Prince of Wales to attend speech where prime minister will focus on economic expansion and reducing unemployment
David Cameron will signal his determination to produce a pro-growth budget by saying he is sick of the dangerous anti-business snobbery creeping into national debate, promising his focus is economic expansion and reducing joblessness among young people.
In a speech to the Business in the Community charity, attended by the Prince of Wales, Cameron will mount a fierce defence of business. He will say: "In recent months we've heard some dangerous rhetoric creep into our national debate that wealth creation is somehow anti-social, that people in business are out for themselves.
"We have got to fight this mood with all we've got. Not just because it's wrong for our economy because we need growth and jobs, but because it's wrong for our society. Business is not just about making money, as vital as that is. It's also the most powerful force for social progress the world has ever known.
"The snobbery that says business has no inherent moral worth like the state does, that it isn't really to be trusted, that it should stay out of social concerns and stick to making the money that pays the taxes. Frankly I am sick of this anti-business snobbery."
The speech comes as chancellor George Osborne faces intense political lobbying for tax cuts to boost growth in next month's budget. The Liberal Democrats are openly campaigning for faster progress towards a £10,000 free personal allowance, funded by new taxes on the rich. Clegg even delivered a party political broadcast to say his plans for personal allowances would put £60 a week in the family household.
The Tory right, led by the former defence secretary Liam Fox, are calling for job-creating tax cuts for business, funded through a fresh round of spending cuts.
The Treasury is opposed to further spending cuts, but may be willing to move on personal allowances, so long as the Liberal Democrats embrace a deregulatory package designed to help young unemployed people.
Equally the Treasury is dampening talk of unfunded tax cuts saying the relative improvement in public finances is very marginal.
The Liberal Democrats, desperate to see an end to the squeeze on middle-class living standards, are proposing changes to higher-rate pension tax relief to fund the lifting of personal allowances likely to cost £5bn. An alternative source of funding for the personal allowance has been a version of the mansion tax by by introducing two new council tax bands for high-value properties. No 10 is sceptical of the proposals, but says it is looking at any ideas that will lift living standards andspeed growth.
Cameron will also turn on those criticising the government's work experience schemes in which young unemployed are offered up to 8 week's work experience in return for their job seekers allowance.
A number of firms have been targeted by campaigners to pull out of the scheme that they describe as workfare.
Cameron will say: "We see this in the debate on education, put a young person into college for a month's learning, unpaid – and it's hailed as a good thing.
"Put a young person into a supermarket for a month's learning, unpaid – and it's slammed as slave labour.
"Put a child into a great school run by a local authority – cause for celebration.
"Put them into a great school backed by a bank – and that is a cause for suspicion.
Cameron's unbridled defence of capitalism came as prominent rightwinger David Davis, writing in Prospect, attacked "crony capitalism", adding too many governments had been willing to place their faith in big business rather than small business. He said the coming budget was seen by his fellow Tory backbenchers as the last chance to secure growth in the UK ahead of the next election.
Davis urged the Treasury to "discover the kind of competitive attitude American anti-trust campaigners demonstrated in the middle of the 20th century" when they "spoke of the curse of bigness".
He claimed some of Britain's flagship companies contributed little to our economy and society. In 2009, Barclays made £11.6bn pre-tax profits from its global operations, but paid just £113m in corporation tax.
Davis spreads the blame for what he calls "the network state" across government departments: "Wherever you look in Whitehall the government is too close to big business. We need to drop the idea hat biggest is best, and that Britain's economic health is well served by focusing on a few multinational companies".
Just when the economic news was looking promising for President Obama, a barrel of crude oil is back over $100 and, in places, petrol is more than $4 a gallon. Will the price of gas hurt Obama at the polls?
Congratulations to John Harris on his excellent article about A4e and the perils of outsourcing (Nice work if you can get it, G2, 22 February). As he points out, A4e and others act like an arm of the state but with little transparency or democratic scrutiny. It is good to see a politician of the status of Margaret Hodge admitting policy mistakes and recognising that "private providers often don't provide well". Should a contract end and the work need to be taken back in-house, there are further complications. The expertise has often been lost by the local authority or government department. They then have to reinvent the wheel at great cost to discharge their responsibilities. Tony Clewes Walsall, West Midlands
• I work for a locally recognised, small, specialist welfare-to-work provider – typical of the sort that Iain Duncan Smith insists the prime providers of the now infamous Work Programme should be engaging with. We know from previous articles that, contrary to their assurances during the tendering process, prime providers are not engaging with organisations such as us. A great many of us had and still have concerns about how prime providers have been operating, especially with the "harder to reach" claimants who would need longer-term and more expert support usually provided by specialists.
While it is unfortunate that four members of staff from one of these providers have been arrested on suspicion of skewing the figures to generate more income, I wonder whether this is the tip of the iceberg. Perhaps deeper investigations should be undertaken. Jane Cattermole Senior employment manager, Employment Support and Retraining Agency Ltd
• As somebody who was unemployed for 18 months, I'm glad that MPs and the public are beginning to see A4e's shortcomings. I had a short experience with them and it was awful, with no help in finding work and the only work offered unpaid in a charity shop already over-staffed with other jobseekers from A4e.
I had to borrow money to fund a training course. When I got a new job, A4e got paid by the government for helping me into work even though A4e were no help and continued to get payments for me in work. In your article it says the total payments A4e gets from each person such as me is up to £13,000. Why doesn't the government give jobseekers control of this money, and let them decide how to best use it so they can learn a new skill or fund a university course?
I only needed £1,500, so the government would have saved £11,500. The government must let jobcentres do more and stop people like Emma Harrison making millions from unemployed people. Mark Judge Sheffield
• On Tuesday I listened to an original recording of Asquith talking about his people's budget. He made it clear that it was only fair that those who had most should pay more tax to help those who had nothing. Buried deep down in David Laws's article (Our ambition for fairer tax, 22 February), one politician has the guts to make the same plea.
As a retired person on a reasonable occupation pension, I have, so far, been virtually unaffected by the austerity measures. I would gladly pay some extra tax if it meant that more young people could get into work, but no political party is prepared to offer me that option. Increasing VAT was a regressive measure affecting all, but income tax does, or should, reflect ability to pay and, in David Cameron's "big society", fairness has to be one of his aims or it stands even less chance of capturing the public imagination. Maureen Panton Malvern, Worcestershire
• David Laws, while supporting a policy which will condemn thousands more, particularly young people, to unemployment, claims the only tax change possible is to reduce tax avoidance and scale back certain reliefs. But there is a much simpler "tax change" which could yield up to £10bn: add three extra divisions to council tax rates. Income and affluence levels are closely related to the value of houses owned and any tax is unavoidable. The small number with high-value properties and limited income would simply have to move – the fate which will apply to the large working-class families in London because of the new rules. John Pert Tonbridge, Kent
• Margaret Levy is no doubt convinced by her own claims about the Youth Training Scheme (YTS), and the purported features that, "by design", it was "intended" to have (Letters, 20 February). She omits to state that in 1982, prior to the development of YTS, the Conservative government had abolished the majority of the very agencies that would have been able to develop relevant youth training programmes in negotiation with and agreement by employers, trade unions and educationalists.
Those agencies, the statutory industrial training boards (ITBs), had close links with employers and the occupational fields they covered, undertaking detailed research into changes in skill requirements and developing qualifications directly linked to job requirements. They were run by boards that had employer, trade union and educationalist members. Some 55% of the UK workforce was efficiently covered by the ITBs prior to 1982, with a total staff of only about 20% of that of the bloated Manpower Services Commission, which was effectively an arm of government.
The reason for abolition of most ITBs, and disabling of the remainder, was clear: they would not have supported YTS as it was introduced, because it did not meet the skills needs of industry. If the ITBs had not been abolished, we might by now have the highly skilled, globally competitive workforce we so desperately need. Clearly, the abolition of the ITBs, espousedly to improve training and skills levels, has been an utter failure. Their reintroduction is urgently needed but, sadly, unlikely under the ideologically driven policies of the current government. Dr Leonard Holmes Reader in management, University of Roehampton
• Employment minister Chris Grayling is stalling for time by suggesting that the unpaid work schemes he has promoted to businesses are to be reviewed (Unpaid work scheme may be reviewed, says minister, 21 February). He is attempting to justify the unjustifiable: tens of thousands of people being forced into working for companies, including Tesco, the biggest private-sector employer in the country, which made profits of £3.8bn.
He talks of protecting small employers, but the reality is that "workfare" schemes are a multimillion pound industry. On an eight-week placement, Tesco saves £1,500 by not paying the minimum wage of just £6.08 an hour to people on placements. Many have reported that they do the same work as any other Tesco employee without pay.
Multiply this by the 1,400 workers Tesco says it took on placements in the last four months (Tesco under pressure to withdraw from unpaid work experience schemes, 17 February) and you arrive at £2m pounds in four months – £6m over a year. These savings on Tesco's wage bill are being subsidised by public money used to pay the subsistence benefits that keep those in forced labour fed.
The employment minister also states: "The idea of people being press-ganged to work for nothing to provide cheap labour for big firms is totally untrue." But as documents released by the Guardian show, the minister is disgracefully pushing not just the young, who face mandatory work activity for four weeks,into unpaid work, but also the disabled. In the case of those on disability benefits, there is no time limit on the period of servitude.
Referring to the plans, The Royal College of Psychiatrists has stated it would prefer the placements to be optional, suggesting that as it stands the vulnerable people they are aimed at have no choice in whether to participate.
Grayling should stop playing for time and move immediately to end the disgraceful schemes that are exploiting the most vulnerable to boost the profits of big business. Mark Dunk, Rhia Lawrence, Alexandra Sayer, Richard Donnell Right to Work
Even if you disagree on who is to blame for this crisis, the responsibility for getting out of it must still be shared
Let's be honest: if this eurozone did not exist, no one would now invent it. The key word in that sentence is "this". A smaller eurozone of more compatible, mainly north European economies – a nordozone or neurozone – could probably have weathered the post-2008 crisis of western capitalism, even with Maastricht's design flaws. Alternatively, a eurozone of the current size might eventually have followed from the creation of a political union, in institutions but also in hearts and minds, if and when that proved possible.
That would require a degree of fellow-feeling and inter-operability – so to speak – between Germans and Greeks comparable with that between New Englanders and Alabamans in the US, and (unless Alex Salmond, the Scottish nationalist leader, is to be believed) between Old Englanders and Scots in the UK. Still very different folks, but accepting large-scale redistribution of taxpayers' money from one place to the other; individually ready and able to move easily between and work in both places; having a common politics, budget, media and public sphere.
If only. If ever. But, as psychological counsellors tell depressed patients, you have to start from where you are. No obsessive rumination on what might have been. No regrets. Start from here. Make the best of it. Find a path towards something better.
That is what eurozone leaders insist they did this week. Their exhausting, day-and-night efforts must be acknowledged. They have worked hard to square many circles. It is easy to criticise from the sidelines. Nonetheless, this has to be said once again: they have not succeeded yet. It is not just, as the cliche has it, that they are still kicking the can down the road. Now they are kicking a Molotov cocktail down the road.
At the moment, there is still a solid majority in Greece for staying in the euro. Yet I find it hard to believe that the people of Greece can for months and years take the extreme pain demanded of them, with the only argument being "to leave the euro would be worse". The personal stories are already heartrending. The journalist, teacher, civil servant reduced to queueing at the soup kitchen. Students in a "lost generation" who have left the country or are about to. Unemployment at 21% and rising. An estimated 150,000 businesses that have closed. The minimum wage to be cut by more than one fifth. Thousands sleeping on the streets. The homeless by night; demonstrators by day. The octogenarian musician Mikis Theodorakis – a favourite with generations of German tourists – has called for an "uprising". And the government has to implement a bunch of further austerity and liberalisation measures over the next week, before it can get the €130bn bailout.
Sitting at his regular table in the pub, his Stammtisch, the reader of Germany's tabloid Bild may still mutter, "Well, they have only themselves to blame." But he would be wrong. It is true that a very large share of the blame lies with irresponsible, deceitful and corrupt Greek policies and business practices. But the scale of this mess, and the difficulty of getting out of it, also results from the fact that Greece was accepted into a badly designed, over-extended eurozone; that the way bond markets and banks (including German and French ones) treated that eurozone positively encouraged such irresponsibility; and that this bailout is as much to help those banks as it is to help Greece. So the blame must be shared.
Even if you disagree with that, the responsibility for getting out of it is still shared. This is obviously true so long as Greece remains in the eurozone; but even if Greece leaves, it will remain a member of the EU, and there will be a moral and historical responsibility that derives from having got into this mess together.
Then there's that troublesome thing we call, from the ancient Greek, democracy. Many European leaders privately agree with the German finance minister, Wolfgang Schäuble, that it would be better if Greece did not have an election scheduled for this April. Democracy? Ask the people? What an appalling idea. But the Greek people will be asked. Unless they are shown some realistic prospect of growth, parties opposed to the draconian terms of the bailout may yet gain a majority. No one will then be able (though some may privately wish) to follow Bertolt Brecht's famous ironic suggestion: dissolve the people and elect another.
At that moment, Angela Merkel will have more than a year to go to her own general election, which she is self-evidently determined to win. The eurozone will then be torn between the maximum pain that Greek voters will accept and the maximum price that Merkel believes German voters are prepared to pay. That dilemma – call it Merkel's fork – is just the most critical example of the deeper problem of this eurozone: the contradiction between already European policies and still national politics. You could have close, similar economies and still diverse politics (the nordozone that might have been). Or you could have fairly diverse economies if you had converged politics, with one eurozone election for one eurozone government. That common politics would then allow for the financial transfers to compensate for differences, as in the United States, and work towards economic convergence in the longer term. What is unsustainable is to have, within a single currency zone, both divergent national economies and divergent national politics.
So far as I can see, there are only two ways out of this. One is that Germany, all other European governments (including Britain's), the European Central Bank, the EU institutions, the IMF and every other relevant player work over the next few weeks, like Mozart in his most inspired frenzy, do what every sensible political economist (including many in Germany) says is necessary: produce a strategy for short- to medium-term growth as well as fiscal consolidation and structural reform. For as Mohamed el-Erian, the chief executive of the giant bond investment firm Pimco, observes, this week's agreement "leaves Greece's basic problem unresolved. The country still faces the prospect of too much debt and way too little growth."
That strategy for growth must not only be found, it must be seen to be found – seen by Greek voters, that is, before the next election. The other alternative is that, sooner or later, Greece leaves the eurozone. The former is more desirable, the latter more probable.
After councils and care units, now schools are being encouraged to imitate the department store's stakeholder structure
Once upon a time, we knew three things about John Lewis. One: it's a very nice, very middle-class department store. Two: it owns Waitrose, that very nice, very middle-class supermarket. Three: it is, or claims to be, never knowingly undersold.
These days, we can add a fourth: never knowingly under-referenced within plans to reform the welfare state. In 2010, London's Lambeth council announced an intention to remould itself according to the "John Lewis model". Last June, David Cameron unveiled plans to turn parts of the public sector into "John Lewis-style" mutuals. This week, a rightwing thinktank suggested turning state schools into John Lewis-like companies. A planned free school in Suffolk will be a John Lewis-style partnership, while an NHS hospital in Cambridgeshire and a care unit in Swindon already claim to operate along those lines. Even Nick Clegg has talked about making other firms in the private sector operate a bit more like John Lewis.
The John Lewis business model gives each employee part-ownership of the company, a share of its annual profits, and a say in how it is run. In theory, it makes employees more invested – literally – in their work, and so heightens both productivity and profits. At least, that's how it works at John Lewis itself. Critics argue that the right's proposals either only pay lip service to the scheme on which they are based – or are simply a way of making privatisation seem fluffier. This week's plans could encourage stakeholders (teachers, pupils) to work harder. On the flipside, they could also lead to the outsourcing of a school's management structures, and thereby make teachers less accountable. Suffolk's Breckland Free School has already outsourced its management to a private firm, and won't be overseen directly by the parents who set it up.
Lambeth's John Lewis council promised much – community involvement in exchange for council tax rebates – but has been criticised for playing an active role in privatisation. Only last week the council sold off a community-run arts centre to developers. And what of the Swindon care unit? In the words of cabinet office minister Francis Maude: "It's a mutual where there's no financial incentive. They will own it, but with no profit share or anything, no financial upside. They will have to take out 30% of their cost over the next four years and they are really excited about it." In other words, it's a John Lewis partnership, but without most of the rewards. Unless you count swingeing cuts as a good thing.
Nick Clegg's ideas seem the most appropriate interpretation of the John Lewis model: they're about making capitalist structures fairer. But proposals to turn public services into John Lewis-style firms seems slightly disingenuous. After all, the NHS – which gives citizens both a say in its organisation (at the ballot box) and a piece of its resources (in the surgery) – might already be the biggest John Lewis model going.
Royal Bank of Scotland is expected to reveal a loss of £2bn after the eurozone crisis hit the performance of its investment bank
Royal Bank of Scotland risks igniting a row over City pay when it is expected to announce it is setting aside almost £400m for bonuses despite reporting its fourth consecutive year of losses.
The Edinburgh-based bank, which is more than 80% owned by the taxpayer after a series of bailouts that began in October 2008, is expected to try to defuse any controversy by revealing that 10,000 of its top staff will have pay freezes after a year in which the bank is is expected to reveal a loss of £2bn. The eurozone crisis dented the performance of its investment bank while the retail arm will be hit by a £1bn provision for payment protection insurance (PPI) mis-selling.
After the furore surrounding the award of a near-£1m bonus for chief executive Stephen Hester – - which he waived – he is still on course to be handed £600,000 in bonuses next month while close colleagues in the next few weeks could be handed up to £11m depending on the share price and their performance.
David Hillman, a spokesman for the Robin Hood Tax campaign, on Wednesday:"It is incredible that while the rest of us suffer, a loss-making bank bailed out by the taxpayer is allowed to pay out hundreds of millions in bonuses. The British public is getting a raw deal from RBS and the wider financial sector: it is time they were made to pay their fair share rather than line their own pockets." TUC general secretary Brendan Barber added pay and bonuses were "out of control" in the City.
Making reference to Hester's salary, Liberal Democrat peer Lord Oakeshott said that "every small business in Britain would love to have their bosses' pay frozen at £1.2m".
The bonus pot, expected to be just under £400m, is more than half the £950m paid out in 2010 .The chief executive will on Thursday present a three-year report card to set out the progress the bank is making - despite the £21bn loss the taxpayer is currently incurring in its 82% stake - along the path to recovery following the near £24bn record-breaking loss he inherited in 2008.
Hester will add further detail to the £38bn of costs that have already been incurred to clean-up the bank. Some £28bn relate to losses on loans which have turned sour and almost £3bn from restructuring charges as 33,000 roles have been shed since the financial crisis.
When Rob Freeman took to the slopes with former Olympian Graham Bell he was more than a little apprehensive. Would he live up to his reputation for doing something completely bonkers, not to say terrifying, as soon as he gets to the top of a mountain?
In the colder post-2007 climate for financing, Peacocks chief executive Richard Kirk failed to get rid of the pay-in-kind notes (PIKs). Thus the inevitable process of financial strangulation began
Go back to the £404m management buy-out of Peacocks in 2005 and look at the reason given for taking the company private: "The shares have, for a number of years, traded at a valuation that was a relative discount to what the independent directors perceived to be the comparable companies listed on the London Stock Exchange." That was it: the shares were seen as too cheap compared with the opposition.
Thus chief executive Richard Kirk's offer to pay a 35% takeover premium was approved and nobody stopped to ask whether the boss's financing arrangements were too aggressive for anybody's long-term health. After all, the bid announcement did not contain a portrait of a company enjoying explosive success: profit on ordinary activities had risen from £22.6m to £25m in the year to March 2005 but trading conditions since October 2005 were described as "more challenging."
Aggressive financing was part of the culture of the times, of course. Leverage was the rage and private equity-style deals were appearing everywhere, especially in the retail sector. All the same, Kirk's proposal can be seen as an extreme version, even by 2005 standards: the capital structure, arranged by investment bank Goldman Sachs, relied on the issue of £110m-worth of so-called pay-in-kind notes (PIKs) to a couple of US hedge funds, Och-Ziff and Perry Capital. These notes attracted an annual interest rate of 17.2%.
Those are pauper's terms. Unless you refinance quickly, or produce truly explosive increases in profits every year, you will be slowly strangled by the law of compounding because the PIK feature means that interest payments are rolled up every year and added to the total pile of debt to be repaid at a fixed point in the future.
In the colder post-2007 climate for financing, Kirk failed to get rid of the PIKs. Thus the inevitable process of financial strangulation began. By 2010, the PIK liabilities had reached £301m. Peacocks' total debts at the point of administration last month are thought to have been about £750m, of which the PIKs may be roughly £400m.
The 2005 buy-out was an absurd bull market deal. Kirk's bet rested entirely on the expectation, or hope, that cheaper financing would be available within a year or two. Administrator KPMG's reference on Wednesday to an "unsustainable" capital structure is an understatement.
The anger and despair in Greece has not receded after Tuesday's bailout deal, claim Athens trade union leaders
In the end it was a bit of a damp squib: protesters, put off by the rain and perhaps fatigue, did not come in their thousands to oppose the emergency legislation that is likely to change the face of Greece. But trade union leaders said it mattered not.
The €130bn (£110bn) bailout deal secured in the early hours of Tuesday had not erased the anger or despair of Greeks. "Two years ago we were demonstrating about [wage and pension] cuts but now they want to take away everything," said Ilias Iliopoulos at the civil servants' union Adedy. "People are literally hungry and the number of homeless is growing every day … soon they won't take anymore. There'll be a popular revolt."
Barely a day after Athens agreed to the excoriating EU/European Central Bank/IMF terms to be saved from bankruptcy for a second time, popular fury at the terms of the rescue shows no signs of ebbing.
Demonstrators at an Athens rally on Wednesday night claimed the argument, articulated by the Greek finance minister Evangelos Venizelos, that the debt-choked country has escaped a "nightmare" meant little when so many had already been impoverished. "It would be bad but it's already bad, and it's going to get a lot worse," said Evangelia Fasilakaki, an umbrella in her hands as she evoked the deepening mood of resignation and defeat. "They are even closing down cancer wards here."
But opposition has not dampened the resolve of the technocrat prime minister Lucas Papademos to do what he was appointed to do: pass the reforms that will release the funds to keep bankruptcy at bay.
Despite widely expressed doubts over the efficacy of the latest aid package and attendant bond swap that will write off €100bn from the country's debt pile, Papademos insisted the deal would "create the conditions for growth and the recovery of the [recession-hit] Greek economy."
Although the bailout has generated widespread relief, politicians and analysts voiced consternation over a "confidential" IMF assessment of the Greek economy showing its debt-to-GDP ratio at 160% in 2020, the same level as today, and far above the rescue programme's target of 120.5%. Former finance minister Stefanos Manos said Greek debt would only become sustainable when cut to 90% of national outlay.
Reforms that are expected to overhaul the workings of Greece economically, politically and judicially will be fast-tracked through parliament in a record nine days as the government tries to convince creditors the country is willing to change. The emergency measures include a further €3.2bn in spending and income cuts.
It is hoped that with default no longer on the cards, Greeks will end a capital flight that has seen an estimated €65bn in deposits removed from banks since the crisis erupted in December 2009.
Venizelos said €16bn had been whisked abroad – mostly to banks in Britain – but the rest had remained in Greece, kept under the proverbial mattress of a nation that no longer believed in its own financial system.
Royal Dutch Shell's offer values Cove Energy at £992m
The bosses of London-listed oil and gas explorer Cove Energy are in line for a £38m payday after Royal Dutch Shell put in a near-£1bn takeover bid.
John Craven, Cove's chief executive and veteran geologist, is line for a £18m payout less than three years after he created the African-focus explorer. Michael Blaha, Cove's chairman and Shell's former head of Alergia, holds shares and options worth £13.5m under the 195p-a-share cash offer Shell. The company's finance director, Michael Nolan, is in line for £7.1m.
The offer, which values Cove at £992m, comes a month after Cove reported one of the world's largest gas discoveries off the coast of Mozambique. Cove owns a 8.5% stake in Mozambique's Rovum Offshore Area 1, which operator Anadarko reckons could hold more than 30tn cubic feet of recoverable natural gas.
That discovery and similar finds by Italy's Eni suggest the area could contain up to 60m cubic feet of natural gas, which would be enough to support a liquefied natural gas (LNG) project to supply fast-growing Asian markets.
"East Africa is a major prospective hydrocarbon province, which has seen a significant increase in exploration activity in recent years," Shell said in its offer document.
"Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell's entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa."
Shell's offer represents a 70% premium to Cove's share price before it put itself up for sale in January, and a 29% premium to Cove's average share price over the last five days. Cove's shares jumped by 25% to 193½p on Wednesday.
Stuart Joyner, an analyst at Investec, said the offer was a "much better price than the market anticipated" and said it was unlikely any higher bids would trump it.
Irene Himona, analyst at SocGen, said she expected Shell to buy up other players in the Rovuma field. "As the number one LNG player, Shell absolutely must be in East Africa," she said. "We should assume that 8.5% is too small for them."
The deal requires the approval of Mozambique's government. Standard Chartered Bank is advising Cove on the sale, while Morgan Stanley is acting for Shell.
Separately, Shell said Malcom Brinded, the head of its oil and gas exploration and production operations outside the America's, is to step down. Brinded, who was a contender for the chief executive post before Peter Voser was appointed in 2009, will be replaced by Andrew Brown, currently head of Shell's operations in Qatar.
| 
| 
