Energy Firm SSE To Freeze Household Bills

'Big Six' energy firm SSE is to freeeze household bills until January 2016, it has been confirmed.

The announcement comes amid the ongoing controversy over energy bill price hikes for consumers and businesses.

SSE chief executive Alistair Phillips-Davies said: "We're setting out a positive agenda for customers, including our price freeze to 2016.

"We're making sure our own house is in order for the future by streamlining and simplifying our business.

"And we're making clear we wish to work with people to find more ways of taking costs out of energy bills."

In conjunction with the tariff freezing, SSE announced a swathe of measures to keep its overheads down.

It said "further operational efficiencies" will see it reduce costs by £100m in the coming two years, including a staff reduction of 500.

SSE said it would also legally separate its retail and wholesale segments by March next year.

The big energy providers have come under sustained fire over profits, with critics saying although retail earnings may be modest the firms' wholesale and distributions margins are too high.

The company also said it would limit the size of its deepwater Project Beatrice wind farm, located 12 miles off Scotland's Moray Firth, north-east of Inverness.

It also plans to scale back and exit some other projects to concentrate on Beatrice.

Further cost savings are expected to come from reducing the amount of capital and investment expenditure in the coming years.

It said although investment outlay would be around £1.6bn in 2014/15, this figure would drop by nearly 20% for the following three years.

SSE said it expects to report a full-year annual pre-tax profit of around 9% when it releases its results on May 21.

It expects operating profit to be 10% higher from its network distribution sector and 20% higher from its wholesale division, primarily due to greater gas production.

However, as householders become more aware of reducing energy consumption, SSE expects to see a retail profit reduction of about 25%.

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Lloyds Bank Shares Worth £4.2bn Sold

Taxpayers have been left with a 25% stake in Lloyds Banking Group after the Government sold shares valued at £4.2bn.

The taxpayer owned 33% of Lloyds but the Treasury has continued with plans to fully return the lender to the private sector.

Some 5.6bn shares were sold to City investors on Tuesday night - raising £4.2bn based on the closing share price of 79.1p.

The shares were bought for 73.6p each, generating £106m profit for the taxpayer.

Lloyds was bailed out by the Government in 2008

In early morning Wednesday trades shares were down more than 4%, at 75.9p.

Chancellor George Osborne described the sale was "good value" and that the return would help cut the country's debt burden.

"It is another step in repairing the banks, in reducing our national debt and in getting the taxpayer's money back," Mr Osborne said.

A Treasury spokesman added: "Building a stronger banking system is a core part of the Government's long-term economic plan to deliver greater economic security."

The Government injected roughly £21bn into Lloyds in October 2008 during the financial crisis, giving it a 43% stake.

In April 2010, Lloyds returned to profit for the first time since its bailout.

Antonio Horta-Osorio, chief executive of Lloyds

The Government made a profit of £61m selling off the first tranche of its shares in September last year.

Ahead of the sale Lloyds boss Antonio Horta-Osorio said: "I am pleased that the Government intends to sell a further stake in Lloyds Banking Group and allow taxpayers to get more of their money back.

"I believe this reflects the hard work undertaken over the last three years to make Lloyds a safe and profitable bank that is focused on helping Britain prosper."

Lloyds posted statutory profits of £415m for 2013 against losses of £606m in 2012 - its first bottom-line profit since 2010.

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Royal Mail Confirms Plans To Axe 1,300 Jobs

A union has raised the threat of industrial action after Royal Mail confirmed it was consulting on plans to cut 1,300 jobs, mainly managerial staff.

Unite, which represents 7,000 managers at the firm, described the proposals as "ruthless".

Royal Mail, which was controversially privatised last year, said no delivery staff would be affected by the move, which aims to save £50m annually.

Under the plans, 1,600 operational and head office managerial positions would go but 300 other "enhanced" roles would be created and it would soon begin talks with the Communication Workers Union and Unite.

Moya Greene, Royal Mail's chief executive, said: "We are continuously improving our efficiency, whilst maintaining our high quality of service.

"We need to do so in order to effectively compete in the letters and parcels markets. This is the best way to ensure the continued delivery of the Universal Service and the good quality jobs we provide for our people."

News of the proposed job losses broke just 48 hours after Sky News revealed that the Business Secretary Vince Cable is demanding that the board of Royal Mail limits a pay rise for Ms Greene.

Unite said it was demanding there were no compulsory redundancies.

The union's officer for Royal Mail, Brian Scott, added: "First the Government sells-off Royal Mail on the cheap and now the newly privatised service is ruthlessly sacrificing jobs.

"We do not believe that it's a coincidence that this announcement has been made just before the company prepares to announce its first full set of accounts since privatisation.

"It's more proof that Royal Mail's primary reason for existing is now about making profits rather than serving the nation.

"For all that Royal Mail managers have been through they do not deserve to be treated in this way.

"Unite is demanding a commitment to no compulsory redundancies on fair terms and an effective method for redeployment within the restructured organisation.

"If Royal Mail refuse we will have no alternative than to consider a ballot for industrial action."

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Wind Turbine Plants To Create 1,000 UK Jobs

A £310m investment in the country's offshore wind industry is set to deliver 1,000 new skilled jobs.

German manufacturer Siemens is putting up £160m of the money, covering two sites on the banks of the Humber estuary.

The investment comprises additional cash for its previously announced construction, assembly and service facility at the Green Port in Hull.

A new rotor blade manufacturing facility would be built in nearby Paull, in East Riding, the company said.

Siemens, which already employs almost 14,000 staff in the UK, said the plant at Paull would be the first of its kind for the firm's next-generation blade technology designed for wind turbines.

Each rotor blade is 75 metres long and when rotating covers an area the size of two-and-a-half football pitches.

The company's port partner, Associated British Ports (ABP), is spending £150m on the Green Port Hull development.

Michael Suess, chief executive of energy at Siemens, said: "Our decision to construct a production facility for offshore wind turbines in England is part of our global strategy.

The announcement has been hailed as "excellent news" by the Government

"We invest in markets with reliable conditions that can ensure that factories can work to capacity.

"The British energy policy creates a favourable framework for the expansion of offshore wind energy. In particular, it recognises the potential of offshore wind energy within the overall portfolio of energy production.

"The offshore wind market in Great Britain has high growth rates, with an even greater potential for the future. Wind power capacity has doubled here within two years, to roughly 10 gigawatts.

"By 2020, a capacity of 14 gigawatts is to be installed at sea alone to combine the country's environmental objectives with secure power supply.

"Projects for just over 40 gigawatts are currently in the long-term planning."

The investment was seen as a boost for the industry following a number of setbacks for new UK wind farm projects - scrapped on cost grounds.

Energy Secretary Ed Davey said of Tuesday's announcement: "This deal is excellent news for the people of Hull and the Humber, the UK, the wind industry, and our energy security.

"We are attracting investment by backing enterprise with better infrastructure and lower taxes.

"As well as helping to keep the lights on and putting more than 1,000 people in work, this deal means we will help to keep consumer bills down as we invest in home-grown green energy and reduce our reliance on foreign imports."

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Honda Swindon Plant Job Threat Over Shift Cut

More than 300 jobs are under threat at Honda's plant in Swindon as the car manufacturer cuts production.

The Japanese firm wants to reduce workflow from three daily shifts to two - blaming poor sales growth outside the UK.

Its review would also result in a single production line being created to improve efficiency and flexibility.

The plans, Honda said, would leave 340 production staff (10% of the workforce) at risk of redundancy and the Unite union pledged to fight any job losses.

Ian Howells, senior vice president of Honda Motor Europe, said: "Over the last 12 months, we haven't seen the growth we'd anticipated.

"With no increase forecast for the next couple of years, we must scale our manufacturing activity accordingly.

"However, with the restructuring we're taking today, and our new model plans, we remain confident in the long-term future of our Swindon plant.

"Our Swindon operation continues to be the hub for our European car manufacturing activity," he added.

Honda has been manufacturing cars at Swindon since 1992 and currently builds the Civic, Civic Tourer, CR-V and Jazz models for the UK and European markets.

Tony Murphy, national officer of the Unite union, said: "These job losses are a devastating blow, not just for these workers but for the thousands more across the industry whose work is dependent on the Honda plant.

"Today's losses are also a wake-up call to the UK Government. The economy is far too fragile to proclaim a recovery - those workers losing their jobs today will find claims that the country is turning a corner an insult.

"The truth is that there is simply no pick up in the incomes of Honda's customers, either here or in the eurozone. People are not confident and do not have the cash to spend. That is something which must give the Government serious cause for concern.

"Decent, skilled jobs are being lost today and investment is being withdrawn, which is ringing alarm bells and putting the remaining workforce in fear for their future.

"We cannot allow workers of this expertise to be dispatched to the dole queue - the country needs their skills if we are to power our country back to economic health.

"Unite is determined to do all we can to save these jobs and skills. It is vital that the Government joins us in the fight for manufacturing."

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Centrica Slashes Top Executives' Pay To £6.6m

By Mark Kleinman, City Editor

The owner of British Gas will reveal this week that it slashed executive pay awards last year after a share price decline triggered partly by the intensifying political row over energy prices.

Sky News has learnt that Centrica will disclose in its 2013 annual report, to be published on Thursday, that it paid its top management roughly 60% less than the £16.4m they earned the year before.

Total pay for the company's executive directors, who included the former British Gas managing director Phil Bentley; the outgoing finance director, Nick Luff; and Sam Laidlaw, the chief executive, is understood to have fallen to £6.6m, a source said.

The company, which as the UK's largest gas and electricity supplier is facing growing political pressure to be broken up, will also confirm that Mr Laidlaw has donated his 2013 bonus award to charity.

Insiders said that Centrica's comparatively lacklustre performance in 2013, when British Gas reported a 6% fall in annual profit at its residential arm to £571m, had meant the group's long-term incentive awards from previous years had failed to vest.

The company's equity awards are linked to criteria such as earnings per share and share price performance.

The company's remuneration committee has also decided to reduce annual bonuses because of the lower share price and flat profits, with Chris Weston, who replaced Mr Bentley as British Gas's managing director, understood to have been awarded approximately £400,000.

Mr Laidlaw said last autumn that he would not accept an annual bonus - which is said by insiders to have been in the region of £800,000 - because of the ongoing controversy about energy prices.

"Just to continue in this world where households are under pressure, and assume it is business as normal, is not the way thoughtful remuneration committees think about it,'' he said in November.

All of the big six suppliers raised prices last autumn, blaming an increase in wholesale energy costs and Government-imposed green levies.

The relaxation of those levies by ministers failed to defuse political tensions, however, after some suppliers were accused of being slovenly in passing on the reduced costs to consumers.

The publication of Centrica's annual report will coincide with an expected decision by Ofgem and the Office of Fair Trading to refer the industry to the Competition Commission.

Such a move would be politically palatable for the Government, which was left wrong-footed last year by a pledge from Ed Miliband to freeze prices for 20 months if Labour wins next year's general election.

A full competition inquiry could take as long as 18 months.

Last month, Ed Davey, the Energy Secretary, paved the way for a referral in a letter to Ofgem.

"Clearly you will wish to consider whether [British Gas's position] is prima facie evidence of an issue in the market and so whether it merits a market investigation reference with the whole gamut of potential remedies that could follow, including a break-up of any companies found to have monopoly power to the detriment of the consumer," he wrote.

Separately, Centrica confirmed on Tuesday that it had a reached a deal to acquire some of the assets of Bord Gáis Energy, the retail arm of Ireland's state gas company.

Centrica declined to comment on the executive pay figures.

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Falling Fuel Costs Help Inflation Dip To 1.7%

The biggest monthly fall in petrol prices since September 2009 helped the annual rate of inflation ease to 1.7% in February - a level not seen for more than four years.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) measure dipped for the fifth month in a row - supporting hopes that the real-terms decline in pay is coming to an end.

Wage growth has not been higher than inflation for nearly four years but last week official Budget forecasts predicted earnings would return to real-terms growth later this year.

Today's data shows private sector pay growth - which was also 1.7% in the three months to January - has already caught up, but public sector pay rises remain restricted due to central Government spending cuts.

Smaller rises in energy bills helped ease inflationary pressures

CPI, which fell from 1.9% in January, has not been lower since October 2009 - when it stood at 1.5%.

The ONS said smaller price rises for household gas and electricity bills, as well as clothing and footwear, also eased inflationary pressures in February.

But there were warnings of tougher times ahead as a report warned that grocery and restaurant bills were set to rise by the end of the year.

On the back of the official announcement on February's figure, Prime Minister David Cameron tweeted: "It's good to see inflation falling again.

"Our long term economic plan is helping provide stability and security for hard-working people."

But while welcoming the fall in inflation, Labour's shadow Treasury minister, Catherine McKinnell, argued the Government needed to do more to help working people.

"The squeeze continues as prices are still rising faster than wages," he said.

"Working people facing this cost-of-living crisis are on average £1,600 a year worse off since David Cameron came to office.

"Labour will freeze energy bills until 2017, make work pay by expanding free childcare for working parents and get at least 200,000 homes built a year by 2020.

"We also want to introduce a lower 10p starting rate of tax to help 24 million people on middle and lower incomes.

"By opposing all these measures and giving a £3bn tax cut to people earning over £150,000, David Cameron has shown he's out of touch and only stands up for a privileged few."

The ONS also reported that UK house price inflation continued to rise in January.

It measured annual growth of 6.8% - the biggest rise since August 2010.

Prices in London were up 13.2%.

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Santander Fined £12m Over Poor Advice Service

Santander UK has been fined £12.4m by the City regulator over poor advice given to its customers.

Details of the penalty were first revealed by Sky News City Editor Mark Kleinman on the Jeff Randall Live programme on Tuesday night.

He revealed that the Financial Conduct Authority (FCA) penalty comes after a 13-month long investigation by its enforcement division.

The fine is the largest suffered to date by Santander UK, which has expanded through acquisition into Britain's fifth-biggest high street bank following takeover deals involving Abbey, Alliance & Leicester and Bradford & Bingley.

Tracey McDermott, FCA director of enforcement and financial crime, said: "Customers trusted Santander to help them manage their money wisely, but it failed to live up to that responsibility.

"If trust in financial services is going to be restored, which it must be, then customers need to be confident that those advising them understand, and are driven by, what they need.

"Santander let its customers down badly."

The penalty is significantly below the FCA's biggest-ever fine of £28m, which was imposed on Lloyds Banking Group in December for incentivising staff to sell billions of pounds of unnecessary products.

City watchdog the FCA imposed its biggest ever Santander UK fine

Kleinman revealed that the City regulator's probe into Santander UK followed a mystery shopping exercise across the banking sector, which exposed failings in the investment advice given to consumers.

As a consequence of the FCA enforcement action, Santander UK announced barely a month later that it was closing its investment advice arm to new customers.

Steve Pateman, head of banking at Santander UK, said: "We regret that elements of Santander UK's historic branch-based investment sales processes did not meet the required regulatory standards and apologise to any customers who have concerns.

"To ensure that any concerns our customers may have are addressed we will be writing to them this summer, to offer them an opportunity to withdraw from their investment or have their sale reviewed.

"Customers need take no action now and should wait to receive letters from us."

Other high street lenders, such as Barclays, had already withdrawn from the market altogether, while Lloyds has closed its mass market advisory service and now provides financial guidance to customers with at least £100,000 to invest.

The exodus of major banks from the investment advice market has provoked fears that millions of British consumers are being left financially disenfranchised.

People close to Santander UK said the bank disputed many of the regulator's judgements about the quality of its investment advice during the 13-month investigation.

It is also understood to have argued that consumers suffered no detriment as a consequence of the failings identified by the FCA, an assertion that the regulator is not understood to have contested.

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Facebook In $2bn Oculus Virtual Reality Deal

What Facebook Plans For Oculus Takeover

Updated: 1:26pm UK, Wednesday 26 March 2014

By Tom Cheshire, Technology Correspondent

Happy days: now you can actually strap Facebook to your face.

The social networking giant has bought virtual reality headset maker Oculus for $2bn (£1.2bn). Oculus' rise has been quick - from a wildly successful Kickstarter campaign in September 2012 that raised 10 times its asking price, through to a $75m (£45.4m) round of investment as recently as December last year.

But this acquisition has come from nowhere, leaving a lot of people wondering - why did Facebook buy?

On the face of it, the two companies couldn't be more different. The Oculus Rift headset is all about ultra-immersive, hardcore videogaming (it's one of those things you just have to try to see how good it is - and it really is good) and is still in the development phase.

It hasn't sold a single kit to consumers.

Facebook is used for casual social interaction and holiday boasting - and the company's acquisitions have been in software, in businesses with hundreds of millions of users such as WhatsApp and Instagram.

Oculus is Facebook's bet on the future - and it's clear the company sees it as more than a gaming device.

In the press release announcing the deal, Mark Zuckerberg said: "Oculus has the chance to create the most social platform ever." Cue images of a terrifying Zuckertopia where you spend days grudgingly liking your friends' lunch photos in a high-definition, ultra-immersive version of Second Life.

But the CEO also imagined some more useful applications such as chatting in person with your doctor, attending an online class, or watching a virtual sports game with friends. Developers have already shown real-world use cases: teams of architects can use it to walk through their virtual renderings and collaborate on plans, for example. Teachers in Australia are already using the kit to help autistic children learn.

In these respects, the Oculus acquisition isn't dissimilar from the recent purchase of WhatsApp.

Facebook wants to own every aspect of human communication, whether that's through the web browser on facebook.com or mobile apps like WhatsApp and Instagram.

The company has also started offering free video calls. It wants to own what Silicon Valley types call the whole "stack", whether it's explicitly Facebook-branded or not. So if people are going to communicate using kits like the Oculus Rift, Facebook wants to mediate that experience. And then use it to sell ads.

It also means that Google is not the only Silicon Valley company to have some exceptionally geeky eyewear.

Tech giants including Apple and Yahoo! are battling to acquire new startups and technologies, and so are driving valuations up.

Two billion dollars is loose change for Facebook, especially since the company will pay only $300m (£181.3m) in cash - the rest will be paid in Facebook shares.

With London-based games developer King.com floating on the New York Stock Exchange at a valuation of $7bn (£4.2bn), some are smugly saying we're in a new tech bubble. We're not - at least not yet.

Valuations are definitely high, but the real test point will come with Chinese web company Alibaba's upcoming IPO - potentially the biggest technology flotation of all time.

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Candy Crush Firm Loses $850m On Market Debut

The makers of Candy Crush Saga have seen nearly $1bn wiped from the company's value after shares started trading on the New York Stock Exchange.

The stock price for King Digital Entertainment plc dropped more than 12% within minutes, dropping its value by $850m (£510m) to around $6.25bn (£3.8bn).

The initial public offering (IPO) valued the shares at $22.50 (£13.60), with a total capitalisation for the firm of $7.1bn (£4.3bn).

But shortly after opening the price dropped to below $19.50 (£11.78). It later eased slightly.

The flotation aim was to raise $500m (£302m) to help fund future development and expansion.

King has become hugely profitable based on the success of three games - Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga - even though it has 180 titles in total.

Candy Crush Saga is one of three key games for King Digital

The company has more than 324 million monthly unique users, and operates a website with 14 languages.

However many investors have been wary of games firms with a limited range of products.

They cite the demise of one-time market leader on Facebook, Zynga, and its Farmville as an example to avoid.

King has offices in Stockholm and London, and games studios in several European cities.

It was founded in London originally as Midasplayer Ltd in 2003 before King Digital was registered in Dublin last July, to assist in inter-country transfer pricing, and "intended to provide us worldwide tax efficiencies".

Midasplayer directors include Swedes Sebastian Knutsson 45, and Lars Markgren, 50, and Italian CEO Riccardo Zacconi, 46.

Its website, through which players can buy 'freemium' game tokens, is domiciled in Malta.

In January, it posted a blog explaining its reasons to buy the EU trademark for the word "candy" and application for the US equivalent.

It said the reason was to protect its intellectual property (IP) and thwart competitors trading on its name.

In its February US IPO listing document, King warned potential investors that unauthorised distribution or piracy, particularly in Asia, may harm its revenue and entail costly litigation to protect its IP.

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