RBS Sued In £150m Pre-Crash Advice Battle

Royal Bank of Scotland and a leading rating agency are being sued for £150m over so-called toxic products in the global financial crash.

Sixteen European institutional investors have launched legal action against Standard and Poor's (S&P), and the UK taxpayer-backed RBS, over losses stemming from 2007 and 2008.

"We have created a foundation in the Netherlands and it has filed a claim in the district court in Amsterdam," the executive director of Bentham IMF, John Walker, said.

Bentham IMF is a litigation finance company providing investment capital to plaintiffs for large disputes in the United States and abroad.

S&P told Sky News it would defend the legal action

A court official in the Dutch capital confirmed the filing, saying "proceedings are under way in this regard".

The investors from Austria, France, Germany and Switzerland want the damages over financial products which collapsed during the crisis.

Approached by Sky News, RBS - which is 81% owned by taxpayers - declined to comment on the dispute.

S&P told Sky News: "This claim has no merit and we will oppose it vigorously.

"The ratings on these securities, which date back to 2005-6, were assigned in good faith based on the information available to us at the time."

The complex products, known as constant proportion debt obligations (CPDOs), were created in 2006 and given a top AAA credit rating by S&P's before their value crashed, Mr Walker said.

RBS became involved in a hostile takeover bid of the Dutch ABN Amro

He previously estimated that CPDO notes worth up to €2bn (£1.67bn) were issued in Europe in the three years before the collapse.

They were issued by a branch of the Netherlands' third-biggest bank ABN Amro - which in itself was later taken over by the RBS.

Mr Walker alleged that S&P's used a model created by ABN Amro to evaluate the CPDOs.

"What we are saying is that Standard & Poor's is guilty of negligence and intentional misconduct by allocating triple-A ratings, the highest, to these products," he said.

"Without the rating, investors would not have bought the product, one of the material causes for the crisis," Mr Walker said.

Fred Goodwin was the RBS boss who headed the ABN takeover

Betham IMF filed the claim in the Netherlands as ABN Amro was based there and because Dutch procedures were "cheaper and faster" than in Britain, where RBS is based.

An S&P spokesman told Sky News: "In May this year, we filed an action in the London courts challenging the jurisdiction of the Netherlands in any such claim and that action has now been served on the Dutch claimant.

"S&P has never had a presence in the Netherlands and its CPDO ratings were assigned in the UK."

Betham IMF won a world-first lawsuit against the ratings agency last year on behalf of 13 Australian towns that lost US$16.5m (£10m) on synthetic CPDO derivatives.

It was the first time a ratings agency had stood trial over the complex derivatives, whose collapse was seen as a major cause of the 2008 global meltdown.

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US Jobless Rate At Lowest For Five Years

The unemployment rate in the United States dropped to 7% in November, the lowest figure for five years.

The sharp drop in the rate, from 7.3% in October, was unexpected and raised the odds that the Federal Reserve could soon begin moving away from its huge stimulus plan.

Meanwhile, the number of non-farm jobs in November went up by a net total of 203,000, which beat analysts' expectations.

The strengthening job market is likely to fuel speculation that the Federal Reserve may scale back its bond purchases when it meets later this month.

The economy has now generated an average of 204,000 jobs from August through November. That is up from 159,000 a month from April through July.

Many of the November job gains were in higher-paying industries. Manufacturers added 27,000 positions, the most since March 2012. Construction firms gained 17,000. The two industries have created a combined 113,000 jobs in the past four months.

Another month of robust hiring follows other positive economic news.

The economy expanded at an annual rate of 3.6% in the July-September quarter, the fastest growth since early 2012, the government said.

Still, nearly half that gain came from businesses building their stockpiles. Consumer spending grew at the slowest pace since late 2009.

Greater hiring could support healthier spending as job growth has a dominant influence over much of the economy.

If hiring continues at the current pace, a virtuous cycle starts to build. More jobs usually lead to higher wages, more spending and faster growth.

Roughly half the jobs that were added in the six months through October were in four low-wage industries - retail, hotels, restaurants and entertainment, temp jobs and home health care workers.

The Fed has pegged its stimulus efforts to the unemployment rate and chairman Ben Bernanke has said the Fed will ease its monthly purchases of $85bn (£51bn) in bonds once hiring has improved consistently.

The bond purchases have kept long-term interest rates low.

The recent economic upturn has been surprising. Many economists expected the government shutdown in October to hobble growth, yet the economy motored along without much interruption.

Early reports on holiday shopping have been disappointing.

The National Retail Federation said sales during the Thanksgiving weekend - probably the most important stretch for retailers - fell for the first time since the group began keeping track in 2006.

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NatWest Website Hit By A 'Surge Attack'

The NatWest personal banking website has been hit by a cyber attack in the wake of its IT woes earlier this week, Sky News has confirmed.

Some customers trying to log on to the website found it impossible to enter the site.

NatWest, which is owned by the Royal Bank of Scotland Group, said there had been a deliberate swamping of its site.

An RBS spokesperson told Sky News: "Due to a surge in internet traffic deliberately directed at the NatWest website, customers experienced difficulties accessing some of our customer web sites today.

"This deliberate surge of traffic is commonly known as a distributed denial of service (DDOS) attack.

"We have taken the appropriate action to restore the affected web sites. At no time was there any risk to customers. We apologise for the inconvenience caused."

The bank stressed that the problems on Thursday night and Friday were not connected with its banking blackout which began on Cyber Monday - the biggest online retail day of the year - and stretched into Tuesday.

Some technical problems continued until Wednesday and thousands of customers who were unable to use the banks' websites or card services vented their fury online.

The group chief executive Ross McEwan described the earlier glitch as "unacceptable" and added: "For decades, RBS failed to invest properly in its systems.

"We need to put our customers' needs at the centre of all we do. It will take time, but we are investing heavily in building IT systems our customers can rely on.

"I'm sorry for the inconvenience we caused our customers. We know we have to do better.

"I will be outlining plans in the New Year for making RBS the bank that our customers and the UK need it to be.

"This will include an outline of where we intend to invest for the future."

As well as this week's problems, a glitch in May left RBS and NatWest customers using mobile apps unable to access their accounts online.

That followed a major fiasco in June last year which saw payments go awry, wages appear to go missing and home purchases and holidays interrupted - and cost the group £175m in compensation.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602 and Freeview channel 82

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Autumn Statement: The Key Points At A Glance

The main measures and forecasts as outlined by the Chancellor George Osborne in his Autumn Statement:

ECONOMY

:: Aim is "To fix the roof while the sun is shining" rather than spend beyond our means.

:: "We will not let up in dealing with our country's debts."

:: OBR expects national debt to be 75.5% of GDP this year, £18bn lower than forecast.

:: OBR says 2013/14 borrowing forecast is revised down to £111bn - £9bn less than expected.

:: OBR forecasts underlying measure of deficit revised down to 6.8% this year, no deficit by 2018/19.

:: OBR forecasts 7.6% jobless rate in 2013, falling to 7% in 2015.

:: Doubling export finance capacity to £50bn.

:: Britain is currently growing faster than any other major world economy.

:: OBR GDP growth forecast for 2014 rises to 2.2% from 1.8%.

:: Office for Budget Responsibility (OBR) more than doubles forecast for GDP growth in 2013 to 1.4% from 0.6%.

:: Pays tribute to "the sacrifice and endeavour of the British people."

:: "Britain's economic plan is working but the job is not done."

TAX

:: New £1,000 transferable tax allowance for married couples from April. Allowance to be uprated.

:: Levy on bank balance sheets to rise to 0.156% - to raise £2.7bn in 2014/15.

:: Capital Gains Tax to be paid by foreign sellers of UK homes from April 2015.

:: Tax and fraud measures to raise £9bn over five years.

WELFARE

:: Increase in state pension age to 68 in mid 2030s and 69 in late 2040s.

:: State Pension to rise by £2.95 a week from April.

JOBS

:: To promote youth employment, National Insurance contributions removed for workers aged under 21.

TRANSPORT

:: Plans to increase train fares by 1% above inflation from January cancelled, so they go up in line with inflation.

:: Fuel Duty rise cancelled for next year.

ENERGY

:: Green levies on energy bills rolled back by average £50 per household.

BUSINESS

:: To help improve shop vacancy rates in town centres, discount in business rates for small retailers in England.

:: Extending small business rate relief. Rate rises capped at 2% from April.

EDUCATION

:: 30,000 more student places next year with cap abolished in 2015 - Higher education investment funded by sale of old student loan book.

:: 18 to 21-year olds required to undertake training or lose benefits.

:: Free school meals for all children in reception, year one and year two.

HOUSING MARKET

:: OBR forecasts house prices 3.1% lower in 2018 than 2007 peak.

:: Bank of England has power to take action to ensure a functioning, stable housing market.

:: £1bn of loans to unlock large housing developments outside London.

SPENDING

:: £100m more of Libor fines to be made available to Armed Forces and emergency service charities.

:: Government's contingency reserve reduced by £1bn this year and departmental budgets by similar amount in the next two years, saving £3bn - NHS, schools and security services exempted.

:: Whitehall spending cut by £1bn over next two years.

:: To cap total welfare spending from next year though state pension excluded.

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Autumn Statement: 'The Plan Is Working'

Chancellor George Osborne has told the country "Britain's economic plan is working but the job is not done".

Making his Autumn Statement, Mr Osborne delivered good news for the economy with a freeze in fuel duty as well as help for young people seeking work and for small businesses.

Mr Osborne announced revised figures that doubled growth forecasts for this year. Borrowing is down to just £2,500 for every household, he said, and the country's debt was £18bn lower than forecast in March.

But he warned of "more difficult decisions", setting the tone for a statement that would contain little respite from the tough austerity measures of previous years.

 "The hard work of the British people is paying off and we will not squander their efforts," he said.

Mr Osborne said Britain was growing faster than any other major economy as he announced that the Office for Budget Responsibility (OBR) had more than doubled its growth forecast for this year from 0.6% to 1.4%.

Mr Osborne and chief secretary to the Treasury Danny Alexander

He said that instead of forecasting growth of 1.8% for 2014 they were now predicting 2.5% and, similarly, the forecasts for growth for the next four years had been increased.

However, he stressed that the country could not stop fighting for its recovery as a reassessment by the Office for National Statistics showed that the 2008/9 recession had been worse than thought - with £112bn wiped off the British economy. 

The statement had been so widely trailed that it contained few surprises. Mr Osborne outlined a number of smaller measures to target the cost-of-living crisis but concentrated on a continued and strong recovery.

Key measures included:

:: Pensions to be increased by £2.95 a week from April - with state pension age raised to 68 by the mid 2030s.

:: The 2p rise in fuel duty next year is cancelled.

:: £1,000 off bills for all small high street retailers in an attempt to revitalise town centres.

:: £50 off annual energy bills by rolling back green levies.

:: Tax breaks worth £200 for married couples who will be able to transfer personal allowances.

:: A new capital gains tax for foreign investors aimed at preventing a property bubble in London and the South-East.

:: £375bn of planned public and private investments in infrastructure projects to 2030 and beyond.

:: Free school meals for children up to the age of seven.

:: Job seekers aged 18 to 21 without basic maths or English to be forced to agree to training or lose benefits.

:: A 2% cap on business rates and an extension of the rate relief scheme for small businesses

:: Employer national insurance contributions for under 21s removed

:: An extra 20,000 higher apprenticeships to be offered in 2014/15

:: £11m space technology centre named after "God particle" scientist Peter Higgs to be built in Edinburgh. 

Ed Balls responds to the Autumn Statement

Mr Osborne announced that while the NHS would be protected from spending cuts, welfare spending would be capped.

He said: "Welfare budgets were completely out of control when we came to office and the number of households where no-one had ever worked nearly doubled.

"We have taken very difficult decisions to bring benefit bills down - and saved £19bn a year for the taxpayer. We need to maintain that discipline."

Mr Osborne also said that the budget of Britain's spies would be protected amid public disquiet over the reach of the intelligence services.

Shadow Chancellor Ed Balls accused Mr Osborne of being "out of touch" and said he had done nothing to improve living standards.

He said "living standards are not rising, they are falling year after year, after year", and pointed out that working people were £1,600-a-year worse off now than they were when the coalition came to power in 2010.

Reaction to Mr Osborne's statement was mixed, while small business groups welcomed many of the measures others said little had been done to help households struggling with debt.

Mark Serwotka, leader of the Public and Commercial Services union, said: "This is not an economic plan, it's austerity for austerity's sake, as the Tories - propped up by the Lib Dems - look to reshape our society for years to come and make the poor, sick and unemployed pay for the greed and recklessness of wealthy elites."

However, John Allan, chairman of the Federation of Small Businesses, said: "The statement is a sobering reminder about the scale of the deficit the country faces and the tough choices which need to be made. We therefore welcome the use of what spare resources the Chancellor could find to focus tax cuts on encouraging firms to take on younger workers, which must be an overriding priority."

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Qantas Sinks To 'Junk' Status In Airline War

The credit standing of embattled Australian airline Qantas has been downgraded by a leading rating agency to "junk" status.

Standard & Poor's reassessment of the world's second oldest airline comes after the carrier issued a shock profit warning and slashed jobs on Thursday

Qantas revealed a half-year loss of £165m and said it would axe 1,000 jobs as it struggles under the weight of record fuel costs, fierce competition from subsidised rivals, and a strong Australian dollar.

In response, S&P cut the airline's rating from BBB-, the lowest investment grade, to BB+ and placed it on a credit watch with negative implications.

Qantas shares closed 3.74% lower on Friday, having lost more than 10% on Thursday.

At one point on Thursday its share price dropped more than 17%.

The BB+ rating puts Qantas in what is known as "junk" status among professional investors, increasing the cost of financing for the carrier and restricting access for investors that do not put their money in lower rated companies.

"The downgrades reflect our view that intense competition in the airline industry has weakened Qantas' business risk profile to 'fair' from 'satisfactory', and financial risk profile to 'significant' from 'intermediate'," S&P said.

"We don't expect Qantas to recover to a credit profile commensurate with a 'BBB-' rating in the near term."

The move comes after another ratings agency, Moody's, on Thursday put the airline's investment-grade Baa rating on review for a potential downgrade, saying the forecast conditions were "outside the rating expectation".

Industrial action has hit passengers in recent years

Qantas chief executive Alan Joyce said the challenges facing the airline were "immense" and "urgent" action was needed.

"Since the global financial crisis, Qantas has confronted a fiercely difficult operating environment - including the strong Australian dollar and record jet fuel costs, which have exacerbated Qantas' high cost base," he said.

"The Australian international market is the toughest anywhere in the world."

As well as axing 1,000 jobs, Mr Joyce said he would take a 38% pay cut while the airline would conduct a review of spending with top suppliers and put in place a salary and bonus freeze.

The airline claims domestic rival Virgin Australia, which is majority-owned by state-backed Singapore Airlines, Air New Zealand and Etihad, is waging a campaign to weaken it in the lucrative domestic market with cheap seats underwritten by foreign cash injections.

Mr Joyce has been lobbying the government for the easing of restrictions that limit foreign ownership in the national carrier to 49 percent, or state intervention to shore up Qantas.

But Prime Minister Tony Abbott said government help was unlikely and said: "If we subsidise Qantas, why not subsidise everyone?"

Qantas - originally an acronym for Queensland and Northern Territory Aerial Services - was founded in 1920 by two Australian former First World War pilots.

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Autumn Statement: Longer Wait For Pensions

By Sophy Ridge, Political Correspondent

People will have to work until they are 68 years old before receiving a state pension from the mid 2030s, in a move that will raise around £400bn for the Treasury.

Chancellor George Osborne will also announce the age will rise to 69 in the 2040s in his Autumn Statement.

The changes will affect people currently aged 49 or younger.

A Government source said: "This is part of the Government's long-term plan to secure a responsible recovery.

"It is a difficult decision to make sure there is a fair deal across future generations and that the country can live within its means.

"It will help make sure the country can offer people decent pensions in their old age in a way that with increasing life expectancy the country can also afford."

Currently the state pension age is due to rise to 68 from 2046 and to 69 in the late 2040s.

The news - released by the Treasury ahead of the Autumn Statement - is intended to show the Government is determined to keep making tough decisions to drive down the deficit despite improving economic figures.

Most government departments also face a 1% cut in their budgets for the next three years, which will save £1bn a year.

Health, schools, international aid, local government, HMRC and the security services will be exempt because their budgets are protected.

In an interview with Sky News, Prime Minister David Cameron said: "The truth is you're not really delivering a higher level of standards and actions on the cost of living unless you secure a long-term growth and success of the British economy.

"From that everything else will follow.

"But should we at the same time try to help families with their budgets? Yes of course we should."

The Autumn Statement's good news is likely to be focused around the cost of living, to counter Ed Miliband's pledge to freeze energy bills for 20 months.

Labour argues most people are not benefiting from the improving economy because of rising prices and stagnating wages.

The Chancellor will also announce a £50 cut in the average energy bill and free school meals for every child under seven years old.

Firms will see a business rates capped at 2%, while the Chief Secretary to the Treasury Danny Alexander has confirmed £375bn of planned public and private investment in infrastructure.

For the first time since becoming Chancellor, Mr Osborne is expected to announce more positive economic figures to show growth is returning.

:: Watch live coverage of the Autumn Statement throughout Thursday on Sky News on Sky 501, Virgin Media 602, Freesat 202, Freeview 82, Skynews.com and Sky News for iPad.

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The Autumn Statement: What's Expected?

Longer Wait For Pensions Revealed

Updated: 7:02am UK, Thursday 05 December 2013

By Sophy Ridge, Political Correspondent

People will have to work until they are 68 years old before receiving a state pension from the mid 2030s, in a move that will raise around £400bn for the Treasury.

Chancellor George Osborne will also announce the age will rise to 69 in the 2040s in his Autumn Statement.

The changes will affect people currently aged 49 or younger.

A Government source said: "This is part of the Government's long-term plan to secure a responsible recovery.

"It is a difficult decision to make sure there is a fair deal across future generations and that the country can live within its means.

"It will help make sure the country can offer people decent pensions in their old age in a way that with increasing life expectancy the country can also afford."

Currently the state pension age is due to rise to 68 from 2046 and to 69 in the late 2040s.

The news - released by the Treasury ahead of the Autumn Statement - is intended to show the Government is determined to keep making tough decisions to drive down the deficit despite improving economic figures.

Most government departments also face a 1% cut in their budgets for the next three years, which will save £1bn a year.

Health, schools, international aid, local government, HMRC and the security services will be exempt because their budgets are protected.

In an interview with Sky News, Prime Minister David Cameron said: "The truth is you're not really delivering a higher level of standards and actions on the cost of living unless you secure a long-term growth and success of the British economy.

"From that everything else will follow.

"But should we at the same time try to help families with their budgets? Yes of course we should."

The Autumn Statement's good news is likely to be focused around the cost of living, to counter Ed Miliband's pledge to freeze energy bills for 20 months.

Labour argues most people are not benefiting from the improving economy because of rising prices and stagnating wages.

The Chancellor will also announce a £50 cut in the average energy bill and free school meals for every child under seven years old.

Firms will see a business rates capped at 2%, while the Chief Secretary to the Treasury Danny Alexander has confirmed £375bn of planned public and private investment in infrastructure.

For the first time since becoming Chancellor, Mr Osborne is expected to announce more positive economic figures to show growth is returning.

:: Watch live coverage of the Autumn Statement throughout Thursday on Sky News on Sky 501, Virgin Media 602, Freesat 202, Freeview 82, Skynews.com and Sky News for iPad.

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Blockbuster To Shut With 1,200 Job Losses

The movie and games rental chain Blockbuster is to be closed down by the year's end with the loss of 1,200 jobs, Sky sources say.

The development will be a bitter but hardly surprising blow to the staff as store numbers were slowly cut by administrators Moorfields Corporate Recovery in the weeks after the retailer's collapse following the failure of a turnaround plan.

It is understood no buyer has been found for the remaining 153 shops and 62 of them will be shut in the next few days with the loss of 427 posts.

The other 91 stores are set to close by the end of the year, resulting in the remaining 808 jobs being axed.

An official statement is expected later on Thursday.

Last month the chain's owner, Gordon Brothers, said the plan to transform the retailer's fortunes had failed amid the consumer trend towards online movie rentals and on-demand TV.

Blockbuster was also hit hard by intense competition from supermarkets and online DVD sales.

The devastating impact of web-based sales on Britain's high streets has been laid bare in the past year by the demise of camera chain Jessops and electricals group Comet, which also cited competition from online players as a major reason for their declines.

Jessops was later reborn under the control of entrepreneur Peter Jones of TV Dragons' Den fame.

More follows...

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Eurostar: Government's 40% Stake Up For Sale

The Government is to sell its 40% stake in Eurostar as part of a plan to privatise £20bn of financial and corporate assets by 2020.

The announcement is contained in the new national infrastructure plan (NIP) which sets out over £375bn of planned public and private investments to 2030 and beyond.

The plans include a new target for selling off financial assets, doubling the amount from £10bn to £20bn including shareholding in the cross-channel train operator.

It comes just weeks after ministers were criticised for undervaluing the Royal Mail before its flotation.

Ministers have been given a boost by major insurers, who have announced plans to invest £25bn in UK infrastructure projects over the next five years.

Danny Alexander will announce the plans

Last month Eurostar revealed it had seen an increase in revenues and passenger numbers compared with last summer.

Sales revenue for the period July-September 2013 reached £207m - a 10% increase on the same period last year - and passenger numbers in summer 2013 rose 5% to 2.7 million.

The planned infrastructure investment has increased from £309bn last year to more than £375bn, with 291 of the 646 projects and programmes already under construction.

The decision by insurers Legal and General, Prudential, Aviva, Standard Life, Friends Life and Scottish Widows to invest in infrastructure follows changes in European rules pushed for by the UK which incentivise investment in a wider range of assets.

Treasury Chief Secretary Danny Alexander will unveil the NIP alongside Commercial Secretary and former London Olympics chief Lord Deighton.

Mr Alexander will say the announcement is a "massive vote of confidence in the UK economy".

"It supports the wider £100bn public investment to rebuild Britain over the next seven years that I announced at the Spending Round 2013. Underground, overground, onshore, offshore, wired or wireless, tarmac or train track. You name it, we're building it right now.

"This is great news for the people of the UK because after years of neglect, the UK's energy, road, rail, flood defence, communications and water infrastructure needs renewal."

Shadow chief secretary to the Treasury Chris Leslie said: "Scheme after scheme has been announced to great fanfare, but then little actually delivered.

"Yet another announcement from ministers about possible future investment will do little to reassure business that warm words will finally translate into diggers in the ground."

Other measures being announced include:

:: The scrapping of plans to create the UK's first toll road for a decade. Motorists will not be charged to use the A14 between Cambridge and Huntingdon once the improvement scheme, due to start in 2016, is completed.

:: A further £50m will be allocated to redevelop the railway station at Gatwick Airport.

:: A Government guarantee could support finance for the development of a new nuclear power station at Wylfa on Anglesey.

:: The £1bn Northern Line extension to Battersea in southwest London will also be guaranteed by the Government.

:: Watch live coverage of the Autumn Statement throughout Thursday on Sky News HD

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RBS And Natwest Glitch: Branches To Open Early

More than one thousand Natwest and RBS branches are opening early on Wednesday to help customers resolve outstanding issues with their accounts after Monday's technical glitch.

All of the high street banks' systems went down for three hours on one of the busiest shopping days of the year, 'Cyber Monday', but while the IT issue was apparently fixed there have been knock-on effects of the outage for customers to contend with.

Some complained of accounts being closed, late payments leaving them overdrawn and problems logging on to online banking services.

The banking group said its 15.7 million customers should visit their local branch or contact one of its helplines if they were still experiencing problems with their accounts caused by the resulting backlog of transactions from Monday evening's failure - the third such problem to face the RBS group in 18 months.

Ross McEwan has promised more investment in the group's IT systems

The group promised anyone left out of pocket would be compensated and there would be further investment in its technical systems to help prevent more disruption in future.

The group chief executive Ross McEwan described the latest glitch as "unacceptable" and added: "For decades, RBS failed to invest properly in its systems.

"We need to put our customers' needs at the centre of all we do. It will take time, but we are investing heavily in building IT systems our customers can rely on.

"I'm sorry for the inconvenience we caused our customers. We know we have to do better.

"I will be outlining plans in the New Year for making RBS the bank that our customers and the UK need it to be.

"This will include an outline of where we intend to invest for the future."

The bank is still investigating the cause of the glitch, which struck at around 6.30pm.

RBS, which also owns the Natwest and Ulster Bank brands, insisted the problems were "completely unrelated" to high transaction volumes on 'Cyber Monday' and it is understood that hacking has been ruled out also.

RBS and NatWest came under fire in March after a "hardware fault" meant customers were unable to use their online accounts or withdraw cash for several hours.

A major computer issue in June last year saw payments go awry, wages appear to go missing and home purchases and holidays interrupted for several weeks, costing the group £175m in compensation.

Trade union Unite, which represents RBS staff, called on Tuesday for the bank to halt its cost-cutting programme, which has seen thousands of jobs axed and IT functions sent abroad, in the wake of the IT problems.

National officer Dominic Hook said: "It is unacceptable that the bank's customers are once again facing inconvenience. Unite has grave concerns that staffing challenges are exacerbating the problems facing the bank

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Tesco UK Sales: Further Fall Blamed On Economy

Tesco's UK recovery strategy is facing renewed scrutiny after it confirmed a third quarter decline in underlying sales.

Britain's biggest retailer is 20 months into a turnaround plan for its main UK business that has seen over £1bn invested in store revamps, more staff, new product ranges and pricing initiatives.

But it said that sales at British stores open over a year, excluding fuel and VAT, fell 1.5% in the 13 weeks to November 23.

Tesco said total group sales increased 0.6% at actual exchange rates, excluding petrol though like-for-like sales fell 5.1% in Asia and were 4% lower in the Europe division.

"Despite the challenging conditions in many of our markets, we are performing in line with market expectations for the full year," the results statement said.

More follows...

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Npower Customer Apology After Bill Errors

Energy firm npower has written to its 3.4 million customers to apologise after a sharp rise in complaints in the last year.

The German-owned gas and electricity supplier admitted that a glitch resulted in a number of bills and statements failing to go out on time, direct debit payments not being set up properly and some customer accounts having problems being started.

Regulator Ofgem said it had been concerned about a "serious deterioration" in customer service levels.

Chief executive Paul Massara pledged that anyone affected would not lose out financially as a result.

Npower will also donate £1m to a fund for vulnerable customers, with half of this channelled to Macmillan Cancer Support.

Ofgem welcomed the apology and payment, and said that after its intervention, npower had set out a recovery plan to ensure that service levels improve.

Research last month by Consumer Futures showed that npower had 202.5 complaints per 100,000 customers for the April to June period.

This compared to 38.3 for SSE, which had the lowest level of complaints among the main energy providers.

Mr Massara said the problems arose after customer details were transferred onto a new computer system.

These led to its helpline receiving extra calls, resulting in longer waiting times for those trying to get through.

In the letter, Mr Massara wrote: "We've let many of you down recently in the overall levels of customer service we've been providing. We apologise unreservedly."

Around 700,000 customers are thought to have been affected by the problems, though it is believed the vast majority are not financially worse off.

Mr Massara said the issue was being dealt with as a "top priority", adding that hundreds of staff were working to address it.

Many customers affected had already been contacted individually to address specific problems and others would be, he said.

Anyone affected by payment problems as a result of the glitch would have repayment periods extended, Mr Massara added.

Ofgem senior partner Sarah Harrison said: "The huge growth in complaints about npower is wholly unacceptable and is an issue that Ofgem takes very seriously. That is why we intervened in this case.

"Npower's commitment that its customers will not lose out financially as a direct result of the company's billing system problems is important and we will expect npower to do all it can to identify and rectify such cases."

Npower recently announced a 10% average bill increase, but said it would reduce bills as a result of a shake-up of Government green levies.

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Households Raid Savings At Record Rate

By Ed Conway, Economics Editor

Households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures.

In the past year, families have withdrawn £23bn from their long-term savings accounts to convert into cash and put into current accounts - the equivalent of around £900 for every household in the country.

It is the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding their savings accounts.

Analysis of the Bank's figures by Sky News shows that in the year to October, the amount of cash in time deposits and cash ISAs fell by 4.7%, while the amount families have in their instant access current accounts or in their pockets rose by 11.2% - some £71bn.

According to economists, the shift of cash is the biggest since comparable records began in the 1970s, and reverses much of the sharp increase in saving that happened at the height of the recession.

On Thursday, the Chancellor's Autumn Statement is expected to focus on measures to help households deal with the rising cost of living, including energy bills.

Since the recent recession began, millions of workers have suffered repeated effective pay cuts as inflation has outstripped pay rises.

As well as paying for household bills, economists also believe that people's use of savings may have contributed to recent economic growth.

The news comes amid growing evidence that consumers' appetite for spending is on the rise in the run-up to Christmas.

Consumer spending was one of the main contributors to the sharp rise in gross domestic product in the third quarter, and a further strong increase is implied by the Bank's money figures.

But while the figures suggest that the economy is strengthening, they will also be taken as further evidence that savers are being deterred from putting money aside by record low interest rates.

According to new figures from the Bank, the average interest rate on long-term savings accounts has now dropped to 2.4% - the lowest level since comparable records began in 1999.

Some also suspect that with households still facing a significant squeeze as a result of higher living costs, many are having to dig into their savings in order to afford day-to-day items.

Simon Ward, chief economist at Henderson Global Investors, pointed out that on top of the £900-per-household shift of cash out of long-term savings, families have also put £21bn - a further £800 per household - which might normally have gone into savings accounts into their spending money.

"Consumer strength usually reflects increased borrowing but this hasn't been the key factor recently," he said.

"Instead, households have been running down their savings accounts balances, probably in reaction to the pathetic interest rates now on offer.

"Increased spending is lifting growth and incomes, and money is flowing back to other households, in a virtuous circle."

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RBS And NatWest IT Problems On Cyber Monday

RBS and NatWest say a glitch which left customers unable to access their cash across the UK has now been resolved.

Thousands of people vented their anger on Twitter after all the high street banks' systems went down on one of the busiest shopping days of the year, Cyber Monday.

As well as bank cards, there were problems with RBS and NatWest's websites and smartphone apps.

RBS - which owns NatWest - issued a statement on Tuesday morning via the social network saying: "The systems issues that affected our customers last night have now been resolved and all of our services are now back working normally."

The banking group did not believe the IT problems were related to high transaction volumes on Cyber Monday but was unable to give an explanation for the latest failures in its computer systems following a number of high profile outages in recent years.

It had earlier said on Monday night: "We are very sorry for the system issues that affected our customers this evening. Our customers are reporting that services are coming back on line.

Complaints piled up on Twitter as customers could not access cash

"If customers have been left out of pocket as a result of these system problems, we will put this right.

"If any customer is unable to resolve an issue caused by the disruption, they should get in touch with our call centres or come into a branch in the morning where our staff will be ready to help."

The group said Ulster Bank, which is also owned by RBS, was "partly affected" while several customers in Ireland reported problems.

Reports started to emerge of bank cards being refused at around 6.30pm on Monday.

RBS' apology, along with an earlier tweet about mobile banking problems

One customer from Canterbury, Kent, tweeted: "Natwest down again. Looked like a melt in Londis when my card got declined for milk and tuna."

Josh Barlow, a Sheffield Hallam journalism student, wrote: "This is happening every month if not more and it's getting ridiculous."

RBS and NatWest came under fire in March last year after a "hardware fault" meant customers were unable to use their online accounts or withdraw cash for several hours.

It cost the group £175m to put right and came less than a year after it was hit by a major computer issue.

The latest meltdown will heap more embarrassment on the banks because it came on so-called Cyber Monday, when retailers are hoping for their busiest day of the year as pre-Christmas shoppers search the internet for bargains.

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Miliband Slams 'Smoke And Mirrors' Energy Plan

Ed Miliband will dismiss the Government's plan to cut the cost of household energy bills by £50 as "smoke and mirrors" in a speech today.

The Labour leader will insist that the "cosy deal" reached with the 'Big Six' power firms will still see bills going up this winter, saying that ministers do not "get" the cost-of-living crisis.

Chancellor George Osborne in his Autumn Statement on Thursday is to announce full details of how the Government will achieve its pledge of reducing energy bills by £50 a year.

The energy issue has dominated the political agenda since Mr Miliband promised to freeze prices for 20 months if he wins the next general election.

Mr Miliband is due to launch the attack when addressing staff at the VW National Training Centre in Milton Keynes.

Mr Miliband wants a 'real price freeze'

"A lot of people think that David Cameron and George Osborne are trying to catch up with One Nation Labour on the cost-of-living crisis: from pay-day lending to energy bills," he will say.

"But the truth is they are struggling to catch up with the British people who live at the sharp end of an economy where the link between the wealth of our nation and family finances has been broken. That is the cost-of-living crisis that is happening in our country today."

Mr Miliband will say the Autumn Statement should feature "a real price freeze and action to reset the market to stop them overcharging again in the future".

He will add: "It's right that the debate in Britain is now about the cost-of-living crisis. Political leaders need to understand the new challenges our country faces. That is the test of this Government this week. All the signs are that they simply don't get it."

But Mr Osborne has insisted that families will benefit from the plan.

He told BBC's Andrew Marr Show: "There is going to be an average of £50 off people's bills. We are absolutely insistent that this is going to be brought in."

Mr Osborne will reveal the full details of the plan on Thursday

Mr Cameron and Nick Clegg confirmed on Sunday the plan to reduce the burden on consumers by cutting the green taxes, which add £112 to each bill.

The cost of the Energy Company Obligation Scheme, which funds energy efficiency measures for low-income households and makes up the vast majority of the environmental levies, will be halved under the plan.

Around £12 of the £50 savings to bills will come from a reworking of the Warm Home Discount in a £300m deal. The remainder will come by switching the funding for energy measures to general taxation.

A £1,000 grant for energy efficiency measures for anyone buying a new home, which will be funded by a fresh crackdown on tax avoiders, will be included in the plan.

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Cameron Arrives In Beijing For Trade Talks

The Prime Minister will champion a free trade agreement between the EU and China today which could be worth £1.8bn to the UK alone.

David Cameron arrived in Beijing at the head of the largest British trade delegation ever to visit the country, which has become the world's second biggest economy in recent years.

He said he wanted to use the three-day visit to "take the British/Chinese diplomatic and political relationship to a new level".

Speaking to reporters on board his flight to Beijing, Mr Cameron left no doubt that the main purpose of the trip is to put Britain in pole position to expand trade with China.

Mr Cameron visited a Jaguar Land Rover training facility

The European Commission is due to begin investment treaty negotiations with China early next year to reduce some of the barriers to trade.

Mr Cameron will hold talks with premier Li Keqiang and has promised to throw his full political weight behind the agreement which could face stiff resistance from some EU states who fear their markets would be flooded with cheap Chinese imports.

One of the first things on the itinerary was a visit to the Jaguar Land Rover academy in Beijing, where Chinese staff are trained to service and sell the British-designed luxury cars.

Speaking to TV cameras at the plant, Mr Cameron denied he was steering clear of speaking about human rights in order to avoid offending his Chinese hosts.

"Not at all," said Mr Cameron. "We have a very strong and full relationship between Britain and China and that includes a human rights dialogue.

Mr Cameron with the delegation at Heathrow Airport

"We are one of the few countries to have that relationship with China."

Writing in Chinese magazine Caixin, Mr Cameron declared his ambition to use this week's visit to help forge "a partnership for growth and reform that can help to deliver the Chinese dream and long-term prosperity for Britain too."

He welcomed signals from last month's crucial Third Plenum of the ruling Communist Party that China is ready to open up further to the rest of the world under the leadership of President Xi Jinping, who took up office a year ago.

He added that he wanted to send the message that "an open Britain is the ideal partner for an opening China".

"Britain is uniquely placed to make the case for deepening the European Union's trade and investment relationship with China," said Mr Cameron.

"Building on the recent launch of EU-China negotiations on investment, and on China's continued commitment to economic reform, I now want to set a new long-term goal of an ambitious and comprehensive EU-China Free Trade Agreement.

"And as I have on the EU-US deal, so I will put my full political weight behind such a deal which could be worth tens of billions of dollars every year."

The PM, who raised the possibility of a free-trade deal at talks with EU partners in Lithuania last week, believes that eliminating tariffs in the 20 sectors where they are highest - such as vehicles, pharmaceuticals and electrical goods - could save UK exporters £600m a year.

Mr Cameron wants to improve his relationship with Mr Keqiang

Jaguar Land Rover is signing a £4.5bn agreement to provide 100,000 cars to the National Sales Company in China over the next year.

The company's chief executive Ralf Speth was among the 120-strong business delegation accompanying Mr Cameron, along with executives from major exporters like Rolls-Royce, BP, Royal Dutch Shell, Barclays, HSBC, GlaxoSmithKline, Arup and Virgin.

But the bulk of the delegation was made up of smaller businesses, such as Westaway Sausages of Devon, Moulton bicycles and the Cambridge Satchel Company, which Mr Cameron believes have considerable opportunities in the fast-expanding consumer markets of China.

Also travelling with the Prime Minister were representatives of British football, including Premier League chief executive Richard Scudamore, former England and Chelsea star Graeme Le Saux and West Ham United vice-chair Karren Brady.

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Npower To Freeze Its New Prices Until 2015

'Big Six' energy provider npower, which recently raised its customer bills by more than 10%, has announced a decision to put a freeze on any more hikes until 2015.

The company's promise comes on the morning that the Government said it would take action to reduce the cost of energy bills.

Npower chief executive Paul Massara said: "We welcome today's announcement as an Important step in cutting energy costs for our domestic customers. As a result of this announcement we will reduce our bills.

"We are currently calculating how large this reduction will be, and can assure our customers that it will fully reflect the reduction in the costs to our business."

But the promise comes with a caveat - over the cost the company pays for energy sourcing and distribution.

Ms Massara said:"We don't plan to increase energy prices before Spring 2015, unless there are increases in wholesale energy costs or network charges."

More follows...

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BoE Boss Warns Homeowners Over Rate Rise

Homeowners must find a way to pay their mortgages if interest rates rise because they will not be guaranteed a helping hand, the governor of the Bank of England has warned.

Mark Carney's message came after BoE figures showed mortgage approvals hit their highest level since February 2008, while total household debt reached a new record last month.

The recently-appointed Canadian governor urged would-be buyers to think of the debts they were taking on and whether they would be able to repay a 25-year or 30-year mortgage rather than relying on rising property values.

He told The Guardian: "Are you going to be able to service that mortgage five years from now, 10 years from now, if interest rates are higher?

"Or are you counting, even subconsciously, on the price of your house keeping going up and if something happens an ability to sell it quickly and not facing the consequences of not being able to pay?"

Against the market background where there is strong demand among would-be buyers to get on the property ladder, Mr Carney noted his concern about the lack of new homes being built.

It is hoped that strategic decisions made now to try to control mortgage lending will avoid the need for severe and drastic policy actions to be taken if there is a bubble in the property market.

Mr Carney says people with mortgages must think of the consequences

Mortgage approvals are running at levels not seen since Northern Rock was nationalised in February 2008.

Mr Carney said: "The right way to do policy - to protect against the boom and bust cycles - is to act early in a graduated, proportionate way - and that reduces the probability of having to act in a bigger way later."

Earlier this week the BoE confirmed its Funding for Lending Scheme (FLS) would no longer support mortgage borrowing from January to help prevent the market overheating and future debt risks.

The project, which was introduced in August 2012, offers lenders cheap money in return for loans to customers. It is to be limited to business lending from 2014.

Mr Carney said to try to use interest rates as a way of cooling down the housing market would be a "very blunt tool" as it could hurt recession-hit sectors of the economy which are starting to make a comeback.

He also called for "prudence" from lenders.

The BoE could also keep a watchful eye on the situation, he suggested, and try to head off a housing bubble by calling on regulators and lenders to cap the size of a mortgage compared to the value of the house - the so-called loan-to-value (LTV) ratio.

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Ministers To Fund £300m Energy Bill Rebates

By Mark Kleinman, City Editor

Ministers are to fund a £300m plan for a £12 rebate on every domestic electricity bill in the country as part of a Government effort to combat a round of inflation-busting energy price hikes.

Sky News has learnt that the Government is finalising plans this weekend for a series of measures ahead of next week's autumn statement by the Chancellor, George Osborne.

The debate over energy costs has intensified in recent days as ministers have sought ways to regain the political initiative following the Labour leader Ed Miliband's pledge to impose an energy price freeze for 20 months if Labour wins the next general election.

Five of the 'Big Six' energy companies, including Centrica, the owner of British Gas, and Npower, have announced plans for substantial price increases in the last six weeks. The hikes have sparked a furious row in Westminster and the City about the industry's profitability.

Insiders said on Saturday that the Government package would include an agreement between the Department of Energy and Climate Change (DECC) and a group of companies known as distribution network operators, whose charges account for approximately 20% of consumers' energy bills.

The deal between ministers and these companies, which include National Grid, would involve restructuring their cost-profile over the 15-year period during which they have set out their investment plans.

This measure is expected to lead to an average of £5 off customers' bills, although the precise amount will vary by region, with some parts of the country not seeing any such saving, a source said.

Details of the package of measures could be announced as early as Sunday following intense Whitehall horse-trading over what has become one of the Government's most pressing domestic challenges.

The £300m rebate will be funded by altering the funding of the Warm Home Discount, which funds one-off electricity discounts for thousands of vulnerable customers. This is expected to be transferred to general taxation rather than being funded by the energy companies.

A Whitehall source said the £12-per-account rebate would require licence changes to be overseen by Ofgem, the energy regulator, but that this was unlikely to prove a significant obstacle.

DECC is understood to be keen for the £12 rebate to be clearly marked on consumers' bills and is extracting assurances from the big energy suppliers that they will agree to this.

The largest cut to energy bills is expected to be generated by a roughly £40-per-household saving on a green levy called the Energy Companies Obligation (ECO), which was introduced only this year.

The cost of the ECO, which costs the major suppliers about £1.3bn annually, is to be lowered by lengthening a programme of providing home insulation to 2017.

According to a letter from the Government to energy companies cited in reports this weekend, ministers want to introduce legislation to implement the changes.

"The government intends to make changes to the ECO order with a view to extending the period over which the obligation will run and reducing the expected cost of compliance. The government will consult on detailed proposals shortly and will subsequently look to introduce the necessary legislation as soon as possible," the letter said.

"The changes include extending ECO beyond its current March 2015 deadline. The government's specific proposal in this respect is that a new binding target should be set for March 2017."

David Cameron and Nick Clegg are understood to have been discussing the publication of a joint article in a Sunday newspaper to announce the moves, although it is unclear whether that plan will go ahead.

Ed Davey, the energy and climate change secretary, has informed the energy industry of the full package of proposals in recent days although sources insisted that they were not yet finalised.

The Big Six are expected to announce price cuts or reductions to their planned price increases as soon as the Government's proposals are unveiled.

The overhaul of the ECO will represent something of a u-turn by the Government. The levy places legal obligations on the larger energy suppliers to deliver energy-efficiency measures to domestic energy customers.

It operates alongside the Green Deal and is designed to help people make energy efficiency improvements to buildings by allowing them to pay the costs through their energy bills rather than up-front.

On Friday, Downing Street denied a report that it was pressing the Big Six to agree to freeze prices until after the next election, underlining Mr Cameron's sensitivity about Labour's recent eye-catching policies.

In a statement, Jonathan Reynolds MP, the Shadow Energy and Climate Change Minister, said:

"The Energy Company Obligation is David Cameron's scheme. He only introduced it this year and a few months ago he was even boasting that it was bigger than previous energy efficiency schemes.

"Labour has consistently said that ECO should be reformed to make it better value for money and targeted at those in fuel poverty. But what the public really needs is a Labour government implementing a price freeze until 2017 and resetting the energy market so that it works for the long term."

A Downing Street spokeswoman declined to comment while the Treasury could not be reached on Saturday.

A DECC spokeswoman said: "Government is looking closely at the impact of green levies on consumer bills and how the measures they support are paid for. Details of this review will be announced by the autumn statement."

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Energy Bills 'To Fall By £50' Under Govt Plan

Plans to reduce the cost of soaring energy bills by an average £50 a year as a result of cuts in green levies have been confirmed by the Government.

Prime Minister David Cameron and his Liberal Democrat deputy Nick Clegg confirmed that funding of insulation and other efficiency techniques for vulnerable households was being reworked and would reduce the burden on consumers.

The cost of the Energy Company Obligation (ECO) scheme could be halved by giving power firms two years longer to hit targets, while other charges will be funded from general taxation in future.

Ministers are expected to fund a £300m plan for a £12 rebate on all household electricity bills and homebuyers are set to be handed £1,000 to spend on energy-saving measures.

The reductions are expected to be finalised in negotiations taking place with the 'Big Six' power firms this weekend and full details of the deal are to be announced by George Osborne in his Autumn Statement next week.

In a joint article for the Sun on Sunday, Mr Cameron and Mr Clegg wrote: "Later this week, we'll announce further help: proposals that will be worth around £50 on average to energy bill-payers.

The two leaders insist the plan is 'serious and credible'

"We're doing it without taking any help away from poor families or sacrificing our green commitments; and in a way that will keep Britain's lights on in the long-term too."

The pair added: "Alongside the Green Deal, when you buy a new home, you could get up to £1,000 from Government to spend on important energy-saving measures - equivalent to half the stamp duty on the average house - or even more for particularly expensive measures.

"It's an all-round win: better insulation means cheaper bills; it's how we cut carbon emissions; and it will boost British businesses who provide these services."

Downing Street sources indicated the grants would be available for purchases of new-build or older housing stock, with the amount depending on the property's energy efficiency and how much work needs to be done.

EDF welcomed the move, and said it did not expect to raise prices again before 2015.

Bills are burned during a protest this month against prices and budget cuts

The intervention by Mr Cameron and Mr Clegg marks a concerted effort to regain the initiative on the energy issue, which has dominated the political agenda since Ed Miliband promised to freeze prices for 20 months if he wins the general election.

The coalition leaders accused Mr Miliband of "taking people for fools".

"Energy companies would hike up prices both before and after the freeze - so families would end up paying more," they wrote.

"Not only that - by cutting investment in green energy, their freeze would threaten thousands of jobs. Labour's con is the worst of all worlds. When an offer sounds too good to be true it usually is."

However, shadow chancellor Ed Balls accused the Government of "half measures and panicky climbdowns", insisting that "only a price freeze will do".

"After last year's Budget, Chancellor George Osborne was forced into chaotic U-turns on the pasty tax, the caravan tax and the charities tax," he wrote in the Sunday Mirror.

"This time the U-turns have started before he's even made his speech. With four days until the Autumn Statement, we've already had panicky changes in Government policy: on payday loans, cigarette packaging, energy subsidies and bank lending...

"On energy, the test for George Osborne is this: whatever he announces must both stop bills rising this winter and make the energy companies pay for it, not the taxpayer."

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