Executives' 12% Pay Rise 'Unacceptable'

Executive pay has trebled over the past 10 years, despite the UK's banking crisis and double-dip recession, according to an independent think tank.

Over the last financial year, the chief executives of Britain's top companies have seen pay increase by 12% on average to £4.8m - or 185 times the average wage - the High Pay Centre said in a report.

It blamed the Government's failure to act for the rise, which compares to a pay increase of just 2.8% for most British workers.

New measures that give shareholders the power to veto executive pay increases are "a step in the right direction", the report said, but a vote every three years is "unlikely to achieve significant change".

And over the course of the so-called shareholder spring - when investors had the opportunity to vote against boss' pay packages - only two in the FTSE 100 were were rejected, it highlighted.

Deborah Hargreaves, the High Pay Centre's director, said it was crucial to keep the issue in the spotlight.

"It's wrong that Britain's bosses are taking home more and more money as their companies shrink, their employees are squeezed and jobs are being lost," she said.

"Chief executives are hoping that their big bonus and their inflated rewards culture will escape attention, now that the banking crisis has passed."

She added that the pay increases were "damaging to the economy and to the morale of Britons struggling to make a living".

The majority of growth has not been in salaries, the report found, but in bonuses, grants of restricted shares, long-term incentive plans and new pay structures.

The think tank said a "dramatic simplification" of top pay packages was needed, because "in the vast majority of cases, the way leaders are rewarded remains complex and hidden from public scrutiny."

"High pay - with rewards that are out of kilter with results - is having a corrosive impact on our living standards, our economy and our society," Ms Hargreaves added.

"It damages public trust in businesses and it demoralises employees whose rewards for their efforts are tiny in comparison with their bosses."

A Department for Business spokesman said: "We have taken firm action to reform the framework for executive pay, so that shareholders have the right tools to challenge companies when pay is excessive."

Last month, HM Revenue and Customs (HMRC) ordered some JP Morgan workers to pay tax - or face legal action - over allegations the firm transferred salary payments offshore.

HMRC said the money as "disguised remuneration" and not retirement benefits as claimed.

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Mega Monday To Make Online Sales History

Online retailers in the UK are expecting today to be the busiest shopping day in history.

Recent years have seen online shopping figures consistently peaking on the first Monday in December, dubbed Mega Monday.

Visa Europe predicts £320m will be spent on its cards alone as online transactions top 6.8 million, an increase of 21% on last year, making December 3 this year the busiest online shopping day in history.

It said: "A combination of pay day for the majority of consumers falling on the last Friday of the month and a weekend spent browsing the shops results in shoppers logging on to buy their gifts online on the subsequent Monday.

"All of these factors will result in consumers spending £222,222 per minute, making 4,722 transactions every 60 seconds."

This month will also see more than £11bn withdrawn from cash machines, equating to more than £41,000 per second in the pre-Christmas peak.

Sainsbury's Bank predicts a 1.3% rise in cash withdrawals compared with December last year, to reach a total of £11.1bn.

Friday December 21 is expected to be the busiest day for cash withdrawals, as it is traditionally when shoppers rush to buy last-minute gifts, while this Monday could give online retailers boosts of up to 70%.

Visa Europe commercial director Dr Steve Perry said: "On Mega Monday, people across the UK will go online and use their Visa cards to make 6.8 million transactions, the most in a single day in UK history. That's 21% more than in 2011, signalling that consumers are becoming increasingly accustomed to the advantages of shopping online for everyday purchases and special items, especially in the lead-up to Christmas."

Amazon.co.uk also predicts Mega Monday to be its biggest single day, with orders set to peak at 9.20pm.

Christopher North, managing director of Amazon.co.uk, said: "Monday December 3 could be the busiest day in the history of Amazon.co.uk, and we're preparing for it by hiring more than 10,000 seasonal employees across our eight UK fulfilment centres."

Marks & Spencer says it is prepared for what it expects to be its busiest day of the year.

Online analyst Experian expects UK consumers to make 115 million visits to retail websites this Monday, an increase of 36% on last year.

The busiest shopping day on the high street often falls two days before Christmas Day, with the weekend of December 22 and 23 expected to draw peak numbers of shoppers this year.

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Tax: Starbucks, Google And Amazon 'Immoral'

By Darren McCaffrey, Sky News Reporter

Starbucks, Google and Amazon have been accused of "immorally" avoiding paying their fair share of tax in the UK, as the Chancellor prepares a blitz on tax dodgers.

MPs on the Public Accounts Committee criticised the companies for the "unconvincing and, in some cases, evasive" evidence they gave on why their corporation tax payments are so low.

Starbucks told the committee it had made a loss for 14 of the 15 years it has operated in the UK, a claim the committee said it found "difficult to believe".

In a report, the MPs added that Amazon's representative left them frustrated because he was "evasive and unprepared to answer legitimate questions".

They also said Google "undermined its own argument" that profits should be taxed in the countries where they are made because it transfers its non-US profits, including from the UK, to Bermuda, which has a more advantageous tax system.

Starbucks says it is reviewing its tax arrangements

Margaret Hodge, who chairs the Public Accounts Committee, said: "Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here.

"This is outrageous and an insult to British businesses and individuals who pay their fair share.

"Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever.

"There is little credible information about what is going on. The evidence we took from large corporations was unconvincing and, in some cases, evasive."

Starbucks has now declared that it is preparing to change its tax affairs so that it pays more into Britain's coffers and there is growing pressure on others to follow suit.

The report was published as George Osborne prepares to unveil a £154m crackdown on wealthy companies and rich individuals who dodge tax.

Officials will be ordered to use the cash to draft in an army of investigators to target high earners who aggressively avoid or evade paying tax.

The money will also fund extra staff to speed up work challenging multinationals' transfer pricing arrangements to stop global companies using legal loopholes to shift profits out of the UK.

However, Mr Osborne has warned against pricing Britain out of the world economy.

"If we make our taxes less competitive, that will just mean more companies stay out of Britain," he said.

But Katja Hall, from Confederation of British Industry, told Sky News that tax avoidance is not a widespread problem.

"Companies pay £163bn in tax in the UK every year and the large majority of companies pay the right amount of tax," she said.

Mr Osborne's latest tax crackdown will be outlined in this week's Autumn Statement, which is also expected to contain bleak news for benefits claimants.

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Millions Of Households 'Feel Squeezed'

More than 10 million households are feeling financially squeezed and almost one in 10 have defaulted on a loan, bill or housing costs, a consumer group has said.

Releasing its findings ahead of Chancellor George Osborne's Autumn Statement this week, Which? urged the Government to ensure spiralling energy and food costs are kept under control.

The group's "squeezometer" found almost one in four people are feeling financially squeezed, equating to 10.2 million households.

Researchers found 9% of households have defaulted on a loan, bill or housing costs.

Some 6% of households have gone into an unauthorised overdraft or used a payday loan to tide themselves over.

Researchers highlighted consumers' top worries as the price of fuel, energy and food.

A string of energy firms have recently announced bill hikes, putting further pressure on families this winter.

Food costs are also on the increase, and last week the Office of Fair Trading said eight  supermarkets have agreed to a set of principles following concerns over special offers and promotions for food and drink.

The supermarkets have agreed not to artificially inflate prices to make a later "discount" look more attractive.

Which? executive director Richard Lloyd said: "With 10 million households feeling the squeeze and consumer confidence remaining low, the government has a job on its hands to convince people that everything possible is being done to keep unavoidable costs like energy and food bills under control.

"We're looking for further progress in reforming the energy market, an end to misleading food price promotions, and more competition in banking to take some of the pressure off hard-pressed consumers."

The research asked 2,100 UK adults in October if they had experienced a range of financial difficulties in the previous month.

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Osborne Eyes Tax Evaders And Pensions Of Rich

The Chancellor has promised to hunt down tax evaders and tax the wealthy - warning that everyone must make a contribution.

In his Autumn Statement on Wednesday, George Osborne is set to hit the pension pots of the wealthiest by slashing the £50,000 annual tax relief cap on pensions to as little as £30,000, according to The Sunday Times. That could raise between £600m and £1.8bn.

Tax evaders are also under the scanner of the Chancellor who told The Sun "we are hunting down those who evade tax wherever they try to hide".

The comments come as several leading football clubs face questions about their tax arrangements and amid an unprecedented public outcry over multinational corporations' tax avoidance through complex offshore mechanisms.

Starbucks, which recently came under fire from MPs over its tax affairs, is reportedly in talks with officials at Revenue and Customs about doing a deal.

In an article in The Sun, Mr Osborne said: "We are still all in this together. Everyone must make a contribution to dealing with our debts, from the richest in our society to those living a life on benefits.

"Every one of my Budgets has raised more from the richest. The situation under Labour where top people in the City were paying lower tax rates than their cleaners has been ended."

Meanwhile, shadow chancellor Ed Balls told the Sunday Mirror that a change of course was needed from David Cameron and Mr Osborne.

"When the medicine makes the patient sicker, you don't just take more of it. We need to change the medicine, or change the doctor."

Any form of mansion tax - or splitting council tax bands - is likely to be ruled out in the coming statement.

There is also speculation a planned 3p per litre rise in fuel duty planned for January may be delayed.

Some benefits are also expected to be frozen.

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Making Sense Of Britain's Lopsided Recovery

One of the most common observations you encounter here in London, where Sky News is based, is that despite all the headlines about recession - about the fact that this has been the worst slump in modern British history - it often doesn't feel as if there has been a recession at all.

And it turns out that this is quite right - London and the South East never experienced a double-dip recession at all.

And parts of London - particularly the east end of inner London - didn't even see a fall in their economic output in nominal terms during the deepest years of recession, in 2008/09, according to analysis of official statistics by Sky News.

Meanwhile, other parts of the country have seen the sharpest and deepest collapse in recent economic history. The double-dip recession was largely experienced by Northern Ireland and the North East of Britain, according to analysis from Capital Economics.

The difference in economic experience between London and other parts of the UK (it's not even necessarily just a North-South divide as parts of the South are also suffering) is greater than ever before on modern record. And the gap has widened more here in the UK than in any other major economy in recent decades.

With both the Labour and Conservative leaders trying to claim the mantle of being the "one nation" party, it's clear that in economic terms, Britain is anything but.

We have been travelling to postcodes all around the UK to see how the experience of the recession, and the fledgling recovery, has varied throughout.

We were disturbed by much of what we saw - families facing more hardship than ever before, while others in London are oblivious. Some households stuck deep in negative equity while others reap the benefits of a property boom.

We have produced a series of television and web pieces about the divergence in experiences depending on the postcode in which you live; we're calling it 'The Lopsided Recovery'.

The green line shows the double-dip recession

The first of those pieces concerns the overall growth picture. The official GDP figures show that Britain faced a very sharp recession in 2009, then recovered in 2010 and early 2011, only to face a double dip in 2012. But this masks an enormous divergence between regions.

The North East has had a far deeper recession than the broader UK. The size of its economy is still more than 5% below its 2008 peak. Meanwhile, London's economy has more than regained its pre-crisis peak. It never even saw a recession in 2012.

And if you look in nominal terms (in other words, before you adjust for inflation), East London expanded in 2008 and 2009. It was the only part of the UK to avoid a nominal-terms contraction in that year - aside from Aberdeen, home to the North Sea oil industry, which also grew throughout.

Eurostat said the disparity is greater in Britain than other EU nations

These kinds of divergences in experience are not unusual in an economy - there are always regional disparities in all countries as it's impossible for everyone to be growing at precisely the same speed all the time. But there is evidence that the gulf in experience is greater in the UK than elsewhere.

According to official EU figures, the disparity in real incomes between regions in the UK is greater than in any other European country.

An economic paper produced by the Department for Business, Innovation and Skills a couple of years ago found that while the regions of Britain converged economically more than other major countries between 1950 and 1985, between 1995 and 2007 they have diverged more than in other nations.

Convergence has been reversed in recent years

The worrying trend for the UK is that such disparities have only widened in the recent recession. This looks stark enough on paper - it is even more striking in person.

In Newry, Northern Ireland, where the economy is also more then 5% below the pre-crisis peak, Damien Quinn of one of the neighbourhood community associations, talks of a sharp rise in suicides.

Worn out by years of trying and failing to get work, young men (it is almost always young men) are killing themselves to escape the alternative: permanent unemployment, drug dependence and poverty. The latest funeral was just the week before he spoke to us.

In Hartlepool, Angie Wilcox of the Owton Manor Residents Association, sees a growing number of people coming through her doors for cheap food and help as they battle unemployment. She fears that welfare reforms will only make locals more desperate.

Meanwhile, in East London's Old Street, the area nicknamed 'Silicon Roundabout', Julia Fowler, who runs tech fashion start-up Editd, says she has barely seen any evidence of recession.

It is harder than ever to find decent employees; she has been expanding the business since it started in the depths of recession. For those in London, the main problems are that the cost of living - particularly when it comes to housing - just keeps rising, along with the local economy.

There's nothing inherently perverse about one part of the country performing better or worse than another. After all, a nation state is a union of different economic and cultural areas. However, the longer one part of the country remains so far shy of the rest, the more it will have to be subsidised by its richer regional neighbours.

This kind of regional redistribution already happens: according to the Centre for Economics and Business Research, London taxpayers pay a subsidy of around 20% which goes to its regional neighbours; Northern Ireland receives a subsidy of almost 30%.

The longer such imbalances persist, the more resentment is generated on both sides: one has only to look at Greece and the rest of the Eurozone, which is an analogous situation, except in a dysfunctional currency area.

And the longer certain parts of the country are excluded from economic success, their people consigned to more or less permanent unemployment, the more difficult they will find it to regain their feet at any point in the future.

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Autumn Statement: CPS Calls For Action On Debt

George Osborne should introduce cash freezes to avoid missing his debt target, a right-wing think tank has said just days before the Autumn Statement.

The Centre for Policy Studies (CPS) claimed the country's debt will be between £20bn and £30bn higher than Government forecasts in 2015/16.

To avoid this, the organisation urged the Chancellor to save money by introducing freezes on international aid and all benefits except for the state pension.

The halt on public sector pay rises should also be clarified, it added, as "many departments have interpreted the existing freeze very differently".

These measures need to be part of a plan to reduce Government spending to 38% of GDP within four years, the CPS said, adding that a simplification of the UK's "dysfunctional tax system" is also needed.

The calls come ahead of the Autumn Statement on December 5, when Mr Osborne will reveal his latest economic plans to Parliament.

The CPS' head of economic research, Ryan Bourne, said it is clear that assumptions about the potential underlying growth of the economy have been over-optimistic.

"It's increasingly obvious that a further spending review is necessary, and this should go further in looking at the scope of government activity," he said.

And Tim Knox, the director of the CPS, stressed that need for a "great reduction in Government activity".

"The Chancellor has a choice: will he put the long-term economic health of the country above the temptations of short-term political gain?" he said.

"If he tweaks the numbers to meet his rules and if he announces a wide range of policy initiatives which might grab a few headlines, then we will know that this is a statement inspired more by politics than economics."

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Corporation Tax Transparency Call From KPMG

Companies that operate in the UK have been urged to accept greater transparency over their complicated tax structures by a top professional services firm.

KPMG described it as a "sea change" for companies as they learn to disclose more account details.

The firm's head of tax Jane McCormick said: "We believe that corporations are going to have to embrace transparency to explain what taxes they are paying and where they are paying them."

But resistance still remains with some top firms to greater openness, according to a KPMG survey of 57 senior tax executives at leading British and UK subsidiaries of foreign multinationals (MNCs).

Some 40% of the executives still oppose a General Anti-Abuse Rule (GAAR) targeting highly abusive or artificial tax planning.

Ms McCormick added: "By doing so they will also illustrate how their presence contributes to the economies in which they operate whether that be by generating employment (income taxes), sales (indirect taxes), paying business rates or through corporation tax."

The push for transparency comes amid unprecedented public outcry over MNCs' tax avoidance through complex offshore mechanisms.

Ms McCormick added: "The risk is that, without this transparency, the current debate may turn into a witch-hunt, deterring businesses from investing in the UK."

Her comments come just days before the Commons Public Accounts Committee (PAC) is expected to release a report on its questioning of executives from three leading MNCs.

The PAC questioned representatives of Starbucks, Amazon and Google about the amount of corporation tax they pay in Britain.

When grilled by its chair Margaret Hodge, Starbucks' chief financial officer Troy Alstead said his firm had only made a profit once in the 15 years it has been doing business in the UK.

Amazon director of public policy Andrew Cecil was forced to explain why a CD or a book bought in pounds on Amazon.co.uk delivered from a UK warehouse by the Royal Mail is registered in Luxembourg.

Earlier in the year it was reported Amazon - Britain's largest online retailer - generated UK sales over the past three years of between £7.6bn and £10.3bn, but paid virtually no corporation tax.

Google's UK unit paid just £6m to the Treasury in 2011 on revenue of £395m, according to another news report.

Despite the reluctance from some top tax executives KPMG believes that details of tax arrangements will increase in annual company reports as firms seek to clarify their positions to the public, the media and politicians.

"We predict that a tax report will, in time, become as much a feature of the annual report as a Corporate Social Responsibility statement is today," Ms McCormick said.

"With improved transparency on tax, hopefully the 'bigger picture' of how a business-friendly tax system can attract corporates will emerge, demonstrating how the UK's ambition to create the most competitive tax regime in the G20 can play a key role in rebuilding the economy and fuelling the recovery."

She added: "The risk is that without this transparency, the current debate may turn into a 'witch-hunt' deterring businesses from investing in the UK."

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Data Watchdog Gives Christmas Warning

By Pete Norman, Sky News Online

The data protection watchdog has told Sky News that consumers need to be increasingly wary of what companies do with credit card details given over the phone or online.

The warning from the Information Commissioner's Office (ICO) comes as record numbers use internet and telephone shopping services ahead of Christmas.

ICO head of strategic liaison Jonathan Bamford told Sky News: "Although Christmas is the season for giving, be very, very careful when you give your personal details.

"It's really valuable - treat it like your money."

He added: "You should be very wary of who you are dealing with in an online transaction, if you are not confident with the organisation don't proceed with it."

Card details given online can carry data breach risks

Further concerns have been raised by the increasing use of audio recording of customers' telephone calls by companies.

While many firms tape calls for "training and quality purposes", recordings which contain bank or card details are at risk of fraudulent use if proper precautions are not taken.

"Organisations that do use audio recordings need to make sure they don't hold those for any longer than they need to really verify the transaction," Mr Bamford said.

"Data protection law requires them to get rid of information when they don't need it any longer and that applies to audio recordings, along with any other personal details, which may have credit card information."

Banks have long used audio recordings to pursue internal fraud investigations but retail firms are using the audio technology too.

Many firms increasingly record customers' card details

The watchdog can impose penalties of up to £500,000 data protection breaches by organisations.

Earlier this month the Prudential was hit with a £50,000 fine over errors on two customer accounts.

Greater Manchester Police was also fined £120,000 after an unencrypted memory stick was stolen that contained details of more than 1,000 people with links to serious crime investigations.

"If there are real concerns about what happens to our information we have rights of access to find out about that," Mr Bamford told Sky.

"If the worst comes to the worst, the Information Commissioner has powers to make sure companies look after our information properly."

Corporate solicitor Maung Aye, of Mackrell Turner Garrett, told Sky News: "Companies should take their data protection obligations very seriously.

"There are not only substantial financial penalties which the Information Commissioner can impose but a number of other potential ramifications including adverse publicity affecting the company's image, brand and reputation and even criminal liability for directors which could ultimately result in imprisonment."

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Energy Bills 'Will Be Lower' Under New Policy

Energy Secretary Ed Davey has said the Government's long-delayed Energy Bill would see consumers pay less for energy in the long-run.

As he introduced the legislation to Parliament, Mr Davey said: "The net effect of Government policy on energy bills is downwards not upwards."

His comments come despite admissions by the Department for Energy and Climate Charge (DECC) last week that the additional investment in green power would add £95 to energy bills by 2020. 

When considered alongside all other energy efficiency policies, however, the Government insists that bills will be £94 less in 2020 if the measures are introduced.

The cost to consumers is "the greatest concern", Mr Davey said, stressing that energy companies will come under pressure to help lower bills.

"We intend to underpin this with reforms to the retail market to simplify tariffs and make sure consumers are able to get the best deal for them," he said.

The Government estimates an extra £110bn is needed over the next ten years to restore the UK's ageing energy infrastructure, much of which is set to be allocated to low-carbon power sources.

By pumping more money into these renewable and "green" power generation, it also hopes to help bolster the country's ability to withstand energy shortfalls.

Any new coal plants built must have carbon capture and storage

The Bill outlines a rise in the amount of investment in green power from £2.35bn a year in 2012 to £7.6bn in 2020.

"In an era of rising global energy prices, by shifting to more home grown sources of power and by becoming more energy efficient, we can cushion our economy and households from the fluctuations of world gas markets," Mr Davey said.

Measures detailed in the Bill included a requirement that any new coal plants built have carbon capture and storage, and plans for long-term contracts that see firms paid a guaranteed price for the electricity they generate from low-carbon sources.

A "capacity mechanism" scheme, which would see companies bid for support to provide power sources or reduce demand during peak demand, was also outlined.

In addition, the Government published proposals to cut demand for energy in the UK, as the DECC estimates a 10% reduction in electricity use could save £4bn by 2030 and reduce carbon emissions significantly.

But Mr Davey's lack of a target to decarbonise the power sector led to criticism from Labour's Caroline Flint said.

The shadow energy secretary demanded "a clear commitment" to decarbonise the energy sector by 2030.

She added: "Not just businesses in the renewables sector but elsewhere are really concerned about the lack of a vision of the Government on this issue.

"I make no bones about it: we support a clear decarbonisation target on the face of the Bill."

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