Consumers go on spending spree as banks pay the equivalent of windfall tax

BUSINESS WITH PERSONALITY

Lloyds Antonio Horta-Osorio, RBS Stephen Hester, Barclays Antony Jenkins and HSBCs Stuart Gulliver are paying out billions
TOTAL PPI compensation payouts are
likely to hit 16bn, according to new
estimates out today, providing a 10bn
boost to consumer spending but crip-
pling shareholders and hitting banks
ability to lend to firms and individuals.
The PPI payouts are reaching such a
scale that they are being described as a
bank windfall tax in all but name,
with the authorities deliberately turn-
ing a blind eye to some fraudulent
claims by ambulance-chasers.
The new forecasts came as the
Financial Ombudsman Service
revealed it is looking at taking on
another 500 staff to deal with PPI com-
plaints, despite already doubling its
workforce in the last two years to 2,500
to cope with the scandal.
The biggest banks have already set
aside more than 10bn for PPI com-
pensation, and consultancy Economic
Perspectives one of the few to predict
the financial crisis believes the indus-
try as a whole will eventually pay out
16bn. That is made up of 14bn to cus-
tomers and 2bn to claims manage-
ment companies.
The study found 22 per cent of adults
have taken out PPI policies, and so far
being used to meet everyday expenses.
Is this a bank windfall tax in disguise?
The biggest British banks all
increased their PPI provisions in the
third quarter, hitting hopes the crisis
could be at last lessening its grip.
RBS increased provisions by 400m
earlier this month, taking its total set
aside to 1.7bn. HSBC added $353m
(220m) to its provisions, to a total of
$2.1bn, while Barclays earmarked
700m more, taking its provisions to
2bn. Lloyds has by far the largest war
chest it set aside an extra 1bn, tak-
ing total provisions to 5.3bn.
No one yet knows how much the
scandal will ultimately cost.
three-quarters of them have claimed
or intend to claim.
The average compensation payout
stands at 2,900. Between 60 per cent
and 65 per cent of the cash paid out or
awaited will be spent promptly. And
much of that is on splashing out 15
per cent has gone on holidays, with 12
per cent going to major household
goods and five per cent towards a car.
Almost a quarter is taken up by
everyday household expenditure.
Meanwhile 17 per cent is used to pay
down debts, while 15 per cent is saved.
That has given consumer spending a
5bn boost since the start of 2011, with
at least a further 4bn expected.
PPI payments are reminiscent of the
privatisation proceeds of the 1980s
and 1990s and are sufficiently large
and widespread to influence the sea-
sonal mood, said Economic
Perspectives Peter Warburton, author
of Debt and Delusion. While spend-
ing on consumer durables, holidays
and cars could account for about a
third of the payouts, another third is
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01/10/12 til 28/10/12 is 129,297
CONSUMERS ARE SPLASHING OUT WITH PPI COMPENSATION
Spent on everyday
householdexpenses
Spent on holiday
Given as a gift / charity
Paiddowndebt Savedin a deposit
account or invested
Unspecified
Spent on major
householdgoods
Spent on or put
towards car purchase
%
23
15
ifi d
12
Unspec U
12
5
eposit
5
33
17
15
WITH PPI COM
10
SEVEN NIGHTS IN ANTIGUA FOR TWO
AT A LUXURY SANDALS RESORT & SPA
SEVEN NIGHTS IN ANTIGUA FOR TWO
AT A LUXURY SANDALS RESORT & SPA
See
Page 7
www.cityam.com ISSUE 1,768 MONDAY 26 NOVEMBER 2012
PPI FINES TO HIT 16BN
for full T&Cs
FREE
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Changing face of the City
as workforce diversifies
THE CITY is far more diverse than
the UK as a whole, with proportion-
ally far more ethnic minorities and
non-British workers than the gener-
al population, research released
today reveals.
A report from recruitment firm
Astbury Marsden finds that just
seven in 10 financial services work-
ers in the Square Mile and Canary
Wharf are white, compared with
nine in 10 nationwide.
The survey of 1,655 professionals
also reveals a much higher propor-
tion of non-Christian, gay or les-
bian, and non-British workers.
While 70 per cent of Britons iden-
tify themselves as Christian, less
than half of City workers say they
are. And one in four are white and
non-British, suggesting European
and American workers are finding
jobs in London.
Nine per cent of respondents iden-
tify themselves as Hindu, compared
with 1.3 per cent of the UK popula-
tion, and one in eight are of Indian
origin, while nationally the figure is
around one in 40.
The City was once seen as the
preserve of white Anglo-Saxon
Protestant males and the old school
network, but banks in the Square
Mile and Canary Wharf have
changed radically since then, said
Microsoft in talks over Europe stores
Microsoft is exploring the possibility of
extending its showcase stores strategy to
Europe as it bolsters the number of
devices and appliances on its software
platforms.
Jenkins urged to axe Barclays unit
Some of Barclays biggest investors have
urged Antony Jenkins, the banks new
chief executive, to take an axe to its
investment bank. At meetings with
investors in recent weeks, at least three of
the 30 biggest shareholders told Jenkins
and other executives that the UK bank
should consider following the example of
Switzerlands UBS.
Treasury to act on land sale gridlock
The Treasury is poised to seize control of
the sale of public land owned by
government departments after losing
patience with the slow pace of their land
disposal programme, the Financial Times
has learned. George Osborne, the
chancellor, is set to announce in the
Autumn Statement, that all departments
will be forced to cede control of their
properties to a central body.
Branson triumph after rail inquiry
Sir Richard Bransons train company
hopes to sign a one-year deal to run the
most lucrative long-distance railway this
week, as the government prepares to
reveal the lessons it has learned from the
West Coast Main Line fiasco.
Pot of tea turns tables on Taiwan
Waitrose has agreed to supply British-
made favourites such as tea, marmalade
and digestive biscuits to Taiwans biggest
supermarket chain.
McLaren profits race ahead
McLaren Group, famed for its Formula One
team, is having success off the track as
well as on it, with diversification into such
areas as healthcare technology paying off.
Latest results filed at Companies House
show McLarens pre-tax profit jumped to
19.7m last year from 12m in 2010.
US firm Apollo in talks for Goldsmiths
Jewellery retailers Goldsmiths and Mappin
& Webb could be about to change hands
for up 180m.
Baxter pursues $4bn bid for Gambro
Baxter International is in talks to buy
Swedish medical-equipment maker
Gambro for roughly $4bn, in a move that
would boost the American companys
kidney-dialysis business.
Car Show Is Charged Up
Chevrolet and Fiat will unveil electric
vehicles at the Los Angeles auto show this
week, an effort to comply with California
requirements that car makers sell vehicles
with no tailpipe emissions.
BORIS Johnson yesterday changed
his mind about his previous
support for an in-out
referendum on Britains EU
membership, saying the countrys
arrangements with Brussels
should not boil down to such a
simple question.
His comments to the BBC come
as the debate about changing the
UKs relationship with Brussels is
heating up.
THE CITYS INCREASINGLY DIVERSE WORKFORCE
4 IN 5 CITY WORKERS
ARE MALE
The average salary is
More than half work
75,000
1 in 5 earn over
120,000
The average
City worker
is aged 39
45 hours per week
Against the UK average of
37 hours per week
4 OUT OF 10
CITY WORKERS ARE
WHITE BRITISH
1 IN 4 IS
WHITE AND
NON-BRITISH
1 IN 8 IS
OF INDIAN
ORIGIN
Johnson warns
against in-out
EU referendum
2
NEWS
BY KASMIRA JEFFORD
THE Association of British Insurers
(ABI) last night insisted that talks
with the government to secure
affordable flood insurance for
thousands of homes were still
ongoing as the rain continued to
wreak havoc across the UK.
City A.M. reported last week
that the recent government
reshuffle had delayed talks to
replace the current subsidy deal,
which expires in 2013.
Insurance group
reassures flood
talks ongoing
BY KASMIRA JEFFORD
BY JAMES TITCOMB
To contact the newsdesk email news@cityam.com
A
FEW years ago, Britain was
ridiculously complacent, blind
to everything that was going
wrong in the economy,
determined not to notice the
irrational exuberance, the monetary
pump-priming, the fiscal profligacy,
the epidemic of stupid decisions and
the deliberate malfeasance. We were
a nation in the grip of an insane
bubble yet anaesthetised by cheap
and easy money. Many thought the
City, which was delivering jobs and
tax receipts, couldnt get anything
wrong. Today, the pendulum has
swung too far in the other direction,
with hatred, envy, class war and
extreme suspicion of all businesses
and the corporate world reaching
corrosive and dangerous proportions.
Now most people think the City can
never get anything right, that most
folk who work in finance are crooks,
EDITORS
LETTER
ALLISTER HEATH
Britain is a country of extremes: We either love or we hate
MONDAY 26 NOVEMBER 2012
cowboys or dont pay taxes. Needless
to say, that is nonsense.
The trouble in Britain is that we are
never able to strike the right balance.
We either love or we hate. Yet one can
like and support business and the
City, as this newspaper does, while
keeping ones eyes open, remaining
realistic about the limitations of
human nature and deeply disapprov-
ing of certain kinds of behaviour. The
case for capitalism is not based on the
assumption that human beings are
perfect. And while certain aspects of
business need to be reformed, we
focus too much in todays Britain on
scandals and all that is wrong with
business and not enough on what is
right, on the success stories and the
job creation. We also forget about all
that is wrong with government, and
how counter-productive politically-
motivated official action often is for
example, deranged capital standards
that artificially promoted risk-taking
during the bubble, laws that encour-
aged sub-prime lending in the US
(and new ones that may do so again
in the UK) or monetary policies that
fuelled housing bubbles (and will
doubtless do so again).
We should be discussing the good as
well as the bad about business. One
example of the former is how the City
remains a powerful force for meritoc-
racy and social mobility: a survey of
I know that many of you will be
keen to help us so please go to
www.cityamsurvey.com and you will
be guided through a simple question-
naire. We would be delighted to hear
the thoughts and ideas of as many of
you as possible. To thank you for tak-
ing the time to help us, everybody
who fills in the survey will be entered
into a draw for an all-inclusive trip for
two to one of Sandals luxury resorts
in Antigua, a package which includes
flights (see full terms and conditions
on page 7). We will also be entering
survey participants into a daily draw
to win a bottle of champagne.
Thanks again to all of you for read-
ing our newspaper and for your
exceptional loyalty and trust, for
which we are extremely grateful.
1,655 City workers by Astbury
Marsden shows that the workforce in
London finance is now extraordinari-
ly diverse, with minorities and immi-
grants employed and empowered to a
much greater degree than in other
sectors. In this case, the market is
doing more to help outsiders than
any government programme. We
must remember that capitalism is a
powerful force for good.
CITY A.M. NEEDS YOU
Dear readers, City A.M. needs your
help. As a quality newspaper provided
for free to a record number of readers,
we would very much like to find out a
little more about you what you like
most about your paper, where you get
hold of your copy, which industry you
work for and a few other straightfor-
ward questions that will help us bet-
ter cater to your needs.
Astbury Marsdens chief operating
officer, Mark Cameron. The City is
now a very meritocratic employer and
that gives it a competitive advantage
as it attracts applications from the
very brightest graduates from across
the globe, he added.
Employers are aware that a diverse
workforce is essential to improve cul-
tural and business insights into differ-
ent markets around the world.
The report which covered all staff
working for financial services compa-
nies in the area, not just traditional
front office City jobs says the aver-
age salary for City workers is 75,000,
and that more than half work longer
than 45 hours per week.
However, white British workers are
still paid more than other ethnicities,
and only 18.6 per cent of respondents
were female. Men also earn signifi-
cantly more than women, with twice
as many women as men earning less
than 40,000 a year.
Cameron said the increasingly
diverse workforce was down to both a
meritocratic attitude in City firms,
and the number of internationally
renowned business degrees on offer.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Asmussen against write-down
nA write-down on Greek debt should
not be part of the countrys next
rescue package, European Central
Bank board member Joerg Asmussen
told Germanys Bild newspaper ahead
of todays Eurozone group meeting.
We need a package of measures to
close the financial gap that will
include a substantial reduction of the
interest rates and a debt buy-back by
Greece, Asmussen said in an
interview to appear today.
Apple adds products to lawsuit
nApple has asked a federal court to
add six more products to its patent
infringement lawsuit against Samsung
Electronics, including the Samsung
Galaxy Note II, in the latest move in an
ongoing legal war between the two
companies. The case is one of two
patent infringement lawsuits pending
in the US District Court in San Jose by
Apple against Samsung. An earlier
lawsuit by Apple led to a $1.05bn
(654.9m) verdict against Samsung.
Knight CEO plays down deal talk
nKnight Capital Group, currently in
talks with at least two firms on the
possible sale of its largest business
unit, is well capitalised and would only
pursue a deal if it created value for its
shareholders and clients, Knights
chief executive Tom Joyce said in an
internal memo. The electronic trading
firm has been approached by rivals
Getco and Virtu Financial about its
market-making operation, according
to sources.
S
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:
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European authorities will transfer
35bn (28.3bn) to Spains state bank
rescue fund on December 15 in
exchange for massive layoffs at
Spains four nationalised banks,
including state-rescued Bankia, El
Pais newspaper reported yesterday.
The cash injection from European
bailout funds will be disbursed to
troubled Spanish banks two weeks
after it is paid into Spains bank
restructuring fund, the paper said.
Bankia, which sought a 23.5bn
bailout from the state in May, is
expected to be forced to lay off up to
6,000 people from its current 20,000
staff, while NovaGalicia Bank is seen
laying off 2,000 of its 5,800
workforce, said El Pais, citing
European and banking sources. The
report also said the two banks would
have to close 1,000 branches.
Catalunya Caixa (CX) and Banco de
Valencia, the other two nationalised
lenders, are currently being sold off,
and conditions would be imposed on
the buyers, the paper said.
The payment will be the first since
the Spanish government was
granted up to 100bn of aid in June,
in a European bail-out of the
banking sector. It needs the money
to clean up the balance sheet of
financial institutions hit by the burst
of a real estate bubble five years ago,
which left them loaded with 184bn
in toxic property assets.
Spanish banks
to cut jobs for
35bn from EU
BY HARRY BANKS
THE CHANCELLOR may be faced with
a double whammy of dropping a fis-
cal target and tightening the UKs belt
in next weeks Autumn Statement, a
think-tank said this morning.
Chancellor George Osborne will
have to abandon his goal for the
national debt to finally fall as a per-
centage of GDP by 2015-16, even if cur-
rent borrowing bumps are temporary,
the Institute of Fiscal Studies (IFS) esti-
mated. However the think-tank said
that this target was not macroeco-
nomically relevant anyway and
should be dropped rather than
met with extra fiscal consolida-
tion.
If the current jumps in public
sector borrowing were perma-
nent, the chancellor would
need to hike taxes further or
make more cuts in order
to meet his other target
balancing the struc-
tural current budget
by the end of the par-
liament.
The report also
demanded the
Top think tank:
Osborne set to
miss his target
BY BEN SOUTHWOOD
chancellor didnt use the recent quan-
titative easing accounting changes
which see the government borrow less
now but are likely to drive extra bor-
rowing in future to fudge the fig-
ures, since as the official budget
watchdog has stated, this change will
not affect finances in the long-run.
Since the budget, the outlook for
the UK economy has deteriorated and
government receipts have disappoint-
ed by even more than this years weak
growth would normally suggest, said
IFS deputy director Carl Emmerson.
As a result, the chancellor might
find himself having to abandon one of
his fiscal targets. If much of the addi-
tional weakness this year feeds into
a permanently higher outlook for
borrowing then in order to comply
with his other fiscal target Mr.
Osborne would need to announce
yet more tax rises or spending
cuts for the next parlia-
ment in next weeks
Autumn Statement.
George Osborne may have
to extend austerity
DOUGLAS Flint is pushing for
bankers to swear an equivalent
to the medical professions
traditional Hippocratic oath, as
part of plans to improve
standards in the industry.
The HSBC boss is already on
board with Barclays proposals
for a new professional body to
oversee qualifications in the
sector, track misdemeanours as
bankers change jobs, and even
strike off those who behave too
badly.
The suggested Chartered
Institute of Bankers could also
HSBC chairman Flint backs new
Hippocratic oath for bankers
BY TIM WALLACE take, manage and monitor
complaints from consumers, who
would also be able to check up
on the bankers they come into
contact with.
Flint is part of the British
Bankers Associations (BBA)
taskforce into behaviour, which
is considering how to set up a
new body to establish and
maintain strong ethical
standards in the industry.
And the Sunday Telegraph
yesterday reported that Flint
believes making bankers swear
an oath would support the goal
of improving behaviour in the
industry.
MORE: Pages 10-11

MONDAY 26 NOVEMBER 2012
3
NEWS
cityam.com
Douglas Flint wants to make sure bankers behave with honesty and integrity in future
RBS now expects to take multiple
blows from regulators in the coming
months as their Libor fines are likely
to be split over several days, rather
than concentrated in one announce-
ment, as with Barclays.
Chief executive Stephen Hester
wants the settlement to be agreed
before February, to clear the cloud
above the majority state-owned bank
over the rate-rigging scandal.
The bank has already suspended or
fired traders in regions including
Singapore, where unfair dismissal
hearings have revealed details of staff
conversations relating to Libor sub-
missions. Yesterday the Sunday
Telegraph reported the bank expects
to pay separate fines to the Financial
Services Authority in the UK and US
regulators.
Barclays was fined 290m in June.
The majority of the bill was imposed
by US regulators, with the FSA mak-
ing up a relatively small share of the
sanction just 60m.
It was reported that some FSA regu-
RBS Libor fines
set to be drawn
out painfully
BY TIM WALLACE
lators fear the authority looked weak
in comparison, and so wants to
impose its sanctions separately.
RBS and the FSA both declined to
comment. It is thought that many
other large banks will follow Barclays
and RBS in paying fines over the Libor
scandal, as rate manipulation is
believed to have been widespread. The
British Bankers Association, which
compiled and sold the Libor data, has
already agreed to hand control of the
key rate to a regulated body which is
expected to use real trading data,
rather than estimates, in future.
EU banks want to match US in
delaying tough capital rules
NEW CAPITAL rules are being
introduced too quickly, putting
European banks at a disadvantage
compared with their US rivals,
industry body the European
Banking Federation (EBF) claimed
over the weekend.
The Basel III rules will hike the
amount of capital banks must hold,
with the aim of making them more
resilient and less likely to collapse.
That comes with considerable
extra costs, which critics say is
BY TIM WALLACE reducing the amount of lending to
households and businesses, hurting
the economy.
Europes banks are supposed to
start introducing the new
requirements in the New Year,
whereas US banks will follow a
slower timetable. That means EU
banks will face higher costs sooner
than those in the US. They are now
calling on the European
Commission to level the playing
field by shifting to a timetable
closer to the one adopted in the US.
We are now very troubled over
the possible repercussions that the
most recent statement from the US
authorities may have for the
international competitiveness of
Europes banks, the EBF said in a
letter to European commissioner
Michel Barnier, urging him to delay
the implementation of the new
requirements until January 2014.
But Barniers spokesperson
rejected the claims.
The important thing is to
conclude [negotiations] so that the
EU can start applying Basel III rules
in 2013.
RBS chief Stephen Hester is keen to pay the fine and put the scandal behind the bank
Royal Bank of Scotland Group PLC
23Nov 19Nov 20Nov 21 Nov 22Nov
285.0
287.5
280.0
282.5
290.0
292.5
295.0
297.5 p 294.00
23Nov
ASSET management firms risk
tighter regulation if they are mis-
labelled as shadow banks by
government, an influential trade
body has warned.
The International Capital
Market Association says the
industry must be wary it is not
tagged as part of the shadow
banking industry non-deposit
taking financial intermediaries
which resemble commercial
Asset managers at risk of being
mislabelled as shadow banks
BY MICHAEL BOW
banks.
Bank deleveraging has caused a
wave of commercial bank assets
such as real estate and
infrastructure to be transferred
to asset managers over the past
two years.
ICMA chairman Bob Parker told
the groups annual meeting:
What the asset management
industry needs to laser in on is
shadow banking. We dont want
asset managers to be labelled as
shadow banks.
BOTTOM LINE: Page 17

MONDAY 26 NOVEMBER 2012
4
NEWS
cityam.com
MODERATE and excessive drinkers
alike will have to cough up more
for alcohol under the governments
plan to set a minimum alcohol
price, a report on which is due to
be announced on Wednesday.
The government is expected to
be presented with 40p, 45p and
50p as possible options for floors
on the price of one alcohol unit
equivalent to 10ml or 8g of pure
alcohol as part of its plans to curb
problem drinking. This would
make the cheapest bottle of wine
in a supermarket or off-licence
approximately 4.
Though the policy is supported
by many health professionals, it
has come under fire for the impact
it could have on moderate
drinkers budgets.
However the model upon which
the minimum alcohol price policy
is based is bogus, according to a
study from the Adam Smith
Institute out today, co-authored by
expert statistician John Duffy.
Among its deep flaws are the
assumption that heavy drinkers are
more not less likely to reduce
consumption in the face of price
rises. The model also ignores other
problems with price floors, such as
the boost to the illicit alcohol trade
and the poverty higher prices
could push poorer drinkers into,
the authors claim.
Another blow
for drinkers as
price floor hits
BY BEN SOUTHWOOD
UBM shareholders will today vote on
a move back to Britain, after years of
the business publisher basing itself
in Ireland for tax reasons.
The FTSE-250 listed firm is hosting
a general meeting this afternoon
after UBMs board decided that
recent changes to corporation tax
make the UK a more hospitable
place to headquarter itself.
The transition, which is almost cer-
tain to be approved, follows in the
footsteps of the likes of Sir Martin
Sorrells ad giant WPP, which
announced it would bring its tax
base back to Britain in August. WPP
shareholders meet to approve the
move next month.
UBM moving back to the UK will
come as a welcome boost to George
Osborne ahead of next Wednesdays
Autumn Statement
In March, Osborne announced a
bigger-than-expected cut in corpora-
tion tax, from 26 per cent to 22 per
cent over the next two years.
Although this is still higher than
Irelands corporation tax of 12.5 per
UBM investors
vote on move
back to Britain
BY JAMES TITCOMB
cent, other tax benefits in the UK
make the move worthwhile, UBM
says. If approved, the company will
move its tax base back to Britain at
the end of the week.
UBM, which publishes Property
Week and runs PR Newswire, moved
its base to Dublin in 2008 due to
what it called the less complex tax
system. The company made 102m in
pre-tax profit last year on revenues of
972m.
Around 15 major corporations are
believed to be considering moves to
Britain thanks to lower corporate tax
rates, including drinks giant Diageo
and publisher Informa.
DUBAIs ruler announced ambitious plans this weekend to build the worlds biggest
shopping mall with a park that will outstrip London's Hyde Park in size. Emaar
Properties, the United Arab Emirates largest developer, and Dubai Holding will build
the new district called Mohammed Bin Rashid City, after the the Gulf city states ruler.
DUBAI TO BUILD WORLDS BIGGEST SHOPPING MALL
UBM PLC
23Nov 19Nov 20Nov 21 Nov 22Nov
715
720
725
730
735
705
710
740 p 733.00
23Nov
MONDAY 26 NOVEMBER 2012
6
NEWS
cityam.com
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7 nights Luxury Included
at Sandals Grande Antigua
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Go to www.cityamsurvey.comfor the chance of a dream holiday
Sandals Grande Antigua Resort & Spa is the first
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Choose from the original charming Caribbean
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suites and waterside dining.
Savour gourmet dishes in 11 speciality
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chill in one of the seven bars.
Unwind in the exclusive Red Lane Spa, on the
white sandy beach or in some of the most
luxurious suites in the Caribbean.
This is a resort made for romance and with a
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so it comes as no surprise Sandals Grande
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a row now. Ideal for guests who want to
combine a Caribbean holiday with all the state-
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world. Its two villages mean that you have two
holidays in one.
All rooms feature air-conditioning, king-size
bed, ceiling fan, amenity kit, hairdryer, telephone,
private bath and shower, safe, clock radio, cable
TV, coffee/tea maker, iron and ironing board.
Terms and conditions: 7 nights accommodation is provided for two adults at Sandals Grande Antigua Resort & Spa, Antigua. Accommodation is on a Luxury Included (all-inclusive) basis in a deluxe room with king size bed. Resort transfers are included,
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the stated resort to an alternative Sandals resort if rooms become unavailable for the travel dates requested. By entering this competition you consent to your details being shared with our parent company located outside the European Economic Area. The
competition is not open to employees and their immediate families of promoter Unique Vacations (UK) Ltd and their associated agencies. Prize winners must be over 18. One entry per household. ABTA J3152.
CITYA.M.
EDITORS
LETTER
ALLISTER HEATH
IT is that time of the year again. Today, City A.M.
begins our annual readership survey. As a
quality newspaper provided free of charge, it is
important for us to understand who our readers
are and what you think of us, and this survey is
one of the main vehicles we have to achieve
this.
We know that many of our growing band of
readers will be keen to help and spend just a
few minutes filling in our very simple and
straightforward survey at www.cityamsurvey.com
but as good capitalists here at City A.M. we also
believe in incentives. And in todays somewhat
depressed climate, we realise that the chance to
win a brilliant holiday in the sun is just what the
doctor ordered.
So everybody who fills in the survey will be
entered into a draw for an all-inclusive trip for
two to one of Sandals Luxury Included

resorts
in beautiful Antigua, a package which includes
return flights (see terms and conditions below;
heartfelt thanks to the company for making this
amazing prize possible). To add further spice to
the survey, we will also be entering survey
participants into a daily draw to win a bottle of
Louis Roederer champagne.
We recently reached our highest ever audited
circulation and have very ambitious plans for
the future. We are by no means finished
improving the quality of the paper and making
it even more widely available; and we are very
keen to hear any thoughts or suggestions you
may have.
Thanks for reading City A.M., thank you for your
loyalty and we look forward to receiving your
feedback at www.cityamsurvey.com
RESORT FACILITIES
n373 rooms & suites
n23 luxurious room & suite categories
nAnytime dining in 11 gourmet restaurants
n7 bars serving premium brand drinks
n6 swimming pools
nScuba pool
n6 whirlpools
nWater sports
nScuba diving (free for certified divers)
n2 Tennis courts
nRed Lane Spa
(treatments are at additional cost)
nRed Lane Fitness Centre
nNightly entertainment
nWeekly late night chocolate buffet
THE combined personal fortunes of
the UKs top 10 hedge fund execu-
tives weighed in at 6.6bn last year, a
study out yesterday revealed, with
Brevan Howard co-founder Alan
Howard the richest hedge fund exec-
utive in the country with 1.4bn of
assets.
Data from Hedge Forensics, pub-
lished in the inaugural Sunday
Times Hedge Fund Rich List yester-
day, shows Howard top of the wealth
list, followed by David Harding from
Winton Capital Management.
Harding last month revealed his per-
sonal tax arrangements showing
annual earnings of 87m and
34m paid in taxes.
Elsewhere on the Sunday
Times list are other well known
hedge fund stars, including
Crispin Odey and his wife
Nichola Pease with a fortune
of 455m and art patron
Michael Platt from Bluecrest
Capital with 650m to his name.
The data reveals the growing
importance of the industry,
typically based out of
UKs biggest 10
hedgies sit on
6.6bn fortune
BY MICHAEL BOW small, discreet offices in Mayfair, to
the big institutions in the Square
Mile. It reveals 650 hedge funds in
operation in the UK today, employing
more than 8,000 people. With
250bn of assets under management,
it accounts for some four per cent of
the 5.12 trillion of total assets man-
aged by UK managers.
The combined assets under man-
agement of the funds that house the
top 10 executives total around $172bn
(107.3bn), and vary in size from
Brevan Howards $38bn of client
assets to the $6bn managed by
Pamplona Capital Management, set
up by Alexander Knaster, third on the
list. But the UK still has some
way to go before it can com-
pete with the US hedge
fund industry.
Howard was placed at
number eight on a glob-
al list of the top hedge
fund earners in 2011.
Top in that poll was
Bridgewater Associates
boss Ray Dalio.
CVC gears up for sixth fund as
it eyes water utilities assets
PRIVATE equity giant CVC Capital
Partners is set to push on with its
sixth fund raising venture after
testing the water with investors for
a new 11bn (8.9bn) fund.
The firm, which owns Formula
One and is co-owner of AA and
Saga parent company Acromas, is
soliciting investor interest for a
successor to its CVC European
Fund V, it is understood.
The new fund, CVC European
Fund VI, is of similar size to the
BY MICHAEL BOW 10.7bn the company managed to
raise for number V fund in 2008
despite a tougher fundraising
environment this time around.
CVC is still mulling drawing
down funds raised for its V vehicle.
It is understood the group,
which makes minimum
investments of $150m, is one of the
final bidders in the race to take
over Sutton and East Surrey Water
from Icon Infrastructure.
It is thought Japanese
conglomerate Sumitomo is also in
the running.
CVC, which is one is Europes
biggest private equity firms with
offices around the world, follows a
lead set by its peer Permira, which
is currently aiming to raise 6.5bn
for a new fund.
The fundraising mood has been
buoyed recently by the close on the
biggest private equity fund raised
since the 2008 financial crisis,
when Advent International
announced it had raised $10.8bn
(6.73bn) for its seventh fund on
November 12.
CVC declined to comment.
Winton Capital Managements David Harding is the second richest hedge fund figure
Nichola Pease makes
the top 10 rich list
MONDAY 26 NOVEMBER 2012
8
NEWS
cityam.com
TOP 10 HEDGE FUND RICH LIST
Rank Name Fortune Company
Alan Howard 1.4bn Brevan Howard
David Harding 900m Winton Capital Management
Alexander Knaster 885m Pamplona Capital Management
Louis Bacon 820m Moore Capital Management
Michael Platt 650m Bluecrest Capital Management
Michael Hintze 580m CQS
Crispin Odey/Nichola Pease 455m Odey Asset Management
Stephen Butt 380m Silchester International
Osman Murgian 300m Winton Capital Management
Steven Heinz 270m Lansdowne Partners
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BUSINESS investment will be stuck
below its pre-crisis peak until at least
2015 because of weak confidence, Item
forecasted this morning, calling for the
Comprehensive Spending Review to be
brought forward to give businesses
more clarity over future spending cuts.
Firms will increase investment spend-
ing by just 2.3 per cent across the whole
of 2012, the Ernst and Young-sponsored
economics consultancy said, and
growth will only increase to 3.9 per cent
next year. Though Item expects growth
of around eight per cent between 2014
and 2016, even this rapid growth will
only bring spending in 2015 back to
where it was before the recession
some seven years later.
Slow and steady doesnt always win
the race, said Andrew Goodwin at Item.
Item says weak
investment will
persist till 2015
BY BEN SOUTHWOOD
The UK is facing another two years of
sluggish growth in business investment,
sapping growth from the wider econo-
my. The fundamentals are all in place,
but a lack of corporate confidence is
holding back major spending decisions
and is now hampering UK growth and
the rebalancing of the economy.
The report noted that big firms who
do most of the UKs investment were
sitting on cash, and could access credit,
implying a tight funding market was
not to blame for low capital spending.
Instead, one explanation was the sub-
stitution of labour for capital that firms
were engaging in, holding down the
amount of capital available per worker,
and thus productivity. There is a risk
that a lengthy period of underinvest-
ment could damage the supply side of
the economy and reduce our productive
potential, warned Goodwin.
SIMPLER taxes, an extended
national insurance
contributions (NICs) holiday
and a shake-up of the banking
system to promote
competition will all help small
firms grow, the Federation of
Small Businesses (FSB) claimed
today, pushing for its members
to get help in the Autumn
Statement next week.
The lobby groups
submission to the chancellor
also called for a new state
agency to back small
businesses, as well as an
internet service provider to be
Firms say National insurance
holiday would boost hiring
BY TIM WALLACE
created to roll out broadband
across the whole country to
give better service even in
those areas where broadband
provision is not profitable.
It claims extending the
regional NIC holiday to micro-
firms across the country
would create 45,000 jobs and
add 1.3bn to GDP by making
it cheaper to hire new staff.
The group also said cancelling
the 3p hike in fuel duty due in
January would capitalise on
emerging confidence.
The submission also calls for
air passenger duty to be
scrapped to boost tourism.
THE UK needs a long-term vision to
cut taxes and boost exports,
manufacturers organisation EEF
claimed today, arguing that firms
need certainty if they are to invest
and grow.
Increasing tax breaks for
investment should be a start, it
argued, as the capital allowances
system is the second least supportive
in the OECD. And the group wants
more competition in the banking
sector to increase access to credit.
The Autumn Statement should
take action to ensure firms looking
to invest have the right support from
our tax system, EEF said.
Call for a clear
exports vision
BY TIM WALLACE
MONDAY 26 NOVEMBER 2012
10
NEWS
cityam.com
AMBITIOUS plans to upgrade the
UKs transport network have become
snared in political and planning
delays, the British Chambers of
Commerce said today.
Six key projects remain stuck in
the starting blocks, the BCC
complained, while a further two
have been scrapped for the
foreseeable future.
The chancellors Autumn
Statement last year set out details of
large-scale infrastructure upgrades,
which included 13 projects deemed
business critical by the BCC.
Progress has been made on some
ventures, such as a new Forth Bridge
in Edinburgh and Londons
Crossrail, but others such as extra
airport capacity show little signs of
development.
Even where projects have been
given the go-ahead in Westminster,
progress is typically slow and in too
many cases is mired in the planning
stages, said BCC director of policy
Adam Marshall. Ministers must use
all the powers at their disposal to
kick-start these lay projects.
...but coalition
struggles with
transport work
BY MARION DAKERS
BUSINESSES want the chancellor to
revive plans to inject cash into large
road and rail upgrades with tax
breaks, a survey out today suggests.
Senior tax professionals at some of
Britains biggest firms put tax incen-
tives for those investing in infrastruc-
ture at the top of their wish list for
next weeks Autumn Statement.
Tax credits for big capital projects
would help create jobs while boosting
the coalitions own targets for large-
scale infrastructure improvements,
according to a poll of 57 firms by
KPMG.
The current tax system actually
deters capital investment, for exam-
ple, in new power stations, waste
plants, roads and rail and other capi-
tal projects. UK is the only G20 coun-
Firms call for
tax breaks for
infrastructure
BY MARION DAKERS
try which does not give tax relief for
this expenditure, said Margaret
Stephens, global head of infrastruc-
ture tax at the professional services
firm.
Last year, George Osborne used his
Autumn Statement to launch an
updated National Infrastructure Plan,
which aims to pour both public and
private sector money into upgrading
roads, rail and utilities. Large pension
funds, however, have recently com-
plained that investing in such
schemes is not yet worthwhile.
The survey suggested that a jolt to
infrastructure investment could
prompt firms to add thousands of
jobs.
Many companies are also keen for a
drop in corporate taxes or national
insurance, as well as tax relief on other
types of investment, KPMG found.
Think-tank supports
controversial raid on
pensions tax relief
AN INFLUENTIAL think-tank has
backed the chancellors plans to
raid high-earning savers pensions
tax relief in next weeks Autumn
Statement.
Centre for Policy Studies research
fellow Michael Johnson said in a
paper out today that the current
incentives to save for a pension are
crude and mis-directed, primarily
towards the wealthy.
George Osborne previously
lowered the ceiling for annual
pension contributions eligible for
relief from 255,000 to 50,000 in
2010. He is believed to have put
forward plans for a further
reduction to the rest of the cabinet.
The proposal could help balance out
the 10bn cut to the annual welfare
budget set out at the Conservative
conference last month.
Pensions expert Johnson renewed
BY MARION DAKERS
his call for a combined limit for tax-
free pension and ISA savings, with a
cap somewhere between 30,000
and 40,000, a move that would save
an estimated 600m to 1.8bn a
year.
He argued that since higher
earners are in the habit of saving
anyway, the coalitions focus should
be on encouraging younger people
and those on low wages to save for
their future, therefore lowering the
eventual burden on the state.
He also called for Osborne to axe
higher rate relief, possibly replacing
it with a flat income tax relief rate.
Interest groups such as Saga have
also called for greater flexibility for
savers, for example making ISAs an
attractive alternative to locking
every penny into a pension.
But others, including Baker Tilly,
have warned that the planned tax
relief cut might dissuade those with
above-average salaries from saving.
FIRMS with defined benefit (DB)
pension schemes are still struggling
to get their funding holes under
control, research out today claims.
Low investment returns coupled
with heightened inflation has left
FTSE 350 firms falling even further
behind the funding requirements
of their DB programmes.
PwCs pension support tracker
Inflation and poor returns turn
screws on defined benefit plans
BY MARION DAKERS
has stood at 74 out of 100 since the
start of the year, it said today. The
tracker, which measures a
companys financial strength
against its DB pension obligations,
is far below its 2007 level of 88.
If investment returns remain
low, and company earnings do not
rise in line with inflation,
companies will find they are paying
a greater share of those profits
towards covering their pension
deficit, said PwCs Jonathon Land.
MONDAY 26 NOVEMBER 2012
11
NEWS
cityam.com
FIRMS WANT TO SEE INCENTIVES FOR INFRASTRUCTURE
Hike stafng numbers by 6%
Increase capital expenditure by 12%
Spend 17 % more on research and development
Further reduction in
Corporate Tax rate
8
Relief on infrastructure/
capital investments
17
Relief on other investments
5
Lower National Insurance
contributions
4
Reduce top rate of income
tax to 40%
3
Reduce oil/gas tax rates
3
Simplify the tax code
3
Further relief for R&D
3
Reduce VAT to 17.5%
2
Better certainty on controlled
foreign companies rules
1
Reduce VAT to 15%
1
Funding for training and
apprenticeships
1
Generally lower tax rates
1
AREAS THE GOVERNMENT SHOULD FOCUS ON TO DRIVE GROWTH (NO. OF MENTIONS)
TAX EXPERTS SAID THESE CHANGES COULD PROMPT FIRMS TO:
AUDITORS
RANK COMPANY NUMBER OF CLIENTS CHANGE SINCE AUGUST
PWC 367 (-3)
KPMG 363 (-5)
DELOITTE 290 (-5)
ERNST & YOUNG 259 (-4)
GRANT THORNTON 245 (-4)
1
2
3
4
5
PwC remains Citys top auditor while
JP Morgan holds the top adviser spot
PWC has retained its position as
the Citys most-favoured
auditor, figures out today
reveal, although KPMG has
managed to sign up a number
of FTSE 250 clients.
Research from data
consultancy Morningstar
shows that PwC has 367 stock
market clients, and 42 of the
FTSE 100 almost double that
of second-place KPMG.
However, KPMG has signed
up three new FTSE 250 firms
since August, including UK
haulage giant Stobart Group.
Morningstars Professional
Services Rankings Guide,
which lists the top companies
in the audit, financial adviser,
PR, law, registrar and
stockbroker sectors, also
displayed a strong quarter
from law firm Pinsent Masons
and advisers FinnCap.
Pinsent Masons overtook
Norton Rose to became the
Citys third biggest lawyers in
terms of clients, while FinnCap
joined Numis as the joint
fourth-biggest financial
advisory firm.
FinnCap also became the
most popular adviser for firms
on Londons junior market,
overtaking Cenkos Securities in
terms of Aim-listed clients. It
took Cenkoss place at the top
of the Aim broker list last
month.
JP Morgan Cazenove remains
the Citys most popular
financial adviser and broker,
while FTI Consulting has
signed up seven new clients
since August, retaining its
position as the Citys favoured
PR company, although
Brunswick now represents 24
of the FTSE 100.
Registrars were boosted by
an increase in Aim flotations
over the last three months,
with Capita remaining the
most popular, although FTSE
100 leader Equiniti was hit by
its loss of top client BP to
Capita.
BY JAMES TITCOMB
PwC boss Ian Powell has seen his firm retain its position as the Citys favoured auditor
MONDAY 26 NOVEMBER 2012
12
NEWS
cityam.com
ANANTA. More than 30 years ago, a SEIKO engineer dreamed of a new kind of watch that
would reflect the true, continuous flow of time. 28 years of R&D later, Spring Drive was born,
the only watch in the world with hands that move with no tick and no noise, in perfect glide motion.
Today, the Spring Drive Chronograph sets a new standard in luxury chronographs, capturing the
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the perfect chronograph is no longer a dream. seiko-ananta.com
THEFORUM
cityam.com/forum

JOIN THE DEBATE PAGES 26-27
THE CITY'S TOP FIRMS
FINANCIAL ADVISERS
RANK COMPANY NUMBER OF CLIENTS CHANGE SINCE AUGUST
JP MORGAN CAZENOVE 103 (0)
CANACCORD GENUITY 92 (-8)
CENKOS SECURITIES 86 (-4)
FINNCAP 79 (+4)
NUMIS SECURITIES 79 (+3)
LAW FIRMS
RANK COMPANY NUMBER OF CLIENTS CHANGE SINCE AUGUST
SLAUGHTER AND MAY 110 (-2)
HERBERT SMITH FREEHILLS 94 (0)
PINSENT MASONS 93 (+7)
NORTON ROSE 85 (-2)
CAREY OLSON 82 (+3)
STOCKBROKERS
RANK COMPANY NUMBER OF CLIENTS CHANGE SINCE AUGUST
JP MORGAN CAZENOVE 218 (0)
CANACCORD GENUITY 140 (-15)
NUMIS SECURITIES 138 (+3)
CENKOS SECURITIES 119 (-5)
INVESTEC SECURITIES 102 (-2)
1
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LAST Thursday night saw the Citys
best lawyers get the weekend off to a
traditional early start as Legal Week
magazine invited them to Old
Billingsgate Market to celebrate the
British Legal Awards 2012.
The annual black-tie bash, again
held at the City fish market, was filled
with tables from all the big firms.
Host for the night was comedian
Jason Manford, not as funny, one solic-
itor reliably told The Capitalist, as previ-
ous compere Jack Dee: We
were hoping for Michael
MacIntyre this time
sighed our disappointed
partner.
Presenting Law
Firm of the
Year to
T r a v e r s
S m i t h ,
c h e e k y
Ma n f o r d
qui ppe d:
This is the
p e n u l t i -
m a t e
a w a r d ,
Citys big fish at
Legal Awards
which is why it is my second
favourite.
Other winners included Cleary
Gottlieb Steen & Hamilton for
European Legal Team of the Year and
Burges Salmon for best Commercial
Team. Hogan Lovells won in the
Banking, Finance or Restructuring
Team of the Year category and the City
of London Law Society Lifetime
Achievement Award went to ex-Law
Society president John Wotton. M&A
Team of the Year was scooped up by
Skadden Arps Slate
Meagher & Flom,
which The Capitalist
cannot help but feel
should inspire a
new category for
next year Most
Difficult Name to
Pronounce When
Two Glasses of
Champagne Down.
THREE City boys and former army
officers Ed Janvrin, consultant at
PwC, Alex Mackenzie, consultant at
McKinney Rogers and Will Dixon,
business manager at Barclays
stripped off their suits to row
across the Atlantic in aid of charity
Row2Recovery earlier this year.
The mission, conceived by Janvrin
and Mackenzie, was undertaken by
a crew of six made all the more
impressive by the fact that between
them they had only eight legs.
Despite encounters with a
kamikaze frigate bird and
fractured rudder the team made it
back to dry land and have now
achieved their goal of raising 1m
for the charity.
The story of their ocean crossing,
The Row To Recovery, is out now.
Royalties from the book will help
service personnel injured in the
line of duty.
MONDAY 26 NOVEMBER 2012
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The six rowers mid-Atlantic - Back row left to right: Carl Anstey, Ed Janvrin and Alex
Mackenzie; Front row left to right: Will Dixon, Neil Heritage and Rory Mackenzie
13
cityam.com
AN intriguing sales pitch from
scent marketing firm ScentAir,
who have managed to establish the
tenuous link between Christmas and
the smell of finance: Bank retailers are
perfuming with traditional Christmas
whiffs. Make the customers stay longer
and relate more with you. One such
client to take up the fragrance services
of ScentAir is the office building at 125
Old Broad Street. The home of the Old
Stock Exchange is now occupied by
Alegro Capital, AMCO Commodities,
Seven Investment Management,
property bigwigs DTZ and law firm
King & Spalding. No word on what
notes make up the scent of Christmas in
a bank. The Capitalist presumes it
would be an oil-based fragrance, all the
better for greasing palms.
A JP Morgan album could soon be
the next big thing in pop music.
Swiss model Xenia Tchoumitcheva, a
former summer intern at the banks
London office, has released an erotic
rap song called Youre So Beautiful.
Tchoumitcheva has previously spoken
highly of her time at JP Morgan: I have
to say it was a very positive experience
for me better than any other industry
in the world. Questioned online as to
whether she would return to banking,
the model gave a cryptic response: The
financial system is like the blood of an
organism. If there is a problem with an
organ you can see it, because there is
less, or more, supply. It is an alphabet to
read the whole world, or an
earthquake. Probably a no, then.
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
Jason Manford
(left) and Cleary
partner Andrew
Shutter (right)
Row your boat gently down
the Atlantic say three City boys
THE owners of Londons
lavish Savoy Hotel are
understood to be closing in
on a deal to roll over
almost 290m of debt after
tapping up two European
banks to take on the
borrowings.
The iconic hotel, which
was snapped up in a joint
venture by Lloyds Banking
Groups Bank of Scotland
unit and Saudi business
tycoon Al Waleed Bin
Talal, is in talks to
syndicate the 287m debt
pile with two European
banks. The debt is owned
by Lloyds Banking Group,
meaning Lloyds has both
an equity stake and a debt
stake in the hotel.
The directors of the
hotel have been pushing
hard to strike a deal for
the past six months,
ahead of the debts
maturity at the end of this
year. It is understood
French bank Crdit
Agricole and German fund
manager Deka are in line
to refinance the debt.
Lloyds Banking Group
declined to comment.
Savoy close to 290m
debt pile refinancing
BY MICHAEL BOW
FIVE Guys Burgers and Fries, the cult
US burger chain favoured by
President Barack Obama, is set to
branch out in London after
Carphone Warehouse founder Sir
Charles Dunstone moved to bring
the famous restaurants across the
Atlantic.
Sir Charles, who founded Carphone
Warehouse in 1986, is understood to
have struck a deal through his
Freston Road Investments vehicle to
bring Five Guys to London and
expand with branches across the
country.
Five Guys, which last year was voted
Americas favourite burger
chain in a poll by Zagat
for the 10th year
running, will be
the latest in a
long line of cult
burger chains
moving to
London.
It follows
moves by Shake
Dunstone eyes
iconic burger
chain franchise
BY MICHAEL BOW
Shack to open a branch in Covent
Garden next year and the first steps
abroad by legendary West Coast burg-
er chain In-N-Out, which opened a
pop-up restaurant in Hendon last
month.
Sir Charles, who was knighted by
the Queen in June, set up the
Carphone Warehouse from his flat in
London with just 6,000 and went on
to make a fortune. He is estimated by
Forbes to be worth around 830m.
He is understood to have become a
fan of the chain while travelling in
the US. Five Guys is led by its founder
68-year old Jerry Murrell one of the
original five guys along with his four
sons and has around 1,000 outlets.
Murrell told Forbes in August he
and Sir Charles had signed a
deal for 200 to 300 stores in
the UK.
Sir Charles was unavail-
able for comment last
night.
Sir Charles Dunstone set up his business 1986, the same year Five Guys was founded
IN BRIEF
US probes Swiss bank Pictet
n Swiss private bank Pictet is under
investigation by the US authorities, the
bank said yesterday, making it the latest
Swiss bank to come under scrutiny in a
US probe into the use of foreign banks
by wealthy Americans seeking to avoid
paying tax. Pictet said in a statement
the US Department of Justice had made
a general inquiry into its wealth
management business with US clients,
adding it would cooperate fully.
Egypt stocks plunge after unrest
n Egypts stock market plunged
yesterday in its first day open since
President Mohamed Mursis seizure of
new powers set off violence and a
political crisis, unravelling efforts towards
stability after last years revolution. More
than 500 people have been injured in
protests since Friday, when Egyptians
awoke to news Mursi had issued a decree
widening his powers. Yesterdays stock
market fall of nearly 10 per cent was the
worst since the uprising that toppled
Hosni Mubarak in February 2011.
Black Friday sales top $1bn
nBlack Friday retail sales online this
year topped $1bn for the first time ever
as more consumers used the internet for
their early holiday shopping, comScore
Inc said yesterday. Online sales jumped
26 per cent on Black Friday to $1.04bn
from sales of $816m on the same day
last year, according to comScore data.
Five Guys has a loyal
burger fan following
MONDAY 26 NOVEMBER 2012
14
NEWS
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Rail ticket website
thetrainline.com boosted pre-tax
profits by one third last year as an
increasing number of train
passengers shunned station ticket
offices in favour of buying fares
online, company accounts revealed
yesterday.
The business, which is owned by
private equity group Exponent
Private Equity, said bargain-savvy
train travellers helped propel
turnover to 106m from 96m for
the year ending March 2012.
The site, which offers price
comparisons of tickets and lets
customers book online, helped its
parent company Trainline.com
reach pre-tax profits of 38.5m a
33 per cent increase on the year
previously.
Customers have migrated from
stations to online as a means of
finding the best available fares, it
said.
Thetrainline.com was snapped
up by Exponent for 163m in 2006
from a consortium of heavyweight
rail players, including Virgin,
Stagecoach and National Express.
The firm operates sales under a
licence provided by the Association
of train Operating Companies, a
consortium of 24 rail operators.
Rail ticket sales across the UK
shot up last year, reaching 1.3bn
of total sales versus 1.1bn in 2011.
The Trainline
rides to profit
on strong sales
BY MICHAEL BOW
MOONPIG.COM, the online greetings
card company, reported a 20 per cent
rise in sales last year driven by
growth at both its core and person-
alised card divisions.
The internet retailer, founded 12
years ago by ex-commodities trader
Nick Jenkins, said sales rose 7m to
45.8m in the year to 30 April.
Profits jumped 10 per cent to 12m
compared with 10.9m the previous
year, according to the latest accounts
filed on Companies House.
Moonpigs founder Jenkins sold the
business in July last year to Photobox,
a venture capital-backed online
photo business, for 120m.
The group said net margins
were hit by the governments
clampdown on a VAT loophole
on shipments between
Guernsey where Moonpigs
cards are produced and the
UK.
It was also forced to
take a 770,000 write
down on the free-
hold value of its fac-
tory in Guernsey
Moonpig signs
off year with
jump in profits
BY KASMIRA JEFFORD
after a fall in property prices.
Jenkins, who was given the nick-
name Moonpig at school, spent eight
years working for Glencore in Russia
before coming up with the idea for
the greetings card business while
studying for an MBA at Cranfield.
He was inspired by his own habit of
Tippex-ing the messages on cards he
bought for friends and replacing
them with his own greetings.
The company now employs 109 peo-
ple and sends out more than 12m
cards a year. It also sells the rights to
its card designs to other publishers
including Paperlink, Disney and The
Great British Card Company.
Jenkins still acts as an adviser to the
business, which also sells bouquets
and personalised mugs, posters and
T-shirts.
PhotoBox, which claims to be
Europes largest online photo pro-
cessing service with 22m members,
last week reported a loss of 22m
after writing down the value of
its acquisition of Moonpig.
Nick Jenkins in 2011 sold
Moonpig.com for 120m
CONSUMERS will not be far from
their smartphones when stocking
up on gifts this Christmas, with
some 3.5bn sales expected to be
purchased on or influenced by
smartphones, according to
business advisory firm Deloitte.
The accountancy firm predicts
10 per cent of in-store Christmas
sales (3.2bn) will be influenced by
smartphones, with another 330m
of sales made directly through the
devices. A further 500m in sales
will be made through tablets.
Overall, online retail sales are
expected to jump by 17 per cent in
Smartphones take centre stage
in the Christmas shopping rush
BY KASMIRA JEFFORD December with total UK retail sales
edging up by one per cent, helped
by a slightly lower inflation
pressure than 2011.
John Lewis said online sales
jumped 34.6 per cent in the week
to Saturday compared with the
same time last year thanks to the
Black Friday effect the day
following Thanksgiving that marks
the start of the holiday shopping
season. Meanwhile, thousands of
shoppers poured into the West End
this weekend as Oxford Street and
Regent Street closed its roads to
traffic for Christmas shopping,
with retailers taking over 100m on
Saturday alone.
MONDAY 26 NOVEMBER 2012
16
NEWS
cityam.com
BOW LANE LONDON
GOLF
GOLF CLOTHING
RUGBY
OFF CHEAPSIDE, NEAR BANK TUBE STATION
High street and online retailers will battle it out for sales in the crucial Christmas period
BP is in talks to invest in the key gas
pipeline between Russia and Europe,
sources said yesterday.
The oil major is having preliminary
discussions about taking a stake in a
project to extend the Nord Stream
pipeline into the UK. Nord Stream cur-
rently runs pipes from Vyborg in
Russia to the German town of Lubmin.
While talks are at an early stage, a BP
spokesperson said the UK and Russian
governments are both being kept in
the loop.
The states involvement extends to
Prime Minister David Cameron and
Russian leader Vladimir Putin,
who according to the Mail on
Sunday discussed Nord
Stream when they met dur-
ing this summers Olympics.
A Downing Street
spokesman said the gov-
ernment is open
to foreign invest-
ment in our ener-
gy supply, but
BY MARION DAKERS declined to comment further.
BP has long been keen to get involved
in the Nord Stream project, but was
hampered by its soon-to-be-former
partner AAR, which fought for first
refusal for all of BPs activities in
Russia.
The London-listed firms new part-
ner, state-owned Rosneft, will give it
more scope to seek out new deals.
Nord Stream is currently owned by
five firms, led by Russias Gazprom.
Investors in the 1,224km pipeline
last month revealed plans to expand
via a new company, to be incorporated
in early 2013. The exact route and par-
ticipants are yet to be decided, but the
Kremlin has said it would like to link
the pipe to the UK.
MONDAY 26 NOVEMBER 2012
17
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DEFENCE contractor BAE Systems
is looking to shut one of its major
shipyards in Britain as it aims to
balance capacity with future
workloads, a top executive said
yesterday.
Nigel Whitehead, who is group
managing director, programmes
and support, told the Sunday
Telegraph that BAE, which
operates a shipyard in Portsmouth
and two in Glasgow, anticipate(s)
that there will be a reduction in
footprint.
We anticipate ... that part of
that might actually be the
BAE is set to close one of its UK
shipyards as work slows down
BY CITY A.M. REPORTER cessation of manufacturing at one
of the sites, he said. We will be
making decisions this year, so we
have a number of weeks in which
to do that.
The company is facing a drop in
work once work on the two Queen
Elizabeth class aircraft carriers is
completed.
BAEs base at Portsmouth is
thought to be most at risk, with an
estimated loss of 1,500 jobs,
though two sites at Glasgow are
also in the frame for closure.
The news comes just weeks after
talks between BAE and EADS on
the worlds largest defence and
aviation merger collapsed.
BP eyes a stake
in new gas pipe
link with Russia
Gloating over broken windows forgets their real costs
T
HE price of payment protection
insurance (PPI) mis-selling
continues to spiral upwards.
Barclays put aside an extra
700m in October for PPI
compensation, taking its expected
payout to 2bn. RBS and HSBC have
each set aside well over 1bn and
Lloyds added another 1bn at the
start of November, taking its PPI
provision to an eye-watering 5.3bn.
Today we publish an analysis
which suggests that these huge
sums may be acting as an artificial
boost to consumer spending. Some
might want to see this as a good
thing for the economy, a way of
punishing the banks and rewarding
ordinary citizens.
But not so fast. As the economist
Frederic Bastiat pointed out in his
famous parable of the broken
window, I am sorry to disturb these
ingenious calculations, but I beg you
to begin them again, by taking into
the account that which is not seen,
and placing it alongside of that
which is seen.
What is seen is added consumer
spending with 15 per cent
spending the compensation on
holidays, 12 per cent on major
household goods and five per cent
putting it towards buying a car. But
you can only read that as a good
news story if you ignore the unseen
costs: the money lost to ordinary
consumers through being mis-sold
products in the first place; the
reputational damage to the banks
and the sums they have lost in the
whole shameful process; not to
mention the industry of PPI claims
that has sprung up to feed the
machine, clogging our mobile
phones and muddying a genuine
injustice with ambulance-chasing.
There is nothing good about the
PPI saga. Certainly not the mis-
selling of products. But lets not
delude ourselves either that the
resolution process is some sort of
win for the economy. In Bastiats
words, how absurd it is to think we
see a profit in an act of destruction.
LIBOR BITES BACK
There was renewed fear this
weekend over the level of fines RBS
might have to face over its role in
Libor rigging, another reminder of
how far the sector as a whole has to
go before it is out of the woods.
The majority state-owned bank is
anticipated to reach a settlement by
February. It had been thought that
any settlement would be in the
region of Barclays 290m fine.
However, it now seems possible the
regulators are hoping for a bigger
bite second time around.
The idea that Barclays was smart
to settle early on Libor has long
seemed preposterous the loss of its
chairman and chief executive,
remains shocking. If RBS does end
up paying more, that will be little
consolation for Barclays and strike
fear into those yet to settle.
It is right that any banks party to
interest rate manipulation should be
held to account. But the possibility
of fines being increased adds
uncertainty. Instead, we need speedy
and even-handed resolution.
BOTTOM
LINE
MARC SIDWELL
BP PLC
23Nov 19Nov 20Nov 21 Nov 22Nov
430
435
440
445
425
450 p 435.50
23Nov
David Cameron
is open to the
pipeline
THE COMPANY that staged the
Olympic torch relay and the Popes
visit to Britain has moved into
China with the acquisition of Hong
Kong-based Serious Events.
WRG Creative Communications,
which employs around 140 people,
announced the deal yesterday.
Serious Events, which was found-
ed in 1996, has a number of high-
profile clients, including the
fashion designer Chanel and drinks
giant Diageo, as well as corporate
clients such as Goldman Sachs.
The company said buying Serious
Events would strengthen the abili-
ty of WRG to support and service its
international clients on a global
basis. It did not disclose how much
it had paid, although one person
close to the company put the figure
in the single-digit millions.
Buying Serious Events will give the
Manchester-based outfit, which also
organised 2009s G20 summit in
London, an office in Hong Kong to
add to its bases in London,
WRG looks east
to expand with
Hong Kong deal
BY JAMES TITCOMB Manchester, Abu Dhabi, Doha and
New York.
Barry Day, WRGs chief executive,
said: The acquisition of Serious
Events is a further demonstration of
our commitment to becoming the
leading partner to global brands in
the field of live communication.
It is WRGs second acquisition in
four months after it bought out
Manchester communications agency
Canyon in July.
The firm, which has ex-BBC chair-
man Michael Grade as a non-execu-
tive director, saw turnover of 31.5m
last year and a 2.6m profit last year,
according to accounts filed with
Companies House.
It has recently been boosted by an
investment from mid-market private
equity firm LDC, allowing it to pur-
sue an international buy and build
strategy.
David Rule, who founded Serious
Events and will continue at the busi-
ness, said: With the strength of
WRG behind us, we will be able to
accelerate our growth into China
and the wider Asian market.
IN BRIEF
Wonga eyes first bond issue
n Wonga is eyeing a debt issue in order
to boost its business lending arm.
The online short-term lending company
has so far been financing itself through
equity from its founders and private
investors, but is hoping that raising a
bond will prove cheaper. Wonga for
Business, which lends up to 15,000 to
small businesses at a rate of 26 per
cent, opened in May. However, the
business has got off to a slow start,
sources close to the company say.
Chief executive Errol Damelin is
understood to be looking at the debt
issue, which could raise hundreds of
millions of pounds, in mid 2013.
The company did not comment.
Playtech eyes Greek bookie
n British gambling software company
Playtech is weighing a bid for the Greek
governments stake in Opap, the
countrys lottery machine and sports
betting operator. Opap, which has a
monopoly in Greece, has been weighed
down by the countrys recession but
remains profitable. The government has
been forced to sell its 34 per cent stake
as part of its international bailout
agreement and may soon be forced by
European law to allow competition into
the gambling market. The stake is worth
around 500m (405m). Playtech,
which is bidding as part of a
conglomerate, is due to sell its stake in
William Hill Online.
WRGs Barry Day is eyeing growth for the events firm via acquisitions
MONDAY 26 NOVEMBER 2012
18
NEWS
cityam.com
INVESTORS in Plus Markets have
agreed to turn the firm into a cash
shell to buy a natural resources firm,
after its stock exchange assets were
sold to Icap. Plus, which offloaded
its junior stock market for 500,000
in June after struggling to deal with
soaring costs, said shareholders
have agreed to let the firm hunt for
a takeover. New directors Donald
Strang and Hamish Harris said they
will look for a firm in the natural
resources sector, but they are also
permitted to size up other deals
that would generate returns for
Pluss remaining investors.
Plus turns into
investing shell
BY MARION DAKERS
THE sale of Stansted Airport is
believed to have attracted fresh
attention from Malaysia.
Stansteds owner BAA, which
recently renamed itself
Heathrow, is being forced to sell
the airport by competition
authorities, after losing its final
appeal in August.
Suitors so far include
Manchester Airports Group,
New Zealand-based investment
manager Morrison & Co,
Australias Macquarie and
BY MARION DAKERS buyout stalwart TPG.
Stansted is thought to be
worth upwards of 1bn.
But the Sunday Telegraph has
reported that Malaysia Airport
Holdings (MAH) has made a late
approach for the London
airport, an intervention that
Heathrow hopes could push up
the asking price.
A spokesperson for Heathrow
declined to comment, while
MAH did not respond to a
request for comment yesterday.
ING and Deutsche Bank are
handling the sale for Heathrow.
New bidder circles
Stansted Airport
FEWER and fewer firms are being
forced into insolvency, data out this
morning suggested, despite contin-
ued economic pressure on business.
Just 1,685 firms went insolvent dur-
ing October, according to data from
Experian, down 8.7 per cent on
October 2011, to make up just 0.08 per
cent of the total business population.
Nearly all firm sizes and most
regions saw fewer firms go under,
Experian said, with some 31.6 per
cent fewer firms that employ between
101 and 500 staff going bust, as well as
23.1 per cent fewer firms with 26 to
50 employees.
Considered together, firms with 25
employees or fewer also suffered
much fewer insolvencies. Only the
biggest firms with 501 employees or
more saw a jump.
BY BEN SOUTHWOOD
All regions of the UK barring the
North East, Yorkshire, Wales and the
South West saw the proportion of the
business population failing during the
month decline in line with the UK-
wide slide from 0.1 per cent to 0.08 per
cent.
In most sectors there were too few
firms listed to draw any strong conclu-
sions from the data.
Insolvencies among leisure and hotel
firms dived 22 per cent, while 18.9 per
cent fewer business services firms
failed. However building and construc-
tion firms were in trouble, with 5.4
per cent more of them becoming
insolvent and engineering firms saw
a yet bigger insolvency hike of 8.4 per
cent.
Max Firth at Experian hailed the fig-
ures as showing a let-up in the middle
market where firms often find them-
selves hamstrung by their size.
Berenberg says Eurozone will
recover in spite of debt crisis
RECESSION and crisis in Europe is
obscuring the fact that economies
are engaging in structural
reforms which will pay off in the
medium term, a study from
Berenberg Bank said today.
Bailed-out Greece, Ireland and
Portugal have shaped up fast,
with a swathe of sweeping
structural and fiscal reforms, the
bank said, suggesting that once
the bloc returns to growth, it
could be the most dynamic of
the major Western economies.
BY BEN SOUTHWOOD
Berenberg called for a swift
resolution to the Greek crisis, a
slowdown or stop to austerity and
more pro-growth structural
reform to give the best chance this
optimistic projection comes true.
More than two percentage
points of GDP in austerity in any
one year is too rapid a pace for
austerity, it said, claiming rapid
cuts risked death spirals in
Greece. Europe needs to learn
the lesson that fiscal shortfalls
caused by an unexpectedly deep
recession need to be tolerated
and should not trigger further
rounds of austerity.
The bank also warned that
France the only major European
economy which is beset by serious
health problems and has yet to do
anything about it could stymie
recovery hopes. It called for
supply-side reform, attacking taxes
both for harming incentives and
depressing demand.
Overall in the report, Greece
topped the adjustment progress
table, followed by Ireland, Estonia,
Spain and Portugal, while
Luxembourg and Germany sat at
the bottom of the league.
IN BRIEF
Save as you earn schemes fall
n The number of UK firms offering
their employees Save As You Earn
(SAYE) share option schemes has
fallen by 15 per cent in the last year
despite a push by the government for
more of them, according to data
released today. Just 510 companies
offered SAYE schemes to their
employees in 2010-11 compared to
600 in 2009-10, and down from 1,110
in 2000-01, according to research by
accountancy group UHY Hacker
Young.
Nissan taking Infiniti to Brazil
n Japans Nissan Motor Co said it
plans to sell its Infiniti brand of luxury
cars in Brazil starting in 2014, joining a
number of automakers targeting the
countrys buoyant high-end consumer
market. The company, which is
building a new manufacturing plant in
Rio de Janeiro, said it will open two
Infiniti dealerships in Sao Paulo and
Rio de Janeiro. Nissans statement
came just a month after rival Honda
unveiled plans to bring its Acura
luxury brand to Brazil, from 2015.
CiU heading for Catalonia win
n The ruling Convergence and Union
alliance, or CiU, was expected to get
the most votes in regional elections in
s Catalonia yesterday, according to an
exit poll by TV3, Catalan public
television. CiU, whose leader Artur
Mas says he will call a referendum on
Catalan independence from Spain,
was seen winning 54-57 seats in the
135-seat regional assembly, or
Parliament. That is down from the 62
seats it currently holds, and below the
absolute majority Mas had aimed for.
FIRMS are planning to boost
employment over the three months
from November, data revealed
today, just as optimism swung back
into the positive regions.
A net balance of seven per cent
of firms working in consumer
services planned to add to their
workforce in the next three
months, the data from the
Confederation of British Industry
(CBI) showed, compared to minus
19 per cent in the August survey.
And business and professional
services firms told a similar story
with plus 13 per cent, up from plus
four per cent, saying they would
add staff in the period.
This move came after a
Service sector business adds to
employment as cheer returns
BY BEN SOUTHWOOD remarkable return to optimism
consumer services firms went from
a confidence score of minus 23 per
cent in August to plus five per cent
in November. In business services a
net balance of minus 11 per cent
expressed cheer in August, but
some plus 22 per cent recorded
positive sentiment in November.
There are encouraging signs
here, said Anna Leach at the CBI,
particularly with employers
increasing headcount and training
expenditure at the fastest pace
since November 2007 and
investment plans for the year ahead
a little better.
But responses concerning profits
showed a less optimistic story, with
negative index values for both
major areas of the sector.
MONDAY 26 NOVEMBER 2012
20
NEWS
cityam.com
SERVICES CONFIDENCE SWINGS POSITIVE AFTER MONTHS OF GLOOM
BUSINESS & PROFESSIONAL
SERVICES PROFITABILITY
CONSUMER SERVICES
PROFITABILITY
-2 IN NOVEMBER
from -14
in August
-2 IN NOVEMBER
from -19
in August
SERVICE OPTIMISM BACK IN THE BLACK AS ECONOMY ESCAPES RECESSION
60
20
40
0
-20
-40
-60
-80
-100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2012
Net balance of positive responses
SOURCE: CONFEDERATION OF BRITISH INDUSTRY
Net balance of positive responses
Business and Professional Services
Consumer Services
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93
Less than 1pc of
firms go bust
during October
NEW POLICE and Crime
Commissioners (PCCs) should
consider using the private sector
to drive down the costs of non-
core police work, the countrys
top business lobby said this
morning.
The police could save some
1.5bn, the Confederation of
British Industry (CBI) said, by
opening up back office services
such as human resources, finance,
procurement and IT to
competition. This could help
forces maintain the standard of
core frontline services while
withstanding 20 per cent funding
reductions. The industry group
pointed out that 6,600 officers are
still performing back office
functions.
Like all public services, the
police force is under significant
pressure to maintain the quality
of its service, while meeting
necessary budget cuts, so carrying
on as normal is not an option,
said Katja Hall at the CBI. Faced
with this challenge the new PCCs
should work with independent
providers to deliver back office
and operational support services
to free up more officers for the
frontline.
Hall also touted private firms
expertise in cutting edge
technology as a boon to help
forces deal with fraud and the
growing scourge of cyber-crime.
The CBI called on the home
office to identify police functions
which are currently performed by
warranted officers but that
could be opened up. And they
called for an expanded remit for
the Independent Police
Complaints Commission to
oversee these new public-private
partnerships.
Firms want to
support police
BY BEN SOUTHWOOD
2012 SEES FEWER FIRMS FORCED INTO INSOLVENCY
1-2 239 -3.2
3-5 232 -9.4
6-10 239 11.7
11-25 221 -7.1
26-50 83 -23.1
51-100 48 0
101-500 39 -31.6
501+ 18 50
GRAND TOTAL 1,685 -8.8
Size of firm by no.
of employees
Insolvencies in
October 2012
Change from
October 2011 (%)
CANARY WHARF
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Sunday 23 December
plus Monday 24 December
11am - 5pm
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to Variety, The Childrens Charity.
MONDAY 26 NOVEMBER 2012
23
US debate over
tax may cause
market swings
W
ITH the S&P 500 above 1,400
after five days of gains,
traders will be hard pressed
not to cash in on the
advance at the first sign of trouble
during negotiations over tax hikes
and spending cuts that resume next
week in Washington.
President Barack Obama and US
congressional leaders are expected to
discuss ways to reduce the budget
deficit and avoid the fiscal cliff of
automatic tax increases and spending
cuts in 2013 that could tip the econo-
my into recession.
As politicians make their case, mar-
kets could react with wild swings. The
CBOE Volatility Index, known as the
VIX, Wall Streets favourite barometer
of market anxiety that usually moves
in an inverse relationship with the
S&P 500, is in a long-term decline
with its 200-day moving average at its
lowest in five years. But the VIX could
spike if dealings in Washington begin
to stall.
This week is heavy on economic
data, especially on the housing front.
Some of the numbers have been
affected by Superstorm Sandy, which
hit the US East Coast more than three
weeks ago. The housing data, though,
could continue to confirm a rebound
in the sector.
Other data highlights include
durable goods orders for October and
consumer confidence for November
tomorrow.
In Fridays post-Thanksgiving rally,
the Dow Jones industrial average
jumped nearly 173 points to close at
13,009.68 putting the Dow up 6.5
per cent for the year. The Nasdaq
Composite Index is up 13.9 per cent
for 2012, closing at 2966.85 on
Friday.
M
ARKET watchers will be keenly
anticipating the second estimate of
the UKs third quarter GDP growth
from the Bank of England
tomorrow.
While economists cheered the first esti-
mate of one per cent, they are hoping any
revision will only be a small one, and not a
sign of further dips in consumer spending.
Howard Archer, of IHS Global Insight,
said there is a possibility it will be trimmed
to 0.9 per cent, but there are new house-
hold spending pressures.
The worry is that consumers are now
being pressurised by higher energy and
food prices, while earnings growth slowed
anew in September after trending up mod-
estly from the lows seen earlier in 2012, he
said.
Further economic news is expected on
Thursday, when the Bank publishes its bi-
annual Financial Stability Report.
In corporate news, the week begins today
with full-year results from Aberdeen Asset
Management, along with interim results
from the UKs largest pork processor
Cranswick, plus Essar Energy and
Quintain Estates & Development.
Tomorrow includes end-of-year figures
for Britvic, Greencore Group, Mitchells &
Butlers, Next Fifteen Communications
Group and Topps Tiles while De La Rue
and Severn Trent will also update the mar-
ket.
Wednesdays reports come from GW
Pharmaceuticals, Thomas Cook and
United Utilities Group.
On Thursday pub group Marstons will
give year-end results, while Dixons Retail
will give its first interim results since the
collapse of Comet.
GDP revision to reveal whether UK
consumers are still penny pinching
BESTof theBROKERS
Lonmin PLC
19Nov 20Nov 21Nov 22Nov 23Nov
p
320
300
310
270
290
260
280
291.40
23 Nov
LONMIN
UBS rates the miner sell
and has cut its price target
from 260p to 240p. The
broker thinks Lonmin will
hit output targets and see
price growth, but the new
management team have
not yet done enough to
ensure the firm recovers.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
23Nov 19Nov 20Nov 21Nov 22Nov
5,850
5,800
5,750
5,650
5,700
5,819.14
23 Nov
Homeserve PLC
19Nov 20Nov 21Nov 22Nov 23Nov
p
255
245
250
235
240
225
230
240.90
23 Nov
HOMESERVE
N+1 Singer has lowered its
rating on the repairs and
insurance group from
buy to hold, but has
lifted its target from 235p
to 250p on growing
confidence in the firm
thanks to international
expansion.
Thomas Cook Group PLC
19Nov 20Nov 21Nov 22Nov 23Nov
p
25
23
24
22
21
24.00
23 Nov
THOMAS COOK
Peel Hunt has a sell
rating and a 10p target
price ahead of full-year
results on Wednesday. It
expects underlying
earnings to have halved to
154m, and hopes to get
some colour on the new
teams turnaround plan.
Pioneer Investments
The investment firm has
announced three new hires.
Hiromi Wada (right) joins from
Itau Japan Asset Management.
Martin Park joins from HSBC
Global Asset Management. He
has also held roles at Citibank.
Finally, Matthew Marks joins from
Prudential Asset Management.
Caxton FX
Tim Cooke has been appointed non-executive director at
the foreign exchange company. He has held senior positions
at Logica, the consultancy, and is a venture partner to the
National Endowment for Science, Technology and the Arts.
Fibercore
John Weston has been appointed chairman of the specialist
manufacturing company. He is a former chief executive of
BAE Systems. Phil Male has additionally been appointed
strategic adviser. He is a former chief operating officer of
Thus, a former operations director of Cable & Wireless, and
currently chief executive of UK2 Group.
PRUPIM
The real estate investment firm has announced four new
hires. Katsuhiro Ishikawa becomes a managing director. He
has previously worked at Daiwa Securities, UBS and
Goldman Sachs. James MacKinnon joins as head of asset
management for PRUPIM Singapore from AIG Global Real
Estate Asia. Lyndom Lim joins as an associate director. And
Sanghyuk Lee joins as an associate director from Savills.
Towers Watson
Alessandra Pasquoni has been appointed head of the
professional services firms Italian investment business. She
joins from Cassa di Previdenza Dottori Commercialisti,
where she was head of investment. Pasquoni has also held
roles at Pioneer Investments.
Hume Brophy
Gary Palmer has been appointed as a senior consultant to
the communications consultancy. He joins from the Irish
Funds Industry Association, where he was chief executive.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
LONDONREPORT
in association with
THE
WEEK AHEAD
in association with
24
MONDAY 26 NOVEMBER 2012
cityam.com
I
WAS so tired at breakfast that,
when the waitress asked if I
wanted coffee, I just tapped the
table a few times. When she
asked about sugar, I flattened
my hand, palm downwards, and
slowly waved it left and right. As a
casino worker, she knew the
blackjack signals for yes and no.
And she smiled as she took the
order, no doubt used to customers
after their marathon sessions.
A mate and I had played nearly
20 hours straight before grabbing a
few hours sleep. These silent
responses were now instinctive to
us. He was well and truly hungover
and he asked me how wed gone. I
realised hed had too much to
drink to remember and I said
jokingly: Youre lucky that Im
honest! And Ive got to say, youre a
mongrel! You won more than I
did. Wed started with $10,000
(6,277) each and Id cashed in over
$50,000 worth of chips, $28,000 for
him and $26,000 for me. Wed
played for fun and done well. It
wasnt luck though; Id been
counting cards.
Counting cards can be easier and
harder than people think. You
dont have to remember every
card; you really just need to follow
one number the ratio of high
value cards to other cards. When
this ratio is low, you know there
are lots of high value cards
remaining to be dealt, and these
are the times you can reap profits.
Normally in blackjack, the casino
wins about 52 per cent and loses
about 48 per cent. When the card
count is favourable, those odds
switch in favour of the player.
The idea is then to massively
increase the stakes and
win some hands before the
next shuffle. Its game on!
The harder part of card
counting can be keeping the
casino off your back.
They consider it
cheating and will
ban you if they spot you. It can be
tricky to disguise your bet pattern,
and the turns of your head as you
follow the other players. On this
occasion, my mates drinking and
cavalier attitude inadvertently may
have avoided eviction.
This was in the mid 1990s,
during a period when I had a
pretty good run as a card
counter. I never pursued
it with any seriousness
and I pretty quickly lost
interest. What was
fascinating, though,
was the idea of using
the right execution
to turn a small
but persistent
advantage
into
success. It
was
something I had looked to do far
more seriously as a hedge fund
manager.
However, now in business, I
realised something that astounded
me. Miscalculating the odds can be
a good thing. People who are
slightly over-optimistic typically do
better than those who are
completely balanced in their
viewpoint. The greater drive and
perseverance more than offsets the
risks that people underestimate. It
seems the idea is not to worry too
much about the odds and push on
regardless. Las Vegas wouldnt
have been built by card-counters.
Richard Farleigh has operated as a
business angel for many years, backing
more early-stage companies than anyone
else in the UK.
www.farleigh.com
Tom Welsh talks with Philip Letts about his ambitious mission to reinvent the service industry
N
OT many early-stage
companies justify an equity
research note. And few get
described as one of the
most exciting growth
stories in the market. But the
recently-listed Blur Group led by
Philip Letts is deservedly attracting
the right kind of attention.
Only three technology firms have
joined Londons Aim market this
year. Blurs public offering in
October didnt rouse the excitement
of WANDisco (which was three times
over-subscribed), but its more cau-
tious approach holds its own les-
sons.
Blur is an online business
exchange like a stock market,
Letts says. The idea is to offer service
businesses a regulated platform for
both marketing their wares (any-
thing from creative design to
accountancy) and commissioning
any project they might need. Its
business-to-business, says Letts.
Think eBay, but without the retail
consumer. Blur makes its money by
charging a commission on the price
of each contract.
The concept is appealingly simple.
And the problem it seeks to solve is
well-known to many small enterpris-
es. Its about making capitalism
more efficient, he says. Were for
the 99 per centers. We want to make
the market quicker, more transpar-
ent, and flatter, he says. Companies
of any size can compete for the same
pitches, and the regulated nature of
the exchange means the smallest
firm will be treated on the same
level as the very largest. The AA and
Harvey Nichols are reportedly users.
Letts himself is old Silicon Valley
(or web one as he likes to describe
it), and a former chief executive of
Beenz the now defunct e-currency
market. The idea for Blur came out
of his involvement in the crowd-
sourcing movement, but hes not
just interested in attracting sheer
numbers. Blur is part of a more
refined offshoot he calls expert
sourcing.
Unlike many online businesses,
quality is built into Blurs model.
Firstly, all service providers are vet-
ted and regulated. Secondly, the
growth of the company was rigor-
ously directed by Letts and his team.
To begin with, we started the target-
ed recruiting of providers ourselves,
he says.
In fact, Blurs whole business
model (despite its reassuringly styl-
Online shopping for an
enterprising capitalist
Company name: Blur Group
Job title: Chief executive and chair-
man
Number of staff: Just over 40
Company turnover: N+1 Singer fore-
casts our 2012 revenues to be
$2.8m (1.75m)
Age: 46
Born: London
Lives: Portobello Road
Studied: History at the University
of Durham (at warp speed) and
business at the University of
Buckingham (more diligently)
Drinking: Tea (but never with
skimmed milk)
Talents: Innovation and surfing,
though probably the worst surfer
in the world
Favourite business book: The Goal,
by Eli Goldratt
Motto: Be different
First ambition: To run an awesome
international business (sad but
true)
Heroes: Steve Jobs
Awards: Really not interested
All in a Blur
Poker face
ENTREPRENEURS
Lay all your bets on a winner: Why optimism beats calculation
PHILIP LETTS
ish tech credentials) is highly conser-
vative, extremely planned, and fol-
lowed through with ruthless logic.
Customers were not introduced
until 18 months after the first
providers were enlisted. It was initial-
ly all about community features. We
realised that if we recruited a firm,
and they enjoyed the experience, they
would invite another ten of their
peers. It was only once Blur reached a
certain size (about 2,500 service
providers) that the company moved
onto the next stage.
And even then, features were intro-
duced gradually, and the range of
providers widened with particular
care. This caution does not imply a
lack of ambition, however. Far from it.
The company has developed a 15 year
plan to ensure maximum success in a
delicate market.
Octobers public offering was part of
that long-term strategy. We are
planned to 2020 and always have
been. And the decision to list on Aim
was due to a desire to take the com-
pany to beyond that date, says Letts.
It was part of the growing up
process. But a word of caution.
Anyone thinking about listing better
be damn clear why theyre going pub-
lic. If its the next phase of the busi-
ness (and not just a way of making an
exit) its the right thing to do.
As a parting thought, Letts explains
why, despite his world-hopping career
and international market, Blur chose
the UK. London was San Francisco
and New Yorks ugly sister for a long
time, he says. But for a company like
ours, with its need to be multilingual,
London was the natural destination.
For Letts, London is the ideal place to
build a truly international market.
On a global scale, our current size is
just a rounding error. We plan to
change that.
CV
of a SERIAL
ENTREPRENEUR
RICHARD FARLEIGH
CONFESSIONS
T
HE Seed Enterprise Investment
Scheme (SEIS) was launched
without much fanfare in April this
year. Designed to help early-stage
companies raise equity finance, it
offers tax relief to investors, with the aim of
offsetting the reticence some feel about
staking their money on a high-risk venture.
Not all small companies qualify, however.
Firms must have fewer than 25 employees,
less than 200,000 in gross assets, and
have received no prior investment from a
venture capital trust. A maximum of
150,000 can be raised.
It does offer, however, tangible tax
advantages for investors. SEIS allows
income tax relief worth up to 50 per cent of
the total amount invested. Similarly, the
government is offering a capital gains tax
holiday in 2012-13 on the sale of any assets
that are subsequently invested in a SEIS
scheme.
It sounds great. But why do many start-
ups face difficulties accessing investment
through the scheme? Firstly, the early-
stage firm must be worthy of investment
(not all are). But secondly, there is the
question of matching investor with start-
up. The government can offer gentle
support, but it cant act as a dating service.
There is help at hand, however. If you're
interested in the scheme,
www.seiswindow.org.uk is a good place to
start. It has information for both investors
and entrepreneurs on how SEIS might work
for them. Investors, for instance, dont have
to cast out a net and hope to find a small
firm to invest in. Some fund managers offer
specific SEIS growth funds, which invest
specifically in eligible early stage start-ups.
And companies could apply for SEIS
investment through angel investor
networks. Unsurprisingly,
www.angelinvestmentnetwork.co.uk has a
good list of potentials, and could link you
up with the ideal new business partner.
SEIS is in its early stages, and its not
clear that it will be extended beyond April
2013. And with tax relief so few and far
between, it may now be time to take full
advantage.
Twitter: @TWWelsh
Who qualifies for
investment relief
INNOVATION
DIARY
TOM WELSH
U
NCERTAINTY over the future
of Europe, and to an extent
Britains role within it,
continues to dominate the
agenda, even as the latest
summit in Brussels wraps up.
Clearly there are strong views on
both sides of this debate in the
Square Mile. But regardless of
whether you are a eurosceptic,
europhile or something in between
we must all engage fully and actively
in this debate, given Londons status
as Europes financial capital.
That is why Mark Boleat policy
chairman of the City of London
corporation and I have the
ambition to visit or hold an event for
each of our EU partners next year.
The first mission took place last
T
HE EU summit in Brussels last
week ended the way most
people expected: no agreement.
The deal on the table from
Hermann van Rompuy
president of the European Council
was for a 973bn (787.5bn) budget
over seven years in 2011 prices. It was
significantly less than the over 1
trillion budget originally proposed by
the European Commission.
Many in Brussels back the European
Commission and regard David
Cameron as an utterly unreasonable
eurosceptic for insisting on at least a
real terms freeze in the Budget.
Hannes Swoboda MEP president of
the Progressive Alliance of Socialists
and Democrats group, which Labour
MEPs call home said it is unaccept-
able that the majority of member
countries are letting themselves be
blackmailed by Cameron, who is per-
manently threatening to block
progress in the EU.
On the other hand, in Britain
Cameron is under attack for being too
soft. Conservative rebels and the
Labour party inflicted a defeat on the
cityam.com/forum
The cost to taxpayers
of the Galileo satellite
project has gone from
2.6bn to 22.bn
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

26
MONDAY 26 NOVEMBER 2012
MATTHEW SINCLAIR
EU budget stalemate: The battle is
about more than European waste
government in Parliament, with a res-
olution that he should work for an
actual cut in the EU budget, not just a
real terms freeze.
This disagreement is not just a clash
of financial interests between the
countries which enjoy most of the
spending and the countries like
Britain who get most of the bill.
There is a deeper divide between those
who see European institutions as a
replacement for national govern-
ments, and those who see them as an
expensive duplication of what is, and
will continue to be, done by member
states.
Nevertheless, there is no doubt that
the EU wastes money on an eye-water-
ing scale. The European Court of
Auditors has refused to sign off on the
EU accounts for the eighteenth succes-
sive year. It found that a farmer was
granted a special premium for 150
sheep but actually did not have any
sheep. Land was classed as perma-
nent pasture, despite being fully or
partially covered with dense forest or
other ineligible features. The overall
rate of material error in payments was
even higher in 2011 3.9 per cent
than it was in 2010 3.7 per cent.
But it isnt just fraud and error that
means the EU wastes money. Even
compared to the British governments
lamentable record in managing major
projects, Brussels has had some incred-
ible overruns.
In 2010, Open Europe found that the
cost to European taxpayers of the
Galileo satellite project designed to
provide an alternative to the American
GPS, used in smartphones and satnavs
today had gone from 2.6bn to
22.2bn. It went from a largely private-
ly funded project, due to be finished by
2008, to a completely taxpayer-funded
disaster, not expected this side of 2017.
European bureaucrats also spend a
fortune promoting their own political
agendas, at your expense. TaxPayers
Alliance research earlier this year
found that nearly 100m has been
given to environmentalist groups like
Friends of the Earth under a pro-
gramme called LIFE+. Those groups use
the money to agitate for even more
aggressive energy policies, meaning
even higher costs for consumers and
industry.
Despite all that, and countless other
examples of EU waste, enthusiasts for
ever closer union see the potential for
savings. Guy Verhofstadt MEP argues,
for example, that the biggest waste in
EU spending is the duplication at
national level in defence spending,
diplomatic representations around the
world or research and development.
In other words, the real problem isnt
waste at the EU institutions, it is the
fact that member states are still cling-
ing to the functions he wants to trans-
fer to Brussels and arent pooling their
resources.
That is why this debate over the budg-
et is about more than the financial
interests of different countries fight-
ing their corner. If you think, like I do,
that the lack of flexibility and account-
ability that afflicts supranational
organisations, like the EU, means we
should continue to govern ourselves,
sending a lot more money off to the
European institutions is therefore a
terrible idea. When taxes are being
raised (and at least some spending is
being cut) at home, it is unthinkable
that the results should be squandered
in Brussels.
But, if you are trying to build a super-
state to govern a population of over
500m people, 1 trillion over seven
years looks like a bargain. This is a dis-
agreement over ends, not just means.
Matthew Sinclair is chief executive of the
TaxPayers Alliance.
week a visit to Dublin ahead of the
Irish presidency of the Council of the
European Union in the New Year.
As a neighbour and our fifth
largest export market, Ireland is a
natural partner for the UK in Europe.
To put this into context, UK exports
to Ireland are twice those to China
a country whose population is more
than 300 times that of Ireland.
Not only do we share common
ground on many European issues,
our two financial services sectors are
also interlinked and interdependent.
Global business moving to London
ultimately benefits the Irish financial
services industry by increasing the
likelihood that complementary jobs
and business will be generated in
Dublin. Yes, theres a natural
competition between us in several
areas, But when attracting
investment from the global arena, we
all benefit.
This mutually-beneficial
partnership makes it even more
important to understand what
agenda will be pursued over the
course of the Irish presidency, and to
feed in the Citys thoughts on EU
regulation before it takes office.
During our visit, Irish
policymakers made it clear that they
intend to adopt a strictly neutral
stance while concentrating on a
containable number of issues. Key
areas affecting the City on the
horizon include the proposed
European banking union, the capital
requirements directive, a revised
markets in financial instruments
directive (MiFID II) and the financial
transactions tax.
The UK needs to be fully engaged
in shaping this legislative
programme. Only by openly and
clearly making the case for a level
playing field and the single market
can we ensure that the regulatory
direction of travel promotes job
creation and growth in Britain.
European policymakers must be
reminded that they are not acting in
isolation, and need to consider the
impact of reforms on all
international competitiveness.
In order to strengthen the single
market, however, we must first
strengthen our relations with key
European allies. Ireland will play a
major role in setting the agenda in
the six months it holds the
presidency. Our visit made it clear
that the City while conscious of the
significance of this period takes a
far longer-term view on the enduring
Anglo-Irish partnership, and the
benefits it continues to bring to our
two financial services sectors.
Roger Gifford is lord mayor of the City of
London.
The City needs partners to strengthen its place in Europes single market
MORNING UPDATE
A.M.
CITY
MATTERS
ROGER GIFFORD
27
MONDAY 26 NOVEMBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
House of cards
[Re:Why Britains housing market has
escaped the disasters of the 1990s, Friday]
Although Ruth Leas article is interesting,
Im concerned that a similar housing disaster
to that of 1990s has simply been postponed
by our unnaturally low interest rates. The
problem that Britains housing market faces
is that a huge number of mortgages in
London, the south east and the south west
are interest-only. In addition, an estimated
1.6m of interest-only mortgages across the
country have no repayment vehicle. The
worry is that the governments fear for the
banks exposure may mean a reliance on
inflation that will eat into the real value of
our housing stock (and most peoples
largest investment).
Tim Coach
Future thinking
[Re:Technology and human ingenuity will
rescue the economy, Friday]
There are many examples of the potential
for technology to transform our lives and
help build a sustainable recovery. But this
relies on the assumption that the structure
of our economy will allow new technology
to make its impact. High taxes currently
discourage hard work and radical thinking,
our education system is failing to encourage
the skills needed for people to recognise
good innovation, and our compliance
culture means that many businesses are too
terrified of regulatory criticism to
experiment with new ways of making
money. Theres many reasons to be hopeful.
But many why we should not.
Rebecca Greening
W
HEN he made his plea
for press freedom in
1644, the poet John
Milton said: Give me
the liberty to know, to
utter, and to argue freely according
to conscience, above all liberties.
His depiction of press freedom as
the greatest thing a man could be
granted, standing above all liber-
ties, was not poetic melodrama.
Rather, Milton instinctively recog-
nised that press freedom is a first-
order freedom, the freedom upon
which all other freedoms are built.
Without the freedom to know, to
utter, to publish what we believe to
be true and to distribute it as we see
fit, freedom itself collapses.
Liberty is not possible without the
freedom of the press. Think about
the fundamental rights that would
be compromised if freedom of the
press died. The freedom of associa-
tion; the right to political organisa-
tion; the right to protest; the right to
vote; all are dependent upon man
having the right to think, speak,
write and publish freely, and to artic-
ulate and disseminate his political
and moral (and sometimes immoral)
convictions without restriction.
Thats why the First Amendment to
the US Constitution says the state
shall make no law abridging free-
dom of speech or the press. Because
none of the other rights outlined in
subsequent amendments would
have meant anything without the
guarantee of that core freedom of a
citizen to say or write what he or she
believes to be true. This is the free-
dom that makes us fully human,
which allows us to be political and
moral creatures and to engage with
the world, with knowledge, and with
each other.
Today, in Britain, where numerous
liberty-lovers fought tooth and cata-
pult for the ideal of press freedom,
TOP TWEETS
I suggest wind farms are paid for in taxes
rather than increased energy bills. I dont
trust energy firms.
@Neil_in_Norfolk
On an ideological level, Leveson reaction is
fascinating. It will show which Tories value
liberty against the censors.
@RyanCPS
Both Greenpeace and Friends of the Earth
say we need to get off expensive gas. And
offshore wind farms are so cheap?
@PlanktonMath
Its always Britains fault in the EU. But I
suspect David Cameron is closer to Europes
taxpayers than most other leaders.
@DanHannanMEP
Is the governments new Energy Bill a good
deal for British businesses and consumers?
YES
If we do not find 100bn of investment by 2020, Britain will face an
energy crisis. We need to replace polluting coal power plants and
construct new nuclear reactors. The governments Energy Bill will
give generators a guaranteed price for clean, low-carbon
electricity. This will cut the risk of investing in projects with high
up-front costs, like nuclear or offshore wind farms. Claims that
low-carbon levies are the only reason bills would be pushed up for
consumers is misleading: there is a risk that world energy prices
may continue to rise (as they have done over the last five years).
This has been the main cause of increasing fuel bills. We need a
diversified energy mix that improves energy security, while cutting
emissions. This is why I will be backing plans to increase the
support for nuclear and other low carbon energy sources.
Tim Yeo is Conservative MP for South Suffolk and is chair of the
Energy and Climate Change committee.
Tim Yeo
NO
Benny Peiser
Green energy subsidies will come back to haunt the government. As
energy bills go up, the coalition will become increasingly unpopular.
These policies will prove to be economically and politically costly. At
a time when many countries are returning to cheap and abundant
fossil fuels, Britain alone seems prepared to sacrifice its economic
competitiveness. We will undermine our recovery by wasting
billions on one of the most expensive, least efficient forms of
energy. Millions will be consigned to fuel poverty. Some experts
have warned that the impact may be catastrophic 300,000
companies could go out of business as energy bills continue to rise.
The only saving grace is that the government has refused to adopt
new unilateral carbon targets, and it may be ready to give shale gas
extraction the go-ahead without further impediment.
Dr Benny Peiser is director of the Global Warming Policy
Foundation.
RAPIDresponses
There must be no
compromise on
our press freedom
we should likewise insist that the
state make no law muzzling the
press.
The current assault on press free-
dom might be led by a mild-man-
nered judge (Lord Leveson), and be
supported by floppy-haired celebs
and liberal journalists. But the end
result of any statutory regulation
proposed by Leveson would be the
same as every other top-down assault
on press freedom in history: it would
grant the authorities the right to
control the traffic in ideas and
belief, denting our liberty to know,
to utter, and weakening the founda-
tion upon which liberty itself is
built.
But at the same time, as we rail
against any statutory regulation that
might be proposed by Leveson, we
should also guard against excessive
regulation per se, including the
internal, industry-based variety pre-
ferred by some of Levesons critics in
the media.
The danger is that the Leveson
process has unleashed a regulatory
logic, with some journalists now
accepting that the press has been too
free and naughty and must there-
fore self-flagellate in atonement for
past sins. In truth, the press isnt free
enough. We need more of the liberty
to know, to utter, not less. Lets not
create a situation where theres no
need for the state to castrate the
press, because it has shown itself
willing to castrate itself.
Brendan ONeill is editor of spiked online.
BRENDAN ONEILL
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R
ISING childcare costs are
deterring British mothers from
returning to work. According to
a 2011 Eurostat survey, 48.8 per
cent of women with three or more
children are in employment in the UK,
compared with 71.3 per cent in the
Netherlands and 68.2 in Finland. But
family formation patterns have
changed over the past few decades,
and both parents often want to
continue with their careers after
having a child.
WORTH ITS SALT
A family with both parents working
full-time, and two children aged two
and above in full-time care (42.5 hours
per week, 47 weeks per year), will
spend an average of 13,529 per year
on childcare. Middle income earners
tend to be hit hardest by childcare
costs, as they are not entitled to the
working tax credit. A family with a
gross household income of 76,374
will see that income reduced to
43,604 after childcare and taxes, says
Alex Hurrell at the Resolution
Foundation. And this is not to mention
additional costs that come with having
a family mortgages, food, utilities,
saving for school fees (see article below)
and the odd family holiday.
TAKING THE NANNY ROUTE
According to the Tax Nanny Payroll,
the average weekly salary in Greater
London of a live-out nanny is 340-
500; for a live-in nanny the rate will be
310-450. So where possible, opt for
the more cost-effective live-in nanny.
Nanny wages are usually agreed on
the basis of net pay. However, it is
cheaper for employers to negotiate
wages in gross terms; if you agree to a
net salary, you will be agreeing to pay
all your nannys taxes. The payroll serv-
ice NannyTax warns that if, for exam-
ple, you agree a net salary of 300 per
week, the nannys gross salary would
be approximately 381. In addition to
the nannys tax and national insur-
ance (NI), you will also have to pay
employers NI contributions which in
this instance would be approximately
35, bringing the total cost to 416.
ASSESSING THE COST
Private nannying is an expensive route
to go down. Indeed, NannyTax found
High childcare costs
neednt give you a
case of baby blues
S
INCE 2002, private school fees
have risen at 1.8 times the rate
of inflation. The average cost
today is 11,500 per year, up
from 6,800 in 2002. Private education
is becoming more of a luxury, and it
may be a good idea to find a more
innovative solution than relying on
your Christmas bonus.
A trust, for example, has some
significant advantages over other
investment options. And its not just
parents who can save for their childs
school fees. There are a number of
taxation rules in trust law that, in
certain circumstances, give extra
advantages to grandparents.
According to Doug Bonar, director
at School Fees Independent Advice,
the two main benefits of a trust
derive from control and tax. And
there are two popular options bare
and discretionary trusts.
A bare trust is the simplest type of
trust. The assets, and any income
derived from them, are held in the
name of a trustee. They are, however,
under the absolute ownership of the
beneficiary. As the settler, you will
have no access to the trust, and no
power to revoke it.
Bare trusts are particularly suited
to grandparents. If you place assets in
a bare trust for someone who is not
your child, the income and capital
gains are taxed as the beneficiarys
rather than yours. Thus, if their
income and gains are less than the
annual allowance (8,105 and 10,600
respectively), they pay no tax.
In terms of inheritance tax, assets
placed in a bare trust are regarded as
a potentially exempt transfer. This
means that, if you survive seven years
from the date of the transfer of assets,
they will not be liable.
If you are the parent of the
beneficiary, the income tax guidelines
for bare trusts are slightly different.
An income of over 100 will mean the
entire income is taxed at the parents
rate rather than the childs, until they
reach 18 or marry.
There is one particular
disadvantage of a bare trust. Granting
full access to a potentially significant
amount of money to an 18 year old
may be seen as less than ideal. It is an
issue of control. Ash Pankhania at
Watermead Financial says that you
may wish to retain access to
investments, or have multiple
beneficiaries. In this case a
discretionary trust may be better.
A discretionary trust is held in your
name, and does not have legally-
binding beneficiaries. It gives you
investment access, and the freedom to
withdraw funds or close the plan.
The price for this level of control is
that you lose many of the tax
advantages you would have in a bare
trust. Significantly for
grandparents, assets in the trust
remain part of your estate for
inheritance tax purposes.
The rules for taxation are also
much more complicated with
discretionary trusts. For example,
current HMRC rules state that
trust income above the standard
rate band (currently 1,000) is
taxed to the trustee at special trust
rates. If the settler has more than
one trust, the standard rate
band is divided equally by
the number of trusts they
have.
You should always seek the
aid of an independent financial
adviser when putting aside for an
investment as large as school fees. A
private education may be a luxury,
but using a trust could be the first
step towards your child coming top
of their maths class.
Time to start saving your pennies
MONDAY 26 NOVEMBER 2012
28
cityam.com
PERSONAL FINANCE MANAGEMENT WEALTH
The soaring rates for pre-school care can make a sizeable dent in your household budget, writes Annabel Palmer
G
E
T
T
Y
that live-out nannies working in
Central London earned an average of
34,516 in 2011. This means that the
second earner would need to earn the
best part of 50,000 if a couple was
paying a nanny full-time. If the second
earner opts to return to work six
months after the childs birth, the cou-
ple will be paying those nannying fees
for a good few years.
That is why the best advice is to save,
save, save and as soon as possible. If
your plan is to start a family within the
next few years, one option is investing
in a higher rate savings account. A
fixed-income Individual Savings
Account (Isa), for example, will let you
plan and give you predictable returns.
CHILDREN IN NEED
Unfortunately, there are currently few
mechanisms in place that make child-
care more affordable. But before you
despair, there are some ways to cut
costs.
According to Childcare Vouchers, if
your employer signs up to a scheme,
you will be given the option to take
part of your salary in childcare vouch-
ers. It is arranged through payroll, and
the value of vouchers you choose to
take is tax and NI free meaning you
end up with more than if you had paid
for your childcare in cash from your
normal taxable pay. The process
called salary sacrifice can save
higher rate taxpayers up to 623 per
year. Each parent can claim, which
doubles the amount to 110 a week
and maximum tax relief to 2,390. Be
aware that, if your employer pays more
than the maximum 55 per week or
243 per month in vouchers, you will
need to pay tax and NI contributions
on the difference.
At a cost of 2.5bn to the Department
of Education, parents of all three and
four-year olds get state help towards
childcare costs regardless of income
says Hurrell. It is largely delivered
through nurseries and preschools. In
England, the free entitlement is
offered for 15 hours per week. This is
worth in the region of 2,000 per year
for each child.
FOREIGN AFFAIR
Getting an au pair can be a highly cost-
effective alternative to a nanny.
According to the parenting advice web-
site Baby Centre, if your au pair works
25 hours per week, you will need to
pay them a minimum of 65 per week.
For 30 hours a week, this should be at
least 80 and if they do extra babysit-
ting outside of their set hours, youll
need to give them extra pocket
money. However, it is important to
take into account that they wont pos-
sess the same qualifications as a
nanny. They will also be living and eat-
ing in your home, using your water
and electricity.
LAST RESORT
Parents in the UK have the highest
dependency on relatives and friends
for help with childcare. So if you are
lucky enough to have willing family
and friends, this could be an excellent
way to keep costs down.
Trust a trust to protect your childs education
Bare or discretionary, it could save you money on independent school fees, writes Chris Harlow
N
EW rules from the Financial
Services Authority the
retail distribution review
(RDR), which comes into
effect on 1 January intend to
empower consumers by making
investing more transparent. The
idea is to help retail investing work
more effectively. But investors will
also face greater choice in how
they buy their investments, and
this could open the door to
confusion. Its important to
consider each method to ensure
that you are buying appropriately.
THE VALUE OF ADVICE
The role of advisers is set to change.
They will explicitly charge fees for
giving advice, rather than the cur-
rent commissions-led structure.
One benefit of using advisers is
that they can help you to under-
stand what the most suitable
investments are, based on your cir-
cumstances, as well as planning
other areas of your wealth like
inheritance. Though advice has
never been free, surveys show that
many Brits are reticent to pay for it:
BlackRock recently surveyed 11,000
people and found that only 35 per
cent of people were willing, and
most have unrealistic expectations
of what advice should cost.
Under RDR, upfront fees for
advice could range up to 3 per cent
of assets under management, as
well as 1 per cent on an ongoing
annual basis. Those taking advice
are likely to retire with a larger
investment pot, so if you find this
too expensive, you might consider
a consultation with a wealth plan-
ner. This will allow you to pay a one
Prepare for a brave
new world of more
investment choices
decisions. Platforms, like
Bestinvests FIRST, can offer guid-
ance on this and suggest model
portfolios, based on different risk
profiles and investment timelines.
Investors should be cautious
about using platforms based
abroad, however. If anything goes
wrong for example, a fund
provider collapses investors may
not be fully protected.
While platforms are helpful, be
aware that they still do not consid-
er your personal circumstances.
GOING DIRECT
Investors can also invest directly
through fund providers, which
have an array of tools similar to
independent platforms. However,
many funds will only offer general
guidance. This is partly because of
regulation, since giving advice
means that they would need to
comply with RDR legislation.
Some fund providers feel that this
goes outside their core business.
Mark Till of Fidelity, which wel-
comes retail business, says that it
is about choice. He prefers
investors to be informed, which
often means going through an
adviser.
RDR is set to shake up the entire
retail investment sector, for advis-
ers and for platforms. Investors
will have more choice. But
increased choice may be over-
whelming for some. Bespoke
advice is the best way to get specif-
ic information based on your per-
sonal circumstances. However,
those without access to advice still
have very good resources to find
guidance.
off fee for bespoke advice.
Advisers can talk to you about
attitude towards risk which
some people may not fully under-
stand helping you to develop a
long-term strategy, says Karen
Barret of Unbiased.co.uk.
INVESTMENT PLATFORMS
An investment platform allows
you to buy investments, such as
funds, and monitor their perform-
ance through an online panel.
They are provided by companies
like Hargreaves Lansdown.
Traditionally, investors who were
comfortable with making their
own choices used them. But RDR
could encourage more people to
go online to seek guidance.
Platforms vary in their capabili-
ties: some only execute transac-
tions; others offer more
sophisticated tools. However, they
do not currently fall under the
remit of RDR (this is likely to hap-
pen next year), so providers are
still able to earn commissions
from sales. This is unfortunate,
because not all providers are clear
about their charges, says Nick
Curry of Rplan, a platform provid-
ing free online tools for investors.
Rplan allows investors to com-
pare the costs of different
providers, and Curry is optimistic
that RDR will increase demand. He
estimates that it could save you up
to 620 per year in adviser fees.
Choosing a fund is only half of
the challenge. Equally important
is how you allocate assets. Jason
Hollands of Bestinvest says that
research shows that most of your
return comes from asset allocation
A TECHNOLOGY REVOLUTION
IS EMPOWERING INVESTORS
ROBERT LEMPKA
EXECUTIVE CHAIRMAN, GEKKO
I
NVESTMENT platforms came about
because switched-on providers realised
that the more choice investors were
given, and the more they understood
the wisdom of diversifying their
investments, something needed to be done
to simplify the whole investment process.
More choice and greater diversification
meant investors had to deal with a host of
detailed (and often complicated)
paperwork. This could include application
forms and detailed investment reports not
to mention the onerous task of calculating
capital gains and other taxes.
So platforms were introduced to minimise
paperwork, deliver comprehensive and
consolidated reporting and to improve the
whole investment process. Investors could
therefore maximise the benefit of choosing
from a wide choice of opportunities.
Yet investors were not alone in benefiting
from the emergence of platforms. Advisers
have gained too. Platforms allowed them to
focus on creating investment portfolios for
clients, at the same time as building a trail of
introductory and on-going commission from
product providers. Platforms brought a high
degree of focus, convenience and
satisfaction to the adviser-client
relationship, as well as a means of ensuring
that advisers satisfied the ever-increasing
demands of the regulator.
However, as with all good things, the
passage of time and economic
circumstances have made their mark. This
changed what once rendered platforms so
beneficial to both sides of the investment
process. The poor economic environment of
the last 10 years delivered, when compared
with the previous decade, very poor
investment returns. At the same time as
clients were seeing these meagre returns,
they consequently and understandably
noticed the costs involved with portfolio
management. Indeed, this has become such
a problem that you often hear investors
saying that they may as well take on the
responsibility of managing their own
investments. They couldnt do any worse
than their adviser, and at least they would
have the opportunity to reduce the cost of
managing their money.
The ability to reduce costs came about
because platforms improved and simplified
their offering, and this broadened their
appeal beyond savvy or experienced
investors. And as more and more execution-
only platforms have come to the market, the
usual thing has happened when supply
increases. The cost of executing investment
choice directly with manufacturers,
compared with doing it through an adviser,
has plummeted.
As if these economic factors were not
enough to see the responsibility for
investment choice swing away from advisers
to the investor, the market is now looking at
one more harbinger of change that will have
even more dramatic implications for
investment platforms.
The introduction of the retail distribution
review next year will well and truly put the
spotlight on the cost of investment advice.
As investors face the prospect of paying for
advice in a more transparent and up-front
manner, and as advisers try to adapt to the
new regulations by experimenting with
different fee structures, a great swathe of
investors will closely investigate the process
of self-directed investing. They will look for
platform providers that will deliver cheaper
execution charges, and more relevant
information to their needs and wants. They
will expect to see model portfolios based on
their appetite for risk. They will demand
wider product and service choice.
Its an exciting time for investment
platforms. The one that can deliver a
constant flow of improved (and completely
new technology-led) solutions, at the lowest
price, will have an advantage in this
expanding market.
Part three of a four-part series
MONDAY 26 NOVEMBER 2012
29
MANAGEMENT WEALTH
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r d an d e is r o h t au is s t e k ar M al b o l G o k k e G
v n i k is r h hig e ar s D F C d an ngg i t t e B d a e r p S


y t i r o h t u A s e c i v r e S al i c nan i F e h t y b d e at l u g e r
han t e r o m e s o l o t e bl i s s o p is t i d an s t n e m t s ve


t. i s o p de al i t ni i r u o y
But some may find it overwhelming, says Yogesh Chandarana
FUTURE OF INVESTING
LIFE&STYLE
MONDAY 26 NOVEMBER 2012
30
cityam.com
TRAVEL
E
NSCONCED in a luxury yoga
hotel in the Himalayas, or in a
resort matrix like Goa, you
might just be able to avoid the
clanging, overwhelming reality of
India as you go about your daily
business. Not in the cities. No matter
how luxurious your hotel, enclave, or
colony (as certain leafy districts are
known), the moment you leave the
gates even in a leather-seated
Jaguar you are assailed. This is why,
if youre planning a trip to India,
getting the balance right between the
sweltering heat and chaos, and your
retreat from it all, is of paramount
importance.
If youre visiting northern India for a
Rajasthani or Himalayan odyssey, or
sliding down the east through West
Bengal for some tiger spotting, the
chances are youll find yourself in
Delhi or Calcutta. These are cities well
worth visiting, but beware: outdoor
life is an onslaught no matter how
much money you have. Particularly if
youre female, white and sporting red
hair (take it from me).
Here are a few of the best places to
lay low while living high in Delhi and
Calcutta.
DELHI
The Taj Mahal Palace
The Taj rears up at number one
Mansingh Road, a prestigious
address on one of Edwin Lutyens wide
boulevards. The foyer here is knock-
out the rooms (or mine anyway) less
so. Think enormous, sky-high lobby,
marble floors and tessellated stone,
clusters of businessmen and languid,
sari-clad ladies sitting in plush arm-
chairs taking tea and cake. The large
pool, visible from the lobby, could use
a repaint and a new floor, however
and the water was far too warm by late
afternoon to provide anything like a
refreshing dip.
If the hotel needs a bit of a facelift,
the service is excellent. I relied on the
concierge for everything from taxis to
maps to print-outs of my boarding
pass, promptly delivered in an enve-
lope to my room. I didnt eat dinner at
the hotel, but I did score a tasty take-
away breakfast of paratha and lentil
dumplings for my flight the next day,
and I can report that the martinis at
the hotels iconic but dingy-ish bar,
Dicks, are tasty. Theyre also pretty
much the only thing in India with
London prices (apart from wine).
Rooms are perfectly nice but mine
a regular double was a bit out of date.
The bathroom would not have
impressed those used to gleaming, spa-
cious marble mansions and tech-luxe
showers. But what the room did have
in spades was light and view the win-
dow was huge, looking out of the
green expanse of the New part of
Delhi.
For the purposes of a jet-lagged trav-
eller in Delhi for a night or maybe two,
the Taj Mahal is perfect: the concierge
will help get you organised, the restau-
rants will feed you well, you can stroll
to Khan for some local flavour, and
youll sleep well in a silk-soft bed in a
room with a fabulous view.
Deluxe rooms from250plus tax, www.tajhotels.com
The Leela Palace
Wowsers, this hotel is impressive
even for the five-star circuit. Only a
year old, the Leelas got quite a rep in
Delhi the local elite frequent its bars
(such as Le Cirque) and you may well
see rich youngsters slugging bellinis
round the spectacular rooftop pool.
As is par for the five-star course, the
hotel is located in an ambassadorial
no-mans land and the surroundings
are scrubby blocks of greenish land.
But once youre in the hotel, you wont
really care whats around it. The lobby
is an opulent feast of sexy chandeliers,
glass, gold, marble brocade and
baubles. There are several restaurants,
including an excellent Indian one
called Jamavar and a Japanese located
in a glass box attached to the main
building.
My room featured an all-marble
bathroom that might make it difficult
to leave a bottomless square bath
probably bigger than the homes of
people sleeping half a kilometre away,
a shower with a generous marble seat
in it and a golden lighting concept.
The spa is also rather wondrous its
on several floors and has not held back
on flash-factor, opting for the Park
Lane look rather than an incense-
tinged ayurvedic vibe. I had time for an
Ayurvedic massage before dinner and
jolly nice it was too, performed (as they
mostly are in luxury hotels) by a
woman from Indias northeast.
You really must take time to lan-
guish by the pool. Its got panoramic
views (never mind that the views
arent of anything much) and feels
very Beverly Hills meets India. As soon
as you settle on a lounger, a white-clad
pool attendant will bring you a basket
containing fresh iced lemonade,
water, sunblock, wet towels and so on.
And finally, should you want to leave
the hotel, the concierge is ready for
you. I asked for a city tour and was pro-
vided with a Jaguar, driven by a man
with a cap, and a guide who took us to
Humayuns tomb, India Gate, the
mosque in Old Delhi and so on. The
guide wasnt great pinched, obse-
quious and bored-seeming but he got
the job done and the experience was
well-organised.
The Leela is just the place to spoil
yourself for a night or two on your way
in and out of Delhi.
Rooms from275 per night, including breakfast.
www.theleela.com
The Rose
Ah, the Rose. A white-washed, art-filled
Find sanctuary fromthe
A trip to India can
be draining. Zoe
Strimpel visits some
places to recharge.
MONDAY 26 NOVEMBER 2012
31
boutique hotel in Hauz Khas Village,
Delhis arty enclave, full of cafes,
trendy restaurants and rooftop bars.
Oh, and a stunning medieval madras-
sah bordering a lake and park that
rivals Hampstead Heath betters it, in
fact, at sunset. Though it lacks a spa,
pool and numerous restaurants, I
loved the Rose and felt more at home
there than at the flashier places I
stayed, not least because of the free
wifi. Its elegant, interesting and, in its
way, luxurious, with fresh pale paint, a
bohemian lobby with low cushioned
chairs, bookshelves and paintings
everywhere.
My room was a vast space of comfort
and minimalism, half living room,
half bedroom. My friends room was
much smaller but no less nice. White
and blue stripes on the wall made it
Hamptons-style cosy and he was snug
as a bug.
But the best thing about the hotel is
the location. Hauz Khas is simply the
place to be if youre young, arty,
bohemian or international. And so, by
appearances, is the Rose.
Rooms from50. www.therosenewdelhi.com
The Oberoi Calcutta
Calcutta makes Delhi seem like
Stratford Upon Avon: there are few
matches for its poverty and density of
population in India, let alone the
world. The Oberoi is a striking con-
trast to the streets just outside it.
Located right in the centre of the
city, near Park Street with all its
restaurants and bars, the Oberoi real-
ly feels like a refuge. Its incredibly ele-
gant, too full-on colonial
architecture in smooth pale yellow
stucco. The marble lobby leads to a
large courtyard and pool framed by
arches and overlooked by the rooms.
The pool is a luxuriant, attractive
affair as are the palm trees,
loungers and ice cold beers arranged
near it.
My room, a suite, was Raj-style poise
itself lustrous brocade sofas and
Burmese teak chairs and glass-topped
tables, plus oil paintings of Bengali
princes. The bedroom contained a
four-poster bed so grand and deco-
rous it exerted a magnetic force field.
With two wrought-iron balconies
overlooking the pool, I felt a queen.
The Oberoi has two restaurants: an
award-winning Thai, and an Indo-
European one. The former provides
the best Thai food in Calcutta, and
possibly in India we had a very posh
feast there and were impressed by the
delicacy of the preparations, bar a
rather hulking appetiser plate of fried
things which was more Superbowl
Sunday than five-star Bangkok.
The spa was reminiscent of a
wealthy Bengalis living room. Unlike
its more aggressively luxurious sis-
ters, it really did evoke calm, with its
high ceilings, tapestries and white-
painted wood. My Ayurvedic massage
was about as relaxing as it gets
(though do not let the therapist put
oil in your hair. My scalp itched so
ferociously I nearly tore it out).
If you fancy exploring the hectic
streets outside which include a mar-
ket bursting with fabulous pashmi-
nas and saris simply ask the
concierge and a member of staff will
guide you for free. Now thats service.
Rooms from240. www.oberoihotels.com
The opulent Taj Mahal Palace hotel in Delhi
The glimmering golden facade of the Leela Palace in Delhi
The Oberoi Calcutta is an oasis of elegance in the midst of poverty
The hip Rose hotel in the trendy Hauz Khas area of Delhi
Indian bustle
NEED TO KNOW
Booking the best experience:
Greaves are the India specialists to go for: for everything from airport transfers to
tiger spotting drives to month-long sojourns, they're the folks. They arranged a tour
of Calcutta for me, with an extremely knowledgeable guide. In an air-conditioned
Jeep, we went to Mother Teresa's tomb and convent, a fascinating street devoted to
the construction of clay gods and goddesses for the festival Puja, a Jain temple and
the world's largest Banyan tree at the Botanical garden.
www.greavesindia.com
Flights:
Zoe flew Virgin Atlantic to Delhi. Virgin flies twice daily to Delhi from London
Heathrow. Economy fares start from 270 plus 340 tax. Upper Class fares start from
1,360 plus 561 tax. Expect champagne bowls, excellent Indian (or European) food,
comfy flat-bed, nightwear and a fantastic selection of films. For more information call
0844 2092770 or visit www.virgin-atlantic.com
A street full of people near Jama
Masjid in Old Delhi. Electricity
wiring in Old Delhi is a mess.
32
TV & GAMES
cityam.com
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SKY SPORTS 1
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4.30am-6amBBC News
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8pmUniversity Challenge
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9pmThe Dark Charisma of
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2006.
2.20amJackpot247; ITV
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Wildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7 8 9 10 11
12
13 14 15
16 17 18 19 20 21
22
23 24
25 26
10 12 19
45
24 23
45
9 12 6
35
9 13 7
45
20 22
45
8 5 8
14
17
10
3
17
34
24
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7
16
15
6
9
38
33
19
33
16
4
7
11
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ACROSS
1 Impertinent (5)
4 Circle of rope used in
a throwing game (5)
7 Characteristic
of a clan (6)
10 Barrier constructed to
keep out the sea (4)
12 Blithe (8)
13 Being moderately
fond of (6)
14 Finishes (4)
16 Ramble aimlessly (4)
19 Disorderly ghting (6)
22 Component of
blood, essential
for clotting (8)
23 Scof (4)
24 Herb with leaves
valued as salad
greens (6)
25 Donkeys (5)
26 Irritable, peevish
(coll) (5)
DOWN
1 Coloniser (7)
2 Film of oil oating
on water (5)
3 Ache, long (5)
5 Without clothing (9)
6 Irritated (5)
8 Vessel of hot water
in which pans and
their contents are
slowly heated (4-5)
9 Beneciary of
a will (7)
11 Japanese currency
unit (3)
15 Appearance of
a place (7)
17 Afords access to (5)
18 Alcoholic beverage (3)
20 Relating to the
forearm (5)
21 Supply sparingly
and with restricted
quantities (5)
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J S P S W A M P
O B T R U D E M E
U R R A P E P
S P O D E M O N E Y
T B E E P S S
C E A S E L E S S
B D P O U T B
A R M E D O R A T E
B O N E S V R
E D C L E M E N T
S P E C K N S H
5 6 8 9 8 6 9 3
3 4 9 6 8 2 5 7 1
1 7 6 1 2
2 9 2 7 4 3 5 1
8 6 4 9 8 9 3
7 2 3 1 8 4 3 2
9 3 1 2 7 1 4
8 5 4 2 1 3 8 4
9 4 8 1 2
8 9 7 3 5 4 2 6 1
3 8 2 1 9 8 7 5
4
4
4
4
4
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4
4
4
The nine-letter word was
DETOURING
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
MONDAY 26 NOVEMBER 2012
NEVER MIND THE BUZZCOCKS
BBC2, 10PM
With host Alex Horne, Olympic
gymnast and Strictly Come Dancing
star Louis Smith and singer-
songwriter and actress Paloma Faith.
THE ALL NEWGADGET SHOW
CHANNEL5, 8PM
Jason Bradbury and Pollyanna
Woodward head to British Columbia in
Canada, where they test mountain
bikes and phone-tablet hybrids.
THE CURIOUS CASE OF THE CLARK
BROTHERS CHANNEL4, 9PM
Documentary about a couple looking
after their two sons, who developed a
condition that is regressing them to
childhood.
TVPICK
ENGLANDS mercurial batsman
Kevin Pietersen poured praise on his
captain Alastair Cook yesterday after
the pair stormed their way to record-
equalling centuries in the second
Test against India.
Cook and Pietersen both hit the
22nd tons of their Test careers, the
equal highest number in the teams
history alongside Geoffrey Boycott,
Wally Hammond and Colin Cowdrey.
Cook scored 122 before Pietersen
achieved a stunning 186 runs, help-
ing England to 413 in their first
innings in Mumbai.
Chef [Cook] was magnificent, and
its a great feeling to be at the top of
the list with him, said Pietersen.
Getting hundreds for England,
and especially Cookie going to 22
[Test centuries] and then saying to
me you havent got far to go, then
youre there as well it was a special
moment.
Pietersen and
Cook hit record
equalling tons
Both men now have the chance to
become Englands top Test century
scorer of all time an incredible turn-
around for Pietersen, who was frozen
out in the summer after a public spat
with England chiefs. Yet all is now
well in the England camp, according
to the reinstated batsman.
The dressing room is absolutely
fantastic, he said. Were sticking
together really well, all helping each
other out and not letting things get
on top of us. If anybody is going
through a rough time, everybody else
is right behind them. Its a very unit-
ed dressing room at the moment, and
it will be even more so if we manage
to pull off a brilliant victory.
England resumed play this morn-
ing needing only three wickets to end
Indias second innings, with the
home side leading by just 31 runs.
India were at 117-7 at the end of yes-
terdays play, after Monty Panesars
spin ripped through their defence,
claiming five of the seven wickets.
BRITISH former two-weight world champion Ricky Hatton announced his retirement
from boxing after losing his comeback fight against Vyacheslav Senchenko on Saturday
night. The 34-year-old, who was stopped in the ninth round in Manchester, said: I
needed one more fight to see if I had still got it and I havent.
BEATEN HATTON HANGS UP GLOVES
BY JULIAN HARRIS
SPORT
33
MONDAY 26 NOVEMBER 2012
cityam.com
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Lets help fourth officials stamp out thugs
O
N Friday evening the great
Welsh scrum-half Clive
Rowlands was speaking at a
dinner in Cardiff on the eve of
the Wales v New Zealand Test,
remembering his part in changing
the laws of rugby union. In 1963, he
had almost singlehandedly been
responsible for perhaps the most
remarkable statistic in the history of
the sport, when by repeatedly
kicking the ball out of play he
ensured there were 111 (you havent
misread that: one hundred and
eleven) line-outs in a Scotland-Wales
match. Dull or what? They had to
change things and they duly did.
Less than 24 hours after the dinner,
something happened in the
Millennium Stadium that we can all
only hope will force a similar re-think
about the role of officials in the sport.
New Zealand hooker Andrew Hore
punched Waless Bradley Davies from
behind and knocked him out. It was
an assault. Pure and simple. If it hap-
pened to you in the street, the perpe-
trator would end up behind bars.
Through no fault of anyone, none of
the three officials on the pitch saw
the incident. It was clear, however, to
the crowd that Davies hadnt been
struck by a passing meteorite, if only
because the roof was closed. Someone
must have hit him. And on television,
we knew within seconds who it was.
So why in situations like that is the
fourth official not called into action?
Referee: Did you see what hap-
pened? Was he struck by a passing
meteorite or did he get punched?
Fourth official: He was punched by
New Zealands No2 in a totally unpro-
voked attack.
Referee: Should I send him off?
Fourth official: Unequivocally.
Brief and to the point. Early bath.
New Zealand down to 14. A game-
changing decision. And a sport-
changing decision. Dont think you
can hit people and worry if the citing
officer might catch up with you later.
You take the rap there and then, your
team suffers accordingly, and you still
get banned for a long time.
New Zealand play with a flair and a
vitality even magnificent French
sides of the past would envy. But
there lies within a cynicism that
betrays that greatness. If rugbys
game-makers act quickly though,
Hores despicable conduct may have
done rugby a favour. Give the fourth
official more power to combat thugs,
and immediate retribution against
the players that betray the game will
in the end mean a better sport for all.
SPORT
COMMENT
JOHN INVERDALE
In association with
IN BRIEF
Storming finish earns Rory glory
n GOLF: World No1 Rory McIlroy
signed off the finest year of his career
in style yesterday by winning the
season-ending DP World Tour
Championship in Dubai. The Northern
Irishman, who this month completed
the European and PGA Tour money list
double, birdied his last five holes to
finish 23 under par two strokes clear
of Englands Justin Rose. World No2
Luke Donald tied for third on 18 under.
Robinson quits Scotland job
n RUGBY UNION: Scotland have
begun the search for a new head
coach after Andy Robinson quit after
Saturdays 21-15 defeat by Tonga in
Aberdeen. The ex-England boss, who
took charge in 2009, had failed to
prevent losses in 10 of Scotlands last
13 fixtures, a run that pushed them
down to 10th in the world rankings.
Ex-Chelsea boss Sexton dies
n FOOTBALL: Former Chelsea, QPR
and Manchester United manager Dave
Sexton has died, aged 82. Sexton, who
also coached England Under-21s, led
Chelsea to the FA Cup in 1970 and the
1971 European Cup Winners Cup.
Results
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RED Bulls Sebastian Vettel evoked
the memory of legendary driver
Ayrton Senna last night, after he
eclipsed the late Brazilians record
to become the youngest ever racer
to win three Formula One
championships.
Britains Jenson Button won
yesterdays thrilling and rain-
soaked Brazilian Grand Prix in one
hour, 45 minutes and 22 seconds,
yet all attention was turned to
Vettel whose sixth place finish
earned the German his third
straight drivers title.
Were here in Sao Paulo, the
place where he was born, came
from and was buried, Vettel said of
Senna, who in 1991 had become the
youngest driver to claim a hat-trick
of championships.
To come here and win the
championship for a third time I
dont really know what to say. Its
not sunk in, Ive hardly had any
time for myself. There are only two
guys who have done that before,
Vettel added referring to Michael
Schumacher and Juan-Manuel
Fangio, the only other drivers to
have won three consecutive titles.
Schumacher himself finished his
last race one place behind Vettel.
He will now retire from F1 for the
second time.
Ferraris Fernando Alonso came
second, with his team-mate Felipe
Massa completing the podium. The
result meant that Vettel pipped
Alonso to the title by three points.
The incident-packed race ended
behind a safety car with only nine
cars completing all 71 laps. Lewis
Hamilton looked set for a win in his
final race for McLaren before Force
Indias Nico Hulkenberg crashed
into the Brit with 27 laps to go.
Record-setting
Vettel honours
legend Senna
Fans will see that they are
wrong to boo me Rafa
Anti-Semitism mustnt detract
from Spurs win, says Villas-Boas
TOTTENHAM manager Andre
Villas-Boas refused to dwell on
apparent anti-Semitic chanting
from West Ham fans after Jermain
Defoes brace sunk the strikers
old club at White Hart Lane.
Winger Gareth Bale scored in
between Defoes goals, while a late
Andy Carroll header for the
visitors could not prevent Spurs
ending a four-match domestic
losing run and climbing to seventh
in the Premier League.
The match was tainted by chants
of Viva Lazio, just days after a
Tottenham fan was stabbed in
Rome in an apparent anti-Semitic
attack, and gas chamber-mimicking
hisses among the away end.
But Villas-Boas said: I prefer not
to mar the performance with a
situation like this. You know the
animosity there is between
Tottenham and West Ham and as
long as it doesnt reach stupidity it
is a great, great rivalry of two
London clubs.
It would be extremely unfair for
me to mar the performance of the
players but understanding that a
couple of situations are avoidable
but we cant decipher the true
meaning of what they were saying.
West Ham manager Sam
Allardyce said he had not heard the
chants, adding: They shouldn't be
doing things like that. It is the least
of my worries at the minute.
Defoe brought a drab first half to
life in the 44th minute when he
drove in from the right wing,
turned Mark Noble and lashed a
dipping low shot past Jussi
Jaaskelainen from 18 yards.
Clint Dempseys clever scooped
pass set up Bale to convert the
second after 58 minutes, and
moments later Dempsey freed
Aaron Lennon to streak clear and
square for former Hammers star
Defoes second.
Sebastian Vettel is still just 25 years of age
MONDAY 26 NOVEMBER 2012
34
SPORT
cityam.com/sport
BY JULIAN HARRIS
TOTTENHAM HOTSPUR ..............3
WEST HAM UNITED.....................1
BY FRANK DALLERES
PREMIER LEAGUE
@cityam_sport
FINAL STANDINGS
Drivers championship
1. Sebastian Vettel (Red Bull) 281 points
2. Fernando Alonso (Ferrari) 278
3. Kimi Raikkonen (Lotus) 207
Constructors championship
1. Red Bull (Renault engine) 460 points
2. Ferrari (Ferrari engine) 400
3. McLaren (Mercedes engine) 378
SOUTHAMPTON climbed out of
the Premier League relegation
zone with a comfortable 2-0 win
over freefalling Newcastle
yesterday at St Marys.
Record 12m signing Gaston
Ramirez set up Adam Lallana for
the first and added the second
himself to condemn the Magpies
to a third successive defeat.
Liverpool boss Brendan Rodgers
saw his team held to a 0-0 draw as
he returned to former club
Swansea for the first time.
Defender Jose Enrique had a
goal ruled out for the visitors,
while teenage England winger
Raheem Sterling also hit the
Swansea crossbar.
Saints out of
bottom three
BY FRANK DALLERES
CHELSEAS Rafael Benitez insisted last
night that the fans who gave him a
hellish reception will come to see the
error of their ways, after the new man-
ager failed to end the Blues month-
long wait for a Premier League win.
A torrent of verbal abuse was aimed
by the home crowd as Benitez was
presented prior to his sides solid yet
unspectacular goalless draw against
champions Manchester City.
Because I have confidence that we
will do well and we will win games, I
think that some of the fans they will
realise that its not the way to support
your team, Benitez said.
They will see, listen we have a pro-
fessional, he is our manager now.
They can be happy or not, but if I keep
working hard, doing my job properly
and winning, I am sure that they will
be there.
A chorus of boos welcomed Benitez
to his new job, drowning out the stadi-
um announcers attempts to quieten
the crowd. Supporters in the Matthew
Harding Stand chanted Rafa Benitez,
youre not welcome here.
Owner Roman Abramovichs deci-
Man Utd 13 10 0 3 32 18 30
Man City 13 8 5 0 25 10 29
West Brom 13 8 2 3 23 15 26
Chelsea 13 7 4 2 24 13 25
TOP FOUR
TEAM PLD W D L F A PTS
sion to dismiss Roberto Di Matteo last
week and replace him with Benitez
who endured a fierce rivalry with
Chelsea when he was manager of
Liverpool from 2004 to 2010 has been
met with intense disapproval at
Stamford Bridge.
Yet Benitez revealed that
Abramovich is keeping a close eye on
the man that he has appointed inter-
im first-team manager. The new boss
discussed the draw with Abramovich
soon after the final whistle, he said.
He knows it was a tough game, he
knows it is a difficult time because of
the last games, he knows my opinion
[on the game], Benitez said.
The tie started slowly with the first
attempt at goal not coming until the
19th minute, when Citys James
Milner hit a tame shot wide. Two min-
utes later the visitors again attacked
down their right wing, yet Pablo
Zabaletas cross was headed over by
the diminutive David Silva.
With City showing most attacking
intent, Chelseas first shot did not
come until seven minutes before the
break, when David Luiz hit a free-kick
straight at goalkeeper Joe Hart.
Benitezs team were more spritely in
the second half, with the best chance
falling on the hour mark to Fernando
Torres. Neat work from Juan Mata and
Eden Hazard set up the Spaniard, but
he blazed narrowly over from 12 yards.
City could have nicked it in the 91st
minute, yet Matija Nastasics header
was saved by Petr Cech to earn a point.
Chelsea supporters protested against the appointment of new manager Rafael Benitez, who managed rivals Liverpool until June 2010
CHELSEA....................................0
MANCHESTER CITY ....................0
BY JULIAN HARRIS
AT STAMFORD BRIDGE
PREMIER LEAGUE
35
26 year-old Chris Robshaw, named England captain earlier in 2012, has come under fire for recent decisions he has made on the pitch
LONDON Wasps forward Phil
Swainston hailed his pack after they
helped extend the clubs 100 per
cent home record in the Aviva
Premiership with a 14-12 victory over
Leicester Tigers.
Tom Varndells blistering try put
Wasps into an early lead, and
dominance at the scrum allowed
Nick Robinson and Lee Thomas to
kick the decisive points.
We worked really hard all week
on the scrum and to get reward out
of that, even though it is not a full-
strength Leicester, is a real positive,
Swainston said.
London Irish missed eight first-
team regulars as they lost 27-23 to
Exeter Chiefs. London Welsh
succumbed to a Northampton
comeback at Franklins Gardens, the
home side running out 23-16 victors.
Saracens missed the chance to
leapfrog leaders Harlequins, who
lost 21-18 to Bath Rugby, as they were
beaten 12-3 by Worcester Warriors.
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Wasps victory
keeps flawless
home record
WORLD Cup-winning former
England coach Sir Clive Woodward
has leapt to the defence of under-fire
captain Chris Robshaw, after
Saturdays 16-15 defeat to South
Africa saw his judgement called into
question again.
Robshaw was criticised for
ordering Owen Farrell to kick at goal
in the dying stages at Twickenham,
rather than aiming for the corner
and attempting to bulldoze over the
line for a match-winning try.
It was a second contentious Test in
a row for the Harlequins skipper,
who faced opprobrium last week for
choosing tap penalties instead of
kickable opportunities as England
tried in vain to overhaul Australia.
But Woodward said: Robshaw is a
fantastic player and a fantastic
captain and the right guy to be
captaining England. I expect him to
be captain next week, I expect him
to be captain in the Six Nations.
This is not like club rugby.
Captaining Harlequins youre with
the same players week in, week out
and everyone gets used to the big
decisions. When youve got a whole
bunch of people from different clubs
coming together, the art of coaching
and the art of captaincy is very
different, and youve got to find ways
of making sure everyones on the
same page very quickly.
They werent on the same page
with this decision and I dont think
they were last week, and this has
obviously caused a big talking point,
but thats not why England lost.
Two penalties from fly-half Toby
Flood and a trio from Farrell kept
England in touch with the
Springboks, for whom Willem
Alberts scored the only try and Pat
Lambie landed three penalties and a
conversion. Farrell openly
questioned Robshaws orders for the
decisive late penalty, and the flanker
himself even asked referee Nigel
Owens if he could reverse his call to
kick at goal. Owens refused.
It wasnt a time for big debate,
Woodward added. If he goes for
goal, you have to do that kick within
about 10 or 15 seconds. So if theyd
done it very quickly, it absolutely is
the right decision. Also, if Im
brutally honest, I dont think
England really looked like scoring a
try against South Africa. Theyve
conceded one try in three games so
the chances of England scoring that
try in the last two-and-a-half minutes
were quite minimal.
Flood is a doubt for England final
Test of the autumn at the weekend
against New Zealand, who beat
Wales 33-10 in Cardiff on Saturday.
Give the fourth official more power to combat
rugbys thugs and immediate retribution will in
the end mean a better sport for all

cityam.com
MONDAY 26 NOVEMBER 2012
BY BEN BAKER
BY FRANK DALLERES
TWICKENHAM
25TH MAY
FINAL 2013
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NEVER BEEN SO EXCITING!
Limited offer, order by noon on Friday, 14 December to guarantee delivery by Christmas.
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THIS YEAR DONT JUST GIVE A BORING PAIR
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Dont blame Robshaw for defeat to Boks, hes
still right man to captain England, says Sir Clive
John Inverdale: Page 33