PRESS DIGEST - Financial Times - June 7

CONCERN AT VAT BILL FOR AGENCY DOCTORS

According to RSM Bentley Jennison, The Treasury has hit the NHS with a 100 million pound bill for VAT by insisting it pays the VAT on the full cost of employing agency doctors and other medical professionals. Until recently, NHS organisations only paid VAT on the commission that employment agencies charged when they hired doctors from them. Martin Kaney, director of NHS VAT services, said the move was "slipped into the small print of the Budget announcement in March" but the NHS organisations have been given no guidance to alert them to its budgetary impact.

TUC SAYS PUBLIC OPPOSES TAX CUTS FOR BIG COMPANIES

According to a poll by the Trades Union Congress, tax cuts for big companies would be strongly opposed by the public. The TUC aims to stiffen the Treasury's resolve ahead of a meeting with multinationals about the future of the tax system. Brendan Barber, general secretary, has urged the government to "stand firm and not be duped into creating a completely skewed tax system that favours big multinationals." However, finance directors from some of the biggest companies are likely to report growing anger about the aspects of the corporate tax system when they meet the Treasury this Monday.

BANK GOVERNOR HAS VETO ON DEPUTIES

Mervyn King received a crucial "understanding" from the Treasury that he would not have deputies forced on him without agreement when he secured a second term as governor of the Bank of England. King has expressed his strong preference for Charlie Bean, the Bank's chief economist, but that choice is at odds with the view among commercial and investment bankers that what is really needed in a senior role at the Bank is not another economist. Right now the right person, in the judgement of many bankers, is Paul Tucker, who heads the Bank's financial stability division.

ROW AS NHS SURPLUS EXCEEDS TWO BILLION POUNDS

Figures released by the Department of Health on Friday showed that the National Health Service made a surplus of well over two billion pounds last year. The data shows directly owned NHS trusts underspent their allocations by 1.65 billion pounds - less than the 1.8 billion pounds surplus that had been previously forecast. It is also understood that NHS foundation trusts will report a surplus before exceptional items of between 400 million pounds and 500 million pounds, which takes the total above two billion pounds.

VOLUME OF AUCTIONED PROPERY AT LOWEST LEVEL SINCE RECORDS BEGAN

The amount of property being sold at auction is at its lowest level since 1991 when records began. Over the past year, there has been a sharp decline in success rates for auctions of both commercial and residential property, as well as in the prices being achieved. The managing director of Essential Information Group, David Sandeman, said: "It is a clear downward turn . There are so few buyers out there as there is so little money." Mr Sandeman hints there are bargains beginning to emerge, with houses not even going beyond the reserve price.

SPORT MEDIA FALLS TEN PER CENT AS NEWSPAPER RELAUNCH FLOPS

Sport Media Group lost nearly a tenth of its value on Friday after saying it would miss profit targets. The publisher of the Daily and Sunday Sport newspapers said the relaunch of the papers with less overtly adult content and more mainstream news had been "disappointing" and revealed a new strategic review that included buying the publisher of Front for 265,000 pounds. Sport Media Group said: "The initial reaction to the relaunch has been disappointing, although the board remains confident that the revised style of the paper will attract new readers and advertisers."

CABLE & WIRELESS SETS THUS DEADLINE

Cable & Wireless(CW.L) has given the board of Thus THUS.L until the end of the month before it withdraws a 165 pence-a-share offer for the alternative network provider. Thus said that C&W's approach denies shareholders a portion of any synergy benefits, and it has only held one meeting and three telephone calls with the company since its initial approach on May 28. C&W revealed it was "disappointed" the provider had not entered into negotiations.

FLOMERICS HOLDS TALKS WITH NEW SUITOR

Flomerics FLO.L, the engineering software company facing a hostile bid from Mentor Graphics (MENT.O), has identified a rival potential bidder in Autodesk (ADSK.O). The company has been in preliminary discussions with Autodesk, and the news added 5.5 pence to its shares, which closed on Friday at 112.5 pence. Mentor is offering 104 pence in cash plus the final dividend of 1.6 pence, and the closing date for its bid is on Monday. Mentor said: "Shareholders should not be distracted by the unconfirmed possibility of other bidders who may or may not table a rival offer."

PANTHEON STARTS FRIENDS TURNROUND

Friends Provident FP.L is close to selling Pantheon, its upmarket intermediary business, to a private equity buyer, in the first round of its planned disposals to come to fruition. According to sources close to the process, Friends could announce the sale of Pantheon to a private equity buyer and for a price in the region of 30 million pounds as early as next week. A sale of Pantheon would be the first deal to be struck to reshape and revive the life assurer since it said in January that it would make a series of disposals.

BARCLAYS FOLLOWS US DIRECTIVE ON IRAN

In an apparent effort to avoid falling foul of US financial sanctions, Barclays(BARC.L), one of Britain's largest banks, has shed Iranian customers in the UK. The decision to close the accounts of two Iranian owned banks, Saderat and Melli, along with those of bank directors and staff, follows a decision by the US Treasury's Office of Foreign Assets Control in October to place both on its list of specially designated nationals. A letter from Deborah Cooper, a Barclays lawyer, to lawyers representing bank employees said: "Barclays . has a policy of not conducting business with people or entities which are publicly designated SDNs."

Prepared for Reuters by Durrants.