EU Review Reveals Fears About New Powers

Britain needs to keep control of its own tax policy and look out for any loss of control over foreign affairs, according to a new Government report on the EU.

The first part of the biggest review of Britain's involvement in the union in 40 years looked at what membership has brought the UK.

It will form the basis of David Cameron's renegotiation of the country's role in Europe before an in-out referendum he has pledged to hold by 2017.

The Government has described the review as "the most extensive analysis of the impact of EU membership on the UK ever undertaken".

It will publish 32 reports between now and 2014.

Drawn up by officials, they do not make recommendations but attempt to summarise how the EU helps and hinders the UK.

The first set looked at the European single market, taxation, foreign policy, overseas aid, health and animal welfare.

The report on foreign affairs raises concerns about the performance of EU institutions such as the diplomatic service - the external action service headed by Baroness Ashton.

"If the internal conditions of EU external action deteriorate, how will that affect our choices of how to deliver international impact in the British interest?" the report asks.

"If the institution's performance does not improve, or if there is an undesirable shift in control away from the member states, such as a greater role for the European Parliament, how will we alter our approach, what will the constraints be, and how will we use or develop our other partnerships and alliances as alternative vehicles?"

The report on health questioned the impact of EU regulations - such as the working time directive (WTD) and data protection laws - on the NHS.

"There was a strong view that it is important to consult more with health departments and their stakeholders on these areas from the outset. A number of concerns were raised about the negative impact of the WTD on the NHS," it said.

Foreign Secretary William Hague said the reports were an essential contribution to the debate on Britain's EU future.

"At a time when the EU is facing considerable challenges and discussion on the EU in Britain is intensifying, it is vitally important that the debate in the UK is as well-informed as possible," he said.

"These reports make a valuable contribution, not only to the debate in this country but also to the debate taking place in other European nations about the future of the EU."

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China In Ban On 'Glitzy' Official Buildings

Chinese authorities have ordered a five-year suspension of the construction of new official buildings, state media reported.

It is the latest move by President Xi Jinping to crack down on extravagance and pervasive corruption that blights the world's most populous nation.

The decision was "made in accordance with the country's frugality campaign", official news agency Xinhua said.

Some structures built in violation of regulations had tainted the image of the Communist Party and stirred vehement public disapproval, the agency said.

"The directive called on all party and government bodies to be frugal and ensure that government spending goes toward developing the economy and boosting people's wellbeing," it added.

The ban also covered "glitzy structures" built as training centres, hotels or government motels, it said.

Numerous scandals in recent years have centred on extravagant expenditure on new government buildings by officials, often in poverty-struck inland regions.

A building belonging to the state-owned Harbin Pharmaceutical Group

Some local governments have embezzled poverty-alleviation and disaster-relief funds to build offices and other facilities for themselves that sometimes resemble high-end resorts.

Mr Xi, who took office in March, has made the fight on graft a key objective of his administration, and the party has already targeted everything from the use of government cars to liquor served at official banquets.

Corruption is so bad it could hurt the party's grip on power, Mr Xi has warned.

But so far few high-level officials have been caught in his dragnet and the party has shown no sign of wanting to set up an independent graft-fighting body.

Similar orders in the past to rein in construction of over-the-top government buildings have had little apparent effect.

Some international observers believe that an apparent crackdown on foreign pharmaceutical firms over kickbacks is an early phase of turning the heat up on domestic wrongdoers.

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Help To Buy Extension Sparks New Warnings

Experts Divided Over Help To Buy

Updated: 1:41pm UK, Tuesday 23 July 2013

By Tadhg Enright, Business Correspondent

The Chancellor says that Help to Buy will "fix a broken housing system" but critics claim it risks creating another bubble at taxpayers' expense.

Anyone looking to buy a new home will have noticed Help to Buy branding on the hoardings outside new developments across the country.

It offers buyers the opportunity to buy a new home with a deposit of just 5%.

An additional 20% of the property's value is provided by way of a five-year, interest free loan to the buyer leaving a shortfall of 75% to be made up by a mortgage lender which is a lot less risky.

Homebuilders attending a round-table discussion at Downing Street toasted its success in boosting business.

Some 7,000 new homes have already been reserved as part of the scheme.

The economic filip of such schemes is that building new homes creates jobs for builders as well as the ripple effect that any new home purchase has across the economy when new owners invest in fixtures, fittings and furniture too.

And from January, the offer will be extended to purchasers of existing as well as new homes with the Government guaranteeing up to 15% of their mortgages up to a maximum property value of £600,000.

Good idea? It depends who you talk to.

Chief among those raising red flags was the former governor of the Bank of England, Lord King, whose parting shot was a warning not to allow Help to Buy become a permanent fixture.

Over the weekend I met Brunel University's Professor Moorad Choudhry to talk about prospects for the economy at large and he also felt the need to raise his concerns about the plans.

He said: "I'd like to ask why is the Government subsidising house purchases. That is something we got out of years back when we unwound tax relief on mortgages interest.

"If I inject cheap money into the stock market and it rises, that's not genuine growth. It's conceptually similar to subsidising anything and it's a false growth."

I also interviewed the former government economic advisor Vicky Pryce that day and she thought it was a fabulous initiative which would, in Keynesian style, raise the fortunes of the entire economy.

Ask anyone with a rudimentary understanding of property economics and they will tell you that if you boost the budget of the average homebuyer, that enables them to stretch that little bit further and offer that little bit more to get the place they want.

Economists at the estate agents Savills have already increased their forecasts for property price increases over the next five years from 11.5% to 18.1% by 2018.

Director of Savills residential research, Lucian Cook said:  "A combination of low interest rates and stimulus measures means there is capacity for improved price growth over the next three years or so.

"Help to Buy goes further than any of its predecessors in being aimed at all buyers, not just first time buyers, but we believe its primary impact will be increased transaction levels and that higher than expected price growth is a secondary impact."

It will give first-time buyers and ordinary homeowners seeking to trade up a greater ability to compete with property investors who are barred from the scheme but in the South East, where there is a shortage of housing, increased competition can only lead to increased prices.

Mortgage advisor Martin Wade, from Your Mortgage Decisions, sees another benefit.

He said: "What is great is that it's open to existing homeowners to remortgage. We've got a lot of people out there stuck on unattractive rates but because lending criteria have changed, they are effectively prisoners of their mortgage.

"What this will allow them to do is to remortgage, free up some capital, and it will be a huge relief for tens of thousands of people who are stuck on standard variable rate mortgages with very unattractive terms."

And talking of attractiveness, Capital Economics have singled out Help to Buy's most potent effect: the feelgood factor.

How do you help the disenfranchised feel like they have a real stake in life and society? Help them to buy a home.

Capital Economics' Michael Pearce said: "While the policy has been criticised for its ropey economics, it may be more successful politically.

"Indeed, the risk that it pushes up house prices may be positive for the Conservatives' election chances in 2015."

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Sun Shines On Britain's Exporters - Survey

UK export activity is at its highest since 2007, according to the latest confidence index from the British Chambers of Commerce (BCC).

The BCC/DHL Trade Confidence Index of more than 1,700 businesses showed that 50% of service sector and 42% of manufacturing firms reporting an increase in exports during the second quarter of 2013.

The survey index rose to a level of 118.12 in the second quarter, up from  114.8 in the previous quarter and above the long-term average of 100.

In addition, 51% of export firms believe that their profitability will increase this year, with 60% expecting a boost in profitability.

Nearly a third of firms said they expected to increase staff numbers this year in response to the growth.

BCC director general John Longworth said: "For the first time on record, these results are positive across the board.

"Export sales and orders have gone up, confidence is high and expectations around profitability have increased."

In recent months there have been encouraging signs of a return to growth for British industry.

Similarly, the UK housing market has shown how it continues to grow within certain regions.

Mr Longworth added: "Even more businesses have taken on new staff this quarter, with many expecting to hire again next quarter, which is really encouraging."

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British Films Hit New Box Office Record High

Cinema box office receipts rose 6% in 2012 to hit a record of £1.1bn, according to newly released figures.

According to the British Film Institute (BFI) 2013 Statistical Yearbook, cinema admissions in the UK reached 172.5 million, the third highest level in the last 40 years.

The BFI said UK films took £3.45bn at the global box office, claiming a 15% share of the international market - the third highest global box office take ever recorded.

The yearbook also revealed that filmgoers over the age of 45 became the largest proportion of the British cinema audience for the first time.

Skyfall, the latest film of the James Bond franchise, was the year's biggest movie and it took £715m around the world.

It took £103m at the UK box office, setting a new domestic record as the highest earning film of all time.

British films are now in the leading two spots for the most successful film franchises of all time, with the Harry Potter series taking over £5bn worldwide, followed by Bond with more than £3.97bn.

Although a number of top films have foreign funding, according to the BFI statistics British actors have also been big winners.

It said that two-thirds of the top 200 films released worldwide since 2001 feature UK actors in "lead or prominent roles".

It added that 31 films based on stories and characters created by UK writers were in the top 200 global box office successes between 2001 and 2012 - together earning more than £14.3bn.

The appeal of cinema in 2012 came despite competition for the public's attention from the Olympics, Paralympics, the Diamond Jubilee and Euro 2012 football.

Overall, the number of tickets sold in Britain was up 0.5%.

BFI chief executive Amanda Nevill said: "UK films captivated audiences and 007 spearheaded another strong year for UK film internationally.

"(They) collectively pulled in £3.45bn and helped export British culture and creativity around the world in 2012.

"Our Yearbook shows film's continued importance to the UK economy overall, with a record turnover of £7.7bn and trade surplus of £1bn in 2011."

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Fire Control Room Overhaul 'Is Still Failing'

A project to build new fire control centres which wasted £482m of taxpayer's cash is still costing millions of pounds three years after it was scrapped, MPs have said.

The previous Labour government drew-up plans in 2004 to locate 46 local fire services in nine regional centres.

But after a series of delays and problems the FiReControl plan was dropped by the coalition in 2010.

The Department for Communities and Local Government (DCLG) made £81m available to support the drive to fill the empty centres and improve existing ones.

But the new programme has already slipped by three months and projected savings are £2m less than originally predicted, the MPs' report said.

Seven of the 22 projects are running late, with two now a year behind schedule.

Four of the nine planned regional centres are still empty and the prospects of finding new tenants "do not look good", with "significant" costs remaining, said the MPs.

The large scale and high specification of the four purpose-built control centres, which are still empty, mean they are very expensive to run, said the report.

The centre at Castle Donington in the East Midlands, for example, costs £1.8m a year in rental charges, facilities management, utilities and rates, the MPs noted.

Labour MP Margaret Hodge, who chairs the committee, said: "Three years after the project was cancelled, the DCLG still hasn't decided what it is going to do with many of the specially designed, high-specification facilities and buildings which had been built.

"Four of the nine regional control centres are still empty and look likely to remain so.

"Seven of the 22 projects are reportedly running late and two have been delayed by 12 months. We are therefore sceptical that projected savings, benefits and timescales will be achieved."

A DCLG spokesman said: "This Government has taken decisive action to protect taxpayers' interests, cancelling the flawed FiReControl contract, which was over-budget, behind schedule and failed to work."

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Royal Baby Memorabilia Boost For UK Firms

By David Crabtree, Sky Correspondent

The Royal birth is generating a mass of souvenirs and memorabilia - providing a huge sales boost for British companies.

Pottery companies are on standby for the Duke and Duchess's baby to be named.

At Royal Crown Derby they are poised to produce several pieces priced from around £50 up to £16,500, which is a gilded, hand-painted table centrepiece.

Simon Willis, the sales and marketing director, said: "Obviously not knowing what the name is before time means we can only do so much work before we start producing the pieces.

"We at least know it is a boy so we are doing the blue range. The name will be in gold. We can print all the other colours and hold the name until the last minute.

"Fingers crossed, it would be nice to know by Friday and we can prepare over the weekend and get into production next week."

He said there was now a worldwide demand in the collectables.

Royal Crown Derby says it had workers in 20 minutes after the announcement

"We knew this was coming because we had nine months warning which was similar I suppose in many ways to the Royal wedding.

"The difficulty here has been is it a boy? Is it a girl? There is a great deal of international interest, which means exports for us and good news for the UK.

"So when they talk about the massive amount of business that is going to be done in relation to the Royal baby, a lot of that will be exported."

He added: "It is amazing that the Russians, for example, are taking an interest in this.

"And other parts of Eastern Europe, Kazakhstan, Azerbaijan - other countries we have probably never even heard of - are really taking an interest in this, which is fantastic for us.

"We have had three very good years with a Diamond Jubilee, a Royal wedding and now a Royal baby.

Dr Laura Cohen, chief executive of the British Ceramic Confederation, highlighted how foreign collectors, especially from countries such as America and Japan, prize items from the UK.

She said: "This will be a welcome boost for UK tableware and giftware manufacturers, generating significant sales for many companies in the UK and overseas.

The Royal couple's wedding was also a bumper time for memorabilia firms

"UK manufacturers are uniquely placed to commence manufacturing as soon as the baby's name is announced and so respond rapidly to orders.

"Many customers value the 'Made in England' back stamp on cherished family items such as these marking Royal occasions."

Memorabilia to mark the Royal birth will be led by the official range produced by the Royal Collection Trust.

In recent years, the organisation has produced high-quality bone china items to mark historic moments for the monarchy.

A spokeswoman for the trust said: "Royal Collection Trust has produced a number of commemorative china ranges to celebrate Royal anniversaries and events, most recently for the Royal wedding, the Diamond Jubilee, and the anniversary of the coronation in 2013."

Burleigh Pottery in Stoke-on-Trent is also waiting for the all-important name of the Royal baby.

They had two prototype mugs ready, one pink and one blue. Work is now starting on the blue mug.

"We are so excited about this baby," said the firm. "Being a part of it in the manufacturing world is wonderful."

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Bentley: First SUV To Create 1,000 UK Jobs

Luxury car firm Bentley is to build a new model - its first sports utility vehicle (SUV) - in Crewe, creating an estimated 1,000 jobs.

The company said the development of its fourth model would include an investment of £800m in headquarters and development infrastructure.

The vehicle will be launched globally in 2016. China has become a key market for sales of the luxury marque.

Bentley has not yet released an image of what the car will look like.

A Bentley at Brooklands in 1931 travelling at 120mph during a 500-mile race

But the company, which is owned by the Volkswagen group, said it would be a "thoroughbred Bentley, true to the brand hallmarks of luxury, performance, quality and craftsmanship".

It said: "The styling will set it apart from any other SUV on the road and will be true to the Bentley design DNA.

"It will be the most luxurious and most powerful SUV in the market."

Bentley was founded after the First World War and scored early successes in motorsport, particularly at Le Mans.

It was later bought by Rolls-Royce, and Volkswagen purchased the firm in 1998.

A price range has not been revealed for the new model - however, early estimates put the car's value at around £150,000.

Prime Minister David Cameron, speaking at the company's Crewe headquarters, said: "This £800m investment and 1,000 new jobs from Bentley is fantastic news for both Crewe and for the UK as a whole.

The car has become a favourite for the wealthy in emerging markets

"It is another important milestone in strengthening our economy."

The decision to make the car in Britain further reinforces the country's position as a key vehicle manufacturing location in the competitive global market.

Britain's automotive sector has continued to show strong performance figures amid a languishing status for other areas of the economy.

Mr Cameron added: "One sector that we know is sprinting ahead in the global race is our booming automotive industry.

"One vehicle rolls off the production line somewhere in the UK every 20 seconds and we have just launched the Government's automotive industrial strategy to help continue this success for years to come."

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GSK Admits China Execs Flouted Law Over Drugs

GlaxoSmithKline (GSK) has said that some of its executives in China appeared to have broken the law as part of a major bribery scandal that has ensnared the UK pharmaceutical firm.

The news comes as rival UK drugmaker AstraZeneca has confirmed to Sky News its Shanghai office has also been visited by Chinese investigators.

GSK said that new proposed changes to its operations would result in lower prices of its medicines in China - an original issue and complaint made by authorities.

"Certain senior executives of GSK China, who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law," the firm's head of emerging markets, Abbas Hussain, said in a statement.

Mr Hussain, who was sent to China last week to lead GSK's response to the crisis, held a meeting with the Ministry of Public Security at which he also promised to review GSK's business model.

"Savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients," Mr Hussain added.

Meanwhile, AstraZeneca (AZ) believes the Shanghai investigation police launched relates to enquiries on a single employee.

GSK boss Sir Andrew Witty

In a statement given to Sky News, it said: "AstraZeneca can confirm that it was visited by the Shanghai Public Security Bureau ... regarding a local police matter focused on a sales representative.

"We believe that this investigation relates to an individual case and while we have not yet received and update from the Public Security Bureau, we have no reason to believe it's related to any other investigations."

In mid-afternoon trades on the FTSE 100 GSK shares were down 1.37% while AZ shares were down 0.47%. Both eased slightly before the close.

GSK initially denied any wrongdoing when police first announced an investigation into the company's Chinese operation.

Authorities alleged that more than £200m was funnelled to hundreds of travel agents in the country, which was then given to doctors, hospitals and health foundations as travel kickbacks.

Chinese police last week accused GSK of bribing officials and doctors to boost sales and raise the price of its medicines in China.

They said GSK transferred up to 3bn yuan (£232m) to 700 travel agencies and consultancies over six years.

Four senior Chinese executives from GSK have been detained and it said it was deeply concerned by the allegations, which it called "shameful".

In a statement, China's Ministry of Public Security said Mr Hussain apologised for the scandal during the meeting.

Mr Hussain was dispatched to China by chief executive Sir Andrew Witty, along with the group's global head of internal audit and a senior legal official on Friday, according to sources.

The CEO is expected to further detail what action the drugmaker is taking in response to the bribery allegations when he presents quarterly results on Wednesday.

The company has run into problems despite conducting up to 20 internal audits in China each year, resulting in the sacking of dozens of staff for misconduct.

In 2012, GSK dismissed 312 staff for policy violations worldwide, according to its annual corporate responsibility report, of which 56 were in China.

There has been widespread speculation that other multinational drug companies would be drawn into the corruption investigations.

The National Development and Reform Commission (NDRC) - China's powerful economic planning agency which sets and enforces drug prices - has announced the sector.

The NDRC said it would establish a web platform to monitor the pricing behaviour of drugs distributors, but has so far given few details.

Since 2000, the NDRC has made three rounds of adjustments on the maximum retail prices for medicines, the agency said in a statement posted on its website.

Those efforts were geared toward preventing a rise in prices.

"The next step is to establish an online platform for medicine factory price monitoring, and strengthen monitoring of distributors' pricing behaviour," the statement said, citing an unnamed official.

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Retail Boss McEwan Leads Race For Top RBS Job

By Mark Kleinman, City Editor

The head of Royal Bank of Scotland's (RBS's) UK retail banking operations, Ross McEwan, has become a frontrunner to replace Stephen Hester at the helm of the state-backed lender.

Sky News understands that Mr McEwan has become the leading internal candidate for the job and could be announced as Mr Hester's successor as soon as RBS's half-year results on August 2.

People close to RBS cautioned that the chairman, Sir Philip Hampton, had yet to make a decision about his preferred choice, who would almost certainly oversee the eventual reprivatisation of the taxpayer's 82% shareholding in the bank.

A number of unidentified external candidates are also still in the running, although some other outsiders have been deterred from participating in the process by the extent of the Government's interference in the bank's strategy, according to insiders.

"The process is still live and there is no final decision at this point," a person close to the situation said. They stressed that it was possible that one of the external candidates could yet be picked to take over from Mr Hester.

RBS CEO Stephen Hester has announced his decision to leave the lender

Sir Philip's search for a new boss is understood to have encompassed candidates in Australia, Canada, Hong Kong, Singapore, the UK and the US - "the entire English-speaking banking world," as one insider said on Tuesday.

Mr McEwan, a New Zealand national, is understood to have told Sir Philip that he would be prepared to commit to a long-term stint in the UK if he is chosen as the new boss.

RBS's board will meet next week to finalise the bank's interim results announcement and discuss the appointment of a new chief executive, although naming a new boss could yet slip beyond next week.

UK Financial Investments, the agency which manages the Government's shareholding in RBS, has not yet been asked to give its verdict on Mr McEwan or the other contenders.

Mr McEwan would - if chosen as Mr Hester's successor - almost certainly win the crucial support of Cabinet ministers such as Vince Cable, the Business Secretary, and George Osborne, the Chancellor.

He spent five years as the group executive for retail banking services at Commonwealth Bank of Australia before joining RBS, and is credited at the Edinburgh-based lender with driving through reforms aimed at improving customer service.

Some analysts have positioned Mr McEwan as a similar candidate to Antony Jenkins, who headed Barclays' retail banking business before being appointed to replace Bob Diamond in the wake of the Libor rate-rigging scandal last year.

Appointing Mr McEwan would, nevertheless, represent something of a gamble for RBS and the Government. He has limited experience of the British banking sector, having only been appointed to his current role in August last year.

His experience of investment banking is also negligible, although RBS's investment banking operations are now sufficiently small at less than 20% of its balance sheet that appointing a deputy to Mr McEwan with greater experience in that area is seen as possible but unlikely.

The Treasury is carrying out a review of whether a 'bad bank' containing approximately £60bn of assets could be carved out of RBS, enabling its 'good bank' to accelerate lending to the UK economy.

Mr Cable has been vocal in his demands for RBS to grow its business lending, prompting the bank to announce this month an independent review of its lending practices.

Such a split has been opposed by Mr Hester and was among the factors that triggered tensions between the outgoing boss and the Chancellor in recent months.

One advantage of appointing Mr McEwan would be his availability to take over the top job in time for Mr Hester's departure in December.

Among the other RBS executives who have been seen as credible candidates for the chief executive's role were Nathan Bostock, the new finance director, who may still be in the frame; Chris Sullivan, the chief executive of corporate banking; and Rory Cullinan, who has led the rundown of RBS's non-core division during the last five years and is leading the group's engagement with the Treasury's 'bad bank' review.

Bruce Van Saun, who is leaving as finance director to head RBS's US retail bank, Citizens, was also a possibility if he could have been persuaded to remain in the UK, although his dealings with the Treasury about RBS's strategy are also understood to have been tense at times.

RBS declined to comment.

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