Welsh Water says the average household bill will only rise at the rate of inflation from 2010 to 2015.

Thames water expects bills to rise by around 3 percent a year above inflation during the period, and Northumbrian water said its rate would be 1.3 percent above. Manchester United Utilities said it plans to raise prices by 2.7 percent above inflation.

Industry regulator Ofwat has requested that all water firms must submit their draft spending and pricing plans for the five-year period starting from 2010.

Welsh Water said it would invest £1.5bn before inflation, or £1,000 per household on average during the period. The money is to be used to protect the quality of the water, improve water treatments, support new infrastructure and reduce the risk of repeat sewer flooding to properties. The firm’s average house bill will be around £390 before inflation.

United Utilities said its capital investment for the period would be £4bn, of which £1.6bn would be for water services, while the remaining £2.4bn will be for water waste services. However, it added that it would reassess its costs when it submits its final plan to Ofwat in 2009 “in light of financial market conditions at that time”.

The UK’s largest water company, Thames Water, said its £6.5bn investment plan would be the largest spending programme by a water company.

The company said that its customers had “the lowest bills in the industry for many years”, and although there would be “an inevitable impact on bills”, the firm would try to keep charges below the industry average.

Peter Antolik, Thames Water’s director of regulation, said that the money was “vital to improve London’s ageing water system.”

“We also have, it should be remembered, a growing population in London and the south east,” he said.

“We have, we estimate, about 380,000 more people coming in to the region and we have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with that influx of people.”

The industry watchdog will decide whether to allow above-inflation prices at a time when customers are under financial pressure from rising fuel bills.

Ofwat chief executive Regina Finn said:  ”This is the start of the process of making decisions on how each company proposes to provide value-for-money, long-term, high-quality water services to its customers.”

“We will now examine draft business plans in detail, checking the proposed level of service and investment.

“We will make sure each plan includes everything we expect, takes account of concerns expressed by customers, and does so as efficiently as possible.”

Ofwat will make its final decision by November 2009.

The Royal Bank of Scotland wrote down the value of many of its credit market assets by £5.9bn, for the first time in the bank’s 40-year history as a public company,

Compared to £5bn profit a year ago, the bank reported a pre-tax loss of £691m in the first half of the year, but the loss was less than the £1.6bn expected by city analysts.

Sir Fred Goodwin admitted that the first half of the year had been “as difficult an operating environment as we have encountered for some time.”

On a pro-forma basis, the bank did make a profit of £5.1bn, excluding write-downs, the cost of integrating acquisitions and one-off charges.

The write-downs were what analysts had predicted following announcements by the bank in recent months, but were offset somewhat by a £812m reduction in the value of its own debt. RBS shares, which have more than halved in the last year, have increased by 1.4 percent in early trading to 236.3p.

The bank announced that it had disposed at some of its credit portfolio at better prices than it had expected to see.

“It doesn’t feel like we’re heading back to the good old days, but we are seeing some movement,” Sir Fred said on Friday.

RBS said it had reduced its leverage finance portfolio to £10.8bn at June from £14.5bn at the end of 2007, and last month it sold a further £1.25bn of leveraged loans.

The lender had increased the write-downs relating to its exposure to monoline insurers as credit spreads in the sector had widened

Sir Fred said the bank was comfortable with its “marks”, or valuations.

Sir Fred said, “It’s a brave person that can try and predict this market through year-end, but we feel these are strong marks and we have a reasonable degree of confidence,” he said. “We’re still reducing exposure. We feel more comfortable with these marks now than at the end of April.”

As part of a plan to raise an additional £4bn capital by selling off non-core assets, RBS has been looking to sell its insurance operations – Direct Line and Churchill – however, a number of bidders have walked away from the sale, raising questions about its viability at this time.

Sir Fred said the bank would only sell the assets at a “sensible price”.

He added, “The worst thing we could do is destroy value by selling assets at anything less than that.”

According to the latest monthly report from the Halifax, house prices fell another 1.7 percent last month, taking the annual rate of decline down from 6.1 percent to 8.8 percent.

The Halifax has calculated that the average house price in the UK is now as low as it was in June 2006 - £177,351.

The bank said that demand from buyers had been “significantly curbed” due to high prices, a lack of mortgage funds, and the squeeze of household finances.

Suren Thiru, the Halifax’s economist, said: “Pressure on householders’ income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers’ ability to enter the market.”

“This is resulting in both lower prices and activity levels,” he added.

The Halifax survey if similar to that of its mortgage lending rival Nationwide, which recently calculated that UK property prices had fallen by 8.1 percent in the year to July.

Jin June, the Halifax forecast that house prices would probably fall by about 9 percent over the course of the year. However, the new figures suggest that prices have fallen by 10 percent in the first seven months of the year so far.

With mortgage approvals down by 69 percent in the past 12 months, activity in the property market looks likely to fall much further, with many analysts predicting a fall of around 20 percent over the course of this year and the next.

Standard & Poor, the credit ratings agency, suggested that a fall of this magnitude might send 1.7 million households into negative equity, where the size of a borrowers mortgage debt exceeds the value of their property.

The prime minister is set to announce the postponement of stamp-duty and a tax-free savings account allowing first-time buyers a greater tax-free cash allowance to save towards a deposit. The measures are part of a package of economic steps designed to rescue Gordon Brown’s position at the party leader.

Yesterday (Tuesday) the government pledged that it would “help people with housing” and fuel bills, but it has not worked out exactly what those policies will be.

The Treasury is costing options to defer stamp duty for lower value homes, however officials said that reports claiming tax would be axed for all properties was “wide of the mark”. The prime minister is currently trying to revive Labour’s standing, after a dismal time in recent months, however the government cannot afford to lose the £6.5bn annual revenue generated from the stamp duty.

The chancellor, Alistair Darling, committed the government to announcing “further measures in the autumn to help people with housing”. However the chancellor stated: “We have not concluded what exactly we need to do.”

If stamp duty was to change, the most likely aspect of this would be the deferral of the 1 percent duty charged on properties of £125,000-£250,000, for an unspecified period of time. Echoing Conservative proposals last year to waive stamp duty on properties up to £250,000, the Treasury wants to focus any concession on first-time buyers. Officials, however, admitted that at present there is “no stamp duty proposal”, adding that “all the options are on the table”.

The Liberal Democrats has warned that suspending stamp duty could add to the problems in the housing market. Vince Cable, the Lib Dem treasury spokesman said, “The government shouldn’t be trying to bribe people into buying houses in a falling market.”

Early this morning, Northern Rock announced losses of £585.4m for the first six months – much higher than expected. Much of the loss came from the charges it takes to cover losses from struggling mortgage borrowers.

However, the mortgage lender did manage to repay £9.4bn of a loan from the Bank of England, reducing the amount it owes to £17.5bn.

The government, which nationalised the lender in February, will give £3bn cash injection to bolster its finances. The money for the injection will come by pausing repayments of the huge taxpayer loan made to the bank, of which about £3bn will be converted in to equity.

BBC business editor Robert Peston said: “To put it another way, the nationalised bank is having a mega rights issue that taps its one shareholder”.

“It is similar to what other banks have been doing recently, where they have been having rights issues.”

“But the £3bn is taxpayer’s money - that is money that is very much at risk.”

Northern Rock revealed that the total percentage of it residential mortgage customers in arrears had risen sharply from last year. In June 207, the figure showed 0.38% of mortgages were in arrears, but it has now risen to 1.18%. However, this is lower than the Council of Mortgage Lenders average of 1.21%.

The company have said that this is due to more demanding economic and market conditions, which have be exaggerated by reducing the number of their customers by 15%.

House possession numbers have risen from 2,215 to 3,710 – an increase of 67 percent, and represents 0.56% of all mortgage accounts.

The company said that this is because it is moving to repossess properties faster when it is clear they cannot maintain their mortgage payments.

Northern Rock was floored by the global credit crunch, when its method of financing mortgage loans – borrowing cash from wholesale markets – dried up.

The bank, which was at one time the UK’s fifth-biggest loan provider, was taken into public ownership when it failed to attract a suitable buyer from the private sector.

The government’s plans to increase car tax for “gas-guzzling” vehicles should be bolder say MPs.

The Environmental Audit Committee’s official report backs the move as a “step in the right direction”, but chairman Tim Yeo has asked for more ambitious changes, as the benefit to the environment would be limited.

Three members wrote a minority report labelling the plan as ‘retrospective taxation’ because it put “a new tax on old cars”. They argued that the plans should be put on hold until impact was properly assessed.

Official Estimates say vehicle excise duty will rise for 43 percent of vehicles made since 2001 – but will far for 18 percent. The changes will increase the number of bands to 1, with maximum tax for vehicles with the highest emissions being $455 for 2009/10, while vehicle owners with the least polluting vehicles will pay nothing.

The report, entitled Vehicle Excise Duty as an environmental tax, said the idea was a “step in the right direction” and agreed it was not a retrospective tax. The report did however criticise some aspects of the changes, including the way they were presented in the small print of this year’s Budget, and that the cost difference between the bands was not enough to convince drivers to buy a cleaner vehicle.

“This is quite an urgent issue - emissions from cars are increasing, people are buying cars all the time,” Mr Yeo said

“We don’t want them to stop driving, but we want to them choose the greenest car. They need the biggest possible incentive, that’s why the government should be even bolder - really penal rates for high-emission cars and really attractive ‘carrots’ so that tax is almost nothing on the greenest models.”

He added that because three out of every four car were bought second-hand, the tax should apply to old as well as new cars.

The report said there were concerns over the effect of the change on lower-income households.

The minority report, by one Tory and two Lib Dem MPs, called for the increase to be put on hold until the government had produced a detailed analysis of how the changes would affect those on low incomes, and whether it would make drivers buy greener cars.

‘Plans should also be introduced to ensure tax bands of second-hand cars were clearly labelled by dealers, and proceeds from the tax should go towards designing more environmentally friendly cars,’ it said.

Jo Swinson MP, one of the authors of the minority report, said: “The public must have faith that green taxes are not about raising revenue for the Treasury, but in this case, their use is clearly more to do with filling Alistair Darling’s coffers than cutting carbon emissions from our roads.”

A Treasury spokesperson defended the scheme, saying the new plans would encourage people to use more environmentally friendly cars as well as saving 1.3m tonnes of CO2 by 2020.

“We set out the position very clearly in the Budget. Rates for pre-2001 cars will continue to be based on engine size,” he said. “Taking account of inflation, drivers of these cars will still pay less than in 1997, and some will see a decrease in inflation terms.”

The RAC Foundation said it supported the graduated scheme of vehicle excise duty as it “was helping people choose smaller cars”.

But Sheila Rainger from the RAC said it should only be for new cars.

“In the Budget it was shown as a policy to change people’s behaviour - how can you change someone’s decision made in 2001? The idea of making it apply to older cars is just wrong.”

British Airways has blamed the credit crunch for a massive drop in year-on-year profits, stating that aviation industry has faced the “worst trading environment ever”.

The carrier made a profit of £37 million in the three months to the end of June compared to last years £298 million for the same period – an 88 percent drop. In an effort to reduce overheads, BA said that it would cut 3 percent of flights this winter.

BA says that its fuel bill would be £3 billion in the year to the end of March – the equivalent of £8m per day. However, BA insists that the company is “well prepared” to control its costs.

BA chief executive Willie Walsh is fully aware of the problems faced by the carrier: “We are in the worst trading environment the industry has ever faced,” he said.

“The combination of unprecedented oil prices, economic slowdown and weaker consumer confidence has led to substantially lower first quarter profits.”

Mr Walsh added that the airline has managed to hedge some of its fuel costs in the quarter which “mitigated the impact” of rising bills, although they still rose by 49 percent.

Although BA has reduced the number of flights in the winter, BA has said that it will not “compromise its network”.

Earlier in the week, BA announced that it was in merger talks with Spanish airline Iberia. However, the proposed deal would take months to finalise. The deal is seen as an attractive proposition for BA as it would allow it to reduce costs.

The results are he first full quarter to include operations at Heathrow Airport’s Terminal Five – which BA has exclusive use.

After the chaotic opening which led to hundreds of cancelled flights, lost baggage, and thousands of unhappy customers, BA says the Terminal is going “from strength to strength”, with more than six million passengers through the gates since March 27th.

Terminal Five was deemed a national embarrassment, and resulted in some executives leaving both BA and Heathrow operator BAA.