Tips, Ships and Executorships

New Month Old Post: first posted 14th April, 2017.

'Waylands', 93 Ferriby Road, Hessle (now 'Woodlands Lodge')

“Never appoint a bank as executor to a will.” My dad’s advice was born out of sheer frustration.

“You’ll be all right one day son,” his own father had told him in expectation of a life-changing legacy due on the death of an ailing wealthy spinster then living permanently in a hotel in Harrogate. As things turned out she lived another forty years, by which time the legacy was no longer life-changing, having dwindled away in excessive, unnecessary fees.

Edwin Ernest
Atkinson (1872-1939)

It was one of those quirks of family history that testators fail to foresee, which result in their money going to unrelated beneficiaries they never knew or had heard of: in this case my father, his sister and the husband of their late cousin. It originated in Edwin Ernest Atkinson, chairman of the Yorkshire Dale Steamship Co., and Atkinson and Prickett Ltd., shipowners and brokers of Hull. 

On leaving school, Edwin had first worked as a clerk for the Aire and Calder Navigation Company at Goole docks, and then as a coal exporter with the shipping company J. H. Wetherall & Co. In 1906 he began in business on his own, joined in 1911 by Thomas William Prickett.

Within twenty-five years both were wealthy men with handsome houses on the outskirts of Hull at Hessle. Edwin’s was called ‘Waylands’, at the corner of Woodfield Lane and Ferriby Road. It had eight bedrooms, an oak-panelled dining room, two other large reception rooms, a billiards room, domestic quarters, coal-fired central heating, outbuildings, cultivated gardens, a heated greenhouse and vinery, tennis courts and a croquet lawn. Thomas William Prickett had a similar property nearby,  ‘Northcote’, at 85 Ferriby Road. Among their dirty British coasters with their salt-caked smoke stacks were the SS Yokefleet, SS Swandale, SS Easingwold and MV Coxwold. There were trains of railway wagons bearing the company name.

Atkinson and Prickett ships: SS Yokefleet, SS Swandale, SS Easingwold, MV Coxwold

When Edwin died in 1939 at the age of 66, he left a life interest in most of his £27,000 estate to his wife and only surviving daughter. In terms of price inflation, this would be today’s equivalent of £1.5 million and a great deal more in earnings or property price inflation. It was a considerable sum of money. His wife died less than two years later, thus his daughter, Constance Ruby, still in her thirties, assumed a life interest in the whole sum, to live in comfort and luxury for the rest of her life. She was the lady in the hotel at Harrogate.

Note that Edwin only left a life interest to his wife and daughter, rather than the capital sum outright. They therefore received income from investments, and the capital remained intact. It was a throwback to earlier times when women were not expected to manage their own financial affairs. It also kept the money out of the hands of unscrupulous husbands they might later marry.

Numbers 8 to 2 North Bar Without, Beverley, with the fifteenth century gate to the right

Constance Ruby never did marry, although she did have a brief engagement at the age of twenty. She later became Clerk to the Archdeacon of York, living in the Precentor’s Court at York Minster. After her father died she moved with her mother to Harrogate. Later in the nineteen-fifties, she moved to Beverley, into a half-timbered eighteenth century house immediately without the North Bar (the fifteenth century gate). She died there in 1983. As she was the last surviving descendant of Edwin Ernest Atkinson, the capital passed in equal shares to the families of his three siblings. 

One sibling was my great-grandfather’s second wife, who he married five years after his first wife had died. There were no further children, but a deeply shared interest in Methodism saw them happily through the next twenty-four years. They, and Edwin’s other siblings, died long before Constance Ruby, so the money passed to their families. One-third of the capital passed through my great-grandfather’s second marriage, through his children who had also died, to my father, his sister, and their late cousin’s husband.

It was not so simple. An unfortunate legal charade had gobbled up much of the inheritance. The solicitor who managed the capital trust had sensibly established, with documentation, the names of the beneficiaries in readiness for when the trust was wound up. But then, at some point during the nineteen-seventies, the National Westminster Bank trustees department persuaded Constance Ruby that her affairs would be better handled by them. They began the costly process of establishing the beneficiaries all over again, but after several years were still not convinced they had identified them all. Everything came to a standstill after Constance Ruby’s death. It took considerable persistence to have the case transferred back to the original solicitors and at last sorted out.

Around this time, bank Executor and Trustee departments were becoming known for their outrageous fees. An article in The Times in 1985 explained how one executor saved nearly £7,000 by handling a simple £100,000 estate himself. Solicitors charged less, but were still expensive. We have no way of knowing what fees were taken out of the Atkinson trust, how well the investments performed, or how much income was paid out over the years, but when my father and his sister at last received their legacies, what would once have been life-changing sums had shrunk away to just over £3,000 each. Their cousin’s husband (i.e. Edwin’s sister’s husband’s granddaughter’s widowed husband) got £6,000. Welcome amounts for sure, but nothing like what my grandfather had predicted. £3,000 might then have bought a small car. The total value distributed to all beneficiaries was around £37,000. Had the capital kept pace with retail price inflation it would have been ten times that amount (fifty times today). 

In later years, when my father made his will, true to his principles he appointed me as executor. After he died I handled everything myself. It was fairly straightforward. In another case, I was able to manage sums in trust for children until they reached the age of eighteen. More recently, I handled all the paperwork for the estate of another family member. Despite being complicated by inheritance tax (inevitable for owners of houses in the Home Counties) it was still trouble-free. Estate administration can be a long-drawn-out and time-consuming process that tests your patience and endurance, but if you have the time to cut out the banks and solicitors and do things yourself you can save an awful lot in professional fees; sometimes tens of thousands of pounds. You can bring things to completion much more quickly too.  

Further information:  Patrick Collinson (2013). Probate: avoid a final rip-off when sorting out your loved one’s estate. The Guardian, Sep 21, 2013. Maggie Drummond (1985). Finding a will and a way to cut costs. The Times (London, England), Feb 16, 1985; page 16. 

Inflation

The minute Starmer gets in to power, prices go up. Just what you would expect. The Conservatives were getting inflation under control and it was coming down, but as soon as Labour gets in, it goes up again. And we have not seen the effects of the public pay rises yet. Did people realise what they were voting for? 

This is what I hear Conservative supporters saying. But is it really true that prices have risen since Labour was elected, and were going down until? 

On the face of it, yes. The monthly inflation figures published by the Office for National Statistics (ONS) show that inflation rose to 2.2% in July 2024, up from 2% the month before, and remained at 2.2% in August. That was much lower than a year earlier when it was 6.8%. 

I do not find the percentage rate all that meaningful on its own. If a bag of oranges went up to £2.10 from £2 the previous month, most of us would say they had gone up by 10p, not that they had gone up by 5%. If that continued with 10p increases each month for a year, so that oranges were then £3.20, few would say they had gone up 60%, or that the annual rate of increase had slowed from 5% per month to only 3.1%. We would say “Bloody hell! They’re expensive compared to what they used to be”, and think twice before buying than. 

We need to know about prices as well as inflation to properly understand what is happening. Prices are measured by the Consumer Prices Index (CPI). ONS calculates this each month by statistically combining the prices in a typical shopping basket. The percentage as usually reported is not the index. It is the change in the index over the previous year. The index itself is rarely reported. It is as if journalists think it would confuse us, or maybe they are confused about it themselves. 

The CPI was set at 100 in 2015. In August, 2024, it was 134.3. In August the previous year it was 131.3. The increase of 3.0 over the year is an increase of 2.2%, which is the inflation figure reported in the media. (Actually, it works out nearer 2.3 than 2.2, but let us not get paranoid). 

Finding the political point scoring irritating, I wanted to understand the figures better. This is my attempt to do so. 

I plotted prices against inflation over the past three years. What is most obvious is that they do not always move together. While prices over the last three years marched relentlessly upwards from 112.4 to 134.3, inflation increased and then decreased again, varying between 11.1% in October, 2022, and 2.0% in May and June, 2024. 

To see why, I imagined a scenario in which the price index remains unchanged at 100 for over a year, resulting in an inflation rate of 0%. The index then jumps suddenly to 130, causing an immediate rise in inflation to 30%. It then fluctuates between 100 and 130 in steps of 10 for the next 24 months. This is shown in the blue graph below. 

The red graph shows the effects upon annual inflation. 

As one might expect, for the 12 months after the first price rise, inflation and prices rise and fall together (A). This is because prices over the second 12 months are being compared with prices over the 12 months before, when they remained steady at 100. 

But the effects then become less intuitive. In week 25 (B), despite prices climbing back to their highest level, inflation falls to 0%. And in week 28 (C), as prices begin to go down again, inflation jumps back up. 

Another quirk is that inflation becomes negative in week 31 (D), and then falls further in week 34 (E), but this second fall is only marginal (from -8.3% to -9.1%) despite a fall of 10 in the index, and much less then the further fall in week 37 when the index is unchanged (F).

The scenario shows that prices can go up when inflation goes down, or down when inflation goes up, and when they do move in the same direction, one can change by a large amount while the other only changes a bit. Prices and inflation do not always change in the same direction, or to the same extent.

These effects occur because they compare current prices with those of 12 months earlier. There can be a time-lag between price changes and their effects. The percentage rate of inflation reflects what was happening a year ago as much as what is happening today. 

Are such month-by-month fluctuations found in the real ONS data? Indeed they are, but they are harder to see because the CPI goes up and down in small steps. You have to look more closely. This third pair of graphs shows the monthly changes in CPI and inflation in the ONS data. 

The largest CPI increase was in April, 2022, when it went up by 2.9. The smallest, actually a fall of 0.8, was in January, 2023. The large increase immediately showed in the inflation figure, which shot up by nearly 2%, but the fall had little impact. Most monthly changes are much smaller, but it is still fairly easy to find contrary movements, as in January and February, 2024, or movements of different sizes, as in October, 2023. 

Returning to the original questions, did inflation come down under the previous government, and will it go up under Labour? Yes and yes. But this begs the question as to whether this is caused by governments, or is it a simple statistical side-effects? 

Statistics plays its part. Inflation was bound to decrease as it fell from the previous highs, and if the CPI continues to increase at its current rate, inflation will climb to over 3% by the end of the year as the earlier falls drop out of the numbers. One reason for the July increase in inflation was that prices did not fall as much as they had twelve months earlier. 

Prices are also influenced by other events and phenomena beyond government control. The peak in inflation in October, 2022, was largely caused by international events. The new public sector pay awards will be inflationary, as would have been the costs to not awarding them. 

Political point scoring will no doubt continue on both sides, but it might be helpful to report monthly inflation changes as well as the annual retrospective. 

I think I understand it slightly better, now.

Premium Bonds

In August, 1957, my grandfather bought me and my brother one of the first £1 Premium Bonds each. They had been introduced just under a year earlier on the 1st November, 1956, to encourage people to save. He bought us each another £1 bond in 1959.

Rather than paying interest, bonds were entered in a monthly prize draw, drawn by ERNIE (Electronic Random Number Indicator Equipment), a Colossus computer. They retained their original value and could be cashed in at any time.

In those days, the maximum you could invest was £500 and the top prize was £1,000, as compared to £50,000 and £1 million today. Also, today, you cannot invest less than £25 at a time.

I didn’t cash mine in. In fact, I later bought more, and once won £500. I still have the original two, along with the others, and my Premium Bond record shows a total investment ending in 02.  The original bonds are now numbered 000AB01---- and 000AB76----.  

The records are all electronic now, but here are my two original paper certificates. 

A dutiful grandfather thinking of his grandchildren’s financial future? These two particular bonds have never won a thing.

Doubters, Doomsters, Gloomsters

In 2019, in his first speech as Prime Minister, Boris Johnson said:

“The doubters, the doomsters, the gloomsters, they are going to get it wrong again. The people who bet against Britain are going to lose their shirts.”

What a masterful statement! The first six words are rather good, but I am especially impressed by the subtle insertion of the word “again”. 

In the late nineteen-eighties, I moved from the public to the private sector. The salary seemed generous but the pension provision not so good. As I could no longer add to my so-called “gold plated” public sector scheme, I needed to make my own provision. I joined a private pension scheme and started to take an interest in stock markets.

In those days the global share indices were not dissimilar. In Britain the FTSE100 was at 2144, in America the Dow Jones Industrial was at 2679, and in Germany the DAX30 was 1366.

As I write this, the FTSE is 7138, the Dow 35,369 and the DAX 15,781.

In other words, since 1990, the value of the FTSE is now 3.3 times what it was in 1990, while the Dow has multiplied 13.2 times and the DAX 11.5 times.

So £5,000 invested in 1990 would now be worth about £16,500 in the FTSE, £65,000 in the Dow and £55,000 in the DAX.

In fact, the Dow Jones and DAX have done as well over the last ten years as the FTSE100 over the last thirty.

Here it is as a graph showing how they multiplied over the years: 

This doesn’t tell the whole story. In 1990 the pound was worth 1.7 dollars. Today it is around 1.4, so the £65,000 would be worth more like £79,000 taking into account the exchange rate. Similar factors apply to the German stock market. When the Euro was introduced in 1999 it was worth £1.40 compared with £1.17 today.

You can argue about this until the cows come home – for example that it doesn’t take into account rip-off fund management fees, that the constituent companies in the indices have changed, that FTSE companies pay higher dividends and that the Dow Jones contains more technology stocks and fewer traditional industries – but the numbers must surely be indicative of the economic wealth, health and confidence of the three countries.

So much for “get it wrong again.” Does it look as if those who waged bets against Britain lost their shirts?

Should we now be switching funds to Britain in readiness for the great catch up? I don’t think so.  

Fortunately, I put a good chunk of pension into international funds. And as I later re-joined the public sector, I’ve had the best, and worst, of both worlds.

Get Tret Better

English is a strange thing, especially in its regional forms.

Yesterday, BBC Television News had a report about how insurance companies ramp up premiums so that customers who renew their policies year after year end up paying far more than they should. One poor chap who had kept his home insurance with the same insurer for twenty-one years received a renewal bill of £1,930, but after shopping around he got the same cover for £469. 

They asked people at Doncaster Market what they thought about it, including two ladies behind a food stall:

“Well,” said one in comforting Yorkshire tones, “I think it's a disgrace, actually, because I think loyal customers should get tret better.”

“Tret better?” I wanted to rush straight to Doncaster Market, give her a big hug, and sit beside the stall listening to her all day. It’s what my mother would have said.

I’m no grammaticist, but I suppose it’s like met instead of meeted, sat instead of seated, or het instead of heated, as in I’m all het up. 

At one time I would have said “tret better” too, but, sadly, I’ve had it educated out of me.