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Osborne Claims 'Real Win' Over £1.7bn EU Bill

Written By iwan Jundaedi on Minggu, 09 November 2014 | 11.46

George Osborne has described his efforts to cut the surcharge Britain will pay towards the European Union budget as a "real win" after being accused by Labour of "trying to take the British people for fools".

The Chancellor and the Prime Minister claimed to have halved the UK's £1.7bn bill from the EU but critics said the reduction would have been achieved by bringing forward a rebate to which the UK would have been entitled anyway.

Mr Osborne and Mr Cameron have argued that it was not certain that the rebate would apply to the surcharge, which was demanded after a recalculation of Britain's gross national income relative to the other 27 member states, until the deal was struck in a summit with fellow EU finance ministers in Brussels.

The Chancellor defended their stance, saying: "Everyone said we were going to have to pay £1.7bn (but) instead we are going to have to pay half that so no-one should be in any doubt this is a real win for Britain."

He added: "It shows this Government can deliver for Britain in Europe.

Video: Cameron: 'Good News' On EU Bill

"Every time the Government sets out the goals it wants to achieve in Europe people say they're impossible to achieve.

"When we do achieve them, like cutting the European budget or getting out of the bailouts or now reducing this bill, people say that was inevitable. Well people shouldn't be in any doubt, it's a real win."

Labour has claimed the deal does not save the UK "a single penny", while the Chancellor's European counterparts also appeared to contradict his account of the deal.

Irish finance minister Michael Noonan said he believed that the UK "will pay the whole amount" while Dutch finance minister Jeroen Dijsselbloem said "it's not as if the British have been given a discount".

The European Commission's vice-president with responsibility for the budget, Kristalina Georgieva, said the additional contribution being demanded from the UK meant that its rebate was also increased, leading to a "downward correction" in the overall sum to be paid.

Shadow Chancellor Ed Balls said: "David Cameron and George Osborne are trying to take the British people for fools.

Video: A Surcharge Victory Or Just Spin?

"Ministers have failed to get a better deal for the British taxpayer. Not a single penny has been saved for the taxpayer compared to two weeks ago when David Cameron was blustering in Brussels.

"By counting the rebate Britain was due anyway, they are desperately trying to claim that the backdated bill for £1.7bn has somehow been halved. But nobody will fall for this smoke and mirrors.

"The rebate was never in doubt and, in fact, was confirmed by the EU Budget Commissioner last month."

UKIP leader Nigel Farage said: "Osborne (is) trying to spin his way out of disaster.

"Borrowing what we are rightfully owed in the future to pay an unfair bill being levied now is not a victory. It's a sham."

The bill is now due to be paid after the next General Election, rather than on 1 December as originally demanded by the EU.


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Royal Mail In Stand-Off Over MPs' Inquiry

By Mark Kleinman, City Editor

Royal Mail has been secretly resisting pressure from MPs for it to appear alongside rival postal operators as part of a new probe into competition in the industry.

Sky News has learnt that Royal Mail made representations to the Business, Innovation and Skills (BIS) Select Committee requesting that it should not be forced to give evidence during the sale session as Whistl and UK Mail.

Sources said that Moya Greene, Royal Mail's chief executive, would appear before the Committee on 26 November, adding that the MPs had refused to bow to the company's desire for it to appear separately.

The row is the latest development in Royal Mail's efforts to persuade politicians and regulators to commit to reforms that it says are necessary to protect the Universal Service Obligation (USO), which obliges it to deliver to every UK address for a fixed price.

"This decision might make good theatre but it won't make for good analysis of the issues," a source said on Friday.

The BIS Committee announced the launch of its inquiry in September following complaints from the privatised Royal Mail that its ability to meet its USO obligations is being undermined by the expansion plans of Whistl, the rebranded TNT Post.

Sky News also understands that Dave Ward, a senior official at the CWU union, has also been asked to appear before MPs this month, while Ed Richards, Ofcom chief executive, will give evidence in early December.

The hearings will mark the latest phase of an intensive period of lobbying by Ms Greene, who has been vocal in her criticism of the industry's regulatory regime.

Last month, she and her chairman, Donald Brydon, attended an Ofcom board meeting to warn that a review of postal markets planned for the end of next year must be accelerated to safeguard the USO.

Since listing on the stock market as part of its contentious £3.3bn privatisation last year, Ms Greene has complained that Whistl's expansion plans could cost Royal Mail £200m in lost revenue by 2017.

Ofcom is expected to decide whether to bring forward its assessment shortly.

Reiterating previous statements on the issue, a spokesman for the regulator said: "Protecting the universal service is at the heart of Ofcom's work, and our own evidence clearly shows that the service is not currently under threat.

"We are listening to the views of Royal Mail and other parties regarding competition in the market. We would assess any emerging threat to the service quickly, in the interests of postal users."

Royal Mail's shares have had a bumpy ride since last autumn's sale by the Government.

They initially surged, leading to accusations that Vince Cable, the Business Secretary, had cost the taxpayer £1bn by underpricing them.

However, the UK regulatory framework, an impending financial settlement with French competition authorities and the growing impact of greater competition - exemplified by Amazon UK's recent launch of a same-day delivery service - have weighed on Royal Mail shares in recent months.

On Friday, they were trading at just over 462p, down 20% during the last 12 months but exactly 40% higher than the price at which they floated last year.

Taxpayers continue to own 30% of Royal Mail, although there is little prospect of a sale of the remaining shares ahead of next year's General Election.


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UK 'Halves' EU Surcharge, Osborne Says

Written By iwan Jundaedi on Sabtu, 08 November 2014 | 11.46

Britain will pay the European Union £850m of the £1.7bn surcharge it had demanded, Chancellor George Osborne has said.

After meeting European finance ministers in Brussels he said the deal - which means the bill will be paid in two interest-free instalments after next year's election - was "far beyond what anyone expected us to achieve".

"Instead of footing the bill we have halved the bill, we have delayed the bill, we will pay no interest on the bill and if there are any mistakes in the bill we will get our money back," he said.

Critics accused Mr Osborne of resorting to "smoke and mirrors", saying that the reduction had been achieved only by bringing forward a rebate to which the UK would have been entitled anyway.

Shadow chancellor Ed Balls said the deal had not saved the UK "a single penny" and accused Mr Osborne and the Prime Minister of "trying to take the British people for fools".

Video: Has Surcharge Really Been Halved?

Prime Minister David Cameron claimed it was a victory for Britain and praised his Chancellor for securing the deal. 

Sky's Europe Correspondent Robert Nisbet says it appears the EU will still get the full £1.7bn as a result of what he said some would call "clever accounting".

Nisbet explained: "Next year there will be two instalments that will equal £850m that will be paid to Brussels by the UK and it will get its rebate in full. So far, so good.

"But what will happen in 2016 is that an extra rebate based on increased VAT receipts will be used to settle the rest of the bill.

Video: Cameron: 'Good News' On EU Bill

"That allows the EU to claim it's getting its money, the UK to claim it's negotiated a great deal for Britain and for opposition parties to cry foul."

A Number 10 source insisted there was "no guarantee the rebate would have applied to this" before the deal was struck, and added: "Our view is that this is a very good deal."

However, Conservative MEP Daniel Hannan suggested the devil was in the detail, saying: "The EU sticks us with a bill. Ministers double it, apply the rebate, return to the original figure and claim victory. We're meant to cheer?

"Britain is worse off in absolute terms, but a straw man has been knocked down. A prelude to how the pro-EU side will fight the referendum."

Video: Migrant Movements 'Not Unqualified'

UKIP leader Nigel Farage wrote on Twitter: "Osborne trying to spin his way out of disaster. UK still paying full £1.7 billion, his credibility is about to nose dive."

Mr Osborne said that EU rules would now be changed forever "so this never happens again", claiming he had got his EU counterparts to agree to changing the system for calculating adjustments to member states contributions.

The PM earlier warned there would be a "major problem" if Brussels insisted on Britain paying the bill in full.

Mr Cameron went on the offensive after a meeting with other European leaders in Finland, saying Britain would not pay "anything like" the full amount ahead of a looming 1 December deadline.

Video: How Is The UK Seen In Europe?

The demand was made by Brussels after a recalculation of Britain's gross national income in relation to other EU states.


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Royal Mail In Stand-Off Over MPs' Inquiry

By Mark Kleinman, City Editor

Royal Mail has been secretly resisting pressure from MPs for it to appear alongside rival postal operators as part of a new probe into competition in the industry.

Sky News has learnt that Royal Mail made representations to the Business, Innovation and Skills (BIS) Select Committee requesting that it should not be forced to give evidence during the sale session as Whistl and UK Mail.

Sources said that Moya Greene, Royal Mail's chief executive, would appear before the Committee on 26 November, adding that the MPs had refused to bow to the company's desire for it to appear separately.

The row is the latest development in Royal Mail's efforts to persuade politicians and regulators to commit to reforms that it says are necessary to protect the Universal Service Obligation (USO), which obliges it to deliver to every UK address for a fixed price.

"This decision might make good theatre but it won't make for good analysis of the issues," a source said on Friday.

The BIS Committee announced the launch of its inquiry in September following complaints from the privatised Royal Mail that its ability to meet its USO obligations is being undermined by the expansion plans of Whistl, the rebranded TNT Post.

Sky News also understands that Dave Ward, a senior official at the CWU union, has also been asked to appear before MPs this month, while Ed Richards, Ofcom chief executive, will give evidence in early December.

The hearings will mark the latest phase of an intensive period of lobbying by Ms Greene, who has been vocal in her criticism of the industry's regulatory regime.

Last month, she and her chairman, Donald Brydon, attended an Ofcom board meeting to warn that a review of postal markets planned for the end of next year must be accelerated to safeguard the USO.

Since listing on the stock market as part of its contentious £3.3bn privatisation last year, Ms Greene has complained that Whistl's expansion plans could cost Royal Mail £200m in lost revenue by 2017.

Ofcom is expected to decide whether to bring forward its assessment shortly.

Reiterating previous statements on the issue, a spokesman for the regulator said: "Protecting the universal service is at the heart of Ofcom's work, and our own evidence clearly shows that the service is not currently under threat.

"We are listening to the views of Royal Mail and other parties regarding competition in the market. We would assess any emerging threat to the service quickly, in the interests of postal users."

Royal Mail's shares have had a bumpy ride since last autumn's sale by the Government.

They initially surged, leading to accusations that Vince Cable, the Business Secretary, had cost the taxpayer £1bn by underpricing them.

However, the UK regulatory framework, an impending financial settlement with French competition authorities and the growing impact of greater competition - exemplified by Amazon UK's recent launch of a same-day delivery service - have weighed on Royal Mail shares in recent months.

On Friday, they were trading at just over 462p, down 20% during the last 12 months but exactly 40% higher than the price at which they floated last year.

Taxpayers continue to own 30% of Royal Mail, although there is little prospect of a sale of the remaining shares ahead of next year's General Election.


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Petrol Price Cuts Demanded By Treasury

Written By iwan Jundaedi on Jumat, 07 November 2014 | 11.46

A failure by petrol firms and supermarkets to pass on the full benefit of falling oil prices to customers filling up at the pumps would be an "outrage", a Cabinet Minister has warned.

Treasury Chief Secretary Danny Alexander has demanded guarantees from fuel companies and distributors that they were doing all they could to pass on the price cuts to hard-pressed motorists.

His comments came as Asda announced it would be cutting the price of petrol and diesel by 1p to 119.7pm and 123.7p a litre.

Asda said it was the first time its petrol had gone under 120p a litre in four years.

Video: Chancellor On Petrol Prices

It triggered a supermarket price war and Sainsbury's and Tescos quickly followed suit with 1p cuts of their own.

At a speech in Aberdeen, Mr Alexander said consumers felt petrol prices rise "like a rocket" when oil costs went up, but fall "like a feather" when they came down.

And he said people would "rightly be angry" if they felt prices were not coming down as much as they should.

Brent crude slumped as low as $82 (£51) a barrel earlier this week, its lowest level in just over four years due to concerns about over-supply.

The Liberal Democrat frontbencher will say: "Especially in the current economic circumstances people would rightly be angry if they feel that pump prices don't fall as much as they should on the back of falling oil prices."

However, investigations into the failure to pass on the fall in the price of oil has been inconclusive.

Video: 'We Still Pay Too Much For Fuel'

Mr Alexander has written to the industry's major players "seeking their assurance that they are doing all they can to pass on the benefit of falling oil prices as quickly as possible".

He said: "When the price of oil falls, the public have a right to expect pump prices to fall like a stone, not a feather."

Motoring organisations were quick to say there was more then Government could do that just put pressure on oil firms.

RAC Foundation director Professor Stephen Glaister said: "It is encouraging that Mr Alexander shares the concerns of the nation's drivers but in a way he is passing the buck.

"The biggest driver of pump prices remains the Government. Well over 60% of the price is tax."

AA president Edmund King said: "They themselves could do more.

Video: Cuts: A Loss Leader Or Real Deal?

"First, policies to help strengthen the pound by just 10 cents against the dollar would double the potential for a 2p-a-litre fall in the price of petrol to 4p.

"Secondly, the Government's failure to introduce fuel price transparency, showing the relationship between oil, wholesale and pump prices, has helped no one."

Shadow chief secretary to the Treasury Chris Leslie said: "Of course it's right that drivers should benefit from falling oil prices with lower prices at the pumps.

"But since 2011 people have paid 3p more on every litre of petrol because the Lib Dems broke their promise and backed the Tories in raising VAT."


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Banks' Fury Over FCA Foreign Exchange Fines

By Mark Kleinman, City Editor

Some of the world's biggest banks are resisting details of plans being drawn up by the City regulator to fine them for failings in their foreign currency operations.

Sky News has learned that a number of the six banks in talks with the Financial Conduct Authority (FCA) about a settlement are angry that the spread between the biggest and smallest penalties is in the low tens of millions of pounds.

They are understood to have expressed concern that there will be little distinction between the six in terms of reputational damage despite the fact that the scale of misconduct is understood to have varied markedly between them.

Sources indicated on Thursday that the FCA fines, which could be announced as soon as this month, are likely to range from approximately £225m at the lower end to approximately £250m at the other extreme.

During talks with the six banks, Martin Wheatley, the FCA chief executive, is understood to have informed them that a large proportion of the fines is the result of misconduct by foreign currency traders having taken place after the Libor rate-rigging scandal was exposed in the summer of 2012.

"The FCA is arguing that all of the banks should have heeded the warning after Libor emerged as an issue, whether they were punished for manipulating [Libor] or not," said one source.

It was unclear how the six banks - Barclays, Citi, HSBC, JP Morgan, Royal Bank of Scotland and UBS - would be ranked by size of fines.

The final penalties have yet to be formally agreed and the numbers are still moving around, according to sources close to the discussions.

However, the aggregate FCA fine is now thought to be likely to be in the region of £1.4bn.

During the last 10 days, Barclays, HSBC and RBS have made provisions in their accounts worth just over £1.1bn as they brace for the regulatory settlements.

The provisions followed similar moves from Citigroup, UBS and JP Morgan, which came in the wake of talks held between the banks and the FCA in September.

The so-called omnibus settlement will be the largest collective penalty ever imposed by the City watchdog.

The FCA will find the banks guilty of a string of systems and control failures in their foreign exchange businesses, although the timetable for the settlement, which is partly dependent upon whether the banks settle simultaneously with US regulators, could yet slip.

The FCA and the banks declined to comment.


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Cable Concerns Over Tesco 'Supplier Squeeze'

Written By iwan Jundaedi on Kamis, 06 November 2014 | 11.46

By Mark Kleinman, City Editor

Vince Cable has raised concerns about Tesco's treatment of its supplier base, intensifying the pressure on Britain's biggest retailer as it battles to contain the fallout from its £263m accounting scandal.

Sky News has learnt that the Business Secretary wrote to the supermarket industry ombudsman in recent weeks to express support for a comprehensive review of the way Tesco deals with suppliers and whether its approach may have contributed to the shock profit overstatement.

In a letter to the Groceries Code Adjudicator (GCA), Christine Tacon, Mr Cable is understood to have said that while it was important not to prejudge her review of the matter, it would be an important exercise and closely watched by both suppliers and consumers.

Mr Cable's intervention underlines the interest in Westminster in the crisis at Tesco, which deepened last week when the Serious Fraud Office (SFO) confirmed Sky News' report that it was launching a criminal investigation into the issue.

The GCA was set up by Mr Cable two years ago amid growing anxiety about the treatment of suppliers by the major UK grocers.

Video: Tesco Faces Criminal Investigation

The Business Secretary is understood to have expressed concerns about Tesco's reputation for behaving robustly towards the companies which supply it, many of which are small or medium-sized businesses reliant on their contracts with the retailer.

He is also said by allies to be keen to examine whether aggressive accounting practices are connected to the way in which Tesco's supply chain is perceived to be squeezed by it.

Ms Tacon said in September that she would monitor the situation.

"I have requested that compliance with the Groceries Supply Code of Practice is included in the scope of the internal investigation and I have asked to be notified if Tesco starts to find practices which might breach the Code," she said.

"The GCA will take a decision on next steps based on the evidence."

Dave Lewis, Tesco's new boss, said last month that the £263m profits overstatement related to the premature recognition of revenues from suppliers, which make payments to retailers based on the sale of their products and the scale of promotional activity supporting them.

Video: Tesco's Woes In Detail

Eight executives, including the UK managing director Chris Bush, have been asked to stand aside pending the outcome of the investigations into the accounting mis-statement.

Deloitte, the accountancy firm, and Freshfields, Tesco's legal adviser, undertook a preliminary investigation, which was passed to the Financial Conduct Authority (FCA). The City watchdog dropped its own inquiry when the SFO confirmed that its probe was underway.

Mr Lewis, who replaced the ousted Philip Clarke, unveiled a fall in half-year profits of more than 90% last month, underlining the scale of the task ahead as the company battles to recapture market share lost to discounters such as Aldi and Lidl.

Tesco has also been deserted by some of its leading shareholders, including the US-based Harris Associates and Warren Buffett's Berkshire Hathaway, amid concern over its strategy and the state of its balance sheet.

The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each, with the sale of some of its assets likely in the coming months.


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Petrol Price Guarantees Demanded By Treasury

A failure by petrol firms and supermarkets to pass on the full benefit of falling oil prices to customers filling up at the pumps would be an "outrage", a Cabinet Minister will warn.

Treasury Chief Secretary Danny Alexander is to demand guarantees from fuel companies and distributors that they are doing all they can to pass on the price cuts to hard-pressed motorists.

Mr Alexander will use a speech in Aberdeen to say consumers feel petrol prices rise "like a rocket" when oil costs go up, but fall "like a feather" when they come down.

And people would "rightly be angry" if they felt prices were not coming down as much as they should.

Video: Cuts: A Loss Leader Or Real Deal?

Brent crude slumped as low as $82 (£51) a barrel earlier this week, its lowest level in just over four years due to concerns about over-supply.

The Liberal Democrat frontbencher will say: "Especially in the current economic circumstances people would rightly be angry if they feel that pump prices don't fall as much as they should on the back of falling oil prices.

"I believe it's called the rocket and feather effect.

"The public have a suspicion that when the price of oil rises, pump prices go up like a rocket.

"But when the price of oil falls, pump prices drift down like a feather.

"This has been investigated before and no conclusive evidence was found.

"But even if there were a suspicion it could be true this time it would be an outrage."

Mr Alexander promises to write to the industry's major players "seeking their assurance that they are doing all they can to pass on the benefit of falling oil prices as quickly as possible".

He will say: "When the price of oil falls, the public have a right to expect pump prices to fall like a stone, not a feather."

Pointing to the Treasury's fuel duty freeze, Mr Alexander will say: "I have made sure over the last four years that Government has helped with the cost of fuel.

"And when the oil price falls, industry must do all it can to help too."


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Banks Call Off Effort To Stall Industry Probe

Written By iwan Jundaedi on Rabu, 05 November 2014 | 11.46

By Mark Kleinman, City Editor

Britain's biggest banks have abandoned efforts to head off a full-blown competition inquiry following a lukewarm response from regulators.

Sky News understands that the Competition and Markets Authority (CMA) will announce on Thursday that it is proceeding with a formal probe into the supply of banking services to small and medium-sized companies (SMEs) and personal current accounts.

The decision is understood to have been approved by the CMA board last month.

An inquiry, which could last for up to two years, will kick the politically sensitive issue of banking competition into the post-general election long grass.

The four largest banks collectively supply more than three-quarters of personal current accounts and an even higher proportion of banking services to SMEs.

Insiders said anything other than a decision to launch a full probe would have been unexpected given the small number of occasions on which the competition watchdog had reversed provisional findings.

It will, however, also prolong uncertainty for investors in big UK banks more than three years after the Independent Commission on Banking unveiled reform proposals intended to stimulate competition in the industry.

Announcing its provisional decision to make a market investigation reference in July, the CMA said it had been presented with a package of remedies to improve SME competition by the four lenders which collectively dominate the industry.

"The CMA is...particularly interested in hearing views on the 'in principle' proposals to remedy suspected problems in the SME banking sector that have been put forward by Barclays, HSBC, Lloyds Banking Group and the Royal Bank of Scotland Group, which they consider should be implemented instead of a market investigation reference being made.

"These proposals would involve those banks giving the CMA undertakings to set up a comparison website to improve transparency; to establish new account opening standards to make it easier for SMEs switching banks to open accounts; and to take certain promotional measures to facilitate comparability and switching."

The regulator said at the time that it believed that a full investigation would be "more appropriate" than accepting the banks' proposals but said it remained "open to views".

Insiders said, however, that there had been no further substantive discussions about the remedies and that the quartet of banks had effectively "downed tools" on work about how they would be implemented.

No meaningful responses suggesting that the CMA should accept the remedies had been received by the authority, they added.

Ed Miliband, the Labour leader, has pledged to break up the biggest banks by forcing them to sell significant numbers of branches if he becomes Prime Minister.

A person close to the CMA played down the prospect of a full break-up of the banks as a way of boosting competition, however.

The CMA declined to comment ahead of Thursday's announcement.


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Holiday Pay Should Include Overtime

Overtime should be taken into account when holiday pay is calculated, the Employment Appeal Tribunal has ruled.

The tribunal ruled on two cases against Hertel UK and BEAR Scotland, which related to the UK's interpretation of the Working Time Directive.

Workers for these companies claimed their holiday pay was less than it should have been because their employers did not factor in voluntary overtime completed in the period prior to time off.

Brian Gordon, managing director BEAR Scotland, said they were "disappointed" by the decision.

"We believe that this interpretation of the Working Time Directive is significant for all UK employers, public and private, and we will reflect on our position before considering how to respond," he said

Video: Is Ruling Good For Britain?

But unions welcomed the ruling, with Unite executive director Howard Beckett saying: "Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to.

"This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order."

Business groups have described the ruling as a "blow" to business, with Confederation of British Industry director-general John Cridland warning of "punitive costs potentially running into billions of pounds".

"Not all will survive - which could mean significant job losses," he said.

"These cases are creating major uncertainty for businesses and impacting on investment and resourcing decisions.

"We need the UK Government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face."

Tim Thomas, head of employment policy for manufacturers' organisation EEF, said firms will have little option but to factor the additional costs in to future pay negotiations and to reduce overtime, while one in four could cut jobs.

Some businesses had already prepared for the worst, with John Lewis setting aside £40 million to reimburse workers. 

Business Secretary Vince Cable told Sky News: "Our preliminary assessment is that the impact is likely to be modest."

When asked by Business Presenter Ian King whether the ruling could lead to job losses, he said: "If there is a very substantial cost to business, then that may well be the result, and we would very much regret that."

The Lib Dem confirmed a taskforce has been set up to discuss how to limit the impact of the decision for businesses, adding: "Employers and workers can also contact the Acas helpline for free and confidential advice."


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