Nestlé Chair Warns Over UK Exit From Europe

By Mark Kleinman, City Editor, in Davos

The consumer goods giant Nestle would be forced to re-evaluate the extent of its presence in the UK if Britain decided to leave the European Union, its chairman has told Sky News.

In an interview during the World Economic Forum in Davos, Peter Brabeck-Letmathe said the company was committed to its business in the UK but that he could not envisage a separation from its biggest trading partner being in the country's interest.

Nestle, which makes Nespresso coffee capsules and Kit-Kat chocolate bars, employs approximately 8,000 people in the UK and accounts for exports worth roughly £400m. Its other brands include Nescafe, Smarties and Yorkie.

"From a purely economic point of view, I can't see that the withdrawal of the UK [from the EU] would be favourable for any UK industries," Mr Brabeck-Letmathe, an Austrian, said.

"It would isolate the UK economically. Every company would be forced to re-evaluate the implications of investing in the UK. It would no doubt have an impact on its ability to supply European markets."

The warning, ahead of a likely referendum on Britain's EU membership in 2017, echoes the views of many of the multinational business leaders gathered in Davos.

Prime Minister David Cameron told Sky News on Thursday that he did not believe the Government's stance on EU membership was jeopardising inward investment, saying that companies had been "voting with their feet".

He said: "The argument I make with these business leaders is that the best thing for Britain would be to secure our place within a reformed European Union.

"Simply saying 'let's hope this issue goes away, let's hope that Europe sorts itself out', without doing anything, won't work.

"We need to get in there, change Europe, make it work better, make it more competitive, make it more flexible - help make Britain more comfortable with its membership, have that referendum and then settle this issue."

Mr Brabeck-Letmathe, who also chairs the parent company of Formula One motor racing, said the EU and its single currency had been "an incredible success".

"The EU is full of failures and weaknesses like any large institution, but its achievements are greater. We have to work to strengthen the internal market."

He suggested that the trading bloc's governing mechanisms required reforms such as shrinking the number of EU Commissioners.

"The current system is not an efficient way to run it," he said.

In addition to his corporate roles, Mr Brabeck-Letmathe has also been a leading advocate of water stewardship in large companies, and unveiled new measures this week aimed at improving global water sustainability.

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Non-EU Banks Slip Through Bonus Cap Loophole

By Mark Kleinman, City Editor in Davos

Major global banks such as Morgan Stanley and Nomura are benefiting from a loophole in new European pay rules that could leave British rivals at a big disadvantage.

Sky News understands that banks based outside the European Union (EU) are able to approve bigger bonuses for employees of their subsidiaries in the trading bloc without recourse to external shareholders.

That means Wall Street and Asian banks can instantly consent to variable pay for senior staff worth double the level of their salaries, the maximum permissible under the new EU cap.

However, Barclays, HSBC and other British banks will have to put the same measure to their annual investor meetings. Without approval, they will not be able to award bonuses worth more than 100% of salaries in any one year.

UK banks such as Barclays may be left at a disadvantage over bonuses

Sources said that banks including Bank of America Merrill Lynch and Goldman Sachs had formally discussed the issue at their group remuneration committees "to ensure appropriate corporate governance". Both had already given approval for the 200% cap, they added.

In practice, the UK banks will not be disadvantaged if shareholders back motions at this year's AGMs allowing them to pay bonuses at the higher level.

However, the fact that international rivals have already been able to give staff certainty about their pay from this year onwards was proving to be a valuable recruitment tool, bankers say.

Sky News has revealed in recent weeks the details of plans by Barclays, Goldman, HSBC and Morgan Stanley to raise base salaries through monthly or quarterly allowances for senior staff.

George Osborne, the Chancellor, is aware of the loophole benefiting non-EU banks, aides said on Friday.

Mr Osborne is fighting the ratio cap in the courts, and one senior Treasury official said that while the Government is confident that it has "a decent legal case", recent defeats to Brussels had left it only mildly optimistic about emerging victorious.

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Energy Boss Attacks Price Comparison Websites

The boss of Co-operative Energy has accused price comparison websites of misleading customers and pushing up energy bills.

Group General Manager Ramsay Dunning has called on the likes of uSwitch, MoneySupermarket.com and Energy Helpline to disclose how much they charged in commission each time a business or household moves supplier.

Sky News Business Presenter Joel Hills said it was his understanding the rate of commission could be as much as £60 per account switched.

In a speech at a conference held by Cornwall Energy, Mr Dunning said that far from improving competition, price comparison websites were a negative influence.

He added: "It's time all the advertising costs and fat profits were returned to hard pressed households.

"There is a lot of money spent through the comparison websites - because they charge companies likes us and the Big Six and independents a rate of commission.

"If that rate was a lot lower, or non-existent, the bills to customers would be lower, because our costs would be lower."

Co-operative Energy uses price comparison websites and says it has gained 60,000 customers in the nine months through to the end of last year.

Mr Dunning refused to say how much his company paid the websites in commission, claiming the contracts were commercially confidential, but called for full disclosure.

According to the Department of Energy and Climate Change, almost five million gas and electricity accounts switched in the year through to the end of September 2013.

Ofgem, the regulator, said price comparison websites play an "important role" in the energy market, but admitted it does not know how much they charge in commission.

A spokesperson said: "Ofgem runs a code of practice for these sites and we are reviewing it to ensure that its objectives are in line with our reforms for a simpler, clearer, fairer energy market. We will be consulting on this in spring.

"The code of practice protects consumers in a number of ways. For example switching sites have to state which suppliers they earn commission from.

"They also have to make sure that they do not rank tariffs in accordance with which suppliers from which they are earning commission."

Adam Scorer, director of Consumer Futures, said price comparison websites are popular but there were issues of trust and transparency with their services.

He said: "Consumers should not automatically assume that a price comparison website will save them money on their purchase. In our research this was only true in 21% of cases.

"Without price comparison websites millions of people would be on higher tariffs than they are now."

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High Street Chain Bathstore Groomed For Sale

By Mark Kleinman, City Editor

Another prominent UK high street chain is poised to change hands with the sale of Bathstore, the specialist bathrooms retailer.

Sky News understands that Endless, the investment fund which acquired Bathstore in May 2012, has decided to explore a sale of the company, which operates more than 150 shops across the country.

Rothschild, the investment bank, has been appointed to sound out interest from potential buyers.

Plumbing firm Wolseley acquired Bathstore for £15m

Bathstore was acquired for just £15m from Wolseley, the FTSE-100 plumbing group, which had been struggling to satisfy the City with its financial performance and had decided that the retailer was a non-core asset.

Watford-based Bathstore made a profit of £6.5m on sales of £95m in 2011, a reasonable result at a time when the UK economy was relatively weak.

In a statement, a spokesman for Endless said: "We are pleased with the performance of Bathstore since we made our investment in May 2012.

"There has been encouraging inbound interest in the business and we continue to work with management to support its growth."

It is thought unlikely that Endless will pursue a stock market listing for Bathstore, and will instead opt for a private sale of the business.

However, that will make Bathstore a relative rarity as the owners of thousands of high street shops examine flotations in an effort to take advantage of strong equity markets and a rebounding economy.

Fat Face, House of Fraser, Pets At Home and Poundland are among the private equity-backed retailers looking to go public this year.

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Morgan Stanley Joins Race To Beat EU Pay Cap

By Mark Kleinman, City Editor

Morgan Stanley is to join the ranks of global banks offering substantial pay rises to London-based staff ahead of the imposition of new European remuneration rules.

Sky News understands that the Wall Street bank is finalising proposals to offer senior employees at its Canary Wharf base cash payments that will enable it to continue paying large bonuses.

Insiders said that Morgan Stanley was likely to operate a similar scheme to that planned by rival Goldman Sachs, which will involve eligible staff being handed big increases to their annual salaries.

The awards may involve lump sums paid out at the end of the financial year, according to a person briefed on Morgan Stanley's deliberations.

The news about Morgan Stanley, which employs thousands of people in the UK, is significant because it underlines the extent to which major banks are seeking to negate the impact of the European Union measures.

Sky News understands that Citi and Deutsche Bank are also working on similar incremental payments for senior staff.

The move to retain key employees is likely to mean significantly increasing the 113 employees designated as "code staff" by Morgan Stanley in 2012. Code staff are those who are deemed by regulators to hold senior responsibilities.

Last week, Sky News revealed that Goldman is to hand substantial rises in fixed pay to hundreds of London-based staff.

The shift from variable to fixed pay, about which staff will be informed shortly, will in some cases be worth hundreds of thousands of pounds, although the sums are not expected to impact the total amounts that Goldman's top risk-takers in London will earn.

Under the new pay framework imposed by Brussels, the bank will only be able to pay double the level of salaries in variable pay to London-based staff in any given year.

The new European Union rules will restrict the amount that banks operating within the trading bloc can pay to their staff as a proportion of their basic pay.

From this year, banks will be allowed to pay up to 100% of salaries as bonuses, or double that sum with the approval of the company's shareholders.

Barclays and HSBC are among the other banks which have devised methods for enhancing the remuneration of key staff as they seek to avoid a defection to rivals who are less hindered by the EU ratio cap.

A Morgan Stanley spokesman declined to comment.

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Help To Buy Scheme: Under 40s Rush To Apply

Nearly half of would-be homeowners under the age of 40 are planning to apply for Help To Buy assistance this year, a new study suggests.

According to research by Experian, 39% of those aged between 20 and 40 hope to apply for the Government initiative in 2014.

The report said the average deposit saved by them is £9,590.

There has been a flurry of applications in recent months.

In November, figures showed in the first month of the scheme's launch more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage - and by early January that had topped 6,000.

Under the scheme, which came into effect at the beginning of October, people can buy homes of up to £600,000 with a deposit of just 5% as the Government guarantees up to 20% of the mortgage.

The report warned that 26% have saved less than £5,000 - the minimum deposit required to take part in the scheme.

The research also indicated that many have burdensome credit outstanding that may hamper applications.

The study said the average credit owed is around £4,600, which increases with age, so that the average 40-year-old owes £5,240.

Regionally, the East Midlands has the highest credit owed (£5,800), with the South East the lowest (£3,940). Some 5% owed more than £15,000 to creditors.

But with lenders increasingly reliant on database checks for loan risk assessment, many of those wishing to become homeowners are unaware of the process.

The report said 40% are not listed as living at their current address, which will adversely affect credit ratings.

It said: "Those living in the East Midlands, Yorkshire and London proved the least likely to have their names on the electoral roll."

"Ensure everything is accurate and up-to-date. Simple issues like incorrect address details, linked accounts they may have forgotten about and not being on the electoral roll can hamper attempts to access a mortgage.

"Buyers should also play close attention to things like outstanding accounts that should be marked as settled."

Prime Minister David Cameron said he hoped 2014 would see "thousands more realise their dream of home ownership".

However, the significant take-up of the loans will further fuel fears of a housing bubble.

The scheme's expansion this year means two-thirds of the entire UK mortgage market will offer products under Help to Buy, bringing home ownership to a growing number of people.

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Lloyds Co-Op Deal Denounced By Lord Levene

A peer has alleged "bad faith" after a bid he was leading to buy hundreds of Lloyds bank branches lost out to the rival Co-operative Group.

Giving evidence to MPs at Westminster, Lord Levene, who chaired NBNK Investments which had been seeking to create a new 'challenger' bank, said the bidding process had been unfair.

And he accused Lloyds of "unattractive commercial practice".

Lord Levene also claimed he was told in a confidential meeting with the then-Governor of the Bank of England, Mervyn King, that it would be a "political decision".

Lord Levene claimed the bidding process for the Lloyds branches was unfair

The hearing formed part of the Treasury Select Committee's inquiry into the collapse of the Co-op's acquisition of 632 Lloyds branches.

Lord Levene appeared alongside Gary Hoffman, the former chief executive of NBNK.

Speaking about the thwarted NBNK bid, Lord Levene told MPs: "It's a matter of great regret to me this didn't happen.

"I think it was a good idea but life goes on and you have to get on with it."

But when asked by committee chairman Andrew Tyrie if the bidding process was fair he said: "No."

Under further close questioning by Mr Tyrie, he was asked if he was alleging bad faith.

He replied: "Yes."

In evidence to MPs, Lord Levene said during the bidding process he was told to look at the reference to financial services in the Coalition agreement, which said one of the goals was "to promote the interests of mutuals".

Lord Levene said: "With the benefit of hindsight there seems to have been a view that if the creation of a new challenger bank was created by a mutual it would be another tick in the box for the goals set out.

"I have no problem with that provided it's done by fair means rather than than foul.

"In our view they chose to concentrate on all the positive aspects of the Co-Op, and none of the positive aspects of our bid."

He said later: "It was like a penny dropped, and we suddenly started to realise where this was coming from."

Lord Levene also accused Lloyds of "unattractive commercial practice", and said  the evidence it had given to the Treasury committee was "at best disingenuous".

Lord Levene repeated his claim that the bid by NBNK had been "financially superior".

The peer told MPs he had personally lost £60,000 as a result of the failed bid. Investors collectively lost £30m.

Mr Hoffman said: "The great tragedy out of all of this is that it's been to the detriment of the mutual sector, and that's a great tragedy.

"The other great tragedy is we don't have a challenger bank."

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Osborne Hails New IMF Growth Forecast For UK

Full-Blown Recovery Uncertain Despite IMF Boost

Updated: 4:40pm UK, Tuesday 21 January 2014

By Ed Conway, Economics Editor

The chances are by now that you are already well aware of the gist of the International Monetary Fund's latest update to their economic forecasts.

As we revealed on Sky News on Monday, the Fund is raising its forecast for UK economic growth this year from 1.9% to 2.4% - the biggest upgrade of any major economy.

It is raising its forecast for world economic growth as well, though by far less: it is 0.1 percentage points higher than in October, at 3.7%.

The US is also slated to grow at a faster rate than previously expected - 2.8%, compared with the 2.6% forecast last time around.

The news is not uniformly positive, however. There are cuts in the forecast for Russian and Brazilian growth, and although China's growth forecast is notched up slightly, it is nonetheless poised to be at its lowest rate since the mid-1990s.

And while many will look at the IMF upgrade and exhale a large sigh of relief, the numbers are by no means compatible with a full-blown recovery.

In fact, the Fund itself points out that, for the most part, the recent improvement in GDP numbers - the key metric it bases its forecasts on - is down not to a genuine bounce-back in spending but to something else.

As it puts it, in advanced economies, "much of the upward surprise in growth is due to higher inventory demand".

Inventories are a rather bizarre element of national accounting - essentially they measure the work and products companies have made, but not sold. It is the stuff they have warehoused away until there is more demand.

The problem is that a big reliance on inventories often means that today's growth may not be sustained all the way into the future (after all, those big stockpiles mean companies may not have to produce as much in the coming quarters).

Now, on the one hand, set against the scale of the recession and crisis faced both in the developed and developing world, this question of whether we are now witnessing the "right kind of growth" might seem like a minor one.

But the worry is that the world economy (especially the UK and US) is still reliant on the massive monetary stimulus provided by quantitative easing.

As Olivier Blanchard, the chief economist of the Fund, put it on Tuesday: "As the recovery takes hold in advanced economies, a main challenge will be to normalise monetary policy."

This will imply big movements in markets in the coming years as investors become accustomed to the new world where markets are no longer being artificially propped up by central banks.

This, in turn, holds some risk for developing economies, which are reliant on those capital flows for much of their growth.

But the more profound concern is that despite the monetary mountain of cash which has been poured into major economies, many consumers are still reluctant to spend. Those high inventory numbers are a little worrying in that respect.

There seem to be two alternative extremes going on right now: in countries like Britain people are willing to go out and spend, but only using their saved cash or by borrowing (because of those low interest rates caused by Quantitative Easing).

Meanwhile, in other areas, Europe in particular, there still seems to be a profound reluctance to spend.

A real rebound may well be on the cards in the coming months, but the IMF is worried we are still yet to see the full-blooded recovery that often follows a recession.

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IMF Upgrades UK Growth Forecast Above Rivals

By Ed Conway, Economics Editor

The International Monetary Fund is on the brink of upgrading its growth forecast for the UK more than any other major economy, Sky News has learnt.

The Fund is poised to increase its projection for UK growth in 2014 from 1.9% to 2.4%. Although the Fund will also lift its forecasts for world economic growth, the UK upgrade is significantly stronger.

It is the latest boost to the fortunes of the Chancellor, coming barely 24 hours after the Ernst & Young ITEM Club also increased its projection for UK economic growth this year.

Although the Fund's forecast for growth this year will be shy of the 2.7% predicted by the ITEM Club, the scale of the upgrade underlines how quickly sentiment about Britain's economy has turned in recent months.

The updated forecasts may also be construed as a reputational blow for the Fund itself, whose chief economist warned less than a year ago that the economic policies being carried out by George Osborne amounted to "playing with fire".

Since then, the Fund has already increased its growth projections for Britain once, last October, before this week's anticipated upgrade.

The news comes amid growing optimism about the speed of the UK recovery. In spite of concerns about retailers' fortunes over Christmas, retail sales grew in December at the fastest annual rate in almost a decade.

The Office for National Statistics is expected to announce next week that growth in the final quarter of 2013 remained relatively strong at around 0.7%.

However, some have voiced concern that Britain has been reliant for much of the growth on household spending rather than the exports and manufacturing sector.

The IMF itself has voiced concern that, having failed to rebalance the economy, the government is now reliant, through policies such as Help to Buy, on boosting the housing market and encouraging consumers to take out more debt.

Nonetheless, the IMF upgrade represents the latest evidence that Britain's recovery is starting to take real hold, pushing the country towards robust growth this year.

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'Risky' £1m Motorway Pub To Open Despite Fears

A new £1m pub opens at a motorway service station today, in the face of fierce criticism from road safety and alcohol campaigners.

The pub chain JD Wetherspoon says The Hope and Champion pub will be open from 4am to 1am, seven days a week.

The venue is located in the Extra Motorway Service Area at junction 2 of the M40 in Beaconsfield, Buckinghamshire.

It is the first pub ever to be opened at a motorway service area, and will sell real ale from local and regional brewers.

But critics say the location of the pub is "at odds" with public opinion.

The RAC said a survey of 2,000 people showed only 12% of respondents supported putting pubs into motorway service stations.

Around two-thirds said they did not agree with the move, with older drivers more likely to oppose the sale of alcohol at motorway service areas.

Only 8% of over-55s were in favour, with 71% against, while almost one in five of those aged between 18 and 34 were in support.

The RAC's head of external affairs Pete Williams said: "The public appear to be very much against the introduction of motorway pubs.

"In our view this is a risky and frankly unnecessary move. The question we are struggling to answer is - of all the places to open a pub, why choose a motorway service station?

"The temptation to drink and drive can only be increased by easier access to alcohol."

But Steve Baldwin, manager of the new pub, said the venue would serve the local community.

"The Extra Motorway Service Area, now including The Hope and Champion, primarily serves the motorway users, but its facilities are also available to the surrounding community from the local road network," he said.

Sir Ian Gilmore, Royal College of Physicians special adviser on alcohol and chair of the Alcohol Health Alliance, said: "I am disappointed by the decision to open a JD Wetherspoon on the M40.

"We are trying to prevent harm from alcohol-related traffic accidents and this sends out completely the wrong message."

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Bingo Hall Burden: MPs Call For Tax Cuts

By Adele Robinson, Sky News Correspondent

The UK's bingo hall business will "stagnate" if the Government does not cut tax on it, campaigners say.

More than 50 MPs are backing calls to reduce duty and bring levies on the game in line with other forms of gambling.

Bingo hall profits are currently taxed at 20% compared with a 15% rate for most other gambling activities.

Campaigners estimate that reducing bingo duty is expected to raise around £40m for the Exchequer over four years.

Miles Baron, from the Bingo Association, says investment is vital for growth.

"By building new clubs and investing in new clubs, attendances would improve that would generate more income, that would generate new taxes, that would employ more people ... this is at the heart of the community, this is a vital and important part of some people's social repertoire."

Campaigners claim gambling taxes are forcing more and more clubs to close

The Government says it would have to carefully consider before reducing the rate because its priority is to cut the budget deficit.

Jim Cunningham, Labour MP for Coventry South, says if more support is not given then the "social service" side of bingo will be lost.

"The implications can be that some of these places may have to close because they're not profitable and if that happens then there is a problem for some of these elderly people, during the day in particular, to find somewhere else to go."

Nearly 400 bingo clubs across England, Scotland and Wales are hosting free bingo games this weekend to support the campaign to cut tax.

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Ex-Barclays Executive Plots New Business Bank

By Mark Kleinman, City Editor

A former Barclays executive is setting up a new bank to target small and medium-sized businesses (SMEs) in a test of the City regulator's pledge to accelerate approvals for new lenders.

Sky News understands that OakNorth, which has secured backing from a group of prominent investors, is one of 20 fledgling banks which are pursuing licences from the Financial Conduct Authority (FCA).

OakNorth has been established by Richard Davies, who rose to become the head of UK operations within Barclays' corporate bank before resigning last November.

He is being joined by a team including Chris Dailey, who was an executive at Aldermore, one of the new banks which have emerged in Britain in the aftermath of the financial crisis.

The emergence of lenders such as OakNorth comes at an important moment in the political debate about banking competition, with the Labour leader Ed Miliband vowing to make the creation of new banks a central plank of his economic policy.

Last summer, the FCA said it would relax capital and liquidity rules for new entrants to the banking market, two of the major obstacles for start-up banks to gain regulatory approval.

London-based OakNorth, which declined to comment further on its plans, intends to "focus on the entrepreneurial community in the UK - working with fast growing small and medium sized enterprises, property developers, high net worth individuals and venture capital firms," according to a website it has set up.

"OakNorth will offer a wide range of lending and saving products to assist SMEs and investors in financing their future growth. The business model will seek to augment traditional banking practices with digital / new form lending techniques."

Sky News has also learnt that Vince Cable, the Business Secretary, held talks earlier this month with a group of so-called challenger banks to discuss the hurdles confronting them.

Among those attending the meeting were executives from Aldermore, Metro Bank, Shawbrook and TSB, as well as Treasury ministers, regulators and the chief executive of Mr Cable's new British Business Bank, which will become operational this year.

Mr Cable told Sky News: "New banks entering the market should be encouraged as they provide choice to customers and are an important source of finance for small businesses.

"Regulators have taken moves to improve the way they authorise new entrants, working closely with the banks and providing time for those that need to get staff and investment in place.

"They have reported an increase in the number of potential new banks they are in talks with, which is promising.

"However, most applications under consideration are for niche banks and to have meaningful competition we need banks with the significant technological platform, the kind TSB and Williams and Glyn received from their parent banks [Lloyds Banking Group and Royal Bank of Scotland."

One of the executives who attended the meeting with Mr Cable said industry representatives had emphasised the need for new bank entrants to have access to robust technology platforms that were often prohibitively expensive to small start-up companies.

In a speech last week, Mr Miliband said that Britain's banking market was "broken" and said Labour would, if it won the next general election, create at least two new credible competitors to the country's five biggest lenders.

His pledge has sparked a row with the industry and political rivals, who have accused him of duplicating plans already being implemented through the creation of new high street players such as TSB.

Sky News revealed last month that Aldermore had raised £40m from two leading hedge funds ahead of a flotation this year, while Metro Bank had secured nearly ten times that sum in new funding.

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Fastest Growth In Retail Sales Since 2004

Brisk business for smaller retailers ahead of Christmas helped sales volumes grow at their fastest annual pace since 2004 in December.

Figures from the Office for National Statistics (ONS) measured 2.6% growth during December to show an annual increase of 5.3% - easily topping the forecasts of economists.

The performance suggests a bigger contribution to GDP growth from consumer spending in the fourth quarter of 2013, after the sector was credited with driving recovery during the previous three months.

However, it will also raise more concerns about consumer debt levels and the extent to which people are digging into savings.

The surge in business for small stores may have been a result of the storms ahead of Christmas - prompting consumers to shop locally.

Debenhams had a poor Xmas despite department stores seeing strong trade

Small stores were found by the ONS to have outperformed their bigger rivals, with the amount spent in them increasing by 8.1% against growth of 2.6% for larger stores, compared with December 2012.

The figures follow news of upbeat trading from the likes of Argos, Halfords, Primark and Next over the festive season, though Marks & Spencer and Debenhams struggled.

The extent of their woes was laid bare by the ONS, which measured department store sales volume growth of 11.7% in December - the highest year-on-year growth since January 2000.

The slew of results from major chains suggested retailers who embraced online and high demand for gadgets and cheap fashion enjoyed robust trading.

The ONS said internet sales increased 11.8% by value compared with the same month last year, with average weekly spending online standing at £675.4m.

The statistical body also reported that the 2.6% growth in sales volumes month-on-month equalled the previous high set in February 2010.

The overall amount spent in shops was up 3.6% compared with the same month last year, with food stores improving by 2.2% and non-food stores by 4.4%.

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Bingo Hall Burden: MPs Call For Tax Cuts

By Adele Robinson, Sky News Correspondent

The UK's bingo hall business will "stagnate" if the Government does not cut tax on it, campaigners say.

More than 50 MPs are backing calls to reduce duty and bring levies on the game in line with other forms of gambling.

Bingo hall profits are currently taxed at 20% compared with a 15% rate for most other gambling activities.

Campaigners estimate that reducing bingo duty is expected to raise around £40m for the Exchequer over four years.

Miles Baron, from the Bingo Association, says investment is vital for growth.

"By building new clubs and investing in new clubs, attendances would improve that would generate more income, that would generate new taxes, that would employ more people ... this is at the heart of the community, this is a vital and important part of some people's social repertoire."

Campaigners claim gambling taxes are forcing more and more clubs to close

The Government says it would have to carefully consider before reducing the rate because its priority is to cut the budget deficit.

Jim Cunningham, Labour MP for Coventry South, says if more support is not given then the "social service" side of bingo will be lost.

"The implications can be that some of these places may have to close because they're not profitable and if that happens then there is a problem for some of these elderly people, during the day in particular, to find somewhere else to go."

Nearly 400 bingo clubs across England, Scotland and Wales are hosting free bingo games this weekend to support the campaign to cut tax.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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