Small business loan deal ‘stalls’

Workers silhouetted in front of the Canary Wharf skyline, LondonThe deal was supposed to announce nearly £200bn in loans to small businesses

Attempts by the coalition government to reach an agreement with the UK’s biggest banks on the amount they lend to small businesses have stalled, the BBC has learnt.

The plan known as Project Merlin which was expected to have resulted in an announcement this week but negotiations will now continue.

About £200bn in loans to firms was to have been made available in 2011.

The stumbling block is thought to have concerned governance issues.

BBC’s business correspondent Joe Lynam says bank bosses argue that lending targets for what might be weaker businesses could breach rules that say any decision should be in the best interest of shareholders.

They also say banks’ ability to lend to companies and consumers may be restricted if some of the ideas from the Independent Commission on Banking set up by the government are implemented.

On Saturday, the head of the commission said the failure of banks to efficiently manage risks had been “spectacular” and wide-ranging reform was needed but stressed that no final decisions had yet been made.

In a speech to the London Business School, ICB chairman Sir John Vickers said plans to separate bank trading and retail operations were being looked at.

Sir John, a former chief economist at the Bank of England, also hinted that banks may need to set aside even more capital for emergencies, which might reduce moneys available to lend.

The ICB is looking at financial stability and competition, including the question of what should be done about banks deemed “too big to fail”.

It is also considering issues like whether too few big banks have too much control over the retail banking sector in the UK.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Academies ‘lead to council cuts’

Pupil with teacherAll schools can now apply for academy status

Local councils in England claim they are losing millions of pounds to allow the government to pay for schools to convert to academy status.

Their grants are being cut because these privately-run but state-funded schools will not use the services councils provide to state schools.

The Local Government Association claims ministers are reducing council grants by £350m more than they will save.

The government said the double funding of services was not sustainable.

Local education authorities face cuts of £413m over the next two years tied to the expansion in the academies programme.

However, Department for Education figures suggest they will only save a maximum of £60m from the changes if 200 schools convert to academy status each year.

“It cannot be fair for local taxpayers to subsidise the roll-out of the academies programme”

Baroness Margaret Eaton LGA chairman

This would leave them about £350m out of pocket, says the LGA.

Its chairman Baroness Margaret Eaton said: “We have made it clear that school choice is something that councils support. But it cannot be fair for local taxpayers to subsidise the roll-out of the academies programme.

“As it stands, councils face a bill of £413m at a time when their budgets are already facing an unprecedented squeeze.

“This is unacceptable when the saving from not having to provide central services to academies is less than one seventh of that amount.

“Whatever you think of academies, it cannot be right that other frontline services suffer so that the government’s academies programme can flourish.”

She called on the government to think again about how it pays for academies to be set up.

The claims were supported by the F40 group, which campaigns for fairer funding of education.

Its chief executive Gillian Hayward, who chairs the Gloucestershire Schools Forum, suggested the additional money for academies was being “top-sliced from the money which should be available for all schools”.

She added: “Such practice would also be at odds with government indications that there should be no financial incentive or disincentive to a school becoming an academy.

“Executive members of F40 believe that there is now a significant financial advantage to academy conversion, and that this is unfair to the entire education sector and in particular to low-funded local authorities and the schools in them.”

A Department for Education spokesman said: “Previously local authorities did not lose funding for certain services when schools under their charge became directly funded academies.

“This meant that there could effectively be double funding for some services. Clearly this situation represented poor value for money and was not sustainable in the current fiscal climate.”

He added that funds were being deducted from council grants to address this.

He said it was not possible to say precisely which schools in which local authorities would convert to academy status, so it was not practical to target the reductions at individual local authorities, “and therefore a national top slice has been applied”.

“This means that all local authorities will have certainty over the funding they will receive over the period and will not see unpredictable changes because of variable patterns in the growth of the academy sector.”

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Quangos ‘get reprieve’ from cull

Ross HawkinsBy Ross Hawkins

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Ministers have withdrawn 18 bodies from the bill they say will lead to a “bonfire of the quangos”.

Bodies that select judges, draw up sentencing guidelines and investigate miscarriages of justice in England and Wales are among those that have been taken off a list of those that could be abolished, scrapped or merged.

The Parole Board, the Criminal Cases Review Commission and the Surveillance Commissioners have also been withdrawn.

This followed criticism by judges.

Ministers announced plans in October to axe 192 public bodies and merge a further 118.

But the government has now amended the Public Bodies Bill, which is currently being considered by the House of Lords, after peers expressed fears that the proposed cull could put the independence of the judiciary at risk.

Liberal Democrat peer Lord Goodhart welcomed the change of heart.

“I thought a lot of the proposals in the bill were wrong but I thought this was the worst of them, because it is an absolutely essential part of our constitution now that it should be a role of an independent body to select the judicial appointments,” he said.

Cabinet Office minister Francis Maude conceded the bill was not perfectly drafted, and said the 18 bodies were all removed because they performed some kind of judicial function, and he wanted to protect their independence.

“We’re getting on with this,” he said. “We could do this in a leisurely bureaucratic way and try and get everything completely perfect before we started or we could get on it, and listen to concerns, respond to them where the concerns merit a response and get it done.”

The government has also added new rules forcing ministers who want to get rid of quangos to consult widely, and to tell Parliament about the responses.

Ministers were defeated in a vote before Christmas on an amendment to preserve the roles of the Chief Coroner, Deputy Chief Coroners, Medical Advisers to the Chief Coroner and Deputy Medical Advisers to the Chief Coroner.

Peers scrutinising the legislation have objected to powers that would allow ministers to abolish bodies established by Parliament.

Earlier this month the House of Commons Public Accounts Committee said the cull of quangos would not save much money or improve accountability.

Its chairman, Conservative MP Bernard Jenkin, said the removal of some organisations from the legislation “reflected the fact that these powers are so wide-ranging in the bill that Parliament simply is not prepared to allow those bodies to be subject to the bill, which effectively puts ministers in charge of bodies which were set up by primary legislation”.

David Cameron said earlier this year that the “bonfire of the quangos” would save billions of pounds but Labour have accused ministers of “rushing” the bill through Parliament.

“It was one of the first things that came before Parliament, and not enough thought went into the preparation of the bill,” Labour’s leader in the House Lords, Baroness Royall, said.

The following quangos have been removed from the Public Bodies Bill:

Agricultural Land TribunalsCivil Procedure Rule CommitteeSurveillance CommissionersCompetition Appeal TribunalCriminal Cases Review CommissionCriminal Procedure Rule CommitteeFamily Procedure Rule CommitteeHorserace Betting Levy Appeal Tribunal for England and WalesInsolvency Practitioners TribunalInvestigatory Powers TribunalJudicial Appointments and Conduct OmbudsmanJudicial Appointments CommissionParole BoardPlant Varieties and Seeds TribunalSea Fish Licence TribunalSentencing Council for England and WalesTribunal Procedure CommitteeValuation Tribunal for England

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Ben Ali’s properties investigated

breaking news

The Paris state prosecutor’s office says it has opened a preliminary investigation into the property assets held by ousted Tunisian leader Zine al-Abidine Ben Ali in France.

Mr Ben Ali fled his country earlier this month following a number of violent protests.

Separately, the head of Tunisia’s armed forces has warned a power vacuum there could lead to a dictatorship.

Rachid Ammar was addressing anti-government protesters.

The investigation in Paris was opened after three NGOs filed a legal case against the former leader over corruption during his 23-year rule.

The three groups – Sherpa, Transparency International France and the Arab Commission for Human Rights – accuse Mr Ben Ali of corruption, misusing public funds and money-laundering, the AFP news agency reports.

They estimate the wealth amassed by the former leader and his entourage at $5bn (£3bn).

Last week, Tunisian prosecutors said they would be investigating the foreign assets of Mr Ben Ali and his family, including possible illegal transactions and foreign bank accounts.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.