Rip-Off Britain
Encyclopedia
Rip-off Britain is when some products and services cost significantly more in the United Kingdom
than in other places, especially the United States
and other member states of the European Union
.
The term is an expression coined by the tabloid press in the late 1990s to describe complaints and is particularly prevalent in the mass media when the pound sterling
is strong, as this makes other states' prices cost less in pounds.
in 1998 aimed at lowering car prices in Britain, which were at the time, and despite legislation outlawing the practice, significantly higher than the EU average.
The Consumers' Association hired a stand at the British International Motor Show
, only revealing on press day its true purpose. The organizers, the Society of Motor Manufacturers and Traders
, decided not to fan the media flames by ejecting the Consumers' Association.
The phrase had already taken hold in the mass media and it became a term in frequent use to describe anything that was wrong with Britain. Along the way, it proved to be one of the elements that led to a tipping point
in the harmonization of car prices within the EU.
The campaign was devised by UK advertising agency
Claydon Heeley, who are known for this type of "guerrilla
" work.
, tobacco
and petroleum
and diesel fuel varies widely from country to country, and these products should be excluded from any argument against retailers (as opposed to politicians) for high prices in these markets. Although high taxation also may serve to disguise a high profit margin by the retailer, it may also work in the opposite direction, squeezing profits where there are other legal markets with lower taxation.
While the standard UK rate of Value Added Tax
(VAT) 20% generally higher than US sales tax
es, differences are often far greater than this could account for. Also, the standard UK rate of VAT is lower than in all but three of the other EU states (although the rate increase in 2011 will bring it in line with other EU states). Secondly, the Crown Dependencies
of Jersey
and Guernsey
are not part of the EU and Low Value Consignment Relief
applies to imports. Retailers such as Play.com
and Specsavers
operate from Jersey or Guernsey specifically as a means of avoiding VAT.
In the UK, imported (commercial) goods valued up to £18 are exempt from VAT; for personal gifts the exemption rises to £36. As of 1 December 2008, imports up to the valued of £105 are not liable for UK customs duty.
It is hard to quantify differences in storage costs, since many goods are shipped just in time directly from the manufacturer to the consumer, or in the case of electronic goods and services may not be physically shipped at all but delivered via the Internet.
Retailers and manufacturers sometimes argue that legal requirements for guarantees and warranties differ between markets and this must be factored into prices.
or directly from abroad, including via eBay
and other online auction sites.
Most US Internet retailers ship directly to consumers in the UK which, assuming the customs provisions are met, can provide a worthwhile alternative to higher UK prices. Many believe that true competition from the Internet, and the Eurozone general free trade, will tend to normalize retail prices and put an end the UK being known as "Treasure Island".
Generally, "customer not present" transactions cannot be made for legally controlled products such as alcohol, tobacco, solvents, fuels, or medication.
Electrical and electronic products designed for the North American market may have to be converted to run on EU voltage and TV systems, annulling any benefit in buying at a reduced price. Other products may also differ in specification. They may not come with the same warranties or guarantees, and returning faulty goods may be difficult, or at least not cost effective. Furthermore, products for sale in the European Union should carry the CE mark for safety, but products purchased in the USA or designed for the US market are often supplied with other safety designations such as the UL listing.
The biggest player in music downloads, Apple's iTunes, operated a model where purchases can only be made in a domain where the users' means of payment is registered. UK customers are therefore tied to the offerings in the UK iTunes store: a disadvantage both in price terms (79p per download in the UK is about $1.16 at April 2009 exchange rate, so 17% more than the 99¢ per download in the US) and also in terms of available choice. On 9 January 2008, however, Apple conceded that this was unfair practice and promised to harmonise prices with Europe within six months, citing the record labels' wholesale music price as the reason.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
than in other places, especially the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and other member states of the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
.
The term is an expression coined by the tabloid press in the late 1990s to describe complaints and is particularly prevalent in the mass media when the pound sterling
Pound (currency)
The pound is a unit of currency in some nations. The term originated in England as the value of a pound of silver.The word pound is the English translation of the Latin word libra, which was the unit of account of the Roman Empire...
is strong, as this makes other states' prices cost less in pounds.
Origins
The phrase originated with a campaign by the Consumers' AssociationConsumers' Association
The Consumers' Association is the umbrella organisation that houses the trading arm Which? Ltd. The Consumers' Association is a charity, registered in England and Wales No 296072. Which? Ltd is its wholly owned trading subsidiary....
in 1998 aimed at lowering car prices in Britain, which were at the time, and despite legislation outlawing the practice, significantly higher than the EU average.
The Consumers' Association hired a stand at the British International Motor Show
British International Motor Show
The British International Motor Show is an automobile show held biennially in the United Kingdom. It is recognised as an international show by the Organisation Internationale des Constructeurs d'Automobiles. The 2008 was the last event with no news of a return of the British International Motor Show...
, only revealing on press day its true purpose. The organizers, the Society of Motor Manufacturers and Traders
Society of Motor Manufacturers and Traders
The Society of Motor Manufacturers and Traders is the trade association for the United Kingdom motor industry. It "promote the interests of the UK automotive industry at home and abroad".-History:...
, decided not to fan the media flames by ejecting the Consumers' Association.
The phrase had already taken hold in the mass media and it became a term in frequent use to describe anything that was wrong with Britain. Along the way, it proved to be one of the elements that led to a tipping point
Tipping point
In sociology, a tipping point is the event of a previously rare phenomenon becoming rapidly and dramatically more common. The phrase was coined in its sociological use by Morton Grodzins, by analogy with the fact in physics that adding a small amount of weight to a balanced object can cause it to...
in the harmonization of car prices within the EU.
The campaign was devised by UK advertising agency
Advertising agency
An advertising agency or ad agency is a service business dedicated to creating, planning and handling advertising for its clients. An ad agency is independent from the client and provides an outside point of view to the effort of selling the client's products or services...
Claydon Heeley, who are known for this type of "guerrilla
Guerrilla marketing
Guerrilla warfare is about waging small intermittent attacks on different territories of the opponent with the aim of harassing and demoralising the opponent and eventually securing permanent footholds....
" work.
Taxation
The level of indirect taxation applied to some products such as alcoholic drinksAlcoholic beverage
An alcoholic beverage is a drink containing ethanol, commonly known as alcohol. Alcoholic beverages are divided into three general classes: beers, wines, and spirits. They are legally consumed in most countries, and over 100 countries have laws regulating their production, sale, and consumption...
, tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
and petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
and diesel fuel varies widely from country to country, and these products should be excluded from any argument against retailers (as opposed to politicians) for high prices in these markets. Although high taxation also may serve to disguise a high profit margin by the retailer, it may also work in the opposite direction, squeezing profits where there are other legal markets with lower taxation.
While the standard UK rate of Value Added Tax
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
(VAT) 20% generally higher than US sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
es, differences are often far greater than this could account for. Also, the standard UK rate of VAT is lower than in all but three of the other EU states (although the rate increase in 2011 will bring it in line with other EU states). Secondly, the Crown Dependencies
Crown dependency
The Crown Dependencies are British possessions of the Crown, as opposed to overseas territories of the United Kingdom. They comprise the Channel Island Bailiwicks of Jersey and Guernsey in the English Channel, and the Isle of Man in the Irish Sea....
of Jersey
Jersey
Jersey, officially the Bailiwick of Jersey is a British Crown Dependency off the coast of Normandy, France. As well as the island of Jersey itself, the bailiwick includes two groups of small islands that are no longer permanently inhabited, the Minquiers and Écréhous, and the Pierres de Lecq and...
and Guernsey
Guernsey
Guernsey, officially the Bailiwick of Guernsey is a British Crown dependency in the English Channel off the coast of Normandy.The Bailiwick, as a governing entity, embraces not only all 10 parishes on the Island of Guernsey, but also the islands of Herm, Jethou, Burhou, and Lihou and their islet...
are not part of the EU and Low Value Consignment Relief
Low Value Consignment Relief
When goods are imported into a European Union country from a non-eu territory, goods may be subject to customs duty, excise duty and value-added tax....
applies to imports. Retailers such as Play.com
Play.com
Play Ltd., trading as Play.com, is a Jersey-based online retailer of DVDs, CDs, books, gadgets, video games, DRM-free MP3 downloads, and other electronic products, as well as clothes and accessories. It is a wholly owned subsidiary of the Rakuten Group....
and Specsavers
Specsavers
Specsavers Optical Group Ltd is the biggest optical retailer in the UK and Ireland. It is also the biggest of the four major opticians that control 70% of the British market for spectacles and contact lenses, with Specsavers having a 39% share of the market...
operate from Jersey or Guernsey specifically as a means of avoiding VAT.
In the UK, imported (commercial) goods valued up to £18 are exempt from VAT; for personal gifts the exemption rises to £36. As of 1 December 2008, imports up to the valued of £105 are not liable for UK customs duty.
Storage and distribution
Companies sometimes argue that some of their fixed costs are higher in the United Kingdom than elsewhere, for example for storage and distribution. The amount of substance to this defence varies from case to case; for example the UK has the fiftieth highest population density of any country in the world, eight times that of the US and over twice that of France, so transportation distances are unlikely to be a factor, and a parliamentary report concluded there was no great difference across EU states.It is hard to quantify differences in storage costs, since many goods are shipped just in time directly from the manufacturer to the consumer, or in the case of electronic goods and services may not be physically shipped at all but delivered via the Internet.
Over-regulation
Quality and safety regulations, while different, are roughly comparable between the markets discussed in this article, though again some businesses argue that increasing safety regulation increases costs which must be passed to the consumer.Retailers and manufacturers sometimes argue that legal requirements for guarantees and warranties differ between markets and this must be factored into prices.
Shipping from abroad
Perceived or actual higher prices in the UK often have the effect of encouraging British consumers to order goods from the Internet, whether from UK businesses claiming to break a price cartelCartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...
or directly from abroad, including via eBay
EBay
eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...
and other online auction sites.
Most US Internet retailers ship directly to consumers in the UK which, assuming the customs provisions are met, can provide a worthwhile alternative to higher UK prices. Many believe that true competition from the Internet, and the Eurozone general free trade, will tend to normalize retail prices and put an end the UK being known as "Treasure Island".
Generally, "customer not present" transactions cannot be made for legally controlled products such as alcohol, tobacco, solvents, fuels, or medication.
Electrical and electronic products designed for the North American market may have to be converted to run on EU voltage and TV systems, annulling any benefit in buying at a reduced price. Other products may also differ in specification. They may not come with the same warranties or guarantees, and returning faulty goods may be difficult, or at least not cost effective. Furthermore, products for sale in the European Union should carry the CE mark for safety, but products purchased in the USA or designed for the US market are often supplied with other safety designations such as the UL listing.
Internet delivery
Products and services delivered over the Internet are the most obvious market for trade, since the physical barriers for shipping the goods are eliminated. Therefore, one would expect Internet-based markets to tend to normalize across free trading countries.The biggest player in music downloads, Apple's iTunes, operated a model where purchases can only be made in a domain where the users' means of payment is registered. UK customers are therefore tied to the offerings in the UK iTunes store: a disadvantage both in price terms (79p per download in the UK is about $1.16 at April 2009 exchange rate, so 17% more than the 99¢ per download in the US) and also in terms of available choice. On 9 January 2008, however, Apple conceded that this was unfair practice and promised to harmonise prices with Europe within six months, citing the record labels' wholesale music price as the reason.
See also
- Regional lockoutRegional lockoutRegional lockout is the programming practice, code, chip, or physical barrier used to prevent the playing of media designed for a device from the country where it is marketed on the version of the same device marketed in another country.-Video games:...
- Value-Added-Tax-free imports from the Channel Islands
- Rip Off Britain (TV series)Rip Off Britain (TV series)Rip Off Britain is a daytime series which exposes Britain's rip-offs to help the British consumers. It began on 30 November 2009 presented by former news journalists Angela Rippon, Gloria Hunniford and Jennie Bond...