Tax Breaks For Married Couples 'Before 2015'

Tax breaks for married couples will be introduced by David Cameron before the next election, according to a Treasury minister.

David Gauke has moved to reassure Tory backbenchers amid growing concern in the party about how much support is being offered to traditional families.

In a letter to Conservative MPs, he insisted the change would go ahead during this parliament - meaning it will happen in the next two years.

The step is designed to avoid another backbench rebellion as Tories are currently trying to force the issue by introducing an amendment to the Finance Bill.

Treasury minister David Gauke

Mr Gauke wrote: "The Prime Minister and Chancellor have consistently made clear that we remain committed to recognising marriage in the tax system.

"I know that many of you will have heard the Chancellor set out his commitment to deliver on this during the course of this parliament.

"An announcement on details of how we will legislate for this in this parliament will be made by the Chancellor in due course."

Under the Tory plan, spouses who do not work could transfer part of their tax-free allowance if their partner earned less than the basic rate of tax.

It is thought the change would be worth up to £150 to married couples, meaning its significance would be largely symbolic.

But it would go some way to easing anger about the coalition's approach to stay-at-home mothers, who have been hit by restrictions on childcare support and child benefit cuts.

MPs welcomed the reiteration of Mr Cameron's commitment to the policy, but pushed for a clearer timetable for its introduction.

Former education minister Tim Loughton, who is leading the backbench revolt, told The Telegraph: "There is only a certain amount of promises about 'in due course' that hard-working families can take.

"This was a clear Conservative manifesto commitment to deliver a clear and popular Conservative policy that rights an injustice by recognising hard-working families in the tax system."

A tax break for married couples is a pet project of David Cameron's

A limited tax break was offered in the Tory election manifesto in 2010 and a commitment to hold a vote on the measure by 2015 was included in the coalition agreement.

The document allows the Lib Dems, who oppose the measure, to abstain.

Government sources are reported to have indicated the change is likely to be tabled in April 2015, which would coincide with general election campaigning.

But is is also considered possible that it could be legislated on in this parliament with implementation delayed.

Mr Cameron's official spokesman confirmed George Osborne intended to bring forward legislation before the end of the parliament but refused to give any clearer timetable.

He also refused to clarify whether the change could come into effect before or after the election.

Sky's deputy political editor Joey Jones said: "Whether or not that will satisfy some increasingly impatient colleagues, we will only find out in the next couple of weeks."

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iPhone 5 'Slowest' In Smartphone Speed Test

Apple's iPhone 5 has turned out to be the slowest smartphone in a test of seven handsets by Which?, the consumer watchdog.

It is possibly the world's best-known mobile, but it ended up at the bottom of the Geekbench 2 technical evaluation of the UK's most popular phones.

The test measures processor and memory performance across smartphone platforms - if a phone has a high score, it will work well when photo-editing, playing games and using apps.

The results revealed Samsung's Galaxy S4 was almost twice as fast as Apple's star phone with Samsung's Note 2 also scoring higher in the Geekbench pecking order.

Sony, Google, Blackberry and HTC smartphones also outranked the iPhone 5 for tasks such as games, pictures or apps.

The low score will be a disappointment for the US giant's huge fan base who tend to believe Apple's products are superior to all their competitors.

"Undoubtedly, Apple will upgrade its next iPhone with an improved processor when it launches later this autumn," Which? said.

"For the moment, Samsung's Galaxy S4 is the phone to beat when it comes to speed."

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Come And Get Our Cash, RBS Tells UK Companies

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is poised to reignite the bitter political debate about business lending by telling thousands of its corporate customers: "come and get our money".

Sky News has learnt that in recent weeks the state-backed lender has begun writing to approximately 100,000 small and medium-sized businesses (SMEs) to inform them that it would be willing to substantially increase the sums it lends to them.

The initiative follows a successful pilot programme by RBS and its NatWest subsidiary, and is likely to be extended to a much larger number of its 1.2m UK-based SME customers.

The bank is expected to announce details of the campaign, which is the most aggressive since RBS was rescued by taxpayers in 2008, later this week.

It involves offering new working capital facilities or term loans, as well as providing 12-month capital repayment holidays or reduced monthly repayments in some cases.

The lending appetite project is understood to be the brainchild of Chris Sullivan, RBS's corporate banking chief, who is seen in the City as one of a small number of credible internal candidates to succeed Stephen Hester as the group's chief executive.

It comes as industry-wide figures showed a further contraction in lending to non-financial businesses.

Data released by the British Bankers' Association on Tuesday revealed a £1.7bn fall in May, which the trade body said was attributable to businesses relying on cash and other forms of funding rather than bank loans.

RBS's move to reach out to business customers also comes amid growing uncertainty about its future structure, with George Osborne, the Chancellor, bowing to calls to explore a break-up of the group.

In his speech at Mansion House last week, Mr Osborne said a review of whether to split RBS into separate 'good' and 'bad' banks was partly driven by a desire to see it lend more to the real economy.

"We will establish a 'bad' bank if it meets our three objectives: if it supports the British economy; if it's in the interests of taxpayers; and if it accelerates the return to private ownership," he said.

Senior RBS sources said the bank had trialled the lending appetite outreach programme with 20,000 SME customers, resulting in an additional £1.7bn of credit being extended.

To avoid possible accusations that it is lending recklessly, RBS is only writing to customers with a satisfactory repayment history.

In an interview with The Sunday Times last month, Mr Hester said RBS was "desperate" to lend as much as £20bn of corporate deposits but said customers' borrowing appetite was being constrained by a lack of confidence in the British economy.

Mr Hester's departure from the bank was effectively orchestrated by the Chancellor, and his successor will face intense pressure to grow its SME lending as the Government tries to engineer a faster economic recovery.

RBS is Britain's biggest lender to businesses, extending £58bn of new loans to corporate customers in its home market last year, more than half of which were to SMEs.

The debate about the bank's future and its willingness to lend has drawn in other Cabinet ministers. Vince Cable, the Business Secretary, said last week that he wanted formal lending targets to be reintroduced at RBS and for the pay of its next chief executive to be more closely linked to business lending levels.

Rows over business lending have blighted the banking sector since the financial crisis, with a string of government measures failing to trigger a sustained upturn in the supply of credit to British companies.

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China: US Factory Boss Describes 'Insane' Dispute

By Mark Stone, Asia Correspondent in Qiaozi, China

An American businessman who has been held hostage in his Chinese factory for six days over an industrial dispute has described his situation as "absolutely insane".

Chip Starnes spoke to Sky News through a barred window from his medical supply plant on the outskirts of Beijing.

He said: "I keep telling myself that I am in a movie or a book.

"But it's playing out live. It's real and it's surreal."

Workers at the plant have been blocking exits around the clock and initially deprived him of sleep by shining bright lights on his office.

According to Chinese Union officials, Mr Starnes, 42, has failed to pay wages for two months, and staff at the factory fear the business is about to close without any promise of severance packages.

Sky's Mark Stone talks to Chip Starnes through a window in the factory

Mr Starnes denied the workers' allegations of unpaid wages and put it down to a "miscommunication".

He said: "The issue is this. People who already had jobs also wanted to be paid severance."

Mr Starnes explained that he is downsizing the factory and moving some work to a cheaper labour market in India.

"We were downsizing it. That was no secret," he explained.

He said that the workers knew about these plans and that those who will be made redundant would receive severance packages.

But he said that even those workers who were not being laid off were demanding a pay-off.

"Having to pay to rebuild confidence in them for a job that they already have. It just doesn't add up," he told Sky News.

Workers block journalists from entering the compound in Qiaozi

Looking relatively relaxed through the bars of his office window, Mr Starnes said that his treatment was now "fine".

He said: "The first few nights were very, very hectic. Since then, no. They are making me wait it out; wear me down.

"For the past three days, no issues at all but I am still not allowed to leave.

"It is classified as a civil dispute. This is how they can hold you up until you come to some sort of common bond."

Mr Starnes, who manages the Florida-based firm Speciality Medical Supplies, said the dispute was disappointing but that he was keen to resolve it internally.

One worker, Gao Ping, speaking to reporters on Tuesday said she wanted to quit because she had not been paid for two months.

Chu Lixiang, a local union official representing the workers, said they were demanding the portion of their salaries yet to be paid and a "reasonable" level of compensation before leaving their jobs.

The dispute is over unpaid wages and fears of factory closure

Similar disputes have happened at other businesses in China after a history of workers sometimes being unprotected when factories close.

There is increasing evidence of a trend of foreign-owned factories across China closing as workers demanded ever higher salaries.

Foreign companies are re-locating their operations to cheaper markets in South-East Asia.

Last month, Sky News visited a clothing factory in Burma. The factory, owned by Japanese firm Famoso, was once located in China.

That company is closing its three factories near Shanghai and Ningbo and moving their entire operation to Burma.

Experts acknowledge that the trend is a worry for the Chinese market but say that China is still more attractive than other Asian markets because of its better infrastructure and domestic sales market.

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Direct Line Cuts 2,000 Jobs In New Cost Drive

The insurance group Direct Line wants to cut approximately 2,000 jobs as part of new cost-cutting plans.

The majority of the anticipated job losses, Direct Line said, would come from head office and support functions though it did not rule out some redeployment.

Three sites would close under the proposals, in Liverpool, Croydon and central London.

The group, which is Britain's biggest motor insurer and behind the Churchill brand, said it had launched a consultation and would work to find opportunities for affected workers with other potential employers.

More than 1,200 positions were cut last year after the transformation plan was first launched.

The latest job cuts - which represent about 14% of its current 14,400-strong workforce - are part of Direct Line's drive to more than double its original cost savings target to over £200m in gross annual savings by 2014, or £130m a year on a net basis.

Paul Geddes, group chief executive, said the firm had "not made these proposed changes lightly."

He added: "As we have done in the past, we will deal fairly and carefully with those impacted, and do all we can to support them through these changes."

Nearly 500 staff work at the Liverpool site that is due to close, while around 240 are employed in Croydon and just under 400 at the London office earmarked to shut.

Direct Line hoped to transfer some of the Liverpool staff to Manchester, while a number of workers at Croydon and in London will transfer to its headquarters in Bromley.

As had been previously announced, the group's Teesside call centre is to shut over the next week.

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BP Battles 'False' Gulf Spill Damages Claims

BP is stepping up its campaign to prevent what could be billions of dollars worth of claims against it relating to the Gulf of Mexico disaster.

The oil firm is placing full-page advertisements in three of America's largest newspapers on Wednesday as its $7.8bn (£5.1bn) initial estimate on compensation for tens of thousands of businesses and individuals remains on course to be significantly over-shot.

The advert, scheduled to run in The New York Times, Wall Street Journal and Washington Post, accuses "trial lawyers and some politicians" of encouraging Gulf Coast businesses to submit thousands of claims for inflated or non-existent losses.

It says: "Whatever you think about BP, we can all agree that it's wrong for anyone to take money they don't deserve.

The tourism and fishing industries were hit hard by the spill

"And it's unfair to everyone in the Gulf - commercial fishermen, restaurant and hotel owners, and all the other hard-working people who've filed legitimate claims for real losses."

The ad campaign is being launched as BP prepares to appeal a US court ruling in April that the company argues was based on a flawed interpretation of its agreement to compensate companies affected by the huge spill in 2010.

BP claims the ruling effectively gives the green light to anyone to make a false claim.

BP's advert appears in three US newspapers

Its appeal is scheduled to be heard on July 8 but Jim Roy, one of the lawyers who brokered the settlement terms, has accused the company of under-estimating its responsibilities.

He said: "The court has rejected BP's argument multiple times.

"Simply put, BP has buyers' remorse because it guessed wrong on the cost of a deal, which it - for nearly two years - negotiated, co-authored, agreed to and sought Court approval of.

"The notion that BP is somehow trying to portray itself as a victim is preposterous."

In addition to the compensation bill and clean-up costs, billions more hinge on the outcome of a trial designed to identify the causes of the well blowout and assign percentages of fault to the companies involved.

BP spokesman Geoff Morrell said the newspaper advert was consistent with the company's efforts to keep the public informed of its economic and environmental restoration efforts.

"It explains the actions we are taking to defend the contract we agreed to and to assure the integrity of the claims process," he said in a statement.

"But it is also intended to make clear that BP remains as committed today as it was three years ago to doing the right thing.

"While we are actively litigating the payments by the claims programme for inflated and even fictitious losses, we remain fully committed to paying legitimate claims due to the accident," he said.

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Interest Rate Rise 'Threatens Borrowers'

The Bank of England has ordered City regulators to assess the "significant" threat from a sharp rise in interest rates to debt-laden households, banks and finance firms.

In its quarterly financial stability report, it echoed comments to MPs by outgoing governor Sir Mervyn King on Tuesday that borrowers face significant distress when the bank's base rate starts to rise from its historic lows.

UK borrowers have benefited in recent years from the 0.5% base rate - in place since March 2009 - helping cash-strapped households to keep on top of mortgage repayments, despite a fall in real incomes, with lenders also relaxing debt demands through forbearance.

The Bank said today: "The significant cohorts of UK borrowers could experience financial difficulties if interest rates were to rise during a period of subdued income growth.

"A rise in interest rates without a strengthening in income could significantly increase borrower distress and losses to banks."

It added that UK household debt remains high as a proportion of income at around 140%, with UK bank lending to households and non-financial firms at around £1.4tn.

The bank warned that around 9% of UK mortgage holders will have to take action - such as working longer hours, cutting back on essentials and changing mortgage - if rates were to rise by just one percentage point.

It also said a rise in rates could hike bad debt losses at banks, as well as increase their funding costs.

Sir Mervyn had told the Treasury Select Committee of MPs: "I think the idea we are about to return to normal levels of interest rates is premature, and one of the reasons we are not about to return is precisely because so many households have such a high level of household debt."

It was his final appearance before MPs before his retirement at the end of the month.

The consequences of rising rates will be an issue his successor Mark Carney will have to consider.

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Rolling Stones To Get Some BMG Satisfaction

The Rolling Stones have decided to get some satisfaction - by signing up with a German company to protect their music rights.

BMG is to represent the group's music publishing catalogue, as the band celebrates the release of its first single in June 1963.

It is the first time the veteran rockers have appointed an outside music publisher in 40 years.

The songs to be directly published by BMG span six albums from 1983's Undercover to 2005's A Bigger Bang

Future compositions will also be represented by the company, which was started in 2008.

It was launched as a new style of music company representing both of the traditionally separate music publishing and recording rights.

It is already the fourth biggest music publishing company in the world and recently acquired the Sanctuary Records and Mute Records catalogues.

BMG will also administer singer Mick Jagger and guitarist Keith Richards' interests dating back to 1963 including (I Can't Get No) Satisfaction, Brown Sugar and Angie.

The company has expanded rapidly as it maximised returns for artists and sought new and lucrative areas to market music.

Its responsibilities will range from marketing and licensing the songs to the film, TV and advertising sectors in the fast-growing number of digital music services.

BMG Chrysalis senior vice president Alexi Cory-Smith said: "Mick Jagger and Keith Richards are among the greatest songwriters in rock n' roll history. It's a huge honour that they have chosen us to represent their interests.

"Beginning July 1, we will be working alongside all of our offices around the world to give them the very best BMG can offer."

The Rolling Stones are currently touring the United States ahead of performing at  the Glastonbury Festival on June 29 and two dates in London's Hyde Park in July.

BMG is a subsidiary of international media company Bertelsmann.

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Spending Review: The Key Points

The main announcements from Chancellor George Osborne in his spending review for 2015/16 as outlined to MPs in the Commons:

WELFARE:

:: Reforms to include the 'welfare cap' set in Budget statement annually from April 2015 for four years, though state pension not included.

:: Jobseekers face new requirements to get benefits. Non-English speaking claimants must learn the language or risk cuts to payments.

:: New upfront work search system will require claimants to provide a CV, register for online job search and start looking for work before getting benefits. 

:: Lone parents of three and four-year-olds to be required to attend job centres regularly and prepare for work.

:: Payment of winter fuel payments for people living abroad to be linked to a 'temperature test' from Autumn 2015 to ensure pensioners in hot countries do not get it.

JOBS & PAY:

:: Government workers to fall by extra 144,000 by 2015/16.

:: Ending automatic progression pay in public sector - though Armed Forces excluded. Pay rises limited to average of up to 1%.

INVESTMENT:

:: £50bn of capital investment in 2015/16, amounting to more than £300bn for infrastructure including broadband, science and schools by 2020. Promises the largest programme of investment in roads for 50 years and in railways since the Victorian age.

TAX:

:: HMRC resource budget cut by 5% but extra resources provided to tackle tax evasion raising a predicted £1bn-plus.

NHS:

:: NHS budget rises to £110bn for 2015/16. some £4.7bn capital spending in NHS.

EDUCATION:

:: Education budget increased to £53bn for spend on schools only. Pupil Premium extended to more children and 180 more Free Schools funded.

DEFENCE:

:: No reduction in numbers of soldiers, sailors or airmen, but cuts in civilian workforce.

:: Defence resource budget maintained at £24bn. Its equipment budget will be £14bn and will grow by 1% in real terms in following years.

TRANSPORT:

:: Government to "look at the case for" Crossrail 2 link from Wimbledon to Alexandra Palace in London and give mayor Boris Johnson almost £9bn of capital spending and additional financing power by 2020.

:: Transport to make 9% savings in day-to-day spending but receive largest boost of any department to its capital budget, which rises to £9.5bn - to be repeated every year to 2020.

LAW & ORDER:

:: Savings of 10% in justice department.

:: Police counter-terrorism budget will not be cut while there will be an increase of 3.4% in intelligence services budget.

KEY FIGURES:

:: A further £5bn of efficiency savings found in the latest spending round.

:: Total Government spending for 2015/16 will be £745bn.

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Spending Review: Osborne Wields The Axe Again

Public sector workers, benefit claimants and ex-pat pensioners have all been hit under the Chancellor's drastic plans for extra spending cuts.

George Osborne declared Britain was "moving out of intensive care and from rescue to recovery" but warned the country had to keep on making savings.

As part of moves to save a further £11.5bn across Whitehall, public sector pay will be limited to an average of 1% for 2015/16 and automatic rises scrapped.

Welfare spending including housing benefit, tax credits, disability benefits and pensioner handouts except the state pension will be capped from April 2015.

A council tax freeze due to end next April is being extended for two years, saving around £100 per family, but local authorities face 10% cuts in resources.

And £30m-a-year will be saved by stripping the winter fuel allowance from Britons who move to live in countries warmer than the UK.

George Osborne and Danny Alexander leaving the Treasury on Wednesday

In a 50-minute statement, Mr Osborne said balancing the UK's books involved "difficult decisions", adding: "There never was an easy way to bring spending under control."

But shadow chancellor Ed Balls claimed the new cuts represented a "comprehensive failure" of the top Tory's economic strategy and were simply "more of the same".

"This out of touch Chancellor has failed on living standards, growth and the deficit and families and businesses are paying the price for his failure," he said.

Ministers for the Treasury, Cabinet Office, Justice, Environment and Communities and Local Government will have to slash another 10% from their budgets and Work and Pensions 9.5%.

Business and the Home Office face cuts of 6%, the Foreign Office 8% and Culture, Media and Sport 7% while Scotland, Wales and Northern Ireland offices will also be squeezed by 2%.

The security services were one of the biggest winners with MI5, MI6 and GCHQ seeing a 3.4% increase in their annual budget to help the fight against terrorism.

The Department of Transport has to find 9% in day-to-day savings but also emerged with the largest cash boost because its capital budget is due to rise to £9.5bn.

Mr Osborne promised there would be the largest programme of investment in roads for 50 years and in railways since the Victorian age.

The Ministry of Defence will see its budget maintained in cash terms at £24bn, which will mean a real-terms cut of 1.9%, but money for equipment will rise by 1% a year.

Its capital budget will also be held at £8.7bn, representing a real-terms reduction of 2.3%.

There will be no further reductions in troop levels, although the Chancellor confirmed the civilian workforce will be slashed.

And fines levied against banks for the Libor rate-rigging scandal will be used to fund the Armed Forces Covenant, setting out the nation's obligation to troops in perpetuity.

The Chancellor insisted his measures, which only spared schools, the NHS, overseas aid and the intelligence services, were necessary and fair.

Nurses, police officers and teachers will all be hit by the loss of progressive pay, which sees them earn more each year regardless of performance, with only the armed forces exempt.

Mr Osborne said: "Progression pay can at best be described as antiquated; at worst, it's deeply unfair to other parts of the public sector who don't get it and to the private sector who have to pay for it."

The Chancellor also revealed the Office for Budget Responsibility predicts another 144,000 working for the Government will lose their jobs by 2015/16.

There was immediate anger at the pay changes, with union chiefs claiming civil servants have been made "scapegoats" for the coalition's austerity regime.

Fresh cuts for local authorities also raised concerns, despite Mr Osborne telling MPs spending would only fall by 2% once local government changes had taken effect.

Sir Merrick Cockell, chairman of the Local Government Association, said the reductions would "stretch essential services to breaking point in many areas".

Mr Osborne defended moves to restrict winter fuel payments for ex-pats, declaring he was putting a "limit on the nation's credit card".

"Paying out even more money to people from all nationalities who may have worked in this country years ago but no longer live here is not a fair use of the nation's cash," he said.

An unimpressed Ed Balls during Mr Osborne's statement

But he vowed not to include the basic state pension in his welfare cap, despite Labour signalling it would and experts warning its exclusion would make the limit "meaningless".

In further moves on benefits, jobseekers will have to wait seven days before they can claim handouts and sign in once a week, and foreign applicants will be forced to learn English.

In his last spending review in 2010, Mr Osborne set out plans to eliminate the deficit by 2015 - allowing the cuts to end in time for the election.

But sluggish economic growth and a rising deficit have forced him to impose further drastic savings for 2015/16.

There was some positive news as billions more was pledged for key infrastructure projects over the next five years, further details of which will come on Thursday.

More than £3bn in capital investment will go on affordable housing, Mr Osborne said, and science capital funding will rise from £0.6bn this year to £1.1bn in 2015/16.

The education budget will also rise by £53bn to cover extra spending on schools, with the pupil premium extended and funding for another 180 free schools.

The Commons statement was highly political, coming less than two years before the next election and outlining plans for a time Mr Osborne hopes the Tories will be in power alone.

He said: "I know that times are still not easy for families. But we have a clear economic plan. We've stuck to it. It is working. And I'm determined to go on delivering it."

Labour claims the Government will go into 2015 with state debt at £96bn and has pushed borrowing up by £245bn more than planned at the last spending review.

However leader Ed Miliband has admitted he cannot promise to reverse any of Mr Osborne's cuts in day-to-day spending if he wins the next election.

John Cridland, Director General of the CBI , said: "The Chancellor has carefully walked a tightrope of protecting growth, while making sizeable savings to pay down the debt."

But he warned the Government had to deliver on its promises about infrastructure, saying it was "critical we see a real pipeline of projects" announced by Danny Alexander tomorrow.

TUC general secretary Frances O'Grady said: "This is a toxic mix of bad economics, nasty politics and dishonest presentation.

"The last thing our struggling economy needs is further cuts to spending to try to close a deficit made worse by the Chancellor's earlier cuts.

"When the medicine is not working and side effects are choking the patient, you need a change in treatment, not more of the same.

Ahead of the statement, Sky's City Editor Mark Kleinman revealed the Government's main body for encouraging inward investment and promoting British companies abroad, UKTI, faced an 8% cut to its budget.

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