Viewpoint

24 May 2011 Last updated at 16:01 GMT By Simona Vittorini and David Harris School of Oriental and African Studies India's fast-growing economy is helping it to increase its influence across the world, including in Africa Indian Prime Minister Manmohan Singh's six-day visit to Africa kicked off on 23 May with the inauguration of the 2nd Africa-India Forum Summit in Addis Ababa.

Accompanied in Ethiopia by a high profile delegation of ministers and India's most powerful chief executives, this is already the third visit to Africa by Manmohan Singh in his eight years as prime minister.

Whilst India's presence on the continent is not new, this visit is certainly symbolic of the opening of a new chapter in India-Africa relations, designed to expand the "strong and purposeful partnership between India and Africa", as Manmohan Singh declared before leaving for Africa.

Africa and India are two of the fastest-growing regions in the world.

Economic growth in Africa has averaged 5% in the past decade and, with a growing domestic market, major and emerging powers are competing to consolidate their positions in the continent.

With the growth of India's economy at an average rate of 9% per annum since the early nineties, New Delhi has expanded its reach and its influence in many parts of the globe, including Africa.

Chasing China?

Bilateral trade between India and Africa has recently boomed. With a 15-fold increase from 2001, trade soared to $46bn (?28bn) last year, and it is expected to reach $70bn by 2015.

Indian investments across Africa have increased substantially in recent years

Beside oil, the other main areas of trade are pharmaceutical, gold, diamonds, and information technology.

India is now Africa's second major trading partner after China.

Further, observers are keen to see India's late arrival in Africa as part of its strategy to catch up with its old arch enemy.

But New Delhi is firm in its claims that it is not planning to counter Beijing's rising influence in the continent. In fact, India does not have the same financial and political clout as China.

Trade-wise, India's investments in Africa are less than half of China, which is aiming to reach $110bn this year.

Equal relationship?

These unprecedented levels of Indian engagements in Africa are often seen purely as a means of extracting resources and opening new markets for the Indian economy, not much dissimilar to Chinese dealings in the continent.

Manmohan Singh has now visited Africa three time during this time in office

Equally, India's hands-off approach to African state sovereignty is seen as largely analogous to that of China, even if utterly different to that of the West.

If India is not currently feeling the heat of Western opprobrium to the extent of China in Sudan, it is most likely only because India is hiding behind China to the extent that it is a smaller investor and trader, it is a democracy and considered more multilateral in its foreign policy.

India may one day face the same pressure and the same dilemmas as China over the balance between sovereignty and, for instance, concern for human rights.

However, unlike China which has focused on resource extractions and large infrastructure projects, India's relationship with Africa, it is asserted, rests upon equality, mutual trust and a transparent approach.

India's own model of inclusive development is claimed to be accessible and transferable to Africa.

India's private-led engagement offers its African partners skills transfer and triple-A technology (affordable, adaptable and available).

To some extent, it also focuses on capacity building, value addition and human resources development rather than just resource extraction - and in the case of China the importation of Chinese labour to build the infrastructure associated with the deals.

New Delhi has recently signed a deal with 19 education institutions in Africa and it is planning to set-up diamond processing facilities in Botswana to help the country move up the value chain.

Global politics

Equally important to India-Africa relations are India's global power aspirations.

Whilst aiming to be the voice of developing world in negotiations at various global fora, New Delhi has lobbied for the restructuring and expansion of the United Nations and almost all African countries back India's bid for a permanent seat at the UN.

The new deal that India is planning to put on the table at the second India-Africa forum indicates India's intent at deepening this burgeoning partnership.

Proposals for new ways of strengthening trade and investments relations between India and Africa include the implementation of free-trade agreements with Africa's, the launching of a fresh line of credit with no links to India's own commercial interests, as well as support for two seats for Africa in an reformed Security Council.

These initiatives seem likely to bolster India-Africa partnerships.

If India lives up to its promises, it does still however remain to be seen how African states will respond to India's new advances, and indeed, how Africa will respond to this new multi-polarity in its international affairs.

Dr Simona Vittorini and Dr David Harris both teach at the School of Oriental and African Studies, University of London.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

View the original article here

American boost

23 May 2011 Last updated at 23:02 GMT By Will Smale Business reporter, BBC News UK small firms are benefiting from higher demand from American companies Two years ago Ken Wickham was thinking of closing down his small manufacturing company in the face of the global recession.

"Trade was so quiet, the phone was ringing just once every two weeks," he says.

"Things were very difficult. We survived in the end because we had a very good client base, but a lot of other companies I know went to the wall."

Mr Wickham is owner of Wickham Engineering, which has been in business for more than 25 years.

Based in Southend, Essex, it makes highly specialised milling machines, some the size of houses.

Supplying food, chemical and paint companies around the world, exports account for 75% of its business, with the US being its main overseas market.

Fast-forward to today, and Mr Wickham says export demand is now very strong again.

"The orders are all coming from the US," he says. "About 18 months ago we started to get more interest from America, which has really increased over the past six months.

"We aren't back to pre-global-recession levels of orders from the US, but things have certainly picked up again."

Demand 'unabated' Ken Wickham says his strong client base kept the company going

Mr Wickham's experience appears to have been replicated at small manufacturers across the UK.

A recent study by the CBI business organisation said small manufacturers had seen demand for their goods rise at its fastest rate for 16 years during the first quarter of 2011. The majority of this increase had come from exports.

This was backed up by a separate report from manufacturing organisation EEF. It said UK manufacturers of all sizes were "taking advantage of export-led demand, which shows no signs of abating".

And official figures from the Office for National Statistics showed that the wider manufacturing sector continues to be strong, with output expanding by 1.1% from January to March, the same as during the last three months of 2010.

Stimulus boost

Another small manufacturer that says it has seen a big increase in exports is Oxford Optronix, which specialises in hi-tech medical-testing equipment.

Like Wickham Engineering, it says demand is being led by exports, and again, specifically from the US.

"We saw a massive upswing in demand and orders from the US during the second half of last year, and things have continued to look pretty good," says sales director Dr Michael Rau.

Oxford Optronix saw US orders grow last year

"We have increased our presence in emerging markets, such as China and India, which is very interesting, but our single biggest market has always been the US."

A look at the most recent US economic data shows why British small manufacturers have been enjoying increased orders.

While US unemployment remains stubbornly high - 9% in April - the US economy is continuing to grow.

Buoyed by the global economy gathering pace, and the continuing boost from President Obama's $800bn (?494bn) stimulus spending, 2011 has so far seen US manufacturing output increasing at its fastest rate in seven years, while US exports have risen to an all time high.

Dr Rau says: "It may very well be that we have been benefiting from the Obama stimulus spending, as some of that money has been injected into science.

"And the weakness of the pound in recent years has also done wonders for our competitive position."

'Pessimistic'

But while UK small manufacturers are enjoying higher demand from American companies, how is trade in the US for those small UK manufacturers who target American shoppers?

Dr Rau also highlights sterling's dollar weakness in recent years

The economic data coming out of the US suggests they are still finding trade a lot harder to come by, as consumer spending - while continuing to rise - remains weak in the face of higher energy bills.

James Stewart, who owns Northern Ireland-based clock-maker James Stewart & Sons, says this is the case for his company.

Manufacturing grandfather clocks that can cost as much as ?13,000, the Omagh company's main overseas market for luxury products is the US.

"The US has picked up marginally, but it is nothing to get excited about," says Mr Stewart.

"Talking to our sales team over there, they remain pessimistic. Trade will pick up again, but it is going to take time.

"Our problem is that we make a luxury product, so if people are nervous about the economy, we are going to be the last thing on their shopping list, whether in the US, or back in the UK and Republic of Ireland."

View the original article here

US new home sales rise in April

24 May 2011 Last updated at 15:24 GMT New-home sales make up only a small proportion of the US housing market US new home sales rose for the second month in a row in April, climbing 7.3% on the month before, figures show.

April sales came in at a seasonally adjusted annual rate of 323,000 homes, the Commerce Department said, which was stronger than analysts had forecast.

But sales are still at historically low levels and April's figure was 23.1% below that of April 2010.

In February 2011, new-home sales had fallen to a rate of 278,000, the lowest since records began in 1963.

The better-than-expected improvement in April signals a slight pick-up in the depressed construction sector.

However, in terms of total sales, new home sales represent only a small portion of the US housing market.

Sales of previously-owned homes unexpectedly fell by 0.8% in April to an annual rate of 5.05 million, the National Association of Realtors said last week.

And despite mortgage rates being at historic lows and rock-bottom house prices, would-be homebuyers face high unemployment and a weak economic recovery.

View the original article here

Clarity call for consumer privacy

24 May 2011 Last updated at 12:21 GMT Computers and mobile phones have made distance shopping easier Businesses should be clearer about how they plan to share customers' personal data with other companies, a consumer body has said.

The growth in online transactions has allowed more businesses to collect information such as credit card details and shopping preferences.

The Communications Consumer Panel said that people should have control over which information is shared.

Such details should not be buried in the small print, the panel said.

"Companies should be able to explain how they protect people's privacy in a straightforward way that makes sense to consumers," said the panel's acting chairman, Bob Warner.

Data doubts

Consumers using their mobile phones can allow businesses to collect data about their location and the products and services they are interested in.

Some data can also be sold on to third parties to target the consumer with offers.

Mr Warner said that a lack of confidence in how private information was handled could curtail the development of new technology.

The panel, which was set up to advise communications regulator Ofcom about consumers' interests, wants more control for shoppers over their data.

It also called for more reassurance that companies were minimising the amount of data they collected and keeping it for no longer than was necessary.

Earlier this year, the Information Commissioner raised concerns over people's awareness of data privacy.

"It has never been more important to protect your personal information. Whether you are surfing the net, shopping online or signing up to social networking sites, it is crucial that people are thinking about how their information might be used," said Christopher Graham, the Information Commissioner.

"From employers looking up potential employees on Facebook to cyber-criminals hacking into unsecured wi-fi networks, not protecting your personal information can cause serious harm and distress."

View the original article here

Marks & Spencer profits up 12.9%

24 May 2011 Last updated at 10:02 GMT Watch: The CEO of Marks and Spencer, Marc Bolland says customers 'buy once and buy well'

Marks & Spencer says it has defied the retail gloom with a 12.9% jump in annual profits to ?714.3m.

The profits before tax and one-off items came on sales up 4.2% to ?9.2bn, with margins rising in the key clothing and food divisions.

Marc Bolland, delivering his first annual figures since taking over as chief executive, said it was a "good year" for M&S.

But he is cautious about future trading due to pressures on consumer spending.

Even so, Mr Bolland told the BBC there were signs that customers were trading up and "looking for quality" again. "Price points are rising," he said.

The chain runs 600 stores in the UK and 300 overseas, and recently announced plans to move back into France.

Britain's biggest clothing retailer also said on Tuesday that it would begin testing new store formats from October.

These stores will be tailored more to their locations, selling products selected against five local criteria - affluence, demographics, competition, regionality and ethnicity.

The stores would also have improved layouts and signs and better showcase M&S' sub-brands.

For example, a town known to have a large number of families might see its local M&S store stocking far more clothes for children.

Mr Bolland, the former boss of Morrisons supermarket, described the economic outlook as challenging because of a squeeze on consumer spending and higher commodity prices.

However, he said that the recent sharp rise in cotton prices had less impact on M&S than on rivals, many of which sell cheaper goods in which raw materials make up a larger proportion of the price.

Fightback

M&S, which sees 21 million customers pass through its doors each week, was hit by the recession when its mid-market positioning left it exposed to consumers moving to rivals.

A fightback included initiatives such as its Dine In For ?10 promotion, and an advertising campaign featuring X Factor judge Dannii Minogue, former footballer Jamie Redknapp, and model Twiggy.

The result has been a increase in clothing market share of 50 points to 11.7%, with growth across all areas.

Market share in food rose 10 points to 3.9% after the launch of 1,900 new lines.

M&S also saw international sales increase 6.1%, and sales in the online operation rise 31%.

Analysts at Investec Securities said in a research note that the international arm performed much better than expected, in spite of continued weakness in Greece and the Irish Republic.

M&S shares, which have risen strongly this year, opened 5.5p down at 391.5p.

View the original article here

Property sales still stagnating

24 May 2011 Last updated at 12:23 GMT No sign of an upturn in the housing market yet Property sales in the UK are still lower than a year ago, according to HM Revenue & Customs (HMRC).

Just 66,000 homes were sold in April, 1,000 fewer than in March and 6,000 fewer than in April last year.

Sales in the first four months of the year have been 5% lower than in the same period of 2010.

The figures suggest that with the continued rationing of mortgages, and the economy in the doldrums, there is little chance of sales reviving.

Last week, the Council of Mortgage Lenders (CML) reported that total mortgage lending in April had fallen back from March and was 5% down on a year ago.

The drop was attributed to seasonal factors, such Easter falling in April, and an extra bank holiday.

However, all the accumulating evidence on sales, prices and mortgage lending indicates that the property market has stagnated, with little obvious evidence of any immediate upturn.

The Bank of England reported at the start of the month that the number of mortgages approved but not yet granted, a traditionally accurate indication of near-term trends, had risen in April to 47,557.

But that figure was only slightly higher than the monthly average for the past six months.

View the original article here

Cisco rejects Falun Gong lawsuit

24 May 2011 Last updated at 06:08 GMT Falun Gong is banned in China, but tolerated in other Asian countries US computer networking giant Cisco Systems has rejected allegations it helped the Chinese government repress the Falun Gong movement.

The spiritual movement is suing Cisco over claims it worked on the "Golden Shield" online censorship network, to help Beijing spy on its citizens.

The law suit says some Falun Gong members had been detained, tortured and even killed as a result of the network.

Falun Gong is banned in China, where the government calls it an evil cult.

The court papers, filed in the US on Monday, allege that Cisco provided networking equipment and technical assistance to Beijing to enable it to create an online "censorship and surveillance network".

It accuses Cisco of aggressively marketing the product, knowing it would be used to crack down on the banned movement.

"Cisco's specific intent to meet the requirements of the Chinese Communist Party's purpose to identify, track and thereby abuse and eliminate Falun Gong practitioners... was expressed in marketing presentations," say the papers.

It alleges Cisco established a subsidiary, China Network Technology Corporation, in Beijing in 1998 to work with the government.

The 52-page suit, brought by the Washington-based Human Rights Law Foundation, names senior Cisco executives, including chief executive John Chambers.

But in a statement issued from its headquarters in San Jose, California, Cisco vowed to "vigorously defend" its operations.

"Cisco does not operate networks in China or elsewhere, nor does Cisco customise our products in any way that would facilitate censorship or repression," the company said.

"Cisco builds equipment to global standards which facilitate free exchange of information, and we sell the same equipment in China that we sell in other nations worldwide in strict compliance with US government regulations."

China's government has invested heavily in controlling what its citizens can access on the internet.

The Golden Shield, also known as the Great Firewall, blocks thousands of websites, including those linked to Falun Gong or the Tibetan spirital leader, the Dalai Lama.

It also filters keyword searches for sensitive topics such as Tibet or Liu Xiaobo, the Nobel prize-winning dissident.

View the original article here

Land 'scams' techniques revealed

20 May 2011 Last updated at 23:01 GMT By Bob Howard Reporter, Money Box Landbanking victim William McNaught paid more than ?100 000 for almost worthless strips of land. The strategies used by a landbanking brokerage to sell strips of land to unwary investors have been outlined to the BBC by a former employee.

The man worked for the Property Partnership, which sold virtually worthless plots across the UK.

Many were persuaded to pay tens of thousands of pounds for land that is unlikely ever to be built on.

The firm, believed to be ultimately controlled by Kent businessman Scott Assemakis, is now in liquidation.

Pressure selling

William McNaught, from Yorkshire, was contacted by the Property Partnership three years ago, and persuaded to pay ?101,000 in order to buy eight strips of land in different locations around the UK.

He said he was taken in by the high returns that were promised.

"They were so convincing. The broker told me the investment would achieve a profit of 100-130% in a period of 12 to 18 months," he said.

Radio 4's Money Box has investigated a strip of land Mr McNaught bought from the Property Partnership near Towcester in Northamptonshire for ?10,000 in September 2009. A local estate agent now values the land at just ?75.

Recruitment tactics

"Gareth", whose name has been changed, worked for the firm for three months in 2007, after being recruited while he was working as a salesman in Spain. He told Money Box brokers were tempted with huge rewards.

"You are told that if you just stick with the company for 12 months they guarantee you will be a millionaire. It was very easy for me to go with them," he said.

Gareth sold plots of land to eight clients, charging them ?10,000 for each. He said the brokers were given scripts to persuade people to part with their cash.

"We were told to lie. The scripts were pretty much 100% lies. The top brokers were given free will to go off the script and all manner of promises were made there," he said.

"As long as that cheque came in, then the management were not bothered."

Big returns

Gareth said they were told to offer the prospect of fantastic profits to their clients.

"We were saying that to make 100% on top of your investment should be the very least that we are looking at," he said.

Gareth and other credible sources Money Box has spoken to say the Property Partnership was run by Scott Assemakis.

"It was well known, told from other managers, told from other brokers, it was just common knowledge," said Gareth.

After three months Gareth left the firm as he was unhappy about how the firm was treating its clients and warned the police about its activities.

"Guilt was heavily upon my shoulders. I knew I had to get out," he said.

Shareholders in the Property Partnership have been keen to hide their identity. The shares for the parent company - known as Ultraclass - are held anonymously by a third party. Only a court order or demand from the police or the regulator can reveal who the real owner is.

Money Box investigated the Property Partnership in March. The firm was put into liquidation in April.

The documents held at Companies House concerning the liquidation confirm that Mr Assemakis had a major interest in the firm: they show him as the individual owed most money by the Property Partnership, over ?53,000.

Similar operations

Money Box understands Mr Assemakis has also sold land through another company called Burnhill Land Investments Limited, and is involved with a third company which has just been launched to do the same thing, called Complete Building Systems Limited.

The similarities between the Complete Buildings Systems Limited website and the websites for the Property Partnership and Burnhill Land Investments Limited are striking.

Money Box invited Mr Assemakis to comment but he did not respond to the programme's requests.

The Financial Services Authority (FSA) said it had closed down five land investment schemes in the past year, in which ?42m had been invested. However it can only act if it is able to prove that a firm is effectively running a collective investment scheme in which it promises to liaise with potential developers on behalf of clients.

Jonathan Phelan, head of unauthorised business at the FSA, told Money Box in March that his organisation was doing its best to clamp down on the problem.

"Where you have a collective investment scheme, we can get involved. We would estimate it to be around a ?200m problem. We have got 20 firms under inquiry," he said.

He urged anyone who believed they had been a victim to come forward.

"Please, do come to us because there are a dozen, a hundred, a thousand people who are going to come after you and lose similar amounts of money. We really need you to tell us," he said.

On and off for a year or two I was contacted between 2008 and 2009 by a company called The Property Partnership. Always a withheld number, and a similar line from each caller asking whether I'd receive the info pack they had sent me. Despite explaining that I had no interest, and asking them to remove my contact details I was called regularly.One of the last times I was called it just happened I was on the motorway with my hands free kit, so I thought that if I wasted their time chatting, but going nowhere then maybe that would stop the calls.

The young lady on the phone appeared new to her role, after talking for a bit she asked me whether I held shares in UK quoted public companies.I assume this is where they get details from, so they can home in on people with equity and an appetite for investment.In my view it comes down to the classic saying "if it's too good to be true, it probably is". If one had 100% return deals on the table you wouldn't be paying people to cold call and sell them to others!

John, Swindon

I was contacted by Burnhill Land Investments in 2010. I asked them for written details which they sent in the form of a glossy brochure which did not say very much. Whist waiting for it to arrive I looked the company up at Companies House which looked dodgy as that appeared to be a name change from a scrap metal dealer! I also contacted the Royal Institute of Chartered Surveyors who stated that very few of these schemes ever made any money as it was extremely speculative relying on planning permission that might not come. When the rep called back I explained to him what I had found and he put the phone down and I never heard from them again.

Tony, Hants

My father has invested ?120 000 with The Property Partnership. He is 88 and suffers from a cognitive disorder. He is currently being bombarded with other companies to spend more. I have now just received the power of attorney but it is very difficult to stop him being approached.

W.G

I was contacted around November 2010 by phone asked if I'd ever thought about investing in land. I said I already had and they sent me a Burnhill brochure (I still have it) This led to them phoning me several times and I sort of led them on a bit as it seemed "too good to be true". Lots of pressure later I said I'd make enquiries locally through a family friend and the salesman became extremely rude and abusive and slammed the phone down! I was then 100% sure it was a con and am pleased my judgement was sound.

Roger , Gosport

I bought land from The Property Parternship in 2007 and paid ?10,000 I was recently contacted by them again asking for another ?6000. I was told they had a buyer for the land but had to purchase extra land for the exit to the site. I paid. They sent me a receipt and land registry docs. All seemed above board. What an idiot!

Pauline, Mansfield

Bought a plot in Rubery, Worcestershire for ?10k with promises of 3-500% returns. Aggressive sales techniques but it was believable at the the time. I also think in hindsight the solicitor who made the transaction should also be investigated as an 'accessory.' He may not have done anything illegal but certainly not very moral.

Ian, Bristol

I was approached by a company called Burnhill Land Investments some months ago. They sent me information about land in Royal Tunbridge Wells, all of which looked genuine and I was pesuaded to invest. I was later approached to invest in land in Hounslow at a higher cost. When I said I could not afford to invest in both sites they offered to buy back the Tunbridge Wells land if I would add to it to buy the land in Hounslow, which according to the information they gave would get full planning permission more quickly than the land in Tunbridge Wells. I eventually agreed to make the additional investment. Appropriate paperwork has come from them and from their solicitors. Everything looked ok but now, hearing what Moneybox has to say I am very concerned and will be contacting the FSA as soon as their offices reopen on Monday.

Tony, Newcastle

Sheer greed has motivated all parties and I have no sympathy for investors who were chasing the dragon - in this case money. Why were the investors so dumb as not to get an independent valuer in to value the land? Oh yes one simple answer no doubt they were told buy now or someone else will and so their greed drove them to buy. Sorry if these people really were so greedy to believe that money is so easy come then they deserve what they get and after all they still have their strips of land so why not do something with them like grow some trees and help the wildlife and the environment instead of whinging about what is their own stupidity! I would respect any of them who did choose to grow trees or plant a wildflower area or even if they were allowed build a pay area for children.

Denice, London

I was contacted by a company around about 2006. I believe it was called The Property Partnership. The salesman was very persuasive. I actually argued with him on the phone that I was happy with the strategy I had at the moment and having researched the property market I suggested that he wouldn't be in a job in the next few years. Then I left it at that. The salesman contacted me on a number of occassions which made it a bit of a niusance.

Peter, Whitehaven

In our village we have experienced a couple of these land bank style sales. Fortunately our District Council who are the planning authority have acted quickly and endured restriction notices have been placed on the land. However not to be outdone the landbankers are marketing the propreties in the overseas markets with specific advice on their websites to the effect that the land cannot be marketed to UK or USA clients. So some misguided expat will no doubt see the potential in investing for his pension in one of these scams - at the same causing a fair degree of grief to the community.

Peter, Charlwood

I was sold land in Bucks and in East Sussex by a landbanking firm approx 5 years ago and one particular point I remembered was that they said they would organise the sale of the land after all the plots have been sold. The plots of land in E. Sussex have been sold. I recently called the mobile number advertised on their website and gentleman who answered stated that I would have to call the council myself and to seek planning permission. I said to him how would I know when all the plots of land were going to be sold in a collective scheme. He seemed to be a bit evasive or he just didn't seem to be in a position or have knowledge about the business he was in.

Anthony, London

One of my friends worked for a while for one of these companies, he was promised constant big pay rises. He was naive and worked there for 7 months before the firm was shut down. He made good money, but I knew there was something weird about the whole siutation. He is now in Cyprus working for a similar company selling carbon credit. Very weird again. People get roped into the idea of making alot of money, quickly and easily. Especially those with few qualifications,like my friend.

Jordan, Surrey

I was called and offered building land in Bedfordshire, they claimed I had requested information in the past and did I want an info pack, I said yes, they asked for my date of birth I refused. I read the literature it was clearly not building land and no planning permission was mentioned on the paperwork anywhere. I emailed back saying don't contact me. I was then phoned by someone else who said that the previous broker was unprofessional, I said I wasn't interested he asked why not, I refused and he became abusive, so I told him where to go and hung up. He rang back but I didn't respond. Luckily I am quite an experienced investor, clearly a lot of poor victims were not.

Vincent, Richmond

I have an awful feeling that I have been duped under similar circumstances with a company operating along the same lines. I invested 11,000 in a plot of land in Leicestershire, I fear its value is also zero now after reading your report. It was all I had left out of a painful divorce and now it seems I have lost any hope of redeeming my so called investment. I am on incapacity benefit only presently and would have been better off putting it under my mattress.

Darren, Strood

I moved down to London to work for one of these companies and within a couple of weeks the offices were raided and as I understand it several people arrested. I have a list as long as my arm of disgusting practices used by these companies.

Mark, Glasgow

I was contacted by a similar company and was offered an investment offer on land. In the end I declined and after reading the report I'm glad I did. I'd suggest that everyone should contact their solicitor before taking up any such offer.

Pete, Lichfield

These people can be a ruddy nuisance. Several years ago now I enquired for information on what I thought was a reasonable investment, however, purely through the "hard sell" approach I was immediately put off. Glossy, high quality brochures have been sent to me, emails and telephone calls have been made at "out-of-work" hours all to no available. You have to be strong and determined and simply say, 'No thank you'. Remember the old adage, "if it's too good to be true, it undoubtedly is"!! Thankfully I never parted with any cash despite "guarantees" of lucrative pay-backs. I've heard of some stories where planning permission hasn't been granted and in some instances where plans have not even been submitted. I have now no interest in these scams and welcome any moves to expose these cowboys.

David, Leicestershire

BBC Radio 4's Money Box is broadcast on Saturdays at 1200 GMT, and repeated on Sundays at 2100 BST.

View the original article here

No clown: McDonald's chief defends Ronald

20 May 2011 Last updated at 10:32 GMT Ronald McDonald is an "ambassador for good", the company says McDonald's chief executive Jim Skinner has stood by the fast-food chain's trademark clown Ronald McDonald.

On Wednesday, a group of 550 healthcare workers wrote to McDonald's asking it to stop marketing to children using methods such as toys and the clown.

"Ronald McDonald is going nowhere," Mr Skinner told Thursday's shareholders' meeting.

Shareholders rejected a proposal for the company to issue a report outlining its role in childhood obesity.

The proposal, put forward by a group of nuns, asked for a report within six months, "assessing the company's policy responses to public concerns regarding linkages of fast food to childhood obesity, diet-related diseases and other impacts on children's health".

The board of directors opposed the motion, saying it offered a variety of food to its customers, provided nutrition information about the food, and communicated with children "in a responsible manner through age appropriate marketing and promotional activities".

Mr Skinner said: "This is about choice and we believe in the democratic process."

Separate to the nuns' motion was the latest step in a two-year campaign by Corporate Accountability International, the organisation best known for its campaign to get rid of Joe the Camel from cigarette advertising.

Its open letter to McDonald's said: "While acknowledging that fast food is unhealthy, you pin responsibility for the epidemic of diet related disease on a breakdown in parental responsibility."

"We ask that you heed our concern and retire your marketing promotions for food high in salt, fat, sugar, and calories to children, whatever form they take - from Ronald McDonald to toy giveaways."

At the shareholders' meeting, Mr Skinner said: "As the face of Ronald McDonald House Charities, Ronald is an ambassador for good and delivers important messages to kids on safety, literacy and balanced, active lifestyles."

View the original article here

Warning over uninsured vehicles

23 May 2011 Last updated at 00:37 GMT An advertising campaign reminding motorists of the law change is being launched by the government Motorists are being reminded that a new law comes into force in a month's time which will require them to make sure their vehicle is insured.

An advertising campaign is being launched to publicise the change, which means from 20 June people can be fined without actually driving the car.

There are estimated to be about 1.4 million motorists without insurance.

At the moment uninsured drivers are prosecuted only after they have been caught actually driving.

Although police cars have number plate recognition technology which can check cars against a database, it still requires police time to enforce.

The new offence will allow motorists to be prosecuted for simply owning a vehicle without insurance.

Letters will be sent to drivers and, if they do nothing, they face a ?100 fine followed by court action.

If the vehicle remains uninsured - regardless of whether the fine is paid - further action will be taken. If the vehicle is on public land it could then be clamped, seized and destroyed.

Alternatively court action could be taken, with the offender facing a fine of up to ?1,000.

Motorists who have declared their car as off the road will not be fined.

'Nowhere to hide'

Ministers say the change will allow police to concentrate their efforts on hard core offenders, who drive unregistered cars which the automatic system will not be able to trace.

Road Safety minister Mike Penning said: "Uninsured drivers are a danger on our roads, killing 160 and injuring a further 23,000 people each year, and they cost honest motorists ?500m in extra premiums.

"That is why we are introducing this tough new law which will leave uninsured drivers with nowhere to hide.

"Our message is clear - get insured or face a fine, court action or seeing your car seized and destroyed."

Ashton West, chief executive at the Motor Insurers' Bureau, said the change in law is a "stepping up of enforcement activity".

He added: "Now the registered keeper must make sure that their vehicle is insured all the time.

"Around four percent of vehicles have no motor insurance at any given time, and this needs to change so that is why this new enforcement approach is so important."

View the original article here

Keeping it local?

18 May 2011 Last updated at 23:03 GMT By Phil Kemp BBC Radio 4's The Report Campaigners in Stokes Croft, Bristol objected to the opening of a Tesco store in their neighbourhood Campaigners are calling for greater transparency in UK planning law so communities are made more aware of new businesses opening in their area.

The Tesco Express which was the focus of riots in Bristol in April is still boarded up and has now been covered in graffiti.

"I love community," has been daubed on one of the hoardings.

Another scrawled message reads "not welcome".

For those who witnessed the disturbances in the Stokes Croft area of the city earlier this year, it is clear who the messages are meant for.

For years Stokes Croft has been a bohemian area, crammed with independent shops, squats, bars and clubs.

It is this individual character which some people felt would be compromised by the arrival of supermarket giant Tesco, even in its smaller Tesco Express guise.

These objections were not confined to a few disgruntled squatters, say campaigners, who claim thousands of people sent postcards to Bristol City Council objecting to the opening of another supermarket, with thousands more signing a petition.

Much of the anger was directed at the planning process which failed to make it clear a new supermarket was on the cards.

Planning reform

The Tesco case prompted Bristol City Council to write to the Department for Communities and Local Government.

The Tesco Express store in Stokes Croft remains closed after it was vandalised in April this year

Along with the London Assembly, they have called for a new "supermarket" classification in planning law.

At present, express supermarkets come under the 'A1' classifiction which can cover any type of retail outlet - a vintage clothes shop, a hairdressing salon, even an undertaker.

The impact a new supermarket can have on an area, such as frequent deliveries from heavy goods vehicles, should put Tesco, Sainsbury's, Lidl and the like, in a class of their own, say campaigners.

Continue reading the main story

Despite the recession it's hard to see any sign of the supermarket expansion slowing down”

End Quote Professor Cliff Guy Cardiff University Bristol councillor Alex Woodman said: "What we're asking the government to do is refine the A1 class so that it distinguishes between, say, small local independent retailers and national chain stores, where the impact on the local area is potentially more significant."

He told BBC Radio 4's The Report that had his committee known about Tesco's interest, they would have given more consideration to the potential impact the store would have on the local area.

"Because we didn't know that at the time, the council wasn't able to consider the impacts and we were in a situation where planning permission was granted without any thought being given to them," he said.

In response to Bristol City Council's call for changes to planning regulations, the Department for Communities and Local Government said that it was not the role of the planning system to restrict competition, or give preference to one retailer over another.

'Nothing underhand'

Claire Milne, co-ordinator of the No Tesco in Stokes Croft campaign, believes Tesco deliberately kept quiet about its intentions.

"We know from various people in the community that Tesco have been looking in this area for at least a few years," she said.

"If they were genuinely being true to what they claim in their social responsibility report and on their website - that as soon as they identify a site they start talking and listening to the local community - then we would have heard from them."

But Tesco's head of property communications, Michael Kissman, says there was nothing underhand in the way Tesco went about setting up in Stokes Croft.

He said the original planning application was put in by the administrators of a comedy club, who were struggling to find someone to take over the property.

"They were clear that the purpose of its change of use was to make it more marketable to future occupiers," he said.

Mr Kissman told the BBC that Tesco had decided to invest in an area which had long been abandoned by other retailers, creating jobs and providing products and services.

Advantage in turndown

Despite the campaigners' plea for greater restrictions on supermarket chains, retail experts believe there could be a continued expansion in the number of supermarket convenience stores in the future.

Professor Cliff Guy, from the School of City and Regional Planning at Cardiff University, said "despite the recession it's hard to see any sign of the supermarket expansion slowing down."

Up until now it has mainly been Tesco and Sainsbury's which have been opening smaller, convenience-style supermarket stores.

But Professor Guy believes fellow retail giants Waitrose and Morrisons have clear plans to develop more shops in this field and the current economic climate could make their ambitions easier to fulfil.

"In one sense the recession helps because it makes property more available and so there is more opportunity.

"Despite worries about this, lots of planners will be quite receptive to [the supermarkets] because they want to see their town centres functioning properly - they don't want empty shops."

The Report will be broadcast on Thursday 19 May at 2000 BST on BBC Radio 4.

You can listen again via the iPlayer or download the podcast.

View the original article here

IMF urged to retain European head

19 May 2011 Last updated at 18:33 GMT The top seat at the IMF is vacant after Dominique Strauss-Kahn resigned, facing criminal charges Leading voices in Europe say another European should head the International Monetary Fund (IMF) following the resignation of Dominique Strauss-Kahn.

Germany's Angela Merkel and European Commission President Jose Manuel Barroso's comments come amid debate over whether the next IMF chief should come from the developing world.

Ms Merkel said a European was needed in light of the eurozone's problems.

Mr Strauss-Kahn is in jail in the US, accused of trying to rape a hotel maid.

He denies the charges and arrived at court in Manhattan on Thursday morning to make a fresh appeal for bail. His first application was rejected on Monday.

His wife, Anne Sinclair, arrived for the hearing shortly before the scheduled start time of 1815GMT.

Mr Strauss-Kahn had been coming under mounting international pressure to leave his post amid the furore over his arrest.

In a statement posted on the IMF website late on Wednesday, he said he resigned with "infinite sadness", but wanted to "devote all my strength, all my time, and all my energy to proving my innocence".

Mr Strauss-Kahn's deputy, John Lipsky, has been placed in interim control of the organisation, and the IMF says it will release information "in the near future" about the appointment of a permanent successor.

'Only natural'

Analysts say a battle is looming over who will head the IMF amid growing calls for it to reflect the growing power of emerging economies.

Continue reading the main story

It's awkward for the Europeans and the US... [But] if Europe can get the Americans on their side, then another European will replace Mr Strauss-Kahn”

End Quote Stephanie Flanders BBC Economics editor But Mrs Merkel - who leads Europe's biggest economy - said she was in favour of another European candidate.

"Of course developing nations are within their rights in the medium term to occupy the post of either IMF head or World Bank chief," she said according to AFP news agency.

"But I think that in the current situation, with serious problems with the euro and the IMF strongly involved, there is a lot in favour of a European candidate being put forward."

A spokeswoman for Mr Barroso was quoted as saying it was "only natural that the member states of the European Union, as the biggest contributor to the fund, agree on a strong and competent candidate who can rally support from the IMF membership".

She said talks were likely to identify a "strong European candidate".

But South Africa, Brazil and Mexico are among developing nations urging the IMF to abandon the tradition of reserving the post for a European - with Brazil saying that era is "over".

US Treasury Secretary Timothy Geithner said on Thursday: "We want to see an open process that leads to a prompt succession for the fund's new managing director."

A Chinese government spokeswoman said the selection process should be based on "merit, transparency and fairness", Reuters news agency reported.

She was quoted as saying "we believe that emerging and developing countries should have representation at senior levels".

Continue reading the main story Christine Lagarde, FrancePeer Steinbrueck, GermanyAxel Weber, GermanyKemal Dervis, TurkeyTrevor Manuel, South AfricaAgustin Carstens, MexicoGordon Brown, UKStanley Fischer, IsraelMontek Singh Ahluwlia, IndiaHowever, the IMF's 24-member executive board votes to fill the top post, and the G7 established economic powers retain a majority on the board.

There is an array of potential candidates from around the world, but BBC economics editor Stephanie Flanders says she understands French Finance Minister Christine Lagarde would be hard to beat if she entered the contest.

Bail hearing

Mr Strauss-Kahn is accused of sexually assaulting a 32-year-old maid in New York's Sofitel hotel on 14 May.

The Frenchman is charged with committing a criminal sexual act, attempted rape, sexual abuse, unlawful imprisonment and forcible touching.

On Monday a judge in New York denied Mr Strauss-Kahn bail - despite the offer of a $1m (?618,000) guarantee - saying there was a risk the IMF chief would flee the country.

Judge Michael Obus will hear the new application.

A copy of Mr Strauss-Kahn's new bail plea, published on the website of the New York Times, shows Mr Strauss-Kahn's lawyers are offering new bail conditions they hope will convince the judge their client will not abscond.

The conditions include Mr Strauss-Kahn being confined 24 hours a day to a Manhattan address, subject to electronic surveillance.

Mr Strauss-Kahn has been remanded at the notorious Rikers Island prison.

One of his lawyers told French radio on Thursday that Mr Strauss-Kahn was in good health and optimistic, Agence France-Presse news agency reported.

View the original article here

PPI drives record finance claims

18 May 2011 Last updated at 07:22 GMT FOS chief executive Natalie Ceeney says the service has experienced its busiest year The Financial Ombudsman Service (FOS) handled a record 206,000 formal complaints in the last financial year - a rise of 26% from 2009-10.

Just over half them, 51%, were about the mis-selling of payment protection insurance (PPI).

The 105,000 PPI complaints were a record for any type of financial policy in a single year.

The FOS tries to deal with problems that financial businesses have failed to resolve themselves.

Its chief executive, Natalie Ceeney, said the service, which started 10 years ago, had experienced its busiest year to date.

"We have received more calls to our front-line consumer helpline than ever before," she said,

"And even though we have been able to resolve four out of five problems and enquiries at this early stage - by giving general advice and guidance to over 800,000 people on what to do next - we have still had more consumers come to us with formal unresolved disputes than in any previous year."

Fobbed off

PPI has generated a deluge of complaints for the FOS in the past three years.

Continue reading the main story

The banks' battle to dodge its PPI responsibilities has damaged the industry's reputation, tied up the ombudsman's resources and worst of all left consumers out of pocket and out of patience”

End Quote Sarah Brooks Consumer Focus The insurance is supposed to cover loan repayments if someone becomes ill or loses their job, but it has emerged that many of the policies sold by the banks were mis-sold.

The FOS had previously told the City regulator, the Financial Services Authority (FSA), that many banks were simply fobbing off customers who complained.

But the situation took a turn for the worse last autumn.

Some banks refused to deal with the any new PPI complaints while the British Bankers' Association (BBA) used the High Court to challenge new industry rules about the sale of the insurance and the way banks should handle complaints about past sales.

The BBA recently lost its case, which should mean tens of thousands of cases on hold are now processed by the FOS or the banks themselves.

But the banks' procrastination has led to a big backlog at the FOS.

"This legal action against us has led not only to exceptionally high volumes of PPI complaints, but also to growing numbers of cases where the banks behind the challenge have decided not to co-operate fully with us," said FOS chairman, Sir Christopher Kelly.

"This has made it impossible for us to progress these complaints as quickly as we would like."

Sarah Brooks of Consumer Focus said: "The banks' battle to dodge its PPI responsibilities has damaged the industry's reputation, tied up the ombudsman's resources and worst of all left consumers out of pocket and out of patience."

Emerging problems

Overall, 51% of the complaints resolved by the FOS during the year were settled in favour of the customer.

Although the number of complaints about investments fell by 30%, and those about banking by 9%, the FOS said it was concerned about other emerging problems.

Among them are:

more problems with claims for specialist insurance, such as mobile-phone covermore complaints about consumer credit dealsmore complaints about travel and car insurance.

Richard Lloyd of Which? said: "The fact that over 200,000 people a year are now having to refer their complaint to the Financial Ombudsman Service - the last port of call - shows that banks and insurers are simply not taking complaints-handling seriously enough."

The FOS said there was a continuing trend for complaints to become more complex and hard fought, by both sides.

The number of cases that involved an ombudsman's final decision, rather than just an earlier adjudication, rose from 8% to 11% of all complaints that were resolved.

The biggest banking groups - Barclays, Lloyds, RBS and HSBC - accounted for 51% of all the cases that were dealt with by the FOS.

Meanwhile 3,592 businesses generated just 5% of its workload.

View the original article here

Green gadgets

18 May 2011 Last updated at 16:23 GMT By Roland Buerk BBC News, Tokyo Watch: Roland Buerk says people will have to walk more and get used to cold toilet seats

Japan is braced for a summer of electricity shortages after the earthquake and tsunami in March.

The country relied on nuclear power for 30% of its supply.

But the Fukushima plant was disabled by the disaster, and another nuclear plant at Hamaoka has been shut down because of safety fears.

Tokyo's electronics shops are busy these days with customers looking for energy efficient gadgets.

The earthquake has left Japan with an electricity shortage, so people have been urged to use it sparingly.

At Bic Camera, a huge multi-storey building in the Yurakucho district, demand began to pick up the week after the earthquake and tsunami.

Popular lights Continue reading the main story

I don't think any of us imagined we would lose the power supply because of a natural disaster like we did”

End Quote Junichi Nonaka Kirin brewery The latest lines of eco-fridges are selling well.

Also popular is a new range of air conditioners, which can sense when people are in the room, and whether they are being active or sitting still, and adjust the cooling output accordingly.

The machines even send a message to the remote control to remind people to shut the doors and windows if they detect a draught of warm air.

"The interest level has risen quite a bit," says salesman Kai Fujiwara.

"If you are talking about [energy efficient] LED lights alone, it's twice as much as before the quake. LED lights are expensive, 20 or 40 times more than ordinary light bulbs, but people are buying 10 at a time."

Power consumption falls

The Japanese have a large appetite for power.

Tepco, which serves Tokyo and the surrounding area, used to boast it sold more electricity than was consumed in all of Italy.

Demand for energy efficient gadgets is picking up

But sales have fallen sharply along with this new enthusiasm for frugality.

Tepco produced, or bought from other utilities, 15.3% less electricity in April compared with the same month last year.

Tohoku Electric, which serves the badly hit north east, saw its capacity fall by 19.3%.

Sandals and T-shirts

More generating capacity should be online by the summer, but the shortfall in the east of Japan could still be 10% of normal supply.

Surplus power from the west cannot be transferred easily because electricity there runs on a different frequency.

In response the Cool Biz campaign, in which salarymen are urged to discard their jackets and ties every summer to save on air conditioning, has been ramped up.

Under the motto Super Cool Biz, the government is suggesting they consider sandals and T-shirts, even Hawaiian shirts, for the office this year so the thermostat can be set even higher.

Brewing power Tepco has seen electricity sales fall sharply

But just saving electricity is not enough.

The way it is generated and supplied is also being reassessed.

Two days after the earthquake, the Kirin brewery at Yokohama began selling electricity to the national grid.

Gas-fired generators on site power the brewing, bottling and canning processes, and with spare machines installed in case of breakdown there is more capacity than needed.

Now they have been put to use, providing enough energy to run more than 3,000 homes.

Harnessing electricity from factories is likely to become increasingly important to Japan.

"I don't think any of us imagined we would lose the power supply because of a natural disaster like we did," says Junichi Nonaka, the Kirin brewery manager.

"So we have realised that we took unlimited electricity for granted. We also now know we need to save energy and not to waste it."

Electricity wasted

Even before the disaster, though, Japanese industry used energy efficiently.

Consumption is about the same as in the early 1970s, despite the economy now being far bigger.

Others are more wasteful.

Many shops are brightly lit and doors are typically left open in the summer, allowing cool air to stream onto the pavement.

Some 4% of electricity in households goes to power heated toilet seats, so clearly there is room for saving.

Geothermal resources

But getting by on less, or making more, will take innovation.

That could be an opportunity for the economy.

Solar panels are already being adopted, but some experts believe the technology could be a dead end.

Even if production can be ramped up, making each unit cheaper, it will still be a costly way of generating electricity.

Instead, some believe Japan's position on the Pacific ring of fire, the very thing that makes it vulnerable to earthquakes, may provide an answer.

"Japan is full of geothermal resources," says Taishi Sugiyama from the Central Research Institute of Electric Power Industry.

"There are many volcanoes.

"If we successfully develop that, then it can be one of our major electricity supplies.

"You have hot water everywhere in Japan. If we drill much deeper we can tap geothermal resources. The potential is close to 10% of Japanese power supply."

Mother of invention

Over the next few months Japanese offices and homes are likely to be rather uncomfortable with less air conditioning.

Tokyo's summer is sticky.

But necessity is the mother of invention.

And in the long term the drive to conserve power and find new sources could help Japan's economy to recover.

View the original article here

UK tests deep water oil leak plan

19 May 2011 Last updated at 17:29 GMT An RAF Hercules sprayed water to simulate dispersant in the oil spill exercise west of Shetland More than 100 people have taken part in an oil spill exercise off Shetland, one of the biggest of its kind in the UK.

It followed concerns raised by the Gulf of Mexico spill in April 2010, when a blast at the Deepwater Horizon rig caused a massive oil leak.

Exercise Sula tested how authorities would react to and deal with a major deep water spill in the UK.

It was led by the Maritime and Coastguard Agency and the Department of Energy and Climate Change.

The clean-up exercise west of Shetland was hampered by rough seahs and strong winds gusting up to 50mph.

Greenpeace protest

Only one of several booms - used to contain spills - was deployed in the simulation, while an RAF Hercules was also used to break up the oil.

Last year, the UK government set up a planning group for the exercise, involving the emergency services, government agencies, the local authority and the oil industry.

Continue reading the main story David Shukman Environment & science correspondent, BBC News

Just the weather to test the claims of the oil industry that it can cope with a spill.

Here at Shetland's massive Sullom Voe oil terminal, the winds are vicious, squalls strike without notice and everyone keeps rushing for shelter.

Stretches of bright orange boom have been laid in the bay but not as much as planned because the gusts would blow them away.

Imagine doing this for real in mid winter. Seeing the oil vessels engaged on the exercise takes me back to the Gulf of Mexico last summer, the nightmare spill that is in everyone's minds today.

That challenged BP. Now in these wild waters, it is Chevron pretending it has lost control of a deep well. They keep stressing that they are not complacent. In these conditions, you cannot be.

A giant Hercules plane has just flown by spraying water to simulate dispersant. Who knows where the wind has blown it?

US oil giant Chevron, which is drilling for oil in the area, agreed to join the simulation before its staff were targeted by environmental protesters from Greenpeace last September.

The campaigners attached themselves to the Stena Carron, a drilling ship off Shetland operated by Stena Drilling and on contract to Chevron.

They then attached a survival pod to the ship in a stunt aimed at highlighting the dangers of deep water drilling.

Exercise Sula director Murray Milligan said: "The UK's offshore safety and environmental regulatory regime is one of the most robust in the world and the industry's record is strong.

"Nevertheless, it's right that we continue to test our response capability.

"Exercise Sula will test the participants' response to an unfolding scenario, involving the uncontrolled release of hydrocarbons into the sea from a deep water well operated by Chevron Upstream Europe at the Cambo well site, 86 miles west of Shetland.

"This exercise will give the UK an opportunity to assess its response capability to a release from a wellhead 1,000m below the surface.

"Because the exercise scenario involves the weather and tides forcing the oil to land onshore, we'll also have the opportunity to test a shoreline response in Shetland."

Eleven people were killed in the Deepwater Horizon rig explosion last year, and in the months that followed more than 200 million gallons (780 million litres) of oil flowed into the Gulf of Mexico from the well.

It polluted hundreds of miles of coastline and became the worst US oil spill in recent history.

View the original article here

Inflation-busting

17 May 2011 Last updated at 23:07 GMT By David Black Banking specialist, Defaqto Savers and borrowers have seen contrasting fortunes as a result of the low interest rates We are in an era where the Bank of England interest rate is languishing at a historic low of 0.5%, while the rate of inflation is significantly higher.

While this is clearly great news for borrowers, it creates very real difficulties for those reliant on income from their savings.

The sad fact is that for the vast majority of people, money saved in deposit-based accounts is actually getting a negative return in real terms.

The average easy access savings account currently pays 0.97% gross on a ?1,000 balance - although some pay as little as 0.01% and the highest paying account pays just above 3%.

The pain does not end there, because if you are a taxpayer, then HM Revenue & Customs also takes a bite out of the interest for all accounts except cash Individual Savings Accounts (Isas) and selected National Savings & Investment (NS&I) products.

To get the best returns on your money you really need to be proactive and review your current deal, and, if appropriate, transfer to a better account elsewhere.

You may want to take advantage of things like introductory bonuses, guaranteed minimum rates or fixed rates.

So, is there anything you can do to inflation-proof your savings?

Let's start with some good news. All the deposit-based inflation-linked bonds are linked to the Retail Prices Index (RPI) rather than the other widely-used inflation measure known as the Consumer Prices Index (CPI).

This is beneficial because the methods of calculation used to determine the two inflation rates mean that the RPI is usually higher than the CPI.

Last week, NS&I launched its Index-Linked Savings Certificates which, for an investment of between ?100 and?15,000, guarantees a tax-free return of 0.5% above the RPI over its five-year term.

For inflation-linked deposit-based accounts available elsewhere, if you are a taxpayer you really need to confine your attentions to inflation-linked cash Isas because you will have to pay tax on interest from non-Isa savings accounts.

Inflation rate Non-taxpayer or cash Isa Basic rate taxpayer 40% higher rate taxpayer 50% higher rate taxpayer

Kent Reliance currently offers the highest rate for a five-year inflation-linked cash Isa, paying RPI plus 2% on balances of more than ?2,500.

Five-year inflation-linked cash Isas paying RPI plus 0.1% are available from Barnsley Building Society, Chelsea Building Society and the Yorkshire Building Society for a minimum balance of ?3,000.

All of these cash Isas will accept transfers in of cash Isas from previous tax years.

Inflation-linked structured deposit-based bonds are available from Barnsley Building Society, Chelsea Building Society and Yorkshire Building Society.

These all offer bonds that pay RPI plus 0.1% for five years on balances of more than ?3,000. Do bear in mind that these three building societies count as one institution as far as investor protection is concerned and have an overall limit of ?85,000 that is protected under the Financial Services Compensation Scheme.

If you are thinking of opening one of these accounts do remember you should only deposit money that you are sure you will not need to access for the entire term of the bond.

Early withdrawals or closure may not be permitted but, where they are, penalties would be imposed that would dramatically reduce any return.

Burst bubble

What happens if inflation is negative?

It is worth checking the small print to see whether a negative inflation rate will result in a reduction of your capital. None of the accounts mentioned above will deduct money from your investment in the event that RPI is negative.

Looking at the alternatives, index-linked gilts - which are bonds issued by the government - have been available since the 1970s.

However, the prevailing purchase prices of existing UK government issues mean that the real yields are now below 1%.

You can buy gilts through a stockbroker, or when new stock is issued, through the government's Debt Management Office.

Index-linked corporate bonds - which are issued by companies - are a newer phenomenon and currently have real yields of about 1.5% to 2%. You can buy existing issues of corporate bonds through a stockbroker.

You can also invest in Open Ended Investment Companies (OEICs) or unit trusts that have funds investing in inflation linked and/or other fixed rate investments that are targeted to have a return that matches or betters inflation.

Clearly there is no guarantee that they will meet their targeted performance and there is also capital risk in that the price of the units can fluctuate.

Most of these funds invest in gilts rather than corporate bonds.

However, M&G Investments has recently launched its UK Inflation Linked Corporate Bond Fund that invests in index-linked corporate bonds, Floating Rate Notes, index liked gilts and other fixed income instruments. It aims to achieve a return that beats CPI over the medium to long term.

Aegon's Inflation Linked Fund also specifically aims to outperform inflation, although it can have up to 60% exposure in equities.

Fund managers offering a fund that invests primarily in UK index-linked gilts include AXA Sterling Index Linked Bond Fund, Baring BAM Index Linked Bond Fund, Henderson Index Linked Bond, LV= UK Index Linked Fund, M&G Index-Linked Bond Fund A, and Royal London Index-Linked Fund.

Bear in mind that you may have to pay an initial charge to buy an OEIC - or a bid/offer spread in the case of a unit trust - and that there will also be an annual management charge.

You can hold these funds in a stocks and shares Isa which would remove much of any potential tax liability. If held outside an Isa you may be subject to income tax on interest received and capital gains tax on any gain when you sell the units.

If you want to invest in an OEIC or unit trust you can do so either directly through the provider or through an independent financial adviser.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

View the original article here

Brighter outlook

18 May 2011 Last updated at 16:27 GMT Viewpoint by Peter Esho City Index Asia Pacific The cost of New Zealand quakes is heavier than Japan's, according to the IMF New Zealand's latest budget shows a government facing up to harsh economic realities at a time when it is dealing with the aftermath of one of the country's worst natural disasters.

The budget deficit has hit a record high of NZ$16.7bn ($13.2bn, ?8.2bn), or around 8.4% of gross domestic product (GDP).

At the same time, the government is going to have to find an estimated $6.7bn to finance reconstruction after the earthquake.

The cost is actually higher than Japan's earthquake bill when measured as a proportion of GDP.

However, despite natural disasters and trading disruptions, the government is trying hard to get its finances in order.

This is in stark contrast to talk in the northern hemisphere which is dominated by increasing debt limits, European bailouts and the printing of money.

Government debt

Budget deficits are financed by government debt.

Large deficits - when obligations are larger than government revenue - usually require government debt to rise.

The problem is when the debt gets too large.

New Zealand's government debt as a proportion of GDP was 16.7% at the end of 2010.

It is expected to rise to around 20-25% over the next year.

US government debt on the same measure is expected to rise above 100% this year so New Zealand's position is not problematic in a global context.

But the extra burden to New Zealand increases government borrowings and raises doubts among some about the speed of repayment on loans.

New Zealand does not benefit from record high commodity prices like Australia. Its export mix is more exposed to agricultural products.

Its major source of income - tourism - is also affected by the disaster. The sector employs just fewer than 10% of the population.

Debt commitments

Australia's budget last week re-affirmed a pre-election commitment to return into surplus by 2012-13, which should reduce the level of government borrowing.

Next-door neighbour New Zealand faces a much tougher position, although its commitment to rein in spending and eventually pay-off its government borrowings is in tune with Australia.

Funding the government's commitments should continue unchanged unless credit agencies downgrade their ratings - a key part in determining funding costs.

New Zealand has maintained its AA+ credit rating since 1996, just one level below Australia's.

But its outlook was downgraded to negative following February's Christchurch earthquake on fears it will find it hard to meet its rising debt commitments.

Further downgrade is unlikely.

The negative outlook might even be revised to stable if the budget shows a better-than-expected set of numbers.

Today's budget is important in determining New Zealand's ability to meet near term requirements and highlights Prime Minister John Key's plan to repay debt.

Despite being in an election year, spending will target only essential areas.

There will be cuts to certain areas, like family entitlements, changes to investment-scheme benefits and social-welfare payments in the hope of redirected money to reconstruction efforts.

Brighter outlook

The financial cost of the earthquake follows several recessions in what has been a very tough decade.

Rebuilding is costly but it generates growth, spending and jobs.

Tourism will recover and its position as a food basket to a quickly developing Asian region is strategically attractive.

The IMF estimates New Zealand's 2012 GDP growth at around 4%. This compares with Australia at 3.5%, the USA at 2.9% and Germany at 2.1%.

With that in mind and a possible budget surplus by 2016, the next decade could be a lot brighter for New Zealand.

Peter Esho is the Chief Market Analyst of City Index Asia Pacific.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

View the original article here

Banks face 'intensive' regulation

19 May 2011 Last updated at 14:10 GMT Watch: Hector Sants says "regulators cannot rely on the judgement of the firms they supervise"

Banks have been told they will be much more strictly supervised by the new Prudential Regulation Authority (PRA).

The warning came from Hector Sants, the incoming boss of the PRA and the current head of the Financial Services Authority.

He told an audience of senior banking executives that they could not be relied on to avoid making mistakes that endanger the financial system.

He described the new approach as "close intensive engagement".

"Central to this supervisory model is the presumption that regulators cannot rely on the judgement of the management of firms they supervise, and must take their own view formed from their own analysis of the significant issues which affect the safety and soundness of the firm," said Mr Sants.

"Furthermore, where that judgement differs from that of the firm's management, the regulator must act," he added.

'Welcome step'

The decision to carve up the FSA was made by the newly elected coalition government last year after the financial crisis in 2007 and 2008 exposed problems with the regulatory regime.

Continue reading the main story

A decision has been taken for the PRA to publish all the regulatory data supplied to it by banks... so that banks' investors and creditors will be able see for themselves whether the banks are taking excessive risks.”

End Quote Robert Peston Business editor, BBC News The Treasury published a second formal consultation document on its plans in February this year.

The audience of banking executives was called to hear the latest thinking of the FSA and the Bank of England about how the new regulatory regime will work.

Andrew Bailey, who will be the deputy chief executive of the PRA, warned them that this would not involve trying to save insolvent banks at all costs.

"Key elements... will be to ensure that financial firms do business in such a way that adverse effects on the UK financial system are avoided and to minimise damage to the system in the event that a firm does fail," he said.

"We will seek to ensure that all firms it [the PRA] regulates can fail or be closed in an orderly manner with minimal impact on the financial system, consistent with the PRA's objective of promoting financial stability in the UK," he added.

Angela Knight, of the British Bankers' Association [BBA], said: "Today's announcement, setting out the authorities' approach to banking supervision in the future, is a welcome step forward offering a real opportunity to progress the lessons we have all learned to create a stronger regulatory framework for the future."

New regime

The PRA, which will be a division of the Bank of England, is being created next year to replace and improve on some of the functions of the Financial Services Authority, which is being closed down.

Continue reading the main story Big six UK banks: HSBC, Barclays, RBS, Lloyds TSB, Standard Chartered and the Nationwide building society.Big six UK subsidiaries of international banks: Credit Suisse, Goldman Sachs, Morgan Stanley, Santander, Nomura and JP Morgan.Big six UK branches of international banks: Deutsche Bank, UBS, JP Morgan, Credit Suisse, Credit Agricole and BNP Paribas.Source: FSA & Bank of EnglandResponsibility for supervising the way financial firms treat their customers will go to a separate Financial Conduct Authority (FCA).

The PRA will be responsible for supervising all banks, building societies and credit unions, plus insurance firms, amounting to more than 2,000 firms companies.

All of these will be subject to a minimum "baseline" level of supervision.

The joint FSA and Bank of England discussion document says that collectively the deposit-taking institutions functioning in the UK have worldwide assets worth about ?9 trillion - about seven times the total annual economic output of the UK.

So the PRA will concentrate its efforts on the small number of very large banks, including some investment banks, whose failure would have the biggest impact.

View the original article here

House prices falling, says survey

17 May 2011 Last updated at 15:46 GMT Most surveys suggest prices have been in decline in the past few months UK house prices fell slightly in the first three months of the year, according to the Communities and Local Government department (DCLG).

Its survey shows prices over the first three months of the year prices were 0.5% down on the previous three months.

However, during March alone, prices rose by 1.2%, leaving them 0.9% higher than a year ago.

Prices in London have grown by 5.6% in the past year, far outstripping other areas of the UK.

Nicholas Ayre, director of UK buying agent Home Fusion, said: "The property market, very clearly, has fragmented into a series of micro-markets.

"It could be many years before we see the return of a property market that trends at a national level."

Regional differences

The DCLG survey is based on a 60% sample of all completed house purchases involving a mortgage.

Continue reading the main story

We do not expect there to be a significant increase in first-time buyer activity in 2011 or 2012”

End Quote Council of Mortgage Lenders It shows that prices have risen in the past year in the south-east and east of England, as well as the East Midlands.

But they have dropped elsewhere, especially in Northern Ireland, where they have fallen by nearly 14% in the past 12 months.

"The DCLG data showing a marked rebound in house prices in March do not materially alter our view that house prices will lose ground over the coming months," said Howard Archer of IHS Global Insight.

"House prices are notoriously volatile from month to month and from survey to survey.

"Furthermore, both the Halifax (by 1.4% month-on-month) and the Nationwide (by 0.2% month-on-month) reported falls in house prices in April," he added.

Property ladder

The falling price of homes should assist potential first-time buyers.

However, in a report published on Tuesday, the Council of Mortgage Lenders (CML) said that first-time buyers were one of the groups who had not been "well served" by current conditions in the housing market.

The lenders' group said that there was no single solution to the issue.

"Although there have been a number of initiatives to help first-time buyers, the relatively small scale on which they operate - combined with a severe shortage of funding, and a risk-averse market environment - means that we do not expect there to be a significant increase in first-time buyer activity in 2011 or 2012," the CML said.

"The reality for first-time buyers is that, although there is widespread sympathy for their plight, they are only one of a number of different types of consumer who are experiencing difficulties in challenging housing and mortgage market conditions."

Other groups facing difficulties included those in negative equity after buying their first home at the height of the boom, and those whose mortgage deals were no longer available on the market.

View the original article here

AUDIO: Business Growth Fund 'a good step'

A ?2.5bn Business Growth Fund is being launched by a group of banks today, as part of a government strategy to provide better loans for British companies.

Business editor Robert Peston analyses the immediate impact.

And Business Secretary Vince Cable goes through the wider benefits of the scheme.

Get in touch with Today via email , Twitter or Facebook or text us on 84844.

View the original article here

Olive branch

18 May 2011 Last updated at 23:05 GMT By Richard Anderson Business reporter, BBC News The idea behind international forestry conservation is making trees worth more standing than cut down Given their obvious lack of qualifications, not to mention their recent track record, bankers don't immediately spring to mind as potential saviours of the rainforests.

Biologists, conservationists and ecologists may seem better suited, but in actual fact one of the most important tasks facing the world today may fall to financiers.

A scary thought perhaps, particularly in light of the global financial crisis brought about in part by excessive risk taking and dodgy synthetic investments dreamt up by over-zealous bankers, but one that is fast becoming reality.

For better or worse, there appears to be little choice.

'Front runner'

There should be no doubt about just how vital a function the world's rainforests perform. Not only do they play key role in regulating global temperatures through carbon storage, but they are in essence responsible for the air we breath, the water we drink and many of medicines we rely on.

Preventing deforestation, through which an area of forest equivalent in size to the UK is cut down every two years, is not desirable, but essential for maintaining the earth's natural capital upon which the global economy relies.

In fact, the United Nations Environment Programme (UNEP) has calculated the current rate of deforestation needs to be halved by 2020 to prevent global temperatures rising to dangerous levels.

As Andrew Mitchell of the Global Canopy Programme puts it: "In the race against climate change, forests have come from nowhere to being a front runner."

Tackling deforestation, he says, is now seen as one of the "biggest, cheapest and quickest" ways of tackling rising temperatures.

Cash shortfall Rainforests perform a hugely important role in the global ecosystem

Sixty-nine countries around the world have already signed up to the reduced emissions from deforestation and forest degradation programme, or REDD, under which forest owners are effectively paid not to cut down trees. About $5.5bn (?3.4bn) has been pledged by governments to the scheme already.

However, to reach its 2020 target, UNEP estimates that between $17bn and $30bn a year is needed. Governments alone cannot provide this kind of money.

"The problem cannot be solved without the private sector," Mr Mitchell says. Barring resistance from a few isolated participants, including most notably Bolivia, most people seem to agree with him.

In fact, last year a US government paper proposed that its $1bn contribution to REDD should be conditional on private sector support.

Market mechanisms, therefore, will be the key to REDD's success.

Open market

The theory is fairly straightforward. Private sector investors will fund REDD projects on the ground which, depending on their success, will generate carbon credits that can be sold on an open market.

And it's here where the bankers get involved. As Abyd Kamali, global head of carbon markets at Bank of America Merrill Lynch, explains: "Banks can play a very important role as financial intermediaries in terms of providing liquidity, risk management and structured finance".

At its most simple, this could involve helping to raise capital to fund REDD projects, which would involve an upfront capital payment with returns generated from carbon credits.

The key is establishing a trusted market for forestry credits. And here lies the biggest problem - there isn't one.

Without a workable, regulated market, investors will not be prepared to risk the kinds of capital needed to make REDD work.

Forest investments

A big step towards this goal should take place next year, when California is due to begin issuing forestry credits, but it could be many years before confidence in REDD carbon markets is high enough to attract sufficient funds.

This helps to explain why, as yet, only a handful of major banks, including Bank of America Merrill Lynch (BoA), BNP Paribas and Macquarie, are actively involved in REDD.

Stopping deforestation is now seen as one the best ways to slow global warming

There are a number of possible mechanisms through which banks can raise capital, some of which appear harmless; others less so. Some in fact do away with the need for carbon credits, which means they can be launched more quickly.

One involves creating forest funds, where forestry carbon credits essentially become the underlying assets.

Another is what are loosely termed forestry bonds. Under one possible model, banks would issue bonds to raise funds that are then lent to governments to help preserve forests. The loan repayments would then form the income on the bond.

Another possibility, and one being piloted by BoA, is for a portion of the funds raised to be used to provide some kind of investment protection, with the balance used to invest in either carbon credits or other potentially revenue-generating services derived from forests, such as flood protection or genetic resources for drug development.

These kinds of vehicles may appear all too familiar to some

"The financial sector can raise money very quickly - the sub-prime mortgage market proved this," says Mr Knight.

"Forest-backed bonds are not completely dissimilar to sub-prime vehicles [that rolled up US mortgages into investment funds and which helped trigger the global financial crisis when they unravelled]. It might be a way to raise funds, but is it sustainable?"

He also points out that "one bank has a vested interest in securitisation [pooling assets to create investments]".

Raising taxes

Politicians and financiers are focusing heavily on REDD, yet there are other ways to help save the forests.

Banning unsustainable timber is one effective method, but the world's forests would be lost before enough trees were certified as sustainable, Mr Knight argues.

Reforming subsidies by transferring funds to more environmentally-friendly industries is another, says Mr Mitchell, as is raising taxes on commodities grown on deforested land, such as soya and palm oil.

Tax credits could even be introduced to encourage farmers to improve degraded land.

But it's unlikely these measures would be enough to reduce deforestation quickly enough.

This is why so many are pinning their hopes on REDD. And for REDD to work, serious amounts of money are needed. It's no surprise, therefore, that politicians and scientists are looking to bankers and private investors for the answers.

A sobering fact, perhaps, but the amount of money needed to make REDD work is nothing like the amount of money that was invested in sub-prime mortgages.

And besides, for now at least, there is no other realistic option on the table.

If bankers get it right, they will have played an important role in preserving one of the world's most important stores of natural capital.

If they get it wrong, the world's efforts to save the rainforests will be seriously undermined.

View the original article here

Japan economy back in recession

19 May 2011 Last updated at 07:09 GMT Japan is struggling to restore damaged production lines Japan's economy, the world's third largest, has slid back into recession after the devastation caused by the earthquake and tsunami in March.

Gross domestic product shrank 0.9% in the first three months of the year, the Cabinet office said, giving an annualised rate of contraction of 3.7%.

Analysts say consumption and exports were worst hit.

Japan's economy has now contracted for two quarters in a row, the generally accepted definition of a recession.

Japan sank into a recession during the global financial crisis, but had emerged from it in 2009.

The contraction in the first three months of this year was bigger than expected, with most analysts expecting the annualised rate would show a contraction of about 2%.

"Japan's economy is expected to remain weak for the time being," said Japanese Economics Minister Kaoru Yosano on Thursday.

However, Mr Yosano said that supply constraints were easing and reconstruction demand was likely to spur growth.

"The economy has the strength to bounce back," Mr Yosano said.

Pessimistic consumers

Naomi Fink, Japan Strategist at Jefferies, said the most worrying part of the latest data was the decline in private consumption of 0.6%, as people cut their spending after the earthquake.

Private consumption accounts for almost 60% of the Japanese economy.

Roland Buerk reports from Tokyo on Japan's attempts to deal with power loss caused by the earthquake

"It was already soft in the final quarter of 2010," said Ms Fink.

The earthquake, however, has further dampened sentiment.

The consumer confidence index fell to 33.1 in April, according to the Cabinet Office, where a reading below 50 suggests consumer pessimism.

"Judging by the drop in retail sales and household expenditures over March, consumption should be one of the greater contributors to negative growth in the first quarter," said Ms Fink.

Damaged supply chains

The second biggest component of the world's third largest economy is trade.

Exports made up 13.5% and imports 12.7% of gross domestic product in 2009.

The massive earthquake and tsunami devastated exports, while the costs of imports rose due to high commodity prices.

Japan's trade surplus fell by 34.3% in March compared with the same month a year ago.

"One issue on the export side is the ongoing struggle to restore damaged production lines and supply chains," said Ms Fink.

"On the import side, the increase in demand for fossil fuels, to offset the drop in supply of nuclear energy, is unlikely to fade anytime soon," she added.

Reconstruction demand

Once rebuilding gathers momentum, however, it should have a positive impact on the economy.

But that is only likely to happen towards the end of this year.

"I do not expect positive growth in the second quarter," said Ms Fink.

The country's central bank begins its two-day meeting on Thursday to discuss its monetary policy.

"Japan's economic strength is gradually declining," Bank of Japan (BOJ) governor Masaaki Shirakawa told a parliamentary committee meeting on Tuesday.

Analysts say this signals that the central bank will stick to its ultra-loose monetary policy.

The bank has pumped billions of dollar into the financial system to stabilise the economy since the massive earthquake.

The BOJ is expected to keep the rates unchanged at the lowest level in a range of 0.0% to 0.1%, to help stimulate the economy.

View the original article here