Grangemouth Refinery Workers 'Reject Deal'

Two-thirds of workers at the Grangemouth oil refinery have refused to accept new terms and conditions, their union says.

Ineos had set a deadline of 6pm on Monday for the workforce to agree to its "survival plan", which amounts to a cut in pension entitlement, overtime pay and redundancy terms.

Without agreement and without fresh investment, management has said it could close the plant by 2017.

Ineos said the Scotland's biggest oil refinery, which has been shut down since last week because of the dispute, is losing £10m a month. 

Ineos Grangemouth site manager Gordon Grant talks with Unite's Pat Rafferty

Ineos group director Tom Crotty told Sky News that the risk of the refinery having to shut permanently was very real and that the workers needed to show commitment to persuade shareholders to increase investment.

He said: "The shareholders will consider the over all view of the workforce and we have to consider have we got enough people supporting the company to make it a viable proposition to restart the plant because we have serious safety concerns over this type of operation.

"It's a big site, three time the City of London, and to restart it we cannot take the risk of having to restart it and then stop it again. It's very risky.

"Until we know we have got the support of the people on the site we cannot do that."

Ineos sent out a letter on Thursday to all 1,350 worker at the plant asking them to either reject or accept the plan, and said that hundreds had agreed to the new deal.

However, according to Unite, 65% of workers had rejected the plan.

Ineos says if workers do not agree, the refinery will close

Unite's Scottish Secretary Pat Rafferty said: "The people who have so far rejected Ineos' ultimatum are the backbone of the plant, the people who keep the site running and the oil flowing.

"The people of Grangemouth and Scotland will be expecting Jim Ratcliffe and the Ineos shareholders to now take heed. Do the right thing tomorrow, drop the threats to the workforce, fire up the plant and get around the table at Acas.

"This is an overwhelming rejection of the company's blackmail and threats. This workforce has said that they want to secure a future for Grangemouth, free from fear, based on negotiation not confrontation."

A shareholders meeting is expected to take place on Tuesday to discuss the dispute.

The plant processes around 200,000 barrels of oil a day and supplies most of Scotland's fuel, however, Ed Davey, the energy secretary has said that the shutdown would not hit petrol and diesel supplies.

Ineos and Unite have been embroiled in a bitter dispute for weeks, initially over the treatment of Unite convenor Stephen Deans, who was involved in the row over a selection of a Labour candidate in Falkirk, where he is chairman of the constituency party.

He was suspended, then reinstated, and is facing an internal investigation, which is due to report on Friday.

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Rescue Plan Leaves Co-op With 30% Bank Stake

The Co-operative Group is to lose overall control of its banking arm amid a funding struggle, Sky sources have confirmed.

The Co-op will be left with only a 30% stake in the bank, according to Sky News City Editor Mark Kleinman.

An announcement is expected to confirm the deal next Monday, with City investors and bondholders filling the funding shortfall.

The growing likelihood of the self-styled ethical lender being controlled by predatory US hedge funds and blue-chip investors such as pension funds and insurers has triggered warnings over the bank's future ethos.

Meanwhile, the bank has confirmed a suspension of listing and trading on the London Stock Exchange of its subordinated debt securities.

"The group has stated that constructive engagement with bondholders is continuing and that Group remains confident that a proposal to recapitalise the bank can be agreed and put to bondholders," it said in a statement.

"The bank expects to request the suspension of the relevant securities to be lifted at the time that full details of a recapitalisation plan are announced."

The Co-op banking division operates as a mutual concept and currently has 4.7m customers. It includes an insurance arm for home, motor and pet cover.

On June 17 the bank, which was founded in 1872, announced it needed to raise £1.5bn to plug the capital black hole.

The bank now admits it needs an additional £105m to deal with increased provision for payment protection insurance (PPI) and other product mis-selling claims, and "expects that many elements of any recapitalisation plan will be materially different".

The recapitalisation from outside the mutual comes after the Co-op previously set aside £269m to compensate customers mis-sold PPI.

The recalculated funding shortfall is due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.

The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.

Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.

The bank said the overall new provision of up to £105m also took into account "the identification of a technical breach of the Consumer Credit Act".

This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.

The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.

Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.

The attempt to plug the £1.5bn black hole in its balance sheet through a painful fundraising will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.

Hedge funds represented by investment banks had earlier demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.

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Energy Regulator Moves To Protect Fixed Rates

The energy regulator has confirmed new rules governing fixed rate energy deals while announcing an £8.5m penalty against Scottish Power over misleading sales techniques.

Ofgem said Scottish Power would pay £7.5m to benefit vulnerable customers and establish a £1m customer compensation fund  for breaching the terms of its market licence between October 2009 and January 2012.

It said Scottish Power provided customers with inaccurate estimations of annual charges and comparisons with their current supplier both on the doorstep and over the phone.

The settlement, the company said, meant that more than 140,000 people on the Warm Home Discount scheme would automatically receive payments of around £50 each.

Scottish Power accepted the failings but said it had now rectified the problems. It stopped door-to-door selling in 2011.

The penalty comes at a sensitive time for the big six energy firms - under fire from customers over inflation-busting increases to bills ahead of winter while politicians scrap over intervention in the market.

To date, three of the firms have announced average rises of between 8 and 11%.

As part of moves to ensure the market acts fairly, Ofgem said new rules were now in force meaning energy suppliers were banned from increasing prices on fixed term tariffs over the course of a contract and banned from automatically rolling householders on to another fixed term offer when their current one ended.

From December 31, firms will have to cut the number of tariffs they offer customer to just four for gas or electricity while from March companies will have to show the cheapest tariff they offer on every customers' bill.

Andrew Wright, Ofgem's chief executive, said: "Ofgem is resetting the energy market in consumers' favour to make it simpler, clear and fairer.

"Today's extra protection for consumers on fixed prices is just one of a range of reforms we are bringing in over the next six months to hold energy companies to higher standards.

"If suppliers fail to deliver, then Ofgem stands ready to take enforcement action to protect consumers.

"In an era of rising prices it is vital that competition works as effectively as possible. Our reforms seek to give consumers the tools they need to find the best energy deal for them and to ensure that suppliers have to treat them fairly.

"Ofgem is going to make it easier for consumers to "vote with their feet" and for new suppliers to enter the market and take on the Big Six.

Now we are looking for energy suppliers to pick up the baton and put their efforts into restoring consumer trust.

"Encouragingly suppliers have shown a willingness to start on this journey by signing up to our reforms and are now acting to implement them."

More follows...

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Co-Op Bank Ups PPI Mis-Selling Gap By £105m

Troubled lender Co-operative Bank has revealed that the cost of a series of failings including its involvement in controversial payment protection insurance policies (PPI) will be up to £105m more than expected.

The bank, which is in the middle of a rescue plan after a £1.5bn black hole was identified in its balance sheet, said it has had to increase its provision for customer redress.

However, it also revealed that regulators say the amount needed to cover the wider issue of the hole in its finances does not need to be increased.

The update comes amid speculation that details of a rescue plan which would have seen Co-op Group retaining a majority stake in the bank while floating a chunk on the London Stock Exchange have been rejected.

More follows...

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Tourist Attraction Firm Merlin In Float Plan

The company behind some of Britain's biggest tourist has announced plans to float on the London stock market.

Private equity-owned Merlin Entertainments, which operates sites including the London Eye, Madame Tussauds and Alton Towers, announced the decision this morning.

It operates 99 attractions in 22 countries and received more than 54 million visitors in 2012.

Analysts believe the firm to be worth as much as £3bn.

Madame Tussauds has been popular as a London attraction for decades

Merlin said the public offer of shares will enable it to pay down debt and plan for the next stage of its development.

The company generated revenues of more than £1bn last year and is Europe's leading visitor attraction operator and the second largest globally after Walt Disney.

Other sites operated by Merlin include Legoland Parks, Chessington World of Adventures and Warwick Castle.

News of an impending float was first revealed by Sky News City Editor Mark Kleinman, last May.

Merlin is owned by Blackstone and CVC Capital Partners, two of the world's biggest buyout firms, and would be likely to head straight into the FTSE 100 given its potential £3bn-plus valuation.

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PM Cheers Somerset Nuclear Power Plant Deal

The Prime Minister has hailed a landmark deal to build Britain's first new nuclear plant in a generation.

The agreement with French-owned EDF Energy will see Hinkley Point C, in Somerset, begin operating in 2023.

David Cameron said: "As part of our plan to help Britain succeed, after months of negotiation, today we have a deal for the first nuclear power station in a generation to be built in Britain.

"This deal means £16bn of investment coming into the country and the creation of 25,000 jobs, which is brilliant news for the South West and for the country as a whole.

The 'strike price' gives EDF a guaranteed rate for producing electricity

"As we compete in the tough global race, this underlines the confidence there is in Britain and makes clear that we are very much open for business."

The Government has been negotiating with French-owned EDF Energy for more than a year over two new plants.

But ministers are likely to face criticism over the £92.50 per megawatt hour that will be paid for electricity produced at the Somerset site - around double the current market rate.

The so-called 'strike price' could fall by £3 if another mooted development at Sizewell goes ahead, allowing for efficiencies in development and testing.

Ed Miliband and George Osborne weighed into the energy debate last week

The contract is due to run for 35 years, with the electric price increasing annually in line with CPI inflation. At full capacity the two reactors could provide up to 7% of the country's energy needs.

It is understood that China General Nuclear Power Group and China National Nuclear Corporation will be investing in the estimated £14bn scheme.

One of the last stumbling blocks to a deal was removed last week when Chancellor George Osborne announced that Chinese firms would be allowed to invest in civil nuclear projects in the UK - even potentially taking a majority stake.

Energy Secretary Ed Davey insisted he had secured "good value" following more than a year of intense negotiations.

The project will cut the UK's carbon emissions by 9 million tonnes a year, and create thousands of jobs.

"We think it would be good value if (the strike price) was a little higher," the Liberal Democrat Cabinet minister said.

Anti-nuclear campaigner, Theo Simon

"I was determined to get them below £90 so I could prove to everybody we had got a good deal...

"What has driven a tougher deal is the fact that I made clear we could walk away from the table. We had other nuclear options."

Energy policy has shot up the agenda since the party conference season, when Labour leader Ed Miliband pledged to freeze retail prices for 20 months.

The funding agreement will almost certainly mean that the new reactor at Hinkley will be a mirror image of the Taishan plant in China.

During a visit to the Taishan plant last week, Mr Osborne said: "It is an important potential part of the Government's plan for developing the next generation of nuclear power in Britain.

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

But anti-nuclear activists living near the site say they have been misled by the decision process to site the plant at Hinkley.

Campaigner Theo Simon told Sky News: "We were told it would mean lower energy bills, but actually the announcement of the strike price is really the last nail in the coffin of this project.

The Chancellor visited a Chinese nuclear power plant last week

"We were told that it would provide cheap energy; we were told it would help us to bridge the energy gap in the early 2000s, and now it seems it won't be built (until) 2025 and we will all be paying for the profits of EDF and Chinese nuclear corporations for the next 40 years."

The issue of prices has become even more controversial with the Big Six power firms unveiling hikes of more than 9% in electricity and gas prices.

Deputy Prime Minister Nick Clegg has raised concerns about the increases, telling Sky News' Murnaghan programme that the energy firms needed to justify prices increases.

"Clearly the companies need to justify the bill increases that they are now announcing," he said.

"It cannot be right that people who are really struggling - many, many people still struggling to pay their weekly, their monthly bills, where electricity and gas bills for this winter are a looming worry.

"It can't be right that those bills are increased for those households in our country and yet it is all rather opaque about what drives these increases."

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HS2 Rail Link: 'Cities Could Lose Up To £220m'

Some cities in the UK could lose as much as £220m if a new high-speed rail link is built, previously unseen figures have shown.

If HS2 goes ahead, it will leave more than 50 areas worse off - details that were omitted from a Government-commissioned report in September, it is claimed.

The full findings of the KPMG study into the north-to-south rail route were released under a Freedom of Information request by the BBC's Newsnight programme.

Last month, the Department for Transport hailed the study, which found the UK economy would be boosted by £15bn a year, with Greater London benefitting by £2.8bn and the West Midlands by £1.5bn.

The project has caused outrage in some areas

But the study shows many areas not on the line - which would connect London to Birmingham and to Manchester and Leeds - will suffer a fall in economic output.

The worst-hit areas will be Aberdeenshire (-£220m), Norfolk East (-£164m), Dundee and Angus (-£96m), Cardiff (-£68m) and Norfolk West (-£56m).

Professor Henry Overman, who was an expert adviser to HS2 Ltd, told the BBC it was obvious that as some areas reap the benefits of being better connected, other places away from the line will pay a price.

The link will cut journey times between the north and south

"When a firm is thinking of where to locate, it thinks about the relative productivity of different places, and the relative wages etc," he said.

"HS2 shifts that around. So if you are on the line, that makes you a better place that hasn't had that productivity improvement."

Alison Munro, chief executive of HS2 Ltd, told Newsnight the figures were unsurprising.

"What this is showing is that the places that are on the high-speed network ... those are the places that will benefit most from high-speed two," she said.

The first phase of HS2 from London to Birmingham

"But high-speed two isn't the only investment that the Government is making. Over the next five years it is planning to spend £73bn on transport infrastructure."

Earlier this month, the Treasury Select Committee said HS2 had "serious shortcomings" and should be put on hold.

It said a "more convincing" economic case was needed for the scheme, which is now estimated to cost £42.6bn - 17% higher than first thought.

A Department for Transport spokeswoman said: "These figures show that the new north south railway is vital to rebalance our economy and it boosts the north overall more than the south. Of course the line does not serve every city and region and these figures reflect that.

"But it is wrong to take them in isolation. HS2 is part of a much bigger boost to our transport system - £73bn in the next parliament, of which HS2 is just £17bn. This will massively benefit places HS2 will not serve long before the line opens."

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Energy Bills: Welby Slams 'Severe' Price Rises

The Archbishop of Canterbury has launched a stinging attack on Britain's energy firms, warning the latest round of price hikes seem to be "inexplicable".

Justin Welby insisted the so-called Big Six energy companies had an obligation to behave morally rather than to simply maximise profit.

His intervention, published in an interview with the Mail on Sunday, came after British Gas followed in the footsteps of SSE by announcing a 9.2% increase in prices.

The head of the Church of England, himself a former oil executive, said he understood the anger the rises had generated.

"The impact on people, particularly on low incomes, is going to be really severe in this, and the companies have to justify fully what they are doing," Mr Welby said.

Last week British Gas announced a 9.2% increase in prices

"I do understand when people feel that this is inexplicable, and I can understand people being angry about it, because having spent years on a low income as a clergyman I know what it is like when your household budget is blown apart by a significant extra fuel bill and your anxiety levels become very high. That is the reality of it."

The Archbishop urged firms to be "conscious of their social obligations", saying they had to "behave with generosity and not merely to maximise opportunity".

"They have control because they sell something everyone has to buy. We have no choice about buying it. With that amount of power comes huge responsibility to serve society," he said.

"It is not like some other sectors of business where people can walk away from you if they don't want to buy your product and you are entitled to seek to maximise your profit.

"The social licence to operate of the energy companies is something they have to take very, very seriously indeed."

Electricity prices are rising faster than those for gas

But the Church Of England owns a significant number of shares in energy companies.

Sky's Chief Political Correspondent Jon Craig said: "Justin Welby has now joined in this increasingly politically charged debate about energy prices - the only embarrassment really for the Church of England really is that it owns more than £7m of shares in Centrica and about £6m of shares in SSE.

Craig added: "The remarks have been welcomed already by the Labour Party - but they will infuriate government ministers, the Prime Minister and the Energy Secretary."

An ongoing bitter political spat over energy has seen Labour leader Ed Miliband attempt to seize the initiative by pledging a 20-month-long price freeze.

But Prime Minister David Cameron has dismissed the idea as a "con", and encouraged consumers to switch suppliers to keep bills down.

But polls have suggested that Labour's promise is popular with voters, putting pressure on the coalition to respond.

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JPMorgan Facing Record £8bn Fine: Reports

One of America's biggest banks is facing a record $13bn (£8bn) fine for mis-selling mortgage-backed securities in the run up to the 2008 financial crisis, say US reports.

A tentative deal has reportedly been reached between JPMorgan and the US Justice Department.

Last month, the bank was fined more than £600m over the "London Whale" trading scandal arising from disastrous trades by former bank employee Bruno Iksil.

If the deal is finalised, it would be the biggest settlement of its kind ever paid by a US company.

The agreement was reached by Attorney General Eric Holder, Associate Attorney General Tony West, JPMorgan CEO Jamie Dimon and the bank's general counsel Stephen Cutler in a phone call on Friday night, according to the Wall Street Journal.

It does not resolve a criminal investigation into the bank's conduct being handled by federal prosecutors in Sacramento, California, according to the reports.

On Friday night, Mr Holder told the bank that a non-prosecution agreement was a non-starter, meaning the Justice Department will continue its criminal investigation into JPMorgan.

JPMorgan executives give evidence over the 'Whale' losses to US Senate

As part of the deal, the Justice Department expects the bank to co-operate with its probe into the sale of overvalued mortgage-backed securities, which were blamed for the near-collapse of the banking system in 2007.

JPMorgan spokesman Brian Marchiony and Justice Department spokesman Brian Fallon declined to comment on the reports.

Of the $13bn, $9bn is fines and $4bn will go to consumer relief for struggling home-owners, it is claimed.

When the US housing bubble burst in 2007, bundles of mortgages sold as securities turned sour and the investors who bought them lost billions.

In the aftermath, public outrage boiled over that no high-level Wall Street executives had been sent to jail.

Some lawmakers and other critics demanded that the big bailed-out banks and senior executives be held accountable.

In response, the US government set up a task force of federal and state law enforcement officials to pursue wrongdoing with regard to mortgage securities.

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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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