Ireland Digs Deep For Economic Recovery

By David Blevins, Ireland Correspondent, in County Mayo

Seismic surveys are to be carried out to ascertain if Ireland has enough oil and gas reserves to export fuel.

Shell is already building the longest gas tunnel in Europe (4.9km) to transport fuel from one field, 85km off the west coast.

If Russia ever turns off the supply, Ireland may soon be able to offer an alternative.

Michael Crothers, managing director of Shell Ireland, explained: "Because Ireland is beside a major market, and the UK is looking at decommissioning nuclear facilities, having to shut down coal-fired power plants because of greenhouse gas emissions, there's an enormous opportunity for Ireland, if gas can be found, to export into that ready market."

At the peak of its 20-year life, gas from the Corrib field will meet two thirds of Ireland's need. 

The ambitious project has created 1,400 construction jobs in County Mayo, a remote region previously blighted by unemployment and emigration.

Bernadette McManamon, a civil engineer, said: "Sixty percent of my class, if not more, have emigrated and most of them are in Malaysia or Australia and some in America so I definitely wouldn't be working in Ireland … if it wasn't for the Corrib gas project."

The exploration has not been without its opponents. In 2005, five local protesters - the so-called 'Rossport Five' - went to prison.

Civil engineers will carry out the seismic surveys

Lessons have been learned about the need for greater engagement with communities along the coastline before any prospecting takes place.

Gerry Coyle, a Fine Gael councillor, said: "You cannot come in and go telling them what to do. You have to explain in great detail.

"Sometimes, it's very difficult on communities. This community were cast into the middle of this. They didn't go looking for gas. Gas came to them."

Mr Crothers agreed: "I really think it depends upon how they are approached. Any project is a balance between the social, the environmental and the economic and getting that balance right is key."

The gas has brought an estimated 6bn euros (£5bn) for Ireland's GDP.

Tommy Talbot, who opened a local hotel during the recession, said: "You drive from here to Dublin and there's a lot of towns on the way out - Roscommon, Leitrim, there's nothing in them. They really are struggling.

"Down here, we really have been cushioned by the development."

To date, they have found one trillion cubic feet of gas in the Corrib field, boosting the country's energy security.

If the seismic surveys turn up enough fuel for export, Ireland could have found the solution to its economic problems.

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Swansea Bay Tidal Lagoon May Open In 2017

By Rhiannon Mills, West of England Correspondent

Exploratory work is underway off the coast of south Wales where scientists hope to build the world's first tidal lagoon power station.

As Britain continues to search for more sustainable forms of energy, plans are in place for a 9.5km-long, U-shaped sea wall in Swansea Bay that would harness the strength of the tides.

The £650m project's 26 hydro turbines would be permanently underwater, generating energy on both the incoming and outgoing tides.

It is hoped the power station could produce enough electricity to power every home in Swansea, saving over 200,000 tonnes of CO2 and offering predictable zero-carbon electricity for 120 years.

The project is yet to receive planning permission but teams are already drilling to assess the make-up of the seabed.

Alex Herbert, head of planning for Tidal Lagoon Swansea Bay, told Sky News: "We hope this will be the first in a network of lagoons around the British coast which could produce up to 10% of our energy requirements.

The power station's 26 turbines would be permanently underwater

"With the first one happening in Wales, we're on the map and we're producing jobs locally, as well as expertise we can take elsewhere."

Promotional videos describe the power station's potential to help regenerate the area and attract tourists.

The sea wall would be used for walking, running and cycling, while the lagoon itself would be used for watersports.

However some groups have concerns about the environmental and visual impact of the project.

"It's concerning a number of people," Swansea councillor Tony Colburn said. "It's basically going to cut the bay in half and we'll be looking at a very large wall as opposed to the magnificent view we've got."

Sarah Kessell, of the Wildlife Trust, added: "There could be a loss of breeding ground or of spawning areas for fish that birds feed on.

The 9.5km-long sea wall would be used by walkers and cyclists

"We don't know what the long-term impact will be ... but there are certainly opportunities for mitigation along the way."

A planning application will be submitted later this year with a decision expected in early 2015.

If the development is approved it could be open by 2017, with similar schemes possible in Colwyn Bay, north Wales, and in locations near Liverpool.

Canada, France and South Korea already have tidal power plants but the one planned for Swansea would be the first to utilise both the incoming and outgoing tides.

The bay is considered an ideal location for the project because of its shallow water and 10-metre tidal range - the second highest in the world.

"It's a fantastic proposal because it diversifies how we produce energy," Barry Stewart, a local wildlife enthusiast, said.

"Obviously a project of this scale is always going to have an adverse effect on some ecological features. The wildlife can be accommodated but time will tell."

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RBS Thrashes Out Pay Deal For New Boss McEwan

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is on the verge of agreeing a pay deal for its new chief executive that will be sharply lower than that of Stephen Hester, his predecessor.

Sky News understands that UK Financial Investments (UKFI), the agency which manages taxpayers' 82% shareholding in RBS, is poised to sign off on a remuneration package for Ross McEwan, who will be appointed later today to one of the toughest jobs in banking.

Mr McEwan is understood to be in line for a base salary of approximately £1m, less than Mr Hester's £1.2m annual pay, as well as bonus and long-term incentive plan (LTIP) entitlements that are also understood to be lower than those of the outgoing chief executive.

The RBS board has agreed to Mr McEwan's appointment and is awaiting the approval of the Prudential Regulation Authority (PRA), but is expected to say tomorrow alongside half-year results that he is to replace Mr Hester.

It is likely that the new boss's pay deal will be disclosed alongside the news of his elevation to the top job.

Under the terms of his contract, Mr Hester was eligible for a bonus of twice his basic pay and an LTIP award of four times his salary, theoretically putting him on an annual £8m-plus package.

However, he rarely collected anything like that sum after waiving several annual bonuses under intense political pressure and failing to meet performance targets that would have triggered the release of long-term share awards.

Because he is not currently on the RBS board, Mr McEwan's remuneration is not disclosed in an identifiable way, although RBS did pay him roughly £3m in shares to buy him out of his contract with his previous employer in Australia.

People close to the situation said that no decision had been made on Thursday afternoon whether Mr McEwan's pay deal would replicate that of his Lloyds Banking Group counterpart, Antonio Horta-Osorio, whose annual bonus is partly dependent upon the price at which the Government sells a chunk of its 39% stake in the bank.

RBS's majority state ownership means that George Osborne, the Chancellor, will also need to approve Mr McEwan's pay package before it is announced.

Sky News revealed last week that Mr McEwan, a New Zealander who currently runs RBS's UK retail banking operation, was the frontrunner to take over from the departing chief executive.

RBS and UKFI declined to comment.

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Half Of UK Nation 'Living On The Edge'

Around nine million more adults are struggling with money compared to seven years ago, a report into the health of the nation's finances has found.

More than half (52%) of those surveyed are living on the edge, equating to 26 million people across the UK, Government-backed body the Money Advice Service (MAS) said.

This is a sharp increase from 35% of people who were having difficulty keeping up with bills the last time similar research was carried out in 2006.

The service found that many people are suffering from poor financial skills and the squeeze on families following the economic downturn has encouraged a "live for now" culture which is dragging down people's ability to save enough for their future.

Income per hour has dropped by 6% in real terms since the previous research was carried out, making it harder for people to make ends meet.

More than 5,000 people took part in the latest financial capability survey and more than 70 families were followed over the course of a year for the Financial Capability Of The UK report, which found "a general feeling that people worry about their ability to make it to the next pay day".

It continued: "And because of this, people are focusing more on the here and now than on planning for the future, including for unforeseen emergencies."

One in five people surveyed said they would rather have £200 now than £400 in four months' time. Two-fifths also said they would have to think about how they could cover an unexpected £300 bill and one quarter said they prefer to live for today rather than plan for tomorrow.

Caroline Rookes, chief executive of the service, said: "In theory, money management is easy - spend less than you earn and consider your future - but the difficulty comes when applying this to the real world."

A Treasury spokesman said: "We recognise that times are still tough for families, but Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend.

"The Government has taken continued action to help households with the cost of living, including cutting tax for 25 million people by raising the personal allowance and freezing fuel duty."

MAS, an independent body set up by Government, has a statutory objective to raise public understanding and awareness about financial matters. It is due to publish a strategy on how people can be helped to improve their finances next year.

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Pegatron: Second Apple Firm Slammed In China

Tech giant Apple is under renewed fire over workers' rights in China, according to a report issued by a human rights charity.

China Labor Watch (CLW) said it has documented violation of work laws, forced excessive overtime and underage employees at Pegatron, where Apple's iPads and iPhones are made.

The abuses are alleged to have taken place at facilities owned by the Taiwan-based manufacturer, which is subcontracted to make Apple gadgets.

New York-based CLW said workers' rights were violated at several of Pegatron's factories in Shanghai and Suzhou.

Apple boss Tim Cook visited a factory after earlier abuse claims in China

The report said many workers were students or teens, with some forced to work standing up for as long as 11 hours.

Up to 12 workers shared cramped dormitories with rudimentary facilities.

"The Pegatron factories are violating a great number of international and Chinese laws and standards as well as the standards of Apple's own social responsibility code of conduct," CLW said in the report.

Pegatron, which has market capitalisation of around £500m, said in a statement that it would investigate the matter and would take immediate action to correct any violations of Chinese labour laws and its own code of conduct.

"We strive to make each day at Pegatron better than the last for our employees. They are the heart of our business," Pegatron's CEO Jason Cheng said in the statement.

Apple supplier Foxconn has admitted using 14-year-old staff members

"That's why we take these allegations very seriously."

Pegatron posted revenues of around £4.2bn for the first quarter of 2013, up 30.9% on the same period last year, due primarily to tablet growth.

Apple, responding to the CLW report, said it had conducted 15 audits at Pegatron facilities since 2007 that covered more than 130,000 workers to ensure safe and fair working conditions throughout its supply chain.

It has been in touch with CLW for several months and has fixed some issues raised by the organisation, Apple said.

"Their latest report contains claims that are new to us and we will investigate them immediately," Apple said.

Staff anger grew so high at one Foxconn plant that a riot broke out

"If our audits find that workers have been underpaid or denied compensation for any time they've worked, we will require that Pegatron reimburse them in full."

CLW said it sent undercover investigators into three Pegatron factories and conducted nearly 200 interviews with workers outside the factories from March to July.

It said it discovered 86 violations at the three factories making Apple products.

Pegatron's factories in China now employ more than 70,000 workers after it stepped up production of Apple's products as part of the US technology giant's plans to diversify its contract manufacturing partners.

Foxconn Technology Group, which has also been criticised by labour groups for poor working conditions, suicide rates and underage staff, now makes most of Apple's top products through its flagship unit, Hon Hai Precision Industry.

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ID Theft Insurer CPP Nears Financial Lifeline

By Mark Kleinman, City Editor

The struggling identity theft insurer CPP is closing in on a deal with its lenders that should secure its future beyond a £1bn-plus mis-selling payout to customers.

Sky News understands that CPP has finalised the details of a refinancing with a quartet of lending banks that will involve the company slashing its borrowings and agreeing to tough restrictions on its business activities for three years.

The agreement could be announced as soon as Tuesday, according to insiders.

An agreement with Barclays, HSBC, Royal Bank of Scotland and Santander UK will come as a relief to hundreds of CPP staff employed at its York headquarters who have faced an uncertain future during on-off talks about a takeover of the group.

CPP's founder, Hamish Ogston, walked away from a bid to take it private last month, but the new borrowing agreement with its banks should secure the company's medium-term future.

CPP, which calls itself an "international life assistance provider", operates across more than a dozen countries and expanded rapidly after listing on the London Stock Exchange in 2010.

It recently sold its US business in an attempt to raise funds following a £10.5m fine imposed by the City regulator last year for mis-selling.

The company sold more than four million policies to customers, many of which were the result of introductions by the major high street banks.

Barclays is expected to bear the scars of its involvement in the scandal when it unveils a sizeable provision for compensation in its half-year results on Tuesday.

The agreement with its lenders will mean that redress for mis-selling can be paid out through a mechanism known as a solvent scheme of arrangement, which comprises a ring-fenced pot of cash for compensation.

Some reports have suggested the total amount could reach £2bn although most observers believe it will be little more than half that sum.

The Financial Conduct Authority is keen for the scheme to get underway as soon as possible, and it is possible that it will launch within weeks depending on final agreement with the banks that will be contributing.

The new borrowing facility is understood to have been cut from the previous £80m to significantly less than half that amount, reflecting CPP's smaller ongoing business. A person familiar with the refinancing said the lenders had also extracted more advantageous fees "although the terms would not be penal (to CPP)".

Under a deal announced earlier this year, an extension to CPP's loans had given the company until September to find a longer-term solution, and this week's announcement is expected to provide it with breathing space until 2016.

CPP is one of several specialist insurers to have fallen foul of regulators in recent times. Homeserve, which provides insurance against household mishaps, was also the subject of mis-selling allegations in 2011.

Concerns about potential exposure to any future evidence of mis-selling at Domestic & General, the warranties supplier, have thrown an obstacle in the way of its sale to a major private equity firm.

A CPP spokesman declined to comment on Monday evening.

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Barclays Faces Fresh Customer Mis-Selling Bill

By Mark Kleinman, City Editor

Barclays will face up to mis-selling misdemeanours on three fronts next week when it sets aside hundreds of millions of pounds more for historical malpractice.

Sky News understands that the bank will make provisions for compensation for customers who were mis-sold payment protection insurance (PPI), interest rate derivatives and identity theft cover through the stricken credit card insurer CPP.

Insiders said this weekend that Barclays chief executive Antony Jenkins had been told by its regulators to be "conservative" in topping up its previous £2.6bn provision for PPI and an £850m bill for mis-selling swap products - designed to insure customers against sharp interest rate movements - to small businesses.

Barclays directors are also understood to have discussed taking its first hit for compensating CPP customers at a board meeting this week.

The final bill will be signed off by Mr Jenkins, Sir David Walker, the bank's chairman, and the soon-to-depart finance director Chris Lucas on Monday.

A Barclays spokesman declined to comment on the size of the new compensation figures but it is understood that they will take the amount it has set aside for swaps mis-selling to well over £1bn.

The scale of the new provisions will partly explain why Barclays is also planning to announce a major capital-raising comprising conventional shares and contingent convertible (or 'coco') bonds alongside its results.

That follows pressure from the Prudential Regulation Authority for Barclays to meet a target measuring the strength of its balance sheet, called the leverage ratio, by the end of next year.

The announcement will be made as part of Barclays' half-year results on Tuesday, and could undermine Mr Jenkins' efforts to overhaul the bank's reputation following last summer's Libor rate-rigging scandal.

Barclays was fined £290m for its role in the affair, leading to the departure of Mr Jenkins' predecessor, Bob Diamond.

It was also recently hit with a £300m penalty by a US energy regulator for attempting to manipulate electricity prices, although the bank is appealing against it.

Barclays will not be the only lender to add to its PPI mis-selling provisions during next week's results, with Lloyds Banking Group and others also expected to belie suggestions that the tidal wave of compensation claims had abated.

Barclays has, though, been particularly affected by the way interest is calculated on PPI compensation claims because of its liabilities dating back many years.

Mr Jenkins will also spell out the progress of his overhaul of the bank, called Transform, in which he will say that Barclays is exceeding cost-reduction targets announced in February.

Barclays declined to comment.

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£2bn Lloyds Profit Triggers Stake Sale Talks

By Mark Kleinman, City Editor

The agency which manages taxpayers' £19bn stake in Lloyds Banking Group is expected to hold talks with City investors this week about a quick-fire sale of shares as Britain's biggest high street lender unveils a £2bn half-year profit.

Sky News understands that UK Financial Investments (UKFI) and the Treasury will discuss in the coming days the prospect of an accelerated placing of shares in Lloyds with major institutional investors on or around the day that Lloyds announces half-year results on Thursday.

Treasury sources said that the results would show a "stellar" first-half performance from the bank, which owns the Halifax brand and is in the process of spinning TSB off into a separately-listed company.

Lloyds, they said, would report a statutory profit of approximately £2bn - in line with the consensus forecast of analysts - and also provide further positive news in the form of better-than-expected cost reductions and a stronger-than-anticipated capital position.

The move into the black would contrast with a loss of more than £400m at the half-year stage in 2012.

"The stars are aligned for us to start selling shares now," said one Whitehall insider.

The Government is understood to believe that it has a window of a few days beginning on the day of Lloyds' results to place a chunk of stock before the markets slow down too far for the summer to make such a substantial transaction more difficult.

Lord Davies is assembling a consortium keen to buy part of Lloyds

If the discussions do not point to sufficient demand for an institutional placing of shares, the Government would postpone any attempt to begin selling its 39% stake in the bank until September at the earliest.

A Treasury spokesman said that no timetable for the sale of shares had been set and refused to comment on the prospect of a sale next week.

Earlier this month, UKFI hired JP Morgan Cazenove, the investment bank, to advise on its privatisation strategy for Lloyds and Royal Bank of Scotland, in which taxpayers hold an 82% stake.

The agency also appointed a roster of other banks to execute deals in the capital markets to sell down the shares in the two banks during the coming years.

One banker said on Saturday that a report suggesting that Lloyds was priming City investors for a sale was inaccurate, arguing that the deal would be orchestrated by UKFI rather than the bank itself.

The source added that it would be theoretically possible to brief a group of investors the night before the results announcement - making them insiders unable to trade in Lloyds shares - with the objective of announcing a deal alongside on Thursday.

Sky News revealed earlier this month that Lord Davies, the former trade minister, was assembling a consortium of investors keen to buy at least half of the Government's stake in Lloyds.

The half-year results are expected to include a modest new provision for payment protection insurance mis-selling, taking Lloyds' total bill so far to more than £7bn, one insider said.

However, unlike Barclays, the bank is not expected to have to set aside money to compensate small businesses for mis-selling interest rate swaps or customers of CPP, the identity theft insurer.

On Friday, Lloyds shares closed at 68.37p, which if sustained until after next week's results announcement would make a placing at or above 61p viable, banking sources said. Such a deal would be likely to take place at a discount to the prevailing share price.

The 61p figure is significant because Lloyds said in March that it had been notified by the Treasury that that was the average price at which taxpayers' support for Lloyds during the banking crisis had been recorded in the public finances.

Selling above that price would be significant for George Osborne, the Chancellor, because it would allow him to hail the return of funds injected by taxpayers into Lloyds after its initially disastrous merger with HBOS.

It would also be potentially meaningful for Antonio Horta-Osorio, Lloyds' chief executive, whose £1.48m deferred share bonus awarded in March will only vest under certain conditions, one of which is that at least one-third of the Government's shareholding is sold for at least 61p-per-share.

Lloyds declined to comment on Saturday.

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Equitable Life Victims' Compensation At Risk

More than 200,000 victims of the collapse of Equitable Life may miss out on compensation payments because of failings in a Government scheme, a scathing report by MPs has warned.

The House of Commons Public Accounts Committee accused the Treasury of adopting an "arbitrary" target of March 2014 to close the compensation scheme.

The Westminster spending watchdog urged the Treasury to take urgent action to track down as many former policyholders of the failed insurer as possible before the deadline passes.

"It is completely unacceptable that more than 10 years after the collapse of Equitable Life so many victims still have not received the compensation they are entitled to," Committee chairwoman Margaret Hodge said.

"Hundreds of thousands of conscientious savers are losing out because of the Treasury's failure to get a grip on the payment scheme."

Mrs Hodge also said she was "stunned" to learn that the Treasury destroyed details and addresses of 353,000 policyholders on data protection grounds.

After a decade-long battle by Equitable savers, the Treasury announced shortly after the coalition Government took office in 2010 that it would compensate up to 1.5 million policyholders.

Mrs Hodge slammed the compensation scheme

Chancellor George Osborne capped total payments at £1.5bn in his spending review later that year.

But the report found that the Government "failed to learn the lessons" from previous schemes, such as those for former miners and Icelandic trawlermen.

The Treasury focused on an arbitrary deadline of June 2011 for making the first payments, at the expense of planning properly for how the scheme would be administered, said the report.

A "lack of good planning" led to "unacceptable delays" in payments, with only £168m paid out by March 2012, rather than the expected £500m.

By the end of March this year, some £577m had been paid out to 407,000 policyholders, with a further 664,200 payments totalling £370m due to be made by the time the scheme winds up in March 2014.

But the Treasury estimates that it may not be able to trace some 17%-20% of policyholders - between 200,000 and 236,000 people eligible for payments - by that date.

And ministers are not planning to publicise the closure of the scheme until September, which provides little time for applications to be submitted by these savers, many of whom are elderly.

Urging ministers and the government agency National Savings & Investment (NS&I) to bring forward the publicity campaign, the cross-party committee said it was "concerned" that some policyholders will miss out.

"With less than a year to go before the scheme closes in March 2014, the Treasury still has 664,200 payments worth £370m left to make," Mrs Hodge said.

"Unless the Treasury and its administrator, NS&I, get their act together there is a real risk that large numbers of policyholders will miss out."

A Treasury source said: "While Labour did absolutely nothing about the Equitable Life scandal for a decade, this Government has allocated up to £1.5bn to help people who suffered a great injustice, with tens of thousands of policy holders receiving around £700m in payments since 2011.

"We make no apology for starting to get payments out the door a year after the Coalition was formed.

"We do not agree that the Government has failed to get a grip on the planning or delivery of this important work.

"We continue to monitor the progress of the Equitable Life Payment Scheme very closely and are working hard to maximise the numbers of people who will eventually receive payments.

"Instead of scaremongering, the Labour chairman of this committee should explain why her party shamefully did absolutely nothing about this scandal for a decade."

12.06 | 0 komentar | Read More

Wonga Ad Delivers Riposte To Archbishop

By Mark Kleinman, City Editor

The payday lending group Wonga will on Friday attempt to begin changing public perceptions of its business model following a vow by the Archbishop of Canterbury to "compete it out of existence".

Sky News has seen a copy of an advertisement that Wonga will place in a number of national newspapers, in which the company will set out 'ten commitments' about its lending practices.

Among the pledges to be made by the payday lender are that it welcomes competition, would "always help customers in financial difficulty" and that it would never charge interest at an annual percentage rate running into the thousands.

The description of Wonga's manifesto as its 'ten commitments' is understood to be a tongue-in-cheek riposte to the Archbishop but follows a bruising period for Wonga and the wider industry. 

Last month, the sector was referred to the Competition Commission amid political anger about the activities of some short-term lenders.

The row was stoked on Thursday when comments made by Justin Welby, the Archbishop of Canterbury, were published in the magazine Total Politics.

Referring to a meeting that he had held with Errol Damelin, the chief executive of Wonga, several weeks ago, Dr Welby said:

"We had a very good conversation and I said to him quite bluntly 'we're not in the business of trying to legislate you out of existence, we're trying to compete you out of existence'. He's a businessman, he took that well."

The Archbishop was referring to the emerging credit union movement, a form of financial co-operative which lends money at comparatively low rates.

However, the Church of England faced being embarrassed by the debate on Thursday night when it emerged that its pension fund was an investor in one of the funds that helped to establish Wonga in the UK.

Wonga has sought to counter mounting criticism by pointing out that it only lends money to consumers who have been subjected to credit-checks, and that customers can repay loans early with no additional charge.

In remarks to be published on its website on Friday, Wonga is expected to say: "Since 2007 Wonga has responsibly lent over £2bn and we now have over a million customers.

"We've done that despite declining three quarters of all first loan applications and ensuring a principal default rate (money lent that we don't get back) of around 7%. This is comparable to other forms of short-term credit, such as credit cards.

"We work hard to lend only to the people who can pay us back, and our mainstream services for individuals and businesses are now available across three continents."

Wonga has also been caught up in a row over the refusal of Papiss Cisse, the Newcastle United striker and practising Muslim, to wear a shirt bearing the name of the payday lender, which is the club's sponsor. He has now agreed to do so, Newcastle announced on Thursday.

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