LONDONYC

Hallam criticises police after murder conviction quashed

Thu, 17 May 2012 16:08:00 GMT

Young man jailed over 2004 killing then released by court blames Met police for taking away eight years of his life

Sam Hallam has criticised the Metropolitan police for taking away eight years of his life after the court of appeal quashed his conviction for murder when hearing fresh evidence that "significantly undermined" his conviction.

Speaking outside the high court, Hallam – who was put in prison at the age of 17 and released only on Wednesday – said he had not received an apology from the police for wrongly focusing on him as one of the killers of Essayas Kassahun in a gang attack in Hoxton, north London, in 2004.

"It [the investigation] just wasn't done properly," he said.

"Them not doing their job properly cost me eight years of my life. I lost eight years of my life and nothing is going to happen to them."

The court of appeal quashed his 2005 conviction for murder on Thursday after hearing that evidence he had had all along on his own mobile phone undermined the case against him.

The phone was never examined by the Metropolitan police investigating the murder of Kassahun, nor by Hallam's own defence team, nor raised as an issue by him – which Lady Justice Hallett blamed on his own "faulty recollection and dysfunctional lifestyle".

Hallam, who is now 24, said on Thursday that prison had been tough. He started his sentence in Feltham young offenders' institution – which his uncle, Terry Hallam, said had been very difficult.

His father killed himself while Hallam was in prison, and he has not yet been able to visit his grave. "Just knowing I was innocent and having a lot of support outside kept me going," Hallam said on Thursday in an interview with BBC London. "I couldn't have done it personally, it was the support outside."

Clearly angry with the police, he said: "I have lost my family, my family lost me, I have lost my life. I spent all my time in prison, and I lost my liberty … I can't get that back. That time is gone. I have got to carry on from there."

He thanked his family and the huge numbers of supporters from the community in Hoxton for their long campaign to free him.

Hallam was jailed in 2005 for life with the recommendation that he serve at least 12 years for the murder of Kassahun, having served a year on remand at 17.

The main evidence against him was from two young witnesses whom the appeal court said on Thursday had only a fleeting glimpse of what happened and for whom there was always plenty of scope for making a mistaken identification.

His case was investigated by the Criminal Cases Review Commission, which brought an appeal based on fresh evidence that raised doubts about the reliability of the two key witnesses and new information from his mobile phone in the form of pictures that supported what he had always maintained: that he had not been at the scene at the time Kassahun was killed.

Hallam was released on bail on Wednesday when the crown surprisingly announced that it would not oppose his appeal. He is one of the youngest victims of a miscarriage of justice. His freedom had come after a massive campaign was launched – eliciting the support of the actor Ray Winstone among others – to clear his name.

But in her ruling on Thursday, Hallett said what had emerged was that Hallam had evidence in his possession – his mobile phone – that could have helped him all along. When he was arrested, Hallam could not remember where he was on the night of the murder. He later said he was with a friend – Timothy Harrington – but Harrington denied being with him, and the crown claimed at the trial that Hallam had clearly made up an alibi.

Hallam remained silent when he was arrested by the police shortly after the killing in 2004.

"It has to be said that his inability two days after to say where he was at the time of the murder has not exactly helped his case," Hallett said. She asked why neither the police nor his legal team had examined his two mobile phones

"One reason proffered for the failure to examine the phones was that in 2004 the Metropolitan police did not have the technology in use for 3G phones," she said.

"However, given our limited knowledge, we would have thought that even a cursory check would have produced some interesting results."

When Hallam's 3G phone was eventually examined by the CCRC and Thames Valley police – which carried out inquiries for the CCRC – it was found to contain pictures that put Hallam in a pub with his father on the evening of the killing and also showed that he had been with Harrington the day after – thereby giving credence to his original alibi.

It raised the distinct possibility, the judge said, that Hallam and his friend Harrington had merely been mistaken as to when they had met and that he had not – as was claimed – concocted an alibi.

Expressing surprise that Hallam himself had not mentioned the existence of his phone or the fact that he had been taking pictures with it to his legal team, she said: "We would have thought the appellant [Hallam] would have alerted the defence team that he had been taking photos on a new phone, which would have helped establish his whereabouts."

She blamed his failure to alert them on his "faulty recollection and a dysfunctional lifestyle, not a deliberate lie".

Hallett stopped short of criticising the Met or the Crown Prosecution Service, which were accused by Hallam's defence team at his appeal of failing to pursue lines of inquiry and not disclosing all the evidence.

Quashing his murder conviction, Hallett said there was now significant material before the court that supported Hallam's story that he was not at the scene of the murder on the night.

"The situation has now changed dramatically," said Hallett. The "false alibi" claim that the prosecution had used to support their two witnesses had now been "significantly undermined".

The Met police said: "The death of Essayas Kassahun was a tragedy and what followed was a complex investigation for which one person remains convicted. It is a matter of deep regret that Sam Hallam lost his liberty due to what has subsequently been found to be an unsafe conviction. The circumstances of his death involved a large group of people and this type of investigation often relies on people coming forward to give us personal accounts. We continue to face challenging investigations such as these and there are undoubtedly certain lessons to be learned for police and the wider criminal justice system from today's judgement which we will carefully consider."

General Motors saves Vauxhall factory at Ellesmere Port

Thu, 17 May 2012 13:02:00 GMT

Feared closure averted as GM announces that next Astra car model will be built at Merseyside and Polish plants

The Vauxhall car plant at Ellesmere Port has been saved from closure, preserving 2,100 jobs and creating 700 more, after workers accepted a deal that will result in the next-generation Astra built at the factory.

The business secretary, Vince Cable, visited the plant on Thursday to mark an agreement that, in a rare reversal of industrial fortune, could lead to the closure of a sister plant in Germany.

The European arm of General Motors, Opel/Vauxhall, will split production of the new Astra model between the Cheshire site and a plant in Gliwice, Poland, with Opel's factory in Bochum, Germany, likely to lose out as a consequence.

Ellesmere Port and Bochum had been chosen by GM executives as the plants most likely to close, triggering frantic lobbying by British politicians and trade union officials that appears to have paid off. GM is attempting to cut losses at its European operations that reached $747m (£470m) last year.

Workers at the plant voted 94% in favour of new pay and conditions under the deal, clearing the way for the £125m investment to go ahead.

Cable, an Astra owner, told the Guardian the government had serious concerns over the future of Ellesmere Port earlier this year. "At the beginning," he said, "we were very concerned because it was clear that GM were committed to substantial downsizing in Europe. But we thought that this was one of the most productive plants and it was not being fully utilised. We had a good story to tell about the British car industry." Cable said the plant had been saved by a "team UK effort" that included officials at the Unite trade union, led by former general secretary Tony Woodley.

Asked about the Bochum plant, Cable said: "I don't want to be triumphalist but the fact that they have chosen to commit to the UK rather than the German plants is a significant statement in a way.

"But rather than dance up and down on Germany I would prefer to leave it as a positive story for us." Cable said he would be "in the market" for buying the new Astra when it rolls off the Ellesmere Port production line from 2015 onwards.

Welcoming the news, David Cameron said: "This is excellent news for Ellesmere Port and for UK manufacturing. Once again we have seen the success of the UK automotive industry and the crucial role it plays in growing and rebalancing our economy.

"This has been a real team effort with the government, the company, unions and workers all focused on keeping production in the UK."

The government is expected to support the expansion of Ellesmere Port through supply chain and apprenticeship initiatives.

Unite's current general secretary, Len McCluskey, said the plant's future had been guaranteed into the next decade. "This is extremely good news for Ellesmere Port. The company has made an offer to the workforce, which our members have accepted.

"From a position of uncertainty earlier this year, there is now a potential for a future at the plant until 2020 and beyond, and with that, 700 new skilled jobs at Ellesmere Port itself, and possibly hundreds more in the supply chain."

The site is 50 years old this year and employs 2,100 workers, plus a further 700 suppliers on the site. The directly employed staff have accepted a new labour agreement that includes a pay deal. Woodley played a significant role in negotiating the deal, which will result in Ellesmere Port ratcheting up to a 24-hour production cycle, from two daily shifts to three.

GM is not the only carmaker scrutinising its European operations. Analysts believe the industry in Europe is more than 3m units over capacity. GM owns seven plants in Europe, including a van factory in Luton, which is not under immediate threat. Ellesmere Port builds the Astra Sports Tourer, making 140,000 models last year. The plant was built in 1962, producing its first car, a Viva, two years later. As well as creating 700 new jobs, the new agreement will see £125m invested in the plant, which will produce a minimum of 160,000 vehicles per year.

The doubts about Ellesmere Port's future have been the only cloud over a UK car manufacturing industry that is enjoying a renaissance from the post-crash lows of 2008-09. Britain made about 1.34m cars last year, an increase of 6% on 2010. A large contributor to the boom is demand in emerging markets for premium cars, such as Minis, Land Rovers and Bentleys – all made in the UK.

However, the mass-produced market has been suffering across Europe and Ellesmere Port has been caught by that crisis. Nonetheless, other mass producers based in the UK, such as the Japanese trio of Honda, Toyota and Nissan – the biggest car producer in the UK – have boosted their British production plans in recent months.

Vauxhall's chairman, Duncan Aldred, said: "This is great news for the Ellesmere Port plant, our employees, the local community, our suppliers, the Vauxhall brand and the UK. We have been able to develop a responsible labour agreement that secures the plant's future. This is assisted by the government's industrial strategy: increasing its focus on the manufacturing sector and creating ideal ground for companies to build up long-term investments."

Broadcasters win Dale Farm footage case

Thu, 17 May 2012 09:07:52 GMT

High court says broadcasters including BBC, ITN and Sky News do not have to hand over Dale Farm eviction footage to police

The high court has ruled that news broadcasters including the BBC, ITN and Sky News do not have to hand over footage of the Dale Farm eviction to police.

In a ruling handed down at the high court on Thursday morning, Mr Justice Eady said broadcasters did not have to disclose unbroadcast footage of the eviction to Essex police.

The judge said that the police need clear evidence of criminality when applying for production orders against the media.

Broadcasters including BBC, Sky News and ITN – the producer of ITV News, Channel 4 News and 5 News – won the right to a judicial review after they were told by Chelmsford Crown court to hand hours of footage of the Dale Farm eviction in October last year over to the police.

In his judgment on Thursday, Eady said that the Chelmsford Court decision failed to give any sufficient weight to the inhibiting effect of production orders on the press.

The ruling marks a significant victory for the media, which has campaigned strongly against being forced to disclose unbroadcast footage.

Broadcasters warned they would be seen as an extra arm of the state if they passed unaired footage to the police.

Eady said in his judgment: "The interference caused by such orders cannot and should not be dismissed mainly because a small proportion of that which is filmed maybe published.

"The judge should have feared for the loss of trust in those hitherto believed to be neutral observers if such observers maybe too readily compelled to hand over their material. It is the neutrality of the press which affords them protection and augments their ability freely to obtain and disseminate visual recording of events."

Eady and Lord Justice Moses described as scattergun and speculative the attempt by Essex police to obtain more than 100 hours of broadcast and unbroadcast footage from the media groups.

The ruling also applied to Hardcash, the independent producer behind a BBC Panorama documentary on Dale Farm, and Jason Parkinson, the freelance journalist who filmed an Essex police officer using a stun gun against a Traveller during the eviction.

Eady and Moses said that production orders should only be granted if there was cogent evidence of how important the unbroadcast footage would be in a police investigation.

Parkinson said he was "very happy" with Thursday's ruling because it recognised the impact production orders have on the "safety and impartiality of all journalists".

"This ruling to overturn the crown court's decision to grant the Dale Farm production order sends a very clear message to all police forces that these wide-ranging fishing trips will not be accepted by the UK courts and that we will not be forced into the role of unwilling agents of the state.

"We are not there as evidence gatherers to fill police intelligence databases with hours of material on activists or protestors. We are journalists and we are there to report the news and keep the public informed.

"In the last 18 months, every time one of these orders have been served it has put journalists in greater danger while trying to report on public order situations. I know this because I have been threatened and assaulted by people claiming my material will be used by the police. I am very happy to see [the high court] has recognised the impact these orders have on the safety and impartiality of all journalists and has made sure any future production order applications must take this into account, as was clearly not the case this time round."

NUJ general secretary Michelle Stanistreet said: "Today is a huge victory for the cause of press freedom and the protection of sources and journalistic material.

"We are incredibly pleased that the NUJ and other media organisations have won the high court battle against the police production order to force journalists to hand over their Dale Farm eviction footage."

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The Sunshine Boys – review

Thu, 17 May 2012 22:02:01 GMT

Savoy, London

America's Danny DeVito and Britain's Richard Griffiths join forces in this joyous revival of Neil Simon's 1972 comedy about a pair of superannuated vaudevillians. But what makes the play profoundly touching as well as funny is Simon's understanding of the obduracy, childishness and professional neglect that are often inseparable from old age.

The play has echoes of Simon's greatest hit, The Odd Couple. This play is also about two men in a quasi-marital relationship. For 43 years Willie Clark and Al Lewis were a headline double-act but, after a decade in non-speaking retirement, they are to be reunited for a CBS comedy special. But Willie is a cantankerous old cuss who loathes his ex-partner because of his decision to quit the business. Al, meanwhile, is a gentler soul who lives with his daughterin New Jersey and wonders why he should go through an old routine with the waspishly vindictive Willie.

Because of his early training in Sid Caesar TV comedy, Simon is often thought of as a gag writer, but what makes him so funny is that his jokes spring from character. At one point Willie's agent-nephew, who pays a weekly visit to his truculent uncle in his hotel room, complains: "I always get chest pains on Wednesdays." Willie's dry response of "Then come on Tuesdays" captures the veteran comic's determination to have the last word. But, while Simon gets an extraordinary number of laughs out of the confrontation of the bickering comics, he also makes it clear old age is no joke. Willie and Al may be vaudeville characters; but, in their arguments and their mix of dependence and open hostility, they resemble many old couples fighting off the fear of mortality.

Thea Sharrock's production treats the play as a character study rather than a mechanical gag-fest and yields two glowing performances. DeVito's Willie is an extraordinary mix of the hard-nosed old pro, who explains why words with a "k" are funny, and the malevolent loner. For such a small man, DeVito exudes a disproportionate rage, but he makes you feel Willie's volcanic anger stems from his yearning to work. Griffiths, as his former partner, is mellower but displays a silvery determination when it comes to the precise placement of a chair and has the look of a wounded man. By the end you begin to understand why Willie says of Al, "As an actor no-one could touch him, as a human being no-one wanted to touch him." Adam Levy as Willie's peace-making nephew is a desperate man caught between an irresistible force and an immoveable object. The end result is a richly resonant comedy that reminds us that, while Simon may be pure, he is rarely simple.

Rating: 4/5

HSBC chief to subject UK banking operation to performance tests

Thu, 17 May 2012 22:01:00 GMT

Stuart Gulliver says move will follow government's white paper on ringfencing bank's high street operations

Stuart Gulliver, the chief executive of HSBC, has said the bank will have to think "long and hard" about its operations in the UK once the government publishes its rules on erecting a ring fence around its high street operations.

As he gave an update of the bank's strategy – which has led to 14,000 job cuts as he cuts costs to make the bank more efficient – Gulliver said the UK business would be subjected to his performance tests once it was known how the final details of the Independent Commission on Banking (ICB) were implemented. A white paper is expected next month.

Last May, when he first unveiled his strategy for the bank, Gulliver described the UK as essential for retail banking and he said on Thursday that the business was one of the best performing, describing it as a "home" market.

But referring to the "five filters" of performance measures he is applying to all the bank's businesses and which have led to 28 disposals in the past year, Gulliver said: "We need to see what the ICB final report is because it's unclear to me whether we'll end up with two operations both of which are excellent and have RoEs [return on equity] above the cost of equity or no operations which have RoEs above the cost of equity, in which event we'll have to think long and hard because the five filters apply everywhere.

"The only reason we haven't put the UK as one of the restructuring priorities into the activity for this year is that we don't know yet until we get the white paper, so there's not a lot of point in having a large slide with 20 different hypotheses on it. But these will be restructured. If they can't restructure it will make no sense for us to deploy shareholders' equity where we can't get returns."

He is intending to achieve $3.5bn (£2bn) of savings within three years to bolster the bank's return on equity to 12-15%. It was 11% last year.

He became chief executive last year after three decades with the bank, latterly running the investment bank.

He introduced a new approach, which he described as requiring staff to act with "courageous integrity", and said he had concluded that retail business in 39 out of 61 countries was "sub-scale".

Picture desk live: the day's best news images

Thu, 17 May 2012 21:54:00 GMT

In our photo coverage of the day's events we witness the swearing in of the people destined to be the shortest-lived government in Greek history and remark on baffled butterflies

Stephen Moss's diary

Thu, 17 May 2012 21:50:01 GMT

Azerbaijan may score nil points on human rights, but according to the wonderful world of PR, Eurovision's got the solution

• The Eurovision song contest is always the sequinned highlight of the cultural calendar, but will its lustre be dimmed this year because it's taking place in Azerbaijan, ranked 162nd in Reporters Without Borders' press freedom list? Quite a few opponents of President Aliyev will have to watch on 26 May on prison TV, and the anxious Azeris are employing a phalanx of PR companies across Europe to boost their profile. Berlin-based Consultum Communications, headed by the unfortunately named Hans-Erich Bilges, has been lobbying hard in Germany, but Azerbaijan's two agencies in the UK, Freud Communications and Ketchum, are also doing their bit. Freud works principally on cultural projects patronised by the president's daughter, Leyla Aliyeva, and denies reports it has been recruiting celebs to add glamour to next week's contest in Baku. A spokeswoman for Freud admits the country has human rights problems, but suggests acting as Eurovision host will force it to confront them. Ketchum describes its role as "providing communications and media relations support" for the contest's organising committee. It, too, denies ferrying out celebs, but says it will be helping with "general logistics" for the 1,500 journalists expected to attend. Naturally, the Diary is available for an all-expenses-paid fact-finding mission. C'mon Engelbert!

• And now let us pray. Sunday has been declared a "day of prayer for the media", and God knows we need it after the revelations at Leveson. There will be special prayers at churches across the country. "God, who turned word into flesh, inspire those who turn flesh into word and image and story, that truth may be told and life celebrated." Book your pew early to avoid disappointment.

• Which brings us to former News of the World reporter Graham Johnson's new book Hack. "I moved at 800 miles per hour, the mean velocity of a tabloid terrorist, whether I was coming through your door to destroy your life, filing copy, or irritably phoning my mum once every six months. Like a German tank column, I only ever ate on the move, mostly out of 24-hour garages – Ginsters curry pasties, Lucozade to dissolve the exhaustion, and a couple of Zantac popped for dessert. My mind was so disturbed with passion and vice, I took beta-blockers in an attempt to make it still. I was in my twenties." Fear not, Graham, there is more rejoicing in heaven over one tabloid sinner who repents than over 99 righteous persons who work for the Economist.

• Carla Bruni says she was staggered by the treatment of her husband's campaign by the French press and that he was a victim of "fury", reports rightwing weekly Le Point. No media organ was spared as she declared "French television – it's leftie television!" Odd coming from a woman who called herself a leftist up until the day she married the prez. As one cruel radio pundit quipped: "She really should put on a brave face – if she can still manage the expression." What can he mean?

• Teach Yourself Kusunda (part 3). Today, weather. "Yago; tang giwen tsirmatn. Wi-yi badza qai ugi ipen sumle agendzi. Dza hoego borloq in dzi." "Cold; I believe it will rain. Outside the house, wind comes and the corn breaks. Stoke the fire and boil the water." Pure poetry. Today programme weather gabblers, take note. Next week: rude words.

• The unexpected benefits of minimum alcohol pricing. "As Tesco own-brand whisky will be £10.25 a bottle in Middlesbrough but £14 in Scotland," emails a sharp young fellow called David Carter, "I'll be stocking up the car to drive to Edinburgh at festival time. The profit will pay for accommodation. I assume there are no customs checks at the border." Trebles all round.

• Duncan Campbell, an esteemed former occupant of this pulpit, reckons he has solved the great insults question. "Surely any insult should have to pass the Groucho Marx test – does it make a bystander smile? My favourite Groucho (which I have used once, very satisfyingly) is: 'I never forget a face, but in your case I'll make an exception.'"

Twitter: @StephenMossGdn

Examiners axed after marking mistakes

Thu, 17 May 2012 21:30:11 GMT

Exam board OCR apologises for errors that affected GCSE and A-level grades

Four examiners have had their contracts terminated and 78 others have been ordered to improve their performance after mistakes were made in calculating pupils' scores in GCSE and A-level papers from last summer.

The exam board OCR has apologised for marking errors that affected GCSE and A-level grades. Exams regulator Ofqual said it could not be certain that all candidates had the grades they deserved.

Channel 4 News said David Leitch, a senior supervisor at OCR, found wrongly calculated final scores in 100 papers from last summer that schools had referred for checking. A wider search found "hundreds more" mistakes by the same markers but Leitch claims he was instructed to inform only schools which had requested paid-for remarking.

Dissatisfied with a review ordered by regulator Ofqual, the programme reported, he emailed 30 schools directly to alert them to errors and has now been suspended by OCR pending a full inquiry.

Ofqual's director of regulation, Fiona Pethick, said questions remained over the accuracy of marks. Asked if she could be personally sure that no pupil still had a lower grade than they should, potentially affecting a university place, she told the programme: "I'm not satisfied yet. That's why we will be continuing to look into this matter and if we find OCR to be negligent we will take action."

The errors related to examiners totting up marks from traditional pen and paper scripts. The exam board said its investigation had found 16 cases where pupils had received a lower grade than they should – eight AS-levels, two A-levels and six GCSEs.

It resulted in the termination of four examiners' contracts, while 78 others out of 13,000 - "almost all" teachers and ex-teachers with relevant degrees - were ordered to improve their performance.

Mark Dawe, OCR's chief executive, said: "Any error in the exam process is unacceptable and we have taken action to implement more robust processes. This included terminating the contracts of weaker examiners. Students taking exams in the spring and this summer can be assured that mistakes of any sort will not be tolerated."

The exam board's qualifications director, Clara Kenyon, said OCR had not been made aware of the existence of further errors. "We were not told of the existence of these additional scripts with mistakes on them until schools contacted us," she said. "This is of course a concern and we are processing them in the usual way and will make grade changes, if required, and inform schools."

The board was confident that new safeguards would provide "a high level of clerical accuracy" in future, she said, pointing out that marks for three in four papers were calculated electronically.

All papers are due to be handled electronically by 2014.

"Students taking exams both in the spring and this summer can be assured that mistakes of any sort will not be tolerated and we have taken the necessary measures to guard against them," Kenyon said.

The civil service is not a punchbag for ministers | Peter Riddell

Thu, 17 May 2012 20:30:02 GMT

Politically inspired civil service bashing is naive, and counterproductive to the process of reform

Ministers and civil servants have got to work together, or else they will fail separately. In the last few days there have been well-sourced reports of angry clashes at Downing Street meetings, and the unexpected departure of Ian Watmore as permanent secretary at the Cabinet Office has stirred a buzz of speculation. Politically inspired civil service bashing in the media – about officials being lazy for working from home during the Olympics and being generally obstructive – is not only naive and exaggerated but also counterproductive.

The complaints read oddly, given the scale of radical reforms – to schools, health, welfare, immigration, higher education - that have already been enacted and are now being put into operation. Head counts have already fallen by as much as they did during the Thatcher years.

Of course, there is plenty of scope for reform, as the Institute for Government has repeatedly argued. The record on managing big projects, notably on information technology, has often been poor. Departments lack the right kind of information to assess whether there is value for money, and policymaking too often does not take into account the problems of implementation. Civil servants can too easily fall into a cynical "here today, gone tomorrow" attitude towards ministers. Departmental permanent secretaries too often behave like barons resisting efforts to create collective leadership.

But the civil service has already changed considerably in the past 20 years, being more open and diverse and putting much greater emphasis on delivery and improving skills. And, as all accept, much more needs to be done. The public sector is still only a fifth to a quarter of the way through spending cuts lasting well after the next election with targets of cutting administrative budgets by between 33% and 50%.

The immediate focus is the government's long-awaited civil service reform plan, due next month. The discussions have been enlivened by the often brutal iconoclasm of Steve Hilton, the prime minister's strategy adviser, who has just started a year-long sabbatical in California. He advocates a much smaller civil service, all fitting into Somerset House, and he has clashed with civil service leaders who regard some of his views as naive. But many of his underlying frustrations are shared by ministers. However, the new civil service leadership, Sir Jeremy Heywood, the cabinet secretary, and Sir Bob Kerslake, the head of the civil service, fully accept that more big cuts and reforms have to happen – even though there has been vigorous debate over the extent and details.

Sir Bob and Sir Jeremy are indispensable to David Cameron. Sir Jeremy is the most powerful cabinet secretary in a generation, precisely the complaint of some Tory MPs and commentators. While Sir Bob's reflective style may be unusual in Whitehall, he has far more experience of running large organisations – from his nearly two decades as a local authority chief executive – than any other permanent secretary.

The pair represent the best hope for taking forward civil service reform. They now need to show a joint commitment to reform in detail if they are to mobilise their fellow permanent secretaries to show collective leadership.

It is no good ministers and their advisers treating the civil service as a populist punchbag. They cannot change government on their own. Cameron should publicly and strongly back the civil service leadership and the reform plan. The alternative is that reform will falter, as it so often has in the past, leading to a downward spiral of morale and performance.

Peter Riddell is director of the Institute for Government

London 2012: Athens hands over Olympic flame to Princess Anne - video

Thu, 17 May 2012 20:16:51 GMT

Princess Anne, David Beckham, Boris Johnson and Sebastian Coe attend ceremony at the Panathenaic Stadium in Athens

Eurozone crisis live: Fitch downgrades Greece on euro exit fears

Thu, 17 May 2012 20:07:00 GMT

• Fitch cuts Greece to CCC
• Bankia chairman denies reports of bank run
• El Mundo: €1bn taken out since Bankia nationalisation
• Markets fall again
• Spanish bond yields jump at auction
• Vince Cable: Germany can solve the crisis

9.05pm: Another dramatic day must end. Keep an eye on the website, Twitter, or your nearest Reuters/Bloomberg terminal in case Moody's does downgrade some Spanish banks, as we had expected. In the meantime, here's a closing summary:

Fears that Greece might leave the eurozone, sparking global turmoil, intensified tonight as Fitch downgraded its credit rating. The ratings agency said that there was a heightened risk that next month's election will lead to a government that does not support the current austerity plan, leading to a break-up of the single currency and a Greek default. Fitch would also put all eurozone countries on negative watch, which could lead to further downgrades.

Rumours of a bank run at Spain's fourth-largest bank rocked the markets. Spanish media reported that over €1bn had been withdrawn from Bankia since it was nationalised. The report was denied, after shares in the bank fell by almost 30%.

It was another day of losses on many world stock markets.
The FTSE 100 closed 66 points lower at 5338, meaning it is now officially in correction territory. On Wall Street, the Dow closed 156 points lower.

In Greece, the temporary government was swown in as the election campaign got underway. Polling data painted a mixed picture, with one showing New Democracy in the lead, and another placing Syriza in front. The party's two leaders both hit the headlines, with ND's Antonis Samaras warning that Greece faced a 'nightmare' if it left the euro, and Syriza's Alexis Tsipras predicting 'hell' if it stayed.

UK politicians weighed in on the crisis again. David Cameron urged other leaders on a conference call to take decisive steps to save the eurozone, Alistair Darling warned that the crisis could blow up in a few hours, and Vince Cable argued that Germany would act to protect the euro.

Thanks, and goodnight! We'll be back in the morning. Hope you can be too.

9.01pm: Wall Street just closed after another day of losses, with the Dow Jones unofficially finishing 157 points lower at 12,441, a drop of 1.25%. That's its 11th fall out of the last 12 day's trading.

The S&P 500 ended almost 1.5% lower, while the Nasdaq lost over 2%.Europe got a lot of the blame.

8.19pm: Downing Street officials have been telling journalists tonight that David Cameron warned fellow European leaders that they need to take "decisive action" to ensure eurozone stability.

This afternoon's high-level conference call involving Cameron, German chancellor Angela Merkel, French president François Hollande and Italian prime minister Mario Monti lasted for 45 minutes.

A Downing Street spokeswoman said it was a "constructive discussion", ahead of this weekend's G8 meeting at Camp David.

He discussed with the others their priorities for G8: the eurozone - including Greece, growth and the importance of expanding trade relations between the US and the EU.

7.48pm: It's been a tough day for Spain* -- with those rumours (officially denied) of a run at Bankia, the higher borrowing costs seen at this morning's auction of sovereign debt, the IBEX closing at a new nine-year low, the regional downgrades from Moody's, and confirmation that it's in recession.

And in a few minutes, we fear Moody's will also announce that it has downgraded some Spanish banks.....

* - not Greece as briefly mistyped. Perhaps a sign to close things up

7.10pm: Fitch's downgrade of Greece came as I was digesting two opinion polls from Athens.

The latest MARC/Alpha survey, which was conducted between Tuesday and today, put New Democracy (which broadly supports the terms of Greece's financial programme) back in the lead, closely followed by Syriza (which has vowed to reshape it).
New Democracy: 26.1% of the vote
Syriza: 23.7%
Pasok: 13.2%

That, according to Bloomberg, would give New Democracy 123 seats (including the 50-seat bonus for coming first), followed by 66 for Syriza and 41 for Pasok. So the two "mainstream" parties could then form a majority in the 300-seat parliament.

However, a different poll carried out by the Pulse polling group (see bar chart) found that Syriza was the most popular:

Syriza: 22%
New Democracy: 19.5%,
PASOK: 14%,
KKE Communist Party: 5.5%
Democratic Left: 5.5%
Golden Dawn: 5.5%

6.47pm: Fitch has also warned that it would put all eurozone sovereign ratings on rating watch negative following the Greek elections if it believes a Greek exit from the eurozone has become "probable".

That would be the first step towards credit rating downgrades. As things stand, only four eurozone countries still hold AAA ratings with all three major rating agencies, while others have already suffered several rating cuts since the crisis began.

Tonight's statement also shows that Fitch have cut Greece's "country ceiling to just B-" That, I think, means that no bond issuer based in Greece can have a higher rating....

Business Insider have now helpfully uploaded the whole statement.

6.36pm: Big breaking news tonight -- Fitch has just downgraded Greece, warning that it could soon crash out of the single currency.

The rating agency cut Greece's long-term rating to CCC, from B-, just two months after upgrading its rating following its debt swap deal.

Fitch said it had taken the move because of the chance that the next Greek government will be led by parties who oppose the current austerity plan.

In a statement, Fitch said

The downgrade of Greece's sovereign ratings reflects the heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union (EMU).

The strong showing of 'anti-austerity' parties in the 6 May parliamentary elections and subsequent failure to form a government underscores the lack of public and political support for the EU-IMF EUR €173bn programme.

In the event that the new general elections scheduled for 17 June fail to produce a government with a mandate to continue with the EU-IMF programme of fiscal austerity and structural reform, an exit of Greece from EMU would be probable.

Fitch went on to warn that a Greek exit would likely result in widespread default on bonds issued by Greek companies, as well as its own sovereigh debt.

6.19pm: On Wall Street, the main stock indices have fallen again today. That's partly due to fears over the eurocrisis, and partly the weak economic data released today (see 3.06pm). The Dow Jones is currently down 46 points at 12551, a fall of 0.4%, with the S&P 500 down 0.6%.

That puts the S&P on track for its fifth daily loss in a row.

Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver, told Reuters tonight:

Europe continues to drive sentiment, and it continues to be negative, while in addition today's data was mediocre overall. That's causing people to take risk off the table.

6.06pm: Some breaking news on Spain -- Moody's has just announced that it has downgraded four Spanish regions: Catalunya, Murcia, Andaluca, and Extremadura.

It confirmed its ratings on two other regions - Valencia, and Castilla-la Mancha.

Moody's said it had taken the decision because it believes there is little chance that authorities in these areas will hit their deficit goals. That's worrying – Spain missed its overall deficit target in 2011 because its regions borrowed too much.

The move comes as speculation grows that Moody's will downgrade as many as 21 Spanish banks tonight. According to the FT's fine Alphaville blog, the downgrade is definitely coming, and it's going to be big....

5.39pm: Nearly £190bn has been wiped off the value of leading shares on the London Stock Exchange since markets began to take fright over a potential Greek exit from the euro, two months ago.

My colleague Patrick Collinson has crunched the numbers, and reports:

In the eight weeks since the FTSE peaked on March 16, the market has fallen by 10.4%, including today's 1.24% drop. The FTSE100 has plummeted from 5965 to 5338, while the All Share index has slumped from 3098 to 2776, according to FTSE Group.

The scale of the fall means it is now an official 'market correction', which is defined as a fall of 10% or more in a relatively short space of time.

4.56pm: Alistair Darling, the former UK chancellor of the exchequer, has blasted Europe's leaders for wasting the last two years, and warned that the crisis could blow up in just a few hours.

Speaking on Sky News, Darling said EU politicians must realise that:

If you don't get growth, you don't get deficits down. It's common sense. We had this debate seventy five years ago.

Darling, who was UK finance minister between June 2007 and May 2010, warned that the world economy simply couldn't cope with another banking crisis, saying that confidence was "desperately needed"

From my own experience these things can blow up in a matter of hours. The slow bleeding of Greek banks should worry everyone.

Europe for the last two years has been running round like headless chickens. It's no wonder people now think things will go wrong.

4.39pm: European stock markets have closed in the red again, after another day dominated by fears over the eurozone.

FTSE 100: down 66 points at 5338, - 1.24%
DAX: down 67 points at 6316, -1.06%
CAC: down 32 points at 3016, -1.07%
IBEX: down 73 points at 6537, -1.11%
FTSE MIB: down 194 points at 12089, -1.46%

Fears over Bankia's future saw its shares close 13% lower, despite the official denials that it was suffering a bank run.

The Stoxx 600 Euro Zone banking index, which includes financial stocks from across the single currency, fell by 2.6% to its lowest ever closing level. That reflects speculation that Moody's will downgrade a swathe of Spanish banks at 8pm BST tonight...

4.19pm: With stock markets heading into the close after another day of losses, it has been calculated that the collective pension deficits of Britain's biggest listed companies has swelled by £30bn in the past fortnight.

Actuaries at Towers Watson have, according to the Daily Telegraph, worked out that total deficits in FTSE350 companies' pension funds have increased from £62bn at the end of April to £92bn yesterday.

Most of the damage was caused by falling yields on government bonds such as UK gilts and German bunds, rather than the drop in share prices. Lower bond yields mean that pension funds must calculate that they will earn less from holding sovereign debt, which is why pensions groups really dislike quantitative easing.

4.02pm: Following today's denials from Bankia, City analysts are warning this afternoon that Europe could see bank runs in earnest unless progress is made to resolve the crisis.

Capital Economics pointed to reports of deposit outflows in Greece, saying:

Concerns are growing that bank runs could soon become a regular feature in other troubled countries in the region deemed at risk of following Greece's lead.

The recent rapid decline in Greek bank deposits underlines our warnings that it could be market pressures exerted through the banking system which prompt some form of euro-zone break-up.

This graph shows how Greek bank deposits have been falling for months.

With the euro bobbing around the $1.27 mark, and shares down in Europe, CMC Markets' Michael Hewson compared the markets to the Vortex rollercoaster at the Thorpe Park theme park:

Talk of bank runs in Europe clobbered banking shares across Europe with Bankia in Spain gyrating wildly lower. Reports that ratings agency Moody's is considering downgrading 21 Spanish banks has also weighed on sentiment as the Spanish IBEX hit fresh nine year lows, as economic data confirmed that the country was back in recession.

UK banks also got caught up in the backdraft with Royal Bank of Scotland and Barclays the biggest losers in UK markets.

3.38pm: Greece can look forward to a visit from the International Monetary Fund after next month's election.

David Hawley, the IMF's deputy director of external affairs, told reporters in Washington that officials were very keen to meet Greece's next government, and review progress made against the targets set by the Troika as part of its €130bn bailout.

3.16pm: EC president José Manual Barroso has told the United Nations that Europe will do whatever it takes to help keep Greece within the eurozone.

In prepared remarks running on Reuters, Barroso told the UN General Assembly that the EU will meet its obligations, and that Greece must do the same. Here's a flavour:

As far as Greece is concerned, I would like to reaffirm very clearly that we want Greece to stay in the euro area. And the European Union will do all it takes to ensure it.

Barroso also sent a signal to Greece's leaders, as the new general election campaign gets underway.

We will honour our commitments toward Greece and we expect the Greek government - current and future - to fulfill jointly agreed conditions for financial assistance.

3.06pm: Some disappointing data from America has just knocked market confidence, and suggested that the US economic recovery is faltering.

The Philadelphia Fed business conditions survey was weaker than expected, coming in at -5.8 for May. That suggests US business leaders in the Philadelphia region are seeing tougher conditions.

Seperately, the Confidence Board's Leading Economic Index (a measure of future economic activity), fell in April for the first time in seven months.

2.46pm: Stuart Gulliver, chief executive of banking giant HSBC, has told the Guardian that the crisis has intensified over the last week, and that a firewall would need to be put around Spain if Greece leaves the euro.

Jill Treanor, our banking expert, reports:

A week ago, when Stuart Gulliver was asked about whether Greece would stay in the eurozone he said it was "impossible" to tell. Asked again today, he said "We're in a worse place than we were a week ago".

"It remains a very difficult thing to call. I think the second election in June will be be a referendum on whether to stay in the euro. A month is a very long way away," he said.

"We are now seeing price action that is consistent with capitulation," said Gulliver. And if Greece decides to exit the eurozone, he believes an firewall will need to put around Spain. "We need to take Spain out of the market," he said.

HSBC has a bank in Greece with 16 branches and he said there were no particular signs of inflows or outflows. Asked it if was logical for Greeks to keep their money in banks if the county was going to leave the euro, he said it was: "if you believe the polls that show 75% of the electorate want to stay in the eurozone but don't support the austerity".

But, he added, that if there was a run on Greece banks it might not be possible to wait for the elections on June 17.

2.33pm: Our Madrid correspondent Giles Tremlett has full details on Bankia's denial of a bank run:

In the note, published by the Comisión Nacional del Mercado de Valores as "price sensitive information", Bankia said that operations in its branches "have been within the normal parameters", adding:

The evolution of deposits in the first fortnight of May has a highly seasonal nature

However, there is no mention of the €1bn euros that El Mundo newspaper said had been pulled out of the bank over the past week.

Bankia also expected that "the level of deposits will not suffer any major changes over the coming days."

The bank went on to remind clients that the governmnent had said they would not suffer because of the nationalisation and that the Bank of Spain said last week that Bankia was solvent and functioning normally.

Shares are now "only" 11% down on the start of day price.

2.05pm: Breaking news: Spain's Bankia has called on savers to remain calm. The bank has responded to today's reports that more than €1bn of funds had flowed out of the company in recent days.

Bankia issued a statement to the Madrid stock market in the last few minutes. In it, new chairman Jose Ignacio Goirigolzarri said:

Bankia's clients can be absolutely calm about the security of the the savings they have deposited

So, a clear signal that a bank run is not taking place.

1.26pm: It appears that Spain's economy minister Fernando Jimenez Latorre has calmed the worst of the crisis by insisting that Bankia was not suffering from an outflow of deposits (see 12.54pm)

Shares in Bankia have struggled back a bit, now down 13.6% at €1.43. Still a hefty fall.

1.08pm: Today's plunge in Bankia shares comes just a week after Spain's government stepped in to partially nationalise the bank. Under that deal, €4.5bn of state loans are being converted into shares, giving the Madrid government 45% of the company.

Like the rest of the Spanish banking sector, Bankia has suffered massive losses because of the country's property crash. This has left it sitting on around €30bn worth of bad debts to developers, or losses on land and buildings which have been repossessed.

12.54pm: Spain's economy secretary has just denied that Bankia is suffering a bank run, Reuters reports from Madrid.

Asked about today's reports that Bankia customers had withdrawn more than €1bn since it was nationalised last week, Fernando Jimenez Latorre told a press conference that:

It's not true that there is an exit of deposits at this moment from Bankia.

According to news flashes from Madrid, Jimenez Latorre also said that Bankia has everything it needs for succes, and should be given time....

12.32pm: The euro has just slipped to a new four-month low against the US dollar, as fears over the eurozone crisis swept through the foreign exchange markets again.

The euro hit a low of $1.2668, its lowest level since 17 January this year. The dollar was also rallying against other currencies, hitting a four-month high against the Swiss franc.

As well as the sitation in Bankia, traders were reacting to a report that Moody's would announce updated ratings for 21 Spanish banks tonight. City analysts fear that many of the banks could be downgraded, with the news now expected at 8pm BST.

12.05pm: European stock markets have fallen sharply following the news that Bankia's shares had tumbled.

In London the FTSE 100 is down 57 points, or 1.05%, at 5348, with Barclays shares falling 3.7%, and IAG (British Airway's parent company which also owns Spain's Iberia) down 3.8%.

Spain's IBEX is down 1.5% at 6510, a new low since 2003.

Italy's FTSE MIB has dropped almost 2%, with its own financial stocks falling.

The French CAC is down 0.8%, losing 24 points to 3023, while the German DAX is down 0.6%, or 40 points, at 6343.

11.51am: Shares in Spain's Bankia have now fallen by as much as 26% on the Madrid stock market, following those reports of customers withdrawing funds (see 11.17am for more).

Bankia was previously classed as 'under auction' (Reuters reports) -- which indicates that a large buy or sell order was passing through the market, or that the Madrid exchange was struggling to match buy and sell orders due to a mismatch.

UPDATE: Looks like I was wrong to state that Bankia shares had actually been officially suspended, as some City traders also thought. It appears that market volatility was causing trading to be interrupted (with thanks to Pablo Rodriguez of El Mundo, which was the first to report that some Bankia customers have been withdrawing funds.

11.31am: Vince Cable, the business secretary, said this morning that Germany can save the eurozone from disaster, pointing out that Europe's largest economy has done very well out of the single currency.

Cable told my colleague Dan Milmo that he was not "Apocalypse Now" about the crisis. Speaking from Ellesmere Port, where more than 2,000 Vauxhall car manufacturing jobs have been saved this morning, Cable said he confident of a positive outcome to the Greek crisis.

I am not Apocalypse Now about the European Union and the Eurozone. There are risks around Greece but Greece is a very small country. The significance of Greece is if you get contagion but I think that it is possible to be reasonably optimistic that Germany understands those risks and will put mechanisms in place. There are risks and worries and I am not minimising that. But there is every reason to believe that the EU will pull out of this crisis as Britain will.

Asked what 'mechanisms' he was referring to, Cable added:

We are talking about the firewall, the willingness of the European Central Bank to intervene, the understanding of the Italian and Spanish governments that if they play their part they will get back-up from, particularly, Germany. The Eurozone has advanced quite a long way from the peak of the crisis

It ultimately comes back to Germany thinking they have done extremely well out of the Eurozone, the competitive exchange rate. They have everything to gain from making sure this succeeds. And they are not just going to let it go down the pan.

11.17am: Shares in Bankia, Spain's fourth-largest bank, have tumbled by as much as 26% this morning. This follows a report that worried customers have withdrawn more than €1bn from their accounts since it was partially nationalised last week.

The El Mundo newspaper reported this morning that Jose Ignacio Goirigolzarri, the bank's new chairman, gave Bankia's board the information at a meeting this week.

Bankia, which was created from seven 'cajas' (savings banks) last year, was only floated on the stock market last July.

This graph shows how its share price tumbled in recent weeks, and is down 70% since flotation. That means huge losses for the many retail investors who took part.

10.31am: David Cameron has begun giving his speech in Manchester, warning about the dangers of the eurocrisis. He began by saying:

We are living in perilous economic times. Turn on the TV news and you see the return of a crisis that never really went away. Greece on the brink; the survival of the Euro in question. Faced with this, I have a clear task: to keep Britain safe. Not to take the easy course - but the right course. Not to dodge responsibility for dealing with a debt crisis - but to lead our country through this to better times.

Andrew Sparrow is covering the whole event here, in his Politics Live blog.

10.23am: A striking poster urging a No vote in Ireland's referendum on the EU fiscal treaty was erected overnight in Central Dublin:

It shows a European fist squeezing Ireland until it bleeds, and was put up by the Mandate union over its headquarters in Dublin's Parnell Square.

It appeared as the latest opinion polls send a warning sign to the Republic's governing parties. Just over a third of the Irish electorate remain undecided about what way to vote in a fortnight's time, according to respected polling firm Milward Brown.

From Dublin, Henry McDonald reports:

Around 35% of voters are in the "Don't Know" category with 37% saying they will vote Yes and 24% indicating they will vote No. This latest snapshot of Irish public opinion was taken amongst 1,000 voters on Monday and Tuesday for today's Irish Independent newspaper.

Of the two ruling parties Labour has the toughest task in securing a Yes vote on 31 May with 50% of their supporters saying they oppose the EU fiscal treaty, the poll found.

However a substantial majority of voters want the Republic to remain inside the euro currency zone with three out of every four polled stating they do not want Ireland to exit the euro.

The increase in the "Dont Knows" indicates that the Taoiseach Enda Kenny and his team still have a fight on their hands to persaude the Irish people to ratify a treaty that ties his government and all other states in the EU into tight budgetary controls.

The opposition to the treaty ranges from Sinn Fein and the United Left Alliance over to pro free market multi millionaire businessman Declan Ganley and his Libertas organisation.  Even the British eurosceptic UKIP have entered the fray distributing tens of thousands of leaflets across Ireland urging voters to reject the latest EU treaty.

10.12am: The word from Westminster is that Downing Street officials are confirming that prime minister David Cameron will hold a conference call with François Hollande, Angela Merkel and Mario Monti this afternoon.

This will give the leaders of the UK, France, Germany and Italy a chance to talk ahead of this weekend G8 meeting, where Barack Obama is expected to urge Merkel to back a new eurozone growth package.

9.54am: Spain has seen its borrowing costs jump sharply at an auction of government bonds. That's worrying, but the good news is that it raised the funding it needed.

The interest rate, or yield, on €1.09bn Spanish bonds maturing in 2016 jumped to 5.106%, compared with 3.374% at a similar auction in March. That underlines the fears swirling through the eurozone.

Spain also sold €1.02bn of 2015 bonds at an average yield of 4.375%, up from 2.89% in April (a much calmer month).

In total, Spain managed to raise €2.5bn, which means it has met 55.8% of its gross funding programme for 2012.

Nicholas Spiro of Spiro Sovereign Strategy said it would be "painful" for the Spanish Treasury to be selling debt at such prices.

Spain is selling its debt at punitive rates against a rapidly deteriorating domestic and external backdrop. Eurozone "break-up contagion" is seeping into Spanish yields.

The Greek crisis is placing huge strain on peripheral eurozone bonds and European bank shares. Spain is on the sharp end of these fears. The Spanish government itself can do very little to shore up confidence in the near term.

Unless there is a bold and decisive response on the part of the eurozone, sentiment towards Spain will deteriorate further. This is a very slippery slope right now.

9.49am: More developments in Greece - Antonis Samaras, the conservative New Democracy party leader, has addressed his parliamentary group this morning saying "we are the front of resistance against catastrophe."

From Helena Smith in Athens:

The unilateral withdrawal from the EU-IMF sponsored loan deal keeping the Greek economy afloat would be tountamount to the destruction of the country, he said, attacking Syriza for its "lack of preparedness and inability" to govern.

Samaras spelt out "the nightmare" that would ensue if Greece gave up the euro.

Reverting to the drachma would mean wages being "cut in half, deposits being cut in half" and property prices being devalued. The price of imports would skyrocket particularly for food and gas.

"This is the nightmare that those who speak of a unilateral condemnation [of the loan accord] will bring us."

Looking visibly shaken, the ashen-faced Samaras who had been a vociferous supporter of Greeks going to the polls "as early as possible" after the emergency interim government of Lucas Papademos took over last November, said Greece's national interests would also be threatened.

"Greece in Europe is protected nationally and geopolitically," he said. "If we become isolated we will find ourselves totally vulnerable with many around us being tempted to exploit our weakness," he said.

With the new caretaker government in power the speech in effect kicked off the electoral campaign. Alexis Tsipras' will also address his parliamentary group at 1:30 PM (11.30am BS) (as I type, his speechwriters are sharpening their pens).

9.30am: We're hearing that Alexis Tsipras, the head of the Syriza party whose popularity has surged recently, will travel to France and Germany next week to discuss the crisis.

More from Helena.

Senior cadres in Syriza, the radical left group which looks poised to emerged as the biggest party in next month's elections, have just confirmed that Alexis Tsipras, its leader, will be visiting Berlin and Paris for talks next week.

The 38-year-old, who has sent shockwaves through EU capitals saying that Greece can no no longer commit to the onerous terms of €130bn loan agreement it has signed up to with the EU and IMF, will be departing from Athens for Berlin on Monday.

It's not clear yet who Tsipras will be meeting.

9.25am: News in from Greece, where our correspondent Helena Smith says the country's interim caretaker government has just been sworn in.

Helena writes:

In what will go down in modern Greek history as one of the smallest cabinets ever, it is comprised of 16 ministers, mostly university professors and diplomats.

The swearing in of the new cabinet followed a similar ceremony for new prime minister Panagiotis Pikramenos. In another first the make-up of the new government was announced at dawn. A high court judge, Pikramenos takes over from former vice president of the European Central Bank Lucas Papademos who left the post warning that Greeks hadn't made sacrifices for "an empty shirt" but to put the debt-stricken Greek economy back on track. "There are those who are waiting to benefit from the chaos that will follow the humbling exit of the country from the common currency," he said.

9.15am: Benedict Brogan of the Daily Telegraph has a good take on David Cameron's upcoming address in Manchester:

'The Prime Minister's speech is the verbal equivalent of grabbing the Germans by the lapels and shouting 'do something'.

8.51am: Shares have fallen in major European stock markets today, but we're not seeing a repeat of Wednesday's selloff.

FTSE 100: down 19 points at 5384, - 0.36%
CAC: down 10 points at 3038, - 0.34%
DAX: down 3 points at 6380, - 0.06%

Mike McCudden of Interactive Investor said markets remain on a "negative trajectory", despite some traders reckoning that the crisis might prompt yet more quantitative easing from the world's central banks.

Volatility will remain until the markets have some comfort over Greece and the elections on the 17th June are looking more like a vote on whether they stay in the Euro despite local public opinion.

8.48am: There are reports from Italy this morning that Mario Monti, Francois Hollande, Angela Merkel, David Cameron and Herman Van Rompuy will hold a videoconference this afternoon, ahead of a meeting of G8 leaders this weekend. Nothing official yet...

8.38am: New economic data from Spain has confirmed that its economy shrank by 0.3% in the first three months of 2012, which put it officially back into recession.

No relief for the Madrid government, as it battles record unemployment and the crisis in its banking sector.

Spain will be in the spotlight this morning, as it holds an auction of government debt.

8.35am: $1,000,000,000,000. That's the cost of a disorderly, badly managed Greek exit from the eurozone, according to the Centre for Economics and Business Research.

The CEBR warned this morning that the end of the euro in its current form is certain. But while a well-managed Greek exit might only knock 2% off global GDP, the worst-case would see a 5% drop in global output (or $1 trillion).

CEBR's Douglas McWilliams said: "The economic consequences depend on the timing and the way in which the euro splits. There is no doubt that when the euro breaks up it will be costly.

Some countries will lose around 10% of annual GDP. But this will happen anyway – the choice is between a period of austerity followed by the impact of the end of the euro and then some eventual recovery OR facing the trauma of the end of the euro early and then starting to get the recovery underway."

More details in our front-page story here.

8.15am: The fact that David Cameron will make such a blunt intervention on the eurozone later today underlines the desperately serious nature of the crisis.

The prime minister's message to Europe will be delivered in the city of Manchester. It appears to be partly a message to his European counterparts, and partly a signal to domestic voters that he will do everything possible to keep Britain safe.

Here's what we expect the prime minister to say:

Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalised and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the eurozone, or we are in uncharted territory which carries huge risks for everybody.

"But be in no doubt: whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system.

Cameron may also repeat his line from Prime Minister's Questions yesterday that the eurozone "either has to make up, or it is looking at a potential break-up".

Our politics editor, Patrick Wintour, also reports this morning that Treasury insiders has been criticising Germany for demanding too much from peripheral countries. UK sources claim the Westminster government has long been pushing for eurobonds (collective borrowing) and a looser monetary policy.

But while Britain is badly exposed to the eurocrisis, Cameron's ability to influence events is limited. As political commentator Gaby Hinsliff points out this morning, it's not ideal for governments to be warning of problems they can't solve.

..& that's a dangerous position for govt to be in. warning of perils ahead, sounding rather powerless to stop it.

— Gaby Hinsliff (@gabyhinsliff) May 17, 2012

8.10am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis.

Coming up ... David Cameron is due to warn of the desperate consequences of a eurozone break-up. In a sign that the crisis is dominating the political world, the UK prime minister will argue that eurozone leaders must urgently create closer fiscal ties and an effective firewall to prevent their currency union imploding.

More on that shortly.

In Greece, the new caretaker government will be sworn in this morning. Outgoing prime minister Lucas Papademos has warned that the country stands at a "critical crossroads", but insisted that it can return to "stability, sustainable development and social prosperity".

In the financial markets, yesterday morning's mood of panic has been replaced by a sense of weary unease. Asian markets have clawed back some losses overnight, as traders hunker down for weeks of uncertainty until the Greek elections of 17 June.

Shock of beauty on a windswept moor

Thu, 17 May 2012 20:00:02 GMT

South Uist: Though small, tormentil has great character with something infinitely cheering about its buttercup brightness in the most inhospitable of places

The rock's pale surface is patched and patterned with lichen in shades of grey and soft sage green. At its foot are straggly hard-stemmed heather plants, still winter brown. From among them rise pinnate fronds of polypody. Bright green and fresh, delicate-looking and glossy, they make a perfect visual accent and a striking textural contrast with the rock behind. In the short turf between the heather is a scatter of wild flowers; the tallest are pale, slender-stemmed violets, sheltering where turf rises to meet rock.

Milkwort, dwarfed by the conditions at this exposed spot, lies low to the ground. Seen in close-up, it is exquisite, its tiny flowers an intense and holy blue. Curiously, the petals are barely to be seen. The glorious colour comes from two of the flower's five sepals which, grown large and brightly blue, enclose the petals almost totally. Only at the flower's tip can they be seen where the largest of them ends in a fringe of white plain to see against the blue. Close by, also growing low to the ground, are the yellow flowers of tormentil, the shape and arrangement of its petals reminiscent of the inner four petals of a Tudor rose. Though small, it has great character with something infinitely cheering about its buttercup brightness and something resolute about its ability to grow in the most inhospitable of places, even on the dampest of acid moorland soils.

And if the attractiveness of milkwort and tormentil was not enough in itself, both have medicinal and domestic uses. Milkwort's name records its use taken as a decoction to stimulate the flow of a nursing mother's milk, while preparations of tormentil were used to relieve ailments as diverse as toothache and gripings of the stomach. One of its folk names‚ "bloodroot", recalls its use as the source of a red dye, and from those same roots came an astringent substance sometimes used in tanning.

Harold Evans tells Leveson of conflict and 'vindictive' atmosphere at Times

Thu, 17 May 2012 19:57:03 GMT

Former Times editor recalls broken promises and says 'deal involving Thatcher' let Rupert Murdoch takeover papers in 1981

Thirty years after he was forced out from his last fulltime job in British journalism, Sir Harold Evans was back on Thursday to offer his reflections on Rupert Murdoch's 1981 takeover of the Times and Sunday Times and to recall an unhappy year editing the daily title while in constant conflict with the media mogul.

Speaking to the Leveson inquiry via an often failing video link, Evans said the takeover had been the "seminal event" that had propelled Murdoch into the dominant position in British media, a deal that had been assisted by a private meeting with Margaret Thatcher.

Evans recalled that Murdoch did not remember that meeting, the truth of which emerged only when a memo was released by Thatcher's foundation this year.

In effect, the veteran journalist was siding with a suggestion made previously by Robert Jay, counsel to the inquiry, who contended that Murdoch could have suffered "selective amnesia".

The former editor told the inquiry he believed a deal was hatched at that lunch to stop the purchase being referred to the Monopolies and Mergers Commission (MMC).

It was "ridiculous" to push through the "most important newspaper takeover in British press history" in three days, he said, adding that it "was a whole set of chess moves" in which "the pawn" had been advanced in a single move to the middle of the board "to bishop six".

Murdoch transferred Evans from the Sunday Times once the 1981 purchase had been seen through by John Biffen without referral to the MMC. Evans said that when Murdoch started at the Times he was a dream owner with an "electric presence" who was "vigorous and encouraging".

This rapidly changed. Evans described a year of constant editorial interference from Murdoch, replaying the events as if they had occurred the day before yesterday.

"I had a reporter in Poland sending little messages out in people's shoes," he said. The story was "a marvellous narrative" of events around the coup, spread over two pages. The next morning, though, the newspaper owner was unimpressed. "He turned to the Sun newspaper, which had this much on Poland: 'That's all you need on Poland'."

A leader writer was summoned behind Evans's back and told: "You should be attacking the Russians more."

At another point Evans replayed an argument with Murdoch in which the newspaper owner stated: "Sport, didn't I tell you sport, sport, sport, where are the four pages of sport?"

Evans said he had recently seen notes kept by the columnist Hugo Young, then of the Sunday Times, which showed Evans calling Murdoch "evil incarnate … he had his heart removed long ago, together with all his moral faculties". Evans said he had been "kind of so furious" that Murdoch had broken so many of the promises he made on buying the paper.

By this stage he was warming to his theme: "I was so absolutely disgusted, dismayed and demoralised by living in a vindictive atmosphere."

He added that Murdoch went around town telling other journalists he was going to fire him as Times editor because he was a "commie" or a supporter of the SDP, which was "untrue".

The Leveson inquiry seemed to show the rancour between the men was not cooling. Evans told Lord Justice Leveson he wanted to correct Murdoch's testimony in which the media owner said Evans had once come to his office to ask what he should put in the newspaper. "Portraying me as Uriah Heep, coming in and saying 'I don't have an opinion, Mr Murdoch can you tell me what to say?', was the funniest thing I've heard in 100 years."

It was evidence that the inquiry team listened to, for the most part, patiently. At the end the judge said that the insights had been particularly valuable, coming "from one who's spent a lifetime in the area and in respect of whom so much has been written and so many fabulous stories have emerged".

Lloyds bankers relax at luxury spa

Thu, 17 May 2012 19:38:17 GMT

Bailed-out bank sent dozen to Champneys to learn how to be more effective 'hunter-gatherers in the corporate jungle'

It's a tough job working for a bailed-out bank that owes the taxpayer about £20bn – so exhausting, indeed, that Lloyds Banking Group dispatched a dozen top bosses on a luxury spa break at Champneys designed to teach them to eat like an executive and learn how to be more effective "hunter-gatherers in the corporate jungle".

The celebrity spa resort created a "bespoke programme" to prevent the executives from "bail out, burn out or being booted out". The bank is just under 40% owned by the UK taxpayer.

Champneys, well known for hosting Premier League footballers and celebrities and the odd Metropolitan police chief, tutored Lloyds bosses in the "little-known, but highly effective methods of the UK's leading physique and corporate longevity specialists".

Tim Bean, the celebrity trainer who designed Lloyds' personally tailored programme, said the two-day trip last November was designed to teach the bankers "how to manage their chaotic lives". Bean, who promotes himself with the nickname "The Merciless Mr Bean", said he created a personal workout programme for each of the 12 bankers and tutored them on "executive nutrition".

Bean said one seminar, called Hunter-Gatherers in the Corporate Jungle, was designed to "re-equip them with the skills of alpha males and females".

The executives were also given advice on the latest developments in "physique management" and even "anti-ageing".

A spokesman for Lloyds said: "It is important to stress that this was a free one-off event that a small group attended last year at the request of a customer who wanted feedback on a new programme they planned to launch. It was arranged by a senior executive who no longer works for the group."

However, the chief executive of Champneys, Stephen Purdew, said: "Of course they bloody paid for it." He declined to state how much the event cost, but similar stays start at £995 per person.

According to the event programme, available on the Guardian website here, the bankers arrived at Champneys' Tring resort, set in 170 acres of Hertfordshire parkland, on 3 November – the day after Lloyds' chief executive, António Horta-Osório, took a month's sick leave owing to fatigue.

The next day they rose at 6am for a "dawn-breaker exercise class", and after breakfast attended a "build before you burn" class encouraging them not to rush into heavy workouts.

After a gruelling day's exercise they were invited to "de-stress or detox in our top-rated spa" where they could pick from "over 100 relaxing, energising and rejuvenating spa treatments".

Lloyds, Champneys and Bean declined to identify any of the employees on the trip, but Bean described them as an "executive team from Lloyds". He added: "I'm not sure how much more I can tell you. We offer our clients a pretty comprehensive NDA [non disclosure agreement] – it's about half an inch thick." Champneys has attracted attention for offering high-profile figures freebies at the resort. Sir Paul Stephenson resigned as commissioner of the Met after it was revealed that he had accepted £12,000 of free hospitality from the spa, which was then using Neil Wallis, the former deputy editor of the News of the World arrested in connection with the phone-hacking scandal, for public relations work.

Purdew is also a close friend of Rebekah Brooks, the former editor of the NoW and chief executive of News International. Brooks was a guest at Purdew's wedding at Claridges in 2009, along with Liam Gallagher, Piers Morgan, the EastEnders actor Samantha Janus, the late Stephen Gately from Boyzone, several ex-Arsenal footballers, Frank Bruno and Jimmy Savile.

Facebook share price set at $38

Thu, 17 May 2012 19:13:10 GMT

Social network's landmark flotation has investors clamouring to buy, but some analysts issue warnings about IPO

Facebook has set the final price of shares in its landmark initial public offering (IPO) at $38 (£24), the top of the price range it gave this week, as investors clamoured to buy into the social network. The move values the company at over $100bn.

Facebook had raised the price range to $34-$38 a share, up from $28-$35 earlier this week. The company's shares will begin trading alongside Amazon, Apple and other tech giants on the Nasdaq stock exchange tomorrow in what will be the biggest technology flotation ever.

The $18.4bn share sale will be America's second biggest, behind Visa's $19.65bn share sale in 2008. Founder Mark Zuckerberg, who owns 28.1% of Facebook shares, will be instantly propelled into the top tier of the super-rich.

The consultancy Wealth-X estimates his net pre-IPO fortune at $18.95bn. When, and if, Facebook's shares take off on Friday, some are predicting a massive first-day rise, known as a "pop", that would make Zuckerberg richer than Larry Page or Sergey Brin, the Google founders whose wealth soared after their own IPO.

The Los Angeles-based Wedbush Securities, the first firm to rate Facebook after it announced plans to sell shares, has set a 12-month price target of $44.

Facebook raised the size of its share sale this week to meet investor demand. Some of its largest shareholders and early investors seized the moment to significantly raise the number of shares they are selling.

Facebook increased the size of its IPO by 25%, or about 100m shares, as early investors announced they would sell as much as $3.8bn in additional shares.

While Zuckerberg said he would be maintaining his holding, the hedge fund Tiger Global, run by 36-year-old New Yorker Chase Coleman, increased its sell-off from 3m to 23m shares. DST Group, which represents Russian investors such as Yuri Milner, is now planning to offload a quarter of its holding.

Goldman Sachs announced it would sell 29m shares, more than double its previous plans to sell 13m. Peter Thiel, a legendary Silicon Valley investor who was one of the firm's first big backers, is now planning to sell 17m shares, up from 8m.

Zuckerberg will ring the Nasdaq stock exchange's opening bell in New York remotely from the company's headquarters, a 23-hectare complex in Menlo Park, California. The company's shares will then start trading with the stock symbol FB.

The massive hype has drawn scepticism from some analysts. Sam Hamadeh, founder of the analysis firm PrivCo, has argued that Facebook is worth a fraction of the estimates. In a note to potential investors, he valued Facebook at just $24-$25 a share.

General Motors announced this week it was pulling its advertisements off the social network, claiming that they were not working. GM is one of the world's largest advertisers and spent $1.83bn on ads in the US alone last year.

The car firm spent just $10m on Facebook, a tiny fraction of the tech company's $3.7bn revenues. But the move was a PR blow for a company that intends to make most of its cash from advertisers.

Nate Elliott, an analyst with the interactive marketing firm Forrester, wrote on his blog: "We wish we could predict this IPO would serve as a new beginning for Facebook's marketing offering, and that a new focus on becoming a grown-up business would inspire the company to put even half the energy into serving advertisers that it does into serving users.

"But we doubt Zuckerberg's going to wake up any day soon having acquired a taste for advertising, or even a proper understanding of it. And so every day more smart marketers are going to wake up and look for other places to dedicate their social resources."

Files close on BCCI banking scandal

Thu, 17 May 2012 19:02:12 GMT

Liquidators and lawyers acting for creditors to BCCI hold final meeting with victims of bank's collapse

It took 21 years and $656m (£415m) of fees paid to two firms of lawyers and accountants but on Thursday the files were finally closed on the banking scandal that was the Bank of Credit and Commerce International. It ranged from arms trafficking to prostitution and ended with a $20bn collapse.

Liquidators and lawyers acting for creditors to BCCI held a final meeting with victims of Britain's biggest banking scandal. About 150 creditors sat in silence at Westminster's Central Hall as liquidators from Deloitte and lawyers from Hogan Lovells explained how the battle for recoveries had taken them around the world, to "desert warehouses" and remote locations where "documents were rotting in damp, humid and rat-infested rooms". On some occasions the inspection of papers was only permitted under armed guard.

Deloitte amassed a library of 95,000 box files containing about 100m chaotically ordered documents – material that spawned a welter of litigation around the world, including the unprecedented decision, eventually aborted, to sue the Bank of England, which was responsible for bank regulation at the time of the BCCI collapse, for misfeasance in public office.

The failure of BCCI also revealed a nest of corruption, money laundering and other secretive activities. Organisations such as the CIA, Manuel Noriega and mujahideen guerrillas were linked to BCCI.

A damning report was produced by Lord Bingham in Britain, while in the US Senator John Kerry's report to the foreign relations committee delivered his verdict: "BCCI's criminality included fraud by BCCI and BCCI customers involving billions of dollars; money laundering in Europe, Africa, Asia, and the Americas; BCCI's bribery of officials in most of those locations; support of terrorism, arms trafficking, and the sale of nuclear technologies; management of prostitution; the commission and facilitation of income tax evasion, smuggling, and illegal immigration; illicit purchases of banks and real estate; and a panoply of financial crimes limited only by the imagination of its officers and customers."

A string of more than 60 prosecutions followed, including, in Britain, that of Abbas Gokal, a businessman with intimate ties to the bank, who received a record 14-year jail sentence.

BCCI, which at its peak had 417 offices in 73 countries, collapsed in July 1991 with liabilities estimated at close to $20bn. Adding to efforts by Deloitte and Hogan Lovells on behalf of English creditors, legal and liquidation costs for other divisions of BCCI took the total bill for lawyers and insolvency professionals to $1bn.

Angus Martin, one of three joint liquidators dealing with BCCI's UK estate, told the Central Hall meeting that the $369m bill from Deloitte represented value for money. He pointed to a recovery rate for creditors of 90p in the pound. "I think it has been very successful. I don't think anybody in the early days thought we were going to get anywhere near that figure."

After the meeting Martin accepted the recovery figure had been flattered greatly by the passage of time and that a pound in 1991 would have a value today of £1.76. "Even that conservative calculation gives a figure of about 50%, which is still a good result is liquidations go." An inflation-adjusted recovery rate is not given by Deloitte in the 78-page final report.

Many attending the meeting were elderly figures from an Asian background, reflecting the bank's deliberate decision in the 1980s to target British communities with links to India, Bangladesh and Pakistan. Almost two decades ago, many of them had been among the thousands who descended on the first creditors' meeting at Wembley Arena, a more angry affair.

At the 1994 meeting Keith Vaz MP, who had seen many Leicester East constituents caught up in the BCCI scandal, emerged as one of the loudest voices of scepticism at the huge sums of money being taken by Deloitte liquidators and their advisers. On Thursday Vaz was again in attendance. He said: "This process has made millionaires of the liquidators. What we need is a proper inquiry into these liquidation fees. Why is this still important? It has lasted 21 years; Lehmans [the US investment bank which failed in 2008] is going to be even longer. Government seems to think it has no role in this. That's got to change."

Martin said the liquidation process was helped by the collaborative approach to asset recoveries taken by Deloitte and counterparts responsible for liquidating BCCI operations overseas.That position is in marked contrast to the legal feuding which has characterised the early years of the Lehmans insolvency process, which in Europe is being carried out by PricewaterhouseCoopers. While Lehman was not infected with widespread criminality in the same way as BCCI, some of its investment banking activities represent a much greater challenge in terms of their complexity.

Wandsworth babies were suffocated, inquest told

Thu, 17 May 2012 18:45:07 GMT

Coroners court hears Lily and Mason Boots were found unconscious at their south-west London home last week

Two babies allegedly murdered by their mother were suffocated, an inquest heard on Thursday.

Lily Boots, 14-months-old, and her 10-week-old brother Mason were found unconscious by their father when he returned from work last week.

Their mother Felicia Boots, 34, who is believed to be suffering from post-natal depression, was arrested at the semi-detached home in Wandsworth, south-west London, and later charged with two counts of murder.

At inquest openings for Lily and Mason, Westminster coroners court heard the provisional cause of death for both was asphyxia.

Lily Skye, born on March 1 last year in Tooting, and Mason Godfrey Robert, born on February 28 this year, also in Tooting, were both identified by their father, investment banker Jeff Boots, who was not at the hearing.

Detective Inspector Paul Clack told the court that police and the ambulance service were called to the family's home in Killarney Road at 7.25pm last Wednesday after reports that two children had been found dead.

"They attended the scene and found the mother of the children, Felicia Boots, who was present at the address and father Jeffrey Boots together with two children, Lily Skye and Mason Godfrey, who were found to be dead in a bedroom at the address. Mr Boots had returned from work and found the situation."

He said Mrs Boots, who was described as a housewife at the hearing, was arrested on suspicion of murder at 9.28pm that night and was taken to Battersea police station.

She was charged with two counts of murder and appeared in court on Saturday, Clack said.

He told the court she was too ill to appear at a hearing at the Old Bailey this week and had been detained in a psychiatric hospital under the Mental Health Act.

She was remanded in custody to appear again on 10 August .

Clack said a postmortem took place on Friday, adding: "The provisional cause of death was asphyxia for both children."

Coroner Dr Fiona Wilcox told the court: "I formally open and adjourn the inquests into the deaths of Lily Skye Boots and Mason Godfrey Robert Boots in the public interest to allow the investigation of what appears to be their murders, by the police."

She set an additional provisional review date of 5 November.

JP Morgan losses 'could happen elsewhere'

Thu, 17 May 2012 18:36:01 GMT

Lloyds Banking Group chairman predicts that losses could be repeated even in groups with a good risk culture

The huge losses suffered by JP Morgan following its London office's disastrous investment strategy, could just as easily happen elsewhere, the chairman of the UK's largest retail bank has warned.

Sir Win Bischoff, chairman of Lloyds Banking Group, made his prediction following yesterday's shareholder meeting for the part taxpayer owned institution.

He said: "I'm a great fan of Jamie Dimon [JP Morgan chief executive]. But my concern is if it can happen to JP Morgan, which has such a good risk culture, it could happen to anyone."

He said no links had been found between Lloyds and JP Morgan's positions that led to a $2bn loss in six weeks.

Shareholders in LBG, which includes HBOS, Lloyds TSB and Scottish Widows, voted overwhelmingly in favour of the company's remuneration report.

The firm avoided the sort of investor revolt which has claimed the scalps of chief executives at Aviva, Trinity Mirror and AstraZeneca, thanks, in part, to boss Antonio Horta-Osorio waiving his bonus. Sir Win called the decision of Horta-Osorio to not take a bonus a "principled decision".

To cheers from the around 800-strong audience, one shareholder said: "There should be no bonuses until a return of the dividend."

Chairman Sir Win said: "We will resume payment of the dividend as soon as financially possible."

He added: "This is the preeminent issue for the board. We'd like to introduce it sooner rather than later."

There was no revision to the £3.6bn pot put aside to fund the PPI payouts to customers mis-sold insurance, but Horta-Osorio revealed half the amount – £1.8bn – has already been paid out.

Cairn Energy faces shareholder rebellion over pay

Thu, 17 May 2012 18:12:46 GMT

67% of investors vote down pay report on day which sees similar rebellions at Cookson, Prudential and Resolution

Cairn Energy, which has spearheaded controversial oil drilling in the Arctic, has become the biggest victim of the "shareholder spring" with 67% of investors voting down its pay reporton Thursday.

There were a further 10% of abstentions at Cairn on a day that also saw sizeable rebellions at Cookson, the industrial group, and the insurers Prudential and Resolution in protest at excessive pay.

Cairn, founded by its chairman, the former rugby star Sir Bill Gammell, acknowledged that it had been "rebuked" but gave no indication that it would back down on its proposals.

"The board and I fully acknowledge the strength of the views expressed by our shareholders in some of their voting," said Gammell. "Cairn endeavours to meet the highest corporate governance standards and is conscious of its responsibility to ensure best practice and continue an open dialogue with shareholders at all times."

Co-op Asset Management, which voted against the pay package, said the lack of a promise by Cairn to withdraw its plans showed why the government needed to make shareholder votes legally binding.

"We voted against the remuneration report on the back of Sir Bill's £1.4m bonus award for moving from the role of chief executive to chairman," said Abigail Herron, the corporate governance manager at the Co-op. "The methodology used for calculating this severance is dubious and the concept of moving from chief executive to chairman is against the UK corporate governance code."

Shareholder frustration followed critical comments from the Association of British Insurers and from the shareholder advisory groups Pirc and Manifest before Cairn's annual meeting in Edinburgh.

Investors were also angered because Cairn was forced at an extraordinary general meeting this year to scrap an additional £2.5m share award to Gammell to "compensate" him for moving job.

The company said the payments were a reward for completing the $6bn (£3.8bn) sale of the bulk of Cairn's Indian business to the mining group Vedanta, a deal that led to a major special payout to shareholders.

At Cookson nearly a third of investors voted against the industrial material group's boardroom pay policy – which has awarded £20m in shares to the group's three most senior executives. At the group's annual meeting 31.8% of investors voted against a pay scheme that has been strongly criticised by advisory groups.

Cookson's chairman, Jeff Harris, said the award was justified. "There is no suggestion whatsoever that this is in some way an example of reward for failure."

The chief executive, Nick Salmon, was given shares worth about £7m, with the finance director, Mike Butterworth, receiving shares worth £3.6m and the head of the ceramics division, François Wanecq, awarded stock worth £9.3m.

The Association of British Insurers had issued a red-top alert – its highest level of objection – over the report while Pirc, another advisory service, called for a vote against the reappointment of the board.

There was a similar size of rebellion at Prudential, which had disclosed in its annual report for 2011 that its seven executive directors were to share £30m in payments, including shares. Meanwhile, 20% of investors failed to back pay policies at the insurer Resolution.

They join pay protest votes this year which include opposition at Barclays, Xstrata and William Hill, as well as the enforced departures of chief executives at Trinity Mirror, Aviva and AstraZeneca.

Shareholders are angry that some business leaders have seen their pay soar at a time when profits have stuttered and share prices have been depressed. Promises by the business secretary, Vince Cable, to tighten shareholders' grip on executive pay seem to have emboldened investors to fight back. The rebellions are believed to reflect public concern about executive pay levels when many further down the employment ladder have lost their jobs.

Trouble is looming at the bailed-out Royal Bank of Scotland with Pirc advising a vote against the remuneration report because of its concerns about international accounting rules. Pirc is also advising a vote against the non-executive director Brendan Nelson, who chairs the audit committee. RBS declined to comment.

Jon Cruddas: the philosopher at the heart of Labour's policy planning

Thu, 17 May 2012 18:12:32 GMT

The sailor's son and would-be kite surfer is expected to reconnect Ed Miliband's party with its past

Jon Cruddas had an important duty to perform on Tuesday evening. He had promised to cook a 4lb trout he caught last week, as a special treat for his son's 19th birthday.

The fish was duly served, but the meal was regularly interrupted as friends and supporters called and texted to congratulate Cruddas – a few hours earlier, Ed Miliband had finally managed to reel him into a frontline position, appointing him Labour's policy review co-ordinator.

Cruddas, who will now attend the shadow cabinet, has spurned a series of offers to join the Labour front bench since his election as MP for Dagenham in 2001. He has preferred to campaign on his own terms against the BNP in his constituency and to keep some distance from the Westminster bubble. Over the past year he has been teaching Labour history at University College, Oxford.

But Cruddas, who turned 50 last month, agreed on Monday with Miliband that he will now shape the thinking behind Labour as it gears up for the next general election in 2015.

His task goes much deeper than just drawing up a list of policies for the manifesto. It will be his job to put flesh on the bones of Miliband's crusade, launched at the Labour conference last year, to build a new economy that shuns asset-stripping "predators".

Shadow ministers will soon learn by heart a key Cruddas mantra: that policy is not about lists. "Policy is about illustrations of a deeper story, the establishment of a deeper sentiment which Labour had and it lost," is how one figure describes the Cruddas approach.

His guiding force will be Ben Chifley, the late Australian prime minister, who, like Cruddas, had an Irish Catholic heritage. Chifley famously declared that the duty of the Labour movement is to provide a "light on the hill". One figure said: "Policy is about people's places, and stories. Labour needs to help forge that light on the hill."

Neal Lawson, who has worked closely with Cruddas in the left-of-centre Compass group, says: "Jon has a grasp of an emotive, some would say romantic, human sense of politics – not a dry, arid, mechanical approach. His speeches are poetic and beautifully constructed with stories.

"So why give him a dry policy thing? Because he will make it come alive. He will give some kind of narrative and framework on which we can eventually hang dusty policy. It will be within the context of a sweeping history. He will take us from Aristotle through to Ruskin, William Morris up to early Blair, and tell us a story about all of that in a way very few politicians can."

The new job will make quite a change for Cruddas. Until a spate of recent text messages with Miliband led to his appointment, he was focusing on four priorities for 2012 that showed his wide range of interests outside the frontline.

First on the list was the completion of the first draft of a book on socialist figures from William Morris to George Lansbury and into the modern era with Tony Blair and his political hero, the former Australian Labor prime minister, Paul Keating. The book, inspired by conversations with the historian Kenneth O Morgan, will attempt to draw lessons about the future from the Labour movement's past.

Keating is a key figure for Cruddas – who worked in Australia for a year after university – as he takes on his new task. Keating's great achievement, according to Cruddas, was to embark on nation-building from the left, creating a "sense of country", by leading the reconciliation with indigenous people.

Lansbury, who led the Labour party from 1932 to 1935 after its heavy defeat at the height of the depression in the 1931 general election, is another hero. Cruddas believes that the current failure of austerity – and the success of the centre left in France – potentially provides a breakthrough for Labour. But the lesson from the Lansbury era – and the experience of the party 50 years later during the Thatcher years, and possibly today – shows that Labour can be shut out of power even when capitalism is shaken. "The three periods when socialist solutions would appear most appropriate – at moments of capitalist crisis – are precisely when Labour is itself engulfed by crisis," is how Cruddas put it earlier this month in a lecture at the University of East Anglia.

Blair can expect a mixed assessment. Cruddas, who became Blair's link from No 10 to the trade unions between 1997 and 2001, believes the New Labour pioneer started well as an ethical socialist but then came to a "dismal end". Cruddas frequently cites the call by Alan Milburn for people to be allowed to "earn and own".

The Cruddas view of Blair is highly significant in his new mission. "Blairism isn't owned by those standing at the death," one figure says. "Labour has to get back to what Blair deserted."

The next Cruddas priority is to finish the house he is building on a beach on an island off the west coast of Ireland with his wife Anna Healy, known in the family as "the Baroness" after her elevation to the House of Lords in 2010. The County Mayo house is dear to the hearts of the couple. Healy's family came to Britain from Mayo in the 1950s, while Cruddas's mother came from County Donegal.

Politics comes in again at number three on the Cruddas list. He hopes to build up a 2,000-strong network of volunteers in his Dagenham and Rainham constituency. Cruddas knows he cannot he cannot stop fighting the BNP after beating them back into third place at the general election.

Fourth, Cruddas hopes to become an expert at kite surfing, the new sport he has been practising on the beach in County Mayo. This may come as a disappointment to his partner in his other great sporting interest, fly fishing.

"In his introductory years of fishing Jon has been lucky – in fact I would say he has been jammy," says his great friend and fishing companion, the Tory MP Charles Walker. "He has caught 12 barbels in his life – and I landed them all."

But Walker has a serious point. "Jon is one of the most decent men in politics. The Labour party is very lucky to have him. It is a testament to Ed Miliband that he has managed to bring him on board. I think he will make an enormous contribution. He is not a great ideological figure on the left. He champions justice and fairness, but he is a politician who is into winning elections."

Walker's praise shows one of Cruddas's great strengths: he is a Labour figure to his fingertips but in a deeply untribal way. This explains why Tory attempts to attack Cruddas as a union stooge have not really hit the mark, even though his campaign for the deputy leadership of the Labour party in 2007 was generously funded by the Unite union.

A new line of attack from George Osborne on Thursday – mocking Cruddas's habit of delivering lectures in abstract language – did have more impact. The chancellor quoted from a recent Cruddas lecture at the University of East Anglia in which he said: "What interests me is not policy as such; rather the search for political sentiment, voice and language; of general definition within a national story. Less The Spirit Level, more What Is England."

Osborne said to laughter: "Well, that is clear then. Perhaps when they find out what is England they will let us all have the answer."

John Pugh, the Liberal Democrat who says that he and Cruddas are among the few MPs with doctorates, sent him a congratulatory note. But Pugh warns that his fellow philosopher must use less abstruse language if he is to connect.

Miliband believes that Cruddas can connect and has identified key themes – patriotism and tradition – that will help Labour reconnect with working-class voters. Cruddas is, however, dismissive of the "Blue Labour" label used to describe this and had something of a falling out with Maurice Glasman after his explosive remarks about immigration last year.

Cruddas is a convert to Miliband after backing his brother, David, in the Labour leadership contest in 2010. But the younger Miliband and Cruddas kept in touch after this wrinkle. Miliband tells friends that Cruddas's Aneurin Bevan memorial lecture in October 2010 was better than any of the speeches during the Labour leadership contest.

Cruddas delivered two key warnings to Labour: it is facing the "third great crisis" in its history, after 1931 and 1981, and it needs to embark on new thinking. "To retreat into purity will bring impotence," Cruddas said.

The breakthrough in their relationship came when Ed Miliband accepted an invitation from Cruddas to join him on a visit to Billingsgate fish market just before Christmas 2010 as part of his campaign on behalf of 120 porters who were set to lose trading licences dating back to 1632. Royal Navy sailor's son Cruddas, whose campaign on behalf of the porters symbolised his determination not to neglect the fears of the white working class, and Miliband, the son of an LSE professor, made an unlikely pair at Billingsgate.

Lord Wood of Anfield, a former Oxford don who is one of Miliband's key advisers, says: "Jon is incredibly imaginative. He has a very strong sense not just of the tradition of Labour but of the importance of talking about work and working people. He's got incredible intellectual breadth but he doesn't talk like an intellectual. He understands the importance of engaging with different visions and different philosophies but translating them into concrete policies that people can understand who aren't particularly interested in the debates about great philosophies. When you meet and talk to Jon, he doesn't strike you like a politician. He is someone who seems very grounded and has breadth and range and interests outside politics."

Pat McFadden, the former business minister who worked with Cruddas in Downing Street, says people on the left often overlook an important part of his life. "Jon has got quite a strong Catholic faith," he says. "It is an important part of who he is. It makes him question a purely material view of looking at politics. Issues around faith and family are important."

Cruddas has a happy and rock-solid home life. But "the Baroness", who was a formidable figure in Labour's wilderness years in the 1980s, was unamused when Cruddas voted in favour of the Iraq war, something he now deeply regrets. "Anna took a very, very, very strong view," one source says.