The National Trust of Ireland launches a legal challenge against the UK government over its decision to approve a new nuclear plant in England.
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Business Secretary Vince Cable writes to the Scottish legal authorities urging a rapid decision on whether to prosecute former directors of RBS.
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George Osborne also faces a jump in unemployment, another ratings downgrade and the IMF’s criticisms on austerity
George Osborne faces a fresh onslaught on his economic credibility this weekend, as the influential Treasury select committee publishes a damning report on his flagship budget housing policy, hours after Fitch became the latest credit ratings agency to strip the UK of its coveted AAA rating.
Capping a grim week for the chancellor, in which the International Monetary Fund urged him to rethink his austerity plans and the latest official figures showed a jump in unemployment, MPs accuse him of failing to answer 19 key questions about the Help to Buy scheme, aimed at helping first-time buyers.
“It is by no means clear that a scheme whose primary outcome may be to support house prices will ultimately be in the interests of first-time buyers,” the MPs say.
They warn that the chancellor’s package of measures to boost the property market could instead stoke a housing bubble and leave taxpayers exposed to a future downturn in prices.
Andrew Tyrie, the Tory MP who chairs the committee, said: “The government’s Help to Buy scheme is very much work in progress. It may have a number of unintended consequences.”
The committee’s report, published on Saturday, is a fresh blow for Osborne, after Fitch followed rival agency Moody’s in reducing the UK’s credit rating to AA+.
The chancellor had made retaining the coveted AAA badge a key gauge of his credibility, but Fitch said that its decision reflected sickly growth and the worse than expected state of the public finances.
“The downgrade of the UK’s sovereign ratings primarily reflects a weaker economic and fiscal outlook and hence the upward revision to Fitch’s medium-term projections for UK budget deficits and government debt,” it said.
Of the major ratings agencies, only Standard & Poors now describes the UK as an AAA country.
Speaking in Washington, the chancellor adopted a defiant tone, signalling his determination to face down calls from the IMF to soften his deficit reduction strategy and insisting that his approach to putting the public finances in order was both “credible and flexible”.
Asked whether he would accept the advice of the report that will be published by the IMF after a team visits the UK next month, Osborne said: “It depends whether I agree with the advice.”
The chancellor’s bold attempt to get the housing market moving, by offering interest-free loans worth up to 20% of the price of a property and taxpayer-backed mortgage guarantees, was the centrepiece of last month’s budget.
But Saturday’s report from the Treasury select committee cautions that the new measures give the Treasury “a financial interest in maintaining house prices to limit the losses to the taxpayer”, which could make the housing support measures permanent.
If mortgage lenders got tough on borrowers, the report adds, repossessions could rise, leading to a sharp fall in prices, so that “the Treasury could end up facing large losses on those mortgages it has guaranteed”.
The MPs’ strongly worded report will stir memories at the Treasury of last year’s “omnishambles” budget, when the chancellor was forced to reverse a series of key policies, including the controversial “pasty tax” and a cap on tax relief for charitable donations, after vocal public criticism.
Cathy Jamieson, the shadow Treasury minister, said: “At the end of a week when unemployment rose and the IMF warned Britain needs a plan B, this damning report is another damaging blow to George Osborne.
“We will only tackle the housing crisis and help first-time buyers if we have a major programme of affordable house building.”
The select committee finds there is no evidence that Osborne’s housing plans would help to boost the construction of much-needed new homes. “If the government’s priority was housing supply, its housing measures should have concentrated there,” the report says.
Several City economists have also expressed scepticism about the chancellor’s mortgage measures. Danny Gabay, of consultancy Fathom, accused the chancellor of encouraging households to take on even more debt, exposing them to the risk of a housing downturn.
“Square the circle: ‘excessive government debt, bad; excessive private sector debt, good,’” he said, calling Osborne’s policies “the most naked, cynical attempt to engender a housing-based boom, built on yet more debt”.
Asked whether his housing subsidies risked inflating a new bubble, the chancellor said: “I don’t agree. This is a period of real weakness in the housing market. The risks of a housing bubble are pretty nonexistent.”
He insisted he was trying to tackle the “abnormally high cost of mortgages and the very high deposits being asked of people”.
The chancellor said the Bank of England would have the power to end the scheme if it had concerns that it might create a housing boom.
“This is a time-limited scheme and I have given the key to its continued operation to the Bank of England financial policy committee. It can turn the key off in the next parliament,” he said.
But the select committee expressed concerns that exercising this power would be “a distraction or burdensome” for the fledgling body, which could face intense pressure from hard-pressed homebuyers to continue taxpayer support.
Instead, MPs argued, there was a strong case for the final decision on ending the scheme to rest with politicians.
Despite two years in which the economy has moved sideways, the chancellor said he did not feel under threat politically.
“I don’t see anybody coming up with a political alternative,” he said. “I remain focused on delivering what I said I
Request by discredited former HBOS chief comes after MPs’ report slammed his management of bank
• James Crosby’s statement in full
Sir James Crosby, the former boss of HBOS, has asked for his knighthood to be revoked after a scathing report by MPs found that he sowed the “seeds of destruction” at one of Britain’s biggest banks.
Crosby was chief executive of HBOS until 2006, but was described as the architect of a strategy that just two years later led to the bank having to be rescued by Lloyds and eventually bailed out with £20bn of taxpayers’ money.
He said he was “deeply sorry” for his role in HBOS’s failure and asked for his knighthood to be removed. He is believed to be the first person to have voluntarily offered to hand back a knighthood. The 57-year-old chose to give up the honour, granted in 2006, rather than face the prospect of being stripped of it – as Fred Goodwin, the former boss of RBS was last year.
Crosby also offered to hand back 30% of his £580,000-a-year pension. He will still collect £406,000 annually in pension payments – 80 times as much as the average private sector worker. On Tuesday he also quit his £125,000-a-year role on the board of catering company Compass.
Attention is now likely to turn to his successor at HBOS, Andy Hornby, and the chairman, crossbench peer Lord Stevenson, who were also blamed in the damning report.
Liberal Democrat peer Lord Oakeshott said: “James Crosby has done the right thing. Clearly it’s not sustainable for Andy Hornby not to follow.”
Crosby’s decision came hours after David Cameron refused to intervene when MPs from all three main political parties called for action.
The former banker, who is sitting on a pension pot worth more than £20m, said he had “never sought to dissociate” himself from HBOS’s near-failure and its bailout by taxpayers.
“Shortly after I left HBOS, I received the enormous honour of a knighthood in recognition of my own – and many other people’s –contribution to the creation of a company which was then widely regarded as a great success,” he said.
“In view of what has happened subsequently to HBOS, I believe that it is right that I should now ask the appropriate authorities to take the necessary steps for its removal.”
The Parliamentary Commission on Banking Standards report, published on Friday, had described him as the “architect of the strategy that set the course for disaster”.
The MPs blamed Crosby for putting in place “a culture of perilously high–risk lending” with a lack of controls that “may have given rise to an accident waiting to happen”.
Crosby said the report, which described his misjudgments as “toxic”, made for “very chastening reading”.
The honours forfeiture committee, chaired by the head of the civil service Sir Bob Kerslake, will meet to discuss Crosby’s request for his knighthood to be revoked. A spokesman for the Cabinet Office said although it is believed to be the first time anyone has asked to have their knighthood revoked, Crosby’s request does not preclude the committee formally stripping him of the title if it is told to consider doing so – as happened with
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Some UK pensioners living in Cyprus are struggling financially following a decision to suspend pension payments to bank accounts there.
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Company to Appeal Nasdaq Decision to Delist Its Securities; Securities to Remain Listed on Nasdaq Pending Appeal
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Ryanair says that the European Commission intends to block its proposed offer for rival Aer Lingus and says it will appeal against any such decision.
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Fortescue Metals Group Ltd has filed a Home Country News Release – Competition Tribunal Rail Access Decision To view the full release click here (link to PDF).
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President’s spokesman says action on climate change is ‘one of a host of priorities’ as critics demand meaningful action
Barack Obama has ducked a decision on the Keystone XL pipeline, a key environmental issue, just one day after delivering a stirring call to action on climate change.
In the first test of Obama’s renewed commitment to climate, the administration said on Tuesday it was putting off until April a decision on the project, which is designed to pump crude oil from the Alberta tar sands to refineries on the Texas Gulf Coast. Meanwhile, the White House told reporters that climate change was just “one of a host of priorities” for the president’s second term.
The decision on Keystone XL is widely seen as a key test of his administration’s commitment to the environment. The project was propelled to the top of Obama’s inbox on Tuesday when the the governor of Nebraska signed off on the pipeline, leaving it up to the White House to decide on the fate of the project.
“Construction and operation of the proposed Keystone XL pipeline… would have minimal environmental impacts in Nebraska,” Dave Heineman, the governor of Nebraska, wrote in a letter to the White House. The approval from Nebraska leaves the fate of the project entirely in Obama’s hands.
Republicans immediately pushed Obama to approve the pipeline. “There is no bureaucratic excuse, hurdle or catch President Obama can use to delay this project any further,” John Boehner, the Republican speaker of the House of Representatives, said in a statement. “He and he alone stands in the way of tens of thousands of new jobs and energy security.”
Campaigners against the pipeline said Obama should immediately shut down the project. “Approving Keystone XL would make a mockery of the commitment he made at the inauguration to take action on climate change,” said 350.org, which has led opposition to the pipeline.
Obama’s solution was to stall for time. “We don’t anticipate being able to conclude our own review before the end of the first quarter of this year,” said Victoria Nuland, a spokeswoman at the state department.
The state department has final approval over the project because it crosses the US-Canadian border. Officials had previously said a decision would be reached before the end of March.
Obama called a halt on the Keystone XL project a year ago, citing opposition from Heineman and local landowners in Nebraska to the proposed pipeline route. Heineman, a Republican, had balked on approving the pipeline because of concerns about its proposed route. Now with Heineman signing off on the pipeline, that political cover is gone, leaving it up to Obama to make a decision on a project that has come to symbolise the clash between environmental protection and economic growth.
In the letter, Heineman said he approved of the revised pipeline route, which would avoid the environmentally sensitive Sandhills region. The route would still cross part of a crucial aquifer. However, Heineman said he was satisfied with the safety plan put forward by the pipeline’s operators, TransCanada. “The concerns of Nebraskans have had a major influence on the pipeline route,” he wrote.
TransCanada Corp, the Canadian company building the pipeline, welcomed the decision and said it could help secure approval from the Obama administration. “Today’s approval of the Nebraska re-route by Governor Heineman moves us one step closer to Americans receiving the benefits of Keystone XL,” Russ Girling, the company’s chief executive, said in a statement.
The statement said the company had adopted a number of measures to make this pipeline safer than other projects, including burying the line and installing remote sensors and shut-down valves to speed reaction time in the event of a spill.
Campaigners accused Heineman of selling out Nebraska landowners. “Governor Heineman just performed one of the biggest flip-flops that we’ve in Nebraska political history,” said Jane Kleeb, the executive director of the group Bold Nebraska.
With Nebraska on board, the state department review of the 1,800-mile route is the last remaining hurdle for the Keystone XL. Campaigners say the decision could determine Obama’s legacy.
The project is crucial for landlocked Alberta, which is facing difficulty getting its vast store of crude out of the ground and into American and European markets. But it would also unlock a big source of carbon, and tie America’s economy more closely to the burning of fossil fuels.
Campaign groups are planning a day of protests at the White House and around the country on 17 February, to try to force Obama to block the project. “If President Obama is serious about tackling climate change, he needs to reject KXL once and for all, and we’re not going away until that happens,” 350.org and Sierra Club said in a statement.
Even before Tuesday’s developments, Obama’s climate commitment was in the spotlight, because of his inaugural address. The White House spokesman, Jay Carney, appeared to damp down expectations on Tuesday. Climate change was indeed “an important issue” for Obama, he said. But Carney added: “It is not a singular priority. It is one of a host of priorities he believes we can act on.”
Carney went on to reaffirm Obama’s commitment to developing America’s home-grown fossil fuels.
Before Tuesday’s developments, campaigners had been upbeat about the possibility that the incoming incoming secretary of state, John Kerry, would be more inclined to block the project than Hillary Clinton. Kerry has a reputation as a climate champion, for his efforts trying to push a climate law through the Senate. But the Keystone XL decision puts him in a delicate position.
Federal financial disclosure records show Kerry, who ranks among the richest men in Congress, has investments in two Calgary-based energy companies that have lobbied for approval of the pipeline project. The Massachusetts Democrat, whose estimated net worth is $194m, had as much as $750,000 in Suncor and $31,000 in Cenova. Both energy firms have pressed for approval of the pipeline, the records show.
Such investments are usually managed by blind trusts, but campaigners have called on Kerry to divest from firms linked to tar sands development.
Decision to invest £370m in West Midlands plant comes days after Honda cut jobs in Swindon
Britain’s car-making industry, stung by the loss of 800 jobs in Swindon last week, is to receive a boost from Jaguar Land Rover, which is to create jobs in Solihull.
The announcement of the decision to put £370m of investment and 800 additional roles into the West Midlands plant was timed to coincide with the annual Detroit motor show, where the Indian-owned Jaguar Land Rover boasted of record-breaking sales.
Unlike Honda, which blamed the eurozone crisis for the axing of jobs last week, Jaguar Land Rover said it was expanding on the back of demand from China, Russia and the US.
“Looking ahead to 2013, we are continuing to invest in our business to support our ambitious plans for growth and we will be introducing eight new or refreshed products throughout the year,” said Phil Popham, Jaguar Land Rover’s director of group sales operations.
“2012 has been a strong year for Jaguar Land Rover with record-breaking sales performance globally. All of our key markets saw strong progress, with demand for our premium vehicles setting new records in a very competitive environment.”
The top five markets were China, the UK, the US, Russia and Italy; they accounted for 65% of the record sales of 357,773 vehicles. China, where it has started making vehicles for the first time in a joint venture with domestic producer Chery, is now the largest market, up 70%.
More than 200 of the new jobs in the West Midlands factory are being supported by the government’s regional growth fund, which has awarded £80m to the operation, owned by India’s Tata industrial group, which paid Ford £1.1bn for the then struggling business in 2008.
About people 6,000 are already employed in Solihull, where production started in 1948 and where the Range Rover, Range Rover Sport, Land Rover Defender and Discovery are all made.
When Japan’s Honda cut 800 jobs in Swindon, where it makes Civic, Jazz and CR-V models, it blamed a 1m-unit decline in the European car market caused by the eurozone crisis. They were the first jobs cut in the UK by Honda since it opened its factory in 1992.
But while sales of cars in France and Spain are at their lowest levels in 15 years, data earlier this month showed that sales in the UK had recorded their largest year-on-year increase since 2001 and volume of sales was the highest since 2008.