Queen's speech: George Osborne to outline banking reform plans

Government to press ahead with banking reform and Vickers recommendations – with further details released next month

The queen prepares to deliver her speech to parliament. Photograph: Oli Scarff/Getty

The government signalled its determination to press ahead with banking reform in the Queen's speech but intends to provide more details on 14 June when George Osborne delivers his Mansion House speech.

The white paper outlining how the government intends to force banks to erect a ringfence between their high street and investment divisions will be published alongside the chancellor's set-piece speech next month.

Kevin Burrowes, UK financial services leader at PwC, said: "Formally signalling intent to pursue ringfencing helps eliminate uncertainty but, in reality, the banks are already well aware this would be pursued by the government. All banks are already undertaking enormous changes to their business models in light of trading outlook and pressure to generate acceptable returns for investors for the increasing capital that has to be invested."

In the speech, the Queen said that "measures will be brought forward to further strengthen regulation of the financial services sector andimplement the recommendations of the independent commission on banking".

The commission, chaired by Sir John Vickers, also included recommendations on bolstering competition among high street banks by making it easier to move bank accounts. There were also proposals about "depositor preference", which would allow savers to get their money back when a bank goes bust before other creditors – a move that is intended to reduce the need for taxpayer bailouts. Despite lobbying by the banks for this to be avoided, the government is expected to press ahead with change.

While the Vickers legislation is expected to be passed by 2015, the banks are likely to have until 2019 to implement the artificial ringfences.

David Wootton, lord mayor of the City of London, said the City would work with the government on implementing bank reform: "The City looks forward to working closely with government to ensure that these reforms – particularly ringfencing – are sensibly implemented in a way that delivers a stable and secure banking system, but does not hinder economic growth.

"Clearly, the taxpayer should not be asked to underwrite bank bailouts again but we must also guard against hindering the UK's capacity for future growth."

Clinton Cards goes into administration

More than 8,000 jobs on the line as embattled retailer becomes latest high street chain to be hit by spending slump

Clinton Cards operates 628 Clinton and 139 Birthdays stores. Photograph: Alamy

More than 8,000 jobs at Clinton Cards were on the line after the group became the latest casualty of the high street spending slump.

Earlier its biggest supplier had said it planned to push the British retail chain into administration.

The aggressive move by American Greetings (AG) wrongfooted Clinton's chief executive, Darcy Willson-Rymer, who had hoped to work closely with the New York-listed group as part of a turnaround of the loss-making retailer.

But AG took action on Tuesday night, buying up Clinton's £35m debts from Barclays and taxpayer-backed Royal Bank of Scotland and then calling in the loans.

Nick Hood, the restructuring expert who runs analyst group Company Watch, told the BBC this was a popular tactic in the US called "loan to own". "This is a very American way of doing insolvency," he said. "You buy the loans as a way of taking control of the company."

The move puts AG in pole position ahead of any restructuring. Unlike banks, suppliers are unsecured creditors and usually lose out when a company goes under. "AG may not get all their money back this way, but they will get a lot more back than if they had not employed this strategy," said Hood.

Whereas the banks had waived certain conditions on the loans, AG has said it will push the company into administration. The Ohio-based company, which has annual sales of $1.6bn (£990m) and manufactures cards under brands such as Carlton Cards, is expected to make a statement later on Wednesday.

Clinton Cards, which operates 628 Clinton and 139 Birthdays stores, earlier requested that its shares be suspended on the London Stock Exchange. It is the country's biggest card retailer and according to its website has 8,350 employees, mostly working in store, many on a part-time basis.

Staff have been told to turn up for work and it is thought the administrators will continue to run the stores as normal while seeking a buyer – although a substantial number of the shops are ultimately expected to close.

Clinton's problems are another blow to the high street following recent high-profile casualties, including video games retailer Game, fashion chain Peacocks and outdoor specialist Blacks Leisure.

Clinton has suffered dire trading in recent months as it comes up against stiff competition from supermarkets and online retailers such as Funky Pigeon and Moonpig, which sell personalised cards. It made a pre-tax loss of £3.7m in the 26 weeks to 29 January, compared with a profit of £11.7m in the previous year, and warned that the second half of the year would be below expectations.

Willson-Rymer has been working on a strategic review for six months, which is understood to have included a fruitless search for a buyer for all of the business or its Birthdays chain. Clinton revealed more poor trading for the 14 weeks since 29 January, with same-store sales down 3.5%.

Clinton said that it was not in breach of any financial covenant or repayment obligation, but that the banks had waived "technical breaches of default" related to management changes and supplier-related discussions. It had believed that AG would have extended that support if it bought the loans, and had been caught off guard by the decision the US company made.

The crisis is a dark day for founder Don Lewin, who started the retailer in 1968 from a shop in Epping, Essex. In 1988 it had 77 stores when it floated on the stock market. Its store numbers were swelled by numerous acquisitions, including Hallmark Cards and the ill-fated Birthdays Group, which had 170 stores, in 2004.

Spain prepares to nationalise Bankia amid market turmoil

Bankia's board was meeting on Wednesday night, with reports that new chairman José Ignacio Goirigolzarri would ask the government to take control of the troubled bank

Bankia is on the verge of being nationalised. Photograph: Paul White/AP

Spain's government is poised to partly nationalise the country's fourth-largest bank, Bankia, according to reports in the Madrid press, as investors dumped Spanish bonds and stocks amid increasing worries about the country's banking sector.

Bankia's board was meeting on Wednesday night, with reports that new chairman José Ignacio Goirigolzarri would ask the government to take control of the troubled bank as it sinks under a mountain of toxic real estate assets.

It was unclear how that would happen, however, with reports that the government would convert a €4.5bn (£3.6bn) loan to the banking group's parent company, BFA, into shares. Other estimates see the bank needing €10bn.

Jitters about banks drove the Madrid stock market to an eight year low, while yields on benchmark 10-year Spanish sovereign bonds soared back over the key 6% level.

The selloff was further proof that Spain has become the main worry in the troubled eurozone as the country suffers a second recession in three years and unemployment hits 24%.

The Bankia debacle showed how Spain's banking sector has failed to digest the pile of toxic assets and debt left over by a property bubble that burst four years ago. There have been suggestions that it will need help from the eurozone's rescue fund to tackle the problem.

Prime minister Mariano Rajoy dodged questions on Bankia saying only that reforms to be announced by Friday will "will help solve a lot of Spain's economic problems".

Those reforms will include yet another round of provisioning against toxic real estate with banks ordered to set aside a further €35bn on top of the €54bn they are already provisioning, financial sources told Reuters.

Bankia was created just 17 months ago by the merger of seven regional savings banks in an attempt to shore up their combined defences against the bad real estate loans, worthless building land and unsold apartment blocks they had accumulated.

Saving banks, many controlled by local politicians, were the most reckless lenders to developers, land speculators and building companies, which have left Spanish banks burdened with €184bn of problem loans and assets.

Alberto Garzón, a deputy for the communist-led United Left party, warned Rajoy against using public money to nationalise only the Bankia group's separate "bad bank" — where many of its toxic assets are parked – while leaving the healthier part of the bank in private hands.

Milly Dowler: truth about deletion of messages may never be known

Police inquiry confirms murdered teenager's phone was hacked but says key evidence has been lost

Milly Dowler: police said because the full technical call data was missing, reaching a definitive conclusion may never be possible. Photograph: Surrey police/PA

The full truth about the extent of hacking into Milly Dowler's phone may never be known, police have admitted. Their report to the Leveson inquiry followed an investigation lasting five months into the hacking of the murdered teenager's phone.

"It is not possible to state with any certainty whether Milly's voicemails were or were not deleted," says the report, which was written by Detective Chief Inspector John Macdonald from the Metropolitan police's Operation Weeting, which is investigating phone hacking.

He said two voicemail messages appeared to have been removed at the time, but because the full technical call data was missing, "reaching a definitive conclusion is not and may never be possible".

The police said last year that a Guardian report might have mistakenly blamed the News of the World private detective Glenn Mulcaire for deleting Milly's voicemails and giving her family "false hope" that she was still alive because new evidence had emerged about the dates of calls.

Wednesday's report does not seek to exonerate Mulcaire over the deletions but refers only to NoW reporters.

It says: "There is no evidence at present to support a suggestion that any journalist attempted to hack into Milly's phone prior to 26th March 2002."

It is believed the "false hope" moment when Sally Dowler found that messages had been deleted on Milly's phone was on 24 March.

The report confirms, however, that NoW hacking did subsequently take place.

Gill Phillips, the lawyer for the Guardian, which originally revealed the hacking of Milly's phone, told the inquiry: "The Guardian welcomes the fact that the Metropolitan police has modified its statement from last December.

"The Guardian has no wish to cause any distress to the Dowler family. We also recognise the continuing need for care in reporting this matter given the ongoing criminal investigation."

She said the statement made clear that "the News of the World hacked into the voice messages of Milly Dowler after she disappeared in March 2002. The police have found evidence to suggest that somebody may have manually deleted two of Milly's messages but they have been unable to identify the person responsible. They have also found evidence which suggests automatic deletion.

"In April 2002. Surrey police made a connection between the apparent deletion of Milly's messages and the News of the World. The manual deletion of the messages was discussed by Sally and Bob Dowler and the police during meetings in 2011. The Dowlers speculated to the police that their 'false hope moment' was due to such manual deletion. Surrey police continued to regard this link as 'completely reasonable and absolutely possible' and the Metropolitan police did not seek to dissuade Mr and Mrs Dowler from this belief. The Guardian's story of 4 July 2011 was based on multiple sources and their state of knowledge at the time. Our error – as we acknowledged and corrected last December – was to have written about the cause of the deletions as a fact rather than as the belief of several people involved in the case. We regret that.

"After five more months of intensive inquiry, the police have found that the passage of time and the loss of evidence means that 'reaching a definitive conclusion is not and may never be possible'."

The NoW lawyer, Antony White QC, said repeated an apology for the NoW's behaviour. He said that nevertheless the false hope moment was likely to have been caused by automatic dropping-off of voicemails after 72 hours.

The Guardian submitted to the inquiry a timeline detailing the paper's understanding of the sequence of events surrounding the hacking of Milly's phone.

David Sherborne, for the Dowlers and other hacking victims, said important questions remained unanswered and that the NoW was "rotten to its core".

He read out a statement from the Dowler family. They thanked the police team for their efforts, but said "neglect and deference" by Surrey police in 2002 had caused the original failure to investigate and prosecute the NoW for hacking. Praising the Guardian's reporter, Nick Davies, they said the scandal had only come to light thanks to the "relentless efforts of one journalist".

Sherborne said: "If Surrey police had prosecuted this activity in 2002 then the position would have been very different and perhaps countless others might also have been avoided having their private messages hacked into by the News of the World. Police neglect and deference meant that it took the relentless efforts of one journalist to uncover what the police knew had gone on, and whilst we would never have wished to have been thrust into the middle of this extraordinary scandal on top of what we have already had to deal with as a family, we continue to have faith that his efforts and the efforts of the inquiry and Operation Weeting will have a lasting positive impact."

Later Mark Lewis, the solicitor acting for the Dowler family, said Rupert Murdoch's decision to pay Milly Dowler's parents £3m in an out-of-court settlement for phone hacking had nothing to do with allegations that the News of the World had deleted her voicemails.

He said demands that some of the Dowler money be refunded, because it was impossible to say whether or not the News of the World deleted a voicemail that led to the "false hope" that the teenager might be alive, were misplaced.

"I cannot recall ever discussing the concept of false hope in any negotiations between the Dowlers through me and News Corporation through their lawyers," he said.

Met police officer to be charged over assault allegations

CPS to charge PC Joe Harrington with assault 'occasioning actual bodily harm' over allegations he attacked black teenager

The decision to prosecute PC Joe Harrington is the second time in a month the CPS has reversed an earlier decision not to prosecute a police officer. Photograph: Dominic Lipinski/PA

A police officer will face prosecution over allegations he assaulted a 15-year-old black teenager who was handcuffed in the custody area of aLondon police station shortly after last summer's riots.

Metropolitan police constable Joe Harrington is to be charged with assault "occasioning actual bodily harm" over allegations he attacked Terelle Ferguson, now 16, at Forest Gate police station.

The decision to charge the officer was announced by the Crown Prosecution Service, which had previously decided there was no realistic prospect of prosecution in the case. Alison Saunders, the chief crown prosecutor for London, said it was "regrettable" that prosecutors previously came to the wrong conclusion in the case.

"I hope the seriousness with which the CPS has taken this matter gives the public confidence that we are an organisation which will review our decisions, openly accept when we've got them wrong and then take the correct course of action," she said.

The complaint against Harrington, first reported in the Guardian, was one of 13 alleged racism cases identified by the Met in recent weeks. However, there was no suggestion in the CPS announcement that there was any racial dimension to Harrington's prosecution.

The decision to prosecute Harrington is the second time in the space of a month the CPS has reversed an earlier decision not to prosecute a police officer. Both cases involved alleged mistreatment of young black males by officers at Newham police station.

Saunders said: "In February this year the Crown Prosecution Service decided there was insufficient evidence to charge PC Joseph Harrington in relation to an alleged assault on a young man in custody in August 2011.

"The incident was investigated by the Independent Police Complaints Commission, with CPS involvement beginning in November 2011. The IPCC gave summaries of interviews to the CPS in February, and in the same month the CPS decided that there was no realistic prospect of conviction in the matter.

"Grace Ononiwu, deputy chief crown prosecutor for CPS London, directed in April that there should be a new review of this case after concerns were raised with CPS London. That review is now complete and I have decided that there is sufficient evidence for a realistic prospect of conviction to charge PC Harrington with assault occasioning actual bodily harm contrary to section 47 of the Offences Against the Person Act 1861.

She added: "Occasionally, a new look at a prosecution decision shows that the wrong view of the evidence was taken. That is regrettable. In this case, the conclusion originally reached was not tenable on the available evidence.

"When a review shows a previous decision not to prosecute is clearly wrong, it is open to the CPS to rectify that error by reconsidering the prosecution decision at chief crown prosecutor level. As chief crown prosecutor for London, I have taken the decision in this case that not only is there sufficient evidence to provide for a realistic prospect of conviction, and that a prosecution is required in the public interest, but that a prosecution is necessary in order to maintain confidence in the criminal justice system.

"That is the test I must apply under the code for crown prosecutors when reinstituting a prosecution. It is clear that the allegation of using excessive force on a handcuffed 15-year-old in custody is a serious matter."

Saunders said she had advised the IPCC to summons Harrington. She added: "All parties have now been informed. Can I please remind all concerned that PC Harrington is to be prosecuted for a criminal offence and has a right to a fair trial. It is very important that nothing is said, or reported, which could prejudice his trial. Proceedings are now active."

Louise Mensch 'troll' is told he could face jail

Frank Zimmerman, 60, tried to drive the Conservative MP off Twitter by saying one of her children would be killed

Louise Mensch said the abusive email from Frank Zimmerman had left her feeling 'powerless and scared'. Photograph: Olivia Harris/Reuters

An internet "troll" who tried to drive the Conservative MP Louise Mensch off Twitter by sending her an email threatening the lives of her children has been warned he could be jailed for six months.

Frank Zimmerman, 60, told Mensch she faced "Sophie's choice", meaning she would have to decide which of her children lived and which died. Zimmerman, from Gloucester, told Mensch her phones and computer had been hacked and images of her family would be posted online.

At a hearing in Gloucester on Tuesday, Zimmerman said he had no recollection of having sent the message and claimed his own email account had been hacked and the offensive messages sent from it by someone else.

But Judge Martin Brown said he was satisfied the case against Zimmerman had been proven. The judge said he would sentence him on 7 June at Cheltenham and warned him that he could be imprisoned for up to six months.

Zimmerman said he had no means of getting to Cheltenham and told the judge he did not even have enough money to eat. But the judge told him he would have to find a way of getting there.

Zimmerman targeted Mensch following last summer's riots when the MP suggested that sites such as Twitter ought to be closed down if the police thought it necessary. Mensch was also in the public eye as part of the Commons culture, media and sport committee, which questioned Rupert and James Murdoch.

Addressing the Corby MP as the "slut of Twitter", Zimmerman said: "We are Anonymous and we do not like rude cunts like you and your nouveau riche husband Peter Mensch. We are inside your computer, all your phones everywhere and inside your homes.

"So get off Twitter. We see you are still on Twitter. We have sent a camera crew to photograph you and your kids and we will post it over the net including Twitter, cuntface. You now have Sophie's Choice: which kid is to go. One will. Count on it cunt. Have a nice day."

Mensch was in New York when she received the abusive email in August last year.

In a victim statement she said: "It was abusive and threatening, making threats to my children and saying I would have to choose which one would die. I felt powerless and scared that my children had been targeted."

The police tracked Zimmerman down to his run-down, rubbish-filled home and he was charged with "sending Mrs Mensch an electronic message that was grossly offensive or of an indecent, offensive or menacing character".

Zimmerman claimed he could not come to court for his trial because he suffered from agoraphobia. Arrangements were made for him to appear via video link but he failed to take part and was convicted in his absence.

The "Sophie's choice" phrase is a reference to the film of that name in which Meryl Streep plays a mother who has to choose which child to save and which to send to a Nazi gas chamber.

Victim of Rochdale child sex ring: 'they ripped away all my dignity'

Victim whose 2008 complaint to police eventually led to conviction of nine men tells how grooming began




Rochdale grooming victim talks about her ordeal. Link to this video

The girl whose complaint to police in 2008 led to the conviction on Tuesday of nine men for running a child sex ring said the grooming began when a friend introduced her to men who promised her "free alcohol and cigarettes, food and taxis and things".

She thought it was "great" at first because there were no sexual strings attached.

"I just thought: 'I can get all this stuff for free.' And then I ended up living pretty much with this girl because I thought how good it was and I could do what I want. That's when the relationship turned bad with my mum and dad because of the way I was acting."

She said the first time she was attacked, "you don't expect anything like that to happen. I just thought I was having a good time with this getting drunk and stuff. I was young and I didn't think they'd want me."

The men did not talk to the girls much. "We'd be upstairs [above a takeaway] and they'd be downstairs … and they'd come up now and then and have a chat to us for five minutes. It made me feel like I was pretty. I never thought they'd do what they did to me because you don't think that, do you? That that will happen."

She said of one man: "He asked me to come upstairs and I didn't really think anything of it. Then he was basically saying about all the things he's bought for me and he wants something back for it. Then I was saying no, like, I was kind of saying it in a giggly way. I felt like if I'd said it nastily to him he could have hurt me. I tried to say no in a nice way but he just weren't having it."

She said her friend had changed her. "At that time I was scared of her and I was scared of them as well. At first I felt really bad and dirty and ashamed, but after a while it had been going on for so long and so many different men that it just became … I didn't feel anything. It weren't like me any more."

The girl said it just became something she had to do "and I couldn't get out of it. Like once you're in it, you're trapped. It just became like a daily life." She said this could mean having sex with up to five different men in a day, sometimes every day, but at least four or five times a week.

"They'd arrange a time and they'd come and pick me and her up and we'd go to the place, a flat or a house, and there would be different men waiting. There were quite a few men who would be there and there's other men who would pick us up and take us to different places for the other men waiting. But there was a lot of men that I'd only seen once or twice."

She said that on one occasion she had got drunk and angry and smashed the counter in the takeaway, and the men rang the police and she was arrested. She said she was scared to tell her parents "because I didn't know what the consequences would be from the men. Because I knew what they were capable of, because they'd threatened me."

During the 2008 interview, she told police what had happened, gave them her underwear and described the places where it had happened. When the Crown Prosecution Service decided not to prosecute, she said the abuse just carried on.

"I was back in the same position and she [the other girl] was introducing other men to me again. It just started again with different men and more men this time. And that's when it started becoming like up to five men a day."

She said: "I felt let down. But I know that they believed me … then in 2008 it weren't really heard of … Asian men with white girls. Nobody like … it was just unheard of. You think of Muslim men as religious and family-minded and just nice people. You just don't think they'd do things like that."

The girl said social services intervened because different men were picking her up and dropping her off from school, and she was arriving dirty and smelling of alcohol.

"Then I got pregnant and social services said to me that if I don't leave that house [the house she was sharing with the other girl] they'll remove my baby at birth and I were frightened to go because I didn't know what they'd do … the men."

When she moved back in with her parents, she was getting phone calls and taxi drivers were parked outside the house, watching it.

"I'd be getting phone calls off the girl and the men and that went on for months. I would not go out of the house on my own for nine months or something without my mum or dad because I was frightened what could happen." She said she eventually moved out of the area.

"I just hope now people realise it does happen and how it happens and how they do something about it … and justice will be done."

She added: "There are so many different men and you're being forced to sleep with these other men for them to gain money for selling you out. They frighten you and you're scared of them and obviously that's how they make you do it. The girls are too frightened to get out of it in the first place – to tell somebody."

The girl she was staying with and her sister thought they were in a relationship with the perpetrators, but "it's not a relationship. They're just brainwashing you so you think that they love you so you'll do what they say.

"I think what they did to me was evil. They ripped away all my dignity and my last bit of self-esteem and by the end of it I had no emotion whatsoever because I was used to being used and abused daily.."

She said she regarded the defendants' testimony describing the victims as prostitutes running a business empire as "ridiculous".

"How could I make it up? It was too big to lie about. How can 13, 14, 15-year-olds run a business empire of prostitutes? It's just stupid."