UK Motor Industry Gets £1bn Hi-Tech Boost

Britain's motor industry is to receive more than £1bn in new funding over the next decade to improve its global competitiveness.

The joint UK motor industry and Government automotive strategy has agreed to the deal to help secure the growth and development of the vehicle and component manufacturing sector.

This new funding supports multi-billion pound investments announced in the last few years by global automotive companies to boost production levels and develop new technologies and models.

Developed under Automotive Council guidance, both industry and the Government will fund the investments.

The range of projects include the creation of an Advanced Propulsion Centre (APC), thousands of new motor industry apprenticeships and the development of an Automotive Investment Organisation.

The APC is expected to research, develop and commercialise technologies for the vehicles of the future.

What Car? editor-in-chief Chas Hallett told Sky News: "The British motor industry is booming at the moment but companies are still struggling to attract top quality young people.

"Any incentives to provide apprenticeships in order to attract the brightest and best should be welcomed."

The UK car industry covers several major regional areas

The development of the strategy also sees the provision of finance for tooling investments in the supply chain, and a renewed commitment to encourage the UK as a lead market in the production and sale of low emission vehicles.

The financial commitment is backed by 27 companies in the motor industry sector, including supply chain companies, and it is expected to secure at least 30,000 jobs currently linked to producing engines and create many more in the supply chain.

It was also announced that the Automotive Council, co-chaired by Mr Cable and Professor Richard Parry-Jones, is aiming to recruit more than 7,600 apprentices and 1,700 graduates over the next five years.

In addition, the newly-created Automotive Investment Organisation will aim to double the number of jobs created or secured in the automotive supply chain over the next three years to 15,000.

In a further announcement, the Technology Strategy Board launched a £10m competition that could see successful projects fast-tracked for commercialisation through the APC.

Businesses are being invited to bid for support on innovative, collaborative low-carbon vehicle projects.

Announcing the total initiative with Prof Parry-Jones at the Goodwood Festival of Speed in West Sussex on Friday morning, Mr Cable said: "The UK automotive sector has been incredibly successful in recent times, with billions of pounds of investment and new jobs.

"With the next generation of vehicles set to be powered by radically different technologies we need to maintain this momentum and act now. Our industrial strategy will ensure we keep on working together to make our automotive industry a world leader."

Prof Parry-Jones said: "Businesses prefer consistency, stability and a clear path to the future in order to make investment plans.

"This is critical to sustaining and growing a thriving UK automotive sector in a highly competitive global industry."

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Twitter Takes On Tax Expert To Avoid Woes

By Pete Norman, Sky News Online

Twitter is bolstering its international operations ahead of an expected flotation by employing its first full-time tax manager, to ensure complex company structures comply with laws across Europe.

Based in its international headquarters in Dublin, it will include oversight of the preparation and filing of all business tax returns.

The social media giant described the new role as being "in a fast-moving, challenging yet fun environment".

Sky News understands Twitter is hiring a number of new key finance personnel as part of its extensive international expansion plan.

The tax manager will be responsible for taxation affairs across Europe, the Middle East and Africa (EMEA) and is expected to "implement and monitor transfer pricing strategy".

Transfer pricing is a system whereby goods or services are supplied and charged between arms of a multinational firm, sometimes across national borders and jurisdictions.

Twitter UK Ltd answers to Twitter International Company in Ireland, which is wholly-owned by Twitter Inc - one of at least three companies California-based Twitter has formed in the US state of Delaware.

However, leading American multinationals have been under increasing UK parliamentary scrutiny in recent months over transfer pricing.

The tax expert role advertised by Twitter International

Last week the UK arm of Twitter filed its abbreviated accounts for the year ended December 31, with the business regulator Companies House.

Twitter declined to confirm that UK sales were routed through Ireland.

But its accounts revealed that "turnover represents the value of services provided to other Twitter group companies".

A Twitter UK spokesperson told Sky News: "Since Twitter UK opened in 2011 we have been steadily building our team, focusing on promoting great uses of Twitter by all elements of UK society - the arts, sport, Government, and brand partners."

UK profit for 2012 was listed as £108,907, up from £16,499 in the previous year. Twitter UK was formed in June 2011.

The company's taxation and social security liability also increased from £36,800 in 2011 to £326,949 in 2012.

"There have been a number of significant changes and you can see the company's tangible assets in the 2012 accounts have substantially increased to £504,595 from £2,696 in 2011," Maung Aye, corporate solicitor and Mackrell Turner Garrett associate, told Sky News.

"Another factor to consider is whether the assets and equipment of the now dissolved TweetDeck Ltd were absorbed into Twitter UK Ltd so that the application can be continued for its users."

Last December Sky News revealed that Twitter UK and its sister firm TweetDeck Ltd were fined by Companies House for failing to file their 2011 accounts on time.

Twitter CEO Dick Costolo resigned his role as Twitter UK director

Two of Twitter's top American officials, chief executive Dick Costolo and head of trust Alex Macgillivray, were directors of the TweetDeck. The two executives, along with chief operating officer Ali Rowghani, were directors of Twitter UK.

Although Twitter UK finally filed its 2011 accounts TweetDeck did not and was forcibly dissolved by the business regulator on May 7 this year.

On May 9, Mr Costolo resigned his remaining British directorial role - with Twitter UK - and his position was taken by Irish ex-'Big Four' chartered accountant Laurence O'Brien, who is in charge of international operations in Dublin.

Forbes magazine has reported that Twitter may seek a public flotation in 2014, saying it could be worth more than $11bn (£6.8bn) to investors if it successfully monetises the service without disenfranchising users.

Meanwhile, the micro-blogging site has fought against spam attacks masquerading as legitimate tweets.

In January, hashtags for the World Economic Forum in Davos were bombarded with so-called spam bots and porn bots, while a recent swamping involved diet aid spams.

In both cases Mr Costolo responded to complaints personally by tweeting that the company was dealing with the problems.

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GlaxoSmithKline Denies China Drug Bribes

Britain's biggest drug maker has told Sky News it rejects claims by Chinese authorities that it offered bribes to doctors and hospitals.

GlaxoSmithKline (GSK) had been accused by China's Public Security Bureau (PSB) of offering free travel as "large bribes".

It said the bribes were "to open new sales channels and increase drug revenues" and given to doctors, hospitals, foundations and medical associations.

In a statement to Sky News, GSK said: "We take all allegations of bribery and corruption seriously. We continuously monitor our businesses to ensure they meet our strict compliance procedures

"We have done this in China and found no evidence of bribery or corruption of doctors or government officials."

It added: "We are aware of the statement from the PSB. We are willing to co-operate with the authorities in this inquiry.

"But this is the first official communication GSK has received from the PSB in relation to the specific nature of its investigation."

The Chinese authorities allegedly identified employees only as "high officials" but gave no details of the size of payments or who received them.

The Chinese authorities said the investigation took place in Shanghai and the cities of Changsha and Zhengzhou.

"After questioning, the suspects confessed to the crime," the PSB statement said.

Sky sources confirmed that a British national was detained and questioned by Chinese authorities in Shanghai and has has now been released.

Sources revealed that dozens of Chinese police entered the GSK Shanghai offices on June 27, entered the offices of senior British staff and seized paperwork.

After the raid GSK circulated an internal memo which said: "At this stage, it is unclear about the precise nature/purpose of their visit and investigation.

"We will of course cooperate with their inquiries, but are unable to comment further at this stage."

It added: "Generally speaking, travel to China can continue as planned, unless you are planning to visit the GSK Pharmaceuticals offices to meet with senior management, in which case you should check with your host to ensure that the current meeting arrangements still stand."

A Foreign Office spokesman told Sky News: "We are aware of the Chinese investigation, and we are providing consular assistance to a British national.

"We are in contact with GSK and are in the process of seeking further information from the Chinese authorities."

Sky News Asia Correspondent Mark Stone, reporting from Beijing, said: "This comes a week after police in a city in south-central China said they were investigating high level Chinese staff."

Police in Changsha announced two weeks ago that GSK employees had been detained for questioning about unspecified "economic crimes".

Brentford-based GSK said in June that it had investigated an accusation that its salespeople in China bribed doctors and found no evidence of wrongdoing.

Last week Chinese state media reported that the government was investigating production costs for 60 foreign and domestic drug companies in a possible first step toward changing state-set maximum prices.

The announcement gave no indication any companies were suspected of wrongdoing.

:: In late Thursday trading in London shares in GSK remained virtually flat.

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Phoenix In Talks Over £3bn Swiss Re Merger

By Mark Kleinman, City Editor

Phoenix Group, the life assurer backed by one of the entrepreneurs behind the Pizza Express chain, is in talks about a £3bn merger that would transform it into an industry powerhouse.

Sky News can exclusively reveal that Phoenix, whose directors include Hugh Osmond, one of Britain's best-known businessmen, has begun discussions over a combination with Admin Re, a subsidiary of the giant Zurich-based insurer Swiss Re.

If completed, the merger would create a business with more than £100bn under management and close to 10m policy-holders.

The talks are at an early stage and may falter before a deal can be reached, according to insiders.

However, the fact that they are taking place at all underlines the renewed strength of Phoenix's financial position following a restructuring late last year that saw £250m of new capital injected into the company, which also acts as a consolidator of pension funds.

Formerly known as Pearl, Phoenix brought in the US hedge fund giant Och-Ziff as part of the restructuring.

The structure of a merger of Phoenix and Admin Re has not been finalised but under one of the scenarios being discussed, Phoenix would issue new shares that would result in Swiss Re becoming a major shareholder in the British company.

Swiss Re is best-known in the UK for its former ownership of the Gherkin, the nickname given to the iconic City building which is home to Sky News' studio in the Square Mile.

At Thursday's closing share price of 653p, Phoenix had a market capitalisation of £1.46bn while Admin Re is understood to have approximately the same value attached to it by its current owner.

Phoenix may be forced by regulators to issue a statement confirming the talks as soon as Friday morning.

A combination of the two companies would make Phoenix a much closer rival to Resolution, which has a market value of £4.3bn.

Phoenix's chairman is Sir Howard Davies, who is leading a Government-commissioned review of aviation capacity in the south-east of England.

It is unclear whether Swiss Re, which had previously signalled its interest in a disposal of the closed-life business, is also holding talks with other would-be purchasers of the division.

Sources said that it had in recent months engaged with other potential providers of third-party capital into the business.

Closed-life funds such as Phoenix and Admin Re specialise in acquiring books of insurance policies which are no longer open to new business.

They have become a popular mechanism for large insurance and financial services groups to divest themselves of non-core assets, freeing up capital for other investment opportunities.

They also produce lucrative savings in administration costs, meaning that the role of industry consolidator has become a prized one, particularly as the new Solvency-II regulatory regime for the insurance sector has begun to dictate companies' capital allocation decisions.

Their history in the UK has not been entirely smooth, however, with major players such as Resolution and Phoenix having to overcome significant capital obstacles at various points of their existence.

Until recently, Swiss Re has continued to be an acquirer of assets, announcing two years ago a deal to buy 300,000 policies and £1.6bn in assets from American Life Insurance Company.

At the time, David Blumer, chairman of Admin Re, said the transaction confirmed its "commitment to being a recognised force in the closed life book business.

"Transactions like this allow life insurance companies to monetise the value of in-force blocks of business, while providing Swiss Re with attractive, diversified returns."

Admin Re has gained scale through dozens of acquisitions during the last 15 years. Last year, however, it turned into a seller of Admin Re assets, generating a $630m gain when it offloaded its US division to Jackson National Life Insurance, a division of Prudential, the UK's biggest insurance company.

Phoenix is being advised by Deutsche Bank while Swiss Re has hired JP Morgan Cazenove to work on the potential deal.

The Swiss company first examined a bid for Phoenix in 2011 when the UK-based group also explored a takeover by both Resolution and CVC Capital Partners, the private equity firm.

Both companies declined to comment on the current talks.

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Apple Guilty Of E-Book Price Rise Conspiracy

Apple has been found guilty of conspiring with five publishers to raise electronic book prices.

"Overwhelming" evidence showed the company acted knowingly and unlawfully in breaking anti-trust laws, said US judge Denise Cote.

The civil case related to Apple's entry into the electronic book market in 2010 with its iBookstore.

Publishers at the time were unhappy with Amazon's practice of charging $9.99 (£6.68) for bestsellers but were unable to change it until Apple helped organise the group, ruled the judge.

Customers ended up paying as much as $5 extra for a book, said US government lawyers.

Statements from Apple co-founder Steve Jobs were also cited in court as proof of the wrongdoing.

These included a remark to his biographer boasting that the publishers "went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books.'"

Apple said it would appeal against the decision and has always denied the charges, insisting its entry into the e-book market was actually good for competition.

Statements from Steve Jobs were used against the company in court

"Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations," said spokesman Tom Neumayr.

The five publishers named in the conspiracy all settled out of court, leaving the technology giant to fight the case alone.

The trial focused on late 2009 and early 2010 when Apple negotiated contracts with publishers ahead of its iPad launch.

It proposed a more profitable business model where publishers could dictate the final retail price - as long as Apple got a 30% cut.

Amazon.com was instead working on a wholesale model where it decided what price to charge customers. However, the publishers threatened to withhold titles if it did not switch to the Apple model.

Assistant Attorney General Bill Baer called the judge's ruling "a victory for millions of consumers who choose to read books electronically."

Damages will be decided at a later date.

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Royal Mail Sale: Cable Outlines Flotation

Royal Mail staff will get free shares under the Government's plans for the privatisation of the service, despite strong opposition to the sell-off among the workforce.

The Business Secretary confirmed in a statement to MPs the intention to float a majority stake in Royal Mail initially, with the rest following depending on market conditions.

Vince Cable told the Commons: "These shares will be free to eligible employees, recognising that many of them would otherwise find them unaffordable."

Royal Mail workers took to a 'protest' bus in London to make their point

As he announced that staff would hold 10% of the business under proposals first revealed by Sky News, members of the Communication Workers Union (CWU) took to an open-top bus in the City to denounce the sell-off.

Some of the protesters - most of them employees of the postal service - held placards reading: "Save our Royal Mail" or "You own it, don't buy it."

They argued that they cared more about the future of the service, their pensions, jobs and working conditions than the prospect of a windfall worth more than £2,000 each for the 150,000-strong workforce.

Chuka Umunna questioned the Government's motives for the sale

The union's deputy general secretary, Dave Ward, dismissed reassurances about future employment rules to warn of the prospect of strikes unless legally-binding agreements were put in place to guarantee his members' conditions.

But  the chief executive of Royal Mail assured staff their pay and conditions would not be changed without their agreement.

Moya Greene said: "As we move into the private sector, the current legal position is that all terms and conditions that apply to Royal Mail employees would remain in place, on the same basis.

"To provide further reassurance, we will create a legally-binding and enforceable contract with the CWU. Pay and protections could not be changed for the period of the contract without CWU agreement."

Mr Cable said the flotation, which was expected to value the business at £3bn, would begin over the next year and the shares would be listed on the London Stock Exchange. They will be available to the general public as well as institutional investors.

"This is logical, it is a commercial decision designed to put Royal Mail's future on to a long-term sustainable basis," he said.

"It is consistent with developments elsewhere in Europe where privatised operators in Austria, Germany and Belgium produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.

"Now the time has come for Government to step back from Royal Mail, allow its management to focus wholeheartedly on growing the business and planning for the future."

Labour said it would oppose the flotation.

Shadow business secretary Chuka Umunna said: "Having nationalised the organisation's debts by taking on its pension liabilities, they now want to privatise the profit at the very time it is making money.

"There is every sign this treasured national institution is being sold off on the cheap to get income quickly to a Treasury whose economic strategy has failed."

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City Watchdog Boss Got £86,000 Bonus In 2012

By Mark Kleinman, City Editor

Martin Wheatley, the boss of the new City conduct regulator, received a near six-figure bonus last year despite criticism of its handling of a string of mis-selling scandals.

Sky News can reveal that Mr Wheatley, chief executive of the Financial Conduct Authority (FCA) was paid an annual bonus of £86,000 in 2012-13, part of a total package worth more than £650,000.

The pay deal, which will be disclosed in the FCA's annual report due to be published on Wednesday, made Mr Wheatley one of the UK's best-paid public servants.

He is understood to have been paid a base salary of about £430,000 and received pension contributions and other benefits of approximately £150,000 on top of his annual bonus.

It is unclear whether the FCA annual report will detail the precise performance criteria on which Mr Wheatley's bonus was decided. If it does not, it will provoke accusations of hypocrisy given the scrutiny to which the watchdog subjects the pay plans of the firms it supervises.

The former head of the markets regulator in Hong Kong, Mr Wheatley was recruited back to London in 2011 while the Financial Services Authority was still in existence.

In March, the FSA was abolished under George Osborne's plans to overhaul City regulation and was replaced by the FCA and Prudential Regulation Authority, which has responsibility for the safety of the financial system.

Mr Wheatley has played a key role in changes to the operation of the scandal-hit Libor interbank borrowing rate. Sky News revealed on Tuesday that Libor's administration would be taken on by NYSE Euronext, owner of the New York Stock Exchange.

However, the FCA has faced criticism for not moving swiftly enough to force banks to pay compensation to victims of the interest rate swaps mis-selling scandal.

The FCA chief's base salary in 2012-13 was similar to his pay the previous year, when he also received a £29,000 bonus for seven months' work. His total package that year amounted to £399,657.

A source pointed out that Mr Wheatley's remuneration was significantly lower than that of Sir Hector Sants, the former FSA chief executive who now works in a highly-paid job at Barclays.

In a speech in London on Tuesday, Mr Wheatley said the FSA had been guilty of "implausible economic assessments" and a "flawed approach" to regulation.

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Royal Mail Privatisation Plans To Be Unveiled

By Poppy Trowbridge, Business and Economics Correspondent

The Business Secretary will announce plans for one of the biggest UK privatisations in decades when he makes a statement on the future of the Royal Mail later.

Vince Cable will tell the House of Commons how the Government plans to sell off the 375-year-old postal operator.

It wants to sell stock in the company to market investors, which could see the company valued at around £2.5bn.

Moya Greene, chief executive of Royal Mail, has held talks with scores of potential investors in recent months in an attempt to persuade them to back the plans.

Many Royal Mail staff will be offered free shares in the company

She faces opposition from unions and many employees, who fear privatisation will lead to a shake-up of services and cuts.

Steve Butts, a Royal Mail staff member for the past 32 years, told Sky News: "I think privatisation will only bring a race to the bottom for employees.

"Any private investor would always want to make money and the way they are going to do that is to drive down our terms and conditions."

Mr Cable's announcement comes after Sky News revealed many of the Royal Mail's 150,000 staff will receive free shares worth as much as £300m as part of the privatisation.

The share sale would raise hundreds of millions of pounds that experts say could help modernise the mail system in Britain.

Robert Hammond, director of post and market analysis at Consumer Focus, told Sky News: "I would hope that a privatised Royal Mail would be looking to expand on their products and services, and to make those services ready for 21st century consumers."

Mr Cable is expected to deliver his statement after Prime Minister's Questions.

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Fallon To Unveil £2.5bn Royal Mail Flotation

By Mark Kleinman, City Editor

The Government will this week fire the formal starting-gun on the most ambitious privatisation in decades by unveiling plans for a £2.5bn autumn stock market listing of Royal Mail.

Sky News can exclusively reveal that Michael Fallon, the Business Minister, is expected to disclose the news in a statement to the House of Commons. The statement has been provisionally scheduled for Wednesday although the timing could still change, according to people close to the situation.

Mr Fallon's announcement will end any lingering suggestions that the Government could abandon plans for a flotation of Royal Mail in the face of escalating public hostility from trade unions.

The Communication Workers' Union rejected an 8.6pc basic pay rise offer – spread over three years – from the company's management last week, a deal which Mr Fallon described as "pretty reasonable".

It will also confirm the widely-held expectation that the Government wants to pursue a listing in which members of the public can participate, although there may be restrictions on the number of shares for which individuals can apply.

Mr Fallon had previously said the Coalition's "preferred route" to injecting capital into Royal Mail was a stock market flotation but insisted that other options remained under consideration.

Last week, the Government hired three investment banks to add to an existing quartet of advisers that will work on the share sale. They are expected to earn up to £15m in total, a relatively small fee pool for such a sizeable listing.

It is unclear whether this week's statement will include full details of the terms of an initial public offering (IPO), such as the mechanism through which Royal Mail's 130,000 staff will receive shares in the company.

Sources said the Government was leaning towards the option of giving the equity to staff for free rather than at a discount.

However, Sky News understands that the employee share offer, which will take place over a period of some months, will only include those Royal Mail staff who are based in the UK.

Ministers and officials have been deliberating over whether the roughly 13,000 people who are employed by General Logistics Systems (GLS), Royal Mail's European parcels business, should be involved in a staff share ownership scheme.

The Government has been sensitive to potential accusations that they are orchestrating a share giveaway worth hundreds of millions of pounds from which thousands of French, German and Italian citizens would stand to benefit.

GLS, which delivers more than 360 million parcels to 220,000 customers every year, is one of the most profitable parcel delivery businesses in the world. Its earnings have been one of few financial bright spots during the restructuring of Royal Mail during the last decade.

The company has staged a significant financial turnaround under the leadership of Donald Brydon, its chairman, and Moya Greene, the Canadian who was parachuted in to lead the restructuring in 2010.

Royal Mail's annual report, which could also be published this week, is expected to show that she will receive an annual bonus worth almost £500,000 after nearly trebling the company's operating profit to £403m last year.

The Department for Business, Innovation and Skills and Royal Mail both declined to comment.

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Bad Bankers Face Criminal Charges And Jail

Reckless bankers could face criminal charges and jail after the Chancellor pledged to implement most of the recommendations produced by the Parliamentary Commission on Banking Standards.

George Osborne is also backing calls for tighter control of bonuses but he has rejected the Commission's recommendation that UK Financial Investments (UKFI) - the body that handles the state's holdings in the Royal Bank of Scotland and Lloyds Banking Group - be abolished.

In a statement, the Government set out key proposals from the commission to be added to the banking reform Bill in the autumn.

These are to include a new offence of "reckless misconduct" for senior bankers, with those found guilty facing a possible jail sentence.

Lloyds then RBS face returns to private ownership after taxpayer bailouts

Mr Osborne also backed moves to allow bonuses to be deferred for up to 10 years and enable 100% "claw back" of bonuses where banks are propped up by the state.

Further measures, designed to improve competition, will include asking the new payments regulator to look into making it easier to switch between accounts, and beefing up the role of the new Prudential Regulation Authority.

Labour has accused the Government of ducking radical reforms and is demanding that ministers explain how it will protect taxpayers' interests when the state-owned stakes in Lloyds and RBS are sold off.

The commission, chaired by Conservative MP Andrew Tyrie, was set up by the Chancellor in the wake of the financial crisis and the Libor rate-rigging scandal.

Mr Osborne said the main recommendations of its report, published last month, were being delivered.

He said cultural reform was necessary in banking "to move the whole sector from rescue to recovery and ensure that UK banks demonstrate the highest standards, and are able to support business and drive economic growth."

He added: "The Government is determined to raise standards across the banking industry to create a stronger and safer banking system."

Business Secretary Vince Cable said: "If we're to get our economy back on track, we need to get the banking system back on track first.

"Creating new powers to jail bankers who are reckless with other people's money and getting more competition into banking, is a start."

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Ex-Trade Minister Plots £10bn Raid On Lloyds

Lord Davies, the former trade minister, is masterminding a £10bn raid on Lloyds Banking Group that would allow the Government to offload a big chunk of its shareholding in Britain's biggest high street lender.

Sky News can exclusively reveal that Lord Davies, who served in the last Labour administration, has assembled a consortium of blue-chip City and international investors to buy as much as half of the taxpayer's 39% stake in Lloyds.

Lord Davies has been working on the plan for more than a year, according to insiders, and approached the Treasury about his proposal several months ago.

Corsair Capital, the financial services-focused private equity firm where he is a senior partner, would be part of the consortium but would not buy the stake on its own.

A former chairman and chief executive of Standard Chartered, the emerging markets bank, Lord Davies has enlisted the backing of sovereign wealth funds in Asia and major City institutions.

The deal would be structured to acquire the Lloyds stake at somewhere close to the current share price, which by one measure is now above the taxpayers' break-even price.

HSBC and JP Morgan, the Wall Street bank from which Corsair was spun out several years ago, are said to be helping Lord Davies to structure and finance a deal.

The Government paid more than £20bn to rescue Lloyds during the banking crisis of 2008, although it quickly recouped £2.5bn as a fee for the implicit guarantee the bank had enjoyed from its prospective participation in a giant scheme to insure toxic banking assets.

Lord Davies is understood to be in active dialogue with the Treasury about his proposal, which would be structured to allow the Government to share in any future rise in the Lloyds share price.

Arranging it in this way would allow George Osborne, the Chancellor, to avoid any future accusation that he had sold the Lloyds shares too cheaply.

Gordon Brown was dogged by criticism that he had sold Britain's gold reserves too cheaply, leading to broader questions about his economic competence.

The Government paid more than £20bn to rescue Lloyds

Institutions such as Standard Life Investments have been approached about participating in Lord Davies' deal, although sources played down the likelihood that Temasek Holdings, the Singaporean state-backed fund, would be involved.

The Treasury has not yet decided whether to proceed with a transaction with Lord Davies's consortium, although the former trade minister is said to be positive about the prospects of a deal.

However, one insider insisted on Saturday that it could still not happen because of competing proposals from other investors keen on buying the Government's Lloyds shares.

The exact size of the stake that the consortium would buy is unclear, although it is likely to be much larger than 10%, or a quarter of the Government's shareholding.

Lord Davies would not seek board representation as part of any deal, a source said, despite the fact that - if it bought 20% of the bank - it would become easily the biggest private sector shareholder in Lloyds.

At Friday's closing share price of 64.63p, Lloyds had a market capitalisation of £46.1bn.

Antonio Horta-Osorio, Lloyds' chief executive, will receive a larger bonus if the Treasury sells at least a third of its stake for more than 61p-a-share.

The bank's share price has recovered sharply during the last year as its underlying earnings power has become apparent.

Lloyds has been the most heavily punished of the UK banks from the scandal surrounding the mis-selling of payment protection insurance, having had to pay out well over £4bn to date.

Mr Osborne said in his Mansion House speech last month that he was actively considering proposals to sell Lloyds shares and it is conceivable that the first disposal could come as soon as  the next few weeks.

UK Financial Investments, the agency which manages the taxpayer's stake in Lloyds, is understood to be aware of Lord Davies's consortium.

The Lloyds stake is not the only state-backed banking asset for which Lord Davies is trying to make an offer. Corsair is also among three remaining bidders for more than 315 Royal Bank of Scotland branches, and has secured the backing of the Church Commissioners for England in an attempt to provide an ethical dimension to its plans.

Lloyds and Lord Davies were unavailable for comment.

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Billionaire Backs UK Music Dotcom Shazam

By Mark Kleinman, City Editor

Carlos Slim, the Mexican telecoms magnate who has become the world's richest man, is investing tens of millions of pounds in Shazam, the British digital music company.

Sky News can reveal that Mr Slim, whose net worth is estimated at $73bn (£49bn), is injecting $40m (£26.8m) through his wireless group, America Movil.

The investment will see America Movil, which is the biggest mobile network in Mexico, become a significant minority shareholder in Shazam, which uses sophisticated technology to help users identify music and then proceed to buy the track with a single click.

The deal represents a coming-of-age for Shazam, which has in the past struggled to convince many in the technology industry that it can make a sustained move into profitability.

America Movil has more than 262 million wireless subscribers across Latin America, one of the world's fastest-growing regions for mobile services.

The exact size of Mr Slim's stake in Shazam is unclear although people familiar with the deal said his investment valued the technology company at broadly the same sum as its most recent fundraising round in 2011.

That would reflect investors' caution over the valuations being attached to even the most well-known digital companies, with the soaring multiples enjoyed by some groups evoking echoes of the original dotcom boom.

Shazam came to London in 2000 after failing to secure funding in Silicon Valley, and has since gone on to become one of the UK's most internationally-recognised technology start-ups.

The music company, which is branching out into television and other consumer services, recently appointed Rich Riley, a senior Yahoo! executive, as its new chief executive.

The appointment was interpreted by technology analysts as a signal that Shazam is likely to pursue a stock market listing in the next few years.

Andrew Fisher, Shazam's executive chairman, said when Mr Riley was appointed that he expected the company to be worth $1bn (£671m) when it went public.

America Movil's investment in Shazam - which describes itself as "the world's leading media engagement company" - will be accompanied by a strategic partnership across the markets in which the telecoms group operates.

The music company now has roughly 350m users around the world, a figure that has doubled in the last two years. Its number of active monthly users has trebled to more than 70m, with sales of digital products now more than $300m (£201m) annually through affiliates such as Apple's iTunes service.

Shazam declined to comment ahead of an announcement about the investment from America Movil, which insiders said was likely as soon as Monday.

Mr Slim's wealth is estimated by Forbes magazine to put him marginally ahead of Bill Gates, the Microsoft founder.

The UK-based company employs more than 180 people and has offices in Australia, South Korea and the US.

Among Shazam's existing investors are Kleiner Perkins Caufield & Byers, one of the most prolific  firms in Silicon Valley, and Brent Hoberman, the co-founder of Lastminute.com who has gone on to create a string of other tech start-ups.

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Slump In Pound Signals Gloom For Holidaymakers

The pound has fallen heavily against the dollar for the second time this week after key US jobs figures showed better than expected evidence of an economic recovery.

While stock markets rallied, seemingly shrugging off recent fears about US stimulus being slowly withdrawn, sterling lost two cents against the world's reserve currency when news of the positive employment data from the US emerged.

The pound, which had also dropped heavily the previous day when the Bank of England confirmed the base rate of interest was to remain at its current level for at least two years, fell below the $1.48 mark.

While such exchange rates are good news for exporters, it will hit the spending power of British holidaymakers heading to America.

The euro has also strengthened against the pound.

The US payroll rose by 195,000 in June and the jobless rate remained the same at 7.6% - raising hopes for a stronger economy in the second half of 2013. The forecast was for around 165,000.

Hiring was more robust in the two previous months than earlier estimated, with some 70,000 net new jobs in May and April.

The positive data was seen as suggesting that the US Federal Reserve may start to ease off its support for the economy as early as this autumn - while quantitative easing and low interest rates will continue to push down the pound in the UK.

The US job market and the economy have proved surprisingly resilient this year. Hiring and consumer confidence have remained steady despite higher taxes and federal spending cuts.

The US economy has added an average of 202,000 jobs a month for the past six months, up from 180,000 in the previous six. That suggests businesses are growing more confident in the economy.

If the gains continue, the Federal Reserve might start to scale back its bond purchases before the year ends.

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Ex-Trade Minister Plots £10bn Raid On Lloyds

Lord Davies, the former trade minister, is masterminding a £10bn raid on Lloyds Banking Group that would allow the Government to offload a big chunk of its shareholding in Britain's biggest high street lender.

Sky News can exclusively reveal that Lord Davies, who served in the last Labour administration, has assembled a consortium of blue-chip City and international investors to buy as much as half of the taxpayer's 39% stake in Lloyds.

Lord Davies has been working on the plan for more than a year, according to insiders, and approached the Treasury about his proposal several months ago.

Corsair Capital, the financial services-focused private equity firm where he is a senior partner, would be part of the consortium but would not buy the stake on its own.

A former chairman and chief executive of Standard Chartered, the emerging markets bank, Lord Davies has enlisted the backing of sovereign wealth funds in Asia and major City institutions.

The deal would be structured to acquire the Lloyds stake at somewhere close to the current share price, which by one measure is now above the taxpayers' break-even price.

HSBC and JP Morgan, the Wall Street bank from which Corsair was spun out several years ago, are said to be helping Lord Davies to structure and finance a deal.

The Government paid more than £20bn to rescue Lloyds during the banking crisis of 2008, although it quickly recouped £2.5bn as a fee for the implicit guarantee the bank had enjoyed from its prospective participation in a giant scheme to insure toxic banking assets.

Lord Davies is understood to be in active dialogue with the Treasury about his proposal, which would be structured to allow the Government to share in any future rise in the Lloyds share price.

Arranging it in this way would allow George Osborne, the Chancellor, to avoid any future accusation that he had sold the Lloyds shares too cheaply.

Gordon Brown was dogged by criticism that he had sold Britain's gold reserves too cheaply, leading to broader questions about his economic competence.

The Government paid more than £20bn to rescue Lloyds

Institutions such as Standard Life Investments have been approached about participating in Lord Davies' deal, although sources played down the likelihood that Temasek Holdings, the Singaporean state-backed fund, would be involved.

The Treasury has not yet decided whether to proceed with a transaction with Lord Davies's consortium, although the former trade minister is said to be positive about the prospects of a deal.

However, one insider insisted on Saturday that it could still not happen because of competing proposals from other investors keen on buying the Government's Lloyds shares.

The exact size of the stake that the consortium would buy is unclear, although it is likely to be much larger than 10%, or a quarter of the Government's shareholding.

Lord Davies would not seek board representation as part of any deal, a source said, despite the fact that - if it bought 20% of the bank - it would become easily the biggest private sector shareholder in Lloyds.

At Friday's closing share price of 64.63p, Lloyds had a market capitalisation of £46.1bn.

Antonio Horta-Osorio, Lloyds' chief executive, will receive a larger bonus if the Treasury sells at least a third of its stake for more than 61p-a-share.

The bank's share price has recovered sharply during the last year as its underlying earnings power has become apparent.

Lloyds has been the most heavily punished of the UK banks from the scandal surrounding the mis-selling of payment protection insurance, having had to pay out well over £4bn to date.

Mr Osborne said in his Mansion House speech last month that he was actively considering proposals to sell Lloyds shares and it is conceivable that the first disposal could come as soon as  the next few weeks.

UK Financial Investments, the agency which manages the taxpayer's stake in Lloyds, is understood to be aware of Lord Davies's consortium.

The Lloyds stake is not the only state-backed banking asset for which Lord Davies is trying to make an offer. Corsair is also among three remaining bidders for more than 315 Royal Bank of Scotland branches, and has secured the backing of the Church Commissioners for England in an attempt to provide an ethical dimension to its plans.

Lloyds and Lord Davies were unavailable for comment.

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