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Thursday newspaper round-up: Bank levies, Defence companies, Music downloads…

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03/01/2013
Bank levy raises less than hoped; defence companies bid for £1.5bn military contract; download sales break records

The Government’s levy on the banks will raise only £1.8bn in the current financial year, much less than the £2.5bn figure repeatedly trumpeted by David Cameron and George Osborne. It is the second year running that the Chancellor has fallen short of his goal for raising money from the banks. The lower-than-expected revenue from the levy on the banks’ balance sheets was confirmed by the Office for Budget Responsibility (OBR), the independent fiscal watchdog, in its twice-yearly report on the economy. [The Independent]

Defence companies competing for a £1.5bn contract to replace Britain’s military air traffic infrastructure will submit proposals over the next few days. Three teams including BAE Systems and Lockheed Martin are vying for the work, which will be undertaken over a period of 22 years. The contract, known as Project Marshall, is expected to be awarded by the Ministry of Defence in 2015. [The Telegraph]

Sales of downloaded music, films and video games exceeded £1bn in 2012, breaking all previous records, but retailers continue to see steep falls in people buying CDs and DVDs. New figures released today show that the sales of digital downloads in Britain now make up a quarter of all entertainment sales, increasing more than 11 per cent compared to 2011. Sales of CDs, DVDs, Blu-ray and video games still account for just over three quarters of the entertainment market. But there is grim news for high street stores, which saw purchases of physical discs falling by 17.6 per cent compared with 2011. [The Times]

A stark split of retail and investment banking rather than mere “ring-fencing” would help cut customer fees and charges, a top think-tank claimed yesterday. The Institute for Public Policy Research (IPPR) is the latest body to throw its weight behind moves for a more formal separation of high street and so-called casino banking than that proposed by the Vickers report. Bank customers were paying substantial fees and charges – which the IPPR compared to unjustifiably high “rents” – because competition in the sector was “severely distorted and regulation has been historically ineffective”. The body, in a report out yesterday called “Don’t bank on it: financialisation in the UK economy”, said such charges failed to reflect the levels of banking service and performance, and were helping “harm the rest of the economy”. [The Scotsman]

The advertising tycoon Sir Martin Sorrell reignited the row over corporate tax after he described the amount big companies pay as “a question of judgement”. The comments, in an interview with the BBC, sparked a furious response from tax campaigners amid a public outcry over the way multinationals such as Starbucks, and Amazon have avoided paying UK corporation tax. Sir Martin, the chief executive of WPP, said: “The right model is you make a contribution. All contributions you make to your stakeholders are a question of judgement. There are the rules. If companies choose to make a contribution to all the stakeholders, all credit to them.” [The Independent]

Billionaire US investor Warren Buffett is taking a $2.5bn (£1.5bn) bet on solar energy, acquiring what is set to become the largest photovoltaic development in the world. MidAmerican Energy Holdings, a subsidiary of Mr Buffett’s Berkshire Hathaway investment company, has struck a deal with SunPower to acquire and build two projects in California’s Antelope Valley. The deal, which will see MidAmerican pay between $2bn to $2.5bn, marks the third time in little over a year that Mr Buffett has ploughed cash into solar energy. [The Telegraph]

Bank of America is ramping up mortgage and corporate lending after two years of focusing on capital levels and cost-cutting under chief executive Brian Moynihan. Mr Moynihan said the company should overtake JPMorgan Chase in direct-to-consumer mortgage lending in the next six months and he had directed bankers to be “more aggressive” in lending to companies. [Financial Times]

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