff here: http://www.trutv.com/library/crime/terrorists_spies/spies/sydney_reilly/4.html

Garbo’s story is in this book: http://www.amazon.co.uk/GARBO-Saved-D-Day-Secret-History/dp/1903365589 while story of Yuri Modin who ran the Cambridge Five spy ring is here: http://www.amazon.co.uk/Five-Cambridge-Friends-Yuri-Modin/dp/0747212805 You couldn’t make it up.

To conclude with the day job, if you are not sure about your tax position before the Emergency Budget Day or haven’t reviewed your portfolio for a while, George has been pretty busy lately, but would still be happy to hear from you.

With my niche in financial planning essentially dealing with the end of people’s lives i.e. those who are terminally/seriously ill or need advice when they are starting to have to pay for care, perhaps it is no surprise that a group that shows the future, makes a nice counter-balance. Solicitors Simmons & Simmons again host www.3Cscommunity.com meeting near Moorgate. This month there are 4 presenters in the auditorium and firstly, Modwenna Rees-Mogg of http://www.angelnews.co.uk/ tells us about Early Stage Finance. The best source is actually profitable customers rather than the more usual friends and family. Even cash neutral customers may help but getting rid of 20 per cent of unprofitable customers can help too.

Proper documentation for friends and family is best done properly to avoid the  “I need my money back next month” scenario as many start-ups only “cash out” after 6 to 10 years. Over 50 per cent go bust (usually within 3 years) so funding your friend/relatives business is quite a leap of faith. If you think shares are risky, stay away from start-up businesses which are unregulated and not covered by the Financial Services Compensation Scheme. A start-up is not a particularly smart investment for the tax-free cash from your pension either, unless you will not lose sleep if it doesn’t work out. Interestingly, some angels these days do not want to be directors of a new business as if it goes bust, this is on their record at Companies House. This may hinder raising money for future ventures. Instead, they may ask for observer status allowing them to attend board meetings but not vote.

Successful venture capitalists basically invest in good management teams and typically do 25 to 30 deals before they get The Big One! One needs to be open and honest with backers to avoid the so-called Oh sh*t! meeting where the money is in the bank, but you forgot to tell them about……   If you need research to perfect your gizmo, try and get a grant as what VC people really like to do is fund the growth phase of a business rather than the R&D bit. Using an intermediary is often better than a direct approach – perhaps a specialist solicitor or a group like 3Cs, which has helped about 30 entrepreneurs. Another source, if you want to keep up to speed on this stuff, is serial entrepreneur Mike Southon’s weekly column in the FT http://www.ft.com/comment/columnists/mikesouthon while the most economical way to get in front of serious investors is probably Bill Morrow’s Angels Den featured in one of my more popular blogs http://www.georgeemsden.co.uk/2009/07/im-an-investor-get-me-out-of-here/

Jack Butler of  http://www.future-foundations.co.uk/ who previously spoke at 3Cs in 2007 is back looking for extra funding for his programmes to help young people achieve their potential. This is done through 1 – 5 day total immersion programmes where the emphasis is on personal responsibility, leadership and enterprise skills.

Most exciting presentation is by Nick Coates of http://www.ultramo-engines.com/aboutus.html whose engines aim to reverse the current efficiency ratio of internal combustion engines. Your typical car engine is only around 30 per efficient with the rest going in roughly equal proportions via exhaust loss and heat loss. 40 years as a mechanical engineer has prompted a clean sheet approach from a thermodynamic perspective. Losses which cannot be avoided include  pumping, mechanical and Carnot losses - best explained here http://www.grc.nasa.gov/WWW/K-12/airplane/carnot.html

Starting from this carte blanche,  unavoidable losses account for about 30 per cent of the available energy, which should give an efficiency rating of around 70 per cent and really help save the planet as 45 per cent of world CO2 emissions are from the internal combustion engine. The respected Ricardo Institute http://www.ricardo.com/en-gb/ has seen the proposition and confirmed that the thermodynamics are sound – the question now is “will it work?” £200,000 is needed to build a working prototype plus another £1 million to develop it. Revenue would be from licensing and manufacturing and patent applications are in. While patents are needed to protect your idea (or intellectual property) lodging a patent tells the whole world what you are doing.

Third speaker is Matthew Scherba of http://www.tx3.biz/Events.html looking for funds to develop his project management software using MS Silverlite technology used by the public and private sector. Apparently, the pricing model is different as most software for example has a bronze, silver, gold model – more money = more/better/quicker features. Their’s is different but you pay less if you don’t need all the features. Surely this is the same principle but in reverse? Proving perhaps that I am beyond my zone of competence here, I don’t understand the answer but as the audience members are limited to one  question each, let it go. No point in wasting valuable drinking/networking time either which in the best 3Cs tradition continues at the nearest decent pub after we have have left the building.

Next 3Cs meeting 29th June 2010 at UCL Advances – the venture arm of University College London -see you there?

To finish on a more down to earth note, recent pension reviews will probably result in £26,000 of tax rebates for two clients. The people concerned did not realise that Higher Rate Income Tax relief on personal pension contributions has to be claimed unlike Basic Rate Income Tax relief which you get automatically (the pension company does it for you). Contact me if you are not sure here.