What happens to a Lottery winner?

Lottery millionaires each fund six jobs a year, study shows

3,000 £1m-plus winners have created another 3,780 millionaires among family and friends and contributed £750m to GDP

• Caroline Davies
• guardian.co.uk, Monday 22 October 2012 00.05 BST

Some of the National Lottery's 3,000 millionaire winners. Photograph: David Parry/PA

The balls have dropped and all six numbers match, so it's time to buy that Audi, book the holiday in the US and phone the estate agent. At least, that's what most lottery millionaires do, according to an analysis of spending and investment by jackpot winners.

Since its launch in 1994, the lottery has created 3,000 millionaires who have won more than £8.5bn in total, at an average of £2.8m each. The trickle-down effect means that between them they have created a further 3,780 millionaires among their children, family and friends, according to the forecasting consultancy Oxford Economics.

Most winners (59%) give up work straight away, but 19% carry on doing the day job and 31% do unpaid voluntary work. The good news for the economy is that 98% of winners' spending remained in the UK. Through their spending on property, vehicles and holidays, it is estimated that each winner keeps six people in a full-time job for a year.

Winners have contributed almost £750m to GDP, and generated more than £500m in tax receipts for the Exchequer. The bulk of the money went on property, with £2.72bn spent on winners' main properties, and £170m in paying off existing debt and mortgages.

Maintaining income was a priority, with £2.125bn spent on investments. Gifts to family and friends accounted for £1.17bn, and £680m was spent on cars and holidays.

The study, commissioned by Camelot to mark the 3,000 winners milestone, was based on research from 100 £1m-plus winners. It found that in total the 3,000 winners have purchased 7,958 houses or flats in the UK, or 2.7 each, spending £3.3bn. Most winners (82%) changed their main residence, spending an average £900,000.

The new home is likely to come with a hot tub, with almost a third (29%) putting that on their shopping list. A walk-in wardrobe was a must for 28%, almost a quarter (24%) opted for a property behind electric gates, and 22% had a games room, with 7% installing a snooker table.

Larger properties need maintaining, and 30% of winners employed a cleaner and 24% a gardener. A small proportion (5%) employed a beautician.

Audis were the favourite cars of 16% of winners, with Range Rovers and BMWs also popular purchases (11% each), as well as Mercedes (10%) and Land Rovers (5%). Winners spent £463m on 17,190 cars, with the average price of their favourite being £46,116.

Holidays were also a priority. The majority (68%) choose five-star hotels overseas. The US was the favoured destination for 27%, followed by the Caribbean (9%). Closer to home, however, UK caravan sales have benefited. Over the past 18 years, 10% of millionaires have bought a caravan, generating sales worth about £7.4m.

Some winners (15%) have started their own businesses, 9% have helped others to do so, and 6% have invested in or bought other people's businesses. Businesses started or supported by lottery winners employ 3,195 people, according to the study.

Andy Logan, co-analyst and author of the report, said: "The effect of a win spreads much further and wider than we anticipated. Not only does it transform the lives of friends and family, but each win has a measurable effect on the UK economy, especially with so much of it being spent in the UK. The use of each win creates a ripple effect across this generation and very often the next."

Three decades after privatisation, monopoly power is still king

IoS investigation: The great British energy rip-off 

The "big six" energy firms were last night accused of maintaining a "stranglehold" over millions of consumers, after new figures showed that they each control more than two-thirds of the market in different regions across the UK.

An average of 70 per cent of households across all regions use the same electricity supplier, with the proportion rising to 85 per cent in some areas, undermining claims by the Government and Ofgem, the regulator, that the energy market is operating competitively.

The figures, uncovered by Labour, are published in the wake of the confusion over the future of energy bills after David Cameron pledged in the Commons to force companies to offer householders the "lowest tariff" – a promise that within hours was exposed as unworkable. The Prime Minister clashed with the Liberal Democrat Energy Secretary, Ed Davey, who backed Ofgem's proposals, published on Friday, for a simplified tariff system that encouraged consumers to switch between firms.

The official figures show that companies supplying electricity to homes where they inherited the network from the former utility boards are operating a near monopoly, making a mockery of the idea that customers routinely switch firms to get better deals.

Separate data from the Department for Energy and Climate Change (DECC) reveals that customers who have stayed with their old electricity supplier are paying more than those who have switched. DECC analysis shows that these "home suppliers" charge an average of £31 a year more than non-home suppliers for electricity – in effect placing a premium on loyalty.

The research emerged on the eve of British Energy Saving Week amid an outcry that energy firms are pushing up fuel bills beyond the rate of inflation, adding between £80 and £112 to the average annual household bill.

Although deregulation of the energy market in the 1980s supposedly led to more competition, the reality is more similar to a monopoly within each region of the UK.

The largest five electricity suppliers dominate the regions they inherited from utility boards more than two decades ago, while British Gas still retains the largest share of the retail gas market nationwide. This is despite consumers being encouraged by price comparison websites to shop around for the cheapest supplier. When the gas and electricity networks were first privatised, price caps were in operation, but a decade ago Ofgem removed controls because competition had, in theory, been established.

Yet figures published in Parliament in a written answer to the shadow Energy Secretary, Caroline Flint, show that there is little real competition. Firms last night claimed the figures show the loyalty of customers they inherited from the boards, but Ms Flint said the companies appear to be exploiting consumers' unwillingness to shop around. With a baffling array of more than 500 tariffs on offer, consumers are often loath to switch.

In Northern Scotland, SSE, the firm that inherited the network from the North of Scotland Hydro Board, has retained an 85 per cent share of the retail electricity market, while in south Wales, SSE has an 82 per cent share and in the Southern region it has an 80 per cent share.

Scottish Power has an 82 per cent share in southern Scotland, and a 73 per cent share in north Wales. EDF has remained dominant in London with a 74 per cent share; in the South-east, it supplies electricity to 73 per cent of homes; and in the South-west, it has 71 per cent.

Npower remains the dominant supplier in the West Midlands, with 65 per cent of the retail market; in Yorkshire, it has a 65 per cent share; and in the North-east, 64 per cent. E.ON has a 69 per cent share in the East Midlands; 68 per cent in the Eastern region; and 67 per cent in the North-west.
The sixth major energy firm, British Gas, has held on to 76 per cent of gas-only accounts across the UK. The figures do not apply to dual fuel accounts, but nearly 10 million households are on electricity only, and 4.6 million have gas only.

Ms Flint said: "It's no wonder the energy giants are shame-faced about hiking up energy bills when they have a stranglehold over the energy market. People talk about the 'big six', but in most parts of the country there's only one big supplier in town. The fact that 70 per cent of people in any region all use the same electricity supplier suggests that the energy market is not functioning properly. It cannot be right that customers who have stuck with their old electricity supplier pay a premium for their loyalty.
"The time has come to create a tough new regulator to police the energy market properly, and force the energy companies to pass on price cuts to the public."

A spokesman for Npower said: "We have a larger than expected share in the West Midlands because our history is in the Midlands. A lot of people were Midlands Electricity Board customers and many of them remained so [under the new name]. The rate of turnover has been quite significant, people have left and people come back. It is about loyalty – many people still refer to us as 'the Midlands Electricity Board' as they refer to British Gas as 'the Gas Board'. They are with us because we are incredibly good value. It is the same in the North-east. We feel very much part of the community in these areas."

A spokesman for E.ON said: "Many of our customers, while staying with us, will have regularly changed products. As such it would be wrong to say they are not engaged in the energy market – they are, and have chosen to stay with us. Some 69 per cent of our customers overall have switched supplier or tariff in the past three years.

"It is important that we treat every customer as an individual and as such being on the right tariff for your own individual circumstances is vital. In recent weeks we have made checking you're on the right tariff easier than ever, and it is this simplicity and comparability that our customers are responding to. By making things simpler and more comparable, as well as continuing to provide help and advice that will make homes more energy efficient, we can really help our customers and ensure they are on the best deal for them."

A Scottish Power spokesman said: "The British energy market is one of the most competitive in Europe, and Scottish Power welcomes anything that encourages or supports this competition."
SSE said in a statement: "We would fully expect our customer retention rates to be higher than those of our competitors because of our exceptional standards of service, for which we are consistently recognised as the best in the business by the likes of Consumer Focus and uSwitch.

"There's no doubt that greater levels of consumer engagement in the market would be a positive thing. However, switching rates in the UK compare very favourably with those in other European energy markets, and with other retail service markets such as fixed and mobile telecommunication, insurance, mortgages and personal current accounts."

How easy is it to reduce your energy bill?

If a seasoned investigator has trouble, what hope for the average consumer? Here’s what I discovered after many frustrating minutes on hold:

Npower

My current provider, Npower, predicts my spend for the next 12 months will be £208.37 for 1,620 kWh of electricity and £531.78 for 11,260 kWh of gas – all helpfully displayed in my latest bill, but irrelevant because it was generated two days before they announced an 8.8 per cent price hike. Sneaky.

British Gas

After an automated apology for any delay due to “a high volume of customer calls” came some advice: “If you’re calling for our fix and fall tarif,f go online to sign up and register your details. If you have received a coupon about this offer, please complete it and return the pre-paid envelope. If you are calling about a fixed contract that ends in either 2013, 2014 or 2015, your prices are not affected by our recent price increase.”

I simply want to find out if you can beat my existing deal.

“Press 1 to change your account name or address or if you are moving house. Press 2 to give us your meter reading or find out your balance, pay your bill or to let us know you are going to pay your bill or you have paid your bill. Press 3 if you have any questions about your central heating or home care or press 4 to talk to one of our team.”

Hooray. Well, nearly. I sit through more suggestions to “go online for further information”. A pause, then a human voice. “You probably were sent that estimate prior to their price rise announcement.” True. “Our best deal is the online variable until November 2013, which includes the price increases taken into effect. We can do a 6 per cent discount from your total bill for direct debit.”

“That will cost you around £229 for electricity and £532 for gas. A little bit more than your estimate, but your prices will go up remember”.

So your prices are fixed, then?

“No, we have another “fix and fall” tariff which is not discounted but is fixed until March 2014. That might make more sense to you.

“If our prices go up, yours won’t do, but if prices go down, yours go down – and you get a fixed premium of 3 per cent.”

“That comes to £253.34 for electricity and £583 for gas.”

£100 more! “Ah, but your charges…”

Yes, yes, they will be going up.

To be fair, she did recommend I call npower to check how much my bill would apparently be going up by. That was easier but it still took 17 minutes.

E.ON (no freephone)

It took less than a minute to speak with someone and we were straight down to business: full address and phone number (“in case you get cut off”) before we were on to the tariffs. Four on offer: standard, E.ON energy discount (“3 per cent cheaper than standard for 12 months but you’re not protected against price rises”), fixed one year or fixed two years. It was like remortgaging a house.,

Standard came to £787.93 and the energy discount was £752.69. Fixed one came to £776.48 – “no premium, mind” – and fixed two £816.39 – “a bit of a gamble as it is 5 per cent above standard unit rate but you’re protected against price rises.”

The good news: E.ON was not among the four of the “big six” energy companies which had recently announced price rises for 2012. The bad: “but it’s more than likely we will put them up for 2013”. Hmmm.

That took four minutes.

EDF

Oh dear. I gave up trying after being on hold for 15 minutes listening to what sounded like Morcheeba. Rubbish.

SSE

After seven minutes on hold, I was mercifully told there were only two tariffs the company provides – standard and capped. My quote was £28 more expensive than npower, but SSE credits your account with £100 when you switch and their rate is capped for two years meaning, like British Gas, it won’t go up, but could come down. And SSE “was the only energy company that reduced their prices last year”. In addition, my gas and electricity standard charge of 16.44 pence per day would come down to 14.8p with paperless billing. “I’m here until 2pm if you want to switch,” a very helpful Eddie told me.

Scottish Power

I had tapped in my numbers to their online quote generator which gave me an estimated bill of £816.57. But on the phone, a quote using the same figures was better: £755. This for a deal fixed until March 2014 without a cancellation fee. Did I want to know the unit price? I certainly did. “Scottish Power’s first quarter electricity unit price is 21.74p for the first 225 units going down to 10.99, compared with Npower’s current unit price of 16.93 reducing to 13.39. Our primary gas units are 8.10 going down to 3.01 with Npower’s at 7.89 reducing to 3.51.” I regretted the request for more detail.

So much to choose from. Do I ditch and switch, fix or stick? I have no idea. I tried calling Npower to see what their updated estimate would be for next year, but their systems were down. I’ll have to call back on Monday.

Paul Gallagher

Stiglitz on FDI in India's retail

Nobel laureate Joseph E. Stiglitz is one of the world’s leading economists. A former chief economist at the World Bank and currently University Professor at the Columbia Business School, he was recently in India to attend an international conference on development and to promote his new book, The Price of Inequality. He spoke to Pranay Sharma about growing inequality in the world and the challenges facing India. Excerpts:

Your coinage, “one per cent versus 99 per cent”, has caught the imagination of different people in the world. What does that reflect?

It reflects a different view of society. The nomenclature, ‘one per cent and ninety nine per cent’, is a way of saying that almost everybody today is in one boat and a few people are in another boat. There is now that huge divide from the very top that is no longer class-based but money-based. So it’s really the redefining of the divisions within our societies.

And this is not specific to the US but something seen all over the world?

That’s correct, it’s all over the world. India has become famous for being the land with the highest per capita of billionaires. This is striking for a country which is average and has a large number of poor people.

“India’s famous for being the land with the highest per capita of billionaires. Striking for an average country with so many poor people.”

Some of your detractors describe you as “the prophet of gloom and doom”. Is that a correct assessment?

I had accurately perceived the crisis of 2008 and there were those who drew a rosy scenario and did not see it happening. The same people started seeing the ‘green shoots’ in 2009 which again did not happen and we did not get the recovery. Those who are described as ‘gloom and doom’ people are the ones who have predicted, as people jokingly say, five out of the last 10 recessions.

Everybody now talks about the global economic crisis and how it has affected countries across the world, including the US. But are you overstating the case about the US?

The statistics are what they are. The fact that the median income of a full-time worker is lower than what it was in 1968 is part of it. I have gathered some of the statistics that may not have been given sufficient attention by others, but those are facts. The question is, what do you make of those facts? Where the US economy is going is obviously a matter of interpretation. But some of the facts that I think are disturbing may be different from the facts that others are looking at.

What you describe in your book is not only an economic or political failure, but a systemic failure in the US. Is democracy in the US in crisis?

Yes, it is. We have changed the rules of the game to give more weight to money and moneyed interests just at the time when inequality is growing. So we now have an out-of-balance political system.

“There is that huge divide now from the very top that is no longer class-based but money-based...a redefining of divisions within societies.”

You say in your book that if the economic benefits were shared better, Americans would have forgiven many of the ‘sins’ of the US corporates. If that were to happen, then who would have paid the price, people in other countries?

What I was trying to suggest was two-fold. That people in America would not have been so concerned if the top had walked away with just a larger share and did not damage the environment too much. The typical American would have felt that he himself was getting better without asking a lot from the corporation. But part of what is going on in terms of global warming is that the price is being borne by people outside the US. People of America had not paid any attention to that at all.

In India, we have the experience of the Bhopal gas tragedy. An American national responsible for it paid very little compensation and refused to share the burden of guilt. Now we have a debate on ‘nuclear liability’ where the US government and American companies planning to set up N-plants in India are opposed to accepting a larger share of the burden if an accident occurs in any of their plants. How do you react to this?

This is a perfect example of why I say that we have a distorted market economy through politics. Markets don’t exist in a vacuum, we create frameworks. They give money to special interest groups—the one per cent. The nuclear industry is a good example. If the government had not been subsidising them, then in a calamity there would be no one to pick up the tab. They say they have insurance but that is a price no company is willing to pay. We pick up the cost of nuclear exposure, nuclear waste...nobody is willing to pay for that. So there is this massive subsidy given by the government to the nuclear industry.

“We have changed the rules of the game to give more weight to moneyed interests, just at the time when inequality is growing.”

So you think US companies planning to set up N-plants here should share a larger burden of that liability?

They should bear it all. In the global context, they don’t bear that in the US either. The nuclear industry exists only because of government subsidies. But subsidy in the form of liability; the oil industry is also protected in the same way. They have a law that limits the liability in the event of a spillover. If you look at the way the legal system is designed, many of those who are injured by the spill will never be compensated.

You have praised governments in China and India for intervening in the market to make globalisation work better for their respective people. How do you now see the performance of the two countries?

China represents what is the success of globalisation, where over 400 million people moved out of poverty. The gap between their income and that of people in the US has reduced enormously. Same is perhaps also true for India. But when you have rising aspirations in a country like China—which has been slow in implementing good working conditions—it can lead to agitations by workers.

What about India?

India has not grown as fast as China but it is growing significantly. There have been very significant successes, though there hasn’t been much reduction in poverty in a big way.

“US firms planning to set up N-plants should bear all the liability. But they don’t do that even in the US, state ‘subsidies’ protect them.”

PM Manmohan Singh announced a clutch of economic reforms recently, particularly in regard to allowing FDI in multi-brand retail. Do you think India needs to open up its market?

India is an unusual country and different from many other developing and emerging markets. It has a large entrepreneurial class and has lots of savings, wealth. And this entrepreneurial class is very talented. So that raises the question as to why India needs foreign entrepreneurs in any sector, particularly the retail or the financial sectors.

And what’s your answer to that?

I have not seen a good explanation yet. To me, as most economists say, a little competition is good. On the other hand, the worry is that a company like Walmart may owe some of their success to its power and ability to drive down prices. Because they can buy things out and if that’s the case then they will use that power to have Chinese goods displace Indian goods. The real harm will not be to the retail sector. That is not the real problem. The harm will be to the Indian supply chain going into the retail sector. The other concern is that Walmart has succeeded in expanding its business by adopting abusive labour relations.

“India has a large, talented entrepreneurial class, and lots of savings and wealth. Why should it need foreign entrepreneurs in any sector?”

Is that the experience of other countries where it has a presence?

That is the experience of other countries. It is a business practice that you don’t want to import to your country. Bribery in Mexico, free-riding on healthcare, a policy against unionisation, discrimination against women—a whole range of accusations, some of which have been proved and others that remain accusations but are hard to win in courts. Why would you want to import such business practices into India? Many economists see the breakdown in social contract as one of the reasons for inequality. There is also a worry that Walmart will break down the social contract in India that is already frail.

So how does one go about it?

The other reply to these concerns is for India to have legislations to ensure these problems don’t happen. You should have good protection from large multinationals.

Does President Obama have a shot at being re-elected?

I think he has a good chance. I think he has been more successful than what his critics say but far less successful than the expectations when he was elected in 2008. The reality is, if the Republicans do well in Congress then it will be a more defensive (move) to prevent things from getting worse. But also not allowing changes that’ll make the economy work.

“Corruption scandals have a resonance as people know the power of money. Money begets money and it begets via the political process.”

When you look at India what are the areas of concerns?

One of the things would be the huge inequality which is still there. It is very serious and it cannot be ignored. The existence of extreme wealth and extreme poverty, they are worse than many other countries.

Do you see the government intervening to tame the market?

I don’t see it that much...when you have so much of economic inequality, there is always the fear that political power will corrupt the government. A lot of the corruption scandals have a resonance because people understand the power of money. They know money begets money and it begets through the political process. It may be difficult to ascertain what happened in the coal block allocations. But these are people’s assets which have surely not been sold in efficient, transparent auctions that could raise the most money for the well-being of everyone in society. And that has a real resonance in a society that already has such inequality.

Corporate Social Responsibility (CSR) - a Cloak for Crooks

By S A Aiyar

The government's new Companies Bill will reportedly ask large companies to spend 2% of their net profit on CSR (corporate social responsibility). The theory is that corporates must aim for social goals, not just profits.

It's unclear whether the 2% allocation will be compulsory or indicative. In either case, this misses altogether what corporate social responsibility actually is. It is an ethical attitude, a determination to observe the highest standards in dealing with all stakeholders - customers, suppliers, shareholders. CSR means observing the highest standards in dealing with health and environmental hazards, and in presenting corporate accounts accurately. If a company cheats its stakeholders, fiddles its accounts and ignores hazards, then it is grossly irresponsible whether or not it spends 2% of profits on some list of government-approved social activities.

Last week the Enforcement Directorate attached Rs 822 crore of fixed deposits of the erstwhile Satyam Computer Services. The Satyam scam was the biggest in corporate history. Promoter Ramalinga Raju made Satyam India's third-biggest IT company. But in 2009 Raju confessed he had fiddled the books for years, and forged certificates of bank deposits. This helped inflate the share price and enable Raju and family to borrow huge sums for real estate speculation.

Raju was India's biggest self-confessed crook. Yet he was much celebrated for CSR and won several awards. These included a UK government award for CSR in 2008.

His Byrraju Foundation took information technology directly to rural India. It set up a rural call centre, enabling villagers without college degrees to join the globalisation bandwagon. He took telemedicine to rural areas, enabling villagers to interact with specialist urban doctors. His foundation sought to build self-reliant rural communities, providing services like healthcare, education, water, sanitation and green awareness.

He ran an emergency ambulance service that reached sick and injured people within 30 minutes, ready with paramedics and equipment, and rushed them to hospital. This scheme attracted so much praise that many other states replicated it.

Lesson: a company that cheats shareholders, creditors and other stakeholders can parade as a paragon of corporate ethics, and win multiple awards. Allocating some profits for rural development and health is no indicator whatsoever of ethics. Rather, the CSR allocation can camouflage lack of ethics.

Many consumers have been duped by CSR awards. They are willing to pay more for products from such award winners. After the Satyam debacle, they should know better.

Worse than Satyam has been the oil multinational, BP. It caused the biggest environmental disaster in history when its Maconodo well exploded in the Caribbean Ocean after it failed to observe many safety procedures. This exposed as fraudulent its campaign to paint itself as a green saviour. Once called British Petroleum, it change its name to BP and launched a hugely successful image-building makeover calling itself "Beyond Petroleum". It got a new logo of a green and yellow sun (representing solar energy) to emphasise its green credentials. It boasted it was among the world's biggest producer of solar panels and windpower, although these accounted for barely 3% of its business, and actually represented public relations spending. "Beyond Petroleum" won two "Campaign of the Year" awards from PR Week, and an award from the American Marketing Association.

BP won the 2007 Prime Minister's CSR award in Malaysia for aiding a turtle sanctuary. Fortune magazine has an annual corporate accountability rating for CSR. BP topped the Fortune list in 2004, 2005 and 2007, and came second in 2006. The Chinese were taken in too: in 2007 they gave BP the "The Most Responsible Enterprise" award organized by China News Weekly and the Chinese Red Cross Foundation. BP won the Corporate Citizenship Award for Chinese enterprises several times.

Yet behind this image-manship, BP had a horrendous record of cutting corners and neglecting safety. Its poorly maintained refinery in Texas exploded in 2005, killing 15 and injuring 180. In 2007, a BP pipeline got corroded through neglect and leaked 200,000 gallons of crude into the pristine Alaskan wilderness. BP was fined $303 million to settle an accusation of conspiracy to manipulate the price of propane gas. Between 2007 and 2010, BP refineries in Ohio and Texas ran up 760 "egregious, willful" safety violations, while rivals Sunoco and ConocoPhillips each had eight, Citgo had two and Exxon had one comparable citation. So, BP accounted for 97% of all corporate refinery violations. 

Lesson: don't get fooled by corporate spending on CSR. Far from being evidence of ethics, it's often a cloak for gross misgovernance. If the Companies' Bill mandates 2% spending on supposed CSR, corporate ethics will not improve. Rather, more Satyams will emerge.

George Osborne's 'Austerity begins at home' example

George Osborne raises standard in first-class train row

Treasury account of chancellor's aide finding ticket inspector to pay for upgrade on Virgin train contradicts reporter's version

• Robert Booth, Lizzy Davies and Rajeev Syal
• The Guardian, Friday 19 October 2012 20.36 BST

George Osborne is accused of 'great train snobbery' after journalist says aide told ticket inspector the chancellor 'could not possibly' sit in standard class but could not pay any extra.

George Osborne's face was fixed in a thin grin as he was jostled across platform two at Euston last night, but inside he must have known that a political bomblet had just gone off. Shortly after 5.17pm, as the chancellor alighted from the busy Virgin Pendolino train from Wilmslow, Cheshire, in his Tatton constituency, the reality of what had already been labelled Plebgate 2 became clear.

As Osborne's train rattled through the countryside an hour and a half earlier, a tale of apparent fare dodging by the chancellor – estimated to have a personal wealth of £4m – had emerged through Twitter.

Rachel Townsend, a correspondent for ITV's Granada Reports programme, had been travelling on the same train and tweeted: "Very interesting train journey to Euston. Chancellor George Osborne just got on at Wilmslow with a standard ticket and he has sat in first. His aide tells ticket collector he cannot possibly move and sit with the likes of us in standard class and requests he is allowed to remain in First Class. Ticket collector refuses."

Was it true? Had Osborne, moments before the Tory chief whip, Andrew Mitchell, was forced to resign for reportedly calling a policeman a pleb, really refused to sit in standard, triggering a story that was quickly labelled The Great Train Snobbery?

Virgin, which in August had to swallow the government's decision to remove its franchise for the west coast mainline, which Osborne had just used, confirmed that he had travelled in first class on a standard class ticket, initially at least.

"The chancellor, who was travelling in first class accommodation, held a standard class ticket," a spokesman for Virgin said. "As soon as the train left Wilmslow, an aide went to find the train manager to explain the situation and arrange to pay for an upgrade. It was agreed that the chancellor would remain in first class and an amount of £189.50 was paid by the aide to cover the upgrade for Mr Osborne and his PA. The situation was dealt with amicably between the train manager and George Osborne's aide. At no time was there a disagreement or a refusal to pay for the upgrade. Nor was there any discussion between the train manager and Mr Osborne."

It chimed with the Treasury's account. "The chancellor got a different train than planned due to diary change following a series of meetings in his constituency," a spokesman said. "As he had no seat reservation on the new train, which was crowded, he decided to upgrade – and obviously intended and was happy to pay. An aide sought out the train manager and paid the ticket upgrade."

But that clashed with what Townsend said. She told ITV: "Then his aide approached the ticket collector right next to me. He said he is travelling with George and he has a standard ticket but can he remain in first class? The guard said no. The aide said Osborne couldn't possibly sit in standard class. The guard replied saying if he wants to stay it's £160. The aide said he couldn't pay and he couldn't really sit in standard. The guard refused to budge. The guard went on gathering tickets and later told me Osborne had agreed to cough up the £160."

Fellow passengers were unimpressed with the reports. "Fair's fair. He should be saving the taxpayer money but definitely he shouldn't be sitting in first," said Justin Bateman, 34, a civil servant from Manchester. Keith Young, 60, a doctor from London, agreed. "Standard was busy and the chancellor would not have been able to sit alongside his aides, but he would have been able to occupy a single seat alongside the other passengers." He added: "It's one rule for them and one rule for us. He had no right to make a stand against paying an upgrade."

But even as the facts were still settling, Labour seized on the tale.

"Another day, another demonstration of how out of touch this government is," said Michael Dugher, the shadow Cabinet Office minister. "Just like Andrew Mitchell, George Osborne obviously thinks that it is one rule for him and another for the plebs he is so keen to sit apart from. So much for 'we are all in it together'."

As with Mitchell's rant at the Downing Street police, the spirit of Boris Johnson loomed. In Mitchell's case it was quickly pointed out that the mayor of London had once called for people who swear at police to be jailed. Now memories turned to the Tory darling's scathing attack last year on what he called the "parasitic scourge" of fare dodgers in London.

At a teeming rush-hour Euston, as Osborne's train was due to arrive in London, a feverish posse including Labour activists, the president and vice-president of the National Union of Students and assorted press were waiting to pounce. Officers from the Metropolitan police's specialist response unit pored over train timetables to try to work out which service the chancellor was on to make sure he was spirited away in safety.

"Are you embarrassed Mr Osborne?" shouted an anti-government activist who had rushed to the station after hearing the rumour about the chancellor.

As he was ushered across the platform by aides and security, the chancellor had very little to say. "I'm sure it will be, um …" was all he could tell the Guardian as he was shepherded through a security gate and past the bins towards a waiting government car.

Petrol from Air - Renewable Energy Solution?

British engineers produce amazing 'petrol from air' technology

Revolutionary new technology that produces “petrol from air” is being produced by a British firm, it emerged tonight.

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An Air Fuel Synthesis technical team member with a flask of AFS fuel Photo: Air Fuel Synthesis

By Andrew Hough

11:30PM BST 18 Oct 2012

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A small company in the north of England has developed the “air capture” technology to create synthetic petrol using only air and electricity.

Experts tonight hailed the astonishing breakthrough as a potential “game-changer” in the battle against climate change and a saviour for the world’s energy crisis.

The technology, presented to a London engineering conference this week, removes carbon dioxide from the atmosphere.

The “petrol from air” technology involves taking sodium hydroxide and mixing it with carbon dioxide before "electrolysing" the sodium carbonate that it produces to form pure carbon dioxide.

Hydrogen is then produced by electrolysing water vapour captured with a dehumidifier.

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The company, Air Fuel Syndication, then uses the carbon dioxide and hydrogen to produce methanol which in turn is passed through a gasoline fuel reactor, creating petrol.

Company officials say they had produced five litres of petrol in less than three months from a small refinery in Stockton-on-Tees, Teesside.

The fuel that is produced can be used in any regular petrol tank and, if renewable energy is used to provide the electricity it could become “completely carbon neutral”.

The £1.1m project, in development for the past two years, is being funded by a group of unnamed philanthropists who believe the technology could prove to be a lucrative way of creating renewable energy.

While the technology has the backing of Britain’s Institution of Mechanical Engineers, it has yet to capture the interest of major oil companies.

But company executives hope to build a large plant, which could produce more than a tonne of petrol every day, within two years and a refinery size operation within the next 15 years.

Tonight Institution of Mechanical Engineers (IMechE) officials admitted that while the described the technology as being “too good to be true but it is true”, it could prove to be a “game-changer” in the battle against climate change.

Stephen Tetlow, the IMechE chief executive, hailed the breakthrough as “truly groundbreaking”.

“It has the potential to become a great British success story, which opens up a crucial opportunity to reduce carbon emissions,” he said.

“It also has the potential to reduce our exposure to an increasingly volatile global energy market.

“The potential to provide a variety of sustainable fuels for today’s vehicles and infrastructure is especially exciting.”

Dr Tim Fox, the organisation's head of energy and environment, added: “Air capture technology ultimately has the potential to become a game-changer in our quest to avoid dangerous climate change.”

Peter Harrison, the company’s 58 year-old chief executive, told The Daily Telegraph that he was “excited” about the technology’s potential, which “uses renewable energy in a slightly different way”.

“People do find it unusual when I tell them what we are working on and realise what it means,” said Mr Harrison, a civil engineer from Darlington, Co Durham.

“It is an opportunity for a technology to make an impact on climate change and make an impact on the energy crisis facing this country and the world.

"It looks and smells like petrol but it is much cleaner and we don't have any nasty bits."

Bullying Interns the Goldman Sachs way

Back on 12 June 2000, as the dot-com bubble was deflating, young Greg Smith was all puffed up, clutching his "extra-large coffee" and looking up "at the formidable tower that housed Goldman Sach's equities trading headquarters" in New York. "Holy shit," he thought, as he arrived for the first day of his summer internship at the Wall Street bank.

More than a decade later, on 14 March 2012, not long after a different financial bubble had burst, the remark may well have risen in a hush over the Goldman dealing room as wide-eyed traders poured over an opinion piece in The New York Times. Title? "Why I'm Leaving Goldman Sachs". Author? Greg Smith. "Today is my last day at Goldman Sachs," Mr Smith proclaimed. Over 12 years, he said, he had understood what made the bank tick. "And I can honestly say that the environment is now as toxic and destructive as I have ever seen it."

Now, Mr Smith, who had risen to become a Goldman executive director and head of the firm's US equity derivatives business in Europe, the Middle East and Africa before quitting, is preparing tell us the full story. According to reports, his biting commentary on Goldman won him a book deal and a cool $1.5m (£930,000) advance, with the product of his labours, imaginatively titled Why I Left Goldman Sachs, set to hit the shelves on 22 October. The night before, he is reported to be planning to break his self-imposed hiatus from the public square with a US television interview. Ahead of the launch, Goldman yesterday said it had conducted a detailed review of Mr Smith's claims and found no evidence to support them.

But as we near the release date, it seems the firm's President Gary Cohn, who along with chief executive Lloyd Blankfein merited special mention in Mr Smith's op-ed for losing "hold of the firm's culture on their watch", is likely to be among those waiting in line for a copy of the tome. "I probably will read it," he said during an interview on Bloomberg television earlier this month. If Mr Cohn wants an early look, the first chapter was released on the Apple iBookstore this week. Titled "I Don't Know, But I'll Find Out", it offers a glimpse of Mr Smith's first days in the belly of the "great vampire squid", as the bank was memorably dubbed by Rolling Stone.

Back then Mr Smith was a dedicated convert to the Goldman cause. That summer's day, the 21-year-old had no premonition of what – in his view – Goldman would become, and how he would go on to feel. Young Mr Smith, then on a scholarship at Stanford, was, to his mind, justifiably proud. "The selection process for any type of job at Goldman Sachs is extremely rigorous. On average, only one in 45 people... who apply for a summer internship, or a full-time job, get an offer," he says. To get ahead, he'd prepped hard for the interview. "I'd read The Culture of Success, a history of the firm by Lisa Endlich, a former Goldman VP," he reveals. Who doesn't, right?

With a toe in the door, Mr Smith was issued with a folding stool and a "big orange ID badge" on a "bright orange lanyard" – status markers to remind an intern that he or she was mere "plebe, a newbie, a punk-kid". "It was innately demeaning," he says, recounting how interns had to carry around the stools "at all times because there were no extra chairs at the trading desks".

The internship itself was demanding. "You came to work at 5:45 or 6:00 or 6:30 in the morning," Mr Smith recalls. Goldman interns were put through two "Open Meetings" a week, where "a partner would stand at the front of the room with a list of names and call on people at will with questions on the firm's storied culture, its history, on the stock market".

"Depending on the personal style of the people in charge, the meetings could be brutal. They were always intense," Mr Smith says, recalling how, on one occasion, an intern was rebuked by a VP for not knowing enough about Goldman's stance on Microsoft shares. "What is our price target? What are the catalysts coming up? How has the stock been trading? Come on," said VP barks, according to the account. The hapless intern "starts to tear up and runs out of the room".

Smith also recalls the treatment handed out to an intern after a managing director ordered a cheddar cheese sandwich and was presented with a cheddar cheese salad. The boss "opened the container, looked at the salad, looked up at the kid, closed the container and threw it in the trash". "It was a bit harsh, but it was also a teaching moment," Mr Smith writes.

The anecdotes chime with the caricature of Wall Street as a laddish jungle where ritual hazing is just part of doing business. But at this early stage there is none of the greed that Mr Smith spoke of in his op-ed – he claimed, for instance, that people in the firm "callously talk about ripping their clients off". Instead, the gruelling intern routine is presented as a way of training new initiates to be "truthful, resourceful, collaborative".

Tantalisingly, though, Chapter 5 is titled "Welcome to the Casino".