/ Technology

International trade must be fairer to stop the Great British rip-off

Have you noticed that tech products often seem to be more expensive in the UK than, say, the US? Our chief executive Peter Vicary-Smith says Brits are still unnecessarily paying over the odds for some goods.

Sometimes, it rather feels like there’s a large sign above the UK saying ‘Ripe for rip-off’.

It’s 10 years since Which? first challenged Apple to justify why it charged UK consumers 20% more than those in France and Germany to download the same digital music track on iTunes. Eventually, Apple agreed to cut the UK price.

In the 1990s, Which? launched the ‘Great British Car Rip-off’ campaign, exposing the astonishingly high prices of new cars in the UK compared with the rest of Europe. Eventually, prices fell to be more in line.

The Great British rip-off

While UK consumers have benefited in some ways from a European Single Market, where there’s greater access to products sold elsewhere in the EU, we’re still paying over the odds for some goods, particularly many imported from outside the EU.

Our latest investigation, ‘The Great British rip-off’, shows that – taking tax out of the equation – a MacBook Pro laptop costs £194 more in the UK than it does in the US. Apple is far from alone. While companies selling their physical products, such as laptops, can point to higher operating costs in the UK (which is only a partial justification in the view of our supply chain expert), sellers of digital-only products, such as software, have no such justification. So why does certain software cost hundreds of pounds more in the UK than it does in the US?

While Which? is pressing manufacturers to play fairer, we’re also pushing the Government to boost e-commerce by dropping import charges for any goods with a value of less than £390. Not all products are subject to these fees (laptops aren’t but clothes and TVs are, for example). Longer term, we’re supporting an ambitious free trade agreement between the EU and US, which could cut all import duties on products from the US.

Are UK consumers ripped off on tech products compared to US consumers?

Yes (96%, 1,889 Votes)

Don't know (4%, 75 Votes)

No (1%, 11 Votes)

Total Voters: 1,975

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Comments

This does not only apply to items imported from the US. I have been researching buying an expensive bike and one particular German manufacturer’s UK dealers charge the same number of pounds as the European price in Euros, a mark up of about 20%. They claim higher costs for doing business here and all the usual excuses. But, I have found a dealer in Frankfurt who advertises free delivery throughout the EU. You can guess who will get my money!

Could Which? post on the web the report on which its press release was based? That would make clear the exact basis for comparisons, eg, what taxes were excluded, how easy it is to compare specifications in different markets and how exchange rates were calculated – all issues that can make comparing prices more difficult.

Hi Tim, if you’re a Which? member you can access a PDF of the magazine online: http://www.which.co.uk/account/which-magazine-archive/august-2014/

“Ripped Off” sounds so academic can we have something more nuanced?

It strikes me that this is how the Northern Irish or those on the Western Isles must feel when they have to pay more and no free delivery. I wonder which country is most disadvantaged buying Apple products – I would do something but given its an Icon …. and I use a ordinary PC purchased from German vendor Lidl..

http://www.everymac.com/global-mac-prices/mac-prices-uk-united-kingdom-gb-great-britain-england.html

Look at the number of 13″ MAc pros! 2013. Anyway if someone wants to do a quick piece of research we might know whether it is the UK or various other countries who are worse off.

Software prices are high but then I find with freeware like Libre Office – based in Germany, Nero based in Germany, Irfanview – based in Austria plus dozens more why are we looking to the States.

Jim Kent says:
31 July 2014

Because that’s where Microsoft is based! That’s one real target for brickbats, especially after producing a Skype update that (almost certainly deliberately) blocked hundreds if not thousands of Skype users still using software that MS deemed to be “retired” and followed in the last week by the usual promise of new and better software that would solve all your problems – but in fact with a demand to “Download it now” with (of course) the usual disclaimer that it may not actually do anything useful and might even damage your existing setup.
For those who have been captured over the years by MS operating systems, the demise of support for a perfectly functioning OS to be replaced by a completely different animal plus the prospect of loss of functionality that one has relied upon for some years and the amount of time and effort likely to be needed to carry out any “updgrade”, to re-establish preferences and learn the new system does not endear one to this company that practices the UK-US digital differential (see the Which? Rip-off report, p25).

Pat says:
26 July 2014

Import duty is payable on goods over £135, but import VAT (together with Post Office handling charge, £8 I think) is payable on goods over £15 including postage (£36 excluding postage for gifts). This makes it not worth buying lowish value goods from outside the EU.

I used to buy 3 or 4 Threadless T shirts in the sale from the US, which came in at just under £18 inc postage, no VAT payable, but when the limit was lowered to £15 it became uneconomic as the ratio of postage to number of T shirts became too high. I wouldn’t have minded paying the VAT but the PO handling charge was the killer.

Why limit it to “tech” how about imports of cigarettes, alcohol, clothes and non perishable foods from Europe. Why can I get in my car and buy what I want in France, Belgium, Luxembourg and Spain Then bring it back for my own consumption, yet on line I can’t do it !!!
WHY do I have to have the hassle, add to the pollution and carbon footprint when two trucks daily would probably cater for the needs of a region ????

Let’s face it whilst ciggies and alcohol are classified as “BAD” people still use them, by legalising these imports it would kill the smugglers and counterfeiters dead !!!!

Is it something to do with raising taxes to pay for running the country? The effort and cost of traveling to Europe to save some money is pitched against the savings that could be made.

Overall I cannot escape the conclusion that if we remove tax in one area the Government will either cut services or raise the tax by other means. Can someone start the ball rolling on what increased taxes they would prefer, or what services to cut?

Which ? – I assume you have costed out the loss of tax income to the Government if people are able to import more – can you provide figures and suggestions where the shortfall may be recovered?

“While Which? is pressing manufacturers to play fairer, we’re also pushing the Government to boost e-commerce by dropping import charges for any goods with a value of less than £390. Not all products are subject to these fees (laptops aren’t but clothes and TVs are, for example). Longer term, we’re supporting an ambitious free trade agreement between the EU and US, which could cut all import duties on products from the US.”

Jim Kent says:
31 July 2014

But this same TTIP you appear to advocate would allow internatinal corporate bodies to sue the Government for (speculative) potential loss of future earnings in the event of legitimate action (e.g. modifying Regulations) within the UK, unless the Bill’s wording has been re-designed.

Uk consumers are daily ripped off by sellers ! Whether these are imported goods or uk manufactured goods .Whilst working in South Africa It was cheaper for me to buy uk manufactured. goods there and import ,there is no protection for UK consumers .

H. T. Porter says:
28 July 2014

What gets my goat is that the US companies dare to claim that it costs more to sell to us when they do not pay full tax on everything they do make from us. When they do start paying this country the proper tax on what they make from us, then they MAY have a case for charging us these extra prices.

Barry Giddings says:
30 July 2014

It is not just in electrical goods where USA pays substantial lest than the UK. I have been appalled at the number of times I have done a web search for a product to see the product sold in the USA and potentially 50% less than the UK. Many of the products I wanted to purchase were manufactured within Europe, but they were still substantially cheaper in the USA. I am sure many manufacturers believe that we are stupid in the UK and do not realise how we’re being completely ripped off. We need a national campaign to bring to suppliers attention that, we are not stupid and want to have our pricing on par with the USA. When I have contacted manufacturers for their response to this price differential, their response seems to be “we can charge what we want and you just have to take it”.

BG Can you give specific examples? There may be differences not apparent on a quick glance or it may genuinely be companies maximising their profits. Which is a basic part of the capitalistic system.

” While we support the Transatlantic Trade and Investment Partnership (TTIP) in principle it is with some reservations around the detail and we want the negotiations to be as open and transparent as possible.” Patrick Steen toward the head of this thread.

It has dawned upon me that I am not clear who “WE” are!

Is this the Which? excutive, the Trustees, the shareholders in the company that controls Which?, or the subscribers in general. I suspect the answer is the first option but it would be nice given the huge game changing importance of this treaty that if the nature of WE is established.

If Which? is going to take a stance on this matter perhaps it needs to explain the benefits and drawbacks and get a buy-in from its subscribers. Or possibly change its current position in response to opinion.

Nick says:
1 August 2014

Yes, I agree with a number of comments, including those of John Airs at the start and the last one from dieseltaylor. I wondered who your ‘technology expert’ was speaking on behalf of when he says ‘we’ support TTIP. Removing ‘unnecessary regulation’ sounds straight out of a Tory manifesto.

John Hillary, an executive director of War on Want produced a report of TTIP, illustrating some of the issues and concerns.
http://rosalux.gr/sites/default/files/publications/ttip_web.pdf

China – Xbox One to launch in China on September 23 2014 for $600 [ £355]. However the launch in China does include a game and a Kinect .The cost in the US via Microsoft was $499 for the package.

The Which? article price is California £254 including Californian state tax at 8% and in UK £349 including 20% VAT [£291]. This is all based on an exchange rate of $1.694 on June 18th used by Which? for their article.

Over the last seven years the exchange rate for $ has been 1.54 to 2.00 to the pound [average over a year] and this volatility has to be calculated in when a company buys product from abroad.

It is worth bearing in mind that if we did not pay VAT the cost would be similarish – and of course unlike the States we have a freeish National Health and better social services. Obviously software is a rip-off but then its difficult to feel too much sympathy for people who buy Apple and those who buy US software.

Bottom line is that there is no law that vendors must not make big profits whilst they can and then reduce prices as demand drops – and Apple plays the game beautifully.

Jack Turner Which? Technology expert:
“”We see it as a stopgap while the Transatlantic Trade and Investment Partnership [TTIP] – which we support – that seeks to increase free trade and reduce unnecessary regulations; talks are expected to conclude in 2015”

I look forward to finding out who about “we” very shortly so we members can discuss.

How do the costs we pay in the UK compare with those paid elsewhere in Europe?

Ess says:
2 August 2014

In response to the ‘don’t buy it and the price will fall’ comments, this clearly isn’t always possible. Taking the Adobe Creative Cloud example in the magazine article, there IS no viable alternative to this product, as the Adobe suite is the industry standard.

Ultimately British creative businesses depend on this product, despite the additional 20% ‘British Surcharge’ that Adobe chooses to levy for no justifiable reason – there is no option to boycott it.

As a business suite I take it that it is a tax deductable cost of doing business. I see no reason why cratives here and in Europe cannot pressure their elected representatives on this specific point.

Microosoft Office has no lost its proprietary doc. or docx hold on national governments and everyone in the entire nation can standardise on the free Office Libre – so lets get to work on other areas,

The other thing I find confusing is that it is given a single price whereas it appears to be like Office you now go on paying for it.:
£15/mth (£18/mth inc VAT); complete suite: £39/mth (£47/mth inc VAT). Upgrade: (CS3 or later): £23/mth for 1yr (£27/mth inc VAT)

I will be in Canada later this year. Are there any disadvantages in buying a sim/contract free iPhone there (and paying about £150 less) compared with buying one here. Any advice would be welcome. Thanks.

David Martin says:
11 August 2014

The Great British Rip Off is misleading, poorly researched and should not have been published. Virtually all goods and services – not just electronic gadgets – have had the same price differences between US and UK for at least 30 years. Indeed, one of the first things I was told and learned when I first travelled to America 34 years ago was the well-known rule: everything is “pounds for dollars”. So something which costs £100 here is usually around $100 there. It’s been the same ever since, apart from very brief crises in exchange rates. Why doesn’t Which? know this? If you want to produce a helpful article on this subject, you should try to explain why virtually all goods and services are usually more than 30% cheaper in America, and always have been.

Consumer Reports $30 per annum

John says:
12 August 2014

The pricing of software, hardware and music into the UK from US has been a scandal for the last 30 years. Indeed I knew a company who flew an employee to New York to get copies of “Auto CAD”. It was much cheaper even after paying the airfare.
The only way this be resolved to the benefit of the consumer is to make intellectual property rights conditional on the price being the same. That way there can be no case to answer, hit them in the profits, works every time.

Similar but different … as a wheelchair user I know huge savings can be made by purchasing, lightweight designs in US. Users go out in old chair + back in new. Has to be done!