Christmas Shoppers To Spend £12bn In Four Days

By Emma Birchley, Sky News Reporter

Shoppers are expected to spend £12bn in just four days as they make the most of slashed prices and promotions, according to retail forecasters.

The deals are being offered as a fierce battle for sales rages both on the high street and online.

Alan Dadswell relies on Christmas to keep his shop Toys 'N' Tuck in Southend-on-Sea going and he says discounts are crucial.

He said: "To get people to spend the money they have got to feel they are getting a bargain and we have got to give them a bargain. We have to hunt with our suppliers to do good deals to get people in to the store."

A sluggish autumn has put added pressure on retailers.

But with 74% of shops offering deals, 13 million people are expected to shop on the high street on the last Saturday before Christmas.

It will help that many people finished work for Christmas on Friday.

Offering discounts at Toys 'N' Tuck in Southend-on-Sea is crucial

But Diane Wehrle, from the shop footfall monitors Springboard, says shoppers are getting increasingly canny.

She said: "Tactics definitely come into it. Shoppers are becoming much more savvy than they used to be. They understand that retailers are slashing prices. They understand they are doing one-off specials and they wait for them.

"So they perhaps go window shopping before the Christmas trading period starts, look out for what they want to buy and then buy them when they are on offer."

Lizzy Clarke, armed with bags of gifts in Southend, has made the most of the offers.

"They've got some great deals ... 75% off in some stores and I've just bought some jumpers that cost me £30 last week and this week have cost me £7," she said.

But Rob Antoniazz, who is unconvinced, said: "The decent items in good shops are never up for sale because the demand is there to buy them."

Tesco's distribution centre in Erith, Kent, has gone into overdrive

Half of the money being spent in the four days to the end of Monday will be on food, with £900m going towards online groceries.

Tesco has sold twice as many turkeys over the internet than last year. At its distribution centre in Erith, Kent, staff are working around the clock preparing orders.

Simon Belsham, the managing director of Online Grocery for the chain, said: "This is a really busy time of year for us. It really reflects that customers are looking for more and more convenient ways to shop for their Christmas presents and Christmas food."

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M&S Extends Clothing Sale Amid Poor Trading

By Mark Kleinman, City Editor

Marks & Spencer (M&S) is to extend heavy discounting on clothing into a second day on Sunday as it attempts to drive sales during the most crucial period of its trading year.

Sky News has learnt that the high street giant will run another sale offering 30% off all clothing lines just three days before Christmas amid growing expectations of one of the toughest festive periods for retailers in years.

While food sales are said to have been satisfactory, M&S is understood to have been disappointed by the response to Saturday's clothing sale, prompting executives to decide during an evening conference call to repeat the event on Sunday.

The company is far from alone on offering heavy discounts on clothing, with 50% off usual prices at Banana Republic, French Connection and Reisss, and up to 60% savings on some lines at Gap.

M&S is, though, the most closely-watched of any retailer on UK high streets because of its scale.

It has tended to shun such significant pre-Christmas discounts under the leadership of Marc Bolland, its chief executive, although it occasionally ran them under Sir Stuart Rose, his predecessor.

Mr Bolland has been attempting to improve M&S's clothing sales by introducing new management and a focus on greater quality, but faces an anxious wait to see whether that translates into adequate trading.

Standard Life Investments, one of the retailer's biggest shareholders, said in January that disappointing Christmas trading last year meant that Mr Bolland was on borrowed time, although many investors are keen to give his strategy more time to take effect.

Some analysts are forecasting a fall in sales during the important third-quarter period, although the like-for-like measurement that will be provided by retailers in January does not indicate the profitability of their sales.

M&S declined to comment on Saturday.

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Cable Attacks PM Over 'Immigration Panic'

By Darren McCaffrey, Political Reporter

Business Secretary Vince Cable has accused the Prime Minister of panicking on the issue of immigration and comparing that panic to the notorious 'Rivers of Blood' speech made by Enoch Powell.

Referring to previous periods of heightened tensions, Mr Cable said politicians had a responsibility to give the facts and not resort to populist tactics.

David Cameron arriving at the EU summit last week

In a series of attacks on the Conservative's stance on immigration made on BBC1's Andrew Marr Show, Mr Cable said: "The responsibility of politicians in this situation when people are getting anxious is to try to reassure them and give the facts, not panic and resort to populist measures that do harm.

"The 75,000 cap is illegal and impossible to implement in any event. I think what's happening here, the Conservatives are in a bit of a panic because of Ukip (UK Independence Party) reacting in the way they are.

"All the evidence suggests that they put far more into the economy in terms of tax than they take out in benefits."

Bulgarian President Rosen Plevneliev

Meanwhile the Bulgarian President has warned David Cameron he risks being judged by history as a Prime Minister who has isolated the UK and damaged its reputation.

Rosen Plevneliev said his countrymen were watching Britain's immigration debate unfold and raising questions about the "democratic, tolerant and humane British society".

Transitional controls on Romanian and Bulgarian migrants will be lifted in two weeks.

Some think-tanks have warned that 50,000 people could arrive from the two countries each year.

Mr Cameron has reacted to concerns about the move with a string of interventions including to limit access to benefits for those travelling to the UK.

At the European Council meeting in Brussels this week he threatened to veto the EU-accession of new countries such as Albania and Serbia without strict immigration rules.

One idea put forward by the PM is to set a GDP limit below which countries will not be given free movement of labour if they join the EU.

Mr Plevneliev said he feared for the safety of Bulgarians in Britain. He said "iron curtains" should not remain in the 20th century, arguing this was a time to bring down walls, not to build them.

"Mr Cameron should never forget that a politician is remembered in history not with the everyday business," he said.

Transitional controls on Romanians and Bulgarians to be lifted in two weeks

Reacting to Mr Cable's comments, a Number 10 spokesperson said: "Vince is a member of the government and supports government policy. The words he chooses to do that are up to him."

Meanwhile, Labour has accused the Government of being spilt on the issue. Shadow immigration minister David Hanson MP, said: "Government measures could have been taken much earlier and a sense of panic and hyperbole could have been avoided.

"Instead we have the chaos of the Prime Minister and Home Secretary (Theresa May) pretending to pull up the draw bridge and the Lib Dems doing nothing to reform the labour market - both approaches deeply damaging to Britain and local workers."

Mark Field, a Conservative backbencher, has also entered the debate saying the tough talk on immigration could turn off non-white voters.

He has warned Mr Cameron not to repeat the mistakes made by Mitt Romney - the US Republican candidate - in 2012.

He said failure to reach out to the Hispanic community had meant it had failed to understand his stance on immigration.

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Weather Damages 'Biggest Xmas Shopping Day'

A predicted high street spending spree dubbed 'Manic Monday' has largely failed to materialise, with strong winds and heavy rain combining to force late-Christmas shoppers indoors.

Analysts had expected 15 million people to take to stores, spending £2.6m a minute on gifts, food, drink and decorations.

But the spending spree appears set to fall short of retailers' expectations after the bad weather disrupted travel and left shoppers seeking shelter.

Despite huge red signs announcing sales of up to 70%, many shops on London's Oxford Street were experiencing customer numbers they would see on a normal day rather than those you would expect just two days before Christmas.

One M&S shopper said: "With the weather, well, it's really quiet.

"A few years ago you wouldn't have been able to get in here."

Major indoor centres, however, were expected to have benefited from the storm.

The Waitrose department store-supermarket in London's Canary Wharf had long queues waiting at tills while car parks at Manchester's Trafford Centre were reported to be full.

Retailers had expected their biggest day of the year, with shoppers parting with about £3.6bn by the end of the day.

Visa expected to process 31 million transactions on UK cards with a peak between 1pm and 2pm as workers rushed out to the shops on their lunch break.

Visa predicted an average £15,000 per second would be spent on its cards.

Many retailers have been furiously discounting prices over the past few days in a bid to attract shoppers amid signs of a slow start to the big festive spend.

While the prospect of bargains bodes well for consumers who left their shopping late, there are fears the price cuts will leave the retail sector with a profits hangover after a bruising battle for business during 2013.

Large promotions have included a 30% discount across clothing lines at Marks & Spencer, as well as price cuts at Debenhams, Gap, Argos and BHS.

John Lewis confirmed on Sunday it had enjoyed record weekly sales with takings hitting £164m - up 4.2% on the same period last year - though its customers tend to be less affected by the squeeze on incomes than the average consumer.

Many supermarket chains planned to keep their biggest stores open 24 hours daily until late on Christmas Eve.

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Christmas Debts 'Won't Be Cleared Until June'

The average family is going to take on debts this Christmas that will take until June to pay off, it has been claimed.

The Trades Union Congress has carried out research that shows that the typical family will add £685 to its borrowing by the time the festive season is over.

That will take a family on an average income 24 weeks to pay off, the labour organisation claims.

Last Christmas, one in six families borrowed money to pay for food, drinks and presents, with households borrowing an average of £654 per adult (Men £1,000, women £547).

Using average weekly earnings and savings data the TUC estimated that it took average-income earners 20 weeks to pay off this debt.

This year, consumer debt has increased by 4.9 per cent. The TUC's calculations estimate that it will take four more weeks for an average-income earner to pay back the extra debt burden they will take on.

If a minimum wage worker were to borrow the same sum it would take them an entire year working full-time to pay it off.

The TUC says the findings underline how ordinary people are not benefiting from the recovery and are instead facing a bigger struggle to pay off their debts.

The study has emerged on the day when the Bank of England has warned of the scale of the debt burden weighing on British families.

According to the TUC, British workers are currently suffering the longest real-wage squeeze since the 1870s, with inflation rising faster than wages for the last 42 months.

It says the government needs to make fairer pay rewards a priority.

Nicola Smith, head of economic and social affairs at the TUC, told Sky News: "It's to do with the fact that is an expensive time of the year for everybody, and with wages hardly having kept up with prices for the last four years, with family incomes under historic pressure, just meeting the basic costs of Christmas is going to mean a lot more people having to rely on credit."

She said the problem was that most growth in the economy was being provided by consumption and because pay was not keeping up with prices, the extra money people had to spend on buying goods was coming from borrowing.

"People are having to borrow to make up the extra spending that is driving growth in the economy," she said. "It's really worrying that that does not provide us with a sustainable basis for a recovery going forward."

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Tobacco Boss Quits Helm Of Silk Cut-Maker

By Mark Kleinman, City Editor

The executive who orchestrated Japan's biggest-ever takeover of a British company has quit his role at the helm of the manufacturer of Benson & Hedges and Silk Cut.

Sky News has learnt that Pierre de Labouchere, the president and chief executive of Japan Tobacco International (JTI), resigned with immediate effect.

The departure of Mr de Labouchere, who led Japan Tobacco's £7.5bn acquisition of Gallaher International in 2007, surprised analysts, who said they expected that the exit of such a senior executive would have been the subject of a public announcement.

JTI accounts for over half of its parent's global earnings and through its ownership of Gallaher's brands, which also included Mayfair, it now jostles with Imperial Tobacco for leadership of the UK cigarette market. British American Tobacco has a vast international presence but a comparatively small share of the UK market.

Mr de Labouchere has been replaced by Tom McCoy, previously the chief operating officer.

In a statement issued on Friday, a JTI spokesman said: "I confirm that Mr. Pierre de Labouchere has decided to resign from his position as President and Chief Executive Officer of JTI as of December 18th.

"Mr Thomas A McCoy has been appointed President and Chief Executive Officer of JTI. He brings in-depth knowledge of the business and a wealth of experience to this new responsibility. His 14 years with JTI have generated a proven track record of success in leading the international tobacco business at JTI."

JTI declined to comment on the reasons behind Mr de Labouchere's sudden departure but insiders said that another senior executive responsible for the company's mergers and acquisitions activity had also quit in recent days, suggesting some kind of strategic disagreement.

Mr de Labouchere, one of the most senior Frenchmen in a major Japanese company, led the takeover of Gallaher having previously been president of JR Reynolds' international operations, which were acquired by JTI in 1999.

JTI's UK operation is run directly by Jorge da Motta, who took over earlier this year.

He warned on his appointment that "the most challenging dynamic for the UK business is the high tax regime and the corresponding high level of non-UK duty paid cigarettes at a time when the Government is consulting on plain packaging".

"This makes the threat to legitimate businesses both small and large significant and dangerous," he added.

Headquartered in Geneva, JTI recorded sales of $11.8bn (£7.2bn) in 2012. The company has operations in more than 120 countries and about 25,000 employees.

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Apple Strikes iPhone Deal With China Mobile

Apple has finally secured a deal to bring the iPhone to China Mobile, the world's biggest network, opening the door to a massive sales boost.

The state-owned network has more than 750 million subscribers.

The latest iPhone 5S and 5C will go on sale in the country from January 17 with analysts forecasting a sales surge of anywhere between 10 and 25 million over the next year.

China's granting of 4G licences earlier this month is thought to have helped the deal as the faster network is compatible with the iPhone.

In a statement promoting the deal, Apple and China Mobile said they were "excited" to finally be working together.

Apple CEO Tim Cook said: "Apple has enormous respect for China Mobile and we are excited to begin working together. China is an extremely important market for Apple and our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world's largest network."

While popular around the world, the iPhone has faced tough competition in China from cheaper Android smartphones made by the likes of Samsung. Collectively, Android phones far outsell iPhone models.

Apple's cheaper 5C model, released earlier this year, was widely seen as an attempt to crack the Chinese market.

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British Airways Plane 'Crash' In Johannesburg

A British Airways plane has crashed into a building at Johannesburg Airport in South Africa.

The aircraft, carrying 182 passengers, sliced its wing through the building while taxiing on the runway, BA confirmed.

Posting on Twitter, the airline said: "One of our aircraft was damaged whilst taxiing at JNB airport. All 182 passengers disembarked safely with no injuries onboard."

There has so far been no comment made on whether anyone was injured in the building or on the ground.

The plane involved is believed to be a Boeing 747.

British Airways says nobody in the plane was injured. Pic: John Hart

Harriet Tolputt, Oxfam's head of Media, who was on the flight, posted pictures of the incident on Twitter.

She wrote: "BA plane crashes into building at J Burg airport. No one injured only the pilot's pride ... Not impressed that first class passengers get off before premium economy during an emergency."

Johannesburg Airport said it would be able to provide more information on the incident later in the morning.

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SFO Investigates Rolls-Royce Bribery Claims

The Serious Fraud Office (SFO) has started a formal investigation into bribery and corruption allegations at Rolls-Royce.

The claims first came to light a year ago when the SFO ordered the world's second-largest maker of aircraft engines to conduct an inquiry and hand over details of possible wrongdoing in China, Indonesia and other markets.

"We have been informed by the Serious Fraud Office that it has now commenced a formal investigation into these matters," Rolls-Royce said on Monday.

Last December, the company said it was co-operating with regulators relating to allegations of malpractice involving intermediaries in Indonesia and China.

The aerospace and defence group said then it had "identified matters of concern in these, and in other overseas markets."

Shares in the company, which operates in more than 50 countries across the world, were 0.2% down in the minutes following the announcement.

The group, which has major sites at Derby and Bristol and employs around 45,000 people, appointed veteran lawyer Lord Gold last year to review the company's compliance procedures in the wake of the claims.

In March, the company appointed BP director Ian Davis, a former managing director of management consultancy McKinsey & Co, as chairman.

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M&S Says Sorry Over Alcohol Refusal

Marks & Spencer has apologised after a Muslim member of staff refused to sell a customer alcohol.

The retailer said that where employees have religious beliefs that restrict what foods or drinks they can handle, it tries to place them in a "suitable role".

An M&S spokeswoman said: "We regret that in the case highlighted we were not following our own internal policy."

The issue arose after an unnamed customer at a London store told the Telegraph they were "taken aback" when an "extremely apologetic" Muslim checkout worker asked for them to wait for another till to become available.

The customer told the newspaper: "I had one bottle of champagne, and the lady, who was wearing a headscarf, was very apologetic but said she could not serve me. She told me to wait until another member of staff was available.

"I was taken aback. I was a bit surprised. I've never come across that before."

Drinking alcohol is forbidden in Islam, and some Muslims refuse to handle it.

M&S said its policy applied to staff of other religions, not just Islam.

The spokeswoman said: "Where we have an employee whose religious beliefs restrict food or drink they can handle, we work closely with our members of staff to place them in suitable role, such as in our clothing department or bakery in foods...

"As a secular business we have an inclusive policy that welcomes all religious beliefs whether across our customer or employee base.

"This policy has been in place for many years, and when followed correctly, we do not believe that it should compromise our ability to offer the highest level of customer service.

"We apologise that this policy was not followed in the case reported."

The case highlighted differences among retailers on whether religious staff should have to carry out certain jobs, the Telegraph said.

Sainsbury's guidelines say that there is no reason why staff who don't drink alcohol or eat pork on religious grounds could not handle them, the paper said, while Tesco said it made "no sense" for staff who refuse to touch items for religious reasons to work on a till.

Muslims working at Asda would not have to work on tills if they objected to handling alcohol, and Morrisons would "respect and work around anyone's wishes not to handle specific products for religious or cultural reasons", the paper added.

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Children Of The 1960s Worse Off Than Parents

The children of the 1960s and 1970s are likely to be worse off than their parents, with no higher income or savings, no home ownership and smaller private pensions than those born in the previous decade.

The only way they will be better off when they retire is thanks to inherited wealth, according to the leading economic think-tank the Institute for Fiscal Studies.

More people born in the 1970s are expecting to inherit (70%) than those born in the early 1940s (28%).

The findings appear to bring to an end to the steady rise in incomes and living standards that successive generations have enjoyed since the end of World War Two.

Incomes for working-age adults born in the 1960s and 1970s were no higher in real terms than those of their predecessors of the same age a decade ago, the study found.

People have spent more over their working career so have not saved much

And, while the Sixties and Seventies generation did have higher incomes when they were younger, they also spent more, leaving them with no more savings than those of the previous generations.

Those in their forties and fifties have also suffered from the move away from final salary pension schemes to less generous deals.

That same generation has also taken longer to get on the housing ladder, with the home ownership rate having fallen back to around two-thirds compared with a peak of four-fifths among those born in the 1940s and 1950s.

The only hope for increased cash is through inheritance

And, as far as inheritance goes, while they are more likely to inherit than their predecessors, the gap between the richest and the poorest will grow, with those already the wealthiest set to receive the most.

Andrew Hood, one of the report's authors, said: "Since the Second World War, successive cohorts have enjoyed higher incomes and living standards than their parents.

"Yet the incomes and wealth of those born in the 1960s and 1970s look no higher than the cohorts who came before them.

"As a result, younger cohorts are likely to have to rely on inheritances to be better off in retirement than their predecessors.

"But inheritances are unequally distributed, with households that are already relatively wealthy far more likely to benefit."

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New Runways For Gatwick And Heathrow Airports

Building a controversial third runway at Heathrow airport has been shortlisted as one of the options for expansion by the Airports Commission in its first report.

The interim findings of an independent inquiry led by the former head of the Financial Services Authority, Sir Howard Davies, has also recommended a second runway for Gatwick airport.

Sir Howard has also said he would consider the idea of building a new airport in the Thames Estuary, plans for which have been backed by the London Mayor, Boris Johnson, although he did not include it on the shortlist of options.

He warned if the UK did not expand its airports then it would cost the economy £45bn over 60 years and that to cope with increasing passenger numbers the first new runway should be operation by 2030, the second by 2050.

Sir Howard said: "The UK enjoys excellent connectivity today. The capacity challenge is not yet critical but it will become so if no action is taken soon and our analysis clearly supports the provision of one net additional runway by 2030.

Heathrow dealt with 70 million passengers last year

"In the meantime we encourage the government to act on our recommendations to make the best of our existing capacity."

He said that politicians would have to chose which runway to build first - one at Gatwick or one at Heathrow - as work on them would not be able to be carried out at the same time.

A third runway for Heathrow has met with bitter opposition and the publication of the report will likely trigger a substantial political row.

The Conservative party made its opposition to plans for the airport's expansion – supported by the Labour government - part of its 2010 election manifesto and ruled a third runway out when the coalition came to power.

Among the most vociferous opponents have been Mr Johnson and the Conservative MP, Zac Goldsmith, a keen environmentalist whose constituency is in the flight path.

Mr Johnson told Sky News that building another runway at Heathrow would be "bonkers".

He said that both the new runway options for Heathrow would involve "concreting over the M25 probably closing that major artery for five years at the least".

Plans for a third runway at Heathrow have been controversial

And he said that a second strip for Gatwick would make no difference to dealing with the air traffic.

He said: "A new airport in the inner estuary is the only credible hub option left, and the only one that would uphold this country's claim to be the natural financial, commercial and economic capital of Europe."

Last week he threatened to call for a judicial review if plans for the four-runway airport on the Isle of Grain, which at £112bn would cost five times as much as Heathrow expansion, were not included in the commission's report.

The commission said it had not shortlisted the Thames Estuary plan "because there are too many uncertainties and challenges surrounding them at this stage".

However, it will undertake further study of plans to see whether it was a "credible proposal" and may include it on the shortlist next summer.

Gatwick is running at 85% of its total capacity

The Airport Commission's final report will be submitted in the summer of 2015, after the next General Election, and the Transport Secretary, Patrick McLoughlin said the Government would not indicate a preference on options until after that.

Mr Goldsmith, who has suggested he would leave the Tory party over the issue, said last week that any decision by the Prime Minister to back Heathrow expansion would represent an "off-the-scale betrayal".

Heathrow is currently operating at 98% of its capacity with 65m travellers using it in 2012 but the report pointed out that it was so busy passengers suffered "a high level of delay and unreliability".

If it is not allowed to expand, those in favour of a third runway claim that travellers to Europe will opt to fly into airports at Frankfurt, Paris and Amsterdam instead, at a cost to the UK economy.

Heathrow representatives told the commission that a third runway could be operating by 2029 allowing 260,000 more flights a year.

Boris Johnson says a third runway for Heathrow would be "crackers"

There are two options for the extra runway - to build a 3,500m (11,500ft) strip to the north west of the site or to extend the northern runway to 6,000m (20,000ft) and use one half for take-offs and the other for landings.

The north west option would see 1,500 homes demolished and the loss of 30 listed buildings, the extension would see 720 homes flattened and affect eight listed buildings.

Heathrow chief executive Colin Matthews welcomed the report saying: "I think the report we received today is good news for trade, for jobs and for the UK as a whole."

However, Keith Taylor, Green Party MEP for the South East, said: "The political opposition to airport expansion in south east England is sadly melting away.

"There's no doubt that the Government will be pleased with this report. It gives them the cover they need to go on avoiding answering difficult questions on airport expansion and to prepare themselves for a colossal U-turn on Heathrow expansion."

The idea of expansion at Gatwick, which is currently running at 85% of its capacity and full capacity at peak times, has also met with opposition. It would be built to the south of the existing runway.

Georgia Wrighton, director of the Campaign for the Protection of Rural England in Sussex, said: "A second runway at Gatwick, together with sprawling development and car parks anticipated on a massive scale, would concrete over cherished open countryside."

The report did not include options for a new runway for Stansted or Birmingham airports, as had been suggested.

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Ticket Rip-Off: Prices 'Marked Up' Online

Theatre-goers and music fans face mark-ups of as much as 38% on the value of some online tickets, according to a Which? study.

Compulsory charges are added to 72% of tickets sold online, said the consumer group, which is launching a campaign to bring down the cost.

Buying online is convenient, offers variety and quick transactions, but nearly half of those surveyed (49%) said the charges had put them off buying tickets for an event altogether.

In one study, only 3% of tickets were being sold at face value without any additional compulsory fees like booking or delivery charges.

Which? says in some cases the practice is illegal.

Which? says that many consumers feel ripped off by ticketing charges

Richard Lloyd, executive director of Which?, said: "Consumers tell us they are feeling ripped off by the level of ticketing charges and the lack of transparency means it is almost impossible for people to compare prices when booking online.

"We want to see the ticketing industry play fair on ticket fees, so that all charges are displayed up-front and with a clear explanation of what they're for."

A Ticketmaster spokesperson told Sky News: "To suggest that ticket fees are hidden is utterly misleading and factually incorrect. 

"Before a customer purchases a ticket, any additional fee is always displayed clearly.

"The fees cover a wide range of costs to provide the services which ensure the best and easiest possible experience for our customers from purchasing a ticket to accessing the event."

One explanation for the additional fees may be the acts themselves. They want their ticket prices to seem as low as possible, leaving the ticket agency to tack on the fee.

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Airport Expansion: The Case For And Against

The news that new runways at Heathrow and Gatwick are on a shortlist of airport expansion options has been welcomed by the airline industry as well as business leaders.

But green campaigners, local residents and some politicians are worried about the effects on the environment, as the options were outlined in an interim report by Sir Howard Davies's Airports Commission.

There are no firm long-term proposals in the report - they will come when the commission makes its final report in the summer of 2015, after the next general election.

PRO-NEW RUNWAYS:

Heathrow argues that a third runway would raise its capacity to 740,000 flights a year, from the current limit of 480,000.

The airport said it would be able to cater for 130 million passengers compared to 70 million today, "allowing the UK to compete with our international rivals and providing capacity for the foreseeable future".

Chief executive Colin Matthews said: "Britain needs a world-class hub airport with the capacity to compete against Paris, Frankfurt and Amsterdam. A third runway is the quickest, cheapest and surest way of connecting the UK to growth."

Some argue another runway at Heathrow will increase air pollution

The airport said a third runway would provide benefits to the UK worth £100bn and expansion would bring considerable benefits to the local community by protecting the 114,000 jobs already dependent on the airport and creating more than 70,000 new jobs.

Addressing environmental concerns, Heathrow said expansion could be met within EU climate change targets. Continued improvements to aircraft efficiency means air traffic could double by 2050 without a substantial increase in emissions, it argues.

Gatwick said expansion "can give the country the economic benefits it needs at an environmental cost it can afford with the lower fares and greater choice that passengers want. It can be delivered more quickly and at lower cost".

And the London Chamber of Commerce said: "Government should just get on and act on the short-term measures now. It will make no sense to delay any measures to enhance capacity until after the General Election.

"Businesses are crying out for aviation action now.  Political posturing would put the economic recovery at risk and threaten London's reputation as a world leading city."

ANTI-NEW RUNWAYS:

Local groups say the north-west runway plan at Heathrow will require significant demolition in the villages of Longford and Harmondsworth.

Anti-Heathrow expansion group Hacan have vowed to fight the Heathrow plans.

"We understand the strength of feeling of those living near Heathrow," Sir Howard said.

Countryside campaigners at the Campaign to Protect Rural England (CPRE) also voiced concern at the options set out.

Georgia Wrighton, director of the CPRE in Sussex, said: "A second runway at Gatwick, together with sprawling development and car parks anticipated on a massive scale, would concrete over cherished open countryside.

"A heady cocktail of increased flights, HGV traffic and cars would erode the tranquillity of rural communities, and the health and quality of life of people living under its shadow."

Keith Taylor, Green Party MEP for the South East, said: "The political opposition to airport expansion in South East England is sadly melting away.

"There's no doubt that the Government will be pleased with this report. It gives them the cover they need to go on avoiding answering difficult questions on airport expansion and to prepare themselves for a colossal U-turn on Heathrow expansion.

"This report will be of great concern to my constituents near Gatwick and Heathrow. We know that any new runways at either airport will increase air pollution, destroy homes and countryside and mean more people's lives are blighted by flight noise."

Tory MP for Richmond in west London, Zac Goldsmith, who has many constituents who live under the flight path, told Sky News: "The case for expansion is very weak.

"The case for improving our road transport, our rail links to existing airports is very strong. If we did that, we would have enough capacity for many, many years."

Last week, Mr Goldsmith said any decision by the Prime Minister to back Heathrow expansion would represent an "off-the-scale betrayal" and David Cameron would "never be forgiven in west London" .

London Mayor Boris Johnson, who wants a new airport in the Thames Estuary, said a third runway at Heathrow would be "completely crackers".

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Motor Insurance Premiums Could Be Cut

Car insurance premiums are too high, says the competition watchdog which is to look at ways of reducing them.

The Competition Commission said there could be caps on the cost of accident repairs and providing replacement vehicles for drivers.

The watchdog also said in its provisional report that too many accident repairs were not carried out to the required standard.

Deputy chairman Alasdair Smith told Sky News: "We were surprised when we did a survey of cars that had been repaired after an accident to find that of the 100 cars inspectors looked at, 45 hadn't been repaired properly."

The also commission found the way add-on insurance products were sold made it difficult for customers to find the best-value products.

It said overall the £11bn market was not working well for drivers and believed too many were footing the bill for unnecessary costs incurred during the claims process after an accident.

These costs are initially borne by the insurers of at-fault drivers, but they feed through into increased insurance premiums for all motorists.

The watchdog was also concerned about the relationship between price comparison websites and insurers.

Alasdair Smith, who is leading the investigation, said: "We are now considering a range of possible measures, some of them far-reaching reforms, to ensure that the market better serves the interests of customers."

Mr Smith said that in most cases the party managing the accident claim - typically the non-fault insurer or intermediary - was not the party liable to pay the costs of the claim.

He added: "There is insufficient incentive for insurers to keep costs down even though they are themselves on the receiving end of the problem."

The commission estimates the extra premium costs due to the separation of control and liability on replacement cars and repairs to be between £150m and £200m a year.

It is considering whether to make a driver's own insurer responsible for providing a replacement vehicle or to give at-fault insurers greater opportunity to take control over managing claims.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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New Pipeline To Loosen Russia's Grip On Energy

By Tim Marshall, Foreign Affairs Editor

The UK Foreign Secretary William Hague is in Azerbaijan today at a ceremony to sign a £27.6bn pipeline deal which will provide another alternative to energy supplies from Russia to Europe.

The deal will make Britain the biggest foreign investor in the country.

BP is the lead shareholder in an international consortium to bring gas from the Caspian Sea into Italy, Bulgaria, Turkey, and Greece.

British officials do not openly admit that part of the strategy behind the Shah Deniz 2 deal is to loosen Russia's grip on energy supplies to Europe, but Mr Hague did hint at that in a speech in the capital Baku, telling Sky News: "Energy security is a major concern to much of Europe and this new gas corridor will bring a new supply of energy and will increase competition.

"With major involvement of BP and other British companies, it will also be a major boost to British companies and jobs."

Behind the statement lies the idea that countries west of Russia could become less beholden to Moscow for energy, and that Russian gas prices may have to come down due to this new route.

One source told Sky News: "Europe is too reliant on too few sources of gas and oil, this makes it vulnerable."

Human Rights campaigners have criticised the deal claiming it will boost Azerbaijan's President lham Aliyev who is accused of human rights abuses and of rigging elections.

In October a government phone app appeared to release the results of this year's Presidential election a day before the polls opened. It gave the President a landslide victory over his rival Jamil Hasanli.

According to the country's electoral commission it was a "technical glitch" and a "misunderstanding".

The manager of the company making the app told local media that the test result was data from the previous presidential election. Not everyone believed this and pointed out that Mr Hasanli had not then been standing for President.

Mr Aliyev duly won the election by a landslide.

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Inflation Falls To Four-Year Low Of 2.1%

The annual rate of inflation hit a four-year low last month of 2.1% as recent energy price increases are yet to feed in to the figures.

The Consumer Prices Index (CPI) measure eased from 2.2% in October - partly due to falling fruit and vegetable prices.

The rises to energy bills are expected to make a large upward contribution to December's inflation figures.

The easing of inflation in November takes pressure off the Bank of England as it attempts to help bring the CPI measure back towards its target of 2% - giving it plenty of breathing space to keep interest rates low even as the economy picks up.

And the slowdown could be seen as providing at least a crumb of comfort to squeezed households where wage growth continues to lag behind the rise in the cost of living.

The CPI rate of 2.2% in October was sharply lower than September's 2.7%.

The Bank's interest rate setters have had to loosen their focus on inflation, maintaining ultra-low borrowing rates to help nurse the economy back to health.

But pressure to tighten monetary policy would increase if inflation started rising.

Cost-of-living increases are still outstripping pay rises, with the last published figures showing wage growth at 0.8%.

Meanwhile, the cost of filling a Christmas stocking has gone up, with games, toys and hobbies up 2.8% on October, taking the annual increase in prices in the sector up to 1.8%.

Restaurants and hotels increasing their rates by a smaller amount made a downward contribution to inflation.

Petrol prices also fell in November, but less steeply than last year, meaning they made an upward contribution to the overall rate.

The CPI rate has not been lower since November 2009, when it stood at 1.9%.

A separate measure of inflation, the retail prices index (RPI), which includes housing costs, remained the same at 2.6%.

Catherine McKinnell MP, Labour's Shadow Economic Secretary to the Treasury, said of CPI: "This small fall in the inflation rate is welcome, but with prices still rising much faster than wages the cost-of-living crisis continues.

"Families and pensioners are still set to face inflation-busting hikes in energy prices this winter, which the ONS says are not in today's figures.

"After three damaging years of flatlining, working people are on average £1600 a year worse off. But the Autumn Statement failed to set out a plan to tackle the cost-of-living crisis and earn our way to higher living standards for the many and not just a few."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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Superdrug Parent Picks Banks For £15bn Float

By Mark Kleinman, City Editor

The owner of Superdrug, Britain's second-largest specialist health and beauty retailer, has picked a trio of banks to oversee a stock market flotation that could involve a secondary listing in London.

Sky News has learnt that Hutchison Whampoa, the Hong Kong-based conglomerate, has appointed Bank of America Merrill Lynch, Goldman Sachs and HSBC to manage a share sale of its AS Watson division during 2014.

The listing is likely to be jointly in Hong Kong and London, although no firm decision has been made about the UK component, with Singapore also competing to secure a slice of one of the world's largest retail sector offerings for years, insiders said on Tuesday.

AS Watson is the world's biggest health and beauty retailer, with interests in 33 countries through a network of more than 11,000 shops. As well as Superdrug, it owns The Perfume Shop, the UK's biggest fragrances retailer

Hutchison, which is run by the octogenarian Li Ka-shing, Asia's wealthiest man, had previously been considering a sale of Park'n'Shop, the Hong Kong grocery chain that is one of AS Watson's largest individual businesses.

However, Mr Li abandoned the auction after prospective buyers failed to meet his apparent $4bn (£2.5bn) asking price.

Hutchison is by some measures the largest single inward investor in the UK, with interests in ports, mobile communications and - through its sister company Cheung Kong Infrastructure Holdings - water supply and other utilities.

A London listing of AS Watson, which reportedly could value the company at as much as $25bn (£15bn), would be a major boost to UK capital markets following an intense debate about the quality of foreign companies which have listed their shares on the London Stock Exchange.

One person close to the situation said that recently-announced rule changes could make a London flotation more complicated for Hutchison Whampoa.

AS Watson was established in 1828 as a platform for providing free medicines to the poor of Guangdong, a province in southern China.

Superdrug, which operates nearly 900 shops in the UK and Ireland, trails only Boots in the market for health and beauty products, and is expected to have a successful Christmas trading period, according to industry observers.

A Hutchison spokesman could not be reached for comment on Tuesday.

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GCHQ To Monitor Huawei Amid Cyber Spying Fears

GCHQ intelligence officials will strengthen their oversight of a controversial Chinese telecoms giant engaged in supplying Britain's network amid fears that its equipment could be used for cyber espionage.

The Prime Minister's national security adviser has said that senior members of Britain's listening post should have a greater role at work being done at the Huawei Cyber Security Evaluation Centre, known as the Cell, which is based in Banbury, Oxfordshire..

Earlier this year the parliamentary Intelligence and Security Committee warned that the involvement of Huawei in the UK's critical national infrastructure risked compromising national security.

Both US and Australian politicians have been critical of the firm citing its links to China's government and military.

The firm was founded by Ren Zhengfei, was a former officer in the People's Liberation Army, and has been banned from bidding for some US infrastructure contracts.

A review carried out by by national security adviser Sir Kim Darroch, concluded that GCHQ should in future "lead and direct" all senior appointments to the Cell.

Huawei founder Mr Zen with George Osborne in China

A senior member of GCHQ will also chair a new oversight board monitoring the Cell's work and ensuring its continued independence from the firm.

However, the Cell's staff will continue to be employed by Huawei, despite the the apparent conflict of interest.

Huawei is now a major player in the UK telecoms sector following a multi-million pound deal to provide networking equipment to BT in 2005.

The Government has been apprehensive about imposing monitoring on the firm, despite concerns over national security, because of the risk of antagonising Beijing at a time when ministers are trying to boost trade links.

During his visit to China earlier this month, Mr Cameron broached the idea of establishing formal process of dialogue on cyber-security with Chinese counterpart Li Keqiang.

Huawei, which said it supported the recommendations made in the review.

In a statement it said: "Huawei shares the same goal as the UK Government and our customers in raising the standards of cyber security in the UK and ensuring that network technology benefits consumers."

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Aldi And Lidl: Half Of Brits Shop At Discounters

The squeeze on family budgets has seen more than half of British shoppers going to discount stores Aldi or Lidl in the last three months.

It comes as the big four supermarkets all lose market share, new figures have shown.

Aldi and Lidl have successfully broadened their customer base, with the former having a record 4% of the market and the latter retaining the 3.1% it reached during the summer.

Chris Longbottom, director at Kantar Worldpanel, said: "Value continues to be a powerful incentive for the British shopper, a fact that is further highlighted by Farmfoods which, while still a relatively small player in the market, has grown its sales by 36.6% compared with last year."

Some 50.1% of all British households stepped into a discount retailer in the 12 weeks to December 8, compared with 46.1% a year ago, researchers found, as wages grow at a slower pace than the annual rate of inflation.

Aldi and Lidl have broadened their customer base

Mr Longbottom added: "At the other end of the market Waitrose has performed strongly with 6.7% growth.

"Based on past patterns, it is likely to further boost its market share over the busy Christmas period, as is Iceland which traditionally performs well with its party food offering."

Among Tesco, Asda, Sainsbury's, Morrisons and the Co-operative, the best performer continued to be Sainsbury's although the year-on-year growth of 1.8% was insufficient to match the market growth of 2.8%, said Kantar Worldpanel.

Tesco accounted for 29.9% of sales in the latest period, Asda 16.9%, Sainsbury's 16.8% and Morrisons 11.6%.

The Tesco figure will add to concerns over the effectiveness of a turnaround plan that has seen over £1bn invested in its home market.

Earlier this month, the retailer reported a 1.3% fall in third quarter underlying UK sales.

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China's 'UK Is No Big Power' Snub To Cameron

UK 'Just An Old European Country'

Updated: 9:04am UK, Tuesday 03 December 2013

By Mark Stone, China Correspondent

The editorial in China's Global Times on Tuesday gives a clear hint about how David Cameron has been received in the country so far.

To a significant extent, editorials in the Chinese (state run) papers reflect the broad thinking of the communist leadership.

Under the headline "China won't fall for Cameron's 'sincerity'", the Global Times' article is less than complimentary.

It reminds Mr Cameron that "the UK is not a big power in the eyes of the Chinese. It is just an old European country ..."

It also points out that on the very day that Mr Cameron was praising the Chinese, his Navy Chief of Staff was meeting the Japanese military and apparently supporting Japan's stance in a bitter territorial dispute.

In short, the editorial paints a picture of a China that is less than impressed.

:: Full transcript of the Global Times editorial:

"The UK Prime Minister David Cameron arrived in China Monday, starting his three-day tour in the country.

"The once halted Sino-British relations, due to Cameron's meeting with the Dalai Lama last year, may see an ice-breaking.

"This year, China has been actively engaged in relations with Germany and France, which propels the urgency of the Cameron administration to end the chilliness of bilateral relations.

"Some analysts say that the UK, France and Germany have reached an unwritten understanding on the issue of the Dalai Lama to provoke China. When the leadership of one country meets with the Dalai Lama, the other two countries develop ties with China.

"Such an argument does echo the real situation of China's relations with Europe, especially when, yesterday, the British Royal Navy's Chief of Staff, Admiral George Zambellas met with Japanese Defense Minister Itsunori Onodera and supported Japan's stance toward China's recently declared Air Defense Identification Zone in the East China Sea.

"This has added doubts over Cameron's sincerity in improving ties with China.

"Perhaps there is no need to talk about 'sincerity' in terms of Sino-British relations.

"What Cameron does is out of his own political interest and the UK's national interest. His visit this time can hardly be the end of the conflict between China and the UK.

"Beijing needs to speed up the pace of turning its strength into diplomatic resources and make London pay the price for when it intrudes into the interests of China.

"China has gained some achievement in countering European leaders' moves of meeting with the Dalai Lama.

"China's strategic initiatives in its relations with Europe have been increasing.

"The UK, France and Germany dare not make joint provocations toward China over the Dalai Lama issue.

"The Chinese government will surely show courtesy to Cameron. But the public does not forget his stance on certain issues.

"We know that the British government has been making carping comments on Hong Kong implementing universal suffrage for the chief executive's election in 2017.

"It also gives ulterior support for those who advocate opposition between Hong Kong and the central government. This has added to the negative impression the Chinese public holds toward the UK.

"Chinese people believe that if London interferes in Hong Kong's transition process of implementing universal suffrage, Sino-British ties can be halted again.

"The Cameron administration should acknowledge that the UK is not a big power in the eyes of the Chinese. It is just an old European country apt for travel and study. This has gradually become the habitual thought of the Chinese people.

"China has believed in 'diplomacy is no small matter', while after years of ups and downs, we have acquired the strategic confidence that 'diplomacy is no big matter'. China will act accordingly given how it is treated.

"Finally, let us show courtesy to Cameron and wish him a pleasant trip."

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RBS And NatWest Glitch: Problems Persist

RBS and NatWest customers are still reporting problems with their accounts after a third major glitch in 18 months hit the banking group's IT systems nationwide.

Thousands vented their anger on Twitter after all of the high street banks' systems went down for three hours on one of the busiest shopping days of the year, Cyber Monday, and the fury continued to be felt by the bank on Tuesday.

As well as bank cards, there were problems with RBS and NatWest's websites and smartphone apps.

The banking group said that while the technical issue had now been resolved, its 15.7 million customers should visit their local branch or contact one of its helplines if they were still experiencing problems with their accounts caused by the resulting backlog of transactions.

It promised anyone left out of pocket as a result of the failure would be compensated and there would be further investment in its technical systems to help prevent more disruption in future.

The group chief executive Ross McEwan described the latest glitch as "unacceptable" and added: "For decades, RBS failed to invest properly in its systems.

Complaints piled up on Twitter as customers could not access cash

"We need to put our customers' needs at the centre of all we do. It will take time, but we are investing heavily in building IT systems our customers can rely on.

"I'm sorry for the inconvenience we caused our customers. We know we have to do better.

"I will be outlining plans in the New Year for making RBS the bank that our customers and the UK need it to be.

"This will include an outline of where we intend to invest for the future."

Customer services director Susan Allen told Sky News: "We know it was a very busy time of people doing their shopping before Christmas.

"Clearly, we deeply apologise for the inconvenience we've caused."

RBS' apology, along with an earlier tweet about mobile banking problems

Ms Allen insisted the problems were "completely unrelated" to high transaction volumes on Cyber Monday but was unable to give an explanation for the failure, saying it was still under investigation.

It is understood that hacking has been ruled out, although some customers told Sky News they were being targeted by phishing emails in the wake of the meltdown, an issue RBS said it was looking into.

Others complained about accounts being closed, suddenly overdrawn or unavailable to access online.

The group said Ulster Bank, which is also owned by RBS, was "partly affected" by the outage.

Reports started to emerge of bank cards being refused at around 6.30pm on Monday.

One customer from Canterbury, Kent, tweeted: "NatWest down again. Looked like a melt in Londis when my card got declined for milk and tuna."

Josh Barlow, a Sheffield Hallam journalism student, wrote: "This is happening every month, if not more, and it's getting ridiculous."

RBS and NatWest came under fire in March after a "hardware fault" meant customers were unable to use their online accounts or withdraw cash for several hours.

A major computer issue in June last year saw payments go awry, wages appear to go missing and home purchases and holidays interrupted for several weeks, costing the group £175m in compensation.

The latest meltdown will heap more embarrassment on the banks because it came on so-called Cyber Monday, when retailers expect their busiest day of the year as pre-Christmas shoppers search the internet for bargains.

Trade union Unite, which represents RBS staff, called for the bank to halt its cost cutting programme, which has seen thousands of jobs axed and IT functions sent abroad, in the wake of the IT problems.

National officer Dominic Hook said: "It is unacceptable that the bank's customers are once again facing inconvenience. Unite has grave concerns that staffing challenges are exacerbating the problems facing the bank."

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Households Raid Savings At Record Rate

By Ed Conway, Economics Editor

Households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures.

In the past year, families have withdrawn £23bn from their long-term savings accounts to convert into cash and put into current accounts - the equivalent of around £900 for every household in the country.

It is the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding their savings accounts.

Analysis of the Bank's figures by Sky News shows that in the year to October, the amount of cash in time deposits and cash ISAs fell by 4.7%, while the amount families have in their instant access current accounts or in their pockets rose by 11.2% - some £71bn.

According to economists, the shift of cash is the biggest since comparable records began in the 1970s, and reverses much of the sharp increase in saving that happened at the height of the recession.

On Thursday, the Chancellor's Autumn Statement is expected to focus on measures to help households deal with the rising cost of living, including energy bills.

Since the recent recession began, millions of workers have suffered repeated effective pay cuts as inflation has outstripped pay rises.

As well as paying for household bills, economists also believe that people's use of savings may have contributed to recent economic growth.

The news comes amid growing evidence that consumers' appetite for spending is on the rise in the run-up to Christmas.

Consumer spending was one of the main contributors to the sharp rise in gross domestic product in the third quarter, and a further strong increase is implied by the Bank's money figures.

But while the figures suggest that the economy is strengthening, they will also be taken as further evidence that savers are being deterred from putting money aside by record low interest rates.

According to new figures from the Bank, the average interest rate on long-term savings accounts has now dropped to 2.4% - the lowest level since comparable records began in 1999.

Some also suspect that with households still facing a significant squeeze as a result of higher living costs, many are having to dig into their savings in order to afford day-to-day items.

Simon Ward, chief economist at Henderson Global Investors, pointed out that on top of the £900-per-household shift of cash out of long-term savings, families have also put £21bn - a further £800 per household - which might normally have gone into savings accounts into their spending money.

"Consumer strength usually reflects increased borrowing but this hasn't been the key factor recently," he said.

"Instead, households have been running down their savings accounts balances, probably in reaction to the pathetic interest rates now on offer.

"Increased spending is lifting growth and incomes, and money is flowing back to other households, in a virtuous circle."

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Water Companies Submit Five-Year Price Plans

Britain's 19 water companies have submitted their price proposals for the period between 2015 and 2020.

With the exception of Thames Water - the nation's biggest water service provider - they are all pledging to either freeze or cut bills in real terms during that time.

The average UK household currently pays £388 a year for water and sewerage services.

The regulator Ofwat, had urged the firms to apply downward pressure on bills, despite them spending millions on investment programmes.

Thames Water wants a real terms price hike of 11% - to fund £8bn of investment projects.

On November 8, Ofwat said the proposed Thames Water price rise of £29 was not justified, despite the company saying the extra money was needed to fund the construction a "super sewer" under London.

The watchdog's chief regulation officer Sonia Brown said: "We said we would challenge Thames' application, in the interests of customers.

"We did just that and on the evidence provided we are not convinced that an extra bill increase is justified."

Documents given to Sky News show that most of the water companies holding their prices static were acting on the wishes of their customers.

In October the water companies were warned that they must offer value for money or risk a backlash of complaints from customers.

In its annual report, the Consumer Council for Water (CCWater) revealed that written complaints had reduced by 7.4% in England and Wales.

This was down for the fifth year in a row while complaints by telephone were also down.

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Npower Customer Apology After Bill Errors

Energy firm npower has written to its 3.4 million customers to apologise after a sharp rise in complaints in the last year.

The German-owned gas and electricity supplier admitted that a glitch resulted in a number of bills and statements failing to go out on time, direct debit payments not being set up properly and some customer accounts having problems being started.

Regulator Ofgem said it had been concerned about a "serious deterioration" in customer service levels.

Chief executive Paul Massara pledged that anyone affected would not lose out financially as a result.

Npower will also donate £1m to a fund for vulnerable customers, with half of this channelled to Macmillan Cancer Support.

Ofgem welcomed the apology and payment, and said that after its intervention, npower had set out a recovery plan to ensure that service levels improve.

Research last month by Consumer Futures showed that npower had 202.5 complaints per 100,000 customers for the April to June period.

This compared to 38.3 for SSE, which had the lowest level of complaints among the main energy providers.

Mr Massara said the problems arose after customer details were transferred onto a new computer system.

These led to its helpline receiving extra calls, resulting in longer waiting times for those trying to get through.

In the letter, Mr Massara wrote: "We've let many of you down recently in the overall levels of customer service we've been providing. We apologise unreservedly."

Around 700,000 customers are thought to have been affected by the problems, though it is believed the vast majority are not financially worse off.

Mr Massara said the issue was being dealt with as a "top priority", adding that hundreds of staff were working to address it.

Many customers affected had already been contacted individually to address specific problems and others would be, he said.

Anyone affected by payment problems as a result of the glitch would have repayment periods extended, Mr Massara added.

Ofgem senior partner Sarah Harrison said: "The huge growth in complaints about npower is wholly unacceptable and is an issue that Ofgem takes very seriously. That is why we intervened in this case.

"Npower's commitment that its customers will not lose out financially as a direct result of the company's billing system problems is important and we will expect npower to do all it can to identify and rectify such cases."

Npower recently announced a 10% average bill increase, but said it would reduce bills as a result of a shake-up of Government green levies.

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Stolen Mobile Phone Bills To Be Capped

Mobile phone owners will no longer have to face huge bills if their handsets are stolen under a deal between the Government and four of the main suppliers.

EE, Three, Vodafone and Virgin Media say they will put a cap on the amount they will charge customers.

The amount is expected to be in the region of £50, about the same price at which a stolen credit card is capped.

The companies have also agreed to halt unexpected mid-contract price rises and allow customers to break their contract if such charges are brought in.

Telecoms providers Sky, BT and Talk Talk have also signed up to the scheme.

Culture Secretary Maria Miller announced the measures as she accompanied Prime Minister David Cameron on his trade trip to China.

"We are ensuring hard-working families are not hit with shock bills through no fault of their own," she said.

"Families can be left struggling if carefully planned budgets are blown away by unexpected bills from a stolen mobile or a mid-contract price rise.

"This agreement with the telecoms companies will deliver real benefits to consumers and help ensure people are not hit with shock bills."

The deal comes on the heels of the Government's proposals to end roaming charges - the costs associated with using mobile phones abroad - within the EU.

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Apple Buys Twitter Trends Tool Topsy Labs

Topsy Labs has been bought by Apple in a deal that will provide the iPhone maker with more insights about the chatter on Twitter.

The San Francisco-based startup's analytic tool pores through the stream of conversations on the social network to identify trends and people influencing public opinion.

It also runs a free search engine that boasts an index of every tweet posted since 2006, a resource not publicly available on Twitter's own online messaging service.

Apple spokeswoman Kristin Huguet confirmed the Topsy acquisition without elaborating on its plans for the service.

Ms Huguet did not disclose the acquisition price, adding: "Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans."

There was a flurry of speculation on Apple's intentions, although it was generally agreed that having a better grasp on the hottest topics on Twitter could help Apple sell more advertising on iPhones and iPads - a key target for the company. 

Topsy's Twitter tools could also be used simply to give the iPhone a unique search feature.

Unlike Topsy, Google, which makes the Android operating system that powers many of the iPhone's rival products, has been unable to obtain a licensing agreement that would give its search engine more immediate and deeper access to Twitter's content.

Apple spent a total of $496m acquiring other companies during its last fiscal year ending September 28.

In comparison, Google spent $1.4bn acquiring other companies during the same period, including the mapping app Waze.

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Rival Lloyds Branch Bidder Urged To Sue Bank

By Mark Kleinman, City Editor

The bidder which lost out to the Co-operative Group in the auction of 632 Lloyds Banking Group branches is being urged to consider legal action to recover the £30m it spent on its bid.

Sky News has learnt that a number of shareholders in NBNK Investments, which is listed on the stock market, are encouraging the acquisition vehicle's directors to consider suing to recover tens of millions of pounds in costs.

The NBNK board, which is now chaired by the veteran US investor Wilbur Ross, has not yet made a decision to take such action and it is unclear whether a lawsuit would be targeted at Lloyds or the Government, insiders said.

Investors including Crystal Amber, which owns just over 3% of NBNK, are keen for its directors to consider the move amid the growing political controversy about the regulation of the Co-op's banking operations.

NBNK spent roughly £30m of the £50m it raised from City institutions to assemble a bid for the Lloyds branch network, which was given the codename Project Verde.

However, its offer was trumped on two separate occasions by the Co-op, which was subsequently forced to abandon the deal when it became clear that its finances were not in an adequate state to mount such a significant takeover.

None of NBNK's shareholders, including Crystal Amber, would comment on a prospective legal action against Lloyds or the Government.

However, they are understood to have been galvanised by intensifying allegations in recent weeks that the outcome of the branches auction was influenced by a desire from the Treasury to see a mutually-owned organisation emerge as a more powerful player in Britain's high street banking sector.

"This was not a level playing field. That has become clear," said one NBNK investor. "NBNK has paid £30m to compete in an auction it had no chance of winning."

The chances of a successful legal action are unclear, since NBNK would have to demonstrate a form of misrepresentation by Lloyds, its advisers or the Government.

"Whilst the legal test is a substantial one, it was always felt that the Verde process was heavily geared towards the Co-op's success," another investor said.

"The telling factor may come out of numerous Freedom of Information Act requests which have been submitted to various Government departments."

Sky News revealed last month that Lord King, the then Governor of the Bank of England, had told Lord Levene, who at the time was NBNK's chairman, that he believed the Co-op's bid had won political favour.

In a statement, a Lloyds spokesman said: "The bidding process for the Verde business was assessed on a fair and open basis.

"The Lloyds board made the decision to proceed with the Co-op based on value and certainty.

"They chose to proceed with a business that had an existing franchise, branch network and a banking licence.

"The Group also maintained a Plan B - an IPO (initial public offering) of Verde. The first phase of that completed in September with TSB on the UK high streets."

The TSB network is likely to float on the stock market in the middle of next year, with former RSA Insurance boss Andy Haste poised to be appointed as its chairman.

A Treasury Select Committee inquiry into the Verde sale process is hearing further evidence on Tuesday from advisers from KPMG, the accountancy firm, and JP Morgan, the investment bank.

In evidence provided to the Committee earlier this year, NBNK said it had warned Lloyds that it believed the Co-op was in a worse financial position than had been publicly acknowledged and that the mutual would be forced to withdraw.

In a letter to the Financial Times this week, John Aitken, an adviser to NBNK, said "the result for both the Co-op and NBNK (whose investors could reasonably have expected an unbiased process) has ensured we have gone backwards".

"This dire result has been achieved by a combination of ineptitude and political interference and, rather than congratulating themselves, those responsible should be deeply ashamed," he added.

Senior City sources believe that one of the motivations for favouring a Co-op deal  was that the well-capitalised Verde network would help to ease the mutual's difficulties over IT systems, management inexperience and doubts about the robustness of its capital position.

A series of probes now awaits the Co-op and some of its former directors, with the Financial Conduct Authority and Prudential Regulation Authority considering whether to launch formal enforcement investigations.

A separate probe commissioned by the Treasury and undertaken by an as-yet unidentified figure from the world of banking or law will also take place.

In a statement last month, it said its inquiry would "cover the actions of relevant authorities (regulators and government) and the institution itself, including prudential issues, governance (including the appointment of senior staff) and acquisitions".

The Treasury's inquiry will not begin until after any PRA and FCA enforcement action has been concluded.

Following the termination of its interest in the Lloyds branches, Lord Levene and other NBNK directors stepped down from the board, with Mr Ross investing in the cash shell last December.

NBNK has not yet pursued any alternative acquisitions.

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140 Jobs At Risk As Stationer Osbornes Folds

By Mark Kleinman, City Editor

Another high street retailer was on the verge of collapse on Tuesday when a 180-year-old stationer called in administrators amid intense competition from supermarket chains.

Sky News understands that Osbornes Stationers is poised to announce that FRP Advisory, a professional services firm, has been appointed to oversee the administration, which could threaten 140 jobs.

Osbornes, which operates 20 shops across the Midlands, including in Birmingham, Bristol and Nottingham, is understood to have been loss-making for several years.

Like many high street businesses, it has been adversely affected by consumer shopping habits switching to the internet, as well as the buying muscle of supermarket giants.

Osbornes employees are understood to have been informed of the decision to call in administrators on Tuesday morning, with FRP said to be hopeful of identifying a buyer to save most, if not all, of the business.

The retailer was founded in 1832 by Edward Corn Osborne, who established a printing business on New Street in the centre of Birmingham.

It has undergone several changes of ownership since and was the subject of a buyout by several directors in 2008.

Osbornes is the latest retailer to succumb to the continuing challenges affecting many regionally-based businesses, even as the overall economic picture improves.

National chains which have fallen into administration in recent months include Blockbuster, the DVD rental business, while Tie Rack recently announced a plan to close the vast majority of its remaining UK stores.

An FRP spokesman declined to comment.

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Housebuilding Grows At Best Pace For A Decade

Housebuilding grew at its fastest pace for a decade in November amid surging demand buoyed by Government initiatives.

Figures from the closely watched Markit/CIPS purchasing managers' index (PMI) for construction showed housing activity at its highest since November 2003 while job creation was at a six-year high.

It helped overall PMI for the sector accelerate to its best level since August 2007.

Markit chief economist Chris Williamson said the housing figures suggested the number of new home starts had risen to 40,000-45,000 per quarter in recent months, up from 28,000 at the end of last year.

It meant, he said, that the wider improvement in the UK economy was more likely to be sustainable with the boost in housing supply helping to meet buoyant demand.

Combined with improvements in manufacturing data, the figures also added to the likelihood that gross domestic product growth could accelerate to more than 1% for the fourth quarter, he said.

The construction upturn came as demand for property is spurred by the Government's Help to Buy scheme to help would-be homeowners struggling to find a deposit, as well as low interest rates.

Meanwhile, the Funding for Lending scheme to improve borrowing conditions has proved so successful in helping the mortgage market it has had to be cancelled and refocused on small businesses.

But the PMI figures also showed commercial construction growth accelerating while civil engineering continued to expand, albeit at slightly below the pace it managed the previous month.

Mr Williamson said: "The survey indicates that the construction upturn is not simply predicated on a housing market boom fuelled by Government initiatives and low borrowing rates."

Howard Archer, chief UK and European economist at IHS Global Insight, said: "What is particularly encouraging and bodes well for the sustainability of the construction upturn is that the improvement in activity is now widespread across sectors while incoming new business is elevated.

"If consumer spending gains appreciable momentum as Christmas gets ever nearer, fourth quarter growth prospects for the economy will be looking very bright."

However, the construction sector remains a long way off returning to its best levels, with latest official figures showing it was 13.3% off its pre-recession peak.

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RBS To Spin Off Remnants Of Investment Arm

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is in talks to spin off one of its last-remaining investment arms as the bank pares back its non-core activities amid Government pressure.

Sky News can reveal that the lender is at an advanced stage of discussions about handing control of a division called the RBS Special Opportunities Fund to its management team.

The deal, which could be finalised before the end of the year, reflects a growing trend among global banks to downsize their principal investment businesses because of more punitive capital treatment by international regulators.

In RBS's case, the outsourcing of its Special Opportunities Fund (SOF) is also a consequence of growing pressure from Chancellor George Osborne to focus on consumer and small business lending.

The bank's new chief executive, Ross McEwan, will outline a revised strategy for RBS at its full-year results in February.

There have been fresh calls this week for RBS to be broken up following the publication of two critical reports relating to its treatment of struggling small business (SME) customers.

RBS holds a 13.5% direct stake in the SOF, which describes itself as "a discreet £1.1bn third-party fund" but which has provoked occasional controversy since the bank's rescue in 2008 by continuing to make new investments.

The fund has been part of RBS's non-core division since 2008, and owns assets including Moneycorp, the currency provider, and Target, a financial services outsourcing provider.

Under the management of Lindsey McMurray, SOF has been shrinking its portfolio of investments through a series of asset sales and flotations.

These have included the recent stock market listing of Arrow Global, the debt collection agency which snapped up a £900m portfolio of student loans from the Government on Monday.

Among the other businesses it has been an investor in are Catalina, a Bermuda-based acquisition vehicle that is currently engaged in bidding for the insurance assets of the struggling Co-operative Group. RBS SOF sold its stake in Catalina to Apollo Management, another investment firm, earlier this year.

It was also a shareholder in Four Seasons, the nursing home group.

The deal being proposed is for Ms McMurray and her team, who manage the fund's investments on behalf of all investors, is understood to involve removing it from RBS's non-core arm.

This will allow it to raise new capital to invest although it is unclear whether RBS will retain its minority shareholding.

Ms McMurray joined RBS in 2002 from Cabot Square Capital, an investment firm which at the time was part of Credit Suisse First Boston.

Ms McMurray and RBS declined to comment.

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Big Six Energy Firms Face New Profits Storm

The big six energy companies made £23 more in average profit from each UK household on aggregate last year - a rise of 75% on 2011 - and profits are still rising, according to the industry's regulator.

Ofgem said the latest average profit for all suppliers from the average dual fuel customer hit £53 in 2012 but was measured at double that on November 21 this year at £105.

The regulator announced the figure after releasing its analysis of the companies' accounts for 2012, which found average profit margins of 20% for energy generation.

The revelation prompted the watchdog to suggest it may insist on greater clarity in future to ensure that the profits are a fair reflection of investment in future power generation.

It found that the average profit margin for supply to household customers was 4.3% - in line with the claims made by the industry - as energy use rose and bills went up.

EDF is involved in the planned new Hinkley Point nuclear power station

But it calculated the profit margin made in generating energy in 2012 at 20% - slightly lower on the previous two years - but still high in the context of rising household bills.

The study sought to explain the disparity between supply margin and that for generation by pointing out that the generation part of a business needed significant sums of money over the long term to invest in building new power stations.

Ofgem said it was now considering whether companies needed to provide additional profit measures in generation which took account of capital investment to help ensure greater transparency.

The big six - SSE, E.ON, EDF Energy, Scottish Power, npower and Centrica's residential arm British Gas - have faced a backlash from politicians and consumer groups since the latest round of bill increases - up to 11% in some cases - was announced.

npower's Pembroke power station replaced old gas capacity

Of the firms, only E.ON is yet to confirm its increase ahead of the coming winter.

Ofgem's report follows analysis of statements the companies have had to submit annually since 2009 as part of efforts to subject the firms to greater financial scrutiny.

The statements showed that across all six suppliers, overall profits for energy supply and generation fell from £3.9bn in 2011 to £3.7bn in 2012.

However, profits in supply to households and businesses increased from £1.25bn in 2011 to £1.6bn.

Energy companies have insisted their profits are fair, reflect wholesale costs and the country's need to invest in future supply.

Amid the criticism of the industry over the latest rises to bills, the firms highlighted the growing cost to households from so-called green levies.

The environmental and social charges could be placed under general taxation by the Government in the coming Autumn Statement.

The firms have pledged to cut the rises to bills to match any reduction to the charges confirmed by the Chancellor on December 5.

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Scottish Independence: £600 Better Off Claim

Key Economics Of An Independent Scotland

Updated: 3:23pm UK, Tuesday 26 November 2013

For those without the time to sift through all 650 pages of the Scottish White Paper, here are some of the key points on the economics of an independent Scotland.

:: The Big Picture

At present, Scotland has only limited autonomy to change taxes or spending - with many of the key decisions taken in Westminster.

An independent Scotland would have the autonomy to determine its own taxes and spending plans. However, the White Paper says that the country will accept some constraints on these in order to keep the pound.

It would have the independence to control the flow of both people and goods across its borders - though, again, the White Paper says the plan would be to leave this flow unchanged.

The paper presents a vision of a country which could become a small, independent dynamic economy with a vital corporate sector, low taxes and high exports.

Whether this is possible remains a matter for debate. The Scottish economy is indeed a dynamic, relatively prosperous area, albeit with a high reliance on oil revenues.

However, attractive as independence might seem to many, it would come with some costs and constraints, as the White Paper reflects (occasionally).

:: The Public Finances

Scotland generates more tax than the rest of the UK thanks largely to North Sea oil revenues.

However, it also spends more, per head, than the rest of the UK. The upshot is that its net position is remarkably similar. In 2012/13 Scotland had a primary deficit (eg borrowing before interest costs) of 5.3% of GDP deficit. So did the rest of the UK.

However, the estimates for where Scotland will be in the coming years differ depending on whose numbers you use.

The White Paper calculates that the deficit will be between 1.6% and 3.2% of GDP by 2016/17 – the potential year of independence if there is a "yes" vote in next year's referendum.

However the Institute for Fiscal Studies thinks the deficit will be significantly higher at just over 4% of GDP by then.

The real difference of opinion occurs in the following years. The IFS thinks that as North Sea oil revenues decline and Scotland's growth rate remains steady, it could be left with a big hole in its public finances, equivalent to 4.1% of national income.

This is what Danny Alexander's claim of a £1,000 tax rise for each Scot is based on.

Alex Salmond, by contrast, believes that North Sea revenues will last longer, and that Scotland will be able to generate enough growth as a small, dynamic independent economy, akin to Singapore or Hong Kong, to avoid such an outcome.

However, the SNP has not provided any long-term forecasts to compare with the IFS's numbers.

:: The National Debt

Britain has a sizeable pile of debts built up over recent decades - by 2016/17 they will stand at £1.6 trillion. The White Paper accepts that some of this should be borne by an independent Scotland (which in turn means Scotland will have to service that debt, paying interest on it for many years into the future).

It suggests two ways of calculating the scale of that debt:

1. A population share: under this, the national debt would be split between Scotland and the rest of the UK based on their population sizes. Under this, the White Paper says Scotland would take responsibility for around £130bn - leaving it with total debts equivalent to 76% of GDP. This is a relatively high debt-to-GDP ratio by international standards.

2. An historical share: under this plan, the national debt would be split based on how much in the way of debt (or surpluses) Scotland and the rest of the UK generated in recent years. Because Scotland has generated a series of budget surpluses due to North Sea oil revenues, its share of the debt would considerably lower at approximately £100bn - 55% of Scottish GDP.

:: Currency

The White Paper says that Scotland will keep the pound, becoming a part of an effective currency union with the rest of the UK.

It says that it is entitled to do so as an effective shareholder of the Bank of England. The Bank would set monetary policy (in other words, interest rates and various banking regulations) for the entire currency area.

Westminster politicians have raised questions over whether the UK Treasury, or indeed the Bank itself, would be willing to authorise this. The SNP suggests it will be a Scottish right.

The White Paper says that an independent Scotland would agree to be bound by fiscal rules and an independent Scottish Fiscal Commission to keep its public finances in check. What this might mean in practice is that the country will not have the tax-and-spend independence it would otherwise have with a fully independent currency.

It's a similar analogy to the euro, where the single currency's members are having to sign up to a "fiscal compact" barring them from borrowing excessively.

:: Financial Regulation

One area covered in only scant detail in the report is precisely what would happen in the event of a future financial crisis - a significant question given that Scottish banks (RBS, HBOS) were at the centre of the recent financial crisis.

The report says that the Bank of England would remain in place as a lender of last resort if a bank was in trouble. However, it also says that while the Bank of England would be partly responsible for broader "macroprudential" financial regulation in Scotland, Edinburgh would also have her own independent financial regulator which would take on the job of the Financial Conduct Authority in Scotland. Whether this complex system of structures would cohere remains an open question.

And there is a deeper, more worrying issue: the Bank of England's Lender of Last Resort function kicks in only if a bank is having cash-flow issues, not if it is fundamentally insolvent.

If a bank is to be bailed out, taxpayers tend to have to step in to rescue the failed institution. Quite which taxpayers that would be is left unclear in the document.

:: North Sea Oil

One of the key elements underlying the White Paper is that the UK Government has benefited from billions of pounds of North Sea oil related revenues over recent decades, and not been set aside for future generations (let alone for those in Scotland specifically).

Indeed, unlike in some countries, including Norway, where a chunk of the proceeds of revenues is put into a fund for the future, Britain's revenues went towards current spending, helping boost the overall economy and public finances through the 1980s and 1990s.

Even today, Scotland is responsible for 94% of North Sea oil revenue (though this is not an enormous total earner for Britain, at 0.4% of GDP).

As a result, the country, which has 8.3% of the population, pays 9.2% of total taxes. However, at present that extra revenue is compensated for by extra spending.

The White Paper suggests that in future the oil revenue could be put towards a sovereign wealth fund, called the Scottish Energy Fund. However, some will ask whether this is really compatible with the rest of the White Paper's calculations, which seem to imply a large role for North Sea revenues in paying off the country's net debt.

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