Google Defends Tax Affairs From New Scrutiny

Google's tax arrangements are under further scrutiny after it revealed paying £11.6m in corporation tax last year on UK sales said to be as high as £3.5bn.

The US technology firm, which has faced Parliamentary criticism amid suggestions of tax avoidance in the past, has consistently argued it operates within the law.

The company, which recently celebrated its 15th birthday and employs around 2,000 people in the UK, said it paid the Treasury £156.1m in total during its last financial year.

The Daily Telegraph, citing filings at Companies House, reported its UK revenues for 2012 at £506m but Reuters said its total UK sales stood at £3.5bn.

Google's tax affairs rose to prominence again in June when a report by MPs found Google had made around £11.5bn in revenue from the UK between 2006 and 2011 but paid just £10m in corporation tax.

The Public Accounts Committee called for an HMRC investigation amid evidence from apparent whistleblowers while a Reuters investigation alleged that Google's UK staff were responsible for sales rather than marketing as the company has always insisted.

Today, a Google spokesperson said: "Like most multinationals, we pay the bulk of our £1.2bn corporate tax bill where our business originated, in our case the US.

"That's a rate of more than 19%, roughly what a UK-based company would pay.

"We're also a significant contributor to the UK economy- having created over 2,000 jobs.

This year alone we've invested more than £300m in property, and tax related to our UK operations totalled more than £150m."

Reuters journalist Tom Bergin, who conducted the news service's investigation into Google's tax arrangements, told Sky News he believed it was an "incredibly low" effective corporate tax rate.

He said: "Google reports half of its profits in Bermuda where it pays no tax so that's why Google has one of the lowest tax rates on its non-US income among any company.

"Google pays around 3 percentage points tax on its overseas profit so it is true when it comes to paying tax one of the few countries where Google does pays tax is the US.

"Of course that's because the US tax rules are considerably stronger than they are here in Europe and particulary in the UK.

So Google cannot possibly avoid paying tax in the US but when it comes to Europe and the UK it is a different matter, he concluded."

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US Shutdown Looms As Congress Squabbles

The US government is teetering on the brink of a partial shutdown that will curtail all but essential services, with no compromise in sight in a deeply polarised Congress.

If the Democrats and Republicans fail to find a solution before the deadline on a new spending bill, the shutdown goes into force at 12.01am on Tuesday.

The federal funding bill is usually considered routine business, but this time the measure is tied to the highly controversial health care law promoted by President Barack Obama.

It would be the first shutdown in 17 years.

While essential services would remain in place, nearly a million government employees will be forced off work without pay, and museums and national parks will close.

National parks and the capital's Smithsonian museums will be closed, pension and benefits cheques will be stopped and passport applications will not be processed.

The healthcare law was passed by Congress and signed into law by President Barack Obama in 2010, despite opposition by the Republican Party, especially Tea Party conservatives.

Senator Ted Cruz has been among the most ardent critics of Obamacare

The Republican-dominated House has passed a funding bill that would delay the full effect of the healthcare law by one year.

But the Senate, controlled by the Democrats, has promised to reject the bill when it reconvenes later - resulting in a stalemate.

"To be absolutely clear, the Senate will reject both the one-year delay of the Affordable Care Act and the repeal of the medical device tax," Senate Majority Leader Harry Reid said.

"After weeks of futile political games from Republicans, we are still at square one."

With a solution looking increasingly elusive, the blame game has begun on Capitol Hill.

A Tea Party leader, Senator Ted Cruz, pointed the finger at Senate Democrats.

"The House has twice now voted to keep the government open. And if we have a shutdown, it will only be because when the Senate comes back, Harry Reid says, 'I refuse even to talk,'" said Mr Cruz, who led a 21-hour talkathon against Obamacare.

The last shutdown was under President Bill Clinton in 1995

White House spokesman Jay Carney said the "Republicans decided they would rather make an ideological point by demanding the sabotage of the healthcare law".

The expected shutdown is jolting markets worldwide.

The New York Times said Mark Zandi, the chief economist for Moody's Analytics, estimated that a partial shutdown would trim annual economic growth by 0.2 percentage points in the fourth quarter, even if it ended within four days.

An impasse of a month could cut growth by 1.4 percentage points.

Mr Zanda estimated that an interruption longer than two months "would likely precipitate another recession".

The last time the federal government shutdown was under President Bill Clinton, when services ground to a halt for 28 days between December 1995 and January 1996.

It nearly happened again in April 2011.

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Osborne Plans Fuel Duty Freeze Until 2015

Fuel duty will be frozen until 2015 if the money is available, George Osborne has pledged as he addressed the Tory party conference.

The Chancellor's pledge came as he warned the battle to rebuild the UK economy is not over and that the Tories must be allowed to finish the task.

Mr Osborne accused Labour of making up policy "on the back of a fag packet" as he addressed the Conservative Party Conference.

He warned of disaster if Ed Miliband was to win power, suggesting his eye-catching energy price freeze plan would stunt growth and cost jobs.

Countering accusations of complacency about the recovery, Mr Osborne insisted there was "no feeling of a task completed or a victory won".

It was "not even close to being over and we are going to finish what he started," he declared, insisting his policies were a "serious plan for a grown-up country".

George Osborne at a vehicle manufacturers on Monday

In his speech, he also unveiled tough new rules to make the long-term unemployed earn their benefits by doing full-time unpaid community work from next year.

From April, people still without work after two years on the coalition's Work Programme will face three options if they want to remain on the dole.

They will have to do community work such as litter picking, visit a job centre every day or take part in compulsory training to tackle problems like illiteracy.

Those who break the rules of the new Help to Work scheme, for example by failing to turn up without a good reason, could lose their benefit for four weeks.

A second offence would see them lose it for three months.

Ahead of his address, Mr Osborne insisted on Sky News that the policy was not a return to the Conservative "nasty party" of old - describing the move as "compassionate".

"This is not about punishment, this is about help," he stressed, but also said: "What we are saying is there is no option of doing nothing any more.

"We are saying we are going to help you into work but we are going to ask for something in return. I think it is a very compassionate approach to people who previous governments just ignored."

Amid concern that job centres will be overstretched, he added that they would have extra money to police the scheme.

The Chancellor's speech came as TNT announced it was creating 1,000 new jobs by expanding its postal delivery service.

Potentially, around 200,000 long-term Jobseeker's Allowance claimants could be eligible for the new coalition initiative.

But ministers believe the numbers on it will be significantly lower, as many of those working covertly will decide it is no longer worth trying to claim benefits and drop out.

The scheme, devised by Work and Pensions Secretary Iain Duncan Smith, will cost around £300m - with the money likely to be found from departmental underspends.

Sky's chief political correspondent Jon Craig described the new conditions as "a tough crackdown".

Labour's shadow chief secretary to the Treasury, Rachel Reeves, said: "It's taken three wasted years of rising long-term unemployment and a failed Work Programme to come up with this new scheme.

"But this policy is not as ambitious as Labour's compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months and every adult unemployed for more than two years."

During his speech later, Mr Osborne is not expected to unveil specific action on living standards, despite pressure to respond to Labour leader Ed Miliband's energy price freeze pledge last week.

Instead, the Chancellor will stress the need to stick with the coalition's economic plans, warning that the UK still has not fully recovered from the credit crunch.

He told Sky: "Our economic plan is helping Britain turn a corner. We have dealt with the problems we inherited, we have still got a long way to go ...

"By contrast the Labour party got us into this mess and all I hear from them is that they want more borrowing and more spending. A set of gimmicky announcements isn't going to cover up the fact that they don't have a credible economic policy."

Critics claimed the Government scheme would treat the unemployed more harshly than criminals and was just a "rehash" of plans that had already failed.

Joanna Long, from the Boycott Workfare campaign, said: "It's bad news for people who will be forced to work at far below the minimum wage - and it's terrible news for the people whose jobs they will be replacing.

"This is about cutting the safety net for unemployed people, and handing something for nothing to charities, companies and councils which should be paying wages and taxes."

Graeme Cooke, from the Institute for Public Policy Research, added that the measures would probably only affect one in 20 people on the dole and warned it needed careful planning.

"The key issue is how such schemes are designed. If they give people real experience of work and the practical employability habits that go with it, they can help people be more attractive to prospective employers," he said.

"But if it is pitched as a punishment where people do menial tasks, it risks acting as a signal to employers that these are people not to employ."

But Matthew Sinclair, chief executive of the TaxPayers' Alliance, welcomed the move, insisting it was unfair to have people on benefits "for years on end". 

"There is plenty of international evidence from countries such as Australia, Canada and the US that this type of scheme is not only fairer on those footing the welfare bill, but also gets people back into work," he said.

:: The Chancellor's speech to the Conservative Party Conference in Manchester is being broadcast live on Sky News.

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Church Consortium Wins RBS Branch Sale Race

Royal Bank of Scotland is to sell 314 branches to a consortium backed by the Church of England in a deal forced on the bank because of its taxpayer bailout.

It will see Williams & Glyn's, a bank brand that has been dormant for nearly 30 years, soon return to the UK high street to become a new competitor in the market.

The consortium includes Corsair Capital, Centrebridge Partners and the Church Commissioners for England - the church's pension fund.

The deal will give the church a role in high street banking after the Archbishop of Canterbury Justin Welby slammed controversial payday lenders for their rates before learning that the church had actually invested in Wonga, the country's best-known payday firm.

The Archbishop of Canterbury wants banking to have a moral compass

The new player, whose executives include former trade minister Lord Davies, has pledged to put lending to small business at its heart, give more funds to the community and cap its bonuses at 100% of annual salary.

RBS confirmed the investors would pay £600m for part of the business with the remainder being raised in a stock market listing at a future date.

RBS chairman Sir Philip Hampton said: "We are delighted to be working in partnership with these investors to establish a new challenger bank for UK customers.

RBS chairman Sir Philip Hampton

"Williams & Glyn's will play an important role in the UK banking landscape and will be an excellent new addition to the market, with a particular strength in small business banking - a sector that is so crucial to the UK's economic recovery.

"Much has been done already in building the standalone business, and today's announcement provides more certainty for our customers and employees ahead of a flotation."

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets.

Lord Davies, who is vice chairman of Corsair Capital, said today: "We are delighted to have been selected by RBS.

"The Consortium views this as an opportunity to create a genuine challenger bank, which will be a vibrant, healthy competitive force in UK banking and a new financial services provider to the UK public and small and medium sized businesses.

"There is a great history in the Williams & Glyn's brand and the business has an opportunity to be at the forefront of the UK banking industry whilst making an active contribution to the community from its strong regional network."

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Ex-Barclays Chief In Frame For Lloyds Role

By Mark Kleinman, City Editor

One of the architects of the legislation that will force Britain's banks to ring-fence their high street lending operations is being considered as a surprise candidate to chair Lloyds Banking Group.

Sky News can reveal that Martin Taylor, a member of the Independent Commission on Banking (ICB) in 2010-11, is on a list of names approached about taking over from Sir Win Bischoff next year.

Mr Taylor's presence on the shortlist to chair Lloyds has emerged less than a fortnight after George Osborne, the Chancellor, began reducing the taxpayer's stake in the bank, raising £3.2bn from the sale of a 6% stake.

His name is an unexpected one to feature in the reckoning to succeed Sir Win is a surprise given that his last term in a UK bank's boardroom ended in ignominy at Barclays in 1998.

Lloyds has been searching for a new chairman for just over four months but is in no hurry to identify a replacement for Sir Win, who will not step down until its annual meeting next year.

The task of finding a new figurehead for the bank's board is likely to have been made significantly easier by the fact that the Treasury has begun selling its shareholding. A surge in Lloyds' share price during the last year would, if maintained, pave the way for further disposals ahead of the next general election.

The chairmanship of Lloyds is one of the most high-profile in British boardrooms. Sir Win, a former boss of Citi, the Wall Street bank, was appointed four years ago to replace Sir Victor Blank, who was forced to step down in the wake of Lloyds TSB's rescue of HBOS.

That deal resulted in taxpayers pouring more than £20bn into Lloyds to save the combined group, leaving UK Financial Investments, which manages the Government's stake, to threaten to vote against Sir Victor at its annual meeting in 2009.

Mr Taylor was a trenchant critic of banks' behaviour during the year-long probe into the structure of the industry that was chaired by Sir John Vickers.

He argued forcefully for the system of ring-fencing that will be adopted before 2019 by the major lenders, although Lloyds will be relatively unaffected by the policy because of its limited investment banking operations.

Last year, Mr Taylor recounted how he had been "among the first to succumb to the myth of (former Barclays boss Bob) Diamond's indispensability" as he outlined the need for a cultural overhaul of British banking.

If Mr Taylor was chosen as Lloyds' next chairman, he would have to step down as an external member of the Bank of England's Financial Policy Committee (FPC), which he joined only a few months ago. One banker said this weekend there was unlikely to be any question over conflicts of interest with either the ICB or FPC if Mr Taylor did take the Lloyds role.

Since being forced out of Barclays in 1998, Mr Taylor has served as an adviser to the international arm of Goldman Sachs, chairman of WH Smith and then of Syngenta, a Swiss-based agricultural chemicals producer.

The search for Sir Win's successor is being led by Tony Watson, the former fund manager who is Lloyds' senior independent director.

David Roberts, the bank's deputy chairman and another former Barclays executive, is seen as a strong candidate to land the role although it is unclear whether he wants it.

Lord Davies, the former trade minister, has also been linked with it although he has made it clear he is not interested and was this week part of the consortium which agreed to buy a stake in 314 Royal Bank of Scotland branches.

Odgers Berndtson, the headhunting firm, is leading the search, while Lloyds is also about to announce the appointment of a chairman of TSB, the 631-branch network it is spinning off as an independent bank.

Lloyds declined to comment on Saturday.

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Cameron Launches State-Backed Mortgages Plan

David Cameron says 95% government-backed mortgages to help people get on to the property ladder will start within days.

The scheme was due to start in January but hours before the Conservative Party Conference opened, the Prime Minister revealed that NatWest, RBS and Halifax had all agreed to provide the new deals. 

It is widely being seen as a response to Ed Miliband's Labour conference crowd-pleasing announcement that the party would freeze energy prices for two years as conference season has shaped up as a "battle over the consumer".

Mr Cameron arrives in Manchester ahead of the Conservative Party Conference

Speaking on Sunday morning, Mr Cameron said that it was ridiculous that people could afford mortgage repayments, but not the deposit to get the loan in the first place. 

The Prime Minister said that only those with well-off parents could manage to get on the housing ladder, telling BBC One's Andrew Marr Show: "I'm not going to stand by while people's aspirations are trashed."

He denied that the move would create a housing bubble and said that they had taken advice from the Bank of England and empowered it to stop a bubble being created.

The mortgage guarantees will allow buyers to acquire a newly built home or an existing property worth up to £600,000 with a deposit of only 5%.

The second stage of the Help to Buy scheme aims to boost mortgage availability by reducing the risk for lenders because the Government takes on the risk of default when it guarantees a proportion of a loan.

In a wide-ranging interview ahead of the conference Mr Cameron also said:

:: He was sorry he did not win the 2010 election and made it clear he was looking for a straight Conservative victory in 2014

:: The high-speed rail HS2 project would stay on its £42.6bn budget

:: That Britain could pull out of the European Convention on Human Rights, which has prevented the UK deporting foreign criminals 

:: He would never back a mansion tax, marking a clear coalition red line

:: Televised leaders debates should take place before campaigning for the 2015 election begins.

Mr Cameron also spoke about Mr Miliband's energy bill freeze proposals saying: "I want to lower prices not just for 20 months but for 20 years."

George Osborne tweeting the hashtag #forhardworkingpeople

He said that he wanted to look at "all those markets" and make sure they were "working for hard-working people".

Sky News Political Correspondent Anushka Asthana said bringing forward the mortgage plan and the announcement, on Saturday, of tax breaks for married couples was an attempt to give Conservatives something to "take to the doorsteps".

She said: "This is also about Mr Cameron looking outwards and thinking about the public and trying to come back on some of the ideas that Labour and the Liberal Democrats have put forward over the past few weeks.

"People are calling this the battle over the consumer. At the Lib Dems we have free school meals and then Ed Miliband promises to freeze energy prices. The Tories have tried to rubbish that idea but at the same time they are clearly worried."

The Chancellor, George Osborne, tweeted the news that RBS, NatWest and Halifax had all signed up to the mortgage scheme using the Conservative buzzwords hashtag #forhardworkingpeople.

A YouGov poll for The Sunday Times put Labour on an 11 point lead on 42%, with the Conservatives at 31%, UKIP on 13% and the Liberal Democrats trailing on 9%.

The 95% mortgage scheme has previously attracted widespread concern, with some claiming it may lead to more problems than it solves.

Mr Balls says the Government focus should be on affordable homes

Liberal Democrat Business Secretary Vince Cable warned the scheme "could inflate the market" and said he feared there was a "danger of getting into another housing bubble".

Former Bank of England governor Lord King said the scheme is "too close for comfort" to a general scheme to guarantee mortgages.

Speaking on Sunday, Labour's shadow chancellor Ed Balls said: "If David Cameron is serious about helping first-time buyers he should be bringing forward investment to build more affordable homes. Rising demand for housing must be matched with rising supply, but under this government house-building is at its lowest level since the 1920s."

The first stage of Help to Buy was launched in April and offers loans to give people the chance to buy a new-build home with a deposit of just 5%. The scheme has been credited with spurring a surge in home sales and driving up prices.

:: Watch Conservative Party conference coverage on Sky News from 2pm

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House Prices: Bank Given New Help To Buy Role

By Ed Conway, Economics Editor

The Bank of England is to be given effective control over the loan-to-value ratios of mortgages eligible for the Government's new Help to Buy scheme, it has emerged.

As of next September, the Bank's Financial Policy Committee will be able to impose swingeing fees on high-debt loans in the Treasury's mortgage guarantee scheme, potentially ruling out 95% loan-to-value products.

The news came after the Chancellor announced that he will give the Bank the right to review the scheme on an annual basis, instead of only after three years, as had been originally intended.

Under the original conception of the scheme, in which the Treasury will part-finance deposits to help prospective homeowners onto the housing ladder, buyers would only have to provide a 5% deposit, with the Government helping provide a further chunk.

However, Sky News understands that in an annual review, starting next September, the Bank will also be able to call for a specific increase in the fees banks will have to pay if they want to lend out a 90-95% loan-to-value mortgage.

Although the Bank only has the power to recommend the fee changes, Treasury insiders say they would be highly likely to implement them.

The other lever the Bank can pull is to recommend lowering the price of properties eligible for the scheme from £600,000.

According to documentation sent out to mortgage lenders, banks will be charged three different fees depending on the scale of loans they plan to extend under the scheme: one for an 80-85% loan, one for a 85-90% loan and another for a 90-95% loan.

Should the Bank's FPC become concerned about households overextending themselves, they could recommend an inordinate increase in the fees for the highest debt mortgages, effectively ruling them out in the market.

The development underlines the scale of concern in the Treasury and Bank that the Help to Buy scheme could have the potential to overheat parts of the housing market which already look unaffordable.

Research by Sky News has found that the average property in Kensington & Chelsea is now worth almost 30 times the average salary of those living in the area; this compares to an average ratio of 6.1 times across England and Wales.

According to Nationwide house prices rose by 4.3% in Britain over the past year – though the increase in London was 10%.

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Church Consortium Wins RBS Branch Sale Race

Royal Bank of Scotland is to sell 314 branches to a consortium backed by the Church of England in a deal forced on the bank because of its taxpayer bailout.

It will see Williams & Glyn's, a bank brand that has been dormant for nearly 30 years, soon return to the UK high street to become a new competitor in the market.

The consortium includes Corsair Capital, Centrebridge Partners and the Church Commissioners for England - the church's pension fund.

The deal will give the church a role in high street banking after the Archbishop of Canterbury Justin Welby slammed controversial payday lenders for their rates before learning that the church had actually invested in Wonga, the country's best-known payday firm.

The Archbishop of Canterbury wants banking to have a moral compass

The new player, whose executives include former trade minister Lord Davies, has pledged to put lending to small business at its heart, give more funds to the community and cap its bonuses at 100% of annual salary.

RBS confirmed the investors would pay £600m for part of the business with the remainder being raised in a stock market listing at a future date.

RBS chairman Sir Philip Hampton said: "We are delighted to be working in partnership with these investors to establish a new challenger bank for UK customers.

RBS chairman Sir Philip Hampton

"Williams & Glyn's will play an important role in the UK banking landscape and will be an excellent new addition to the market, with a particular strength in small business banking - a sector that is so crucial to the UK's economic recovery.

"Much has been done already in building the standalone business, and today's announcement provides more certainty for our customers and employees ahead of a flotation."

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets.

Lord Davies, who is vice chairman of Corsair Capital, said today: "We are delighted to have been selected by RBS.

"The Consortium views this as an opportunity to create a genuine challenger bank, which will be a vibrant, healthy competitive force in UK banking and a new financial services provider to the UK public and small and medium sized businesses.

"There is a great history in the Williams & Glyn's brand and the business has an opportunity to be at the forefront of the UK banking industry whilst making an active contribution to the community from its strong regional network."

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Marriage Tax Breaks For Four Million Couples

David Cameron says four million couples will benefit from the Government's new £1,000 marriage tax allowance.

Ahead of the start of the Conservative Party conference, the Prime Minister said the scheme - starting in April 2015 - will be worth up to £200 a year for married couples, including 15,000 in civil partnerships.

They will receive the benefit at the end of the tax year in 2016.

It will work by letting people transfer £1,000 of their personal tax allowance to their spouse or civil partner - an increase on the £750 allowance promised in the Tory manifesto, which would have seen couples gain £150.

The new allowance, which is not available to couples which include a higher rate taxpayer, is aimed at couples where one partner has not used all of their personal allowance or does not work at all.

Bride-to-be Jo Herbert, told Sky News at a west London wedding show that she did not think the proposals were fair and that she felt they would do little to encourage marriage.

She said: "Personally I don't think that it's very fair that they (married couples) are receiving financial rewards and couples that just that just choose not to get married for any reason cannot benefit as well. 

The PM says 'nothing would be possible' without his wife Samantha

"I don't think that it would actually incentivise anyone to get married because £200 - I mean yes thank you very much I will take that -but it is not going to go too far especially in the grand scheme of things, in how much weddings cost."

The announcement comes after a trade-off that allowed the Liberal Democrats to announce free school meals for all children under eight earlier this month.

The proposal, which Downing Street said shows the Government values commitment by recognising marriage and civil partnerships in the tax system, makes good on promises Mr Cameron made when he was running for leadership of the party in 2005.

In an article in today's edition of The Daily Mail, he said: "I believe in marriage. Alongside the birth of my children, my wedding was the happiest day of my life.

"Since then, Samantha and I have been a team. Nothing I've done since - becoming a Member of Parliament, leader of my party or Prime Minister - would have been possible without her."

He said that the new measures would apply "if you're gay or straight - and in a civil partnership or a marriage. This summer I was proud to make Equal Marriage the law. Love is love, commitment is commitment".

Labour's shadow chief secretary to the treasury, Rachel Reeves, said that the marriage tax break would not even help two-thirds of married couples and said he was out of touch if he "thinks people will get married for £3.85 a week".

She said: "And even for the minority who might benefit, it will be far outweighed by what David Cameron's Government has already taken away in higher VAT and cuts to child benefit and tax credits. In most cases, the extra payment will be paid to men, even though it is women who have disproportionately lost out so far."

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Jobless 'To Be Forced To Work' For Benefits

Work and Pensions Secretary Iain Duncan Smith will announce tough new conditions on the payment of unemployment benefits at the Conservative Party conference next week, according to reports.

The Daily Mail reported that the long-term unemployed will be told that they must do an unpaid full-time job or lose their benefits.

The paper said it was expected that claimants who go through the Work Programme - the Government's main back-to-work scheme - but fail to find a job will be required to take part in unpaid community work or work experience.

Mr Duncan Smith has said people should not live a life on benefits

Refusal to do so could mean the loss of welfare payments.

Mr Duncan Smith told the Mail: "It's not acceptable for people to expect to live a life on benefits if they're able to work."

He added: "Benefits should be a safety net - but not something that gives claimants an income out of reach of many hard-working families."

Mr Duncan Smith also announced the Government's benefits cap is now fully in place across Britain.

The controversial cap - which limits benefits to £500 a week for couples and lone parents and £350 a week for single adults - is a key plank of Mr Duncan Smith's welfare reforms. It is expected to affect about 40,000 households.

The cap covers the main out-of-work benefits - jobseeker's allowance, income support, and employment and support allowance - and other benefits such as housing benefit, child benefit and child tax credit and carer's allowance.

It was piloted in four London boroughs last April before being introduced across the country from July.

Mr Duncan Smith defended the cap, arguing that it restores fairness to the system, ensuring households where no one is working cannot claim more than the average family earns.

Critics say that it penalises out-of-work families in areas with high housing charges, forcing them to move out to cheaper areas.

But Mr Duncan Smith told the Daily Mail: "We have now successfully delivered a cap on benefits so that out-of-work households know they can no longer claim more than the average family earns and we have returned fairness to the benefits system."

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Chancellor Acts As House Prices 'Accelerate'

As a report highlights accelerated house price growth in September, it has been revealed that the Chancellor has asked the Bank of England to keep a closer watch for evidence of a price bubble.

According to the latest Nationwide House Price Index, UK prices rose 0.9% month-on-month, leaving them 5% higher than in September 2012 - the strongest pace of growth since July 2010.

The growth was largely fuelled by prices in London and South East England, Nationwide said.

Its chief economist Robert Gardner said: "There are also signs that the pickup is becoming increasingly broad-based.

"For the first time since 2007, all thirteen UK regions experienced annual house price growth in the third quarter of 2013.

George Osborne needs housing supply to rise

"However, the southern regions of England continued to see the strongest rates of growth – especially London, where the annual rate of growth reached double digits in the three months to September. 

"The gap between house prices in the North and the South of England reached a new high in the third quarter, rising above £100,000 for the first time.

"The typical property price in the South of England is now 74% above its Northern equivalent," he said.

On the prospect of a bubble, Mr Gardner added: "The acceleration in house price growth from the subdued pace prevailing throughout 2011 and 2012 has been surprisingly quick, though house prices are still some way below their previous peaks in most parts of the country.

"Overall, UK house prices are still around 8% below their 2007 highs.

"Only in London are prices at an all-time high, 8% above the previous peak."

It is against that backdrop that George Osborne has given the Bank of England greater powers to prevent the Government's Help to Buy scheme from causing a property boom - with borrowers over-stretching themselves.

From January the Help to Buy initiative will provide mortgage guarantees on properties worth up to £600,000 but the Bank's Financial Policy Committee (FPC) will now make annual reviews and could recommend that the cap is reduced.

It was initially due to only assess the scheme after three years.

The FPC could also make loans more expensive by recommending that the Treasury raises the fees paid by lenders for the guarantees.

The Business Secretary Vince Cable previously voiced concerns on Sky News over the second phase of Help To Buy.

But Mr Osborne insisted: "Let's not pretend there's a housing boom," saying it was important to "go on trying to fix specific problems in our financial system."

The Bank has previously said there is no evidence of a bubble but said it would be watching closely so it could intervene if necessary.

More follows...

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Tesco Sorry For Inflatable 'Gay Best Friend' Doll

Tesco has withdrawn an inflatable figure labelled "gay best friend" and apologised for selling it.

It comes a day after the retailer removed a Halloween costume called "Psycho Ward" from sale after it sparked widespread criticism.

The product has been withdrawn. Pic: Tesco.com

The Tesco website described  "The Inflatable g*y Best Friend" as an "amusing gift".

"If SEX in the City and Will & Grace taught us anything, it's that g*y best friends are in this season," the description of the product said. 

"We've had the manbag, we've had leg warmers and iPhone fever, now it's time for the new craze.

"Although not much can be said for his own attire, your Inflatable g*y Best Friend is ready to give you fashion advice, tell you if your bum looks big and b**ch about everyone who doesn't wear Jimmy Choo's."

The product remains on sale on the Amazon website.

Gay rights charity Stonewall chief Ben Summerskill said: "We can't imagine why any woman" would buy the item.

Tesco and another retailer, Asda, both faced a backlash on Thursday over the sale of Halloween costumes referring to mental health issues.

Tesco said it was "really sorry for any offence caused" by its "Psycho Ward" offering.

The website description of the costume said: "Dress up as the most thrilling psycho killer character of all time in this Psycho Ward costume, consisting of a bright orange, long-sleeved boiler suit with zip fastener to front, 'Psycho Ward' printed on the chest.

A Tesco spokeswoman said: "We're really sorry for any offence this has caused and we are removing this product from sale."

Asda was also been forced to apologise after it advertised a fancy dress outfit featuring someone covered in blood and brandishing a machete as a "mental patient fancy dress costume".

The retailer also made a £25,000 donation to the mental health charity Mind.

More follows...

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Thousands Of Pubs And Restaurants Cut Prices

Thousands of pubs and restaurants across the UK are lowering their food and drink prices - for one day only.

Up to 40 leading businesses are involved in the stunt, including the pub chain JD Wetherspoon and Pizza Hut, with up to 15,000 outlets in total said to be taking part by trimming their prices by 7.5%.

The move is part of a Europe-wide campaign - led by French businessman and lobbyist Jacques Borel - to persuade governments to reduce levels of VAT on food and drink in the hospitality sector.

In the UK, that would involve cutting VAT from 20% to 5% to give it tax parity with supermarkets.

JD Wetherspoon chairman Tim Martin wants a level playing field

The industry suggests that the taxman is missing out, arguing that more could be raised in tax from making meals out more competitive at a time of constrained family budgets.

The hospitality sector says tax parity would mean higher employment - helping arrest the decline in pubs and restaurants and prompting further investment to assist economic recovery.

Mr Borel estimates that 670,000 jobs could be created in the UK by reducing the 20% VAT burden to 5%.

The issue has long been championed by JD Wetherspoon chairman, Tim Martin, who warned earlier this month that the pub industry faced an uncertain future.

He told Sky News then: "I am pleased to report another year of progress, with record sales, profit and earnings per share, despite having paid £551.5m in taxes.

"It is unsustainable to have far higher taxes for the pub industry than those for supermarkets.

"Already, 10,000 pubs have closed and many others are suffering, through insufficient investment.

"In particular, there should be VAT equality for pubs, restaurants and supermarkets," he said.

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Post Office Dispute: Christmas Strike Threat

A union is threatening industrial action at post offices into the Christmas season unless a row over jobs, pay and closures is resolved.

The Communication Workers Union (CWU), which is locked in a separate dispute with Royal Mail over privatisation, issued the ultimatum as it confirmed a fresh strike affecting hundreds of Crown post offices.

CWU members at Crown post offices in England, Wales, Northern Ireland and most of Scotland will walk out on Monday, followed by a strike in a handful of branches in Scotland on Tuesday, the union said.

It will be the 12th round of industrial action since Easter, while staff are also taking other forms of action including a sales ban on financial products and services.

Dave Ward claims staff are paying for bosses' bonuses with their jobs

The union is opposed to plans to franchise or close 75 Crown offices, the larger sites usually found on high streets.

Dave Ward, CWU deputy general secretary, said: "If the Post Office thinks this dispute will simply fade away they are sadly mistaken.

"Our members are fiercely opposed to the company's plans to close and franchise offices, slash jobs and impose a pay freeze.

"The company's plans are to downgrade the network, reduce services to local communities and hit jobs in the network. There is no mandate for this course of action and customers across the country are appalled at the reckless attitude of the Post Office towards these public services.

"We have tried talking to the Post Office about costs and efficiencies, but this is a company which made £94m profit last year and paid significant bonuses totalling £15.4m primarily to senior managers. This can't be paid for by cuts to frontline jobs and services, it's simply not right.

"Next week's strike and the continuing sales ban activity will continue into the Christmas period unless management see sense and negotiate a fair deal for Crown office staff."

The union said the strike will affect up to 4,000 staff in 372 offices.

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Miliband Warns Energy Firms After Backlash

Ed Miliband has rejected warnings his plans for an energy price freeze if Labour regains power will spark blackouts.

The Labour leader told Sky News he was serious about ending the "blatant overcharging of millions" as he brushed off criticism about the pledge.

In a surprise move, Mr Miliband vowed on Tuesday to freeze gas and electricity prices for 20 months if he becomes prime minister in 2015.

He has also now written to the "Big Six" energy companies warning that they will be "part of the problem" unless they support the move.

Ed Miliband insists it is time to "reset the market"

Firms claim it could lead to energy shortages and power cuts as the industry is starved of the investment it needs and business chiefs have also been critical.

Shares in Centrica - British Gas's holding company - were down almost 4% in early trading, and shares in Southern Electric and Swalec owner SSE fell 3.6%.

Centrica chairman Sir Roger Carr said: "We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on."

Energy Secretary Ed Davey added: "When they tried to fix prices in California it resulted in an electricity crisis and widespread blackouts. We can't risk the lights going out here too.

"Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt."

But Mr Miliband hit back, saying: "There are bound to be people coming up with scare stories ... California was a totally different approach."

Energy firms argue they need money to overhaul UK power stations

His plans would see a price freeze from 2015 until 2017 while the sector is reformed, with watchdog Ofgem axed, firms split into generation and retail arms and competition increased.

The Labour leader insists it is time to "reset the market" and told the industry he would not help guarantee funding for its development if it does not fall in line.

In his letter, he wrote: "I appreciate that you will not welcome all aspects of this package but it is my firm view that without resetting the market we are not going to see the public consent that is required to underpin the scale of taxpayer backed guarantees for which you have argued.

"I am prepared to make the case for sharing the risks of such investment, but that must be against the backdrop of a market that customers believe works for them.

"You and I know that the public have lost faith in this market. There is a crisis of confidence. We face a stark choice.

"We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution."

Mr Miliband announced the 20-month price freeze in his conference speech as he sought to show only his party could tackle a "cost-of-living crisis".

Pitching the next election as a battle between Tories representing the "privileged few" as ordinary families and small businesses suffer, he repeatedly declared: "Britain can do better than this."

"I will lead a government that fights for you," he vowed as he insisted he would relish a contest with David Cameron based on leadership and character.

Labour claims the freeze, to last from May 2015 until January 2017, would save the typical household £120 and an average business £1,800.

Consumer group Which? has said it will "give hope to the millions worrying about how they can afford to heat their homes" but the CBI warns it will damage Labour's "pro-enterprise credentials".

The energy sector's umbrella group, Energy UK, accused Mr Miliband of "posturing to no purpose" and warned the freeze could have drastic consequences.

Chief executive Angela Knight said: "Freezing the bill, may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000 plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone."

SSE claimed price freezes would lead to "unsustainable loss-making retail businesses" and suggested the Government's energy policy costs be put into general taxation instead of on bills.

"This would wipe £110 off the average person's bill and shift the cost away from those who can't afford to pay and on to those who can," a spokesman said.

Simon Walker, director general of the Institute of Directors, said: "We should think very, very carefully before piling more distortion on an already grossly distorted energy market. Price controls only add greater uncertainty to companies who we need to take the financial risks of energy investment.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "When the government fixes prices, it always ends in a disaster for consumers.

"Ed Miliband is sticking by the green taxes and expensive subsidies that drive up the price of energy, so at best this new policy would just store up massive price hikes for another day. At worst it could create a crisis and force the government to bail out the sector."

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Fewer Town Centre Shops Closing Their Doors

Town centre shops shut at an average of 18 a day during the first half of 2013, reflecting continuing economic and evolving social pressures on the high street.

However, the closure rate fell from more than 20 during the same period last year, according to the report from accountants PwC compiled by the Local Data Company (LDC).

It highlights the continuing change in the make-up of the high street - with a declining number of women's fashion stores and camera shops as consumers' demands change.

Charity shops, betting shops and cheque cashing outlets picked up the slack, the study suggested.

Video and photography outlets - following the insolvencies of Blockbuster and Jessops respectively - suffered most, while women's fashion was hit by intense competition from major chains and online offerings.

The study of 500 UK town centres showed 3,366 outlets closed in the six-month period, compared with 3,157 openings, a net reduction of 209 shops.

This was an improvement on the net reduction of 953 over the first half of last year.

Coffee shops and hearing aid outlets were among those increasing, the research showed, as were convenience stores as large supermarket groups move into the sector to bolster their market share.

Mike Jervis, insolvency partner and retail specialist at PwC, said: "Upticks in areas such as cheque cashing and pawnbroker reflect a society where a sizeable part of the population is forced to turn to these types of borrowing for basic needs."

Matthew Hopkinson, director of the LDC, added: "The good news is that the significant decline in chain retailer numbers in town centres in 2012 is slowing down.

"That said, closer examination of the data shows the significant ongoing decline of traditional shops, with food, beverage and entertainment taking their place.

"The pressure from online competitors, supermarkets and out-of-town providers will only increase," he warned.

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Labour's £800m Tax Break For Small Business

By Jon Craig, Chief Political Correspondent

Ed Miliband will later offer an £800m tax break to smaller companies and pledge to make Labour "the party of small business".

The first act of a Labour government, if it wins the next General Election, will be to reverse a hike in small business rates due in April 2015 and to freeze the levy the following year, the party leader will say.

Labour calculates the move will be worth an average £450 over two years to 1.5 million businesses, including shops, pubs and hi-tech start-ups, and up to £2,000 for some firms.

It would be paid for by scrapping the coalition Government's planned cut in corporation tax from 21% to 20%.

In his speech to Labour's conference in Brighton, Mr Miliband will say he wants growth in the UK economy to benefit "hard-working families" including small business owners, and not just the "privileged few".

Borrowing a slogan from Ronald Reagan's successful 1980 bid for the US presidency, he will say voters should ask themselves in 2015: "Am I better off now than I was five years ago?"

He will also risk a backlash from countryside campaigners by launching a "road map" for the construction of a generation of new towns in England in a bid to solve the housing crisis.

Labour insiders did not identify areas which might come under consideration for new towns, but said Mr Miliband wants to ensure families are given better access to new homes, and communities which want to grow are helped to do so.

The Labour leader will accuse David Cameron and George Osborne of "boasting" about fixing the economy when the proceeds of growth have only gone to a minority.

He will argue life for ordinary families has been getting harder, thanks to a "cost of living crisis" caused by soaring bills and wages which fail to keep pace with inflation.

"Too many of the jobs we're creating in this country are just too low-paid, too many of the gains in our economy are just scooped up by a privileged few, including those with big bonuses," he will say.

"And too often you are left being charged over the odds. They used to say 'a rising tide lifts all boats'. Now the rising tide just seems to lift the yachts."

Mr Cameron has often said his economic policies are designed to help the UK compete in a "global race" for prosperity.

But Mr Miliband will accuse the Conservatives of pursuing a "race to the bottom", in which prosperity for a few is bought at the cost of worsening wages, conditions and workplace rights for the majority of workers.

Ed Miliband says he wants growth to benefit 'hard-working families'

Labour would instead offer "a race to the top", with support for small firms to become the wealth and job creators of the future.

"You've made the sacrifices. But you've not got the rewards. You were the first one into the recession, but you are the last one out," he will say.

"Will the pain be worth it for the gain under this Government? No. They aren't going to solve the cost of living crisis. Because for them, it is not an accident of their economic policy, it is their economic policy.

"David Cameron talks about Britain being in a 'global race'. But what he doesn't tell you is that he thinks the only way Britain can win is for you to lose.

"For the lowest wages, the worst terms and conditions and the fewest rights at work - a race to the bottom. The only way we can win is a race to the top."

Mr Miliband will say 80,000 big businesses have already benefited to the tune of £6bn in reductions in corporation tax under the coalition Government, while 1.5 million small firms will have seen their business rates rise by an average of almost £2,000 by the end of this Parliament.

Labour's decision to hold business rates at 2014 levels for two years would affect properties and commercial premises with an annual rental value of £50,000 or less.

The Labour leader out in Brighton at the weekend

This would mean some franchise-holders operating branches of major multinationals benefiting from the change.

The move would save small firms a total of £250m in 2015/16 and £540m in 2016/17, according to figures from the House of Commons Library.

Halting the 1% cut in corporation tax would raise an estimated £340m in the first year and £785m the next, but Labour insists that any extra money will be passed on in further cuts to business rates and not taken as additional tax revenue for the Treasury.

Explaining his decision to target tax breaks on small firms, Mr Miliband will say: "Most of the jobs of the future are going to be created in a large number of small businesses, not a small number of large businesses.

"And most of the new jobs that British people will be doing in 15 years' time will be in new companies.

"That's why we have to support our small businesses, the vibrant, dynamic businesses that will create wealth in Britain."

He will also caution activists at Brighton that a Labour government would not have funds to lavish on spending hikes.

"We won't be able to win the race to the top by spending money we don't have," he will say.

"You know and I know that the next Labour government will face tough times, and there's no point in pretending otherwise.

"We have to deal with the deficit and that means we need to win the race to the top in a different way, based on the jobs we create, the businesses we support, the talents we nurture, the wages we earn and the vested interests we take on."

:: Watch Mr Miliband's speech live on Sky News from 2.15pm.

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eBay And Argos Strike 'Click & Collect' Deal

eBay and Argos have joined forces to offer a 'click & collect' service as retailers rush to cash-in on the growth of online shopping.

At least 50 merchants using the online marketplace will participate in a trial of the service, which will enable eBay customers to collect their goods from a choice of 150 Argos stores.

The companies said the trial - expected to last six months - was delivering what customers wanted in terms of choice, convenience and speed as a study reported a continuing decline in store numbers on the UK's high streets.

Its statement cited research from Econsultancy that 40% of UK shoppers used some form of Click & Collect service over Christmas 2012.

Devin Wenig, President of eBay said: "At eBay we continue to find new ways to connect buyers and sellers.

Argos has been transforming itself towards a stronger online offering

"Traditional retail isn't going away; it is transforming. Smart retailers are innovating, re-imagining the store and what it means to shop.

We're proud to join Argos on this journey. Their unique store network and operating model is fit for serving customers in a digital future.

This exciting pilot takes us one step nearer to our goal of offering customers an inspired and seamless shopping experience."

John Walden, Managing Director of Argos added: "With the continuing growth of online shopping, customers increasingly expect faster, cheaper and more convenient fulfilment of their orders.

John Walden and Devin Wenig see strong demand for 'click & collect'

"Few companies move as many products as effectively as Argos through a national network of local stores, served by friendly and well-trained colleagues.

Having pioneered Click & Collect in the year 2000, it now accounts for around a third of our business and continues to grow.

"eBay, an innovator in digital and leading online marketplace connecting sellers and consumers, is already a strong partner with Argos and a logical partner for the trial.

"We look forward to assessing the opportunity for Argos to provide fulfilment for eBay's merchants, including the operational requirements, attractiveness to sellers and consumers, and opportunity for increased customer footfall."

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Centrica Shelves £1.5bn Gas Storage Plans

Britain's attempts to keep the gas supply from hitting dangerously low levels has been dealt a blow by British Gas owner Centrica after it shelved plans for two storage projects at a cost of £240m.

The country came within six hours of running out of gas in March after the prolonged spell of cold weather and there were warnings at the time that supply could be affected.

Centrica's decision to ditch the gas storage plans will leave the UK with only around 15 days of gas supply in storage - and make the country increasingly reliant on imported gas.

Germany has around 99 days of gas storage capacity and France has 122 days of supply.

The energy firm had planned a £1.5bn conversion of the Baird depleted gas field off the North Norfolk coast, which would have held 13.5 days of gas on peak demand.

It would have become Britain's second-biggest gas storage site and the projects would have created 1,000 construction jobs.

It also put on hold indefinitely its much smaller project to convert a depleted gas field at Caythorpe in East Yorkshire into a storage facility.

Michael Fallon has ruled out subsidies for storage schemes

Centrica had already spent £240m on acquiring the two sites, plus engineering costs.

The firm said the decision was taken after the Government announced it would not subsidise new gas storage projects.

Centrica said: "This decision was taken in light of weak economics for storage projects and the announcement by the UK Government on September 4 ruling out intervention in the market to encourage additional gas storage capacity to be built."

Centrica commissioned two reports on gas storage, which found subsidising it would have added between 40p and 80p a year to customers' bills over 25 years.

Energy minister Michael Fallon argued the decision not to subsidise gas will save consumers £750m over a decade.

A spokeswoman for the Department of Energy and Climate Change said: "The UK has the capacity to deliver twice the amount of gas required on a normal winter's day, and has coped well with recent extreme winter conditions. Gas storage, while important, only provides a small proportion of UK total supply.

"Subsidising storage risks adding significant costs to consumer bills, with the costs of the subsidy outweighing any benefits to security of supply."

Centrica is also reportedly planning to add an average of £100 to annual bills despite vowing earlier this year to use an earnings windfall from the cold weather to keep a lid on tariffs.

Earlier this year Centrica also pulled out of plans to build the next generation of new nuclear power plants in the UK, leaving French utility EDF to go it alone.

It comes as a report found that a third of households would like to change their energy provider for a firm offering a cheaper deal but are put off of doing so by the time it takes to switch.

According to independent provider First Utility, if a third of households in the UK did switch they would save £1.5bn on their energy bills.

Richard Lloyd, executive director of Which?, said: "Rising energy prices are consistently one of the top worries for consumers, yet we've found people are so bamboozled by the vast array of tariffs that consumers are paying a staggering £3.9bn a year more for their energy simply by not being on the best deals.

"People should switch to save, we've long called for faster, smoother switching."

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Tesco Launches Hudl Tablet Computer

Supermarket giant Tesco has launched its challenge to the iPad and the Kindle with its own tablet computer, the Hudl.

The Android-operated, seven-inch device is priced at £119, a snip compared to its Apple counterpart but on a par with the Google and Kindle offerings.

It has a high-definition widescreen display, nine hours of video battery life, and 16GB of memory, which can be extended to 48GB.

The Hudl goes on sale on September 30

The tablet, which comes in a range of four colours, goes on sale in 1,000 Tesco stores and on the website from September 30.

Its closest competitor on the market is the Kindle Fire, which retails at £99. I also has a seven-inch screen, and nine-hour battery life, but, crucially, has just 8GB of storage.

The iPad mini, with a 7.9-inch screen, starts at £269, but, like the Hudl, has 16GB of memory.

Company chief executive Philip Clarke promised the Hudl was the first stage of its entry into the tablet market, making a thinly veiled jab at the more expensive competitors by saying: "The digital revolution should be for the many, not for the few."

The Hudl has an in-built Tesco launcher button, which allows users to shop, see their Clubcard points, watch movies on Tesco's Blinkbox system, and listen to music.

It also comes with a range of in-built apps, including YouTube and Google Chrome, and users can download new apps on Google Play.

The tablet comes in black, blue, red and purple, has wifi, Bluetooth and a micro HDMI port.

Mr Clarke said: "Being online is an increasingly essential part of family life and whilst tablets are on the rise, usage is still quite limited.

"We feel the time is right for Tesco to help widen tablet ownership and bring the fun, convenience and excitement of tablets to even more customers across the UK."

Tesco said that the Hudl had been designed from scratch taking into account what customers wanted.

The machines have been built by a manufacturing partner based in China, which also manufactures products for Microsoft, HP, Blackberry and Sony.

Microsoft is expected to announce new Surface tablet computers, including a version with a smaller screen to compete with the iPad mini at an event in New York on Monday.

The original Surface launched in October but sales have been slow.

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Labour Wants Bank Levy Hike To Fund Childcare

Working parents with children aged three and four would receive 25 hours of free childcare a week under new Labour plans.

Shadow chancellor Ed Balls has pledged pledge to increase the hours covered by state funding from 15 to 25, where a single parent or both parents work.

The move, in his keynote speech to the Labour party conference in Brighton, comes after another proposal to extend childcare at primary schools from 8am to 6pm.

Under Labour's plans, which it suggests would be funded through an increase in the bank levy, the 15-hour early years entitlement would also remain universal.

Ed Balls and Rachel Reeves at a nursery on Monday

Mr Balls also attempted to underline the party's "iron discipline" on spending amid claims there is a £27bn black hole in its plans.

As he and Ed Miliband struggle to restore public trust in Labour on the economy, he told delegates the party has to be "straight" with the country about the action needed.

He has written to the Office for Budget Responsibility (OBR) to ask for an audit of its spending commitments but the watchdog cannot go ahead under its current remit.

Ed Balls playing football on Sunday

Mr Balls now wants parties to unite and push for change so that the body is able to scrutinise the opposition as well as Government, claiming it is about "rebuilding trust".

Tory Sajid Javid, who has released Treasury analysis suggesting Labour promises would require more than £1,000 in extra borrowing per household in 2015, called the move a "stunt".

The Treasury minister said: "Ed Balls knows this is not allowed under the Budget Responsibility Act and the OBR's Charter, so this is just a stunt to try and distract attention from the fact that Labour have been found out for making unfunded commitments that would just mean more borrowing and more debt.

"Nothing has changed - it's the same old Labour. Ed Balls and Ed Miliband still want more spending, more borrowing and more debt - exactly how they got us into a mess in the first place."

OBR chairman Robert Chote also warned there would be "practical issues" if its remit was altered, with questions about resources and access to the right data.

However, some have suggested asking the OBR to assess the credibility of Labour policies would simply be an extension of what already takes place.

The Prime Minister's spokesman said there was an "established process" allowing ministers to ask Treasury officials to cost opposition ideas.

This was used by Mr Javid to examine Labour's policies and led him to make the claim about a £27.5bn black hole of unfunded plans.

The tool has been used by all sides - Labour asked for 38 Tory policies to be costed before the last election, including moves on inheritance tax and stamp duty.

The idea has been put forward by Mr Balls in apparent recognition that Labour still has much to do win back the public's trust on the economy.

Its conference is focused on the cost of living as it seeks to argue that the recovery is not translating into any change for struggling British families.

Mr Balls claimed the Government's bank levy has raised £1.6bn less than the coalition promised and that institutions paid £2.7bn less in overall tax in 2011 compared to 2010.

"At a time when resources are tight and families are under pressure that cannot be right," he told delegates.

"So I can announce today the next Labour government will increase the bank levy rate to raise an extra £800m a year.

"And we will use the money, for families where all parents are in work, to increase free childcare places for three and four- years-olds from 15 hours to 25 hours a week.

"For the first time, parents will be able to work part-time without having to worry about the cost of childcare."

The shadow chancellor admitted that Labour will face some "tough choices" if it regains power in 2015, and will not be able to reverse all of the Government's measures.

He said growth and jobs "cannot magic the whole deficit away at a stroke" and that the coalition's spending totals for 2015/16 would have to be Labour's "starting point".

"Any changes to the current spending plans for that year will be fully funded and set out in advance in our manifesto," he promised.

"There will be no more borrowing for day-to-day spending. And we will set out tough fiscal rules - to balance the current budget and get the national debt on a downward path."

He added: "We won't be able to reverse all the spending cuts and tax rises the Tories have pushed through. And we will have to govern with less money around. The next Labour government will have to make cuts, too."

Ahead of the speech, he dismissed the Conservative claim about a billion-pound funding gap in his tax and spending plans.

"There are no uncosted spending commitments," he insisted on ITV's Daybreak. "There will be no more day-to-day borrowing from Labour in 2015."

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BlackBerry Slashes Jobs In Face Of $1bn Loss

BlackBerry has confirmed it will cut 40% its global workforce as it said it expects to report that it has lost almost $1bn in its second quarter.

The smartphone company said it will lay off 4,500 employees as it tries to slash costs by 50% and shift its focus back to competing mainly for the business customers most loyal to its brand.

The Canadian-based firm had been scheduled to release its net earnings for the quarter next week but warned on Friday that it expects to post a staggering loss of between $950m and $995m.

Shares in the company plunged as low as $8.01 when the stock reopened for trading on Friday, before closing down 17% at $8.72.

Thorsten Heins, president and CEO of BlackBerry, said in a statement: "We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."

BlackBerry boss Thorsten Heins says the changes are hard but 'necessary'

BlackBerry said last month that it would consider selling itself and reiterated on Friday that a special committee of its board of directors continues to "evaluate all options".

The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007. Since then, BlackBerry has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10. The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand, but BlackBerry's market share continues to lag behind its rivals.

BlackBerry, formerly known as RIM, was once Canada's most valuable company with a market value of $83bn in June 2008.

Canada's industry minister James Moore said in a statement: "Our thoughts are with those who have lost their jobs at BlackBerry, it is always a cause for concern for our Government."

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City Funds In Last-Ditch Bid For RBS Branches

By Mark Kleinman, City Editor

A consortium of City investors has tabled a last-ditch bid to win control of 315 Royal Bank of Scotland (RBS) branches by pledging a substantially-higher payment to the taxpayer-backed lender.

Sky News understands that W&G Investments, a vehicle set up specifically to buy the branch network, tabled a revised offer within the last 48 hours even as RBS began leaning towards backing a rival bid involving the Church of England's pension fund.

The revised offer is not understood to include a substantial hike to the £1.1bn up-front cash payment promised by W&G in its original bid.

However, it is said to have altered its proposal to mean that RBS would receive additional payments on completion of a deal that would take the total value of its offer to well over £1.5bn.

Headed by Andrew Higginson, a former Tesco finance director (and non-executive director of BSkyB, the owner of Sky News), W&G's backers include leading fund managers such as Old Mutual, Schroders and Threadneedle.

RBS favours an alternative bid from a consortium led by Corsair Capital, an investment firm whose executives include Lord Davies, the former trade minister.

The branch network is being sold under the state aid deal that resulted from RBS's bail-out by British taxpayers in 2008, with the bank set a deadline of this autumn to offload it.

However, RBS is keen to retain a stake in the branches to share in a potential increase in value ahead of a flotation in what amounts to a bet on the recovery of the UK economy.

Unlike W&G's proposal, which would involve an outright takeover of the RBS branch network, the Corsair bid would entail buying just 49% with the remainder being listed on the stock exchange at an unspecified future date.

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets, 250,000 small business customers and approximately 5,000 staff.

W&G and RBS both declined to comment.

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Food Price Rises 'A Source Of Stress'

Rocketing food prices are a "source of stress" for four in 10 UK consumers, while a third say they are struggling to feed themselves or their family.

Almost eight in 10 shoppers (78%) are worried about the increasing cost of food, with almost half (45%) spending a larger proportion of their available income at the supermarket compared to a year ago, the survey of 2,028 consumers for Which? found.

Food prices have risen over and above general inflation by 12.6% over the past six years, according to the Office of National Statistics, while incomes have stagnated.

The poll found 60% are worried about how they will manage their future spending on groceries if prices continue to rise.

A separate survey by the consumer watchdog found one million more households are feeling financial pressure compared to a year ago, leaving 9.5 million households struggling to cope with the cost of living.

It found 40% are likely to cut back spending on food in the next few months.

Richard Lloyd, Which? executive director, said: "While people seem to have accepted their grocery bill going up, stagnating incomes and rocketing food prices are causing stress and worry and leaving people wondering how they are going to cope.

"Supermarkets need to make it much easier for consumers to spot the best deal by ensuring pricing is simple and making special offers genuinely good value for money.

"Politicians need to put consumers at the heart of their economic policies to tackle the rising cost of living and to support growth and prosperity."

Dan Crossley, executive director of the Food Ethics Council charity, added: "As the global food system becomes more deeply trapped in the strangleholds of resource constraint, climate change and population growth, rising food prices are an almost inevitable fact of life.

"Food businesses and government need to start planning now for that future by taking urgent action to tackle the issue of food affordability, including the introduction of measures such as a living wage.

"They also need to develop robust policies that make healthy food affordable, rather than peddling 'cheap' food that is costing us dear in terms of our health and our environment."

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Buying A House 'Cheaper Than Renting'

Home buyers are almost £900 better off a year than those who rent - but an upturn in house prices means the gap has narrowed in recent months, a report has found.

Research by Halifax, which based its calculations on its own database as well as official figures, found that people buying a three-bedroom house face typical costs of £672 a month, which is £73 less than the average £745 a month cost of renting.

Five years ago, renting was considered much more financially attractive than buying, but home buying costs have since fallen by more than a third, meaning that buying has become cheaper than renting.

Falls in house prices following the economic downturn combined with low mortgage rates in the low interest rate environment have all contributed to the about-turn.

Meanwhile, rental costs have been pushed higher by strong demand in the sector, as many renters have struggled to get on to the property ladder.

But a return to activity in the housing market has pushed house prices up, which means that the gap between buying and renting costs has narrowed from a difference of £78 a month one year ago.

Halifax recently reported that prices nationally have risen by 5% over the last year. Other reports have recently put prices in London at around 10% higher than they were a year ago.

People living in London and Northern Ireland have the most to gain from buying rather than renting, the research suggested. The gap in percentage terms is biggest in Northern Ireland, at 11%. Buying in Northern Ireland costs £369 a month on average, while renting costs £415.

In cash terms, Londoners have the most to gain from being on the property ladder, with a saving of almost £100 a month.

Wales and Yorkshire and the Humber were the only areas of the UK where renting was found to be more affordable than buying. In Scotland, buying was found to work out £27 a month cheaper than renting.

Martin Ellis, housing economist at Halifax, said: "A combination of lower mortgage rates and declining house prices has substantially reduced the cost of buying over the past six years.

"Nevertheless, the number of home buyers in the 12 months to June 2013 was nearly half of that in 2008, which will have been constrained by worries over job security."

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BlackBerry Slashes Jobs In Face Of $1bn Loss

BlackBerry has confirmed it will cut 40% its global workforce as it said it expects to report that it has lost almost $1bn in its second quarter.

The smartphone company said it will lay off 4,500 employees as it tries to slash costs by 50% and shift its focus back to competing mainly for the business customers most loyal to its brand.

The Canadian-based firm had been scheduled to release its net earnings for the quarter next week but warned on Friday that it expects to post a staggering loss of between $950m and $995m.

Shares in the company plunged as low as $8.01 when the stock reopened for trading on Friday, before closing down 17% at $8.72.

Thorsten Heins, president and CEO of BlackBerry, said in a statement: "We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."

BlackBerry boss Thorsten Heins says the changes are hard but 'necessary'

BlackBerry said last month that it would consider selling itself and reiterated on Friday that a special committee of its board of directors continues to "evaluate all options".

The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007. Since then, BlackBerry has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10. The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand, but BlackBerry's market share continues to lag behind its rivals.

BlackBerry, formerly known as RIM, was once Canada's most valuable company with a market value of $83bn in June 2008.

Canada's industry minister James Moore said in a statement: "Our thoughts are with those who have lost their jobs at BlackBerry, it is always a cause for concern for our Government."

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Barclays £1.3m Cyber Raid: Four Due In Court

Four alleged cyber plotters accused of stealing £1.3m from a high street bank by taking control of its computer system are due to apear in court later.

It follows the arrest of eight men suspected of targeting a branch of Barclays bank in Swiss Cottage, north London.

Tony Colston-Hayter, 47, of Seymour Street, Marylebone, central London, is charged with conspiracy to steal.

Michael Victor Harper, a 26-year-old estate agent of Kiln Place, Hampstead, northwest London, Darius Bolder, 34, and Lewis James Murphy, 29, both of Ebury Bridge Road, Chelsea, central London, are accused of conspiracy to commit fraud by false representation.

Bolder also faces an additional charge of conspiracy to steal.

All have been remanded in custody until their appearance at Westminster Magistrates Court.

The other four men have been bailed to a central London police station on dates in late November pending further inquiries.

Police carried out a secret intelligence operation following the theft in April.

It is believed somebody posing as an engineer planted a "keyboard video mouse" (KVM) - which can be purchased online for as little as £10 and is the size of a small laptop computer - at the branch.

That allowed thieves to transmit the contents of the computer's desktop, take control of the machine remotely and access accounts.

Alex Grant, Barclays' managing director of fraud prevention, said the bank "acted swiftly to recover funds" on the day of the theft and that no customers suffered financial loss.

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Retail Sales Slow After July Heatwave

Consumers reined in their spending in August after July's heatwave had boosted demand for food and sales of outdoor goods.

The Office for National Statistics (ONS) said retail sales volumes tumbled by 0.9% on the month.

Economists had expected an increase, given continuing good weather in August and high numbers of people taking their holidays at home in the UK.

But the fall meant the annual rate of growth slowed to 2.1% - supporting recent caution among retailers about a recovery on the high street.

Food sales - which lifted strongly in July amid the heatwave - fell 2.7% on the month, reversing the previous month's gain.

However, fashion retailers did better as sales across textile, clothing and footwear shops climbed 1.1% and department stores rose 1% month-on-month.

Internet and mail order retailing saw high growth of 30.4% compared to the same period last year, when sales were hit as consumers watched the Olympics and Paralympics.

Chris Williamson, chief economist at Markit, said: "Consumers pulled back on their retail spending after a spending spree in July, but retail sales are still trending higher at the fastest rate since mid-2007, meaning the economy looks set to have grown strongly in the third quarter."

Rising house prices, record low mortgage rates and signs of economic recovery had been thought to have given consumer spending a boost.

But economists had also warned that the July performance was unlikely to be sustainable because inflation continues to outpace wage growth.

The retail sector, which accounts for 6% of the UK economy, has largely reported improved earnings but no big names had witnessed a huge change in spending attitudes as budgets remained tough.

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Rip-Off Pensions: OFT Calls For Shake-Up

Changes to the pensions market are needed to make sure millions of workers are not sinking cash into schemes that are bad value for money, the Office of Fair Trading (OFT) has said.

The trading watchdog disappointed consumer groups by not to referring the market to the Competition Commission or recommending a cap on charges, instead making a string of recommendations to shake up the sector.

The OFT, which has been examining the £275bn defined contribution (DC) pensions market, said it had agreed a package of reforms with companies and The Pensions Regulator as the auto-enrolment programme expands.

It will gradually see all workers aged between 22 and the state pension age, who are not members of a workplace pension, being signed up to one under the Government's plans to head off a looming retirement savings crisis.

The OFT said the Government should look into improving the transparency of pension schemes to make it easier for employers to choose the best scheme for their workers.

The pensions minister Steve Webb has pledged to act on the findings

It found that employers "often lacked the capability or the incentive to assess value for money".

The watchdog also called on ministers to look at banning schemes being used for automatic enrolment which ramp up management costs for people when they stop contributing to their pension, perhaps because they have changed jobs.

It identified a risk of savers losing out in two parts of the market - in what it said were "old and high charging contract and bundled trust schemes" and in smaller trust-based schemes because of "low levels of trustee engagement and capability".

The Pensions Regulator, the OFT said, had agreed to take "rapid action" to look at whether the smaller schemes were delivering good value and Government had agreed new enforcement powers to clamp down on them.

The Association of British Insurers was to begin an immediate audit of the old and high-charging schemes, which the OFT said contained around £30bn of savings.

Minister for Pensions Steve Webb said: "This report outlines further important ways to help consumers, and we will act on its recommendations.

"In particular, we need to ensure those already in pension schemes are getting good value for money, and will be actively involved in the audit of pension schemes sold prior to 2001.

"We will consult shortly on minimum scheme standards, including further action on charges."

But consumer groups suggested the report was a disappointment.

Which? executive director Richard Lloyd said: "Unfortunately the Office of Fair Trading's recommendations don't go far enough to prevent billions of pounds of consumers' money from languishing in poor value schemes.

"People need to see a difference today and be confident in the pension scheme that they're automatically enrolled into, so that they're encouraged to save for their retirement.

"The Government must go further and set high-quality minimum standards for all workplace pensions as soon as possible, including a cap on all charges."

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Asos: Fashion Retailer Unveils 'Stunning' Figures

Online fashion seller Asos has revealed a huge rise in sales, up 40% on last year.

The fast-growing British business has bucked the trend on the traditional high street and seen even higher growth than its online rivals.

The firm, which targets young women seeking to emulate the designer looks of celebrities such as singer Rita Ora, has seen customer numbers grow to more than seven million.

It has tapped into demand from value-seeking twentysomethings for both branded and own-label products and expanded into overseas markets. Two-thirds of its sales now come from outside the UK.

Asos likes the style of Rita Ora

Total sales for the year were £753.8m, driven by strong growth in countries such as the US, France, Germany, Italy and Spain, where Asos has dedicated websites and 'in-country' teams, the company said.

It is aiming for annual sales of £1bn by 2015.

Shares in the company, which have more than doubled over the past year, rose sharply on news of the figures. They were up 10% at one stage on Wednesday's closing figure of 4,833p, which valued the business at £3.9bn.

Analysts have described the company's final quarter results as "stunning".

Michelle Obama is a fan of Asos

Asos, whose celebrity fans include Michelle Obama, plans to strengthen its overseas business with the launch of a Chinese-language website in October.

Founded as As Seen On Screen Ltd in 2000 and floated on the Alternative Investment Market (Aim) a year later, Asos is the biggest success story of British retailing in recent years.

Earlier this year it announced a tie-up with Primark, allowing the budget fashion chain to sell clothes on the internet for the first time.

The firm was hit by a high-profile departure in the summer when former Marks and Spencer executive Kate Bostock walked out after just six months, saying Asos "isn't the right place for me".

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Retirement: One In Five Will 'Never Stop Work'

By Rhiannon Mills, Sky News Reporter

One in five Britons now fear that they will never be able to stop working because of shortfalls in their pensions and savings, according to a new report.

The survey, carried out by HSBC, warns that the UK is heading for an "Age of the Unretired", with pensioners in Britain more gloomy about their future prospects than those in other countries around the world.

The global survey, which questioned 16,000 people in 15 countries, shows that 19% of those asked in the UK expect that they will never be able to afford to retire fully.

In America the figure was 18%, in France and Hong Kong it was 12%, but in Brazil - one of the world's new fast-growing economies - only 5% think they will never retire properly.

It is also perhaps not surprising Brits are so downbeat, with nearly half of the British pensioners questioned saying their retirements had not turned out as they had planned, because they have less money to live on than hoped.

Darren Flip, from the National Association of Pension Funds, was not surprised so many are finding themselves short on funds later on in life.

He said: "The Government's own figures suggest that seven million people aren't saving enough for their retirement.

"Also people are living longer, so any money they do save has to last longer and we know that the economic environment hasn't been great over the past years so investments in pensions haven't been what people expected.

"It's tough out there for people."

Christine Foyster, head of wealth management at HSBC, said: "Today's workers should prepare for retirement as early as possible to have some certainty for retirement. 

"Life is full of reasons to prioritise short-term spending over longer-term planning, but the sooner people start saving, the less likely they will have to rely on working in old age."

Raj Bhudia from London is 42 and works for a bank.

Despite working since he was 16 and financially planning for the future, he believes a restful retirement is some way off.

He told Sky News: "I think everyone is going to have to work beyond 65 or 70, because whatever little pensions we do have are not going to be enough to retire on and obviously the Government pension is not there either.

"My sons, they are going to university. They will be coming out with debts so hopefully we can help them, which means we won't have enough money to retire on and we'll have to work longer."

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