Wednesday, May 14, 2008


Millions of families are having to spend almost 1,000 pounds a year extra on food after more punishing price rises. The annual increase in the price of a basket of essentials surged to 19.1 per cent in May, according to the Daily Mail Cost of Living Index. The rate has jumped alarmingly from 15.5 per cent in April - a 3.6 per cent rise - and there is no sign of the pressure easing. There is now a worldwide crisis over supplies of key crops such as corn, wheat and rice. It has triggered food riots in some countries. And in the UK it has brought the biggest rises in bills in a generation.

A family which spent 100 pounds a week on food last year now has to find another 19.10 for the same products, equivalent to 993 a year. Once "must-pay" bills for petrol, mortgages, power and council tax are added, the extra cost is more like 2,200 pounds. Yet the official inflation rate is just 2.6per cent.

Experts say a worldwide drive to produce biofuels - made from corn, wheat and soya as an alternative to oil - is a major factor. Farmers have switched from food production to biofuel crops. Last month, the EU agreed the biofuel content of all petrol and diesel should be 2.5 per cent. This is set to rise to 10 per cent by 2020.

But the Government's two most senior scientists, Professor John Beddington and Professor Robert Watson, have called for a rethink on the rush to biofuels. Professor Beddington said: "It's very hard to imagine the world growing enough crops to produce renewable energy and at the same time meet the enormous demand for food." Gordon Brown is understood to be preparing to call on the EU to scrap the plan.

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Socialists decide not to destroy Britain's finance industry after all: "The Treasury has succumbed to sustained pressure from big business and agreed to water down controversial proposals to change the UK corporate tax regime. Several big multinational British companies had said that they were prepared to move their headquarters from the UK amid concerns that the Treasury was preparing to tax the profits they derived overseas. A Treasury spokesman confirmed yesterday that the department had drawn up a new set of tax plans after extensive consulation with UK companies. The move will be seen as another embarrassing government climbdown. The spokesman said that new proposals would be put out to consultation in mid-June, with a view to introducing legislative changes next year. Sir Martin Sorrell, the chief executive of WPP, threatened to move the advertising giant offshore, following a lead set by Shire, the pharmaceuticals business, and United Business Media, the publishing group. Other companies looking at moving their headquarters outside the UK for tax reasons include Aberdeen Asset Management, the fund manager, and Brit Insurance and Chaucer, the Lloyd's of London insurers. Smith & Nephew, the medical equipment firm, and Old Mutual, the insurance and fund management group, have both refused to rule out a departure.... Treasury sources said that the Government would move ahead with legislation only if it had secured the broad agreement of business and would not rule out abandoning the proposals."

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