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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Regional Home Price Disparity Widens In April

Help To Buy: 80% Go To First Time Buyers

Updated: 3:26pm UK, Thursday 29 May 2014

Some 80% of the Help To Buy loans granted in the mortgage scheme's first six months were given to first time buyers, the Treasury has said.

A total of 7,313 loans were issued between October last year and March this year, with a total value of £1bn.

The average value of each loan taken out under the controversial scheme was £136,742.

Only about 1% of all mortgages taken out in the period were helped by the scheme, undermining critics of the programme who have said it is prompting a house price bubble.

Most mortgage completions through the scheme were on properties outside London and in regions where prices are lower.

A high proportion of homes supported by the scheme were in the North West and the East of England.

Blackstock property expert Andrew Teacher said: "Today's figures reinforce the fact that Help to Buy has not helped to blow up the London market as numerous commentators have suggested.

"The figures show the scheme has been most effective in areas of reduced growth where prices have remained relatively flat."

The mean value of a property purchased or remortgaged through the scheme is £151,597, compared to a national average house price of £252,000.

A total of 38% of loans were for terraced houses.

The scheme's rollout in October saw only four completions, followed by 164 in November and 818 in December.

However, the monthly figure jumped significantly in the first three months of this year.

In January, completions reached 1,580, while the number rose further in February and March, to 2,090 and 2,657 respectively.

Only 5% - a total of 385 completions - were made on properties in the capital.

The Help To Buy mortgage guarantee scheme was boosted by a second phase equity loan scheme in the spring.

Data for both phases shows a total of 27,861 homes were bought under the scheme, with 85% of sales to first-time buyers.

Prime Minister David Cameron said: "Help to Buy has helped thousands of hardworking people to buy a new home and crucially it is helping to increase the number of new homes being built around the country.

"It is an important part of our long term plan to back those who want to get on and to secure a better future for Britain."

Meanwhile, net lending to small and medium sized businesses as part of the Bank of England's Funding for Lending Scheme dropped  by £723m in Q1, amid a focus on business loans.

The Bank said that between February and March lenders drew just £2bn from the scheme. It was launched in mid-2012 to encourage banks to improve borrowing facilities.

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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.

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.

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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Drugs And Prostitution Worth £10bn Annually

Illegal drugs and prostitution contribute more to the UK economy than housebuilding, according to newly-released official data.

The Office for National Statistics (ONS) said the two "illegal activities" had a combined impact of £10bn on gross domestic product (GDP) in 2009, calculated at current prices.

In comparison, it said only £4bn, some 60% less, was spent on "own-account construction".

The ONS defines own-account construction as "the production of new dwellings and major repairs and improvements by enterprises and households for their own use".

Of the £10bn estimate, around £5.3bn was attributed to prostitution and at least £4.4bn to the illicit drugs trade.

A small estimate error was factored into the figures.

The ONS has published the data ahead of National Accounts due to be released in September, which will include latest figures for both enterprises.

It said the £10bn amount for drugs and prostitution is based on a variety of sources and assumptions.

It added: "The new estimates cover the import, production and sale of illegal drugs and the provision of prostitution services."

The ONS said that between 1997 and 2009 the annual impact of drugs and prostitution varied annually between £7bn and £11bn, measured at today's prices.

The inclusion of the two underground sectors is part of a move to ensure consistent economic comparisons between EU member states.

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Insurers Expose £1.3bn In Fraudulent Claims

A record £1.3bn worth of fraudulent insurance claims were uncovered last year as the industry continues to crack down on cheats.

The Association of British Insurers (ABI) said some £3.5m worth of dishonest claims are uncovered every day.

The figures show an 18% increase in the value of fraudulent claims detected in 2012.

In 2013, some 118,599 fraudulent or exaggerated claims were detected, the equivalent of more than 2,000 each week.

Motor insurance claims were the most expensive and common dishonest claims to be uncovered.

The average value of fraud detected across all kinds of insurance products was £10,813.

Aidan Kerr, the ABI's assistant director, said: "The message is clear: never has it been harder to get away with committing insurance fraud.

"Never have the penalties - ranging from a custodial sentence and a criminal record, to difficulties in obtaining financial products in the future - been so severe."

The ABI says the figures also reveal a "significant" rise in the number of people reporting suspected fraudsters.

Calls from members of the public reporting frauds to the Insurance Fraud Bureau's "cheatline" rose by one third (32%) in 2013 compared with the previous year.

Malcolm Tarling, a spokesman for the ABI, said the industry has also seen an increase in the number of "staged accidents".

This dangerous practice sees fraudsters cause deliberate accidents, often with innocent motorists, in order to cause injuries and claim insurance.

"Staged accidents, which are extremely serious, involve criminal gangs deliberately staging an accident, normally involving an innocent motorist," Mr Tarling said.

"These are increasingly becoming more commonplace and the industry is actively working very hard to crack down on them."

One insurer, AA Insurance, said it identifies more than 100 fraud attempts each week.

Simon Douglas, director of AA Insurance, said: "These figures are encouraging because they reflect the growing success of the insurance industry in the war against fraud, rather than more fraud taking place.

"This should send a strong signal to anyone thinking of trying it on."

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