PRESS DIGEST - Financial Times - June 17

The Financial Times

OSBORNE PLANS RADICAL REVAMP OF TREASURY

George Osborne, shadow chancellor, has said that a Conservative government would radically restructure the "rather dysfunctional" Treasury by scaling back its Whitehall empire and shaking up its policymaking function. Mr Osborne said: "There is a strong argument for removing the delivery function of tax credits, child benefit and child trust funds, and putting them with the Department for Work and Pensions." The shadow chancellor's words will strike a chord with business, which is becoming increasingly vocal about the department's perceived shortcomings under Gordon Brown's premiership.

CARBON CAPTURE PROPOSAL ATTACKED

The Association of Electricity Producers has warned that electricity producers would be unable to comply with Conservative proposals to allow no new coal-fired power plants to be built without "some element of carbon capture and storage." David Porter, chief executive of the electricity trade body, said the Tories had the "wrong approach" as their proposals would make carbon capture and storage "mandatory before it has even been demonstrated successfully."

OLDER PEOPLE NEEDED TO FILL SHORTFALL

According to analysis by the Financial Times, the number of old people retiring from the workforce is set to outstrip youngsters joining it by several hundred thousand over the next two decades. By 2026, some 14.5 million people will have reached the age of 65, the current state pension age for men. This is 331,000 more than the amount of young people, currently younger than 20, who will be coming through to replace them in the workforce.

UK MOST POPULAR IN EUROPE FOR FOREIGN INVESTMENT, SAYS STUDY

According to a survey, Britain is the most popular place in Europe for investment by foreign companies. The KPMG survey found that one in seven large multinational companies from 15 leading economies expected to make a significant investment in the UK in the next year. One in six of the companies also chose Britain when asked where they would be investing in the next five years. The majority of the more than 300 corporate investment strategists in the survey thought the problems caused by the credit crunch will be short-lived - affecting investment only for the next two or three years.

HOUSING DOWNTURN HELPS STOP NON-DOMS RELOCATNG

A study commissioned by Barclays Wealth shows that the downturn in the housing market is a factor persuading wealthy foreigners to remain in Britain, despite this year's introduction of higher taxes for non-doms. According to the research, Britain's career opportunities and culture have ensured that it remains one of the world's most attractive regimes. However, the study also warns that financiers and hedge fund managers are highly mobile and have a "domino" mentality. It says that London, for the moment, retains a critical mass, but this could change rapidly if only a small proportion elects to leave.

AVIVA CHIEF SET TO MARK A TOUGH FIRST YEAR IN CHARGE

In a few weeks it will be the first anniversary of when Andrew Moss officially took the helm at Aviva (AV.L), and some in the City are asking questions about the performance of the UK's biggest insurer. Since Mr Moss's appointment last year on July 11, its shares have fallen by 21 per cent, underperforming the FTSE all-share life assurance index by one per cent. One analyst said: "[Mr Moss] does not seem to be having the luck of the draw at the moment." The latest flashpoint has been a shake-up at Aviva's UK non-life insurance business which risks defections of key companies that provide it with business.

PRIMARK TAKES ACTION ON CHILD LABOUR

Primark, the discount fashion retailer owned by Associated British Foods (ABF.L), has stopped buying from three suppliers it found to be using child labour to embroider clothes it had sold in its stores. It said that the three factories in India, one of which had been supplying Primark for 12 years, were found to have subcontracted work to home workers who had used children. The retailer told other suppliers that it "would not tolerate this type of contracting" and would appoint a "reputable non-governmental organisation in southern India to act as its eyes and ears on the ground."

AERO INVENTORY WOOED BY PRIVATE EQUITY FIRM

On Monday, shares in Aero Inventory AI.L, the aircraft component supplier, rose by nearly a quarter after it said it had received a "very preliminary proposal" that could lead to its sale. The unsolicited approach from private equity firm Bridgeport has been pitched at a premium to its 52-week peak of 720 pence. Bridgeport already has a presence in the aerospace market through ownership of Global Design Technologies, which provides services to Airbus, Boeing and Bombardier.

ICAP CHIEF GIVEN 34 PER CENT RISE IN PAY

Icap (IAP.L) has demonstrated the value of performance-linked pay by giving its chief executive, Michael Spencer, a 34 per cent pay rise to 9.1 million pounds for the last financial year. Icap said its executive pay is heavily performance related to "keep executive interests in line with those of shareholders." Its annual report for the year to March also showed that the group had agreed a new one billion pound medium-term loan facility, its largest such financing so far.

CLIENT WINS LIFT KEWILL SYSTEMS

Kewill Systems (KWL.L) has promised further advances in profits and revenues after reporting strong business growth last year. Revenues for the company, which specialises in software used to track inventory in transit and in warehouses, in the year to March, jumped 41.6 million pounds as pre-tax profits increased to 1.14 million pounds. Corus, the steel producer, Allianz (ALVG.DE), the insurance group, and Fuller, Smith and Turner, the brewer, join a list of new clients it has secured during the year.

Prepared for Reuters by Durrants