Mervyn King told MPs yesterday, banks should pay upfront to build a multi-billion pound fund that would help compensate depositors quickly when an institution failed.

The Bank of England governor’s comments come as many banks are struggling to rebuild their balance sheets, making ministers wary of forcing the industry to pay into a pre-funded pool of assets that guarantee’s savers’ deposits, and the costs of dealing with future bank failures.

Kitty Ussher, economic secretary to the Treasury, said “legislation would include power to pre-fund compensation payments, but would only be used if there were a market consensus”.

However, Mr King wants the government to toughen this position before it finalises its plans for banking reform. “Banks should contribute on a scale that would build a fund of many billions over ten years, paying more if they had riskier business models,” he said

“Some element of pre-funding is desirable . . . I hope that issue will still be on the table,” he added.

Although no one suggesting seeking large sums now, or expecting to rely on free funding, he said that “if you wait until there is a problem, that’s a pretty bad time to ask banks to put up a large amount of money’’.

Questioning Mr King’s proposal for “risky” banks to pay more into the fund, Angela Night, chief executive of the British Bankers Association asked, “How is riskiness assessed? Are big institutions classed as risky because they have a large number of customers even though they are well capitalised? Or are smaller banks regarded as riskier even though they have fewer customers.” 

Mr King and Ms Ussher were speaking to MPs scrutinising Treasury proposals for reforming financial stability arrangements proved inadequate by the collapse of Northern Rock last autumn.

UK motorists will be in a good mood today with the news that a number of major supermarkets have said they will lower the price of petrol.

Asda say they will cut the price of unleaded petrol and diesel by 3 pence per litre, while Morrisons said it would cut both prices by 4 pence a litre. Sainsbury’s said it would cut the price of unleaded petrol and diesel by 5 pence if customers spend £50 or more on food in store.

As crude oil prices hit record levels, the price of fuel has increased rapidly. However, while oil prices rose at the start of the month, they have fallen recently.

Asda said the price reduction would be effective from Tuesday, making unleaded petrol 113.9p per litre, while diesel would cost 128.9p.

Asda;s trading director, David Miles, said: “We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers. We urge other retailers to follow our lead at a time when customers need as much help as possible.”

Morrisons said its price change will come into effect on Monday “ensuring customers reap the benefit by passing on the saving quickly, for cheaper prices at the pump”.

Sainsbury’s said its fuel promotion would start on Thursday 24th of July and end on Thursday 7th of August.

Sainsbury’s explained in a statement that: “Our customers can reap an even bigger reward because we are running a 5p off per litre promotion when they spend £50 or more in-store and they will earn Nectar points as well.”

The AA said that wholesale gasoline prices had fallen 6 percent since mid-July, and hopes that other fuel retailers will follow the supermarkets example and cut fuel prices.

“The AA expects fuel suppliers to pass on, not pocket, the saving for the good of UK families, hauliers and the economy,” said AA president Edmund King.

“Should fuel suppliers and retailers appear to be dragging their feet we will seek to expose this.”

Although oil prices dropped in recent days the expectation is that they will remain high.

Under new government plans, Benefit claimants could be forced to pick up litter and clean graffiti. The Welfare Green Paper is expected to include proposals to encourage those who have been unemployed for over 2 years to work full-time for the community.

James Purnell, the Work and Pensions secretary, believes the plan would “transform lives”.

The Conservatives have agreed to support the plans, as they said they have suggested them in the past. The move will apply to 4.5 million people on benefit, but is expected to impact those on Jobseekers Allowance most. The plans would involve claimants having to carry out four weeks’ community work, if they have been unemployed for more than a year.

After two years, they will be ordered to work full-time. Incapacity Benefit claimants will all move to the new Employment Support Allowance by 2013, which ministers hope will be regarded as a temporary benefit for all but the most disabled people. Drug addicts are also being targeted, with the government expecting them to declare their problem and embark on treatment in return for benefits.

Any Labour backbench opposition is likely to be neutralised by the Conservatives support for the proposals. The Liberal Democrats have welcomed some elements of the Green Paper, but have not yet confirmed their support.

Frank Field, the former welfare reform minister, said that he doubts the program will make any difference. “The key fault in the old system is being brought into the new system, and that is if you can get through the employment capacity test… you’ll get onto a higher rate of benefit,” he said.

Mr Field said that there should be a single rate of benefit for people of working age who were unable to work. They should be funded via the Disability Living Allowance, not benefits, he said.

“The whole emphasis here, naturally, will be for people not to get jobs but to get onto the higher rate of benefit,” he added.

On Sunday, Mr Purnell said the welfare reforms being proposed were “revolutionary”.

Referring to incapacity benefit he said: “The worst thing about the old system was, people were given no help at all. We will be using the benefits that we would have spent if people had stayed on the benefit… to get them back into health and back into work.”

He added that people who did not take up the offer of support would lose benefits. He also said the government’s target was to get one million people off incapacity benefit by 2015.

In February David Freud, government welfare advisor, suggested that less than a third of the 2.7m people claiming the benefit were doing so legitimately.

Conservative leader David Cameron said: “What [Mr Purnell] has done is very much taken the ideas we came up with in January, that are very clearly thought through and involve tough choices.”

After less than a fifth of Barclays existing shareholders participated in its £4.5bn capital-raising issue, The Qatar Investment Authority has become the banks largest investor.

On Friday Barclays said that 19 percent of existing shareholders had taken up their rights in the ‘claw-back’ issue. The bank had conditionally pre-placed shares with around 20 institutional investors as well the QIA and Challenger, a Qatari fund.

Existing shareholders, The China Development Bank and Singapore’s Temasek, were also part of the underwriting group.

The pre-placed shares were offered to existing shareholders to allow them to retain their proportional shareholders in Barclays. However, 81 percent opted not to exercise this right, and the shareholding will now be diluted. A 9 percent discount to the existing share price, the offer was placed at 282p a share at the time of the announcement.

Even though shares in Barclays rallied this week as the deadline approached, they dropped below the offer price last week. Shareholders enthusiasm to participate in the capital raising was likely affected by the recent weakness in the price of the shares. Barclay’s shares opened 2.8 percent lower at 282.6p amid general weakness in UK financial stocks.

Next week, further details on the extent of the dilution of existing shareholders will be revealed as it has not yet been quantified. Barclays did confirm that QIA would become the single biggest shareholder, with around 6 percent. Other investors that were involved in the pre-placement included Japan’s Sumitomo Mitsui Financial Group, which now owns 2.1 percent, and Challenger, an investment vehicle controlled by the family of the Qatari prime minister, owning a little under 2 percent.

China Development Bank retains its near 3 percent of Barclays, while Temasek has raised its interest from 2 percent to between 2.5 and 3 percent.

The banks new shares will start trading from Tuesday, and the listing of the new American depository Receipts on the New York Stock Exchange is expected on the same day.

If you were one of the many expecting tax refunds then you will be wondering where it’s got too recently. Recent news has stated that there has been an error on the HM Revenue and Customs tax form on the website that rejected all of the entries it received, this means that no one was able to pay their tax or claim anything back that they are owed.

This issue can be very serious for the people who are relying on claiming tax back this year to be financially stable. An accountant from Kent, Sue Hitchcock reported the problem as her company prepares tax returns for over 700 clients in the construction industry who are eligible for them. This problem has put her own company under threat as she stated that 40 of her customers are owed a tax return, with a total amount reaching around £100,000 between them. She is suffering financially as her clients are not paying her until they receive their refund which has been put on hold until the problem is resolved.

That’s just one person that has come forward to be suffering from this lack of management by the HM Revenue and Customs online technical support, the glitch lies with just a single text box on the actual form itself.

If you have been chasing your tax return you can expect to be waiting until they look into the problem and fix it, be sure to use a tax rebate calculator to ensure that you receive all of the money that you are owed. You would hate to be waiting around for your refund to find out that it is still incorrect and you have to go through the process all again.

The companies and individuals that use commercial self assessment software were not affected as the problem was only with HM Revenue and Customs own software.

Ministers should set up a compensation fund for policy holders in the Equitable Life, so say the Parliamentary Ombudsman. The life insurance company almost fell apart in 2000 after it was ordered by the high court to fulfil financial promises which it could not afford. Over a million of its policyholders were left with reduced retirement saving.

Ann Abraham believes the government should apologise for a “decade of regulatory failure” and identified 10 instances of mal-administration by its departments.

Ms Abraham said that the various regulators, such as the Department of Trade and Industry, the Governments Actuary’s Department, and the Financial Services Authority, simply failed to use the powers available to them to protect the interests of the Equitable’s policyholders.

She said that the regulators failed to verify the solvency of the company and make sure the information that was in the public domain was reliable.

“Those responsible for the prudential regulation of Equitable Life failed to do so throughout the period covered in my report,” Ms Abraham said.

“I have alerted Parliament to the injustice which I have found in this case resulted from serial maladministration on the part of the former Department of Trade and Industry, the Government Actuary’s Department and the Financial Services Authority,” she added.

The Ombudsman did not say exactly how many people might be eligible for compensation, or how much they should receive.

“The aim of such a scheme should be to put those people who have suffered a relative loss back into the position that they would have been in had maladministration not occurred,” she said.

Ms Abraham said that the Equitable’s plight had unique features and said her report did not suggest that the conclusions drawn could be applied more widely.

The current executives of the Equitable welcomed the report. The oldest mutually-owned life insurance firm in the world, they were appointed to replace the old management in the early years of this decade.

Equitable chairman Vanni Treves said the Ombudsman’s conclusions were damning. “From a policyholder point of view we think this is as formidable a report as the Ombudsman could possibly have produced,” he said.

“We could not really have asked for more. Her reasoning and recommendations are beyond argument.”

The board also announced it would assist in a scheme to compensate its policyholders. The Ombudsman’s report did not look into what role Equitable Life executives played in its near collapse, a role which was examined in a 2004 report.

Mr Treves said the firm had already taken responsibility for its failings. “We have done the right thing and paid out to all these who had a debt,” he said. “We’ve paid up for that responsibility. The government should now pay up.”

However, it will be some months before the government responds to the proposal for a compensation scheme.

“The government recognises that the Ombudsman’s report raises issues of concern for the parties involved,” said a Treasury spokesman.

“The length and complexity of the report mean it would be inappropriate to comment before giving it our full and careful consideration. We expect to provide a full response to the House in the autumn,” he added.

Campaigners welcomed the findings of the report, saying that it was a “devastating indictment” of the performance of regulators over many years.

Paul Braithwaite, from the Equitable Members Action Group (EMAG) said, “The UK regulators were fully aware for a decade that Equitable Life was effectively insolvent, yet they allowed the company to suck in another £20bn in pension contributions from more than a million new investors.”

The Ombudsman says that in the run up to the Equitable’s financial crisis, the society’s regulators failed to check properly on its financial position and allowed it to dress up its finances to the tune of £2.7bn. As such they allowed the society to continue giving misleading financial information to its policyholders.

Then, “on an unsound basis”, they allowed it to stay open for business even though it was in a “dire financial position”. As such, anyone investing in an Equitable policy after 1990 was misled and lost the chance to put their money elsewhere.

Ms Abraham also found that, after the Equitable shut to new business in December 2000, the work of the regulators was ineffective. She said they misled policyholders and the public when they claimed, falsely, that the society had always been solvent.

Exposed in an earlier report by Lord Penrose, published in 2004, Equitable’s problems lay in the policy of its executives who had, for more than a decade, told policyholders that their investments were worth far more than was actually the case. The crisis in the society’s finances were crystallised when it went to the High Court in 1999 for permission to continue ignoring promises to make minimum payouts to people who had invested in so-called “guaranteed annuity rate” pension policies.

The eventual loss of the court case in 2000 meant that society was immediately short of the £1.5bn necessary to make good the promises it had made when it first sold those policies, in some cases as far back as the 1960s, until 1988. Attempts to find a buyer for the society failed and it closed to new business in December 2000. It has been winding down ever since, with most of the business now having been sold off to other insurers.

Most policyholders who were still with the society by 2001 found its near collapse a disastrous experience. Those still saving had to face their money being invested in an ultra-safe but very low return investment strategy, or see the value of their polices slashed if they moved their money elsewhere.

Those whose money continued to be invested in with-profits policies had the value of their investments slashed anyway, because there simply was not enough money to go round. This was an approach that was applied not only to those still saving but even to some of those whose pension policies were already in payment.

Ann Abraham pointed out that one decision by the society’s new management in 2001, to impose an across-the-board cut in policy values, cost society members £4bn and should have been fairer.

Thousands of council staff are striking over pay, forcing schools to close and hitting services, and the Unison and Unite unions expect a further 600,000 workers in England, Wales and Northern Ireland to join the 48-hour action, which began at midnight.

Members of the PCS union, who include driving test examiners and coastguards, are also striking in a separate row.

Council employers say they have reached the “limit of what is affordable”.

The strike will see schools and libraries closed, and disrupt rubbish collections and other town hall services. In Wales, one in three schools are closed, while a third of all households in Southampton will not have their rubbish collected this week.

The council action by the Unison and Unite unions comes after members rejected a 2.45% pay offer. The unions are asking for a rise of 6%, or 50p an hour. They say the pay deals are the rate of inflation and would mean an effective pay cut for their members.

The RPI inflation measure - often used as a benchmark in pay negotiations - is 4.6%.

Unison general secretary Dave Prentis said: “The pounds in local government workers’ pockets are turning to pennies.

“The cost of everyday essentials like milk, bread, petrol, gas and electricity are going through the roof - our members cannot afford to take another cut in their pay.”

Unite national officer Peter Allenson said its members were “living on the breadline”.

Lucy Marr, who is a Unison member from Hampshire County Council, told the BBC: “Local government workers are the lowest paid in the public sector. We’ve had 10 years of below-inflation pay rises.”

Jan Parkinson, managing director of the local government employers, said: “Our greatest asset is our staff but we have simply reached the limit of what is affordable.

“We remain willing to talk to the unions on a constructive basis about the future employment conditions of our workforce but this week’s strikes will not change the fact that our last offer was our final offer.”

The Local Government Association (LGA) said a survey of councils suggested less than a quarter of staff would take part.

In the PCS union dispute, driving test examiners will strike on Wednesday, and Valuation Office Agency staff on Wednesday and Thursday. Home Office and Land Registry workers will strike for part of Friday, coastguards for 48 hours from Friday and the Identity and Passport Service for 72 hours from 23 July.

Prime Minister Gordon Brown sees the policy as essential in the fight against inflation.

Mr Brown’s spokesman said: “We have had to make some difficult decisions over the last year or two in relation to a wide range of public sector workers in order keep inflation lower than it might otherwise have been, which has enabled the Bank of England to keep interest rates lower than they would otherwise have been.

“These are difficult economic times and a wide range of public sector workers are also having to accept lower settlements than anybody would have liked to have seen in an ideal world.”

Preston web design company ictinsite limited provides an international web marketing and web design service with high levels of expertise at getting web sites to the top of the search engines. The business has been formed to build success online for companies -by providing eye-catching designs, relevant communication that induces action; and expertise to drive conversion.

The combination of offerings with value for money and efficient delivery make ictinsite a leading Preston web design company.

The Chief Executive was a founder member of the Creative Industries and IT Cluser group in the North West and has presented to the group on a number of occasions and introduced relevant speakers on Intellectual Property and Legal Affairs.

The company has used Lancaster University Projects to assist in developing the business and is a keen promoter of local interest ictinsite has run workshops presented to members of both the Lancaster Chamber of Commerce and the NW and Central Lancashire Chamber of Commerce.

By locating close to the M6 the team are able to give clients within the North West a fast response. The company takes its environmental responsibilities seriously and tries to reduce its carbon footprint in order to make its contribution to the planet. Being a creative and IT company the power of the web to drive business for our clients will be a a major contributor to reducing carbon footprint. The growth in use of web searching, online purchasing and communications has beaten most expectations - ictinsite has set its stall out to aid companies to make above average returns on investment by being found, and converting potential to actual customers.

Within a few months of a well thought through communications package and with an SEO approach the customer will see the traffic build up and the opportunities expand.

As a web design Preston company ictinsite has already serviced customers nationwide and has started to work on international opportunities.

According to analysts, the expected 20 percent drop in UK house prices over the next two years could destroy up to 100 percent of the value of land banks held by Britain’s struggling housebuilders, threatening their survival.

On Monday Royal Bank of Scotland published research predicting a 70 percent fall in land prices, compounding even bleaker outlooks from Merrill Lynch and Cazenove over the past week

The news came as Persimmon prepares to announce that 1,000 staff will lose their jobs in an effort to cut costs. Last week, Barratt said it will cut 1,000 staff, and Taylor Wimpey announced 900 job cuts.

The ever-worsening outlook for housebuilders comes in a week that sees four of the UK’s listed groups publish what are expected to be bleak trading updates. They are expected to include a raft of measures to fend off a deepening crisis of sharply lower volumes and steadily declining prices.

The next few months are about survival. “[Housebuilders will need to strike] the balance between right-sizing and maintaining sufficient scale to take advantage of a recovering market – when it comes.” Cazenove said last week.

Tomorrow will see Bovis and Redrow both update the market, while Barratt Developments will disclose its position on Thursday. Bovis and Redrow are expected to focus on cost-saving measures. Barratt, who slipped out of the FTSE 100 index after losing 95 percent of its value in the last 12 months, have been locked in talks with its banks to secure refinancing. The group is likely to tell the market how successful it is likely to be on Thursday.

Analysts believe only a 20 percent fall in house prices in the short-term will make home ownership affordable again to first time buyers. Cazenove says that “at current levels, homes are still 25 per cent overvalued for first-time buyers, and about 17 per cent overvalued for the market as a whole.”

Merrill Lynch says a 20 per cent-plus decline in house prices over 12 months “has the potential to eliminate all of a housebuilder’s net asset base”.

Douglas Alexander visited Glasgow this weekend in an attempt to drum-up support for Labour in a clear sign that the government are concerned about a critical by-election in the city this month.

Mr Alexander – brother of Wendy, who just last month stepped down as Labour’s leader in Scotland – is among 39 Scottish MPs who have been urged by the prime minister to travel north to help the campaign.

The moves come amid fears that the Scottish National party will claim Glasgow East in the July 24th by-election – prompted when David Marshall, who had a majority of about 13,500, was forced to step down due to health reasons.

However, the prospect of defeat at the hands of the SNP appeared to strengthen on Sunday night after a weekend of chaos surrounding the selection of a Labour standard bearer.

Favourite candidate George Ryan, a local councillor, withdrew citing the “pressures” on his family if he became an MP.

Labour will be hoping to restore some momentum by selecting Margaret Curran, at present a member of the Scottish Parliament for Glasgow, as its candidate.

Ms Curran said that she hoped for a “spirited” campaign. “I am putting my name forward because I’m deeply committed to the communities of the east end of Glasgow,” she said.

Internal polling by Labour shows that the party’s majority in the seat has fallen to as little as 5,500, according to a Scotland on Sunday report. Labour is concerned about a catastrophic defeat in the city – once an impregnable party stronghold – since the loss of Crewe and Nantwich, and the waning poll ratings.

No candidate for Glasgow East and any leader in Scotland Alex Salmond, first minister and SNP leader suggested that Labour was in “complete meltdown”.