LONDON BRIEFING:Angel Delight and Paxo stuffing are among the foodstuffs seeking crumbs of comfort

SOME OF the nation’s oldest and most-loved food brands are up for sale as ailing Premier Foods, Britain’s biggest grocery group, steps up its fight for survival against a mountain of debt.

One in 20 of the workforce – 600 jobs in total – are to be axed, Premier announced yesterday, as it doubled its cost-saving targets from £20 million a year to £40 million by 2013. The bad news didn’t stop there – after warning on profits just a few months ago, Premier revealed it now expects its performance to fall at the lower end of those reduced expectations.

Premier boasts a collection of some of Britain’s best-known, although hardly healthiest, brand names, from Angel Delight, Smash and Marvel to Gale’s honey, Rose’s marmalade and Paxo stuffing. The future of those brands is uncertain as Premier plans to focus its resources on what it calls its eight “power brands” – Ambrosia, Batchelors, Bisto, Hovis, Loyd Grossman, Mr Kipling, Oxo and Sharwood’s.

New advertising campaigns are planned for the power brands with marketing spend set to double to £40 million. Premier has yet to announce which of its second-tier brands are on the auction block but analysts say the group is actively touting some of the oldest names in its stable – Haywards pickles; Sarson’s vinegar, founded in 1794; and Hartley’s jams, established in 1871. Estimates of a price for Hartley’s range up to £250 million, which would give Premier breathing space.

Another name missing from the power brand list is Branston, thought to be one of Premier’s most profitable businesses. The group is said to be keen to retain Branston but at the same time urgently needs to reduce its £1 billion debt mountain. The debt pile has been whittled away in recent weeks with the sale of its four Irish brands – Chivers, Gateaux, McDonnells and the Erin licence – which were bought by Boyne Valley Group for just over €40 million. One of its healthier businesses, the meat-free Quorn brand, was offloaded a year ago for £200 million.

But Premier needs to do more if it is to keep its bankers sweet by March 31st, when it faces a covenant test that has already been put off from the end of last year. Talks with the banks, led by state-controlled Royal Bank of Scotland, are continuing, Premier said yesterday.

RBS is facing fierce criticism over its decision to pull the plug on Peacocks, the 700-shop fashion chain which employs 13,000 people. The bank withdrew from lengthy negotiations on debt restructuring at the retailer, which is now in a desperate race to find new investors to stave off a collapse.

Given the number of jobs at stake, RBS will not be keen to pull the plug on Premier too, but it will want to see more action on debt in return for its continued support.

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IT MAYnot be good for the nation's health, but record reductions in the price of alcohol and cigarettes have helped Britain's inflation rate fall at its fastest rate in three years.

The widespread discounting by retailers in the run-up to Christmas, along with lower fuel prices, saw the consumer price index ease to 4.2 per cent last month against 4.8 per cent in November. As the stream of rather less than festive trading updates from the retail sector shows, clothing and footwear prices were down by a chunky 2.8 per cent between November and December as the store groups battled for business. But there was an even bigger drop in the price of spirits, down 4.4 per cent and wine, 3.3 per cent lower.

This was the third month in a row that inflation has fallen and it is now significantly below the peak of 5.2 per cent reached last September. The data goes some way to vindicating Bank of England governor Mervyn King in his long-held view that high inflation is a temporary blip, caused largely by external factors outside the bank’s control. But, at 4.2 per cent, the cost of living is still more than double the government’s target of 2 per cent and the governor should resist any urge to say “I told you so” for a little while longer.

If all goes well, he should be able to start crowing in the summer, however. The rise in VAT from 17.5 per cent to 20 per cent a year ago will soon be out of the equation and a recent round of price cuts by the big utility companies will also come into effect in the months ahead. In the meantime, as the opposition Labour Party pointed out yesterday, UK inflation remains the highest of any EU country except Slovakia and Poland.

Fiona Walsh writes for the Guardiannewspaper in London