Big Six To Be Forced To Make Switching Easier

By Anushka Asthana, Political Correspondent

The 'big six' energy companies will be forced to be more transparent about their profits and make it simpler for customers to switch providers, under plans for an annual competition check on the industry.

Energy Secretary Ed Davey will unveil plans for the yearly review later in the House of Commons.

He is expected to say the companies will be subject to rigorous checks in three key areas - competition, profit and customer engagement.

It follows a storm of controversy around energy prices after four of the big six companies raised prices by an average of 9.1%, causing customer bills to exceed £1,400 a year and leading to allegations of cartel behaviour.

The annual check is designed to drive up competition in the market, which is still heavily dominated by the big six.

Despite a number of new entrants to the market, British Gas, SSE, Powergen, EDF, E.ON and Scottish Power still provide gas and electricity to 99% of British homes.

The annual review will aim to crack down on practices seen as preventing new firms from entering the market.

Ed Davey will announce the move in his annual statement

One supposed method revealed earlier this week involved British Gas. The energy giant was said to have a dedicated team that contacted customers who had switched away and offered them lower rates to go back.

Stephen Fitzpatrick, managing director of Ovo Energy, made the claims at a select committee hearing in which companies faced MPs.

Sources told Sky News the review would also look at how to force companies to offer clearer information to customers who want to switch and to reduce the time it takes to change companies.

There are already plans to reduce the number of tariffs on offer so that customers can easily compare them.

And the review will be expected to push companies to be more transparent about their profits.

While companies say they only make margins of around 5% on their retail products, they enjoy much bigger percentages in power generation - and the profits made through trading are not disclosed.

The review will be carried out by three regulators - Ofgem, the Office of Fair Trading and the Capital Markets Authority.

A source said the plans were "very much about transparency and asking the (big six) to open their books".

Jonathan Reynolds, a shadow energy minister for Labour, said the problem was that the regulators ought to be doing that work anyway.

He argued that we know what the problem is - we just need to fix it.

"Hard-pressed energy customers struggling with the cost of living need action now, not the promise of another review in future by the same regulator that has let the energy companies get away with ripping people off," he said.

"Nothing less than a price freeze will do, because this is the only way we can deal with the energy companies overcharging."

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Facebook Shares Plummet Despite Profit Boost

Facebook saw some $18bn (£11.2bn) wiped off its share price in minutes after a top exec admitted the social network had seen a drop in teenage users.

The company's stock soared by around 18% to $57.98 (£36.16) in after-hours trading following the announcement of better-than-expected financial results.

But the shares slid back to $48.44 (£30.20) - slightly below the day's closing price of $49.01 (£30.56) - during a conference call between Facebook management and market analysts.

Investors may have been spooked by comments from finance chief David Ebersman, who said the social network had noted a decrease in daily use among the important demographic of younger teenagers.

He said: "Our best analysis of youth engagement in the US reveals that usage of Facebook among US teens overall was stable."

But he added: "We did see a decrease in daily users specifically among younger teens."

Mr Ebersman said the trend was of "questionable statistical significance" but that he wanted to share it as the company was often asked about it.

The statement comes after a survey by financial firm Piper Jaffray found earlier this month that Twitter had overtaken Facebook as the preferred social network for teenagers.

Facebook's finance chief David Ebersman revealed the drop in teen users

Facebook has dropped from being the top choice with 44% of young users a year ago to just 23% in the latest survey.

The share price fluctuation masked an impressive set of Q3 figures that surpassed Wall Street's expectations.

The company's revenue grew 60% to £2.02bn (£1.26bn) as its share of the mobile ad market continued to grow.

The world's largest social network said it had earned $425m (£265m) in the third quarter - up from a loss of $59m (£37m) in the same period a year ago.

Adjusted earnings were $621m (£387m) in the last quarter - better than analysts expected. 

Facebook's advertising revenue was $1.8bn (£1.12bn), up 66% from a year ago, with mobile ads accounting for 49% of the company's total ad revenue during the quarter.

CEO Mark Zuckerberg said: "The strong results we achieved this quarter show that we're prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy." 

Facebook went public in May 2012 at $38 per share but initially saw its share price tumble.

It took the stock more than a year to surpass the launch price as the company worked to prove that it could grow mobile advertising revenue at a time when an increasing number of its users were accessing it on mobile phones and tablet computers.

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Pensions: 'Rip-Off' Charges Targeted By Govt

Plans to stop "rip off" pension charges could see people getting an extra £100,000 in their retirement savings pot.

The Government is to unveil plans that could include a ban on all charges above 0.75% a year as it rolls out landmark reforms to automatically place people into workplace pensions.

The industry has been working to improve transparency and the average charge on new pension schemes set up in 2012 is around 0.51%.

But the Office of Fair Trading (OFT) estimates there are more than 186,000 pension pots with £2.65bn worth of assets which are subject to an annual charge of above 1%.

Small variations in charges can make huge differences over time to the eventual size of the pension pot that someone ends up with.

The Government said that someone who saves £100 a month over a typical working lifetime of 46 years could lose almost £170,000 from their pension pot with a 1% charge and over £230,000 with a 1.5% charge.

A pension saver with a 0.75% annual charge on their pension pot could eventually end up £100,000 better off than if they had been charged a rate of 1.5%, the Government said.

Pensions Minister Steve Webb said: "The Government believes that enough is enough on charges.

"People need to know they are getting value for money when they save into a pension and not being ripped off by excessive charges."

Other options for caps being considered by the Government include a higher charge cap of 1% and a "two-tier" cap.

The two-tier cap would involve a standard cap of 0.75% and as well as a higher cap of 1% if employers explain to the Pensions Regulator why their scheme charges more than 0.75%.

Any final cap could lie somewhere between the two levels suggested, depending on the evidence received.

The Government wants to hear from the industry and the public on how it can best design a charging cap that can protect people's savings before putting its plans in place next year.

Otto Thoresen, director general of the Association of British Insurers (ABI), said: "The industry is committed to making pension reform a success and of course will engage fully with this consultation."

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Supermarkets Announce New Petrol Price Cuts

By David Crabtree, Midlands Correspondent

The cost of fuel is being slashed at pumps across the UK in the latest phase of a supermarket petrol price war.

It was sparked by Asda which is cutting prices to its lowest this year. Then, Sainsbury's,Tesco and Morrisons acted quickly to announce reductions.

Asda is imposing a national cap on prices, saying drivers filling up at its forecourts will pay no more than 126.7p a litre for petrol or 133.7p for diesel.

Sainsbury's says it is cutting prices by up to 3p - their cheapest for two and a half years.

The cuts have been welcomed by drivers

Tesco will reduce prices by up to 2p. Morrisons will do the same "at the majority of its sites".

Quentin Wilson from the campaign group FairFuel UK said: "Don't get excited everybody because this will not stay, we will see it go up again.

"But at least now we have a much faster reflection of wholesale prices at the pump. We don't have to wait two or three or four weeks for the fuel to come down in price when we know it goes up in a heartbeat, so I'm pleased, fair fuel is pleased."

The AA has welcomed the move saying it reflects a fall in the wholesale price of fuel, but the continued uncertainty over Libyan oil production continues to leave the market unpredictable.

"The average price of petrol in the UK has hovered around the 132p a litre mark since mid-October, making 126.7p a very good price," said an AA spokesman.

At Asda in Leamington Spa motorists greeted the news with delight.

Susan Cooper, who drives 50 miles a day, said: "This will save me a lot of money. It is about time we had some better news with gas and electricity going up."

The fall in supermarket fuel prices may not last

Martin Cavanagh said: "It has to be good news. I know oil and everything is a complicated commodity and that's why we get the price jumping around. Let's hope it goes low and stays low."

Oil analyst Richard Mallison said it was significant that retailers were passing on the fall in wholesale oil prices to consumers on the forecourt.

He told Sky News: "The biggest reason for supermarkets being able to slash prices at the pump has been the change in the dollar to pound exchange rate.

"The dollar's weakened, that's brought down the cost of oil and wholesale fuel and that's now being passed on."

But he warned that low prices may not last for long.

He said: "We've seen the UK recovery stronger than expected, we've seen the troubles with the US shutdown and debt ceiling - both of those effects might fade in terms of the exchange rate, which would  then mean petrol prices starting to go up again."

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Apple Earnings Drop For Third Quarter In Row

Apple's fourth-quarter earnings have fallen 9% as more people opt for the company's lower-priced iPhones and iPads.

It is the third consecutive quarter that its earnings have dropped compared with the previous year.

Apple said it had sold 33.8 million iPhones, 14.1 million iPads and 4.6 million Mac computers between July and September.

iPhones sales were up 26% on the same time last year, but the cheaper 5C model has helped lower the average sale price of the handset.

Quarterly revenue was still a massive $37.5bn (£23.2bn) however, giving earnings of $7.5bn (£4.3bn).

That compares with $36bn (£22.3bn) and $8.2bn (£5bn) for the same time last year.

"Wall Street didn't like these numbers - they weren't enough," Fox business correspondent Dennis Kneale told Sky News.

"They are (also) a little concerned about the current quarter's outlook and with profit margins and what is happening there."

Argos' tablet is one of a growing number of cheaper iPad alternatives

Kneale added: "Here's the thing bothering Wall Street, profit margins a year ago 40%, this quarter only 37%. That's a little scary for Apple."

The 'budget' iPhone 5C was released last month and is seen by experts as an attempt to gain greater market share in the Chinese market, where cheaper Android-based handsets dominate.

Apple also faces more competition in the tablet sector, particularly from an increasing number of budget devices.

In the UK, Tesco and Argos are the latest retailers to have entered the market.

However, Apple now heads into the lucrative Christmas period with an updated iPad range and is predicting revenues of between $55bn (£34bn) and $58bn (£36bn) the next time it reports.

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Energy Prices: MPs To Turn Up Heat On 'Big Six'

By Poppy Trowbridge, Business and Economics Correspondent

Executives from Britain's biggest power companies will appear before a panel of MPs today to justify their most recent round of price hikes.

British Gas, SSE, Scottish Power and Npower have raised household bills by an average 9.1% for this winter. E.ON and EDF are expected to follow in the coming weeks.

They all say mounting wholesale costs are partly to blame.

But data from the energy regulator, Ofgem, show those prices have only gone up by 1.7% over the past year and should only add £10 to a bill.

Mark Todd, co-founder of the EnergyHelpline website, told Sky News: "I can't see a reason a why an energy company could really say that wholesale gas and electricity price increases are the main reason for these hikes.

"They need to increase their profits, their own take is going up.

"They do have to pay these green levies, they are going up dramatically, and also the transmission costs are going up dramatically. Wholesale costs, no. But other costs, yes."

The Energy and Climate Change Committee will take evidence from Tony Cocker, the Chief Executive of E.ON, the boss of British Gas' Energy division, Ian Peters and representatives from SSE, Npower, EDF Energy and Co-operative Energy from 1pm.

MPs will grill bosses on the different pricing policies between energy suppliers, improving transparency of their profits and ask them to justify the most recent round of price hikes.

Andrew Wright, Interim Chief Executive of Ofgem will also appear before MPs.

UK households pay some of the lowest energy tariffs in Europe.

Jillian Ambrose from energy information provider Platts said: "Gas prices have been going up.

"It is a global market at the end of the day and something as far removed as the Fukushima disaster has had a big impact on UK gas prices.

"Japan have shut reactors and they are more dependent on gas than ever and they are willing to pay for it. So in a global market the UK needs to compete and those prices have reflected that."

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HS2 Alternative 'Will Cause Years Of Gridlock'

By Anushka Asthana, Political Correspondent

Railway services between the north and south of England will be crippled by 14 years of weekend closures if HS2 is abandoned for an alternative, ministers will claim this week.

The warning will be part of a coalition 'business case' for the high-speed rail link published on Tuesday in a bid to fight off critics of the increasingly controversial project.

It will paint a picture of chaos for commuters if other investments are chosen instead of HS2.

The closest alternative would require 2,770 weekend closures - equivalent to 144,000 hours - on the East Coast Mainline, Midland Mainline and West Coast Mainline, the report will say.

That will increase a typical journey from London to Leeds by two hours and 10 minutes to more than four and a half hours overall.

Map of the HS2 route

The Government has drawn the evidence from a study by Network Rail and transport consultant Atkins. It also finds that houses and businesses would have to be demolished.

A Government source said: "We need to do something because our railways are nearly full but the alternative to HS2 is a patch and mend job that would cause 14 years of gridlock, hellish journeys and rail replacement buses.

"The three main routes to the north would be crippled and the economy would be damaged."

The strong language is a response to heavy criticism of HS2 - including from the Labour party who are no longer promising to support the project.

The party wants to introduce a "cancellation trigger" to the legislation, forcing the Government to reveal if total costs rise about £50bn. Ministers may support the amendment.

Labour's role is seen as key after David Cameron admitted that "multi-year, multi-parliament infrastructure projects … can't go ahead without all-party support".

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Airbus' Airline Appeal For Wider Plane Seats

Relief could be on the way for passengers crammed into narrow seats on planes.

Aircraft manufacturer Airbus is calling on the aviation industry to set a minimum seat width of 18 inches for long-haul aircraft.

The call comes after London-based research showed that sleep quality can improve substantially if seats are a little wider.

Airbus, whose planes' wings are made in the UK, already has an 18-inch minimum width in its long-haul economy cabins, with business and first-class passengers having wider seats.

The company said today: "However, other manufacturers are eroding passenger comfort standards by going back to narrower seat widths from the 1950s in order to remain competitive."

Airbus released details of research conducted by Harley Street medical practice The London Sleep Centre.

Tests were done on a selection of passenger, which included monitoring brainwaves, eye, abdominal, chest, hip and leg movement.

The tests revealed that a minimum seat width of 18 inches improved passenger sleep quality by 53% when compared to the 1950s-style 17-inch standard.

Dr Irshaad Ebrahim, of The London Sleep Centre, said: "The difference was significant. All passengers experienced a deeper, less disturbed and longer night's sleep in the 18-inch seat."

Kevin Keniston, Airbus' head of passenger comfort, said: "If the aviation industry doesn't take a stand right now then we risk jeopardising passenger comfort into 2045 and beyond - especially if you take into account aircraft delivery timetables combined with expected years in service. Which means another generation of passengers will be consigned to seats which are based on outdated standards."

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McDonald's To Drop Heinz After CEO Change

McDonald's has announced it will end a 40-year relationship with Heinz as the sauce company is now led by the former chief of rival Burger King.

"As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time," McDonald's said in a statement.

"We have spoken to Heinz and plan to work together to ensure a smooth and orderly transition."

The switch will be more apparent outside the United States, as McDonald's only serves Heinz sauce in Pittsburgh and Minneapolis.

Heinz has had a 40-year-old relationship with McDonald's

Heinz is now run by Bernardo Hees, former head of Burger King, 

Sauce packages handed out at McDonald's restaurants in the United States often say only "fancy ketchup". Most in-store sauce dispensers are not branded.

The move by McDonald's could benefit Heinz rivals Hunt's, owned by ConAgra Foods Inc., and Del Monte.

Warren Buffett's Berkshire Hathaway and an investment fund affiliated with 3G Capital bought Heinz for $28bn (£17bn) in June and immediately named Hees CEO.

Burger King went public in June 2012, less than two years after it was privatised by 3G Capital Management LLC, which retains a stake in the fast-food chain.

Burger King has been a Heinz customer for "decades" and uses its products in roughly 80% of markets around the world, spokesman Miguel Piedra said.

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Osborne To Stop Short Of Full RBS Break-Up

By By Mark Kleinman, City Editor

George Osborne will stop short of ordering a full break-up of Royal Bank of Scotland (RBS) following a review that will aim to redeploy billions of pounds of capital for lending into the British economy.

Sky News understands that the Chancellor and senior Treasury officials will next week finalise a blueprint for the future of RBS, in which UK taxpayers hold an 82% stake, which avoids the need for a formal vote by independent City shareholders.

The key recommendations of a four-month review led by Rothschild, the investment bank, and BlackRock, the world's largest asset manager, are understood to focus on "internal surgery" rather than a wholesale break-up of the RBS group.

They will include the creation of a more formal internal "bad bank", a further reduction in the size of RBS's investment banking operations, a more aggressive strategy to resolve the future of impaired loans, and a number of other asset sales.

An announcement about the outcome of the review, launched by the Chancellor in June, could be made as soon as next Friday, when RBS publishes its third-quarter results.

"He will want to present it as a break-up, but it won't quite be at the most radical end of the spectrum of options," said a source close to the situation.

Treasury and RBS officials cautioned that final decisions had not yet been taken and that the shape of the proposals could yet shift significantly.

The announcement of the restructuring is expected to be made by the bank itself, rather than Mr Osborne.

Under the currently-envisaged plans, the shake-up would involve in the region of £40bn of RBS's bad assets being held within a rebranded non-core asset division, or "bad bank". That figure is at the lower end of a range considered during the review, according to insiders, and roughly corresponds to the size of RBS's existing non-core unit.

It will not require the separation of those loans from RBS by injecting them into an independent taxpayer-owned vehicle, and so will not trigger a vote from which the Government would be excluded under stock market rules.

That will enable Mr Osborne to present decisions about RBS's future as a fait accompli - presuming that he has the agreement of RBS's negating the risk of an embarrassing defeat at the hands of institutional investors.

As Sky News revealed in June, many big RBS shareholders are opposed to a full break-up, arguing that it would be costly, time-consuming and further delay - possibly by years - the sale of the Government's shareholding in the bank.

The bad assets identified by the review largely comprise loans within RBS's Ulster Bank and property lending portfolios, and will be more aggressively run off in the coming months by the bank's executives.

The commitment to accelerate this process may trigger further writedowns to their value, with the bank raising additional capital by selling other assets.

Citizens, the US retail bank, is likely to be floated earlier than a previous target date of 2015, while the international arm of Coutts, the wealth manager owned by RBS, is also a candidate for sale.

It was unclear this weekend whether Rory Cullinan, the executive who has overseen the massive shrinkage of RBS's portfolio of bad assets during the five years since it was bailed out, will continue to run the unit.

One challenge facing Mr Osborne will be the scrutiny of Andrew Tyrie, the MP who chaired the Parliamentary Commission on Banking Standards. In its report earlier this year, it called for radical action to transform RBS into a bank that could support the UK economy.

The resolution of the dispute over the future of RBS, whose shares languish well below the level at which taxpayers injected £45.5bn of equity in the autumn of 2008, will bring relief to RBS managers tired of repeated conflicts between the Chancellor and Stephen Hester, who stepped down as RBS chief executive last month.

Mr Osborne said in June that he would only proceed with a major shake-up at RBS if it delivered clear benefits to taxpayers and the UK economy through increased lending capacity and appetite.

A Treasury official said on Saturday that the Chancellor had been keen to identify a "headline number" that would demonstrate that inflated capacity.

He added that the structural review would be linked to a separate piece of work led by Sir Andrew Large, former deputy governor of the Bank of England, which has been examining the flow of credit from RBS to small and medium-sized businesses (SMEs).

The views of UK Financial Investments (UKFI), which manages the taxpayer's stake in RBS, will also be important.

James Leigh-Pemberton, the investment banker who on Monday takes the helm of the Treasury agency, was asked by Mr Osborne last year to conduct a review of RBS's structure.

Mr Leigh-Pemberton argued in favour of a more radical break-up of RBS than the Chancellor is expected to favour.

Since becoming RBS's chief executive several weeks ago, Mr McEwan has been working with the management consultancy Bain & Co on a review of RBS's operations and an examination of core client services.

In a memo to staff earlier this month, he said that the location of RBS's bad assets was less important than the bank's need to focus on improving service to customers.

"The future of this company will not be about whether we operate in particular areas or where our problem assets sit," he wrote.

"The future of this company is about how good a job we do for our customers, including those who are having difficulty repaying their loans. And it will be about how well we live up to all our responsibilities, particularly those we have to the UK."

RBS and the Treasury declined to comment.

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