Britons feel the squeeze as inflation rises to four-year high of 2.9%

Staff  reporter(wp):

UK inflation rose to a four-year high in May as the pound’s sharp fall since the Brexit vote worked its way through the economy, intensifying the squeeze on household budgets.

The increasing cost of computer games and package holidays helped push up inflation to 2.9% last month, above the expectation of economists that it would remain at the 2.7% rate seen in April. The year-on-year rise in the consumer prices index (CPI) means prices continue to go up faster than wages for many workers, further denting living standards.

Inflation has been steadily increasing since the EU referendum result a year ago, which triggered a sharp drop in the value of the pound and pushed up the cost of goods imported from abroad. Inflation was 0.3% in May 2016, a month before the Brexit vote.

Higher oil prices have also added to the upward pressure on inflation. But in the latest official figures, there was evidence that sterling was a key factor. Statisticians highlighted the rising prices of package holidays, reflecting the growing cost of travelling abroadfor Britons because of the weaker pound.

The Office for National Statistics said higher food and electricity prices also contributed to the inflation figure. This continues a pattern of essentials becoming increasingly expensive, leaving households with less to spend on treats. Consumer spending has slowed as a result, holding back the pace of overall economic growth.

The TUC general secretary, Frances O’Grady, said the inflation figures underlined the pressure on the new government to help households cope with rising living costs.

“The election showed that working people are struggling. And the biggest price rises in four years won’t provide any comfort,” she said.

“Working people are still £20 a week worse off, on average, than they were before the crash, and now rising prices are hammering their pay packets again. The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK.”

Tim Roache, the general secretary of the GMB union, said: “Too often there is more month than money left after pay day. Ending the public sector pay freeze and making sure all workers are paid a decent wage is an absolute must and it needs to be on the agenda for the Queen’s speech.”

A Treasury spokesman said: “The government is helping families with the everyday cost of living by keeping taxes low, freezing fuel duty and increasing the ‘national living wage’.”

Inflation remains higher than the average wage growth of 2.1% year on year in the three months to March. Wage figures due on Wednesday were expected to show the gap between underlying pay growth and the inflation increase widened further in April.

The higher-than-expected inflation figure will intensify the debate over how long the Bank of England may leave interest rates at the record low of 0.25%. Inflation is well above the Bank’s 2% target, but policymakers have said they are happy to tolerate some overshoot because they want to support growth and employment as the UK prepares to begin Brexit negotiations.

The Bank’s monetary policy committee (MPC) will meet this week to set interest rates and announce its decision at noon on Thursday.

Oliver Kolodseike, a senior economist at the Centre for Economics and Business Research consultancy, said: “Under normal circumstances, the Bank of Englandwould have a sufficient set of arguments to justify an interest rate rise.

“That said, the recent rise in inflation was partly driven by external factors such as the oil price and the depreciation of the pound ... Another argument for the Bank to keep monetary policy on hold is that a rise in interest rates would increase the cost of borrowing, at a time at which consumers are already feeling a squeeze on their incomes as wage growth remains stubbornly low.

“Add to this uncertainty regarding the UK’s future outside the European Union and it seems sensible for the Bank to keep interest rates at their current levels.”

The ONS figures showed that its preferred measure of inflation, CPIH, which includes owner occupiers’ housing costs, hit a five-year high of 2.7% in May, up from 2.6% in April.

Its measure of how much manufacturers are having to pay for raw materials and energy showed that these cost pressures continued to ease off last month. Input prices increased by 11.6% in the year to May, down from a 15.6% rise in the year to April. This took pressure off companies to raise the prices they charge customers, and factory gate inflation held at 3.6% in May for the third month in a row

Jonathan Athow, the ONS deputy national statistician, said: “The rate of increase in factory gate prices has levelled now that manufacturing input costs have started to fall back.”

Paul Hollingsworth, a UK economist at consultancy Capital Economics, said this pattern supported a view that the struggling pound had fed through faster than expected, rather than by a larger amount.

“The effects of the lower pound already appear to be fading at the start of the production pipeline,” he said.

“Of course, it takes time for rises in producer prices to feed through to prices in the shops, and as a result, we think that CPI inflation will rise a bit further in the second half of the year, peaking at about 3.2% in the fourth quarter. But inflation is likely to drop back quickly in 2018 as the impact of the lower pound begins to fade.”

Gatwick rated among world's worst airports, damning study finds

Pic:Gatwick Airport was ranked the second worst in the world /Getty Images
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Gatwick is the second worst airport in the world, according to a damning new study.

A survey by ranked four British airports in the bottom 20 for “punctuality and quality”, for people flying into and out of the UK. Kuwait was rated the world's worst airport.

It comes after a year of chaotic incidents for travellers flying from the airport, including a British Airways IT crash that left thousands stranded in the capital last month.

Heathrow was rated the 20th best of the 76 airports studied.

A spokesman for Gatwick dismissed the survey, saying delays at the airport were often due to continental strikes and "outside its control".  

In April, a Which survey found Gatwick to have the worst airport lounge in Britain, with customers complaining that the “floor was grubby and the facilities were basic”.

May Bank Holiday travellers were also left furious when they were told they would have to fly without luggage due a fault with the conveyer belt system that sorts suitcases before boarding flights.

Gatwick Airport's South Terminal last year unveiled a £186 million "state of the art" terminal link including a brand new baggage handling system, the airport's biggest single investment under its new ownership.

The top airport in the world, according to the rankings, was Singapore's Changi, followed by Munich and Hong Kong.

AirHelp’s UK manager Marius Fermi said: “It’s important - now more so than ever - that passenger service is a top priority of both airlines and airports, ensuring they receive the experience they deserve, so it’s fantastic to see that Singapore is setting the standard for customer-first service.

“This research should hopefully give airlines and airports across the world, particularly in the UK, a nudge to improve their quality and punctuality urgently before the travel rush starts this summer."

The rankings also looked at airlines, with British Airways placed seventh worldwide out of 87 carriers, despite a worldwide computer outage that caused chaos in London last month.

Passengers at Heathrow and Gatwick were left stranded when computer systems went down, with travellers reporting being charged thousands to stay at nearby hotels.

Flybe came in 22nd, while Ryanair and Monarch featured in the bottom five of the rankings which measure on-time performance, quality of service and how well airlines process claims for compensation.

The top ranked carrier in the world was Singapore Airlines.

Sig Watkins, from Hampshire, flew from Gatwick with an under-12s rugby team to Lyon when the conveyer belt broke in May, describing being greeted by the "biggest queues I've ever seen" and confusion at the airport.

Airline staff assured her that their bags were on board, but when she arrived in Lyon they were nowhere to be found, she said.

"That's the frustration. If they'd said, then maybe we would have taken hand baggage," said Ms Watkins.

Nathan James called the airport a "nightmare" and described "chaos" after the incident.

A spokesman for Gatwick Airport said: “Gatwick recognises the inconvenience that delays cause to our passengers and we will continue to do everything possible to prevent them from occurring. 

“However over recent years repeated strike action on the continent and heavily congested airspace above parts of Europe and London, have led to a significant increase in the number of delays caused by wider air traffic control issues outside Gatwick’s control."

He added: "Surveys conducted amongst real passengers travelling through Gatwick currently show record levels of satisfaction and advocacy, with other third party passenger surveys also telling a different story and rating Gatwick’s service levels highly.”

Jeremy Corbyn says Britain could have another election in a matter of months

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Osborne says Theresa May is a 'dead woman walking'

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George Osborne has called Theresa May “a dead woman walking” and suggested the prime minister would be forced to resign imminently.

The former chancellor said he did not expect to back the prime minister for much longer. “I think we will know very shortly. We could easily get to the middle of next week and it all collapses for her,” he said.

Osborne said the campaign had undone the work of himself and former prime minister David Cameron in winning socially liberal seats such as Bath, Brighton Kemptown and Oxford East, now lost to Labour and the Lib Dems.

“She is a dead woman walking and the only question is how long she remains on death row,” the editor of the Evening Standard said, defending his paper’s attacks on May as speaking from a “socially liberal, pro-business, economically liberal position” that he said had been consistent as editor and chancellor.

Asked if Boris Johnson was in a position to replace her, Osborne also mocked the foreign secretary whom he said was “in a permanent leadership campaign”.

Speaking on the BBC’s Andrew Marr Show, Osborne said he and Cameron had spent “years getting back to office, winning in seats like Bath and Brighton and Oxford and I am angry when we go backwards and I am not afraid to say that”.

Osborne said the Conservatives’ political strategist Lynton Crosby, blamed by May’s advisers for an overly negative, presidential-style campaign with robotic slogans, had been undermined by the prime minister’s own flaws.

Crosby ran two successful campaigns for the Conservatives when Cameron was elected in 2010 and 2015. “They are professionals,” Osborne said, blaming May’s “failure to communicate and a disastrous manifesto”.

Osborne said blame should be on the shoulders of May, though her advisers Nick Timothy and Fiona Hill resigned on Saturday. “You can’t just blame the advisers. The only person who decides to have an election is the prime minister, the person who decides what’s in the manifesto is the prime minister.”

The former chancellor has a long enmity with the prime minister, who sacked him the day after she was elected Conservative leader, telling him to “get to know the party better”.

As editor of the Evening Standard, Osborne’s paper has repeatedly attacked the May government for its stance on Brexit, especially the apparent willingness in Downing Street to control immigration at cost to the British economy.

In one savage editorial, the paper said the Tory campaign had “meandered from an abortive attempt to launch a personality cult around Mrs May to the self-inflicted wound of the most disastrous manifesto in recent history”.

Brexit negotiations “could not have got off to a worse start”, the paper argued, citing “high-handed British arrogance” as part of the problem. The newspaper did endorse the Conservatives ahead of the election, but in a symbolic twist on election night, the Conservative stronghold of Kensington, which houses the Evening Standard offices, fell to Labour by 20 votes.

During election night as a pundit on ITV, Osborne spent the evening taking pot shots at May and the Conservative campaign as the results rolled in.

“The manifesto which was drafted by her and about two other people was a total disaster and must go down now as one of the worst manifestos in history by a governing party,” he said. “I say one of the worst, I can’t think of a worse one.”

On Sunday, Osborne praised the performance of the Scottish Conservative leader, Ruth Davidson, calling her “the heroine of the party ... if she had not won seats in Scotland there would not be a Conservative government and Jeremy Corbyn would be in Downing Street”.

Osborne called for Davidson to “flex her muscles” over Brexit and push to prioritise the economy and free trade. “I think there is no majority in the House of Commons for a hard Brexit and if the Ruth Davidsons of the party are starting to flex their muscles, in my view that is only a good thing.”

However, Osborne said the party had no choice but to do a deal with the Democratic Unionist party despite its attitudes to social issues such as gay marriage and abortion. “I reject all of those views personally, but the Tory party doesn’t have a choice in order to get a majority,” he said.

The party would be “basically at the whim [of the DUP] on every vote ... you have to negotiate every line item of the budget with them,” Osborne said.

“The DUP need a Brexit deal, they are absolutely committed to no hard border with the Republic of Ireland. Therefore the position that no deal is better than a bad deal is untenable because DUP would never allow no deal. There is not a parliamentary majority for no deal.”

Osborne also said May’s speech on her return to Downing Street had caused further upset within the party. “The Tory party was absolutely furious that Theresa May failed to acknowledge the loss and suffering of many MPs,” he said.

Private schools to save £522m in tax thanks to charitable status

Educational reporter(wp):

Private schools are set to get tax rebates totalling £522m over the next five years as a result of their controversial status as charities, according to a study of local council records.

Charitable organisations in England and Wales are entitled to relief of 80% on the business rates payable on the buildings they use, and some of the country’s best-known private schools qualify under the rules.

Business rates firm CVS sent freedom of information requests to councils, and responses from 132 showed that 586 out 1,038 private schools held charitable status and were granted the mandatory relief.

Its analysis of government data suggested that on 2,707 properties classified as private schools there would be a business rates bill of around £1.16bn over the next five years. Extrapolating from the data received from councils, it forecast that £634m would be paid, with £522m saved through the schools’ charitable status.

CVS said Eton College, whose former pupils include David Cameron and Boris Johnson, would have faced a bill of £4.1m for business rates over the next five years without its charitable status, but instead it would pay just £821,040.

Dulwich College in south London, which educated former Ukip Leader Nigel Farage, will only pay £786,752 out of its £3,933,760 five-year bill under the tax regime.

Leeds grammar school, which offers extensive sports facilities on a campus of nearly 60 hectares (140 acres), will only pay £826,016 out of its £4,130,080 five-year bill.

Business rates have come under fire since an overhaul resulted in huge rises for schools and hospitals along with businesses in London and the south-east. The government promised £300m to ease through the reforms, but refused to alter the status of public sector organisations or review the charitable status of private schools.

The Department for Communities and Local Government said private schools seeking charitable status “must meet a robust public benefit test”. It also said academies, foundation schools and voluntary-aided schools automatically qualified for charitable status, while insisting that state-school funding accounted for the cost of business rates.

In the run-up to the election, Labour leader Jeremy Corbyn announced plans to charge VAT on private school fees to fund free school meals for primary school children.

DUP deal with Tories 'could lead to vote on reducing abortion time limits'

Pic:the DUP's leader Arlene Foster with Theresa May
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A former Tory minister has suggested MPs could vote to reduce time limits on women having abortions after Theresa May struck a deal with the Democratic Unionist Party.

Owen Paterson opened the door on debating the 24 week time limit which is currently in place after the Conservatives entered an agreement to govern with the right-wing Northern Irish party the DUP.

Abortion is illegal in Northern Ireland unless a woman’s life is in danger or there is a serious or permanent risk to her mental or physical health.

The DUP has a consistently anti-abortion stance and has repeatedly opposed attempts to legalise it. Last year, its leader Arlene Foster said: “I would not want abortion to be as freely available here as it is in England.”

Asked about the impact of Mrs May’s deal with the DUP Mr Paterson, who served as Northern Ireland Secretary from 2010 to 2012, said: “I don't see many major social issues coming up in the next parliament.

"You might get a debate I suppose on further reduction of abortion times as medical science advances.”

Addressing criticism of the DUP’s stance on gay rights, he said: “That is all devolved. It's not only a free vote issue, most of this, but it's nearly all devolved and that's down to the politicians in Northern Ireland to resolve."

Mrs May announced on Friday that she would govern in partnership with 10 DUP MPs sitting in Westminster after losing the Conservatives’ Commons majority in a humiliating snap election.

The decision was met with criticism almost immediately as abortion rights groups voiced fears over the DUP’s record on the issue.

Mrs May has previously backed the reduction of abortion time limits from 24 to 20 weeks, saying: “I think there is scope for some reduction.”

The London-Irish Abortion Rights Campaign, which campaigns for legal abortion in Ireland and Northern Ireland, warned the PM about the agreement with the DUP.

“The DUP has consistently blocked any attempts to allow abortion even in limited circumstances,” the group told Newseek.

“They are out of step with the Conservative Party and the people of Britain on many moral and social issues, having also blocked attempts to legalise gay marriage in Northern Ireland. We urge Theresa May to think carefully before aligning herself with a party intent on undermining the human rights of Northern Irish women.”

Others have expressed fears over the DUP’s stance on gay rights.

Scottish Conservative leader Ruth Davidson said she has received assurances from the Prime Minister over gay rights should the Tories do a deal with the party.

Ms Davidson, who is gay, appeared to criticise the deal on Friday when she tweeted a link to a speech she made in favour of marriage equality, with the message: "As a Protestant Unionist about to marry an Irish Catholic, here's the Amnesty Pride lecture I gave in Belfast."

Ms Davidson, who became engaged to partner Jen Wilson in May 2016, later told the BBC: "I was fairly straightforward with her (Mrs May) and I told her that there were a number of things that count to me more than the party.

"One of them is country, one of the others is LGBTI rights.

"I asked for a categoric assurance that if any deal or scoping deal was done with the DUP there would be absolutely no rescission of LGBTI rights in the rest of the UK, in Great Britain, and that we would use any influence that we had to advance LGBTI rights in Northern Ireland

"It's an issue very close to my heart and one that I wanted categoric assurances from the prime minister on, and I received (them)."

Northern Ireland is the only part of the British Isles where same-sex marriage remains outlawed.

The DUP has repeatedly used a controversial Stormont voting mechanism - the petition of concern - to prevent the legalisation of same-sex marriage, despite a majority of MLAs supporting the move at the last vote.

Sadiq Khan warns London could lose almost 13,000 police officers under Tory spending plans

Pic:Sadiq Khan and Cressida Dick
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Sadiq Khan has issued a stark warning that London will lose thousands of frontline police officers under Conservative spending plans.

The Labour Mayor said the Metropolitan Police could lose as many as 12,800 constables – a reduction in its strength of up to 40 per cent – as it seeks to slash at least £400 million from its budget.

Scotland Yard has already had to make savings of £600m since 2010, with more cuts to come.

Mr Khan said that on top of the £400m, the Met could also face a further loss of up to £700m a year under Tory plans to change the formula for determining police funding.

"Our city has suffered two awful terrorist attacks since I was elected as mayor - and we must do everything possible to stop there being any more," said Mr Khan, who praised emergency services after seven people were killed in Saturday night’s London Bridge attack. 

"Police officers in our communities act as the eyes and ears of the security services, providing the intelligence and information that allows us to disrupt attempted terrorist attacks.

"Cuts on this scale would make it harder to foil future terrorist attacks on our city - and as the mayor of London I'm simply not willing to stand by and let that happen."

The warning comes as Theresa May faces growing pressure over police cuts after presiding over a loss of almost 20,000 officers during her time as Home Secretary between 2010 and 2016.

Met Police Commissioner Cressida Dick asked for extra resources after the third terror attack in 10 weeks hit Britain at the weekend.

“In the face of this changing and changed threat, absolutely I will be seeking for London and for policing generally more resourcing obviously," she said on Monday.

Labour leader Jeremy Corbyn called for Theresa May to resign over policing cuts, but the Prime Minister insisted she had protected numbers of counter-terror officers.