HBOS: Bosses Get Bonuses 'For Going Bust'

Pressure is mounting on disgraced former HBOS bosses amid anger over mammoth pension pots and nearly £1m of "bonuses for going bust".

Seven directors of HBOS landed £914,000 in "change of control" payments triggered by the bank's rescue takeover by Lloyds Banking Group, following its £20.5bn taxpayer bailout in 2008.

It also emerged that Sir James Crosby and Andy Hornby - two of the three former HBOS chiefs damned last week by a parliamentary commission for "catastrophic failures of management" - were on pension schemes that accrued benefits at twice the rate of average workers.

Mr Hornby, eligible to start drawing down a £240,000-a-year HBOS pension when he turns 50 in four years' time, is now in the spotlight following Sir James's decision earlier this week to hand back 30% of his £580,000-a-year pension.

Under the change of control payments handed out at the time of the Lloyds takeover, Mr Hornby received £251,000 cash and 7,599 shares - on top of salary, pensions awards and redundancy payments.

MPs are now demanding an inquiry into the handouts.

John Mann, MP and member of the Treasury Select Committee, said the due diligence done at the time of the deal needed to be investigated, while the former bosses should also pay the money back.

He told the Guardian: "This is taxpayers' money being used to pay bonuses to bankers that brought down their own bank and cost thousands of ordinary workers their jobs - These are bonuses for going bust."

Others to receive the payments include Peter Cummings - the former head of corporate lending and the only ex-HBOS director penalised by the Financial Services Authority (FSA) after being fined £500,000 and banned for life from working in the City. He received £129,000 and 2,051 shares.

Lloyds said the decisions to award change-of-control payments and pensions were made by HBOS before its takeover.

A spokesman said: "At the time these arrangements were settled, Lloyds did not own HBOS.

"All decisions with respect to the redundancy or severance terms applicable to departing HBOS senior executives, including pensions, were made by the HBOS remuneration committee or board of HBOS prior to the acquisition by Lloyds."

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Austria Slams UK Over 'Tax Haven Hypocrisy'

Austria's finance minister has slammed Britain over its push against tax havens and bank secrecy laws.

Maria Fekter said: "Great Britain has many money laundering centres and tax havens in its immediate legal remit - the Channel Islands Gibraltar, the Cayman Islands, Virgin Islands.

"These are all hot spots for tax evasion and money laundering."

Ms Fekter would fight transparency "like a lion"

She added: "The G20 never, never accepted the information exchange (for bank accounts) and they never did any step to close the money laundering in all the (Caribbean) islands ... or the US in Delaware."

Ms Fekter made the statements as she arrived in Dublin for a two-day meeting of eurozone finance ministers, where they later formally approved the terms of a Cyprus debt bailout, saying it could now go ahead once cleared by national parliaments.

Earlier, Ms Fekter said she would "fight like a lion" to defend Austria's banking privacy.

"Austria is sticking to bank secrecy. We fight tax evasion and money laundering. I don't expect any uncomfortable questions."

According to an estimate by The Economist magazine, some $3trn (£2trn) has been ploughed in oblique tax haven accounts where investors' identities can remain hidden.

A recent data leak allegedly revealed Caribbean account holders as including British nominee firms, American dentists and the families of dictators.

Austria has vowed to stick to its bank secrecy laws on EU depositors, even though it has come under increasing EU pressure.

Prime Minister David Cameron and Chancellor George Osborne have both pushed for greater transparency among EU and G20 nations.

Business Secretary Vince Cable has also voiced serious concerns over multinational businesses using cross-border structures to reduce corporation tax liabilities.

Isle of Man banks have improved transparency and data exchanging

Australia has already informed large companies that their tax accounts would be made public.

The outburst from the Austrian finance minister comes amid pressure from Germany for Luxembourg, which has become a finance hub for many multinationals, to improve bank transparency.

Luxembourg said it would improve transparency from 2015 and Austria remains the last EU nation to resist greater exchange of financial data.

Meanwhile at the Dublin meeting, Cyprus said it did not want more money from Europe to solve its financial crisis but it will ask for leeway to lessen the burden of measures imposed in exchange for agreed helped.

Cyprus said the bailout cost will jump from 17.5bn to 23bn euros but Luxembourg said it will oppose any increase in the EU & IMF's 10bn-euro contribution.

The Nicosia government said that banks and their depositors would not have to fund the extra 6bn euros needed to prevent the economy's collapse, on top of 17.5bn.

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Floods: UK Insurers Avoid Covering Risky Homes

By Becky Johnson, North of England Correspondent

People whose homes have been devasted by flooding fear they will be unable to get insurance in future as talks between the Government and insurers have so far failed to reach an agreement.

At present insurers are required to provide cover at reasonable rates provided the Government continues to strengthen flood defences, but this agreement - known as the Statement of Principles - is due to expire in June this year.

In St Asaph in North Wales more than 400 homes were deluged when the River Elwy burst its banks last November. So far, the majority of people have still been unable to return to their houses.

James Alcock stands in his kitchen after flood water recedes

John Wynn Jones who is a local councillor and whose own home was flooded told Sky News: "What we are finding is that because people are so concerned about getting insurance, as well as clearing up after the floods themselves, people are actually considering not moving back into their homes.

"They don't want to get back into their properties and then find out they can't get insurance or the premiums are now so high they can't afford it.

"There's one lady who was insured and ... they've told her they won't be able to renew her policy. When she's questioned it, they've told her 'you no longer fulfil our criteria'. It hasn't been explained to her why but she says the only thing that's changed is she has now been flooded.

"Another resident has had to shop around. Her existing premium had been £200 a year and the best deal she can get now is £1,200 a year. Someone else was told they'd only get a policy with a £10,000 excess.

"People are desperate to have the cover but a lot of people are saying they don't have the money to pay so they'll end up living in uninsured properties."

A fireman helps a member of the public in Aberfoyle

Aidan Kerr, head of property at the Association of British Insurers (ABI), said: "We continue discussions with Government on the model we have developed to safeguard the availability and affordability of flood insurance for those at high risk.

"With flooding the biggest natural risk the UK faces, it is important we have consensus on managing the risk going forward, which includes sustained and targeted flood defence investment and sensible planning decisions."

A spokesperson for the Department for Environment, Food and Rural Affairs told Sky News: "We want to get an agreement on insurance that provides a lasting solution and secures affordability and availability of flood insurance for policy holders.

"Constructive negotiations are ongoing and Government is meeting with the ABI regularly."

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Shoppers 'Misled' By Copycat Packaging

Retailers are misleading shoppers into buying own-brand products which "borrow" elements from the packaging of well-known competitors, according to a watchdog.

A fifth of Which? members said they had accidentally bought a supermarket version of a favourite brand at least once with 60% of those saying the mistake left them feeling annoyed or misled.

The consumer group found more than 150 own-label products had mimicked the packaging of products such as McVitie's digestives, Kellogg's coco pops, Simple cleanser and wipes, Radox bath gel and Jacob's cream crackers.

Lurpak butter seemed to have "a recognisable own-label imitator" in most major supermarkets, Which? said.

Aldi, Asda, Lidl, Morrisons, Sainsbury's, Boots, Superdrug and Tesco were named for stocking such items.

Own-label products, which tend to be cheaper than brands, are becoming more popular among shoppers struggling with tightened finances and rising food prices, according to separate research from the group.

Its survey on own-brand packaging found 18% of members had deliberately bought an own-label product because it resembled the branded equivalent, with 60% of these shoppers doing so because it was cheaper and 59% wanting to see if it was as good.

But consumers looked upon own-brand products less favourably when they were confused by the packaging, with 38% of those who bought such a product by mistake saying it annoyed them and 30% reporting that they felt misled.

British Brands Group director John Noble said: "Our research shows that consumers are more likely to buy own-label products if they look like brands.

"Brands survive by being distinctive and standing out, and retailers are free-riding on brands' reputations.

"Currently in the UK there is little to stop a competitor packaging its product to look like a familiar brand, whether or not the product's performance is in any way similar.

"That can't be good if we want a market in which shoppers can make informed decisions at speed."

Boots said that colours could be synonymous with certain active ingredients and helped consumers find the right product, while Morrisons, Superdrug and Aldi all said retailers used the same colours as branded products to help customers find products quickly.

A Which? spokeswoman said: "Own-brand products can provide good value and several have topped our tests to become best buys.

"But retailers should make sure that people are under no illusions about what they are buying and not leave so many consumers feeling that they have been misled."

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'Free' Web And App Games Investigated

So-called "free" web and app-based games for children are under investigation following concerns that users can run up substantial costs.

The Office of Fair Trading (OFT) said it was investigating whether children were being unfairly pressured or encouraged to pay for content in free games, such as upgraded membership or virtual currency in forms including coins, gems or fruit.

The investigation will look into whether these games include "direct exhortations" to children to do something that will require making a purchase, or to persuade their parents or other adults to make a purchase for them.

It will also consider whether the full cost of some of these games is made clear when they are downloaded or accessed.

The OFT has written to companies who offer such games asking them for information on how they market to children.

It is also asking parents and consumer groups for information about potentially misleading or commercially aggressive practices.

OFT senior director for goods and consumer, Cavendish Elithorn, said: "We are concerned that children and their parents could be subject to unfair pressure to purchase when they are playing games they thought were free, but which can actually run up substantial costs.

"The OFT is not seeking to ban in-game purchases, but the games industry must ensure it is complying with the relevant regulations so that children are protected.

"We are speaking to the industry and will take enforcement action if necessary."

Martin Lewis, the founder of MoneySavingExpert.com, said it was "disappointing" that apps aimed at children have been allowed to charge "ridiculous amounts" for extra features.

He pointed to one game, My Little Pony, which he said charged users £69 for some in-app purchases.

Mr Lewis said: "When games such as My Little Pony, which are obviously targeted at young children, bait kids with £69 purchases of a 'mountain of gems', something is going wrong in the system.

"What's really disappointing is it's been allowed to get this far. Apple especially makes a play of only allowing approved apps in its store.

"So why does it allow games that can be targeted at young children to charge such ridiculous amounts for in-app purchases?

"As always, an OFT investigation, even if it does advise action, will take time. So the most important message meanwhile is to protect yourself."

MoneySavingExpert.com said case studies reported on its forum included a seven-year-old who racked up a £69.99 bill on the College Girl app, a parent who was unaware their five-year-old had spent £65 on in-app purchases and a child who spent £80 on the Tiny Pets app.

Last month, Apple agreed pay out around £66m ($100m) to settle a US lawsuit which claims children were improperly charged while playing iPad and iPhone games.

It was alleged that poor safeguards meant kids were easily able to buy extra features for the free games without their parents' knowledge or permission.

The tech giant agreed to give a £3.30 ($5) credit to an estimated 23 million people who were affected. However, if parents can show they were charged more than £20 ($30) then cash refunds will be offered.

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KPMG Auditor Charged Over Insider Trading

US officials have charged a former senior partner of accounting giant KPMG over alleged insider trading.

Authorities charged Scott London with five criminal and civil charges over claims he gave a golfing partner non-public information, which was used to make share trades.

Mr London was apparently given part of the profit as cash, a Rolex watch and VIP concert tickets to see rocker Bruce Springsteen.

On Thursday, a federal court judge in Los Angeles released Mr London on $150,000 bail (£100,000) and ordered to hand in his passport.

The charges stem from information about five firms given to long-term friend, jeweller Bryan Shaw, who recorded some conversations and later gave them to the FBI.

The judge also ordered that the former KPMG auditor not to make contact with Mr Shaw unless in the company of representing lawyers.

Mr London's lawyer, Harland Braun, said his client intended to plead guilty when he next appears in court, on May 17.

In exchange for the privileged information Mr London apparently received a share of the share trading proceeds.

Inside information was given on corporations including footwear firm Skechers and nutritional group Herbalife.

KPMG is one of the so-called Big Four audit firms

"Had my client been asked to give information for cash, he would have said no," Mr Braun said after the hearing.

"This is that grey area, when you talk at the country club. But once you take money, you're dead."

KPMG chief executive John Veihmeyer said his firm will take legal action against Mr London in the near future.

However, he said there was no reason to believe the financial statements of the companies involved are materially misstated.

"We unequivocally condemn his actions, and deeply regret the impact that his violations of trust and the law have had on our clients and our people," Mr Veihmeyer said.

According to prosecutors, Mr Shaw made about $1m (£640,000) trading on the tips and gave Mr London roughly 10% of his profits.

One gift for Mr London was a Rolex Daytona Cosmograph watch valued in 2011 at $12,000 (£7,800), while another payment he said was $10,000 wrapped into a bundle of $100 bills.

Mr Shaw told the FBI he believed he spent between $25,000 and $45,000 in concert tickets for the two of them, including a Bruce Springsteen VIP event.

Mr London's lawyer disputed the amounts, saying his client only received about $35,000. Mr London has already turned over $7,500 in cash and the Rolex to officials.

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President Obama Unveils 2014 Budget Blueprint

By Dominic Waghorn, US correspondent

President Barack Obama has sent a $3.77trn budget to Congress hoping to overcome fundamental differences with Republican rivals.

The ongoing struggle between Republicans and Democrats over taxing and spending has pushed the US to the brink of dysfunctional shutdown a number of times.

The American leader is looking for a compromise between the two parties on the issues that have divided US politics.

Republicans are ideologically opposed to raising taxes, hoping to balance books with severe spending cuts instead. They believe it is not possible to tax and spend a way out of deficit.

Democrats believe raising taxes on the rich will not jeopardise recovery and oppose drastic cuts in public spending. They seek inspiration from the Bill Clinton years when a strong recovery took the US from deficit to surplus in one presidential term.

The White House says Mr Obama's budget is a common sense and reasonable balance between spending cuts and tax increases. 

But at its heart is an offer he has already made to Republicans and seen rejected. House Speaker John Boehner has already walked away from the proposal to raise taxes on the rich.

Among its other proposals are plans to reduce defence spending by an additional $100bn, set aside a billion to launch manufacturing innovation institutions nationwide and cutting $400bn from health care programmes for the elderly and poor.

The president has been criticised from the right and left on his proposals but insists they form the basis for a longer term solution to an issue that has bedevilled US government for much of his term in office.

To try and win over opposition Mr Obama is inviting a dozen Republican senators to the White House for dinner to discuss the budget, along with gun control and immigration.

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M&S Sees Clothing Sales Fall As Food Goes Up

Retailer Marks and Spencer has reported a drop of 3.8% in like-for-like clothing sales for the first three months of the year, as food sales rose 4%.

It was the seventh consecutive quarterly fall in underlying general merchandise sales, though the outcome was a touch ahead of expectations.

Marks & Spencer, which has been the subject of takeover speculation, said sales of its non-food products, spanning clothing, footwear and homewares, at stores open over a year dropped in the 13 weeks to March 30.

As a result of the boost by food, total group sales in the period rose by 3.1%.

More follows...

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Huge Car Recall Over Faulty Airbags

Nearly three million cars made by Japanese manufacturers are to be recalled worldwide because of possible problems with their airbags, a government official has said.

A Japanese transport ministry official said four carmakers submitted reports to about the problems and the recall would reach a combined total of 2.92 million.

The four makes are Toyota, Nissan, Honda and Mazda, the official said.

A Toyota spokesman said his company was recalling a total of 1.73 million vehicles, manufactured between November 2000 and March 2004 in Japan and abroad, due to a defect in passenger-side airbags.

A Toyota UK spokesman told Sky News the recall would affect some 76,000 cars in the UK. Across Europe the figure is 490,000.

Its affected vehicles are all between 9 and 13 years old, sold from November 2000 until March 2004, and include Corollas, Yaris, Avensis, Avensis Verso, Picnic, Camry and Lexus SC430.

The Corolla and Avensis recall involves cars manufactured in Britain using at-risk Japanese components.

He said five problems had been recorded worldwide - none in the UK - and no accidents or injuries had occurred in Toyota vehicles.

Toyota's share price on the Nikkei went up 4% after the recall was announced.

Honda is recalling 1.135 million vehicles worldwide, and a spokesman told Sky News that the recall would be made for 15,400 Civics, CR-Vs and FR-Vs in the UK.

Nissan said it would recall 480,000 vehicles globally, with 59,058 requiring modifications in the UK. No injuries had been reported.

Its affected British cars were built between 2000-2004 and the models include the X-Trail, Patrol, Almera, Almera Tino, Terrano II and the Navara.

The recalled air bags were made by Japan's Takata Corporation and are also believed to affect some non-Japanese manufacturers, company spokesman Akiko Watanabe said.

As a result, additional recalls are expected to be made later in the day.

A source told Sky News some airbags were constructed with excess gas canister charges.

A Honda representative said the problem stems from two human errors during production by the supplier.

Spokeswoman Akemi Ando said a worker allegedly forgot to turn on the switch for a system weeding out defective products and parts were improperly stored, which exposed them to humidity.

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Fracking Earthquake Fears Dismissed By Study

Fracking: The Pros And Cons

Updated: 2:51pm UK, Thursday 13 December 2012

Opinion about fracking is bitterly divided amid fears of its environmental impact. Here are the key arguments.

What is fracking?

Hydraulic fracturing - or fracking - involves drilling into the ground. Drills go down and then sideways into areas of gas-bearing shale. Small charges are used to blow holes in the walls of the well before water and chemicals are pumped in at high-pressure to shatter the rock. This releases natural gas, formed from deposits of mud, silt and other matter that is stuck in pores within the rock layers, which is then pumped up to the surface.

The Pros

Energy security: Using Britain's own natural gas could provide a major proportion of Britain's energy needs and reduce the country's reliance on imports. Well operator Cuadrilla Resources estimates the Bowland Basin prospect site in Lancashire contains as much as 200 trillion cubic feet of gas. If even a fraction of that is extracted, Cuadrilla says it could make a significant contribution to Britain's energy supplies.

Availability: Britain has high resources of shale gas in areas including the Pennines. It could be an alternative to other fossil fuels and be worth billions of pounds.

Lower prices: There have been claims that the use of shale gas could result in lower energy costs, although the Government's own advisers have now cast doubt on the prospect.

Economic boost: Cuadrilla, the only company currently with a fracking licence, says it could create tens of thousands of jobs and generate significant tax revenue.

The Cons

Safety fears: Cuadrilla's testing in Lancashire caused small tremors in Blackpool in 2011 although there was no structural damage. Strict measures will now aim to minimise any risks.

Contamination: Environmentalists believe the process risks polluting water suppliers with chemicals. In the US, there have been reports of dangerous methane leaks, toxins from extraction plants escaping, sick animals and tap water turning grey. Cuadrilla denies the British water supply could be spoiled and insists fracturing fluid cannot escape from the rock.

Visual impact: There are concerns about drilling and hydraulic rigs, and general industrial development, in areas of natural beauty - although this also applies to many renewable projects.

Shift of focus: Proponents say shale gas could be a transitional fuel that helps to bridge the energy gap but campaigners insist attention should be on developing renewable energy. Environmental groups also claim fracking will affect efforts to slash carbon emissions.

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Unicef: Austerity Risks Children's Prospects

British children's prospects trail behind many of their European neighbours and current Government policies are making it worse, a UN organisation has warned.

Unicef's report on child well-being placed the UK 16th out of 29 developed countries, but it ranked much lower on key indicators including involvement in further education (29th), teenage pregnancy (27th) and youth unemployment (24th).

The children's rights organisation warned that a generation of British teenagers is being "sidelined" by the Government's austerity agenda and called for more state investment in young people.

Anita Tiessen, deputy executive director of Unicef UK, said: "There is no doubt that the situation for children and young people has deteriorated in the last three years, with the Government making policy choices that risk setting children back in their most crucial stages of development.

"With the UK ranking at the bottom, or near the bottom, of the league table on teenage pregnancy and young people not in education, employment or training, we know that many are facing a bleaker future.

"While children and young people will be the first to bear the brunt if we fail to safeguard their well-being, over time society as a whole will pay the price."

The UK has actually crept up the child well-being tables since Unicef's last report in 2007, which branded Britain the worst place in the developed world to be a child.

But the organisation warned that the improvement seen under the previous Labour administration risks being reversed by the Coalition cuts programme.

It cited research by the Family and Parenting Institute and Institute for Fiscal Studies predicting that 400,000 more children will be in poverty by 2015/16 due to austerity measures.

The new report draws on statistics from 2010 and shows a general improvement in children's experiences over the first decade of this century, compared with the previous scorecard, which looked at data from 2001/2.

But the brighter picture for younger children is not matched among teenagers, who remain more likely than their peers in other developed countries to drop out of education and get involved in underage drinking and teenage pregnancy.

The table was topped by the Netherlands, then Finland, Iceland, Norway and Sweden. Romania was ranked last.

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KPMG Quits Audit Role Amid FBI Investigation

Top accounting firm KPMG is under investigation by the FBI over allegations of insider trading by one of its auditors.

KPMG said it has resigned as auditor of two US corporations amid the inquiry involving leaked information from a former senior partner.

The two California-based companies - nutritional products group Herbalife and footwear maker Skechers - confirmed separately that KPMG had quit as their auditor in connection with the alleged leaks.

The two companies said that the investigation did not relate to their own conduct but that of the auditor.

The FBI's Los Angeles office is understood to be heading the investigation.

KPMG said that "the partner was immediately separated from the firm" when the allegations were made.

The company also said: "This individual violated the firm's rigorous policies and protections, betrayed the trust of clients as well as colleagues, and acted with deliberate disregard for KPMG's long-standing culture of professionalism and integrity."

The company is one of the so-called Big Four accounting firms which handle much of the corporate world's auditing.

In the UK, KPMG last year audited 21 companies in the FTSE 100, bringing in £431m in audit revenues.

Its total revenue peaked in 2012 at £1.8bn.

Shares of Herbalife in the US closed on Thursday down 3.8% amid an ongoing battle between key investors, meanwhile Skechers shares were up 1.9%.

The investigation into the auditor comes as increasing scrutiny mounts on the audit firms over corporate tax minimisation schemes and their role in the run-up to the global financial meltdown.

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Hedge Funds In Talks Over RBS Branches Bid

By Mark Kleinman, City Editor

Two hedge funds which made millions of pounds shorting UK bank shares during the 2008 financial crisis are in talks to back a £1bn bid for more than 300 Royal Bank of Scotland (RBS) branches.

I have learnt that Lansdowne Partners and GLG, which is part of the listed Man Group, are among more than 20 institutions which have indicated their interest in participating in an offer for the branch network.

The prospective involvement of the hedge funds is likely to provoke comment in the City because they were among dozens of investors which profited from bets that banks' share prices would fall during the febrile period leading up to taxpayers' rescue of lenders including Northern Rock and RBS.

Neither GLG nor Lansdowne has formally committed funds yet to the institutions' bid, although GLG's interest is understood to be the more advanced of the two.

Lansdowne made handsome profits from shorting shares in banks such as Barclays and HBOS, whose senior executives were last week criticised by the Parliamentary Commission on Banking Standards for their role in its near-collapse.

The offer would involve an investment worth hundreds of millions of pounds being made into a new company that would have a binding commitment to acquire the RBS branches.

The company would then be floated on the stock exchange.

The institutions' offer is principally made up of major UK pension funds and other investors, such as F&C, Schroders and Threadneedle.

It is being led by Andy Higginson, a former finance director of Tesco and non-executive director of BSkyB, the owner of Sky News.

RBS is expected to decide as soon as this week about the next stage of the process to offload the 316 branches.

People close to the auction said the taxpayer-backed bank could elect to enter exclusive talks with a bidder imminently.

The City institutions are vying with a bid from two private equity groups, Corsair Capital and Centerbridge, who are backed by prominent investors such as Lord Rothschild.

Another private equity consortium is also in the running.

RBS has been forced to sell the branches as part of a package of state aid remedies agreed between the UK Government and the European Commission.

Neither GLG nor Lansdowne would comment on Monday.

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Energy Debts: Amount Families Owe Mounts

The number of families in debt to their energy supplier is rising, with around one in five households owing money, a study suggested.

Collectively, Britons are estimated to owe £637m to energy firms, which is £159m more than last year's projections, comparison website uSwitch said.

Some 20% of bill payers surveyed by the website, equating to more than five million households nationally, are in debt to their energy supplier after falling behind with payments or due to discrepancies between estimated bills and actual amounts.

This figure is up from 14% when similar research was carried out last year.

The latest survey of more than 2,000 bill payers in February found that the typical amount owed is £8 less than it was a year ago, at £123.

But a recent string of price hikes by energy companies combined with the unseasonably chilly weather could see the size of people's energy debts shooting back up again, the study warned.

The average annual household energy bill has risen by almost £100 in the space of a year, adding to the pressure on families as wages remain stagnant.

The website said the typical bill now stands at £1,353 a year, which is around £830 higher than it was in 2004.

This sum is based on a consumer who uses a medium amount of electricity and gas on a standard dual fuel bill, paying quarterly by cash or cheque.

Just over one fifth of those in debt to their supplier said they were turning a "blind eye" to what they owe in the hope that the amount will go down naturally over time.

A similar proportion plan to pay off a big lump sum, while one in 12 people in debt said they would need to try and agree a repayment plan with their supplier.

Ann Robinson, director of consumer policy at uSwitch, said: "The soaring number of households in debt to energy suppliers is a clear indication of the pressure people are coming under just to meet the cost of their basic bills."

She said ways that people could cut down on their costs included paying by direct debit as suppliers tended to offer discounts for paying in this way.

And consumers should also make sure that someone was taking regular meter readings, as relying on estimated bills can be a "shortcut to debt".

A Green Deal scheme has recently been launched by the Government, which allows people to make energy efficiency improvements such as loft insulation or double glazing at no up front cost. Repayments are then to be added to the property's energy bill over a period of time.

Last week, utility giant SSE was handed a record £10.5 million fine by regulator Ofgem for "prolonged and extensive" mis-selling.

SSE provided "misleading and unsubstantiated statements" to potential customers about prices and savings that could be made by switching to SSE, according to Ofgem.

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Cold March Weather Puts Freeze On Sales

The coldest March in 50 years saw sales of clothing and footwear freeze but it boosted demand for food and drink, according to new figures.

The British Retail Consortium (BRC) said sales grew by 1.9% in March on a like-for-like basis, weaker than February's 2.7% surge but a performance described as "encouraging" given the weather impact.

While clothing and footwear retailers endured a "dismal" month, food sales were up as families treated themselves over Easter and cold weather boosted the appetite for hearty meals.

BRC director general Helen Dickinson said: "Snow and the prolonged cold were not ideal but not a disaster. They brought mixed fortunes for different categories.

"2013 has got off to an encouraging start for the market as a whole.

"Retailers are now hoping for a boost in consumer confidence and the general mood to lift performance across all, not just some sectors, as we head into the second quarter.

Across the whole of the January to March quarter, like-for-like retail sales increased 2.2%, with 1.9% non-food growth offset by 2.5% food growth.

Continued expansion by the retail sector will add to hopes the UK economy managed to eke out growth in the first quarter, thus avoiding a feared triple-dip recession.

KPMG head of retail David McCorquodale said it may be the start of a positive trend for retailers, adding clothing and shoe stores will be "desperate for a change in weather in April".

The BRC said clothing and footwear were the worst-performing non-food categories in March and the only ones where sales declined, but did not break out specific figures.

Marks & Spencer, one of the UK's biggest clothing retailers, is likely to be a major casualty of the big chill, and is expected to report falling clothing sales for the three months to the end of March on Thursday.

However, the retail bellwether's food sales are forecast to grow by 3%, as consumers continue to treat themselves and opt to eat in rather than dine out.

Roasts and oven chips were popular categories as shoppers sought out warming meals, the BRC said - while beer and ready meals were also big sellers, as shoppers stocked up for the Six Nations rugby tournament.

House textiles were the best-performing category, as sales of duvets boomed and Easter boosted table cloth sales.

Furniture and flooring was the second-best category, helped by a gradually improving housing market.

Online sales were up 6.6%, but that growth was much slower than the 13.9% increase recorded in March 2012.

That was the slowest online growth since August, and the BRC said it may suggest shoppers are searching out items online but completing the purchase in-store, as well as spending less time online over Easter.

:: House sales have been lifted to a three-year volume high in March, according to the Royal Institution of Chartered Surveyors.

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Cable 'Wants Investigation Into HBOS Life Bans'

An investigation is to be launched into whether the three former HBOS directors blamed for the banking group's collapse can be banned as company directors for life, it has been reported.

The Business Secretary has asked his officials to see if there is enough evidence against Lord Stevenson, the former HBOS chairman, Sir James Crosby, the former chief executive, and Andy Hornby, his successor, to start a formal probe under the Company Directors Disqualification Act.

Vince Cable told The Sunday Times it was the first step in a process which could lead to the three - who have so far not faced formal sanction - being barred from acting as company directors.

The move comes in the wake of a damning report into the collapse of the bank by the Parliamentary Commission on Banking Standards published on Friday.

The group was given a £20.5bn bailout

It found Sir James was the "architect of the strategy that set the course for disaster" and held primary responsibility for the collapse along with former chairman Lord Stevenson and fellow chief executive Andy Hornby.

Their "toxic" misjudgments led to the bank's downfall and a £20.5bn taxpayer bailout at the height of the financial crisis and they should never be allowed to work in the financial sector again, according to the influential commission of MPs and peers.

Mr Cable told The Sunday Times: "It's quite a legalistic process. I can ask (officials) to look at whether the companies investigations branch take action.

"We do have this power which I have begun to initiate."

Sir James stepped down from his role as a member of Bridgepoint's European Advisory Board on Friday but remains chairman of the car credit company Money Barn and a senior independent director for Compass, one of the country's largest catering firms, according to company spokespeople, as well as a trustee for Cancer Research UK.

Mr Hornby's current employer, Gala Coral, has said he has their "complete backing" as chief executive.

Sir James and Lord Stevenson have so far retained their titles, though the Royal Bank of Scotland's disgraced former boss Fred Goodwin was stripped of his knighthood.

Peter Cummings is the only former HBOS director to have been penalised by the Financial Services Authority, after being fined £500,000 and banned for life from working in the City last September.

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Disability Benefits: New System Rolled Out

By Siobhan Robbins, Sky Reporter

Major changes to disability benefits, which critics say will leave many worse off, are beginning to be rolled out today.

New claimants in parts of northern England will now receive Personal Independence Payments (PIP) in place of the old Disability Living Allowance (DLA).

The new system which includes face-to-face assessments and regular reviews will take at least two years to roll out across the rest of the country.

Steven Sumpter from Worcestershire, who suffers from ME and diabetes so finds walking painful, told Sky News he was worried about the future.

Previously, to get disability benefit he had to prove he was unable to walk 50m, but that will be changed to 20m.

He said he fears in the future he will lose half of the money he receives and the subsidised car he relies on.

"It means every single trip to the shops and the doctor will turn into maybe three hours of effort and that will leave me in bed, exhausted and in pain for days afterwards," he said.

The Government insists DLA was outdated and the changes mean those who really need support will now receive it.

Work and Pensions Secretary Iain Duncan Smith has described the previous system as "ridiculous".

Iain Duncan Smith: Old system is "ridiculous"

"We've seen a rise in the run-up to PIP. And you know why? They know PIP has a health check. They want to get in early, get ahead of it. It's a case of 'get your claim in early'," he told the Daily Mail.

He added that rigorous new health checks for claimants were "common sense".

Some charities have already expressed concerns that it will mean 600,000 people miss out on support.

Chief Executive of Scope, Richard Hawkes admitted changes were needed but claimed the Government was motivated by cost cutting.

"The Government has already announced how much the Disability Living Allowance budget is going to be reduced, they've already announced how many people are going to lose DLA and they're introducing a test which is going to provide them with the results they want to reduce those costs. It's not right, it's not fair," he told Sky News.

PIP will initially be introduce for new claimants in northwest England, Cumbria, Cheshire, northeast England and Merseyside.

As the new scheme is being rolled out, welfare reform campaigners will present a petition calling for Mr Duncan Smith to live off £53 a week to his office.

Musician and part-time shop worker Dominic Aversano, who started the petition on campaigning website Change.org, said: "When I started this petition I never imagined the level of support it would get, and the amount of encouragement people would give me.

"It has sent a powerful message to this Government, showing the level of opposition to their vicious welfare cuts."

George Osborne has defended the changes

Mr Duncan Smith was challenged to live on £53 a week after a market trader on a radio show said that was all he had to live on despite working 50 to 70 hours a week.

Asked whether he could live on £53 a week, the former army officer who now earns around £1,600-a-week after tax replied: "If I had to I would."

As well as the Personal Independence Payments, other reforms including a below inflation 1% cap on working-age benefits and tax credit rises for three years, have already come into force.

Around 660,000 social housing tenants deemed to have a spare room will lose an average of £14-a-week in what critics have dubbed a "bedroom tax".

Trials of a £500-a-week cap on household benefits are also due to begin in four London boroughs.

Chancellor George Osborne insisted on Sunday that the public was behind his changes to the benefits system.

Mr Osborne also said he felt "angry" that too much money was being "spent in the wrong way in our welfare system".

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Luxembourg 'May Ease' Bank Secrecy Laws

Luxembourg has said it is prepared to ease its banking secrecy rules and work more closely with foreign authorities amid a crackdown on tax havens.

Its finance minister, Luc Frieden told Germany's Frankfurter Allgemeine Sonntagszeitung of the possible shift in policy.

He said there was an international trend towards automatically exchanging information about depositors, adding: "We no longer strictly reject this, in contrast to before."

"Luxembourg does not rely on clients who want to save tax," he said.

Last month's 10bn euro (£8.5bn) bailout of Cyprus, whose banking system was swollen by foreign deposits attracted by low taxes and easy regulation, has put the spotlight on tax havens.

Australia has warned 2,000 top firms that their tax arrangements are to be revealed while Britain has pushed for bank secrecy changes.

Prime Minister David Cameron and Chancellor George Osborne have both urged the G20 group of countries to improve transparency.

Some firms have been criticised over 'transfer pricing', where local divisions must buy goods and services from a parent firm - often from a small office in places such as Luxembourg.

Austria and Luxembourg are the only European Union states that do not share with other EU members the identities of EU residents with cross-border bank accounts.

German finance minister Wolfgang Schaeuble said he was pleased with the comments from Luxembourg.

"I welcome every step towards automatic information exchange," he told the Saarbruecker Zeitung newspaper.

Amid growing outrage over the scale of tax evasion, Mr Schaeuble said last week Berlin would push the EU to take legal measures against tax havens.

The German government this weekend also urged several German publications to hand over details they have obtained on suspected tax cheats.

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US New Jobs At Lowest Level For Nine Months

US Jobs Figures Are Deeply Worrying

Updated: 4:04pm UK, Friday 05 April 2013

By Ed Conway, Economics Editor

Americans are dropping out of the jobs market, and fast. That's the depressing takeaway from today's non-farm payroll report.

The overall participation rate – a measure, essentially, of the proportion of people of working age either in a job or looking for one – has fallen to the lowest level since 1978.

It is, as far as employment experts are concerned, a deeply worrying signal: increasingly, potential workers are giving up on getting work, dropping out of the jobs market instead of attempting to find a new position.

In fact, as you can see from the chart, participation has been falling since the turn of the millennium, though it's only in the wake of the financial crisis that the drop has become more vertiginous.

Why be concerned about this? Well, a high participation rate has typically been seen as evidence of the American economy's strength – a complement to its high productivity rate and consistently-strong GDP growth rate.

A low participation rate, on the other hand, is often evident in economies which are more sclerotic and less efficient – particularly ones with over-generous welfare states which some think discourage people from working.

So, for instance, Japan and Spain both have participation rates below 60%: Germany's has only just tipped fractionally above it.

The reality is that now, for the first time since 1977, America's participation rate, at 63.3%, is lower than Britain's, which is 63.6%, or was in the three months to the end of January.

It would be nice to claim that this was because Britain was in some way becoming leaner and meaner, but the statistics suggest otherwise: Britain's participation rate has remained steady since 2005 while America's has fallen sharply as people leave the workforce.

It might be odd, having said all of the above to say that today's nasty US jobs report (the headline, by the way, was that a mere 88,000 net jobs were added in March – well below the rise in the population) also technically make it more likely that the Federal Reserve will scale back its stimulus.

But in one sense they do. The Fed has committed to more quantitative easing, buying up $85bn (£55.8bn) of debt each month until the unemployment rate drops below 6.5%.

But because unemployment measures the number of working people as a percentage of the total workforce, it can fall as a direct result of the workforce falling – and that's what happened this time, with the rate dropping from 7.7% to 7.6%.

Now, pragmatically speaking the Fed will try to "look through" this optical illusion. But it's an important reminder that when you tie your monetary policy to a very specific number, it doesn't always make it easy to predict future moves from the central bank.

Mark Carney, who is coming in as Bank of England Governor this summer and has nodded approvingly over at what the Fed has been doing, should take note.

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Axminster Rescue To Save 100 Devon Jobs

By Mark Kleinman, City Editor

One of Britain's oldest carpet-makers is to be rescued in a deal that will preserve about 100 jobs in the south-west of England.

I understand that Axminster Carpets, which traces its roots back to 1755, will be bought out of administration by a local consortium. An announcement about the deal is expected.

The consortium is being led by Stephen Boyd, a businessman who chairs Pittards, a major leather supplier, and includes backing from Centric Commercial Finance, an invoice discounting and asset-based lending group.

Axminster fell into administration last month, citing difficult trading conditions, with the loss of about three-quarters of the company's 400-strong workforce.

A supplier to Clarence House, 10 Downing Street and the Royal Albert Hall, the carpet-maker was founded by the Whitty family in the 1750s, and gave rise to what became known as the Axminster method of weaving.

After going out of business in the 1830s, it was subsequently revived a century later.

Joshua Dutfield, grandson of the founder of the current incarnation of Axminster, is expected to remain involved with the company following the rescue deal.

Axminster's collapse sparked an emotional response in Devon, with thousands of people signing a petition aimed at saving the company.

A spokeswoman for Axminster declined to comment ahead of the announcement. Duff & Phelps, which has been handling the administration, could not be reached for comment.

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Cable 'Wants Investigation Into HBOS Life Bans'

An investigation is to be launched into whether the three former HBOS directors blamed for the banking group's collapse can be banned as company directors for life, it has been reported.

The Business Secretary has asked his officials to see if there is enough evidence against Lord Stevenson, the former HBOS chairman, Sir James Crosby, the former chief executive, and Andy Hornby, his successor, to start a formal probe under the Company Directors Disqualification Act.

Vince Cable told The Sunday Times it was the first step in a process which could lead to the three - who have so far not faced formal sanction - being barred from acting as company directors.

The move comes in the wake of a damning report into the collapse of the bank by the Parliamentary Commission on Banking Standards published on Friday.

The group was given a £20.5bn bailout

It found Sir James was the "architect of the strategy that set the course for disaster" and held primary responsibility for the collapse along with former chairman Lord Stevenson and fellow chief executive Andy Hornby.

Their "toxic" misjudgments led to the bank's downfall and a £20.5bn taxpayer bailout at the height of the financial crisis and they should never be allowed to work in the financial sector again, according to the influential commission of MPs and peers.

Mr Cable told The Sunday Times: "It's quite a legalistic process. I can ask (officials) to look at whether the companies investigations branch take action.

"We do have this power which I have begun to initiate."

Sir James stepped down from his role as a member of Bridgepoint's European Advisory Board on Friday but remains chairman of the car credit company Money Barn and a senior independent director for Compass, one of the country's largest catering firms, according to company spokespeople, as well as a trustee for Cancer Research UK.

Mr Hornby's current employer, Gala Coral, has said he has their "complete backing" as chief executive.

Sir James and Lord Stevenson have so far retained their titles, though the Royal Bank of Scotland's disgraced former boss Fred Goodwin was stripped of his knighthood.

Peter Cummings is the only former HBOS director to have been penalised by the Financial Services Authority, after being fined £500,000 and banned for life from working in the City last September.

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