Virgin Travel the airline and holidays group run by Richard Branson slid into the

Virgin Travel, the airline and holidays group run by Richard Branson, slid into the red last year, according to reports filed at Companies House. Figures for the year to October 1994 show that the company made a loss of pounds 2.98m on sales of pounds 503m This compares with a modest pounds 457,000 profit in 1993. Like Lord Archer, Ms Morgan Thomas has rejected allegations of insider dealing, insisting that she acted on a newspaper tip.. The shares rose by pounds 80,000 on news of the bid, at a time when Lord Archer’s wife Mary was a member of the Anglia TV board.The former Tory chairman was forced to apologize to his wife, who later resigned from the board. The link between Ms Morgan Thomas and Lord Archer will refuel the controversy he had hoped had died down when Mr Heseltine decided, after taking legal advice, that the novelist should not face an insider dealing prosecution after he bought 50,000 Anglia shares for a friend, Broosk Fawzi Saib. PATRICIA WYNN DAVIES

Political Correspondent
Allegations of insider dealing in Anglia TV shares, which last year centred on Lord Archer have resurfaced in a new Department of Trade & Industry investigation, it was claimed yesterday.The inquiry is said to have been reopened in May on the instructions of Michael Heseltine, then President of the Board of Trade, following reports that Karen Morgan Thomas, a stockbroker friend of Lord Archer, made a pounds 22,000 profit on the sale of Anglia shares which soared in value when MAI launched a takeover bid in December 1993.Adopting conventional practice, the Department of Trade and Industry said yesterday: “It is not our policy to confirm or deny whether we are investigating an individual or a company.” But a Sunday Mirror report said the reopened inquiry covers a longer period than the original probe, allowing inspectors to scrutinise transactions involving Ms Morgan Thomas.

The pay analyst Income Data Services reports that most private sector agreements which took effect over the summer months remained within the range of 3 to 3.9 per cent, compared with the current headline rate of inflation of 3.5 per cent.The proportion worth 3.5 per cent has, however, more than doubled to six out of ten in the three months to the end of August.An IDS spokesman says: “Our analysis shows that private sector pay rises have followed inflation upwards since the beginning of the year.”In the manufacturing sector, the CBI today reveals that pay deals averaged 3.4 per cent in the three months to the end of July compared with 3.5 per cent in the period to the end of June.But service firms made awards averaging 3.7 per cent over the period from an earlier 3.6 per cent.. Professor McWilliams says that all the most recent statistics appeared to have vindicated Mr Clarke’s position.Separately, surveys published today show that pay awards continue to be struck at about the rate of inflation or slightly above it. Interest rates would therefore have to rise again in late 1996 or in 1997 to restrain excessive growth.Professor Doug McWilliams, the chief executive of the Centre, also argues that that the Bank of England has temporarily lost credibility because of its attempts since May to persuade the Chancellor, Kenneth Clarke, to raise interest rates. But the state of the relationship is unclear since SEI launched its pounds 1bn bid for South Western Electricity. Southern of the UK subsequently held abortive talks with neighbouring SWEB on the possibility of becoming a “white knight”.. MARY FAGAN

Industrial Correspondent
Underlying inflation will peak later this year and fall below the Government’s 2.5 per cent target by 1997, allowing a cut in interest rates in the autumn, according to the Centre for Economics and Business Research.In a report published today, the think tank says a base rate cut from the current level of 6.75 per cent would help the economy shake off the effects of the mini-recession it had been going through.The report coincides with the latest forecast from Oxford Economic Forecasting, which expects an export-led revival over the next few months, with manufacturing in the driving seat and strong performance in the capital goods sector.The Centre for Economics and Business Research says that the conditions for renewed growth – including a recent pick-up in global economic activity and a likely revival in consumer spending funded by rising real incomes – are already in place.

Hanson is supportive of Eastern’s diversification into generation and would also like to exploit its UK experience in power projects overseas.Southern Electric was bidding for plants in conjunction with Southern Electric International of the US. National Power has confirmed that it is in negotiations with “several groups” but has declined to comment further on any disposals, which could raise pounds 1bn for the company.Eastern Electricity is thought to even more keen to buy power stations following the proposals by Hanson, the industrial conglomerate, for an agreed pounds 2.5bn bid for the regional firm. But recently the regulator eased the rules by suggesting that they might be able to lease the plants and be paid some sort of royalties on the power produced by the new operators.At one point PowerGen was looking at asset swaps with overseas firms rather than a sale, but this is not now thought to be priority. Offer, which hopes the disposal will boost competition in generation, has threatened to refer the companies to the Monopolies and Mergers Commission if they fail to meet the deadline of the end of this year.The companies have dragged their feet over the issue, arguing that they must get best possible value for shareholders and railing against being forced to sell market share. AES, the American energy utility, has emerged as the leading contender to buy or lease power stations from the generator, PowerGen, in a deal which could be worth pounds 500m or more, writes Mary Fagan. The UK firm is also thought to be talking to regional electricity firms, including Eastern Electricity and Southern Electric, and with an overseas group.
National Power and PowerGen were told last year by the electricity regulator, Offer, to dispose of 4,000 megawatts and 2,000 megawatts of generating capacity respectively – the equivalent of three very large power plants.

These include Peter Bamford, at WH Smith, Alan Giles, at Waterstones, and Simon Burke, at Virgin/Our Price.Since the profits warning in May, Peter Troughton, the head of UK retailing and the son of a former Smith’s chairman, has left.Earlier this month Dr Kevin Hawkins, the company’s corporate affairs director, left to join Argyll, the Safeway supermarkets group.The company’s results are expected to show a fall in profits from pounds 124.8m to pounds 115m for the year to May.. Lord Windlesham is principal of Brasenose College and has been on the Smith’s board since 1986.Ms Morgan joined the board in 1989 and is also a non-executive of Cable & Wireless and Midlands Electricity.More recent arrivals, such as Martin Talyor, chief executive of Barclays Bank, and Marjorie Scardino, chief executive of the Economist group, are likely to stay on. Philip Smith, who is a direct descendant of the founding Smith family, will also remain.The managing directors of the main operating businesses are tipped for promotion. NIGEL COPE

WH Smith, the troubled high-street retailer which surprised the stock market with a profits warning in May, is expected to announce a further boardroom reshuffle on Wednesday when it announces its full-year results.
It is anticipated that WH Smith will prune its long list of non-executive directors and strengthen its executive committee, which is still heavily reliant on Sir Malcolm Field, its chief executive.However, the City is unlikely to be satisfied if Sir Malcolm merely shuffles his pack rather than bringing in a heavyweight executive director from outside.City analysts have been calling for an injection of new blood to shake up the company’s cosy management style since the profits warning three months ago which focused on problems at the core WH Smith chain.The company would not confirm details yesterday, but it is possible that two of the company’s seven non-executive directors, Lord Windlesham and Janet Morgan, may step down. Although the Gov- ernment has an extension until 1 September to deliver its verdict, the industry expects a decision well before the deadline.As ministers are also taking advice from the Office of Fair Trading on the bids for Eastern and Manweb, there is some speculation that they may decide to refer the entire sector in order to lay down some ground rules for acquisitions.. Manweb will today release its first formal defence against a pounds 1bn hostile bid by Scottish Power.Later this week, South Western Electricity may deliver its expected package of sweeteners for shareholders – worth about pounds 5 per share – in its attempt to fend off a pounds 1bn attack by Southern Electric International of the US.But the real crunch could come at the end of the week when the Government may announce whether it will refer the SEI bid for SWEB to the Monopolies and Mergers Commission.

Recently Bob Reid, chairman of London Electricity, said the disposal could be delayed until next year because of the recent changes in the Government and the difficulty in getting the detailed attention that the deal requires.The 12 regional electricity companies have spent months trying to agree between themselves and with the Government how much they should give out in customer rebates when the grid is floated and how much they will pay in windfall tax. Some companies have argued that if the Government exacts too high a price – the tax is expected to be between pounds 700m and pounds 1bn – they would be better off retaining their stakes.The debate takes place against the continued takeover frenzy in the sector. Eastern, which has a 12.5 per cent stake in the grid, received pounds 23.5m in dividends last year. Hanson’s pounds 2.5bn offer for the electricity firm includes about pounds 500m for the grid stake.Failure by any of the 12 companies to dispose of their part of the NGC would also raise the thorny issue of whether their customers would be deprived of any rebate when the grid is floated.The Government wants UK electricity customers to get a payout of at least pounds 25 each when the NGC is floated – the intention being to show that privatisation benefits the public as well as shareholders.The letter from the DTI is the latest twist in the long drawn-out battle over the future of the grid. Hanson, for one, is unlikely to want to sell as the logic of buying Eastern is to get a stable source of UK profit.”Hanson plans to put Eastern’s share of the grid in a holding company before deciding whether to sell it or keep it.