One In Five 'Paid Less Than Living Wage'

Nearly five millions British workers are being paid less that what is required for a basic standard of living, according to a new study.

It found 4.82 million people are being paid below the Living Wage, a pay packet which enables the basic standard of living.

The rate currently stands at £8.30 an hour in London and £7.20 in the rest of the UK.

It is a voluntary rate, unlike the National Minimum Wage - the amount that employers must pay by law - which is set at £6.19 an hour for those aged 21 and over.

Accountants KPMG, which carried out the study, said lower paid workers are feeling the impact hardest, with more than four in 10 (41%) saying that their finances are worse now than they were just one month ago.

Marianne Fallon, head of corporate affairs at KPMG, which has itself signed up to pay the Living Wage, said: "Times are difficult for many people, but of course those on the lowest pay are suffering the most."

She added: "Tackling in-work poverty is vital if we are to enable more people to improve their life prospects and increase social mobility in this country."

The report revealed workers in the hospitality industry are the worst affected, with 90% of bar staff paid lower than the living wage.

Furthermore, three quarters (75%) of kitchen and catering assistants, as well as launderers and dry cleaners, were paid less than the living wage.

Rhys Moore, director of the Living Wage Foundation, said: "Paying a Living Wage makes a huge difference to the quality of life of thousands of cleaners, caterers and security staff across the country.

"It is really encouraging to see nearly 100 organisations now signed up and accredited, but that still leaves many more organisations that aren't."

The report suggested that Northern Ireland had the highest proportion of people earning below the Living Wage, at 24% of workers, followed by Wales at 23%.

The lowest levels were in London and the South East of England, both at 16%.

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Tearful 'Rogue Trader' Tells Of UBS Losses

A trader accused of Britain's biggest fraud was allegedly trying to cover millions of pounds worth of losses incurred during the financial crisis for the bank he called his "family", a court has heard.

Kweku Adoboli, 32, is accused of gambling away £1.4bn while working as a trader for Swiss bank UBS.

At one point, he was at risk of causing the bank losses of $12bn (£7.5bn), jurors at Southwark Crown Court were told.

Adoboli wept as he gave evidence for the first time at his trial, in which he claimed his off-book trades were to cover $40m (£24.9m) annual losses of his portfolio of companies from 2008.

The court heard that by 2007 Adoboli, aged just 27, and more senior trader John Hughes, 25, were in charge of a portfolio of companies with assets of $50bn (£31.1bn).

"Our book was massive. A tiny mistake led to huge losses. We were these two kids trying to make it work," he said.

Mr Adoboli, wearing a dark suit and red tie, denied he was a "gambler" and said his knowledge of UBS's systems did not result in "fraudulent behaviour".

Fighting back tears, he said: "It's hard to find the words to describe the relationship I had with UBS as an organisation. It isn't about a bank. It was about what I thought was my family, considering how much (I) neglected my real friends and family.

"Every single bit of effort I put into that organisation was for the benefit of the bank, the people around me and the book I worked on.

"If I was not so proud to work for UBS, I would never put so much effort trying to convince them that we could achieve something at this bank."

He added: "To find yourself in Wandsworth Prison for nine months because all you did was work so hard for this bank..." before stopping as he broke down in tears.

Mr Adoboli is facing two counts of fraud and four counts of false accounting between October 2008 and September 2011, allegedly gambling away the money on high-risk illegal trades aimed at boosting his annual bonuses and job prospects.

The former public schoolboy worked for UBS's global synthetic equities division, buying and selling exchange traded funds (ETFs), which track different types of stocks, bonds or commodities such as metals.

Ghanaian-born Mr Adoboli enjoyed a rapid rise at UBS after completing an internship while a student at Nottingham University in 2002, the court heard.

Mr Adoboli told the court he feared UBS would not survive $52bn (£32.3bn) losses incurred in 2007-08 as the banking crisis took hold.

He said: "The effect on the organisation was incredible. There were times we thought there was no way the organisation would survive. I grew up with UBS. I felt very loyal to UBS.

"What could we do to help this organisation survive this incredible crisis?"

The trial continues.

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Victory For Man Who Took Cold Caller To Court

A businessman plagued by nuisance phone calls offering compensation for Payment Protection Insurance has secured £220 in an out-of-court settlement.

Richard Herman, 53, was so fed up with the unwanted calls arriving from India, he decided to take matters into his own hands.

He warned the company that, in future, he would invoice them £10 for every minute of his time they used.

When the calls continued he began recording them before finally invoicing the company £195 for their use of his "time, telephone and electricity".

Upon receipt of the invoice the marketing firm acting on behalf of UK-based PPI Claimline Ltd, denied making the calls. When Mr Herman revealed he had recorded evidence, they still refused to pay.

But when Mr Herman filed a claim in the small claims court for the unpaid invoice - plus £25 in costs - the company offered to settle the debt out of court and transferred £220 into his bank account.

Mr Herman filed in the small claims court when his invoice was not paid

Mr Herman said: "I kept being called, as we all do, and I thought the only way for them to stop would be for me to speak to them and say, 'For goodness sake, take me off your list!'

"Then it occurred to me to tell them that if they call again I'll charge for my time. When they continued calling I sent them an invoice for 19.5 minutes."

To encourage others to do the same Mr Herman has set up a website with examples of covering letters and invoices to send to nuisance callers.

Even though the validity of Mr Herman's original invoice was not tested in court, he believes anyone who warns cold-calling companies they will be charged if they call, have a right to invoice them.

"I did business studies at 17 and studied 'offer-and-acceptance' so I knew a verbal contract is just as valid as a written one but harder to prove.

"The recorded calls proved I did tell them I would charge for my time if they called again".

Mr Herman, who works in the telephone industry selling call-recording equipment, said his action was a last resort after asking the Information Commissioner and the Telephone Preference Service for help.

In a statment, PPI Claimline said: "We would like to stress that all our supplier relationships are subject to strict contractual provisions requiring full compliance with all relevant regulations, including those which relate to data protection and the telephone preference service.

"We would like to draw a clear line between the two calls to Mr Herman made on behalf of PPI Claimline and any other calls he received, which were nothing to do with PPI Claimline or its suppliers."

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Exclusive: Lords Unite In Newspaper Deal

By Mark Kleinman, City Editor

One of the City's most influential investors is to back an audacious attempt to consolidate Britain's flagging regional newspaper sector by merging the business interests of Lord Rothermere and Baron Iliffe.

I can reveal that Iliffe News & Media, owner of the Cambridge News and Hertfordshire Mercury, and Northcliffe Media, the regionals arm of Daily Mail & General Trust (DMGT), are in advanced talks to pool their assets into a new vehicle spearheaded by David Montgomery, the former editor of the News Of The World.

The deal will create a business with more than £250m of annual revenue and could spark a bidding war in the regional newspaper industry involving Trinity Mirror and Johnston Press, two of the three largest players.

I understand that Crispin Odey, whose hedge fund Odey Asset Management is among the most prominent names in the City, has agreed to support a deal that would combine Iliffe and Northcliffe.

They will be folded into a new vehicle called Local World plc that will be privately-owned. Mr Montgomery will own a stake in it, while Iliffe's parent group, Yattendon, and DMGT will between them own close to 50%.

The deal is also being backed by a syndicate of banks led by Bank of Ireland, HSBC and Lloyds Banking Group, which are on the verge of agreeing new borrowing facilities with the enlarged group.

A spokeswoman for Yattendon said: "I can confirm that Yattendon Group has held preliminary discussions with David Montgomery about becoming founder shareholders in a new local media company.

"We have a shared vision about the long term opportunities for local media but at this stage there is no certainty whether these discussions will lead to a satisfactory conclusion."

DMGT tried to sell Northcliffe in 2005 in a deal that would have valued the business at more than £1bn.

The proposed new transaction will value Northcliffe at little more than 10% of that price-tag, underlining the declining fortunes in the regional newspaper sector in recent years.

The industry has been hit by the waning economy as well as sharp declines in print advertising revenue and soaring print costs.

DMGT has subsequently cut hundreds of jobs at Northcliffe and switched some of its newspapers to digital-only titles to combat the slump.

Yattendon, which owns assets in agriculture, property and marine leisure as well as local media, will not take any cash out of the deal but will roll its entire newspaper investment into the new vehicle.

The group used to own titles including the Birmingham Post and the Coventry Telegraph before selling them.

The deal to create Local World has not yet been formally agreed but could be within weeks. If it does get completed, it would represent a significant step in the long-awaited consolidation of the regionals sector.

Mr Montgomery is likely to use the initial deal to pursue further mergers, potentially with Johnston or Trinity, according to insiders. Reports of his interest in Northcliffe have been circulating for the last few weeks.

A spokesman for DMGT said: "In response to media speculation, DMGT confirms that it is currently in talks regarding the future of Northcliffe Media.

"No deal or transaction has been agreed, but if these talks move to the point where agreement is reached, an announcement will be made to the market."

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New Road Tax Plan For Motorways And A-Roads

Drivers who use motorways could be charged a higher rate of road tax than those who stick to slower routes.

According to reports, motorists face a two-tier road tax under proposals being considered by the Government.

It has been suggested drivers could be offered a lower rate of the tax if they agree not to use the country's trunk road network of motorways and major A-roads.

Those paying a higher rate of vehicle excise duty would be free to use any roads.

Proponents say a network of automatic number-plate recognition cameras could be used to catch any drivers who were using the motorways without paying the higher rate.

A Department For Transport (DFT) said: "The department and Treasury are currently carrying out a feasibility study to review new ownership and financing models for the strategic road network.

"This is looking at how best we can secure investment in the network to increase capacity and boost economic growth."

Governments have long sought to explore revenue generation options for road users.

Sky's Deputy Political Editor Joey Jones said: "The fact is when they look years down the line with people changing their pattern of road use - some people getting electric or hybrid vehicles, or vehicles that have lower emissions - that means they are going to be paying less in vehicle excise duty."

Money-raising concepts raised by previous governments have included expanding toll booths across the motorway network and a system based on mileage.

But a DFT spokesman added: "The Government has made clear it will not implement tolls on existing road capacity and has no plans to replace existing motoring taxes with pay-as-you-go road charging."

The AA said it was opposed to an overhaul of road tax.

"This is the last thing drivers want on top of high fuel prices," said spokesman Paul Watters.

"This would create a two-tier system on Britain's roads, which would push many drivers away from trunk roads and into towns and villages where congestion would increase.

"Governments keep coming back to the idea of charging motorists for the roads they use, but the costs of implementing such a scheme would be huge."

Stephen Glaister, director of the RAC Foundation, said that a scheme could work if the proceeds were used to improve the road network.

He said: "Ministers would go a long way to restoring trust among drivers if the proceeds were ring-fenced and ploughed back into road provision."

Dr Richard Wellings, head of transport at the Institute of Economic Affairs, said the road network had been "neglected" by successive governments.

"For too long British drivers have had to pay over the odds for a road network that is simply not up to scratch," he said.

"It is lamentable that this vital area of infrastructure has been neglected by government after government."

Road tax is currently paid based on a sliding scale of 13 bands from zero to more than £1,000 in the first year of registration.

Drivers pay according to how much carbon dioxide their vehicle produces.

Another option is to replace the annual road duty charge on cars with a one-off charge on new vehicles.

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Penguin Books Owner Pearson Confirms Merger

Pearson, which owns the Financial Times, has agreed to merge its Penguin book division with Bertelsmann's Random House to create the world's leading publisher.

The move comes as traditional book publishers are confronted with the threat of concentrated buyers such as Amazon, who are in a strong position to negotiate favourable prices.

The education and media publisher Pearson said the newly-created joint venture would be named Penguin Random House, with Bertelsmann owning 53% and Pearson the rest.

Bertelsmann will nominate five directors to the Board of Penguin Random House and Pearson will nominate four.

John Makinson, currently chairman and chief executive of Penguin, will be chairman of Penguin Random House and Markus Dohle will be its chief executive.

The companies said the combination means readers "will have access to a wider and more diverse range of content in multiple print and digital formats".

The news could be a blow to the media mogul Rupert Murdoch, as Pearson confirmed the joint venture one day after reports suggested his News Corp also made a direct bid for Penguin Books.

In addition to announcing the news about the merger, Pearson also took the opportunity to publish a trading update, showing the challenges facing the wider group.

While sales were up by 5% in the first nine months, operating profit was down by 5%, reflecting the sale of assets, acquisition costs and weakness in the British professional training market.

In 2011, Random House reported revenues of £1.48bn, whilst Penguin reported revenues of £1bn.

Pearson shares were up 2% at the beginning of the trading day, following the announcement about the merger.

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Fuel Duty Cut 'Would Create 70,000 Jobs'

Ministers are being urged to cut fuel duty in a bid to help revive the UK economy, ahead of the next planned rise in the tax.

Fuel duty is due to be raised by 3p a litre in January but a study by the National Institute for Economic and Social Research (NIESR) for the campaign group FairFuelUK argues it would be counterproductive.

The report found, by going ahead with the increase, up to 35,000 jobs could be lost and economic growth cut by 0.1% as firms and motorists absorbed the impact.

As a result of the job losses and damage to growth, the tax increase would only bring in just over half the expected extra tax revenue of £1.5bn, the study claimed.

The report suggests that by cutting fuel duty by 3p instead of raising it by 3p would create 70,000 new jobs and boost growth by 0.2%.

The report added the 6p relative difference between the two options would normally have been estimated to have lost the Treasury about £3bn but, because of the boost to the UK economy, that loss of revenue would be much less - at £1.8bn.

FairFuelUK will present the report when its leaders meet Treasury officials in London.

Speaking ahead of the meeting, FairFuelUK's national spokesman Quentin Willson said: "We have always argued that fuel duty shouldn't be the Treasury's sacred cash cow - it should be used as a lever for growth.

"And we've proved our argument with robust financial research and modelling that shows if you raise duty you destroy jobs and damage growth.

"We appreciate the Government's aspiration to reduce the deficit but know that hiking fuel duty up by 3p in January will only make things much worse."

A Treasury spokesman said: "It is right that the Treasury engages with FairFuelUK to discuss technical issues around the impact of the cost of fuel on the economy.

"What matters to motorists and businesses is that fuel is now 10p a litre lower than under the previous Government's plans. This Government has done more to support motorists and businesses than any other."

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Report: Small Firms In Credit Drought Fear

Bank lending to corporate clients is set to drop to its lowest level for six years despite Government funding, a new study suggests.

According to the Ernst & Young ITEM Club, a funding gap for small and medium enterprises (SME) will remain even though Government funding has been announced.

The study said corporate lending is forecast to drop by £429bn at the end of 2012.

The annual rate of contraction is estimated at 4.6%, which is markedly slower than the 6.1% decline during 2011.

It said positive growth is forecast to resume from 2013, but corporate loans will not recover to 2008 levels  – the year of the global financial crisis - until 2016.

Item Club senior economic adviser Carl Astorri said: "The good news is that 2012 is likely to be the last year of such marked deleveraging in the UK - the bad news is that, once again, SMEs will bear the brunt of it.

"Government schemes to increase lending may help a lucky few but, as banks are encouraged by regulators to store up more capital and to look again at their forbearance policies and so-called bad-loan books, most small business are going to continue to feel the squeeze."

According to surveys from the Office for National Statistics (ONS) and Warwick Business School, the rejection rates for SME loan applications have trebled recently.

Rejection rates averaged around 11% between 2005 and 2008, whereas the rate in mid-2012 averaged around 38%, the Federation of Small Businesses and the SME Finance Monitor said.

The loan rejection rates provide an indication of the 'financing gap' facing SMEs over the coming year, experts believe.

Data from the Bank of England indicate that gross lending to SMEs amounted to £44.2bn in the 12 months to the first quarter of 2012.

If this lending data reflects a rejection rate for credit of 38%, then lowering the rejection rate to the pre-crisis level of 11% would imply the need for additional loan facilities worth around £19bn.

In September, Business Secretary Vince Cable announced the first steps of a Government-funded British business bank to help SMEs grow.

Mr Astorri said: "The figures suggest that the British business bank's lending capacity could be exhausted in less than a year.

The new bank's aim was to attract private sector funding so that when fully operational it could support up to £10bn of new and additional business lending.

"Its impact will also be reduced by competition with private sector lending activity - even if the Government aims to lend at market interest rates, it is unlikely to be able to avoid displacing existing lending activity," Mr Astorri said.

"Indeed, we expect the business bank will have to compete for projects that are commercially viable, and so we do not think the scheme will have a tangible impact on the economy."

The study also found that there was evidence that lower funding costs were being passed on to homeowners following implementation of the funding for lending scheme in July.

It also found that contraction in profits of the insurance industry would slow from 31% in 2011 to 9.5% this year, before a slow recover from 2013 onwards.

The Item Club said the combination of continued low interest rates, higher hedging costs, lower business volumes and more onerous capital requirements continues to create a challenging environment for UK insurers.

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Barclays Battles Care Home In Mis-Selling Case

Barclays is facing a landmark test case at the High Court over claims it mis-sold complex financial products to a care home operator.

It is being brought by Guardian Care Homes (GCH), which says it should never have been sold two interest rate swap arrangements worth £70m when it sought to refinance loans with Barclays.

The company also claims it should be compensated as the products were based on Libor - the key interbank lending rate that was found to have been manipulated by Barclays staff.

GCH, which is based in Wolverhampton and runs 27 homes, said: "It is simply wrong that with one hand a bank is aggressively selling a highly complex financial product designed to protect someone against an interest rate rise, while the other hand is manipulating the rate for its own benefit."

Interest rate swaps are designed to insure businesses against rising interest rates.

Barclays, which agreed in June to pay £290m in fines to UK and US regulators to settle allegations that it manipulated Libor, has set aside £450m to compensate customers mis-sold interest rate swaps.

The bank is expected to argue at the High Court that GCH was sophisticated enough to understand the terms of the agreement.

The preliminary hearing will involve submissions by both sides before a judge determines what should happen next.

The dispute - the first of its kind to come to the High Court - will be watched closely by businesses which believe they were mis-sold a rate-swap product while other banks - many of them facing Libor probes - will hope the case eases pressure on the industry.

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Extra Council Spending Powers To Boost Growth

Towns and cities are to be given new powers to keep the tax receipts they collect from businesses to spend on major infrastructure projects to drive economic growth.

Ministers have already handed eight cities, including Manchester, Sheffield and Newcastle, more control over strategic planning decisions and public transport budgets.

A further 20 areas including the Black Country, Southend and Cambridge have been invited by Deputy Prime Minister Nick Clegg to bid for a "city deal" and similar spending powers.

Mr Clegg warned regions could no longer rely on handouts from the Government collected in the City.

"You can't revive the regions just through handouts from Whitehall - certainly not now when the Treasury's coffers are bare. And even if we did have lots of money, the previous approach was fundamentally flawed," he said.

"Revenues from the financial services sector were recycled round the rest of the country through the long arm of the state, creating the illusion of strong, national growth. Jobs were created but in an unbalanced way, over-relying on the public sector, funded by tax receipts from the City of London.

"And we've seen what happens when the conveyor belt breaks, as it did spectacularly in 2008. Those tax receipts fall, the money stops flowing and the whole country feels the consequences as the public sector contracts and jobs are lost.

"This nation is made up of 100,000 square miles. It cannot rely so heavily on one. So we need a stronger, more resilient economy, built on the backs of industrious and independent cities."

He added: "Wave one were the trailblazers. Their ingenuity and drive have made it possible to have this second round. But wave two will help decide whether this level of decentralisation goes from being the exception to the norm. Personally, I'd like to see a deal for every area that can make it work.

"This is a rare opportunity to rewire our political system, to unleash the grassroots genius that will take our economy from strength to strength."

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