Fuel Duty: Govt Hints It May Axe Increase

The Government has hinted that a planned fuel duty rise could be axed, despite ministers having seen off Labour calls for the 3p increase in January to be scrapped.

Treasury Economic Secretary Sajid Javid said the Government understood the pressures facing households and was determined to help with the cost of living.

Robert Halfon, a Conservative backbencher and a prominent campaigner on fuel duty, did not back Labour's demands because he believed ministers were in "listening mode" ahead of Chancellor George Osborne's autumn statement next month.

"I believe it is perfectly sensible and right to wait for the autumn statement, given the Government's record, given that they cut fuel duty last year and given that they have stopped two fuel duty rises," he told the House of Commons.

Labour's call to delay the tax hike until at least April next year was defeated by 282 votes to 234 - a majority of 48.

Mr Javid said: "The Government is doing all it can to help hard-working families with the cost of living and putting money back into their pockets.

"Action on fuel duty is part of this. Fuel duty is currently 20% lower in real terms compared to its peak in March 2000 and 7% lower compared to May 2010.

"If we had continued with the policies of the previous government, quite simply prices would be higher. Fuel would be 10p more expensive per litre.

"I know some will call for a further freeze in fuel duty today. I can assure them this Government understands the financial pressures hard-working families are facing.

"Subject to the constraints of the public finances, this Government is determined to help families with the cost of living."

Labour's Cathy Jamieson, the shadow economic secretary, said the fragile state of the economy meant it was "exactly the wrong time to hike fuel costs".

She said: "In the here and now petrol is 15p a litre higher than at the general election, it's 5p a litre higher than in the summer when the Government last deferred a rise, and let's remember that the Chancellor took that decision following pressure from this side of the House."

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Gas Prices: Watchdogs Probe Fixing Claims

The Financial Services Authority (FSA) and Ofgem are investigating claims by a whistleblower that Britain's wholesale gas market has been frequently manipulated by energy companies.

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

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

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

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

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

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

Ed Davey said he was "extremely concerned"

Mr Davey is expected to make a statement to MPs on Tuesday afternoon.

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

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

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

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

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

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

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

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

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

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

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Workers To Be Able To Ask For Flexible Hours

By Gerard Tubb, Sky Correspondent

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

Mothers will be able to share up to a year's leave with their partners once they have a baby, under changes to be announced by Deputy Prime Minister Nick Clegg.

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

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

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

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

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

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

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

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

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

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

Mr Clegg rethought the reforms after being warned that extending paternity leave from the current two weeks would be too difficult for businesses.

Flexible leave will be reviewed by 2018 and extending paternity leave will be reexamined then, Mr Clegg is expected to say.

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

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

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

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

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

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

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

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

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

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Exclusive: Royal Mail To Deliver Float

By Mark Kleinman, City Editor

The Government is to begin sounding out City investors about their appetite to buy shares in Royal Mail ahead of a potential flotation of the postal service.

I have learned that ministers and the Shareholder Executive, the body which manages state-owned assets, have sanctioned a preliminary roadshow of major City institutions to begin in the new year.

The Government will wait until Royal Mail's Christmas trading performance is clear before commencing discussions with prospective investors.

On Tuesday, Royal Mail will unveil half-year results which are expected to show continued progress in restructuring the core UK letters division, which has seen tens of thousands of jobs axed in an attempt to secure the company's survival.

A decline in letter volumes accelerated by the explosion of the internet has only been partially offset by the growth in Royal Mail's parcels business.

Moya Greene, the Canadian chief executive of Royal Mail, is likely to confirm the plans for initial talks with City investors alongside the results.

A privatisation of Royal Mail would be arguably the most significant privatisation of a UK asset since John Major sold the railways during the 1990s.

Analysts say that a restructured Royal Mail could be worth as much as £4bn, although that figure is likely to be at the upper end of the range that a flotation could attract.

Ms Greene is also likely to reaffirm a ministerial commitment to make shares available to Royal Mail employees as well as the public.

A flotation is viewed in Whitehall as a more attractive option than an outright sale of the company because of the shortage of trade buyers and the political difficulties of negotiating a takeover by a financial investor such as a private equity firm.

Michael Fallon, the business minister, is taking a hands-on role in discussions about the potential sell-off.

Barclays is advising the board of Royal Mail, which is chaired by Donald Brydon, a leading City figure, with UBS advising the Government.

Royal Mail's finances have been knocked into shape by hiving off the company's historic pension deficit onto the taxpayer. The regulatory regime dictating stamp prices and other areas of its operations have also been loosened by Ofcom.

Royal Mail declined to comment.

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Greece Approves 2013 Austerity Budget

Greek MPs have approved the country's 2013 austerity budget - which involves fresh spending cuts.

The budget was passed by a 167-128 vote in the 300-member parliament.

It came days after a separate bill of deep spending cuts and tax hikes for the next two years squeezed through with a narrow majority following severe disagreements among the three parties in the governing coalition.

Prime Minister Antonis Samaras pledged that the spending cuts would be the last Greeks have to endure.

"Just four days ago, we voted the most sweeping reforms ever in Greece," he said.

"The sacrifices (in the earlier bill and the budget) will be the last. Provided, of course, we implement all we have legislated.

"Greece has done what it was asked to do and now is the time for the creditors to make good on their commitments."

Athens says that with the passage of the two bills, the next loan instalment, worth 31.5bn euros, should be disbursed. Without it, the government has said it will run out of cash on Friday, when 5bn euros worth of treasury bills mature.

Finance ministers from the 17-nation eurozone are meeting in Brussels later today, with Greece high on the agenda.

However, German finance minister Wolfgang Schaeuble has indicated it is unlikely that the ministers will decide on the disbursement at that meeting.

"We all ... want to help Greece, but we won't be put under pressure," Mr Schaeuble told the newspaper Welt Am Sonntag.

Mr Schaeuble said the so-called troika of debt inspectors would probably not deliver their report on Greece's reform programme by Monday. The creditors also want to see what the debt inspectors have to say about Greece's debt sustainability.

But speaking minutes before the vote, the prime minister pledged the bailout funds would be disbursed "on time".

Finance minister Yannis Stournaras also stressed the precariousness of Greece's cash reserves, with the treasury bills due on Friday.

"Without the help of the European Central Bank, the refunding of these treasury bills from the banking system will lead the private sector to complete suffocation," Mr Stournaras said.

Disbursement of the next instalment is essential "because the state's available funds are marginal, although better than expected because the 2012 budget is being executed better than expected," he said.

He added that the funds are needed to pay salaries and pensions, as well as for the import of medicines, fuel and food.

Greece is mired in a deep recession heading into its sixth year, with more than a quarter of Greeks unemployed.

Battered by a mountain of debt and a gaping budget deficit, Greece has been relying on international bailout loans from other eurozone countries and the International Monetary Fund since May 2010.

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Fuel Duty: Chancellor Osborne Under Pressure

Chancellor George Osborne may bow to demands and delay a planned fuel duty hike amid fears it will hit struggling families.

Tory rebels had been planning to break ranks and vote with Labour in an Opposition debate on Monday calling for the 3p increase planned for January to be delayed.

They believe the rise, first delayed in August, will ramp up anger because it is due to coincide with rail and bus far increases and the changes to child benefit.

But now rebel leader, Robert Halfon, has said he will vote with the Government after all and wait to see what Mr Osborne does in his Autumn Statement next month.

He said: "The cost of fuel is the number one issue, that's why I am campaigning on it. I have had discussions with various people and it is my view that the Government is in strong listening mode.

"If I didn't believe that I would make a point and go in to the lobby with Labour."

Under pressure: George Osborne

Campaign group FairFuelUK previously said it believes the tax hike could would raise only £800m, compared with Treasury projections that it would bring in £1.5bn. It could also cost as many as 35,000 jobs, it said.

The group will be campaigning at Parliament today ahead of the debate and vote in the Commons.

Its spokesman, broadcaster Quentin Willson, said: "The momentum building up behind FairFuelUK's call to see this damaging 3p rise scrapped is becoming unstoppable.

"The Treasury appears to be listening. We welcome Labour pushing on this issue. Consumers are currently paying an eye-watering 80p-per-litre in combined fuel duty and VAT.

"This is socially unjust and adding another 3p in tax doesn't make sense for economic recovery and deficit reduction."

Shadow chief secretary to the treasury Rachel Reeves added: "With our economy so fragile and prices still rising faster than wages, it would be wrong to go ahead with another tax rise on families and businesses.

"To boost our flatlining economy, Labour has already called for a temporary VAT cut which would take 3p off a litre of fuel. But if ministers won't do this, the very least they could do is axe January's fuel duty rise at least until April.

"And they could pay for this by clamping down on known tax avoidance loopholes, like the one used by some employment agencies to falsely inflate expenses."

A Treasury spokesman said: "The Government recognises that the rising price of petrol is a significant part of households' day-to-day spending.

"Since coming to office, the Government has listened to the concerns of motorists about high pump prices and acted. Fuel is now 10p a litre lower than under the previous Government's plans."

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Treasury Gets £35bn Windfall From QE Interest

The Treasury is to receive a £35bn boost as part of a deal with the Bank of England that will effectively reduce public debt.

Chancellor George Osborne and Bank Governor Sir Mervyn King have agreed that the BoE will give the Treasury interest earned through its £375bn economy-boosting programme known as quantitative easing (QE).

The cash - currently on the BoE's books - will flatter the public accounts by reducing the budget deficit, while also acting as a "small loosening of monetary conditions" equivalent to taking more QE action, according to the Bank.

The announcement comes a day after it decided not to extend QE at its monthly policy-setting meeting.

The Treasury said the agreement was in line with similar practices surrounding QE in the United States and Japan.

In a letter to Mr Osborne, Sir Mervyn stressed the cash transferred to the Government would likely need to be paid back to the Bank in the future.

The move comes at an apt time for Mr Osborne as he faces pressure on his plans to cut borrowing.

But JP Morgan Chase economist Malcolm Barr said it was "still likely" that the Chancellor will need to push back debt reduction targets in his upcoming autumn statement.

Shadow chief secretary to the Treasury Rachel Reeves said it was a "smoke and mirrors" deal.

"Instead of changing course and taking action to create the jobs and growth we need to get the deficit down. The Chancellor seems to think he can just be bailed out in the short term by money from the Bank of England," she added.

Under the arrangement, £11bn is expected to be handed to the Treasury this year, with the remaining £24bn paid in four instalments over the next financial year.

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Exclusive: Royal Mail To Deliver Float

By Mark Kleinman, City Editor

The Government is to begin sounding out City investors about their appetite to buy shares in Royal Mail ahead of a potential flotation of the postal service.

I have learned that ministers and the Shareholder Executive, the body which manages state-owned assets, have sanctioned a preliminary roadshow of major City institutions to begin in the new year.

The Government will wait until Royal Mail's Christmas trading performance is clear before commencing discussions with prospective investors.

On Tuesday, Royal Mail will unveil half-year results which are expected to show continued progress in restructuring the core UK letters division, which has seen tens of thousands of jobs axed in an attempt to secure the company's survival.

A decline in letter volumes accelerated by the explosion of the internet has only been partially offset by the growth in Royal Mail's parcels business.

Moya Greene, the Canadian chief executive of Royal Mail, is likely to confirm the plans for initial talks with City investors alongside the results.

A privatisation of Royal Mail would be arguably the most significant privatisation of a UK asset since John Major sold the railways during the 1990s.

Analysts say that a restructured Royal Mail could be worth as much as £4bn, although that figure is likely to be at the upper end of the range that a flotation could attract.

Ms Greene is also likely to reaffirm a ministerial commitment to make shares available to Royal Mail employees as well as the public.

A flotation is viewed in Whitehall as a more attractive option than an outright sale of the company because of the shortage of trade buyers and the political difficulties of negotiating a takeover by a financial investor such as a private equity firm.

Michael Fallon, the business minister, is taking a hands-on role in discussions about the potential sell-off.

Barclays is advising the board of Royal Mail, which is chaired by Donald Brydon, a leading City figure, with UBS advising the Government.

Royal Mail's finances have been knocked into shape by hiving off the company's historic pension deficit onto the taxpayer. The regulatory regime dictating stamp prices and other areas of its operations have also been loosened by Ofcom.

Royal Mail declined to comment.

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Chancellor Told To Halt Petrol Price Hike

George Osborne is under renewed pressure to abandon a planned increase in fuel duty, amid warnings that the rising price of petrol was putting household budgets under unprecedented pressure.

As MPs prepare to vote on Monday on the planned 3p a litre increase due in January, the consumer organisation Which? said more people than ever before were being forced to cut back on motoring costs.

It said its latest polling found a record 85% of people expressed fears about rising fuel prices - a nine point increase since July.

Those saying they would cut back on motoring costs rose seven points to 39% - another record high - while one in 10 said they had had to dig into their savings to cover their motoring costs.

Overall, one in three people said they were finding it difficult to live on their current income, with 33% also cutting back spending on the essentials last month. Getting on for half  - 44% - said they were planning to cut back on food and groceries in the coming months.

Which? said the figures showed 8.7 million households curbed their spending on essentials last month, while 6.4 million households dipped into their savings to cover their outgoings.

Which? executive director Richard Lloyd said: "Rising fuel prices are the number one consumer worry and people are already telling us they're having to cut back and dip into savings just to get by.

"On the back of inflation-busting energy bill rises and increasing food prices, consumers can little afford another hit on their household budget. We're calling on the Government to think again about their plans to increase fuel duty in January.

"The forthcoming Autumn Statement must focus on measures that will help put money back in the pockets of consumers, because the economic recovery is at risk if we don't increase consumer confidence."

For Labour, shadow treasury minister Cathy Jamieson said: "Families, pensioners and businesses are still feeling the squeeze. Labour will vote on Monday for a delay in this fuel duty increase at least until next April."

A Treasury spokesman said: "The Government recognises that the rising price of petrol is a significant part of households' day-to-day spending.

"Since coming to office the Government has listened to the concerns of motorists about high pump prices and acted. Fuel is now 10p a litre lower than under the previous government's plans."

:: Pollsters Populus interviewed 2,100 UK adults on behalf of Which? online between October 26 and 28.

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BA Owner Faces Strike Threat Over Job Cuts

Staff at Spanish airline Iberia have rejected a restructuring plan that involves 4,500 job cuts and are willing to strike, labour unions said.

The threat of industrial action comes after IAG - the company formed by merging BA and Iberia - revealed an operating profit of just £13.5m in the nine months to September 30.

In addition to cutting nearly a quarter of the workforce, IAG has proposed a staff salary cut of 25-35% for three years.

"We are willing to take any necessary action," the airline unions said in a statement.

The results show Iberia is the weak link in the group, making a standalone operating loss of £209m in the period, while BA contributed operating profits of £228m.

On a pre-tax basis, taking wider cost pressures into account, the group made a loss of £134m in the nine months.

IAG shares have shed 40% of their value since the group's formation in 2011.

Iberia is Europe's leading carrier to Latin America, but it has been battling against increased competition from low-cost airlines and high-speed trains, labour disputes and Spain's deep economic crisis.

It is bleeding cash as revenues fail to cover its high operating costs, with a 15% spike in fuel costs.

"Iberia is in a fight for survival and we will transform it to reduce its cost base so it can grow profitably in the future," IAG chief executive Willie Walsh said in a statement.

Mr Walsh is no stranger to battles with trade unions and took on employees of BA over reforms when he was boss of the UK flag carrier.

He has also been a vocal critic of the British Government's aviation policy and said it was a "disgrace".

A BA aircrew strike in 2010 cost the airline up to £7m per day, but Mr Walsh used contract pilots and retrained ground staff on planes.

Mr Walsh stood firm on an airline's decision to withdraw travel perks from striking cabin crew, but staff called the ploy "bullying tactics".

Mr Walsh rejected suggestions the withdrawal of concessions was a "punishment" or an attempt to "break the union".

He added: "We told them about the consequences if they went on strike."

IAG's transformation plan for Iberia includes the fleet being downsized by 25 aircraft and routes cut by 15% in 2013, to concentrate on longer haul, profitable destinations.

Iberia head Rafael Sanchez-Lozano said: "It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability.

"Unless we take radical action to introduce permanent structural change the future for the airline is bleak."

Whilst the possibility of strikes by Iberia staff now loom, passengers booked from Heathrow to Madrid should feel secure, Business Travel News editor-in-chief Malcolm Ginsberg.

"Previously Iberia operated out of Terminal 3 at Heathrow but have now joined sister carrier British Airways in Terminal 5," he told Sky News.

"From a practical point of view if an Iberia flight is cancelled at short notice it should be relatively easy to transfer to British Airways - providing they have space."

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