PM Ditches Banker Trade Envoys In Shake-Up

By Mark Kleinman, City Editor

Two of the figures most closely-associated with the reputational crisis at Britain's banks are being quietly dropped as international flag-bearers for British business.

Sir Victor Blank, architect of the disastrous merger of Lloyds TSB and HBOS in 2008, and Marcus Agius, who stepped down as chairman of Barclays following its £290m fine for Libor-fixing, are to end their roles as British Business Ambassadors, I have learned.

People close to the situation said that Lord Marland, the Government minister who chairs the Business Ambassadors programme, had written to some of the members during the last few weeks, including Sir Victor, who resigned as Lloyds Banking Group's chairman in 2009, to inform them that their services were no longer required.

Insiders said the Business Ambassadors were being "refreshed" to focus on people who are serving as chairmen or chief executives. Those who retire from full-time roles with companies would be asked to step down a year later, these people said, meaning that Mr Agius would probably relinquish his role in 12 months' time.

The ambassadorial initiative was launched two years ago during a trade mission to China and South Korea led by David Cameron and was designed to promote trade with key overseas markets.

Ambassadors' duties include lobbying to remove barriers to market access or leading events for smaller companies during overseas visits, briefing ministers on key business priorities, and contributing to government dialogues with fast-growing markets including Brazil, China and India.

Some people familiar with the working of the initiative said it had been largely ineffectual, with some of the Ambassadors using the status of the role principally to promote their own companies, rather than wider British economic interests.

A spokeswoman for UK Trade & Investment (UKTI), the trade promotion agency, confirmed that a number of the original Business Ambassadors were not being retained following the end of their two-year term.

In addition to Sir Victor, the list of those unveiled in 2010 who are no longer involved in the programme includes Sir David Brewer, a former Lord Mayor of London, Lord Brittan, former trade adviser to Mr Cameron, Larry Hirst, former chairman of IBM in Europe, Baroness Hogg, chairman of the Financial Reporting Council, Paul Skinner, ex-chairman of Rio Tinto, and Bob Wigley, the chairman of Hibu, the directories publisher which used to trade as Yell.

"Appointments for Business Ambassadors are reviewed as a matter of course every two years or at the end of a political term," the UKTI spokeswoman said.

"Business Ambassadors should occupy a senior executive role, and on ceasing such a position there will be a 12-month transition period, after which they will step down from membership of the group.

"We would like to thank all those who have stepped down for their hard work in promoting UK excellence overseas."

Among those who are continuing as Business Ambassadors beyond their initial two-year term are Lord Patten, the under-fire chairman of the BBC Trust, Dick Olver, chairman of BAE Systems, the defence contractor, and Lord Browne, the former BP chairman who is now a partner at the private equity group Riverstone Holdings.

Mr Cameron has also appointed several new members of the programme, including Lucian Grainge, the British boss of Universal Music Group, and Paul Walsh, chief executive of Diageo.

Last night, the Prime Minister confirmed Sky News reports that he is appointing a group of parliamentarians to serve as trade envoys focused on specific trading partners.

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Google's New Nexus Devices Are A Sell-Out

Google has launched its new Nexus 4 - but some customers in the UK were left disappointed when they were not able to get their hands on the smartphone.

The Nexus 4 went on sale in Europe and Australia alongside the new Nexus 10 and upgraded Nexus 7 tablets.

Numerous posts on Twitter suggested the Nexus 4 had sold out within 30 minutes in the UK, and the Google Play store confirmed neither the 8GB nor the 16GB versions was in stock.

Instead, it advised people to register their interest in the phone, saying: "Coming soon. Sign up to be notified by email when Nexus 4 becomes available."

In contrast, the revamped Nexus 7, which is made by Asus and now offers the 3G connectivity that was lacking on earlier models, was still in stock as of 1pm on Tuesday.

The 16GB version of the Nexus 10, which is made by Samsung, was still in stock, while no more units of the more expensive 32GB version were available.

Some prospective Nexus 4 customers were left disgruntled, claiming Google had deliberately understocked the device. They suggested this had been done to generate hype about the new phone.

Others took to Twitter and other social media sites to say they had waited up specially to order the phone, but ran into problems when they tried to order on Google Play.

"Waiting up all night and all morning, adding to basket and trying to add delivery address, all for nothing," complained one user.

The Nexus 4, which was designed and made for Google by LG, is the company's fourth Nexus-branded Android smartphone.

It is equipped with a 1.5 GHz quad-core Snapdragon S4 Pro processor, 2GB of RAM, a front facing 1.3 megapixel camera and an 8 megapixel rear camera.

The 8GB version costs £239, while the 16GB phone goes for £279.

A Google spokesman confirmed that the firm is out of stock but is pledging to make devices available again on Play "as soon as we can".

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'Zombie Firms': Mass Unemployment Warning

More than 100,000 so-called zombie firms - debt-laden companies surviving only because of ultra-low interest rates - are at risk of failure, a think tank has warned.

According to the Institute for Turnaround (IFT), a 'zombie collapse' is threatening to hit the country once interest rates return to more traditional levels.

"The number of businesses only able to pay off the interest on their debt has escalated to somewhere between 100,000 to 150,000," the IFT said.

"If those organisations employ on average 10 people each, consigning them to oblivion overnight would have a profoundly undesirable effect on unemployment.

"Zombies are a problem that can and should be responsibly managed - these are real businesses that carry the fate of people's livelihoods and wellbeing with them."

Some companies have already been forced to sell off crucial assets to survive, further harming their future viability.

It said capital-flush firms have been engaged in a "corporate 'pick and mix' in each portfolio" amid a large-scale disposal of assets worth billions.

The IFT has published a spoof video of football manager Arsene Wenger explaining what zombies firms are and what happens when quality assets are sold off.

The Bank of England base rate has been at a historic low of 0.5% since March 2009.

Once the base rate climbs again, indebted firms are at risk of seeing their debt burden increase too.

However the IFT also warns that some sectors that exist with oversupply, such as retail, will need to shed more jobs and firms before recovery can be achieved.

"There will be business failures but the enlightened management and investors who move to tackle their challenges stand a much better chance of staying viable and sustainable long after the competition has faded away," it said.

"To return to a productive and growing economy, we need good people working in business models that have a long term future," it added."

And it insisted: "Companies stuck currently in limbo with unaffordable debt, having been starved of investment and lacking, after a punishing recession, the energy and the skills to break out of their inevitable decline, need some TLC - tough loving care."

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Workers To Be Able To Ask For Flexible Hours

By Gerard Tubb, Sky Correspondent

New mothers will be able to share leave with their partners and all workers will have the right to flexible hours under radical reforms.

Changes announced by Deputy Prime Minister Nick Clegg will mean mothers could return to work two weeks after childbirth and hand over their leave to the father.

Every employee in the country will also be given the right to ask for flexible hours to encourage different work patterns for parents and help more women back into work.

Mr Clegg believes that enabling relatives and friends of working parents to alter their working patterns will boost the economy.

The Government estimates around a million women are effectively locked out of employment because of problems balancing work and childcare.

The plans to allow anyone to ask for flexible hours are an extension of the rights introduced in 2009 for parents of children aged 16 and under.

They also mean that grandparents will be able to apply so that they can look after their grandchildren.

Under the changes, a mother could decide to stop her maternity leave at any point and hand over the rest of the year to her partner instead.

Parents will be able to "chop up" time between them or take time off together, as long as no more than 12 months is taken in total and no more than nine at guaranteed pay.

Fathers-to-be will also be given a legal right to take unpaid leave to attend two antenatal appointments.

Mr Clegg will claim that the plans could transform opportunities for young people who want to start a family.

"You won't get to 30 and suddenly have to choose - motherhood or work - because we're making the changes that give you a route back," he has said.

The Lib Dem leader rethought the reforms after being warned that extending paternity leave from the current two weeks would be too difficult for businesses.

Flexible leave will be reviewed by 2018 and extending paternity leave will be re-examined then, Mr Clegg  has pledged.

"These are major reforms and, at a time of continuing economic difficulty, it's sensible to do them in a number of steps, rather than one giant leap," he added.

"More and more men are taking on childcare duties, or want to, and flexible leave builds on that."

A study last year of eligible parents showed 28% of women and 17% of men had asked to change their work patterns in the previous two years, with 80 to 90% of requests accepted.

At Odyssey Systems on Teesside, a telecommunications company with 30 employees, management says it has helped parents to change working hours, but extending the scheme to everyone will be a burden.

Sales director Christine Gilbert said: "We're still here because we think about customers first. To say that everybody in the whole company has to have flexible working is just going to be a massive managerial nightmare."

Adam Marshall, director of policy at the British Chambers of Commerce, believes the new proposals could cause "unnecessary friction" in the workplace and "unrealistic expectations about the level of flexibility most businesses will be able to accommodate".

But the TUC welcomed the proposals, with General Secretary Brendan Barber describing them as common sense.

He said: "These reforms will make life easier for millions of working parents. Businesses will also benefit from a more engaged workforce and a larger pool of people to recruit from."

The entitlement to ask for flexible hours will be introduced in 2014 at the earliest and employers will have to provide good reason for refusing a request.

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Windows 8 Boss Steven Sinofsky Exits Microsoft

The head of Microsoft's Windows division is leaving just weeks after the new generation of the computer operating software was launched.

Microsoft did not explain why Windows president Steven Sinofsky was departing, but Windows 8 has had a mixed reception since its launch on October 26.

Chief executive Steven Ballmer said: "I am grateful for the many years of work that Steven has contributed to the company.

"The products and services we have delivered to the market in the past few months mark the launch of a new era at Microsoft.

"To continue this success it is imperative that we continue to drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings."

Products launched in recent months include Windows 8, new Windows-powered mobile phones, a Surface tablet computer and the Halo 4 video game that is exclusive to Microsoft's Xbox 360 console.

Mr Sinofsky launched the Surface tablet as well as Windows 8

Mr Sinofsky's duties are being divided between a pair of executives who will answer directly to the CEO.

Julie Larson-Green has been promoted to lead Windows software and hardware engineering, while chief financial officer Tami Reller will run the business side of Windows in addition to her current duties.

"It is impossible to count the blessings I have received over my years at Microsoft," Mr Sinofsky said in a written statement.

"I am humbled by the professionalism and generosity of everyone I have had the good fortune to work with at this awesome company."

Mr Sinofsky joined Microsoft in 1989 as a software engineer and became head of the Windows team in 2009.

Microsoft kicked off sales of its revamped Windows 8 system and Surface tablet late last month as it accelerated its efforts to compete in a market shifting rapidly from PCs to mobile devices.

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Greece Forced To Borrow More From Markets

Debt-laden Greece has been forced to tap the financial markets further to avoid bankruptcy after Eurozone finance ministers delayed a crucial aid payment.

The country, which faced a bond repayment on Friday it could not afford, was banking on Eurozone finance ministers releasing a long-delayed 31 billions euros (£23.5bn) to meet the bill.

But at a meeting on Monday night the ministers said they would have to gather again on November 20 to make a decision because there was still work to do on finalising the details of the bailout.

Eurogroup head Jean-Claude Juncker said Greece had made progress on its commitments to reduce debt and the public deficit - and insisted there would be no problem for Athens in rolling over the debt.

He said: "I will do all I can to make sure that a decision is taken on November 20. I won't tell you how but there won't be a problem on November 16 (Friday)."

European Economic Affairs Commissioner Olli Rehn explained that Greek banks would be able to take part in a government sale of treasury bills, providing the money Athens needs to cover the debt repayment.

That was completed on Tuesday morning when it raised 2.762.5 billion euros in one-month Treasury bills at an interest rate of 3.95% and a further 1.3 billion euros in three-month bills at 4.2%.

If Athens had been disappointed by the further delay to its bailout funds, a proposal to extend its debt reduction deadline by two years to 2016 was accepted despite strong reservations about the sustainability of Greek debt raised by the head of the International Monetary Fund (IMF), Christine Lagarde.

The IMF, which makes up the so-called Trioka of international lenders to Greece along with the European Central Bank (ECB) and European Commission, is worried about the extra cost the extension would impose.

A draft report by the Troika on Greek austerity efforts, seen on Monday, put the additional cost at nearly 33 billion euros (£26.3bn), with the bill rising as the economic outlook darkens.

Greece's debt mountain - now nearly 190% of GDP - is supposed to come down to 120% by 2020 and Madame Lagarde insisted that target be maintained though Mr Juncker believes it should also be extended by two years.

The 17 eurozone finance ministers joined their 10 non-euro colleagues for another meeting, expected to focus on how to boost the slumping economy and the bloc's hotly-contested 2014-20 budget.

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Inflation Increases Blamed On Tuition Fees

The headline rate of inflation has hit a five-month high, driven up by the trebling of university tuition fees in England and rising food bills.

The Office for National Statistics (ONS) confirmed the Consumer Prices Index (CPI) measure rose from an annual rate of 2.2% in September to 2.7% last month.

The figure surprised economists, who had largely predicted a small increase and it makes it more likely that the Bank of England will have to raise its own forecast.

The main driver behind the increase, according to the ONS, was the Government's increase in maximum university tuition fees in England to £9,000 from just over £3,000, which added 0.3% to the CPI rate.

The ONS said education costs jumped 19.1% in total last month - the largest increase since records began.

Higher potato and carrot costs - caused by the soggy summer - and rising second hand car prices also contributed, the body added.

Potatoes form part of many basic foodstuffs

Planned rises in gas and electricity bills, which are starting to take effect, are predicted to drive inflation even higher in the coming months.

Last month's SSE bill increase - which saw tariffs rise by around 9% - were not taken into account for the October figures.

Sky News Economics Editor Ed Conway said the increase means there are some "worrying points for the future".

He added: "We saw inflation start to fall and lots of people were reassured by that because it's been responsible for much of the squeeze on people's incomes.

"If you look beyond those university fees, the fact there are some things in the pipeline - higher utility prices - that may continue to push it up will be of some concern."

The latest figures also showed that the Retail Prices Index (RPI), which includes housing costs, rose to 3.2% in October from 2.6% in September as mortgage rates also increased.

The RPI rise between September and October was the largest monthly increase for two and a half years.

It raises the prospect of rising costs ahead of the crucial Christmas season for retailers - many of which are already launching Christmas sales to attract shoppers in what is expected to be a vicious scrap for business.

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Gas Prices: Watchdogs Probe Fixing Claims

Downing Street has urged the Financial Services Authority (FSA) and Ofgem to speedily investigate a whistleblower's claim that Britain's wholesale gas market has been frequently manipulated by energy companies.

The allegations, revealed by The Guardian, suggest the £300bn market has been fixed in a way similar to bank fiddling of the Libor interest rate.

The FSA, the City watchdog, said: "We can confirm that we have received information in relation to the physical gas market and will be analysing that material."

Ofgem, the energy regulator, said it had also received information relating to trading in the gas market and is looking into the issue.

The allegations come with the energy sector already under fire after major energy suppliers announced inflation-busting price rises.

It is understood the Treasury and the Department for Environment were alerted to the market manipulation claims by Ofgem and the FSA on Monday.

Energy Secretary Ed Davey said: "I am extremely concerned about these allegations and will be keeping in close touch with the regulators while they get to the bottom of this."

Ed Davey said he was "extremely concerned"

Mr Davey is expected to make a statement to MPs later today.

An Ofgem spokesman said: "In preparing for full implementation of new EU legislation (Remit) to tackle market abuse, we will consider carefully any evidence of market abuse that is brought to our attention as well as scope for action under all our other powers.

"Ofgem has already activated its established procedures to review the information we have received."

UK energy companies EDF Energy, NPower, SSE, ScottishPower, E.On and British Gas have all denied any involvement.

The whistleblower, Seth Freedman, works as a price reporter for ICIS Heren, a company responsible for setting so-called benchmark prices.

Mr Freedman raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company.

ICIS said in a statement that it had "detected some unusual trading activity" on the British wholesale gas market on September 28, which it reported to Ofgem in October.

"The cause of the trading pattern, which involved a series of deals done below the prevailing market trend, has not yet been established," an ICIS spokesman said.

"ICIS welcomes the seriousness with which the regulator has so far responded to this information and we have provided all the evidence at our disposal to help the regulator determine what happened."

It is believed that on September 28 prices went down by about 0.4%.

Experts suggested that alleged manipulation may have been an attempt to maximise profit on an earlier trade position.

Shadow energy secretary Caroline Flint said: "These are very concerning reports which, if true, suggest shocking behaviour in the energy market that should be dealt with strongly."

The UK's biggest energy supply company, Centrica which is the parent firm to British Gas, said in a statement: "Centrica's traders are prohibited from providing price information to price reporting agencies.

"It's important to stress that the wholesale gas market has more than 50 participants, not just energy supply companies, handling hundreds of trades every day.

"It is in everyone's interests that there is a well-functioning and orderly wholesale energy market."

RWE npower also commented: "We were not involved in any of the trades which we understand are under investigation ...We would be happy to support any  regulatory investigation.

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US And Iraq 'Winners From Energy Revolution'

By Pete Norman, Sky News Online

The United States is to become virtually self-sufficient in energy in the coming decades while Iraq is set to be the leading oil supplier to China, the world's leading energy authority has said.

The predictions have been made by the Paris-based International Energy Authority (IEA), in its annual World Energy Outlook report.

In recent years the US has reaped an energy windfall as new technology allowed access to previously unrecoverable shale gas and so-called light tight oil reserves.

So dramatic is the US shale gas boom, now seen as a "game changer", that recently planned harbour gas import plants have been redesigned for export.

"By around 2020, the US is projected to become the largest global oil producer  - overtaking Saudi Arabia until the mid-2020s," the IEA said.

"The result is a continued fall in US oil imports, to the extent that North America becomes a net oil exporter around 2030."

The IEA said the cost saving for gas and electricity in the US will help improve its competitiveness and "spur economic activity".

Gas fracking has been trialled in the United Kingdom

Meanwhile, the big global winner in oil supply is expected to be Iraq, which should see oil production more than triple from the 2012 rate of 2.5 million barrels per day (2.5mb/d).

In 2000, Iraq exported over 3mb/d but it has failed to replicate the output since US and UK forces led an invasion in 2003.

US architects of the war had planned to use Iraqi oil exports to pay for reconstruction. However, ancient process infrastructure hampered quick development.

"In our projections, oil output in Iraq exceeds 6mb/d in 2020 and rises to more than 8mb/d in 2035," the IEA said.

"Iraq becomes a key supplier to fast-growing Asian markets, mainly China, and the second-largest global exporter by the 2030s, overtaking Russia."

Without Iraqi oil in the global market, the IEA predicts that oil would be $15 (£9) a barrel more.

But geopolitical concerns over Iran, and strategic security of oil routes through the constricted Strait of Hormuz to Asia, will also be factors in coming years.

The IEA warns of Iraq falling victim to squandered wealth

The shift occurs as China reconfigures its naval forces from a brownwater fleet to a bluewater force, gaining experience with its first aircraft carrier and expanding submarine capabilities.

The US has planned to balance growing Chinese defence expenditure by building a new base for Marines in Australia's Northern Territory and elsewhere, building bonds with India and using so-called smart power techniques.

The IEA said Iraq stands to make $5trn (£3.14trn) in revenues - giving it some $200bn (£125bn) annually - but warns against falling victim to the so-called resource curse.

"It is an opportunity to transform the country's prospects," the agency said.

"Translating oil export receipts into greater prosperity will require strengthened institutions, both to ensure efficient, transparent management of revenues and spending, to set the course necessary to encourage more diverse economic activity."

Gas 'fracking' has been trialled in Britain and the technology may allow further extraction from previously unviable or seemingly exhausted fields.

Deepwater drilling techniques continue to develop quickly, with Brazil attempting to recover oil offshore - and Ireland may soon follow suit.

:: On Monday, prospector Petrel Resources saw a 300% increase in its share price after announcing it had found up to a billion barrels of oil 120 miles offshore from Kerry at a drill depth of 2.5 miles from the sea surface.

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Vodafone Hit By £6bn Eurocrisis Phone Bill

Vodafone has suffered a £492m half-year loss after being hit with a multibillion write-down in the value of its business in crisis-hit southern Europe.

The telecoms giant announced a £5.9bn write-down in Spain and Italy, which prompted a 2.46% fall in its share price.

Vodafone's pre-tax loss for the six months ending September 30 compared to a profit of £8bn in the same period last year.

It was hit by customers making fewer calls in the economically-depressed southern region, along with the weakening of currencies in its major markets.

It was also hit by a partial slowdown of growth in emerging markets such as India and South Africa.

"We have continued to make progress on our strategic priorities over the last six months, with good growth in data and emerging markets in particular," chief executive Vittorio Colao said.

"In the short-term, however, our results reflect tougher market conditions, mainly in southern Europe."

However the Berkshire-based firm has been helped by the strong performance of its joint venture Verizon Wireless in the United States.

It said it expected to get a £2.4bn dividend from Verizon Wireless by the end of the year and added it would start a £1.5bn share buyback programme.

Vodafone owns 45% of Verizon Wireless while Verizon Communications owns the other 55% in the joint venture.

The UK company has also come under fire for its tax arrangements, just a day after three leading US multinationals felt the wrath of UK politicians.

Speaking to Sky News, Mr Colao told Jeff Randall Live: "We do pay and we will pay whatever corporation tax the rules require us to pay and I don't think there's any dispute over that."

"I'm absolutely in favour of making sure there's no avoidance and I'm absolutely in favour of making everybody pay the right amount of tax."

Group service revenue, which reflects ongoing income and not one-off items such as handsets, was down 1.4% in the second quarter.

Vodafone was hit by the drop of 11.3% in southern Europe business while the downturn in northern Europe was 0.7%.

The negative result was buoyed slightly by growth sustainment of 4.1% in its emerging markets.

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