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Nearly 4,000 jobs are at risk after Focus DIY, Britain’s fourth-largest DIY chain, called in administrators having failed to clinch a rescue deal.

Ernst Young were expected to be appointed at midnight after the company, which has struggled for years, particularly during the recession, admitted that it was close to defaulting on its huge debts and “that there were no alternatives that could be explored any further”.

“The directors have sought consent from the business’s lenders to appoint EY as the administrators. All stakeholders including staff are being informed,” Focus said in a statement. Lloyds and GMAC have yet to agree to the administrators.

The Focus website stopped taking online orders and the company’s statement was posted on the site. The chain has 178 stores and employs 3,919 people. A spokesman said the shops would remain open for another five days, after which EY will decide if they can continue as a going concern.

The loss-making company was reportedly in talks with the restructuring firm GA Europe but failed to agree a deal. Its US private equity owner, Cerberus, began to look for a buyer for the chain last autumn.

Focus made a loss of £21m on sales of nearly £490m in the year to 21 February 2010, compared with a loss of £95.4m in 2009, according to the latest figures.

David Jeary, a retail analyst at Investec, said: “My sense is that Focus has suffered for a long time because it’s been squeezed between the two major DIY chains, BQ and Homebase.

Both have much better defined customer propositions and trying to carve out a niche between them has proved difficult for Focus.” BQ, owned by Kingfisher, is by far the biggest DIY chain, with a store in most British towns and is similar to the big warehouse-style operations in the US known as “category killers”. Homebase has a softer touch, marketing itself as a home adornment and gardening specialist. Focus has struggled to come up with new formats.

Wickes, the third-largest chain, has many lines but with less choice within categories. “Not all customers need a choice of 63 screwdrivers when 15 will do. Wickes too has a very defined image,” said Jeary.

Focus began in 1987 when Bill Archer quit Crown Paints to set up a DIY firm with £300,000 from remortgaging his house. He and a former business partner bought two small chains, Choice DIY and Focus, and rebranded all 12 shops as Focus DIY.

Four venture capital firms later backed Archer in a £4.5m buyout. The business grew rapidly by acquiring rivals Do It All, Great Mills and Wickes (the latter sold to builders’ merchant Travis Perkins in 2005). Focus was bought by Cerberus, which took on debts of £180m, for £1 in 2007 and hired former Wickes boss Bill Grimsey to turn it around. It is thought the US firm spent about £200m trying to rescue Focus.

Article source: http://www.guardian.co.uk/business/2011/may/04/focus-diy-administrators-jobs

Nationwide building society is launching a savings account which enables first-time buyers to apply for a mortgage with just a 5% deposit.

From Friday, those aspiring to buy their own home can open a Save to Buy regular savings account which pays interest of 2.5% gross on balances up to £20,000. After at least six months of saving a minimum of £50 a month, the saver is entitled to apply for one of the Nationwide’s 95% loan-to-value (LTV) ratio mortgages: until now these have only been available to existing Nationwide mortgage customers who want to move home.

The Nationwide joins a very small band of lenders prepared to extend mortgages to those with a deposit of just 5% on a relatively straightforward basis. Most others require parents or other family members to act as guarantors on the loans, or to put their own money into savings accounts which can be set against the loans in case things go wrong.

Nationwide currently offers a 95% loan fixed for three years at 6.29% and one fixed for five years at 6.89%, although the rates on offer will almost certainly have changed by the time first-time buyers qualify to apply.

Those who go on to take out a Nationwide 95% LTV mortgage will also benefit from cash back ranging from £250 for those who save from £2,500 to £4,999, to £1,000 for those who save £10,000 or more. Save to Buy customers will also qualify for any Nationwide first-time buyer deals available at the time of application, such as the current offer of a £500 discount off the product fee.

David Hollingworth of mortgage broker London Country said aspiring buyers might be able to find better savings rates elsewhere, but added that the Nationwide’s entrance to the 95% LTV market was still very welcome.

“The Nationwide is getting back to that old-fashioned condition of wanting to get some savings in and making sure the borrower is able to put money away each month. This is no bad thing,” he said.

“The obvious downside is that saving in the Save to Buy account does not guarantee that you will get a mortgage. The Nationwide is simply saying that it will consider your application.”

He said other lenders offering 95% LTV loans, including the Skipton building society and Yorkshire Bank, charge similar interest rates to the Nationwide, but he added that the lenders set strict criteria when considering applications. “It’s not easy to get one of these loans,” he said.

First-time buyers are generally considered to be the driving force behind the housing market. Their buying of a property releases homeowners to buy bigger or more expensive property, and spurs a whole chain of shopping, from house paint to white goods, that helps support the economy.

But their numbers have dropped over the past few years, as buyers have been forced out of the market by high house prices, low or non-existent salary increases and an unwillingness on the part of lenders to provide them with high LTV mortgages.

The government has put pressure on lenders to increase the number of mortgages they are making available to first-time buyers, and launched a scheme to help such buyers in the Budget. The Firstbuy scheme is open to those with a household income of less than £60,000 a year who can put down a 5% deposit – but the catch is that the mortgage must be used to buy a new home.

Article source: http://www.guardian.co.uk/money/2011/may/04/first-time-home-buyers-nationwide

The Labour leader, Ed Miliband, has urged voters not to use the AV referendum to “kick Nick Clegg” as the latest poll showed opinion against changing the electoral system is hardening.

Miliband, who supports replacing first past the post with the alternative vote – under which voters would rank candidates in order of preference – said the referendum presented a “once in a generation opportunity” to change Britain’s political system for the better.

Speaking on the eve of the polls, which will see the referendum conducted alongside local elections and devolved elections in Scotland, Northern Ireland and Wales, the Labour leader appealed to voters to send a message to the coalition about their concerns over cuts, university tuition fees and the proposed shake-up of the NHS.

But he urged them not to vote against AV in order to punish the deputy prime minister for breaking Liberal Democrat election promises. The referendum was the key concession gained by Clegg from David Cameron in last year’s coalition negotiations.

Miliband made his last-minute appeal amid polling which suggests the no campaign will romp to victory in the referendum.

A ComRes poll for the Independent showed a resounding 32-point lead for the no campaign among people who have made up their minds and say they are sure to vote.

It put the no vote on 66%, compared with 34% for the yes campaign – a 12-point widening of the gap since last week, when the margin was 60% to 40%.

Miliband, whose party is split on the issue, declared his own belief that AV was “the best way” of combining a fairer system with the one member constituency link.

He said that, if AV were adopted, he would not want further electoral reform. But he refused to be drawn on the referendum result and said he did not think “we’re going to be coming back to this very quickly” if voters say no on Thursday.

He defended his refusal to share a platform with Clegg throughout the campaign, despite lauding AV as a system more likely to encourage parties to “reach out to each other”.

The Labour leader said he had feared throughout the campaign that the poll would become a referendum on a political individual, whether this was Clegg, Cameron or himself.

He told BBC Radio 4′s Today programme: “I think there was always a danger that it did become that, and that was my reason [for refusing to share a platform with Clegg].”

Pointing out that he had been willing to share a platform with Vince Cable, the business secretary, Miliband said the difference with Clegg was that people – including many in his own party – had been “shocked” by his willingness to “pose as somebody from the centre-left” and then go into a Tory-led coalition to pursue policies for which the government had no mandate.

Many of those policies – such as raising tuition fees and the pace of spending cuts – had previously been opposed by Clegg.

The Labour leader said Clegg had presented himself as “the poster child” for new politics before the last general election before entering into coalition and breaking promises in line with “old politics”.

“I hope people vote Labour tomorrow on those issues [at the local and devolved elections] because I think they do need to send a message to this government without a mandate, but I hope people do not use the referendum to kick Nick Clegg,” he said.

Miliband conceded that Labour should have introduced AV during its 13 years in power, but had failed to do so because it had “too big a majority”.

He also dismissed the claim, made by David Cameron on air on Tuesday, that AV would mean some votes counted more than others. “Votes count equally,” he said.

The campaign for or against voting reform for Westminster elections has seen tensions mount among the coalition partners. Chris Huhne, the energy secretary, directly confronted Cameron at the weekly cabinet meeting at Downing Street over alleged “lies” by the no camp.

Clegg admitted “feelings are rising high” ahead of the referendum, but dismissed the idea that the alternative vote poll would destroy the coalition.

He declined to comment directly on Huhne’s intervention in cabinet, which was criticised by the yes campaign as unhelpful.

The Liberal Democrat leader told BBC’s 5 live Breakfast: “This government will move on whether the vote tomorrow is yes or no.”

Clegg also denied that he had given up on a yes result, saying many people would not put their minds to how to vote until polling day arrived.

“I wouldn’t immediately start deciding how people are going to vote until they’ve had the chance to vote tomorrow,” he added.

“It’s a very simple choice – obviously the temperature is rising, feelings are rising high as you’d expect at this stage in the referendum campaign, but at the end of the day it isn’t about what politicians think or feel or even say to each other – it’s about what people want and do people want the current system.

“Gallons of ink is going to be spilled in the nation’s newspapers providing a post mortem one way or another. Actually, the choice before people is not whether this was said in the referendum campaign or that was said in the referendum campaign but what this is all about.”

Article source: http://www.guardian.co.uk/politics/2011/may/04/miliband-voters-av-referendum-kick-clegg

Ian Tomlinson’s son, Paul, and his widow, Julia, talk to Paul Lewis Link to this video

The police officer who attacked Ian Tomlinson at the G20 protests in London in 2009 could be prosecuted for manslaughter after an inquest jury ruled that the newspaper seller was unlawfully killed.

Returning their verdict after three hours of deliberation, jurors said Tomlinson died of internal bleeding in the abdomen after being struck with a baton and pushed to the ground by a police officer.

For legal reasons, the verdict did not name the officer, Metropolitan police constable Simon Harwood.

However, the jury said that “excessive and unreasonable” force was used when he struck the newspaper vendor who “posed no threat”.

The director of public prosecutions, Keir Starmer, immediately said he would “review” his decision last July not year not to prosecute Harwood.

There were shouts of “yes” from Tomlinson’s family when the jury confirmed their belief that the 47-year-old father of nine was unlawfully killed.

The family’s lawyer, Jules Carey, said : “Today’s decision is a huge relief to Mr Tomlinson’s family. To many, today’s verdict will seem like a statement of the blindingly obvious. However, this fails to take account of the significant and many obstacles faced by the family over the last two years to get to this decision.”

Police initially denied Tomlinson had contact with police officers before his death on 1 April 2009.

The Independent Police Complaints Commission only launched a criminal inquiry a week later, after the Guardian released video footage showing Tomlinson being struck from behind by Harwood near the Royal Exchange Buildings.

The footage was played repeatedly during the five-week hearing at the International Dispute Resolution Centre in Fleet Street, London.

Jurors were given two divergent explanations of his death.

The first pathologist to conduct a postmortem examination on Tomlinson, Dr Freddy Patel, said he died of a heart attack as a result of coronary heart disease. He was contradicted by three other pathologists who examined the body, all of whom found he died of internal bleeding in the abdomen.

Starmer said last July that complications with the medical evidence led him to believe prosecutors would be unlikely to prove a cause of death.

His decision, which was backed by the attorney general, Dominic Grieve, prompted widespread anger and questions in parliament.

The Metropolitan police commissioner, Sir Paul Stephenson, said he could understand the “outrage” over the decision not to prosecute Harwood.

Jurors at the inquest were told they could only decide Tomlinson was unlawfully killed if they were convinced beyond reasonable doubt, the same burden of proof which would apply in a criminal trial.

The Crown Prosecution Service will now also consider new medical evidence given to the inquest by Professor Kevin Channer, a heart expert who contradicted the theory that Tomlinson died of a heart attack.

He said defibrillator readings of Tomlinson’s heart activity obtained moments after his collapse were “entirely inconsistent” with Patel’s explanation of his death.

Tomlinson had been trying to walk home from work through the demonstrations near the Bank of England on the evening he died. An alcoholic, he had been drinking heavily and was looking vacant and confused as he was repeatedly turned away from police cordons.

At 7.20pm, he stumbled on to Royal Exchange Buildings, a passage police had been ordered to clear. Tomlinson had his hands in his pockets and was walking away from police when he was struck with a baton and pushed from behind by Harwood.

During three days of evidence at the inquest, Harwood, 43, told jurors that he believed at the time that Tomlinson was obstructing police and he believed his actions were proportionate.

Harwood will face a Metropolitan police gross misconduct hearing at which he stands accused of “inadvertently causing or contributing to” Tomlinson’s death. If found guilty by the disciplinary panel, Harwood, who is currently suspended on full pay, would almost certainly be sacked.

The verdict brings to an end a two-year wait for Tomlinson’s family, who maintain police attempted to cover up officers’ involvement in his death.

Article source: http://www.guardian.co.uk/uk/2011/may/03/ian-tomlinson-simon-harwood-prosecution

BY JEFF BATER AND JEFFREY SPARSHOTT

U.S. factory sector orders climbed for the fifth consecutive month in March and capital spending by businesses surged as manufacturers sell to overseas markets amid weakness in the dollar.

Orders for manufactured goods climbed by 3.0% to $462.91 billion from the prior month, the Commerce Department said Tuesday.

Economists surveyed by Dow Jones Newswires had forecast a 2.0% increase in March factory orders. A broad-based increase in orders as well as rising prices for food and oil were factors behind the …

Article source: http://online.wsj.com/article/SB10001424052748703834804576300941513476116.html?mod=rss_economy

By SEBASTIAN MOFFETT

PARIS—Income inequality is increasing in most industrialized countries as a result of globalization and technological progress that requires greater skills from workers, according to an OECD paper released Tuesday.

The gap between rich and poor is widening in countries that traditionally have a high level of inequality, such as the U.S. It also is rising in countries that have been more equal, such as Denmark, Germany and Sweden, said the Organization for Economic Cooperation and Development, a Paris-based think tank. The paper was a preview of a larger report set to appear later this year.

The report comes as globalization and its effects face a backlash in some countries, due to a perception that some kinds of jobs in industrialized countries are being lost to emerging countries. In addition, governments world-wide are trying to rein in budget deficits, making it harder for them to redistribute wealth through benefits, the most direct way to reduce inequality.

The average income of the richest 10% of the population of the 34 OECD member countries is currently about nine times that of the poorest 10%, the paper said. The ratio is lower than that in Nordic and many other Continental European countries. It is around 14 to 1 in Israel and the U.S., and 27 to 1 in Chile and Mexico.

The report compared the changes between the mid-1980s and late 2000s in the Gini coefficient, a measure of income inequality that ranges from zero, when everybody earns the same amount, to one, when all income goes to only one person. The coefficient rose to an average of 0.31 in the OECD in the late 2000s, up from 0.28 in the mid-1980s.

The biggest increases came in Israel and the U.S., which have relatively high Gini coefficients, and in Finland, Germany and Sweden, whose coefficients are relatively low. France, Greece and Belgium were among five countries recording small decreases in inequality.

The main reason for the greater inequality was that the salaries of higher earners rose faster than those of lower earners over the two decades, in all the OECD countries, even those where inequality declined. Incomes for the top 10% of the population rose at an annual average of 2.0% during the period, whereas as incomes for the bottom 10% went up just 1.4% a year. That trend was linked to changes in working hours: While average annual hours worked fell a little on average, those for lower-paid workers declined far more than those for the higher-paid.

Another key cause of rising income inequality was that the rise in free trade and global financial markets “has generated a relative shift in labor demand in favor of high-skilled workers at the expense of low-skilled labor,” the OECD said. Greater demand for skilled labor has also resulted from technical progress, the paper said.

Governments have typically tried to reduce inequality through redistribution. However, said the report, “the stabilizing effect of taxes and benefits on household income inequality has mostly declined.” Moreover, “redistribution strategies based on government transfers and taxes alone would be neither effective nor financially sustainable.”

The OECD said the solution to the growing inequality was training and education for the low-skilled. “Policies that invest in human capital of the work force are needed,” it concluded.

Article source: http://online.wsj.com/article/SB10001424052748703922804576301154008155570.html?mod=rss_economy

By NICHOLAS WINNING

LONDON—Growth in the euro zone’s private sector strengthened in April as French output growth surged to a 10-and-a-half-year high, but prices charged rose at the fastest rate since mid-2008, a survey by financial information firm Markit showed Wednesday.

Meanwhile, retail sales in the euro zone fell sharply in March, underscoring the weakness in consumer demand even before the European Central Bank began raising its key interest rate.

Chris Williamson, chief economist at Markit, said the results of the private-sector survey were consistent with the quarterly rate of economic growth equivalent to the 0.8% expansion it expects to see in the first quarter. Euro-zone gross domestic product grew 0.3% in the fourth quarter of 2010.

“This would represent the best start to a year so far since 2006. However, the worrying two-speed nature of the upturn shows no signs of fading, with soaring growth in France and Germany failing to spill over to stimulate similar buoyancy in the periphery,” he said in a statement.

The final Markit Euro-Zone Composite Output Index, a gauge of private-sector business activity based on a survey of some 4,500 manufacturing and services firms, rose to 57.8 in April from 57.6 in March. A reading above the neutral 50 level indicates an expansion in activity. Although the headline index was below February’s four-and-a-half-year high of 58.2, the Aril reading has been exceeded only once since July 2006, Markit said. The reading was unchanged from the preliminary March reading published April 19.

The survey found average input cost inflation slowed from March’s post-crisis high, but remained elevated due to high oil and other commodity costs. Consequently, average prices charged rose at the fastest rate since July 2008, a sign the European Central Bank will face further pressure to tighten monetary policy in the months ahead.

“A slight dip in the rate of input cost inflation will do little to steady nerves among hawkish policy makers, as the pace remained very elevated by the historical standards of the survey,” Mr. Williamson said.

The ECB raised interest rates by a quarter of a percentage point to 1.25% on April 7, the first increase since mid-2008, to prevent rising consumer prices from leading to broad-based inflation. The euro zone’s inflation rate hit a 30-month high of 2.8% in April – far above the ECB’s medium-term target of just below 2%.

Economists don’t expect the ECB to raise interest rates after its next policy meeting Thursday, but will be scrutinizing what ECB President Jean-Claude Trichet says for any hint of the outlook. The central bank could raise rates another two or perhaps three times this year, they say.

Further monetary-policy tightening is likely to make life even harder for several euro-zone member states that are facing severe economic and debt problems—such as Greece, Ireland, Portugal, and Spain.

Portugal announced Tuesday that it had agreed a €78 billion ($115.7 billion) bailout package with the European Union and International Monetary Fund—the third euro-zone country after Greece and Ireland to require such emergency financial assistance.

The PMI survey showed that France overtook Germany to become the fastest growing euro-zone state in April, with support from a surge in services. German growth hit a five-month low, but remained elevated by historical standards.

By contrast, Italy and Ireland expanded at the weakest rate for three and four months respectively as moribund service sectors offset strong mainly export-led manufacturing performances. Spain managed only a near-stagnation of activity.

Statistics agency Eurostat said Wednesday that retail sales in the 17 nations that use the euro were down 1% monthly in March. The largest decline was in nonfood items, suggesting households were reining in consumption of nonessential goods as their disposable income waned. Official data Tuesday showed that, after inflation, euro-zone household income fell 0.1% in the final three months of 2010.

Eurostat said Wednesday retail sales fell 1.7% in annual terms, the largest decline since November 2009. Analysts had predicted no change in March from the corresponding month a year earlier.

Sales in Portugal saw the biggest month-to-month fall in the euro zone in March, of 4.7%. However, retail sales also fell in Germany and France, the region’s biggest economies.

—Alex Brittain contributed to this article.

Write to Nicholas Winning at nick.winning@dowjones.com

Article source: http://online.wsj.com/article/SB10001424052748703937104576302482355901852.html?mod=rss_economy

By PAUL HANNON

LONDON—Consumer prices in developed economies rose in March at the fastest pace since October 2008, driven by energy and food inflation.

But with the economic recovery still fragile in many of those economies, the response of central banks to the pickup in inflation is likely to vary. The European Central Bank raised its key interest rate last month, but the U.S. Federal Reserve and the Bank of England aren’t expected to match that move for many months.

Data released by the Organization for Economic Cooperation and Development on Tuesday show consumer prices in its 34 member countries rose by 2.7% in the 12 months to March, having risen by 2.4% in the year to February.

Rising energy and food prices are the main source of inflation. In the 12 months to March, food prices rose 3.2%, having risen by 3.1% in the year to February. Energy prices rose by 12.4%, having risen by 10.2% in the period to February.

There are signs that prices of other goods and services are rising at a more rapid rate as the global economy recovers. In the OECD area, the core rate of inflation—which excludes volatile items such as energy and food—rose to 1.4% in March from 1.3% in February.

Write to Paul Hannon at paul.hannon@dowjones.com

Article source: http://online.wsj.com/article/SB10001424052748703922804576300602018333170.html?mod=rss_economy

BY SARA MURRAY

Sluggish economic growth dragged down service-sector activity and produced modest job gains last month, reports on Wednesday showed.

An index of service-sector activity fell to 52.8 in April from 57.3 in March, the Institute for Supply Management said Wednesday. Readings above 50 indicate the sector is still expanding. The slower growth was caused by weakening consumer demand and price pressures for fuel and other raw materials.

Slowing improvement in the economy is likely to yield job gains that aren’t sufficiently robust to restore the labor market’s health anytime soon. A …

Article source: http://online.wsj.com/article/SB10001424052748703849204576302811095012844.html?mod=rss_economy