Business Blog

22 April 2013 Last updated at 04:42 ET By Judith Burns BBC News family reporter

Better-off older people should pay tax at the same rate as younger people on similar incomes, a think tank argues.

The report from the Fabian Society argues that as older people are no longer always poor they should "share the pain of deficit reduction".

"All policies that appear to give special advantages to older people as a category should be reviewed," it says.

Age UK said financial options for elderly people were often very limited.

Researchers for the left-of-centre Fabian Society analysed data from the English Longitudinal Study of Ageing (Elsa).

The paper, part of a series produced for the Hanover housing charity, suggests that the majority of older people are neither wealthy baby-boomers with "a surfeit of wealth and leisure" nor "pensioners on the breadline facing poverty, isolation and ill health".

'Profound implications'

"The truth is that the majority of older people today are somewhere in between, neither rich nor poor, and the middle is expanding as a result of recent successes in reducing pensioner poverty," writes author Andrew Harrop.

"Of course this is something to welcome and celebrate, as part of the steady decline of pensioner poverty, but it has profound implications," he argues.

The paper says that "older people catching up with everyone else was not problematic while middle incomes were rising across the board.

"Perhaps it is more so today with growth in median earnings at a standstill."

Mr Harrop cites figures from 2010-11 that suggest that the real incomes of the middle fifth of all households were no greater than in 2003-04 "but middle incomes for retired households were 13% higher".

He added: "Since the financial crisis this disparity has become even more stark: real middle incomes have fallen by 5% overall, but they have risen 5% for retired households."

The report says that when it comes to disposable incomes after housing costs, pensioner couples are now in the top half of UK income distribution because 80% of them are homeowners and most are no longer paying rent or mortgages.

But, Mr Harrop argues, rising house prices have meant a fall in the share of people aged under 45 who are owner occupiers, "with the median 25 to 34-year-old now renting rather owning their home".

When it comes to taxation, the paper highlights a "really significant intergenerational unfairness", with retired middle-income households paying 27% of their gross income in tax, compared with 33% for non-retired households with the same income.

The paper concludes that "in financial terms alone, older people are no longer special", and it calls on the government to assess the evidence for existing rules on social security, taxation and the design of services.

The paper says moves to equalise the tax system would have to be carried out more slowly to avoid a sudden fall in living standards.

'Safety net'

In the meantime, it suggests the government should consider taking national insurance from earnings after state pension age and ending tax-free lump sums on private pensions.

It also argues for more taxes on property, such as a land value tax or a reformed council tax, to suppress rises in house prices.

On top of this, the paper suggests scrapping current rules that guarantee that the state pension "will rise annually by an average of 0.26% more than earnings" and restricting universal benefits to pensioners, such as winter fuel allowance, free TV licences and free bus travel.

Michelle Mitchell, of Age UK, said: "The Fabian Society is right to point out that there has been significant progress in tackling pensioner poverty in recent years. But there are still 1.7 million pensioners living in poverty today, while a further 1.1m have incomes only just above the poverty line.

"It can be difficult for older people to change their financial plans as their options are likely to be very limited. They have also contributed national insurance payments throughout their working lives to receive in return a state pension that ensures a financial safety net but little more."

A Treasury spokesperson said the government was committed to ensuring that older people are able to live with the dignity and respect they deserve and the basic state pension is the foundation of state support for older people.

"In difficult economic times, we have protected the benefits of those who have little means to increase their income, for instance pensioners."

A spokesman for the Department for Communities and Local Government said: "At a time when people are fighting for every pound in their pocket a tax hike is the last thing they need. The government has repeatedly made clear it will not be introducing any changes to council tax banding."

21 April 2013 Last updated at 19:04 ET

Hundreds of business leaders have formed a new lobby group Business for Britain to press the government to renegotiate the UK's deal with the EU.

The group backs David Cameron's plan to remake the UK's agreements with the EU if the Tories win the next election.

Some 500 business chiefs - including Lord Wolfson of Next and Sir Stuart Rose of Ocado - have signed a letter in Monday's newspapers backing the plan.

But other business leaders have said it is not possible to pick and chose.

As the prime minister unveiled his plan to renegotiate the UK's relationship with the EU and then hold an in/out referendum on whether to stay in the EU on those new terms or leave, the British manufacturers' association, the EEF, and the UK head of the accountancy firm Deloitte were among those to express doubts.

They suggested it could create uncertainty and lead to a period of "investment chill".

But in its letter in Monday's newspapers Business for Britain states: "As business leaders and entrepreneurs responsible for millions of British jobs, we believe that the government is right to seek a new deal for the EU and for the UK's role in Europe.

"Far from being a threat to our economic interests, a flexible, competitive Europe - with more powers devolved from Brussels - is essential for growth, jobs and access to markets."

Looser arrangement

The group's co-chairman is Alan Halsall, who heads the upmarket pram making company, Silver Cross. He said he thought the new group was needed because there was a misconception about the attitude of businesses to European Union membership: "Business for Britain has been formed because many would have you believe that business doesn't want politicians to try and renegotiate a better deal from Europe."

He said that the economy would do better with a more flexible, looser relationship with the EU.

John Mills, the founder of online retail business JML and the other co-chairman, said the group was politically neutral: "This campaign is not about taking political sides or backing the right horse - it's about doing what's best for British business."

He said he had been a member of the Labour Party for 40 years.

The lobby group's letter comes a week after a major survey by the British Chambers of Commerce suggested most UK companies wanted to stay in Europe, but with some powers brought back home.

Its survey of 4,000 businesses found 64% of those who responded said they favoured making adjustments to the UK's agreements with the EU.

Employment law was the number one area they wanted opt outs from.

22 April 2013 Last updated at 03:36 ET

German airline Lufthansa has cancelled the majority of its flights scheduled for Monday due to a strike over pay.

The airline said only 32 of its flights would run as planned, out of more than 1,700 originally scheduled.

Flights to and from London, Manchester, Birmingham, Newcastle, Glasgow, Dublin, Aberdeen and Edinburgh will be hit. German airports affected are Frankfurt, Munich, Dusseldorf and Hamburg.

The airline said the strike, the second in two months, was uncalled for.

"It's completely out of proportion," a Lufthansa spokesman was quoted as saying by the Reuters news agency.

"Especially given that four further dates for pay talks had already been agreed upon."

Only 20 of its planned 1,650 short-haul flights are to go ahead, while 12 of its 73 scheduled long-haul flights will do so.

Common tactic

Ground staff have called a one-day strike amid an ongoing pay dispute with the airline.

Like many airlines, Lufthansa is looking to cut costs in the face of stiff competition from low-cost carriers and big Gulf airlines, as well as rising fuel prices.

Last week, Lufthansa rejected union demands for a 5.2% wage increase over the next 12 months.

Strikers are also looking for guarantees over job cuts.

Unions staged a similar one-day strike last month. Short "warning strikes" are a common tactic among German unions, designed to put pressure on wage negotiations.

In a statement on its website, Lufthansa said passengers should expect "massive" flight cancellations and delays that will start to affect long-haul flights from Sunday.

The airline said it was offering free alternative bookings.

22 April 2013 Last updated at 03:30 ET

Sandwich chain Pret A Manger has said it plans to create at least 500 new jobs in the UK this year, as part of a plan to add 1,000 new staff worldwide.

Its announcement came as it reported a 17% rise in profits to £61.1m in 2012, with sales also up by 17% to £443m.

Chief executive Clive Schlee said 2012 had been a "strong year" for the firm.

He also responded to criticism that the firm was not hiring enough UK citizens, saying it had 15% more British employees this year than last year.

The group - which was bought by private equity fund Bridgepoint in 2008 - has 323 stores, mainly in the UK, but with others in Hong Kong, the United States and France. The firm said average weekly sales in Paris were bigger than in any other region.

Pret plans to open another 50 new shops worldwide this year, up from 36 new launches last year.

Earlier this year, London Mayor Boris Johnson said that an increasing number of workers at food outlets like Pret were not "native Londoners".

But Mr Schlee told Radio 4's Today programme: "We've responded to a lot of criticism like that.

"It depends on what market you're talking about. Outside London Pret is predominantly British," he said.

"Inside London it's a much more cosmopolitan economy and our staff reflect the nature of the people in London," he added.

Pret started a school-leaver's programme last year aimed at encouraging more British applicants to join the firm.

22 April 2013 Last updated at 07:22 ET

Reforms to energy tariffs could leave some consumers struggling to identify the best deal for their needs, a consumer group has warned.

Which? said that more than three million households could find it difficult to compare prices under plans to reform tariffs.

It has called for energy prices to be displayed in the same way as petrol prices.

The regulator said that the new system would prompt people to shop around.

'Too complicated'

Regulator Ofgem's proposed tariff comparison rate (TCR) aims to simplify energy tariffs and allow consumers to compare prices across the market.

It would work in a similar way to an APR used by financial services providers.

However, as it is based on medium usage of gas and electricity, Which? said that it would not be a relevant measure for many people.

This would include 500,000 low energy usage households, who could spend over the odds as a result of making their tariff choice based on the TCR.

"These current proposals are far too complicated and will fail to achieve their aim of making it easier for people to find the best deal," said Richard Lloyd, executive director at Which?.

"The government should introduce single unit prices for each energy tariff so people can easily see the best deal for them at a glance. Only then will people have the confidence to switch, injecting much needed competition into the broken energy market."

But an Ofgem spokesman said that the TCR was only one part of the reforms, which also featured a plan to ensure that bills included details of the cheapest tariff available by the start of next year.

Other changes to be introduced this year include:

• a cap on the number of tariffs. Suppliers will only be allowed to offer eight (four for electricity and four for gas)
• an end to multi-tier tariffs (e.g. the first 1,000 units at a higher rate)
• banning price increases during a fixed-term contract.

"Our key goal is to try and get consumers engaged with the market as 70% are currently not taking part," an Ofgem spokesman said.

"Which? is misrepresenting the purpose of the tariff comparison rate and how it fits into the full scope of Ofgem's reform package. The tariff comparison rate acts as a prompt to consumers to take a look at comparative deals."

A spokesman for the Department for Energy and Climate Change said: "We are taking powers in the Energy Bill to ensure these vital reforms are not delayed or frustrated, and will shortly set out government action to bolster what Ofgem is already doing.

"This includes requiring suppliers to provide personalised estimates of potential savings and a tool to enable consumers to compare tariffs on a like for like basis."

22 April 2013 Last updated at 04:04 ET

Online betting exchange Betfair has rejected a £912m takeover approach from CVC Capital Partners and other investors.

Betfair said it had received a preliminary bid proposal last week offering 880 pence per share in cash or investments in a new entity.

But the offer "fundamentally undervalues" the company, said Betfair.

Chairman Gerald Corbett said that the company had a "unique business" that "this proposal fails to recognise".

Betfair said it had received the proposal on Friday from CVC together with investors Richard Koch, Antony Ball and partners.

Earlier this month, CVC said it had held preliminary discussions with the investors about a takeover approach.

Mr Koch, a co-founder of LEK Consulting, holds a 6.5% stake in Betfair. Mr Ball is a non-executive director at Luxembourg-listed investment group Brait.

Their preliminary proposal offered 880 pence per share in cash or an "unlisted securities alternative made up of shares and loan notes in a new entity".

But Mr Corbett said: "We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise."

Betfair's exchange processes more than seven million transactions a day.

Shares in Betfair, which rose 15% last week, closed at 805 pence on Friday.