Centrica Slashes Top Executives' Pay To £6.6m

By Mark Kleinman, City Editor

The owner of British Gas will reveal this week that it slashed executive pay awards last year after a share price decline triggered partly by the intensifying political row over energy prices.

Sky News has learnt that Centrica will disclose in its 2013 annual report, to be published on Thursday, that it paid its top management roughly 60% less than the £16.4m they earned the year before.

Total pay for the company's executive directors, who included the former British Gas managing director Phil Bentley; the outgoing finance director, Nick Luff; and Sam Laidlaw, the chief executive, is understood to have fallen to £6.6m, a source said.

The company, which as the UK's largest gas and electricity supplier is facing growing political pressure to be broken up, will also confirm that Mr Laidlaw has donated his 2013 bonus award to charity.

Insiders said that Centrica's comparatively lacklustre performance in 2013, when British Gas reported a 6% fall in annual profit at its residential arm to £571m, had meant the group's long-term incentive awards from previous years had failed to vest.

The company's equity awards are linked to criteria such as earnings per share and share price performance.

The company's remuneration committee has also decided to reduce annual bonuses because of the lower share price and flat profits, with Chris Weston, who replaced Mr Bentley as British Gas's managing director, understood to have been awarded approximately £400,000.

Mr Laidlaw said last autumn that he would not accept an annual bonus - which is said by insiders to have been in the region of £800,000 - because of the ongoing controversy about energy prices.

"Just to continue in this world where households are under pressure, and assume it is business as normal, is not the way thoughtful remuneration committees think about it,'' he said in November.

All of the big six suppliers raised prices last autumn, blaming an increase in wholesale energy costs and Government-imposed green levies.

The relaxation of those levies by ministers failed to defuse political tensions, however, after some suppliers were accused of being slovenly in passing on the reduced costs to consumers.

The publication of Centrica's annual report will coincide with an expected decision by Ofgem and the Office of Fair Trading to refer the industry to the Competition Commission.

Such a move would be politically palatable for the Government, which was left wrong-footed last year by a pledge from Ed Miliband to freeze prices for 20 months if Labour wins next year's general election.

A full competition inquiry could take as long as 18 months.

Last month, Ed Davey, the Energy Secretary, paved the way for a referral in a letter to Ofgem.

"Clearly you will wish to consider whether [British Gas's position] is prima facie evidence of an issue in the market and so whether it merits a market investigation reference with the whole gamut of potential remedies that could follow, including a break-up of any companies found to have monopoly power to the detriment of the consumer," he wrote.

Separately, Centrica confirmed on Tuesday that it had a reached a deal to acquire some of the assets of Bord Gáis Energy, the retail arm of Ireland's state gas company.

Centrica declined to comment on the executive pay figures.

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Ukraine: Obama Talks Of Russia's Weakness

President Barack Obama has labelled Russia a "regional power" that is threatening its neighbours out of weakness, not strength - but admitted further encroachment into Ukraine was an increasing concern.

Speaking at a summit of the G7 industrial leaders in The Hague, the US president reiterated the West was ready to crank up sanctions against Russia should it continue to aggravate the crisis in Crimea and Ukraine.

Mr Obama said: "Russia is a regional power that is threatening some of its immediate neighbours, not out of strength but out of weakness.

"We (the US) generally don't need to invade our neighbours in order to have a strong co-operative relationship with them.

"The fact that Russia felt the need to go in militarily and lay bare these violations of international law indicates less influence, not more."

Barack Obama speaking on day two of a G7 summit in The Hague

Mr Obama said Russia's annexation of Crimea was not a "done deal" as it has not been recognised by the international community.

"It is up to Russia to act responsibly and show itself once again to be willing to abide by international norms, and if it fails to do so there will be some costs," he said.

Mr Obama also rejected President Vladimir Putin's claim that Russian speakers had been threatened in Crimea and Ukraine.

"I think it is important for everybody to be clear and strip away some of the possible excuses for potential Russian action," he said.

The Cold War-style showdown dominated international talks in The Hague for a second day.

During a meeting with Chinese President Xi Jinping and UN Secretary-General Ban Ki-moon, David Cameron warned that Russia faced further diplomatic and political isolation if it intervened in eastern Ukraine.

Western leaders are working to put forward a united front on the crisis

Mr Cameron said: "What I think we need to do is just send the clearest possible message about the eastern Ukraine and the steps that we don't want to see Putin take.

"We need to send a very clear message that would lead to significant sanctions."

The Prime Minister's comments come a day after the G7 - the US, UK, France, Germany, Canada, Italy and Japan -  agreed to pull out of a scheduled G8 meeting in Russia and hold its own meeting in Brussels.

The move effectively suspended two decades of cooperation with Moscow in the G8 "until Russia changes course".

In a joint statement, the G7 leaders said: "This group came together because of shared beliefs and shared responsibilities. Russia's actions in recent weeks are not consistent with them."

The US and European Union have already targeted some Russian individuals, but are yet to impose broader economic sanctions.

Mr Cameron said the international community must respond with "vigour"

Foreign Secretary William Hague acknowledged that measures targeting Russia's economy could carry a negative impact in Europe, but said "we have to be prepared to do that".

"Every country would have to do what is necessary if more far-reaching sanctions were applied, accepting that it would affect different economies in different ways," he said.

"The United Kingdom is fully prepared to play its full part."

Russian representatives, also in the Hague, largely shrugged off the G7's comments.

Russia's Foreign Minister, Sergei Lavrov, said the G8 had been useful to discuss issues such as the nuclear tensions with Iran and the civil war in Syria, but that it was not a vital tool.

Ukraine fears Russia plans to make a move on the country's east

"If our Western partners believe the format has exhausted itself, we don't cling to this format," Mr Lavrov said. 

"We don't believe it will be a big problem if it doesn't convene."

Mr Lavrov held his own meeting with his Ukrainian counterpart Andriy Deshchytsia on the sidelines of the nuclear talks.

It was the first time the pair had met since Ukrainian President and Kremlin ally Viktor Yanukovych was ousted last month following mass protests in Kiev.

Speaking ahead of the talks, Mr Deshchytsia warned that Ukraine would never give up Crimea.

He also warned Russia against making further attempts to seize Ukrainian territory amid reports that Russian troops are assembling along its borders.

Sergei Lavrov meets with Ukraine's Andriy Deshchystsya. Pic: @mfa_russia

Mr Deshchytsia told reporters: "Our military and civilians living in Eastern Ukraine, Ukrainians, Russians, other nationalities, they are ready to defend their homeland."

Earlier in the day, Ukraine announced it was pulling all its forces from Crimea after losing another military base to Russian troops in the early hours of the morning.

Russian forces have gradually seized control of the region since voters in Crimea agreed to join the Russian Federation in a swiftly arranged referendum following Mr Yanukovych's removal.

Since then, Nato's top commander in Europe, General Philip Breedlove, has warned that Russia's military force massing on Ukraine's border was "very, very sizeable and very, very ready".

He said he was worried the Russian military could make a move for Moldova's breakaway Transdniestria region.

Ukrainian troops have been withdrawn from Crimea

Transdniestria, a narrow strip of land to Ukraine's southwest, already has a Russian military presence and most people there favour a union with the country.

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Falling Fuel Costs Help Inflation Dip To 1.7%

The biggest monthly fall in petrol prices since September 2009 helped the annual rate of inflation ease to 1.7% in February - a level not seen for more than four years.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) measure dipped for the fifth month in a row - supporting hopes that the real-terms decline in pay is coming to an end.

Wage growth has not been higher than inflation for nearly four years but last week official Budget forecasts predicted earnings would return to real-terms growth later this year.

Today's data shows private sector pay growth - which was also 1.7% in the three months to January - has already caught up, but public sector pay rises remain restricted due to central Government spending cuts.

Smaller rises in energy bills helped ease inflationary pressures

CPI, which fell from 1.9% in January, has not been lower since October 2009 - when it stood at 1.5%.

The ONS said smaller price rises for household gas and electricity bills, as well as clothing and footwear, also eased inflationary pressures in February.

But there were warnings of tougher times ahead as a report warned that grocery and restaurant bills were set to rise by the end of the year.

On the back of the official announcement on February's figure, Prime Minister David Cameron tweeted: "It's good to see inflation falling again.

"Our long term economic plan is helping provide stability and security for hard-working people."

But while welcoming the fall in inflation, Labour's shadow Treasury minister, Catherine McKinnell, argued the Government needed to do more to help working people.

"The squeeze continues as prices are still rising faster than wages," he said.

"Working people facing this cost-of-living crisis are on average £1,600 a year worse off since David Cameron came to office.

"Labour will freeze energy bills until 2017, make work pay by expanding free childcare for working parents and get at least 200,000 homes built a year by 2020.

"We also want to introduce a lower 10p starting rate of tax to help 24 million people on middle and lower incomes.

"By opposing all these measures and giving a £3bn tax cut to people earning over £150,000, David Cameron has shown he's out of touch and only stands up for a privileged few."

The ONS also reported that UK house price inflation continued to rise in January.

It measured annual growth of 6.8% - the biggest rise since August 2010.

Prices in London were up 13.2%.

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Royal Mail Confirms Plans To Axe 1,300 Jobs

A union has raised the threat of industrial action after Royal Mail confirmed it was consulting on plans to cut 1,300 jobs, mainly managerial staff.

Unite, which represents 7,000 managers at the firm, described the proposals as "ruthless".

Royal Mail, which was controversially privatised last year, said no delivery staff would be affected by the move, which aims to save £50m annually.

Under the plans, 1,600 operational and head office managerial positions would go but 300 other "enhanced" roles would be created and it would soon begin talks with the Communication Workers Union and Unite.

Moya Greene, Royal Mail's chief executive, said: "We are continuously improving our efficiency, whilst maintaining our high quality of service.

"We need to do so in order to effectively compete in the letters and parcels markets. This is the best way to ensure the continued delivery of the Universal Service and the good quality jobs we provide for our people."

News of the proposed job losses broke just 48 hours after Sky News revealed that the Business Secretary Vince Cable is demanding that the board of Royal Mail limits a pay rise for Ms Greene.

Unite said it was demanding there were no compulsory redundancies.

The union's officer for Royal Mail, Brian Scott, added: "First the Government sells-off Royal Mail on the cheap and now the newly privatised service is ruthlessly sacrificing jobs.

"We do not believe that it's a coincidence that this announcement has been made just before the company prepares to announce its first full set of accounts since privatisation.

"It's more proof that Royal Mail's primary reason for existing is now about making profits rather than serving the nation.

"For all that Royal Mail managers have been through they do not deserve to be treated in this way.

"Unite is demanding a commitment to no compulsory redundancies on fair terms and an effective method for redeployment within the restructured organisation.

"If Royal Mail refuse we will have no alternative than to consider a ballot for industrial action."

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Wind Turbine Plants To Create 1,000 UK Jobs

A £310m investment in the country's offshore wind industry is set to deliver 1,000 new skilled jobs.

German manufacturer Siemens is putting up £160m of the money, covering two sites on the banks of the Humber estuary.

The investment comprises additional cash for its previously announced construction, assembly and service facility at the Green Port in Hull.

A new rotor blade manufacturing facility would be built in nearby Paull, in East Riding, the company said.

Siemens, which already employs almost 14,000 staff in the UK, said the plant at Paull would be the first of its kind for the firm's next-generation blade technology designed for wind turbines.

Each rotor blade is 75 metres long and when rotating covers an area the size of two-and-a-half football pitches.

The company's port partner, Associated British Ports (ABP), is spending £150m on the Green Port Hull development.

Michael Suess, chief executive of energy at Siemens, said: "Our decision to construct a production facility for offshore wind turbines in England is part of our global strategy.

The announcement has been hailed as "excellent news" by the Government

"We invest in markets with reliable conditions that can ensure that factories can work to capacity.

"The British energy policy creates a favourable framework for the expansion of offshore wind energy. In particular, it recognises the potential of offshore wind energy within the overall portfolio of energy production.

"The offshore wind market in Great Britain has high growth rates, with an even greater potential for the future. Wind power capacity has doubled here within two years, to roughly 10 gigawatts.

"By 2020, a capacity of 14 gigawatts is to be installed at sea alone to combine the country's environmental objectives with secure power supply.

"Projects for just over 40 gigawatts are currently in the long-term planning."

The investment was seen as a boost for the industry following a number of setbacks for new UK wind farm projects - scrapped on cost grounds.

Energy Secretary Ed Davey said of Tuesday's announcement: "This deal is excellent news for the people of Hull and the Humber, the UK, the wind industry, and our energy security.

"We are attracting investment by backing enterprise with better infrastructure and lower taxes.

"As well as helping to keep the lights on and putting more than 1,000 people in work, this deal means we will help to keep consumer bills down as we invest in home-grown green energy and reduce our reliance on foreign imports."

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Honda Swindon Plant Job Threat Over Shift Cut

More than 300 jobs are under threat at Honda's plant in Swindon as the car manufacturer cuts production.

The Japanese firm wants to reduce workflow from three daily shifts to two - blaming poor sales growth outside the UK.

Its review would also result in a single production line being created to improve efficiency and flexibility.

The plans, Honda said, would leave 340 production staff (10% of the workforce) at risk of redundancy and the Unite union pledged to fight any job losses.

Ian Howells, senior vice president of Honda Motor Europe, said: "Over the last 12 months, we haven't seen the growth we'd anticipated.

"With no increase forecast for the next couple of years, we must scale our manufacturing activity accordingly.

"However, with the restructuring we're taking today, and our new model plans, we remain confident in the long-term future of our Swindon plant.

"Our Swindon operation continues to be the hub for our European car manufacturing activity," he added.

Honda has been manufacturing cars at Swindon since 1992 and currently builds the Civic, Civic Tourer, CR-V and Jazz models for the UK and European markets.

Tony Murphy, national officer of the Unite union, said: "These job losses are a devastating blow, not just for these workers but for the thousands more across the industry whose work is dependent on the Honda plant.

"Today's losses are also a wake-up call to the UK Government. The economy is far too fragile to proclaim a recovery - those workers losing their jobs today will find claims that the country is turning a corner an insult.

"The truth is that there is simply no pick up in the incomes of Honda's customers, either here or in the eurozone. People are not confident and do not have the cash to spend. That is something which must give the Government serious cause for concern.

"Decent, skilled jobs are being lost today and investment is being withdrawn, which is ringing alarm bells and putting the remaining workforce in fear for their future.

"We cannot allow workers of this expertise to be dispatched to the dole queue - the country needs their skills if we are to power our country back to economic health.

"Unite is determined to do all we can to save these jobs and skills. It is vital that the Government joins us in the fight for manufacturing."

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Kim Dotcom: Mega Listing For Cyber Fugitive

A new company founded by one of the world's most wanted cyber fugitives is to be listed on the New Zealand stock exchange with an estimated value of more than £100m.

Internet file storage company Mega Ltd announced its planned listing just over a year after it was launched by indicted entrepreneur Kim Dotcom.

Mr Dotcom built the company from his lavish estate in New Zealand under the shadow of an extradition bid by United States authorities.

He is wanted on online piracy charges for founding the now closed file-sharing site Megaupload.

Since its launch, his new venture has amassed an estimated value of NZ$210m (£109m). 

The company, which offers encrypted cloud-based data storage, boasts an estimated seven million users who have stored roughly 860 million files.

The entrepreneur held a flamboyant launch party for Mega last year

Mr Dotcom took to Twitter on Tuesday to celebrate the news.

He wrote: "Indicted. Raided. On Bail. All assets frozen without trial. But we don't cry ourselves to sleep. We built #Mega from 0 into a $210m company."

Mega has said it will achieve its listing on the New Zealand stock market through a move known as a reverse takeover.

That involves using the small, already public, company TRS Investments as a vehicle.

TRS will buy Mega through a share issue to its shareholders. They will then own 99% of TRS, which will change its name to Mega.

The method can save time and money which would otherwise be spent on the complex process of a private company going public.

TRS shares were up 900% after news of the deal broke on Tuesday.

Mr Dotcom stepped down as director of Mega last August, although his wife continues to own 26.5% of the company through a trust.

Mr Dotcom was arrested in a dramatic raid on his New Zealand home in 2012

The German national, born Kim Schmitz, was arrested in 2012 alongside three Megaupload colleagues on charges of online piracy, money laundering and racketeering.

Their assets were frozen and the site was shut down. Mr Dotcom spent a month in prison before he was released on bail.

US authorities say Megaupload encouraged users to store and share copyrighted material which cost film studios and record companies an estimated $500m (£303m).

Mr Dotcom says he cannot be held responsible for users who stored illegally obtained content. His extradition hearing, which has been delayed several times, is scheduled to take place in July.

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B&Q Owner To Reward Investors As Profits Rise

The owner of the B&Q DIY chain and Screwfix brand has announced its first return of cash to investors in its 32-year history.

Kingfisher confirmed group pre-tax profits of £759m - a rise of 9.8% on its previous year - and said it would return £200m to shareholders this year and more cash over following years but the details were yet to be finalised.

The news helped its share price climb more than 7% in morning trading on the FTSE 100 to its highest level this century.

Like for like sales in the UK and Ireland were up 1.1% over the 12 months and Kingfisher, which is Europe's biggest home improvement retailer, said it expected consumer spending to improve as Europe's economies return to growth.

The performance was a big improvement on 2012/13 when a soggy summer combined with a cold winter to hit profits.

The weather boosted sales in the fourth quarter at B&Q in the UK, with sales of fence panels rising more than 100% after the Autumn storms.

Flooding in the same period saw B&Q sell 750 times more sandbags than usual while water pump sales at trade supplier Screwfix leapt 143% in January alone.

Kingfisher said that after a tough first quarter, trading conditions for the group got better through the year, with the exception of a persistent weak economic backdrop in France, its most profitable market.

It offset weak demand in many countries through a scheme designed to improve profitability.

Measures included buying more goods centrally and directly from places like China.

Kingfisher also confirmed it was searching for a local strategic partner for its loss-making B&Q China business.

B&Q China, which trades from 39 stores, made a loss of £6m in 2013-14.

Chief executive Ian Cheshire said: "We believe there is a long-term home improvement market in China which is going to be very big", adding there had already been some expressions of interest.

He planned expansion of the Screwfix business in Germany and said the future of its Russian operations, which currently produce 5% of group sales, would be influenced by further economic sanctions, trade and currency issues.

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TV Licence Dodgers May Not Face Jail Threat

Proposals allowing ministers to lift the threat of jail and a criminal record for TV licence dodgers have taken a step forward.

MPs on a Commons committee gave the go-ahead for a review of TV licence sanctions, including allowing the Government to make non-payment a civil offence.

The move is almost certain to become law, with cross-party backing for decriminalisation.

The BBC had warned an immediate change would hit funding for its services by leading to increased evasion.

Cases of people accused of not paying the £145.50 fee accounted for more than one in 10 criminal prosecutions last year, with 155,000 people convicted and fined.

It led to more than 150 MPs to back a decriminalisation campaign led by Tory MP Andrew Bridgen.

In response, proposals were put forward requiring Culture Secretary Maria Miller to carry out a year-long review of the sanctions.

It means the review is unlikely to report until after next year's general election.

The BBC has indicated it is willing to discuss changes as part of discussions over the renewal of its charter, due in 2017.

Its director of strategy and digital, James Purnell, said the present system "works pretty well" and challenged some of the evidence put forward by supporters of decriminalisation.

But he added: "We want to look at the facts and work with Mr Bridgen and other people in Parliament who have expressed a concern and with the Government to come up with the best possible system.

"That is what this set of amendments allows us to do. It avoids the risk of doing it in a rush, it allows it to be looked at in the round and that is something we welcome."

Chancellor George Osborne said the Government was "looking very closely" at decriminalisation.

"It is getting more and more support across the political parties and you can see it is all heading in a particular direction," he said.

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Govt To Sell Off £4.2bn In Lloyds Bank Shares

Taxpayers are to be left with a 25% stake in Lloyds Banking Group as the Government announces plans to sell £4.2bn in shares.

The taxpayer currently owns 33% of Lloyds but the government is continuing with plans to fully return the lender to the private sector.

Some 5.4bn shares are expected to be sold later this year - raising about £4.2bn based on Tuesday's closing share price.

A Treasury spokesman said: "The Government set out its objectives for its shareholdings in the banks in the Chancellor's annual Mansion House address last June - getting the best value for the taxpayer, maximising support for the economy and restoring private ownership.

"And, as set out in that address, the Government will only conclude a sale if these objectives are met.

"Building a stronger banking system is a core part of the Government's long-term economic plan to deliver greater economic security."

More follows...

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