Money

Hogg appointed as Bank's new COO

Press Association — 2013-06-19T01:58:00+00:00

Filed under: News

The Bank of England has continued its shake-up by appointing a senior female banker to the new role of chief operating officer.

The central bank said Charlotte Hogg, the head of retail at Spanish-owned lender Santander UK and the daughter of former Conservative minister Douglas Hogg, will join on July 1.
Ms Hogg will take responsibility for all day-to-day management of the Bank in an appointment approved by incoming governor Mark Carney.

Mr Carney, who takes over next month from Sir Mervyn King, said Ms Hogg will help "catalyse change" at the Bank.

Her appointment comes just days after deputy governor Paul Tucker announced he is quitting the Bank in the autumn after losing out on the top job to Mr Carney, a Canadian.

Ms Hogg is currently head of retail distribution and intermediaries at Santander UK, overseeing a network of almost 1,200 branches.

She started her career at the Bank of England as a graduate in 1992, and other previous roles include UK managing director of credit checking group Experian and senior posts at McKinsey and Morgan Stanley.

Her father, Viscount Hailsham, was a member of the Margaret Thatcher and John Major governments, but stood down as an MP in 2010 after reportedly claiming expenses to clean his moat.

Ms Hogg's mother Sarah, or Viscountess Hailsham, is the former economics editor of The Independent newspaper.

Her role will have the same status and pay - about £260,000 a year - as the Bank's two deputy governors.

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£330m research base for drug firm

Press Association — 2013-06-19T01:54:00+00:00

Filed under: News

Drug group AstraZeneca said plans for a new research base in Cambridge will boost the chances of Britain discovering the next generation of medicines.

The group revealed it will build a new £330 million research and development (R&D) site on Cambridge Biomedical Campus in the south of the city by 2016, employing about 2,000 staff.

The group will merge its small molecule and biologics R&D at the site under plans aim to make AstraZeneca a "global leader in biopharmacuetical innovation". The drug group will also move its corporate headquarters to the site from London.

The new 11-acre site will become AstraZeneca's biggest centre for cancer research, as well as hosting scientists focusing on cardiovascular, metabolic, respiratory, inflammation and autoimmune diseases.

AstraZeneca chief executive Pascal Soriot said: "Cambridge competes on the global stage as a respected innovation hub for life sciences and our choice of site puts us at the heart of this important ecosystem, providing valuable collaboration opportunities.

"Moving to the Cambridge Biomedical Campus means our people will be able to rub shoulders with some of the world's best scientists and clinicians carrying out some of the world's leading research - that's a really exciting prospect.

"Today's announcement also confirms AstraZeneca's long-standing commitment to the UK and increases the chances that the next generation of medicines will be discovered here in Britain."

AstraZeneca announced plans for the new R&D site in March, but did not confirm the exact location until Tuesday.

The company has also announced plans to cease R&D at Alderley Park in Cheshire, with about 1,600 roles moving from the site over the next three years. Combined with the closure of its London headquarters, the group expects to cut about 700 UK jobs by 2016.

AstraZeneca's biologics arm MedImmune already employs about 500 staff in Cambridge.

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RBS boss 'decided to go' - Osborne

Press Association — 2013-06-19T01:50:00+00:00

Filed under: News

George Osborne insisted Stephen Hester made the decision to quit as head of Royal Bank of Scotland (RBS) following claims that he effectively forced him out.

The Chancellor said the banking chief executive "decided to go" but added that his "consent and approval" was sought.

Mr Hester quit last week but made clear he had wanted to see the bank through to privatisation and had "mixed feelings" about leaving.

Mr Osborne also confirmed he will set out the next steps for state-backed banks RBS and Lloyds banking group on Wednesday in his annual Mansion House speech.

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PM faces MPs' questions on G8 deals

Press Association — 2013-06-19T01:44:00+00:00

Filed under: News

David Cameron is to face questions from MPs after G8 leaders thrashed out limited agreements on how to handle the Syria crisis and tackle tax dodging.

The Prime Minister is due to make a statement to the Commons after claiming to have achieved significant progress at the summit of wealthy countries at Lough Erne, Northern Ireland.

n a joint statement, the eight nations said a planned conference on ending the conflict in Syria should be held "as soon as possible".

Resistance from Russian president Vladimir Putin meant there was no explicit reference to the need for Bashar Assad to step aside. Instead the communique called for a transitional government to be formed "by mutual consent" between the different elements of Syrian society. It also included a commitment to keeping the troubled country's military and security forces intact - seen by some as a tacit encouragement to Assad's senior officers to launch a coup.

Mr Cameron said the agreement between the UK, US, Germany, France, Italy, Canada, Japan and Russia amounted to a "road map" for Syria's future.

He also argued that pledges on tax avoidance and evasion had the potential to "rewrite the rules". The statement promised to "fight the scourge of tax evasion" by ensuring automatic exchange of tax information, making clear who owns companies and where they generate profits.

To tackle corruption linked to the trade in resources like oil, gas and minerals in the developing world, extractive industries and governments should publish details of what money changes hands, the agreement said.

Development charities and anti-poverty campaigners welcomed the action to open up tax havens and enforce openness on extractive industry contracts, but said the 10-point document did not go far enough for poor countries to reap the full benefits.

They pointed out that the declaration only said developing countries "should have the information and capacity to collect the taxes owed them", rather than guaranteeing them automatic access to the information. It states that "tax collectors and law enforcers" should have access to information about the ultimate owners of companies, leaving it to individual G8 countries to decide whether to make the information public as campaigners are demanding.

The White House said it would leave the decision to individual US states, while Chancellor George Osborne said the UK was open to the idea of public registers and is consulting on the issue. Meanwhile, Germany and Russia refused to join the other G8 nations in agreeing to publish their own action plans to ensure openness on so-called "beneficial ownership".

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Inflation rise bigger than expected

Press Association — 2013-06-18T09:30:00+00:00

Filed under: News

The squeeze on consumers intensified last month as soaring air fares and more expensive clothing and footwear lifted inflation higher than expected.

Consumer Prices Index (CPI) inflation climbed to 2.7% in May, from 2.4% in April, the Office for National Statistics (ONS) said. But while inflation is expected to peak at about 3% in coming months, economists believe it will then begin a "slow but steady" drift down.

Last month's surge in inflation was higher than forecasts for a 2.6% reading, as price rises rebounded after a sharp fall in inflation in April. Inflation remains stubbornly above the Bank of England's 2% target - which it has not hit since late 2009 - far outstripping wage rises and further eroding consumers' spending power and savings.

Average earnings increased by just 1.3% in the year to April and 0.7% on the previous month, the ONS said recently, as salaries struggle to keep pace with price hikes.

Air fares leapt 22% from April - the highest rate of increase for this time of year since records began in 2001. Prices rose across European, long-haul and domestic flights, the ONS said, adding there was no clear link to the early timing of the Easter holidays. Overall transport prices rose by 0.4% between April and May, the ONS added, as price falls for petrol and diesel slowed to 2.2% month-on-month, compared with a 3.1% fall a year earlier.

The price of clothing and footwear also rose 1.2% month on month, as the cost of women's outdoor clothing increased during a colder-than-normal month. There were also price rises for furniture, carpets and garden tools. But food and drink prices helped hold back inflation, with price falls for meat, vegetables, fruit, sugar, sweets and jams.

David Kern, chief economist at the British Chambers of Commerce (BCC), said: "With earnings growth stagnant, the rise in inflation will put pressure on businesses and consumers." Neil Prothero, analyst at The Economist Intelligence Unit, added the protracted decline in average real wages, now in its fifth consecutive year, will "persist for some time to come".

But despite May's inflation rebound, economists believe future price rises will be more restrained than originally feared, giving the Bank greater scope to resume pumping money into the economy. The Bank now expects inflation to hit a summer peak of about 3%, down from earlier fears of a 3.5% peak, held back by weaker commodity prices.

Vicky Redwood, economist at Capital Economics, said that while higher than expected, inflation's peak is "hopefully not too far away now". She said: "Inflation will probably get above 3% in the next month or two - meaning that one of [new Bank governor Mark] Carney's first jobs will be to write an explanatory letter to the Chancellor."

The figures come ahead of minutes due this week from the Bank's June interest rates meeting - the last meeting for outgoing governor Sir Mervyn King - which will reveal the level of support for more economic stimulus. The Bank's Monetary Policy Committee voted to hold its quantitative easing (QE) programme steady at £375 billion this month, also keeping rates at 0.5%, amid signs of improvement in the economy. The Bank is expected to hold off more QE until the arrival of Mr Carney next month.

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Norfolk council bans hard cricket balls

Hannah Ricci — 2013-06-18T08:30:00+00:00

Filed under: News

Just when you think the health and safety police can't get any more ridiculous; they take it to an entirely new level.

A Norfolk cricket club has been barred from its home of 36 years after refusing to agree to a ban on hard balls being used during batting practice on the pitch.

The new health and safety ruling were drawn up Bacton parish council last month because of fears that members of the public could be hit and injured by stray balls.

But club officials have refused to agree to the new set of rules, according to BBC news, and club chairman David Gale said talks were now in place to move the team away from the village to a new base at a nearby high school.

He said: "We are a cricket team - how are we supposed to practice without cricket balls? Are they expecting us to use tennis balls instead?"

Eviction
Despite a petition from local residents, the Norfolk Eastern Daily Press reports that
the parish council is refusing to back down, forcing the club to leave the village where it was founded 79 years ago.

Council clerk Elaine Pugh said there had been a couple of recent "near misses" in which other people on the field had almost been hit by cricket balls.

The new rules for the use of the field state: 'Batting or bowling practice with a cricket ball or other solid or semi-solid practice ball must only take place inside the batting cage [nets]. Under no circumstances may this take place elsewhere.'

Bacton Cricket Club honorary treasurer Ramone Stringer told the local newspaper: "It's very sad for Bacton, which should always have a cricket club. But we're 99.9% certain to move to North Walsham High School and change our name.

"The move will probably pay off, because North Walsham should have a cricket club and it will attract youngsters to play."

Killjoys
Despite calls from the government that excessive health and safety rules "had to stop" outlandish regulations continue to be enforced throughout the country.

We reported last week how overzealous health and safety rules prevented a Waitrose fish monger from filleting a fish for a customer

In the sporting world, schools have banned football games unless the ball is made of sponge and many have cancelled sports days altogether due to a myriad of health and safety fears.

Council killjoys have also banned people from flying kites on some beaches in case someone gets hit and prohibited dodgems cars from bumping each other through fear of whiplash or broken bones.

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Royal baby fever set to boost economy

Hannah Ricci — 2013-06-18T08:12:00+00:00

Filed under: News

Royal baby fever is set to boost the economy by around £243 million this summer, according to new data from Centre for Retail Research (CRR).

Even the Royal Family is joining in with the launch of baby products from the Royal Collection Trust for sale at palace shops and online
The worldwide buzz surrounding the the first child of William and Katherine, Duke and Duchess of Cambridge, is expected to lift UK retail sales in a similar way to the royal couple's wedding in 2011.

Professor Joshua Bamfield, Director of Centre for Retail Research (CRR) comments: "It is no great surprise that this type of feel good event provides retailers with a welcome boost, with consumer hype generating additional spending.

"These are difficult times for retailers and every catalyst for consumer spending should be utilised as this will bring the economic recovery one step closer."

Spend spend spend
Around £25 million is expected to be spent on festivities celebrating the birth, with consumers splashing out on champagne and party food for informal garden parties at home.

A further £80 million is likely to be spent on souvenirs and toys including items sold overseas, with particular interest from North America, parts of Europe and Australia and New Zealand.

The CCR predicts that 14 million souvenirs with a total value of £56 million and toys (£24 million) are likely to be sold to enthusiasts and collectors. Around £76 million will be spent on books, DVDs and media connected to the event.

Only the best
The baby product industry is expected to enjoy a particular boost as new parents 'trade-up' to more exclusive brands favoured by the Duke and Duchess.

"One of the biggest factors will be the unintentional Royal brand endorsement," explains Bamfield. "The carriage of choice for the royal arrival will no doubt become this year's best selling pram for new and existing parents.

"The 'Kate effect' has already taken the fashion world by storm with each of her choices flying off the shelves within moments of her leaving the house. This trend will follow for the heir's baby grows, rattles, first bike and so on. It's a culture of 'keeping up with the Cambridge's' that isn't going away, albeit a very profitable culture for the retail sector."

Baby memorabilia
The Royal Collection Trust has a small range of baby products for sale, with all profits used for the upkeep of the royal palaces. The collection includes children's mugs, a royal guardsman's style sleepsuit and a child's bear skin hat.

Hundreds of high street stores and small independent brands are getting in on the action too, with everything from HRH baby gift sets and silver jewellery charms, to personalised art prints and commemorative ceramics.

However it is official palace memorabilia that is likely to offer the most appeal and investment potential, as well as anything directly linked to the Duke or Duchess.

"The Duchess of Cambridge has proved a hit among collectors, with news of her pregnancy providing a huge surge in the value of her memorabilia," explains Paul Fraser from Paul Fraser Collectables.

In 2012, PFC Auctions sold the first slice of cake from Kate and William's wedding for an impressive £1,917 ($3,085), while the infamous see-through dress which first attracted William to Kate in a university fashion show achieved £78,000 ($125,535) in 2011.

Fraser adds: "I have personally pursued items previously owned by the Duchess of Cambridge, as I anticipate that there are substantial gains to be made in the future."

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UK care home death rate soars

Adrian Holliday — 2013-06-18T07:32:00+00:00

Filed under: News

Death rates in UK care homes are soaring. A decade ago there were an estimated 38,000 deaths in care homes a year. Last year the death rate hit more than 103,000, according to new figures uncovered by Professor Brian Jarman at Imperial College London.

The new data raises serious questions about the quality of UK residential care.

More scrutiny

Professor Jarman, who analysed mortality rates at Mid Staffs, is clearly worried. "As we are finally getting the scrutiny we need in hospitals," he told the Mail, "deaths are being exported to care homes where they not well regulated. It really beggars belief."

The worry has deepened on analysis which claims that up to 27% of care homes in England have not submitted death rates to the Care Quality Commission (CQC), the national regulator, despite a legal obligation to do so. The CQC is also now looking at data from the BBC's Panorama program.

Neglect allegations

Last night's program focused on two elderly women who were, it was claimed, mistreated in their residential care homes. Following an inspection by the CQC of Poplars Care Home in Mountsorrel, Leicestershire, the county council acknowledged that one woman, Kathleen Reid, 88, died of neglect.

The Care Quality Commission says a third of care and nursing homes in England do not meet all the necessary standards.

Not acceptable

"We are going to be absolutely clear about what is acceptable and what isn't acceptable," David Behan, the chief executive of the CQC, told Panorama. "There's too much poor care in this country and we need to ensure that that is improving, or providers cease to exist."

If you are worried about a relative or the quality of care in a home you can call Age UK Advice for free on 0800 169 6565, or visit www.ageuk.org.uk. You can also complain to your local authority.

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Court dismisses attempt to ban bookies

Sarah Coles — 2013-06-18T07:30:00+00:00

Filed under: News

Newham Council failed in its efforts to ban Paddy Power from opening another shop in the borough. It argued that bookies attract underage gambling, drinking and violence. It also highlighted that it believed the shop's profits would come largely from gaming machines rather than traditional betting.

The court disagreed, so what does it mean for the UK's high streets?

Newham

Newham already has more than 80 betting shops, and took a stand against a new one. It originally rejected Paddy Power's application for planning permission, the bookies won an appeal, and this was the council's attempt to overturn the appeal ruling.

However, the judge decided that there was no evidence that the betting shop would attract anti-social behaviour or crime, and he ordered the council to pay £33,900 costs. Judge Goldspring said: "I find it significant the police did not object to the licence and agreed conditions. One would have thought, that if the concerns of the local authority were evidenced and well founded, the police would have said so then and at this appeal."

Spread

The proliferation of betting shops on the high street came on the back of the 2005 Gambling Act, which relaxed planning rules in order to allow more of them. According to The Independent, Councillor Ian Corbett, executive member for the environment, described current legislation as "toothless in dealing with the clustering of betting shops and the proliferation of high stakes gaming machines".

Campaigning MP, David Lamy, told the Daily Mail: "This was a high-profile case being watched very closely and I have no doubt now that this will be a red rag to bookmakers to go for it, and take the opportunity to move into high streets up and down the country in even bigger numbers."

Concerns

The result may mean more betting shops, which will worry many people. A survey by the Local Government Association found that 68% of people are against existing rules that allow betting shops to take over banks and building societies' premises without planning permission. It also showed worries of 'clusters' of shops such as betting shops, sex shops and takeaways.

Sir Merrick Cockell, Chairman of the LGA, said: "This opinion poll shows local people want government to give councils the powers to tackle unsightly clusters of sex shops, bookies and takeaways that can blight so many of our high streets. People want action so the places they live, work and shop can be revitalised to reflect how they want them to look and feel."

"Councils want high streets to thrive and are on the side of local people and are ready to put a stop to high numbers of unsavoury takeaways, betting shops and strip clubs where there is a demand to do so. High streets across the UK have suffered a cardiac arrest and it is now time to let local authorities step in and deliver the necessary life support."

Positives

However, there are those who highlight that in themselves, there is nothing wrong with betting shops. In a statement following the ruling, Paddy Power said: "Paddy Power makes a positive contribution to local communities in which it operates."

"The UK high street is currently facing unprecedented challenges and our expanding retail presence adds much needed vitality and footfall to localities around the country as well as vital employment. Paddy Power is a responsible operator that takes proactive measures to offer a safe and responsible leisure experience for its customers and the community."

There's an argument that if you want a strong and thriving local high street, a bookies opening up will drive footfall to the other shops on the street. It will mean a shop front that is rented and cared for, rather than standing empty and symbolic of the decline of the high street.

It was this thinking which encouraged the government to change the rules in May this year to allow shops to switch use and become bookmakers without planning permission (for the next two years) in order to prevent the spectre of ghost towns across the country.

But what do you think? Would you rather have a new betting shop or an empty shop on your high street? Let us know in the comments.

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Doubts raised over value of HS2

Press Association — 2013-06-18T06:30:00+00:00

Filed under: News

Demand for the HS2 high-speed rail project has "likely been overestimated" and the £33 billion project does not offer good value for money, according to a report by a think-tank.

Evidence that HS2 will promote economic growth or tackle the north-south divide is "limited", the report from the New Economics Foundation (NEF) said.

The line, whose first phase from London to Birmingham runs through picturesque Tory heartlands, will be "carbon intensive and environmentally damaging", the foundation added. It was "time to invest in transport away from London" with the money earmarked for HS2 being "better spent elsewhere", the report said.

The NEF said: "Demand for HS2 has likely been overestimated by oversimplified government modelling." The foundation suggested alternatives for the money that will be spent on HS2.

It said £10 billion could transform rail infrastructure in northern England and the Midlands, creating new and faster east-west rail links, redeveloping stations and electrifying regional rail lines, or could overhaul the East and West Coast main lines, increasing the speed, capacity and reliability of north-south rail travel with less environmental damage than HS2.

It also estimates £6 billion could upgrade mass transport in Birmingham, Leeds, Manchester and Liverpool, including investments in large light rail schemes and bus networks, while £4.5 billion could roll-out superfast fibre optic broadband across the country, which would boost business, reduce pressure on transport and future-proof British infrastructure. Meanwhile, £2 billion could make cities outside London better for cycling and walking.

David Theiss, a researcher at the NEF, said: "HS2 is the largest transport investment in the UK's history. At the moment it amounts to a £33 billion gamble.

"Our research shows the Government is backing the wrong horse. Instead of pouring billions of pounds into a single line that will take 20 years to complete we should be spreading our bets on a wider range of transport investments that offer better value for money."

Transport Minister Simon Burns said: "Demand for long-distance rail travel has doubled to 125 million journeys a year in the past 15 years and by the mid 2020s the West Coast Main Line will be completely full. HS2 will provide the capacity needed in a way that will support thousands of jobs and billions of pounds worth of economic benefits.

"It is not a case of HS2 and nothing else. During 2014-19 we are investing over £9 billion on the current rail network while latest figures show that over a one-year period we spent upwards of £8.7 billion on our roads. We will continue to make significant investment into all modes of transport across the country."

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Deal to avoid industrial action

Press Association — 2013-06-18T03:30:00+00:00

Filed under: News

The threat of industrial action by workers at communications giant O2 has been averted after a deal on jobs, pay and terms and conditions.

Members of the Communication Workers Union were set to be balloted over issues including outsourcing work to Capita, but talks led to an agreement.

National official Sally Bridge said: "The union's aim has always been to avoid a dispute and reach an agreement.

"Since the ballot opened, Telefonica and Capita have intensified discussions with us in an attempt to reach an agreement and to avoid industrial action.

"We have concluded negotiations on a package which includes job security, pay, protection on terms and conditions of employment, redeployment and union recognition. We believe we have made considerable progress in seeking assurances and employment protections."

An O2 spokesman said: "We are pleased to have reached a positive conclusion to the discussions we've held with the CWU over the past few weeks.

"We have been committed from the outset to deliver the best possible outcome for our people and customers.

"The CWU has now been reassured and, having reached a mutual and shared understanding, O2 is now focused on ensuring that the transition to Capita is a positive one."

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Euromillions jackpot hits £122m

Press Association — 2013-06-18T02:00:00+00:00

Filed under: News

The Euromillions lottery jackpot in Tuesday's draw will be £122 million, organiser Camelot has said.

A single ticket winner would become the UK's third biggest National Lottery jackpot winner to date with a fortune twice that of X Factor judge and Take That star Gary Barlow's £60 million, the organisation said.

A Lottery spokesman said a winner would become the joint-649th richest person in the country, adding: "This jackpot is now up to a point which can mean fast cars and private jets."

The largest Euromillions jackpot to date is the £161 million won by Colin and Chris Weir of Largs in North Ayrshire in Scotland in 2011, followed by Gillian and Adrian Bayford, from Haverhill in Suffolk, who won more than £148 million last August.

Last month an anonymous British player won £81 million on Euromillions.

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Rajan appointed Independent editor

Press Association — 2013-06-18T01:35:00+00:00

Filed under: News

Amol Rajan has been appointed editor of The Independent in a shake-up of senior positions.

Indian-born Rajan - who was comment editor of the daily title - replaces Chris Blackhurst, who is moving on to become group content director.

nother move, all of which take immediate effect, sees Oly Duff become editor of the spin-off i newspaper. He had been news editor of The Independent.

The changes - which also include Lisa Markwell recently moving from executive editor to editor of the Independent On Sunday - were confirmed to staff on Monday morning.

Evgeny Lebedev, the owner of the Independent titles, said in an email to staff: "Our businesses are at a critical stage and a bold approach is needed for our industry.

"Our goal is to develop a pioneering and integrated newsroom for the 21st century, providing print, digital and television output 24/7."

He said the "energy, creativity and resourcefulness" of the new editors "will invigorate both the Independent and i".

Rajan, 29, moved to the UK when he was three and studied at Cambridge. He has also been a media advisor to Lebedev.

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Bail-in plan to rescue Co-op's bank

Press Association — 2013-06-17T13:00:00+00:00

Filed under: News

A rescue of the Co-operative's troubled banking arm has been launched in a move that will see investors help fill a £1.5 billion hole in its balance sheet.

No taxpayers' money will be involved in the plan, with bondholders forced to take losses on their investment as part of a "bail-in" due to happen in October. They will be offered shares in the banking arm, a move which will result in a stock market listing for the UK's biggest mutual.

The Co-op said that around 5% of the bondholders were smaller retail investors - a figure thought to number 7,000 - and whose average investment was around £1,000.

The black hole in the Co-op's capital reserves largely stems from commercial property loans acquired through a merger with the Britannia building society in 2009 which created a financial ''super-mutual''.
Concerns over its financial position came to a head last month after credit ratings agency Moody's downgraded the bank to junk status, just weeks after it had pulled out of a deal to buy more than 600 Lloyds branches. As a member-owned institution, the Co-op is hamstrung in its ability to raise fresh capital.

The Co-op, which has around 4.7 million banking customers, is also planning to raise funds through the disposal of its insurance business, although the largest part of the rescue is coming from bondholders.

The shortfall was identified by the Prudential Regulation Authority (PRA), the new City watchdog. It is due to set out further details on the capital positions of all eight major banks and building societies in a briefing on Thursday. It launched its review after the Bank of England's new Financial Policy Committee claimed that banks needed another £25 billion of capital to prop up their balance sheets.

However, Lloyds Banking Group and Royal Bank of Scotland have already agreed with the PRA that their requirements will be met without having to raise funds through the issue of new shares or securities.

Co-op chief executive Euan Sutherland, the former B&Q boss who joined the group last month, said the long-term plan was to now focus on retail customers. He told the BBC Radio 4 Today programme: "I think we are really strengthening the group right now and we have put in, in a very short time, a very strong management team and we have got a very clear plan to drive a very successful future for this bank going forward.

"Clearly there are lessons to learn and clearly there will be a time to look back and do that but, to be honest, in the last six weeks, where I have been involved with the Co-operative group, we have focused on driving a very solid future for this bank. In effect this is the best solution for all concerned. It's a very equitable solution and we believe that this will provide security, safety, stability for our customers and the bank going forward."

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Inflation to remain stubbornly high

Press Association — 2013-06-17T11:30:00+00:00

Filed under: News

A renewed pick-up in price hikes will underline the pressure on consumers on Tuesday as rising fuel and air fares keep inflation stubbornly high.

Consumer Prices Index (CPI) inflation is expected to have risen to 2.6% in May from a better-than-expected 2.4% in April.

The squeeze on household budgets is expected to continue in the coming months, with inflation set to hit a summer peak of around 3%.

Economists believe the Office for National Statistics (ONS) will buck a recent trend of upbeat economic data by saying inflation rose further above the Bank of England's 2% target in May.

The extent of April's softening of price rises surprised economists, and was down steeply from 2.8% in March. But experts believe higher tuition fees and rising gas, electricity and water bills will heap further pain on consumers during the summer, to lift inflation towards a 3% peak.

Philip Shaw, chief economist at Investec Securities, forecasts a "rebound" in inflation in May. He expects rising petrol and diesel prices, plus higher air fares due to the early timing of Easter, to resume the upward trend for inflation.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Consumer price inflation is likely to move modestly higher over the next few months." However, economists believe the squeeze on households from rising prices will ease after the summer, as inflationary pressures from utility bill hikes and higher food prices abate.

Dr Archer added: "It is very possible that inflation will fall earlier and more quickly than previously anticipated. There is a very real chance that inflation could finally get down to the promised land of 2% early in 2015. The fact that consumer price inflation looks likely to peak at a markedly lower level over the summer than had previously seemed likely is good news for growth prospects."

Shoppers were handed some welcome news on inflation recently when the British Retail Consortium (BRC) said food price rises slowed to their lowest level in almost three years in May as retailers lured in cash-strapped shoppers with promotions and vouchers.

Food prices rose by 2.4% in May on a year earlier, down from 2.9% in April and the lowest rate since June 2010, the BRC said. Prices of clothing, footwear, electrical goods, furniture and carpets all fell in May, to drag non-food prices down by 1.5% year-on-year. That meant the wider measure of shop price inflation fell by 0.1% in May, the first overall deflation since September 2009.

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Street lights off to save elderly care?

Adrian Holliday — 2013-06-17T07:46:00+00:00

Filed under: News

Council economising may lead to switching street lights off in order to help pay for funding elderly care at home. The Local Government Association has written to George Osborne to beg for more NHS funding to be funnelled to councils to meet rising care costs.

Even at current levels the LGA says many councils are having to turn off lights and close parks.

Elderly cash concern

The LGA claims social care cash has already been hobbled by a 20% fall in the last three years. It claims 86 councils in England now think their projected income will only cover around 85% of their spending commitments come 2016 - and half of these councils worry this will mean slashed spending on social services for the elderly and disabled.

The pressure is very much on councils to find ways of saving money so that basic spending on core services and the most vulnerable is maintained. Councils have seen their budgets cut by around 30% since the Coalition came to power - and the cumulative effect of that is building.

Shire rift

It also means, potentially, more likelihood of poor planning and services being cut at the last minute, due to the resources pressure. What is new also is that the gap, or rift, between Metropolitan-based Conservatives and Conservative-run authorities from the shires is now widening.

Street lights in Leeds look likely to be switched off in an effort to save cash, though the switch-off would be relegated to 8,000 of the council's 92,000 lights - so far. Currently the bill for Leeds' street lighting comes in at just under £4m a year, despite using energy efficient light bulbs.

There is, however, close consultation claimed between the emergency services and the police on where the lights will go off, avoiding, for example, high crime areas and bus stops.

£4bn savings - claimed

The only way of maintaining public services, argues the LGA in its letter to Osborne, is to devolve budgets "away from Whitehall to local areas to increase cooperation between public agencies, save money and improve services."

The LGA claims research by Ernst and Young shows this would save up to £4 billion a year across the public sector. "It would be bad for the country," the LGA adds, "bad for people and bad for our prospects of economic recovery if funding for local services is cut further to reinforce inefficiencies within Whitehall."

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£262m to pay-off council staff - and buy their silence

Sarah Coles — 2013-06-17T07:11:00+00:00

Filed under: News

It has emerged that former council employees have received an incredible £262 million, as town halls got rid of staff, and bought their silence, over the last six years. This enormous sum was built up as councils axed 36,000 staff.

So how have they spent the money, and is this a crazy waste of cash?

The figure was revealed by Channel 4's Dispatches programme, which used the Freedom of Information act to assess the scale of the pay-offs.

The money has been paid out in what are known as 'compromise agreements'. These are contracts drawn up by an employer and a member of staff, effectively agreeing to pay them a sum of cash in return for them promising not to go to a tribunal or a court to contest their dismissal - and not to speak to the media. It's essentially paying them to go away.

Channel 4 discovered that Cardiff City Council spent the most on compromise agreements, Since 2007 they have spent £30.4 million on 1,192 agreements. Edinburgh City Council, meanwhile, signed the most - spending £29.7 million on 3,809 agreements.

Outrage

The Daily Mail has argued that these deals are unfair on the taxpayer, because these contracts can be used to silence whistle-blowers, and keep taxpayers from knowing what their money is being spent on. It quoted Communities Secretary Eric Pickles, saying: "This is an outrage. It is not a sensible use of public money to ensure that a council doesn't feel a degree of embarrassment. It is the same as trying to muffle whistle-blowers."

He added: "It is not a sensible use of public money because a compromise agreement might well be about hiding from the public information that the public should get."

Back in April, Richard Bacon, a Conservative MP and member of the Commons public accounts committee, told the Daily Telegraph: "These agreements are outrageous, they are using taxpayers' money to shut people up. It reveals an approach and philosophy to the way the public service is run that is rotten to the core."

There are clearly some instances where they are being misused.

Not so bad

However, there is a flip side to this particular argument. Councils are having to get rid of huge numbers of staff. In some cases these agreements are used in order to enhance the terms of voluntary redundancy, in order to persuade more people to leave of their own accord.

It's considered a good option, because those to leave have made a positive decision to do so. It makes the process quicker, and easier, and because no-one is being forced out, it means they will not launch expensive legal action. Overall, therefore, it may well be a cheaper option.

In other instances, employers will want to get rid of an employee - either to cut costs or because they are not doing the job properly. Sometimes individuals will dig their heels in, and launch an employment dispute, which can cost employers tens of thousands of pounds. In these instances it may be quicker and cheaper for the employer to pay them off with a compromise agreement.

It's not just councils that use this approach. According to the Chartered Institute of Personnel and Development, 70% of all employers use them. Mostly they are used to remove poorly performing staff, however a quarter are used to avoid legal challenge in relation to redundancy. It also found that an average agreement costs £11,000, which the CIPD concluded was cheaper in many cases than legal action.

The only problem, it added, was where the employer is seen as a soft touch, so employees automatically launch a tribunal when they are made redundant, because they know they will get a payout.

The government, is currently consulting on 'settlement agreements', which would allow more employers to take advantage of this approach more easily. Mike Emmott, Employee Relations Adviser at the CIPD, said: "The principle that employers should be able to manage the performance of their employees effectively, without fearing expensive and time consuming tribunals, is a good one. The reality that employment relationships sometimes don't work out, and that compromise agreements can be used as a quick, face-saving way out for employees and employers is also recognised."

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Co-op unveils rescue plan for bank

Press Association — 2013-06-17T06:00:00+00:00

Filed under: News

A rescue plan for the Co-operative's troubled banking arm has been unveiled in a bid to plug a £1.5 billion hole in its balance sheet.

No taxpayers' money will be involved in the plan, which will address the shortfall identified by the Prudential Regulation Authority (PRA), the new City watchdog, through a process where bonds are converted into shares.

The black hole in the Co-op's capital reserves largely stems from commercial property loans acquired through a merger with the Britannia building society in 2009 which created a financial ''super-mutual".

Group chief executive Euan Sutherland told the BBC Radio 4 Today programme that the bank was "asking our bondholders to contribute", and said the long-term plan was to focus on retail customers.

He added: "I think we are really strengthening the group right now and we have put in, in a very short time, a very strong management team and we have got a very clear plan to drive a very successful future for this bank going forward.

"Clearly there are lessons to learn and clearly there will be a time to look back and do that but, to be honest, in the last six weeks, where I have been involved with the Co-operative group, we have focused on driving a very solid future for this bank."

"In effect this is the best solution for all concerned," he added. "It's a very equitable solution and we believe that this will provide security, safety, stability for our customers and the bank going forward."

The PRA said it will set out further details on the capital positions of all eight major banks and building societies in a briefing on Thursday.

It launched its review after the Bank of England's new Financial Policy Committee claimed banks needed another £25 billion of capital to prop up their balance sheets.

However, Lloyds Banking Group and Royal Bank of Scotland have already agreed with the PRA that their requirements will be met without having to raise funds through the issue of new shares or securities.

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Households' finances 'more upbeat'

Press Association — 2013-06-17T05:00:00+00:00

Filed under: News

Households are the least downbeat about their finances for more than three years, in signs that the economy is strengthening, according to a poll.

Almost 8% of people saw an improvement in their budgets in June while around 26% said that they worsened, according to financial information firm Markit.

People's expectations for their finances in the next 12 months also picked up to their highest levels since March 2010. Finance and business workers were the most confident, followed by IT and telecoms workers. Those working in the construction sector were the most pessimistic.

The overall household finance reading was 40.8 in June, with readings above 50 signalling an improvement to people's finances and ones below 50 indicating a deterioration. While the latest reading is still a negative one, it shows the strongest easing of the squeeze on household budgets seen since February 2010.

Within the findings, mortgage holders were the least downbeat about their finances since the research began more than four years ago. A package of Government measures to kick-start the housing market have resulted in a mortgage price war, with lenders slashing their rates for new borrowers.

There have also been signs of house prices picking up amid confidence returning to the housing market.

Across the survey, levels of workplace activity picked up for the fifth month in a row and households felt at their most confident about job security in three months.

Pay restraints meant that income from employment fell at the fastest pace seen since January, although some of the strain was offset by perceptions of the rise in living costs falling to their weakest levels in three years.

Tim Moore, senior economist at Markit and author of the report, said: "Improving household finance trends are an early indication that the UK economy has continued to strengthen in June.

"Better labour market conditions helped reinforce the upturn in households' financial expectations during June, as rising levels of workplace activity translated into diminishing job insecurities."

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Barber: Honour for union movement

Press Association — 2013-06-17T02:10:00+00:00

Filed under: News

Brendan Barber, who gets a knighthood in the Queen's Birthday Honours, won respect from both sides of industry and all shades of government during his time as leader of the TUC.

He spent almost a decade as general secretary before leaving at the end of last year, although he held several jobs over 37 years at the union organisation.
He worked as policy officer and headed the TUC's press and information and organisation and industrial relations departments.

The 62-year-old gained a reputation as a skilled negotiator, helping to resolve a number of disputes, in between finding time to watch his beloved Everton football team.

In his last few years at the helm of the TUC he was heavily involved in negotiations with the Government over the coalition's controversial changes to public sector pensions.

He spoke at many rallies and demonstrations, fiercely criticising the changes, and marched with huge numbers of public sector workers who took strike action.

Since leaving the TUC he has taken up posts on the board of Transport for London, on the council of City University, where he was a student, is a member of a government advisory group on a British Business Bank and is studying the future role of the Police Federation.

He told the Press Association: "The trade union movement does outstanding work day in day out, making lives better for millions of ordinary people.

"I regard this honour very much as recognition of that major contribution to the life of our nation."

His popularity across many strands of British society was shown at an event to mark his departure from the TUC, which was attended by Labour leader Ed Miliband and many MPs, with a special message sent by outgoing Bank of England governor Sir Mervyn King.

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