Online Sales Boost A 'Sluggish' December

By Ursula Errington, Business Reporter

Strong online sales in December have buoyed what has been described as an "underwhelming and sluggish" Christmas on the high street.

The British Retail Consortium (BRC) said retail sales for the month were up just 1.5% compared to the Christmas period in 2011.

However Internet sales rose by almost 18%.

If the online contribution to total year-on-year sales growth is stripped out, it shows that high street trading stagnated compared to last Christmas.

"Online retail still accounts for a relatively small part of total sales," said BRC director general, Helen Dickinson.

The outlook for British retailers for 2013 year is 'subdued'

"But in December it played a disproportionately larger role in driving non-food sales.

"Shoppers took advantage of the investment many retailers have made in making their websites easier to use across multiple devices, in flexibility of delivery options as click-and-collect came of age, and in security - they now feel much more comfortable putting their credit card numbers into their mobile phones."     

Pimlico-based florist, Rosemary Watkins, knew it would be a tough December for the shop she has worked in for three years but it was worse than she imagined.

They closed early on December 24 and in the run-up to Christmas they hardly saw what could be termed as Christmas trade.

"We had the shop ready from the first week in December," she told Sky News. "But what we anticipated would happen, didn't happen.

"We were lucky to sell what we did. We had to stop buying stock as it's perishable; you can't hold onto it. If it's this bad here in SW1 I can't imagine what it's like in other parts of the country."   

The survey reveals shoppers are increasingly confident buying good online

Footfall was down considerably on last year largely because of bad weather and consumers buying more in one go, thereby reducing the opportunity to browse and be tempted to buy.

But perhaps the most influential factor was the shift towards the internet. It appears fewer shoppers were searching in stores first, before going online.

Pharmacy owner Nishma Hirani is just a few doors down from Rosemary's florist. She has decided to focus on internet sales of perfume and her higher-end health and beauty products for Christmas 2013.

She also intends to modify how much stock she carries in the run up to next Christmas. The BRC survey showed that generally, retailers bought in less stock and held off offering heavy discounts in order to keep their margins up.

But optimistic Nishma did not do that. Buoyed by solid sales in last year's difficult climate, she bought a lot of stock and is now stuck with it.

Surrounded by perfumes bearing sale stickers she explained: "Last year people were buying four or five bottles of perfume at a time but this year they only bought one or two - not bulk buying.

"We kept our stock quite high but we just didn't find it was moving as quick as we would have liked it too."

Overall, the BRCs outlook for this year is subdued. They have said their members expect the hard times to continue but not worsen, with this "bumping along the bottom" effect to continue for perhaps years to come.

KPMG's head of retail, David McCorquodale, said: "While consumer confidence remains low, shoppers will tighten their belts and rein in their spending, making life difficult for the average UK retailer.

"There will be no boom and it's likely more than a few will go bust".

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Debenhams Posts Record Christmas Trading

Debenhams has revealed it has enjoyed its best Christmas sales ever.

Like-for-like sales in the five weeks to January 5 climbed 5% - with online sales "ahead of expectations", rising 39% over 18 weeks to the same date.

The department store said figures were boosted by its seasonal advertising campaign, product range and online sales.

Web sales accounted for 12.6% of total sales over the 18 week period, compared to 9.3% in the previous financial year.

As a result, it said the higher than anticipated online sales would have an impact on its warehousing and distribution costs over the course of the year, which are expected to increase from 3.2% to 3.5% as a percentage of sales.

The retailer also admitted it cut its prices ahead of Christmas because of greater promotional activity on the wider high street - a decision that hit its margins more than it had previously forecast.

Michael Sharp, chief executive, said: "I am pleased with our performance in the first four months of our financial year.

"The trading environment was extremely challenging but we focused on meeting the needs of our customers and executing the four pillars of our strategy.

"I would like to thank the whole of the Debenhams team for their tremendous efforts in delivering this performance.

"We continue to believe that whilst customers have become acclimatised to the new economic reality, we don't anticipate a significant change in consumer confidence in the remainder of the year.

"We remain committed to prudent investment in key areas of the business to deliver long-term substantial growth as well as driving shareholder value."

Debenhams is not the only retailer to buck the gloomy retail trend.

On Monday, House of Fraser posted record trading results for the festive period, with like-for-like sales up 6.3% in the six weeks to January 5.

Last week, John Lewis revealed it made £684.8m in the five weeks to December 29 - up almost 15% on the same period in 2011.

All three retails giants - among the first to provide Christmas trading updates - have all reported a surge in online sales.

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Virgin Atlantic Confirms Craig Kreeger As CEO

Virgin Atlantic has confirmed the appointment of Craig Kreeger, the boss of American Airlines, as its new chief executive.

Details of Mr Kreeger's appointment were first revealed by Sky News City Editor Mark Kleinman.

Mr Kreeger is to join the carrier on February 1.

American Airlines has a key transatlantic alliance with British Airways (BA) - the bitter rival to Sir Richard Branson's Virgin Atlantic.

Mr Kreeger has been with American for 27 years, and will replace incumbent Steve Ridgway, who has been Virgin CEO since 2001.

Boss Sir Richard Branson said: "We are thrilled to welcome Craig to Virgin Atlantic – he is the right person to succeed Steve Ridgway at this dynamic and challenging time for our airline.

"We believe Craig has the experience and passion to drive Virgin Atlantic forward and capitalise on the opportunities created by our new venture with Delta Airlines."

Speaking about the headhunting of the key executive, Kleinman said: "His arrival is likely to be viewed in the aviation industry as a coup for Sir Richard, for whom Virgin Atlantic has always remained his flagship enterprise.

"As American's head of customer service, Mr Kreeger is credited with overseeing improvements on one of the biggest US airlines by passenger numbers."

The recruitment of a successor to Mr Ridgway comes just weeks after Delta Air Lines, the big US-based carrier, acquired a 49% stake in Virgin Atlantic from Singapore Airlines for $360m (£220m).

The fate of Singapore Airlines' stake had cast a shadow over Virgin's future for several years, with the Asian carrier making little secret of its desire to offload the shareholding - having written down its £600m investment to zero.

Virgin Atlantic remains a minnow when measured against BA, although some of Virgin's other airline ventures, including its domestic US carrier, have been commercially successful.

Flying around six million passengers annually and owning 40 aircraft, Virgin Atlantic has slumped to annual losses in recent years, hit by sharp rises in fuel prices and intense competition at Heathrow.

Flights between the UK and the US make up the most valuable long-haul market by revenue, a segment Delta was keen to secure a more lucrative slice of.

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Dyson Warns Government Over UK Manufacturing

The Government must do more to protect the future of manufacturing in Britain, inventor Sir James Dyson has warned.

The entrepreneur, who is famous for inventing the bagless Dyson vacuum cleaner, said Britain will have a deficit of 60,000 engineering graduates this year.

Too much emphasis has been placed on "the glamour of web fads and video gaming" over "tangible technology that we can export", he argued.

The 65-year-old's comments come despite Dyson's decision around 10 years ago to move production to Malaysia, with the loss of 550 jobs.

He said: "The Government must do more to attract the brightest and best into engineering and science so that we can compete internationally. 26% of engineering graduates do not go into engineering or technical professions.

"More worrying is that 85% of all engineering and science postgraduates in our universities come from outside the UK."

Speaking to the Radio Times magazine, he said: "Yet nine in 10 leave the UK after they finish their studies. British knowledge is simply taken abroad.

"Engineering postgraduates need to be encouraged with generous salaries. A salary of £7,000 a year for postgraduate research is insulting."

Asked to reconcile his remarks with Dyson's decision to shift manufacturing jobs abroad, he told Sky News all the firm's machines were still conceived and developed at its research and development headquarters in Wiltshire.

"We have more scientists and engineers there than ever before, over 750 Dyson scientists and engineers developing technology for the next 25 years," he said.

"Last year, another 220 engineers joined the team, a third of them graduates. But we need more. Dyson is expanding, new markets and new machines. 

"Our future technology depends on nurturing bright minds to develop technology for export, but there is a shortage of engineers in the UK. To help businesses the Government needs to encourage more students into engineering subjects.

"Businesses full of bright minds can then develop patented technology for export."

A spokesman for the Department for Business, Innovation and Skills said: "Engineering graduates go into a range of sectors, including financial services and retail as well as manufacturing.

"We are working closely with industry and continue to look at various ways to support engineering at all levels, including engagement in schools, apprenticeships and postgraduate training.

"Applications for engineering courses at university have held up this year."

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West Coast: Toy Train Firm Bids For Franchise

Toy Firm's Letter And Aide's Reply

Updated: 12:48pm UK, Tuesday 08 January 2013

These are the full letters from Bigjigs to the Department of Transport and the Government's response.

Bigjigs Letter, October 3rd

Dear Mr McLoughlin,

It has been well documented in the public arena recently that you are having a few issues deciding which train companies should serve the West Coast Main Line.

Obviously this is a decision that should not be taken lightly and has many complex issued that need serious consideration. I, however, feel there is only one company that stands head and shoulders above the rest.

This company has been delivering exceptional service on time and to low cost for its customers for years, and should be a serious candidate amongst the other four bidders.

You might be asking who can offer such a service. Simple. Bigjigs Rail.

Bigjigs Rail has been running efficient and cost effective services since 2005, and has had many customers over the years who are delighted with the service we offer.

Bigjigs Rail would like to put in a bid for the West Coast Main Line, and we promise the following:

:: An efficent service on some exciting trains including our Bullet Train, Passenger Train, Princess Train or even one of our Heritage Trains.

:: No delays - our track is not affected by sun, rain, snow, wind or leaves. Our trains run whatever the weather!

:: A 'fair' fare for all - our trains run on enjoyment and so our service will be FREE.

:: We have enough trains to run frequent services - so no more cramped conditions for our commuters; everyone gets a seat (we might even introduce beds at some stage).

:: Safety - our safety record speaks for itself. We have never had nor never will have an accident. Our track and all of our trains are tested under the highest scrutiny and have to be fully compliant with safety regulations at all times.

Our promises speak for themselves and we are confident we will 100% deliver to the 31 million people who travel on the West Coast Main Line every year.

I look forward to hearing your thoughts on our bid and look forward to changing the British Rail Network.

Yours Kindly,

George Poole

Government Reply, December 24

Dear Sir,

You wrote to the Secretary of State earlier this year, enclosing a model train and a short section of track. You had some helpful proposals as to the operation of the West Coast Mainline (WCML).

While the Secretary of State did not have time to read your letter personally, I myself took a keen interest. Your model now adorns my desk.

Turning to your specific points, I am afraid there are some necessary bureaucratic hurdles you will need to overcome before you are able to run passenger services on the National Rail network. I suggest that you contact the Office of Rail Regulation who can provide advice. Their website is at orr.gov.uk.

With regards to your rolling stock, I can see expert craftsmanship and high build quality. Government policy is indeed to allow the market to dictate rolling stock solutions, but in the spirit of partnership working, I will make a few recommendations:

:: While perfect for the in-home market, wooden carriages are unlikely to meet modern crashworthiness standards for operation on the heavy rail network. Aluminium might be a better bet.

:: Though traditional, a locomotive and coaches formation does not use all available scarce space within the maximum train length. Please remember that the maximum length of a train on the WCML is around 260m. May I suggest a multiple unit?

:: Your ratio of 1/3 first class, 1/3 standard and 1/3 guard's van is rather wasteful of space. Perhaps building accommodation for the guard's van into the first class coach would be a good approach.

:: From my inspection, the carriage bodies are attached rigidly to the bogeys. To take advantage of higher speeds on the WCML, it will be necessary to retrofit a tilting mechanism.

:: I note that your current design employs only two axles per carriage. This is likely to result in poor ride quality at high-speed (you will be aware that class '14x' Pacers use this set-up and are limited to 75mph). Four may be more appropriate.

Notwithstanding the above, your vibrant livery would certainly brighten up the railway. Good luck refining your proposal.

May I also take this opportunity to thank you once again for your model and wish all staff at Bigjigs Rail a Merry Christmas. I hope you have a successful 2013.

Yours faithfully,

Mark Reach

Private Secretary

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Benefits Cap Vote On George Osborne's Plans

Work and Pensions Secretary Iain Duncan Smith has accused Labour of bribing voters with tax credits during a bitter debate about the 1% cap on benefit payments.

Mr Duncan Smith attacked the Opposition for criticising legislation to sever the link between welfare handouts and inflation in a fiery Commons session.

He claimed the previous government had created a system in which nine out of 10 families with children could claim tax credits, including those on £70,000-a-year.

"They think that helping people is about trapping more and more people in benefits," he told MPs ahead of a vote on the controversial move later.

"The result of all of this is that the debt we all had to pay off was costing us £30,000 every single minute," Mr Duncan Smith said.

He accused Labour of failing to face up to the need to slash the deficit, pointing out the party had opposed £83bn of savings set out by the Government.

"That's the equivalent of adding another £5,000 of debt for every working family in the country," he said.

But shadow work and pensions secretary Liam Byrne claimed the coalition's approach was turning into a "hit and run on working families".

He accused Chancellor George Osborne of "battering the life" out of the economic recovery and Mr Duncan Smith of living "in a fantasy land".

George Osborne's 1% cap is opposed by Labour's Ed Balls

"The Tory way is to hit working families. The Labour way is to help people work," he told MPs.

MPs will vote on the cap following the heated debate and Labour as well as some Lib Dem rebels are set to vote against it.

What amounts to a real-terms cut will hit most working age welfare payments and tax credits, including jobseeker's allowance and maternity pay.

The Government insists it is unfair that state handouts have been rising twice as fast as wages during recent years of austerity.

But Labour argues that the move will mostly affect people who are actually in work, citing analysis that shows seven million working households will lose £165-a-year.

Shadow chancellor Ed Balls said: "While millionaires get a tax cut, seven million striving working families are paying the price for David Cameron and George Osborne's economic failure.

"The best way to get the benefits bill down is to get the economy growing and people back to work, not hit striving families."

Mr Duncan Smith, appearing earlier on Sky News, condemned the Opposition's stance as "pathetic", "unrealistic" and "ridiculous".

"We have to still continue to try and tackle the deficit left for us by Labour which is fuelling huge borrowing and will cost taxpayers enormously unless we get it under control," he said.

"It is also about trying to do it in a way that is fair to those who are in work and are paying the taxes for those who are on welfare.

"The reality is they have seen their welfare payments rise far faster over the last six or seven years than anybody in work."

Labour was "a pathetic opportunistic group who spend their time trying to pretend to people there are soft options out there", he added.

However, anti-poverty campaigners have warned that families will increasingly struggle to properly feed children if benefits fail to keep pace with rises in the cost of living.

Former children's minister Sarah Teather has already broken ranks, warning the the measure would make poverty "significantly worse" and accusing Mr Osborne of "playground politics".

She has now been joined by South Manchester Liberal Democrat MP John Leech, who said he found the Tories' language "objectionable".

"I strongly support raising the tax threshold for low paid workers, but this cut will wipe out much of that good work," he said ahead of this evening's Second Reading division.

Meanwhile, the Tories are trying to distance themselves from the "skivers against strivers" rhetoric sparked by Mr Osborne's original announcement.

Conservative MP Sarah Wollaston insisted that the "vast majority" of her party did not use those terms and it was not how they "feel generally".

The Institute for Fiscal Studies (IFS) has estimated seven million working families will be £165 worse off a year, compared to £215 for the 2.5 million workless households.

Mr Duncan Smith says the £165 figure only reflects the benefits cap and claims working families will actually be £125 better off each year due to the rise in the income tax threshold.

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Ofcom To Boost Hunt for Nuisance Call Firms

The telecoms watchdog is to boost efforts to hunt down companies behind nuisance calls to householders.

The move was prompted after Ofcom said a study found almost half of all adults were subjected to silent or abandoned calls within a six-month period.

The regulator announced a plan to tackle the growing problem after its own research suggested the number of those affected had increased from 24% in 2011 to 47% in 2012.

An abandoned call is one that ends when it is picked up while a silent call is where the receiver hears nothing and has no way of knowing whether there is anyone at the other end of the line.

The figures, released in the regulator's annual Consumer Experience Report, also reveal that 71% of landline customers received a live marketing call, while 63% received a recorded marketing message over the same six-month period.

Ofcom said its plan to help tackle nuisance calls would include a new study to build a clearer picture of the problems consumers experience.

It has also pledged to work closely with the industry to identify ways to trace companies behind nuisance calls when they try to hide their identity.

Ofcom issued fines totalling more than £800,000 within the last year to HomeServe and npower over silent or abandoned calls. TalkTalk is currently under investigation.

The watchdog has also received numerous complaints from consumers who have been pestered by callers acting on behalf of firms looking to payment protection insurance mis-selling compensation claim firms.

Ofcom's consumer group director Claudio Pollack said: "Nuisance calls can cause annoyance, inconvenience and anxiety to consumers.

"This is a complex and challenging area, but Ofcom is determined to work with industry and other regulators to help protect consumers. Our new research will help to understand the root cause of the problem."

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'Dream Job' Put Up For Grabs By First Choice

A holiday operator is looking for a thrillseeker with adrenaline in spades and who is happy to get wet at work.

Pitched as the "dream job" for "a fun-loving water park enthusiast", First Choice is hunting for a "slide tester" for its SplashWorld resorts this summer.

Applicants are required to have a good sense of humour, a passion for water parks, and good written skills to promote the experience through social media.

Luke Gaskins, from the company, said: "This is an amazing job for one lucky person who'll get to escape the 9-5 and instead spend their days rating slides and pools in the sun this summer."

The successful candidate will be given a six-month contract to test the flumes, slides and pools at destinations across Europe and North Africa including Majorca, Turkey and Egypt.

In addition to a salary of £20,000 per annum (pro rata), all overseas travel will be paid and the posting will end with a free seven-night holiday for two at an all-inclusive resort.

Those keen to take the plunge and don their swimwear for a living must apply by pitching their credentials in a 30-second video clip.

A shortlist of five will be whisked off to a water park to battle it out for the job in a series of challenges.

It is not the first time an organisation has drawn attention to itself by embarking on a very public search for a new recruit.

In 2009, the Tourism Office of Queensland advertised for a caretaker for Hamilton island on the Great Barrier Reef for six months.

Billed as the "best job in the world", the move aimed to promote and boost visitor numbers. The post was eventually filled by British man Ben Southall.

Mark Borkowski, a PR and brand expert, said travel firms were competing for attention in a "very aggressive market".

He said: "It is one of those 'money can't buy' jobs. It will certainly be talked about on the web."

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Halfords To Host Practical Driving Tests

Practical driving tests will be available from branches of Halfords from next month, the Government has announced.

The first test centre will open at the firm's Wellingborough store on February 5, before the initiative is rolled out to branches across the country in the coming months.

All tests will be conducted by Driving Standards Agency (DSA) examiners.

The firm's director of communications, David Sawday, told Sky News the store offered learner drivers a "non-threatening environment to meet your examiner and start your test".

"All the people in the country are within a 20 minute drive of a Halford's store so we are a very accessible location," he added.

Other sites under consideration as future test centres include Glasgow, Altrincham, Market Harborough and Hemel Hempstead.

And the car parts and bicycle retailer may not be the only private sector company enlisted to help provide "a more local service for driving test candidates".

The DSA is looking at both the private and public sector, with fire stations and universities reportedly also in the running to host practical driving test centres.

Driving test wait times currently vary from between one week and almost three months, depending on the location.

The Government is currently consulting on proposals to improve the way all motoring services are delivered.

The Halfords deal, which has been in the pipeline since last summer, was finalised by Road Safety Minister Stephen Hammond.

He said: "We are very pleased to be working with Halfords to provide a more local service for candidates.

"This is a great example of working with private sector partners to provide an important local service that is convenient as well as being cost effective."

Paul McClenaghan, Halfords' commercial director, said: "Halfords is already a local destination for motorists, who come to us for a diverse range of automotive products and services.

"We're always seeking new ways in which to enhance our offer, so working with the Driving Standards Agency is a natural fit for the business and extends the help we are able to provide to motorists," he added.

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Boeing 787 Dreamliner Catches Fire In Boston

An electrical fire onboard a Boeing 787 aircraft has prompted further concerns about the Dreamliner's delayed introduction.

The Japan Air Lines jet filled with smoke after arriving at Boston, following a non-stop flight from Tokyo.

The fire chief at Logan airport said a a fault occurred in the battery pack for the plane's auxiliary power unit, which runs the jet's electrical systems when it is not getting power from its engines.

Fire crews using infrared equipment found flames in a small compartment in the plane's belly and had the fire out in about 20 minutes, he said.

A Boston fire chief inspects the Dreamliner

Massachusetts Port Authority's fire chief Bob Donahue said there was a flare-up later when a rechargeable battery exploded.

He said it was too soon to know the cause.

About 15 minutes after all 173 passengers and 11 crew members had disembarked, a mechanic spotted light smoke in the cockpit and cabin.

"When we arrived, it was a heavy smoke, and that was in three minutes, so this was advancing," Mr Donahue said.

The model was originally planned for launch in 2009 but production has been beset with technical problems. It was first delivered in late 2011.

In November 2010, a test flight had to make an emergency landing after an in-flight electrical fire - delaying test flights for several weeks.

Last month, a United Airlines 787 flying from Texas to New Jersey diverted to New Orleans because of an electrical problem with a power distribution panel.

The head of Qatar Airways recently criticised Boeing after its delivery-delayed planes were grounded for five days because of the electrical faults.

A prototype Dreamliner was displayed at Farnborough in 2010

It came as the US aviation watchdog discovered fuel line assembly errors.

It said that the faults could result in fire risk from leaks dripping on hot engine parts or causing the aircraft to run out of fuel.

British Airways has ordered 24 Dreamliners from Boeing and is still expecting its first 787 in May, with a further three due for delivery before the end of 2013.

Virgin Atlantic has 16 Dreamliners on order and told Sky News it still expects its first delivery in 2014.

Thomson Airways has also placed orders for the hi-tech long-haul Boeing plane, which has been marketed as being more comfortable and environmentally friendly than other aircraft.

A spokeswoman for Thomson told Sky News: "Our first Thomson Dreamliner is still on track to be delivered early this year. Boeing has reassured us that they are taking action to rectify the issues highlighted to them."

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