$1M not untold wealth, but it helps
NEW YORK — Renee Weese has reached an enviable goal — she’s become a millionaire. But like many others whose net worth has risen in recent years to seven figures, she doesn’t feel particularly wealthy.
Not that long ago, the word “millionaire” conjured up visions of chauffeured limousines and extravagant shopping trips and elegant yachts. These days, a millionaire is more likely to be the guy or gal next door who saved carefully — and perhaps benefited from the sharp run-up in housing prices — but still worries about covering the exploding costs of children’s educations, caring for aging parents and funding their own retirements.
Weese, 51, of Atlanta, credits her good financial fortune to good- paying jobs and windfalls when her startup insurance company went public and, later, when it was taken over by a bigger insurer. Still, Weese worries about how far the money will go.
As she puts it: “I know I have more money than a lot of people do. But I don’t feel I can sit back on my heels. I have lots of years ahead of me, and elderly parents I help financially a bit, and kids and grandkids.”
To people living paycheck to paycheck or who haven’t saved much - - which is the bulk of the U.S. population — a million dollars seems very far out of reach. But a growing number of Americans are accumulating that amount and more. According to research from Merrill Lynch & Co. and the consulting firm Capgemini, some 2.9 million people in the United States and Canada have net worths of $1 million. The New York-based companies count all of an individual’s financial assets except a primary residence.
Atlanta financial adviser Micah Porter, who has worked with Weese, estimated that about 70 percent of the wealthy clients his Minerva Planning Group sees have earned their money by building successful businesses or saving from their salaries. The others inherited all or part of their wealth.
But having that much money doesn’t necessarily mean their financial concerns are over. He said a big worry is how long the money will last because “they’ve become used to a certain standard of living that may be difficult to support” when they stop working.
And the fact is, $1 million doesn’t go as far these days as it used to. For one thing, it’s vulnerable to inflation — someone who bought $1 million worth of goods in 1957 would need $7.3 million to buy the same goods today, according to Federal Reserve figures.
It’s also vulnerable to longevity. Americans are living much longer than they used to, and that means they need larger nest eggs to get them through retirement.
Interestingly, it is workers’ focus on saving for their retirement that leads Dan Sontag, an executive in the global private client division of Merrill Lynch, to predict that a growing number of Americans will achieve the million dollar milestone.
He notes that many baby boomers — those born between 1946 and 1964 — have been contributing to company-sponsored 401(k) retirement plans and similar employer-backed programs for 25 years “and those account balances have mushroomed.”
In addition, many of these people also own homes that appreciated greatly in the boom market of recent years.
“I think if boomers look at the numbers, between your 401(k) and your home equity, you may be a millionaire — or pretty close,” he said.
But Sontag also understands that those who accumulate that kind of money may not feel as if they’ve arrived on Easy Street.
“Your father and my father had a guaranteed income stream from pensions,” he said. “But today’s retirees aren’t guaranteed the income flow. They guaranteed a block of assets that they have to create the income against.” That leads to uncertainty, he says.
Two baby boomers who recently hit the $1 million mark are Liz Pulliam Weston, 44, a personal finance expert, and her husband Will, 53, a professor at the Art Center College of Design in Pasadena, Calif. As she put it in a recent column on MSN.com, “the day my husband and I became millionaires was a lot like any other day.”
In fact, she said in an interview, she was updating her computer software and “like when a car’s odometer rolls over, our net worth totaled out to seven figures.”
Weston described the milestone as “feeling neat,” but she also drew several practical lessons from it:
– The average person may feel that $1 million is unattainable, but Weston points out that she accumulated her cache “putting away a little of every paycheck no matter what.”
– Hitting the $1 million mark doesn’t mean you can stop saving. The couple has a daughter to educate and, with long-lived relatives in the family, a likely long-term retirement to finance.
“On top of that, we have a pretty expensive lifestyle, living as we do in southern California,” she said.
But David Bach, author of “The Automatic Millionaire” and other financial advice books, points out that “99 percent of Americans don’t have a million dollars — and to them, a million dollars is a fortune.” To the millions around the world who live on $1 a day or less, “it’s unfathomable.”
`Do I Look Like A Chauffeur?’ - automobile insurance for car pooling - Brief Article - Statistical Data Included
INSURANCE | You may need extra coverage if CARPOOLING KIDS is part of your routine.
IF YOUR MINIVAN is constantly filled with other people’s kids–on car-pool duty to school, soccer games, band practice and Girl Scouts–make sure your auto insurance provides the right protection.
In most cases, your liability coverage will protect you if you cause an accident while driving the car pool. But in rare instances, car-pool driving isn’t covered by your regular insurance policy. Instead, it’s considered business use of your car–especially if you receive gas money or a small fee for the service. In that case, you may need extra coverage, says Madelyn Flannagan, vice-president of research and education for the Independent Insurance Agents of America. The rules vary by company and may depend on where you live; ask your agent or company if you’re okay.
Even if your policy covers car pooling, you may want to beef up the medical-payments coverage. This coverage, which pays for injuries to you and your passengers no matter who is at fault, can speed up payments in a situation in which there is a dispute over accident liability. Donald Beery, an independent insurance agent in New Orleans, recommends that parents who carpool frequently boost their coverage from the standard $2,000 to $5,000 per person. That typically adds $20 to $50 to an annual premium. This coverage would also kick in if someone were injured getting into or out of your car.
If you’re carpooling children as part of a home-based day-care business, or if you lend your van for team outings and somebody else drives, be sure to tell your company or agent. And make sure that you have an adequate number of child seats and seat belts to protect the children–and protect yourself against liability.
Former BET head makes pounds 3m claim
John Clark, the former chief executive of BET, yesterday launched his court claim for pounds 3.3m compensation over his dismissal from the business services group in May.
American-born Mr Clark opposed the pounds 2.2bn hostile takeover of BET by Rentokil, and has asked the courts to rule on his severance package.
He is claiming more than pounds 1.4m for loss of salary, plus damages for loss of pension rights, stock and share options, bonus payments, an executive car and chauffeur, and health insurance. His counsel, Brian Langstaff QC, told Mr Justice Timothy Walker it was perhaps inevitable his head would roll when Rentokil gained control of BET. BET agreed it should compensate him, but hotly disputed how much it was liable to pay, arguing that an executive of his stature should easily be able to find a new job and that he was thus bound to “mitigate his own loss”. It said it offered Mr Clark the same “fair” terms as other former BET directors, all of whom had accepted the offer. Mr Clark, 55, contended he would have serious difficulty in finding a new top executive post in a large British company because of his age and his “controversial” reputation, his counsel said. Mr Langstaff said Mr Clark joined BET in November 1991, when it was regarded as being potentially loss-making. He succeeded in turning round BET. That was one of the few matters unlikely to be in dispute during the court hearing, his counsel said.
$1M not untold wealth, but it helps
NEW YORK — Renee Weese has reached an enviable goal — she’s become a millionaire. But like many others whose net worth has risen in recent years to seven figures, she doesn’t feel particularly wealthy.
Not that long ago, the word “millionaire” conjured up visions of chauffeured limousines and extravagant shopping trips and elegant yachts. These days, a millionaire is more likely to be the guy or gal next door who saved carefully — and perhaps benefited from the sharp run-up in housing prices — but still worries about covering the exploding costs of children’s educations, caring for aging parents and funding their own retirements.
Weese, 51, of Atlanta, credits her good financial fortune to good- paying jobs and windfalls when her startup insurance company went public and, later, when it was taken over by a bigger insurer. Still, Weese worries about how far the money will go.
As she puts it: “I know I have more money than a lot of people do. But I don’t feel I can sit back on my heels. I have lots of years ahead of me, and elderly parents I help financially a bit, and kids and grandkids.”
To people living paycheck to paycheck or who haven’t saved much - - which is the bulk of the U.S. population — a million dollars seems very far out of reach. But a growing number of Americans are accumulating that amount and more. According to research from Merrill Lynch & Co. and the consulting firm Capgemini, some 2.9 million people in the United States and Canada have net worths of $1 million. The New York-based companies count all of an individual’s financial assets except a primary residence.
Atlanta financial adviser Micah Porter, who has worked with Weese, estimated that about 70 percent of the wealthy clients his Minerva Planning Group sees have earned their money by building successful businesses or saving from their salaries. The others inherited all or part of their wealth.
But having that much money doesn’t necessarily mean their financial concerns are over. He said a big worry is how long the money will last because “they’ve become used to a certain standard of living that may be difficult to support” when they stop working.
And the fact is, $1 million doesn’t go as far these days as it used to. For one thing, it’s vulnerable to inflation — someone who bought $1 million worth of goods in 1957 would need $7.3 million to buy the same goods today, according to Federal Reserve figures.
It’s also vulnerable to longevity. Americans are living much longer than they used to, and that means they need larger nest eggs to get them through retirement.
Interestingly, it is workers’ focus on saving for their retirement that leads Dan Sontag, an executive in the global private client division of Merrill Lynch, to predict that a growing number of Americans will achieve the million dollar milestone.
He notes that many baby boomers — those born between 1946 and 1964 — have been contributing to company-sponsored 401(k) retirement plans and similar employer-backed programs for 25 years “and those account balances have mushroomed.”
In addition, many of these people also own homes that appreciated greatly in the boom market of recent years.
“I think if boomers look at the numbers, between your 401(k) and your home equity, you may be a millionaire — or pretty close,” he said.
But Sontag also understands that those who accumulate that kind of money may not feel as if they’ve arrived on Easy Street.
“Your father and my father had a guaranteed income stream from pensions,” he said. “But today’s retirees aren’t guaranteed the income flow. They guaranteed a block of assets that they have to create the income against.” That leads to uncertainty, he says.
Two baby boomers who recently hit the $1 million mark are Liz Pulliam Weston, 44, a personal finance expert, and her husband Will, 53, a professor at the Art Center College of Design in Pasadena, Calif. As she put it in a recent column on MSN.com, “the day my husband and I became millionaires was a lot like any other day.”
In fact, she said in an interview, she was updating her computer software and “like when a car’s odometer rolls over, our net worth totaled out to seven figures.”
Weston described the milestone as “feeling neat,” but she also drew several practical lessons from it:
– The average person may feel that $1 million is unattainable, but Weston points out that she accumulated her cache “putting away a little of every paycheck no matter what.”
– Hitting the $1 million mark doesn’t mean you can stop saving. The couple has a daughter to educate and, with long-lived relatives in the family, a likely long-term retirement to finance.
“On top of that, we have a pretty expensive lifestyle, living as we do in southern California,” she said.
But David Bach, author of “The Automatic Millionaire” and other financial advice books, points out that “99 percent of Americans don’t have a million dollars — and to them, a million dollars is a fortune.” To the millions around the world who live on $1 a day or less, “it’s unfathomable.”
Financial Disasters Of Our Time
WHENEVER YOU hear people talk about “Eighties’ excesses”, they usually have an image in mind of sharp-suited salesmen guzzling champagne, chomping on fat Cuban cigars, with a posh car in the garage of their luxury town house.
Roger Levitt fitted that stereotype beautifully. Levitt was a super-salesman specialising in insurance and investment products. He smoked cigars flown in from Cuba, travelled in a chauffeur-driven Bentley and lived in a multi- million pound house in North London.
Emerging from a humble background in the East End of London, Levitt became an insurance salesman and, in 1977, he set up a business called Roger Levitt Pension Consultants. In 10 years, Levitt had built it into the largest independent financial advice firm in Britain.
Levitt’s high-society clients included Frederick Forsyth, the Day of the Jackal novelist, while attracting Sebastian Coe, former Olympic gold medallist and then a Tory MP, and Adam Faith, the singer and actor, to work for him. He also promoted Lennox Lewis, the boxing champion.
By late 1989, everything looked hunky-dory for Levitt, on the surface at least. Yet, as a subsequent court hearing was told, many millions of pounds, handed to Levitt for investment purposes, were allegedly being used to prop up an rotten core at the centre of his business. More than pounds 22m was used in this way.
By 1990, the financial watchdog Fimbra sent its own investigation team to inspect the firm. Liquidators who moved in found a company in debt to the tune of pounds 34m.
Levitt was arrested shortly afterwards and originally faced dozens of fraud-related charges with a potential maximum jail sentence of 10 years. He denied them all. When his trial opened in November 1993, following a lengthy investigation masterminded by the Serious Fraud Office (SFO), it was expected to last up to eight months.
Instead, within a day or so, it was suddenly announced that Levitt would after all be pleading guilty to one count of “misleading” Fimbra. In return, the SFO’s prosecutor, Michael Cocks QC, announced that other outstanding charges would not after all be pursued. Levitt was sentenced to 180 hours’ community service.
Amid the uproar that followed, the SFO denied doing any deal with Levitt. Two years later, the truth came out: faced with Levitt’s obstinate refusal to plead guilty to any but the smallest charges, a junior counsel for the Crown met Levitt’s barrister in a Southwark Crown Court lavatory and raised the subject of a deal. Three weeks later the deal was done and dusted, with both sides informing the judge of the agreement they had reached.
Despite winning his freedom, Levitt has been unable to work in the UK since. He is now in the US, where he is said to be involved in boxing promotions.
Most of his victims received compensation, although the maximum of pounds 48,000 available under the Investors Compensation Scheme meant that some, like Mr Forsyth, were left massively out of pocket. Still, if he is short of a subject for a book, there is one story of Eighties’ greed that springs instantly to mind.
Nic Cicutti
Consider Safety Factors For Cheapest Teen Car Insurance
It seems to almost be a rite of passage that when a teen gets their driver’s license, they start to talk to their parents about getting a car, and many parents, glad to be out of the role of chauffeur, are willing to oblige them. But the majority of those parents are not being smart about the kind of car they choose for their teen driver.
If you go to the car dealership, which is a very likely place to start shopping, they are obviously concerned with the cost of the car. This is natural, but when shopping for a car when your teen will be the primary driver of it, there are more considerations than just the cost, where cost almost becomes secondary.
For example, you can get a good late model used car in good condition for say $17k-$18k, one that does not need a lot of repairs, gets good gas mileage, and will not be constantly in the auto shop being fixed for something or other. But any astute car sales person is going to point out that for only a few thousand dollars more, you could easily get a brand new car, not a used one, and hey the financing from the manufacturer is better because it is a new car, listing every reason in the book why the new car is a much better overall value than any used car.
Consider their motivation. The sales person’s motivation is to move cars and point out value to you, and the more money they can extract from your wallet, the better they are doing their job. There is nothing wrong with that, because that is what the dealership is paying them for. But is it the best option for your teen driver?
Typically, no. Especially for a teen driver, you need to look at other factors first, usually two of them which should even come before price. First is the safety rating for that particular model of car, which goes into the specifics of the model, the engine (4 cylinder versus 6 or even 8 cylinder) and many other factors. What is the crash safety rating for this vehicle? You can call your car insurance company to find out, and may be surprised to learn that one make and model costing $5000 more has twice the crash safety rating as the one you are looking at. No amount of money can replace your teen if they are killed in a car accident, so examine the crash safety rating for the specific car you are considering.
You also need to consider the cost of insurance, which to a great extent is tied to the crash safety rating of a car. What you will find may open your eyes. A car that is considered to be sporty and fast (something your teen may want) may have a cost of insurance that is twice that of another car or even more, where that other car does not have the “sporty and fast” look to it.
The fact remains that teenage drivers are a greater risk for a car insurance company. Teen drivers between the ages of 16 and 19 are 4 times more likely to have an accident than older drivers. Regardless of how safe and responsible you believe your teen to be, the statistics don’t lie and this point is driven home year after year.
When shopping for a car for your teen, look first at the safety rating for the vehicle you are considering, then look at the amount of safety equipment installed on the car, such as side air bags, anti-lock brakes, seat belt reminder buzzers on the dashboard, and other safety related items. Then look at the price. The cost of the car for your teen cannot be the primary decision maker.
When you have determined the right car for your teen and taken the safety rating and safety equipment into account, you will almost certainly find that the car insurance rate you are paying is quite reasonable for your teen, or at least much more reasonable than it would be if you had not put those other considerations first.
Starting A Car Rental Business In Memphis
Memphis is the largest city in the state of Tennessee and was established in 1819. It is a port of entry and a rail and air distribution center with a large number of industries. Memphis is the seat of many educational, health, and art institutions. With increasing population, a car rental business is one of the fastest growing businesses. Many people choose to occasionally rent the vehicles rather than put up with high maintenance, repair, and insurance costs of ownership.
Starting a Car Rental Business: You have the option of becoming either a franchisee of any car rental company or buying your own vehicles and entering the market. Both options are now considered.
As A Franchiser:
Auto Hire is a big car rental company that can guarantee good business and opportunity for growth. The company backs all new franchisees with a comprehensive business plan that includes financing arrangements, vehicle leases, training and hiring staff, and marketing. They also have a tie-in with insurance companies to provide replacement vehicles while the insurance firm deals with the aftermath of an accident.
As A Car Rental Business Owner: • Location. It is very important to start the business in a good, central location to generate high customer traffic. Marginal retail locations do not attract many customers. Have your own car hire counter at busy airports, rail stations, or bus depots to attract inter-city travelers.
• Finances. Start with a small, manageable fleet of cars by taking personal bank loans and cash advances on easy collaterals from special state cells for small business entrepreneurs. A good business plan can even get you partners willing to collaborate with finances and expertise.
1. Hiring/Training Staff. It is very important to train first-line staff in the correct handling of customers. If you provide drivers or chauffeur services along with car renting, check the driving licenses. To meet federal standards, as of April 1, 1992, each state must carry out the new commercial driver license program. This includes tests of knowledge and driving skills for certain types of vehicles. Good health, good hearing, vision of at least 20/40, normal use of arms and legs, good manners and etiquette are additional requirements for chauffeurs and drivers.
2. Car Rental Rates. Lease out various types of cars to suit different customers. High-end cars, SUVs, and mid-segment to low-end cars give a wider choice to people. Vary the rates according to the car and the number of days it is rented for. Some car rentals give unlimited mileage on most vehicles as a means of enticing new customers. Some even provide free chauffeur services or expensive cars for important occasions.
3. Tie-In with Local Car Insurance Companies. A tie–in with insurance companies to rent replacement vehicles while they deal with the aftermath of an accident or mishap can be an added attraction.
Starting a car rental business in Memphis, Tennessee, can be a very paying proposition. You have the option of running the business either as a franchisee or as a car rental business. A good business plan and attention to essential details will ensure that your venture is a success.
Why Use Chauffeur Car Hire?
There are many reasons behind this. High flying business men and women use chauffeur car hire for ease. It keeps them stress free in the traffic, leaving them available to take a well-earned breather or, if they just can’t resist, to carry on working from a lap top or conducting business calls in the relative comfort of the back seat.
A lot of celebrities use it for protection, some use it so they can drink freely and still get private transport without risk to their driving licence. Indeed, many celebrities have been known in the past to lose their licence from drink driving.
Of course, this is not just something that affects the rich and famous. Drink driving fatalities were last year reported to be at an all time high. Those fortunate enough not to experience loss of life through this crazy act stand to lose their driving licences if caught.
It is documented that 300,000 drivers lose their driving licences annually in the UK. This is due to a variety of reasons from drink driving, speeding and various other motoring offences.
It is important to look at the expense this brings to the car driver apart from the inconvenient 148 extra commuting hours lost over the course of an average 10 month ban.
It is estimated that 2,654 pounds will be spent, per person banned, on alternative transport. This includes taxis, buses, trains and paying friends and relatives for lifts. Add to that the expected 157 pounds lost in unused tax and insurance and this brings the total payout to over 2,800. pounds All supposing, of course, that you are not a new driver with a ban, thus incurring the expense of a re-test.
Of those that can afford it, some banned drivers will use chauffeur car hire. Of course, this is quite an expense and could contribute to the 62% of drivers that claim a ban has changed their driving habits for the better. 21% of drivers worryingly said a ban had no effect on their driving skills, with 13% saying they had tried but found themselves slipping back into bad habits.
November 2007 saw a very harsh crackdown on untaxed vehicles being targeted by UK authorities. Many were found to be without MOT and/or insurance and many cars were impounded and subsequently crushed.
With a fleet of hi-tech ‘robo-vans’, each with the ability to scan up to 10,000 vehicle registration plates in one day, there is no hiding place for tax evaders. The DVLA are building up a picture of offenders and are increasingly able to target appropriate areas.
They estimate that there are over 1.55 million road tax offenders currently being pursued across Britain and they intend to remove each and every one of these vehicles from the roads. At the risk of sounding stereotypical, authorities suggest that those who have no qualms about flouting the UK’s road laws are often involved in crimes of other sorts too.
To avoid the expense and inconvenience of losing your licence or vehicle, not to mention the loss of life due to an unsafe vehicle or driver being on the road there are only two options. Abide by the law or get a chauffeured hire car.
Bonus will make British Gas chief’s pay top pounds 1m
Chief executive of British Gas, faces thousands of shareholders at the company’s annual meeting this morning, knowing that, short of a disaster, he will pick up a pounds 440,000 bonus this year to take his pay package to more than pounds 1m.
The outrage provoked by Mr Brown’s salary rise of 75 per cent last year will be fuelled today by an independent study which confirms his pounds 1m-a- year status. But shareholders are unlikely to be pacified by the mountains of tuna, ham and egg mayonnaise sandwiches which British Gas said last night it was planning to feed more than 7,000 who have indicated they will attend.
Expected among the audience at London’s Docklands Arena are representatives of the holy order, The Daughters of Jesus, whose investments include Gas shares.
But the chief protagonist is Pension Investment Research Consultants (PIRC), which wants Mr Brown’s pay package revised, a move unanimously opposed by the board. It is PIRC’s claim that the performance of British Gas can remain static, or profits even fall, and Mr Brown will still collect his bonus.
Under a new bonus scheme announced in November, Mr Brown gets a bonus worth up to 125 per cent of his basic pay. The actual percentage awarded depends on the company’s performance relative to that of all other FT- SE “league table” of 100 companies.
If the company comes in below the top 60, Mr Brown gets no bonus.
At 60th position Mr Brown gets 30 per cent of the shares he can be entitled to. At 50th place, 75 per cent of the shares are awarded.
However, an analysis for PIRC by the independent financial consultants, Datastream, shows that British Gas is already in 46th position. At this level Mr Brown is entitled to 75 per cent of the shares awarded under the scheme - which would be worth 93 per cent of his pounds 475,000 basic salary.
British Gas disputes the Datastream analysis, claiming the company is currently in 75th position in the table. These were the figures the company gave the House of Commons Employment Select Committee in March as part of its inquiry into boardroom pay.
To tip or not to tip, what is the answer?
The British really do not care for tipping. It makes most of us feel awkward: we are not sure quite when to do it or how much to give. So we cower behind suburban nets when the postman, binmen and milkman come knocking for their Christmas bonuses. As for tipping porters, most of us would rather risk a collapsed vertebrae than give a fiver to a British Rail sherpa. And when we do part with a few coppers, we do not so much tip as run away without the change.
The customs that surround tipping in restaurants are particularly upsetting to the British. Many establishments now assume that they will receive a gratuity. A service charge automatically added to the bill feels like a con, mentioned, if at all, only in the small print on the menu. Just as you dig deep for a bill that looks like it requires a small mortgage, you discover another hefty slice, supposedly optional, on top when the bill arrives. And it’s never clear who benefits from our largesse: is a tip lining a restaurateur’s pocket or saving the waiter from starvation?
Despite general distaste for tipping, only the brave and the mean dare to refuse. After all, those deprived of their tip can cause terrible embarrassment: everyone has heard of the taxi drivers who storm off, bawling obscenities; the ship’s steward who returns an ungenerous offering with the words, “I think you need this more than I do, sir.” How many people have never dared return to a hairdresser’s salon out of guilt for being short of cash last time and failing to leave the customary 10 per cent? And then there are the tales of nose-to-nose confrontations with New York waiters for whom a Brit’s few hard-earned dimes are rarely enough.
The issue has always been messy for the British. Back in 1908, the Times published correspondence on the problems of visiting a friend’s country seat and having to tip everyone from the housekeeper to the chauffeur. So costly had these incidental items become that one writer despaired, announcing that the time had “come for the man of small means to sell his guns and forget all about grouse and pheasants, and to cultivate golf as a casual recreation”.
Part of British discomfort with tipping springs from its origins in a master-servant relationship, rather than as a transaction between equals. The origins of the word are uncertain. It is said to stand for “To Insure Prompt”, a phrase coined as a financial incentive to Victorian stagecoach drivers who delivered letters. But the term is also traced by the Oxford English Dictionary to the early seventeenth century, when it meant “the giving of a gratuity to an inferior”. The survival of tipping in Britain is, perhaps, a mark of how we still regard waiters as a subspecies, to be treated poorly, as if from below stairs.
The same is not true in other European countries, where waiting at table is considered a skilled profession that should be properly rewarded. Today, most of Britain’s neighbours make service inclusive in the bill. In France, for example, a waiter’s wage is not expected to depend on the whim of a customer: an extra 15 per cent service charge is automatically added to the price of food and drink. This sum is distributed to the staff, from the chef and the doorman to the hat-check staff. The concept of the tip survives, but a gratuity is meant to cover only especially good service. In short, the Continent has shaken off the feudalism that still bedevils the relationship in Britain between those who serve and those who are served.
This is the example that Lord Bradford, owner of Porter’s restaurant in Covent Garden, would like to copy. He wants restaurants to charge prices that are fully inclusive of service, with notice that staff do not expect anything in the way of a tip or gratuity. He has introduced a Private Member’s Bill into the House of Lords to that effect. The second reading of the bill is due on 10 January.
This measure would still allow exceptional service to be rewarded, at the customer’s discretion. But it would outlaw cover charges, unless the restaurant provided specific entertainment, such as a floor show. Restaurants would also be required to fill in credit card slips in full when presenting them for signature. At the moment, some provide billing slips with a space left for a tip, even when the menu states that a service charge has already been included in the price. This means that some diners are fooled into paying a tip twice, which can, in theory, add a total of 30 per cent to the bill.
The Consumers’ Association supports Lord Bradford’s Bill because it makes life simpler for consumers. Some restaurateurs are not so sure: the change might increase their costs. As it stands, service charges are not generally included in the total price, so owners do not have to pay VAT or national insurance contributions on tips.
Those involved in waiting are not dancing on their tables with joy at the proposal. Nothing in the Bill requires that the service charge goes to the staff. So catering staff might not be any better off. Currently, fewer than half of all restaurant workers get to keep tips given by customers.