Thousands Of Pubs And Restaurants Cut Prices

Thousands of pubs and restaurants across the UK are lowering their food and drink prices - for one day only.

Up to 40 leading businesses are involved in the stunt, including the pub chain JD Wetherspoon and Pizza Hut, with up to 15,000 outlets in total said to be taking part by trimming their prices by 7.5%.

The move is part of a Europe-wide campaign - led by French businessman and lobbyist Jacques Borel - to persuade governments to reduce levels of VAT on food and drink in the hospitality sector.

In the UK, that would involve cutting VAT from 20% to 5% to give it tax parity with supermarkets.

JD Wetherspoon chairman Tim Martin wants a level playing field

The industry suggests that the taxman is missing out, arguing that more could be raised in tax from making meals out more competitive at a time of constrained family budgets.

The hospitality sector says tax parity would mean higher employment - helping arrest the decline in pubs and restaurants and prompting further investment to assist economic recovery.

Mr Borel estimates that 670,000 jobs could be created in the UK by reducing the 20% VAT burden to 5%.

The issue has long been championed by JD Wetherspoon chairman, Tim Martin, who warned earlier this month that the pub industry faced an uncertain future.

He told Sky News then: "I am pleased to report another year of progress, with record sales, profit and earnings per share, despite having paid £551.5m in taxes.

"It is unsustainable to have far higher taxes for the pub industry than those for supermarkets.

"Already, 10,000 pubs have closed and many others are suffering, through insufficient investment.

"In particular, there should be VAT equality for pubs, restaurants and supermarkets," he said.

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Post Office Dispute: Christmas Strike Threat

A union is threatening industrial action at post offices into the Christmas season unless a row over jobs, pay and closures is resolved.

The Communication Workers Union (CWU), which is locked in a separate dispute with Royal Mail over privatisation, issued the ultimatum as it confirmed a fresh strike affecting hundreds of Crown post offices.

CWU members at Crown post offices in England, Wales, Northern Ireland and most of Scotland will walk out on Monday, followed by a strike in a handful of branches in Scotland on Tuesday, the union said.

It will be the 12th round of industrial action since Easter, while staff are also taking other forms of action including a sales ban on financial products and services.

Dave Ward claims staff are paying for bosses' bonuses with their jobs

The union is opposed to plans to franchise or close 75 Crown offices, the larger sites usually found on high streets.

Dave Ward, CWU deputy general secretary, said: "If the Post Office thinks this dispute will simply fade away they are sadly mistaken.

"Our members are fiercely opposed to the company's plans to close and franchise offices, slash jobs and impose a pay freeze.

"The company's plans are to downgrade the network, reduce services to local communities and hit jobs in the network. There is no mandate for this course of action and customers across the country are appalled at the reckless attitude of the Post Office towards these public services.

"We have tried talking to the Post Office about costs and efficiencies, but this is a company which made £94m profit last year and paid significant bonuses totalling £15.4m primarily to senior managers. This can't be paid for by cuts to frontline jobs and services, it's simply not right.

"Next week's strike and the continuing sales ban activity will continue into the Christmas period unless management see sense and negotiate a fair deal for Crown office staff."

The union said the strike will affect up to 4,000 staff in 372 offices.

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Libor Scandal: ICAP Fined Amid Criminal Probe

The London-based brokerage ICAP has been fined £55m and told three individuals will face criminal charges in connection with the Libor rate-rigging scandal.

The financial penalties, previously reported as imminent by Sky News, were confirmed by the company - headed by former Conservative Party Treasurer Michael Spencer - moments before news of the charges emerged.

The City watchdog, the Financial Conduct Authority (FCA), imposed £14m of the total fine while US regulator the Commodity Futures Trading Commission (CFTC) secured £41m.

Eric Holder confirmed the criminal charges

The CFTC found that ICAP brokers, including one known as "Lord Libor", helped fixed the rate for a period of at least four years.

It also highlighted various email conversations including one in which a Ferrari was offered as an apparent bribe.

In its later statement announcing criminal charges, the US Justice Department outlined its case against three brokers it alleged were part of the manipulation of Libor.

The men were named by authorities as former ICAP employees Daniel Wilkinson and Colin Goodman from England and Darrell Read - a New Zealand national.

Each is accused of conspiracy to commit wire fraud and two counts of wire fraud and face a maximum 90 years in jail if convicted.

US Attorney General Eric Holder said: "By allegedly participating in a scheme to manipulate benchmark interest rates for financial gain, these defendants undermined the integrity of the global markets.

"They were supposed to be honest brokers, but instead, they put their own financial interests ahead of that larger responsibility and as a result, transactions and financial products around the world were compromised, because they were tied to a rate that was distorted due to the brokers' dishonesty."

A separate investigation by the UK's Serious Fraud Office into the setting of the Libor rate is continuing.

The Financial Conduct Authority confirmed a civil fine settlement

In its statement on Wednesday, after confirming the civil fine, the FCA said ICAP's misconduct involved a "significant number of brokers (including two managers) and occurred over a number of years between October 2006 and November 2010."

The misconduct included, the FCA said, brokers colluding with traders at UBS to manipulate the (Japanese Yen) JPY Libor rates for the benefit of the traders.

The statement said it involved brokers deliberately disseminating incorrect or misleading Libor submission levels and "one broker receiving corrupt bonus payments (at the instigation of one manager) as a reward for his assistance in manipulating the JPY Libor rates."

Confirmation of the civil settlements against the interdealer brokerage - which essentially acts as an intermediary in deals between bank traders in the global financial system - takes the aggregate penalties from the scandal to date to more than £1.7bn.

The £55m penalty is a relatively modest sum when viewed in the context of the fines imposed on three other financial institutions which have settled with regulators over Libor.

Barclays paid just over £290m, Royal Bank of Scotland just over £390m and UBS just over £1bn.

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Osborne Takes Legal Action Over EU Bonus Cap

By Mark Kleinman, City Editor

George Osborne is to take legal action against Brussels over the European Union's proposed move to cap the bonuses of thousands of British-based bankers.

Sky News has learnt that Treasury officials have been considering the move for several months.

A decision to formally challenge Brussels in the courts over measures to restrict bank bonuses echoes a similar legal action launched by the Treasury in April over the EU's proposed financial transactions tax (FTT).

The details of the Treasury's complaint are unclear, although banking industry sources said they had been told that a legal challenge had been lodged by the Government with the European Court of Justice.

The move is politically risky for the Chancellor, who is likely to be portrayed by Opposition politicans as a defender of high pay for wealthy bankers at a time when Ed Miliband, the Labour leader, is positioning himself as a defender of ordinary consumers.

Mr Osborne is expected to say that the proposed cap – which would impose a ceiling on bonuses of twice the base salary of a bank employee – risks undermining the City's status as a global financial centre and the objective of creating stronger and safer banks.

He may find himself insulated from the most trenchant political attacks by virtue of the fact that his position is endorsed by independent regulators.

The Prudential Regulation Authority (PRA), an arm of the Bank of England, is also opposed to the cap, arguing that it risks increasing instability in the banking system by driving up fixed costs.

About two-thirds of those affected by the cap are said to work in the UK

British-based lenders have argued against the cap, saying that they will have little choice but to inflate basic pay if they are to compete with rivals unaffected by the new restrictions.

Andrew Bailey, the PRA's chief executive, echoed their opposition at a Treasury Select Committee hearing earlier this year.

He said that the cap would "reduce the discipline in the system but it won't reduce overall remuneration" and warned that it "will institute an unhelpful culture of banks spending their time finding ways to get around the rules".

Without a legal challenge, UK regulators have little scope to overturn or ignore the cap despite the fact that regulators and many Westminster-based politicians agree that it will be potentially counter-productive.

"There will certainly be an expression of the sentiment that the cap is likely to result in an increase in fixed costs which could expose banks to some risk when profitability is low or negative, as there would be less scope to adjust pay," said a source familiar with the PRA's thinking.

Douglas Flint, the widely-respected chairman of HSBC, has paved the way for Europe's biggest lender to increase salaries in time for the introduction of the new ceiling.

The source said the text of the consultation paper had not yet been finalised, but denied that the PRA would allow a wider array of payments, such as pension contributions, to count towards executives' base salaries when calculating the multiple allowed for bonuses.

Some senior bankers say the regulator has appeared to be receptive towards that idea during recent discussions.

The British Bankers' Association has predicted that 35,000 bank employees around the world will be affected by the cap, approximately two-thirds of whom are based in the UK.

A Treasury spokesman declined to comment.

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Miliband Warns Energy Firms After Backlash

Ed Miliband has rejected warnings his plans for an energy price freeze if Labour regains power will spark blackouts.

The Labour leader told Sky News he was serious about ending the "blatant overcharging of millions" as he brushed off criticism about the pledge.

In a surprise move, Mr Miliband vowed on Tuesday to freeze gas and electricity prices for 20 months if he becomes prime minister in 2015.

He has also now written to the "Big Six" energy companies warning that they will be "part of the problem" unless they support the move.

Ed Miliband insists it is time to "reset the market"

Firms claim it could lead to energy shortages and power cuts as the industry is starved of the investment it needs and business chiefs have also been critical.

Shares in Centrica - British Gas's holding company - were down almost 4% in early trading, and shares in Southern Electric and Swalec owner SSE fell 3.6%.

Centrica chairman Sir Roger Carr said: "We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on."

Energy Secretary Ed Davey added: "When they tried to fix prices in California it resulted in an electricity crisis and widespread blackouts. We can't risk the lights going out here too.

"Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt."

But Mr Miliband hit back, saying: "There are bound to be people coming up with scare stories ... California was a totally different approach."

Energy firms argue they need money to overhaul UK power stations

His plans would see a price freeze from 2015 until 2017 while the sector is reformed, with watchdog Ofgem axed, firms split into generation and retail arms and competition increased.

The Labour leader insists it is time to "reset the market" and told the industry he would not help guarantee funding for its development if it does not fall in line.

In his letter, he wrote: "I appreciate that you will not welcome all aspects of this package but it is my firm view that without resetting the market we are not going to see the public consent that is required to underpin the scale of taxpayer backed guarantees for which you have argued.

"I am prepared to make the case for sharing the risks of such investment, but that must be against the backdrop of a market that customers believe works for them.

"You and I know that the public have lost faith in this market. There is a crisis of confidence. We face a stark choice.

"We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution."

Mr Miliband announced the 20-month price freeze in his conference speech as he sought to show only his party could tackle a "cost-of-living crisis".

Pitching the next election as a battle between Tories representing the "privileged few" as ordinary families and small businesses suffer, he repeatedly declared: "Britain can do better than this."

"I will lead a government that fights for you," he vowed as he insisted he would relish a contest with David Cameron based on leadership and character.

Labour claims the freeze, to last from May 2015 until January 2017, would save the typical household £120 and an average business £1,800.

Consumer group Which? has said it will "give hope to the millions worrying about how they can afford to heat their homes" but the CBI warns it will damage Labour's "pro-enterprise credentials".

The energy sector's umbrella group, Energy UK, accused Mr Miliband of "posturing to no purpose" and warned the freeze could have drastic consequences.

Chief executive Angela Knight said: "Freezing the bill, may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000 plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone."

SSE claimed price freezes would lead to "unsustainable loss-making retail businesses" and suggested the Government's energy policy costs be put into general taxation instead of on bills.

"This would wipe £110 off the average person's bill and shift the cost away from those who can't afford to pay and on to those who can," a spokesman said.

Simon Walker, director general of the Institute of Directors, said: "We should think very, very carefully before piling more distortion on an already grossly distorted energy market. Price controls only add greater uncertainty to companies who we need to take the financial risks of energy investment.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "When the government fixes prices, it always ends in a disaster for consumers.

"Ed Miliband is sticking by the green taxes and expensive subsidies that drive up the price of energy, so at best this new policy would just store up massive price hikes for another day. At worst it could create a crisis and force the government to bail out the sector."

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Record Property Prices Fuel Bubble Debate

An annual surge of almost 10% in London's house prices has cast more fears about a bubble and highlighted a growing divide in the UK market.

The Office for National Statistics recorded a 9.7% increase in the capital over the year to July, helping to push the value of homes across England to a new high of £255,000 on average.

Prices in London and the wider South East were both found to have raced past their 2008 peaks and stood at an average of £438,000 and £303,000 respectively.

Property prices in the East of England and the South West also edged close to their previous highs but while a 3.7% year-on-year increase was measured in England as a whole, prices dropped by 2% in Scotland and 0.7% in Wales.

Prices in Northern Ireland were up by 1.8% year-on-year.

North East and North West England both recorded falls of 1.3% and 0.7% respectively - highlighting a growing north-south divide, though the ONS said the annual pace of house price inflation picked up across the UK in July to its fastest rate recorded in 2013 so far at 3.3%, taking values to £245,000 on average.

The price rises have prompted concerns that Government initiatives to kick-start the housing market such as Funding for Lending and Help to Buy are in danger of creating a property bubble, with borrowers over-stretching themselves as access to low-deposit deals returns.

In an interview with Sky News, the Business Secretary Vince Cable said the second phase of Help To Buy might have to be reconsidered while the Royal Institution of Chartered Surveyors (RICS) suggested that a 5% cap should be placed on annual house price growth to stop any future bubble.

Matthew Pointon, property economist at consultancy Capital Economics, described London today as a "special case", with prime central London in particular seen as a safe haven for overseas buyers to place their cash.

He said some areas were seeing "bold behaviour" from buyers and predicted that in the short term, a shortage of homes on the market in London is likely to spell further price gains in the capital.

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Inflation 'Ruining Power Of Savings Accounts'

A report highlighting deteriorating consumer saving power claims £10,000 invested five years ago in the average savings account would only be worth £8,844 today.

The website moneyfacts.co.uk issued the findings - charting the effects of taxes and inflation on savers - as official figures credited slowing fuel cost rises and summer discounting of autumn clothing for easing inflation.

The Office for National Statistics said the Consumer Price Index (CPI) measure slowed from an annual rate of 2.8% in July to 2.7% in August - also spurred by a lower rise in air fares compared to the same period last year.

The fall in the CPI rate was credited to clothing and footwear inflation coming at 2% compared to 2.8% 12 months previously, at a time of year when retailers were introducing new full-price autumn ranges.

Meanwhile, petrol prices rose 2p per litre compared to a rise of 3.5p per litre in August 2012, mirroring movements in oil prices.

Air fare increases were smaller than those in August 2012

Air fares were up 9.4% compared to 10.2% a year ago, with the main downward effect coming from domestic routes.

The ONS said the most notable upward contribution to inflation came from furniture, household equipment and maintenance where prices rose for a variety of furniture items and household appliances.

After the figures were released, moneyfacts suggested only three of the 840 ISA and non-ISA accounts on the market now negated the effects of tax and inflation on savers.

It calculated that to beat inflation, a basic rate taxpayer at 20% needed to find a savings account paying 3.38% per annum, while a higher-rate taxpayer at 40% needed an account paying at least 4.5%.

Moneyfacts has questioned the concept of savings accounts

The effect of inflation on savings, it said, meant that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £8,844.00 today.

Moneyfacts editor Sylvia Waycot said: "Inflation may have fallen but it is still high enough to ruin the spending power of any feeble interest paid on today's savings accounts, which leaves the elderly reliant on savings income and the young saving for a house deposit high and dry.

"It is time to start calling savings accounts by a different name as 'savings' suggests growth and the reality is one of stagnation."

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