Energy Bills: Npower Deal Creates 'Big Seven'

A new player in the UK energy market is to be created after npower agreed a deal to offload 770,000 customer accounts.

They form part of npower's Electricity Plus and Gas Plus subsidiaries, which were sold today for £218m to Telecom Plus, a supplier of energy and telephony services trading as Utility Warehouse.

The deal, which will not result in any change to customer service and contracts, is expected to complete by early January.

It is the result of new rules from the industry regulator Ofgem which limit the number of tariffs on offer to domestic customers to a maximum of four.

As Utility Warehouse already manages the brands on behalf of npower, the sale will allow the two companies to continue to offer their customers up to four tariffs under their respective brands.

It will also meet demands for greater competition in the industry at a time of rising energy prices - a situation that has resulted in fierce debate in recent weeks over political intervention to ensure a fair marketplace for consumers.

Npower, which is part of Germany's RWE Group and recently topped a league table for customer complaints, currently has 5.4 million household accounts while price rises have prompted more people to look at switching from big six firms to a smaller competitor.

Npower's chief executive Paul Massara said: "In one move we have helped to create the biggest independent competitor in Britain's household energy supply market.

"This is good for competition and good for consumer choice. Today's announcement shows that Britain is well on the way to having a 'big seven' rather than a 'big six'."

Utility Warehouse will continue to receive its gas and electricity from npower under a new 20-year energy supply agreement which should enable it to provide more competitive tariffs to its customers.

The company said the deal boosted its medium-term target of supplying gas, electricity, fixed-line telephony, mobile telephony and broadband to more than one million customers.

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Co-Op: Cameron Pledges Flowers Inquiry

David Cameron has said there will be an inquiry into the appointment of the disgraced Methodist minister Paul Flowers as chairman of the Co-operative Bank.

The Prime Minister told the House of Commons there were "a lot of questions that have to be answered" about Mr Flowers' time at the head of the bank for three years.

Mr Flowers is under investigation by police after being filmed allegedly buying and using illegal drugs including crystal meth, crack cocaine and ketamine - a horse tranquilliser used as a party drug.

Police raided the home of Mr Flowers in Bradford on Tuesday amid the deepening scandal over his appointment to the bank and his association with the Labour party.

It came as it was disclosed that Mr Flowers had resigned as a Bradford councillor in 2011 after inappropriate adult material was found on his computer.

The Mail On Sunday filmed Mr Flowers allegedly buying drugs

On Tuesday the Co-op boss Len Wardle resigned with immediate effect because he had led the board that appointed Mr Flowers.

Speaking at Prime Minister's Questions on Wednesday, Mr Cameron said: "The Chancellor will be discussing with the regulators what is the appropriate form of inquiry to get to the bottom of what went wrong here.

"But there are clearly a lot of questions that have to be answered. Why was Rev Flowers judged suitable to be chairman of a bank? Why weren't alarm bells ringing earlier, particularly by those who knew?

"I think it will be important in the coming days that if anyone does have information they stand up and provide it to the authorities."

He added: "The first priority is to safeguard this bank and to make sure that it is safeguarded without using taxpayers' money."

There are questions over what Ed Balls knew about Mr Flowers' resignation

Mr Flowers has apologised for doing things that were "stupid and wrong" in relation to the drugs claims - but has not elaborated.

Labour Party leader Ed Miliband is also under pressure over when he and shadow chancellor Ed Balls knew that Mr Flowers had resigned as a councillor in Bradford after adult material was found on his computer.

In a letter to Mr Miliband, Conservative Party chairman Grant Shapps wrote: "Was your shadow chancellor, Ed Balls, aware of this when he accepted £50,000 to fund his personal office?

"When you met Mr Flowers on 6 March, 2013, did you discuss the £1.2 million loan agreement that the Labour Party entered into with the Co-operative bank, just weeks later?"

Mr Shapps also challenged Mr Miliband to give details of his private meetings with the minister and explain what advice the former Co-op chairman gave as a member of Labour's business advisory group.

Mr Flowers has also been accused of incompetence and resigned his post as chair in June after a £1.5bn black hole was discovered in its finances.

Mr Flowers was criticised for a stumbling performance in front of MPs

The bank found a massive gap following the purchase of Britannia Building Society in 2009 and abortive attempts to take on hundreds of Lloyds branches.

It now faces a rescue which will see 50 branches close and investors including US hedge funds take control of 70% of the business.

During an appearance before the Commons Treasury committee earlier this month, Mr Flowers stumbled over basic facts and figures relating to the bank.

He was also pressed on whether he had approved the £50,000 donation to Mr Balls while a member of the bank's board.

"My recollection is that we paid for a particular researcher to assist the shadow chancellor in the work that he needed to do, and that we believed to be a legitimate and proper use of resources," he replied.

Co-operative group chairman Len Wardle has resigned over the scandal

A spokesman for Mr Balls said: "The Co-op Group, not the bank, donated £50,000 to the shadow chancellor's office, which was declared in the normal way at the time.

"Ed (Balls) has never discussed the donation with Paul Flowers. Ed's been to a few events which Rev Flowers has also been at, but he's never had a meeting or phone conversation with him."

It has also emerged that the Methodist minister was convicted of gross indecency in 1981, reportedly over a sex act in a public toilet.

A church spokesman said that at the time he went through the "usual procedures" before being allowed to continue in his role. He is currently suspended from his role as minister.

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Debt Crisis: Poorest Enduring 'Perfect Storm'

A report is warning of the impact of a debt trap on the poorest in society, with unsecured debts nearing £160bn in the UK.

The Maxed Out study by the right-leaning think tank the Centre for Social Justice (CSJ) charted a "perfect storm" of rising living costs, falling real wages, low savings and expensive credit.

It calculated that essential bills had increased by 25% since 2007 and 3.9 million British families did not have enough savings to cover their rent or mortgage for more than a month, while thousands were being made homeless every year because they were unable to meet their payments.

Households in the poorest 10% of the country were found to have average debts more than four times their annual income, with their average debt repayments amounting to nearly half their gross monthly income - pushing more people towards payday lenders and loan sharks because banks were reluctant to lend.

It said payday lenders alone had increased business from £900m in 2008/09 to just over £2bn in 2011/12, according to the CSJ, with eight million loans taken out.

Despite signs of a national economic recovery, the CSJ said personal debt in the UK remained close to its all-time high of £1.4trn while average household debt stood at £54,000 - nearly twice the level of a decade ago.

The CSJ report highlighted fears that the number of households being made homeless will increase in the coming years should interest rates rise though that is likely to be at least two years away as the Bank of England has said it will only consider raising the base rate when unemployment falls from its current 7.6% rate to 7%.

Maxed Out suggests growing numbers are turning to payday lenders

The report concludes: "Rising personal debt levels represent a significant problem for people in Britain.

"While most personal debt is healthy and manageable, such as an affordable mortgage, student loan or low-interest credit card used to bridge income gaps, for many people their debt has become unhealthy and unmanageable.

"While people of all income levels can end up seeking debt advice or declaring bankruptcy, the problem of debt seems to be more of an issue for low-income and vulnerable households.

"A perfect storm of rising living costs, decreasing real wages, low savings and expensive credit seems to have pushed many to the edge and over a financial cliff edge."

CSJ director Christian Guy added: "Years of increased borrowing, rising living costs and struggling to save has forced many families into a debt trap that is proving very difficult to escape.

"Problem debt can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing.

"Across the UK people are up until the early hours worrying about their finances and bills.

"Some of the poorest people in Britain are cut off from mainstream banking and have no choice now but to turn to loan sharks and high-cost lenders."

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Government Spent £410,000 On Green Deal PR

By Sophy Ridge, Political Correspondent

The Government has spent more than £410,000 on PR consultants to promote its Green Deal scheme, despite only 219 households having the work completed.

The £413,815 marketing spend works out at £1,889 for every household with the energy efficiency measures installed.

According to figures released to Sky News under the Freedom of Information Act, PR agency Freud was paid £350,155 in 2012/13 and £63,660 in the first eight months of 2013/14 to promote the policy.

Yet by the end of last month, only 1,173 households had committed to taking part - up from 954 in September - and the Green Deal had been implemented in only 219 properties.

Under the scheme, an assessment is carried out to calculate any savings a householder could make through energy efficiency.

The customer repays the costs of the work in the form of a loan paid for through increased energy bills.

Ministers claim the savings should cover the expense of the repayment.

Jonathan Reynolds, Labour's shadow minister for energy and climate change, said: "Ministers said the Green Deal would be the biggest home improvement scheme since the Second World War but so far installation work has only been completed on 219 properties.

"Consumers simply do not think that the Green Deal is a good deal, with concerns about hidden costs and high interest rates regularly being cited as issues that are deterring people from signing up.

"It has been obvious that there are serious problems with the Green Deal for some time, and these latest statistics just reinforce that point, but ministers are still not getting to grips with the problem."

A spokesman for the Department of Energy and Climate Change said: "The benefits of making properties more energy efficient, in terms of warmer homes and lower bills, are clear to everyone.

"The Green Deal is one way which households can finance energy efficiency measures and over 100,000 people have already had a Green Deal assessment.

"Research shows that over 80% of those people have already had or intend to have at least one energy saving measure installed."

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Poor Language Skills 'Hampering UK Economy'

By James Matthews, Sky News Correspondent

Britain's inability to speak "important" foreign languages could jeopardise future prosperity and global standing, according to a new report.

The British Council has said the UK has an alarming shortage of people who are able to speak what it regards as the 10 most important languages.

They are Spanish, Arabic, French, Mandarin Chinese, German, Portuguese, Italian, Russian, Turkish and Japanese.

The Languages For The Future report identifies these languages as vital to the UK over the next 20 years on economic, geopolitical, cultural and educational grounds.

John Worne, director of strategy at the British Council, told Sky News: "The problem isn't that we're teaching the wrong languages, because the most widely taught languages like French, Spanish and German all feature in our top 10.

"But the UK needs more people to take up the opportunity to learn, and crucially, get using these languages - along with new ones like Arabic, Chinese and Japanese.

"If we don't act to tackle this shortfall, we'll lose out both economically and culturally.

"Schools have their job to do, but it's also a problem of complacency, confidence and culture - which policymakers, businesses, parents and everyone else in the UK can help to fix.

"Languages aren't just an academic issue - they are a practical route to opportunity for the UK in business, culture and all our lives."

A YouGov poll commissioned by the British Council showed that three quarters of British people cannot speak the "important" languages well enough to hold a conversation.

French is spoken by 15% of people, German by 6%, Spanish by 4% and Italian by 2%.

Arabic, Mandarin, Russian or Japanese are each only spoken by 1%, while less than 1% of people in the UK speak Portuguese or Turkish.

The report calls for children to be taught a broader range of languages and for the subjects to be given the same priority as maths and sciences.

It also states that businesses should invest in language training for staff and that everyone should learn at least the basics of those languages deemed so important to the country's future.

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JPMorgan Agrees $13bn Mortgage Complaint Deal

JPMorgan Chase has agreed to pay $13bn (£8bn) to settle complaints over mortgages and mortgage securities, US officials have said.

The deal includes $9bn in payments to authorities and $4bn which will go to people affected by the bank's actions, New York State Attorney General Eric Schneiderman said.

The US government called the settlement the largest in the country's history.

It resolves a series of complaints against the bank for mis-stating the quality of mortgages and mortgage securities it sold before the financial crisis, and complaints it mishandled the mortgages of millions of homeowners.

Mr Schneiderman said: "This historic deal, which will bring long-overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do.

"We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten.

"And as a result we've won a major victory today in the fight to hold those who caused the financial crisis accountable."

Chief executive of the bank Jamie Dimon

JPMorgan has said most of its mortgage-backed securities came from Bear Stearns Cos and Washington Mutual Inc, troubled companies that JPMorgan acquired in 2008.

As part of $6bn it will give to investors, $4bn will resolve government claims that JPMorgan misled mortgage finance giants Fannie Mae and Freddie Mac about risky mortgage securities the bank sold them before the housing market crashed.

That part of the deal was announced on October 25.

Fannie and Freddie were bailed out by the government during the crisis and are under federal control.

The $13bn settlement amount is only about half of JPMorgan's record 2012 net income of $21.3bn, or $5.20 a share, which made it one of the most profitable US banks last year.

Mounting legal costs from government proceedings pushed JPMorgan to a rare loss in this year's third quarter, the first under chief executive Jamie Dimon's leadership.

The bank reported on October 11 that it set aside $9.2bn in the July to September quarter to cover the string of legal cases against it. 

It faces at least nine other government probes, covering everything from its hiring practices in China to whether it manipulated the Libor benchmark interest rate.

JPMorgan said it has placed $23bn in reserve to cover potential legal costs.

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Kill Switch: US Carriers Resist Security Feature

Mobile phone carriers in the US have been accused of "shaking down" customers for billions of dollars after refusing to install "kill switches" on devices.

Lost and stolen mobile devices cost consumers more than $30bn (£18bn) last year, according to a recent study.

However the biggest carriers - AT&T, Verizon Wireless, US Cellular, Sprint Corporation and T-Mobile - have rejected Samsung's offer of installing its anti-theft technology.

They say a kill switch would allow a hacker to disable someone's phone.

Almost one in three US robberies involve phone theft, according to the Federal Communications Commission (FCC), leading law enforcement officials to demand a solution.

San Francisco District Attorney George Gascon claims to have seen an email between a senior Samsung official and a software developer.

It said Samsung had pre-installed kill switch software in some smartphones ready for shipment, but carriers ordered their removal as a standard feature.

A national stolen phone database is scheduled for launch this month

"These emails suggest that the carriers are rejecting a technological solution so they can continue to shake down their customers for billions of dollars in (theft) insurance premiums," Mr Gascon said.

"I'm incensed. This is a solution that has the potential to end the victimisation of their customers."

The Wireless Association, a trade group for wireless providers, said it has been working with the FCC, law enforcement agencies and elected officials on a national stolen phone database scheduled to launch on November 30.

It says a permanent kill switch has serious risks, including potential vulnerability to hackers who could disable mobile devices and lock out not only individuals' phones, but also phones used by entities such as the Department of Defence, Homeland Security and law enforcement agencies.

"The problem is how do you trigger a kill switch in a secure manner and not be compromised by a third party and be subjected to hacking," said James Moran, a security adviser for a UK-based trade group.

Currently Samsung Galaxy smartphones are shipped across the US without its LoJack security software as a standard feature. Users can pay a subscription fee for the service.

And a new activation lock feature, designed to prevent thieves from turning off the Find My iPhone application, has been installed on Apple devices in a recent software release.

Both these security features are now being tested by federal and state security experts.

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Banker Defends £9.5bn Royal Mail Valuation

By Mark Kleinman, City Editor

The investment bank which proposed a near-£10bn valuation for Royal Mail defended its approach on Wednesday, saying it had not had access to inside information and had taken a bullish view of the company's prospects.

Appearing in front of the Business, Innovation and Skills (BIS) Select Committee, John Mayne, a managing director for UK client coverage at JP Morgan, said it had built in the prospect of a high dividend payout ratio into its projection for Royal Mail's valuation.

Mr Mayne said his employer had told ministers it believed the postal operator was worth between £6.8bn and £8.5bn excluding Royal Mail's debts. Including its roughly £1bn of borrowings, that range rises to £7.75bn to close to £10bn, as Sky News disclosed last month.

JP Morgan and other banks appearing before the committee failed to win roles on the deal, which has sparked a furious political debate about whether the UK taxpayer missed out on a windfall worth potentially billions of pounds.

Ben Story, the head of UK investment banking at Citi, another bank which pitched unsuccessfully to work for the Government, agreed with Mr Mayne, saying the US bank had not had sufficient access to information about Royal Mail to conduct proper due diligence before presenting its valuation range.

Two banks which did work on the privatisation also appeared before MPs, arguing that the taxpayer had not been deprived of significant revenues.

Richard Cormack, a senior executive at Goldman Sachs, said the price to which Royal Mail's shares have soared since the flotation was not reflective of the level at which the investment banks could have sold 60% of the company last month.

Adrian Bailey, chairman of the BIS Committee, said the banks had effectively allowed themselves to be misled by the institutional investors with which they had discussed Royal Mail before settling on the 330p-a-share sale price.

Earlier on Wednesday, analysts at banks connected to the privatisation published their first recommendations on Royal Mail shares following the end of a blackout period.

UBS, one of the lead bookrunners on last month's deal, urged clients to sell, placing a price target for Royal Mail of 450p, roughly 20% below the level at which the shares closed yesterday, but more than one-third higher than the 330p at which ministers agreed to privatise it.

"We believe management has executed well on improving productivity, with the UK margin rising to 4.3% in 2012-13 from -1.6% in 2009-10. We expect further improvements, due to productivity and revenue growth," the note said.

"However, with Royal Mail's share price up 69% since the IPO (versus 7-32% for peers), we believe the market is over-estimating margin upside. In particular, we believe it will be difficult to accelerate its transformation, given the limitations of the labour agreement.

"To get to the upper end of the 5-10% regulated range (assumed by the market; current 3%) would require acceleration of staff reductions, additional automation and no adverse events."

UBS said the stock market faced disappointment over the pace of automation in Royal Mail's parcels business.

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Boeing Hails 777X Dubai Air Show Order Spree

Boeing has announced up to $101.5bn (£63bn) in aircraft orders at the Dubai Air Show, driven by 'record demand' for its planned long haul 777X aircraft.

The new business took the US aerospace firm's total orders at the show to more than twice that booked by European rival Airbus.

Boeing said more than $95bn (£58.9bn) of its orders were for the 777X long-haul aircraft, making it the "largest product launch in commercial jetliner history by value".

Airbus totted up orders worth $44bn (£27.2bn), with Emirates placing the biggest by value, spending $20bn (£12.4bn) on 50 A380 super jumbos.

The total takings of about $145bn (£89.8bn) by the two rivals at Dubai were about twice those recorded at the Paris Air Show in June, when Airbus announced $39.3bn (£24.3bn) in orders and Boeing unveiled $38bn (£23.5bn).

Boeing had a tough start to 2013 when its Dreamliners were grounded

Boeing's performance in Dubai was underpinned by demand for its new 777X, which was snapped up by Middle Eastern airlines.

Dubai's flagship Emirates placed an order worth $55.6bn (£34.4bn) for 115 777-9X aircraft, which is designed to carry more than 400 passengers.

It also ordered 35 777-8Xs, which have a capacity of 350 passengers.

Etihad Airways ordered 17 of the bigger model and eight of the 777-8Xs, while Qatar Airways bought 50 777-9Xs.

Boeing claims the aircraft, which is due to enter service around 2020, will be 12% more fuel efficient than the Airbus A350.

The brisk business the company enjoyed in Dubai followed a tough period for the firm in 2013.

Its 787 Dreamliner was beset by technical issues and was grounded worldwide for a time while battery modifications were completed to prevent over-heating.

In July, a fire aboard an Ethiopian Airlines Dreamliner at Heathrow was linked to the plane's emergency beacon rather than the batteries at the centre of the previous probe.

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Ratings Agency Fitch Bids For Deals Newswire

By Mark Kleinman, City Editor

The parent of Fitch, one of the world's biggest credit ratings agencies, has emerged as a surprise bidder for a provider of business intelligence being sold by the owner of the Financial Times.

Sky News has learnt that Fitch Group has lodged an interest in acquiring Mergermarket, which charges subscribers fees for supplying information about takeover deals and companies to the City and Wall Street.

The business is being sold by Pearson, the FTSE-100 media and education group which owns the FT and a stake in Penguin Random House, the global book publisher.

Fitch is understood to be competing to buy Mergermarket against BC Partners and Warburg Pincus, two private equity firms, the latter of which has joined forces with Caspar Hobbs, the site's founder.

Advance Publications, the owner of Conde Nast, the publishing house behind magazines such as GQ, Vanity Fair and Vogue, is also understood to have made an offer for Mergermarket although it was unclear on Wednesday whether it remained in the auction.

Two other buyout groups, Advent International and Providence Equity Partners, are said to have dropped out of the process in recent days.

Final bids for Mergermarket are due next Wednesday, insiders said, with Pearson deemed unlikely to sell Mergermarket for less than £300m, three times the price it paid to buy the business information service in 2006.

Mergermarket was founded in 2000 to offer financial news and information to clients such as banks and hedge funds. It was acquired by Pearson in 2006 although John Fallon, its chief executive, has judged the division to be non-core.

That decision has triggered a revival of speculation that the FT itself is likely to be sold following the leadership transition at Pearson, although Mr Fallon has said that drawing such an inference from the Mergermarket disposal would be misleading.

Fitch's presence in the auction is intriguing, since acquiring Mergermarket would represent a strategic departure for the ratings agency. Standard & Poor's, Fitch's competitor, does offer a similar intelligence service about business and finance.

Pearson does not break down the financial performance of the constituents of its FT Group unit - the other component of which is its 50% stake in The Economist newspaper - although Mergermarket is said to contribute significantly to the division's profit.

Fitch is jointly-owned by Hearst, the American publishing group, and Fimalac, a French financial services holding company.

Pearson and the bidders for Mergermarket declined to comment.

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