Archive of news 04.07.2006-15.08.2006
Archive of news 07.06.2006-03.07.2006
Archive of news 05.05.2006-06.06.2006
20.01.2006††††††It's not every day that bonds - or debt - as exotic as Iraq's come onto the market. Indeed, it's been more than 15 years since that happened. But on 23 January this is all set to change. As part of its ongoing attempts to wipe out the $125bn (?71bn) of debt it inherited from Saddam Hussein's regime, Iraq will issue $2.7bn of new bonds. They are being given to about two-thirds of its commercial creditors, the remainder being either unreachable or having not been informed that the debt exchange was taking place. In return, the creditors have agreed to forgive about 80% of the money they were owed.
Debt swap marks clean break for Iraq
††††††For Baghdad, the move marks a major step towards financial rehabilitation. For creditors, however, it doesn't sound like a great deal. Some have even complained. But as one Iraqi banker told the BBC, most of these debts date back at least 12 years and will have long since been written off, at least on the companies' balance sheet. Debt forgiveness by other countries is also gathering pace. Last November, the Paris Club of rich nations - which includes Britain, the US and Russia - agreed to write-off (in stages) a large chunk of the $40bn owed by Iraq to its members. Where that leaves Iraq right now can be a little confusing to work out. But in practice, the bond move leaves Iraq carrying about $70bn to individual nations such as Romania and China. And assuming Iraq keeps to the terms of a recent IMF agreement, it hopes to reduce those debts to about $33bn by 2010.
††††††Despite the violence hampering recovery and rebuilding, Iraq may not find this target too difficult to meet. Oil revenues, which were a little over $20bn in 2005, are expected to grow this year. But why - when the country has so many other pressing problems - is it putting so much emphasis on debt reduction? "Probably the most important thing is it will be the green light for institutional investors and foreign direct investors to start putting their money back into Iraq," says Peter Bartlett, managing director of Exotix, a bond trading house in London. "Maybe we'll see two or three big international banks trying to get banking licences and open up offices in Baghdad as a result of this." And Iraq desperately needs investment - and credit - to fund its reconstruction and repair its shattered economy.
††††††On top of this, however, there is the intangible effect of being back in the mainstream of global finance. According to the former head of Rafidain bank - then Iraq's main bank and the one which subsequently racked up most of the country's debts - the bond issue is as important psychologically as it is financially. "Really it's about re-establishing its name in the market," says Haydar Al-Uzri. "It's a clean break from the past: being accepted in the international community. For a long time Iraq was a pariah for the whole world." A successful debt swap could be seen as a vote of confidence in the country: a sign that better times lie ahead for its battered economy. Bond traders will not see anything like this for some time to come.
18.01.2006††††††The financial hangover from Christmas has begun to take its toll with record numbers ringing debt helplines. Both the Citizens Advice Bureau and Consumer Credit Counselling Service have said their debt advice lines have had more calls than normal for January. National Debtline has had 12,000 calls since 3 January - making it the busiest month since it was set up in 1987. The group put the surge down to more public awareness that help is available rather than a jump in debt levels. "Calls are certainly up and we are taking on another 25 staff, " National Debtline spokesman Richard Gale said.
Caller deluge hits debt helplines
††††††He added that calls to the group usually rose following the Christmas period as people began to take stock of their spending. The average caller to the service owed between ?5,000 and ?15,000, he added. In 2004 UK consumer debt broke through the ?1 trillion mark, driven mainly by lending against properties, prompting stark warnings of future debt problems. However, the most recent data from the Bank of England has shown that the appetite for debt among consumers appears to be waning. Last month, figures from the Bank showed the growth rate of consumer credit - such as credit cards and bank loans - fell to just 9.8% a year in November, the slowest rate of growth recorded since September 1994.
17.01.2006††††††Lincolnshire's health service debt will be far higher than originally forecast, according to NHS officials. Managers have admitted that the overspend is predicted to reach ?19.5m by the end of March, despite extensive cost-cutting measures. The debt belongs to East Lincolnshire Primary Care Trust and United Lincolnshire Hospitals NHS Trust. However the whole trust has said it will work together to make further savings and patients are the priority.
Hospital trust overspend worsens
Recovery plan accelerated
††††††Tim Rideout, chief executive of West Lincolnshire PCT and acting chief executive of East Lincolnshire, explained that last year the Lincolnshire NHS overspent by ?8m and this year's figure of ?19.5m is more than double that amount. He added: "This cannot be allowed to continue and the senior managers accountable for the NHS in Lincolnshire have a clear responsibility to deal with this problem. "We aim to provide the highest possible quality of care for our patients and to do this, we must have a stable, sustainable and financially balanced NHS." The financial recovery plan, which has been accelerated to tackle the debt, includes moves to improve access to diagnostic tests, lessening the need for a stay in hospital and reducing levels of staff sickness.
16.01.2006††††††Hospital beds could close and health visitor and district nurse posts may be cut to cut costs in Stoke-on-Trent. North Stoke and South Stoke primary care trusts (PCTs) are trying to find ways to wipe out their ?8m debts. Plans also include reducing services at the Haywood Community Hospital and Longton Cottage Hospital and urging GPs to write cost-effective prescriptions. The PCTs' chief executive Mike Ridley said it needs to balance the books, but added the cuts should be temporary. The two trusts started the year about ?14m in debt and have managed to save ?6m so far.
Hospital beds may go to cut debts
††††††Mr Ridley said patients should not miss out on treatment they need as there will still be a health-visiting service and beds at the hospitals. "I think it is more likely they will face delays at the present time," he said. "We're taking savings round the edges at the present time. "We just need to be sensitive to our staff as well and make sure they are not overstretched." He said that some of the plans were already being brought in because of staff shortages caused by a vacancy freeze at the beginning of the year. The rest of the savings proposals will be considered by the two trust boards at their next meetings this month. Mr Ridley said the Strategic Health Authority and the PCTs' auditors have demanded "speedy progress" in reducing and then eliminating their debts.
13.01.2006††††††The push to cut the number of unnecessary hospital admissions is at risk because GPs are refusing to run their own budgets, doctors say. Government proposals are set to be unveiled at the end of the month to improve access to community services from GPs to sexual health clinics. But the drive is largely dependent on doctors taking on their own budgets to commission a new range of services. Doctors' leaders claim most do not want the responsibility. Dr Hamish Meldrum, chairman of the British Medical Association's GPs committee, said: "With GPs not on board, the whole push could be undermined.
GP budget snub threat to NHS plan
††††††"The problem is that the NHS is gripped by deficits and doctors understandably do not want to take on budgets where cuts are being made. "I think there is also an issue over management costs of running budgets and the fact that a new contract has just come in coupled with other government reforms. They just don't want the budgets on top of it all." It is estimated that a little over a quarter of GP practices have taken on responsibility for budgets under a scheme launched last year called practice-based commissioning. It has been designed to encourage doctors to provide specialist services such as diabetes clinics as well as paying for innovative community-based schemes run by nurses and hospital consultants. Local health bodies, called primary care trusts, commission services in areas where doctors do not have the responsibility. But supporters of GP commissioning claim doctors are more responsive to need, as they act as gatekeepers to the rest of the NHS.
††††††The white paper, expected at the end of January, is likely to stress a more community services-focused NHS to reduce the amount of costly hospital treatment. Dr Mike Dixon, chairman of the NHS Alliance, which represents primary care professionals, said the scheme offered GPs a unique opportunity to help redesign community services. But Dr Dixon, whose Devon practice has taken responsibility for its own budget, added: "I can understand why doctors are being turned off. "I think the government needs to offer better incentives about what they can do with the money otherwise it will threaten what the white paper will recommend." But the Department of Health said it expected many more practices to come on board over the course of the year. A spokesman said: "Practice-based commissioning remains voluntary for practices, but given the significant benefits that it offers, we would expect that it will be taken up by the majority of practices."
12.01.2006††††††Chancellor Gordon Brown has been reprimanded by the European Commission for breaking targets on borrowing. The UK has borrowed more than the EU's debt limit of 3% of national income for the second year running. The commission fears the UK will continue to break the rules but cannot impose a fine on a non-euro member. It wants EU finance ministers to set a deadline for Mr Brown to cut the UK's deficit. The chancellor continues to insist his plans are affordable. He has often said the European growth and stability pact limit should not be applied too rigidly.
Brown gets EU borrowing reprimand
††††††UK government borrowing was 3.3% of GDP in 2004/5 and the commission predicts it is likely to stay above the 3% limit in 2005/6 and 2006/7. The commission gave an early warning to Mr Brown last September and is now setting a deadline of the 2006/07 financial year to bring borrowing in line with the EU rules. EU economic and monetary affairs commissioner Joaquin Almunia said the excess debt was close to the limit but was not temporary. "Although the UK budgetary position is less worrying than that of others in the EU, particularly as far as its debt position is concerned, the commission recommends that the UK deficit be declared excessive and the UK asked to correct the situation," he said.
'No big adjustment'
††††††There could now be a stand-off when the European Council of Ministers discusses the commission's recommendation. But Mr Almunia told reporters he was confident EU finance ministers would back the plan - and that Mr Brown would agree. "The slippage is not so big as to require a very big package of measures for the adjustment," he said. Mr Almunia said Mr Brown still had to keep his books on a sound footing despite the fact the UK could not be fined for breaking the debt rules. "I do not drive my car properly because I don't want to pay fines, but because I think it is the right thing to do - that applies to budgets as well," he argued. Former UK Cabinet minister Peter Mandelson was among the 25 EU commissioners who approved the reprimand.
††††††Mr Brown insists he has stuck by his "golden rule" of borrowing only to invest and balancing the books over the economic cycle. Critics point out that he has changed the dates of the current the economic cycle. The Treasury said in a statement: "As the government set out in the pre-Budget report last month, we continue to meet our fiscal rules over the cycle, with the public finances sustainable and increases in public investment fully affordable. "Over the last year, the UK's current deficit has virtually halved, and is projected to halve again over the coming year." It said the government's projects were in line with a "prudent interpretation" of the rules and the UK had since 1997 enjoyed the lowest average debts of any major European country.
††††††Other nations which have broken the growth and stability pact in recent years include Germany, France, and Italy. But Conservative shadow chancellor George Osborne said the commission had simply joined a "chorus of international institutions chastising Brown for his poor handling of the public finances". "And it is hard working families who will have to pay for it with taxes rises," he argued. Liberal Democrat Vince Cable said the warning was embarrassing for Mr Brown. "The argument that he 'continues to meet the fiscal rules over the cycle' is hollow and spurious," said Mr Cable. UKIP MEP John Whittaker said it made no sense for the commission to criticise the UK as it was not part of the eurozone. "It is farcical that the commission should be pointing its finger at Britain," he said.
10.01.2006††††††Spain has told Bolivian President-elect Evo Morales that it will write off a large part of the Latin American country's debt to Madrid. Spanish officials said Mr Morales had agreed that the $120m (99m euros; ?68m) debt would be spent on improving educational programmes in Bolivia. Spain also promised to help Bolivia's agricultural sector. Mr Morales said Bolivia needed foreign partners but they would not be "masters of our natural resources". He has met Spain's King Juan Carlos, socialist Prime Minister Jose Luis Rodriguez Zapatero and other officials as part of an international tour ahead of his inauguration. Mr Morales also held talks with a number of business leaders, including the head of the energy giant Repsol.
Spain to write off Bolivian debt
††††††In response to the offer of cutting the debt, Mr Morales said: "This is a great relief for me. We want to put an end to our country's illiteracy rate." He also urged Spanish society to "accompany" Bolivia on its new political course, which he said would be focused on the fight against poverty. Spain is the third biggest foreign investor in Bolivia. Mr Morales told reporters his country needed "partners, foreign investors, but not owners of our natural resources". "My government... is going to exercise its property right over its natural resources," he added. He said this did not mean his government would confiscate or expropriate resources or evict companies. A raging struggle over who should exploit Bolivia's large natural gas reserves has forced two presidents to resign in recent years. Mr Morales - who will become the country's first indigenous president - won the December election on pledges to increase social spending and turn away from free-market policies.
††††††On Tuesday, Mr Morales visited Venezuela, where he pledged to join President Hugo Chavez in a fight against "neo-liberalism and imperialism". Mr Morales last week held talks in Cuba with its leader Fidel Castro. He will also visit France, Belgium, South Africa, China and Brazil. His next stops in Europe are France and Belgium. After Europe, he will travel to South Africa at the personal invitation of Nelson Mandela. His 10-day tour of seven countries does not include the US. Mr Morales was elected president with nearly 54% of the vote, the biggest support for any candidate since democracy was restored in Bolivia in the 1980s.
30.12.2005††††††A row has broken out in the UK over a deal to cancel part of Nigeria's $30bn (?17bn) debt to Western nations. Religious leaders say that although the deal would relieve Nigeria of nearly $18bn in debt, it would still have to repay a further $12bn in coming months. They said it would be a huge burden for Nigeria which is one of the world's poorest countries despite oil wealth. But critics say funds available from abroad only benefit Nigeria's rich elite, which cares little for the poor. The head of the Baptist Union of Great Britain, Rev David Coffey, said debt relief is a matter of justice, not charity.
Row over Nigeria debt repayment
††††††"We want to secure that debt cancellation. We applaud the UK and Nigerian governments' efforts to secure debt cancellation for Nigeria," he told BBC Radio Four's Today programme. He pointed out that of the $12bn that would still have to be repaid, "$1.7bn is coming to the UK - and that figure is twice as much as the UK is giving in aid to the whole of Africa in 2005." The Anglican Archbishop of York and the Muslim Council of Britain are also among a group of religious leaders who have become involved in the debate. Correspondents say the issue has raised serious questions about debt cancellation, including whether the rich countries have a moral obligation at all to help poor countries which fail to keep their house in order. Nigeria is the world's eighth largest oil producer, and the largest in sub-Saharan Africa.
29.12.2005††††††The UN has agreed on a budget for next year, with a $950m (?548m) spending cap for the first six months, aimed at applying pressure for major reform. Funding for the second half of 2006 will be released if Secretary General Kofi Annan concludes that enough reforms have been adopted. Wealthy and developing nations had been at odds over the budget. Developing countries objected to links between the budget and reform - a top priority for the US and EU. A spokesman for Mr Annan said a package of management reforms would be presented by the end of February. US ambassador John Bolton said the deal was a victory for his country. US and EU diplomats have been pressing for management reforms at the UN and had suggested in November that a short-term interim budget should be adopted while reform proposals were worked out.
UN states resolve budget impasse
††††††The Group of 77, which represents 132 developing nations, had wanted a $1.3bn cap. Several other key members, including Egypt and India, objected to any link between the new budget and management reform. Jamaica's ambassador Stafford Neil said the group was "unhappy" with the spending limit but decided to go along with it. "We find unpalatable the fact that there is this axe hanging over our heads in terms of the spending limitation, but we will still go forward," Mr Neil said. Mr Annan and a number of rich countries have been pushing for management reforms at the UN, following extensive allegations of corruption and mismanagement, particularly in its handling of the oil-for-food programme for Iraq.
27.12.2005††††††There has never been a year like it. Warmed by the words of Nelson Mandela - "sometimes it falls upon a generation to be great. You can be that great generation" - people campaigned in more than 80 countries to "make poverty history". And for the first time the leaders of the richest countries of the world were listening. Tony Blair's decision to put Africa alongside climate change as the policy priorities of Britain's leadership of the G8 guaranteed that. He had already put government effort into the Commission for Africa, engaging the energy of Bob Geldof as well as African leaders to examine what had gone wrong in the only continent to become poorer in this last quarter of a century. So was it all worth it? The campaigning certainly helped. The momentum of Live 8 persuaded some reluctant leaders at the Gleneagles summit, most notably Japan and Germany, to agree to the final declaration.
Africa's 'aid year': Was it worth it?
††††††Mr Blair's requirement that they should all sign publicly gave the deal even more weight. As well as a commitment to double aid to $50bn (?29bn), and extend the principle of debt relief, other parts of the deal could end up as even more valuable to Africa, most notably the commitment to universal free access to treatment for HIV/Aids, and measures to allow African countries to own their own economic strategies, rather than having them imposed from Washington. And since then policy commitments in Europe mean that the aid increases promised will happen, although this has not been matched in a deliverable way in America. President Bush's so-called "Millennium Challenge Account" has far too many conditions attached to it to make it accessible by the poorest countries.
††††††The last time that campaigners made such a difference on an international development issue was when the G8 first agreed to a programme to cancel unpayable debts for some least-developed countries at the summit in Cologne in 1999. But the Jubilee debt campaign was on a single issue, with 2000 as a target date for action. Making poverty history is clearly going to be harder than that, certainly by the UN's target date of 2015. Gloomy figures emerged at the UN General Assembly meeting in September when the "Millennium Development Goals" were reviewed. On present progress, it would be 2150 not 2015 before the target to halve the number of people living in poverty would be reached. Looking back over the year, the head of the UN Millennium Campaign, Salil Shetty, said: "In aid, we have gone a long way. In debt, a small step has been taken. But in trade we are nowhere. There is still a long way to go.'
††††††Improving trade for Africa would be the one thing which could make all the difference. This is not just a north-south issue. One of the key recommendations of the Africa Commission report was to lower barriers, and improve infrastructure for trade within Africa. But campaigners were unhappy with progress at the World Trade Organisation meeting in Hong Kong in December, where low expectations of a result in favour of poorer countries turned out to be justified. Mr Shetty said that renewed emphasis should go into campaigning for this as the WTO tries to resolve the deadlock over the next few months, because changes in the trading regime will not have quick consequences. "Big changes in the multilateral trading regime don't happen overnight. They take a long time. If we don't crack it this time we are not going to have another opportunity like this," he said. The Make Poverty History campaign was similarly downbeat. Spokesman Steve Tebbitt said: "Tony Blair's strategy has been to go for the low-hanging fruit, on aid and debt. On the tough questions like trade justice he hasn't really delivered."
'Marathon, not sprint'
††††††But the key to keeping momentum in the campaign is not about Britain but the wider world. 2005 was an extraordinary year for the British focus on Africa, but elsewhere it is part of an ongoing campaign. The spokesman for the Global Call to Action Against Poverty, Kumi Naidoo, said: "We have always understood that this is going to be a marathon not a sprint." The focus now is on compliance and delivery on promises made by the rich world, while ensuring that poor countries live up to their side of the bargain. "We cannot accept any excuses for failure to move on gender equality, failure to improve governance, failure to eradicate corruption and so on. We will have a dual approach going forward," Mr Naidoo said. "And there is momentum now for holding governments accountable. With developing country governments we will have to hold them accountable for things that are within their domain of control, and for rich country governments, for commitments, half-hearted they might have been in 2005, and to push them further.'
26.12.2005††††††Households in Cumbria face an above-inflation council tax rise, officials have warned. Cumbria County Council said it is planning to impose an increase of 4.97% in an effort to plug a multi-million pound shortfall in funding. The council said it has saved ?12.2m this year and will have to cut a further ?1.5m from next year's budget. Merging departments and reducing grants to some organisations will make "significant" savings, bosses said. Joan Stocker, deputy leader of the county council, said: "We did a little better than expected, with the 13th best county settlement of a 3.3% increase on last year's grant settlement from the government.
Households face council tax hike
††††††"But the bad news was that ?6m came out of our budget to cushion the negative effects. "That has left us with a real challenge, but we will continue to target our resources at frontline services while making efficiency saving where possible. "There will be 700 more people over the age of 85 next year in the county and those kind of changes put real pressure on us. "We had to choose between holding a council tax increase down by 1% or so and investing ?1.5m in adult social care to cope with providing care for an ageing population - we chose to invest in social care." The planned rise would see a Band D household's council tax go up from ?971.16 to ?1,019.43 a year.
22.12.2005††††††The International Monetary Fund (IMF) has agreed to write off the $3.3bn (?1.89bn) owed to it by all but one of the 20 poorest countries in the world. It has delayed granting debt relief to Mauritania until it makes "satisfactory progress in a few policy areas". The write-off follows the Group of Eight debt forgiveness deal which was struck in July. Earlier this month it was feared the IMF was set to withhold help for up to six of the poorest countries. Debt-relief campaigners ended up warning some intended recipients that the IMF was set to drop them from the list because their macroeconomic policies did not meet its requirements. On Wednesday, the IMF dismissed reports that it had been back-tracking as "simply not true". The multilateral debt relief initiative was agreed by leaders of the G8 industrialised states in July after the series of "Live 8" rock concerts drew attention to the issue.
IMF backs poverty debt write-off
††††††The debts owed by the 19 nations will finally be cancelled once the IMF has the approval of all 43 rich countries that have contributed to an anti-poverty trust set up by the Fund. "So far we have 37 consents. We're quite hopeful we'll get remaining the six in the next few weeks," said IMF spokesman Thomas Dawson said. They should receive IMF debt relief by early 2006. Mauritania, meanwhile, is likely to meet the criteria for the write-off "relatively soon", said Mr Dawson. "Mauritania will qualify for relief and receive it once it demonstrates satisfactory progress on some policy areas that have been identified," he said. Oxfam, one of the organisations that feared the IMF would go back on its word, welcomed Wednesday's board verdict. "It's good that the IMF realised that they couldn't wriggle out of promised debt cancellation during a closed-door session in Washington DC," a spokesman said. "The IMF must now deliver the funding quickly and without any further delay."
21.12.2005††††††Six months after the Glazer family swept into Manchester United's boardroom in a controversial takeover deal, the predicted dramatic financial turmoil has not been seen. The football club's major personnel, including team manager Alex Ferguson and chief executive David Gill remain in place. Threatened boycotts by season-ticket holders have failed to hit attendances - and hence the balance sheet - with the Old Trafford stadium 99.4% full for matches this season. Family head Malcolm Glazer has been an invisible presence, while his sons Joel, Avi, and Brian have insisted it is business as usual. Without making any overtly threatening noises, they have continued to familiarise themselves behind the scenes of the club. The trio have been seen at home matches and have made sure they allied themselves to popular figures such as Sir Bobby Charlton. At the time of the takeover, there was speculation the Glazers would sell and lease back Old Trafford to service their huge debts, something which would have had many supporters raging. But Joel Glazer denied this on the club's MUTV channel. Importantly, they have also made soothing sounds towards the game's authorities, promising the Premier League they have no plans to break away from collective bargaining over TV rights.
Man Utd's Glazers face new challenges
††††††However, it has not all been plain sailing: United has seen its sponsorship deal with mobile phone giant Vodafone end early. The latest deal, worth about ?9m ($15.5m) a year, began only last season and will now end in May 2006. But the family has presented this as a mutually-agreed decision that allows it to seek out an new more-lucrative deal, perhaps approaching the levels of Juventus' ?15m a year deal with Tamoil or Real Madrid's new ?16m annual agreement with BenQ. There will be an increase in season-ticket and match-day revenues from the 2006/07 season, when Old Trafford will be expanded to 75,000 seats from the current capacity in the region of 68,000. More of a blow, to both prestige and income, has been the club's failure - after defeat by Benfica - to qualify for the next round of the Champions League, or indeed for the consolation prize of Uefa Cup football. The club has earned about ?11.6m from the Champions League, made up of home match income (?6m), Uefa prize money and bonuses (?2.93m), and a small slice (?2.65m) of the Uefa "market pool" from media rights. Progressing onwards in the tournament could have earned them anything between ?15m and ?32.2m, but the family insisted it was not essential to their business plan. And Harry Philp, managing director of Hermes Sports Partners financial advisers, says: "It is a blow, but not as great as some are putting it.
††††††"We don't know what is in the business plan with regard to the Champions League - we have heard it is a question of just budgeting for the group stage every year. "Others have said it is that from this first year, then the quarter-finals for each year after that." However, Mr Philp also points out that if the club had qualified for the consolation prize of the Uefa Cup by finishing third in its Champions League group, that would have brought in extra prize money. Competing in the junior competition would also have offered extra revenues in gate money and TV rights.
'No major impact'
††††††But Mr Philp says losing out on these extra millions need not hit the Glazer business plan, which is built on a number of debts which are structured to have low repayments in the early years. "With regard to the bank debt and other loans, the initial repayments are so low, going out of Europe is not going to have a massive impact," he says. "It is easy for some critics to say this is the start of the end - but the debt is so back-loaded it is not going to impact immediately." But he adds: "Going out of the Champions League is not good news for trying to find a new sponsor. "They might come up with a deal somewhere in the ?9m to ?16m a year range, and would be hoping for the top level enjoyed by the likes of Juventus and Real Madrid. "But it may be they are not going to get much more than ?9m, compared to what they might have commanded if they were still a force in Europe. "Businesses in Asia still put great credence in the Manchester United name and they may be looking there for their next sponsorship deal."
††††††The club says it has no plans for a dual shirt-naming rights deal which also includes renaming the stadium, such as Arsenal has with Emirates airline for its new north London arena, but neither have the Glazers ruled out such a separate move. Mr Philp says another priority for the family is to eliminate the ?267m of debt they loaded onto the club when they took over. "We very much expect them to get rid of the senior debt as soon as they can - they may offer some kind of bond issue to spread it out over a 25-year period, and backed by season ticket revenue."
††††††Mr Philp said the other major issue for the Glazers would be improving the team, so that it could be market leader on the pitch once again in order to enhance commercial standing off it. "Look at champions Chelsea and their ?11m a year deal with Samsung - that is what Manchester United will be looking for. "But clearly the team at present is lacking. They clearly need to do something - the Glazers have said there is going to be money made available for transfers. "However, it remains to be seen how much will be made available." Meanwhile, the Glazers appear to be sanguine about the present situation, with United off the pace from league leaders Chelsea. After they crashed out of the Champions League, a Glazer spokesman said it had "no bearing on the family's long-term ownership of Manchester United" and that there was enough "slack" in the family investment to deal with the situation. However, much will be determined in the coming year as the club chases a new lucrative money-spinning deal, with just five months before the Vodafone deal ends.
20.12.2005††††††Tony Blair is to lay out his vision for Europe as Britain's six-month presidency of the EU draws to a close. The UK prime minister is also likely to use his speech to the European Parliament to convince member states they should accept an EU budget deal. Last weekend Mr Blair brokered an agreement between the 25 member states for the EU's next seven-year budget. He told UK MPs the deal, which will see ?1bn a year cut from the UK's rebate, is in the national interest.
Blair 'to defend EU presidency'
††††††Members of the European Parliament will have to give their approval to the deal next year, and they have already demanded a much bigger budget. Mr Blair will also be keen to assuage critics of the entire British presidency. BBC Europe correspondent Tim Franks said: "He is likely to point to the start of membership negotiations with Turkey, despite vigorous opposition from Austria. "There has also been movement on the agenda of economic liberalisation, when it comes to sugar pricing, the services sector and better regulation." But critics say Britain's six months in the chair have failed to deal with the big issues, such as deciding what the EU should spend its money on.
††††††The issue of how the EU should organise itself and what it is for remains unresolved, following the rejection of the proposed European constitution in two referendums. On Monday Mr Blair described the EU budget deal as an "investment in the future prosperity" of eastern Europe. The deal, reached in Brussels early on Saturday, includes an EU commitment to review farm spending in 2008. But Tory leader David Cameron said Mr Blair had failed "in every single one" of his objectives in the EU budget negotiations. Charles Kennedy said the outcome of the summit was disappointing.
'Wealthy paying the poor'
††††††Mr Blair told MPs the UK could be "proud" of the part it played in the enlargement of the EU from 15 member states to 25. But he argued that there was also a price to pay for the EU's expansion. "To have championed the cause of these new states; to have welcomed them into NATO and Europe and then to have refused to agree a budget that protects their future economic development would have been a betrayal of everything Britain has rightly stood for in the past 15 years or more since the fall of the Berlin wall," he said. "They are our allies. It is our duty to stand by them. But it is also massively in our interest." The purpose of the budget was to "rightly" transfer cash from the wealthier EU countries to their poorer counterparts, he said. It would have been "a disaster for this country" and its relationship with central and eastern European countries if a deal had not been reached, he said.
19.12.2005††††††Mary prefers not to use her real name. She gets her son's toys and clothes from charity shops. At her rented home in Banbridge, County Down, she pays for electricity through a meter, and uses a pre-paid card to make phone calls. She shops for her groceries once a month. Fresh food is a rarity. "Thomas loves fruit, but I can afford to give it to him only occasionally. The same goes for fresh meat - usually we have frozen dinners of chicken nuggets or pizza," she said. Mary, 34, is struggling to get out of the poverty trap. She's studying for a degree in business information technology, in the hope of obtaining a job that will enable her to give her son a better life.
The real face of poverty
Burden of debt
††††††Approximately 150,000 children in Northern Ireland, 37% of children aged under 17 in the province, live in poverty, according to a research report published earlier this year by the Save the Children charity. Eight per cent of them, about 32,000 children, live in what the report describes as "severe poverty". It says "worryingly high" proportions of severely poor children are going without basic necessities such as three meals a day, fresh fruit and vegetables at least once a day, or new clothes when needed. Many of their parents are burdened with debt and money problems. The report found that one in four severely poor children live in homes where electricity bills are paid late. Baroness May Blood has been a community worker in the socially deprived Shankill Road area in Belfast for many years. She recently addressed a conference on child poverty in Ireland organised by the Church of Ireland. A passionate believer in education as the way out of poverty, she highlighted the stranglehold of debt in areas of deprivation in Northern Ireland, where 21% of households live on social security benefits, compared with 12% of households in England. "Debt is a major, major problem in such areas, whether nationalist or loyalist, particularly in areas where paramilitaries hold sway," she said. "If you borrow a fiver on Monday to get you through Monday, by Tuesday you owe ?7, by Wednesday it's ?9, by Friday it's ?11, by the weekend it's ?13, and you're back in the whole cycle of debt. "People there are living on tomorrow rather than today", she said.
††††††Nigel Williams, the Northern Ireland Commissioner for Children and Young People, has called for a more co-ordinated approach by the authorities to combat poverty in both urban and rural areas. He says government policy needs to be more focussed on child poverty in Northern Ireland. "That means looking at childcare and education in early years, along with a set of simple measures that will look at health and wellbeing of children, as well as focussing on such groups as children in poverty with disabilities who need special help," he said. The Labour government has pledged to eradicate poverty in the UK by 2020. As part of that drive, an anti-poverty strategy and a children's strategy are due to be launched next year in Northern Ireland, where average incomes are lower than in Britain. Tackling poverty on a global scale is one of the topics to be discussed at the World Trade Organisation summit in Hong Kong this week. Tony Blair has called for the meeting to be part of the campaign to make poverty history. For Mary Murray, however, such considerations will have little impact on her life . As the seasonal frenzy of spending continues in the run up to Christmas, she'll be using presents she kept back from her son's last birthday to ensure Santa pays a visit to her home this year.
15.12.2005††††††Brazil has said it plans to pay off its entire $15.5bn (?8.7bn) debt to the International Monetary Fund (IMF) by the end of the month. The move will clear the country's obligations to the Washington-based lender two years ahead of schedule. The Brazilian government said the early repayment reflected the improving performance of the country's economy. It marks an economic turnaround for Brazil, which obtained IMF loans in 2002 to avoid defaulting on its debts. Finance Minister Antonio Palocci said Brazil would fund the early repayment of its IMF debt from its reserves, which have swelled to $66.7bn from just $15bn two years ago. "The repayment will save more than $900m in interest costs," Mr Palocci said.
Brazil to pay off IMF debts early
††††††Brazil had been expected to repay $7.03bn to the IMF in 2006 and $8.43bn in 2007, the Finance Ministry said. IMF managing director Rodrigo Rato welcomed news of the early repayment. He praised Brazil's "excellent track record" of economic policy management. "This decision reflects the growing strength of Brazil's external position, especially continuing substantial trade and current account surpluses and strong capital inflows that have greatly boosted reserves and reduced external debt," Mr Rato said. Brazil's decision to repay its IMF debts by the end of December comes as the government of President Luiz Inacio Lula da Silva struggles to deal with a number of corruption scandals. The president's chief of staff Jose Dirceu was expelled from the country's Congress at the beginning of the month, following allegations he masterminded a scheme under which the governing Workers Party allegedly paid bribes to its congressional allies for votes.
14.12.2005††††††Port Vale Football Club could be getting a ?2.5m loan from Stoke-on-Trent City Council to help them ease their debts. Talks are taking place about the cash assistance, with the council possibly using the football club's stadium, Vale Park, as security against it. The council could then run community events like IT courses and a children's centre at the ground. Councillors will make a decision on Thursday.
Port Vale could get council loan
††††††The club's chairman Bill Bratt has reassured fans that the council is not trying to take over the club. In November it was announced that the club's operating loss had gone down from about ?500,000 to just over ?50,000 in a year. It also cut its borrowings by about 3%. The Potteries club came out of administration two years ago.
13.12.2005††††††Kent County Council (KCC) is aiming to cut 8% of jobs in the next three years, a letter leaked to the BBC reveals. The letter to all Conservative councillors from council leader Paul Carter also sets a target of a 6% reduction in the staffing budget. It states: "Fewer, but smarter, better paid staff must be the way ahead." Mr Carter said on Tuesday it followed an "awful" grant settlement from government which would see the council having to do "more with less money". Speaking to BBC Radio Kent, he said the job cuts would all be managed through natural wastage.
Council cutting staff costs by 6%
††††††He said: "Roughly 7% to 8% of KCC staff change every year. "Over a three-year period, a quarter of our staff will leave. "I have asked managers to look at the opportunities to re-engineer the way they organise their staff, possibly by not always replacing members of staff." He said the council's approach was "looking at being smarter in the way we use our staff and the way we use our technology". Mr Carter said frontline services would not be affected. Earlier this month, KCC said its 2% increase in grant compared with a national average of 3% was a "very hard" settlement. The council said it had already lost one in four back office jobs and was facing "unique" challenges. They included the building of 106,000 new homes over the next 20 years; a 60% increase in the number of people over 85 living in the county; and areas of deprivation that were the equal of anything found elsewhere in the country. But Labour group leader councillor Mike Eddy said: "The council leader should have gone out and consulted with staff to see where savings could be made". Mr Eddy said he had not been able to find out how many staff the council employed but had obtained two estimates for April 2005 which were 29,315 staff and 24,783. He also said the 2% grant increase applied to just one-third of the council's budget, while the increase for the other two-thirds was "virtually 7%".
12.12.2005††††††A husband and wife are beginning a jail sentence for their part in an ?80,000 benefits scam carried out by a team of school cleaners in Cardiff. Perry Carter, 42, was jailed for six months after he admitted using the name of his wife's late husband to claim ?11,000 in benefits. Mrs Carter, 41, admitted claiming ?18,600 in benefits and was jailed for 12 months. The court was told she also encouraged colleagues to falsely claim benefits. An investigation by the Department of Works and Pensions into cleaners at St Illtyd's High School in Rumney, Cardiff, found the couple were at the centre of a widespread fraud operated by staff at the contract cleaning firm Solo Service Group. The court heard how Caroline Carter encouraged her husband to work under her dead first husband's surname as Perry Gough. He then built up claims amounting to ?10,956.54 in housing benefit, council tax benefit and income support. Mrs Carter also claimed ?18,682.25 in incapacity benefit and carer allowances. The couple received up to ?300 a week from the state between 1998 and 2004. The court also head that Mrs Carter encouraged at least three other employees to work using false names and claim benefits under their real names.
Couple jailed in ?80,000 ID scam
††††††Michael Jones, defending Mr Carter, said the couple, from St Mellons, Cardiff, began making fraudulent claims because of his rising debts. Mr Jones told the court how Carter gave up work because of depression after the death of his brother in 1998. "He lost a good job at General Electric and found he was running up large credit card debts," he said. "He was at least ?18,000 in debt and wanted to supplement his insufficient wages. He recognises he has spent society's money."
'Culture' of fraud
††††††John Holmes, defending Mrs Carter, said that there was a "culture" of fraud in the company as a way for employees "to supplement their income". "Her first husband died of cancer and she met Carter in 1998 when he was badly in debt," he said. "She found her husband a job with the cleaning firm because she was a supervisor. "It was low paid work and the culture in the company was that scamming benefits was a normal procedure." The couple admitted six counts of false representation. Mrs Carter also admitted four charges of aiding and abetting her husband and colleagues to make fraudulent claims. Judge Stephen Hopkins told the couple they were both "extremely dishonest people". "These offences are very serious because they involved the raiding of the public purse," he said. Mrs Carter was jailed for 12 months and her husband for six months.
††††††After the hearing a Department of Works and Pensions (DWP) spokesman said they took these cases "extremely seriously". "Benefit fraudsters steal ?1.5bn a year that could be spent on schools and hospitals. There is no excuse for defrauding the system." The managing director of Swansea-based Solo Service Group, Steve Hammett, said the company had not appointed Mr and Mrs Carter in their roles. "We were awarded the cleaning contract about a year ago and these individuals were employed at the school prior to us starting the contract and transferred over to us from the previous contract," he said. "We were legally obliged to take them on. They failed to inform us that they were claiming benefit."
09.12.2005††††††The sale of payment protection insurance (PPI) for loans is to be investigated by the Office of Fair Trading (OFT). The decision follows a so-called super complaint from Citizens Advice that PPI was too expensive and was often sold to people who did not need it. PPI is designed to help people repay personal loans or credit card debt if they fall ill or lose their jobs. The OFT will launch its investigation into the ?5bn industry in the new year. Under consumer law, the OFT is duty bound to investigate super complaints made by Citizens Advice, Which?, the National Consumer Council and Energywatch.
Debt insurance to be investigated
††††††In September, while making its complaint, Citizens Advice outlined a number of problems with PPI, based in part on reports from people attending its Citizens Advice bureaux. It said policies offered by mainstream lenders often excluded cover for common problems such as bad backs and mental illness. Many policies also had arbitrary age limits or banned people who were self-employed or on fixed-term contracts from making a claim.
††††††The OFT said it had already "identified a number of issues which point to the sector not working well for consumers". In particular, the OFT said it had concerns over choice, transparency and the profit made by insurers through the sale of PPI. "Borrowers may shop around for credit, but the complex nature of PPI and a lack of choice mean that they are less likely to shop around," said the OFT chief executive, John Fingleton. "There is a high potential for consumer detriment - our study will look at whether consumers are getting a good deal or not." Ultimately, the OFT can refer the insurance industry to the Competition Commission for enforcement action.
08.12.2005††††††At least two people each day have been visiting Jersey's Citizens Advice Bureau (CAB) with debt problems, its manager has said. The CAB said it had at least 10 enquiries in the past week from people with money concerns as the island's income tax payment deadline approached. The deadline is 1700 GMT on Friday, with a 10% surcharge on late payments. The income tax office said people who had any payment problems should contact its help desk for assistance. CAB Manager Francis Le Gresley said he was told that only serious illness or recent unemployment would be considered for exemptions from paying the surcharge. Mr Le Gresley said if people could not afford their tax bills, then they needed to try and pay back the extra money as soon as possible. Island Comptroller of Income Tax Malcolm Campbell said if people had difficulties settling their tax on time for any reason they should contact the office's help desk for assistance.
Tax deadline sees debt concerns