Treasury says banks need to do more

By Helia Ebrahimi

Published: 9:33PM GMT 31 Jan 2010

Despite stricter regulation forcing banks to defer bonuses to top earners,
many City financiers, who last week learned the details of their 2009 pay
packages, are enjoying more generous terms than politicians and regulators
had hoped for.

“We had hoped to make a shift in the bonus culture of the banks, but it
is unclear that has happened,” said a source close to the Treasury, who
pointed out that shareholders have not made a penny on the banks in the past
decade, while staff have made fortunes.

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Crossrail’s Terry Morgan in optimistic mood

Published: 8:21PM GMT 31 Jan 2010

For Terry Morgan, mining is in the blood. Growing up in the valleys of South
Wales, he remembers his grandfather, a coal miner, returning home with “black
dust around his eyes” from working in the pits. In many ways, Mr Morgan
is now walking in his grandfather’s footsteps.

At the age of 61, he is chairman of Crossrail, Europe’s biggest construction
project. It is an epic, £16bn programme that will see 13 miles of new
tunnels built under London and could help pull Britain back to growth
following the worst recession since the Second World War.

Sitting in his office 28 floors above the ground in Canary Wharf, the steely
engineer is taking it one step at a time. While the building contractors and
designers move around busily outside the glass-walled office, planning what
Mr Morgan describes as an “immense” project, they do so under a
cloud of uncertainty. Government spending cutbacks are in the offing and
some observers have Crossrail in the frame.

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Government opts for City fund over new 3i

By Richard Tyler

Published: 7:23PM GMT 31 Jan 2010

Prime Minister Gordon Brown had hoped to create a new state-backed body that
would invest in growing companies, in the mould of the Industrial and
Commercial Finance Corporation (ICFC). The ICFC was set up after the Second
World War to help small businesses and later became private equity giant 3i.

The Government has now decided that investing the money through existing fund
managers is more efficient. It hopes to raise the bulk of the funds from the
private sector but is prepared to be an anchor investor in what will be the “National
Investment Corporation”.

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DIY power creators eye up a nice earner

By Richard Tyler

Published: 7:16PM GMT 31 Jan 2010

Those buying and installing solar panels, wind turbines or biomass processing
equipment from April will receive a set rate for the electricity they create
that is almost three times the current market rate and is guaranteed for 20
years. Any excess electricity can be sold to the grid, again for a set price.

The level at which the tariffs are set is crucial to manufacturers and
installers.

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The will be NO swingeing cuts to public under a Tory government, Cameron vows

By
Daily Mail Reporter
Last updated at 9:00 PM on 31st January 2010

A Tory government would not make ’swingeing cuts’ to public spending in its first of taking office, David Cameron said today.He said that while a Conservative government would make a start on cutting the £178billion deficit if it took power at the general election, it would not move too quickly.’We’re not talking about swingeing cuts. We’re talking about making a start in reducing our deficit,’ he told The BBC Politics Show.

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Consumers warned as fraudulent ‘tax refund’ emails flood the internet

By
Daily Mail Reporter
Last updated at 3:53 PM on 31st January 2010

Fake emails: Consumers have been warned of a tax rebate hoax
Consumers were today warned to be on their guard against fraudulent emails telling them they were due to receive a tax refund.HM Revenue & Customs thinks around 20,000 of the scam emails have been sent during the past week alone, as fraudsters try to cash in on people’s preoccupation with tax in the run-up to the self-assessment deadline.The emails tell people that they are due a tax refund and ask them to fill in an online form giving their bank account or credit card details so that the rebate can be paid.The fraudsters then use the information to either empty victims’ accounts or spend up to their credit limit, before passing on their details to other criminal gangs.HMRC warned consumers not to respond to any of the emails, stressing that it only contacts people about refunds by post.It added that it was expecting there to be a ‘massive upsurge’ in the number of so-called phishing emails immediately after today’s deadline as people waited to hear about genuine tax refunds.An HMRC spokesman said: ‘We never use emails, telephone calls or external companies in these circumstances.’We strongly urge anyone receiving such an email to send it to us for investigation before deleting it.’Last year HMRC worked with other law enforcement agencies to shut down scam networks in a number of countries, including Austria, Mexico, Korea, the US, Thailand and Japan, as well as the UK.The warning comes just hours before the deadline of midnight tonight for people who have to complete a self-assessment tax return to submit their form.By 12pm today a record 6.2 million people had already filed their tax return online, up on the total of 5.8 million people who filed their return in this way last year, which was itself a 50% jump on the 3.8 million people who did so in 2008.HMRC is expecting around 186,000 people to file their return today as they rush to meet the deadline and avoid a £100 late payment charge.If their form has not been submitted by July 31 they are liable for another £100 penalty.On top of this, they have to pay interest on any unpaid tax, while persistent offenders could face a penalty of up to £60 a day in certain circumstances.Every year around 10% of the 9.5 million people who have to fill in a self-assessment tax return miss the deadline.But not all of these incur the £100 penalty, as people are only fined if they owe tax.

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Bank insurance levy gets backing

An insurance levy on financial institutions to help bail out banks in any future financial crisis has been backed at the World Economic Forum.Politicians and bankers have expressed support for the idea, while the International Monetary Fund (IMF) has described it as “practical”. The levy would go into a fund which could be used to bail out the banks instead of taxpayer money. Governments across the world have spent billions of dollars saving banks. ‘Rescue fund’The insurance levy is seen by many as a more realistic option than a tax on financial transactions, often referred to as a “Tobin Tax”, which has been discussed but has proved unpopular in some quarters. The tax has been proposed by the UK and France, but has garnered less support in the US. The insurance levy is seen as a more workable solution, not least because it has been backed by some leading bankers. Josef Ackermann, chief executive of Deutsche Bank, has advocated what he called “a European rescue and resolution fund”, while Barclays head Bob Diamond has supported the idea of a global levy. The leader of the opposition in the UK, David Cameron, has also backed the proposals. “We would work for a new international levy on banks to protect the taxpayer from footing the bill for banking crises,” he said during a speech in Davos. ‘Defining risk’Such a levy is one of a number of options being outlined by the IMF that will be presented to G20 ministers in April. However, working out the details of such a scheme could prove difficult, said the IMF’s deputy managing director John Lipsky. “You need some sense of how to define the risk you’re trying to insure,” he said. The US government has already proposed a tax on big banks to try and recoup some of the taxpayers’ money spent through its $700bn (£440bn) bail-out programme. Governments across the world are also trying to push through changes to banking regulation to try and prevent future financial crises happening in the first place. Earlier this month, US President Barack Obama outlined far-reaching reforms of the banking sector, including limits on the size of banks and restrictions of some risky trading practices.

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Warning on tax return e-mail scam

Tens of thousands of fraudulent e-mails have been sent out ahead of Sunday’s tax return deadline, officials say.Recipients are told they are due a tax refund and asked to fill in an online form with bank or credit card details. Victims have their accounts emptied or card limits used, and risk having the details sold to other criminal gangs. Revenue & Customs (HMRC) has warned taxpayers not to respond to the “phishing” e-mails, as it informs customers of a refund by post only. Massive upsurgeAn HMRC spokesman said: “We never use e-mails, telephone calls or external companies in these circumstances. “We strongly urge anyone receiving such an e-mail to send it to us for investigation before deleting it.” The Revenue said at least 20,000 fake e-mails had been sent out in the past week alone.

HMRC is expecting a massive upsurge in such correspondence following the 31 January deadline when many people will be waiting to hear about genuine tax refunds. Investigations by HMRC alongside law enforcement agencies have shut down scammers in the UK and countries such as Austria, Mexico, South Korea, the US, Thailand and Japan in the last year. About 5.8 million people filed their self-assessment tax return online last year, up from 3.8 million the previous year. Self-assessment is required primarily from the self-employed or those who have income from several sources. Anyone who completes the details online after 31 January, or who filed on paper after 31 October, could face a fine of £100.

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No early swingeing cuts - Cameron

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“People want to see a government that is taking decisions on a five-year horizon”

A Conservative government would not make “swingeing cuts” to public spending during its first year, party leader David Cameron has told the BBC.But he said it was right to “make a start” on cutting the deficit, to avoid the same “scale of problems” as Greece, whose public finances are in ruins. But Prime Minister Gordon Brown warned it was important not to “pull the rug” from the economy. The budget deficit for this year is forecast to grow to £178bn. Figures released last week show that the UK economy came out of recession in the final quarter of 2009, but with a weaker than expected growth of 0.1%. ‘We are serious’The scale of government debt is becoming one of the key issues in the lead-up to the general election. Labour says cutting spending now will damage the recovery, while the Tories argue that too much debt could imperil it. The Lib Dems say they are proposing £10bn more spending cuts than the government.

Outlining his party’s plans, Mr Cameron told BBC One’s Politics Show: “We’re not talking about swingeing cuts. We’re talking about making a start in reducing our deficit.” “You’ve got to make a start. Look, if we have an election in May, your year is already under way. “You’ve got to make a start, we believe, in proving we’re serious about getting this deficit down. “And those who say you’re taking money out of the economy, I would say, if you don’t do this, even more money could be taken out of the economy in two ways. “One, because interest rates could go up as they have done in Greece. Secondly, money gets taken out of the economy because there isn’t the confidence there and it’s confidence we need so badly. “People want to see a government that is taking decisions on a five-year horizon rather with this government taking things on a five-week or, some say, even five-minute horizon.” ‘Albatross of debt‘Mr Cameron did not give a projected figure for cuts to public spending, but promised to work with the Bank of England to “make sure we keep low those interest rates”. “What year one [of a government] has to have is a start to cutting the public spending programmes. “But it should be done in conjunction with the monetary policy authorities because we want to make sure that those interest rates remain low.” Appearing on the BBC’s Andrew Marr Show, shadow chancellor George Osborne said “early action” was needed on the deficit to avoid a “Greek-style budget crisis”.

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Key US bail-out targets ‘not met’

The US economic bail-out programme has done little to ensure that financial crises do not occur in the future, a key watchdog report has said.While conceding that “some aspects of the financial system are more stable”, it said that a number of the bail-out’s key goals “have simply not been met”. Most notably, banks are still too big and lending has not increased. The $700bn (£440bn) Troubled Asset Relief Program (Tarp) was approved by Congress at the end of 2008. It has been widely credited with playing a vital role in turning round the fortunes of the US economy, which returned to growth during the second half of last year after a long and deep recession. ‘Fundamental problems’But it has failed both in hitting key targets and in putting in place measures to prevent future financial crises, according to the watchdog charged with overseeing the programme. “It is hard to seen how any of the fundamental problems in our financial system have been addressed to date,” said special investigator general Neil Barofsky. “Even if Tarp saved our financial system from driving off a cliff back in 2008,” he warned, in the absence of “meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car”. Mr Barofsky said some US banks remained “too big to fail”, while investors were more convinced than ever that the government would step in to save them in the event of another crisis. There was little incentive, therefore, for banks to curtail risky trading activities, he argued. His report also highlighted the failure of Tarp to increase financing to US businesses and consumers - a key aim of the programme. “Lending continues to decrease,” it said. Banking reformMr Barofsky also said Tarp had failed to help struggling homeowners and to relieve unemployment. “The Tarp foreclosure prevention programme has only permanently modified a small fraction of eligible mortgages, and unemployment is the highest it has been in a generation.” The unemployment rate in the US stands at 10%, but fell slightly between November and December. Earlier this month, US President Barack Obama proposed a tax on big banks to try to recoup some of the taxpayers’ money spent through Tarp. He also outlined far-reaching reforms of the banking sector specifically designed to prevent another crisis, including limits on the size of banks and restrictions of some risky trading practices.

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