Bank of England governor: interest rate rise not on the agenda

Mark Carney vows to keep cost of borrowing at record low 0.5% despite policy linking a rate rise to a sharp fall in unemployment

An early increase in borrowing costs was ruled out by the governor of theBank of England as he insisted that this week's faster than expected fall in unemployment will not lead to an automatic interest rate rise that might choke off the recovery.

All but burying his "forward guidance" policy of linking an interest rate rise to a fall in the rate of unemployment to 7%, Mark Carney vowed to keep borrowing costs at their record low of 0.5% for the time being. He was speaking a day after it emerged that the unemployment rate fell to 7.1%.

Interviewed on BBC's Newsnight, Carney rejected the idea that plunging unemployment was a headache for the Bank. "If our forecast is going to be wrong it's better to be wrong in that direction," he said.

Carney also said that when the Bank decided to raise interest rates for the first time since the onset of the financial crisis in 2007, the moves would be gradual.

Economists have warned that a rise to around 3% in the interest rate would lead to huge increases in mortgage costs and a wave of repossessions, as well as damage business.

Downing Street and the Treasury have been looking nervously at the politically unpredictable consequences of repeated small interest rate rises before the general election in May 2015.

Although the Treasury maintains that an interest rate rise would help savers and be a sign of an economy returning to normality, No 10 is more ambivalent.

Downing Street feels assured that Carney is a practical Bank governor driven by the state of the real economy, unlike his more academic predecessor Mervyn King.

The governor said the Bank's monetary policy committee would be looking at all aspects of the labour market and not just the unemployment rate. The MPC had used the 7% figure to enshrine the idea that joblessness would have to fall considerably before he would "even begin to think about" raising borrowing costs.

Some City analysts are expecting Carney to announce in the next few months that he will lower the threshold at which the Bank would consider raising interest rates to an unemployment level of 6.5%.

The governor said that would be decided by the MPC but added that it was "really about overall conditions in the whole labour market", where productivity remains poor and many people working part-time still want full-time jobs.

Carney said the economy was "coming off a low base" and output was still below the levels when the economy dropped into its deepest recession since the second world war.

"The worst of the crisis is behind us but the financial system is not functioning as well as it could," he said. "Uncertainty among households and businesses is still preventing investment."

No 10 remains convinced that a year of growth, so long as it does not tip into over-heating, will ensure Labour's stubborn opinion poll lead is worn down into 2015.

Although David Cameron urged voters to be patient on living standards, his aides believe average incomes, once tax changes are taken into account, are already starting to rise above prices.

In a speech to business people in Davos, Switzerland, the prime minister will try to present his most optimistic long-term vision of the UK economy for many years , saying Britain can become "the re-shore nation" with businesses bringing production back to the UK, encouraged by cheaper energy costs and the lure of shorter customer chains.

Cameron will hold out the example of the United States where collapsing energy costs owing to fracking have led businesses to relocate back to the US.

He will say: "There is no doubt that when it comes to reshoring in the US, one of the most important factors has been the development of shale gas which is flooring US energy prices with billions of dollars of energy cost savings predicted over the next decade.

"I believe these trends have the ability to be a fresh driver of growth in Europe too. I want Britain to seize these opportunities. I think there is a chance for Britain to become the Reshore Nation."

Chuka Umunna, the shadow business secretary, said: "The Tory-led government came to office promising an export-led recovery but the UK's trade deficit is growing. Any help for manufacturers is welcome after three damaging years of flatlining and in a month where factory orders have fallen back.

"But after so many government schemes have failed to deliver for business, manufacturers will want to see what this one offers in practice."

Cameron's hopes for a boom built on fracking are not shared by the energy department, which is much more ambivalent about the ability of Britain – for geological, political and environmental reasons – to match the US fracking boom, at least not for more than a decade.

The prime minister will try to rebut internal critics tired of the Tory party's negativity by striking a more optimistic note. He will say: "For years the west has been written off. People say we are facing some sort of inevitable decline. They say we can't make anything any more.

"Whether it's the shift from manufacturing to services or the transfer from manual jobs to machines, the end point is the same dystopian vision – the east wins while the west loses, and the workers lose while the machines win. I don't believe it has to be this way. If we make the right decisions, we may also see more of what has been a small but discernible trend where some jobs that were once offshored are coming back from east to west."

To back the rhetoric, UK Trade & Investment will join forces with the Manufacturing Advisory Service to launch Reshore UK, a service to help companies bring production back to Britain.

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UK unemployment rate at lowest since 2009

The UK unemployment rate has fallen to its lowest level since 2009, official figures show.

At 7.4%, this is the lowest rate since the February-to-April period in 2009, the Office for National Statistics (ONS) said.

The number of people out of work fell by 99,000 to 2.39 million in the three months to October, the ONS said.

Prime Minister David Cameron told MPs the figures showed that "the plan is working".

Mr Cameron said: "There should not be one ounce of complacency because we have still got work to do to get our country back to work and everyone back in work means greater stability for them, greater ability to plan for their future, greater help for their families.

But the plan is working, let's stick at it, and get unemployment down even further."

But Labour leader Ed Miliband, while welcoming the news, said more people are working part-time because they could not get the hours they need.

This 7.4% rate compares with a figure of 7.6% for the three months to September, and is below the rate analysts had expected.

The number of people claiming Jobseeker's Allowance in November fell by 36,700 to 1.27 million.

In Northern Ireland the unemployment rate was slightly higher at 7.5%, while Scotland's figure was 7.1.%. England and Wales matched the national figure of 7.4%.

The North East of England had the highest unemployment rate, at 10.1%, while the lowest rate was 5.6% in the East of England.

The North East also had the highest claimant count rate at 6.1%, compared with the South East, which had the lowest, at 2.3%.

Earnings pressure

Average weekly earnings growth, including bonuses, picked up by 0.9% in the three months to October compared with a year earlier, the ONS said, a slight improvement on the three months to September.

Excluding bonuses, pay grew by 0.8%.

But this is still well below the level of inflation - currently running at 2.1% - meaning that people's earnings are still falling in real terms.

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The ONS data also showed that the number of people aged 16 and over who are in work was at a record high of 30.09 million, up 250,000 compared with the May-to-July period.

The percentage of the workforce in the public sector - 18.8% of those in employment, or 5.7 million people - fell to its lowest rate since the current data series began in 1999.

'Spectacular strength'

Economists welcomed the latest jobs figures.

David Tinsley, UK economist at BNP Paribas said the UK labour market was "showing spectacular strength".

David Kern, chief economist at the British Chambers of Commerce, said: "These are very strong labour market figures, which back our recent forecast of increased growth in the fourth quarter of this year."

And Chris Williamson, chief economist at Markit, said: "The official data are now confirming the upbeat signals from business surveys, which have shown the fastest rates of job creation since the late 1990s in recent months, as firms respond to a marked pick up in demand."

The Bank of England has said it will not consider raising interest rates from their record low of 0.5% until the unemployment rate falls to 7%.

But even then, governor Mark Carney has said an interest rate increase is not guaranteed.

The pound jumped against both the dollar and euro after the release of the jobs figures, as expectations rose that UK rates could rise sooner than forecast

The Bank's nine-member Monetary Policy Committee (MPC) was unanimous in voting to keep interest rates on hold, minutes from its December meeting revealed, and to leave the central bank's £375bn programme of quantitative easing unchanged.

The MPC believes inflation could fall to its target level of 2% early in 2014, the minutes show, but it is concerned that sterling's recent 2% rise against other currencies could jeopardise the UK's economic recovery.

The UK grew by 0.8% in the third quarter of 2013, and the Bank is forecasting growth of 2.8% next year.

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David Cameron: Help to Buy triggers £1bn of new home loans

David Cameron claims that more than 6,000 people will move into their own property thanks to the Government's Help to Buy scheme, just three months after it was launched.

Nearly £1bn of home loans have been offered through the Government’s flagship Help to Buy scheme in the first three months since its introduction, the Prime Minister has claimed.

The controversial scheme, which has triggered warnings of a fresh housing bubble, has allowed more than 6,000 homebuyers to put in an offer on a property and apply for a mortgage, David Cameron said.

Those mortgages, once approved, will amount to almost £1bn of new lending, the Prime Minister said. So far 750 purchases have been completed since the initiative was rolled out in October.

“The New Year is often a time when people look to make those big life-changing decisions like moving home or taking that first step on the housing ladder,” Mr Cameron said.

“But too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.”

Mr Cameron added: “That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hardworking people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home.”

However, Help to Buy, which offers Britons the chance to get on the property ladder with a deposit of as little as 5pc, has sparked warnings of a fresh housing bubble from economists and also Vince Cable, the Business Secretary.

Property experts have cautioned that initiatives such as Help to Buy are making it easier to purchase homes at a time when there is a shortage of new property coming on to the market.

Bodies such as the International Monetary Fund have warned the UK needs to be “vigilant” to the risks of another housing bubble and suggested the Government may need to consider other measures such as easing planning constraints to boost house building.

Downing Street insisted today that housebuilding is now growing at its fastest rate since 2008 and Help to Buy encourages “responsible lending”.

People wanting to buy a house through the scheme are, on average, seeking to buy properties worth £160,000 – below the UK’s average house price of £247,000.

Applicants face average monthly repayments of around £900 on an income of around £45,000, Downing Street said.

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Margaret Hodge attacks 'voluntary' tax policies for rich

Hodge has led the cross-party committee through a wide-ranging investigation into how multinational firms pay UK tax

The chair of parliament's public accounts committee, Margaret Hodge, has delivered her most outspoken attack to date on the coalition's tax policies, describing the tax system for corporations and the super-rich as "increasingly voluntary".

She also criticised the "growing gap between rhetoric and reality" coming from David Cameron on tax reform.

Speaking at an event organised by tax campaigning charities in London, Hodge said: "They [ministers] believe we should engage fully in the global race to the bottom … I now believe David Cameron doesn't mean what he says when he says multinational companies should 'wake up and smell the coffee'."

Despite tough language on combating tax avoidance, the coalition government has been acknowledged among tax professionals as accelerating the pace of tax competition in a drive to lure in foreign investment. Measures such as new rules for overseas finance subsidiaries, tax breaks for groups owning patents in the UK, and the plunging corporation tax rate, have been cited by critics of Cameron's approach to tax reform.

Hodge's attack on Cameron harked back to a speech he gave at the World Economic Forum in Davos in January, shortly after the use of aggressive tax avoidance strategies at Starbucks' UK operations had been exposed by a Reuters investigation. The coffee chain had taken £3bn of sales in the UK over 14 years, but paid only £8.6m in tax.

Cameron told the audience of business leaders in the luxury Swiss resort: "When some businesses aren't seen to pay their taxes, that's corrosive to the public trust … Some forms of avoidance have become so aggressive that I think it is right to say these are ethical issues and it is time to call for more responsibility."

In a blunt jibe at Starbucks, he urged multinationals to "wake up and smell the coffee".

Hodge has spent the last two years leading the cross-party committee of MPs through a wide-ranging investigation into how multinational firms pay UK tax. Her tough questioning of company executives, big-four accountancy partners and HMRC bosses has played a major role in keeping tax reform high on the political agenda.

After firms such as Google and Amazon were subjected to a barrage of angry questioning from Hodge's committee, George Osborne responded a year ago by issuing a joint statement with his German counterpart Wolfgang Schäuble, calling for urgent reform of the international tax rules. "Some multinational businesses are able to shift the taxation of their profits away from the jurisdictions where they are being generated, thus minimising their tax payments compared to smaller, less international companies," they said. "We want global companies to pay those taxes."

Since then, however, Schäuble has dramatically switched his view of Britain's commitment to shoring up the integrity of international tax regimes, attacking Osborne's "patent box" tax break. "That's no European spirit," he said. "You could get the idea they are doing it just to attract companies."

Behind the scenes, a growing number of fellow G8 nations have also become increasingly irritated at the apparent gap between Cameron's use, on the one hand, of a language of ethics on tax reform, and, on the other, what some see as begger-thy-neighbour measures to poach business activity from rival economies.

Article Source : http://www.guardian.co.uk
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50,000 consumers switch suppliers after energy price rise, claim experts

Other 'big six' firms hold back from upping prices hoping to win over SSE customers after last week's 8.2% increase

More than 50,000 energy consumers have switched their suppliers and many more are expected to follow on Monday in the aftermath of the 8.2% price increase levied by SSE last week, experts say.

Other "big six" energy firms are believed to be temporarily holding back their own plans to raise bills in the hope they soak up new customers opting to leave SSE.

The mass switching will be welcomed by the government, which had urged consumers hit by the price rise to find cheaper options rather than passively accept an increase in the cost of living.

Paul Green, the marketing manager at Energyhelpline, said that at the end of last week his switching company had had six times the activity seen on normal days.

"I would think that around 50,000 people overall have switched their energy providers – not necessarily all from SSE – following the price rise. We would expect to see more activity on Monday ," he explained.

Green said any price rise triggered a frenzy of activity as customers reviewed their energy bills and considered whether their providers would raise prices.

"If British Gas had raised its prices the peak in activity would have been even higher because it is by far the largest supplier but SSE is the second largest so it was bound to be significant."

Often suppliers quickly raise their prices once a rival has taken the first step. While Energyhelpline expected others to follow suit, it believed there might be a delay as rivals try to win those customers who have bailed out of SSE or have just decided to leave their own provider.

But other City experts said companies such as British Gas were holding back increases in the hope that the government would come up with ways of removing some responsibilities and costs, such as the ECO energy company obligation to provide lagging and other measures for poorer homes. Downing Street confirmed last Friday that the government was considering ways of cutting financial support in a bid to reduce overall fuel bills.

Energy companies including SSE have been campaigning for environmental measures to be taken off bills and put on to generation taxation while others want them scrapped completely.

The SSE price rise – the first to be announced by one of the big six this winter – will take effect from 15 November and force up the cost of living for more than 7 million customers.

SSE blamed government policy charges and green levies for the increase, which it insisted equated to an average rise of just £2 a week on most bills.

Michael Fallon, the energy minister, encouraged people to consider switching to one of the company's rivals."The best answer here is more competition. I would encourage customers to look at the tariffs they are on, and see if they can switch. That competition is best," he argued.

But the Labour leader, Ed Miliband, made an impassioned attack on SSE, accusing it of ripping off customers and said the latest "scandal" showed why the government needed to act.

But David Cameron responded by saying the proposal to freeze energy prices, first unveiled by Miliband at the Labour conference two weeks ago, was a "con" because the increases were driven by international pressures and a moratorium would not help.

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

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George Osborne opens doors to rich Chinese with new visa system

British chancellor moves to improve relations with Beijing after rift over David Cameron's meeting with Dalai Lama

George Osborne has heralded the "next big step" in Britain's relationship with Beijing, unveiling a new visa system to make it easier for Chinese business leaders and rich tourists to visit the UK.

In a sign of Downing Street's determination to reset relations with Beijing, which unofficially downgraded Britain's status after David Cameron met the Dalai Lama last year, the chancellor told an audience in the Chinese capital that no country in the west is more keen to attract Chinese investment than Britain.

Osborne, who began a five-day trade mission to China at the weekend, told students at Beijing University: "I don't want us to try to resist your economic progress, I want Britain to share in it.

"And I want, this week, us all to take the next big step in the relationship between Britain and China. Because more jobs and investment in China mean more jobs and investment in Britain. And that equals better lives for all."

As a first step the chancellor announced Britain will make it easier for Chinese business leaders to visit the UK by introducing a 24-hour "super priority" visa service.

In the biggest step, a separate pilot scheme will allow selected Chinese travel agents to apply for UK visas simply by submitting the application form used for the EU Schengen visa.

The scheme is aimed specifically at the high-end tourism market, after figures showed that wealthy Chinese tourists are not bothering to apply for a UK visa after applying for a Schengen visa, which allows them to visit 22 out of the 28 EU member states plus Iceland, Liechtenstein, Norway and Switzerland.

Ministers were understood to be alarmed when one study found that Chinese tourists were buying vastly higher numbers of expensive designer handbags in Paris than in London. The chancellor said: "These changes will streamline and simplify the visa application process for Chinese visitors, while ensuring the system is strong and secure. This is good news for British business and tourism."

The Foreign Office has no difficulty with the relaxed visa system, which will be administered through its embassy in Beijing and consulates in Shanghai and other high-growth cities.

But concerns have been voiced to the chancellor and the prime minister from within the Foreign Office that Britain needs to tread with care in the light of China's human rights record and its aggressive cyber-attacks.

Cameron is understood to have heard the Foreign Office's concerns with sympathy. But he is determined to open a new chapter in Britain's relations with China after declaring that the "Bric" countries – Brazil, Russia, India and China – would be a priority. He has led two trade missions to India but has visited China only once as prime minister, three years ago.

Ed Davey, the energy and climate change secretary, who has recently returned from Beijing, spoke of a "massive Chinese investment" worth tens of billions of pounds in nuclear power and other sources of energy in Britain.

Davey told the Andrew Marr Show on BBC1 that there would also be major energy investments from Japan and South Korea. The China General Nuclear Power Group has been in talks with EDF Energy about taking a stake of up to 49% in the deal to build a nuclear power plant at Hinkley Point.

Osborne's trip – in which he is being accompanied in part by the London mayor, Boris Johnson, and four other government ministers – is designed to pave the way for a long-awaited trade mission to China by the prime minister.

Cameron was forced to abandon a visit to China earlier this year when Beijing punished him for meeting the Dalai Lama, the spiritual leader of Tibet, at St Paul's Cathedral in May 2012 with Nick Clegg.

The prime minister abandoned tentative plans for a trip to China in April after Beijing indicated that he was unlikely to be granted meetings with senior figures. The UK government said no plans had been finalised and the new Chinese leadership, which only took over in March, needed time to bed down.

The Osborne and Cameron trips, which have been pencilled in for the autumn for some months, have been the subject of intense negotiations in Whitehall. The chancellor is said by some ministerial sources to be adopting a gung-ho approach and is keen to explore every opportunity to boost trade links with China. "With George it all comes to pounds, shillings and pence at the end of the day," said one ministerial source.

Britain's nervousness about the Dalai Lama was highlighted when Johnson declined on five occasions on Sky News to say whether he would like to meet Tibet's spiritual leader. On the fifth occasion an exasperated mayor told Dermot Murnaghan: "This is the fifth time, I'm coming up for air again, Dermot, I'm just repeating that it's not my job as mayor to insert myself into controversial areas of international dispute. My job is to promote the interests of the city."

In his speech Osborne said: "There are some in the west who see China growing and they are nervous. They think of the world as a cake – and the bigger the slice that China takes, the smaller the slice that they will get. I totally and utterly reject that pessimistic view. If we make the whole cake bigger, then all our peoples will benefit. That should be the basis of our relationship with China."

In addition to Beijing Osborne will visit Shenzen, Guangzhou and Hong Kong.

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

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David Cameron: profit and tax cuts are not dirty words

Prime minister to tell Tory conference that firms must be 'responsible' and accuse Labour of anti-business agenda

David Cameron will on Wednesday attempt to lay down clear battle lines for the general election, with Labour cast to the left and the Tories occupying the centre right, when he launches a defence of business with a declaration that profit will never be a "dirty, elitist" word under his leadership.

In a riposte to Ed Miliband, who alarmed the Tories with his populist pledge last week to freeze fuel prices for 20 months, the prime minister will warn against "quick fixes" as he seeks to rebuild the economy after the downturn.

"There is no shortcut to a land of opportunity," he will tell theConservative conference on its final day in Manchester. "No quick fix. No easy way to do it."

Aides insisted the main focus of the speech is not a point-by-point response to Miliband. Cameron instead wants to outline his positive vision to create a "land of opportunity", following last year's "aspiration nation" speech. One source said of the two themes at the two consecutive conferences: "They are cousins of each other."

But Miliband's announcement on energy prices, which prompted George Osborne to claim on Monday that the Labour leader wants to revive Karl Marx's Das Kapital, will hover over Cameron's speech as he charts a careful course. He wants to depict Miliband's proposal as a dangerous lurch to the left, while acknowledging the concerns of voters over high fuel prices.

Cameron will criticise Miliband for pursuing an anti-business agenda and hail the role of business when he says: "We know that profit, wealth creation, tax cuts, enterprise – these are not dirty, elitist words. They're not the problem, they really are the solution because it's not the government that creates jobs. It's businesses that get wages in people's pockets, food on their tables, hope for their families and success for our country."

But he will acknowledge that some businesses must shape up when he says the Tories champion "responsible businesses". He may suggest greater action is needed to regulate the energy market.

Over the weekend Cameron said the government needed to look at the level of subsidies for Britain's energy companies. He also criticised the "big six" energy suppliers for failing to do enough to offer customers the lowest tariff.

The leadership has attempted this week to highlight the signs of economic recovery without sounding triumphalist.

The former chancellor Ken Clarke on Tuesday night backed Osborne's speech pledging to stick to austerity, but warned that ordinary people are "not feeling much benefit" from the economic recovery and it will be "an extremely tall order" for Cameron to win a majority at the next election.

On Tuesday Cameron said the need to eliminate the budget structural deficit within the next parliament, and move towards an absolute surplus, would require spending freezes. He told the BBC: "Over the whole of the next parliament, it's early days but it could mean a real terms freeze in public spending – so not a cut but a freeze. Obviously we would then have to make the decisions about what we do in each department. But we've demonstrated as a government that you can make reductions but improve services."

In a sign of pre-election discipline, the PM has reached an understanding with Boris Johnson. Cameron said he would "absolutely" welcome Johnson's return to parliament at the next election in 2015 – a year before the end of his second term as mayor. Johnson has in return agreed to be more supportive of Cameron.

The PM, who was irritated when Nick Clegg highlighted 16 areas where the Lib Dems have restrained the Tories, will try to show where the Tories have been more responsible than the Lib Dems as he makes clear he is determined to avoid another coalition after the election.

He will say he wants to finish the job he started, adding: "It requires a strong government, with a clear mandate, that is accountable for what it promises and, yes, what it delivers. Let me tell everyone here what that means. When the election comes we won't be campaigning for a coalition, we will be fighting heart and soul for a majority Conservative government because that is what our country needs."ButHe will also say that he wants to forge a new economy when he talks of replacing Britain's "casino economy".

He will say of the "land of opportunity": "It means building something better … [replacing] the casino economy [with] one where people who work hard can actually get on.

"You can't conjure up a dynamic economy, a strong society, fantastic schools all with the stroke of a minister's pen."

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

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Simplified gas and electricity tariffs to begin by 2014

Regulator Ofgem promises the biggest shakeup of the energy retail market since competition began

All UK households will receive simplified gas and electricity tariffs by the end of the year and must be told the cheapest deal available from their supplier by the spring, industry regulator Ofgem said on Tuesday.

Energy companies must offer no more than four tariffs for each type of fuel in the first stage of a package of reforms, which aim to make the energy market more transparent and simplify pricing.

The reforms, backed by the prime minister, include new standards of conduct – a sign that the regulator is taking more aggressive action against energy companies found to have misled customers. Ofgem said the new guidelines would force suppliers to go through "a culture change" in the way they treat consumers.

David Cameron pledged last year to force energy companies to offer customers their lowest tariffs – a promise the regulator is now trying to deliver.

Ofgem has described the reforms as the biggest shakeup of the energy retail market since competition began. In the first step, new enforceable standards of conduct require suppliers to ensure that every domestic customer is treated fairly. New rules forcing suppliers to put details of their cheapest offers – personalised for individual consumers – on all bills will be introduced by the end of March.

Ofgem's chief executive, Andrew Wright, said the reforms aim to tackle the lack of trust which had "blighted" the energy market following revelations of large-scale mis-selling.

He said: "Suppliers have already taken some steps to make the energy market simpler for customers and we welcome that, but our package of reforms means they must go further. The standards of conduct we have introduced require suppliers to go through a culture change in the way they treat consumers.

"They have to make sure they are embedding simplicity, clarity and fairness into all their dealings with consumers to tackle the lack of trust that has blighted the market. The standards of conduct will also enhance consumer protection as they are backed by Ofgem's power to levy fines."

Ofgem has the power to levy a maximum fine of 10% of a company's annual turnover for breach of conduct although it has never gone up to this ceiling.

Ofgem is working to ensure energy company customers are offered the lowest tariffs.
In May it imposed its biggest fine – £10.5m – on energy company SSE for numerous breaches of the company's obligations relating to telephone, in-store and doorstep sales activities. Ofgem said SSE – which provides gas, electricity, phone and broadband for 9.6m households – had made misleading and inaccurate statements to customers in order to make a sale.

Consumer groups welcomed the reforms but questioned whether they go far enough. The executive director of consumer group Which?, Richard Lloyd, said: "Improving the way suppliers deal with their customers is a step forward but Ofgem's reforms to fix the broken energy market do not go far enough.

"Rising energy bills are consistently one of the top worries for consumers so the government must step in to ensure trust in suppliers is rebuilt and prices are kept in check. We want the government to introduce simple pricing and to ringfence energy supply from generation businesses to increase confidence that there is effective competition in the energy market."

New government figures released this month showed that households in England and Wales cut their energy use by a quarter between 2005 and 2011 as prices soared. The sharp fall was probably caused by a mix of efficiency measures and environmental awareness, as well as steep price rises, the Office for National Statistics (ONS) said.

Households have faced large price increases in recent years at the same time as wages have remained frozen, squeezing budgets. Over the past three years, average bills have risen by 28% to £1,420 a year, Ofgem said.

Energy suppliers insisted that they had already taken steps to simplify tariffs.

Angela Knight, chief executive of the industry body Energy UK, said: "Energy suppliers are ahead of the game in making tariffs simpler and have already made them easier to understand and easier to compare as part of their moves to put the customer first.

"Changes are also well under way in better and clearer communications. Companies are working closely with all the policy makers and the regulator, and most importantly with their customers, as Ofgem knows."

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

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Multinational CEOs tell David Cameron to rein in tax avoidance rhetoric

Burberry, Tesco, Vodafone and BAE Systems join CBI chief in lobbying PM to stop moralising on tax ahead of G8 talks

The bosses of some of Britain's largest multinational corporations have urged David Cameron to stop moralising and rein in his rhetoric on tax avoidance ahead of a G8 summit next month.

Chief executives of companies such as Burberry, Tesco, Vodafone, BAE Systems, Prudential and GSK were keen to take a final opportunity to lobby the prime minister in advance of the meeting of political leaders in Northern Ireland.

Cameron has pledged to use Britain's G8 presidency to tackle aggressive tax avoidance by multinationals, but is also keen to heed the counsel of his business advisory group, which he met with on Monday.

Also present was Google's chairman, Eric Schmidt, despite the internet search firm coming under fierce attack from MPs last week because of its tax arrangements.

The president of the Confederation of British Industry, Sir Roger Carr, who was at the meeting, was among those who have taken issue with Cameron's attacks on the ethics of big business tax engineering.

Sir Roger Carr, CBI chairman, said at an earlier meeting that tax avoidance "cannot be about morality – there are no absolutes"

 During a speech earlier in the day at a London event organised by Oxford University's Said business school, Carr said: "It is only in recent times that tax has become an issue on the public agenda – Starbucks, Google, Amazon – businesses that the general public know and believe they understand; businesses with a brand that become a perfect political football, the facts difficult to digest; public passions easy to inflame."

In what appeared to be pointed criticism of increasingly firm rhetoric from Cameron on multinational tax engineering, Carr insisted tax avoidance "cannot be about morality – there are no absolutes".

In January the prime minister used a speech at the World Economic Forum in Davos, Switzerland, to put a marker down on questions of tax structuring by big business. "Some forms of avoidance have become so aggressive that I think it is right to say these are ethical issues," he said, urging multinationals to "wake up and smell the coffee".

Carr said: "Tax payments are not, and should not be … a payment viewed as a down payment on social acceptability, or a contribution made by choice in order to defuse public anger or political attack."

The CBI boss, who is being talked of as a successor to Dick Olver as chairman of BAE Systems, invited the G8 to consider three points in relation to tax reform:

• Avoiding the moral debate – "it's all about the rules".

• Fixing the rules on an international stage, not unilaterally.

• Consulting on proposed changes with business.

A Downing Street spokesman said the specific controversy generated by Google's tax affairs was not raised during the meeting with business leaders, though discussions did focus on "explaining the tax and tax transparency part of the G8 agenda".

Also speaking at the Said business school event was Margaret Hodge MP, chair of the public accounts committee and one of parliament's most outspoken critics of tax avoidance. With Starbucks and the big four accountancy firms in attendance, she said: "Your time has now come on accountability. You are now being asked to answer certain questions and it's important that we all engage.

"One could argue that the way some companies organise their affairs is anti-competitive to many British companies. Especially if you look at the way Amazon arranges its affairs."

On Revenue & Customs' appearance before her committee last week, she added: "Their approach, when they came to parliament last week was complacent and patronising, an attitude that actually didn't help take the committee forward. I don't think it helped members work closely together across my committee.

"In my opinion they are not aggressive enough. These are issues of how you judge individual companies, but at the moment I'm not clear how HMRC makes its judgments. So toughen up, HMRC."

Other attendees at the event were representatives of retailer Marks & Spencer, which was accused of running its online business in a similar structure to Amazon's, and pharmacy group Alliance Boots, which recently relocated its headquarters to Switzerland.

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