Thursday, June 30, 2011

More tax letters due from HMRC

29 June 2011 Last updated at 12:18 GMT Dave Hartnett Top taxman Dave Hartnett had to apologise for last year's flurry of letters to taxpayers Up to 4.7 million taxpayers will be sent letters later this year telling them they paid too much, or too little, income tax in 2010-11.

HM Revenue & Customs (HMRC) says the letters will follow its annual reconciliation exercise.

This checks that people have paid the right tax via the PAYE system.

HMRC estimates that between 1.7 and 3.5 million people will be repaid an average of ?340 each, while 1.2 million will owe ?500-?600 each.

Last September, HMRC was severely criticised when it revealed that 5.7 million people had not paid the correct tax via PAYE for the years 2008-09 and 2009-10.

This led to about 1.4 million people having to pay an extra ?1,428 each on average, while about 900,000 taxpayers had their debts of up to ?300 written off.

Meanwhile 4.3 million people received cheques for overpayments.

Greater accuracy

HMRC explained at the time that the large number of apparent errors had been uncovered by a new computer system.

This was now used to compare data about taxpayers' incomes and employment histories which previously had been kept on 12 separate databases.

The effect of using a more accurate system was to reveal errors in past calculations.

"The computer system is now working very well," said an HMRC spokesman.

"It is faster and more accurate than the systems we used in the past."

If the HMRC estimates are right, nearly ?1.2bn may have to be repaid by the tax authorities, while an extra ?720m may need to be collected.

Last year's concession, in which bills for unpaid tax of less than ?300 were written off, will not continue, and tax will now be collected from anyone owing ?50 or more.

Letters and demands

The reconciliation exercise for 2010-11 will take place in late July.

HMRC expects that cheques for people previously overtaxed will be sent out in August and September.

Calculations for those who appear to owe money will be sent in batches after that, with the last going out in December.

Taxpayers faced with a bill will have time to challenge the calculations if they think they are wrong.

But if they still have to pay then the money will be taken from their earnings each month via a change to their PAYE tax code for 2012-13.

Up to ?3,000 per individual will be collected this time via PAYE , more than the previous limit of ?2,000.

"We expect that hardly anyone will be faced with a bill larger than ?3,000, but if they want to pay us in one go by cheque they can," said the HMRC spokesman.

'Take an interest'

The Chartered Institute of Taxation (CIOT) advised people to check any letters from HMRC carefully.

"PAYE sorts most things for most people, but end of year reconciliations are always going to be needed to finalise the tax situation of a lot of people," said John Whiting, the CIOT's tax policy director.

"People need to take an interest in their tax situation, especially if they are moving in and out of work or have multiple or erratic sources of income."

In January it emerged that the PAYE errors stretched even further back than first thought.

An extra 450,000 people were told to pay more income tax, totalling ?180m, because their tax codes had been recalculated for 2007-08.

Meanwhile 250,000 state pensioners had their newly discovered tax underpayments written off altogether for the years 2008-09 and 2009-10.


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French food fight for Brazil firm

29 June 2011 Last updated at 07:34 GMT Pao de Acucar supermarket in Sao Paulo Pao de Acucar was founded in Sao Paulo in 1948 Two French food giants are locked in a battle to take over Brazil's number one retailer, Grupo Pao de Acucar.

Proposals to merge Pao de Acucar with the local operations of Carrefour are opposed by rival Casino, which already has a stake in the Brazilian group.

The proposed Pao de Acucar-Carrefour deal would create a firm with a 27% market share and sales of more than $40bn (?25bn) a year.

Pao de Acucar is already Latin America's second-biggest retailer.

As well as its Pao de Acucar and Extra supermarket chains, it also has a majority stake in the Ponto Frio and Casas Bahia chains that sell electrical goods and furniture.

Pao de Acucar's shares rose 12.6% on Brazil's main stock exchange on Tuesday after news of the deal emerged.

Secret talks

Brazilian investment fund Gama announced the merger plan on Tuesday. Under the terms of the offer, it will combine Pao de Acucar and Carrefour's Brazilian assets into a new company, to be called Nova Pao de Acucar.

Gama said investment fund BTG Pactual and the BNDES state development bank had committed $2.8bn to the deal, as well as $710m in debt financing.

The deal followed talks between Carrefour and Pao de Acucar chairman Abilio Diniz, whose family founded the firm in Sao Paulo in 1948.

Since 1999, Pao de Acucar has been part-owned by another French firm, Casino, which denounced the proposal to merge with Carrefour as "illegal".

Casino said it was disappointed with Mr Diniz for negotiating a deal without its authorisation.


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Tax credits time

28 June 2011 Last updated at 23:05 GMT Money Talk by Chas Roy-Chowdhury Head of taxation, ACCA Tax credits document Failure to notify HMRC of changes in circumstances might result in underpayments or overpayments Normally, renewing your tax credits is a simple case of updating HMRC about changes in your circumstances.

But because of the changes announced by the government since the last election, the benefits you are entitled to may have changed.

You need to send in the renewal form by 31 July. If you have not received yours by 15 July, call the tax credit helpline on 0845 300 3900.

The HM Revenue and Customs (HMRC) is also a useful source of up-to-date information and frequently asked questions.

What you need to know Firstly, the rate at which payments decrease above a certain income threshold has been speeded up, especially for higher earners.

The reduction is now 41p - up from 39p - for every pound above the threshold.

At the same time, some thresholds have been lowered. The household income threshold has dropped from ?50,000 to ?40,000.

Secondly, some benefits have been increased.

The child element of tax credits is going up this year above inflation, which will help make up for the freeze in child benefit that will affect those on low incomes.

What you need to tell HMRC

HMRC will have sent you an annual review notice in your renewal pack TC603R.

This means your claim will be renewed automatically.

But failure to notify HMRC of any changes in your circumstances might result in underpayments or overpayments.

The changes you need to report include:

if your child or children are no longer living at home with youyou separate from your partnerone of your children leaves full-time education

A full list of changes that require HMRC to be notified is contained in the renewal pack.

Forms

If your circumstances have changed, you are filling in your first claim or renewing over the phone, you will need to have some forms handy.

If you are in employment, you will need your P60 form with you.

If you are self-employed, you will need a copy of your accounts.

And if you are using estimates, you will need to provide HMRC with actual income, usually within 30 days.

Future changes

A couple of extra changes later this year could affect future claims.

The 50+ Return to Work element will stop from the 6 April 2012.

Also from 6 April 2012, couples with children must work at least 24 hours a week between them, with at least one partner working for 16 hours, if they want to continue to make a claim.

The exception is if one partner is incapacitated or in hospital or prison, in which case only a total of 16 hours work a week is required.

If you increase your hours to continue claiming, you will need to tell HMRC as soon as possible.

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.


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Greece passes key austerity vote

29 June 2011 Last updated at 14:07 GMT The BBC's Jon Sopel describes the battle between the police and rioters as one of "cat and mouse"

The Greek parliament has voted in favour of a drastic package of austerity measures intended to save the country from defaulting on its debts.

The proposed tax hikes and spending cuts have been deeply unpopular with the Greek public.

A nationwide 48-hour strike is under way and violent clashes are continuing in the streets of the capital, Athens.

Greece is heavily in debt and the package is needed to win the latest tranche of a 110bn-euro (?98bn) loan.

MPs passed the measures by 155 votes to 138.

They will hold a second vote on Thursday aimed at law reforms that would allow the package to be implemented.

'No time to step back'

Ahead of the vote, PM George Papandreou urged MPs to approve the package by consensus.

Continue reading the main story

Total Greek debt

An old drachma note and a euro note Greece is about to get a second bail-out from the EU, aimed at helping pay its debts until 2014. It also has to agree more cuts as part of the deal.

The economy

The opening ceremony at the Athens Olympics The Greek economy is in dire straits. Retail sales have fallen 18% since 2008 and manufacturing output has dropped 30% in the same period.

Working population

A defunct restaurant for sale in central Athens Greeks retire on average at 61. Tax evasion is widespread. Until 2010, public sector workers received two months extra pay a year in bonuses.

EU demands

A man with a bag of coins walks past the headquarters of the Bank of greece_crisis To meet EU demands, Greece must sell 50bn euros-worth of public assets by 2014, equal to 20% of GDP. Public sector pay is being cut 15%.BACK {current} of {total} NEXT He had faced wavering support from within his governing Panhellenic Socialist Movement (Pasok), which has a slim majority, with 155 seats out of 300 in parliament. But in the end, only one Pasok deputy voted against the package.

Mr Papandreou says his austerity plan is the only way to get Greece back on its feet.

"We must avoid the country's collapse at all costs. Now is not the time to step back," he told deputies.

Were his 28bn-euro austerity package to be rejected, Greece could run out of money within weeks, as the EU and the International Monetary Fund want the measures implemented before they release more funds to help Greece pay off its vast debts.

Top EU officials welcomed the result as a "vote of national responsibility", saying it had pulled Greece away from the "very grave scenario of default" while paving the way for a second aid package.

"The country has taken an important step forward along the necessary path of fiscal consolidation and growth-enhancing structural reform," European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said in a joint statement.

'Unfair but necessary'

But Greek unions are angry that the government's austerity programme will impose taxes on those earning the minimum wage, following months of other cuts that have seen unemployment rise to more than 16%.

Continue reading the main story
No one in Greece believes the tax increases, lay-offs, privatisations will ever be fully implemented. ”

End Quote image of Gavin Hewitt Gavin Hewitt BBC Europe editor Sporadic clashes are continuing between masked protesters and riot police outside parliament.

Shortly after the vote, dozens of rioters using ladders broke into the first floor of an office building near parliament on Syntagma Square before being driven out by police, witnesses said.

The vote covered the first part of Greece's austerity package, focusing on raising taxes to secure some 14.09bn euros over the next five years and introducing 14.32bn euros in public spending cuts.

The package is needed to secure the next instalment of the country's 110bn-euro bail-out to be released by the EU and IMF.

Ahead of Wednesday's vote, the governor of Greece's central bank, George Provopoulos, said a 'no' vote would be "suicide" for the country.

Thursday's vote is over the implementation of different parts of the package, such as tax rises and the sale of state assets.

Continue reading the main story June 29: Parliament approves new austerity package June 30: MPs to vote on details of implementing packageJuly 3: EU will sign off latest bail-out payment to Greece - 12bn euros - if both votes are passedJuly 15: Without the 12bn euros, Greece will defaultOnce passed, European officials will start to finalise the details of a second bail-out, worth an estimated 120bn euros, designed to help Greece pay its debts until the end of 2014.

The impact of the Greek vote would be felt worldwide said Herman Van Rompuy, president of the EU Commission, on Tuesday.

Recently appointed Finance Minister Evangelos Venizelos acknowledged that the cuts were "unfair", though absolutely necessary.

But the main opposition leader, Antonis Samaras of the New Democracy party, said the thinking behind the austerity package was flawed, and that tax rates should be lowered rather than raised in order to stimulate the economy.

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Betfair posts big rise in profits

29 June 2011 Last updated at 12:44 GMT Horses racing in a race sponsored by Betfair Betfair has seen a big fall in its share price since it floated last year Online betting exchange Betfair has reported a big rise in annual profits, but admitted that its revenue growth "could have been higher".

Its pre-tax profit for the 12 months to 30 April totalled ?26.6m, up 50% from ?17.8m a year earlier. Its revenues rose 8% to ?368.6m.

The results come two days after Betfair's chief executive David Yu announced he would be standing down.

Betfair has seen a big fall in its share price since last year.

When the company first listed on the London Stock Exchange last October, its shares were valued at ?13.

Since then the price of its stock has almost halved, as analysts have questioned whether Betfair has been doing enough to expand the business. It shares ended Tuesday trading at 771.50p.

On Wednesday afternoon its shares were up 0.2% after Betfair also announced that it would now return money to shareholders by buying ?50m worth of its stock.

Betfair's betting exchange model allows its customers to bet against each other, bypassing the need for a bookmaker.

'Significant change'

The company said that the number of bets made during the year rose by 20%.

Continue reading the main story It added that it saw a big rise in gambling on football matches, which increased by 24%.

However, bets on horseracing declined, and the company said its website had been hit by a number of technical faults during the year.

Betfair said it was working to improve its website and make it quicker to use.

Mr Yu said: "The past 12 months have seen significant change at Betfair as the business continued to grow and made the transition to being a public company.

"A huge amount has been achieved during the period, and I'm delighted that we have more customers than ever resulting in a record number of bets placed and that we've reported record revenue and profitability.

"Despite these successes, revenue growth... could have been stronger but we have delivered a significant improvement in margin resulting in profitability for the year above expectations."

Mr Yu said on Monday that he would not renew his contract when it expired in October 2012, but he is expected to leave the company before that date.

He joined Betfair in 2001 as its chief technology officer.


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BoA pays $8.5bn to settle claims

29 June 2011 Last updated at 11:50 GMT Bank of America flag and building The payouts are to large investors who bought bonds backed by bad-quality mortgage loans Bank of America says an $8.5bn (?5.3bn) payout over housing crash claims will leave it with quarterly losses of up to $9.1bn.

The money, from the bank's Countrywide arm, is to settle claims that it sold poor quality mortgage-backed bonds that lost money when the market crashed.

The mortgages were granted without proper checks on, for example, borrowers' creditworthiness.

The payout is the third of its type this year.

The bank says it will also set aside another $5.5bn in provisions.

Bank of America's chief executive, Brian Moynihan, said: "We will continue to act aggressively and in the best interest of our shareholders to clean up the mortgage issues largely stemming from our purchase of Countrywide."

In pre-US market trading, though, the shares rose 6% on relief that the issue had been resolved.

Earlier this year, the bank agreed to pay US mortgage giants Fannie Mae and Freddie Mac about $2.6bn (?1.7bn) to settle claims it sold them bad home loans.

Those claims also related to loans sold by Countrywide Financial Corporation, which Bank of America bought in 2008.

Bank of America agreed a further payout in April for an estimated $1.6bn to resolve claims with the bond insurer Assured Guaranty.

The payout is subject to court approval.


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Afghan central bank chief flees

28 June 2011 Last updated at 10:59 GMT Central Bank chief Abdul Qadir Fitrat, file pic 2010 Mr Fitrat has left Afghanistan for the US The governor of Afghanistan's central bank, Abdul Qadeer Fitrat, has resigned and fled the country, saying his life is in danger for investigating fraud.

He said the government had interfered in his efforts to pursue those responsible for corruption at the privately-owned Kabul Bank.

Mr Fitrat was speaking from the US where he has residency. He says he will not return to Afghanistan.

An Afghan government spokesman said the resignation amounted to treason.

Waheed Omar, Afghan President Hamid Karzai's spokesman, also added that Mr Fitrat was himself under investigation.

"My life was completely in danger and this was particularly true after I spoke to the parliament and exposed some people who are responsible for the crisis of Kabul Bank," Mr Fitrat said on Monday.

The embezzlement at Kabul Bank, Afghanistan's largest private bank, almost led to its collapse last year after it was discovered that hundreds of millions of dollars had gone missing. The bank handles up to 80% of the government payroll, including salaries for policemen and teachers.

A run on the bank was only avoided by the injection of massive amounts of public funds and government guarantees.

'Investigation blocked'

Investigators say that the bank made hundreds of millions of dollars of inappropriate loans. It was founded in 2004 by Sherkhan Farnood, a leading international poker player.

The bank was bailed out in September, which is when the central bank also took control of its finances. Mr Fitrat, as president of the central bank, was in charge of an investigation into what went wrong.

Continue reading the main story 2004: Kabul Bank founded by international poker player, Sherkhan FarnoodSeptember 2010: Kabul Bank taken over by the central bank after a run on the bank amid fears of its collapseFebruary 2011: Abdul Qadeer Fitrat, central bank governor, tells BBC those involved in bank's woes should be prosecutedFebruary 2011: An IMF report recommends the bank be put in receivershipApril 2011: Mr Fitrat, names in parliament prominent Afghan figures in connection with the Kabul Bank scandalMay 2011: Report by anti-corruption office shows $467m (?290m) of outstanding loans were made without appropriate collateralAs the crisis at Kabul Bank unfolded, President Karzai pledged to fully investigate those involved in the crisis.

But Mr Fitrat alleges that the central government did not assist him in the investigation or provide any help in recovering the bank's assets.

"During [the] last 10 months during Kabul Bank crisis, I continuously pressed for the creation of a special prosecution, for the creation of a special tribunal to investigate and prosecute those who were involved in Kabul Bank's fraud," he told the BBC.

"I did not receive any information that there is a credible plan to prosecute, to investigate and prosecute these individuals. The high political authorities of the country was responsible [for blocking] these efforts," he alleged.

He said he left the country after he received information that his life was in danger from "credible sources".

In April, Mr Fitrat publicly named in parliament high-profile figures who were allegedly involved in the near collapse of the bank.

Relatives of President Karzai, including his brother, Mahmoud Karzai, were among those named in connection with the scandal. Mr Fitrat also implicated the brother of Vice-President Qasim Fahim.

Both men - who were major shareholders in the bank - deny the charges. They say they are being targeted because of their position

'Foreign advisers' Men walk outside Kabul Bank Kabul Bank was taken over by the Afghan central bank in September 2010

President Karzai has said Afghanistan lacks the necessary banking experience to oversee the institution and has blamed foreign advisers for the crisis.

He has also pledged to ensure that those responsible are subject to criminal investigations.

The International Monetary Fund wants the Afghan government to wind down Kabul Bank before it releases the funds for a new assistance programme. A recent IMF report said the bank should be placed in receivership.

Britain has already suspended a $140m (?85.6m) payment in aid to the country following the crisis.

"We take note of Governor Fitrat's decision to step down as central bank governor," IMF spokesman Raphael Anspach is quoted by the Wall Street Journal as saying.

"We look forward to continue discussing with his successor ways to improve the Afghan banking system in the period ahead."


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Home repossession fear 'overdone'

28 June 2011 Last updated at 14:55 GMT Mortgage application form Thousands of borrowers are behind on their mortgage payments but are hanging on The governor of the Bank of England has said that fears of a wave of home repossessions are overdone as UK interest rates are set to remain low.

Sir Mervyn King said conditions were not right for an interest rate rise.

He said that when there was one, there would be a delay in it feeding through to other borrowing costs.

Earlier, the head of UKAR, which holds mortgages once owned by Northern Rock, said a "tsunami" of homeowners would lose their homes once rates increased.

Delayed impact

Speaking to the Treasury Committee, Sir Mervyn said that the economy was not strong enough to cope with a rate rise at the moment.

"The reason we would raise interest rates would be in the context of a much stronger economy with unemployment falling rather than rising."

He added that consumer borrowing charges such as mortgages, which are generally already several percentage points higher than the base rate, were unlikely to rise as quickly.

"It should also be the case that the interest rates that borrowers face should not rise as fast as the rise in bank rate," he said.

The Bank of England has held its Bank rate at 0.5% - a record low - for more than two years.

Earlier, in an interview with the Guardian newspaper, Richard Banks, the chief executive of UKAR (UK Asset Resolution), said a "scary" number of families faced being repossessed unless lenders prepared them for the impact of higher rates.

He said his organisation was so worried about the situation it had been contacting mortgage holders it thought were likely to default, to try to keep their payments on schedule.

"You can see if you don't do something about it, you can see a tsunami," he said. "If you don't get into the hills you could get drowned by this. If you don't manage this properly it could get very messy."

Some 23,000 of the 750,000 mortgages it owns are at least six months in arrears, he said.

High risk

UKAR, which holds some former Bradford & Bingley and Northern Rock mortgages, is sometimes called the "bad bank" because of the higher proportion of riskier loans it owns.

It carries a higher percentage of loans to people who "self-certified" - did not provide full proof of earnings- and buy-to-let landlords.

But Mr Banks believes it is an industry-wide problem, one caused by over-lenience in the wake of the credit crunch as the then-Labour government pressed the banks not to make the downturn worse by being strict with borrowers.

His warning comes on top of others, including from the Council of Mortgage Lenders earlier this month, which has forecast that repossessions will rise to 40,000 this year from 36,000 in 2010.

Few observers expect UK interest rates to rise in the next few months, but there are warnings that keeping interest rates at this level is "unsustainable".


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Ocado sees its shares decline 9%

27 June 2011 Last updated at 16:07 GMT Retail expert Bryan Roberts says Ocado is struggling to keep up with the pace of demand

Online grocery delivery company Ocado has seen its shares slump 9% despite reporting its first half-year profit.

In the six months to 15 May, Ocado made a pre-tax profit of ?200,000, compared with a loss of ?6.7m a year earlier.

Its sales for the half-year rose 21% to ?297m, although this was a slowdown on the 25% growth in the first 12 weeks of the period.

Ocado also announced a deal to sell products supplied by French supermarket group Carrefour.

These French items, to be called Reflets de France, will be trialled from 14 July.

They will be sold in addition to Ocado's current range of Waitrose lines.

Ocado said its profits were limited by its operational capacity, which it was now continuing to increase.

Its net revenues for the first six months of the year totalled ?277m, up 20% from ?230m a year earlier.

At one point Ocado's shares had been 12% lower, before recovering some losses to close down 9% or 17 pence at 169.9p at the end of trading on Monday.

Investment drive

Chief executive Tim Steiner said: "We are delighted to announce our new supply partnership with Carrefour, an important development in our strategy to offer the broadest and most diverse grocery range to all our customers in the UK."

Ocado has not released financial details of the Carrefour deal.

Continue reading the main story
It is hard to see how the brand can compete with leading retailers over the long term in its current guise”

End Quote Anna Smee Hundred Consulting In April, Waitrose announced that it would be expanding its online presence, which many retail analysts say will likely take orders away from Ocado.

Starting from 1 July, Waitrose will be able to deliver direct to its customers from any of its stores within the M25 around London.

Previously Waitrose had been prevented from doing this under an agreement it had with Ocado.

Waitrose already delivers direct from most of its stores outside the M25.

Ocado said it was now planning to spend ?80m over the next two years to increase its capacity up to 180,000 orders per week.

It added that it was continuing to see strong demand from its customers, but while the number of orders it receives was rising, there had been a slight decrease in the average order size.

Failed strategy?

Retail analyst Anna Smee, of Hundred Consulting, said Ocado's results showed "a degree of resilience in the current economic climate".

Continue reading the main story However, she added that the company still faced an uncertain future.

"The fundamental question mark above Ocado is that it has failed to lay out a clear long-term growth strategy," she said.

"Online shopping is now widespread but so, unfortunately, are the major food retailers that offer it, not least Waitrose, which could prove a major threat in core markets as the non-compete agreement comes to an end."

Ms Smee added that Ocado needed to explore growth options, such as expanding across the UK or oversees.

"It is hard to see how the brand can compete with leading retailers over the long term in its current guise," she said.

Ocado was founded in 2002 and floated on the London Stock Exchange in July last year.


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Hidden card charges to be banned

28 June 2011 Last updated at 14:37 GMT Aircraft The OFT has warned it will take action if companies do not comply Travel companies have been ordered to end the use of hidden surcharges for passengers paying by card.

Airline, ferry and rail passengers typically have to click through four to six pages of an online booking before the charge is added to the price.

Now the Office of Fair Trading (OFT) has ordered them to make all debit or credit card charges clear immediately.

It also wants the law changed to abolish altogether charges for using debit cards.

The OFT said travellers spent ?300m on card surcharges in the airline industry alone in 2010.

It warned that if travel firms did not comply, it would take action against them, using consumer protection laws.

"We will take enforcement action against any businesses that do not respond to today's announcement and instead continue to use misleading surcharging practices," said Cavendish Elithorn, of the OFT.

Super-complaint

The OFT's announcement comes in response to a super-complaint by the consumers' association Which?.

Continue reading the main story

A designated consumer group can make a super-complaint to the Office of Fair Trading (OFT) if an issue is "significantly harming the interests of consumers".

The OFT has 90 days to respond by stating what action, if any, it plans to take on the issue and the reasons behind its decision.

Earlier this year it had called for customers to be told upfront about charges.

It had also argued that charges to customers should be the same as the cost to retailers, and that retailers should absorb the cost of debit card payments.

Which? had pinpointed low-cost airlines as the worst offenders, with cinemas, hotels and even some local authorities starting to copy them.

Peter Vicary-Smith, chief executive of Which?, said the OFT's report was a victory for consumers.

"We want to see the measures recommended by the OFT put in place as quickly as possible and finally put an end to the practice of card surcharging," he said.

Continue reading the main story
There is frustration when people think they are paying for paying, rather than paying for the product”

End Quote Cavendish Elithorn OFT "Businesses can start to be upfront and fair over card charges today - there's no point waiting until the OFT forces action."

Consumer minister Edward Davey said: "We will work with the OFT to make sure that consumers paying by card do not have to pay excessive surcharges."

He added that the government was supporting the introduction of European rules, which would stipulate that surcharges must reflect the costs to businesses. It could be up to two years before these are adopted in UK law.

'Paying for paying'

Airline Easyjet charges a surcharge of ?8 for payments by debit card and ?8 plus 2.5% of the total transaction for credit card users, the OFT's report said.

An Easyjet spokesman said: "We would like to see card charges incorporated into the headline fare, however, for consumers to benefit there needs to be a level playing field.

"The only way to ensure consumers can make easier price comparisons is if a common treatment of card charges can be agreed across the whole of the transport sector in Europe, including train operators and online travel agents."

Ryanair charges a fee of ?6 per journey for both credit and debit card users.

Ryanair responded to the OFT's move by arguing that its administration fees, which include card charges, were optional and "fully avoidable" for customers using a pre-paid card.

But the OFT said that for many people charges such as these were, in effect, compulsory.

Trader Credit card surcharge Debit card surcharge

7% per transaction (min ?4.99)

3.5% per transaction (min ?4.99)

Some travel companies have agreed with the regulator that they will include these charges in their headline price online.

The OFT's Mr Elithorn said he expected this change to be in place within six months.

But he admitted that the surcharge did not have to reflect the cost to companies of processing these payments.

He accepted that this could be annoying for consumers.

"There is frustration when people think they are paying for paying, rather than paying for the product," he said.

Airline Monarch, which has already stopped levying debit card fees, said: "There is no justification for charging excessive fees on credit and debit cards."

Rail booking service Thetrainline.com said: "We will be working with the OFT to make credit card charges clearer within the booking process."

Pricing

At present, using a credit card can offer extra protection for customers if things go wrong, such as a travel company collapsing.

The regulator believes that by banning a surcharge for those using a debit card, competition will force down the cost of credit card surcharges.

In December, the OFT warned retailers about tricking customers with misleading price offers, including "drip pricing" which involves adding compulsory delivery costs.

Businesses must include any compulsory extras in their headline price on their website.

For example, if an airline charges customers a fuel duty surcharge, this must be included in the advertised price of the flight.

Super-complaints have been in the armoury of consumer groups since 2002.

Examples so far have included complaints about bank charges, payment protection insurance, prison call costs and doorstep lending.


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Moody's cuts Toyota credit rating

28 June 2011 Last updated at 09:09 GMT Workers give the final check to Toyota cars Toyota and other carmakers have been operating at reduced capacity since March's earthquake Car giant Toyota has had its credit rating cut by the ratings agency Moody's on worries that the strong yen and rising raw material costs will hit profitability.

Moody's cut the car maker's credit rating one notch to Aa3 from Aa2.

The ratings agency, which had put Toyota under review in April, said further cuts remained a possibility.

Toyota has faced major disruptions to its supply chain from the 11 March earthquake and tsunami in Japan.

"Toyota's profit recovery during the period of its financial year to March 2013 will not be as strong as preferred due to its declining markets share in various regions, the strong yen and high raw material prices," Moody's said in a statement.

A strong yen makes Japanese exporters less competitive, and Toyota is a larger exporter than its Japanese competitors Honda and Nissan.


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New financial ball game?

27 June 2011 Last updated at 23:07 GMT By Stephen Evans BBC News, Berlin Fatmire Bajramaj of Germany in action against Canada Host-nation Germany is the team to beat at the Women's World Cup football The Women's World Cup has just kicked off in Germany and for many football fans around the globe it may be their first taste of the female game.

But, historically, women's football was doing very nicely indeed - in the UK at least - until the men got in the way.

During the First World War in Britain, female workers at the munitions factories formed teams known as "Munitionettes" which played against each other.

On Christmas Day in 1917, 10,000 spectators watched two women's teams playing at Preston in the North of England.

In 1920, 53,000 football fans turned up at Everton's Goodison Park stadium in Liverpool to watch St Helen's Ladies play Dick, Kerr and Co, a female team made up of employees from a Preston munitions factory.

But men were not impressed. There were mutterings that playing football might impair fertility - the women's not theirs.

And in 1921, the Football Association banned women's teams from grounds used by men.

As the motion put it: "The Council feel impelled to express their strong opinion that the game of football is quite unsuitable for females and ought not to be encouraged."

Continue reading the main story

Venue: Germany

Date: 26 June - 17 July

Watch: all England matches live on the Red Button and BBC Sport website (UK only); Highlights on BBC Two; Final live on BBC Three

Listen: on BBC Radio 5 live

Player numbers rising And that was pretty well it in Britain, the home of association football. The game for women declined, relegated to the edges of parks and played on the quiet by outsiders.

Well, not quite. Fast forward to today.

As the Women's World Cup is played in Berlin, there are 26 million women around the world registered as footballers by Fifa, the world governing body for the sport, six million in Europe and eight million in the US.

Rewards for women players are rising.

When Germany's women won their first big tournament in 1989, the bonus to the players was a coffee set, replete with a floral design in red and blue.

The Preston Ladies Football Club (formerly Dick, Kerr's Ladies) represent England in a Women's International match against France in May 1925. The officials of the Football Association did not encourage pioneers such as Preston Ladies FC

If they win this tournament, they will get 60,000 euros each.

Women's football is feted and watched in Germany (not least in Playboy magazine where some players posed in non-feminist and non-football attire).

Chancellor Merkel appears on German television to opine about tactics and the flow of the game.

Tight competition

So women's football in the host country has come a long way since it was banned between 1955 and 1970 because, as the authorities put it, it was a combative sport which was "alien to the female nature" and the "display of the female body violates etiquette and decency".

A special edition football table featuring Barbie dolls - sold with the motto "Barbie Loves DFB" (German Football Federation) Post-modern irony? A special-edition Barbie table football game made for the Women's World Cup

Today, Germany is the team to beat. It has won the last two World Cups and beat Canada in the opening game of this one.

As a measure of the game's growth, this World Cup seems more open than previous ones. The competition will be tighter.

There are now leagues for women in the US, Sweden, Holland, Britain, Japan and Germany, often with some professional players, although they earn far less than their male counterparts - and with crowds far smaller than those drawn by men.

In the US, sponsors are keen to get involved.

Sponsor trailblazer

Dr Jean Williams of the International Centre for Sports History and Culture in Leicester, UK, points to US 1990s legend Mia Hamm, as having had "great cross-class, cross-gender appeal to all kinds of people".

"The second biggest building on the Nike campus is dedicated to ... Mia Hamm, because she was such a big pull for them in terms of their corporate sponsorship.

US player Mia Hamm in action against China in the 1999 Women's World Cup final Mia Hamm was a great boost for Nike in terms of corporate sponsorship

"She was second only to Michael Jordan."

Dr Williams adds: "It was not uncommon to see a father with a Mia Hamm shirt walking into a restaurant with his daughter who was also wearing a Mia Hamm shirt."

She thinks the game needs to attract new, niche sponsors, the makers of "premium goods" like high-end watches or other luxury products.

"A lot of these women are terrifically good-looking, terrifically talented, great athletes - so they could earn more from endorsements from that kind of product than from the game itself," said Dr Williams, who has done a study of the state of the women's game for Uefa, European football's governing body.

Different appeal

But there will be the objection that women's football has to be second best because women are generally slower, smaller and not as strong. They can't compete.

To which the defenders retort that the same was said of women's tennis, which now attracts crowds - and money.

US ambassador to Germany, Philip Murphy

"If I were to be critical of the men's game, it's that the physicality has gone too far, particularly in the Premier League One", says Phil Murphy, who owns Sky Blue FC, a women's football franchise in New Jersey.

Mr Murphy, who is also the US ambassador to Germany, argues that women's football can have a different appeal.

"I think there's much more emphasis in the women's game on making the right pass, on the flow of the game," he says. "I like the flow better. I like that part of the game."

Mr Murphy thinks that, commercially, much will depend on the emergence of "heroes" in this World Cup.

If it produces a star, then the numbers of people bearing money to ticket booths and television channels will rise.

The organisers, too, think that this World Cup is very important in setting a tone, forming an image of the game.

The president of the organising committee, Steffi Jones, who played 111 times for Germany, told the BBC: "For the world, it's important to show that it can be sold out."

She hopes that good football played by women will draw in other women, particularly in countries where women have a tough time of life in general.


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Diageo eyes China's spirit market

28 June 2011 Last updated at 05:42 GMT British drinks giant Diageo takes control of Chinese liquor firm Sichuan Chengdu Quanxing.

Drinks giant Diageo has agreed a deal that will allow it to expand its business in China's fast growing spirits market.

Diageo will acquire an additional 4% stake in Sichuan Chengdu Quanxing Group (Quanxing) for 140m yuan ($22m; ?13m), taking its holding to 53%.

The deal will give Diageo an indirect control of ShuiJingFang, a famous brand of popular Chinese spirit Baijiu.

Baijiu accounts for more than 30% of China's alcoholic drinks market.

"We are privileged to have the unique opportunity to participate at scale in super premium Chinese white spirits, one of the largest, fastest growing spirits segments in the world," said Paul Walsh, Chief Executive of Diageo.

'Iconic Chinese brand' Continue reading the main story
We have managed to quadruple the sales of ShuiJingFang in the regional duty frees in Asia in the last two years”

End Quote Gilbert Ghostine Diageo While Baijiu's popularity within China has been on the rise, Diageo said it was confident of turning the spirit into an international success as well.

"We are fully committed to build ShuiJingFang into an internationally successful iconic Chinese brand," said Gilbert Ghostine, President of Diageo Asia Pacific.

Mr Ghostine said that the brand was already being sold at 14 regional airports and three regional airlines were also carrying it.

He added that Diageo had managed to start sales of the brand at Dallas and Chicago airports and was targeting sales at two additional US airports by the end of the year.

"We have managed to quadruple the sales of ShuiJingFang in the regional duty frees in Asia in the last two years," he said.

"It is going from strength to strength," he added.

Full control

Quanxing currently holds a 39.7% stake in ShuiJingFang.

Diageo said it is seeking approval from the China Securities Regulatory Commission (CSRC) to launch a mandatory tender offer (MTO) for the remaining shares of Shuijingfang.

An employee at Diageo's distillery views a whisky China's economic growth has seen its liquor market expand at a rapid pace

"Once the CSRC approval has been received, Diageo will immediately launch the MTO for the outstanding shares of ShuiJingFang in accordance with Chinese takeover regulations," the company said.

Diageo said that it would offer 21.45 yuan per share, the minimum price permitted by Chinese takeover regulations.

The company will need to pay close to 6.6bn yuan ($1bn) if all the shareholders accept its offer.

"Diageo will fund the MTO through its diversified financing sources and strong global cash generation," the company said.


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Tough times hit High Street names

28 June 2011 Last updated at 16:25 GMT Carpetright logo and carpets Carpetright has reported a 70% drop in profit Tough times are continuing for UK retailers with Thorntons set to shut up to 180 stores and Carpetright saying it may close as many as 50 outlets.

Chocolate maker Thorntons said it would shut "a minimum" of 120 shops over the next three years, with the possibility of an extra 60 closures.

Carpetright could close up to 50 shops when their leases run out if it cannot get the rents reduced, it said.

Meanwhile, store chain TJ Hughes is set to go into administration.

If it does, it will join three other retailers who announced over the past week that they had called in administrators in the face of tough trading conditions.

These are fashion retailer Jane Norman; the owner of Moben and Kitchens Direct, Homeform; and furniture firm Habitat.

Rent for the past three months was due last week, and insolvency experts said this had brought a number of High Street names "to their knees", with more set to follow.

Continue reading the main story
There is a serious risk that many thousands of jobs will be lost and many many hundreds of additional shops will become empty and shuttered”

End Quote image of Robert Peston Robert Peston Business editor, BBC News "It is likely that the next quarter rent day in September could see a further surge in the number of retailers facing administration as High Street stores struggle to pay the rent against a backdrop of decreasing discretionary spending and low consumer confidence," said Julie Palmer, a partner at insolvency practitioners Begbies Traynor.

Declining household incomes and uncertainty about the economy have hit consumer spending.

This was underlined by figures from the Office for National Statistics which showed that real household disposable incomes had fallen 2.7% in the first quarter of 2011 compared with a year earlier - the biggest fall since 1977.

Speaking to MPs, Bank of England governor Sir Mervyn King said inflation, which erodes the value of household incomes, was "uncomfortably high".

He added that he was "definitely concerned" by "the squeeze on real living standards".

Matthew Stych, research director at Planet Retail, said: "With no sign of a big improvement in job prospects and rising fuel costs putting pressure on transport and logistics, and a possible interest rate rise on the horizon, it is very difficult to see any light at the end of the tunnel."

'Continuing weakness'

Thorntons' store closure announcement followed a strategic review of the business.

It said the outlets to be closed were among the 364 stores directly owned and run by the company.

Thorntons store Thorntons is hoping to see more franchised stores

Thorntons added that it hoped to replace them with franchised stores "in the majority of locations".

It currently has 227 shops run by franchisees.

Chief executive Jonathan Hart said: "Our goal is to refocus the business across all channels, and seek to deliver industry competitive results over the next three to five years.

"Although we see the prospect of weakness in High Street footfall and consumer sentiment continuing, I am confident that this strategy is right."

The company added that it would continue to expand its commercial division, which sells Thornton-branded chocolate via supermarkets and other retailers.

In addition, it aims to continue to grow sales via its website.

Richard Perks, retail analyst at Mintel, said there was an opportunity for Thorntons to turnaround its fortunes, but that it currently "doesn't know where to pitch itself".

'Very challenging'

Analysts said that chains selling homewares and other more expensive items were being particularly hard hit as consumers were forced to cut back.

"Retailers are really struggling to pick up sales on big ticket items," said Matthew Stych from consultants Planet Retail.

Continue reading the main story "Both DIY and large-scale electronics are being affected by this with people putting off purchasing items such as fridges and waiting to revamp their kitchen or buy a new TV."

Carpetright chairman and chief executive Lord Harris said his group was facing "very challenging trading conditions".

He pointed to "fragile consumer confidence producing a weak floor coverings market, leading to a reduction in sales volumes and profitability".

There is uncertainty over the future of 50 of its 559 stores in the UK and the Irish Republic, whose leases run out over the next three years.

Pre-tax profit for the year to 30 April was ?6.6m at the carpet and home flooring group, down 70% from the ?22.3m a year earlier.

Its trading was hit not just by reduced consumer spending, but also the continuing weakness in the housing market.

Annual revenues were 6% lower at ?486.8m.

The company had already issued two profit warnings earlier this year, and it has closed 27 outlets over the past 12 months.

Shares in Carpetright were 3.6% lower in afternoon trading, while those in Thorntons were down 7.2%.

Trade downturn

Liverpool-based department store chain TJ Hughes said it was planning to appoint an administrator after reporting a downturn in trade.

The Liverpool-based firm employs more than 4,000 people at its 57 stores across England and Wales.

It said it would bring in the administrator over the next 10 days.

The retailer was bought out by its management team in March following the withdrawal of credit insurance for its suppliers.

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Wednesday, June 29, 2011

Tepco faces shareholder protests

28 June 2011 Last updated at 10:32 GMT Angry protesters at Tepco meeting There has been growing anger over the way Tepco has handled the Fukushima Daiichi radiation crisis Japan's Tokyo Electric Power Company (Tepco) faced the wrath of shareholders at its first annual meeting since the 11 March earthquake and tsunami.

One motion called for the company to abandon nuclear energy in the wake of the Fukushima Daiichi nuclear crisis, although this was defeated.

Tepco may have to pay compensation of almost $100bn (?63bn) following radiation leaks at its nuclear plant.

Tepco shares have plunged 85% since the tsunami damaged the Fukushima plant.

The disaster caused a meltdown at three of the six reactors, and more than three months on radioactive material continues to leak from the facility.

Shareholders have criticised Tepco's management for their slow response to the crisis, accusing them of putting out inaccurate data and displaying a lack of transparency.

Some 80,000 residents living close to the plant have been forced to abandon their properties.

Executives at the meeting in Tokyo issued an apology amid angry shouts and heckling by shareholders.

One shareholder said the senior executives should commit suicide by jumping into the damaged reactors.

"All of us directors apologise deeply for the troubles and fears that the accident has caused. We're working to resolve this crisis as quickly as possible," said Tepco chairman Tsunehisa Katsumata.

Tepco has said it hoped to achieve a cold shutdown of the plant by January next year.

Earthquake risk

The biggest debate among shareholders revolved around the future of nuclear energy and what the company's stand on the issue should be.

Opponents failed to win enough support for a motion that would have forced Tepco to scrap all reactors and halt any construction of new ones.

They said nuclear power did not have a feasible future, not least because of the ongoing Fukushima nuclear crisis.

"Japan has a lot of earthquakes and after this accident I just don't think there is such a thing as safe nuclear power here," said one shareholder, Takako Kameoka.

Japan relies on nuclear power for 30% of its electricity needs.

Although thousands of those present at the six-hour meeting supported the motion, the institutional shareholders that own most of the stock were not swayed, and the motion was defeated.

Analysts said that the current power shortage in Japan was proof that the country needed nuclear power in order to meet its energy demands.

"The question is, can Japan do without nuclear power?" said Mitsushige Akino, of Ichiyoshi Investment Management Company.

"How much are the Japanese people willing to sacrifice in terms of standard of living? The sentiment is understandable, but the reality is that this is difficult without considerable sacrifice to economic growth and activity."


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Q&A: 30 June protests

28 June 2011 Last updated at 11:25 GMT Tens of thousands of public sector workers, many of them teachers, are expected to strike on Thursday, in England and Wales. But what are they striking over, who will be affected and what rights do parents have if their child's school is to close for the day?

Why have the strikes been called?

Because of proposed changes to pensions for public sector workers, and spending cuts. It's mainly about pensions - as people live longer, the cost of funding public sector pensions is "unsustainable", says the government. It wants most public sector workers to:

pay more into their pensionswork for longerand accept a pension based on a "career average" salary, rather than the current final salary arrangement

Unions, however, say the proposals will leave their members paying more and working longer for less. Both sides have been in negotiations.

So why strike now?

The teaching unions wanted to ballot their members before the summer break. The Public and Commercial Services (PCS) union, was also able to move quickly. It takes much longer - up to 17 weeks - for the larger unions, such as Unison or Unite, to organise a ballot of their millions of members. They are, however, planning coordinated strikes at the beginning of October, if they get the backing of their membership.

Who is taking part in Thursday's strikes?

Four unions in total. Three teaching unions - the National Union of Teachers (NUT), the Association of Teachers and Lecturers (ATL) and the University and College Union (UCU) - have voted to strike. They have 200,000, 160,000 and 120,000 members respectively. They will be joined by up to 300,000 members of the PCS, who include air traffic controllers, coastguards, prison workers and customs and immigration staff. The PCS union also represents staff at the Department for Work and Pensions and Jobcentres.

What impact will I see?

Schools: The NUT says up to 85% of schools in England and Wales will be partially or completely closed, affecting millions of pupils. State schools will be worst hit, but union members at private schools are also expected to walk out. A knock-on impact will be felt in some workplaces, as parents stay at home or work from home to look after children whose schools are closedUniversities: The UCU says it expects "significant disruption" at about 350 colleges and 75 "new" universities - those founded after 1992. Lectures may be cancelled - although many universities' summer terms have already endedCriminal justice: The PCS says courts and probation services could be disrupted, and policing could be affected. Prison officers are also expected to protest.Other public services: The union also says it expects customs and passports services to be affected, and driving tests to be cancelled. Services at Jobcentres and tax and benefit offices are also likely to be disrupted, but the government insists it has "rigorous contingency plans in place to ensure essential services are maintained"Could Thursday's strikes yet be called off?

Yes. But it is very unlikely. Both the unions and the government appear to be in no mood to back down.

Who supports the strikes?

Not the government. Ministers insist talks over the pension changes are still ongoing and therefore it is unjustifiable to take action now. For Labour, shadow chancellor Ed Balls has suggested ministers are deliberately "picking a fight" with unions so they can subsequently blame them for the poor economic recovery. But Labour leader Ed Miliband has said the strikes are a "mistake" and urged both sides in the dispute to keep talking to try to reach an agreement.

Is the action limited to 30 June?

At present yes, but more strikes are already being threatened for the autumn. The UK's biggest public sector union, Unison - which represents 1.3 million people working for local authorities, the NHS, colleges and the police - has not yet balloted its members on industrial action. But its leader, Dave Prentis, has said that would change if they continued "to be treated with disdain".

What if my child can't go to school and I have to work?

Parents' rights depend on their employment contracts. If you are an employee, you have the right to take time off to care for a dependant in an emergency - but given that most schools have given several days' notice of closures, this is unlikely to apply in many situations. Other options are to

make use of flexible working arrangements, such as working from home or altering working hourstake a day's paid leave, orask for a day's unpaid leaveWill parents be able to volunteer to help at schools?

Education Secretary Michael Gove has suggested this, but unions have raised concerns. Parents who have passed a Criminal Records Bureau (CRB) check for the school in question - for example if they already volunteer there regularly - would be able to help. But CRB checks usually take several weeks. However, government guidance says CRB checks are not necessary for volunteers for one-off events, such as outings or sports days, as long as the volunteers are not, at any point, in contact with children without supervision by a member of school staff. So in theory schools could use parents, even without CRB checks, to help with activities under the supervision of a single teacher - which might, for example allow them to group several classes together in a school hall. But the National Association of Head Teachers has warned its members against using volunteers in place of trained staff, even if they have the necessary CRB documentation, because of a host of issues ranging from first-aid training, to insurance, to behaviour management.

How can prison officers take part if they are not allowed to strike?

Prison officers are banned from striking because it could compromise the safety of prisons. But the Prison Officers Association is telling members to join "protest meetings" during their lunch hour outside jails in England, Wales, Scotland and Northern Ireland. These meetings will be a largely symbolic act - but the union could cause some further disruption and difficulties if members insist on not entering jails until their shifts start.

Is this a general strike?

No. This week's action has been compared by at least one union leader to the general strike of 1926, but really it doesn't come close. The majority of unions will not be taking part, and while large numbers of teachers and lecturers will be involved, the PCS is only the fifth largest union in the UK. In 1926, up to 1.75 million people went on strike, crippling transport networks, shutting down printing presses and interrupting food supplies.

What's happening with public sector pensions?

The government wants public sector workers - bar the armed forces, police and fire service - to receive their occupational pension at the same time as the state pension in future. Many can currently receive a full pension at 60. The state pension age is due to rise to 66 for both men and women by April 2020. Under government plans, workers - on average - would have to pay 3.2 percentage points more in annual pension contributions phased in between 2012 and 2014. But low-paid public sector workers on less than ?15,000 would not face any increase in contributions and those earning less than ?18,000 would have their contributions capped at 1.5%. There have been some claims and counterclaims over what this means for public sector workers.

Why are these changes needed?

The Office for Budget Responsibility (OBR) has suggested that the gap between contributions and pensions in payment would double over the next four years to ?9bn. One key reason for this is that people are living for longer. The government commissioned Lord Hutton, the former Labour Work and Pensions Secretary, to investigate the situation. Many of its proposals are drawn from recommendations in this report.

What do the unions want to happen?

Trade unions have voiced strong opposition to their members paying more in the form of contributions to their pension. It is not clear how opposed they are to changing schemes to a career average version, or to the plans to raising the retirement age to 65 or 66. They were also unhappy that the government announced its plans for pensions while negotiations with the unions were ongoing.

How can it be settled?

It's going to take some pretty major concessions from one side or the other - something which, at present, doesn't look likely. A leaked memo from the TUC, which represents the majority of unions, seen by the BBC, shows they don't believe the current talks can come to any agreement on changes to the pension age, to contributions or accrual rates. Instead, they say, the way forward must be for each group of workers - nurses, teachers, local government and so on - to work out their own arrangements on a scheme by scheme basis. For its part, the government has said there is "room for dialogue" and talks are being held in good faith, but ministers have not made public any specific areas which might be open to compromise.

Don't public sector workers get paid less because their pensions are better?

This is a myth, according Lord Hutton. His interim report says that "there is no evidence that pay is lower for public sector workers to reflect higher levels of pension provision". Although 85% of public service employees contribute to a pension, he said that these pensions were far from "gold-plated", with the average pension in payment currently at a "modest" ?7,800 a year. About half of public service pensioners received less than ?5,600 a year. Some private sector schemes are worse than this, but he said that should not affect public sector pensions. In the private sector only 35% of workers sign up for a pension.

How are other countries tackling the pensions shortfall?

There are many different systems in place across the world. In France, for example, public sector workers typically retire before 60, but there are plans to bring them in line with the private sector. In Chile, there are mandatory defined-contributions in public and private sectors. Employees pay 10% of their earnings, with top-up benefits for the poorest 60% of pensioners.


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Driving change

27 June 2011 Last updated at 23:07 GMT By Katy Watson Middle East business reporter, BBC News WATCH: Saudi Arabia's women are forced to rely on men to do the driving - which puts many jobs off-limits, and makes running a business almost impossible

The video shows a young woman getting into her car for a spin around town with a friend. Giggling away, they sound excited yet nervous. And all the while, they comment on the reactions of passers-by.

So far, the story sounds uneventful. After all, millions of women across the world drive every day without a second thought.

Only the difference is, this video was shot by 28-year old Solafa from Saudi Arabia, the only country in the world that bans women from driving.

Driving change

On June 17, dozens of videos similar to Solafa's surfaced on the internet, all showing women behind the wheel in defiance of a ban that is not enforced by law but is a religious fatwa imposed by Muslim clerics.

It was a protest of a different kind - unlike the mass demonstrations that have been seen throughout the region this year, this was a campaign of just 50 women.

But one thing it has in common with the Arab protests is the role social media played.

Through Twitter and Facebook, the 'Women2Drive' campaign gave women a voice for other people to hear. US Secretary of State Hillary Clinton openly supported their cause. Even some of the Saudi royals have backed what the women are doing.

Solafa Kurdi Solafa Kurdi uploaded a video of herself driving in Saudi Arabia to YouTube.com

Solafa and her friends joined the campaign to prove a point.

"Being a photographer needs me to be in different places and at different times," says Solafa. "I have to pay around $500 every month just for a driver, when I could do what he's doing myself."

Although Solafa says she can afford that extra cost, it is more of a burden for families where women are paid lower salaries.

"The minimum wage for a Saudi worker is around 3,000 riyals ($800; ?500)," Solafa says. "If you're going to put half of that on a driver, there goes half of your salary, it's almost like paying taxes."

Status update

The likes of Twitter, Facebook and Youtube have enabled the women to challenge the status quo more easily.

A recent report published by the Dubai School of Government examined the role social media has played in the Arab uprising. It found that the percentage of women who used Facebook rose from 32% to 33.5% in the first three months of this year.

A small percentage increase maybe, especially when you consider that on average, women globally constitute 61% of Facebook users. Nevertheless, while the percentage of women users in the Arab world creeps up, the proportion of male Facebook users in the region is falling.

Screen grab from Twitter The social media campaign gained a huge international following

Looking at the effect of social media on the region's economy is still in its infancy, according to Fadi Salem, Director of Governance and Innovation at the Dubai School of Government and the co-author of the report. Nevertheless, it does have potential.

"If compared to the emergence of the internet over the last decade and how it contributed to economic development, there are many indicators suggesting that this could be the case as well for social media," says Salem.

"In theory it has this personal characteristic, it has the anonymity, if that's a barrier for some women to participate or start businesses or join a political discussion."

And taking part is crucial for the Gulf's biggest economy.

Working women

More than half of Saudi's university graduates are women.

Last month saw the opening of the world's largest women-only university in Riyadh. But when it comes to the world of work, it is a different story.

According to the International Labour Organisation, in 2009 just 17% of women of working age were in employment in Saudi Arabia. That compares with neighbouring United Arab Emirates where 42% of women work and Qatar, where half the women work.

Infographic on numbers of working women in the Gulf The proportion of working Saudi women is very low compared to other Gulf countries

Mohammad Al-Qahtani is the head of Saudi Arabia's Civil and Political Rights Association.

He accompanied his wife in the passenger seat on June 17 and says he will make sure his 13-year-old daughter learns to drive too.

"Women's driving is part of it but it's not the whole thing. You have other social restrictions, religious restrictions for women not to work in certain professions," Mohammad says.

"You add all these together and you get this bleak picture of 17% participation, which is one of the lowest in the world."

Even without the full participation of women in the labour market, Saudi Arabia has huge unemployment problems.

One in three people under the age of 25 is jobless in Saudi Arabia. Foreign workers - and that includes the thousands of drivers working for Saudi women - outnumber the Saudi nationals working in the Kingdom.

So what is the solution?

"We should accommodate small and medium sized enterprises, we should create more jobs in the private sectors," says Mohammad.

"If you ask any typical Saudi female businesswoman you get this sense of resentment that she's forced out of her business. She has to hire a male guardian to take care of her business.

"All these restrictions tend to force women to quit their business altogether. It's a big loss not only for them but the economy as a whole."

International assignment

And so many women in Saudi choose to work abroad.

Dr Hibah Shata is a Saudi dentist who has lived in the United Arab Emirates for 10 years.

Business is easier for her in Dubai. The system is set up to encourage women, she says. Nevertheless, she thinks the culture in the region, that emphasises the protection of women, can hold them back.

Dr Hibah Shata Dr Hibah Shata has worked in the UAE for 10 years. She says it's much easier to do business there as a woman.

"The woman is with her father and her brother, then her husband and her children, so there is somebody to take care of her all the time, and that's the shelter that the woman has had for so long," Dr Shata says.

"I think that's one of the challenges that women who are trying to be in business and be equal to men face, because men don't take them as seriously.

"They don't see them very independent as they grow up."

Social media seems to be changing that.

Twitter and Facebook accounts are giving more women a voice outside their own home. But they still face opposition from some quarters in giving women the same rights as men.

Turning online campaigns into meaningful political and economic participation is still a way off.


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Economic growth confirmed at 0.5%

28 June 2011 Last updated at 08:59 GMT supermarket shopping basket Household spending remained squeezed, the ONS data showed The UK economy expanded by 0.5% in the first three months of 2011, the third estimate for the period from the Office for National Statistics (ONS) has confirmed.

The ONS also reaffirmed that consumer spending during the three months declined by 0.6%, the biggest fall since the second quarter of 2009.

Construction output was revised upwards in the third release of data.

However, this was cancelled out by a downward revision to manufacturing.

Philip Shaw, an analyst at Investec, said: "There is nothing that is too surprising [in these figures]."

Mr Shaw added that he was more focused on factors outside the UK that could affect the economy in the future.

Specifically, he said it was important that Greece's debt woes were "sorted out in an orderly manner", and that US economic growth picked up.

Mr Shaw added that the latest figures from the ONS meant that the Bank of England was likely to keep interest rates at 0.5% for the time being.


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US supports Lagarde to head IMF

28 June 2011 Last updated at 14:08 GMT Christine Lagarde Christine Lagarde also has the backing of Russia Christine Lagarde has taken a step closer to becoming the new head of the International Monetary Fund (IMF) after her candidacy was formally backed by the US.

The move by the US comes as the IMF's 24-strong board is meeting to agree on its new managing director.

Analysts say Ms Lagarde is now all but certain to beat her rival candidate, Mexico's Central Bank Governor Agustin Carstens.

The IMF has always had a European head.

US Treasury Secretary Timothy Geithner said: "Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy."

Ms Lagarde also secured the support of Russia on Tuesday. She has already been backed by China and Europe.

Mr Carstens is being supported by Latin American nations, plus Canada and Australia.

In a convention dating back to the establishment of the IMF and the World Bank after World War II, a European has always held the top job at the IMF, while an American leads the World Bank.

However, the countries backing Mr Carstens have argued that it is time the IMF was led by a non-European.

The vacancy at the top of the IMF came after former managing director Dominique Strauss-Kahn was forced to resign last month after he was arrested in New York on charges of sexual assault.

Mr Strauss-Kahn denies the charges.


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Global interest rates 'must rise'

27 June 2011 Last updated at 02:17 GMT ATM machine dispensing notes A surge in lending due to low cost of borrowing in emerging economies has resulted in higher prices The Bank for International Settlements (BIS) has warned that low interest rates across the globe are a threat to world financial stability.

The BIS warned low cost of borrowing had resulted in a credit and property price boom that was fuelling inflation, especially in emerging economies.

Central banks across the globe have cut interest rates in an attempt to boost growth after the 2008 financial crisis.

However, BIS warned that the policy may prove to be counterproductive.

"The prolonged period of very low interest rates entails the risk of creating serious financial distortions, misallocations of resources and delay in the necessary deleveraging in those advanced countries most affected by the crisis," the bank said in its annual report.

The BIS is an organisation of international central banks which is not accountable to any national government.

'Inflation fighting credibility'

While loose monetary policies and availability of easy credit have triggered growth, there has been a flip side to it as well.

Emerging economies, especially in Asia, have had to deal with rising prices for food and other essential commodities.

This has pushed up the cost of living and has threatened to derail growth in many developing nations.

The BIS warned that the central banks needed to change their policies in order to deal with the situation.

"Tighter global monetary policy is needed in order to contain inflation pressures and ward off financial stability risks," it said.

"It is also crucial if central banks are to preserve their hard-won inflation fighting credibility," the bank added.

Asset bubbles Continue reading the main story
All financial crises, especially those generated by a credit-fuelled property price boom, leave long-lasting wreckage”

End Quote Bank for International Settlements One of the biggest concerns that economists and analysts have about low interest rates is the formation of asset bubbles.

They have warned that availability of easy credit and low interest rates are driving up property prices to unsustainable levels.

"Property prices in a number of emerging market economies are advancing at staggeringly rapid rates, and private sector indebtedness is rising fast," the BIS said.

It also warned that the trend was very similar to that triggered by the global financial crisis.

"Emerging market economies managed to escape the worst of the crisis, but many now run the risk of building up imbalances very similar to those seen in advanced economies in the lead-up to the crisis," the bank said.

The BIS warned that the surge in property prices had resulted in over development in the real estate market, leaving large numbers of properties unsold.

"It will take years to absorb this overhang," the bank said.

The bank warned that if not addressed immediately, a crash in the property market may derail economic growth in emerging economies.

"All financial crises, especially those generated by a credit-fuelled property price boom, leave long-lasting wreckage," the bank said.


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Elderly care woes 'to intensify'

28 June 2011 Last updated at 05:08 GMT By Fran Abrams BBC News A close-up picture of a carer reaching out to hold the hand of an elderly person in a cardigan Experts predict the elderly care crisis is set to get much worse The government is set to begin a major review of the funding of elderly care in England. But in the face of massive financial pressures and an increasingly elderly population, what is going to be the true cost of balancing the books?

New figures seen by the BBC reveal struggling care homes are facing average real term cuts of 2.5% in fees from local councils.

Experts have warned this could mean many more face the same fate as Britain's biggest care provider Southern Cross, which this month narrowly avoided being forced into administration.

Preliminary figures from leading health economist William Laing reveal the extent of the squeeze across the sector.

Mr Laing carries out an annual survey of the fees councils pay to care homes. This year, there has been an average rise in fees across the UK of just 0.5%. This equates to a real terms cut of 2.5% after inflation is taken into account.

Most councils have completely frozen their fees, which means a 3% real terms cut.

Mr Laing's figures are based on 70% of the 200 councils in Britain. They show widespread cuts across England in the current financial year, with the deepest in Wirral, which is proposing to take 9.5% off its fees.

Just over half of elderly care home residents are paid for by local councils.

Mr Laing said on average, local authorities were paying about ?100 a week less than the true cost of care for each resident, with privately run homes staying in business by charging those who pay for their own care more than the market rate.

'Most appalling'

With most councils cutting back on the number of beds they provide themselves, the squeeze could lead to a shortage of beds in future, he said.

"It is going to be difficult at these fee levels to get investors to invest," he said.

"At the end of the day, the local authority puts a figure on the table and says that's it - take it or leave it."

Continue reading the main story head and shoulders shot of Mike Davies
They were good homes and if we couldn't make them work, who would want to buy them? ”

End Quote Mike Davies Care home owner The president of the Association of Directors of Adult Social Services, Peter Hay, said 80% of councils had kept their fees at the same level as last year or given a small increase, despite the pressure on budgets.

"We are giving every priority to the sector in a very difficult context, so councils aren't embarking on this recklessly, they are doing their very best," he said.

"We have got to ask questions about trying to work together to manage this very difficult financial climate. That means looking at what use we make of residential care, how much of it we want and how to deliver good quality care of the type and volume that we need."

In Wales, one care home owner, Mike Davies, has taken his local authority to court to force it to pay a fee which will cover his costs.

Mr Davies was nearly forced to close the Woodfield nursing home in Pembrokeshire last December after his bank told him he had breached a profitability clause attached to a business loan.

Pembrokeshire was paying him ?390 per week for each resident it placed there - but his business could only break even if the fees were ?480, he said. The council has now been forced to raise its fee to ?464 after a court ruling.

"The bank wouldn't have put the homes into receivership, because technically they were full.

"They were good homes and if we couldn't make them work, who would want to buy them? So they would have had to close.

"It was coming up to Christmas, so it would have been pretty bad," he said.

Mario Kreft, the chief executive of Care Forum Wales, which supported Mr Davies' case, said many more homes were facing closure across England and Wales because of the squeeze on local authority fees.

'Landmark judgement'

"We've got prices rising, [an] interest rate rise around the corner and very low fees. Put that together and you have the perfect storm," he said.

"Nobody can be sure how many homes we're going to lose in a short space of time."

In Wales, where Mr Davies' won his landmark judgement, many local authorities have actually put fees up.

In Scotland, all local authorities have frozen their fees, as has the Health and Social Care Board in Northern Ireland - in real terms, a cut of 3%.

One of the biggest cuts is being made in Suffolk, where the council has cut private care fees by 4%. The council has also announced it plans to sell off the 16 homes it owns, leading to fears that elderly people in need might not be able to find care places near their homes in future.

Audrey Fife, 91, was told she could go home from the West Suffolk hospital in June, even though she had a broken ankle and could not stand up. She persuaded the NHS to send her to one of Suffolk's homes instead, but fears the sell-off will affect provision in future.

"I feel it's the most appalling thing to be happening. I hope to get back to my home, but many people can't. What is there in the future? Where would these poor folks go?" she asked.

As well as cutting fees and selling off homes, many councils are cutting back the care they provide to elderly people in their own homes. In Birmingham, where fees are not yet finalised but where a 7% cut is expected, the council is cutting ?50m from its social care budget.

Among those affected is Doreen Greenhill, aged 74. She has cerebral palsy, failing eyesight and kidney problems, and she cannot walk unaided.

"I had my teeth cleaned for the first time in two weeks yesterday," she said. "I feel I am not living, just barely existing really, and I don't know how long I can put up with it."

File on 4 is on BBC Radio 4 on Tuesday 28 June at 2000 BST and Sunday 3 July at 1700 BST. Listen again via the BBC iPlayer or download the podcast.


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Greek lessons

28 June 2011 Last updated at 14:41 GMT By Robert Plummer Business reporter, BBC News Greek protester The Greek protests recall the street demonstrations in Argentina in 2001-02 As the financial crisis in Greece drags on, experts hunting for precedents have repeatedly referred to the country that last suffered a comparable economic fiasco: Argentina.

In the worst-case scenario, Argentina's recent past is Greece's future.

The peso collapse, massive default and subsequent social and political unrest that rocked Argentina in 2001-2 are being seen by many economists as an awful warning for the politicians in Athens and Brussels.

Even at first glance, Greece's woes have a lot in common with those of Argentina nearly a decade ago.

On the level of gut instinct - which is, after all, the way the markets generally work - the Greek crisis has the same slow-motion train-crash feel that characterised Argentina's slide into turmoil.

In Argentina's case, the government struggled to keep the economy on the rails, even though it had help from the International Monetary Fund, for most of 2000 and 2001, before President Fernando de la Rua was forced to resign.

His replacement, Adolfo Rodriguez Saa, lasted just a week in office. But before stepping down, he triggered a $102bn debt default which the country is still trying to remedy.

Ordinary Argentines suffered the consequences of the crisis. The unemployment rate hit 21.5% and did not return to single digits until the end of 2006.

Short-term view

If that era of turmoil in Argentina has anything to teach the world, it is debatable whether Argentina itself has, in fact, learned anything from the experience.

In Buenos Aires as in Athens, it is still popular to blame outsiders such as the IMF for the country's plight, without really admitting the extent to which its own behaviour contributed to the crisis.

Cristina Fernandez de Kirchner and Amado Boudou The Argentine president has chosen her finance minister as her running mate in October

And with Argentine President Cristina Fernandez de Kirchner running for a second term as president in elections on 23 October, the same short-term approach to the economy is very much in evidence.

Just as Greece fiddled its national statistics in order to be allowed to join the euro in the first place, Argentina's blatant falsification of its inflation data has been widely denounced by financial analysts.

Many observers have noted that Greece's problems can be properly resolved only by years of painful structural reforms, while doubting whether Greeks really have the stomach for such a solution.

In Argentina, too, any desire to tackle the economy's underlying structural problems vanished once the country returned to growth, heightening fears that its current boom will eventually prove to be unsustainable.

Currency crunch

Aside from the protracted nature of Greece's suffering, there are other, deeper parallels between the two countries' predicaments.

For a start, they both locked themselves into a currency regime that gave them no flexibility.

Greece, of course, is in the eurozone, so its monetary policy is decided by the European Central Bank in Frankfurt.

Jose Luis Machinea in October 2000 Mr Machinea failed to turn Argentina's economy around

In contrast, Argentina kept its own currency, the peso. But under the Law of Convertibility, passed in 1991 and not abandoned until January 2002, its value was fixed at parity with the US dollar.

That policy was the brainchild of Peronist President Carlos Menem's finance minister at the time, Domingo Cavallo, as a way of restoring the currency's credibility after years of rampant inflation.

Initially, it worked well - so well that it became an article of faith for the opposition Radical Party, too.

In the late 1990s, I interviewed the Radicals' Jose Luis Machinea, tipped for the finance portfolio once the party won the next election.

He was adamant that "convertibility" would be the cornerstone of his policy - and he kept his word when he got the job in December 1999.

But he lasted less than 15 months in office before resigning as the government's efforts to defend the currency peg led to unpopular spending cuts.

Outstanding debts

Argentina had let its public debt get out of control, as Greece has now - although Greece's position is far worse, with public debt now at 158% of GDP, as opposed to 62% of GDP in Argentina in 2001.

At the same time, the link to the dollar meant that it suffered from the ups and downs of the US economy, just as the eurozone imposes a one-size-fits-all straitjacket on its diverse economies that stops them devaluing or setting their own interest rates.

Demonstrators wearing masks protest against Greek austerity economic measures and corruption in front of parliament in Athens Not all Greek protests take the form of riots

If Greece is to go down the route of Argentina, it will have to leave the euro and default on most of its debt.

This scarcely looks attractive, since Argentina is still being penalised for its own default. Although it has already struck deals with the majority of its creditors, it remains unable to borrow on world markets.

Argentina is currently in talks with the Paris Club group of lenders to settle the bulk of its outstanding debts, but there is little sign of progress.

Of course, Greece has those much higher debt levels than Argentina did - and it is less competitive in world markets.

And whereas there was little or no wider contagion from the Argentine default, a Greek exit from the euro would make matters worse for other countries on the euro-periphery, such as the Irish Republic and Portugal.

The Argentine and Greek economies, by the way, are broadly similar in size nowadays - the IMF's world ranking last year put them at number 27 and number 32 respectively.

But before its crisis, Argentina's was a whole lot bigger - in 1999, it was the 16th-largest. That's another reason for Greece to beware the siren voices that urge it to default.

Under the mattress

Argentina clearly has lessons to teach the eurozone. But the UK, too, should pay attention.

In the late 1990s, when convertibility was still working for Argentina, there was a feeling among the Buenos Aires elite that the country had genuinely changed and become a more responsible place.

In the days of hyperinflation, people had maintained the value of their savings by exchanging their local cash for dollars and hiding them somewhere in their homes.

Demonstrator throws a burning tyre in Buenos Aires, 17 December 2001 Argentina's protests were as bitter as Greece's are now

The only bank that was trusted was the "colchon bank" - "colchon" being Spanish for mattress.

That habit briefly abated, but is now back again. Much as Britain never really eliminated boom and bust, so Argentina's essential nature remains unchanged.

And if you want evidence to back up the view attributed to Bank of England governor Sir Mervyn King before last year's UK general election - that the resulting government would have to take such unpopular economic measures that it would be out of power for a generation - look also to Argentina.

It might have been Mr Menem's Peronists that pegged the currency and ran up the debt, but the resulting crisis happened on the Radicals' watch - and it almost destroyed them as a political party.

So far, Greece's leaders seem unprepared for the destructive effect that the current crisis may have on their own political system. But unless they manage to muster a cross-party consensus for the government's five-year austerity package, the prospects look bleak.


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Japan's retail sales recovering

28 June 2011 Last updated at 01:03 GMT Electronics shop in Japan Japanese consumers have refrained from spending in the aftermath of the earthquake and tsunami Retail sales in Japan fell less-than-forecast in May as the country starts to recover from the 11 March earthquake and tsunami.

Retail sales fell 1.3% in May compared with the same month last year, according to the latest government data.

However, compared with the previous month, retail sales rose by 2.4%.

Analysts said that the numbers were an indicator that the Japanese economy was starting to recover.

"The pace of decline has slowed, reflecting a quick recovery from the damage to supply chains," said Hioshi Miyazaki of Shinkin Asset Management Company.

Natural factor

While improving supply chain conditions have played their part in better output from Japanese factories, analysts said that natural factors such as the weather was also playing a part.

"Summer clothing seems to have sold well due to the hot weather in May," said Junko Nishioka of RBS Securities.

"This trend may continue in June and beyond," she added.

Mari Iwashita of SMBC Nikko Securities added that a change in weather may have a positive affect, not just on retail sales but also on other areas of the economy.

"A hot summer could result in more spending, especially with corporations allowing employees to take longer summer holidays." said Mr Iwashita.

"The picture may not be bad if summer bonuses are spent domestically, such as on travel," he added.


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