Tuesday newspaper round-up: Trade, taxes, airline M&A, water companies

Philip Hammond has warned the cabinet that he has no more money for other policies after being forced to find £25 billion for the NHS. The chancellor used a presentation to senior ministers before Theresa May’s speech on the health service yesterday to rule out extra spending on areas including schools, defence, prisons and police. - The Times

Theresa May is prepared to tear up the Tories’ tax pledges from last year’s general election to pay for her NHS funding plans, as she comes under growing pressure to explain how she will find the money. Government sources signalled that planned cuts to corporation tax and a pledge to increase the personal income tax allowance to £12,500 a year by 2020 could both be ditched, as could a promise to lift the higher rate threshold to £50,000. - Guardian

The wings may be falling off the bid by the British Airways owner IAG to acquire Norwegian Air after it emerged that dithering by the chief executive, Willie Walsh, had allowed Lufthansa to begin its own takeover negotiations. Reports in the German press revealed that Carsten Spohr, chief executive of Lufthansa, Europe’s largest global airline group, had begun talks with Norwegian, two months after IAG began its own courtship. - The Times

The water industry regulator has threatened to take action against four of the country’s largest water suppliers after homes were left without water in the wake of the "Beast from the East" storm. Ofwat said there is “no excuse” for how Thames Water, Severn Trent, Southern Water and South East Water failed to protect their customers from major water shortages in the aftermath of the severe weather earlier this year. - Telegraph

Households enjoyed the fastest growth in labour income in nine years this month but still suffered a squeeze on their finances due to stubbornly high inflation, according to IHS Markit. Better wage growth and strong levels of job security could not shake the gloom, the research group’s monthly household finance index found. - The Times

The accounting watchdog has released a damning report into Britain's big four accountancy firms, singling out KPMG in particular for the "unacceptable deterioration" in the quality of its audits. The Financial Reporting Council said 50pc of KPMG's audits of FTSE 350-listed companies required more than just limited improvements in the recent financial year, compared to 35pc a year earlier. - Telegraph

Supermarkets and suppliers have warned the competition watchdog that Sainsbury’s £15bn tie-up with Asda could reduce choice and bump up prices at the checkouts. The Competition and Markets Authority (CMA) has published a summary of the responses it has received since firing the starting gun on a probe last month. - Telegraph

The City watchdog is reviewing investment firms’ compliance with European rules brought in at the start of the year to ensure that fund managers could show they always sought the best prices for their clients when trading. The Financial Conduct Authority is examining “unbundling” that was intended to separate the commissions paid by funds for trading services from others offered by brokers, such as free research. - The Times

Deliveroo is the latest company in the gig economy to be subjected to a high-profile probe into its working practices. Labour MP Frank Field, who has led investigations into pay and working conditions at Hermes, Uber, DPD and Parcelforce, said Deliveroo was “the next one on the list”. He plans to gather evidence from Deliveroo riders over the next five weeks. - Telegraph

Britain is to announce plans to replace a fleet of ailing surveillance aircraft in a move that could cause a political row for Theresa May and an outcry from industry if a US model is selected without a competition. The Royal Air Force is in favour of buying between four and six planes from the US aerospace giant Boeing at a cost of £2 billion to £3 billion. - The Times

Motorists have been overcharged at fuel pumps by an estimated £500 million in the past three months, research by a campaign group has shown. FairFuel UK said that diesel and petrol should be at least 5p per litre cheaper and that price increases have significantly surpassed those in the wholesale costs to retailers. - The Times

The takeover of one of Britain’s leading financial software businesses is to face an investigation by the competition watchdog over concerns that its merger with a US private equity-backed rival could damage the market. The Competition and Markets Authority said yesterday that it was considering whether the £1.5 billion acquisition of Fidessa Group by Ion Trading could be bad for the financial software market, potentially delaying the deal by several months.- The Times

Britain’s booming jobs market has been a source of pride for the government, with more people in work than at any time since 1971. However, a report by PWC, the accountancy firm, has revealed that its employment rate for those over the age of 55 is woeful compared with the international average. - The Times

Despite being an early leader in online music, Google's YouTube has never quite found its place in the music streaming era. While YouTube has always been a huge source of plays and views for music videos, as a pure music streaming tool it has always been lacking. Which is why Google on Monday launched YouTube Music, its latest attempt to unseat Spotify from the top spot in music streaming. And it may well be its best effort yet. - Telegraph