LONDON (Reuters) - Here is a round-up of the main stories from Friday's business pages.
Financial Times
DRIVE TO GET BENEFIT CLAIMANTS INTO WORK
Next week, the first government drive to reduce the 2.6 million-strong list of incapacity benefits claimants will be revealed after the Treasury gave ground on one of its main accounting rules. The work and pensions secretary, James Purnell, is due to announce five pilot schemes that will pay private welfare-to-work providers out of the benefits they save as they find people jobs. The financing model was a recommendation of the Freud report that would give the Department for Work and Pensions an unprecedented ability to engage providers on a payment-by-results basis.
EQUITABLE ROW MAY HIT SAVING, EXPERTS WARN
Experts warned on Thursday that Britain's savings culture faces irreparable damage if ministers refuse to compensate the one million policyholders who lost billions of pounds in the Equitable Life crisis. Ann Abraham, the parliamentary ombudsman, believes Equitable policyholders should be compensated as they have been victims of "a decade of regulatory failure". The director-general of the Association of Independent Financial Advisors, Chris Cummings, said: "Where there has been clear regulatory failing, the government will have to step up to the plate and honour at least in part the parliamentary ombudsman's findings."
FOOD SECURITY POLICY EXPLORED IN STUDY
The government took its first steps towards a national food security policy on Thursday, and abandoned its long-held stance of leaving supply to be determined by the market. The Department for the Environment, Food and Rural Affairs found "the current global food security situation is a cause for concern", and listed poor harvest, high energy prices, rising demand, biofuels and export bans in some countries as significant factors. The government insisted the UK should not aim to be self-sufficient in food as that would make food supply too vulnerable to shocks, but wanted to keep British farmers' productivity high.
GAS BILLS FORECAST TO RISE 65 PER CENT IF OIL PRICE STAYS UP
According to a report issued by Centrica(CNA.L), gas bills are likely to hit 1,000 pounds a year for the average household if oil prices remain at their present levels. The owner of British Gas also warned that electricity bills are also expected to increase sharply because of the use of gas for power generation. The news comes as leading energy suppliers prepare to increase household bills to reflect rocketing prices in the wholesale market, with analysts predicting rises of 30 to 40 per cent. Eclipse, which produced the Centrica-backed report, suggests that even such steep rises will not fully reflect the increases in wholesale markets.
CLEGG PLEDGES TO REDUCE TAX BURDEN
Nick Clegg broke the cross-party consensus on the size of the state on Thursday by committing the Liberal Democrats to reducing the overall burden of taxation. The pledge to cut taxes for those on low and middle incomes is a bid to distinguish the party from the Conservatives, who have pledged to match Labour's spending plans, and recast the Lib Dems as the party of small government. Mr Clegg said: "Every tax cut we propose will put more money in the pockets of struggling families, not millionaires." George Osborne, shadow chancellor, believes the Lib Dems can suggest such proposals because they have no chance of winning power.
FIRST TO LAUNCH SHARIAH FUND
The First Group(FGP.L) is to launch a Shariah compliant property fund to invest in Middle Eastern developments. The Emirates Opportunity Fund is set to be listed on the Channel Island Stock Exchange next month. It will require portfolio selection to comply with Shariah law, as with other Islamic investment vehicles, which forbids profiting from payment or receipt of interest as well as investing in certain activities, in this case properties with links to alcohol or gambling. The First Group believes there is a need for further commercial developments in many parts of the region.
RESTRUCTURE PAYS OFF AT EUROTUNNEL
Group Eurotunnel, the company that owns the Channel tunnel, announced its first-ever interim profit on Thursday following a huge debt restructuring and buoyant traffic levels. The company announced net profits of 20.6 million pounds for the six months to the end of June, against the 32 million euro loss reported in the same period last year by the then-unrestructured Eurotunnel. Jacques Gounon, executive chairman, said: "Even if there's a slowdown in the general economy, I don't think that this could have a significant negative effect on our niche market, where we increased our market share."
OVERSEAS EXPANSION HELPING MOTHERCARE BUCK THE TREND
On Thursday, Mothercare bucked the retail gloom to become one of the few high street retailers in the UK to deliver underlying sales growth, while continued expansion in 49 countries helped lift total sales. Underlying sales at the mother and baby chain increased one per cent in the UK over the first 15 weeks to July 11, a credible performance in a difficult market. Its international division did even better, with turnover soaring nine per cent on an underlying basis over the quarter. David 03:15 18Jul2008 PRESS DIGEST - British business - July 18
The Times
TMN SLIDES AS BUYOUT FAILS
The online marketing agency TMN Group was forced to end buyout talks on Thursday after August Equity failed to secure sufficient funds to finance an acceptable offer. It is understood that August met 16 banks but most were unable to lend enough cash. TMN's board began talks with chief executive Mark Smith and finance director Craig Dixon two months ago regarding the buyout at 70 pence a share, the lack of funding for the buyout would have reduced the offer price to an unacceptable 55 pence. Shares closed down seven pence at 30.5 pence.
TIDDLER TO WATCH
Shares in Mediterranean Oil & Gas (MOG.L) rose eight pence to 130.5 pence on Thursday after JP Morgan Asset Management said that it had bought 10 per cent of the company. MOG upgraded its Ombrina Mare reserves recently and is set to pump 20 million barrels of oil from the field.
NEED TO KNOW: NATURAL RESOURCES
Anglo-Australian mining group BHP Billiton(BLT.L) has said that its 50 per cent joint venture, BHP Billiton Mitsubishi Alliance, has entered into an agreement to buy for 2.4 billion dollars the New Saraji coal project in Queensland, Australia, currently owned by New Hope.
The Daily Telegraph
MOTHERCARE PUTS FAITH IN THE WEB AS ONLINE SALES CLIMB 27.5 PER CENT
Mothercare (MTC.L) saw a 27.5 rise online and catalogue sales over the 15 weeks to July 11, although like-for-like sales at its stores rose by just one per cent. Ben Gordon, chief executive, said he was confident that online sales growth will continue as the company expands its selection of pushchairs, adds to the website's resources and as consumer confidence grows in the internet. Shares closed unchanged at 346.25 pence.
EBAY SHARES SLIDE AS CUSTOMERS BID LOW
Shares in eBay (EBAY.O) fell by 14 per cent on Thursday as the auction website reined in its earnings expectations due to the weakening of the US and UK economies. The company now expects revenues to be between 2.1 billion dollars and 2.15 billion dollars for the third quarter, this is below analysts' estimates of 2.17 billion dollars. eBay said that the slowing growth of online shopping pushed the average sale price at auctions down by six per cent, and the group's chief financial officer, Robert Swan, said customers were 'trading down to lower-priced items' especially in the US and the UK.
BLOW FOR DSG AS O'BYRNE QUITS
Kevin O'Byrne, the well-respected finance director of DSG International(DSGI.L), left the retailer on Thursday to take on the same role at Kingfisher(KGF.L). Mr O'Byrne's move is a major loss for DSG's chief executive, John Bowett, who has presided over two profit warning so far this year. DSG said that Nicholas Cadbury has been appointed to replace Mr O'Byrne, effective from August 14. DSG shares closed at 38.25 pence, up 0.5 pence, and Kingfisher closed at 103.7 pence, up 7.6 pence.
The Independent
RUSSIA MAY REFUSE VISA FOR TNK-BP'S CHIEF DUDLEY
The long-running dispute between BP(BP.L) and its Russian partners in TNK-BP flared up again on Thursday after Russian Federal Migration Service officials told Moscow journalists that the visa application for Robert Dudley, the joint-venture's chief executive, may yet be refused because of questions over the validity of his employment contract. BP expressed 'displeasure' at the suggestion and said in a statement: 'Mr Dudley has a legally valid employment contract and a work permit in place. His positions as chief executive of TNK-BP and chairman of the management board remain in force.'
EUROTUNNEL WARNS OF GROWTH SLOWDOWN
Eurotunnel reported a rise in half-year earnings on Thursday, from one million euros a year ago to 26 million euros. However, the Channel tunnel operator warned that sales growth may slow in the second half due to the weakness of the pound against the euro and the economic slowdown.
NUCLEAR POWER SITE CLEAN-UP COSTS RISE
The Nuclear Decommissioning Authority (NDA.L), responsible for 19 nuclear sites, has reported that the estimated cost of decommissioning and cleaning up the sites has risen over the past year. The NDA said undiscounted costs for the 130-year programme were 73.6 billion pounds, up from an estimate of 63 billion pounds last year. Reasons given for the estimate increase were rising construction costs and the fact that the most difficult hazards were being tackled earlier.
The Guardian
HBOS SHARES CLOSE IN ON RIGHTS PRICE
A five per cent rise in HBOS(HBOS.L) shares to 268.25 pence and an endorsement from one of the City's biggest fund managers has provided some relief for the underwriters of the bank's four billion pound fundraising. The underwriters, led by Morgan Stanley and Dresdner Kleinwort, could be left holding millions of pounds of HBOS shares because the share price has failed to rise above the 275 pence subscription price. However, the rise in the shares on Thursday may give the underwriters hope that their losses may not be as large as first feared.
TIFFINBITES BUYS THE BOMBAY BICYCLE CLUB
Tiffinbites has purchased the Bombay Bicycle Club from Clapham House for 4.4 million pounds. The Bombay Bicycle Club has three restaurants and 15 takeaways across London. Clapham House is to use the sale proceeds to pay down its bank debts and develop its other restaurants, The Real Greek, Tootsies and Gourmet Burger Kitchen.
WINTERFLOOD APPEALS AGAINST FOUR MILLION POUNDS FSA FINE
Winterflood is appealing against a four million pound fine for market abuse levied by the Financial Services Authority. The appeal is the highest profile challenge to the FSA for some time. Winterflood said the FSA related to trading in shares in Fundamental-e Investments. The appeal refers the FSA's decision to the financial services and markets
