IMF Sees Housing Market Threat To Recovery

Osborne Should Heed IMF House Market Warning

Updated: 11:57am UK, Friday 06 June 2014

By Ed Conway, Economics Editor

What would you like first: the good news or the bad?

Well, if you're George Osborne, the good news is that the long battle with the International Monetary Fund - the one that began last year when chief economist Olivier Blanchard told Sky News the Chancellor was "playing with fire" on economic policy - is over.

We knew as much in Washington earlier this spring, when Blanchard acknowledged that the Fund's forecasts for Britain had been overly pessimistic.

But today the saga has come to its end, with the Fund also giving the Chancellor's fiscal plans (those precise plans Blanchard had criticised) a ringing endorsement.

"The planned fiscal adjustment this year is appropriate," the IMF says in its annual survey of the UK economy - the so-called Article IV report.

This is a shift from last year, when the Article IV recommended that the Chancellor bring forward spending plans to try to boost the economy. So cause for celebration at the Treasury?

Not altogether, for there is also some bad news. The criticisms of the Treasury's tax-and-spend plans may have dissolved away, but they have been replaced with concerns of another variety: about the housing market.

Such concerns are hardly new: the European Commission already recommended earlier this week that the Government take action to prevent a housing bubble.

However, the Fund is a touch more authoritative - and more specific. Its suggestions are as follows: The Bank of England should leave interest rates on hold for the time being; it should impose limits on how much mortgage companies can lend homebuyers in relation to their incomes; it should also consider outright caps on loan-to-income levels and loan-to-value ratios.

On top of this, the Government should "consider whether [Help to Buy] should be modified or even remains necessary for the full three years of the policy. And as the volume of high-LTV transactions rises, the FPC will need to evaluate if the program is contributing to financial risks."

Like the Commission (and, well, every economist out there), it suggests that Britain needs to build more homes. However, there are no silver bullets in this enterprise, and it acknowledges that all of the above "can only be temporary palliatives to an underlying problem."

The best it can suggest is that the Government reconsider "unnecessary constraints on brownfield and greenfield developments; tax policies that discourage the most economically-efficient use of property; and underdeveloped rental markets with relatively short lease terms."

Some might see the final point as a note of support for the rental reforms recently suggested by Ed Miliband. The problem for politicians of every stripe is that the housing market's structural problems are no secret: but mending them will take many years.

Reforms to the planning system have been desperately needed for decades, but only now are they being implemented; changes to green belt regulations are an economist's dream but a local politician's nightmare – so are unlikely to be implemented before the election, if at all.

However, it is clear that the Chancellor would be foolhardy to ignore the tone of the IMF's report. For there is a growing risk of a housing bubble, and with it the political risk that George Osborne could be remembered not as the austerity Chancellor who got it right, but the man who generated yet another housing market bust.

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White Van Woman 'Held Back By Sexism'

By Clare Fallon, Sky News Reporter

Campaigners are calling for more help to encourage women to enter traditionally male professions, including plumbing, building and plastering.

Despite headlines about the rise of the so-called white van woman and claims a record number of females are working in the trades, industry experts say the proportion is still worryingly low. 

According to Women and Manual Trades, a national organisation which offers support to women, only around 1% of people in skilled trade occupations are female. 

Campaigners say part of the problem is sexist abuse still suffered by some women working in male-dominated professions. 

Hattie Hasan set up Stopcocks, an all-woman plumbing company, after working in the profession for more than two decades. 

She says sexist attitudes are still a problem.

"Unfortunately even after my own 25 years in plumbing things haven't changed much ... girls are still not encouraged to get into the trades.

"Firstly they're not encouraged at school. When I was at school, I just wanted the boys to fancy me, I didn't want to be a plumber and I think that's the pressure for most girls.

Hattie Hassan, who set up her own plumbing firm, calls for more role models

"The second thing is that there are not enough role models. The more female plumbers there are the more there will be because the more people see us the more they'll realise it is a possibility for them.

"There are a lot of things that people say women can't do such as carrying heavy things but health and safety rules mean even if you're a bloke you still can't carry over a certain amount of weight.

"Also I think people seem to forget that women carry babies ... and women do that on a regular basis so I don't think there are barriers where heavy things are concerned."

She added: "The barriers for women are that once women have trained where do they go? The opportunities for getting employment in plumbing is not as widespread as it used to be. It's difficult for lads coming out, but it's even more difficult for girls.

"So really the only route for them is self-employment."

However, there are signs things may improve in the future.

Training centres where construction skills are taught report an increase in the number of women enrolling. 

At Access Training in South Wales women account for one in 10 of those signing up for courses including plastering, plumbing and electrics.

Mary Henderson swapped her admin job for plumbing

Mary Henderson quit her office job to retrain as a plumber, saying she was fed up being patronised by workmen she had hired. 

"I feel like it's a useful thing to have a trade in this competitive, career-driven industry - it just made sense.

"I used to work in admin, from when I left school, and basically I had a lot of trouble with my own bathroom ... I wanted to do something more practical so plumbing just seemed to pop out at me."

She believes there should be more encouragement for women to get into the trades.

"I don't think practical things are pushed at children leaving education  It's not gender specific, it's just something that boys tend to fall into whereas girls are pushed into the first job that comes and then it just rolls into admin.

"I think there should be more focus on school leavers. I think it's a really good thing to have a trade and it should be suggested to students because exams are forced on them and teachers can't afford to have an interest in what they do after that.

Although she is in a minority, Ms Henderson says she is content being a woman in a man's world.

"There is slight banter and it's a little less PC than what you find in an office, but to be honest I find that refreshing rather than threatening."

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ECB Acts To Halt Euro Deflation Threat

The European Central Bank (ECB) has announced a series of measures to help boost economic growth in the euro area and prevent a spiral into crippling deflation.

The bank's governing council's first monetary policy announcement was a lowering of the benchmark interest rate to a new record low.

The refinancing rate - which is effectively the ECB's base rate of interest used to calculate borrowing rates - was cut from 0.25% to 0.15%.

But of greater interest was confirmation the ECB was to charge banks to deposit cash with it for the first time - aimed at stoking bank lending - with the deposit rate hitting -0.1%.

ECB president Mario Draghi later told a news conference the rates would remain at that level for an extended period of time.

Other measures included an offer for banks to access a targeted long-term refinancing operation (LTRO) to persuade them to lend.

The initial size of the LTRO was put at €400bn (£3.23bn) and the ECB was also preparing to purchase asset-backed securities.

Mr Draghi said: "In order to strengthen the economic recovery, banks and policymakers in the euro area must step up their efforts.

"Against the background of weak credit growth, the ongoing comprehensive assessment of banks' balance sheets is of key importance.

"Banks should take full advantage of this (LTRO) exercise to improve their capital and solvency position, thereby contributing to overcome any existing credit supply restriction that could hamper the recovery.

"At the same time, policy-makers in the euro area should push ahead in the areas of fiscal policies and structural reforms."

Mr Draghi confirmed a downgrade in GDP expectations for the 18-nation eurozone for 2014, with economic growth now forecast at just 1%.

Economists say the biggest threats to recovery in the debt-laden euro area come from banks failing to lend and costs falling.

Tackling the spectre of deflation - or falling prices - is part of the ECB's key mandate.

Deflation is seen as such a threat because it has been proved to stop people or firms from making spending decisions because of the hope prices will be cheaper at a later date - a spiral which has persistently dogged Japan.

There was a positive reaction to the developments on world markets (see the latest moves here), with stocks rising across Europe.

The German DAX hit 10,000 points for the first time at one stage while on the bond markets, government borrowing costs remained largely stable.

The euro - widely seen as overvalued given the nature of Europe's economic problems - fell to a four-month low against the dollar and its lowest level against the pound since December 2012.

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AA Races Towards £4bn Stock Market Listing

By Mark Kleinman, City Editor

The AA, Britain's biggest roadside recovery group, is poised to press ahead with a £4bn flotation despite a disappointing stock market debut from Saga, its sister company.

Sky News can reveal that Acromas Holdings, the AA's parent, could announce plans for the listing through a process known as an accelerated initial public offering as soon as Friday.

The deal will involve approximately 10 City institutions acting as cornerstone investors, each of which will agree to acquire a substantial number of shares in the AA.

The fund managers expected to back the flotation, which will value the AA's equity at roughly £1.3bn, include Aviva Investors, Blackrock, JP Morgan Asset Management, Lansdowne Partners and Legal & General Investment Management.

A source said on Thursday that details of the share sale were still being finalised and that there was a chance that the deal could still be aborted.

Bob MacKenzie, a former boss of Green Flag, the car insurance provider, has been lined up to act as the company's new chairman, they added.

Deutsche Bank has been brought in to advise the company, while Cenkos Securities is acting as broker overseeing the recruitment of the major investors.

Acromas is a private equity-backed group which continues to own a majority stake in Saga, the financial services and travel specialist for the over 50s.

Shares in Saga closed up 1.6% on Thursday but have disappointed since listing last month.

Some institutions approached by Cenkos about participating in the AA deal were deterred by the motor insurer's £3bn debt mountain, which they believed was inappropriately high for a public company.

The AA, which generates hundreds of millions of pounds of free cashflow every year, is expected to outline a plan for reducing its borrowings as part of of its listing prospectus.

If the listing goes ahead, the AA could make its own public debut by the end of June, completing a change of ownership for one of the UK's biggest membership organisations.

Acromas has been expected to retain ownership of the AA for some time, given the scale of its borrowings relative to its earnings.

In the third quarter of last year, the AA reported sales of £244m, with earnings up 8.2% to £104m.

It has taken advantage of strong financing markets by launching a £350m bond, the proceeds of which are being used to repay a chunk of Acromas's vast debt-pile.

The AA, which has styled itself as "the fourth emergency service", has four million personal members and nine million business customers, giving it a 40% share of the roadside insurance market.

The accelerated IPO technique was first used in the City more than a decade ago by Collins Stewart, the investment bank which a group of Cenkos executives left to set up.

Like Saga, the AA has turned to new leadership, appointing Chris Jansen, a former British Gas executive, as its new boss.

Acromas is owned by Charterhouse, CVC Capital and Permira, three of the UK's biggest private equity groups. They acquired the AA from Centrica, the owner of British Gas nearly a decade ago, before putting it under the same corporate ownership as Saga.

The AA's principal rival, the RAC, is also racing towards the stock market, with Carlyle, its private equity owner, working on plans for a listing.

An Acromas spokesman declined to comment.

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Queen's Speech: Government's Agenda Set Out

The Queen's Speech has placed a house building drive, tackling pensions and a commitment to EU reform on the agenda for the coalition in its last year.

The speech to parliament put the economic recovery at its centre, opening with a pledge to continue bringing down the deficit and cutting taxes "to increase people's financial security".

David Cameron, Nick Clegg and Ed Miliband listen to the speech

With the threat that the Bank of England will increase the base rate before the General Election, there is also a pledge to keep mortgage and interest rates low and to continue to promote the Help to Buy scheme.

David Cameron had suggested he could amend the scheme after Bank of England Governor Mark Carney warned in an interview with Sky News that rising house prices were the biggest threat to economic recovery in the UK.

The Black Rod knocks on the door of the House of Commons before the speech

In an attempt to tackle the housing shortage, the Government announced plans to give developers powers to push through applications without council approval and allowing the Government to sell off unused land for development.

A new garden city will also be built in the Thames estuary at Ebbsfleet in Kent to tackle the housing shortage.

The Prime Minister and his Deputy Nick Clegg claimed the measures laid out in the Queen's Speech were "unashamedly pro-work, pro-business and pro-aspiration".

The Queen leaves the House of Lords after delivering her speech

Just 11 new bills were introduced by the Queen at the State Opening of Parliament, which will bolster Labour's claims the coalition is now a "zombie government" which has run out of steam. Last year there were 19 new bills.

Mr Cameron hit back at claims there was "not enough" in the speech.

The new carriage carrying Queen Elizabeth II and the Duke of Edinburgh

He told the House of Commons: "We're creating new laws on producing shale gas... new laws to help build high speed rail... new laws to reform planning to build more homes... we're outlawing modern slavery; confiscating assets from criminals; protecting people who volunteer; cutting red tape and curbing the abuse of zero-hour contracts.

"This is a packed programme of a busy and radical government."

The moment a page boy collapsed during the speech

Labour leader Ed Miliband said: "We would have a Queen's Speech with legislation which would make work pay, reform our banks, freeze energy bills and build homes again in Britain. A Queen's Speech which signals a new direction for Britain, not one which offers more of the same."

Pension reforms set out in George Osborne's Budget, which would mean pensioners will no longer be forced to buy annuities with their savings, were also included along with a Recall Bill which could see voters given the power to sack MPs guilty of serious misconduct.

Other measures include:

:: 5p charge for plastic bags

:: Powers to allow fracking firms to dig under private property without asking

:: Parents to face jail for emotional cruelty to children in new Cinderella Law

:: Pledge to fight to keep Scotland in the union

:: Limit to excessive redundancy payouts for public sector workers

:: Tougher sentences for people traffickers

:: Free school meals for infants

:: Fines for employers who do not pay the minimum wage

:: £2,000 childcare vouchers for working parents

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Euro Bank Set For Negative Interest Rates

By Ed Conway, Economics Editor

The European Central Bank is expected to become the first major central bank to introduce negative interest rates, as it seeks to fight off the threat of deflation.

The Frankfurt-based institution is widely-anticipated to cut the rate it pays on deposits from high street banks from the current rate of zero to around -0.1%, meaning it would charge them to keep money on deposit.

The move comes amid growing worries about the long-term economic health of the Eurozone.

Although many economists agree its financial system has now passed its crisis phase, there are concerns that it could be heading towards a lengthy period of deflation, marked by falling shop prices and wages.

ECB president Mario Draghi may consider Quantitative Easing

Inflation - the measure of annual price increases across the economy - was running at just 0.5% in May, well below the ECB's 2% target.

In previous speeches, the ECB's president, Mario Draghi, signalled that he would be prepared to take further measures to prevent it dropping down any more.

The ECB would not be the first central bank to experiment with negative interest rates - Sweden and Denmark have attempted similar schemes - but it would be by far the largest.

Other central banks, including the Federal Reserve and the Bank of England, have briefly contemplated such a measure, but have opted against them, for fear of damaging the financial system.

Economists said the argument in favour of negative rates would be to encourage banks to lend out cash to businesses and households rather than hoarding it at the central bank.

However, Marchel Alexandrovich of Jeffries added that negative rates alone may not be enough.

He said: "With the negative deposit rate so heavily discounted already, what may ultimately matter much more tomorrow is whether Draghi goes beyond what is generally expected and 'surprises' the markets.

"And in particular, whether he signals the ECB's readiness to do more and introduce full blown Quantitative Easing."

Thus far, Mr Draghi has stopped short of Bank of England style QE - buying up government bonds with created money - but he has dropped a number of hints in recent months that it might soon be on the menu.

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ISA Deposits Suffer Unprecedented Fall

Britons 'Draining Savings' To Stay Afloat

Updated: 7:21pm UK, Tuesday 03 June 2014

There's a received wisdom about what is happening in the UK economy. It goes roughly as follows: consumers are short on cash, their real incomes are falling and they are struggling to afford to keep their heads above water. So they are having to borrow to keep themselves afloat.

This borrowing is helping push house prices higher, which in turn is leaving the UK economy vulnerable to collapse.

It's a compelling notion, in large part because much of it is true. Apart, that is, from the central element.

Contrary to widespread assumptions, Britons are not borrowing large amounts in order to keep themselves afloat. In fact, borrowing levels remain strikingly low, according to figures from the Bank of England.

Instead, consumers are tapping into their savings at a record rate in order to finance themselves.

We have known as much since figures uncovered by Sky News late last year showed an unprecedented transfer of cash out of long-term deposits and into households' current accounts.

Our news that deposits in Britons' ISA accounts are falling at an unprecedented rate is the latest evidence of this trend.

On the one hand, it might be construed as a benign pattern: although some consumers might well be overpaying on their new house, at least they aren't borrowing enormous amounts to do so (though of course, at the margin some undoubtedly are doing precisely that).

The worry, though, is that Britons are already overextended as things are.

While the rate at which they are taking on debt is not increasing particularly quickly, it is questionable that they have paid back as much as is necessary following a long pre-crisis debt binge.

The hope is that this savings-fuelled recovery eventually transforms into a business-led recovery – but that would depend on housing market activity diminishing in the coming months.

That still shows little convincing sign of happening, which is why the Bank of England remains privately concerned about the direction the consumer sector is taking.

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Balls Wants Head-On Debate With Osborne

By Ian King, Sky News Business Presenter

Shadow chancellor Ed Balls has thrown down the gauntlet to Chancellor George Osborne to meet him head-on in a debate on Sky News.

The challenge came as the combative Mr Balls repeated his call for the Government to pave the way for more homes to be built in Britain.

He pointed out that, although house prices in some parts of the country had only recovered to peak levels seen in 2007, they had risen by 20% in London and parts of the South East during the last year.

Mr Balls said: "It does feel especially in London and the South East, there's a strong housing market that there's price inflation.

"It's fundamentally about supply and demand - if demand is going up but the supply is not keeping pace prices are rising and that can lead to instability of the past.

"If the Government doesn't do its bit to back the supply of housing, the danger is we will see interest rates going up earlier in this cycle more than the country needs and the rest of the country wants."

Mr Osborne visits the construction site for Kent's Ebbsfleet Garden City

The Shadow Chancellor, who accepted that the Chancellor's Help To Buy Scheme had been necessary to help first-time buyers onto the housing ladder, said he was nonetheless still concerned about the upper limit of the scheme - £600,000 - and that it was open to people other than first-time buyers.

He added: "I've asked the Governor of the Bank of England to keep a close eye on this, to make sure the parameters are right, but at the end of the day, it's actually about supply and demand.

"If supply is the problem, which it is, act on it. We need more affordable homes, I'm afraid a few thousand homes (more built) in Ebbsfleet isn't enough."

Mr Balls said the Government should not just leave it to the Bank of England to try and deflate the housing bubble.

Thousands of homes will be built in Ebbsfleet

He went on: "The Government has been really scaling back on supporting new homes…leaving it to Bank of England sort of says to them they'll have to use the main instrument they've got, which is interest rates.

"I think it would be dangerous for the recovery which is still in its early stages at a time when across the country and there's still spare capacity in the economy.

"To start putting interest rates and mortgage rates up now would be risky and it would squeeze the budgets in which people are still struggling - so I think the Chancellor should pull his weight."

Mr Balls also dismissed suggestions that rising consumer confidence weakened his key critique of the Government, that most households are still seeing a fall in living standards, arguing people were seeing the economy getting better but that they were not seeing an improvement in their own finances.

The shadow chancellor added: "Wages are still going up by less than prices. When the Government says the cost of living crisis is over, most people say 'not in the part of the world where we're living'.

"I think at the moment the Government seems to be patting itself on the back even though we haven't caught up to where we were in 2007. I think it's too early to say they've succeeded."

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Energy Boss On Breakdown In Trust Over Bills

The boss of a UK power generator has told Sky News there has been a breakdown in trust between the industry and customers over energy bills.

Dorothy Thompson, chief executive of the Drax Group, told the Ian King Live programme this needed to be rebuilt along with improved levels of transparency.

Rising energy bills have been at the centre of a continuing political row, with Labour promising to freeze energy prices for 20 months if the party is elected.

Earlier this year, industry regulator Ofgem said profit increases and price hikes had intensified public distrust of suppliers, and also highlighted the need for a market investigation "to clear the air".

Drax power station, near Selby, uses a combination of coal and biomass

It referred the "big six" UK energy suppliers to the Competition and Markets Authority (CMA), the new competition body, "to consider once and for all whether there are further barriers to effective competition".

Only last month, energy giant E.On was told it has to pay out £12m to some of its customers following an investigation into mis-selling by Ofgem.

Ms Thompson told Sky's Ian King: "I do think we are in a very difficult position here in the industry, and particularly in respect of consumer bills because I think there has been a breakdown in trust, and I think that's very hard for everyone in the industry and we have to work hard to improve the levels of trust and transparency."

The group runs Drax power station near Selby, North Yorkshire, which uses a combination of coal and biomass to supply around 8% of Britain's electricity needs.

The company is taking legal action against the Government over its decision not to support the conversion of one of its coal units to biomass under a new subsidy scheme.

The move came as a blow to its plans to modernise its plant and make it more environmentally-friendly, and led to a drop in its share price.

Ms Thompson said: "We are challenging their decision. There's a good process for that with government and that is judicial review and it's because we don't understand their decision.

"We are looking through judicial review to get a proper explanation or actually a reversal."

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Housebuilders Called To Cable-Osborne Talks

By Mark Kleinman, City Editor

The bosses of Britain's biggest residential developers have been summoned to summits with Vince Cable and George Osborne this week amid growing concerns about the UK housing market.

Sky News has learnt that the Business Secretary will hold talks on Tuesday with companies including Persimmon, along with representatives of leading industry bodies and mortgage lenders.

Two days later, the Chancellor is understood to be planning to meet executives from several housebuilders to discuss issues including the bottleneck in the supply of new housing stock.

The meetings will take place amid a growing political headache about the strength of Britain's housing sector and concerns that many first-time buyers are being priced out of the market despite the introduction of the Help To Buy scheme.

Last week, David Cameron defended the initiative, pointing to new powers held by the Bank of England which allow it to intervene to prevent the formation of market bubbles.

The Prime Minister said it was the responsibility of Mark Carney, the Bank Governor, to "call out any problems in our economy".

"We're helping young people who can afford a mortgage payment to get a home of their own, even if they don't have a rich mum and dad who can give them the deposit," he said.

"The housing market wasn't working for them, builders wouldn't build unless buyers could buy."

Sources at the Department for Business, Innovation and Skills described Mr Cable's meeting on Tuesday as "private" and declined to comment on the agenda.

Attendees will include Stewart Baseley, executive chairman of the Home Builders Federation; Paul Smee, director-general of the Council of Mortgage Lenders; Persimmon and McCarthy & Stone; Nationwide; the Homes & Communities Agency; and the NHBC, which provides insurance and warranties for new homes.

Mr Cable has been voluble in warning about the housing market, saying recently: "I am very concerned by the buildup of household debt in relation to income. That was one of the underlying factors in the buildup to the financial crash.

"A lot of people have paid off their debt but the projection is that it is going to start rising rapidly and surpass the previous levels. This is almost entirely a housing story.

"I do worry about a new surge in house prices with all the practical consequences of that. It is a particular London phenomenon."

Housebuilders have warned in recent months that an industry target to construct 200,000 new homes annually is unrealistic, despite a significant increase since Help To Buy was launched.

The Chancellor is said to be concerned that a shortage of new housing could be a significant millstone for the Conservatives at next year's General Election.

The names of those attending the meeting with Mr Osborne was unclear on Monday, and the Treasury declined to comment.

Listed housebuilders have seen their share prices soar on the back of robust market conditions, capping a remarkable turnaround for the sector.

A number of major firms, including McCarthy & Stone, were seized by their lenders after falling into financial trouble in the period before the financial crisis, as loan impairments soared.

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Workplace Pensions Shake-Up 'Could Boost Funds'

Radical changes to workplace pensions are set to be unveiled in the Queen's Speech this week, with supporters claiming the shake-up could boost retirement incomes by thousands of pounds.

Staff will be able to put their money into Dutch-style "collective pensions", which are shared with thousands of other members.

They are regarded by many as a better investment because they are less vulnerable to stock market variations.

The changes, which could be in place as early as 2016, are designed to give better value for pensioners.

Pensions Minister Steve Webb has described the collective schemes, also known as "mega funds", as "some of the best in the world".

Mr Webb told The Sunday Telegraph the key advantage was "pooling risk" of investments performing worse than expected across large numbers of people of different ages, "just like car insurance or the NHS".

The Queen delivers her speech at the State Opening of Parliament in 2013

"It gives people greater certainty and probably better value," he said.

However, critics of the model have warned that pensioners only have a "target" for what they will get in retirement, rather than a guarantee as is the case with a fixed annuity.

Pensioners could in some cases see their incomes fall if the collective fund's investments do not generate the expected profits.

The plan is based on schemes in the Netherlands and Scandanavia.

But some Dutch politicians have recently called for the pensions to be scrapped in favour of British-style individual pensions.

A new bill scrapping tax rules that have stopped pensioners taking more than a quarter of their savings in a cash lump sum will also be included in the Queen's Speech.

Other legislation expected includes:

:: A crackdown on highly paid civil servants and NHS executives getting large redundancy pay-offs before taking similar jobs within a year of leaving their posts.

:: Tax free childcare worth up to £2,000 per child for families where both parents have jobs.

:: A bill to change trespass laws to allow shale gas exploration firms to drill beneath private property without requiring permission from the owner.

:: The Queen's Speech is also expected to contain measures to support further oil and gas developments in the North Sea, and for more major roads to be built.

:: A "Recall Bill" allowing voters to sack their elected MPs, although this has been subject to disagreements inside the coalition.

Legislation for a referendum on Britain's membership of the European Union will not be included, amid opposition from the Liberal Democrats.

David Cameron is instead expected to promise he will use the Parliament Act to overrule the House of Lords and force a bill from a backbench Tory MP into law.

On the eve of setting out its legislative agenda, the coalition has been accused of running out of steam less than a year before the general election.

Labour has released figures claiming the coalition has become a "zombie government", with MPs debating fewer bills last year than at any time since 1950.

Treasury Minister Nicky Morgan rejected this, telling the Murnaghan programme the Queen's Speech will prove the government is "full of ideas".

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Ian King Presents Sky News' New Business Show

By Ian King, Business Presenter

Business news should be for everyone. It affects everyone, after all, not just those who read the business pages avidly.

So I hope Ian King Live will demystify business, strip away the jargon and make the worlds of business, economics and markets accessible and understandable to as wide an audience as possible.

In the process, we will aim to bring Sky News viewers interviews with some of the biggest names in business, both from Britain and the rest of the world.

Ian King will present the show from The Gherkin, Monday to Thursday

There will be packages and graphics that will help clearly explain often complex subjects and the breaking news stories of the day, plus regular appearances from the unrivalled team of specialists in the Sky News team, such as Mark Kleinman, Ed Conway and Poppy Trowbridge.

Viewers will also get regular updates from Wall Street and business centres around the world.

And with the general election now less than a year away and the economy, jobs, the cost of living and the deficit all set to be key debating points, viewers can also expect plenty of interviews with the key voices in the campaign - as well as hearing from leading City experts who can help sort fact from fiction.

It all starts this Monday, 6.30pm, only on Sky News.

:: You can follow the programme on Twitter @SkyIanKingLive

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Retailers' Credit Union To Defy Payday Lenders

By Mark Kleinman, City Editor

Some of Britain's biggest high street names, including New Look and Next, are forming a credit union that will offer staff an alternative to the sky-high interest rates charged by payday lenders.

Sky News has learnt that RetailCure, which has also received backing from entrepreneurs such as Rymans owner Theo Paphitis, is drawing up plans to launch later this year.

The new venture has received start-up funding of £1m and will eventually be accessible to the 4.8 million people who work directly in retail or in related sectors of the economy, half of whom earn less than £8 an hour.

It will be chaired by John Lovering, a veteran retailer who has led buyouts of companies including Debenhams, Homebase and Somerfield.

Mr Lovering is also chairman of the Retail Trust, an industry charity which has been working on plans for the new credit union for some time.

Speaking to Sky News, he said: "The industry feels that we have to find a way of providing a source of cheap, reliable credit for our people.

"The three million in retail and the nearly five million in the wider industry do have a need for low-cost, value-for-money, short-term borrowing facilities, and that's what we as an industry are trying to provide."

Booker and Matalan have also agreed to support RetailCure, while John Lewis Partnership and Wm Morrison have been approached and are expected to provide financial assistance.

The launch of RetailCure comes amid a still-intense political debate about the business model employed by payday lenders, which charge interest rates that work out at more than 5,000% on an annual basis.

The high street chains' credit union will charge interest on a sliding scale from roughly 7% to nearly 28% depending upon the borrower's credit history.

Mr Lovering expects the average loan request to be lower than £5,000, and believes that RetailCure could ultimately become Britain's biggest credit union.

"We think we can build a loan-book of £50m and attract 50,000 members relatively quickly," he said.

Assuming it receives regulatory approval, savers who deposit funds with RetailCure will be protected by the same Government guarantee as that which covers high street banks.

Labour MP Stella Creasy, who has campaigned against payday loans, told Sky News: "Anything that helps people access affordable credit as opposed to some of the legal loan sharks you see on your high streets - the payday lenders and the logbook loan companies - is a welcome move."

Earlier this week, the Church of England unveiled a pilot scheme through which a new credit union network will be piloted in three of its dioceses.

That project is being led by Sir Hector Sants, the former boss of the City watchdog, which since April has had oversight of consumer credit providers such as payday lenders.

Last year, the Archbishop of Canterbury, Dr Justin Welby, said he had told the then boss of Wonga that he wanted to "compete (the company) out of existence".

The remarks sparked acute embarrassment for the Archbishop, however, when it emerged that the Church of England's pension fund was among the investors in one of Wonga's financial backers.

In its annual report this week, the Church Commissioners said they had yet to dispose of the holding because doing so would crystallise a significant loss for its pension fund.

Some industry stakeholders were sceptical about the prospects for RetailCure.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents short-term lenders, said greater choice was welcome but warned that it faced significant uncertainties.

"What this body will have to do is make sure it complies with very stringent regulations that are applied to financial services.

"I would ask questions around what is going to be the collection policy, what happens if somebody leaves the retailers business still owing a debt, how are you going to collect that?"

RetailCure hopes to launch formally in November.

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Spammer To Pay Damages After Court Victory

John Lewis has been ordered to pay damages for sending 'spam' emails in a privacy ruling that could open the floodgates for harassed consumers.

Roddy Mansfield, who is a producer for Sky News, brought the case under EU legislation that prohibits businesses from sending marketing emails without consent.

At a county-court hearing a judge ruled the company acted unlawfully as it could not prove Mr Mansfield had agreed to receive the emails or was one of their customers.

It is the third time Mr Mansfield has secured damages for receiving unsolicited emails but the first time an individual has won damages following a ruling on the legislation.

Spam is named after a Monty Python sketch where it is served with each meal

Previous spam cases won by default include Gordon Dick who secured £1,300 for a single email from Transcom Internet Services and Steve Higgins who was awarded £810 from a home-shopping firm.

Mr Mansfield began receiving the promotional emails after registering his details with John Lewis' website which opted-him-in for marketing using a pre-ticked consent box.

But an EU law drafted in 2003 makes it an offence to send unsolicited emails unless a customer is aware they have been opted-in.

Mr Mansfield issued proceedings under the Privacy and Electronic Communications Regulations arguing it was for John Lewis to prove he consented and after a short hearing the judge ruled in his favour.

Mr Mansfield said: "John Lewis argued that because I had not opted-out of receiving their emails, I had automatically opted-in.

"But an opportunity to opt-out that is not taken is simply that. It does not convert to automatic consent under the law and companies risk enforcement action if they use pre-ticked boxes.

Almost 100 billion spam emails are sent every day

"John Lewis' lawyers then argued that because I browsed their website I had "negotiated" with them for a sale and a business relationship existed between us which would allow them to email me. The judge threw that out too."

Some 100 billion spam emails are sent to consumers every day according to Cyren's Internet Threats Trends report for 2013.

Richard Cox, who is head of anti-spam organisation Spamhaus, said: "As the Information Commissioner cannot take action on individual breaches of the law, the only way to stop this annoying type of spam is for individuals to take action themselves.

"Only the individual in each case will know whether they consented to their details being harvested for this type of activity. Hopefully it will be a warning to other UK companies not to abuse their customers' personal data."

A spokesperson for John Lewis said the case consisted of a "very specific set of circumstances" and while they disagreed with the judge's decision they would abide by the ruling.

The company said in a statement: "Mr Mansfield voluntarily gave us his email address, set up an account online and chose not to opt-out of marketing communications when that option was available to him.

"We listen carefully to what our customers tell us about how and when we communicate with them and endeavour to do so in a manner that is convenient to them.

"We're sorry Mr Mansfield was inconvenienced by our emails."

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