'Mummy Tax': Benefit Changes Criticised

By Tadhg Enright, Business Correspondent

The new Archbishop of Canterbury has chosen Mother's Day to fire a warning to the Government over planned cuts to welfare.

In his first significant intervention since being appointed, the Most Rev Justin Welby is among 43 bishops who have written an open letter condemning changes to the benefit system.

He warned that "children and families will pay the price" if the plans go ahead in their current form.

The Welfare Benefits Up-rating Bill will cap benefit rises at 1% a year until 2016.

Work and Pensions Secretary Iain Duncan Smith, who is attempting to steer the reforms through Parliament, has said they are needed to help get spending "back under control" and create a fairer deal for taxpayers.

But the archbishop, who will be formally enthroned at Canterbury Cathedral on March 21, said the legislation would remove the protection given to families against the rising cost of living and could push 200,000 children into poverty.

His predecessor, Dr Rowan Williams, was strongly criticised for expressing his views about Government policy.

The Most Rev Justin Welby has criticised the planned reforms

Faith and communities minister Baroness Warsi told Sky's Dermot Murnaghan: "The Government takes seriously the concerns the church raises.

"But we are in very difficult circumstances and we have to make some tough decisions. And at a time when people's incomes are frozen and not going up in line with inflation, it is also right that we look at the possibility of freezing benefits."

Meanwhile, the Prime Minister had a Mother's Day card delivered to his door by campaigners for new mums whose benefits are about to be capped.

Labour has accused the Government of imposing a "mummy tax" and said the welfare reforms are part of a series of austerity measures which unfairly target mothers.

Shadow minister for women Yvette Cooper MP told Sky News: "It's like David Cameron and George Osborne have a blindspot about women because they're paying three times more than men in tax and benefit and pay and pension changes.

"That is so unfair when women earn less and own less than men.

"It shows that the Prime Minister and the Chancellor just don't get it and it's outrageous that new mums are hurt hardest."

Around 340,000 women claim either statutory maternity pay or maternity allowance every year.

Until now their benefits have gone up in line with inflation, which currently stands at 2.7%, according to the Consumer Price Index.

Yvette Cooper has slammed the benefit cap

But from next month new mothers' benefits will go up by just 1% every year as part of a three-year cap on welfare increases.

So by 2015 critics have calculated the benefits will be effectively cut by £180 because they will not increase by as much as the cost of living will.

Schools minister, Liberal Democrat David Laws MP, defended the planned welfare reforms and said the Coalition had tried to help those on lower incomes.

He told Murnaghan: "We've had a public sector pay freeze. We've also had a 1% cap in the future on public sector pay. So we've have had to take difficult decisions not just for some of those on lower incomes but for everybody in society.

"And actually we've tried to help some of those on lower incomes by raising the tax free personal allowance and also exempting some of the lowest paid public sector workers from the effects of the pay freeze."

A spokeswoman for the Department for Work and Pensions said: "In difficult economic times we've protected the incomes of pensioners and disabled people, and most working age benefits will continue to increase 1%.

"This was a tough decision but it's one that will help keep the welfare bill sustainable in the longer term. By raising the personal allowance threshold, we've lifted two million people out of tax altogether, clearly benefiting people on a low income."

Single mum-to-be Helen Mockridge has one clear suggestion for a better way to reduce the deficit.

"Taxing really rich people, obviously, that's where the money should come from," she said.

"For me it's a real no-brainer and it makes me really angry that certain parts of society are very, very wealthy and the gap between rich and poor is getting bigger.

"That's where the money should be coming from, not from single mothers or the disabled or any other vulnerable group."

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Coalition Seeks To Deliver Posties’ Share Plan

The Government is accelerating plans to privatise Royal Mail by canvassing external advisers to run a share scheme that will give the postal operator's 145,000 employees a stake in the company.

I have learnt that ministers at the Department for Business, Innovation and Skills (BIS) last week launched a tender process to recruit an administrator for the staff share ownership programme, heralding what will be the largest privatisation for 30 years.

Advisers are expected to be appointed in the coming weeks. The chosen party will be responsible for overseeing the placement of at least 10% of Royal Mail's shares in the hands of its staff, fulfilling a commitment made by the Government as part of its plan to inject private capital into the company.

The adviser will also oversee the necessary back-office infrastructure to supervise the scheme, insiders said.

Sky News revealed last month that Michael Fallon, the Business Minister overseeing the privatisation plans, has asked officials to devise an employee equity scheme designed to avoid the process of 'stagging', which blighted the huge privatisations of the 1980s under Margaret Thatcher. Stagging is the term given to those who buy or receive shares at the offer price of a flotation and then sell them immediately into the market.

It is unclear how long Royal Mail employees would be obliged to hold onto their shares but experts say it would be likely to be for a period of several months at least.

Officials pointed out that by setting a floor for employee share ownership of 10%, they were preparing for the largest statutory commitment to staff participation of any UK Government privatisation.

The sell-off plan, which would be the largest since BT was privatised in 1984, could take the form of a sale to a single buyer or, more likely, a stock market listing that would place Royal Mail on the cusp of the FTSE-100.

Under the Postal Services Act passed in 2011, the Government cannot sell a single share in Royal Mail until it has made provisions for workers to own a stake in the company.

A team of officials from BIS and the Shareholder Executive, which oversees the management of state-owned companies, is working for Mr Fallon on the employee share offering.

The plans are not yet finalised but senior Government sources confirmed that an 'anti-stagging' clause was likely to be included in the scheme to avoid the prospect of millions of pounds-worth of additional shares being dumped in the market as soon as the listing takes place.

Under Moya Greene, Royal Mail's Canadian chief executive, the company has been discussing the company's prospects with potential investors in the UK, Canada and the US as it tries to familiarise fund managers with its financial performance.

Ms Greene, who joined about two years ago, has been cutting thousands of jobs as part of a move to automate many of Royal Mail's processes and modernise the company. Her actions have caused some tensions with trade unions, but their hostility to a privatisation process appears to have eased in the context of previous efforts.

The company's efforts have begun to pay off, with operating profit increasing from £12m to £144m in the six months to September 2012, on the back of a surge in demand for sending parcels as consumers switch their buying habits to online retailers.

A BIS spokesman declined to comment.

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Liam Fox Fuels Tory Divisions Over Economy

Senior Tory Liam Fox has called for a five-year spending freeze to fund tax cuts and help slash the deficit as Conservative tensions continue.

Dr Fox, a former defence secretary, brought Tory austerity divisions to the fore in a speech demanding a change in economic policy.

He warned that David Cameron is wrong to exempt spending on schools, aid and the NHS from the £10bn in cuts he is targeting for 2015-16.

And he urged a total rethink of earnings and savings taxation, including a Capital Gains Tax holiday, to breathe life into the ailing economy.

His intervention comes less than a fortnight before Mr Osborne's crucial budget and as Tory fears of electoral oblivion in 2015 are growing.

A poll at the weekend put the Tories on just 27% - one of its lowest ratings in years. Another suggested Labour would take 93 seats off the Tories in 2015 to win with a huge majority.

The Prime Minister is already facing pressure from Business Secretary Vince Cable over the ring-fencing of certain departments, who warned it isn't "very sensible" in the long-term.

And Home Secretary Theresa May and Defence Secretary Philip Hammond are also resisting moves to further cut their budgets, along with welfare spending.

Dire opinion polls have upped the pressure on David Cameron

In an address to the Institute of Economic Affairs, Dr Fox said: "I believe that in leaving money in people's pockets, economic activity will follow. People will buy houses, invest for their future or just go shopping.

"Whichever is the case, it's creating a society that it sustainable for the future in the way that our current - welfare dependent and debt-ridden - economy is not.

"We should gradually move towards the reduction - or even abolition - of the taxes where the state not only taxes the same money on multiple occasions but discourages the very behaviour that would lead to a more responsible society."

The speech came after Tory MP Sarah Wollaston warned the Prime Minister he was "running out of time" to tackle problems with his "posh" top team.

She wrote on Twitter: "Inner circle still look far too posh, male & white & Cameron is running out of time to fix it.

"I consider myself a Cameron loyalist; he is the best person for the job but should listen to critical friends.

"I am a Cameron loyalist but he needs to change his inner circle which just seems to be telling him what he wants to hear."

Meanwhile, Mrs May fuelled speculation she harbours future leadership ambitions in a wide-ranging speech over the weekend, which included plenty of proposals to appeal to the Tory right.

Tory backbencher Eleanor Laing said on Monday: "There are some people who are clearly positioning for what might happen after the next general election and there are some people who are openly talking about challenges to the leadership.

"They should all be quiet. They should all get their heads down and work together as one Conservative Party for the good of the country."

Dr Fox later dismissed the prospect of a leadership challenge to Mr Cameron before the next general election in 2015, but refused to rule himself out as a candidate in a future contest.

"I think there is no chance of us having a leadership election in the Conservative Party before the next (general) election. I think that would be madness," he said.

"If in 10 years time David Cameron stands down, I'll see how I'm holding up at that point."

Last week, Mr Cameron evoked Margaret Thatcher when he insisted he could not afford to change tack on the economy, insisting: "There is no alternative."

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Banking Commission: Reforms 'Not Enough'

The Government's plans to fix the UK's banking system do not go far enough, the Parliamentary Commission on Banking Standards has said.

The panel - set up following the Libor-fixing scandal - said regulators should have the power to force banks to completely split their retail and investment banking operations.

The commission's second report comes on the day that the Government's Banking Reform Bill is debated in Parliament.

It said a number of recommendations from its first report are not currently in the planned legislation - but should be.

The group of MPs and peers called for extra powers to break up banks if they do abide by rules to separate their investment and high street operations.

Chancellor George Osborne had promised to introduce powers to "electrify the ring fence" if lenders failed to split their divisions.

George Osborne said this year the banking system would be "re-set"

But the report said this does not go far enough, and pushed for the introduction of a "second reserve power for full, industry-wide separation" if the ring fence is broken.

It also described plans for a regulator-led review of ring fences as "wholly inadequate".

"Such a review conducted by the regulator would be little different in character from the regulator's annual report and could amount to no more than a case of the regulator marking its own examination paper," the report said.

Instead, the commission said an independent review of whether ring fences were doing their job was crucial.

Its chairman, Andrew Tyrie MP, described the bill as "improved", but said "much more work" was needed.

"The Government rejected a number of important recommendations," he said.

"The commission has examined these again, alongside the Government's explanations for rejecting them.

"We have concluded that the Government's arguments are insubstantial."

The report concluded: "There is still a long way to go if the legislation now before the House of Commons is to provide legislative impetus for a transformation of the UK banking system.

"The bill as presented to the House of Commons represents not the beginning of the end for the necessary reform process, but the end of the beginning."

Labour described the report as "disappointing reading".

Shadow chancellor Ed Balls added: "It confirms George Osborne is continuing to duck the radical banking reform we need and which the cross-party commission has demanded."

The panel, whose members include Archbishop of Canterbury Justin Welby and former chancellor Lord Lawson, will publish wider recommendations for banking reform in May.

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Buyout Giants Get Taste For Ribena

By Mark Kleinman, City Editor

Blackstone, the American private equity giant, is among a pack of predators eyeing £1bn-plus bids for Lucozade and Ribena, the soft drinks brands.

I have learnt that Blackstone is preparing to make an offer for the brands if their current owner, the drugs giant GlaxoSmithKline, puts them up for sale as expected.

The two brands, which have annual sales of more than £400m, have been designated as non-core assets by Sir Andrew Witty, GSK's chief executive, and are expected to be put on the auction block within months.

"They're great brands but they don't naturally tick the boxes for where I think the core synergy of the company sits," Sir Andrew said last month. "Every option is on the table. If there's an option out there that can do any better with them than us, that'd be great."

City analysts value Lucozade and Ribena at more than £1bn, with some arguing that they could be worth as much as £1.5bn.

The two brands have faced criticism from health campaigners in the past over their sugar content, and some GSK executives believe they sit uncomfortably in the portfolio of a company focused on consumer health.

If Blackstone were to succeed with an offer for Lucozade and Ribena, it would re-establish the buyout firm on familiar ownership territory. In 2005, Blackstone joined forces with Lion Capital to acquire the European beverages division of Cadbury-Schweppes, which included brands such as Orangina.

They sold the company four years later to Suntory Holdings, the Japanese drinks company, for more than £1.5bn.

Other buyout firms, such as Bain Capital, CVC Capital Partners, KKR and Lion - recently in the news because of its joint ownership of Findus, the frozen food company at the centre of Europe's horsemeat scandal - would also be expected to examine offers for the two GSK brands, as would a number of leading beverages companies.

GSK has not yet formally decided whether to sell Lucozade and Ribena, and could yet opt to keep them or pursue a joint venture with a partner, one insider cautioned today.

The company, which declined to comment, is expected to appoint an investment bank to oversee a sale at around the time of its full-year results at the end of April.

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Apprenticeships: Cameron's Pledge On Training

David Cameron has pledged to make it the "new norm" for school leavers to take an apprenticeship or go to university.

The Prime Minister wants the country to follow Germany's lead where work-based training sits alongside higher education as the automatic options considered by teenagers when they finish their exams.

During a visit to a training academy in Buckinghamshire to mark the start of National Apprenticeship Week, Mr Cameron called on employers, schools and colleges, and his own ministers to expand apprenticeship opportunities for young people.

The Government will formally respond to the Richard Review, which has looked at ways to improve the quality of apprenticeships, later this week.

Mr Cameron said: "Apprenticeships are at the heart of our mission to rebuild the economy, giving young people the chance to learn a trade, to build their careers, and create a truly world-class, high-skilled workforce that can compete and thrive in the fierce global race we are in.

"There are record numbers of people taking up an apprenticeship, with a million starting one in the last few years. And as we take forward the Richard Review, our drive to reform and strengthen apprenticeships, raising standards and making them more rigorous and responsive to the needs of employers - means that an apprenticeship is increasingly seen as a first choice career move.

"But we need to challenge ourselves to go even further, that is why I want it to be the new norm for young people to either go to university or into an apprenticeship. We need to look at how we can expand apprenticeship opportunities so that they are available to all young people who are ready and eager to take them up, and aspire to get ahead in life."

Barclays is launching a new programme to help get 10,000 people into work

Barclays is launching a new nationwide scheme today to support 10,000 young people into work. The Barclays Bridges Into Work programme will see local Barclays teams matching up suitable apprentices and businesses in their area.

In addition, it is doubling the number of apprentices that it is recruiting into its own workforce to 2,000 specifically helping young people in long-term unemployment with little or no qualifications into permanent and fully paid jobs.

British Airways has said it will recruit up to 200 apprentices across a variety of different departments this year, covering engineering, operations, IT, finance and project management courses.

Meanwhile, a new study has revealed fewer than one in five parents believe apprenticeships have the same status as university education.

The survey of 400 working parents by the Chartered Institute of Personnel and Development also showed that almost half thought apprenticeships were more appropriate for manual or blue-collar jobs.

A report by the Centre for Economics and Business Research showed that apprenticeships are forecast to contribute £3.4bn a year to the economy through productivity gains by 2022.

The number of people completing apprenticeships is predicted to increase from 260,000 in the current financial year, to 480,000 by 2022, said the report.

Shadow business secretary Chuka Umunna said: "We are proud to be celebrating National Apprenticeships Week, launched by Labour in government and now in its sixth year.

"However, the recent fall in the number of apprenticeships for under 19s is greatly concerning, as well as recent evidence showing that one in five apprentices say they are not receiving training and that many are not being paid. Ministers need to get a grip and back Labour's plans for more, better quality apprenticeships."

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City Bankers 'Unhappy' With Level Of Pay

Over half of bankers were not satisfied with their pay last year, according to research by a financial services recruitment firm.

Selby Jennings said that 64% of bankers surveyed in London said they were "unhappy with their overall remuneration package."

Globally, over 67% of those who work in finance were not satisfied with their total pay.

The banking industry has been hit by a number of scandals over recent years - including the Libor rate-fixing scandal, and the mis-selling of payment protection insurance.

But even when asked to take the "current market conditions" into account, almost half of respondents maintained that their pay was unfair.

Of the 619 bankers questioned, three quarters earned more than £50,000 a year and a third took home over £100,000.

Almost a fifth said they did not receive a bonus last year - but 12% of the respondents earned a bonus of 100% or more of their salary.

It comes as the Parliamentary Commission on Banking Standards - set up in the wake of the Libor scandal - warned the Government that its reforms of the industry did not go far enough.

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Pound Falls To Another Low Against Dollar

The pound has continued to fall against the dollar, hitting a level last seen in the early days of the Coalition.

It fell to $1.4868 on Monday, after slipping below $1.49 for the first time in more than two and a half years on Friday.

The last time it was at this level was around the time of the General Election in 2010, and during the recession of 2008/2009.

The slide highlights the differing fortunes of two of the world's largest economies.

Last week, the US economy was given a boost when its jobless rate fell to 7.7% - the lowest since December 2008.

But concerns that the UK is heading for a triple dip recession remain, following a string of weak economic data and the downgrading of its credit rating by Moody's.

Sterling has been one of the worst performing major currencies this year, falling by around 8.5% against the dollar and 7% against the euro to date.

It also lost ground against the euro on Monday, which was up 0.3% against sterling at 87.34p.

Market analyst Nawaz Ali from Western Union said the falls come as investors prepare themselves for next week's Budget.

"The overriding concern is that the Government is giving little indication that it will take its foot off austerity which is hurting economic growth," he said.

He said speculation is also mounting that Chancellor George Osborne may announce a review of the Bank of England's remit.

"Investors are eyeing a change to the bank's inflation targeting, which may give Governor King and the incoming Mark Carney more room to explore new monetary stimulus," he added.

More quantitative easing is likely to hit sterling further because it increases its supply and drives its exchange value lower.

The currency movements came the day before industrial and manufacturing data for January, both of which are expected to show little or no growth over the month.

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Canadians Hire Goldman For £6bn Urenco Tilt

By Mark Kleinman, City Editor

The Canadian uranium processor Cameco Corp has enlisted the help of Goldman Sachs as it prepares a bid for a substantial stake in Urenco, the state-controlled energy group.

I understand that Cameco, one of the world's largest publicly-traded uranium processors, has hired Goldman and another unnamed bank to advise it on its interest in Urenco, which is one-third-owned by the British Government.

Ministers have signalled that they are keen to explore options for the shareholding, which could be worth as much as £2bn, according to some analysts, although industry experts believe they may ultimately decide to retain a stake in the company.

EON and RWE, the two German utilities, are understood to have been canvassing interest in their one-third stake in Urenco in recent weeks. Angela Merkel, the German Chancellor, is understood to be keen for them to sell the shareholding ahead of elections later this year, in line with German government policy to phase out nuclear power.

The Germans are being advised by Bank of America Merrill Lynch, while Morgan Stanley is advising the UK Government. The other shareholder, the Dutch government, has been advised by Credit Suisse, although ABN Amro is now understood to be undertaking that role, inisders said.

A sale of Urenco would potentially represent one of the biggest takeover deals in Europe so far this decade, although security concerns relating to Urenco's technology mean that the field of bidders is likely to be heavily restricted.

Urenco's activities are governed by the Treaties of Almelo, Cardiff and Washington, which were drawn up in an attempt to control the proliferation of nuclear technology and stop enriched uranium from getting into the hands of terrorists

Tepco, the Japanese energy group, was seen as an obvious buyer until the devastating earthquake and tsunami in 2011 triggered a crisis at the Fukushima reactor, the second anniversary of which was today.

Tim Gitzel, Cameco chief executive, was quoted by Reuters last month saying that his company was watching the Urenco process but was not close to deciding whether to bid.

Reports in Canada have suggested that bidding for Urenco would be a sensible strategic move for Cameco because it would make it a more integrated nuclear company by diversifying its business into enrichment.

Listed on the Toronto and New York stock exchanges, Cameco is headquartered in Saskatchewan, a vast province in the country.

Other bidders for Urenco are likely to include Areva, the French nuclear group, and a number of private equity firms such as Apax Partners, Carlyle and KKR.

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Budget 2013: Businesses Want 'Radical' Action

Business organisations have called for "radical" measures to boost growth as the UK economy runs the risk of falling back into recession.

The Confederation of British Industry (CBI), British Chambers of Commerce (BCC) and EEF have suggested ways for the Chancellor to tackle the deficit while creating jobs.

The CBI said George Osborne could shift £2.2bn from current spending to "high-growth areas" such as the housing market.

It said 75,000 jobs could be created by spending around £1.25bn on building 50,000 affordable homes.

The organisation also called for £950m to be spent on business tax measures like a 2% cap on business rate increases.

Its Director General said the Budget, on March 20, was an opportunity for the Government to "kick-start confidence" among businesses and consumers.

"Our measures will provide another boost for the housing market and will benefit first-time buyers, those trapped in negative equity and those looking to refurbish their homes," John Cridland said.

"With its relatively short lead-in times, house building offers the most bang-for-buck in growth terms - unleashing pent-up demand while creating jobs and growth."

George Osborne will deliver the Budget on March 20

The BCC also urged the Government to shift its spending from "unproductive areas" to measures that deliver growth more quickly.

It called for 100,000 additional new houses to be built by the Government or housing associations by 2015, and for more investment in road building and repair.

The organisation's Director General John Longworth said time is running out.

"Our own research shows that firms across Britain believe they can drive growth this year but they can't do it alone," he said.

"Bold action must be taken now to boost confidence so that businesses can create wealth and prosperity. That means both delivering existing promises and taking radical action today, not tomorrow."

But although the BCC said it supported deficit reduction, Mr Longworth warned that it could become impossible without sustained economic growth.

He said Mr Osborne may have to apply shock treatment to the economy - including the controversial option of new borrowing to fund investment - if growth is lacking.

"If within the next six months there is no prospect of growth ... you might have to consider actually borrowing more money but you should only do it to fund areas that the market would forgive," he said.

It comes despite Mr Osborne and the Prime Minister ruling out any shift from their plan to rein in Britain's budget deficit.

Last week, David Cameron said the country would plunge "into the abyss" if the Government changed course from so-called Plan A.

The EEF, which represents Britain's manufacturers, said investment was needed in infrastructure, as well as increased competition in banking.

Chief Executive Terry Scuoler said: "Having made it clear that it is sticking to its current economic course, the Government must also demonstrate that it has the strategy to deliver the stronger economy that will pay down the deficit.

"This means accelerating action that will deliver public investment in key areas and unlock investment by the private sector."

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