Tesco 'half-price strawberries' deal prompts red faces and £300,000 fine

Supermarket apologises for mis-selling fruit in promotion trading standards officials condemn as misleading

Tesco has been fined £300,000 for mislabelling its strawberries, selling them at "half price" for three months after they were on sale at the full price for just seven days.

The supermarket, which is trying to shed its "big and bad" image, made a £2.3m profit from the promotion after a customer complained to Birmingham trading standards, a court heard.

Judge Michael Chambers said at Birmingham crown court that the case was "shocking by its very nature" because customers had a high degree of trust in national chains.

For seven days in 2011 Tesco sold 400g punnets of strawberries at £3.99, reducing them to £2.99 for a further week before marking them as half price at £1.99 for a further 14 weeks.

The promotion was a breach of the Consumer Protection from Unfair Trading Regulations Act 2008, which bars retailers from running a promotion for longer than the period over which the product was sold at full price.

Birmingham city council argued that the offer had been presented in a way that could mislead or deceive the average consumer into thinking they were getting a good deal.

It also complained about a further promotion involving the same strawberries in which Tesco offered a free pot of single cream with each punnet but then removed the free cream offer, returning the strawberries to their "half-price" status.

The guilty plea by Tesco followed a preliminary hearing this year when the supermarket argued the council lacked the jurisdiction to proceed outside Birmingham on the case. The court threw out that claim.

Strawberries growing in a polytunnelTesco apologised to the court for the mis-selling, and said its internal processes had been tightened to avoid any repetition. It also agreed to pay Birmingham city council's £65,000 legal bill.

A spokesperson said: "We apologise sincerely for this mistake, which was made in the summer of 2011.

"We sell over 40,000 products in our stores, with thousands on promotion at any one time, but even one mistake is one too many.

"Since then, to make sure this doesn't happen again we've given colleagues additional training and reminded them of their responsibilities to ensure we always adhere to the guidelines on pricing."

On Monday Tesco was selling 454g punnets of British strawberries for £2.

Sajeela Naseer, head of trading standards at the council, said the victory would have benefits for consumers across the country. She added: "It was the council's case, confirmed by Tesco's guilty pleas today, that this was a misleading offer which deceived the purchasers of strawberries over many weeks during the summer of 2011.

"Food pricing, presentation and the depiction of promotional practices is a crucial issue for retailers, and in turn, consumers."

In November last year the Office of Fair Trading tightened its rules on promotions, with Tesco, Sainsbury's, Morrisons, Waitrose, M&S, Aldi, the Co-op and Lidl all signing up to a new code to avoid similar abuses.

The fine is the latest labelling embarrassment for Tesco, which was caught up in the horsemeat scandal after horse DNA was found in its beefburgers. In that case the company attempted to reassure customers by publishing full-page adverts in several newspapers.

Since then Tesco has launched a major new marketing campaign in an attempt to regain consumer confidence. However, some experts have suggested this latest scandal may have dented trust even further.

Article Source : http://www.guardian.co.uk

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Government ordered changes to report on Barclays use of loan scheme

Business department told auditors to amend report on Barclays' use of state-backed scheme to reflect bank's response

A government department ordered changes to the report of an independent investigation into a loan made by Barclays under a state-backed lending scheme in order to reflect the bank's views, the Guardian has learned.

An MP has said that amendments undermined the relationship between ministers and civil servants, and called for an inquiry into the process.

The Department for Business, Innovation and Skills (BIS) had asked the auditing firm RSM Tenon to investigate whether a 2006 Barclays loan to a company owned by businessman Jeffrey Morris contravened the now defunct small firms loan guarantees scheme (SFLG). The programme cost the taxpayer nearly £200m in compensation for banks, with Barclays claiming £69,471 for the Morris loan when the company defaulted on it in 2009. There is nothing to suggest Barclays behaved improperly.

RSM Tenon delivered its report at the end of October last year, but BIS asked the firm to amend it. The Guardian has learned that within three hours of receiving Barclays' response to its report, BIS told RSM Tenon to "review and amend the report to reflect this response".

RSM Tenon submitted its amended report a month later. According to an internal BIS email, the altered report "reflects a 'softening' towards Barclays' position following recent discussions". Alec Shelbrooke, Conservative MP for Elmet and Rothwell, who has been pursuing Morris's case for almost a year,said: "Ministers need to be able to trust the reports given to them by civil servants and this episode fundamentally undermines that relationship. The permanent secretary now needs to launch a full investigation."

The scheme for startup businesses, which guaranteed banks a return if the borrower defaulted, cost the taxpayer at least £183m between 2006 and 2008. The Guardian reported on the loan last year, prompting BIS to instruct RSM Tenon to carry out a review.

It found that Barclays believed Morris had a net worth of more than £20m at the time the loan was made, but an SFLG loan was only permissible if the borrower had exhausted all other forms of collateral.

The government then guaranteed to repay 75% of the amount outstanding on the loan to the bank if it went bad.

The report was immediately shown to Barclays and the bank was asked for its response.

The notes of a conference call between BIS officials, RSM Tenon and Barclays held on 31 October reveal that Barclays asked for time to address the issues in the report. BIS declined to comment.

On 9 November Barclays produced its response to the RSM Tenon review. It attempts to discredit a previous internal reportby Barclays, which had concluded Morris had a net worth in excess of £20m, which should have precluded Barclays from offering a loan under the SFLG. In a statement, Barclays said: "RSM Tenon audited the loan based on all available information and concluded that 'the loan and the business appear to meet the eligibility criteria of the scheme at the time' and that they had 'no reason to believe that the bank did not follow their normal commercial lending processes, as applicable and expected of the lenders in 2006'.

Barclays was accused of lending multimillionaire businessman Jeffrey Morris (above) £200,000 under scheme meant for budding entrepreneurs"Recent evidence provided by Mr Morris' solicitors to BIS and RSM Tenon did not change this conclusion."Separately, Barclays is seeking to enforce a multimillion pound high court judgment obtained against Mr Morris, but we are unable to comment on this as it is subject to on-going litigation."On 21 November last year RSM Tenon submitted the amended report, including the new line that the auditor had "no reason" to believe that the process was flawed. It added: "Overall we have no reason to believe the bank did not follow their normal commercial lending processes." The amended report was released under the Freedom of Information Act in January this year but was heavily redacted to exclude some of RSM Tenon's more serious continuing concerns.

Article Source : http://www.guardian.co.uk

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CBI doubles George Osborne's economic growth forecast

Business lobby group cites growing confidence, forecasting UK growth of 1.2% this year and 2.3% in 2014

The CBI has raised its forecast for UK economic growth this year to 1.2% – double the pace predicted by George Osborne in his March budget – as the business lobbying group cited mounting confidence across the British economy.

It becomes the latest organisation to raise its outlook for the UK after a series of surveys and official data have suggested green shoots of recovery are taking hold, prompting the CBI to raise its 2013 growth estimate from 1%. However, the CBI, which has long been a supporter of the government's austerity drive and promises to cut the deficit, sounded a note of caution as it warned that ministers' push for a rebalancing away from consumption is taking longer than expected.

"The economy has started to gain momentum and confidence is picking up, but it's still early days," said John Cridland, the CBI's director general. "We need to see a full-blown rebalancing of our economy, with stronger business investment and trade before we can call a sustainable recovery. We hope that will begin to emerge next year, as the eurozone starts growing again." Government statistics published today show signs of a rebalancing, or at least the impact of austerity measures on public sector jobs, with private sector employment at its highest in 15 years at 24.1 million people.

The CBI said there were "signs of a pick-up in confidence across a broad range of sectors, including services, construction and manufacturing".

For 2014, the group is now pencilling 2.3% growth, up from May's forecast of 2%. Leading thinktank, the National Institute for Economic and Social Research, and forecasters Fathom Consulting both upgraded their outlook for the UK economy earlier this month to 1.2%. That growth is based on a rise in disposable incomes and some support from exports as the eurozone continues to recover following a protracted recession that was finally confirmed over last week.

Official UK data on Friday is expected to add to the tentatively optimistic tone, confirming economic growth accelerated in the second quarter to 0.6%, double the pace in the first three months of this year. That would be unchanged from the number the Office for National Statistics estimated in its first take on GDP for the quarter, which was welcomed by the chancellor as showing the economy has moved "out of intensive care".

A handful of economists believe growth could be revised higher on Friday to 0.7%. Among them, Philip Shaw at Investec, notes that numbers from the construction sector have been revised up since that first estimate on growth and that the performance of the dominant services is also likely to be nudged up.

"Our 2013 GDP forecast is still +1.2%, but we are tempted to upgrade this modestly given the positive data dynamics recorded recently," he added.

But many economists share the CBI's concern that the economy remains overly dependent on consumers, who account for around two-thirds of all spending. They say consumers are not in a strong position to drive a recovery as they grapple with the biggest squeeze on household budgets for decades.

There is fresh evidence of that pressure on Monday. The latest Asda Income Tracker suggests disposable household incomes fell last month as wages failed to keep pace with living costs.

The supermarket chain says the average UK household had £160 a week of disposable income in July, down £1 a week from a year earlier and £5 a week from a peak in February 2010. It blamed energy bills for burning a hole in household budgets after they rose by 8.2% over the past year.

"A 'feel-good' summer has contributed to a boost in retail sales, but we can't ignore the fact that the squeeze on income growth and rising cost of living continue to pull at consumer purse strings," said Asda chief executive Andy Clarke.

But he noted a rise in consumer optimism, nonetheless. That chimes with a separate survey suggesting households spent more in August as they reported that access to unsecured loans improved and they were relatively upbeat about their finances.

Data company Markit, said the measure of financial wellbeing in its Household Finance Index dipped "only slightly" from July's record high. It stood at 40.8 in August, down from 41.5 in July, the highest since the survey was launch in early 2009.

Still, there were contrasting feelings around the country.

"The strains on finances are receding fastest among those in private sector service jobs, while those working in construction, retail and the public sector trail behind. On a regional basis, familiar trends continued in August as people in Scotland and the south of England were the least downbeat about their finances, while those in Wales and the north of England were among the most pessimistic," said Tim Moore, senior economist at Markit.

Growing evidence of a renewed pick-up in house prices has also boosted sentiment among homeowners but at the same time prompted warnings that Britain could be headed for a damaging property boom and bust.

The CBI's director general, John Cridland, said: 'The economy has started to gain momentum and confidence is picking up, but it's still early days.Property website Rightmove is the latest to report rising house price inflation on Monday, adding to a flurry of recent surveys that reignited criticism of government schemes to kickstart the housing market. Average asking prices are up by more than £20,000 so far in 2013 and stood at £249,199 in August, Rightmove said. As is typical for August, that marked a slight dip from July but at 1.8% the holiday season fall was less than in previous years. In annual terms house price inflation accelerated to 5.5% from 4.8% growth in July.

The average asking price for flats hit a record high of £209,652 in August, Rightmove said, as it joined the chorus of warnings over government schemes.

"Flats are most in demand by first-time buyers and buy-to-let investors and we have seen prices for this property type hit their highest ever level as supply fails to keep up with an increase in demand at the bottom of the market," said Rightmove director Miles Shipside.

"Demand is already on the up, and that's before the roll-out of phase two of the Help to Buy stimulus. It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices."

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