Christmas Debts 'Won't Be Cleared Until June'

The average family is going to take on debts this Christmas that will take until June to pay off, it has been claimed.

The Trades Union Congress has carried out research that shows that the typical family will add £685 to its borrowing by the time the festive season is over.

That will take a family on an average income 24 weeks to pay off, the labour organisation claims.

Last Christmas, one in six families borrowed money to pay for food, drinks and presents, with households borrowing an average of £654 per adult (Men £1,000, women £547).

Using average weekly earnings and savings data the TUC estimated that it took average-income earners 20 weeks to pay off this debt.

This year, consumer debt has increased by 4.9 per cent. The TUC's calculations estimate that it will take four more weeks for an average-income earner to pay back the extra debt burden they will take on.

If a minimum wage worker were to borrow the same sum it would take them an entire year working full-time to pay it off.

The TUC says the findings underline how ordinary people are not benefiting from the recovery and are instead facing a bigger struggle to pay off their debts.

The study has emerged on the day when the Bank of England has warned of the scale of the debt burden weighing on British families.

According to the TUC, British workers are currently suffering the longest real-wage squeeze since the 1870s, with inflation rising faster than wages for the last 42 months.

It says the government needs to make fairer pay rewards a priority.

Nicola Smith, head of economic and social affairs at the TUC, told Sky News: "It's to do with the fact that is an expensive time of the year for everybody, and with wages hardly having kept up with prices for the last four years, with family incomes under historic pressure, just meeting the basic costs of Christmas is going to mean a lot more people having to rely on credit."

She said the problem was that most growth in the economy was being provided by consumption and because pay was not keeping up with prices, the extra money people had to spend on buying goods was coming from borrowing.

"People are having to borrow to make up the extra spending that is driving growth in the economy," she said. "It's really worrying that that does not provide us with a sustainable basis for a recovery going forward."

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Christmas Shoppers To Spend £12bn In 4 Days

By Emma Birchley, Reporter

Shoppers are expected to spend £12bn in just four days as they make the most of slashed prices and promotions, according to retail forecasters.

The deals are being offered as a fierce battle for sales rages both on the high street and online.

Alan Dadswell relies on Christmas to keep his shop Toys 'N' Tuck in Southend-on-Sea going. And offering discounts is crucial.

He said: "To get people to spend the money they have got to feel they are getting a bargain and we have got to give them a bargain. We have to hunt with our suppliers to do good deals to get people in to the store."

A sluggish autumn has put added pressure on retailers.

But with 74% of shops offering deals, 13 million people are expected to shop on the high street on the last Saturday before Christmas.

And it will help that many people finished work for Christmas on Friday, leaving extra time to spend.

Offering discounts at Toys 'N' Tuck in Southend-on-Sea is crucial

But Diane Wehrle, from the shop footfall monitors Springboard, says shoppers are getting increasingly canny.

She said: "Tactics definitely come into it. Shoppers are becoming much more savvy than they used to be. They understand that retailers are slashing prices. They understand they are doing one-off specials and they wait for them.

"So they perhaps go window shopping before the Christmas trading period starts, look out for what they want to buy and then buy them when they are on offer."

Lizzy Clarke, armed with bags of gifts in Southend, has made the most of the offers.

"They've got some great deals ... 75% off in some stores and I've just bought some jumpers that cost me £30 last week and this week have cost me £7," she said.

But Rob Antoniazz, who is unconvinced, said: "The decent items in good shops are never up for sale because the demand is there to buy them."

Tesco's distribution centre in Erith, Kent, has gone into overdrive

Half of the money being spent in the four days to the end of Monday will be on food, with £900m going towards online groceries.

Tesco has sold twice as many turkeys over the internet than last year. At its distribution centre in Erith, Kent, staff are working around the clock preparing orders.

Simon Belsham, the managing director of Online Grocery for the chain said: "This is a really busy time of year for us. It really reflects that customers are looking for more and more convenient ways to shop for their Christmas presents and Christmas food."

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Serco Agrees To Repay £68.5m Overcharge

Disgraced firm Serco has agreed to repay the Government £68.5m for overcharging for tagging criminals.

Both Serco and G4S were found to have charged the taxpayer tens of millions of pounds too much for monitoring criminals in a contract dating back to 2005.

The Serious Fraud Office (SFO) opened a criminal investigation after it emerged G4S and Serco overcharged the Government for electronic tagging of offenders, some of whom were found to be dead, back in prison or overseas.

Serco agreed to pay the sum to the Government to reimburse money owed on the contract and for other costs incurred, such as the investigation, at the end of a broader review into Serco and G4S contracts, Justice Secretary Chris Grayling said.

The Government has already rejected a £24m offer from G4S, which came under fire for its poor handling of the Olympics security contract, and officials vowed to "pursue all possible avenues" to recoup more taxpayers' cash.

Discussions on repayment are continuing.

Serco chief Alistair Lyons has apologised

In addition to the investigation it is already facing, G4S has been referred to the Serious Fraud Office a second time after the Ministry of Justice uncovered further problems with two contracts for facilities management in the courts.

Mr Grayling said that while Serco had been willing to allow a further forensic audit to establish what had happened in the overcharging scandal, in July G4S had refused the request.

Francis Maude, minister for the Cabinet Office, which led the review said: "It's good news for taxpayers that Serco has agreed to recompense £68.5m for overcharging.

"We are confident that the company is taking steps to address the issues which our review has identified.

"Since day one this Government has been working to reform contract management and improve commercial expertise in Whitehall."

As revealed by Sky News City Editor Mark Kleinman on Wednesday, both G4S and Serco have withdrawn from bidding for lucrative probation office contracts.

However, the Government has left open the possibility of either firm playing a supporting role, working with smaller businesses or voluntary sector providers.

The remainder of their contract for monitoring criminals has been transferred to rival firm Capita.

Serco non-executive chairman Alistair Lyons said: "The contract issues that were identified should never have happened and we apologise unreservedly for them.

"We are doing everything in our power to make sure that such issues cannot reoccur anywhere in our business around the world."

A statement from G4S said: "G4S places the highest premium on adherence to its company values, including customer service and integrity."

Last month the boss of G4S, Ashley Almanza, admitted to MPs that the company had failed to "tell the difference between right and wrong", while Mr Lyons told the Commons Public Accounts Committee it was "ethically wrong".

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Mortgage Misery For Millions If Rates Go Up

By Ed Conway, Economics Editor

Around four million families would not have enough cash to pay their mortgage if interest rates rose to barely half the rate they were before the crisis, according to Bank of England research.

The warning from the Bank comes amid growing speculation that it may begin to consider lifting the cost of borrowing within months.

Research published in the Bank's Quarterly Bulletin sketches out a worrying picture for UK households in the event of an increase in the cost of borrowing.

The Bank's statistics show that if rates rose by 2.5% to a level of 3%, more than half of the eight million families with mortgages would not have enough in their monthly budgets to afford the increased interest payments.

They would be forced to cut their spending or work longer hours.

However, the Bank said that if families' incomes increased by 5% in the coming years, then the proportion of mortgage-holders struggling to manage their payments would be around a third.

Insiders also pointed towards the fact that at present investors only expect interest rates to reach 1.7% by the end of 2016 - significantly lower than the 3% level in the Bank's scenario.

The shock would not be limited to those with mortgages. The Bank's report also found that almost 5% of small businesses in the UK faced a 50% or greater chance of defaulting if interest rates rose by four percentage points.

However, the report also found that for many families the current debt burden decreased over the past year.

The proportion of mortgagors struggling to pay for their accommodation remained relatively unchanged; the share of households worried about their debt levels dropped from 46% to 39%.

The most strain over the past year was felt by those who rent their home. The Bank's research shows that the number of renters who face credit card and unsecured loan interest bills of more than a fifth of their incomes has risen from 800,000 to 1.1 million this year.

The worry is that the households most exposed to debt problems are those who are renting, are unable to rely on the capital value of their home, and who have had to take out large loans to sustain their lifestyles.

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Serco And G4S Braced For Investigation Outcome

By Mark Kleinman, City Editor

The two outsourcing giants at the centre of a scandal over the delivery of Government projects are braced for more bad news on Thursday as they fight to start bidding again for major Whitehall contracts.

Sky News understands that G4S and Serco will be informed in the coming hours about the outcome of a cross-Government probe of their work following the discovery that they had overcharged tens of millions of pounds in fees for monitoring prisoners on their release from jail.

Ministers are said to have decided that while the two companies have embarked on genuine attempts to rebuild their relationship with the Government, they have not yet done so sufficiently to enable them to be considered for significant contracts in the short term.

An announcement about the outcome is expected on Thursday although it could be delayed, say people close to the situation.

Whitehall insiders said on Wednesday that a settlement being thrashed out with the two FTSE-100 companies will include the repayment of well over £50m of fees that the Ministry of Justice (MoJ) had decided had been wrongly paid.

One source added that fees relating to other contracts handled by the two companies may also have to be repaid, although the scale of these was unclear.

The financial impact is understood to be larger for Serco than the City is expecting. Last month, it said it had incurred £27m of costs relating to the electronic monitoring, or tagging, contract, as well as another for providing Prisoner Escort and Custody Services.

Serco, which is without a chief executive following the departure of Chris Hyman, added that the MoJ had "calculated that their interpretation of the difference on billing totalled low tens of millions of pounds since the contract commenced in 2005. Any such potential repayment and any other directly-related incremental costs, would be charged as further exceptional items."

A person close to the situation said Serco's repayment would be less than £100m but higher than shareholders had been led to anticipate.

The MoJ inquiry has been run in tandem with the Cabinet Office. It was unclear whether the former would make a separate announcement on Thursday, although it is understood to have discovered further shocking examples of charging irregularities as part of its review.

Ministers reacted furiously during the autumn when it emerged that G4S and Serco had billed Whitehall for tagging prisoners who had died, were in prison or were living abroad. Earlier this week, Capita was handed the electronic monitoring contract in their place.

The effective barring of G4S and Serco from bidding for new Government work has highlighted the dearth of companies able to provide key public services.

A Serious Fraud Office probe into the two companies is ongoing, although the Government's settlement with them is unlikely to include additional financial penalties beyond the repayment of the overcharged fees, one insider said.

G4S and Serco executives are understood to have been locked in meetings on Wednesday to negotiate the outcome of the Government's review of their work.

Serco is due to update the City on its performance in a pre-close trading statement on Thursday.

Restoring good relations with Whitehall is a priority for Ashley Almanza, G4S's new chief executive, who is attempting to protect about £700m in annual revenues flowing from a client that accounts for roughly 10% of the company's entire global turnover.

He took the helm of a business still reeling from the reputational crisis triggered by its failure to deliver enough security staff at last year's London Olympics.

"Our reviews into G4S and Serco's contracts are rigorous and extensive," Francis Maude, Cabinet Office Minister, said in November. "But when they report, and we are satisfied full health has been restored, we will move on quickly."

G4S, Serco, the Cabinet Office and the MoJ all declined to comment.

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HMRC Failing To Pursue Big Business, MPs Warn

By Gerard Tubb, Sky News Correspondent

The tax man is too keen to chase small businesses for unpaid tax and is not doing enough to prosecute multi-national firms, according to MPs.

The Public Accounts Committee claimed Her Majesty's Revenue and Customs (HMRC) does not know how much tax is lost through aggressive tax avoidance and said it should be more willing to pursue prosecutions.

The committee's chair, Margaret Hodge MP, said: "HMRC has not clearly demonstrated that it is on the side of the majority of taxpayers who pay their taxes in full."

She accused the department of allowing the Tax Gap, the theoretical amount that is not collected, to grow by £1bn in 2011/12 and of not doing enough about it.

She said: "HMRC holds back from using the full range of sanctions at its disposal.

"It pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations."

The committee's report said inspectors should be "more willing... to test the boundaries of the law".

"HMRC has not attempted to gather intelligence about how much tax revenue is lost through aggressive tax avoidance schemes," it claimed.

The focus on tax avoidance follows on from high profile cases like Starbucks - which was revealed last year to have only reported taxable profit in the UK once in 15 years.

The company has since promised to pay £20m.

In a statement a spokesman for HMRC said it "strongly disputes the conclusions in the Public Accounts Committee report and challenges the committee's selective and misleading use of figures".

The department said it had secured more than £50bn of additional tax from compliance work since 2010, including £23bn from large businesses.

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Airport Expansion: The Case For And Against

The news that new runways at Heathrow and Gatwick are on a shortlist of airport expansion options has been welcomed by the airline industry as well as business leaders.

But green campaigners, local residents and some politicians are worried about the effects on the environment, as the options were outlined in an interim report by Sir Howard Davies's Airports Commission.

There are no firm long-term proposals in the report - they will come when the commission makes its final report in the summer of 2015, after the next general election.

PRO-NEW RUNWAYS:

Heathrow argues that a third runway would raise its capacity to 740,000 flights a year, from the current limit of 480,000.

The airport said it would be able to cater for 130 million passengers compared to 70 million today, "allowing the UK to compete with our international rivals and providing capacity for the foreseeable future".

Chief executive Colin Matthews said: "Britain needs a world-class hub airport with the capacity to compete against Paris, Frankfurt and Amsterdam. A third runway is the quickest, cheapest and surest way of connecting the UK to growth."

Some argue another runway at Heathrow will increase air pollution

The airport said a third runway would provide benefits to the UK worth £100bn and expansion would bring considerable benefits to the local community by protecting the 114,000 jobs already dependent on the airport and creating more than 70,000 new jobs.

Addressing environmental concerns, Heathrow said expansion could be met within EU climate change targets. Continued improvements to aircraft efficiency means air traffic could double by 2050 without a substantial increase in emissions, it argues.

Gatwick said expansion "can give the country the economic benefits it needs at an environmental cost it can afford with the lower fares and greater choice that passengers want. It can be delivered more quickly and at lower cost".

And the London Chamber of Commerce said: "Government should just get on and act on the short-term measures now. It will make no sense to delay any measures to enhance capacity until after the General Election.

"Businesses are crying out for aviation action now.  Political posturing would put the economic recovery at risk and threaten London's reputation as a world leading city."

ANTI-NEW RUNWAYS:

Local groups say the north-west runway plan at Heathrow will require significant demolition in the villages of Longford and Harmondsworth.

Anti-Heathrow expansion group Hacan have vowed to fight the Heathrow plans.

"We understand the strength of feeling of those living near Heathrow," Sir Howard said.

Countryside campaigners at the Campaign to Protect Rural England (CPRE) also voiced concern at the options set out.

Georgia Wrighton, director of the CPRE in Sussex, said: "A second runway at Gatwick, together with sprawling development and car parks anticipated on a massive scale, would concrete over cherished open countryside.

"A heady cocktail of increased flights, HGV traffic and cars would erode the tranquillity of rural communities, and the health and quality of life of people living under its shadow."

Keith Taylor, Green Party MEP for the South East, said: "The political opposition to airport expansion in South East England is sadly melting away.

"There's no doubt that the Government will be pleased with this report. It gives them the cover they need to go on avoiding answering difficult questions on airport expansion and to prepare themselves for a colossal U-turn on Heathrow expansion.

"This report will be of great concern to my constituents near Gatwick and Heathrow. We know that any new runways at either airport will increase air pollution, destroy homes and countryside and mean more people's lives are blighted by flight noise."

Tory MP for Richmond in west London, Zac Goldsmith, who has many constituents who live under the flight path, told Sky News: "The case for expansion is very weak.

"The case for improving our road transport, our rail links to existing airports is very strong. If we did that, we would have enough capacity for many, many years."

Last week, Mr Goldsmith said any decision by the Prime Minister to back Heathrow expansion would represent an "off-the-scale betrayal" and David Cameron would "never be forgiven in west London" .

London Mayor Boris Johnson, who wants a new airport in the Thames Estuary, said a third runway at Heathrow would be "completely crackers".

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New Runways For Gatwick And Heathrow Airports

Building a controversial third runway at Heathrow airport has been shortlisted as one of the options for expansion by the Airports Commission in its first report.

The interim findings of an independent inquiry led by the former head of the Financial Services Authority, Sir Howard Davies, has also recommended a second runway for Gatwick airport.

Sir Howard has also said he would consider the idea of building a new airport in the Thames Estuary, plans for which have been backed by the London Mayor, Boris Johnson, although he did not include it on the shortlist of options.

He warned if the UK did not expand its airports then it would cost the economy £45bn over 60 years and that to cope with increasing passenger numbers the first new runway should be operation by 2030, the second by 2050.

Sir Howard said: "The UK enjoys excellent connectivity today. The capacity challenge is not yet critical but it will become so if no action is taken soon and our analysis clearly supports the provision of one net additional runway by 2030.

Heathrow dealt with 70 million passengers last year

"In the meantime we encourage the government to act on our recommendations to make the best of our existing capacity."

He said that politicians would have to chose which runway to build first - one at Gatwick or one at Heathrow - as work on them would not be able to be carried out at the same time.

A third runway for Heathrow has met with bitter opposition and the publication of the report will likely trigger a substantial political row.

The Conservative party made its opposition to plans for the airport's expansion – supported by the Labour government - part of its 2010 election manifesto and ruled a third runway out when the coalition came to power.

Among the most vociferous opponents have been Mr Johnson and the Conservative MP, Zac Goldsmith, a keen environmentalist whose constituency is in the flight path.

Mr Johnson told Sky News that building another runway at Heathrow would be "bonkers".

He said that both the new runway options for Heathrow would involve "concreting over the M25 probably closing that major artery for five years at the least".

Plans for a third runway at Heathrow have been controversial

And he said that a second strip for Gatwick would make no difference to dealing with the air traffic.

He said: "A new airport in the inner estuary is the only credible hub option left, and the only one that would uphold this country's claim to be the natural financial, commercial and economic capital of Europe."

Last week he threatened to call for a judicial review if plans for the four-runway airport on the Isle of Grain, which at £112bn would cost five times as much as Heathrow expansion, were not included in the commission's report.

The commission said it had not shortlisted the Thames Estuary plan "because there are too many uncertainties and challenges surrounding them at this stage".

However, it will undertake further study of plans to see whether it was a "credible proposal" and may include it on the shortlist next summer.

Gatwick is running at 85% of its total capacity

The Airport Commission's final report will be submitted in the summer of 2015, after the next General Election, and the Transport Secretary, Patrick McLoughlin said the Government would not indicate a preference on options until after that.

Mr Goldsmith, who has suggested he would leave the Tory party over the issue, said last week that any decision by the Prime Minister to back Heathrow expansion would represent an "off-the-scale betrayal".

Heathrow is currently operating at 98% of its capacity with 65m travellers using it in 2012 but the report pointed out that it was so busy passengers suffered "a high level of delay and unreliability".

If it is not allowed to expand, those in favour of a third runway claim that travellers to Europe will opt to fly into airports at Frankfurt, Paris and Amsterdam instead, at a cost to the UK economy.

Heathrow representatives told the commission that a third runway could be operating by 2029 allowing 260,000 more flights a year.

Boris Johnson says a third runway for Heathrow would be "crackers"

There are two options for the extra runway - to build a 3,500m (11,500ft) strip to the north west of the site or to extend the northern runway to 6,000m (20,000ft) and use one half for take-offs and the other for landings.

The north west option would see 1,500 homes demolished and the loss of 30 listed buildings, the extension would see 720 homes flattened and affect eight listed buildings.

Heathrow chief executive Colin Matthews welcomed the report saying: "I think the report we received today is good news for trade, for jobs and for the UK as a whole."

However, Keith Taylor, Green Party MEP for the South East, said: "The political opposition to airport expansion in south east England is sadly melting away.

"There's no doubt that the Government will be pleased with this report. It gives them the cover they need to go on avoiding answering difficult questions on airport expansion and to prepare themselves for a colossal U-turn on Heathrow expansion."

The idea of expansion at Gatwick, which is currently running at 85% of its capacity and full capacity at peak times, has also met with opposition. It would be built to the south of the existing runway.

Georgia Wrighton, director of the Campaign for the Protection of Rural England in Sussex, said: "A second runway at Gatwick, together with sprawling development and car parks anticipated on a massive scale, would concrete over cherished open countryside."

The report did not include options for a new runway for Stansted or Birmingham airports, as had been suggested.

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Carrefour Plans £1.7bn Shopping Malls Deal

Carrefour has announced plans to buy 127 shopping centres across Europe in a €2bn (£1.69bn) deal.

France's largest retailer, which already owns nearly 10,000 hypermarkets, supermarkets and convenience shops across the continent, has joined forces with eight investors to buy the centres in France, Spain and Italy.

Many of the Klepierre sites, which are located in France, Spain and Italy and generate an annual rental income of €135m (£114m), are close to its existing stores.

They will sit alongside its existing 45 malls in a new company, 42% of which will be held by Carrefour with the rest held by investors.

Carrefour has been struggling for years, even before the European debt crisis hit its biggest markets.

Georges Plassat took over as chief executive last year, pledging to cut costs and improve the fortunes of the company's 1,300 hypermarkets.

Carrefour's share price climbed more than 1.5% in the hours following the announcement.

The deal, which Carrefour said would make it one of Europe's leading shopping mall companies, is subject to regulatory approval.

The company is expected to close the deal in March or April next year.

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Ticket Rip-Off: Prices 'Marked Up' Online

Theatre-goers and music fans face mark-ups of as much as 38% on the value of some online tickets, according to a Which? study.

Compulsory charges are added to 72% of tickets sold online, said the consumer group, which is launching a campaign to bring down the cost.

Buying online is convenient, offers variety and quick transactions, but nearly half of those surveyed (49%) said the charges had put them off buying tickets for an event altogether.

In one study, only 3% of tickets were being sold at face value without any additional compulsory fees like booking or delivery charges.

Which? says in some cases the practice is illegal.

Which? says that many consumers feel ripped off by ticketing charges

Richard Lloyd, executive director of Which?, said: "Consumers tell us they are feeling ripped off by the level of ticketing charges and the lack of transparency means it is almost impossible for people to compare prices when booking online.

"We want to see the ticketing industry Play Fair on Ticket Fees, so that all charges are displayed up-front and with a clear explanation of what they're for."

A Ticketmaster spokesperson told Sky News: "To suggest that ticket fees are hidden is utterly misleading and factually incorrect. 

"Before a customer purchases a ticket, any additional fee is always displayed clearly.

"The fees cover a wide range of costs to provide the services which ensure the best and easiest possible experience for our customers from purchasing a ticket to accessing the event."

One explanation for the additional fees may be the acts themselves. They want their ticket prices to seem as low as possible, leaving the ticket agency to tack on the fee.

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Ireland Exits Bailout As Economy Turns Around

Ireland has become the first country in the eurozone to exit a bailout programme it was forced to take when it fell on hard times.

The country's economy, previously dubbed the Celtic Tiger because of it incredible growth, needed the emergency measure because its revenues fell and expenses increased in the wake of the financial crisis.

Taoiseach Enda Kenny said the exit sent out a "powerful signal internationally, that Ireland is fighting back, that the spirit of our people is as strong as ever".

He said: "Ireland is now moving in the right direction. Our economy is starting to recover. While we still have far too many people out of work, jobs are being created."

The bailout programme allowed the country access to £72bn (85bn euros) in cash to help pay its bills.

But the ready supply of money, from the International Monetary Fund, European Central Bank and EU, came at a price.

Experts from the IMF, ECB and EU were able to take partial control of Ireland's economy.

It led to a period of austerity, with taxes being raised and government spending cut, resulting in thousands of public jobs being lost.

It was also viewed as a national humiliation, with the public appalled that its leaders had been forced to go 'cap in hand' to outside bodies.

The government claims that the measures have helped Ireland's economy and jobs are now being created at a faster rate than for years.

The amount of interest Ireland was paying on its government debt began to increase as uncertainty over the country's future intensified and this is widely seen as the main reason for the problems.

The rate at which it borrows money has now fallen, which has allowed it to bring public expenditure under control.

Ireland is some distance ahead of other countries that suffered a similar fate.

Portugal is predicted to complete its programme next year, but Greece could be many years away yet. Other EU countries that are not members of the euro also face controls on their economies for some time.

Despite the bailout exit, Ireland's finance minister has warned the country is not out of danger yet.

He said the signs of sustained improvement were good, but it depended on the country's economy continuing to grow.

Michael Noonan said on Friday: "This isn't the end of the road. This is a very significant milestone on the road. But we must continue with the same types of policies.

"The real heroes and heroines of this are the Irish people. People are beginning to spend. Property prices are improving... it's fragile.

"But in my view things are building well and I would hope that next year would be better for a lot of people who have made a lot of sacrifices."

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Virgin Money To Launch Current Account Trial

By Mark Kleinman, City Editor

The banking arm of Sir Richard Branson's business empire will on Monday become the latest high street lender to begin an assault on Britain's lucrative current account market with the launch of a pilot among its 3000 employees.

Sky News understands that Virgin Money, one of the country's fastest-growing banking groups, will unveil the trial ahead of a full launch scheduled for next year.

It will mark a potentially-significant phase in efforts to bolster competition in the current account market, with well over 80% of accounts currently supplied by the five biggest lenders: the state-backed Lloyds Banking Group, owner of HBOS, and Royal Bank of Scotland, which owns NatWest; Barclays, HSBC and Santander UK.

Once the staff trial has been completed, Virgin Money will target consumers who are underserved by the major lenders, offering a basic account with no fees or charges and free access to the UK ATM network of cash machines.

Sir Richard Branson celebrates his acquistion of Northern Rock in Newcastle

Doing so is expected to be loss-making for Virgin Money, according to analysts, meaning that the availability of the product is likely to be restricted to those consumers without an existing current account.

A wider launch will get underway in Scotland and Northern Ireland in the first quarter of next year, with nationwide coverage and a digital banking service likely to be available by the end of 2014, according to people with knowledge of Virgin Money's plans.

Virgin Money executives are understood to be confident of making a serious impression on the current account market by utilising the network of Northern Rock branches and infrastructure that it acquired in 2011, and through a marketing campaign emphasizing the parent brand's credentials of service and value.

"There won't be hidden charges or gimmicks. It will be about delivering for consumers," an insider said on Sunday.

Sir Richard has said previously that he wanted to offer a choice between 'free' current accounts and those which incur a small up-front fee. It is unclear whether that will be the case as Virgin Money ultimately grows its presence in the sector in the coming years.

The issue of current account charges is becoming more intensively-debated as banks face up to the increased regulatory costs that will be triggered by the ring-fencing structure being introduced as part of the Government's banking reforms.

Under the new rules, so-called universal banks such as Barclays and RBS will have to establish separate subsidiaries for their high street and investment banking arms, which the Independent Commission on Banking said in 2011 was likely to cost the industry several billion pounds annually.

Virgin Money is likely to be an indirect beneficiary of the new rules because its sole focus on retail banking will mean that it does not have to process many of the complex structural changes required by its competitors.

Taking over Northern Rock was a crucial moment in Virgin Money's expansion

It is also likely to be aided by the new seven-day switching system for current account providers which came into effect during the autumn. Barclays and the Co-operative Bank are among those which have seen net losses of customers, the latter as a result of the adverse publicity over its £1.5bn capital hole and allegations about the behaviour of its former chairman, Paul Flowers.

During the last year, Virgin Money sold more than 1.5 million new products to customers, having established a significant market share in loans, insurance and savings.

Its takeover of Northern Rock was a crucial moment in its expansion, but the length of time between that deal and the current account launch reflects both Virgin Money's determination to develop the right products and the pitfalls of associating its brand with the poor service that has blighted British banking.

Senior executives at the major banks admit that they have only been able to avoid charging for current accounts because they have been subsidised by the sale of products such as payment protection insurance (PPI).

The mis-selling of PPI and a range of other products have cost the major banks billions of pounds in compensation and further tarnished the industry's reputation.

Last week, Tesco said it was poised to create hundreds of jobs by entering the current account market at a time when the supermarket group is wrestling with challenges in its core retailing business.

Other new current account providers include Metro Bank, which is raising nearly £400m from investors in an attempt to accelerate its growth.

Jayne-Anne Gadhia, Virgin Money chief executive, declined to comment on the details of its plans but told Sky News: "Our entry into the current account market is a significant step on our quest to make banking better."

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Johnson To Mull Legal Move Over Airport Snub

By Mark Kleinman, City Editor

Boris Johnson is expected to consider a legal challenge to an expected snub next week to his proposals for a new four-runway airport in the Thames Estuary.

Sky News understands that the Mayor of London has discussed the option of seeking a judicial review with his advisers if the Airports Commission sidelines the idea.

Mr Johnson is said not to have decided yet about whether to mount a potentially lengthy and costly legal challenge over the Commission's interim report, which will be published on Tuesday.

However, he said this week that a shortlist of options which favoured the expansion of Heathrow would be "scandalous".

Expansion of Heathrow is expected to head shortlist of options

"You would expect him not to rule anything out at this stage," said a person familiar with the London Mayor's approach to the issue.

The Commission, led by Sir Howard Davies, the former director of the London School of Economics, is expected to propose moving forward with three options for expanding aviation capacity in the south-east.

Each of the trio was said to be likely to include Heathrow, although Gatwick, the busiest single-runway airport in the world, was increasingly confident this weekend that standalone expansion of the Sussex site is now likely to be among them.

Speculation this week had suggested that Gatwick would only be included as part of a proposal that would also involve a third runway at Heathrow.

Mr Johnson met Transport Secretary Patrick McLoughlin on Thursday

However, Gatwick's owners have insisted that such a development would not be economically viable and that they would not proceed with a second runway under that scenario.

Sky News revealed on Thursday that David Cameron had met Sir Howard to discuss the interim report in recent days, and had urged the Commission to include a non-Heathrow option for consideration.

That could yet mean a revival of the London Mayor's proposal or an expansion focused on London's third airport, Stansted.

Sir Howard also met Chancellor George Osborne earlier this week while Sky News understands that Mr Johnson met Transport Secretary Patrick McLoughlin on Thursday.

The publication of an interim report, which will set out several options meriting further analysis ahead of a formal recommendation after the 2015 general election, was supposed to defuse political tensions over Britain's future aviation capacity.

Sky News understands, though, that the Government will publish an official response in the new year, underlining the difficulty it faces in navigating an issue that will feature in the manifestos of the main political parties in 18 months' time.

Stewart Wingate, Gatwick's chief executive, said: "Gatwick's case for a second runway is compelling. Compared to Heathrow we are cheaper, quicker, have a significantly lower environmental impact and we are the most deliverable solution.

"Heathrow's answer for passengers is to re-establish their monopoly which will mean high fares forever, and huge environmental damage to their local communities."

The requirement for new runway capacity has become more pressing as the south-east's airports reach bursting point.

Rival European hubs in Frankfurt and Paris are growing rapidly, while Dubai is expected to overtake Heathrow as the biggest airport by international passengers within two years.

A spokesman for Mr Johnson declined to comment on Saturday.

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UK Plans Cap On EU Immigrants - Leaked Report

The number of people allowed to move to the UK from European Union countries could be capped at 75,000 under proposals set out by the Home Office, it has been claimed.

A leaked Government report on the effect on Britain of the EU's policy allowing free movement of people suggests a cap could cut net migration from EU countries by 30,000 from the current 106,000 a year.

The document, seen by The Sunday Times, also suggests blocking EU immigrants from claiming benefits or tax credits for their first five years in the UK.

The proposals would mean professionals and highly-skilled migrants from countries such as Germany, Holland or Austria could only move to the UK if they had a job offer.

Lower-skilled workers would be allowed to settle if they had jobs on an approved list of occupations for which there was a national shortage.

The leaked open borders review was overseen by Home Secretary Theresa May as part of the Government's assessment of the balance of powers between the UK and Brussels.

Other proposals in the paper include giving British citizens a "national preference" by explicitly reserving jobs for them and limiting labour movement from poorer countries joining the EU to the UK until their GDP is 75% of Britain's.

Prime Minister David Cameron on Saturday said tougher controls on freedom of movement within the EU will be needed in the future and suggested a GDP-based restriction.

He said: "When other countries join the European Union we should be insisting on longer transitions and perhaps even saying until you reach a proper share of an average European Union GDP you can't have freedom of movement.

"The reason for that is if you look at migration between Britain and Germany or France and Germany, countries of pretty even GDP, the movements are pretty much balanced.

"Its only when you have a real imbalance when you have a poor country and a much wealthier country that you get these vast movements."

But any attempt to challenge free movement rules is likely to face resistance in Europe.

European Commissioner Laszlo Andor recently hit out at British politicians' comments about the lifting of restrictions on Bulgaria and Romania at the end of this month, saying on Twitter: "Responsible politicians should avoid legitimising xenophobic reactions that indeed weaken the European spirit."

He also served notice that the UK could be taken to court over existing proposals to tighten the rules on migrants claiming benefits.

Asked about the report, a Home Office spokesman said: "We do not comment on leaked documents."

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