Npower: Energy Firm Denies Tax Avoidance

Npower has admitted it has not paid corporation tax in the UK for three years - just months after increasing prices by around 9%.

The company made the admission to the Energy and Climate Change select committee - but its boss said they had invested billions in new power stations and wind technology.

Chief Executive Paul Massara said: "Effectively we have invested £5bn in the last five years building power plants, creating jobs, creating employment and helping to keep the lights on.

"If we had not made that investment we would not have the deductibility that we would be allowed. That is a simple accounting UK rule."

Npower reported a 34% rise in profits to £413m last year.

The admission came as the "big six" energy companies were questioned by MPs over issues including profits and how they treat their customers.

A company statement added: "Looking at RWE npower specifically, our investment programme since 2008 has amounted to almost £3bn, which means we have seen a large increase in tax relief.

"This is in no way tax avoidance, and all of our business is taxable in the UK. We've not paid corporation tax because we've been investing hundreds of millions to keep the UK's lights on."

Prime Minister David Cameron's official spokesman said: "I wouldn't comment on an individual taxpayer.

"More broadly, the Prime Minister's view is that it is important that companies pay the tax that is due."

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American Airlines Grounds Fleet After Glitch

American Airlines was forced to ground all its flights for several hours because of a glitch in its computer reservation system.

The airline asked the US Federal Aviation Administration to halt all its departures from midday on Tuesday until just before 5pm Eastern time, causing thousands of passengers to be stranded at airports and on planes.

Flights in the air were allowed to continue to their destinations, but planes on the ground could not take off.

The airline blamed its computerised reservation system, which is used for much more than booking flights.

Airlines use such systems to track passengers and bags, monitor who has boarded a plane and to update flight schedules and gate assignments and file flight plans.

As of mid-afternoon, American and its American Eagle offshoot cancelled more than 700 flights and another 765 flights were delayed, according to tracking service FlightAware.

Irate travellers quickly took to social media to flood the airline with complaints.

Twitter user Malcolm Freberg posted: "I'm literally in a cab to airport to fly American Airlines. Cussword-profanity-cussword. There'd better be a bar this side of security."

And Edgar Casillas tweeted that his parents had been stranded in Chicago on their way to Spain to celebrate their 30th wedding anniversary.

However, at least one American customer was delighted with the situation.

Tweeted Sarinne Mirachian, who was stuck in California: "@AmericanAir I love you guys so much. I get to stay in LA one more week because of you guys! My favourite airline hands down."

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Jobless Total Up As Income Squeeze Tightens

The unemployment total has risen for the second month in a row while average pay increases were found to be at their weakest on record.

The Office for National Statistics (ONS) said the number of people without work rose 70,000 in the three months to the end of February to reach 2.56 million - pushing the jobless rate up to 7.9%.

The number of people in work fell by 2,000 over the period to just under 30 million - the first time the figure has dipped since autumn 2011.

There were 900,000 out of work for more than a year, an 8,000 increase on the three months to November, while the number of unemployed 16 to 24-year-olds rose by 20,000 to 979,000.

However, those claiming unemployment benefit fell by 7,000 in March.

While the jobless figures suggested a reversal in the resilience of the UK labour market amid the UK's weak economic growth, it was the pay statistics that will most worry those who are seeking a pick-up in consumer spending to boost output.

Pay, excluding bonuses, rose by 1% between November and February compared to a year earlier which was the smallest on record, the ONS said.

With CPI inflation currently measured at an annual rate of 2.8%, the pay figure demonstrates that prices are continuing to rise at a faster pace than wage growth at a time when energy bills and many other costs have soared.

Employers have been limiting pay increases as a way of managing to keep hold of staff amid the flat-lining economy.

The move has been cited by some economists as a key reason why unemployment levels fell last year: companies wanting to be ready for when recovery came.

While the Government hailed falling jobseeker's allowance claims it admitted there was much still to do to help get people back to work.

GMB union general secretary Paul Kenny said: "The Chancellor should heed IMF advice to change course to grow the economy to end this needless waste of human talent."

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WhatsApp Has 'More Users Than Twitter'

Smartphone messaging app WhatsApp has more users than Twitter, claims its boss.

Jan Koum says the company processes 8bn inbound and 12bn outbound messages every day.

He did not reveal exactly how many active users the service has, but Twitter officially quotes 200 million per month.

Speaking at the D: Dive Into Mobile conference in New York, Mr Koum said he had no plans yet to cash in on its sizable user base through traditional means.

"We do have a manifesto opposing advertising," said the WhatsApp CEO. "We're proud of that. Who likes advertising?

"We're so bombarded with ads so much in our daily lives and we felt that smartphones aren't the place for that ... You don't want to be interrupted by ads when you're chatting with your loved ones."

The app, which allows smartphone users to send free texts, pictures and videos, currently charges 69p per year in the UK and 99 cents in the US.

However, Mr Koum did not rule out extracting more money from the service in the future.

"We're looking forward to a world with billions of phones and once that happens it's going to be extremely easy to monetise," he said.

WhatsApp's meteoric success over the last four years has stoked speculation that Google or Facebook could make a big money move to snap up the company.

However, the firm has denied talking to either of the internet giants.

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M&S Fightback Hit As 'Knicker Queen' Quits

Marks & Spencer's battle to overturn a slump in clothing sales has suffered a blow after its head of lingerie and beauty quit after just three months in the job.

The appointment of Janie Schaffer, who is known as the Knicker Queen, was announced amid much fanfare in November as part of a wider plan to bolster its general merchandise offering.

Janie Schaffer is known as the 'Knicker Queen' (Image credit: Jane Hilton)

A spokeswoman for M&S confirmed on Tuesday night that Schaffer, who had previously worked as chief creative officer at Victoria's Secret, had left the firm but declined to comment further.

It is understood she had wanted more creative input at M&S.

Only last week the company announced its seventh straight quarterly fall in underlying sales of clothing, footwear and homeware - a performance which intensified pressure on chief executive Marc Bolland.

He had previously said that his turnaround plan would not make a major impact on sales until July when autumn and winter collections hit the shops.

His new general merchandise management team is led by John Dixon, the former boss of M&S's food business, and Belinda Earl, the former chief of Debenhams and Jaeger.

News of Schaffer's departure overshadowed M&S's announcement that it was to make a greater advance into Europe in the Netherlands, Luxembourg and Belgium.

M&S, which exited all of its stores in continental Europe in 2001, has previously confirmed a return to France.

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Alibaba Begins Fresh Push To Take On Android

Chinese e-commerce giant Alibaba has said it will subsidise handset makers using its mobile operating system, as well as setting up a large incentive fund for app developers.

Manufacturers will get 1 yuan (11p) per month for every smartphone they sell that runs on Amos, Alibaba's mobile operating system - according to the company's blog.

Five more Chinese companies have agreed to make Amos handsets, and app developers will also be able to benefit from a 1bn yuan (£106m) incentive and revenue-sharing fund.

The move is being seen as a fresh challenge to the dominance of Google's Android system, which has 90% of the Chinese market.

Alibaba was on the verge of a smartphone tie-up with Acer last September, but the deal never materialised, with the Chinese group claiming pressure from Google was to blame.

Google said Alibaba's system was heavily based on Android and had "taken advantage" of its hard work. However, the Chinese company insisted it was its own original product.

Previously called Aliyun, the Chinese system launched in 2011, but up until now has failed to take off, with only a few domestic handset makers getting on board.

China's Ministry of Industry and Information Technology last month warned of Android's dominance and claimed Google had discriminated against some local firms.

Alibaba is China's biggest e-commerce business and is reported to be worth between $50bn (£36bn) and $120bn (£79bn).

The privately-owned company runs some of the country's most successful internet shopping sites.

Its Taobao website, similar to eBay, allows people to trade new and used goods and has hundreds of millions of registered users.

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Tesco Confirms US Exit And Profit Fall

Tesco has confirmed its first fall in annual profits for 20 years and writedowns totalling more than £2.5bn as it moves to concentrate on improving its UK supermarket business.

The retailer confirmed it is exiting its loss-making Fresh & Easy operation in the United States, with a resulting £1.2bn writedown a major factor behind its 51.5% fall in pre-tax profit to £1.96bn in the year to February 13.

Tesco was also hit by costs related to its turnaround plan for the UK while its bank's exposure to the payment protection insurance scandal grew to £115m.

A writedown of £804m was also confirmed on the value of its UK property portfolio as it scrapped more than 100 store developments to focus on store revamps, convenience stores and improved delivery to online customers.

Tesco is seeking a buyer for its Fresh & Easy operations

A £495m 'goodwill impairment' relating to its operations in Poland, the Czech Republic and Turkey was announced too.

Tesco's chief executive Philip Clarke said that the actions would put the company "back on the right track" to deliver long-term growth for shareholders though its share price took a 2.8% hit when trading opened in London.

He continued: "The large stores we have are great and we are doing a lot of work to make them more vibrant and relevant for today's customers, but we won't need many more of them because growth in future will be multi-channel - a combination of big stores, local convenience stores and online."

The group said fourth quarter sales at British stores open over a year, excluding fuel and VAT, grew 0.5% - a slowdown from growth of 1.8% in the six weeks to January 5.

Philip Clarke has signalled an end to 'store wars' by halting new building

Mr Clarke admitted that sales over the past few months had been impacted by the horsemeat scandal as customers steered clear of frozen meat products.

Tesco had to withdraw four products from sale amid the crisis, but said the effect on overall sales was minimal and stressed that trading was now "back to normal".

While still well ahead of its supermarket rivals in terms of market share, Tesco has been facing a greater challenge from the likes of Asda, Morrisons and Sainsbury's.

They had been investing in their UK operations at a time when Tesco had concentrated on diversifying its business.

Tesco apologised in January for horsemeat in some of its burgers

Last year, Mr Clarke pledged a £1bn investment to upgrade its stores and customer service offering - at one stage taking personal charge of the turnaround plan.

Capital expenditure fell by 19% or £0.7bn to £3bn in the financial year.

Recent surveys have suggested the supermarket chain is still struggling to win round customers, with a study by Which? in February suggesting that Tesco was the most complained-about.

Researchers Espirito Santo said this week that customer perceptions of Tesco had deteriorated since November, with the horsemeat scandal a contributory factor.

It found that views on Tesco's quality, prices, promotions and overall value for money had all fallen while a net 16% of Tesco customers chose to shop more elsewhere because of horsemeat.

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UK Banks Tussle Over £8bn Visa Sale

By Mark Kleinman, City Editor

A cross-Channel tussle has broken out over the future of Visa Europe, the payments system, as its British member banks push for a deal that could generate cash proceeds of more than £7bn.

I have learnt that some of the UK's biggest lenders, including Barclays, are angling for Visa Europe to exercise an option that would force California-based Visa Inc to buy the company, as they seek ways to bolster their capital reserves. Their calls are, however, understood to have met strong resistance from a number of French and other European banks which are keen to retain a stake in one of the continent's most important payment networks.

The dispute between some of Visa Europe's most significant members is important because under the agreement governing its ownership, 80% of Visa Europe's main board members are required to support a deal for it to be ratified.

Sky News understands that investment bankers at Credit Suisse have been brought in to advise the board of Visa Europe on the discussions about a sale.

The situation has been given added impetus by British banks' need to boost their cash reserves. Visa Europe's status as a member-owned organisation means that banks' economic interest in it do not currently count towards the capital ratios by which regulators determine their financial strength.

Barclays is understood to own a shareholding in Visa Europe equivalent to just under 10%.  At the top end of a $3bn (£1.96bn)-$12bn (£7.86bn) valuation range for Visa Europe suggested by City analysts, Barclays' stake could be worth as much as $1bn (£655m). In cash terms, that could provide a useful enhancement to Barclays' core tier one capital ratio, insiders said.

Britain's major banks are in talks with the Prudential Regulation Authority, the new regulatory body charged with maintaining the health of the financial system, about strengthening their capital bases. The discussions follow a report by the Financial Policy Committee (FPC) last month which suggested that UK lenders need to raise £25bn by the end of the year.

Roughly 3,700 banks either process payments of customers using Visa cards or issue cards under the Visa name. The size of each of these 3,700 members' economic stakes in Visa Europe, which are each represented by a single share, is determined by the volume of business that they conduct through the payments network.

People close to the situation said that among British lenders, Barclays and Lloyds Banking Group had historically conducted the largest amount of business through Visa, while HSBC had had far closer ties to Mastercard, Visa's principal rival.

Of the other major UK banks, Lloyds' stake in Visa Europe is understood to be as high as five per cent, while Royal Bank of Scotland and HSBC are thought to have much smaller stakes.

The exact sum that Visa Inc would have to pay to acquire Visa Europe would be determined by a pre-arranged formula. Last month, the Wall Street Journal reported that some Visa Europe members wanted to establish their own payments system that would compete against Visa and Mastercard.

A Visa Europe board meeting is understood to have been scheduled for this month to debate the possible sale, although it is unclear whether that has already taken place.

Visa Inc was itself previously a bank-owned association before it became a publicly-listed company through an initial public offering in 2008. Visa had been set up as five distinct operating units focused on different regions. All of those were combined to form Visa Inc except for Visa Europe, which opted to remain a separate bank-run co-operative.

Spokesmen for Barclays, Lloyds and Visa Europe all declined to comment.

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IMF Sees Financial Crisis 'Chronic Risk'

By Ed Conway, Economics Editor, In Washington

The financial crisis which has beset the world economy in recent years is at risk of becoming "chronic", the International Monetary Fund has warned.

In its Global Financial Stability Report, the IMF said that although the immediate risks to the international banking system had abated, governments – particularly in the UK and euro areas – needed to do more to bring it back to full health.

The warning comes a day after the Fund's chief economist, Olivier Blanchard, warned that George Osborne was "playing with fire" with his economic policy.

The report said: "The global financial crisis could morph into a more chronic phase, marked by a deterioration of financial conditions and recurring bouts of financial instability."

Part of the problem is that many banks still have yet to clear bad debts off their balance sheets and undertake reforms to increase their buffers against future crises, the Fund added.

It said: "What is needed now is a renewed political commitment at the global and national level to complete the reform agenda.

The Bank of England's QE programme to date totals £375bn

"This commitment is critical to minimise regulatory uncertainty and arbitrage, and to reduce financial fragmentation.

"Without greater urgency toward international cooperation and comprehensive bank restructuring, weak bank balance sheets will continue to weigh on the recovery and pose ongoing risks to global stability."

One issue in particular is that central banks, including the Bank of England, have carried out so much quantitative easing, stimulating the economy, that this could both mask the pressures facing families and companies, and to generate a new bubble in financial markets.

The report said: "A prolonged period of extraordinary monetary accommodation could push portfolio rebalancing and risk appetite to the point of creating significant adverse side effects."

The Bank of England Governor, Sir Mervyn King, last night presented figures to a meeting on the fringe of the IMF summit showing that its balance sheet had expanded by more than any other central bank's since late 2007.

The IMF report warned that euro periphery banks faced a large overhang of debt which they will struggle to finance – equivalent to up to a fifth of their total owings – with much of this in Spain and Portugal.

It added: "While major UK and core euro area banks have been actively de-risking and deleveraging—as is discussed below—more needs to be done to complete the repair of their balance sheets."

It said that the levels of risk facing the macro-economy, emerging markets, the credit system and the markets more widely had diminished significantly in the past six months.

However, the level of risk appetite had increased sharply, as had the level of monetary stimulus around the world, reflecting the unprecedented amount of money pumped into the system by central banks.

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Pinewood Studio Confirms China Expansion

Pinewood Shepperton has signed a joint venture with a Chinese media entrepreneur as it seeks to expand its production services into the fast-growing Chinese market.

The venture partnership with Bruno Wu's Seven Stars company will be called Song Lin and looks to make co-productions, run film courses, develop financing for Chinese productions and create film-themed entertainment venues.

Pinewood, which is the home of the James Bond movie franchise and owns Europe's largest film studio, said the deal could realise "significant opportunities" for movie and TV producers in the UK.

A sharp rise in box office revenues in China, boosted by an emerging middle class making more trips to the cinema, has encouraged foreign film producers to seek local partners to help them crack the market.

Prime Minister David Cameron, who has sought to woo emerging nations as markets for British exports, welcomed the news.

"Pinewood is leading the way, taking advantage of China's thriving entertainment and media sector and building on Britain and China's growing trade relationship," he said.

Pinewood, which has expanded its presence across large parts of the world, recently submitted a fresh proposal to develop its main site in Buckinghamshire after it was previously rejected by planners.

The original Project Pinewood proposals included homes, sports facilities and city street sets as part of a £200m investment.

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