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."

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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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Debt Time Bomb? New Record Sum 'On Tick'

Mortgage approvals have hit their highest level since February 2008, while total household debt reached a new record last month, according to the Bank of England.

The Bank said 67,701 home loans worth £10.5bn were dished out in October - just 24 hours after confirming that its Funding for Lending Scheme (FLS) would no longer support mortgage borrowing from January to help prevent the market overheating and future debt risks.

It also highlighted rising consumer debt levels in separate figures which reflected concern over the property market, as total household debt hit a new high of £1.43trn in October.

The figures add weight to fears of a "perfect storm" for the economy amid unsustainable debt levels, rising prices and low wage growth.

Earlier this week, the Money Advice Service reported that only a fraction of the nine million people with serious debts were getting help.

People concerned about debts are advised to seek free help from charities

Nationwide said earlier on Friday that a monthly house price increase of 0.6% in November took average UK values to £174,566 from £173,678 in October, although prices were still around 6% below their 2007 peak.

A shortage of property on the market and incentives to help borrowers under Government schemes such as Help to Buy have been cited as reasons for national price growth, though it has been largely driven by soaring values in London and the South East.

Yesterday, the Bank of England took the first step in putting the brakes on the property market as it scrapped an initiative that has had a significant part to play in encouraging mortgage lending.

Governor Mark Carney said the FLS stimulus would instead focus purely on helping small business borrowing, which remains muted.

FLS has offered lenders access to cheap finance on condition that they pass on the benefits to borrowers, and experts yesterday said the Bank's move could spell the "beginning of the end" for ultra-cheap mortgage deals.

Nationwide provides a respected monthly report on house prices

Fears of a looming property bubble have been growing in recent months amid a string of reports suggesting demand in the housing market far outstrips the growth in the supply of homes.

The latest phase of Help to Buy, which offers state-backed mortgages to people with deposits as low as 5%, was launched in October.

This is expected to inject further activity into the market among credit-worthy buyers who have particularly struggled to get on the housing ladder or move up it since the financial crisis struck because they have a lack of upfront funds.

Lenders representing around two-thirds of the mortgage market have committed to coming on board the scheme and there are also signs of competition increasing to attract low-deposit borrowers from lenders which are outside the Help to Buy scheme.

The expansion in mortgage lending comes at a time of growing concerns about wider household debt, which hit a new high of £1.43trn in October - slightly above the total registered in 2009.

But the bank's figures showed a sharp drop in growth of consumer credit, made up of lending on credit cards, personal loans and overdrafts - growing by £457m over the month, halving a £1.1bn rise the previous month.

Experts suggested the figure was a sign that people remain wary of taking on more debt, despite some evidence of increasing confidence in recent months.

Matthew Pointon, a property economist at Capital Economics, said the mortgage lending and credit figures suggested that household finances were "not strong enough" to support a countrywide house-price boom.

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Bankers' Pay: Top Earners Net 35% Rise

The number of high earners in British banks rose 11% last year, with more than 2,700 people raking in above €1m (£833,000) at an average £1.6m - a rise of 35%.

The revelation from the European Banking Authority (EBA) threatens to reignite the row on bankers' pay in the wake of the financial crisis and various mis-selling and misconduct scandals.

News of the average total 2012 pay - including salaries, pensions and bonuses - for London's top earning bankers sparked a bitter response from the TUC.

The union organisation's general secretary Frances O'Grady said: "Britain's bankers are not suffering a cost of living crisis.

"The economic crash has led to the longest decline in living standards since the nineteenth century for ordinary people yet the bankers who caused it get richer every year."

According to the EBA, more than 3,500 bankers in Europe earned €1m or more in total - representing a big rise across the EU as a whole though Britain, with its larger financial services industry, had 12 times as many high earners as any other country.

The figures were released as the EU prepares to introduce caps, which would have easily been broken in London.

Regulators in Brussels decided that from 2014 bonuses for "risk-taking" staff can not exceed annual salary, or twice that if shareholders give their approval.

The data showed that banks in Britain and France in particular needed to adjust pay structures to meet new the rules because variable pay was almost four times fixed pay.

At least 10,000 bankers, most of them in London, are expected to be affected by the new bonus cap.

Banks such as Barclays, Deutsche Bank and HSBC are expected to cut bonuses and raise fixed pay to comply with the new rules.

The EBA figures, part of data-gathering efforts as the EU finalises the bonus cap rules, offer a rare glimpse into the pay of bankers across Europe.

Of the British bankers earning more than €1m, 2,188 worked in investment banking, 62 were in retail banking, 198 were in asset management and 266 were in other areas.

In Spain, which had to bail out its banking sector last year, the number earning at least €1m fell by a fifth to 100.

However, the average remuneration for those 100 was €2.2m, higher than Britain and Germany.

The figures include high earners from employees based in each country, rather than the domicile of the bank, so the UK figures - because of its dominance in financial services - include high earners from international lenders such as Goldman Sachs and JPMorgan.

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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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Annual UK House Price Growth 'Hits 6.5%'

The rate of annual house price growth accelerated to 6.5% in November, its fastest pace since July 2010 according to Nationwide.

The monthly survey suggested prices have now risen every month for the last year but the surge could now be threatened after the Bank of England confirmed on Thursday that its Funding for Lending Scheme (FLS) would no longer support mortgage borrowing from January.

Nationwide said the latest monthly house price increase of 0.6% took average UK values to £174,566 from £173,678 in October.

Its chief economist Robert Gardner said it was important to point out that prices were still around 6% below their 2007 peak.

He said: "Activity in the housing market has picked up strongly in recent months. The number of mortgage approvals for house purchase reached 66,735 in September, 34% higher than the same period of 2012.

A large part of the improvement can be attributed to further improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers."

A shortage of property on the market and incentives to help borrowers under Government schemes such as Help to Buy have been cited as reasons for national price growth, which has soared in London and the South East.

Yesterday, the Bank of England took the first step in putting the brakes on the property market as it scrapped an initiative that has had a significant part to play in encouraging mortgage lending.

Governor Mark Carney said the FLS stimulus would instead focus purely on helping small business borrowing, which remains muted.

FLS has offered lenders access to cheap finance on condition that they pass on the benefits to borrowers, and experts yesterday said that the Bank's move could spell the "beginning of the end" for ultra-cheap mortgage deals.

Fears of a looming property bubble have been growing in recent months amid a string of reports suggesting demand in the housing market far outstrips the growth in the supply of homes.

London in particular has seen strong demand this year, and Land Registry figures released on Thursday showed that house prices in London were up by 8.7% year-on-year in October.

But the market remains patchy and prices in the North East have dropped by 3.1% year-on-year, according to the registry.

The latest phase of Help to Buy, which offers state-backed mortgages to people with deposits as low as 5% was launched in October and this is expected to inject further activity into the market among credit-worthy buyers who have particularly struggled to get on the housing ladder or move up it since the financial crisis struck because they have a lack of upfront funds.

Lenders representing around two-thirds of the mortgage market have committed to coming on board the scheme and there are also signs of competition increasing to attract low-deposit borrowers from lenders which are outside the Help to Buy scheme.

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