The technology used is called CView, created by a company called Detica and based on the same technology that powered the controversial Phorm. CView looks at Web traffic, spots peer-to-peer packets, and takes a look inside. It then collects data if the files being shared are considered to be infringing copyright, based on information from record companies. It’s the equivalent of the Royal Mail opening every parcel to see if there’s a CD inside, and making a note if there isn’t a receipt in there too.

The data is anonymised and totalled up, as the goal is an overall picture of the extent of the problem. Virgin reckons no human will be able to access information on individual users. Individual users will not be penalised during this trial if material is found that CView thinks infringes copyright.

This is the sort of information ISPs could be required to collect in order to satisfy the Digital Economy Bill. Ofcom is reportedly considering CView to measure the 70 per cent reduction in piracy that will count infringement notification as a success. If this nebulous target isn’t met, the government will open the way for rights holders to take users to court and have them disconnected.

The Digital Economy Bill makes this kind of thing seem a sad inevitability.

However, it came in for considerable criticism from privacy groups and prompted an EU investigation.

The firm’s shares were down 43.16% at 270p.

Phorm had conducted trials of its technology with BT, which it marketed as Webwise.

“A third letter was sent to the UK government at the end of January, and discussions with regard to Phorm are ongoing,” Selmayr said. “The Commission may have to proceed to formal action if the UK authorities do not provide a satisfactory response to the Commission’s concerns on the implementation of European law in the context of the Phorm case.”

The investigation has asked the government a series of questions to confirm that the secret trials by BT of Phorm’s behavioural targeted ad-serving technology were legal.

The trials, conducted in 2006 and 2007, tracked the browsing behaviour of BT customers without their consent. They led privacy campaigners, peers and groups such as the Foundation for Information Policy Research (FIPR) to assert that they contravened UK interception and data-protection laws.

Both the Information Commissioner’s Office and the City of London police decided not to take any action over the trials.

The European Commission subsequently became concerned that BT and Phorm may have contravened EU laws and, in June 2008, it began an investigation by sending a letter to the UK government requesting that the government clarify its position.

The Department of Business, Enterprise and Regulatory Reform (BERR) responded to the Commission on behalf of the UK in September. However, it did not comment on the legality of the past trials, saying only that the government was confident that future Phorm ad-serving technology will conform to UK privacy and data-protection laws.

The reward – for information leading to the capture and conviction of the author or authors of the software – follows similar cash incentives offered by Microsoft to catch virus writers since 2003.

“The Conficker worm is a criminal attack. People who write this malware have to be held accountable,” said George Stathakopoulos, of Microsoft’s Trustworthy Computing Group. “Our message is very clear – whoever wrote this caused significant pain to our customers and we are sending a message that we will do everything we can to help with your arrest.”

Graham Cluley, of the antivirus company Sophos, said: “Offering substantial rewards can do no harm. If a culprit isn’t found then Microsoft hasn’t lost anything, and it may just entice some members of the computer underground to come forward with information. People considering releasing malware in the future should take careful note of this and think again.”

Microsoft has brought together a wide group from within the industry to combat the effects of Conficker, which attempts to connect to a randomly generated list of internet domains every day. Experts fear that one of those domains will be a “control” site that will instruct the infected machines to perform an as-yet-unkown harmful action.

“The best way to defeat potential botnets like Conficker/Downadup is by the security and domain name system communities working together,” said Greg Rattray, the chief internet security advisor at the Internet Corporation for Assigned Names and Numbers, in a statement: “ICANN represents a community that’s all about co-ordinating those kinds of efforts to keep the internet globally secure and stable.”

But while the words – and amounts on offer – are dramatic, it is hard to know whether they will be effective. Microsoft set up a $5m fund to catch virus writers in November 2003, shortly after another worm dubbed “Blaster” infected millions of computers and disrupted communications for thousands of companies. It offered $250,000 for the writer of that worm, and for a number of other viruses, such as Zotob, Sobig and Sasser. Though the alleged authors of Zotob and Sasser were caught, it has never been made clear whether the bounties were paid out.

The Conficker worm though has caused far more damage than the amount being offered as a bounty. It has infected millions of PCs worldwide, including parts of the French navy and air force and the American air force. Security experts are still trying to work out what its intent is, although they note that it spreads throughout any network to which a Conficker-infected machine is connected.

That could mean it is either intended to create a “botnet” of machines that could be used to send spam, or a network that would send private information such as credit card numbers and passwords to an unknown location on the net.

Although Microsoft released a “patch” in October for its software that should have prevented computers being infected, many companies and organisations did not install it because they were worried about disrupting their existing setup. A version of Conficker began circulating at the same time as Microsoft released its patch, but had little effect.

The lack of updating left a huge security hole which hackers abruptly exploited in mid-January when a new version of a “worm” that exploited the weakness appeared, apparently written by the same team that wrote the original.

The new worm attempts to crack the passwords of machines on a network using the computing power of the infected machine to apply a “brute force” approach – so that passwords such as “admin”, “password” or “123456″ on potential target machines will quickly be broken.

Once it has infected a machine, the software also tries to connect to up to 250 different domains with random names every day. Researchers believe that one of them will be the intended “control” domain, and that when the computers connect to it they will download a fresh program that will take over the infected computer.

He has said he is “looking at the experience of other countries” but is understood to have told car industry executives it may be impossible to meet their March target date. The Treasury is said to be digging in its heels.

Experience shows, according to continental producers, that the scheme is enticing consumers back into showrooms. Many dealers offering huge discounts fear they could go out of business without this lifeline.”The last two weeks in Germany, since the scheme was introduced, have seen floods of people descending on showrooms,” one senior European sales executive said. “It has brought renewed and urgently required vitality back to the market.”

A German poll at the weekend showed the so-called “Abwrackprämie”, costed at a maximum €1.5bn, had attracted support from 1 million potential buyers. About 17,500 have asked for the payment.

It is understood that the EU competition commissioner, Neelie Kroes, who has been sharply critical of aspects of France’s €6bn stimulus programme for the ­industry, confirmed in detail yesterday, favours the premia as valid aid to boost consumer demand despite wariness about direct state financial help for manufacturers.

France’s “prime à la casse” offers between €1,000 and €2,000 and has already boosted demand for new, small, fuel-efficient cars produced by Renault and Peugeot Citroën. Italy adopted a €1,500 premium last week for eco-friendly cars.

The industry body, the SMMT underlined the parlous state of the market last week with figures showing a further 31% decline in sales last month and said an overall fall of 20% this year was likely.

It said the market would drop to 1.72m vehicles this year, 685,000 down on 2007, but indicated a steep (41%) leap in demand for mini cars, the smallest on the road.

Paul Everitt, SMMT chief executive, said: “Our fundamental problem is demand. Until we start shifting cars our production lines, many of them idle for months, will not move. This [scrappage] could have a much broader impact than just on vehicle retailers and manufacturers; it could reboot competition in the market and demand in the economy.”

He added: “Other EU countries have launched scrappage incentive schemes which have the result of boosting consumer confidence and delivering significant environmental improvements.”

It is understood that the London mayor, Boris Johnson, has pressed Mandelson to adopt a scheme to encourage small businesses (“white van man”) to buy small commercial vehicles before the capital’s lower emissions zone is extended next year.

In a statement, it said: “Virgin Atlantic is continuing to reshape its business to ensure it remains strong during the downturn.”

Ryanair, the Irish low-cost carrier, said that its cuts were “not recessionary”, and were instead a response to airport and passenger taxation imposed by the Irish Government.

Steve Ridgway, the chief executive of Virgin Atlantic, said: “No airline is immune from the recession and we continue to reshape our business to ensure we’re in the best position for the longer term.

“With falling demand for travel, airlines have to reduce their costs through a variety of measures, including cutting capacity, freezing pay, unpaid leave and, regrettably, adjusting staff numbers.”

The airline will begin a statutory 90-day consultation period with its employees and the Unite and Balpa unions.

A spokesman for Ryanair said the slump was not affecting the budget airline’s passenger traffic and instead blamed the introduction of a €10 tourist tax by the Irish Government for his company having to cut 200 jobs among its pilots, cabin crews and engineers at Dublin airport.

Ryanair has also announced reductions at its Dublin airport base, including a cut in aircraft numbers and flights for its summer season, and further reductions to be announced for the winter schedule this year.

There will be a reduction in its aircraft at the airport by 20 per cent, from 22 to 18, and its traffic through Dublin will be reduced by 20 per cent for 2009-10, from 10.8 million passengers to 8.7 million.

Ryanair’s summer flight cutbacks will affect routes out of Dublin to the UK and the Continent, including a 32 per cent fall in flights to Leeds Bradford, a 23 per cent drop in the schedule to Manchester and a 33 per cent reduction in journeys to Barcelona.

The announcement at Dublin is the second hit to Irish jobs today, after SR Technics, the aircraft maintenance company, revealed that 1,135 workers had been cut as management lost several key contracts with airlines in the past year.

Most of the manufacturing jobs are likely to go to Japan, with the bodies and engines shipped to Britain for assembly. The Government said that the contract would “create or safeguard” 12,500 jobs, but Hitachi, the manufacturer, said that it could employ as few as 200 people at a new assembly plant.

The Department for Transport chose Hitachi instead of a consortium involving Bombardier, which employs 2,200 people in Derby. Its factory has only enough orders to employ that number of staff until next year and may have to make redundancies.

The trains will replace the 30-year-old InterCity 125s promoted in the British Rail “This is the age of the train” adverts that featured Sir Jimmy Savile.

Hitachi’s trains will be up to 17 per cent lighter, use 15 per cent less energy and will accelerate more rapidly, cutting journeys from London to Edinburgh by 12 minutes. The carriages will be 3 metres longer than the ones that they replace, allowing an extra 100 seats to be fitted to each train. The first 70 carriages will be manufactured entirely in Japan and will enter passenger service on the East Coast Main Line in 2013.

The total order is for up to 1,400 carriages and the remainder will be put together at a plant to be built at Sheffield, Ashby-de-la-Zouch, Leicestershire, or Gateshead, Tyne and Wear. The bodies of all the carriages will be built in Japan, as will key parts of the engines and bogies.

Hitachi said that it was “in active discussions with 20 carefully selected high-quality UK suppliers”. But Alistair Dormer, the company’s UK manager, said that it was not obliged to use any of them. “I don’t think we can stipulate, under UK procurement law, where in the EU things should be procured or built,” he said. Mr Dormer added that the assembly plant would employ between 200 and 500 people.

The company claimed that 70 per cent of the value of the £7.5 billion contract would be spent in Britain. At least half the cost is for maintenance of the trains for the next 20 years at depots in Bristol, Reading, Doncaster, Leeds and West London. These depots will replace those that maintain the 125 fleet and it is unclear how many jobs will be created.

Lord Adonis, the Transport Minister, said that the figure of 12,500 jobs created or safeguarded included an assumption that each direct job created four more among suppliers. Asked whether the majority of the workforce making the trains would be in Britain, he said: “A substantial proportion of those jobs will be British.”

He said he hoped that Hitachi’s assembly plant would attract orders from elsewhere in Europe and emulate the success of Japanese car plants established in Britain in the 1990s.

Bombardier was planning to do all the final assembly and most of the manufacturing in Britain, using dozens of British suppliers. Bob Laxton, the Labour MP for Derby North, said: “This is a crass decision which gives the Japanese an opportunity of getting into the UK market. I don’t believe for one moment the figure of 12,500 jobs, because work will be brought into the UK from overseas.”

Bob Crow, the general secretary of the RMT union, said: “If the basic manufacture is undertaken elsewhere, today’s announcement will have been a triumph of spin over substance.”

The Government said that it had given the contract to a “British-led consortium”, justifying the description by saying that Hitachi’s finance and planning partners – Barclays and John Laing – were British.

The trains will enter service on the Great Western Main Line in 2016. It is unclear how many will be diesel-powered and how many electric or “bi-mode” because the Government has not decided how much of the line is to be electrified.

In the seven days to February 7, sales in Milton Keynes plunged 39.4 per cent, the single worst performance of any of its branches.

However, Oxford Street was down by 21 per cent, Bristol’s Cribbs Causeway by 38 per cent and Bluewater in Kent by 25 per cent

Within John Lewis’s retail categories, fashion was down by 16.8 per cent, electricals by 12.2 per cent and homewares by 21.2 per cent.

In contrast, Waitrose sales increased by 3.6 per cent year-on-year.

The company reported that John Lewis sales recovered toward the end of the week.

“With the snow easing on Saturday, sales rebounded to give us an increase for the day, and Sunday’s performance also suggests that we may pick up some, but by no means all, of last week’s lost trade,” Barry Matheson, John Lewis’s head of selling development, said.

This week the British Retail Consortium reported an unexpected rise in the value of underlying UK retail sales in January, but this was driven mainly by grocery sales and heavy discounting by non-food retailers.

Most analysts expect the downward trend to resume this month.

Sales for the October-December period fell 20 per cent to Y1.880 trillion, from Y2.345 trillion, with overseas sales decreasing by 29 per cent and Japanese sales down by 10 per cent.

It will shed 5 per cent of its global workforce of about 300,000 and close 14 overseas plants, as well as 13 plants in Japan by the end of March to adjust production and cut costs. The company has 230 production sites around the world.

“The company’s business conditions have worsened, particularly since last October, largely because of the rapid appreciation of the yen, sluggish consumer spending worldwide and ever-intensified price competition,” it said.

The news confirmed the dire state of Japan’s manufacturing sector, which is haemorrhaging jobs in the wake of the global credit crisis. NEC, the computer maker, said that it would shed 20,000 from its workforce, while Hitachi swung into the red and said that 7,000 jobs were in danger.

Honda has lowered its profits forecast for the fourth time this year. Official figures compounded the misery when Japan reported last week that industrial output had plunged 9.6 per cent in December, a record fall that shocked economists. “It is now clear that the Japanese economy fell off a cliff in the final quarter of last year,” Hiromichi Shirakawa and Satoru Ogasawara, of Credit Suisse, said.

The latest restructuring measures will cost an additional Y190 billion on top of the Y155 billion that Panasonic had already announced for the fiscal year to the end of March.

Large swathes of corporate Japan are expected to follow suit, either by directly commanding or indirectly “pressuring” employees to divert part of their salaries towards the goods that their employers produce.

Toyota has already tacitly applauded a “voluntary” scheme in which 2,200 of its top brass decided to buy new Toyota cars, and the president of Fujitsu recently e-mailed 100,000 staff and gently pointed out how nice it would be if “employee ownership rates” of Fujitsu PCs and mobile phones were a little higher.

The 10,000 Japanese staff affected by Panasonic’s unorthodox strategy do not have long to consider their purchases.

Management insists that staff buy their Panasonic goods — whether they need them or not — by the end of July.

Upper-level managers, all of whom have been “encouraged” for years to fill their homes with Panasonic goods as a symbol of corporate loyalty, are being asked to spend at least 200,000 yen (£1,500).

A Panasonic spokesman said that because the “Buy Panasonic” request was made to management-level employees, the company did not expect refusal rates to be high.

The emergency directive, some Panasonic employees say, is a particularly cruel blow: the same 10,000 managers now being commanded to fork out for unwanted electronics were told two weeks ago that their salaries and bonuses would also be slashed.

The company itself is staring down the barrel of one of its worst annual earnings performances ever, with a Y350 billion flood of red ink expected by the end of the year.

Panasonic said that the move, which is not unprecedented in company history, was aimed at forcing management to “recognise the severity of the current business environment” — a recognition that might have been expected to be in place already, Mitsubishi Tokyo UFJ brokers said.

Only a fortnight ago the company announced plans to close 20 per cent of its factories and cut 15,000 jobs from its global workforce.

Other warning signs from that announcement included pay cuts of between 10 per cent and 20 per cent for directors and 5 per cent for managers.

Even if other Japanese companies are less overtly aggressive about forcing staff to buy their products, many are expecting the Japanese corporate tradition of socially enforced loyalty to kick in and force the issue anyway.

Companies such as Sony and Sharp hold regular discount sales of goods for employees, and sources at both companies have suggested that the most recent events have involved a “clear sense of pressure” to be seen supporting the company by buying its products.

The “Buy Fujitsu” campaign involved an e-mail from the president that read: “If everyone in the company gets together, then it will become a great power.”