Cyprus Urged To Protect Savings Under 100k

Eurozone finance ministers have urged Cyprus to protect savers with less than 100,000 euros (£86,000) in their accounts from a proposed tax on bank deposits.

Under a bailout deal agreed with the EU, Cyprus planned to impose a levy of 6.7% on all savings below that level.

The scheme was then changed to a 6.7% tax on all savings between 20,000 and 100,000 euros and 9.9% on all savings over 100,000 euros.

But the finance ministers, known as the Eurogroup, said they favoured a higher, 15.6% tax on richer savers in order to protect those with smaller deposits.

A statement from the group's president Jeroen Dijsselbloem said: "The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below 100,000 euros."

Sparing more modest savers in favour of the higher rate on bigger deposits, would not impact on the overall amount of the bailout - 10bn euros (£8.6bn) - the group said.

Protesters gathered outside the parliament in Nicosia

On Saturday the Eurogroup told debt-ridden Cyprus it would not give it a bailout unless it recouped some of the money it needed from savers.

The scheme had the potential to affect thousands of Britons who had either moved to Cyprus to live or had money saved in Cypriot accounts.

Russia, whose citizens are thought to have up to $30bn of their cash tied up in Cypriot accounts, was left furious by the proposal.

Cyprus may still ignore the advice from the Eurogroup and its parliament is expected to vote on a plan to save its economy on Tuesday.

Foreign Secretary William Hague said Britain had been "separated" from contributing towards the bailout, adding that 3,000 Britons in the country would not suffer in the proposed raid on bank savings.

Large numbers of Russian millionaires have stashed savings in Cypriot banks

It is believed, however, that many British Cypriots may have millions in accounts that are not protected by UK rules.

It was also unclear whether British troops serving in Cyprus who had set up large savings accounts would be able to escape the tax.

Cyprus had been due to vote on the levy on Sunday but it was first pushed back until Monday and then Tuesday.

Banks were closed in the country on Monday because of a bank holiday, which prevented people withdrawing their money but cash machines across the island were emptied.

Branches will stay shut for another two days - Tuesday and Wednesday - to prevent people removing all their cash while the authorities decide what to do.

A large amount of cash was withdrawn from Cypriot banks on Monday

The decision to target bank accounts stunned Cypriots, and police sealed off parliament as about 400 people staged a noisy protest outside, aggrieved that their small island of one million people should be singled out for such treatment.

It is the first time within the EU that it has been proposed to tax savers in a country to pay for the failings of their government.

The euro and stock markets fell on concern that developments in tiny Cyprus could reignite the financial crisis in the 17-nation eurozone.

If Cyprus does tax large savers heavily there are fears that money could flood out of the country as two thirds of deposits are from abroad.

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Nuisance Phone Calls: Which? Demands Action

Campaigners have demanded "tougher regulation" to clamp down on companies who plague people with unwanted phone calls and nuisance text messages.

Consumer group Which? found seven out of 10 consumers had been cold-called in the last three months, while two-fifths had received unsolicited texts.

The majority of calls and messages came from claims management companies (CMCs) offering to take up payment protection insurance (PPI) and personal injury cases.

Which? urged regulators including Ofcom and the Office of Fair Trading (OFT) to set up a joint taskforce to pull the plug on "intrusive and distressing" calls and texts.

It said offenders should receive fines and be put out of business.

"Unwanted calls or texts are not just a nuisance, they can be intrusive and distressing," executive director Richard Lloyd said.

"Many of us have been bombarded with spurious claims of PPI or injury compensation. People are telling us they are totally fed up with this nuisance and want to see action.

"Our research once again shows the behaviour of unscrupulous claims management companies must be tackled to stop them exploiting consumers who could claim compensation for free themselves.

"We want to see tougher regulation from the Government to clean up the CMC industry."

Which? said that a quarter of its members who made a claim on their car insurance were contacted by a CMC within three months.

Many of them were then bombarded by repeated messages. More than a fifth said they were sent at least 10 texts and one in eight received 10 or more phone calls.

The Transport Committee is currently investigating the extent to which bogus and exaggerated whiplash claims push up the cost of car insurance. False claims are estimated to add around £90 to the cost of every premium.

From next month, insurers will be banned from receiving money in exchange for the details of customers who make personal injury claims.

However, Which? said the rules will not cover non-injury claims such as car repairs.

It urged people to register their details with the Telephone Preference Service and to avoid opting into third party marketing when taking out an insurance policy.

It also said consumers should not respond to spam texts, even to text "stop", as this alerts the sender to the phone number being active and in use.

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Budget: Childcare Boost For Working Families

Working families will receive up to £1,200 per child a year under major plans to slash the cost of childcare.

More than two million families stand to benefit from the tax-free childcare plans, which have been announced ahead of Wednesday's Budget.

Eligible families will be given up to £1,200-a-year for each child, up to a maximum of 20% of their total childcare costs.

To qualify, both parents - or one parent if they are raising children alone - will have to be in work and each must earn less than £150,000.

But the scheme, which will replace the existing employer supported childcare programme (ESC) will not come into effect until late 2015, after the next general election.

Initially the measures will cover children up to five years old, but the level of support will build up "over time" to include children under 12.

Ministers say to start with, 1.3 million families will benefit, compared to 450,000 under ESC, eventually rising to around 2.5 million.

The leaders promised to boost childcare support in their mid-term review

The Government is set to invest £1.4bn in the plans - half-funded by abolishing the current childcare vouchers scheme and with the rest of the cash diverted from other departments.

Under the current scheme, parents get vouchers worth up to £55-a-week, deducted from their salary before tax is paid.

Prime Minister David Cameron and Deputy Prime Minister Nick Clegg pledged in their January mid-term review that they would act to help working families with childcare costs.

The move appears designed to appease many parents furious at losing their child benefit after cuts to what was once a universal handout.

Mr Cameron said: "Too many families find paying for childcare tough and are often stopped from working the hours they'd like.

"This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help parents with childcare costs."

Deputy Prime Minister, Nick Clegg added: "The rising cost of childcare is one of the biggest challenges parents face and it means many mums and dads simply can't afford to work.

"This not only hurts them financially, but is bad for the economy too."

Ministers have already announced plans to let childminders look after more children, which they hope will reduce costs and make more nursery places available.

Britain has some of the most expensive childcare costs in the world - with fees rising at more than twice the rate of inflation, according to the Daycare Trust.

A report by the trust recently found that a place at the UK's most expensive nursery cost £42,000 - some 25% more than a place at a top public school such as Charterhouse, which charges £30,574 a year.

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Cyprus Bailout: Savings Tax Could Be Cut

Officials in Cyprus are reportedly trying to renegotiate a eurozone bailout deal in order to soften the impact of a levy on smaller savers.

Authorities had planned a 6.7% tax on deposits under 100,000 euros (£85,454), triggering queues at cash machines as people in Cyprus rushed to withdraw their money.

But the country's government is thought to be discussing cutting the tax rate to 3% while raising the rate for deposits over 100,000 euros from 9.9% to 12.5%.

In exchange for the levy, Cyprus will receive 10bn euros (£8.54bn) in aid to help recapitalise banks.

Cypriot President Nicos Anastasiades held talks with his cabinet

World markets have reacted negatively this morning, with many losing more than 2% and the FTSE dropping 1.6%.

Cypriot President Nicos Anastasiades, who was elected just three weeks ago, said the island had to accept a painful compromise or face bankruptcy.

In a televised address, he said the bailout "will eventually stabilise the economy and lead it to recovery".

Monday is a national holiday in Cyprus and measures need to be approved before banks open again on Tuesday.

Depositors in the eurozone's weaker economies have been unnerved by the levy, with investors fearing it will set a precedent that could reignite market turmoil.

Their uncertainty could be reflected when European markets open later, with the euro having already seen sharp falls in Asia.

British government and military personnel in Cyprus will be protected from any levy on their bank deposits.

Foreign Secretary William Hague told Sky News that Britain had been "separated" from contributing towards the bailout, adding that 3,000 Britons in the country would not suffer in the proposed raid on bank savings.

The tax on deposits in Cyprus, which accounts for only 0.2% of the eurozone's economy, is expected to raise up to 6bn euros (£5bn).

Savers have queued to withdraw their money from cash machines across Cyprus

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island, as well as Cypriots themselves.

The size of foreign deposits in Cyprus - estimated at 37% of the total - was one reason the eurozone agreed to the tax on savings.

It will apply to all deposits held in banks within Cyprus, including an estimated 2bn euros (£1.75bn) of British money, according to the European Central Bank.

It will not affect deposits held in the UK branches of Cypriot banks, such as Bank of Cyprus, whose UK subsidiary is regulated by the Financial Services Authority.

However, Laiki Bank UK said on its website: "Your eligible deposits with Laiki Bank UK are protected up to a total of 100,000 euro (£87,000) by the Cyprus Deposit Protection Scheme and are not protected by the UK Financial Services Compensation Scheme.

"Any deposits you hold above the 100,000 euro limit are not covered."

Cypriot banks lost 4.5bn euros (£3.8bn) - equal to a quarter of the island's gross domestic product - when eurozone leaders decided to write off Greek debt last year.

As part of its bailout deal, corporate tax will rise from 10% to 12.5%, while state assets will be sold off to help balance the public finances.

Cuts to government worker salaries and pensions have already been approved.

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HMRC Tax Helpline Is 'Disgraceful', MPs Say

A "disgraceful" tax helpline run by HM Revenue and Customs (HMRC) costs callers £136m a year through delays in answering calls, a spending watchdog has said.

The Commons Public Accounts Committee found a quarter of the 79 million annual calls to the HMRC phone line go unanswered, despite a £900m investment in customer service.

It said a new target to answer 80% of calls within five minutes was "woefully inadequate and unambitious" and questioned whether waiting times would increase if staff numbers are cut.

HMRC plans to close 281 tax inquiry centres in favour of a targeted "mobile" system in homes, businesses or community locations, claiming the move will save customers £12m a year in lost time and travel costs.

But Margaret Hodge, the Labour MP who chairs the committee, said changes to the way companies report payments to employees, as well as a shake-up of tax and benefit systems, would "drive up the number of phone calls to the department".

"Just how the department is going to improve standards of customer service, given the prospect of it having fewer staff and receiving a higher volume of calls, is open to question," she said, adding that HMRC should be aiming to answer the majority of calls within 20 seconds.

A spokesman for HMRC said it had "already recovered" from its "previous poor standard of service".

"In the past three months, we have been answering more than 90% of calls to our contact centres," he said.

"During the current year we have replied to 84.5% of the 16 million pieces of post we have received within 15 working days.

"We are investing an extra £34m in our contact centres to maintain this industry-standard level of performance.

"To make it cheaper for customers to call us, we have already transferred our Tax Credits phone lines from 0845 to 0345 numbers, and will begin to move our remaining lines to 03 numbers from April.

"We will continue to build on these improvements until we deliver the consistent quality of service that our customers are entitled to expect."

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Cyprus Bailout: Stock Markets Take Tumble

Borrowing costs have risen sharply for countries which received bailouts at the height of the eurozone crisis following the rescue deal for Cyprus.

The FTSE 100 followed other European stock markets lower when trading began in London, falling 1.6% in the first few minutes as investors digested the implications of the controversial agreement.

Asia was first to give its reaction with the Nikkei in Japan closing 2.7% lower while the Hang Seng lost 2%.

Those falls were more closely matched on the bourses of the countries at the centre of the euro crisis with the Spainish IBEX losing 2.3% on opening. The MIB in Italy was 2.2% down.

Banking stocks took the brunt of the losses amid an EU and IMF demand that in return for 10 billion euros (£8.56bn), Cyprus impose a tax on savings deposits.

While the terms are yet to be fully agreed by the local government, the move heightened fears of contagion in the euro area as they were seen by investors as a radical departure from previous aid packages which raised the prospect of either direct exposure or a knock-on effect.

For the UK, the turmoil over Cyprus helped the pound recover some lost ground on the euro as sterling gained 1.2p on the single currency.

There was also a positive implication for the cost of servicing the country's sovereign debt as bond yields tumbled, though the benchmark 10 year debt costs rose sharply for nations such as Spain and Portugal which saw increases of more than 4%.

More follows...

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Clegg Launches £1bn Aerospace Pledge

By Mark Kleinman, City Editor

The Government will next week commit hundreds of millions of pounds of public money to Britain's aerospace industry as it attempts to accelerate the rebalancing of the flagging economy.

I understand that Nick Clegg, the Deputy Prime Minister, will make the pledge on Monday when he unveils the latest phase of the Aerospace Growth Partnership (AGP).

Similar to initiatives already launched in the automotive and defence industries, the AGP will involve money committed by the major companies in the sector - including Airbus, Bombardier and Rolls-Royce - being match-funded by the Government.

Insiders said on Saturday that the total funding under the AGP could reach £1bn within a few years.

Unusually for an industrial initiative of this kind, Mr Clegg will commit to resourcing the AGP well beyond the lifetime of the Coalition Government by saying that the commitment will run for 10 years.

The longer duration of the pledges to support the aerospace industry are designed to counter accusations that the Government is too short-term in its industrial outlook and should enable big companies to make longer-term investment decisions, officials said.

The focus of the new funding will go towards supporting the infrastructure on which the aerospace industry depends, such as research and development activity, and protecting and enhancing the sector's supply chain.

Aerospace is one of the UK's most important industries, directly employing more than 100,000 people and recording more than £24bn in annual earnings, according to a document published by the Government last week.

"The UK's current strength is the result of significant public and private investment in research and technology in the late last century.

"The UK aerospace industry is faced with increasing competition globally, not only from traditional aerospace manufacturing nations but also from developing aerospace nations," it said.

"We can't stand still. To stay at the forefront of the increasingly global aerospace industry, the UK needs to secure strategic work packages on the new programmes, as those we are currently working on come to the end of production and support over the next few years.

"Action is needed now to ensure that public and private investment is increased to globally competitive levels."

Mr Clegg's announcement will come two days ahead of a Budget in which George Osborne, the Chancellor, is under pressure to provide much greater stimulus for industrial growth.

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Chancellor Warns Of 'More Tough Choices'

George Osborne has warned the country of "more tough choices" and says there are no "miracle cures" for the UK economy, as he prepares to deliver Wednesday's Budget.

The Chancellor is under mounting pressure to change course and kick start growth as the UK faces an increased risk of falling into a triple-dip recession.

An opinion poll suggests most voters - including more than a quarter of Conservative supporters - think his policies are failing.

But Mr Osborne dismissed calls for extra borrowing to cut taxes or finance a "spending spree" and insisted that abandoning his austerity programme would be a "disaster".

Writing in The Sun on Sunday, Mr Osborne hinted he would do more to help homebuyers, business start-ups, apprentices and people saving for retirement.

Helping create jobs would mean "cutting tax rates and red tape, backing scientific advance, building new roads and broadband" and making the UK an attractive investment option, he said.

However he warned of "more tough choices" to be made on further slashing public spending from 2015 - with the scale of the squeeze to be unveiled in his statement.

"It won't be easy," he warned, amid rows between ministers over where the axe should fall.

His comments came as a report revealed families have cut back on spending by more than £3,000 a year since the start of the credit crunch.

The Chancellor will deliver his Budget on Wednesday

Consumer watchdog Which? found the cut in discretionary spending's opening up a £136bn black hole in the economy over the last five years.

Hopes the economy could grow in this quarter and thus avoid returning to recession were dealt a blow this week by a 1.5% fall in manufacturing output in January.

Former cabinet minister Liam Fox is leading Tory calls for a change of course - suggesting Corporation Tax be reduced to zero and far bigger cuts to public spending, notably welfare.

Other prominent backbench demands include cancelling a fuel duty rise due in the autumn and scrapping the beer duty escalator that automatically ups the price of a pint.

Mr Osborne is tipped to announce extra investment in housebuilding and road projects - called for by leading business groups - and help for people to buy homes.

But he will not abandon "Plan A" by increasing borrowing to fund it - a move being mooted within the coalition by Liberal Democrat Business Secretary Vince Cable.

Shadow chancellor Ed Balls said he would welcome extra borrowing to fund a cut in the basic rate of income tax to put more money into people's pockets.

But Mr Osborne hit back: "I think the British people know there are no easy answers in today's world. They aren't fooled by the miracle cures peddled by the same snake oil politicians who got us into this mess.

"Labour's answer to Britain's borrowing problems is to borrow even more - that simply doesn't make sense. If there were easy options and miracle cures then of course I would take them, but sadly there aren't."

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Cyprus Postpones Vote On Savings Raid Bailout

Cyprus's parliament is to decide later today whether savers must pay a levy on bank deposits under terms for an international bailout to avert bankruptcy.

The eurozone demand that savers pay up to 10% of deposits as a condition for the 10bn euro (£8.6bn) bailout has drawn criticism and anger in the eastern Mediterranean island.

Queues of people gathered at its cash machines on Saturday as they tried to withdraw their money ahead of the move.

And the country's cooperative banks had to shut their doors after seeing a rush of savers keen to protect their money.

Savers could apparently withdraw money but were not able to carry out electronic transfers.

Newly-elected Cypriot President Nicos Anastasiades said refusing the bailout would have led to the collapse of the island's two largest banks, badly burnt by their exposure to bailed out neighbour Greece.

The tax on deposits in Cyprus, which accounts for only 0.2% of the eurozone's economy, is expected to raise up to 6bn euros (£5bn) as a condition for the bailout, mainly needed to recapitalise banks.

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island as well as Cypriots themselves.

The size of foreign deposits in Cyprus - estimated at 37% of the total - was one reason the eurozone agreed to the tax on savings, to take effect when banks reopen on Tuesday.

Nicos Anastasiades with Angela Merkel in Brussels

The tax will apply to all deposits held in banks within Cyprus, including an estimated 2bn euros (£1.75bn) of British money, according to the European Central Bank.

However, it will not affect deposits held in the UK branches of Cypriot banks, such as Bank of Cyprus, whose UK subsidiary is regulated by the Financial Services Authority.

The country has a large British expatriot community, among them David Symonds who lives in Limassol.

He told Sky News: "Everybody was surprised. We were assured only a few days ago that the haircut on the deposits was a red line for the government.

"When we learned that it might become a possibility we were told it would only be on deposits above 100,000 euros. Now of course we know it affects everybody."

Cyprus was badly hit by the Greek financial crisis because of its close links to the country.

Its two largest banks saw combined losses of 4.5bn euros (£3.8bn) - equal to a quarter of the island's gross domestic product.

The rescue package was agreed after 10 hours of talks in Brussels and was significantly less than the 17bn euros (£14.7bn) asked for.

As part of the deal, the government will also have to hike corporate tax to 12.5% from 10% and sell off state assets to help balance the public finances.

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Red Bull Blackmail Attempt Threatens Cans

Red Bull has revealed it has been the victim of a blackmail attempt, amid threats to contaminate cans of its energy drink on supermarket shelves.

The Vienna-based company said the threats started several weeks ago.

But Marcus Neher of the Salzburg public prosecutor's office said that "up to now there has only been a claim of contamination".

Red Bull said in a statement: "This threat is confined to product on sale in Austria.

"Checks at stores where the perpetrators claimed to have put contaminated goods have found nothing."

The company added: "We are cooperating closely with the police and share the opinion that we are close to the perpetrators and they will be found.

"We will be making no further comment while the investigation continues."

Red Bull, which has become a powerful force in advertising related to adventure and extreme sports, sells its caffeine-boosted energy drink worldwide.

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