Cable Hits Back At Royal Mail Sale Critics

By Mark Kleinman, City Editor

Vince Cable, the Business Secretary, has rebutted claims that he cost taxpayers hundreds of millions of pounds by undervaluing shares in Royal Mail, arguing that the price of the privatisation should be assessed only after the Government has sold its entire stake in the company.

Sky News has obtained a letter sent by Mr Cable on Friday to the Business, Innovation and Skills (BIS) Select Committee, in which he dismisses concerns that the sale of the postal operator was spectacularly mispriced.

Mr Cable and the Government's investment banking advisers have been accused of undervaluing the company after seeing its share price rise by 38% on its first day of trading.

"Value for money has been central to our strategy as we have taken forward the sale of shares through an initial public offering," he wrote.

"Delivering value for money is about more than just the level of proceeds received on day one.

"Our long-term strategy to safeguard the universal service and deliver value for money for the taxpayer involves not only getting good value for the initial stake sold but also getting good value for the residual stake held by Government (30% of the Company assuming exercising in full the Over-allotment Option), and leaving Royal Mail in a strong, sustainable position capable of accessing the capital markets in the future."

Mr Cable said that the initial price range for the flotation, which attributed a value of between £2.6bn and £3.3bn to Royal Mail, was recommended by Goldman Sachs and UBS, the lead banking advisers, and endorsed by Lazard, which provided independent advice to ministers.

"In August 2013, as the date of the IPO approached, this list of potential investors was narrowed down to a focused group of approximately 20 investors, selected on the basis of feedback gathered during the investor engagement process and, in particular, their understanding of the risks inherent in the Company's industrial relations," he wrote.

The timing of the disclosure that unions would ballot Royal Mail workers for strike action, which was voted through this week, meant that some potential investors in the company indicated that they would opt not to buy shares, the Business Secretary added.

Royal Mail's share price has been mildly buffeted by the vote in favour of industrial action next month, but the stock continues to trade well in excess of the 330p-a-share offer price.

Mr Cable told MPs that the top end of the price range was set because it was "compatible with securing a stable, long term shareholder base as a foundation for achieving value in future sell-downs of the Government's retained stake whilst also taking into account the material risks associated at the time with the ongoing IR situation and the market risks arising from possible US default and the fact that the recent IPO of BPost (a recently-listed Belgian peer) was trading below issue price".

In his letter to committee members, Mr Cable argued that the flotation price placed Royal Mail in a similar dividend yield bracket to comparable companies, but said the "considerable media interest that was predicting a substantial first day premium" was a factor in the initial surge in its share price.

The Business Secretary also sought to counter claims by his Labour opposite number, Chuka Umunna, that Royal Mail's property portfolio could be worth more than £1bn.

"Taking into account the overall position of the surplus portfolio and the relative immaturity of these sites in terms of actual development, a combined value of £330m (as suggested in one of the equity research analyst reports) appears at the top end of any likely range," he wrote.

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Business Round-Up And Week Ahead

Sky's Naomi Kerbel offers a round-up of what's coming up in the week's business news.

:: Monday October 21

Heathrow, the UK's busiest airport which also owns Southampton, Glasgow and Aberdeen airports reports its third quarter results on Monday. Formally known as BAA, Heathrow sold Stansted Airport to Manchester Airports Group for £1.5bn earlier this year following intervention by the Competition Commission due to concerns over competition in the sector.

:: Tuesday October 22

On Tuesday, Peter Marks, the former chief executive of the Co-Operative Group is to be questioned about the Co-op Bank's £1.5bn capital shortfall and the collapse of the bid to buy 632 branches from Lloyds Banking Group in April this year.

Also, Everything Everywhere updates the markets with its third quarter results. The communications company owns the EE, Orange and T-Mobile brands and was the first UK network to launch mobile 4G services.

:: Wednesday October 23

Asos, the online fashion retailer gives a trading statement on Wednesday. 

Also, the City of London Corporation's City Banquet will be hosted by Lord Mayor of the City of London Alderman Roger Gifford. Speakers will include the Financial Conduct Authority's Martin Wheatley and the Prudential Regulation Authority's Andrew Bailey.

:: Thursday October 24

The Governor of the Bank of England Mark Carney will give a speech on Thursday.

Also, a two-day EU Summit starts. UK Prime Minister David Cameron will attend, as well as the German Chancellor Angela Merkel and the French President Francois Hollande.

:: Friday October 25

On Friday, the Office for National Statistics releases the UK's third quarter growth figures. Last month's final figures for the second quarter of the year showed GDP up by 0.7%.

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Energy Bills: Small Firms Challenge 'Big Six'

No10 In 'Wear A Jumper' Row

Updated: 1:36am UK, Saturday 19 October 2013

Downing Street has been forced to backtrack after suggesting people struggling to pay their heating bills should put on a jumper.

Officials had to issue a clarification after initially saying wrapping up warm to avoid paying more was something people could "consider".

Labour, which has accused the Government of failing to act to address soaring energy prices, leapt on the comment as proof the Tories are "out of touch".

Leader Ed Miliband declared: "Their crime policy used to be 'hug a hoodie'. Now their energy policy appears to be 'wear a hoodie'."

The comment also quickly gained traction on social networking site Twitter, with various comical suggestions under the tag #cameronsheatingtips doing the rounds.

One user wrote: "Have your maid stitch a fine coat of swan feathers after your manservant plucks a swan for Sunday brunch."

Another advised: "Simply add a large measure of Courvoisier VSOP to your Vanilla Latte."

The row will have been exactly what Downing Street was seeking to avoid when it was quizzed about the Prime Minister's views on energy price hikes.

It came after Energy Secretary Ed Davey said on Thursday night that he wears jumpers at home to keep his bills down.

On Friday morning, Mr Cameron's official spokesman was duly asked whether people should "wrap up warm" and wear jumpers in the same way.

He said: "That's not a question that I have asked him. Clearly, he is not going to prescribe necessarily the actions individuals should take about that but if people are giving that advice, that is something that people may wish to consider."

The spokesman added: "His advice to people is to shop around for fuel prices."

Mr Miliband moved to capitalise on what was interpreted as a gaffe, even though No10 had tried to make clear Mr Cameron would not tell people what to wear.

He wrote on the Labour website: "These responses to the energy price rises show how little Mr Cameron and his Government stand up for the interests of hard-working people.

"He has no grip on the cost of living crisis and he seems to think the solution to this crisis is nothing to do with him.

"Energy bills are already up by an average £300 since he took office. The price hikes we are seeing point to a market that isn't working for consumers. Yet his solution to this market failure was to tell people to shop around and dress warmly.

"Of course people will rightly seek the best deal they can find but that will not fix a broken market, and will not bring the kind of relief that consumers and businesses need."

He added: "Never let the Government tell you that there's nothing they can do, or that it's your responsibility to sort out the problems in our energy market. They could act - they just choose not to."

Downing Street later had to issue a clarification, as insiders admitted the spokesman had used "loose language".

It said: "To be clear, it is entirely false to suggest the Prime Minister would advise people they should wear jumpers to stay warm.

"Any suggestion to the contrary is mischief-making. The Prime Minister would point people to a range of things being done to help people with their fuel bills, such as legislating to put everyone on the best tariff for them.

"He believes Labour's "price freeze" policy is a con - and certainly would not advise people on what they should wear."

Energy policy has been thrust to the heart of the political cost of living row after companies started announcing major hikes in prices ahead of the winter.

On Thursday, British Gas became the second of the "Big Six" to announce price increases after SSE led the charge with an 8.2% rise earlier this month.

Mr Cameron described the hike as "disappointing" and he and Mr Davey encouraged customers to switch to a cheaper deal with another firm.

Labour has said it will impose a 20-month freeze on prices if it wins power in 2015 but this has been dismissed by critics, including the Tories, as unworkable.

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China Economy Rebounds In Third Quarter

China has said its economic growth was on track in the third quarter, potentially easing pressure for more stimulus.

The world's second-largest economy grew by 7.8% over a year earlier in the three months to the end of September - up from a two-decade low of 7.5% the previous quarter.

National Bureau of Statistics spokesman Sheng Laiyun told a news conference: "The fundamentals of China's economy are turning for the better."

But analysts warned the rebound might not last because growth depends on government spending amid weak global demand and Chinese consumer spending.

Spending on factories and other fixed assets contributed 55.8% of the latest quarter's growth, or 4.3 percentage points of the 7.8% expansion, according to Mr Sheng.

Domestic consumption was 3.7 percentage points of the total.

Trade was so weak that its contribution to overall growth was negative, according to Mr Sheng, and detracted 0.1 percentage point from the quarter's growth rate.

September exports suffered a rare and unexpectedly sharp decline of 0.3%, falling short of forecasts.

Surveys of manufacturers show September activity barely expanded.

Nevertheless the improvement eases some pressure on communist leaders who say their priority is longer-term reform aimed at steering the economy to slower, more sustainable growth based on domestic consumption instead of exports and investment.

The abrupt drop in global demand for Chinese goods prompted them to backtrack temporarily and launch a mini-stimulus of higher spending on railway construction and other public works to prop up growth and avoid politically dangerous job losses.

Communist leaders are due to meet in November to craft an economic development blueprint that reformists hope will include market-opening and more financial support to private entrepreneurs.

The country's top economic official, Premier Li Keqiang, said earlier the government would try to keep growth above 7.5%.

That is far above levels forecast elsewhere in the US, Europe and Japan but barely half of 2009's 14.2% growth.

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Energy Bills: British Gas Ups Prices By 9.2%

British Gas has become the second major supplier of household energy to announce a rise in its prices - by an average 9.2%.

The company said its electricity and gas prices will rise by 10.4% and 8.4% respectively from November 23 - affecting 7.8 million households.

Regional variations mean some Scottish customers will see prices rise on average by as much as 11.2% while those in London will suffer a 10.6% increase and households in Yorkshire will have a 10.5% lift.

The move comes despite a pledge by British Gas earlier this year to use an annual earnings windfall from the cold weather last winter to keep a lid on tariffs.

Angry customers took to Twitter to complain ahead of an already planned Q&A session with customer services director Bert Pijls.

Twitter users flocked to complain ahead of a British Gas Q&A session

One user asked: "Hey @BritishGas how many vulnerable people do you think you will push into fuel poverty whilst continuing to make billions in profit?"

The average increase is higher in percentage terms than that confirmed by rival SSE last week which is raising its bills by 8.2% from November 15, although research from price comparison website uSwitch suggested it brought their average dual fuel tariffs together in terms of cost.

The Prime Minister David Cameron described the latest increase as "disappointing" and urged households to try to save money by switching suppliers.

E.ON, Scottish Power, EDF Energy and npower are the other so-called 'big six' providers yet to make announcements on their winter pricing.

Electricity prices are rising faster than those for gas

British Gas said it was a hard decision for the company, which is owned by Centrica.

Its statement said: "We recognise that energy bills are a real worry for hard-pressed households, particularly at a time when the cost of living is rising faster than incomes.

"Today's announcement, which will add about £2 a week to the average dual fuel bill, reflects the increasing cost of: buying energy in global markets, delivering gas and electricity to the home, and the Government's social and environmental programmes, which are paid for through customers' bills."

It pledged that more than 500,000 of its elderly and most in-need customers would be protected by an automatic discount to offset the price increase throughout the winter - worth £60 per dual fuel household.

This was, British Gas said, in addition to the £135 that will be paid to many of these customers who qualify for the Government's Warm Home Discount scheme.

Ed Miliband used Labour's conference to announce his 'bill freeze' plan

Ian Peters, managing director of British Gas Residential Energy, added: "I know these are difficult times for many customers and totally understand the frustration that so many household costs keep on rising when incomes aren't keeping pace.

"We haven't taken this decision lightly, but what's pushing up energy prices at the moment are costs that are not all directly under our control, such as the global price of energy, charges that we have to pay for using the national grid that delivers energy to the home, and the cost of the Government's social and environmental programmes.

"Energy efficiency is the best way to keep bills down, and I encourage anyone who has not benefitted from them to go online and check if they are eligible."

The cost of energy bills sparked a political frenzy last month when the Labour leader Ed Miliband pledged to freeze prices for 20 months if his party won power at the 2015 general election.

Shares in both SSE and British Gas-owner Centrica fell sharply in the wake of the announcement, wiping a combined £2.7bn off the value of the firms.

Caroline Flint, Labour's Shadow Energy and Climate Change Secretary, said: "These latest price rises show clearer than ever why Labour's price freeze is needed.

"People are sick and tired of being left out of pocket because of David Cameron's failure to stand up to the energy companies.

"Britain's energy market isn't working for ordinary families and businesses. Labour's energy freeze will save money for 27 million households and 2.4 million businesses and our plans to reset the market will deliver fairer prices in the future."

In an interview with Sky News, Energy Secretary Ed Davey said: "I think British Gas is going to lose a lot of customers over this.

"British Gas in their press release is trying to blame the Government for social and environmental costs but we've looked at their figures and it looks like they're being very inefficient in managing these Government programmes."

Ministers have been encouraging households to switch suppliers as the best way of keeping their bills as low as possible.

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Fit-To-Work Benefits Test 'Unfit For Purpose'

By Anushka Asthana, Political Correspondent

More than 150,000 people have raised serious concerns about fit-for-work tests administered by a private healthcare company on behalf of the Government.

Figures obtained exclusively by Sky News show the charity Citizens Advice has been inundated by huge numbers of complaints about assessments carried out by Atos.

It warns that genuinely disabled and seriously ill people are being stripped of benefits following inadequate tests.

Meanwhile, doctors are warning that the service is "unfit for purpose".

Gillian Guy, the chief executive of Citizens Advice, warned: "Atos is failing to do its job properly, failing to give taxpayers value for money and worst of all, failing thousands of sick and disabled people who bear the brunt of wrong assessments."

It comes as a woman recently widowed tells Sky News about how the decision that her husband was fit for work was not even overturned while he was dying from a rare and aggressive cancer.

The Coupes' local MP Dennis Skinner challenged the PM about the issue

Lyn Coupe's case was raised in Parliament this week by her local MP Dennis Skinner.

The 81-year-old Labour politician famed for his passionate performances in Parliament implored David Cameron to "abolish this cruel, heartless monster called Atos".

The Prime Minister admitted that every MP had heard similar stories in their own constituencies.

Mrs Coupe, from Calow near Chesterfield, said she felt compelled to speak out even while organising her husband David's funeral.

He was assessed as able to work late last year despite ulcerated legs, back pain that left him in agony, diabetes and heart problems.

Lyn Coupe says she was shocked when her husband's benefits were cut

Mrs Coupe said the couple were forced to sacrifice food and heating to deal with the cut in benefits.

"We didn't have any heating on in the winter like other people would have had. We sat with coats on or blankets. I would go to bed at about eight in the evening to try to get warm."

Food was also sacrificed and the couple never went out.

The Coupes tried to launch an appeal but were told they would have to wait at least 10 months because of a backlog of cases.

Once Mr Coupe was diagnosed with terminal cancer that would kill him within months, his wife contacted Atos again but still the appeal was not brought forward.

David Coupe was deemed fit for work right up until his final days

Mr Coupe told her he wanted to survive long enough to see the decision overturned - but it was not to be.

Citizens Advice have also found that GPs are charging up to £130 to provide medical evidence for use in appeals.

Letters from health authorities, seen by Sky News, warn their GPs are not resourced to provide the services.

One says it understands the Atos system is viewed as "unfit for purpose" and says patients often complain of this, but says doctors cannot help because they are under "huge and increasing" pressure each day.

Richard Hawkes, chief executive of the disability charity Scope, said: "The Government's fitness for work test is utterly broken."

He said most disabled people wanted to work but faced significant barriers such as a lack of skills, experience, confidence and even negative attitudes from employers.

Atos insists it is only following Government guidelines

"The Work Capability Assessment ignores all this. It's a tick-box test of someone's medical condition."

Atos said it did not set policy but was simply carrying out the tests in line with Government guidelines.

It warned the attack on the organisation was scaring those facing the tests and creating hostility for medical staff employed to carry out the assessments.

They said all their doctors and nurses were fully trained and registered with their relevant professional body.

A spokesman for the Department for Work and Pensions said: "Our sympathy goes out to the family of Mr Coupe during what is obviously a very difficult time.

"A decision on whether someone is well enough to work is taken following a thorough assessment and after consideration of all the supporting medical evidence we are given.

"The previous Government appointed Atos. We have made significant improvements to the Work Capability Assessment and we are bringing on board additional providers to carry out assessments."

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Osborne Signs Nuclear Power Deal With China

By Mark Stone, China Correspondent, Taishan, Southern China

Britain's next generation of nuclear power is almost certain to be funded in part by the Chinese following an agreement between governments and operators in the UK and China.

The announcement was made by the Chancellor George Osborne on a visit to China's Taishan Nuclear Power plant in Guangdong, southern China.

Mr Osborne said: "Today is another demonstration of the next big step in the relationship between Britain and China - the world's oldest civil nuclear power and the world's fastest-growing civil nuclear power."

The agreement will almost certainly mean that a new reactor, already planned for Hinkley Point in Somerset, will be a mirror image of the Taishan plant in China.

The terms of the contracts with China and detailed figures for the proposed Hinkley Point project, including the so-called strike price between the companies and governments, will be announced in the UK.

Taishan nuclear power plant in China

However, the broad agreement outlined by Mr Osborne will allow a consortium of French and Chinese firms to build the plant using a proportion of Chinese cash.

China's state-owned China General Nuclear Power Company (CGN), French energy company EDF and the nuclear firm Areva already work together at the Taishan plant, which is due for completion later this year.

Mr Osborne was given a tour of the Taishan plant, where he climbed up one of the unfinished nuclear reactors with CGN general manager Zhang Shanming and the CEO of EDF, Vincent de Rivaz.

"It is an important potential part of the Government's plan for developing the next generation of nuclear power in Britain," he said.

"It means the potential of more investment and jobs in Britain, and lower long-term energy costs for consumers."

Mr Osborne said the deal would mean more jobs and investment

China has the largest new nuclear power construction market in the world. It currently has 17 operating nuclear reactors, with a further 28 under construction.

UK treasury officials, travelling with the Chancellor, have been keen to stress the safety record of the Chinese civil nuclear industry and also the strict regulations under which the Chinese must operate.

"Any investment from any country has to comply with rigorous regulatory standards for safety and security," an official said.

Reports that China has asked for a future licence to operate nuclear power plants in the UK in return for their investment have not been confirmed by British officials.

Today's agreement followed a Memorandum of Understanding (MoU) signed in Beijing on Tuesday between Mr Osborne and his Chinese counterpart Ma Kai on civil nuclear co-operation.

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Shutdown: Congress Passes Bill To Stop Default

Stocks Soar After US Debt Deal

Updated: 3:12am UK, Thursday 17 October 2013

By Hannah Thomas-Peter, US Correspondent

Stocks soared on Wall Street as the markets got wind of a deal in Washington.

By the end of the day, the Dow Jones had climbed over 200 points, or 1.4%, the S&P 500 had gained 1.4%, pushing it close to a record high, and the Nasdaq gained 1.2%.

The volatility index, or VIX, which is considered one of the best measures of fear in the markets, experienced its biggest daily drop since August 2011.

Portfolio manager at Evercore Wealth Management Judy Moses described it as a "relief rally", and a welcome "reprieve" from the uncertainty surrounding the debt ceiling row.

But the market's expectation was always that the United States, the issuer of the world's reserve currency, would not default on its debt.

That would be too catastrophic to contemplate.

It would have pushed America into unchartered territory.

Even the most experienced analysts and bankers struggled to predict what might have happened had US government debt, considered one of the word's safest investments, suddenly become risky.

Billionaire businessman Warren Buffet said in a television interview with financial news channel CNBC that a default was "unthinkable", and that the debt ceiling row was a "political weapon of mass destruction".

To a certain extent then, the markets displayed a degree of immunity to the chaos on Capitol Hill.

Senior portfolio manager at US bank Eric Wiegand said: "Investors have become, unfortunately, accustomed to some of the dysfunction.

"It's become more the norm than the exception."

In 2011, when legislators wrangled over the debt limit, markets plunged and ratings agency Standard & Poor's cut America's credit rating.

This time, although volatility was up, Fitch put the US credit rating on negative watch, and treasury debt became less popular, the widely predicted market mayhem failed to materialise, and there was no panic or large-scale sell off.

Some suggest it is good that Wall Street doesn't appear to be so tied to the ups and downs of a bitterly divided political system, but others warn of a lasting negative effect.

Chief market strategist at Ameriprise Financial David Joy said: "To me the market has yet to reflect the economic damage and the psychological damage this has done."

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Prince Charles Warns Of Pensions Crisis

The Prince of Wales has warned the pensions industry to ditch its short-term outlook or risk condemning many to a "miserable future".

Prince Charles told investors they had a responsibility to create a sustainable financial system during the economic storm created by unprecedented levels of debt, a rapidly growing world population and climate change.

In a pre-recorded speech to the National Association of Pension Funds' annual conference, he said: "With an ageing population, and pension fund liabilities that are therefore stretching out for many decades, surely the current focus on 'quarterly capitalism' is becoming increasingly unfit for purpose?"

He added: "Your sector plays a very significant role indeed in how our economic system works, both now and in the future.

"So it really does fall to you, I am afraid, to help shape a system designed for the 21st and not the 19th century.

"Make that innovative and imaginary leap that the world so badly needs, otherwise your grandchildren, and mine for that matter, will be consigned to an exceptionally miserable future."

Although he is known for his views on the environment, it is a rare for the Prince, who turns 65 next month, to comment on financial matters.

Business Secretary Vince Cable has already criticised traders in equities markets for going after a "quick buck" rather than looking for sustainable returns through responsible capitalism.

An Office of Fair Trading report published earlier this month warned that up to £40bn of pension savings could already be in schemes which are delivering poor value or are at risk of doing so.

Less than half the population is currently thought to be putting enough money aside for retirement.

Office for National Statistics figures recently showed that the number of private sector workers saving into a company pension fell to an all-time low, since records began in 1953, of 2.7 million last year.

The peak for private sector pension saving was in 1967, when 8.1 million people were saving into a pension.

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Pressure On Cameron As Food Bank Use Soars

David Cameron has come under pressure to launch an inquiry into why people are turning to foodbanks as demand for emergency supplies continues to surge.

More than 350,000 people received a three-day food package from the Trussell Trust between April and September, three times as many as the same period last year.

It has written to the Prime Minister calling on him to look into the "scandalous" problem of food poverty, warning some food bank recipients are so poor they have returned produce that needs cooking because they cannot afford the electricity to heat it up.

Trussell Trust executive chairman Chris Mould said: "We said in April that the increasing numbers of people turning to food banks should be a wake-up call to the nation, but there has been no policy response and the situation is getting worse. The level of food poverty in the UK is not acceptable.

"It's scandalous and it is causing deep distress to thousands of people. The time has come for an official and in-depth inquiry into the causes of food poverty and the consequent rise in the usage of food banks."

Earlier this year, Chancellor George Osborne suggested food bank use had increased "because people have been made aware of the food bank service through local jobcentres".

But the Trust has echoed concerns that some households will have to choose between eating and heating this winter as they struggle to cope with the rising costs of food and energy.

It also highlights the impact of welfare reforms that came into force in April, reporting an increase in referrals as a result of the so-called "bedroom tax".

Mr Mould said: "We're talking about mums not eating for days because they've been sanctioned for seemingly illogical reasons, or people leaving hospital after a major operation to find that their benefits have been stopped or delayed."

Chris Johnes, Oxfam's UK poverty programme director, said: "These figures lay bare the shocking scale of destitution, hardship and hunger in the UK.

"It is completely unacceptable that in the seventh wealthiest nation on the planet, the number of people turning to food banks has tripled."

TUC general secretary Frances O'Grady described the figures as "shocking".

A Government spokesman said: "The Trussell Trust itself says it is opening three new food banks every week, so it's not surprising more people are using them. They also agree that awareness has helped to explain their recent growth."

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Grangemouth Oil Refinery Strike Called Off

It has been confirmed that the planned strike at the Grangemouth oil refinery has been called off - ending the prospect of big fuel shortages in Scotland.

The decision was announced by the Unite union following talks which continued through the night with the site's owners at the conciliation service Acas, even though the discussions failed to resolve their bitter row over the treatment of a union convenor.

The meeting broke up at 5am, Unite said, because of  "scandalous behaviour" by Ineos but claimed its decision to abandon the 48-hour stoppage, due to begin on Sunday, was in the interest of protecting a national asset.

Unite's Scottish Secretary Pat Rafferty said: "We are outraged that Ineos representatives walked away from Acas talks, after 16 hours of negotiation and on the cusp of an agreement, for the ludicrous reason that Ineos chairman Jim Ratcliffe instructed his management representatives to demand an apology on his behalf.

"Acas representatives informed us that we could not conclude an agreement to take to our members because a list of fresh demands were placed upon us and because 'Jim wants an apology' and that this was 'a deal-breaker'.

Ineos says Grangemouth is run at a loss

"I have never came across anything like this in over 30 years of employment relations and it is utterly reprehensible," he said.

Unite accused Ineos of running the Grangemouth refinery and petrochemical sites into a "damaging cold shutdown" which will impact on fuel production and supply across Scotland.

Mr Rafferty continued: "As a result, Unite will now call off all industrial action with immediate effect in order to protect this national asset from the scandalous behaviour ofits owner.

"The plant should now start the return to full production and there is no excuse for this not happen."

Petrol and diesel production was suspended at the plant on Monday night in preparation for Sunday's walkout.

Experts had warned that the stoppage raised the prospect of shortages if the dispute was not resolved as all of Scotland's needs are met through supplies from Grangemouth.

The row centred on alleged unfair treatment of plant worker, Stephen Deans, who is also a union official while the union and company were also arguing over terms and conditions at the plant.

Ineos had previously warned the petrochemical site would have to close by 2017 unless a "survival plan" involving cutting pension entitlement and pay was implemented.

The company argued that the refinery, located on the Firth of Forth, was not profitable - losing more than £576m in the last four years.

It claimed the pension scheme was £200m in deficit and pension costs of 65% of salary were "unsustainable".

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Twitter Shuns Nasdaq After Facebook Foul-Up

Twitter shares will trade on the New York Stock Exchange rather than the tech-heavy Nasdaq, which saw major problems in Facebook's market debut in 2012.

An update to Twitter's filing with the Securities and Exchange Commission on Tuesday said: "We intend to list the common stock on the New York Stock Exchange (NYSE)  under the symbol 'TWTR.'"

Twitter's decision to list on the NYSE came after the Nasdaq's foul-up marred the $16bn (£10bn) Facebook share issue in May 2012, the most hotly awaited initial public offering on the US markets in years.

The Nasdaq exchange agreed this year to pay a $10m (£6.3m) penalty for trading glitches.

Facebook's share issue did not go smoothly

Nasdaq is also facing lawsuits from investors who claim the problems led to losses when they were unable to execute trades.

The update also said Twitter's monthly active users had grown to 232 million, up from 218 million as of June 30.

It said the company lost $133m (£83m) in the first nine months of 2012 on revenues of $422m (£263m), updating its earlier figures.

Twitter also revealed a new contract with chief executive Dick Costolo worth some $11.5m (£7.2m), mostly in stock.

Its senior vice president for engineering, Christopher Fry, will get $10.4m (£6.5m), again mainly in stock awards.

Twitter first revealed its initial public offering in a confidential filing last month, and in early October revealed it would seek to raise $1bn (£630m) for the massively popular messaging platform.

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MPs To Probe 'Underpriced' Royal Mail Sale

By Mark Kleinman, City Editor

A panel of MPs is poised to extend a probe into the privatisation of Royal Mail by summoning the City bankers who advised ministers on the sell-off to give evidence.

Sky News has learnt that some members of the Business, Innovation and Skills Select Committee (BIS) want to interview executives from the syndicate of banks responsible for pricing the initial public offering (IPO) at 330p-per-share.

Following a 38% jump on Friday, the postal operator's shares closed up 4% on Monday, valuing the company at 475p-a-share, or £4.75bn - almost £1.5bn more than the level at which the Government decided to privatise it.

Conditional trading in Royal Mail shares has now concluded, with thousands of private investors likely to offload their holdings of 227 shares each when full trading begins on Tuesday.

Some City analysts believe the company's share price will continue its upward momentum in the coming days because of the scale of demand to hold the stock from institutional investors who saw their orders scaled back or rejected altogether by the Government's advisers.

Vince Cable, the Business Secretary, dismissed the initial price surge as "froth".

He told the BIS Committee ahead of the flotation last week that he was convinced the sale had been properly priced.

Adrian Bailey, the Labour MP who chairs the committee, said the appetite of its Conservative members for a full inquiry into the privatisation had yet to be established.

But he added: "I don't think we can let the matter rest.

"It seems that the Government has given its advisers a lot of money for depriving the taxpayer of £750m of value."

Another committee member said it would be important to interview the bankers on the deal to establish the precise methodology for valuing the company.

The National Audit Office is also expected to examine the sale, on which the Government was advised by Lazard, one of the City's top independent investment banks.

The bookrunners – the banks which helped to place the shares with investors – were Barclays, Bank of America Merrill Lynch, Goldman Sachs and UBS, who are each expected to take fees amounting to several million pounds.

On Saturday, the Financial Times reported that the Government had examined whether it could raise the price at which shares in Royal Mail were sold but that institutions threatened to withdraw if ministers attempted to do so.

Royal Mail and BIS declined to comment.

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Burberry Boss Angela Ahrendts To Join Apple

Burberry has confirmed its respected chief executive Angela Ahrendts is to leave the luxury goods firm next year to join Apple.

The company confirmed she would be replaced by chief creative officer Christopher Bailey by mid-2014 and that Bailey would assume both roles.

Ahrendts will assume a title of senior vice president of retail and online stores at Apple - a new position - and will report directly to CEO Tim Cook.

Angela Ahrendts has championed online growth

He said of the appointment that Ahrendts shared Apple's focus on innovation and customer experience.

Her departure saw Burberry stock lose 6% when trading began on the FTSE 100 on Tuesday morning.

Ahrendts said of her departure: "Burberry is in brilliant shape, having built the industry's most powerful management team, converted the business to a dynamic digital global retailer, created a world class supply chain, state of the art technology infrastructure, sensational brand momentum and one of the most closely connected creative cultures in the world today.

"It has been an honour to have partnered with Sir John Peace (chairman) and Christopher for the last eight years.

"I am confident that, with Sir John's continued guidance and the executive team's support, Christopher, as one of this generation's greatest visionaries, will continue to lead Burberry to new heights.

"Today, Burberry is not only a great brand, but a truly great company," she concluded.

Her successor has been at Burberry since 2001 and has held the major creative role for six years.

Burberry also updated the market on its first half progress, saying its retail revenue rose 17% to £694m in the six months to Sept. 30 - in line with analysts' forecasts.

Burberry's revenues rose 14% in the first half of the year

Retail sales from stores open at least a year grew by 13%, helped by double digit growth in Asia Pacific and the Europe, Middle East, India and Africa (EMEIA) division region and high single digit growth in the Americas.

Total revenue was £1.03bn pounds, up 14%.

Shares in Burberry, up 41% over the last year ahead of today's announcement,  valued the business at £7bn.

Ahrendts departure leaves just two female chief executives in Britain's premier share index.

She has spent a total of ten years with Burberry, transforming it into a global luxury brand with a growing presence in emerging markets.

It has been suggested that her success in growing Burberry in Asia - particularly China - will have been attractive to Apple which has struggled to secure the market penetration enjoyed there by many of the iPhone and iPad-maker's rivals.

More follows...

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Royal Mail: Value Climbs As Dealing Starts

Royal Mail's value continued to grow when full dealing began on the London Stock Exchange on Tuesday morning.

Investors - lured by the promise of healthy dividends - sought out shares with the price rising more than 3% in early trading when the stock became available to the wider market following its conditional launch.

In the first day of dealing for many of the 690,000 small investors who bought stock the shares opened at 478p - almost 45% above their privatisation price - before climbing further to 490p in the first hour.

Price correct at 08:35 BST

That made them almost 50% more valuable than the Government's price tag last week and gave Royal Mail a value of £4.9bn.

That compares with the 330p per share price they were sold for on Thursday, which valued the group at £3.3bn, meaning small investors who were allocated shares worth £750 originally are today sitting on paper profits of more than £360.

Only institutional investors such as pension funds and those individuals who ordered stock through a broker offering conditional trade were able to sell before Tuesday.

The start of full trading meant people who bought through the Government's official website or by post could cash in for the first time.

More follows...

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Buyout Firms Eye Debut On West End Stage

By Mark Kleinman, City Editor

Some of the world's biggest private equity firms are mulling takeover bids for the company behind the landmark London theatres that are home to productions including The Lion King and Dirty Dancing.

Sky News has learnt that half a dozen investment groups have been given access to financial information about Ambassador Theatre Group - owner of venues including the Donmar and Lyceum - meaning that a controlling stake in the company could change hands within months.

The interested private equity funds are understood to be BC Partners, Blackstone, Carlyle, Charterhouse, Lion Capital and Permira, which collectively manage tens of billions of pounds of investments.

Ambassador's majority shareholder, Exponent Private Equity, has invited the firms to consider making offers ahead of a wider auction that had been planned for early next year.

A number of international theatre groups are also understood to be interested in examining Ambassador's books. Any buyer is likely to want to see the company's performance during the crucial Christmas trading period, which accounts for about half of its annual trading profits.

Exponent acquired a roughly 55% stake in the UK's largest theatre operator in 2009 in a deal valuing it at just over £130m. The remainder is owned by a number of wealthy individuals and Ambassador's founders, Howard Panter and his wife, Rosemary Squire.

Ambassador's minority investors are said not to be keen to sell their shares as part of the current sale process, but one insider said the existing shareholder agreement contained a clause known as drag rights, which may mean that any buyer of Exponent's stake has the power to compel other investors to sell at the same time.

UBS, the Swiss bank, is handling the sale, which is likely to value Ambassador at between £250m and £350m. Exponent is expected to make a handsome return on its investment, which could also reap a windfall for Greg Dyke, the former BBC director-general who now chairs Ambassador as well as the Football Association.

The company owns about a dozen venues in London's theatreland, which are staging productions such as Jersey Boys, which is transferring to Ambassador's Piccadilly Theatre in March next year.

The Lion King, which is staged at the Lyceum, is one of the West End's most successful and long-running musicals.

In total, Ambassador owns 39 venues in Britain. It was established by Mr Panter and Ms Squire in 1992, and sold to Exponent four years ago in a deal that combined the existing ATG and the theatre portfolio of Live Nation, the American entertainment giant.

Since then, the company has expanded through bolt-on acquisitions including its debut appearance on New York's Broadway this year, when it paid around £40m to buy the Foxwoods Theatre, home to Spiderman: The Musical.

A sale process will take place at a buoyant time for London's theatre industry. Ambassador saw a 17% surge in sales to £111m in the 12 months to March 2012, while operating profits during the same period rose nearly 70% to £15.5m. Both measures are understood to have grown again during the subsequent 12 months.

Overall West End ticket sales were up in 2012 for the ninth consecutive year running despite an anticipated decline during the London Olympics.

Fears about the economic environment and the Games proved relatively unfounded with attendance increasing to almost 14m, up 0.56%, and box office sales setting a new record of £530m, up 0.27%.

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UK To Relax Visa Rules For Chinese Nationals

Visa rules for Chinese nationals coming to Britain will be relaxed by the Government in a drive to boost visitor numbers, Chancellor George Osborne has announced.

Mr Osborne, who is leading a UK trade delegation to China, said the changes will "streamline and simplify" the visa application process for tens of thousands of Chinese visitors.

The move comes amid signs of a thaw in relations with Beijing which have been frosty since David Cameron met the Tibetan spiritual leader, the Dalai Lama, last year.

The changes will reduce the need for Chinese visitors to the European Union to submit separate visa applications for Britain, with selected Chinese travel agents able to apply for UK visas by submitting just the EU's Schengen area visa form.

A new 24-hour "super priority" visa service will become available from next summer, while officials are also looking at expanding a VIP mobile visa service, currently operating in Beijing and Shanghai, to the whole country.

The move will make it easier for tourists to visit

The service involves visa teams going out to applicants to collect their completed forms and biometric data, with the whole process taking less than five minutes.

The move will be welcomed by businesses in the UK who have complained that the existing regime is discouraging high-spending Chinese visitors from coming to Britain.

In 2012, 210,000 visas were issued to visiting Chinese nationals who went on to contribute around £300m to the British economy.

Mr Osborne said: "These changes will streamline and simplify the visa application process for Chinese visitors, while ensuring the system is strong and secure. This is good news for British business and tourism."

Mayor of London Boris Johnson, who is also on a trade visit to China, said he was pleased the Government had listened to him on simplifying the visa system for Chinese people.

Chinese nationals contribute £300m to the British economy

He said: "I'm pleased that the Government has listened to the many voices, mine included, who have called repeatedly for a streamlining and simplification of the Chinese visa system.

"Whilst I await the detail, it would appear the Government's announcement of a pilot scheme available through select travel agents is a welcome step forward.

"The move will hopefully encourage ever greater numbers of Chinese tourists to London.

"Only today I launched the first ever Chinese language website dedicated to studying in and visiting London. Chinese visitors now have all the information they need to access London, and changes to the visa system that will hopefully make getting here a good deal easier."

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US Shutdown: Lagarde Issues Recession Warning

The head of the International Monetary Fund has warned that a political failure to break the stalemate over raising the US debt ceiling risks tipping the world into recession.

Christine Lagarde was speaking as there were few signs in Washington that solutions were close in either the row over the budget - which has left government in a partial shutdown for two weeks - or the debt ceiling dispute.

However, Harry Reid - the Democratic Leader in the Senate - painted an optimistic picture of the dialogue with Republicans late on Sunday, though nothing concrete was disclosed.

Failure to lift the debt limit by Thursday would leave the US government unable to pay its bills or service its debts, leading to a devastating default that analysts warn will devastate market values and tip the global economy back into recession.

In an interview on NBC Sunday talk show "Meet the Press," Lagarde said the US economy was already showing "real improvement," evident from indicators including those from the housing sector to household spending.

But she said it was crucial the government work out a deal to re-open the government and continue borrowing so it does not default on its debt - and not just for a few weeks.

Lagarde warned of serious consequences from  "a combination of the government shutdown for a period of time and, more seriously, more damaging, if the debt ceiling was not lifted with a degree of certainty and enough time so that people could, you know, sort of have the assurance that the economy was in good standing."

She said: "If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over. And we would be at risk of tipping, yet again, into recession."

She called on politicians to address spending on social programmes like Medicare and Social Security but cautioned that spending cuts must not be too drastic.

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London Battles For Slice Of £5bn ISS Float

By Mark Kleinman, City Editor

London is facing a battle to secure a slice of one of the biggest stock market listings anticipated next year as its owners step up preparations for a £5bn flotation.

Sky News understands that the private equity groups behind ISS, a Danish cleaning and catering company that ranks among the world's largest private sector employers, have appointed investment banks to oversee its initial public offering (IPO).

The investment arm of Goldman Sachs and EQT Partners, a Swedish buyout firm, have enlisted bankers from Goldman and UBS for the flotation.

ISS, which has around 500,000 staff, will be floated in Copenhagen but its shareholders are also evaluating the possibility of a dual listing in London, insiders said this weekend.

A decision to include London would deliver a further boost to the City's IPO market, which has been revived in the last 12 months and on Friday saw the spectacular stock market debut of the privatised Royal Mail.

ISS has made at least two previous attempts to list, in 2007 and 2010, and is best-known in the City as the aborted merger partner of G4S, the UK security firm which breached a contract to provide personnel at last year's London Olympics.

G4S and ISS agreed a merger in 2011 but it was abandoned after a revolt by G4S shareholders.

The Danish group is now chaired by Sir Charles Allen, the former ITV boss who also played a key role on the organising committee of the 2012 Olympics.

A £5bn flotation of ISS would value the company at roughly ten times its annual profits, the mid-point at which analysts expect its shareholders to be able to exit their investment.

A large stake in ISS is now owned by Ontario Teachers Pension Plan and Kirkbi, the investment vehicle of the family behind the Lego empire.

Kirkbi is also a big investor in Merlin Entertainments, the theme park operator which plans to announce a London flotation as soon as there is greater clarity about the fate of negotiations over the US government's debt ceiling.

ISS and the investment banks declined to comment.

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Boris And Osborne Make Chinese Trade Visits

By Mark Stone, China Correspondent in Beijing

The Chancellor and the Mayor of London have arrived in Beijing on separate trade visits to China.

Both George Osborne and Boris Johnson will spend a week in the country, promoting British business but also trying to attract more Chinese investment in the UK.

Mr Osborne's arrival signal's the end of a diplomatic spat between Beijing and London which has lasted more than a year.

Both men are expected to sign a number of multimillion pound investment deals in which Chinese companies will fund or part-fund UK infrastructure and building projects.

Mr Osborne is expected to announce the names of the Chinese backers behind an £800m development at Manchester Airport.

Using Chinese money, five million square feet of land next to the airport will be developed into retail, office and manufacturing space.

Creating 16,000 new jobs over 15 years, the airport will be turned into a hub destination in its own right.

Similar projects in Amsterdam and Frankfurt have proved successful and eased congestion at other airports.

An £800m investment in Manchester Airport will create thousands of jobs

Speaking in Washington before leaving for Beijing, the Chancellor said: "I want to use my visit to China this week to strengthen strategic ties between Britain and China in areas that will drive our countries' growth."

A key strand of Mr Osborne's trip will be so-called "e-trade".

He is travelling with the UK Trade Minister Lord Green, City Minister Lord Deighton and the Minister for Science and Innovation, David Willetts.

With them are executives from a variety of British technology companies who will try to showcase the best of Britain's digital technology industry in China.

The delegation will hope the trip allows UK companies to gain access to the rapidly expanding Chinese market.

"The Chinese economy is changing," Mr Osborne said.

"Those who think it is just a low wage, low tech economy are making a mistake.

"It is becoming a cutting edge player in industries like technology and this is a huge opportunity for Britain."

Chinese tech company Huawei is investing £1.3bn in British broadband

The Chancellor will lead the delegation to the Shenzhen-based headquarters of Huawei, the world's largest telecommunications manufacturer, and TenCent, the world's third largest gaming and social media firm.

Huawei's growing footprint in Europe and America has caused controversy, with some suggesting that Chinese involvement in Western telecoms firms poses a security risk.

Despite that, Huawei has already pledged to invest £1.3bn in the UK's broadband network over the next four years.

Mr Osborne's visit is a clear endorsement of the company.

Alongside the commercial strands of his visit, the Chancellor will also hold governmental meetings with his Chinese counterpart Ma Kai.

Known as the UK/China Economic Financial Dialogue, the discussions will focus on a range of financial issues including the global economic recovery, the US debt ceiling debacle and London's efforts to become a Chinese currency trading hub.

Significantly, the talks represent the first face-to-face bilateral ministerial contact between the UK and China for over a year.

The UK has been in the political dog house with China since May 2012 when David Cameron and Nick Clegg chose to meet and be photographed with the Dalai Lama, the exiled spiritual leader of Tibet.

Mr Cameron and Mr Clegg met the Dalai Lama last year

The meeting enraged Beijing given the controversial claim China holds over Tibet.

Ministerial meetings between the two countries were cancelled and Beijing made its disapproval very clear.

Diplomatic sources in the Chinese capital have suggested the move was designed by Beijing not only to punish the UK but to send a clear message to other countries that it is not worth upsetting the world's second largest economy.

However, British officials are always keen to stress that despite the Dalai Lama meeting, for which the UK refused to apologise, trade between the two countries been unaffected by the spat.

Diplomats point out that inward Chinese investment to the UK in the last 18 months has been greater than the past 30 years combined.

The London Mayor's trip is separate but the broad objectives are the same.

Mr Johnson is travelling with the chief executives of several large companies including Justin King of Sainsbury's and Marc Bolland of Marks & Spencer.

He will spend three days in Beijing, where he will visit a UK brands fair, take a ride on the subway and attend a private meeting with China's richest man, Wang Jianlin, whose company Dalian Wanda is investing heavily in the Nine Elms area of London.

Mr Johnson will then travel to Shanghai before ending his trip in Hong Kong.

Both men are effectively cashing in on the thawing of diplomatic relations between the two countries.

By the end of the week, they hope to have signed a variety of deals, forged new relationships and facilitated meetings between UK and Chinese firms.

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Unemployed Migrants: '600,000 Living In UK'

More than 600,000 unemployed migrants from across the European Union are living in the UK, according to a survey.

The 291-page report - commissioned by the Brussels commissioner for employment and social inclusion, Laszlo Andor - found there were 611,779 "non-active" EU migrants in the UK last year compared with 431,687 in 2006 - a 42% increase.

The total number of jobless migrants is greater than the population of Glasgow.

While between 2005 and 2006 the growth of non-active EU migrants in the UK stagnated, since 2006 it has been steadily rising, the report said.

The Sunday Telegraph said that the number of people arriving without employment had increased by 73% in the three years to 2011.

It reported that the figures meant the annual cost to the National Health Service amounted to £1.5bn.

The details emerged as a poll indicated there was strong public support for an early referendum on withdrawing from the European Union.

The opinion poll for the Mail on Sunday found more than half of voters want a referendum on the UK's membership before the next election.

While nearly two-thirds support a vote in the Commons on the issue as early as next month, almost half said they would vote to quit the EU if a poll went ahead in 2014.

Prime Minister David Cameron has pledged to hold a referendum by 2017, but has dismissed the idea of holding it before the next general Election in 2015.

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