24 November 2014
The Bank of England's chief economist, Andy Haldane, tells the BBC that there's a risk that long term growth in the UK, and other developed economies, will be "soggier than it has been in the past"
Thomas Cook chief executive Harriet Green has resigned, saying her work at the travel firm "is complete".
A "toxic" and "aggressive" culture inside British banks will take a generation to change, according to a report from Cass Business School and New City Agenda.
Young people will be able to gain a full honours degree while earning a wage and paying no fees, under a scheme backed by government and industry.
Video bloggers are being told they need to be completely clear about when they are being paid to promote products.
26 November 2014
Royal Mail chief executive Moya Greene is to lay out her case to MPs.
Private sector cost structures mean that Royal Mal's competitors are likely to always be more profitable, particularly if they only operate in urban areas. "Their cost base is always going to be lower," Ms Greene says. Royal Mail did think that increases in zonal pricing for rural deliveries could help offset competition in high volume urban areas, she adds.
UK Mail's Guy Buswell gives us a quick micro-economics lesson on how the universal pricing of the USO works, using his own business as an example. "Our parcel business delivers something like 200,000 parcels every day, and I have one price for the whole of the country. So, if I have a customer who comes to me and says, do you know what, I do my own deliveries in my own area... so what I want you to do is the external parts of the area. I'm not going to charge him that universal price... because he is taking away the revenue I receive in areas that I would use to offset my higher costs in rural areas."
"We do not receive a government subsidy, as other Universal Service Obligation providers around the world do," say Ms Greene. She adds Royal Mail has been through a very painful period over the last five years and does not want to get to the point of requiring a public subsidy to continue to provide the USO. That doesn't mean she won't ask for one in the future, however.
Nick Wells, chief executive of Whistl, says he's not happy about the VAT exemption however. He says in other countries this exemption applies only to stamps, not to delivery services. It's fair to say there is little love lost between Ms Green and Mr Wells, and this is fast becoming about competition between their two respective companies.
The Universal Service Obligation costs Royal Mail £7.2bn, says Moya Greene.
Moya Greene, the chief executive of Royal Mail, is being asked about the company's VAT exemption. She responds that the VAT exemption is not unusual and that it is enjoyed by every single Universal Service Obligation provider.
Nick Wells is now getting a grilling over the number of people his company employs on "flexible" contracts. He says the company has created thousands of jobs among the most needy in society. He says Royal Mail needs to change its work pattern. At his company staff can work on contracts of 40 hours a week, or 20 hours a week. He is critical of Royal Mail's "unwillingness to attacks its cost base". He thinks Royal Mail should make efficiency savings, particularly in terms of labour relations.
Moya Greene comes back on that, saying it's not fair to compare the UK to the Netherlands or Belgium. She says in those countries access is limited to 5% of all mail. The UK market is far more liberalised, she argues. For example, 50% of business mail is not delivered by Royal Mail.
Nick Wells, says the Universal Service Obligation is a requirement in other countries such as the Netherlands, which have been opened up to competition. "And guess what," he says. "Their services have improved."
Mr Wells adds: "We are a start-up business, we cannot cover every address in the UK. We are focusing on dense urban areas but we are also focusing on London, which is the second most expensive area to operate in behind rural."
Nick Wells, chief executive of Whistl says: "We pay Royal Mail a fair and effective price to cover the more difficult rural areas... what is a threat to the Universal Service Obligation is structural decline."
A quick reminder: The Universal Service Obligation, or USO, mandates that Royal Mail provides at least one delivery of letters every Monday to Saturday to every address in the UK, at a single, standardised price.
The session on competition in the UK postal sector is live on Parliament's website.
Guy Buswell, chief executive of UK Mail, says there is "no cherry picking whatsoever, we pay Royal Mail a good rate and they make a good margin on those rates". He adds: "If you do start to try and make deliveries to rural areas it is extremely expensive".
As well as Moya Greene, the Business Committee is hearing from: Nick Wells of Whistl, Guy Buswell of UK Mail and Daniel Vines of TNT UK. Later, Roy Perticucci of Amazon will give evidence too.
Royal Mail has made "some very painful efficiency savings," Moya Greene says in her opening salvo to the Business Committee. She says "I think there is" when asked if there is a real threat to the Universal Service Obligation (USO). She adds the USO has been under attack from competitors who have been able to cherry pick where they can deliver to for 10 years.
The UK economy grew by 0.7% in the third quarter of 2014, the second official estimate of GDP from the Office for National Statistics shows.
tweets: "Founder of the eponymous homeware granny chic label Cath Kidston is stepping down from her creative director role after 21 years"
For those who wish to continue following proceedings at the European Parliament, our colleagues in the politics hub are running a live blog and video feed.
Drinks company Britvic has reported a 23% rise in pre-tax profit of £133m for the year to the end of September. Sales grew 2.4% in the period, to £1.3bn. The company's highly successful Fruit Shoot multi-pack product - familiar to parents of two-year-olds across the UK- is due to launch in the US in the second half of 2015.
Patisserie Holdings, the parent company of cafe chain Patisserie Valerie, reports a 26.8% rise in annual pre-tax profits, to £10.4m. The company, which listed on the London Stock Exchange this year with the ticker symbol CAKE, opened 19 new stores in the past 12 months, and saw a 100% increase in online sales (yes, they offer a range of gateaux via the web).
tweets: "The Juncker Plan - 300"
European markets are higher this morning, cheered by Tuesday's US GDP figure, which showed the world's largest economy growing by an annualised rate of 3.9% in the third quarter. Thomas Cook shares are lower by 20% this morning, to 109.4p, following the departure of chief executive Harriet Green.
Incidentally, the fund is now confirmed to be €315bn, not €300bn as previously reported.
The European Investment Bank will put $5bn into Mr Juncker's investment package, says EIB president Werner Hoyer.
tweets: "@JunckerEU: We don't want national wishlists, we don't want this fund to be politicised. This is not an ATM, the fund is not a bank."
"I have a vision of children in Thessaloniki walking into a brand new classroom" says Mr Juncker. He also mentions improved hospitals, more green energy and better broadband infrastructure as part of his vision for a better Europe.
Mr Juncker says this is a "time for political consensus" in Europe. He says the €300bn package comes on top of existing investment by EU member states, and that individual countries must enforce structural reforms.
"Not only are we faced with an investment gap, we are faced with an investment trap," says Mr Juncker, because investors lack confidence. He adds that Europe's public resources are stretched, which is putting a strain on investment, a large amount of which comes through public expenditure.
"Christmas has come early," says Mr Juncker, as he begins his speech. "Today Europe is turning a page," with an "ambitious investment plan", he says. "Europe is back in business".
Thomas Cook shares have taken a tumble this morning following the surprise announcement that chief executive Harriet Green is leaving the business with immediate effect. Shares are down 18.5% to 112.5p.
European Commission president Jean-Claude Juncker is about to start his speech outlining the €300bn plan to stimulate investment in the eurozone economy. For the fortitudinous among you, a live feed is available on the Commission's website.
writes: "Where does all the money [from fines] go? Presumably some goes in compensation to the victims, but the rest? To pay off the deficit?"
A little more on Harriet Green's departure from Thomas Cook. "I always said that I would move on to another company with fresh challenges once my work was complete," she says. "That time is now." The statement adds that when Ms Green joined, the company's share price was 14p. Today, it is 137.9p.
tweets: "Harriet Green steps down as CEO of Thomas Cook after only 2 years. She once told me she never stays anywhere for long but this is very brief."
Overall, Thomas Cook, which has been struggling to compete with the rise of internet travel agents, made a statutory pre-tax loss of £114m for the year to the end of September. It's an improvement on the year before, when it made a £163m loss.
Global catering and support services firm Compass group - if you have never eaten their food, there is a very strong chance your children will have eaten it at school - has reported a 5.4% rise in pre-tax profits to £1.16bn for the year to the end of September. "Food is and will remain our core competence and is backed with some strong support service businesses," the company says.
British low-cost airline Flybe has announced it has signed an agreement with Scandinavian carrier SAS, to operate some of its short haul services. It's a white-label deal, meaning SAS insignia will be displayed on the planes, and the flights will seem to the outsider like a regular SAS service.
Holiday travel company Thomas Cook has announced that its boss, Harriet Green, is to step down. She will be replaced by Peter Fankhauser, currently the chief operating officer. Ms Green only joined the firm two years ago.
That's all happening at 9:30, by the way.
Royal Mail chief executive, Moya Greene, will for the first time appear in public to make the case about why the universal, UK-wide postal service is in imminent danger. And if the written evidence Royal Mail has sent to the committee is anything to go by, her words will certainly be punchy. The written evidence calls for urgent intervention by regulator Ofcom and warns if not: "A tipping point could be reached. The universal service could become unviable before effective changes can be implemented."
One more from Lord McFall on Wake Up to Money. He says senior managers at banks "have often pleaded ignorance or stupidity rather than culpability" and that has to change. He cites an example of four top executives at Swiss bank UBS who came before the Committee on Banking Standards. Asked if they knew the name of their "star performer" who had just lost the bank $2bn, they replied that they didn't, he says. "The first they had heard of it was on the Bloomberg wires," Lord McFall adds.
Mr Walker adds that BG Group's pay offer illustrates "poor corporate governance", and "puts fund managers in a position where they are forced to approve" the £25m remuneration package for new boss Helge Lund.
The £27bn that banks have paid in fines for the mis-selling of Payment Protection Insurance (PPI) outstrips this year's defence budget, says Lord McFall. Since the start of the financial crisis, banks have paid out more than £38bn in fines, for a litany of sins. What makes matters worse is that he and other MPs were warning the banks over the dangers of PPI for 20 years, before the mis-selling scandal broke, he adds.
"A red rag to anti-capitalists," is what Simon Walker, from the Institute of Directors (IoD), calls the proposed £25m pay packet for the incoming head of gas explorer BG Group, Helge Lund. He tells Today "you could not calculate a measure that is more likely to inflame" politicians, and the general public, who will balk at the sum, which is "more than 10 times [Mr Lund's] pay in Norway", where Mr Lund ran the state's oil firm.
Lord McFall tells Wake Up to Money initiatives to change the culture in banks are "fledging and fragile". He adds: "Rhetoric at the top has been implemented, but not carried down the line [into bank departments]". The aggressive sales culture of the banks will be eliminated eventually. But the banks can't do it alone, he adds. He is also calling on the banks to provide annual progress reports to Parliament's Banking Standards Committee.
The UK's National Audit Office has warned that the cost of introducing major welfare reforms could run into billions of pounds if the IT system needed to deliver the changes isn't completed on time. The Universal Credit programme has been beset by IT problems, and the chairman of the public accounts committee, Margaret Hodge, has accused the government of throwing good money after bad. Ministers insist they are getting value for money.
UK think tank New City Agenda says it will take "a generation" to fix the culture of the banking industry, in a report published today. The organisation's chairman, Lord McFall, who is also former chairman of the Treasury Select Committee, tells Wake Up to Money the report is the first to have gone inside the banks - it visited 11 of them - so provides a real insight into what is going on, and it's not pretty.
The UK's deputy prime minister, Nick Clegg, has said he supports further restrictions on benefit payments to migrants from elsewhere in the European Union. Writing in the Financial Times, the Liberal Democrat leader also warns David Cameron against trying to limit the number of EU migrants coming to the UK.
Plus Moya Greene, chief executive of the Royal Mail, will be giving evidence to the Business Committee - as will a number of her rivals - on competition in the postal sector and the government-mandated obligation to deliver to all UK addresses. As always, get in touch on email at firstname.lastname@example.org or on Twitter @bbcbusiness.
Morning. The president of the European Commission, Jean-Claude Juncker, will set out details this morning of a €300bn plan intended to revive Europe's flagging economy. Most of the money is expected to be provided by the private sector. More on that in the next few hours.
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