PRESS DIGEST - Financial Times - May 12

The Financial Times

BANKS' LOSSES TO HIT PUBLIC FINANCES

The losses suffered by Britain's biggest banks as a result of the crisis in the financial markets will add further pressure on public finances by cutting the amount of corporation tax paid by the financial services industry. The Financial Times has calculated the 10 billion pounds worth of write-downs unveiled in recent weeks by Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) will knock over 2.5 billion pounds off the three banks' combined tax bills. This figure represents over five percent of the Treasury's forecast for corporation tax receipts in the 2007-08 fiscal year.

CHANCELLOR FIRES BLAST AT EU'S FARM POLICY

Chancellor of the Exchequer Alistair Darling is to urge fellow European Union finance ministers to support the dismantling of the Common Agricultural Treaty because it is costing EU consumers billions of pounds in higher food bills, while at the same time hurting farmers in the developing world. In a strongly worded letter, Darling calls current EU farm policies "unacceptable". He also repeats Britain's insistence that Europe must review its 10 percent biofuel target as he believes this may be forcing up food prices in developing nations. The future of the EU farm budget could become the most contentious issue facing the union in the next few years.

TREASURY PURSUES EXTRA EFFICIENCY SAVINGS OF FIVE BILLION POUNDS

The Treasury is about to start the next stage of the government's efficiency drive, which it hopes will deliver billions of pounds of extra savings by next year's Budget. Whitehall estimates put possible savings over the next year at over five billion pounds. This is in addition to the 30 billion pounds already planned for the present spending review. The focus will initially be on four cross-cutting strands where the potential for efficiency gains has been identified, these being: buying in bulk; using property more efficiently; asset management and sales; and back office and IT.

MINISTER IGNORES POLITICAL RISK TO PRESS ON WITH POST OFFICE CLOSURES

Post Office Minister Pat McFadden will make clear on Monday he will go ahead with planned controversial closures of post offices. McFadden will tell the annual conference of the National Federation of Sub-Postmasters that if the network is to face up to the challenges of "lifestyle, technology and competition" then it has no choice but to reorganise itself and modernise. McFadden will argue the main objective of the closure programme is to increase the sustainability of the remaining network of 11,500 outlets.