Co-op Admits 'Disastrous Year' Amid £2.5bn Loss

The embattled Co-operative Group has confirmed a loss of £2.5bn for 2013, in what it described as a "disastrous year".

The loss comes on the back of a £529m figure recorded in its 2012 results.

Interim group chief executive Richard Pennycook said: "2013 was a disastrous year for the Co-operative Group, the worst in our 150-year history.

"Today's results demonstrate that but they also highlight fundamental failings in management and governance at the group over many years.

"These results should serve as a wake-up call to anyone who doubts just how serious the challenges we face are."

It said most of the losses were from "discontinued operations" of its banking arm, which totaled £2.1bn.

Group sales were £10.5bn, down from the £11bn recorded in the previous year.

Profit from its food division were down 8% at £247m but it also recorded a goodwill impairment charge of £226m for its purchase of Somerfield stores.

The Co-operative Group consists of a number of divisions

However, it recorded more encouraging figures for some other divisions.

General insurance profit jumped from £13m in 2012 to £33m last year.

The pharmacy chain, which is being offered for sale, saw profit rise by about a fifth to £33m.

And its funeral services business saw sales up 3% to £370m and profit up £2m to £62m.

Co-operative Group chair Ursula Lidbetter said: "During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society.

"Now is the time to put that right through fundamental reform - we have to act with urgency if we are to lay the foundations for a stronger, healthier co-operative business in the future."

The group's bank division revealed a £1.5bn capital black hole last year and then in March announced a plan to raise another £400m.

Amid risks of the bank's collapse, the group reduced its stake in the institution to 30% as private equity bondholders provided capital - raising concerns of how it would maintain its 'ethical' stance.

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House Price Increases Create 'Generation Rent'

By Siobhan Robbins, Sky News Reporter

The booming housing market is causing a generation of young people to become increasingly pessimistic about their chances of getting on the property ladder, according to a new study.

Halifax's 'Generation Rent' report found that despite the launch of schemes like Help to Buy to give a boost to people with small deposits, 36% of 20 to 45-year-olds felt they have no realistic prospect of owning their home in the next five years.

Around half of those polled in England, Scotland and Wales agreed Britain will become a nation of renters in the next generation and 20% of people aged 23 to 27 said they have no desire to own their own home.

A fifth of people surveyed said they had no desire to own their own home

Caroline Hill, 23, told Sky News she would rather rent than buy.

"I can see myself being able to buy in the future but I'm just really not interested in doing so," he said.

"My parents have always been renters and I think that has had a big effect on the way I feel about it."

Danny Palmer, 27, is frustrated the market is running away from him.

"I think it's going to be really difficult for me to get onto the property ladder purely because rent these days is taking up about 40% of my salary, and that's before bills, living costs and anything else," he said.

Estate agents say high prices mean potential buyers are moving into rentals

Halifax mortgages director Craig McKinlay, said: "We may be heading towards the point where the aspiration to own a nice home will be replaced by the aspiration to simply live in one.

"It seems that people are now beginning to accept a lifetime of renting and this would not only change the way the property ladder looks in the future, it could even bring into question whether or not it will exist at all for some people."

The report warned that any future collapse in the number of first-time buyers - the "life blood" of the housing market - will have a knock-on impact on people trying to move up the property ladder.

If some existing home owners are unable to trade up because of a lack of potential buyers for their property, the market will be brought to a standstill, the report warns.

Woking estate agent Yassar Latif, said: "People who were thinking of buying, but have been let down by the rise in prices, have moved towards rentals now."

The Government has said that Help to Buy and plans to build more houses should ease the problem. But despite this, only around 30% of the people polled believed Help to Buy was working.

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British Gas Bonus Claims To Be Investigated

Claims that British Gas workers have been paid large bonuses to inflate customer bills are to be investigated by the energy regulator, Ofgem.

It comes after a former employee claimed the energy company encouraged its sales staff to sign up charities, churches and small businesses to its highest-priced tariffs in order to boost their own earnings.

British Gas has strongly denied the allegations.

The whistleblower, who worked for the company between 2010 and 2013, told the Daily Mail the firm's policies were designed "to rip off" customers.

He claimed sales agent typically earned between £4 and £37 in commission per deal if they persuaded existing customers to renew contracts.

But by moving a customer to a more expensive deal they could earn more than £400 a time, he alleged.

"People were desperate to make the salaries they had been promised, so everyone inflated the prices," he told the paper.

"Scout clubs was a favourite one; churches, charities, small businesses, where people would just go for the maximum 5p notch-up," he added.

Ofgem will investigate whether the sales activities were 'honest and fair'

A British Gas spokeswoman said: "British Gas strongly refutes any suggestion that employees are paid commission on any prices charged to residential customers."

British Gas Business managing director Stephen Beynon said his sales agents are paid commission, but he denied any suggestion that contracts were negotiated inappropriately.

"This is a highly regulated market, and every part of the sales negotiation process is closely monitored," he said.

"Sales agents in British Gas Business do receive commission, but we are reducing its importance.

"We're leading the way in addressing the variability in price that customers face in this market, and we'll continue to do so."

Ofgem said in a statement: "There are strict rules in place which require suppliers to take all reasonable steps to ensure information provided is accurate and not misleading, and that sales activities are conducted in a fair, honest, transparent and professional manner.

"Ofgem is an evidenced-based regulator and we would encourage anyone with information that an energy company is not complying with Ofgem rules to provide us with this."

The allegations come days after Ofgem fined British Gas Business for a series of failures including blocking firms from switching to other suppliers.

Ofgem said British Gas Business would pay a total penalty of £5.6m of which £800,000 would be in fines, on top of £1.3m already paid to 1,200 customers who paid higher bills because they were not notified when their contracts were due to expire.

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PayPal Warns Users Over Sharing Computers

Online payment firm PayPal has announced plans to prevent users from sharing their computers, smartphones and tablets with anyone else, even family members.

On Tuesday, the company started sending registered users email alerts of upcoming amendments to terms and conditions.

The "Notice of changes to our Legal Agreements" showed policy changes effective June 17, in an email that ran to more than 8,000 words.

A number of the amendments covered improved buyer and seller protection for users, as the company is owned by auction site eBay.

However, the firm also warns against sharing devices under a heading of "Keeping your Payment Instrument Safe", in which changes to security procedures required by users are explained.

PayPal is tightening usage terms as more people use it for transactions

Two new sub-sections have been added amid a rise in PayPal usage by people using smartphones, tablets and other portable devices, heightening the risk of misuse by people other than the rightful owner.

The first clause relates to keeping personal account details up to date and the second to pin and password security.

The second clause adds that users must agree to "Take all reasonable steps to protect the security of the personal electronic device through which you access the Services (including, without limitation, using pin and/or password protected personally configured device functionality to access the Services and not sharing your device with other people)."

No exceptions are listed and owners are in breach of their user agreement if they do not adhere to the clause.

The notification advised: "You do not need to do anything to accept the changes as they will automatically come into effect on the above date.

"Should you decide you do not wish to accept them you can notify us before the above date to close your account immediately without incurring any additional charges."

A number of the new legal clauses relate to PayPal's interaction with eBay

A PayPal statement issued to Sky News said: "We are not banning people from sharing devices.

"The new wording in our User Agreement says that users should take reasonable care when sharing devices so their PayPal account is not compromised. For example, users are advised not to log in to PayPal and then leave their computer unattended.

"This new wording is in line with many other financial services providers and similar agreements."

The existing PayPal user agreement, which runs to more than 20,000 words, was last updated in November 2013.

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Co-op Admits 'Disastrous Year' Amid £2.5bn Loss

The embattled Co-operative Group has confirmed a loss of £2.5bn for 2013, in what it described as a "disastrous year".

The loss comes on the back of a £529m figure recorded in its 2012 results.

Interim group chief executive Richard Pennycook said: "2013 was a disastrous year for the Co-operative Group, the worst in our 150-year history.

"Today's results demonstrate that but they also highlight fundamental failings in management and governance at the group over many years.

"These results should serve as a wake-up call to anyone who doubts just how serious the challenges we face are."

It said most of the losses were from "discontinued operations" of its banking arm, which totaled £2.1bn.

Group sales were £10.5bn, down from the £11bn recorded in the previous year.

Profit from its food division were down 8% at £247m but it also recorded a goodwill impairment charge of £226m for its purchase of Somerfield stores.

The Co-operative Group consists of a number of divisions

However, it recorded more encouraging figures for some other divisions.

General insurance profit jumped from £13m in 2012 to £33m last year.

The pharmacy chain, which is being offered for sale, saw profit rise by about a fifth to £33m.

And its funeral services business saw sales up 3% to £370m and profit up £2m to £62m.

Co-operative Group chair Ursula Lidbetter said: "During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society.

"Now is the time to put that right through fundamental reform - we have to act with urgency if we are to lay the foundations for a stronger, healthier co-operative business in the future."

The group's bank division revealed a £1.5bn capital black hole last year and then in March announced a plan to raise another £400m.

Amid risks of the bank's collapse, the group reduced its stake in the institution to 30% as private equity bondholders provided capital - raising concerns of how it would maintain its 'ethical' stance.

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House Price Increases Create 'Generation Rent'

By Siobhan Robbins, Sky News Reporter

The booming housing market is causing a generation of young people to become increasingly pessimistic about their chances of getting on the property ladder, according to a new study.

Halifax's 'Generation Rent' report found that despite the launch of schemes like Help to Buy to give a boost to people with small deposits, 36% of 20 to 45-year-olds felt they have no realistic prospect of owning their home in the next five years.

Around half of those polled in England, Scotland and Wales agreed Britain will become a nation of renters in the next generation and 20% of people aged 23 to 27 said they have no desire to own their own home.

A fifth of people surveyed said they had no desire to own their own home

Caroline Hill, 23, told Sky News she would rather rent than buy.

"I can see myself being able to buy in the future but I'm just really not interested in doing so," he said.

"My parents have always been renters and I think that has had a big effect on the way I feel about it."

Danny Palmer, 27, is frustrated the market is running away from him.

"I think it's going to be really difficult for me to get onto the property ladder purely because rent these days is taking up about 40% of my salary, and that's before bills, living costs and anything else," he said.

Estate agents say high prices mean potential buyers are moving into rentals

Halifax mortgages director Craig McKinlay, said: "We may be heading towards the point where the aspiration to own a nice home will be replaced by the aspiration to simply live in one.

"It seems that people are now beginning to accept a lifetime of renting and this would not only change the way the property ladder looks in the future, it could even bring into question whether or not it will exist at all for some people."

The report warned that any future collapse in the number of first-time buyers - the "life blood" of the housing market - will have a knock-on impact on people trying to move up the property ladder.

If some existing home owners are unable to trade up because of a lack of potential buyers for their property, the market will be brought to a standstill, the report warns.

Woking estate agent Yassar Latif, said: "People who were thinking of buying, but have been let down by the rise in prices, have moved towards rentals now."

The Government has said that Help to Buy and plans to build more houses should ease the problem. But despite this, only around 30% of the people polled believed Help to Buy was working.

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Official: Average Earnings Outpace Inflation

Average UK earnings increased by 1.7% in the year to February, above the inflation rate of 1.6%, according to official figures.

The Office for National Statistics (ONS) said it was the first time since spring 2010 that the consumer price index for inflation had not exceeded pay increases.

It said pay increases averaged 2% in the private sector and 0.9% in the public sector.

It added the number of people out of work in the UK fell by 77,000 between December and February.

The unemployment rate of 6.9% is the lowest for five years.

Business Secretary Vince Cable said: "Throughout the economic crisis, and now in the recovery, our labour market has shown itself to be resilient and flexible.

"These latest employment figures show that conditions are continuing to improve rapidly."

The improving statistics have eroded Labour's stance on the economic policies at the heart of the coalition Government.

Sky News Economics Editor Ed Conway said: "There are likely to be quibbles with the data and the timing, and many of them are perfectly legitimate.

"What's less in doubt is that wages and inflation are converging meaningfully for the first time since 2010.

"That implies the squeeze on incomes is in the process of coming to an end."

He added: "By the same token, families have had to withstand a whole five-year period of falling real wages, so in real terms they remain significantly less well-off than they were before the crisis.

"That damage will take some years to mend."

The ONS said the total jobless in the period stood at 2.24 million, with a record 30.3 million people in work.

A total of 691,000 people have gained employment in the last year, taking the rate to 72.6%.

It added the number of people claiming Jobseeker's Allowance last month fell by 30,400 to 1.14 million.

Meanwhile, the number of people in Britain defined as economically inactive, including those caring for relatives or withdrawn from the job market, fell by 86,000 in the latest quarter to 8.8 million.

Those out of work for more than 12 months was also cut by 32,000, down to 807,000.

The jobless figure for 16 to 24-year-olds has also continued to fall, down by 38,000 to 881,000 - the lowest for five years.

The ONS said 1.42 million people are working part-time on the basis of not being able to find full-time employment.

It was a drop of 17,000 over the three months, although still 10,000 higher than the same time last year.

Esther McVey, the minister for employment, told Sky News: "More young people are in work, more women are in work, wages are going up and more and more businesses are hiring.

"It's a credit to them that Britain is working again."

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Mulberry's Profit To Get A Handbagging

Luxury fashion brand Mulberry has warned its full-year profit will be below expectations.

The company said pre-tax profit for the year ended March 31 is expected to be around £14m.

The Somerset-based firm, famous for its high-end handbags, said new, lower-priced items would effect the results.

The company said: "Since the appointment three weeks ago of Godfrey Davis as interim executive chairman, a review of operations and strategy has been undertaken with the management team.

"The primary objective is to reinvigorate sales by the introduction of more affordable new product."

Although the company still plans to expand internationally, the pace of new openings has been slowed by nearly 40%.

It said for the 2014-15 fiscal year only five own store openings would occur, down from eight in the previous year.

The company said it would reduce the openings to control costs while allowing existing stores to "achieve greater traction".

Mulberry also confirmed its new UK factory is fully operational, having taken on 300 additional staff.

In January, around £400m was wiped from the company's share value after it reported a drop in its crucial Christmas period sales.

Last year, the company lost its top creative star, Emma Hill, and the group is still looking for a new chief executive after the departure in March of Bruno Guillon.

It also appears that an ongoing appetite for high-priced items is diminishing, even for its regular shoppers.

Releasing the trading update, Mr Godfrey said: "Following the recent change in management, we are focusing on achieving sales growth through the reinforcement of product offering at more affordable prices to meet the expectations of our loyal customers.

"This will have short-term financial consequences but is necessary to ensure the future strength of the Mulberry brand."

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Co-op Admits 'Disastrous Year' Amid £2.5bn Loss

The embattled Co-operative Group has confirmed a loss of £2.5bn for 2013, in what it described as a "disastrous year".

The loss comes on the back of a £529m figure recorded in its 2012 results.

Interim group chief executive Richard Pennycook said: "2013 was a disastrous year for the Co-operative Group, the worst in our 150-year history.

"Today's results demonstrate that but they also highlight fundamental failings in management and governance at the group over many years.

"These results should serve as a wake-up call to anyone who doubts just how serious the challenges we face are."

It said most of the losses were from "discontinued operations" of its banking arm, which totaled £2.1bn.

Group sales were £10.5bn, down from the £11bn recorded in the previous year.

Profit from its food division were down 8% at £247m but it also recorded a goodwill impairment charge of £226m for its purchase of Somerfield stores.

The Co-operative Group consists of a number of divisions

However, it recorded more encouraging figures for some other divisions.

General insurance profit jumped from £13m in 2012 to £33m last year.

The pharmacy chain, which is being offered for sale, saw profit rise by about a fifth to £33m.

And its funeral services business saw sales up 3% to £370m and profit up £2m to £62m.

Co-operative Group chair Ursula Lidbetter said: "During 2013, it became apparent that our governance had fallen far short of the standards to which we aspire as a co-operative society.

"Now is the time to put that right through fundamental reform - we have to act with urgency if we are to lay the foundations for a stronger, healthier co-operative business in the future."

The group's bank division revealed a £1.5bn capital black hole last year and then in March announced a plan to raise another £400m.

Amid risks of the bank's collapse, the group reduced its stake in the institution to 30% as private equity bondholders provided capital - raising concerns of how it would maintain its 'ethical' stance.

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House Price Concern As Wider Inflation Eases

There has been more good news for household budgets with confirmation that price growth eased further in March though property costs accelerated.

The Office for National Statistics (ONS) charted a fall in the Consumer Prices Index (CPI) measure of inflation to an annual rate of 1.6% - down from 1.7% in the previous month - which marked a new four-year low.

This was driven, the ONS said, by falling pressures from fuel costs.

Petrol prices were unchanged between February and March

Furniture and clothing also made downward contributions - with discounting in women's fashion leading the way.

Upward contributions to inflation came from factors including higher bills for overnight hotel stays and more expensive alcoholic spirits.

The figures raised hopes that a milestone in the UK's economic recovery could be reached as early as Wednesday, when the ONS releases the latest unemployment and wage statistics.

Many economists believe they will show pay packets rising at a faster level than inflation.

George Osborne has welcomed easing inflation figures

Earnings have not increased at a higher rate than inflation since a brief spike in March and April 2010 and have not consistently been improving since 2008.

However, separate ONS figures on Tuesday pointed to a steep rise in annual house price inflation of 9.1% over the 12 months to February.

It represented the biggest increase since June 2010 and was up sharply on the 6.8% rise measured in January as London's rapid price growth started to be mirrored outside the capital.

The performance renewed fears the UK housing market is at risk of overheating though policymakers have repeatedly pledged to remain vigilant.

The housing charity Shelter said: "Today's figures are yet more evidence that house prices are spiralling out of control.

"Apart from the lucky few who can rely on the bank of mum and dad, our runaway housing market is forcing a generation to watch a home of their own become an increasingly distant dream, no matter how hard they work or save."

European economist at Schroders, Azad Zangana, told Sky News he expected the Bank of England to intervene on house price inflation in the summer.

The TUC leader Frances O'Grady says a cost of living crisis remains

The wider inflation numbers - which strip out housing costs - were welcomed by the Chancellor.

George Osborne said: "Lower inflation and rising job numbers show our long term plan is working, and bringing greater economic security."

The general secretary of the union organisation the TUC, Frances O'Grady, said workers remained £40-a-week worse off than before the financial crisis.

UK economist at Scotiabank, Alan Clarke, said the latest CPI reading was likely to mark the low point in UK inflation as a rebound is likely to come from the impact of Easter holidays on airfares.

However, he saw real-terms wage growth accelerating to counter that effect.

He said: "At the moment, consumer spending growth is being boosted by falling savings and rising borrowing.

"If real incomes continue to improve over the coming quarters (as we expect), then spending growth will be increasingly underpinned by solid fundamentals rather than the feel-good factor associated with a booming housing market."

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