Sucker punch

Over the last few months an ugly truth has gradually dawned on sleepy Britons - we pay far more for virtually every product and service than people in Europe and the United States. The term "rip-off Britain" is now standard shorthand used by the media, consumer groups and even Government.

This discontent has stirred up enough anger to get several serious moves underway to make prices more competitive. The Secretary of State for Trade and Industry, Stephen Byers, has announced an investigation into the prices of 100 different products. And the Competition Commission is investigating supermarket prices and accusations of profiteering. The latest Government move, on Friday, promised action against pubs and restaurants which routinely charge rip-off prices for soft drinks.

However, this is unlikely to go far enough. John Shaw, author of a new book on rip-offs,Corporate Cons, is incensed by the level of over-charging in Britain and believes that supermarket pricing is just the tip of the iceberg. "There seems to be a culture in Britain whereby every company in retail strives for unnecessarily high profits. Profit levels in Europe and the US are much lower - which is why consumers there pay far less for identical products," he says. A main contributing factor to Britain's high prices is that competition in many markets has been seriously eroded by the domination of a few large companies, Mr Shaw believes.

The Swedish furnishings company Ikea recently faced heavy criticism after a survey revealed that it charges higher prices in its UK stores than it does in Sweden, Holland and France. Ikea claims prices in Britain are higher than elsewhere due to factors such as greater transportation costs.

This claim is rebuffed by Phil Evans at the Consumers' Association, who attributes it to the lack of competitors. "Competition in Britain has been so poor, and the quality so low, that Ikea can come and offer good quality at prices that undercut the competition, even though its prices are cheaper in the rest of Europe."

New car sales have been a long-standing area of over-pricing, with many British consumers paying up to 40 per cent more for a car than those on the Continent. For example, Broadspeed Engineering, which arranges personal car imports from Europe, says a VW Golf 1.4 would cost pounds 13,420 in the UK, but in Europe you could pay just pounds 6,686. If you are looking for a new car, you may want to hang on: prices seem poised to tumble in the near future. But second-hand cars are already selling at bargain prices, and you should be able to negotiate a very good deal.

Eventually the internet should spell the end of higher prices over here. E-shopping has, according to Phil Evans, helped alter the perception of the British consumer and led us to question UK costs. In the meantime, you can learn to spot the pitfalls (see box, above).

Before you start moaning about prices, it seems that part of the problem is our traditional British reluctance to complain. John Shaw believes that if prices are ever to come down here, the consumer has to take a stand. Even though we complain between ourselves, we still buy the goods. "If consumers really feel they're being charged over the odds, then don't buy," Mr Shaw advises.

n John Shaw, `Corporate Cons' (Management Books 2000, Chalford, Glos, pounds 12.99). Broadspeed Engineering, 0906 960 8880 (pounds 1/min) or www.car-prices.com

FIVE WAYS TO AVOID FINANCIAL RIP-OFFS

n Mug up. If you're even slightly clued up about your finances you won't be such an easy target for the hard sell. Read the financial pages of the press and buy a decent book on personal finance planning (Which? publishes useful titles). Ask any salesman or adviser to make all recommendations in writing. Ask for clear explanations and find out what you'll pay in commission and charges - make sure you understand the way this information is presented. It's easy to hide the nasty small print, so be assertive.

n Never sign on the spot. Do not sign any kind of contract without having taken it home and read it through. And if someone comes to your house, demand the right to go through the literature afterwards before signing up. You have more rights to change your mind if you sign in your own time.

n Be prepared. Keep a file of cuttings, internet print-outs and other info on "good deals" - useful when you come to make big decisions, and you could save thousands. Simple "term" life insurance, for example, is often incredibly cheap, but offers from banks and mortgage-linked deals are still expensive. Compare with the offers from discount brokers, such as Lifequote (www.lifequote.co.uk). On investments, stockmarket ISAs carry a high initial charge: again, you can avoid this by buying via a discount broker, such as Financial Discounts Direct (0500 498477).

n Negotiate. Extremely un-British, but effective. If you use an independent financial adviser and buy an investment with a hefty commission (ie, some personal pensions, with- profits investment bonds, income draw-down schemes, annuities) you should ask for some cash to be rebated into your account.

n Don't be fobbed off. Junior staff in banks, building societies and travel agents may get it wrong. So, ask to speak to someone more senior - eg, there's a big problem at present with travel agents trying to insist you take out their overpriced travel insurance when you buy a holiday. If you have, or plan to buy, your own policy, it's almost certainly quite adequate.