Pensions protest well supported, claim unions, as workers join picket lines outside schools and public buildings, while the government insists more people are turning up for work than expected The leader of one of the four unions involved in a national strike has said that the government will be “proved wrong” in its predictions that few will walkout in protest at an overhaul of public sector pensions. Mark Serwotka, general secretary of the Public and Commercial Services union said “hundreds and hundreds of thousands” were expected to take part in Thursday’s strikes because the government was “failing to compromise” over pension reforms that he claimed were unfair and politically motivated. Picket lines were mounted outside schools, government buildings, jobcentres and courts today by striking public sector workers in the biggest wave of industrial unrest since the coalition was formed. Union leaders said early indications were that the 24-hour walkout by the National Union of Teachers (NUT), Association of Teachers and Lecturers (ATL), University and College Union and the PCS, which between them cover 750,000 public sector workers, was being strongly supported. A third of schools are expected to close and two-thirds of universities have cancelled lectures. Benefits will go unpaid, court cases will be postponed, police leave has been cancelled in London and airports are bracing themselves for backlogs at immigration. But the decision to go out on strike while talks with the government are ongoing were criticised both by deputy prime minister Nick Clegg and Labour’s Tessa Jowell as members up and down the country joined picket lines. Boris Johnson, the Conservative mayor for London, reiterated his call for strike laws to be tightened to take action to protect the public, as well as those workers who do not vote for strikes. Francis Maude, cabinet office minister, insisted that early indications from airports and ports showed that fewer members were heeding the “inflamed call” for mass walkouts. “More are turning up for work and we are maintaining a much better service than we expected to be able to,” Maude told the BBC Radio 4 Today programme. Maude and Serwotka became embroiled in a war of words over the airwaves this morning, as the government claims that the public sector pension schemes were “unaffordable” came under scrutiny. The Conservative minister insisted that Lord Hutton, the former pensions secretary who drew up recommendations for reforms , had said “very clearly” that the status quo was “not tenable”. “You cannot continue to have more and more people in retirement being supported by fewer and fewer people in work,” said Maude. Long-term reform is needed.” Pressed on the fact that Hutton’s report made no such claim, Maude insisted that the fact was that the costs of pensions would become unaffordable unless changes were introduced. Yet, Serwotka said that the Hutton report included a graph which clearly shows that the cost of the pension scheme is falling in terms of GDP. Serwotka accused the minister of “floundering” when scrutinised about the government’s plans. “The National Audit Office, the public accounts committee, the Institute for Fiscal Studies, everybody accepts that’s not the case. The cost is going to fall over the next 40 years. So it’s not about affordability, so then they try to move the goalposts and say it’s about being untenable,” he said. Serwotka said the government’s “real agenda” was trying to create a “race to the bottom” on pensions. “This is what it is really all about,” he said. “You are trying to cut public sector pensions and the reason you are floundering this morning is that you are trying to mislead people.” The cabinet was full of people like Maude, in a “very privileged position”, trying to cut the pensions of public sector workers, said Serwotka. “That is why hundreds of thousands of people are on strike, because it is unfair and unjust.” Maude condemned leaders taking members out on strike while colleagues were awaiting the outcome of the talks. Serwotka was “writing himself out of the script, when there is so much to talk about,” he said. But Serwotka fired back that the government had made clear that its mind was already made up: “Whenever I’ve asked him, will the government compromise on any of the central issues in the dispute – work up to eight years longer, pay 3% more, get a reduced pension and move the pensions indexation from RPI to CPI, which devalues pensions by 15% – he says on none of those will he move a jot. While we are talking, we are not negotiating.” Nick Clegg said he was disappointed that unions had gone ahead with strikes while negotiations were still going on. “I think it’s a real shame that there are strike today because there are talks which are actually ongoing between the government and the trade unions, I don’t think the strikes help members of the trade union, I don’t think it helps the public, I don’t think they help the country at large. I think what everybody wants is for us to stick with it, carry on talking and sort this out.” Tessa Jowell, shadow cabinet office minister, also criticised the strikes. “We’re absolutely with the people of this country who should not have their services disrupted,” she told BBC Breakfast . “I’m critical of the way, as Labour is critical, of the way in which the government has handled this dispute, but these strikes today should not be taking place.” But ATL general secretary Mary Bousted said unions felt they had no choice because of the government’s failure to conduct meaningful talks. “We don’t want to be on strike, and we wouldn’t be on strike if the government had been prepared to do what they say they’re going to do now, and that’s negotiate,” she told the BBC. The valuation of the teachers’ pension scheme (TPS) is two years overdue. “How can I negotiate when I don’t know the health or otherwise of my scheme?” she said. “And that’s the cavalier and inept way that they have approached these negotiations. My union hasn’t been on national strike throughout its history in 127 years. Do you think I would be here now if there was any other way?”. Kevin Courtney, deputy general secretary of the NUT, said the early indications were that “large numbers” of schools were affected by the action, around 80%. “We realise that’s very disruptive for parents,” he said, “and we do regret that. We had hoped to reach a settlement before the industrial action, but the government isn’t serious about talks.” Among the buildings being picketed was parliament, with strikers saying they hoped some leftwing MPs would refuse to cross the lines. PCS members were stationed outside the Royal Courts of Justice – where the high court and court of appeal judges sit – in central London. Union officials said court staff had joined the strike but they were unsure what affect the action would have on the running of the courts. Unions were also targeting the headquarters of the education and business departments. Police leave has been cancelled in London, where union leaders and thousands of activists will take part in a march, followed by a lunchtime rally in Westminster. The TUC said today that millions of public sector workers were having to pay for the deficit that they did nothing to cause. Brendan Barber, TUC general secretary, who is visiting picket lines in the south-west, will tell a rally in central London later in the day that it is “hardly surprising” that public sector workers’ pay has been frozen while it was “bonuses as usual” in the financial sector. “This is gold standard for unfairness.” Public sector pensions Public sector cuts Public services policy Public finance Trade unions Francis Maude Pensions Schools Higher education Teaching Public sector careers Hélène Mulholland guardian.co.uk
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Singer turned actor Justin Timberlake takes a stake in $35m purchase of Myspace from News Corp Justin Timberlake is to take a “major role” in the new direction of Myspace after he emerged as one of those behind a $35m deal for the ailing social network . The singer turned actor, who starred as Facebook investor Sean Parker in the Hollywood hit The Social Network, took a stake in Myspace along with the online advertising company, Specific Media. The unlikely entrepreneur will “lead the business strategy” for the fallen social network, the Specific Media chief executive Tim Vangerhook, said on announcing the $35m deal on Wednesday evening. Myspace has shed billions of dollars from its price tag since it was dethroned as the dominant social network in 2008. Ruper Murdoch’s News Corporation agreed on Wednesday to sell Myspace for a fraction of the $100m it was seeking – a sign of the site’s dramatic fall from greatness. In an interview with AdAge , Vanderhook said Timberlake, 30, had put his own money into buying Myspace, but refused to disclose how much. He confirmed that the former N Sync singer will have an office in Myspace but that he was “probably not going to be there every day”. Asked whether he thought Timberlake had been inspired by his star turn in The Social Network, Vanderhook said: “I don’t think it was so much that – that was just ironic. He’s really passionate about how can he create a better community.” Timberlake said in a statement: “There’s a need for a place where fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect. Myspace has the potential to be that place. “Art is inspired by people and vice versa, so there’s a natural social component to entertainment. I’m excited to help revitalise Myspace by using its social media platform to bring artists and fans together in one community.” Just this week, Parker said Myspace’s fall from grace was down to it being a “junkheap of bad design” , while Facebook blossomed with lots of new features. He told TV host Jimmy Fallon at the NExTWORK conference: “They weren’t successful in treating and evolving the product enough, it was basically this junkheap of bad design that persisted for many many years. There was a period of time where if they had just copied Facebook rapidly, they would have been Facebook. They were giant, the network effects, the scale effects were enormous.” Myspace is expected to shed more than half of its 500 remaining staff as part of the deal. The layoffs follow a 30% staff reduction in April last year, and a further 47% cut in January. Two years ago Myspace employed more than 1,400 people. Myspace Internet Social networking News Corporation Josh Halliday guardian.co.uk
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US told to stop drone attacks from Shamsi, in western Pakistan, and leave airbase Pakistan has stopped US drone flights from a remote airbase in the western province of Balochistan and ordered US personnel to vacate it, the defence minister has said. “We have told them to leave the Shamsi airbase,” Chaudhry Ahmed Mukhtar said on Wednesday night, adding that US personnel had already started to shift equipment from the base. A US embassy spokesman declined to comment, referring queries to Washington. Shamsi is located in a remote valley 350 miles south-west of Waziristan, where most of the CIA-directed Predator and Reaper drone strikes against al-Qaida and Taliban targets take place. The closure of the base is a blow to a covert programme that has killed up to 2,500 people since its inception seven years ago and forms a cornerstone of President Barack Obama’s strategy to flush al-Qaida from its Pakistani havens. The US insists it will press ahead with the strikes. In unusually direct comments, Obama’s counter-terrorism adviser John Brennan said on Wednesday that the US would continue to “deliver precise and overwhelming force against al-Qaida” in the tribal areas. The attacks are likely to continue from CIA bases in Afghanistan – the latest took place on June 20 in Kurram tribal agency. A senior Pakistani military official said the US had not used Shamsi for “several months” and was already flying drones across the border. Senior civilian officials said they closed Shamsi in retaliation for an American reduction of coalition support funds, a multibillion-dollar subsidy for Pakistani military operations. The defence minister said US forces had already vacated Ghazi airbase, 40 miles north-west of Islamabad. A US official in Pakistan accused the government of engaging in “diplomacy by headline” but refused to comment further. The spat marks another low point in Pakistan-US relations after the raid to kill Osama bin Laden on 2 May and the furore over a CIA agent, Raymond Davis, who shot dead two men in Lahore in January. Pakistan’s military and the ISI intelligence service have sought to restrict CIA activities by seeking lists of spies, closing intelligence cooperation centres, and restricting visas for US personnel. The US, meanwhile, is trying to repair the relationship, recognising Pakistan’s importance in fighting al-Qaida and, perhaps, reaching a peace settlement in Afghanistan. Although at least 120 military trainers have been ordered to leave the country, the US recently agreed to replace two Orion surveillance planes that were destroyed in a militant assault on a Karachi naval base in May. The CIA use of Shamsi is controversial in Pakistan, where drone strikes are extremely unpopular. A recent Pew poll found 97% of respondents viewed them negatively. Shamsi was built by Arab Sheikhs from the United Arab Emirates to facilitate hunting falcon trips for the houbara bustard, a rare bird some Arabs believe has aphrodisiac properties. The CIA presence was detected in 2004, when the first drone strikes occurred. Google Earth images showed Predator drones parked on the runway. Since then CIA contractors have been stationed at Shamsi, fuelling and arming Predator and the newer Reaper drones. Operators at the base control the pilotless planes during takeoff but control quickly passes to a “reachback operator”sitting at a video screen thousands of miles away at the CIA headquarters in Langley Virginia. The drones use different warheads, from Hellfire missiles that travel at supersonic speeds to laser-guided Stingers and other missiles using thermobaric warheads that create percussion waves which can penetrate deep bunkers and caves. According to the New America Foundation, which tracks drone strikes, there have been 253 since 2004, with 42 so far this year. Various press reports put the death toll from the strikes at between 1,557 and 2,464. The varying figures highlight the difficulty of obtaining accurate information from the tribal belt, which is out of bounds to foreigners and most local reporters, and where Taliban fighters take control of drone attack sites immediately after the strikes occur. The most contentious issue is civilian casualties. The New American foundation, based on press reporters, estimates non-militant deaths at 20% of the total, although in 2010 this fell to 5%. Pakistan’s military has previously tried to distance itself from Shamsi by claiming that the airbase was the territory of the United Arab Emirates. However base security and other logistics have been provided by Pakistani forces. Pakistan US military United States al-Qaida Declan Walsh guardian.co.uk
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Fifteen US troops killed in June, the highest toll in two years, with latest strike blamed on Iranian-backed militia A rocket attack on a US base near Iraq’s border with Iran has killed three American soldiers, according to an official who blamed the strike on a Shia militia linked to Tehran. The deaths came at the end of the bloodiest month for US troops in Iraq in two years, and with six months before the American military is scheduled to leave after more than eight years of war. Wednesday’s rocket attack struck a US base in southern Iraq that is located a few miles from Iran, the official said, saying the Iranian link was evident from the type of rockets used. American intelligence officials believe the Iranian-backed Kataib Hezbollah, or Hezbollah Brigades, is one of the only militias to use weapons known in military jargon as Irams, or improvised rocket-assisted mortars, against US troops. They are made in Iran. Kataib Hezbollah has links to the Lebanon-based Hezbollah group and is solely focused on attacking US troops and other American personnel. The US military is preparing to leave Iraq by the end of the year, as required by a 2008 security agreement between Baghdad and Washington. But as both governments consider extending the deadline to have thousands of troops remain in Iraq into 2012 – in part to counter Iran’s influence – at least three major Shia militias have stepped up attacks on soldiers to force the military out. Kataib Hezbollah claimed responsibility for a 6 June rocket attack on a US base in Baghdad that killed five soldiers. Fifteen US troops have died this month in Iraq, all but one in hostilities. It is the highest number of American military deaths in Iraq since June 2009. There have been 4,469 American troops killed in Iraq since the invasion, according to an Associated Press count. Iraq Middle East Iran US military United States US foreign policy guardian.co.uk
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Luke Yeomans killed by bite from one of his king cobras An investigation is under way into the death of a snake breeder who was killed by one of his venomous reptiles. Luke Yeomans, 47, died after being bitten at his home in Eastwood, Nottingham, on Wednesday. The conservationist was due to open the King Cobra Sanctuary breeding colony to the public this weekend. Nottinghamshire police said officers were called at around 2pm to a property in Brookhill Leys Road, near Eastwood, where a man had suffered a suspected heart attack and was pronounced dead at the scene. A snake had been contained and there was no danger to the public. The RSPCA, Health and Safety Executive and Broxtowe borough council had been informed, police said.”Nottinghamshire police will investigate the circumstances surrounding the death in conjunction with the appropriate agency and will liaise with the coroner’s office.” The King Cobra Sanctuary, based at Brookhill Leys Farm, offers open days to allow people to see the reptiles. Yeomans wrote on the sanctuary’s website that it was “born from my lifelong love for this amazing snake species and my concerns that it could eventually disappear from the wild. “Until mankind changes the way he treats the natural world, a living ‘ark’ is required for the survival of many animal species. “The king cobra ( Ophiophagus hannah ) , an end of the line apex predator, is certainly one of them. “With 30 years experience of the king cobra, myself and my daughter Nicole – now in our third year of the project – will maintain a breeding colony of this large and dangerous, but also misunderstood venomous snake.” Yeomans recently told the BBC he was keeping a colony of adult and juvenile king cobras in a compound behind his house as a “safety net” to protect the species from possible extinction. He said he started the project in 2008 in reaction to the depletion of the snake’s natural habitat in forests of south-east Asia and India, and planned to breed another 100 snakes by the end of 2011. “People do say that I am mad but I say it’s better than people saying you’re bad,” he told the BBC. “I think everything I am doing is good.” Animals guardian.co.uk
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British man jailed in 2008 for shooting his wife Rachel and their nine-month-old Lillian has filed an appeal A British man serving a life sentence in the US for murdering his wife and baby daughter at their Massachusetts home has filed an appeal against his conviction. Neil Entwistle, 32, was jailed in June 2008 for shooting Rachel, 27, and nine-month-old Lillian in Hopkinton on 20 January 2006. He is now arguing he should receive a new trial because police searched his home without a warrant when they came to check on the wellbeing of his family. In his appeal brief filed at the state’s supreme judicial court, his lawyer Stephen Paul Maidman argued that evidence taken from the home was seized illegally. Maidman argues in the appeal that two searches were done without warrants and that the evidence seized as a result should have been suppressed during Entwistle’s trial. “The two warrantless entries into the defendant’s house by the police violated the federal and state constitutions,” he wrote in the brief. But prosecutors have said police were justified in entering the home because they were responding to the pleas of concerned relatives and friends. They say Entwistle had become despondent after accumulating tens of thousands of dollars in debt and had complained about his sex life with his wife. Entwistle’s lawyer also argues that judge Diane Kottmyer did not thoroughly question potential jurors to determine whether they were biased against Entwistle after the case received intense local and international news coverage. “That there was extraordinary prejudicial pre-trial publicity in this case that was both saturating and inflammatory, by Massachusetts and even national standards, cannot be legitimately disputed,” Maidman wrote in the appeal. Kottmyer denied Entwistle’s request to move the trial out of Middlesex county. “The defendant is entitled to a new trial utilising a jury selection process where there can be no question that the seated jurors are fair and impartial,” Maidman wrote. Middlesex district attorney Gerry Leone, whose office prosecuted Entwistle, said he received a “true and just” trial however. “The crimes committed by Neil Entwistle against his wife Rachel and daughter Lillian Rose are to be condemned as horrific and unspeakable acts,” Leone said in a statement. “He received a commendable defence and a fair and just trial under our laws.” Entwistle, a former IT consultant from Kilton, Worksop, left the US the day after the killings and later told police he had departed because he wanted to be consoled by his parents in the UK. He said he found his wife and daughter cuddled together in bed, dead of apparent gunshot wounds, after he returned home from running errands. Friends giving evidence said that the couple appeared to have had a happy marriage and were both thrilled with their daughter. Entwistle was sentenced at Middlesex county superior court in Woburn, Massachusetts, for what Kottmyer described as “incomprehensible” crimes. She imposed a 10-year probation sentence for two firearms offences and ordered that Entwistle should not profit from his crimes by writing a book. United States Massachusetts Crime guardian.co.uk
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Greek parliament expected to approve next stage of cuts despite violent protests in Athens The battle to prevent Greece lurching into disorderly default continues as lawmakers return to the Athens parliament on Thursday to approve the next stage in the hugely unpopular austerity package. Having approved the €28bn (£25bn) programme of fresh taxes and cutbacks in principle on Wednesday , Greek MPs will vote on an enabling bill giving the government authority to implement the new measures speedily. Analysts are broadly confident that the legislation will pass but are still unconvinced that George Papandreou’s administration can actually implement the tough measures in the face of deep public hostility. “If we wanted to be cynical, or realistic, we could say that the disaster scenario has been averted for now but we may well be revisiting in three or six months,” predicted Gary Jenkins of Evolution Securities in a research note on Thursday morning. Jenkins fears that Greece will fail to make enough progress to placate its European neighbours and the International Monetary Fund (IMF), which it relies on for its funding. The financial markets were broadly calm on Thursday, following strong gains on Wednesday. The FTSE 100 index opened 22 points higher at 5878, after Asian markets recorded gains. The euro gained around 0.7 cents against the US dollar, to $1.4505. European leaders have hailed Wednesday’s vote, by 155 votes to 138, as a key moment in the debt crisis that has gripped the region for many months. “The country has taken an important step forward along the necessary path of fiscal consolidation and growth-enhancing structural reform. But it has also taken a vital step back – from the very grave scenario of default. This was a vote of national responsibility,” said Herman Van Rompuy, president of the European Council, and European commission president José Manuel Barroso in a joint statement. Attention may shift to Italy, as the Italian cabinet meets on Thursday to approve its own austerity budget. This includes about €47bn of spending cuts and tax increases, and is rumoured to include a Robin Hood-style tax on financial transactions. Clashes Wednesday’s vote took place against a backdrop of clashes between protestors and police in Athens. About 100 people were treated in hospital, according to Reuters. Several people reported that police officers had fired stun grenades and tear gas at peaceful crowds . But there were also images of individuals, some wearing gas masks, throwing stones or wielding sticks at police officers . Further demonstrations are expected on Thursday. A new EU/IMF rescue package for Greece worth about €110bn is expected to be agreed in the next few weeks. Some form of Greek debt restructuring is seen as inevitable – the challenge is to find a method that will not be treated as a default by credit rating agencies. Eurozone finance ministers will meet on Sunday to consider a proposal from France under which lenders would agree to roll over their maturing Greek debt and buy new bonds. John Lipsky, acting chief of the IMF, said on Wednesday that the private sector will have to be involved in the second Greek bailout. “Eventually there will be on a voluntary basis some degree of contribution by private-sector creditors,” Lipsky said. European debt crisis European banks Greece Europe Graeme Wearden guardian.co.uk
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Five years ago News Corp bought it for US$580m – then it was crushed by Facebook, leaving it at a fraction of its peak value Myspace, once the world’s hottest internet firm, has been sold to an online ad company for around $35m, a fraction of the $100m its parent company was seeking for the ailing social network and billions less than its value five years ago. Rupert Murdoch’s News Corporation bought Myspace in 2005 for $580m. In 2006 Google signed a $900m deal to sell ads on Myspace; by 2007 it had 300m registered users and was being valued at $12bn. But the social network was subsequently crushed by Facebook, which launched a year after Myspace. News Corp put Myspace up for sale this year, engaging investment bank Allen & Co to find a buyer. News had been looking for $100m but settled for $35m offer from advertising targeting firm Specific Media. The sale is believed to be mainly in stock and News Corp will retain a small holding. Myspace is expected to shed more than half of its 500 remaining members of staff as part of the deal. The layoffs follow a 30% staff reduction in April 2010 and a further cut of 47% in January 2011. Two years ago Myspace emplyed more than 1,400 people. Facebook passed Myspace in terms of numbers of users two years ago. As people dropped Myspace, so did advertisers. Market research firm eMarketer estimates that the site will earn about $183m in worldwide ad revenues this year, down from $605m at its peak. The sale comes as a new generation of internet firms are attracting sky-high valuations. Zygna, the online gaming form behind hits including CityVille and FarmVille, is planning an initial public offering (IPO) that could value it at $20bn. LinkedIn, the business-focused social network, has already gone public and is valued at $8.6bn. Next year Facebook is expected to go public – analysts have estimated it could be worth $80bn or more. Myspace News Corporation Internet Social networking Media business Dominic Rushe guardian.co.uk
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• Total job cuts now almost 45,000 • Unite condemns ‘deplorable’ action • Strategic review hopes to save £1.5bn a year • Halifax to be revamped and open branches on Saturday António Horta-Osório, the new boss of Lloyds Banking Group, was unrepentant on Thursday after announcing 15,000 job cuts at the bailed out bank in an effort to cut costs and return the bank to financial health. On a bleak day for jobs in the banking industry, HSBC is expected to cut up to 1,000 roles later today. But the City welcomed the cost reductions, and Lloyds was the biggest riser in the FTSE 100 in early trading. The shares started 5% higher at 42p – but still well below the 73.6p at which the taxpayer breaks even on its 41% stake. In the face of a furious reaction from unions, the Portuguese-born banker insisted the cuts were necessary. “We have to do this because this bank has been loss making last year. This bank is also making an after tax loss [in the first quarter] this year,” said Horta-Osorio. Some 28,000 roles have already been axed as result of the rescue of HBOS during the 2008 banking crisis and the new round of reductions was met with shock by unions. This takes the toll of job cuts to almost 45,000 since the deal was finalised in early 2009, when HBOS employed 75,000. “Astonishingly one in eight roles will be lost over the next three years,” said David Fleming, Unite national officer. “The conclusion of this review to make 15,000 staff cuts is yet another extreme example of the financial services industry cutting vital staff in a desperate attempt to create a mirage of acceptability following the financial crisis. But this total failure to take significant action to make appropriate changes to rebuild the public confidence in the sector is deplorable,” he said. Ged Nichols, general secretary of the Accord union, said: “Accord knows that LBG employees are extremely concerned by today’s news, not only what it might mean for them and their workmates, but also the possible effect it may have on customer service.”. Horta-Osório stressed that the bank hires 10,000 staff a year and that he hoped that “national attrition and internal deployment” would help achieve the cuts which are expected to target middle managers and back office staff. Since taking the helm on March, he has embarked upon the strategic review which has resulted in the job cuts announced on Thursday which he hopes will achieve £1.5bn of annual savings in 2014, on top of £2bn of savings achieved through integration. Labour rewrote the competition rules to allow Lloyds to rescue HBOS during the banking crisis and the new management is now facing pressure from the independent banking commission to sell of branches to bolster competition on the high street. But Horta-Osório wants to show that the bank can compete with itself. The Halifax brand is to be revamped and relaunched in September with its “irreverent” attitude of the past and all its branches opened on Saturday. “Our aim is to become the best bank for customers. We have around 30 million customers, iconic brands, including Lloyds TSB, Halifax, Bank of Scotland and Scottish Widows, and high-quality, committed people. We will unlock the potential in this franchise over time by creating a simpler, more agile and responsive organisation, and by making substantial investments in better-value products and services for our customers, to deliver strong, stable and sustainable returns for our shareholders.” The bank will have to spend £2.3bn to achieve the cost cuts, which also includes pulling out of half of the 30 countries where it currently has operations by 2014. It is targeting a return on equity of between 12.5% and 14.5% by 2014 and hopes to start paying a dividend again once the EU ban on such payouts is lifted next year. António Horta-Osório Banking Lloyds Banking Group Job losses Jill Treanor guardian.co.uk
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Culture secretary says News Corp’s proposal for Sky News to be spun-off from Sky should go ahead to allay plurality fears Jeremy Hunt has confirmed that he plans to give News Corporation’s BSkyB takeover the green light, after nearly four months of negotiations between the culture secretary, Rupert Murdoch’s media company and regulators over spinning off Sky News. The culture secretary said on Thursday that News Corp’s proposal for Sky News to be spun-off from Sky into an independent listed company should go ahead to allay plurality fears. Hunt added that since he gave the News Corp/Sky deal the provisional go ahead in March, a “more robust set of undertakings” had been agreed for the Sky News spin-off. These extra undertakings will now be put out to further consultation, with a deadline of midday on Friday 8 July for interested parties to make submissions to Hunt. The extra measures include having an independent director with senior journalism expertise present at Sky News board meetings where decisions on editorial matters are taken and a requirement for Sky to continue to cross-promote the 24 hour news service on its channels. The other extra undertakings agreed during protracted negotiations between Hunt, News Corp, the Office of Fair Trading and Ofcom are for the appointment of a monitoring trustee whose main role is to ensure that News Corp complies with the undertakings in the run up to spin-off, and a requirement for Sky News’ articles of association to be approved by the culture secretary. “I have considered carefully the points raised and, as at all steps in this process, taken advice from the independent regulators. The regulators have confirmed that the proposed undertakings are still sufficient to ensure media plurality,” Hunt said. “I could have decided to accept the original undertakings but a number of suggestions were made in response to the consultation which could further strengthen the undertakings, particularly around editorial independence, business viability and the articles of association. I am therefore proposing some changes to the undertakings and I will now hold a further public consultation.” Hunt’s clearance fires the starting gun on negotiations with investors in Sky who are pushing for almost £4bn more than the £7.8bn originally offered by News Corp a year ago. The company originally tabled a 700p a share offer when Sky’s share price was under 600p. Since then a continuing strong financial performance – thanks in part to reaping the benefits of investment in areas including high-definition and broadband – and market speculation that Murdoch will be willing to significantly up his bid has seen the company’s share price rocket. Sky’s share price was 848p at the close of the market on Wednesday. The Department for Culture, Media and Sport said it had received more than 40,000 submissions for its consultation on the News Corp/Sky deal, “including a very large number of near-identical responses as a result of internet campaigns”. Hunt also met representatives of rival media companies Trinity Mirror, Guardian Media Group – which publishes the Guardian – Telegraph Media Group and Daily Mail publisher Associated News and Media. These media groups came together in an informal alliance last autumn to oppose the News Corp/Sky takeover, arguing it would stifle media plurality by bringing together the UK’s largest newspaper group, Sun and Times owner News International with a 37% share of the national market, and the largest broadcaster, BSkyB. Hunt also met with law firm Slaughter and May and Avaaz, the campaigning group that has opposed the deal.Hunt gave provisional clearance for the merger in March on the condition that News Corp agreed to spin-off Sky News into a separate company and limit its shareholding in the channel to 39.1%. Initially Hunt said that he would give his final decision by the end of April, following a consultation period. However Ofcom and the Office of Fair Trading, who have been advising Hunt, took longer than anticipated in hammering out a water-tight legal agreement to make sure that Murdoch cannot “get around” clauses designed to ensure Sky News remains independent. Critics of the proposed News Corp/BSkyB deal argue that he has successfully been able to work around previous legal agreements designed to secure the editor’s independence when the Times was acquired in 1981 and when the Wall Street Journal was bought in 2007. Investors including Crispin Odey, founder of Odey Asset Management, which has a 2.7% stake in Sky, and Fidelity are pushing for a price as high as £11 a share. On that basis News Corp would have to find well over £11bn, although the company has already made it clear it does not intend to overpay. There has been speculation that a deal could be reached at about 875p – costing News Corp about £1.8bn more than the original £7.5bn proposal. Under an agreement struck between the two sides when News Corp made its first approach to Sky last June, they will now have five months to reach a deal or Murdoch will have to pay the satellite broadcaster £38.5m. In the first two months of negotiations following Hunt’s approval News Corp needs to get an offer recommended by Sky’s independent directors. Over the next three month period any offer must be subject to a minimum acceptance of 70% of Sky’s shareholders. If a deal is not struck after five months then News Corp stumps up the £38.5m fee and is able to seek a deal requiring just 50.1% shareholder approval. As Murdoch controls just over 39% that means winning over investors controlling 11% of stock. “News Corporation’s leverage over BSkyB gets better over time,” said one City source. News Corporation Media business Jeremy Hunt BSkyB Television industry BSkyB Rupert Murdoch Jason Deans Mark Sweney guardian.co.uk
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