British Gas Customers Hit By Price Hike

Around 8.5 million households are being hit with a 6% rise in their energy bills as British Gas becomes the latest utility giant to hike its tariffs.

The move is estimated to add another £80 to the typical annual dual-fuel bill for a British Gas customer, or £1.50 a week.

The price increase is more than double the rate of inflation.

It was first announced last month but has sparked renewed anger after British Gas parent company Centrica revealed it was set to make profits of £1.4bn this year.

Experts also predict around £575m of pre-tax profit from its British Gas residential arm after gas consumption for the first 10 months of 2012 rose 9% because of colder than normal weather.

Mike Jeram, head of business and environment at trade union Unison, said: "The billion pound profits of energy companies, announced at the same time as massive price hikes for their customers, are an insult to the many families who are struggling to get by as winter takes hold."

Audrey Gallacher, director of energy at Consumer Focus, called for rules forcing energy firms to tell customers about the link between bill rises and profits.

She said: "Consumers will be sceptical over supplier profits, given questions over how justified recent price rises have been."

British Gas's bill increase comes amid a spate of tariff rises among the UK's "big six" power firms.

SSE was the first to increase prices, lifting bills by an average of 9% in mid-October, affecting about five million electricity customers and 3.4 million gas customers.

Npower follows with its increase on November 26, while EDF and Scottish Power will raise bills in December.

German-owned E.ON - the last of the utility firms to lift prices - is reportedly planning to announce an 11% tariff rise next month, which will take effect in January.

They have all blamed rising wholesale prices, which they say is out of their control, but the sector has been embroiled in controversy this week after accusations of alleged wholesale gas price-rigging.

One supplier, Co-operative Energy, has bucked the trend by announcing it will reduce its electricity charges by 2% from December 21.

Co-operative Energy, which supplies 60,000 households following its launch 18 months ago, said the move reflected lower wholesale electricity costs.

Regulators are investigating claims made by a whistleblower to the Financial Services Authority (FSA) and energy watchdog Ofgem of alleged gas price manipulation on September 28.

All six of the big energy companies have released statements denying any involvement in attempts to fix the £300bn market.

Centrica said an internal investigation "found nothing unusual" in its wholesale gas trading activities on the day when price manipulation was alleged to have taken place.

The group, which makes most of its profit from upstream gas and oil exploration, is expected to see a 6% profits improvement in its residential energy supply, driven by stronger trading over the first half of the year, with the figure forecast to be lower for the second half of the period.

Its trading update comes after rival SSE reported a 38% jump in half-year profits to nearly £400m.

Centrica said competition in its division which supplies small and medium-sized businesses had cost it 43,000 customers since June.

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Fuel Price Misery: AA Demands Action

The AA has accused ministers of failing drivers and businesses by failing to clamp down on what is sees as unfair fuel prices.

The motoring group says while average unleaded prices have gone down from 138.95p a litre in mid October to 135.08p - with diesel dropping from 143.74p to 141.89p - motorists are still being short-changed.

It believes the fall in wholesale petrol prices across Europe should have knocked UK pump prices down by between 10p and 11p a litre instead of by an average 4p.

Despite the signs that the Chancellor is poised to postpone the planned fuel duty rise of 3p a litre due in January, the AA said drivers were facing a series of pressures including a "postcode lottery" in fuel prices.

It found that motorists in one area can be charged as much as 5p a litre more than drivers a few miles away.

AA president Edmund King said: "The Government momentarily had a grip of this monster when the previous Transport Secretary (Justine Greening) called in the industry to agree wholesale price transparency.

"This initiative stalled when the Office of Fair Trading (OFT) called for information on road fuel pricing - to which the industry has responded by pumping up wholesale prices and then not passing on cost savings in a timely fashion.

"The average UK domestic energy bill is £1,252 but the cost of fuel for the average car consuming 1,200 litres a year is over £1,500.

"This week the Government said it was going to tackle high gas and electricity bills, yet lets drivers and businesses down by not reacting swiftly to runaway wholesale and pump prices."

Earlier this week, Treasury Economic Secretary Sajid Javid said the Government understood the pressures facing households and was determined to help with the cost of living.

He said: "The Government is doing all it can to help hard-working families with the cost of living and putting money back into their pockets.

"Action on fuel duty is part of this. Fuel duty is currently 20% lower in real terms compared to its peak in March 2000 and 7% lower compared to May 2010."

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RBS And Lloyds TSB 'May Cost Taxpayer £66bn'

More than £66bn of taxpayers' money invested in RBS and Lloyds TSB may never be recovered, MPs have warned.

The Commons Public Accounts Committee (PAC), said that lessons needed to be learned from the sale of Northern Rock - and applied to decisions concerning any future sale of the banks "with value to the taxpayer taking precedence over speed of exit".

The MPs, who are charged with monitoring Government financial affairs, said that the Treasury made a series of costly mistakes in its handling of Northern Rock, which had to be taken into public ownership in 2008.

Just two bidders were interested in taking it over, sparking fears that the two remaining state-backed banks, RBS and Lloyds, will fail to be sold for a profit.

Auditors earlier this year estimated that losses on the Northern Rock rescue would amount to £2bn. That figure includes the loss of about £480m on the sale of Northern Rock Plc to Virgin Money, owned by Sir Richard Branson, last year.

The estimated losses were highlighted in a report in May by the National Audit Office (NAO) into the nationalisation of the bank in 2009 and its subsequent part sale.

Northern Rock Plc was sold to Virgin Money, owned by Sir Richard Branson

The report criticised the then Chancellor Alistair Darling for failing to look at the full consequences to the taxpayer.

Labour MP Margaret Hodge, who chairs the PAC committee, said: "The lack of competition does not fill us with confidence that the taxpayer will make a profit on the sale of the two banks which remain in public ownership, RBS and Lloyds.

"There is a risk that the £66bn invested in RBS and Lloyds may never be recovered.

"It is vital that the final decisions on the wholly owned banks are made with value to the taxpayer taking precedence over speed of exit.

"This will not be the last banking crisis, and the next one is likely to be different. The Treasury must ensure it retains the right staff with the right skills to understand the risks and respond effectively.

"It needs to learn the lessons from the creation and sale of Northern Rock and make sure that these are applied in future, including to any sale of RBS and Lloyds."

The run on deposits at Northern Rock in September 2007 was an early and pivotal moment in the financial crash and subsequent meltdown.

After nationalisation, the bank was split into a mortgage lending and savings arm, Northern Rock plc, and Northern Rock (Asset Management), which held its bad debt.

The move was supposed to generate lending but it fell well short of its £15bn target, reaching just £9.1bn.

MP Margaret Hodge says the £66bn invested in RBS and Lloyds may be lost

The Treasury has accepted its part in a "monumental collective failure", according to the report.

It has now set up a dedicated team, UK Financial Investments (UKFI), to manage taxpayer shares in banks.

Earlier this year the Treasury's most senior official, Sir Nicholas Macpherson, admitted the taxpayer lost out because of five months of "drift" as the crisis unfolded.

A spokesman for the Treasury said the decision to nationalise Northern Rock in 2008 was taken in the interest of financial stability, and that the sale of Northern Rock plc to Virgin Money last year represented "good value for money for the taxpayer, and has helped increase high-street competition".

A Treasury aide added: "RBS and Lloyds have made good progress over the last two years and our goal remains the same: To get the best possible value for taxpayers."

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "This report on the expected cost of the Northern Rock fiasco will come as a devastating blow for taxpayers who are already carrying a huge loss from the Government's stake in RBS."

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John Lewis Boss Urges Action On Foreign Firm Tax

The managing director of retail chain John Lewis has become the first leader of a British business to call on the Government to examine the way foreign multinationals pay tax in the UK.

Andy Street told Jeff Randall Live exclusively that the Treasury needs to do more to prevent the likes of online retailer Amazon "destroying the UK tax base" and potentially putting British companies out of business.

The comments by Mr Street come amid mounting concern about the tax policies of big international firms in the UK.

This week, Amazon, alongside Google and Starbucks, came under fire from MPs when it appeared before the Public Accounts Committee.

Mr Street said: "If you actually improve your business by investing ... you have got less money to invest if you are giving 27% of your profits to the Exchequer than, clearly, if you are domiciled in a tax haven and you've got much more.

"They (Amazon) will out-invest and ultimately out-trade us and that means there will not be a tax base in the UK.

"I do think it's an issue that needs to be examined."

Mr Street said the question centres on determining whether earnings made in a particular country are to be taxed in that country.

"Exactly how that happens I don't know, but that's the principle that needs to be examined," he said.

Asked whether the Treasury should address the Amazon question, Mr Street replied: "I think it should look at exactly what's happening, yes."

Amazon said it used Luxembourg as a base for its European operations because of the favourable tax rate there.

Andrew Cecil, the online retailer's public policy director, said the Luxembourg business' turnover in 2011 was £7.3bn yet it paid taxes of just £6.4m.

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Credit Card Insurer Close To FSA Deal

CPP, one of Britain's biggest credit card protection providers, is poised to reach a settlement with regulators that could safeguard its future.

I understand that CPP is on the verge of announcing that the Financial Services Authority (FSA) has agreed to drop its probe into the company in return for a binding agreement on a multi-million pound compensation pot for customers.

The FSA has been investigating CPP for months over allegations that it mis-sold products such as identity theft cover, potentially to thousands of consumers.

People close to the situation said that a statement confirming the provisional end of the regulator's probe could come as soon as this week.

A binding deal would require commitments from the banks through which CPP policies were sold to stump up hefty compensation bills.

I have learned that some of Britain's major banks are continuing to oppose a settlement on terms recommended by the FSA on the grounds that they would be financially disproportionate to their involvement with CPP.

The credit card insurer disclosed earlier this month that it had received a takeover approach from the American company behind the rival Sentinel brand.

CPP's impending agreement with the regulator follows a string of other mis-selling scandals affecting British banks, including those relating to payment protection insurance and interest rate swaps.

Santander UK, which recently made a substantial provision for misconduct-related payments understood to include CPP, was a major sales channel for its policies.

CPP has put aside tens of millions of pounds for customer compensation, although the final liability of the entire banking industry will be significantly higher.

CPP and the FSA refused to comment.

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Heathrow Third Runway Campaign Takes Off

Heathrow Airport's owners have stepped up their campaign for a controversial third runway by claiming that a lack of capacity at the major hub is costing the economy up to £14bn annually.

It believes the price in lost trade and jobs could rise to £26bn a year by 2030.

The report by Heathrow is the latest salvo to be thrown into the fierce debate over how to boost air capacity in south east England.

The Government has appointed former Financial Services Authority chief Sir Howard Davies to lead an aviation commission to resolve the row but it has attracted criticism because it will not submit its report until the summer of 2015.

Heathrow bosses are lobbying for a third, extra, runway at the west London airport and a separate study has previously suggested an expanded Heathrow would need to cross over the M25 motorway.

But environmentalists and residents surrounding Heathrow have said they would fight any such plan.

Other options for the Davies review to consider include the proposal favoured by London's mayor Boris Johnson: a new hub airport in the Thames Estuary or expanding Gatwick, Luton or Stansted.

Heathrow's report ruled out as "unviable" the so-called Heathwick plan, where Heathrow and Gatwick would be joined by a rail link.

The study, compiled for the airport by economics consultants Frontier Economics, stated: "The choice for the UK is not between two hubs or one, but between one hub or none. Only a single airport can operate as a hub in the UK.

"That leaves three options for the UK Government: It can do nothing and let the UK fall behind its European competitors at the cost of lost growth and jobs.

"It can add additional capacity at Heathrow or it can close Heathrow and replace it with a new hub airport."

The report said that Heathrow operates at 99% capacity and that there was no room to fit in new trade routes to the emerging economies which were important for future economic growth.

It added that there were 1,532 more flights to the three largest cities in mainland China from Paris and Frankfurt than there were from Heathrow.

Heathrow chief executive Colin Matthews said: "If anyone was still in doubt about the importance of aviation to the UK economy, today's report should lay those doubts to rest."

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Toyota Issues Another Massive Recall

Toyota has announced its second huge recall of vehicles in as many months in a move affecting almost 2.8 million cars world-wide.

The company blames problems with steering mechanisms and its hybrid system water pump.

The Japanese firm said it was recalling 1.5 million vehicles in Japan, 670,000 in the United States and 496,000 in Europe to correct  steering intermediate extension shafts which can be damaged at slow speed.

But it insisted that the problem, seen in cars such as the second-generation Prius and certain Corolla models, could be fixed in about 50 minutes.

Separately, the car-maker is recalling 630,000 vehicles worldwide, including 350,000 in the US and 175,000 in Japan, to fix water pumps in hybrid vehicles.

Toyota UK told Sky News there were 75 thousand British cars affected by the two recall issues in total and there had been no reported accidents in the UK as a result of the steering problem.

Customers whose cars are subject to the recall will receive a letter to that effect within 6 weeks, the company said, though anyone concerned could enter their car's registration into a special search database on the Toyota UK website to check whether their vehicle is affected.

The move is the latest in a series of embarrassing recalls for the firm.

In October, Toyota said it was pulling back more than 7.4 million vehicles worldwide to fix faulty power window switches, the industry's biggest single recall since Ford took 8 million vehicles off the road in 1996.

A previous series of Toyota recalls involving more than 10 million vehicles between 2009 and 2011 damaged the firm's image but it recovered and earlier this month raised its full-year net profit forecast to $9.7 billion (£6.1bn), citing solid sales.

This year's profit forecast comes despite a big drop in car sales in China since September, when anti-Japanese protests erupted over a diplomatic row.

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Sainsbury's Sees Pre-Tax Profit Up 2.5%

Supermarket chain Sainsburys has reported like-for-like sales for the half year rise by 1.7%, with pre-tax profit up 2.5% at £405m.

Revenue, excluding VAT and fuel, for the six months to September 29 was up 4% at £12.16bn.

Total sales in the period were up 4% at £13.365bn.

In early trading shares in the company were down 0.85%.

The profit boost for Britain's third largest supermarket chain was helped by the development of its online and convenience stores business, the two fastest growing grocery sub-sectors.

The group, which has enjoyed 31 consecutive quarters of underlying sales growth, has continued to outshine industry leader Tesco.

Last month Tesco posted a 12.4% fall in first half UK trading profit. Asda, the second largest in the market, is due to update on its third quarter on Thursday.

Chief executive Justin King told Sky's Eamonn Holmes: "If you compare our performance with all our major competitors, we are currently doing the best, both in terms of sales and profit – and it is that combination that is important."

"The only way to grow profit at the moment is serving more customers and selling more groceries, and that is what we have done."

Mr King said that the firm would employ around 20,000 temporary staff during the Christmas period, and said habits are changing with festive spending.

"One of the changes we are seeing in customer shopping behaviour now is that they are spreading the cost of Christmas over a longer period of time."

The company said consumers continue to be shrewd when it comes to purchases, with "customers putting on average one fewer item in their basket".

The chain has expanded its convenience store business by 20%, year-on-year and has made plans to further target customers who use the Nectar card, in the previously announced joint venture - Insight 2 Communication (I2C) - with loyalty programme owner Aimia.

Meanwhile, Mr King told Holmes that consumers can have a say in the issue of multinationals operating complicated structures offshore to avoid paying UK corporation tax.

"I think customers have to understand that they can vote with their wallets," he said.

"If they believe that the companies that they are doing business with are not paying an appropriate level of tax and those companies have competitors who are, then they can switch where they spend their money."

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Energy Firm SSE Defends 38% Profits Rise

The energy firm SSE has defended a 38% rise in half year profits at a time when its gas and electricity bills are rising by 9% on average.

The company, formerly known as Scottish & Southern Energy, made an adjusted profit before tax of £397.5m in the six months to September 30.

SSE's retail business, which supplies electricity and gas to homes and businesses, reported an operating profit of £75.7m for the first-half after posting an operating loss of £101.4m a year ago.

Lord Smith of Kelvin, the firm's chairman, said: "While some observers may choose to criticise SSE for making a profit and paying a dividend (of 25.2p per share - a rise of 5%) I believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs while providing an income return that shareholders like pension funds need."

In August SSE became the first of the so-called 'big six' energy firms to announce inflation-busting increases to household bills.

It blamed "sustained increases" in the cost of using the electricity and gas networks, costs associated with mandatory Government schemes and the price it had paid for energy in the wholesale markets for the 9% rise, which came into effect last month.

Wholesale gas charges had risen 14% year-on-year, the group said and its bill increase would add another £8.53 a month on to the typical monthly direct debit, dual fuel customer - taking the average annual bill to £1,274.

In its statement today SSE said that despite the rise its retail profit margin was just 1.5%.

"The prices achieved for generating electricity have been weak and higher gas and non-energy costs unfortunately had to be reflected in the increase in household energy prices."

Adam Scorer, Director of Policy and External Affairs at Consumer Focus, suggested energy firms only had themselves to blame for criticism of profits.

"The furore over wholesale costs, energy pricing and company profits has deepened consumer distrust in the energy industry.

"Energy companies need to make profit so they can invest in our energy infrastructure. But if confidence is to be rebuilt in this market, the information that all energy firms are required to provide must be fully transparent, comparable, and include profit and trading information from across the whole of their business."

SSE's share price opened up slightly when trading began on the FTSE 100.

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Greece Forced To Borrow More From Markets

Debt laden Greece faces the prospect of going to the financial markets to avoid bankruptcy after Eurozone finance ministers delayed a crucial aid payment.

The country, which faces a bond repayment on Friday it cannot afford, was banking on Eurozone finance ministers releasing a long-delayed 31 billions euros (£23.5bn) to meet the bill.

But at a meeting on Monday night the ministers said they would gather again on November 20 because there was still work to do on finalising the details of the bailout.

Eurogroup head Jean-Claude Juncker said Greece had made progress on its commitments to reduce debt and the public deficit - and insisted there would be no problem for Athens in rolling over the debt.

He said: "I will do all I can to make sure that a decision is taken on November 20. "I won't tell you how but there won't be a problem on November 16 (Friday)."

European Economic Affairs Commissioner Olli Rehn explained that Greek banks would be able to take part in a government sale of treasury bills, providing the money Athens needs to cover the debt repayment.

If Athens was disappointed by the further delay to its bailout funds a proposal to extend its debt reduction deadline by two years to 2016 was accepted, despite strong reservations about the sustainability of Greek debt raised by the head of the International Monetary Fund (IMF), Christine Lagarde.

The IMF, which makes up the so-called Trioka of international lenders to Greece along with the European Central Bank (ECB) and European Commission, is worried about the extra cost the extension would impose.

A draft report by the Troika on Greek austerity efforts, seen on Monday, put the additional cost at nearly 33 billion euros (£26.3bn), with the bill rising as the economic outlook darkens.

Greece's debt mountain - now nearly 190% of GDP - is supposed to come down to 120% by 2020 and Madame Lagarde insisted that target be maintained though Mr Juncker believes it should also be extended by two years.

On Tuesday the 17 eurozone finance ministers join their 10 non-euro colleagues for another meeting, expected to focus on how to boost the slumping economy and the bloc's hotly contested 2014-20 budget.

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