I just wanted to express how thrilled I am that a national broadsheet is finally bringing this issue to light (Tip off: waiters still paid minimum wage out of your service charge, Cash, 7 June).

My worst experience was at a restaurant near Aldwych, in London. When the bill came I asked the waitress if the service charge went to the staff or not. She refused to answer which told me that it clearly did not. So I refused to pay the service charge, with the intention of giving the waitress the cash.

On hearing that I was refusing to pay the service charge, the manager came over and became rather aggressive. I explained that the charge was optional and I'd rather give the waitress a tip. He had no choice but to accept this but when I came to give the waitress the tip she refused to take it and looked absolutely terrified.

I realised straight away that I'd handled it wrongly and was extremely concerned that I might have got the waitress into serious trouble; even lost her the job. I handle these situations differently now, either asking a manager about the service charge policy, or finding out before I go to the restaurant.

If we are lucky enough to be able to afford to eat out every once in a while, then surely we owe it to the people who serve us to act on their behalf and put a stop to this exploitation. Let's stop being so "British", not wanting to cause a scene ... the bigger the scene the better in my book.

I've had waiting staff in Brighton cheer me for making a stand before. But, as we know, not all waiting staff can afford to be so vocal about their ill treatment which is why it is up to us to speak up, act up, and do it for them.
Samantha Noonan, by email

Regarding tips, come October (when it becomes illegal to top up staff pay with tips to make up the minimum wage), the answer is simply for customers to stop paying any service charge. Restaurant owners will have to pay staff the minimum wage and I'd be most upset if I thought the service component was going to a restaurant owner.

Tipping is arcane and we Brits find it uncomfortable. If you want to recognise good service then simply leave some loose change on the table.
Michael Pritchard, Watford

The problem with the system is that the incentive is for a restaurant to be dishonest with tips - an establishment that uses tips or service charge to make a salary up to the minimum wage will be able to charge less for food than one that pays the minimum wage and lets staff take all their tips.

Legislation that compels restaurants to pay the minimum wage to all staff, and to give anything that is labelled a service charge or tip to staff, may lead to higher food prices in the dishonest restaurants but will level the playing field and stop eateries that exploit staff from being able to underprice the honest competition. This is what we should be campaigning for.

The current system is awkward (sometimes restaurants make a real fuss when you try to remove a service charge from a credit card bill to pay cash, which is no fun for anyone involved) and embarrassing for waiters and patrons.
Dominic Leggett, by email

Talk about corporate extortion! If you want to deduct the service charge and leave it in cash instead, thus ensuring the tip goes to the waitress (or waiter), you then find out you can't do this because the good intentions might mean the waitress gets fired. Now there's a dilemma for the ethics experts. The only safe option is to leave the service charge and a cash tip - hitting the customer in the wallet. Setting up a Boycott Café Rouge/Carluccio's, etc protest on Facebook means the chains lose so much business that they close down, and then the waitstaff lose their jobs anyway.
mseymour on guardian.co.uk/money

Re: Question of the Week (Are monthly house price indices useful?, Cash, 7 June). No, they're just confusing, because one says we're on the up and another says that prices are falling. It's like playing mind games with the hopes and dreams of first-time buyers.

Good for the press though, because every time a new index is released it generates an article. For the sake of journalist employment figures, keep them if you must.
MorganaLeFay on guardian.co.uk/money

They are as useful as your average weather forecast. Wasn't it supposed to rain over the weekend?
Halo572 on guardian.co.uk/money

Young people are increasingly falling out of love with the idea of owning their own home, new research shows, as prices remain too high for most to afford.

A study of 2,000 people by the Chartered Institute for Housing, to be released tomorrow, shows that only a third of 18-to-24-year-olds now think owning a home is right for them.

Over the past 12 months an estimated 2.4 million people, most of them young, have changed their opinion about home ownership, when asked their ideal living situation before the credit crunch compared with their ideal living situation now.

The biggest change in attitudes has come in the 25-to-34 age range, with a fall from 83% to 69% of respondents wanting to own their home.

CIH chief executive Sarah Webb said: "A generation has grown up believing it has to own at any cost - in part because we haven't provided them with decent information about the alternatives. We can't repeat this mistake with future young people."

Webb believes Britain not only needs to build many more flats and houses, but to come up with more viable and affordable forms of tenure such as shared equity. She also wants the government to consider using the tax system to prevent house prices from booming again.

Lisa Bachelor says that you can snap up a good deal ... but you will have to be quick

First-time buyers have been given a glimmer of hope as a couple of lenders introduced deals that will need only a 10% deposit.

Britannia Building Society, which is soon to merge with the Co-operative Bank, launched its product last Tuesday. The interest rate of 5.09% is fixed for two years once a £599 fee is paid, though there is a fee-free option if borrowers go for a higher rate of 5.49%.

A repayment mortgage of £150,000, would cost £884.77 a month on the £599 fee option.

The society has also launched a three-year fixed rate loan at 5.59% with the same fee, or 5.99% without, and a five-year fix at 5.69% with the fee, or 6.09% without, also both on loans of up to 90% loan-to value (LTV).

"These deals are really good but, with other lenders putting up rates, how long will they last?" said Richard Morea of brokers London & Country.

The smaller Saffron Building Society also reached out a hand to first-timers, with 90% LTV and a rate of 5.65%. It is only available in Saffron's catchment area. This is mainly East Anglia but also includes any London postcode starting with E (not EC), so includes Hackney and Walthamstow.

It comes with a relatively low fee of £495, reduced by a further £200 if a relative of the borrower has £1,000 or more in savings with the building society.

Britannia and Saffron are amongst what is still only a handful of higher loan-to-value mortgages on offer.

A few weeks ago Lloyds TSB launched its Lend A Hand, which allows first-time buyers 95% LTV. But to take advantage of the deal you will not only need the minimum 5% deposit, you will have to find another 20% from parents, grandparents or friends. This money must sit in a Lloyds TSB account held under legal charge for 42 months earning 3% interest.

Most lenders still require deposits of at least 20% or more, though there have been some encouraging signs for those with less. "There are certainly more lenders offering higher LTVs than there were, and some, like Abbey, have started offering their best rates on higher LTVs," said Morea.

"However, swap rates - the market rates which fixed rate prices are based on - have been going up, so borrowers can expect fixed-rate deals to become more expensive."

There was already evidence of this last week. Nationwide announced deals on Wednesday, only to pull them and replace them with higher rates on Friday.

Yorkshire Building Society, West Bromwich, HSBC and Scottish Widows also all put up the price of their fixed-rate mortgages. Two of the best for those wanting 75% LTV - from the Melton Mowbray and Market Harborough building societies - were pulled.

The Mansfield Building Society bucked the trend, however, and has reduced the interest on its three-year fixed rate - on up to 75% LTV - from 4.09% to 3.95%, with a £999 fee.

Tony Ball the frontrunner to take over from Michael Grade as chief executive of ITV, has pledged to shake up the board if he assumes control, according to sources close to the situation.

Ball wants to bring in new non-executive directors to replace stalwarts such as Sir James Crosby and Sir Adrian Russell, both of whom have been with the company for more than five years.

He is also thought to be pushing for Mike Clasper, appointed to the ITV board as a non-executive in 2006, to become non-executive chairman.

Currently, Grade combines the role of chairman and chief executive, but his role at ITV is expected to end within a couple of months of Ball's stewardship.

Grade said he would step aside earlier this year, after ITV ran up losses of £2.7bn and scrapped the dividend as a result of huge writedowns linked to its broadcasting and online operations.

Ball was chief executive of BSkyB until 2003 and presided over a period of spectacular growth at the satellite broadcaster. He left with a £10m payoff that was conditional on him not accepting another job with a British media company for three years, and has been living in Barcelona in the interim.

In recent weeks, Ball has been canvassing support directly from ITV shareholders and is understood to have the backing of major investors Fidelity and Legal & General.

One source warned that some shareholders were unhappy that Ball had apparently usurped the recruitment process being run by the City headhunter Russell Reynolds, but said: "The vast majority support his candidature. The job is there if he wants it."

Possible stumbling blocks remain. One is his remuneration package, including a bonus yet to be agreed. Another is the size of a rights issue that needs City approval to cut the broadcaster's £700m debt pile. Ball is thought to want the cash call to total more than £500m, to give ITV a fresh start. But some investors are reluctant to subscribe to a funding package larger than £400m.

A decision on who will succeed Grade is due in the next month. Other candidates include Malcolm Wall, formerly with media group UBM; John Smith, boss of BBC Worldwide; and Peter Smith of NBC Universal.

Ironically, since Grade announced his departure, ITV has notched up a number of on-screen triumphs, notably Britain's Got Talent. The final was seen by more than 19 million viewers.

Gordon Brown's new apprentice, Alan Sugar, will have to strive to influence business policies without civil servants or a desk in Whitehall.

Government insiders say ministers have been wrangling about who should take responsibility for the feisty businessman and star of The Apprentice. "No one wants to have him," said one source.

Sugar's appointment was announced with great fanfare by the prime minister in his cabinet reshuffle, but a spokeswoman from Lord Mandelson's Department for Business, Innovation and Skills confirmed that he would have no staff and no office there.

"We want him to go out and meet small businesses and report what he's seeing. He's not in the government, he's just an adviser," she said.

Ministers were bruised by the experience of working with Digby, Lord Jones of Birmingham, the former CBI boss whom Gordon Brown appointed trade minister. After stepping down last year, Jones said half the civil servants he had worked with should be sacked.

The panic appears to be over. Now is the time to get worried. The good news last week was that, after a long decline (by some 12% in the previous 12 months), industrial output in the UK rose by 0.3% between March and April. Now, in the old days at the Financial Times, we had a rule that one should not pay too much attention to one month's figures. But the veteran economist Professor Wynne Godley - an ace Treasury forecaster in his time - made an impression on me some years ago when he declared that experience had taught him not to ignore one month's figures.

This said, it has to be emphasised that, in the world of economic statistics, an estimate of a 0.3% rise is a perilously slender base on which to build expectations of a revival. However, one is reassured to some extent by the assessment of the National Institute of Economic and Social Research (NIESR), which has an excellent record in these matters. Martin Weale, director of the NIESR, when questioned about whether the recession had ended, replied: "As far as I can tell. There has been much less downward momentum than we expected."

These things are relative. There has in fact been quite a lot of "downward momentum", as whole industries, businesses, the unemployed and those fearful of being made redundant know only too well. The NIESR reckons that the UK's gross domestic product fell at an annual rate of 6% in the three months to April, but that - given the move from down to up in industrial production (just), and better (or less bad) news from the services sector in May - the annual rate of decline between December-February and March-May was reduced to some 3.6%.

So this may be a "Godley moment" when one month's figures are really significant. Or it may not; we do not really know at this stage. On the one hand some of the so-called "forward-looking indicators" and business surveys, are looking better (or less horrendous); on the other hand, those with their fingers on the financial pulse, such as Paul Tucker, deputy governor of the Bank of England, warn "for the moment it is unclear ... whether the financial system can generate the expansion of credit that will most likely be necessary to support recovery". And Andrew Sentance, another member of the monetary policy committee, agrees, warning of "the potential constraint on lending because of the reluctance of banks to lend as they seek to rebuild financial reserves". (He resisted the temptation for a wisecrack about rebuilding their bonuses.)

Basically, what seems to have happened is that businesses ran down their stocks of goods drastically in the wake of the financial tidal wave last autumn. The destocking had to stop at some point. Similarly, the collapse of consumer confidence during the winter months had its impact on demand and raised what economists call "precautionary saving", part of that process being less inclination to get into debt, and more inclination to repay debt.

To my mind the mere thought that things may be on the turn, or at least not deteriorating further, is a testament to our policymakers at both ends of town. The Bank of England and the Treasury have not quite thrown the kitchen sink at the ailing economy, but they have not washed their hands of the problem. Indeed, they might at least be said to have thrown the wash-basin at it.

Amid all the moaning about government spending and borrowing, it was refreshing last week to hear the wonderful Professor Paul Krugman deliver this year's Lionel Robbins Memorial Lectures at the London School of Economics. I wish some of the more Neanderthal businessmen and City figures could have been there. You know the ones I mean: they complain about recession, yet also complain about the fiscal expansion needed to help us out of recession.

Krugman had fun with an economics profession that had wandered down so many blind alleys in recent decades that, in the United States between 1985 and 2000, out of 7,000 academic articles produced under the aegis of the National Bureau of Economic Research, only five mentioned fiscal policy, and the consensus was that markets were so perfect that crises such as we have recently been experiencing simply could not happen.

This recent crisis demanded a fiscal response: as it is, Krugman would have liked a much bigger one, both in the US and UK, although this does not stop him from sharing the general view that, once we can be sure the economy is on the mend, attention needs to be devoted to the sustainability of the government's finances. That time is assuredly not yet.

The debate about how to put the finances in order has already begun. The debate is already shrouded in obfuscation. My mother used to say that honesty was the best policy, which is why I never became a politician. I shall return to the economics of "cuts" another time. Meanwhile, optimists can perhaps derive some comfort from the fact that, although the Robbins Lectures were entitled "The Return of Depression Economics", the Nobel Laureate concluded by saying: "As of this evening, it looks as though it won't be Great Depression Two."

For the future, let all policymakers recall the words of the great Lord Robbins himself: "To prevent the depression, the only effective method is to prevent a boom." To which should be added: but if the worst happens, bring on Lord Keynes.

Insurer should have sent loss adjuster at first signs of subsidence

I have reached an impasse with More Than, our building insurer. I wrote in January about the reappearance of cracks on the internal kitchen walls. These had been dealt with in 2002 and were due to water from a cracked drain. This time, More Than requested I get a report from a local contractor to confirm the cause of the cracks and the repair work needed.

I was surprised by the response because, with the previous claim, More Than had undertaken all the necessary investigations and engaged a firm of builders. It insisted it was my responsibility to engage a local contractor. I did this, and the building contractor recommended that a structural engineer investigate. More Than said I would have to pay for this too. I believe it should all be covered by the 2002 claim because the cracks appeared in the same place. More Than says it is a new claim. IS, Salford

Your house was underpinned in 1996 as a condition of getting a mortgage, although not through More Than, but this did not include the kitchen side of the house. More Than says that your 2002 claim had been logged as suspected subsidence and this new claim should also have been treated as possible subsidence, in which case its loss adjuster would have been round straightaway. That didn't happen.

Now that the mistake has come to light, More Than has dispatched the loss adjuster, who is investigating the cause of the cracks. Your claim can then proceed.

• Email Margaret Dibben at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.

Buy-to-let landlord out of pocket as rent goes into wrong account

I rent out an apartment and my new tenant set up an online standing order from his bank, NatWest, in my presence. However the first month's rent for £495, did not arrive at my bank, Halifax. After checking, we realised he had entered the wrong account number by putting a zero at the front of the eight-digit figure instead of the end, although he had correctly entered my name and sort code.

Eventually Halifax confirmed the money had been paid to the account number he gave, even though the other details did not match. Halifax said all it could do was write to the recipient and request authority to reclaim my money.

A fortnight later, I still didn't have my money. I contacted Halifax and it agreed to ask the unintended recipient again, but pointed out I was not the complainant, simply the inquirer, so could not pursue it further. This would have to be done by my tenant because, technically, he was the complainant.

I pointed out that I was the victim and requested Halifax send a recorded delivery letter, at my expense, to the person who had my money. Halifax said I could not make that request. Surely the bank has some responsibility to not pay my money to someone else if the three components – name, sort code and account number – do not match. SP, Westhoughton, Bolton

Even though you are Halifax's customer, it cannot take your word that this money should have gone into your account, despite the account numbers being so similar. Your tenant might have intended paying the other person £495 but wrongly wrote the name and sort code, so he had to confirm to Halifax that he meant to pay the money into your account before it could approach the other customer.

You are not sure whether inputting the wrong number was your tenant's mistake or yours but, as £495 had left his bank account, he was naturally reluctant to send another £495. Eventually the unintended recipient did return the money, which was refunded to your tenant's NatWest account. Initially only £485 appeared and he assumed this was a £10 charge. That is not the case. A Halifax clerk had mistyped the figures so another £10 had to be credited separately. Your tenant has now sent you £495.

• Email Margaret Dibben at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.

Estate agent refuses to budge over dispute about tenancy

Last December, I signed a lease agreement with the letting agent Kinleigh Folkard & Hayward, for a company to rent my two-bedroom flat for three months. I had to pay the agent 16% plus VAT, which came to £1,297 for three months. The tenant asked for a break clause and, just before signing, insisted on giving notice on any day of the month rather than the first. He left before two months were up.

The terms and conditions said the fee was payable for the period of the tenancy but the agent will not return the commission for the final month. I have had to pay commission for the third month on rent which I did not receive. I consider that I was misled. I attempted to use the company's complaints procedure, but it dismissed my concerns. MB, London

You believe Kinleigh Folkard & Hayward should have highlighted the impact of its charges if the tenant invoked the break clause. KFH says the fees are included in the terms of business you originally signed. The 11% fee that had been mentioned to you applies only to longer lets, which the staff member should have known. Short lets cost 18% of the rent for the length of the tenancy with no refunds. (KFH gave you a 2% discount as another agent was about to sign up the same tenant.) That's before other fees, such as £117.50 for preparing the contract. Tenancy, to letting agents, means the length of the lease, not the amount of time the tenant pays rent.

You received a higher rent for the short let – £2,350 instead of £2,100 – but the fee is charged on the total rent so, as yours included council tax, gym charges and utilities, you paid commission on that money as well, even when the tenant was not there. For the extra £250 a month rent, you earned only £83.25 a month after the higher agency fees and, of course, nothing for the third month.

You also disputed the agent's description of you as a professional, long-standing landlord who was difficult to contact, but your complaints are getting you nowhere. That's it as far as KFH is concerned. It is sticking to the no-refund clause.

Since 5 May, all firms that belong to the Association of Residential Letting Agents, which includes KFH, have to be licensed. The National Association of Estate Agents will soon make the same rule for its letting agent members. But that won't make any difference to the huge fees that letting agencies charge.

• Email Margaret Dibben at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.

Saver needed cash placed in fixed-rate bond to help mother's flat purchase

Last March, my husband and I put £25,000 into a fixed-rate bond with NatWest. A week later, my elderly mother decided she wanted to move to a flat and we needed to access the £25,000 to help her. I wrote to NatWest to cancel the bond under the 14-day cooling-off rule as detailed in the confirmation letter. We were told this was not possible as the bond price relied on fluctuations outside the bank's control. The very name of the bond, fixed rate, implies there is no question of price fluctuation. RL, Cheltenham

You must have misread the letter because it also said the 14-day cooling-off period does not apply to accounts such as bonds. This bond started on 16 March earning 3.5%. Between your money arriving and the start, it earned 0.25%. You didn't realise that either. You would have been locked into this bond but NatWest has agreed, as a goodwill gesture, to release you without penalties.

• Email Margaret Dibben at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or write to Margaret Dibben, Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU and include a telephone number. Do not enclose SAEs or original documents. Letters are selected for publication and we cannot give personal replies. The newspaper accepts no legal responsibility for advice.

They've come a long way in 25 years, but ethical funds are testing the loyalty of investors committed to the cause, find Jill Insley and Peter Davey

Aimed at investors who wanted to make money without compromising their beliefs, the UK's first ethical investment fund was launched 25 years ago last week. The success of Foreign & Colonial's Stewardship fund led to a large range of funds with similar principles, now collectively managing £4bn. Proponents of the ethical ideal claimed that investing in companies with a strong social and environmental ethos would result in stronger performance over the longer term.

But a quarter of a century on, investors are asking whether Stewardship and the rest are living up to that initial promise.

In 1984, Stewardship was known in the City as the Brazil fund, because "you had to be nuts to invest in it". Yet it has outlived many mainstream funds, and the ethical investments market it helped spawn has been attracting money from investors in spite of the downturn.

"Investors might question whether they want to be in equities at all, but I don't think they'll just drop ethical funds. In fact, I can't see demand trailing off - it's a growing market," says Simon Brett, head of investments at Parmenion Capital Partners, which launched three such funds last October.

According to the Ethical Investment Research Service, investors in the sector tend to be a bit more "sticky" during downturns than others. Their connection with the values the funds reflect means they are less ready to abandon them when performance flags. "It is not just a fiscal relationship," Eiris spokesman Mark Robertson says.

Whether this loyalty is deserved is another question. According to a survey last September conducted by the magazine Investment, Life & Pensions Moneyfacts, ethical investments posted lower than average returns, with some suffering particularly big falls.

Sovereign Ethical, the worst performing of the 57 surveyed, fell 33% - even before the crisis sparked by the collapse of Lehman Brothers - and several others had fallen by 20% or more.

Figures produced last week by Morningstar, a financial data provider, show 27 of the 40 ethical and environmental funds it lists are in the third or fourth quartile of their sector (funds with a similar investment outlook) for the year to date. The original Stewardship fund is among the strugglers, languishing in the fourth quartile of the UK All Companies sector.

One of the reasons for this lacklustre performance is "negative screening" - refusing to invest in certain companies or sectors on moral grounds. Ethical funds might boycott companies involved in tobacco, arms, oil, nuclear power, pesticides, animal testing, dubious labour practices, alcohol, gambling, pornography, GM crops, and even meat processing and production. Airlines joined the list last year when Standard Life Investments announced the industry would be excluded from its ethical funds.

The sectors avoided are often those that weather stock market slumps best. And ethical funds often favour smaller companies, which do less well in downturns than bigger rivals. The result is that, as a whole, ethical funds suffer more than most when markets are falling.

"I've always been the unethical IFA," says Mark Dampier at broker Hargreaves Lansdown. "If I wasn't coming at it from an ethical angle, I'd ask why I would want to limit the universe my fund manager can invest in.

"I've been around so long now I can remember the launch of Stewardship, and I can remember the argument that because you were buying ethical companies, the performance would be superior over time. But while Stewardship has turned in returns of 666% over 25 years, which is OK, you could have invested in Anthony Bolton's unethical Special Situations fund, which has produced returns of 3,901%."

Even those that support ethical investment accept negative screening has an effect. Jonathan Clark, director at Barchester Green, the longest-established dedicated ethical IFA, says: "Ethical funds do tend to be a little more volatile. In bad markets they tend to come down rather more quickly; but in good markets they tend to go higher."

Ethical investors have been prepared to accept extra volatility in return for making sure their principles are not compromised. But F&C recently came under fire for changing the criteria it uses to select shares to allow the inclusion of banks, just when they had tanked.

Jason Hollands, a spokesman for F&C, says the fund was always able to invest in some financials, but was restricted to mortgage banks, in particular former building societies. However, research into investment criteria conducted in 2004 placed the exclusion of financials at the bottom in terms of importance among investors, and the policy was changed in 2007.

Hollands says: "In the last quarter of last year, which was our worst in terms of performance, we had just 4.3% in financials, whereas mainstream funds would have had more than 20%.

"The reason Stewardship suffered in 2008 is that for ethical reasons it cannot invest in key defensive parts of the market - such as tobacco, most oil stocks and most pharmaceuticals, which were among the best-performing parts of the market in the extreme events of 2008 - but this is what its investors want."

What else was new in 1984

• Spitting Image premiered on ITV, introducing Margaret Thatcher as a cross-dressing puppet.

• Thomas the Tank Engine & Friends, the television series based on the popular children's books, first hit our screens.

• The American actress Scarlett Johansson was born.

• Computer giant Apple launched the first Macintosh to rival the PC.

• Rajiv Gandhi succeeded his mother, Indira Gandhi, as Indian prime minister after she was assassinated.

• Sideburns, the facial hair most commonly associated with the 1970s, made a comeback - often accompanied by a mullet haircut.