Debt Ceiling: Senate Democrats Push Toward Vote

Senate Democrats plan to push for a vote to raise the federal debt ceiling, challenging Republicans to yet another showdown as the US closes in on a possible default.

A spokesman says Senate Majority Leader Harry Reid could unveil the measure as early as Tuesday, setting the table for a test vote later in the week.

The measure is expected to provide enough borrowing room to last beyond next year's mid-term election, meaning it likely will permit $1trn (£622bn) or more in new borrowing.

The amount will be added to the current $16.7trn (£10.39trn) debt ceiling that the US Treasury says will be hit on October 17.

The Democrats' measure, however, is not expected to include new spending cuts sought by Republicans, most likely rendering it dead on arrival in the House.

Mr Reid and Mr Boehner have been unable to find a compromise

The vote also could face strong opposition in the Senate if it does not contain budget cuts to make a dent in deficits.

The question is whether Republicans will try to hold up the measure with a filibuster. Such a showdown could unnerve the financial markets.

The development comes as a partial shutdown of the government enters its second week with no end in sight.

The top Republican in Congress once again asked for negotiations with the White House to ease the twin crises.

House Speaker John Boehner told reporters: "I want to have a conversation. I'm not drawing lines in the sand. It is time for us to just sit down and resolve our differences.

"There's no boundaries here. There's nothing on the table, there's nothing off the table."

An aide to the Speaker later said President Barack Obama called Mr Boehner to reiterate he would not negotiate with Republicans until they voted to end the shutdown with a "clean" spending bill.

Some 800,000 'non-essential' workers are on unpaid leave

House Republicans had sought to attach a delay to aspects of Mr Obama's signature healthcare law in exchange for keeping the federal government funded beyond September 30.

Meanwhile, GOP aides said the Republican-controlled House will attempt to set up a new bipartisan panel to negotiate reopening the government and avoid a default.

The prolonged political wrangling in Washington has frustrated citizens and business leaders alike.

A survey by The Washington Post and ABC News found that 70% of Americans disapprove of the way Republicans are handling budget negotiations, up from 63% last week.

Howard Schultz is trying to ratchet up the pressure on Capitol Hill

Disapproval of Mr Obama's role was unchanged at 51%.

Meanwhile, the CEO of Starbucks has urged fellow business leaders to ratchet up the pressure on Washington to end the stalemate.

Howard Schultz wrote in a letter posted on the company's website that he was "utterly disappointed by the level of irresponsibility and dysfunction we are witness to with our elected political leadership."

"This weekend I heard from several business leaders who shared their concern about our relative silence and impact in urging the political leadership to act on behalf of the citizenry," he said.

"It is our responsibility to address the crisis of confidence that is needlessly being set in motion."

"I don't pretend that both parties are equally to blame for this crisis. But I do think they are equally responsible for leading us to a solution," Mr Schultz said.

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Winter Blackout Risk 'Highest For Six Years'

The electricity and gas network operator for England and Wales is keeping a "close watching brief" on supplies as the risk of blackouts was predicted to be at its highest since 2008.

Traditional North Sea gas sources are being replaced by "uncertain" imports, making it more likely that at any other time in six years that supplies will fall short in the coming colder months.

However, the National Grid has said it was confident the market has the capability to keep the lights on.

Chris Train, director of market operations, said electricity margins - the difference between peak demand and available supply - were "tighter than we have seen historically".

The reserve margins are forecast to drop from 9% last winter to 4.5% this winter.

National Grid made the gloomy forecast in its Winter Outlook 2013/14, and highlighted reducing gas output from UK territorial waters, primarily in the North Sea.

"Source supplies continue to evolve as UK Continental Shelf (UKCS) gas supplies decline and the UK's reliance on imports increases," it said.

"The decline in UKCS supplies and subsequent increase in import capability has materially changed the UK's gas supply landscape and fundamentally changed the dynamics of supply from that of near predictability to considerable uncertainty."

Last winter's repeated and prolonged periods of freezing weather saw a dramatic spike in imports through pipelines to Bacton in Norfolk from the Netherlands and Belgium.

Daily winter imports from mainland Europe last winter reached 57%, tilting away from traditional UK North Sea sources.

Traditionally, gas imports flowed from north to south through a North Sea pipeline network based at St Fergus, near Aberdeen.

Last winter coal-fired power generation was increased because of the widening cost differential between coal and gas.

However, the availability of coal-fired plants has fallen almost 20% since last winter.

Mr Train said: "While there have been power station closures since last winter, the information suggests that the market can meet demand in cold weather.

"But as the system operator, we're never complacent and it's up to us to be ready to balance the system in real time. We believe we are ready and have the tools we need to play our part."

Wind power helped meet the increased demand last winter, with the amount of power generated from that resource higher than gas-fired electricity levels for the first time.

However, supply needed to be boosted during periods of low wind speed by greater reliance on gas.

Lengthy periods of cold, still weather will further exacerbate gas usage this coming winter.

The National Grid has estimated wind turbine output at 25%, factoring in breakdowns and insufficient wind speed periods, but added that extended periods of no wind could drop the system's reserve safety margin even lower.

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George: Royal Baby Christening Coin Created

The Royal Mint has created the first ever royal christening coin in the UK to mark Prince George's baptism later this month.

The gold "kilo coin" is worth £50,000

The limited edition gold "kilo coin" is being sold for £50,000 - but a more affordable "Brilliant Uncirculated" £5 coin costs £13.

The £5 coin has been made in silver - because the crossing of a baby's palm with silver is said to bring good health and prosperity to newborns - and gold to commemorate the royal celebration.

The Royal Mint said it has received thousands of pre-orders from within the UK and around the world.

The £5 coin is being sold for £13

The coin features the Lily Font from the Tower of London, two harp-playing cherubs and the royal motto ''Dieu et mon droit'' (God and my right).

Before the special coin was created ahead of George's christening on October 23, the design had to first be approved by his parents, the Duke and Duchess of Cambridge.

The Queen approved the design of the coin

Dr Kevin Clancy, director of the Royal Mint Museum, said: "It's symbolic and it's got dignity about it. Working that out and pitching it at the right level isn't an easy thing to do.

"We've had to bring the royal couple along with us on this."

The Queen and Chancellor George Osborne also had to sign off on the design.

The christening coin was produced in seven months

Dr Clancy added: "They have considered it to be a good design for the subject.

"You don't necessarily get a huge amount of detail beyond that. But that they like it is good enough for us."

The designer of the coin, John Bergdahl, said it normally takes up to two years to produce a new coin, but the christening edition had to be made in around seven months because of the unknown details about the royal baby, such as its gender and name.

The "silver kilo coin" is being sold for £2,600

Mr Bergdahl said: "The design is baroque, a style that has been reborn many times and often featured in royal artwork and traditions.

"One element that I knew I wanted to incorporate was the Lily Font from the Tower of London, which is a strong tradition in christenings for the Royal Family.

The coin is designed in a baroque style

"The motto is traditional and sums up the expectation carried by a young child, born to reign - regardless of gender - for the first time ever.

"Hopefully it will be timeless and it will still look as good in 100 years' time as it does now."

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Child Benefit Penalties Faced By Thousands

Tens of thousands of parents face being fined for failing to register the child benefit they received this year with the taxman.

An estimated 165,000 people missed Saturday's deadline, meaning they could face penalties as well as losing the handout.

HM Revenue and Customs has urged those who have not registered to do so now to avoid further costs.

A spokesman for HMRC said: "More than 29,000 people registered for self-assessment over the weekend, taking the total registrations to 160,000.

"This means that 165,000 people still need to take action and on past experience we expect more people to register in the coming days.

"Although we are past the deadline, people should still register for self-assessment to minimise any penalties they may face."

Fines for failing to register will be decided on a case-by-case basis, HMRC said.

Under Government reforms, households where one parent earns more than £60,000 a year have to return the entire amount through the self-assessment system unless they have opted out of receiving it in the first place.

It will be taken away on a sliding scale where mothers or fathers earn between £50,000 and £60,000.

The system for recovering the money has proved highly controversial as families where both parents earn just under £50,000 each will keep their payments.

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HS2 Should Be Put On Hold, MPs' Committee Says

The HS2 rail project has "serious shortcomings" and should be put on hold, according to a powerful Commons committee.

MPs suggested the controversial scheme should not proceed until the Government produces fresh analysis on whether it offers value for money.

The Treasury Select Committee said a "more convincing" economic case was needed for the project, which is now estimated to cost £42.6bn - 17% higher than previous predictions.

The Government has insisted its costings are "robust" and that the link will be vital to addressing the "urgent capacity needs" on train services.

But a recent study suggested the eventual cost could climb to £80bn and it has been branded a "grand folly" and "foolish" by critics.

The first phase of HS2 from London to Birmingham

Treasury Select Committee chairman Andrew Tyrie said: "There appear to be serious shortcomings in the current cost-benefit analysis for HS2. The economic case must be looked at again.

"The Bill should not proceed until this work has been done and the project has been formally reassessed by the Government ...

"A more convincing economic case for the project is needed. We need reassurance that it can deliver the benefits intended and that these benefits are greater than those of other transport schemes - whether in the department's project pipeline or not - which may be foregone."

The concerns were raised as part of the committee's inquiry into the 2013 spending round that set departmental settlements for the 2015/16 financial year.

It also questioned plans for a cap on annually managed expenditure, predicting it could have a "significant impact" on benefits paid to the most needy.

And it raised fresh concerns about the Help to Buy mortgage scheme, the latest phase of which started this week, warning any mistakes could "distort" the housing market.

The risk of ring-fencing NHS, schools and international aid budgets was also flagged, amid fears it could hit resources for other areas and lead to less discipline on spending.

Labour says HS2 has been "totally mismanaged"

Newly-appointed shadow transport secretary Mary Creagh claimed the HS2 project had been "totally mismanaged".

She said: "David Cameron and George Osborne have made clear they will go full steam ahead with this project whatever the cost. Labour will not take this irresponsible approach.

"There will be no blank cheque for this project or for any project, because we need to ensure it is the best way to spend £50bn for the future of our country."

But a Government spokesman said: "HS2 is absolutely vital for this country if we are to meet the urgent capacity needs we face. The project is on course, under control and will be delivered within the agreed budget.

"We are confident that our analysis is robust and conforms with government spending guidance.

"The case for HS2 will be further improved when we publish shortly the updated strategic case - including cost benefit analysis - which will show high value for money for the project."

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Scottish Independence: Defence Jobs Warning

By Alistair Bunkall, Defence Correspondent

Thousands of jobs could be lost in the defence industry if Scotland votes for independence, the Defence Secretary has warned.

Philip Hammond set out the commercial benefit of the Union in a speech at an Edinburgh defence technology firm. 

"The Scottish people deserve to know what the impact of independence would be on the jobs and livelihoods of the many thousands of people in Scotland that are employed in the UK armed forces or in the defence industry that equips and supports them," he said.

"Less than a year before the Scottish people go to the ballot box to take one of the most important decisions in the history of Scotland, the SNP's plans remain insultingly vague - a two-page wish list that is neither costed nor credible."

Mr Hammond's speech coincides with the publication of an 86-page consultation paper.

Mr Hammond says thousands of defence industry jobs would be lost

It concludes that the UK investment and legal exemptions which protect jobs in the defence sector cannot and would not transfer to an independent Scotland.

Companies with a base in Scotland would be exempted from contracts deemed sensitive by the Westminster Government.

It is probable that BAE Systems would close its two Scottish shipyards in the event of independence.

The UK has not commissioned a naval ship to be made outside of UK sovereign territory since World War II for national security reasons, so BAE would likely seek to protect its primary source of work.

More than 12,600 people are employed by the defence industry in Scotland.

The SNP has made it clear that it would not allow the UK nuclear deterrent to remain in Scotland.

However, Nato has insisted that Scotland would have to earn its place in the alliance, and any Scottish attempts to remove Trident would be viewed in a dim light.

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Malaria Vaccine 'Could Be Widespread By 2015'

By Thomas Moore, Health and Science Correspondent

The world's first malaria vaccine could be in widespread use within two years following "significant" results from an ongoing clinical trial.

Researchers reported at a malaria conference in Durban, South Africa, that the jab continues to protect a substantial proportion of babies and young children 18 months after vaccination.

The mosquito-borne disease kills around 660,000 people every year, most of them children in Sub-Saharan Africa.

British pharmaceutical firm GlaxoSmithKline (GSK), which makes the vaccine, said it would apply for a licence from the European Medicines Agency next year.

If the vaccine - code-named RTS,S - is confirmed to be safe and effective, the World Health Organisation has indicated that it will support use of the vaccine as soon as 2015.

A South Sudanese man with his daughter, who is being treated for malaria

GSK has vowed to sell the vaccine at cost price plus 5%, which it said would fund further research into tropical diseases.

The new results are from a study of 15,000 babies and children in seven African countries.

They show the vaccine is far from perfect, but still offers significant protection.

Eighteen months after a three-dose vaccination programme, young children were 46% less likely to suffer clinical malaria.

For every 1,000 children vaccinated, 21 cases of severe malaria were prevented, according to the results.

The vaccine was less effective in babies. Infants who had the jabs when they were just a few weeks old were 27% less likely to suffer from malaria.

Scientists will now investigate whether a booster dose can increase protection in the longer term.

Halidou Tinto, one of the study's principal investigators, said the vaccine had "the potential to have a significant public health impact".

"Many millions of malaria cases fill the wards of our hospitals," Dr Tinto said.

"Progress is being made with bed nets and other measures, but we need more tools to battle this terrible disease."

British pharmaceutical company GSK makes the vaccine

GSK chief executive Sir Andrew Witty said: "While we have seen some decline in vaccine efficacy over time, the sheer number of children affected by malaria means that the number of cases of the disease the vaccine can help prevent is impressive.

"These data support our decision to submit a regulatory application for the vaccine candidate which, if successful, would bring us a step closer to having an additional tool to fight this deadly disease."

The development of the jab has been jointly funded by GSK and Bill and Melinda Gates through the PATH Malaria Vaccine Initiative.

Professor Eleanor Riley from the London School of Hygiene and Tropical Medicine said if the vaccine is cheap enough it has huge potential.

"It would be great if the vaccine had 80-90% efficacy," she told Sky News.

"But it has taken us 15 years to get this far with this vaccine.

"The question is: can we wait another 15 years before we roll out a vaccine that is going to save lives?"

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Help To Buy Scheme: First Rates Are Revealed

The first mortgage rates on offer under the latest phase of the Government's Help to Buy scheme have been described by the lender as "fair and competitive."

The second phase of the controversial scheme - aimed at helping more people get on the property ladder - sees Help to Buy extended to cover old homes too instead of just new-build properties.

It will see 15% of a property's value guaranteed by taxpayers, in return for a fee from the lender, to help homebuyers obtain mortgages worth up to 95% of a property's value.

RBS and its Natwest subsidiary said they would be offering two and five-year fixed rate deals at 4.99% and 5.49% interest rates respectively with no fee. The brands expect a rush of interest - signing up 25,500 first and next time buyers over three years.

Virgin Money is among the lenders taking part

The banks confirmed 740 of their branches would extend opening hours for two weeks to cope with expected demand but Lloyd Cochrane - their head of mortgages - told Sky News there would be no reckless lending with potential customers facing tough affordability checks.

He said: "We ensure based on what they earn and what they spend that they can afford the mortgage now but really importantly we ensure they can afford the mortgage at a rate of 7% so that gives us and our customers the confidence that they can afford the mortgage into the long term."

Halifax - owned by Lloyds Banking Group - later confirmed its offering: A two-year fixed rate at 5.19% with a £995 product fee and said customers would be able to apply for the mortgages from Friday.

HSBC said it would be taking part later in the year, making it the first major player with no taxpayer support to sign up.

Virgin Money and the start-up Aldermore Bank will join from January while Barclays and Santander UK are still considering whether to participate.

The scheme had initially not been expected to start until the new year but was brought forward by three months.

The PM wants mortgages to be affordable for many

It will offer £12bn in mortgage guarantees over three years and some estimates suggest 180,000 loans could be taken out under the initiative.

Lenders can start offering the mortgages from today, and they will be guaranteed by the Government from January 2014.

Prime Minister David Cameron said: "Help to Buy is going to make the dream of home ownership a reality for many who would otherwise have been shut out."

Chancellor George Osborne said: "Too many people are still being denied the dream of owning their own home, which is why we have brought forward the launch of this scheme, so as of today borrowers can start applying for a mortgage with a 5% deposit."

The new scheme means homebuyers will only have to find as little as 5% on homes worth up to £600,000. Depending on the size of the deposit, the Government will then guarantee up to 15% of the property value in return for a fee from the lender.

An earlier phase of the scheme, offering 20% loans on new-build properties, has already helped more than 15,000 people buy a new home since it was launched six months ago.

Help to Buy is controversial because critics fear it could fuel further rises in a housing market where prices are already going up.

But the Treasury said that while house price inflation stands at 3.3%, it is only 0.8% when the property hotspots of London and the South East are removed.

The latest report on the market from the Royal Institution of Chartered Surveyors (Rics) suggested prices were likely to surge further ahead in London and the South East because the supply of homes was lagging behind burgeoning demand.

It measured home sales at a four-year high last month but remaining historically low.

Commenting on the launch of phase two of Help to Buy, shadow chief secretary to the Treasury Chris Leslie said: "If ministers are serious about helping first-time buyers, they should bring forward investment to build more affordable homes.

"Rising demand for housing must be matched with rising supply, but under this Government house-building is at its lowest level since the 1920s."

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Royal Mail: City Demand For Shares Tops £30bn

By Mark Kleinman, City Editor

Institutional investors have placed more than £30bn of orders for Royal Mail shares as the Government puts the finishing touches to the biggest UK privatisation for decades.

Sky News understands that firms from around the world have deluged the investment banks running the postal operator's sell-off on an unprecedented scale, with the initial public offering more than ten times oversubscribed.

Whitehall sources said that the £30bn figure excluded demand from members of the public, with a last-minute rush for shares expected throughout the course of Tuesday.

Approximately £2bn of shares are expected to be sold in the first phase of the privatisation, with roughly two-thirds of that figure expected to be allocated to institutional buyers and the remainder to retail investors.

The final allocations will be determined over the two days following the expiry of a deadline at midnight on Tuesday for retail investors to place their orders.

An announcement is scheduled for Friday about the pricing of the shares, with insiders saying it is "inevitable" that they will be sold at 330p, at the top of the Government's indicative price range. That would value Royal Mail at £3.3bn.

The £30bn demand figure, on which the Department for Business, Innovation and Skills (BIS) declined to comment, underlines the scale of appetite to own shares in a company that until two years ago was making losses of hundreds of millions of pounds a year.

Bankers pointed out that the figure was "in one sense meaningless" because so many investors had inflated their orders on the assumption that they would be scaled back.

"Many institutional buyers are going to end up with zero or 5% of what they ordered," said one. "There has been a deluge of overbidding."

Michael Fallon, the Business Minister overseeing the privatisation, has pledged that retail investors will receive their "fair share" of the stock although firm details of the share distribution are unlikely to emerge until Friday.

The political row over Royal Mail's privatisation has escalated in recent days, with Vince Cable, the Business Secretary, accusing his Labour shadow, Chuka Umunna, of "irresponsibility" for claiming that the shares will be significantly undervalued when they start trading next week.

Around 150,000 Royal Mail staff will receive about £2000 of free shares as part of the flotation, although they will have to hold onto them for up to five years to avoid triggering a tax liability on the sale.

Only 368 staff declined the offer, including the eight non-executive directors who were asked by BIS not to participate.

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Economy: IMF Makes UK Growth Forecast U-Turn

By Ed Conway, Economics Editor, In Washington

The International Monetary Fund (IMF) has upgraded its forecast for UK economic growth by more than any other major economy, in a boost to the Chancellor's fortunes.

It comes only six months after the IMF downgraded its expectations for the British economy and warned that George Osborne's policies were the economic equivalent of "playing with fire".

In its six-monthly World Economic Outlook, the IMF predicted that the UK's gross domestic product - the broadest measure of economic growth - would increase by 1.4% this year and 1.9% in 2014.

That compares to a forecast of just 0.9% and 1.5% respectively when it last updated its projections in July.

It came as the IMF downgraded its forecast for global GDP this year by 0.3 percentage points to 2.9%.

The rapid change in attitude will be welcomed by the Chancellor, who is due to attend the IMF's annual meeting in Washington later this week.

In April, IMF chief economist Olivier Blanchard warned that austerity policies of the kind Mr Osborne was carrying out were "playing with fire" and urged him to change course.

However, over the following months, the IMF appeared to water down its prescription.

Ed Balls argues the UK economy remains below its potential

Treasury insiders see today's forecast revision as a tacit acknowledgement that Mr Osborne's original course was the right one.

A spokesman said: "The IMF has confirmed that the UK economy is turning a corner, by revising up its forecast for growth over the next two years by more than for any other G7 economy.

"But risks to the global economy remain high, and the recovery cannot be taken for granted. That is why the government will not let up in implementing its economic plan which has already cut the deficit by a third, kept interest rates near record lows and created over a million and a quarter jobs."

However, the text of the IMF report itself did not offer a ringing endorsement of the UK economy.

"In the United Kingdom, recent data have shown welcome signs of an improving economy, consistent with increasing consumer and business confidence, but output remains well below its pre-crisis peak … output levels will remain below potential for many years," it said.

Labour Shadow Chancellor Ed Balls said: "After three wasted years of flatlining it's good that we finally have some growth. But this is the slowest recovery for 100 years and working people are worse off as prices continue rising faster than wages.

"Despite these welcome changes to its forecasts the IMF rightly warns that the UK economy will remain below potential for many years.

"That's why the IMF has repeated its view that the Government should bring forward infrastructure investment now, which could be used to build thousands of affordable homes.

"Instead of more complacency from George Osborne we need action to secure a strong and sustained recovery, catch up all the lost ground and tackle the cost of living crisis," he concluded.

The report said that the global economy was now beginning to recover from the Great Recession, but warned that central banks would find it difficult to bring the unprecedented series of emergency crisis measures to an end.

George Osborne (R) will see the U-turn as a vindication of his policies

The Federal Reserve has signalled that it will soon begin tapering the amount of assets it is buying each month under its quantitative easing programme, but stopped short of doing so at its meeting last month.

It said that the world would have to adapt to a slower potential growth rate from China - for the past five years the powerhouse for global growth.

However, the IMF reserved its most serious warning for the US Congress, which is currently deadlocked on talks over the budget, causing a part-shutdown of federal services.

It has also been unable to pass legislation to increase the US debt ceiling, something which could potentially cause the first US default in history.

The IMF said that its forecasts assumed the shutdown would be brief, that extra public spending would be agreed and that the debt ceiling would be raised.

"There is uncertainty on all three accounts," it added.

"While the damage to the US economy from a short shutdown is likely to be limited, a longer shutdown could be quite harmful. And, even more importantly, a failure to promptly raise the debt ceiling, leading to a US selective default, could seriously damage the global economy."

An added worry is that across the world, the recovery could be more tepid than normal.

Long-term average growth across the world is usually close to 4%. However, the IMF said that in the medium term it might only be realistic to expect something closer to 3%, given the serious impact of the Fed and other central banks reversing their quantitative easing programmes.

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