Energy Debts: Amount Families Owe Mounts

The number of families in debt to their energy supplier is rising, with around one in five households owing money, a study suggests.

Collectively, Britons are estimated to owe £637m to energy firms, which is £159m more than last year's projections, comparison website uSwitch said.

Some 20% of bill payers surveyed by the website, equating to more than five million households nationally, are in debt to their energy supplier after falling behind with payments or due to discrepancies between estimated bills and actual amounts.

This figure is up from 14% when similar research was carried out last year.

The latest survey of more than 2,000 bill payers in February found that the typical amount owed is £8 less than it was a year ago, at £123.

But a recent string of price hikes by energy companies combined with the unseasonably chilly weather could see the size of people's energy debts shooting back up again, the study warned.

The average annual household energy bill has risen by almost £100 in the space of a year, adding to the pressure on families as wages remain stagnant.

The website said the typical bill now stands at £1,353 a year, which is around £830 higher than it was in 2004.

This sum is based on a consumer who uses a medium amount of electricity and gas on a standard dual fuel bill, paying quarterly by cash or cheque.

Just over one fifth of those in debt to their supplier said they were turning a "blind eye" to what they owe in the hope that the amount will go down naturally over time.

A similar proportion plan to pay off a big lump sum, while one in 12 people in debt said they would need to try and agree a repayment plan with their supplier.

Ann Robinson, director of consumer policy at uSwitch, said: "The soaring number of households in debt to energy suppliers is a clear indication of the pressure people are coming under just to meet the cost of their basic bills."

She said ways that people could cut down on their costs included paying by direct debit as suppliers tended to offer discounts for paying in this way.

And consumers should also make sure that someone was taking regular meter readings, as relying on estimated bills can be a "shortcut to debt".

A Green Deal scheme has recently been launched by the Government, which allows people to make energy efficiency improvements such as loft insulation or double glazing at no up front cost. Repayments are then to be added to the property's energy bill over a period of time.

Last week, utility giant SSE was handed a record £10.5 million fine by regulator Ofgem for "prolonged and extensive" mis-selling.

SSE provided "misleading and unsubstantiated statements" to potential customers about prices and savings that could be made by switching to SSE, according to Ofgem.

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Hi-Tech Firms Join Forces Against Google

A group of companies led by Microsoft has asked European officials to investigate Google over alleged unfair practices in the mobile smartphone market.

"FairSearch" - which consists of 17 hi-tech firms including Microsoft, Nokia, Expedia, TripAdvisor and Oracle - has claimed that the internet giant acted unfairly with its Android operating system.

"We are asking the commission to move quickly and decisively to protect competition and innovation in this critical market," Thomas Vinje, Brussels-based counsel for FairSearch, said in a statement.

"Failure to act will only embolden Google to repeat its desktop abuses of dominance as consumers increasingly turn to a mobile platform dominated by Google's Android operating system."

FairSearch said it had filed a complaint with the commission, charging that the internet giant wanted Android operators to use its leading applications such as Maps or YouTube.

It said Google's Android is the dominant smartphone operating system, accounting for 70% at the end of 2012, while it had 96% of mobile phone search advertising.

Samsung's S4 is the flagship Android smartphone device

A spokesman for Google told Sky News: "We continue to work cooperatively with the European Commission."

Google has been under investigation by the commission for practices related to its dominance of online search and advertising markets since 2010.

Last week, six European countries including France and Britain, launched joint action against Google to try to get it to scale back new monitoring powers that watchdogs believe violate EU privacy protection rules.

The European Commission is not obliged to take any action other than reply to the complaint.

Android operating systems have the largest share of the smartphone market, followed by those made by Apple. Blackberry, Microsoft and others are far behind.

The European move comes as Taiwain's HTC saw its shares rise 1.5% even though the smartphone maker posted a record-low quarterly profit.

HTC's first-quarter net profit slumped 98% from a year earlier after sales suffered from the delayed launch of the company's new flagship smartphone.

The phonemaker saw its net profit fall to 85m New Taiwan dollars (£1.85m) for the quarter ending March 31, down from NT$4.47bn (£97m) a year earlier.

:: During 2010 HTC was the biggest seller of smartphones in the US operating on the Android system.

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UK Manufacturing Output Gets February Boost

UK manufacturing output rose 0.8% in February as it rebounded from a snowy January, according to official figures.

The increase was almost double economists' forecasts and comes after a 1.9% drop in the previous month.

The Office for National Statistics (ONS) said overall industrial output in Britain rose 1%, which was also above forecasts.

The encouraging February figures come as concerns continue about the risk of Britain sinking into a so-called triple-dip recession.

However, the balance of trade in February reached £9.41bn as imports exceeded exports of British goods.

The imbalance was up 15% on January's trade figure and the lowest value of goods exported since June.

Sky News Economic Editor Ed Conway said: "The trade deficit has deteriorated over the course of the recession.

"The concern is the UK's recovery has not been allowed to fully take place, partially because there isn't an appetite in Europe for Britain's goods."

The ONS figures also showed the smallest year-on-year fall in manufacturing output since July and the biggest quarter-on-quarter rise in industrial production since September.

James Knightley, from ING, added: "With the UK's largest oil and gas field coming back on-stream in March, likely leading to another positive gain in output, we are more optimistic that the UK can avoid its third technical recession in five years.

"Unfortunately, February's trade numbers were not as good with the trade deficit posting a sharp widening, largely due to disappointing trade with the eurozone."

The overall industrial production increase was led by the mining and quarrying sector, which rose by 2.8%.

Gas and electricity were up 1.3%, boosted by an increasing demand on energy during cold weather, as temperatures lingered well below the monthly average.

It was the biggest month-on-month rise in the production of electricity and gas since October.

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Total UK Wealth Tops £7trn As Rich Get Richer

Total household wealth in the UK has soared past the £7trn mark for the first time but society is becoming more divided, according to new research.

Net wealth - the value of residential buildings and financial assets less outstanding debts - is estimated to have hit £7.05trn at the end of 2012.

But the increase has not been shared equally between the top and bottom rungs of society, with the top 10% accumulating wealth at a much greater rate.

Researchers for Lloyds TSB Private Banking said that despite the current tough state of the economy, there has been a £2.71trn increase over the past decade, equal to a gain of £86,000 per household since 2003.

Lloyds said a rise in financial assets has boosted the increase in household wealth over the last decade, contributing £1.7trn to the overall rise.

The value of household wealth has grown at a faster rate (62%) than either gross household disposable incomes (44%) or the consumer price index (29%), since 2002.

Financial assets include bank and building society deposits, government bonds, shares in listed companies, life assurance and pensions.

Meanwhile, housing wealth has increased by £1trn over the past decade as the value of property has risen by more than the increase in mortgage debt.

Lloyds economist Nitesh Patel said: "Most of this increase came during the 'boom' years prior to 2007 when the economy grew rapidly, with rising employment and incomes."

However not everyone has gained equally with the stratification of society strengthening, according to the research.

"While wealth has soared in the past decade, there is a large divide in where it has accumulated," Mr Patel said.

"The wealthiest 10% of households hold 22 times more wealth, on average, than those in the bottom half."

Lloyds used official figures as well as those from its own database to make its findings.

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Banks Braced For £600m City Regulation Bill

By Mark Kleinman, City Editor

Britain's big banks will this week be asked to pay tens of millions of pounds a year more towards the cost of regulating the financial sector under the coalition's new "twin peaks" system of supervision.

I understand that the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), which took over responsibility for City regulation last week, will outline plans to charge a total of approximately £600m in fees to major banks, brokers and insurers - a hike of more than 20% on last year's figure.

The "fee blocks" for different categories of City firms will be published in consultation papers by the two new watchdogs.

Insiders say they are set to increase the aggregate amounts payable by the biggest universal banks such as Barclays and Royal Bank of Scotland by tens of millions of pounds annually, representing a substantial chunk of the fees increase.

"The PRA's remit is to focus on the major risks within the financial system, and the biggest banks are at the centre of that focus," a source said.

Under the Financial Services Authority (FSA), the predecessor body to the FCA and PRA, the financial industry paid £489.1m last year to its regulator.

The big banks paid on average between £20m and £30m each, according to previously-published figures, whereas under the new regime they are expected to pay in the region of 25% more.

Although the overall budget increase had been anticipated, the extent to which big banks would be forced to stump up for it was unclear until now.

Last week, the FCA set out plans to charge £391.5m in fees, a figure which included a discount based on the recouping of some enforcement costs. The regulator is responsible for supervising the behaviour of 26,000 firms.

The PRA, which is part of the Bank of England and employs 1300 staff supervising 1,400 banks and insurers, will announce its budget and fee proposals on Tuesday.

Andrew Bailey, the PRA chief executive, told the Treasury Select Committee recently that "the starting point was to set a budget for the PRA in its first year which is no higher than what we think the PRA would have cost during the next year under the current FSA set-up".

That comment implied that the PRA's budget in 2013-14 could be no higher than £235m. Insiders said the actual figure to be disclosed would be lower, and probably in the region of £210m.

The PRA has previously set out its approach to levying fees, but the consultation will shed the first light on exactly how much the big banks will be liable to pay.

"In April 2013, the Bank will explain the allocation of the PRA's annual funding requirement across the six categories of firms that it will prudentially regulate, and consult on the fee rates proposed for firms in the fee blocks. Firms will have two months to respond to the proposals," the PRA said recently.

Chancellor George Osborne is taking steps to prevent the financial industry benefiting from fines paid by regulated firms.

Under the FSA, fines levied for misconduct were used to reduce the following year's fee pool, but under the new Financial Services Bill, the FCA must pay all penalty income directly to the Exchequer.

The major banks are unlikely to criticise the fees increase publicly, given that the new bill confronting them will still be modest in the context of their operating income.

The FCA and PRA declined to comment further ahead of the announcements.

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Luxembourg 'May Ease' Bank Secrecy Laws

Luxembourg has said it is prepared to ease its banking secrecy rules and work more closely with foreign authorities amid a crackdown on tax havens.

Its finance minister, Luc Frieden told Germany's Frankfurter Allgemeine Sonntagszeitung of the possible shift in policy.

He said there was an international trend towards automatically exchanging information about depositors, adding: "We no longer strictly reject this, in contrast to before."

"Luxembourg does not rely on clients who want to save tax," he said.

Last month's 10bn euro (£8.5bn) bailout of Cyprus, whose banking system was swollen by foreign deposits attracted by low taxes and easy regulation, has put the spotlight on tax havens.

Australia has warned 2,000 top firms that their tax arrangements are to be revealed, while Britain has pushed for bank secrecy changes.

Prime Minister David Cameron and Chancellor George Osborne have both urged the G20 group of countries to improve transparency.

Some firms have been criticised over 'transfer pricing', where local divisions must buy goods and services from a parent firm - often from a small office in places such as Luxembourg.

Austria and Luxembourg are the only European Union states that do not share with other EU members the identities of EU residents with cross-border bank accounts.

German finance minister Wolfgang Schaeuble said he was pleased with the comments from Luxembourg.

"I welcome every step towards automatic information exchange," he told the Saarbruecker Zeitung newspaper.

Amid growing outrage over the scale of tax evasion, Mr Schaeuble said last week that Berlin would push the EU to take legal measures against tax havens.

The German government this weekend also urged several German publications to hand over details they have obtained on suspected tax cheats.

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US New Jobs At Lowest Level For Nine Months

US Jobs Figures Are Deeply Worrying

Updated: 4:04pm UK, Friday 05 April 2013

By Ed Conway, Economics Editor

Americans are dropping out of the jobs market, and fast. That's the depressing takeaway from today's non-farm payroll report.

The overall participation rate – a measure, essentially, of the proportion of people of working age either in a job or looking for one – has fallen to the lowest level since 1978.

It is, as far as employment experts are concerned, a deeply worrying signal: increasingly, potential workers are giving up on getting work, dropping out of the jobs market instead of attempting to find a new position.

In fact, as you can see from the chart, participation has been falling since the turn of the millennium, though it's only in the wake of the financial crisis that the drop has become more vertiginous.

Why be concerned about this? Well, a high participation rate has typically been seen as evidence of the American economy's strength – a complement to its high productivity rate and consistently-strong GDP growth rate.

A low participation rate, on the other hand, is often evident in economies which are more sclerotic and less efficient – particularly ones with over-generous welfare states which some think discourage people from working.

So, for instance, Japan and Spain both have participation rates below 60%: Germany's has only just tipped fractionally above it.

The reality is that now, for the first time since 1977, America's participation rate, at 63.3%, is lower than Britain's, which is 63.6%, or was in the three months to the end of January.

It would be nice to claim that this was because Britain was in some way becoming leaner and meaner, but the statistics suggest otherwise: Britain's participation rate has remained steady since 2005 while America's has fallen sharply as people leave the workforce.

It might be odd, having said all of the above to say that today's nasty US jobs report (the headline, by the way, was that a mere 88,000 net jobs were added in March – well below the rise in the population) also technically make it more likely that the Federal Reserve will scale back its stimulus.

But in one sense they do. The Fed has committed to more quantitative easing, buying up $85bn (£55.8bn) of debt each month until the unemployment rate drops below 6.5%.

But because unemployment measures the number of working people as a percentage of the total workforce, it can fall as a direct result of the workforce falling – and that's what happened this time, with the rate dropping from 7.7% to 7.6%.

Now, pragmatically speaking the Fed will try to "look through" this optical illusion. But it's an important reminder that when you tie your monetary policy to a very specific number, it doesn't always make it easy to predict future moves from the central bank.

Mark Carney, who is coming in as Bank of England Governor this summer and has nodded approvingly over at what the Fed has been doing, should take note.

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Axminster Rescue To Save 100 Devon Jobs

By Mark Kleinman, City Editor

One of Britain's oldest carpet-makers is to be rescued in a deal that will preserve about 100 jobs in the south-west of England.

I understand that Axminster Carpets, which traces its roots back to 1755, will be bought out of administration by a local consortium. An announcement about the deal is expected.

The consortium is being led by Stephen Boyd, a businessman who chairs Pittards, a major leather supplier, and includes backing from Centric Commercial Finance, an invoice discounting and asset-based lending group.

Axminster fell into administration last month, citing difficult trading conditions, with the loss of about three-quarters of the company's 400-strong workforce.

A supplier to Clarence House, 10 Downing Street and the Royal Albert Hall, the carpet-maker was founded by the Whitty family in the 1750s, and gave rise to what became known as the Axminster method of weaving.

After going out of business in the 1830s, it was subsequently revived a century later.

Joshua Dutfield, grandson of the founder of the current incarnation of Axminster, is expected to remain involved with the company following the rescue deal.

Axminster's collapse sparked an emotional response in Devon, with thousands of people signing a petition aimed at saving the company.

A spokeswoman for Axminster declined to comment ahead of the announcement. Duff & Phelps, which has been handling the administration, could not be reached for comment.

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Cable 'Wants Investigation Into HBOS Life Bans'

An investigation is to be launched into whether the three former HBOS directors blamed for the banking group's collapse can be banned as company directors for life, it has been reported.

The Business Secretary has asked his officials to see if there is enough evidence against Lord Stevenson, the former HBOS chairman, Sir James Crosby, the former chief executive, and Andy Hornby, his successor, to start a formal probe under the Company Directors Disqualification Act.

Vince Cable told The Sunday Times it was the first step in a process which could lead to the three - who have so far not faced formal sanction - being barred from acting as company directors.

The move comes in the wake of a damning report into the collapse of the bank by the Parliamentary Commission on Banking Standards published on Friday.

The group was given a £20.5bn bailout

It found Sir James was the "architect of the strategy that set the course for disaster" and held primary responsibility for the collapse along with former chairman Lord Stevenson and fellow chief executive Andy Hornby.

Their "toxic" misjudgments led to the bank's downfall and a £20.5bn taxpayer bailout at the height of the financial crisis and they should never be allowed to work in the financial sector again, according to the influential commission of MPs and peers.

Mr Cable told The Sunday Times: "It's quite a legalistic process. I can ask (officials) to look at whether the companies investigations branch take action.

"We do have this power which I have begun to initiate."

Sir James stepped down from his role as a member of Bridgepoint's European Advisory Board on Friday but remains chairman of the car credit company Money Barn and a senior independent director for Compass, one of the country's largest catering firms, according to company spokespeople, as well as a trustee for Cancer Research UK.

Mr Hornby's current employer, Gala Coral, has said he has their "complete backing" as chief executive.

Sir James and Lord Stevenson have so far retained their titles, though the Royal Bank of Scotland's disgraced former boss Fred Goodwin was stripped of his knighthood.

Peter Cummings is the only former HBOS director to have been penalised by the Financial Services Authority, after being fined £500,000 and banned for life from working in the City last September.

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US New Jobs At Lowest Level For Nine Months

US Jobs Figures Are Deeply Worrying

Updated: 4:04pm UK, Friday 05 April 2013

By Ed Conway, Economics Editor

Americans are dropping out of the jobs market, and fast. That's the depressing takeaway from today's non-farm payroll report.

The overall participation rate – a measure, essentially, of the proportion of people of working age either in a job or looking for one – has fallen to the lowest level since 1978.

It is, as far as employment experts are concerned, a deeply worrying signal: increasingly, potential workers are giving up on getting work, dropping out of the jobs market instead of attempting to find a new position.

In fact, as you can see from the chart, participation has been falling since the turn of the millennium, though it's only in the wake of the financial crisis that the drop has become more vertiginous.

Why be concerned about this? Well, a high participation rate has typically been seen as evidence of the American economy's strength – a complement to its high productivity rate and consistently-strong GDP growth rate.

A low participation rate, on the other hand, is often evident in economies which are more sclerotic and less efficient – particularly ones with over-generous welfare states which some think discourage people from working.

So, for instance, Japan and Spain both have participation rates below 60%: Germany's has only just tipped fractionally above it.

The reality is that now, for the first time since 1977, America's participation rate, at 63.3%, is lower than Britain's, which is 63.6%, or was in the three months to the end of January.

It would be nice to claim that this was because Britain was in some way becoming leaner and meaner, but the statistics suggest otherwise: Britain's participation rate has remained steady since 2005 while America's has fallen sharply as people leave the workforce.

It might be odd, having said all of the above to say that today's nasty US jobs report (the headline, by the way, was that a mere 88,000 net jobs were added in March – well below the rise in the population) also technically make it more likely that the Federal Reserve will scale back its stimulus.

But in one sense they do. The Fed has committed to more quantitative easing, buying up $85bn (£55.8bn) of debt each month until the unemployment rate drops below 6.5%.

But because unemployment measures the number of working people as a percentage of the total workforce, it can fall as a direct result of the workforce falling – and that's what happened this time, with the rate dropping from 7.7% to 7.6%.

Now, pragmatically speaking the Fed will try to "look through" this optical illusion. But it's an important reminder that when you tie your monetary policy to a very specific number, it doesn't always make it easy to predict future moves from the central bank.

Mark Carney, who is coming in as Bank of England Governor this summer and has nodded approvingly over at what the Fed has been doing, should take note.

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