Confidence has returned to the housing market, but not to the high street, which is anticipating a nightmare Christmas.To make matters worse, we are experiencing a sharp uptick in inflation, caused mainly but not exclusively by rising fuel prices. The scandal of these deficits is that they were, at least in part, caused by the Chancellor’s raid on dividend tax credits. If these had been left intact, the total deficit in company pension funds might be as little as half the £134bn recently estimated by the Pension Protection Fund. With debt and fuel prices still high, and no let up in airline competition, he’s plainly in no mood to consider more. Yet unless employees are prepared to fill the gap instead, either by agreeing to cut benefits or increase their contributions, it is hard to see what option he has.And Mr Walsh thought he would be running an airline when he signed up to join BA Instead, he finds himself working for pensioners. Even using the lowest of these three figures – the company’s own preference – that’s quite a hole to plug.
The new Pensions Regulator has demanded that all companies come forward with plans for closing their deficits within 10 years. Do the maths: all other things being equal, that means BA has to find a minimum of £140m a year in extra contributions if it is to satisfy the regulator’s demands.
Mr Walsh says that the company’s contributions – which he claims are already five times higher than what employees put in – are already unsustainable. Depending on which definition you chose, the BA pensions deficit is variously estimated at £1.4bn, £2bn or even £4bn. Few chief executives have as big a pensions headache as Willie Walsh, the new man at the British Airways joystick. On the positive side, Sky pointed to a 139,000 rise in the number of households taking Sky+, the group’s sophisticated personal video recorder, and a 103,000 increase in the number taking Sky in more than one room.BSkyB shares closed down 25.5p at 501.5p.. Dr Summerfield said: “Even though it would appear an agreement has been reached between BSkyB and News Corp to cap the latter’s voting rights, we are concerned this agreement is not as watertight as you would have us believe. This scepticism emanates from our experience with an agreement brokered between News Corp and its shareholders prior to the company reincorporating from Australia to Delaware.”Mr Murdoch replied thatthe issues at News Corp, where John Malone’s Liberty has an influential shareholding, were nothing to do with Sky.Insiders blamed the increased churn rate on recent price rises – which have increased bills by £3 a month – the tough economic environment and growing competition from the likes of Freeview.
“The team has met or overachieved core performance measures including sales, operating profit and earnings per share, notwithstanding an increase in churn,” he said.BSkyB’s deputy chairman Jacob Rothschild, told shareholders the group would not repeat its controversial share buy-back scheme next year, and said News Corp had signed a legal agreement that would prevent it raising its voting power above its current level.This did not satisfy Daniel Summerfield, of the Universities Superannuation Scheme, and other shareholder groups. Many of the same shareholders had been uncomfortable about the appointment of Rupert Murdoch’s son James as chief executive two years ago, believing the company might not be sufficiently independent of the Murdoch empire.Shareholders attending BSkyB’s annual meeting at London’s QE2 Centre were greeted by an underwhelming first-quarter results statement that revealed a worrying increase in the number of people who had cancelled subscriptions, sending the shares 5 per cent lower.James Murdoch preferred to concentrate on Sky’s profits, which rose 14 per cent to £215m in the quarter, and its 8 per cent rise in revenues to £1.023bn. BSkyB, the satellite TV operator, narrowly avoided an embarrassing defeat yesterday over a controversial share buy-back plan that will allow Rupert Murdoch’s News Corporation to increase its 37 per cent stake to 39 per cent. Shareholders representing nearly half the votes not controlled by News Corp defied the BSkyB board by voting against a waiver that allows Mr Murdoch’s media empire to increase its shareholding without being forced into a full takeover.
Despite the opposition of UK investor lobbying groups such as the National Association of Pension Funds and the Association of British Insurers to the waiver, BSkyB scraped home with 54.6 per cent in favour and 45.4 per cent against.Several UK institutions, including Legal & General and Standard Life, opposed the plan, warning of News Corp’s “creeping control” of the company.
In our view it does not.”Meanwhile annual house price inflation rose for the third month in a row to 3.9 per cent October, Halifax bank said. But it added that the slowdown in growth and continued high prices would prevent a return to price boom conditions.A Treasury spokesman said: “The rate of business insolvencies remains at a record low. As a result of economic stability and wider economic reforms to encourage enterprise, there are more than 4 million businesses in Britain, 575,000 more than in 1997, with 4,000 new ones starting up every week.” It added this was a sign of an enterprising economy as some personal insolvencies were among the self-employed, showing people were confident to start up a business.. He asked: “Does it really feel like the economy is doing worse than in the early 1990s?. Ian McCafferty, its chief economic adviser, said: “I would not see it as particularly alarming given the backdrop of the low rates [of insolvency] we have seen in recent years.”David Hillier, the chief UK economist at Barclays Capital, said the insolvency numbers did not give an “accurate steer” on the economy. Company liquidations in England and Wales edged up 0.3 per cent on the quarter to 3,389 – 14.2 per cent higher on the year.But the CBI, the employers’ organisation, warned against an “alarmist” reaction to the rise in corporate and personal financial failures.
