Network Rail to be 'government body', adding £30bn to UK national debt

ONS says state's role overseeing company through rail regulator means Network Rail should be considered a public body

ONS announces the reclassification of Network Rail will add £30bn to the national debt. Photograph: Jonathan Brady/PA

Network Rail will be reclassified as a government body in 2014 as part of a package of changes to the public finances, adding £30bn to Britain's national debt, the Office for National Statistics (ONS) has announced.

Because the government plays a significant role in overseeing Network Rail, through the Office of the Rail Regulator, and the taxpayer would inevitably be left picking up the bill for keeping the trains running if Network Rail collapsed, the ONS says it is best considered a "central government body".

That will bump up public sector net debt for 2012-13 by approximately £30bn, or 2% of GDP, when the change is implemented next year – and will fuel the debate about the size of the public subsidy for the railway network.

Transport secretary Patrick McLoughlin said in a statement: "The government welcomes the ONS review and has always been committed to the transparent reporting of public liabilities."

He added: "I am committed to ensuring that Network Rail maintains the operational flexibility to continue to deliver a safe, punctual rail network and increased capacity for our busy railways and that it is able to attract a high calibre of staff, while still providing value for money and being accountable to Parliament".

The announcement came as part of an ONS consultation on plans to implement pan-European standards on calculating taxation, public spending and debt, known as ESA10.

As well as the national debt, public sector net borrowing – the amount the Treasury has to borrow each year to fund its day-to-day spending – is also likely to increase, by £2.5bn, as a result of the reclassification of Network Rail.

The Royal Mail pension scheme, which was brought on to the Treasury's books when it decided to underwrite the scheme in April 2012, will also have to be treated differently.

Instead of a short-term boost to the government's coffers from taking charge of the Royal Mail scheme's assets, the ONS will record the transfer as negative, because over time the assets are likely to fall short of the pension liabilities, by approximately £9bn.

"It may be that this shortfall in the pension scheme will be best reflected by a capital expenditure by government at the point of transfer in April 2012. This would increase public sector net borrowing in that period by £9bn," the ONS said in a statement on Tuesday. It is negotiating with the statistical body Eurostat about the precise details of the changes.

Taken together with other changes demanded by the new European rules, the ONS said the overall impact of implementing ESA10 could be an increase in public borrowing of £37bn for 2012-13.

UK inflation falls to four-year low of 2.1% as food prices steady

The fall in inflation eases pressure on households that have been grappling with living costs rising at a faster pace than average wages. Photograph: Chris Ratcliffe/Rex

Inflation has fallen back to its slowest pace in four years thanks to steadying food prices and the fact that energy price hikes have yet to come in.

The consumer prices measure of inflation slowed to 2.1% in November from 2.2% in October and was the lowest since November 2009, according to the Office for National Statistics. The move closer to theBank of England's government-set target of 2% will give policymakers more headroom to leave interest rates at their record low. It will also ease the pressure on households that have been grappling with living costs rising at a faster pace than average wages for several years.

"The fall in UK CPI inflation from 2.2% to 2.1% in November confirms that the economy is enjoying a favourable mix of strong growth and low inflation," said Samuel Tombs at the thinktank Capital Economics.

"We continue to think that CPI inflation is likely to dip below the 2% target in 2014. As a result, even if earnings growth recovers only marginally next year, an end to the squeeze on real earnings is finally in sight."

November's inflation was just below forecasts for 2.2% in a Reuters poll of economists and the monthly rise in prices of 0.1% was below forecasts for 0.2%.

Economists said that recently announced price rises for householdenergy bills have yet to be counted and the rate of inflation could pick up again in the coming months. They noted that underlying inflationary pressures seem modest.

Separate ONS data showed factories' costs falling while the prices they charge rose at a slower pace than expected last month.

The ONS measure of core inflation, which strips out volatile items such as energy and food, was 1.8% in November, up slightly from 1.7% in October.

Rob Wood, chief UK economist at Berenberg bank, said: "Pipeline pressures are subdued and the macro picture points to little pricing pressure. Unemployment is elevated and underemployment is rife … We expect [inflation] to fall to 1.9% by next summer. The strong recovery should then push it back up a little above target (to 2.2%) by the end of 2015, as the labour market tightens."

Against the backdrop of political tussling over the squeeze on living standards, the Treasury welcomed the fall in inflation.

A spokesman said: "Inflation has fallen to its lowest level in four years. The government's long-term economic plan is working. All parts of the economy are growing, the deficit is falling and jobs are being created. But the job is not done and the government will go on taking the tough decisions needed to create a sustainable recovery for all."

Catherine McKinnell MP, Labour's shadow economic secretary to the Treasury, said: "This small fall in the inflation rate is welcome, but with prices still rising much faster than wages the cost-of-living crisis continues. Families and pensioners are still set to face inflation-busting hikes in energy prices this winter."

The main downward effect on inflation last month came from food and non-alcoholic drinks: fruit prices rose by less than a year ago, and vegetables prices fell compared with 2012 when bad weather had hit crops and pushed up prices.

The biggest upward pressure on inflation came from petrol prices, which fell by less than a year ago, and there was some effect from dearer computer games too.

Separately, the ONS published data on costs for manufacturers and what they are charging for their goods – so-called factory gate prices. Their input costs last month were down 1% on a year earlier. Factory gate inflation was 0.8%, just below forecasts of 0.9%.

Bob Diamond could gain millions from new African investment venture

Former Barclays boss returns as non-executive director of London-listed Atlas Mara Co-Nvest, with £200m to invest

Bob Diamond was forced out of Barclays after regulators said they had lost confidence in his management. Photograph: Nick Potts/PA

Bob Diamond, ousted as boss of Barclays last year after the Libor-rigging scandal, potentially stands to reap millions of pounds from a new stock market venture set up to acquire financial services companies inAfrica.

The American banker, often criticised for the size of his pay cheques during his 15-year tenure at Barclays, has become a nonexecutive director of a cash shell that has raised £200m from a stock market listing in London, although it is registered in the British Virgin Islands.

Along with his co-founder, Ashish Thakkar - a British national now based in Dubai - Diamond has special "founder-preferred shares" in the new vehicle, known as Atlas Mara Co-Nvest, which give the pair payouts if the share price rises above a certain level.

Atlas Mara Co-Nvest is based on Diamond's New York company Atlas Merchant Capital and Thakkar's Mara range of businesses in 19 African countries. The two companies have invested $20m. Thakkar, often described as Africa's youngest billionaire, started his first IT companies in 1995 at the age of 15 in Uganda and is one of the World Economic Forum's young global leaders.

In a stock market announcement, Atlas Mara Co-Nvest said that although it was not involved in any discussions with target companies, it could make acquisitions anywhere in the world, and was likely to pick Africa. To counter concerns that shell companies often tie up investors' cash without making deals, the business will be wound up in 12 months if no deals have been concluded by then.

Arnold Ekpe, a former boss of Africa's Ecobank, has been appointed chairman of the company, on an annual fee of $125,000. The company has also named a number of nonexecutive directors, including Rachel Robbins, a former vice-president of the International Finance Corporation, who will get $85,000 a year. Ekpe is also receiving 50,000 five-year options over the shares, which listed at $10, and the nonexecutive directors are getting 37,500. Neither Diamond or Thakkar is receiving any options or fees.

The prospectus shows a higher fee, of $500,000, will go to Jyrki Koskelo, a former executive of the World Bank who will advise on potential acquisitions. The founder-preferred shares give the founders a payout if the shares rise above $11.50 for 10 consecutive days after an acquisition. The payout, in shares, is based on 20% of the difference between $11.50 and the share price.

The 133-page prospectus said that while Barclays could face litigation over Libor fixing, Atlas Mara Co-Nvest does not believe it will have "an adverse impact on the company or its ability to make the acquisition (or subsequent acquisitions) or on MrDiamond's ability to perform his role for the company"

Afghanistan aircraft crash: six US soldiers killed

Soldiers in Zabul province in Afghanistan in 2009: six US soldiers have been killed in an aircraft crash in the region. Photograph: Isaf/EPA

A helicopter crash in southern Afghanistan has killed six US soldiers, the deadliest day for American troops in the country since March.

There was no fighting reported in the area where the aircraft came down, Nato said in a brief statement, and Afghan officials including the provincial governor and police chief said the chopper had suffered a mechanical fault.

The Taliban said they had shot down the aircraft, but although they have hit some helicopters in the past, they have also repeatedly claimed technical crashes as successful attacks.

The late afternoon crash in Zabul province, near the border with Pakistan, was in the same district where a plane came down in Aprilkilling four American soldiers.

"The helicopter had technical problems and crash-landed in Shahjoi district around 4pm. There were no civilian casualties," said the deputy provincial police chief, Ghulam Jelani Farahi.

Zabul was also the site of a suicide attack in early June that killed three US soldiers, a US diplomat and one other US civilian.

Prior to Tuesday's crash, only one US soldier had been killed this month in Afghanistan. The loss of the helicopter was the deadliest single incident of the year, and the worst day for American troops in nine months.

In March, a helicopter crash killed five US soldiers on the same day that an Afghan policeman gunned down two US special forces trainers.

Overall military casualties have dropped dramatically as Nato countries draw down or end their combat missions, and leave Afghans to lead the fight against the Taliban.

With just a few days left to the end of the year, there have been just over 150 deaths, less than half the 402 military killed in 2012

Major US academic body backs boycott of Israeli educational institutions

The boycott movement claimed a major victory earlier this year when Stephen Hawking pulled out of a conference in Israel. Photograph: Felix Clay for the Guardian

A prestigious US academic body has joined a growing movement to boycott Israel in protest at its treatment of Palestinians, in a move both welcomed and condemned in a bitterly divisive international arena.

The American Studies Association (ASA), which has more than 5,000 members, is the most significant US academic organisation to back a boycott of Israeli educational institutions following a two-thirds majority vote. Around a quarter of members took part in the ballot.

The ASA resolution was "in solidarity with scholars and students deprived of their academic freedom", the organisation said in a statement. It cited "Israel's violation of international law and UN resolutions; the documented impact of the Israeli occupation on Palestinian scholars and students; [and] the extent to which Israeli institutions of higher education are a party to state policies that violate human rights."

The resolution bans "formal collaborations with Israeli academic institutions, or with scholars who are expressly serving as representatives or ambassadors of those institutions".

The vote came amid renewed calls in the aftermath of Nelson Mandela's death for an international boycott drive against Israel similar to the anti-apartheid campaign.

Last week the major Dutch drinking water firm Vitens announced that it was severing commercial links, including joint projects agreed just weeks earlier, with Israel's national water company, Mekorot, in protest at its activities in Israeli settlements in the West Bank. "The company concluded that it would be very difficult to develop joint ventures together, considering the fact that they cannot be seen as divorced from their political context. We follow international law," Vitens said in a statement.

At the same time, the UK government issued an explicit warning to British businesses over the risks of involvement in Israeli settlements in the West Bank, including potential damage to a company's reputation. There were "clear risks related to economic and financial activities in the settlements, and we do not encourage or offer support to such activity," it said.

Earlier this year, the EU established new guidelines that prohibit giving funds, grants, prizes or scholarships to Israeli bodies with links to settlements in the West Bank, including East Jerusalem, prompting a furious response by the Israeli government.

The Palestinian president, Mahmoud Abbas, drew a distinction last week between boycotting products and companies connected to settlements and a more widespread boycott of Israeli institutions and goods. "We do not ask anyone to boycott Israel itself," he said in South Africa. "We have relations with Israel, we have mutual recognition of Israel." But, he added, "we ask everyone to boycott the products of the settlements".

The ASA move, which is not binding on its members, drew angry responses from Israeli ministers. "This is an unworthy act that does not dignify the association," said the science minister, Yaakov Peri. "To our regret, in the recent past we have seen numerous examples of the mixing of politics with science, and we are acting to eradicate those phenomena."

Avi Wortzman, the deputy education minister, also condemned the decision. He said: "This is a disgraceful attempt to meddle in the internal policies of the state of Israel under the guise of an academic debate and equal rights supposedly. The state of Israel grants all of its citizens an equal opportunity in the academic world and encourages the integration of minorities in academia."

Ronald Lauder, the president of the World Jewish Congress, said: "This vote to boycott Israel, one of the most democratic and academically free nations on the globe, shows the Orwellian antisemitism and moral bankruptcy of the ASA." The association was deeply biased and disconnected with reality, he added.

The Palestinian Campaign for the Academic and Cultural Boycott of Israel hailed the ASA's "refusal to be intimidated by the persistent efforts of defenders of Israel's regime of occupation, colonisation and apartheid". The move was "a significant step in the direction of holding Israeli institutions accountable for their collusion", it added.

The US-based Jewish Voice for Peace also welcomed the ASA's move, saying it represented a "significant milestone in the growth of the BDS [boycott, divestment and sanctions] movement in the United States". Boycotts to pressure Israel to abide by international law were not inherently antisemitic, it said.

The American Association of University Professors, which has 48,000 members, has rejected calls for a boycott of Israeli institutions. In the UK, the University and College Union supports one.

Earlier this year, the boycott movement claimed a major victory when Stephen Hawking pulled out of a conference in Israel in protest at its treatment of Palestinians.

Other British personalities who have declined invitations to visit Israel include Elvis Costello, Roger Waters, Brian Eno, Annie Lennox and Mike Leigh. Many others, however, including the author Ian McEwan, have resisted pressure to join the boycott on the grounds that it is ineffective or misguided.

Has a natural world wonder just been approved for destruction by the Australian government?

The Great Barrier Reef has been put at risk by the approval of a coal export terminal at Abbot Point. Photograph: Grant V Faint/Getty Images

Who could forget, back in 2009, the launch of the "Best Job in the World"?

The campaign by Tourism Queensland generated global interest in the Sunshine State and the role of park ranger and "caretaker" of Hamilton Island in the Great Barrier Reef. Ben Southall was the inaugural winner, a Brit by birth and native of Hampshire, he beat 35,000 applicants for the coveted role.

Ben spent a year promoting the wonders of the Great Barrier Reef. In the first four days, he visited the pristine Whitehaven Beach, stopped for lunch at Hayman Island, went on a tour of the Coral Sea and Daydream Island and ended up at the Seaworld adventure park and a game of Aussie Rules (Richmond vs Adelaide - Go Crows!).

Four days into his year-long stint in the Best Job in the World, Ben said: "My stay on the Gold Coast has been nothing short of spectacular; there really is something for everybody."

Unfortunately, soon a massively destructive coal port will be built just 50 km north of the magnificent Whitsunday Islands. The port expansion wasapproved by the Abbott Liberal National government on Wednesday 11 December, and it will become one of the world's largest coal ports.

The coal export facility is ironically located on Abbot Point. The construction of this port will involve dredging 3 million cubic metres of seabed. The dredge spoil will be dumped into the Great Barrier Reef World Heritage Area.

To give you an idea of the scale of this dredging, if all of the spoil was put into dump trucks, there would be 150,000 of them lined up bumper to bumper from Brisbane to Melbourne.

This expansion is further proof that the Abbott government is hell-bent on turning Australia into a reckless charco-state that solely represents the interests of fossil fuel and coal companies.

Just around the corner from the port is a beach that is the nesting place for endangered green and flat back turtles. Fun facts about the flat back turtle: they're officially classified as "vulnerable" by the Australian Government, and nest only in northern Australia. They have the smallest migratory range of any marine turtle, so when their home in Queensland is destroyed, they've really got nowhere else to go.

Also in the spoil-dumping area are sea-grass beds, which are the home to dugongs. The "sea cows" may not be the sexiest of marine animals, but they are at risk of extinction, and most of the world's remaining population lives in the Great Barrier Reef. This is one of the reasons that the Reef has World Heritage listing.

An independent government report from August this year found that dredging sediment travelled a lot further than previously thought. The risks include sediment being disturbed by severe weather. Even a cursory look at Queensland's weather patterns near the Reef over the past decade would show that severe weather, including tropical cyclones and flooding, is a regular occurrence, even if you disregard massively destructive events like Cyclone Yasi.

The Great Barrier Reef generated around 69,000 full-time equivalent jobs, and boosted our economy by 5.68 billion in 2011/12, according torecent research. Most of this is through tourism and reef-dependent industries like fishing.

Environment Minister Greg Hunt has mischievously claimed that "Some of the strictest conditions in Australian history have been placed on these projects". This is mischievous because, obviously, massively increasing coal exports at this time will do irreparable damage to our climate.

Worryingly, Greg Hunt's briefing and decision, released on the 11th of December, is based on the assurance of the North Queensland Bulk Ports Corporation, the state-owned corporation that owns the project, that "the project area (dredging area) is not a notable or significant biodiversity site in the Great Barrier Reef World Heritage Area" and "the potential impact area in the dumping ground (which is within the Great Barrier Reef World Heritage Area and the Great Barrier Reef Marine Park) is considerably small". The brief also says that the "habitats were recorded to recover from similar events".

You are obviously free to come to your own views about Hunt's strange cognitive dissonance, where on the one hand there are the "strictest conditions" on the dredging, but on the other hand the "dredging area is not a notable... site" in the Reef. Perhaps someone could leave a comment that explains why Hunt has required strict conditions if the area is not a significant site.

Unless of course, Hunt is simply trying to pull the wool over our eyes. You be the judge.

The very real problems are not just the vast and untold damage that dredging will do to the Great Barrier Reef, or the risk of damage to the reef by the substantial increase in shipping through the World Heritage Area.

The Abbot Point development has been green-lit to funnel vast amounts of coal out of Australia. The coal ports currently proposed, including Abbot Point and new coal terminals proposed at Wiggins Island, Raglan Creek, Balaclava Island, Dudgeon Point, and Cape York, would increase total coal tonnage by more than six-fold, from 156 Mt in 2011 to a capacity of 944 Mt by the end of the decade.

Australia's coal is one of the globe's fourteen carbon bombs. Our coal export industry is the largest in the world, and results in 760m tonnes of CO2 emissions annually. The urgent goal of Tony Abbott's government, and his environment minister Greg Hunt is to ship as much climate-devastating coal as possible, as quickly as possible.

Every day, this Liberal-National government, led by Tony Abbott, provides new examples of its nastiness, its short-sightedness, and its willingness to destroy livelihoods, communities and the environment to enrich coal barons

Refillable electronic cigarettes face EU ban

A person smokes a refillable electronic cigarette. Photograph: Kenzo Tribouillard/AFP/Getty Images

\The European Union has struck a deal which could curb the booming market in electronic cigarettes and lead to an EU-wide ban on a popular version of the nicotine device.

In hard-fought negotiations between the 28 governments of the EU and the European parliament, both sides agreed on Tuesday that refillable e-cigarettes could be banned across Europe if three countries decided on prohibition.

The parliament, under intense lobbying from the tobacco industry, took a more liberal line than the European commission, which proposed that e-cigarettes be legislated for in the same way as pharmaceuticals. That was rejected in the compromise, but individual countries were left free to regulate e-cigarettes as medicines.

Governments also took a more restrictive position on the issue and could still try to reverse some of the agreed elements. Ambassadors from the 28 countries will meet on Wednesday to decide whether to accept the compromise or return to negotiations.

The issue of e-cigarettes quickly became the most contentious aspect of new EU rules on the packaging and sales of tobacco products, although the electronic devices contain no tobacco.

Public health warnings and graphic images of the damage done bysmoking are to cover two-thirds of cigarette packaging, and cigarette flavourings are to be proscribed, if gradually phased out.

Martin Callanan, leader of the Conservatives in the European parliament, said: "This is a perverse decision that risks sending more people back to real, more harmful, cigarettes. Refillable e-cigarettes would almost certainly be banned, and only the weakest products will be generally available. As many smokers begin on stronger e-cigs and gradually reduce their dosage, making stronger e-cigs harder to come across will encourage smokers to stay on tobacco."

The key question centred on the impact of e-cigarettes and whether they encouraged people to start smoking or whether they weaned nicotine addicts off tobacco.

"It's inhaled. It's direct inhalation of nicotine into the lungs. That creates an addiction very fast," said a senior diplomat involved in the negotiations. "It encourages a switch to real cigarettes."

The European e-cigarettes market is currently estimated at €2bn (£1.7bn), but it is growing fast, with approximately seven million users.

In the UK some 1.3 million of an estimated current 10 million smokers have switched to the electronic devices. Celebrity endorsements and social media are attracting young people to use e-cigarettes in large numbers, according to a recent report commissioned by Cancer Research UK.

But public health experts are sharply divided about the devices: some argue that they could substantially cut deaths from tobacco – currently 100,000 annually in the UK – while others warn they will only glamorise smoking, especially among the young.

One study of 657 smokers, published in the Lancet last month, found that e‑cigarettes worked as well as nicotine patches in helping people stop smoking within six months.

France, which has an estimated 1.5 million e-cigarette users, is currently pondering a ban, but a mayor in Normandy has already introduced a local ban.

The EU agreement allows e-cigarettes with a nicotine content below 20mg/ml to be regulated for general sale, rather than treating them as medicinal products. Governments had demanded a 3mg/ml limit.

The deal, however, lets individual governments regulate the cigarettes as medicinal products if they choose.

Refillable cartridges became the biggest sticking point, with the parliament threatening to veto the legislation if replacement sales were banned. On refillable e-cigarettes, the compromise allows cartridges of 1ml of liquid containing up to 20mg of nicotine. But governments will be able to ban refillable e-cigarettes and if three countries do so, then the commission is empowered to impose a blanket prohibition across the EU.

"This will lead to another ridiculous ban from the EU on the majority of e-cigarettes which are better for the health of smokers and for British manufacturers of e-cigarettes," said Nigel Farage, the UK Independence party leader and MEP. "The EU should not be putting restrictions on a safer alternative to smoking."

Carly Schlyter, a Green MEP and public health spokesman, said: "Member states will be free to decide whether they want to subject them to authorisation as medicines or apply new rules that should ensure the quality and safety of these products. Either way should ensure that e-cigarettes can be used safely to help smokers stop smoking, and not act as a gateway for non-smokers."

Rebecca Taylor, a Lib Dem MEP, said the possible ban on refillable cartridges could push consumers back to tobacco.

"This the exact opposite of what the tobacco directive is supposed to achieve. The fight is now on to show that it would not be justifiable to ban refillable cartridges on health and safety grounds."