UK unemployment expected to fall as nascent recovery feeds through to jobs

Economists expect claimant count to fall by 8,000, while Bank of England minutes will shed light on MPC's decision making

The number of people out of work and claiming benefits in the UK is expected to have fallen again last month as the economy's nascent recovery feeds through into the jobs market.

Official labour market data due at 9.30am on Wednesday will show an 8,000 fall in the claimant count in June, according to a Reuters poll of economists, while the unemployment rate for May is expected to remain at 7.8%.

Expectations for an improvement, at least on some measures of the labour market, follow a range of surveys suggesting companies are tentatively hiring new staff as the economy show signs of recovery.

Howard Archer, economist at IHS Global Insight, said: "The latest employment and unemployment data show improvement after the jobs market faltered early on in 2013. We expect further labour-market improvement to be evident in the figures out on Wednesday, supported by recently healthier economic activity.

"We now expect unemployment to be broadly stable over the next few months, before starting to edge lower from the end of 2013."

He predicted employment in the private sector would gradually pick up but that would be offset by an expanding labour force and further job losses in the public sector.

The UK unemployment rate is expected to stay at 7.8%. PhotographThe thinktank Capital Economics is less optimistic than the consensus on the drop in claimant count, expecting a fall of 5,000 in June after a fall of 8,600 in May. It is also cautious about earnings growth, forecasting an annual pace of 1.5%, just above the median forecast for 1.4%.

"With unemployment still high and productivity growth weak, underlying wage growth probably remained subdued," it said in a preview of the data.

That wage growth contrasts with a retail price rate of inflation of 3.3%, according to official data on Tuesday, meaning real wages continue to fall. The TUC says workers have now suffered falling real wages for more than 40 months – the longest lasting squeeze since 1875-1878.

Separately at 9.30am on Wednesday, the Bank of England releases the minutes from new governor Mark Carney's first monetary policy meeting, when rates were held at 0.5% and there was no change to quantitative easing (QE). The minutes will sum up the discussion and show how the nine committee members voted.

On the whole, economists expect the vote against more QE in July to have been seven members to two, compared with 6-3 at King's final meeting in June when he joined Paul Fisher and David Miles in calling for £25bn more in asset purchases.

Although Carney's first policy meeting ended as expected with interest rates pegged at their record low and no further QE on top of the £375bn so far, he still surprised markets with a statement alongside the decision.

The MPC used the release to say that there was no need for the recent sharp increase in yields on government bonds, which would indicate that interest rates were due to rise. It was only the sixth time in its 16-year history that the MPC had issued a statement alongside a decision to leave policy unchanged.

Article Source : http://www.guardian.co.uk
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Labour party pushes for taxpayer safety net in bank selloffs

Labour seeks a value-for-money test for disposals of holdings in Lloyds Bank and RBS, which has seen share price fall

Labour is demanding the government spells out how it intends to ensure taxpayers get the best deal from any sale of stakes in Britain's bailed-out banks, amid expectations that the first chunk of Lloyds Banking Group shares could be sold shortlyl.

The party has tabled amendments to the banking reform bill, which is due to be debated in parliament on Monday. If passed, they would force the Treasury to say how the best interests of the taxpayer would be protected before any sale went ahead.

Sovereign wealth funds such as the Singaporean government's Tamasek fund are said to be interested in tabling an offer for a stake in 39%-taxpayer-owned Lloyds and a consortium led by former trade minister and one-time Standard Chartered boss Lord Davies is also said to be trying to mount an offer. The first opportunity for a sale is next month when Lloyds publishes its half year results on 1 August – but it will depend on the share price.

Ed Balls said: "The value of the taxpayer’s stake in Royal Bank of Scotland has dropped by more than £4bn in recent weeksGeorge Osborne admitted last month that work was under way on selling off Lloyds, with a stake to City investors the most likely option. But the chancellor admitted that 81%-taxpayer-owned Royal Bank of Scotland could take longer to sell as he commissioned a report into breaking it up into a good and bad bank.

UK Financial Investments, which looks after the stakes in the bailed-out banks, is making preparations for a sale of both banks by asking investment banks to submit tenders to advise on the selloffs. Those pitches must be received on Monday, and all of the City's top banks are expected to make submissions.

Labour intends to challenge the government to ensure taxpayers' interests are protected. While the amendments are unlikely to be implemented before any selloff, particularly of Lloyds, Labour will hope to put pressure on the government to explain the rationale for any sale.

Ed Balls, the shadow chancellor, said a report needed to be conducted before any selloff because of the situation at RBS where the share price has fallen sharply since its chief executive, Stephen Hester, was ousted in mid-June to pave the way for privatisation.

Labour wants the report to calculate the value-for-money of any selloff, after taxpayers pumped tens of billions of pounds into both banks, along with the impact on competition and the wider economy.

Balls said: "This [report] is needed more than ever following George Osborne's disastrous handling of RBS in recent weeks. The value of the taxpayer's stake in RBS has now fallen by over £4bn since Stephen Hester was ousted with no replacement lined up."

"And while the chancellor has been forced to back down from his foolhardy idea of a pre-election loss-making firesale of RBS, we know with George Osborne that the political games always come before the economics and the taxpayer's interest," Balls added.

Labour also intends to table amendments to the bill to adopt recommendations by the parliamentary commission on banking standards, chaired by the Conservative MP Andrew Tyrie. These include deferring bonuses up to 10 years and criminal penalties for reckless misconduct.

Labour also wants a "backstop power" for full separation of all the banks if the ring fence between high street banks and investment banks, recommended by Sir John Vickers, proves ineffective. Speculation about a sale of Lloyds began in March when the boss, António Horta Osório, was linked to selling off part of the taxpayer's stake at prices above 61p

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Portugal's soaring bond yields spell end of line for austerity

Portugal bond yields are back to 7.5%, after briefly hitting 8%, as ministers resign and coalition government nears collapse

Here we go again. The eurozone crisis is stirring, confounding the boasts of various eurogroup leaders that the worst is past. Their claims have usually rested on the observation that governments' bond yields, and thus their borrowing costs, have fallen. The austerity medicine must be working, it is asserted, and a bright new dawn beckons just as soon as the current recession in the eurozone clears. Just look at Ireland, they say, or even Portugal, to see how bailout programmes can give countries time and space to adjust.

But look at Portugal's bond yields now: they are back to 7.5%, after briefly hitting 8% on Wednesday, as ministers resign and the centre-right coalition government edges towards collapse.

It is a radical turnaround from the position in May, when Portugal was able to raise €3bn (£2.6bn) via a ten-year bond issue at a yield of 5.7%. At that point, it seemed credible that Portugal might be able next year to exit, on schedule, its three-year €78bn bailout programme and start to fund itself in the market. If 7.5%, or worse, is sustained, forget it. The numbers don't work for an economy still deep in recession.

The political crisis in Lisbon is the market's cue to look under the bonnet of the economy. Steep tax hikes have allowed the annual budget deficit to fall but the International Monetary Fund predicted last month that public debt would peak at 124% of GDP next year "on current policies and outlook." Others think that it is too optimistic – 134% in 2015, say analysts at Barclays.

The political crisis in Lisbon is the market’s cue to look under the bonnet of the economy.One problem is lack of competitiveness. "Improvements in external competitiveness indicators remain limited," said the IMF report, noting that only a quarter of the rise in unit labour costs since 2000 has been reversed. Thus the export recovery is weak, not helped by lack of demand from neighbouring Spain. In the meantime, domestic demand has collapsed amid pay freezes and an unemployment rate of 18%. "Economic recovery is proving elusive," commented the IMF. You bet: output contracted by 3.25% last year.

The IMF's other concern was that the "social and political consensus" behind the bailout programme was weakening. It was right to worry: austerity fatigue is the cause of the current political crisis, with the coalition split over how much reform the economy can bear. It seems highly unlikely any Portuguese administration could deliver the package of cuts and tax rises that the IMF and eurozone leaders are currently demanding.

For now, the crisis is not at boiling point since Portugal can fund its next big debt repayment in September. But even at current temperatures some form of compromise between Portugal and its lenders will be necessary since it should now be clear to all that the austerity programme has run out of road.

Logic says a Greek-style write-off should happen as part of another bailout, this time with softer austerity conditions. But experience says the road to that point will be long – it always is in the eurozone. Complicating factors include: the fact that the terms of the 2011 bailout have already been tweaked twice in Portugal's favour; the IMF's anxiety for the eurozone partners to fill any funding shortfall; and Angela Merkel's election fight in September.

What happened to Mario Draghi's bond-buying pledge? Forget that, too. As the European Central Bank has always made clear, it applies only to countries that can also raise some money from the market under their own steam. Portugal, at present, doesn't fit the bill.

It's the job of the bailout lenders to get it to that point – and it means that the IMF and eurozone leaders should admit that an overload of austerity is a self-defeating strategy in Portugal.

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EasyJet founder to vote against airline's plan to buy 135 new Airbus planes

Sir Stelios Haji-Ioannou says he will reject £8bn deal over easyJet's failure to disclose discount it secured from Airbus

EasyJet's founder and largest shareholder, Sir Stelios Haji-Ioannou, has said he will vote against the budget airline's plan to buy 135 new aircraft, at an investor meeting later this month.

The company revealed last month that it had agreed to buy 35 current generation A320 aircraft and 100 new generation A320neo aircraft from Airbus, for delivery between 2015 – 2022. It has options to buy a further 100 A320neo planes.

If the deal goes ahead, easyJet will use the new aircraft to replace ageing planes as they leave the fleet, and to facilitate growth.

Haji-Ioannou, who founded the airline in 1995 and owns a 37% stake with his family, said in an open letter to shareholders that he would reject the deal worth around $11.9bn (£8bn) at list prices at the meeting on 11 July.

The easyJet founder said he expected the majority of shareholders to approve the deal with Airbus despite his objectionsIn his latest clash with the easyJet board, he criticised its failure to disclose the level of discount secured from Airbus, describing it as a secret deal, and asking: "Would you eat in a restaurant where the menu has no prices?"

"As the person with the most to gain if this company increases profitability and the most to lose if the outcome from this order is not as promised by the board, it is my firm opinion that this is a good deal for Airbus and a bad deal for easyJet shareholders," he wrote.

He added: "I strongly believe public company directors should be legally held to account for their decisions. I will hold these directors to account, if at some point in the future it turns out that their decision to overcommit the company today was wrong."

Haji-Ioannou said his objections were partly based on a belief that the new order will lead to a hunt for new, unprofitable routes. He also claimed that costs per seat had increased by 25% over the past four years, arguing that if the trend continued, customers were unlikely to pay the "ever increasing ticket prices".

Despite his objections, Haji-Ioannou said he expected the majority of shareholders to approve the plan.

A spokesman for easyJet declined to comment.

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DFS supports British manufacturing resurgence

Sofa maker is among firms bringing jobs back to the UK from overseas as Chinese labour falls out of favour

Anyone subjected to brash DFS adverts promising double discounts and 0% finance on sofas would think it was impossible for the furniture firm to get its products from anywhere other than low-cost factories in the developing world.

However, the company is one of a number of British businesses, including Golden Wonder, Hornby and Aston Martin, that has stopped shipping products back to the UK and is transporting jobs to these shores instead, making it the biggest sofa manufacturer in Europe.

At a DFS factory on an industrial estate in Derbyshire there are banks of sewing machines, state-of-the-art fabric cutters and gas-powered staple guns.

Harvey Ellis, head of manufacturing at DFS, who oversees the 838 workers on three sites and in two woodmills, explained: "Once we receive an order, it takes just four days to go from an order on our screens to being loaded on to a van. The frames are shipped in from our wood factory six miles away and we will make 3,000 pieces a week. Today we'll complete 900."

In three years DFS has toned down its Chinese activities to join the march of the makers, increasing UK production by a quarter. One worker, nail gun at the ready, said he could cover an entire sofa with fabric – sewn by the factory's seamstresses – in less than 30 minutes.

It is a skill in much demand. The desire for British-made products has become so great that the factory in Alfreton has just increased its workload, adding an extra shift to keep it running 16 hours a day. Along with two more factories in Doncaster and Long Eaton, it means DFS now makes nearly all of its fabric sofas in the UK, accounting for half of all furniture sold by the company. Only the labour-intensive leather products are still made abroad.

DFS chief executive Ian Filby said he wanted to see the business return to its British roots, and that customers now asked why the company did not make more of its UK credentials.

"Customers are astounded to think that a value-for-money player is also a major UK manufacturer," he said. Then, with a nod to the dark days of the three-day week, he added: "We all know about the bad old seventies, but the historical mindset of 'all UK manufacturing is shoddy' has gone full circle and people now see the UK as the sort of place where people work hard and make a decent crust. People believe that quality product is made in the UK and aren't going to buy British if the product is poor."

DFS appears to have tapped into a patriotic zeal among the British public. Its market share has risen from 25% to 28% in the last three years and Filby believes that there are also compelling financial reasons for bringing work back to the UK.

"I'd be surprised if there's not a lot of British manufacturers wanting to be more responsive to shorter lead times. We're never going to compete with the sweatshops of the Far East as a country, but you can manufacture here as long as you're adding design or R&D [research and development]. I think the other phenomena which people recognise and is going to continue, is that moving things around the globe is expensive."

And it is not just DFS that has seen the benefits of shifting work back to the UK. This year Golden Wonder revealed that its Pot Noodle snack will be made in Leeds instead of being shipped 10,000 miles from China, and Aston Martin Rapide S cars are now built in the Midlands, while clothing businesses including Topshop and Marks & Spencer are selling more British-made outfits.

Lee Hopley, chief economist at the EEF manufacturing association, explained that manufacturing in the UK was increasing as costs overseas grew and customers became more demanding.

"I think customers would be surprised by how much is made in the UK," she said. "There is a lingering perception that it is still made overseas. Manufacturing output is higher now than the 1980s in real terms, although we're still 11% below our pre-recession peak. There's been big investment in technology and equipment, while there is also a focus now on innovation to look beyond the product."

Model railway maker Hornby is another example, shifting its paint production back to the UK from China after there were fears that any quality issues would take several weeks to be resolved. Executive chairman Roger Canham added that making products closer to home helped businesses respond to demand – and check for errors – more easily.

"It takes four weeks for a shipment to arrive from China, which means if you want to check the quality you have to wait until it arrives," he said. "Now, if I want to check all I need to do is jump in a car and go to the factory.

Bringing jobs back home: DFS chief executive Ian Filby at the furniture manufacturer's production facility in Somercotes, Derbyshire"There was a huge surge in manufacturing from China in the 1990s, but now that wages are increasing and shipping is more expensive it's slowed down. We've got a new range of Airfix quick- build models which we will manufacture in the UK because it gives us a better chance to respond to demand quickly."

And with the shift in work back to the UK come much-needed new jobs, at a time when youth unemployment running at around 20%.

Filby said he would create 250 new jobs at DFS this year, having hired 400 new people in the 18 months to January, and revealed that one of the benefits of having UK factories was the loyalty he got from the staff who had worked there for generations.

At Alfreton, for example, nearly half the staff have been there for five years, and 35% have notched up 10 years' service. Owned by private equity group Advent, DFS has promised to reward staff for their loyalty with 1% of any profit made from the company's sale, which is expected to happen over the next few years.

Another reason why British workers will welcome the return of a manufacturing base that dwindled for decades but is showing renewed determination to compete with the rest of the world.

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

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Archbishop backs payday loans alternatives

Justin Welby suggests credit unions use church halls in effort to promote alternative to £2bn payday lending industry

Two thousand years after the financial services industry was ejected from church premises, the Archbishop of Canterbury not only wants to invite the money-changers back in – he wants churchgoers to help them expand their lending.

Justin Welby is promoting credit unions as a credible alternative to the booming £2bn payday lending industry, and says it will help match often vulnerable, low-income borrowers with the most appropriate lenders. He is proposing that credit unions be allowed to use church halls and other properties in order to better access customers. Welby also wants to encourage churchgoers with financial expertise to help these lenders.

Welby, who sat on the parliamentary commission on banking standards and has been an outspoken critic of the financial industry, believes a successful credit union sector could pose a challenge to high-street and internet payday lenders, who target often vulnerable borrowers with expensive loans.

Malcolm Brown, the Church of England's director of mission and public affairs, yesterday said: "It is not about regulating them [payday lenders] out of business. If the market is functioning as it should, there should not be any need for them to exist."

The government has also pledged to spend £38m to strengthen credit unions.

Speedy Cash loans shop in Brixton, south LondonMany high street banks have retreated from offering small, short-term loans in recent years, while demand from low-income groups has soared, sparking an explosion in lightly regulated payday lenders.Welby's intervention comes as ministers and regulators also grapple with how best to curb the ballooning payday lending industry without choking off small-sum credit to low-income groups. Consumer minister Jo Swinson will meet with lenders as well as with debt charities and campaigners to discuss what she calls "widespread irresponsible lending".

Last night she said she would tell companies: "The industry needs to do so much more to get its house in order, particularly in terms of protecting vulnerable consumers. I am concerned that the lenders are not living to the spirit or the letter of the codes of practice."

However, in a weekend column in the Sun newspaper Swinson made clear the government would not impose a cap on loan costs. "That could shut down short-term loans and force people towards illegal loan sharks or other extreme measures," she said. "The solution needs to be more sophisticated than this."

While Welby's plans stop short of inviting church commissioners, who oversee £5.5bn of the Church of England's wealth, to put financial muscle behind credit unions, he nevertheless wants the church to use other means at its disposal to get behind such lenders. The church is also building plans for its own in-house credit union for the clergy, which it hopes will eventually help it build expertise that can be shared with grassroots lenders.Labour's shadow treasury minister Chris Leslie said ministers had "consistently ducked clamping down on predatory pricing and extortionate interest charges". He said regulators already had the power to control costs and loan duration but the political will was absent.

Payday lenders have variously been accused of failing to properly compete with one another on the cost of loans; of conducting too few checks on the financial means of borrowers; and of using overly aggressive tactics to extract repayments.

The OFT referred the industry to the Competition Commmission last week, after repeated warnings that it must get its house in order met with only mixed responses.

Justin Welby, the archbishop of Canterbury. His intervention comes as regulators grapple with how to curb the payday lending industry.One successful payday lender, Wonga.com last week increased customer loan costs to the equivalent of 5,853% APR. Speaking ahead of the meeting with Swinson, co-founder Eric Damelin claimed his company and others were being "used as political footballs". He claimed to be in favour of regulatory reform. "We don't want no regulation, as we want to keep the bad guys out".

At the top of the agenda for the meeting Swinson has called will be the new regulatory regime, which comes into force from April next year, under which industry must answer to the Financial Conduct Authority rather than the Office of Fair Trading. Officials from both the FCA and the OFT will address the meeting.

Last month the House of Common's public accounts committee said the OFT had been "ineffective and timid in the extreme" in regulating payday lenders.

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

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Supermarkets face fine of percentage of turnover for mistreating suppliers

Christine Tacon, the new groceries code adjudicator, will be able to arbitrate on contract disputes and investigate complaints

The UK's new supermarket watchdog wants to fine retailers a percentage of their turnover if they mistreat suppliers.

Christine Tacon, the groceries code adjudicator who started work on Tuesday, is able to impose fines and force supermarkets to apologise publicly with ads in national newspapers if they do not treat suppliers fairly. She is in charge of overseeing a legally binding code of practice, put in place more than three years ago, for supermarkets with a turnover of more than £1bn, such as Tesco, Sainsbury's and Asda.

The code does not govern the prices retailers agree with their suppliers, but aims to prevent changes part-way through the contracts. It covers groceries including food, drink and toiletries, but does not include clothing or tobacco.

Christine Tacon, new groceries code adjudicator, will oversee a code of practice governing relations between supermarkets and suppliersSpeaking on her first day in office, Tacon said her first job is to recommend the rules under which investigations would occur and the maximum fines that could be imposed.

Those recommendations are expected to be published in the next few weeks and will then undergo a 12-week consultation. The new system must be in place before Christmas Day, before which MPs will have to approve the maximum fine.

Tacon said she was inclined to base fines on supermarkets' turnover as this was a straightforward approach similar to that used by the Office of Fair Trading. She said: "Fines are there as the ultimate deterrent. I am prepared to use my powers but I hope we don't have to get to that stage."

She has spent several months talking to suppliers ahead of her official appointment this week but will only be able to look into complaints about breaches of the code that occur from her first day in office. She will be able to arbitrate on disputes and investigate complaints made anonymously or by third parties such as the National Farmers' Union.

She will be looking at issues such as supermarkets charging up to £1m to display suppliers' products, or the imposition of fines for customer complaints that have nothing to do with quality of the goods supplied. Tacon argues that such ruses add extra costs to the industry, forcing up prices for shoppers.

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Barclays to sell customer data

Bank tells 13 million customers it is to start selling information on their spending habits to other companies

Barclays is to start selling information about 13 million customers' spending habits to other companies, and has admitted it could share the data with government departments and MPs.

In letters being sent to customers, it is also outlining what details about them it holds and uses which, it said, "may include images of you or recordings of your voice", as well as comments made in interactions with the bank on social media sites such as Twitter and Facebook. Barclay ssaid it may collect "location data derived from any mobile device details you have given us" - suggesting it will be able to pinpoint where in the world a customer is at a particular moment in time.

However, the bank assured customers that any data it passed on to third-party companies would be aggregated to show trends, and that individuals would not be identifiable from it. A spokeswoman said there was "nothing sinister" going on, and added that it would not be profiteering from customers. Like most companies, Barclays has previously used customer data internally, but it has not shared it with third parties before. It is writing to current and savings account customers to let them know about the changes, which will take effect on 9 October.

Barclays said the data would be aggregated to show trends and individuals would not be identifiable

A leaflet details the "new ways" in which Barclays' companies can use customer data, stating: "We can combine information about you with information about other Barclays customers to create reports which we may share with companies outside Barclays. This information is numerical and not personal, and you will never be identifiable on the basis of it." This could include data on how much people spend on different products and services.

The bank said the data could be passed to government departments and MPs – for example, to give them an insight into what was happening in their constituency.

In a statement the bank said: "We only use information in a numerical, anonymised and aggregated way, as is standard practice at many companies. It is not about providing information for sales or marketing use and does not include any personal data."

It said the move was in accordance with industry guidance from the Information Commissioner's Office and the law. "Customers are always able to opt out of marketing activity and their personal data will never be passed on to anybody else without their explicit consent," it added.

The bank said that data relating to where a mobile phone was at a particular time would be used for fraud prevention purposes, and only when a transaction was picked up by its fraud detection systems. It would confirm "at a country level" if the customer was in the region where the suspicious transaction had taken place. Customers will be able to opt out of this if they wish.

Barclays is the latest in a line of companies to come under scrutiny over the way they use customer information. It emerged recently that Tesco is using data about what Clubcard holders buy in its stores to serve targeted ads to online users of its new movie streaming site, Clubcard TV. Tesco also plans to use its Clubcard data to tackle obesity by offering customers "tailored suggestions for how they could shop more healthily".

Financial companies have different policies when it comes to the use of people's data. For example, MasterCard states in its global privacy policy that it will "perform data analyses" and offers the chance to opt out on its website. Otherwise, people are automatically opted in.

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Government to end tax scheme as part of energy company crackdown

Government announce plans as chancellor accuses gas and electricity distributors of trying to game the tax system

Fresh attempts to crack down on alleged abuse by energy companies were underway last night with the UK government announcing plans to end a £900m "windfall" tax scheme, and a further inquiry into BP over possible fuel price fixing in Spain.

In the middle of a series of existing investigations into alleged petrol and gas price manipulation by regulators, the chancellor, George Osborne accused gas and electricity distributors of trying to game the tax system.

"It is completely unacceptable that utility companies think they can claim for huge amounts of money, that business customers have already covered the cost for. By legislating today, we will prevent utility companies from making these claims, ensuring fairness for British taxpayers."

The Exchequer claims that energy distributors have only recently started to try to claim "windfall" capital allowances for costs dating back decades. The draft legislation, introduced yesterday, will form part of the current Finance Bill but will be acted on by the tax authorities with immediate effect.

George Osborne believes, 'It is completely unacceptable that utility companies think they can claim for huge amounts of money'

It is only a matter of weeks since some of the big six companies such as RWE npower admitted to a House of Commons select committee that they had paid almost no tax and yet made huge profits from recent earnings. The energy companies claim that this is because they are investing billions of pounds on new power plants which can be legitimately "written off" against capital allowances.

But Osborne's move also coincided with Spanish competition authorities announcing they were investigating BP and two local firms, Repsol and Cepsa, for possible collusion in the raising of local fuel prices.

The local regulator, CNE, said it had been keeping a watch on the oil sector since witnessing a significant rise in power prices. The initial inquiry does not imply wrongdoing at this stage but if found guilty, BP and others could be fined 10% of total sales, CNE, explained. BP said it could not comment but is committed to helping the authorities with any inquiries.

The British oil company is already in the middle of a wider price manipulation investigation being undertaken by the European Commission through a series of dawn raids only two weeks ago.

The offices of two rival groups, Shell and Statoil of Norway, plus a price reporting agency, Platts, were also targeted by staff working for the competition authorities in Brussels.

The pressure on oil, gas and electricity companies has partly mounted over recent years as they have continued to make increasing profits through higher prices at a time when customers are being hit by recession.

But there is also increasing concern that the energy markets are not regulated toughly enough and are open to the kind of Libor- interest rate abuses for which the large banks have been fined hundreds of millions of pounds.

The gas and electricity market in Britain is dominated by big six companies such as Centrica, the owner of British Gas, SSE and Scottish Power many of which have been fined by the regulator, Ofgem, for mis-selling or other breaches of their license agreements.

Not all of the big six own the kind of distribution companies that have being tried to take advantage of the tax loophole being closed by the government. The Treasury declined to say which of them had been trying to claim extra allowances and some industry experts said they had been encouraged to do so by some of the big four accounting firms.

But the government was recently embarrassed when it was highlighted that the former head of RWE npower, Volker Beckers, since January was working as a non-executive director for HM Revenue and Customs.

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

Jaguar Land Rover reports record profits for 2012

Big sales increase to China sees revenue also hit all-time high

A near-50% increase in sales to China helped Jaguar Land Roverproduce record profits of £1.7bn last year, the Midlands-based, Indian-owned carmaker revealed on Wednesday.

There was even 20% sales growth in austerity-hit Britain, helped by the launch of new luxury Range Rover and Jaguar models, that drove up revenues to £15.8bn – another record.

"The positive result for the financial year demonstrates that we have strong demand for our great, solid product portfolio all around the world," said chief executive Ralf Speth. "During this period, Jaguar Land Rover unveiled major new products: the all-new all aluminium Range Rover and the Jaguar Sportbrake, the AWD XF and AWD XJ, and the stunning F-Type."

The strong results – also aided by lower raw material costs and a depreciation of the pound against some key currencies – was a boost to its parent group, Tata Motors, at a difficult time for the wider business. Tata recorded a 37% slump in net income to 39.45bn rupees (£466m) in the last quarter of the company's financial year to 31 March.

Jaguar Land Rover reported record profits of £1.7bn last year.

Jaguar Land Rover sold more than 77,000 vehicles in China – up 48% – over the 12-month period, with 72,000 staying in Britain, while 80,000 (up 18%) went to Europe, making the group one of Britain's largest exporters by value.

The company has now started to build a manufacturing plant in the east of China in combination with local carmaker, Chery Automobile, to serve what is already Jaguar Land Rover's biggest single market and avoid a 25% import tax. JLR is also looking at building a factory in Saudi Arabia.

The Warwickshire-based business, bought for £1.5bn in 2008, now accounts for more than three quarters of Tata Motors' group revenues at a time when the parent has been hit in its domestic market, India, by high interest rates and slowing economic growth.

"We see the external environment and overall economic scenario very, very challenging and [it] will remain stressed," said C Ramakrishnan, Tata Motors' chief financial officer, adding that this would have an impact on demand for its products.

But the mood in Warwickshire is upbeat. Speth said: "Jaguar Land Rover invested significantly in the product creation process, in our advanced manufacturing sites and created more than 3,000 jobs. This commitment is set to continue with a sustained programme of investment which will see us spend in the region of £2.75bn on new product, people and infrastructure in the year to March 2014."

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