Church Consortium Wins RBS Branch Sale Race

Royal Bank of Scotland is to sell 314 branches to a consortium backed by the Church of England in a deal forced on the bank because of its taxpayer bailout.

It will see Williams & Glyn's, a bank brand that has been dormant for nearly 30 years, soon return to the UK high street to become a new competitor in the market.

The consortium includes Corsair Capital, Centrebridge Partners and the Church Commissioners for England - the church's pension fund.

The deal will give the church a role in high street banking after the Archbishop of Canterbury Justin Welby slammed controversial payday lenders for their rates before learning that the church had actually invested in Wonga, the country's best-known payday firm.

The Archbishop of Canterbury wants banking to have a moral compass

The new player, whose executives include former trade minister Lord Davies, has pledged to put lending to small business at its heart, give more funds to the community and cap its bonuses at 100% of annual salary.

RBS confirmed the investors would pay £600m for part of the business with the remainder being raised in a stock market listing at a future date.

RBS chairman Sir Philip Hampton said: "We are delighted to be working in partnership with these investors to establish a new challenger bank for UK customers.

RBS chairman Sir Philip Hampton

"Williams & Glyn's will play an important role in the UK banking landscape and will be an excellent new addition to the market, with a particular strength in small business banking - a sector that is so crucial to the UK's economic recovery.

"Much has been done already in building the standalone business, and today's announcement provides more certainty for our customers and employees ahead of a flotation."

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets.

Lord Davies, who is vice chairman of Corsair Capital, said today: "We are delighted to have been selected by RBS.

"The Consortium views this as an opportunity to create a genuine challenger bank, which will be a vibrant, healthy competitive force in UK banking and a new financial services provider to the UK public and small and medium sized businesses.

"There is a great history in the Williams & Glyn's brand and the business has an opportunity to be at the forefront of the UK banking industry whilst making an active contribution to the community from its strong regional network."

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Marriage Tax Breaks For Four Million Couples

David Cameron says four million couples will benefit from the Government's new £1,000 marriage tax allowance.

Ahead of the start of the Conservative Party conference, the Prime Minister said the scheme - starting in April 2015 - will be worth up to £200 a year for married couples, including 15,000 in civil partnerships.

They will receive the benefit at the end of the tax year in 2016.

It will work by letting people transfer £1,000 of their personal tax allowance to their spouse or civil partner - an increase on the £750 allowance promised in the Tory manifesto, which would have seen couples gain £150.

The new allowance, which is not available to couples which include a higher rate taxpayer, is aimed at couples where one partner has not used all of their personal allowance or does not work at all.

The move comes after a trade-off that allowed the Liberal Democrats to announce free school meals for all children under eight earlier this month.

The proposal, which Downing Street said shows the Government values commitment by recognising marriage and civil partnerships in the tax system, makes good on promises Mr Cameron made when he was running for leadership of the party in 2005.

In an article in Saturday's edition of The Daily Mail, he said: "I believe in marriage. Alongside the birth of my children, my wedding was the happiest day of my life.

The PM says 'nothing would be possible' without his wife Samantha

"Since then, Samantha and I have been a team. Nothing I've done since - becoming a Member of Parliament, leader of my party or Prime Minister - would have been possible without her.

"There is something special about marriage: it's a declaration of commitment, responsibility and stability that helps to bind families. The values of marriage are give and take, support and sacrifice - values that we need more of in this country.

"When I ran for the leadership of my party back in 2005, I said that I wanted to do more for marriage in the tax system: a personal pledge that I made right at the start of my campaign - and I then backed that up with a pledge in our manifesto at the last election.

"So this week at the Conservative Party's conference in Manchester, I'm going to deliver on the promise I made.

"From April 2015, if neither of you are higher rate taxpayers, you will be able to transfer £1,000 of your tax free allowance to your spouse.

"In effect, if you pay the basic rate of tax and your partner doesn't use all of their personal allowance, you'll be able to have some of it. Most couples who benefit will be £200 a year better off as a result.

"And of course this will be true if you're gay or straight - and in a civil partnership or a marriage. This summer I was proud to make Equal Marriage the law. Love is love, commitment is commitment."

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Rural Broadband Roll-Out A 'Raw Deal', Say MPs

The roll-out of superfast broadband to homes in rural towns and villages will leave users paying more than they should to get online, according to a spending watchdog.

The Public Accounts Committee (PAC) said the programme represented a "raw deal" for consumers despite a "generous public subsidy".

MPs claimed the scheme had been mismanaged by the Government and said sole provider BT would end up "owning assets created from £1.2bn of public money".

They said the Department for Culture, Media and Sport (DCMS) should cease spending on the scheme until "proper competition and value for money" could be secured.

A spokesman for BT said it was "disturbed" by the report, claiming it was "simply wrong", and insisted the network it is building would be open to its rivals.

BT says it is willing to invest in rural broadband when others are not

"We have been transparent from the start and willing to invest when others have not," he said.

"It is therefore mystifying that we are being criticised for accepting onerous terms in exchange for public subsidy, terms which drove others away.

"The taxpayer is undoubtedly getting value for money."

However, Margaret Hodge, the chairman of the PAC, said all of the 26 contracts awarded by June 2013 had gone to BT and claimed the remaining 18 were "likely to follow suit".

"The DCMS' approach to procurement failed to deliver any meaningful competition to drive down prices and maximise coverage," she said.

PAC chair Margaret Hodge

"Without that competitive tension, it is crucial to have full access to the single supplier's cost information to check that BT's bids are reasonably priced, but the department failed to negotiate that access with the company.

"We now have a situation where local authorities are contributing over £230m more to the programme than forecast in the department's business case, while BT is committing over £200m less."

Concerns about the programme were raised when the Government revised its initial target of 90% of the UK having superfast connections by 2015 to 95% by 2017.

The tender process was also criticised after Fujitsu, which later dropped out, and BT were named as the only approved bidders.

A DCMS spokesman said the PAC's report was "at odds" with the findings of the National Audit Office.

"They found our approach reduced the cost to the taxpayer and reduced risk," he said.

"We put in place a fair commercial process and encouraged different suppliers to bid.

"We are disappointed that the PAC fails to recognise that thousands of rural premises which have never had a decent broadband supply are now getting one, something that is vital for farmers, rural businesses and all those who live outside major cities."

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Jobless 'To Do Unpaid Work' Or Lose Benefits

Work and Pensions Secretary Iain Duncan Smith will announce tough new conditions on the payment of unemployment benefits at the Conservative Party conference next week, according to reports.

The Daily Mail reported that the long-term unemployed will be told that they must do an unpaid full-time job or lose their benefits.

The paper said it was expected that claimants who go through the Work Programme - the Government's main back-to-work scheme - but fail to find a job, will be required to take part in unpaid community work or work experience.

Refusal to do so could mean the lose of welfare payments.

Mr Duncan Smith told the Mail: "It's not acceptable for people to expect to live a life on benefits if they're able to work."

He added: "Benefits should be a safety net - but not something that gives claimants an income out of reach of many hard-working families."

Mr Duncan Smith also announced the Government's benefits cap is now fully in place across Britain.

Mr Duncan Smith has said people should not live a life on benefits

The controversial cap - which limits benefits to £500 a week for couples and lone parents and £350 a week for single adults - is a key plank of Mr Duncan Smith's welfare reforms. It is expected to affect about 40,000 households.

The cap covers the main out-of-work benefits - Jobseeker's Allowance, Income Support, and Employment and Support Allowance - and other benefits such as Housing Benefit, Child Benefit and Child Tax Credit and Carer's Allowance.

It was initially piloted in four London boroughs last April and then rolled out across the rest of the country from July.

Mr Duncan Smith defended the cap, arguing that it restores fairness to the system, ensuring households where no one is working cannot claim more than the average family earns.

Critics say that it penalises out-of-work families in areas with high housing charges, forcing them to move out to cheaper areas.

But Mr Duncan Smith told the Daily Mail: "We have now successfully delivered a cap on benefits so that out-of-work households know they can no longer claim more than the average family earns and we have returned fairness to the benefits system."

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Libor Scandal: ICAP Fined Amid Criminal Probe

The London-based brokerage ICAP has been fined £55m and told three individuals will face criminal charges in connection with the Libor rate-rigging scandal.

The financial penalties, previously reported as imminent by Sky News, were confirmed by the company - headed by former Conservative Party Treasurer Michael Spencer - moments before news of the charges emerged.

The City watchdog, the Financial Conduct Authority (FCA), imposed £14m of the total fine while US regulator the Commodity Futures Trading Commission (CFTC) secured £41m.

Eric Holder confirmed the criminal charges

The CFTC found that ICAP brokers, including one known as "Lord Libor", helped fixed the rate for a period of at least four years.

It also highlighted various email conversations including one in which a Ferrari was offered as an apparent bribe.

In its later statement announcing criminal charges, the US Justice Department outlined its case against three brokers it alleged were part of the manipulation of Libor.

The men were named by authorities as former ICAP employees Daniel Wilkinson and Colin Goodman from England and Darrell Read - a New Zealand national.

Each is accused of conspiracy to commit wire fraud and two counts of wire fraud and face a maximum 90 years in jail if convicted.

US Attorney General Eric Holder said: "By allegedly participating in a scheme to manipulate benchmark interest rates for financial gain, these defendants undermined the integrity of the global markets.

"They were supposed to be honest brokers, but instead, they put their own financial interests ahead of that larger responsibility and as a result, transactions and financial products around the world were compromised, because they were tied to a rate that was distorted due to the brokers' dishonesty."

A separate investigation by the UK's Serious Fraud Office into the setting of the Libor rate is continuing.

The Financial Conduct Authority confirmed a civil fine settlement

In its statement on Wednesday, after confirming the civil fine, the FCA said ICAP's misconduct involved a "significant number of brokers (including two managers) and occurred over a number of years between October 2006 and November 2010."

The misconduct included, the FCA said, brokers colluding with traders at UBS to manipulate the (Japanese Yen) JPY Libor rates for the benefit of the traders.

The statement said it involved brokers deliberately disseminating incorrect or misleading Libor submission levels and "one broker receiving corrupt bonus payments (at the instigation of one manager) as a reward for his assistance in manipulating the JPY Libor rates."

Confirmation of the civil settlements against the interdealer brokerage - which essentially acts as an intermediary in deals between bank traders in the global financial system - takes the aggregate penalties from the scandal to date to more than £1.7bn.

The £55m penalty is a relatively modest sum when viewed in the context of the fines imposed on three other financial institutions which have settled with regulators over Libor.

Barclays paid just over £290m, Royal Bank of Scotland just over £390m and UBS just over £1bn.

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Thousands Of Pubs And Restaurants Cut Prices

Thousands of pubs and restaurants across the UK are lowering their food and drink prices - for one day only.

Up to 40 leading businesses are involved in the stunt, including the pub chain JD Wetherspoon and Pizza Hut, with up to 15,000 outlets in total said to be taking part by trimming their prices by 7.5%.

The move is part of a Europe-wide campaign - led by French businessman and lobbyist Jacques Borel - to persuade governments to reduce levels of VAT on food and drink in the hospitality sector.

In the UK, that would involve cutting VAT from 20% to 5% to give it tax parity with supermarkets.

JD Wetherspoon chairman Tim Martin wants a level playing field

The industry suggests that the taxman is missing out, arguing that more could be raised in tax from making meals out more competitive at a time of constrained family budgets.

The hospitality sector says tax parity would mean higher employment - helping arrest the decline in pubs and restaurants and prompting further investment to assist economic recovery.

Mr Borel estimates that 670,000 jobs could be created in the UK by reducing the 20% VAT burden to 5%.

The issue has long been championed by JD Wetherspoon chairman, Tim Martin, who warned earlier this month that the pub industry faced an uncertain future.

He told Sky News then: "I am pleased to report another year of progress, with record sales, profit and earnings per share, despite having paid £551.5m in taxes.

"It is unsustainable to have far higher taxes for the pub industry than those for supermarkets.

"Already, 10,000 pubs have closed and many others are suffering, through insufficient investment.

"In particular, there should be VAT equality for pubs, restaurants and supermarkets," he said.

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eBay And Argos Strike 'Click & Collect' Deal

eBay and Argos have joined forces to offer a "Click & Collect" service as retailers rush to cash in on the growth of online shopping.

At least 50 merchants using the online marketplace will participate in a trial of the service, which will enable eBay customers to collect their goods from a choice of 150 Argos stores.

The companies said the trial - which is expected to last six months - would deliver what customers wanted in terms of choice, convenience and speed as a study reported a continuing decline in store numbers on the UK's high streets.

Its statement cited research from Econsultancy that 40% of UK shoppers used some form of Click & Collect service over Christmas 2012.

Devin Wenig, the president of eBay said: "At eBay we continue to find new ways to connect buyers and sellers.

Argos has been transforming itself towards a stronger online offering

"Traditional retail isn't going away, it is transforming. Smart retailers are innovating, re-imagining the store and what it means to shop."

John Walden, managing director of Argos added: "Few companies move as many products as effectively as Argos through a national network of local stores, served by friendly and well-trained colleagues.

"Having pioneered Click & Collect in the year 2000, it now accounts for around a third of our business and continues to grow.

"eBay, an innovator in digital and leading online marketplace connecting sellers and consumers, is already a strong partner with Argos and a logical partner for the trial."

John Walden and Devin Wenig see strong demand for 'click & collect'

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Miliband: Labour Would Freeze Energy Prices

Ed Miliband has vowed to freeze gas and electricity bills for 20 months if Labour regains power at the next election.

The party leader told its conference in Brighton that he would pass new laws to enforce the freeze while the energy sector was overhauled.

Labour claims the move will save households £120 a year and businesses £1,800 between May 2015 and January 2017.

The dramatic announcement puts Mr Miliband on a collision course with the "Big Six" energy companies, which stand to lose £4.5bn and have not been consulted.

"The companies won't like it because it will cost them money but they have been overcharging people for too long because the market doesn't work. It's time to reset the market," he said.

He accused the coalition of allowing energy prices to spiral because David Cameron did not have "the strength to stand up to the strong".

An average family's bill has risen by almost £300 since 2010 and companies now say energy is the second biggest cost they face, after wages.

A report last weekend from consumer group Which? also estimated that flaws in the market had left consumers paying £3.9bn a year too much.

Labour has already vowed it will pass new laws to split energy companies into generation and retail arms, create more competition and replace Ofgem with a tougher watchdog.

Ed Miliband and wife Justine arriving at the hall before his conference

Aides said firms should be able to absorb the freeze because of their large profits and challenged Mr Cameron to hold bills down if they try to dodge it by hiking prices early.

But Paul Massara, the chief executive of Npower, criticised the plan and said fixing energy prices was not as straightforward as flicking a switch.

"It's very easy for politicians to come up with simple-sounding solutions to difficult problems," he said in a statement.

"If the Labour Party can commit to reducing policy costs on household energy bills, stopping the smart meter roll-out, preventing commodity cost increases and accept that there won't be any investment in new power stations and infrastructure, then we could freeze our prices. But will this make things better for Britain?"

Centrica chairman Sir Roger Carr said freezing bills would be damaging to the company, which makes "small profits".

"We have a responsibility to supply this level of energy and that means buying it in at costs which are largely outside our control so any system which puts a bid on our prices while our costs are variable presents us with a very difficult business model on which we can invest and make long-term contract commitments and therefore secure supplies to this country," he said.

However, Consumer group Which? welcomed the plan, claiming it would give "hope to the millions worrying about how they can afford to heat their homes".

Executive director Richard Lloyd said: "We now look forward to seeing the detail of how this will work.

The Labour leader spoke for 63 minutes without notes

"Wholesale costs are the biggest part of the eye-watering rises to energy bills that people have faced over the last 10 years.

"Making the wholesale market competitive by separating energy generation from supply is essential to help keep prices in check."

Mr Miliband had spent weeks honing his speech, which lasted 63 minutes, after a summer of recrimination over his leadership and the party's lack of direction.

Speaking without notes, he claimed soaring energy prices were part of a "cost-of-living crisis" which had left ordinary people struggling while the "privileged few" prospered.

He repeatedly declared "Britain can do better than this" as he accused Mr Cameron and George Osborne of leading a "race to the bottom".

And he insisted he had shown his strength by standing against his brother for the top job and refusing to support British military intervention in Syria.

"Leadership is about risks and difficult decisions. It's about those lonely moments when you have to peer deep into your soul," he said.

He predicted a "big fight" between now and the next election, but insisted he would relish going up against Mr Cameron in a test about leadership and character.

Mr Miliband will hope the address will move his party on from the damaging revelations about the Blair-Brown years revealed in Damian McBride's memoir.

Seeking to flesh out Labour's economic policy, he unveiled plans for a £800m tax break for smaller firms - paid for by cancelling a 1% corporation tax cut due in 2015.

He vowed to reverse the hike in business rates due in April 2015 and freeze the levy the following year, a move worth around £450 on average over two years for 1.5 million firms.

"We have to support our small businesses, the vibrant, dynamic businesses that will create wealth in Britain," Mr Miliband said.

However, business leaders were critical of the decision to fund it by keeping corporation tax higher, accusing him of "robbing Peter to pay Paul".

Institute of Directors director general Simon Walker warned it would harm Britain's competitiveness and put off foreign investors at a time when the country had to show it was open for business.

Other measures included:

:: Confirmation that the so-called "bedroom tax" would be scrapped, which prompted a standing ovation in the hall;

:: A "route map" to take all the carbon out of Britain's energy by 2030, creating one million jobs;

:: Breakfast clubs and after-school care in primary schools, to help working parents.

Mr Miliband claimed Britons were "fed up of a Government that doesn't understand their lives and a Prime Minister who can't walk in their shoes".

He said Mr Cameron would "resume his lap of honour" about the economic recovery at the Tory conference next week, when he should be on a "lap of shame".

Borrowing a slogan from Ronald Reagan's presidential campaign in 1980, he called on voters to ask themselves in 2015 "am I better off now than I was five years ago?".

"You've made the sacrifices but you have not got the rewards. You were the first one into the recession, but you are the last one out," he said.

Delegates also loudly applauded when he attacked Tory peer Lord Howell for suggesting fracking should happen in the "desolate" North East.

Arguing that the Tories are out-of-touch, he said: "The Tories call them inhabitants of desolate areas, we call them our friends, our neighbours, the heroes of our country."

On reform of Labour's union links, Mr Miliband insisted he understood why some people were "uncomfortable" but urged union chiefs to work with him.

The Tories claimed Labour moves on decarbonisation would hike energy bills by £125 and that the "tax rise on business" would cost jobs.

Chairman Grant Shapps said: "Nothing has changed. It's the same old Labour. They still want more spending, more borrowing and more debt - exactly what got us into a mess in the first place.

"And it's hard-working people who would pay the price through higher taxes and higher mortgage rates and higher bills."

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Labour's £800m Tax Break For Small Business

By Jon Craig, Chief Political Correspondent

Ed Miliband will offer an £800m tax break to smaller companies and pledge to make Labour "the party of small business".

The first act of a Labour government, if it wins the next General Election, will be to reverse a hike in small business rates due in April 2015 and to freeze the levy the following year, the party leader will say.

The move - which Labour calculates will be worth an average £450 over two years to 1.5 million businesses, including shops, pubs and hi-tech start-ups, and up to £2,000 for some firms - will be paid for by scrapping the coalition Government's planned cut in corporation tax from 21% to 20%.

In his speech to Labour's conference in Brighton, Mr Miliband will say he wants growth in the UK economy to benefit "hard-working families", including small business owners, and not just the "privileged few".

Borrowing a slogan from Ronald Reagan's successful 1980 bid for  the US presidency, Mr Miliband will say that in 2015 voters should ask themselves: "Am I better off now than I was five years ago?"

He will also risk a backlash from countryside campaigners by launching a "road map" for the construction of a new generation of new towns in England in a bid to solve the housing crisis.

Labour insiders did not identify areas which might come under consideration for new towns, but said Mr Miliband wants to ensure families are given better access to new homes, and communities which want to grow are helped to do so.

While Prime Minister David Cameron and Chancellor George Osborne have been "boasting" of fixing the economy, Mr Miliband will say the proceeds from growth have gone to a minority, as life for ordinary families has been getting harder, thanks to a "cost of living crisis" caused by soaring bills and wages which fail to keep pace with inflation.

"Too many of the jobs we're creating in this country are just too low-paid, too many of the gains in our economy are just scooped up by a privileged few, including those with big bonuses," he will say. "And too often you are left being charged over the odds.

Mr Miliband says he wants growth to benefit "hard-working families"

"They used to say 'a rising tide lifts all boats'. Now the rising tide just seems to lift the yachts."

Mr Cameron has often said his economic policies are designed to help the UK compete in a "global race" for prosperity.

But Mr Miliband will accuse the Conservatives of pursuing a "race to the bottom", in which prosperity for a few is bought at the cost of worsening wages, conditions and workplace rights for the majority of workers.

Labour would instead offer "a race to the top", with support for small firms to become the wealth and job creators of the future.

"You've made the sacrifices. But you've not got the rewards. You were the first one into the recession, but you are the last one out," the Labour leader will say.

"Will the pain be worth it for the gain under this Government? No.

"They aren't going to solve the cost of living crisis. Because for them, it is not an accident of their economic policy, it is their economic policy.

"David Cameron talks about Britain being in a 'global race'. But what he doesn't tell you is that he thinks the only way Britain can win is for you to lose.

"For the lowest wages, the worst terms and conditions and the fewest rights at work - a race to the bottom. The only way we can win is a race to the top."

Mr Miliband will make the announcement at the Labour conference in Brighton

Mr Miliband will say 80,000 big businesses have already benefited to the tune of £6bn in reductions in corporation tax under the coalition Government, while 1.5 million small firms will have seen their business rates rise by an average of almost £2,000 by the end of this Parliament.

Labour's decision to hold business rates at 2014 levels for two years would affect properties and commercial premises with an annual rental value of £50,000 or less. This would mean some franchise-holders operating branches of major multinationals benefiting from the change.

The move would save small firms a total of £250m in 2015/16 and £540m in 2016/17, according to figures from the House of Commons Library.

Halting the 1% cut in corporation tax would raise an estimated £340m in the first year and £785m the next, but Labour insists that any extra money will be passed on in further cuts to business rates and not taken as additional tax revenue for the Treasury.

Explaining his decision to target tax breaks on small firms, Mr Miliband will say: "Most of the jobs of the future are going to be created in a large number of small businesses, not a small number of large businesses. And most of the new jobs that British people will be doing in 15 years time will be in new companies.

"That's why we have to support our small businesses, the vibrant, dynamic businesses that will create wealth in Britain."

He will also caution activists at Brighton that a Labour government would not have funds to lavish on spending hikes.

"We won't be able to win the race to the top by spending money we don't have,"  he will say. "You know and I know that the next Labour government will face tough times, and there's no point in pretending otherwise.

"We have to deal with the deficit and that means we need to win the race to the top in a different way, based on the jobs we create, the businesses we support, the talents we nurture, the wages we earn and the vested interests we take on."

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Bank Watchdog Steps Up Bonus Cap Opposition

By Mark Kleinman, City Editor

A cap on bank bonuses being introduced at Brussels' behest would drive up fixed costs and expose lenders to greater risk of instability, the Bank of England will warn next month.

Sky News has learnt that the Prudential Regulation Authority (PRA), the new watchdog responsible for the stability of the banking system, will issue the warning in a consultation paper on financial sector remuneration due to be published in the coming weeks.

It will pit UK regulators firmly against European Commission plans to limit bonuses for bankers and traders to – at most – two times their base salaries, which are expected to be introduced either next year or in 2015.

British-based lenders have argued against the cap, saying that they will have little choice but to inflate basic pay if they are to compete with rivals unaffected by the new restrictions.

Andrew Bailey, the PRA's chief executive, echoed their opposition at a Treasury Select Committee hearing earlier this year. He said that the cap would "reduce the discipline in the system but it won't reduce overall remuneration" and warned that it "will institute an unhelpful culture of banks spending their time finding ways to get around the rules".

UK regulators have little scope to overturn or ignore the cap despite the fact that regulators and many Westminster-based politicians agree that it will be potentially counter-productive.

"There will certainly be an expression of the sentiment that the cap is likely to result in an increase in fixed costs which could expose banks to some risk when profitability is low or negative, as there would be less scope to adjust pay," said a source familiar with the PRA's thinking.

Douglas Flint, the widely-respected chairman of HSBC, has paved the way for Europe's biggest lender to increase salaries in time for the introduction of the new ceiling.

The source said the text of the consultation paper had not yet been finalised, but denied that the PRA would allow a wider array of payments, such as pension contributions, to count towards executives' base salaries when calculating the multiple allowed for bonuses. Some senior bankers say the regulator has appeared to be receptive towards that idea during recent discussions.

The British Bankers' Association has predicted that 35,000 bank employees around the world will be affected by the cap, approximately two-thirds of whom are based in the UK.

The Bank of England declined to comment ahead of the release of the consultation paper.

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Osborne Faces Scepticism Over Lloyds Sale

By Mark Kleinman, City Editor

George Osborne is facing scepticism from inside his own department about the prospect of a multibillion pound sale of Lloyds Banking Group shares to the general public.

Sky News understands that some Treasury officials are expressing private concerns about the complexity of a retail offering of part of the Government's remaining 33% stake in Lloyds.

A mass public sale of shares in the bank is widely-seen as likely in the early months of next year following last week's successful placing of a 6% stake through a deal which raised £3.2bn.

The Chancellor must convince Treasury officials of the sale

The Chancellor wrote to Andrew Tyrie, chairman of the Treasury Select Committee, following the transaction, saying that he would "consider all options for later sales of our shareholding in Lloyds, including a retail offering to the general public".

The idea is backed by many of Mr Osborne's allies, who believe that such a sale would be politically beneficial in the run-up to the next general election.

However, some Treasury officials believe that the likely requirement to publish a full prospectus as well as the delay between doing so and executing an actual sale of shares would be far riskier than further transactions such as last week's.

Value-for-money for British taxpayers would be the "overriding consideration" when planning future disposals, the Chancellor told Mr Tyrie.

Andrew Tyrie, chairman of the Treasury Select Committee

A public offering would not necessarily involve a giveaway of the shares, although that idea has been advocated by a number of think-tanks.

There remains significant demand among institutional investors for Lloyds shares, and any retail offering would encompass only part of the Treasury's remaining stake in the bank, said one insider.

A decision will in any case not be made for months, since UK Financial Investments, which manages taxpayers' shareholding in Lloyds, said last week it wold not seek to further reduce its stake for at least 90 days.

It is possible to waive that commitment but it is seen as unlikely.

The Times reported in May that Treasury officials had similar reservations about a public offering of a stake in Royal Bank of Scotland, although RBS shares - unlike those of Lloyds - are trading at a significant loss on the taxpayer's investment.

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Food Price Rises 'A Source Of Stress'

Rocketing food prices are a "source of stress" for four in 10 UK consumers, while a third say they are struggling to feed themselves or their family.

Almost eight in 10 shoppers (78%) are worried about the increasing cost of food, with almost half (45%) spending a larger proportion of their available income at the supermarket compared to a year ago, the survey of 2,028 consumers for Which? found.

Food prices have risen over and above general inflation by 12.6% over the past six years, according to the Office of National Statistics, while incomes have stagnated.

The poll found 60% are worried about how they will manage their future spending on groceries if prices continue to rise.

A separate survey by the consumer watchdog found one million more households are feeling financial pressure compared to a year ago, leaving 9.5 million households struggling to cope with the cost of living.

It found 40% are likely to cut back spending on food in the next few months.

Richard Lloyd, Which? executive director, said: "While people seem to have accepted their grocery bill going up, stagnating incomes and rocketing food prices are causing stress and worry and leaving people wondering how they are going to cope.

"Supermarkets need to make it much easier for consumers to spot the best deal by ensuring pricing is simple and making special offers genuinely good value for money.

"Politicians need to put consumers at the heart of their economic policies to tackle the rising cost of living and to support growth and prosperity."

Dan Crossley, executive director of the Food Ethics Council charity, added: "As the global food system becomes more deeply trapped in the strangleholds of resource constraint, climate change and population growth, rising food prices are an almost inevitable fact of life.

"Food businesses and government need to start planning now for that future by taking urgent action to tackle the issue of food affordability, including the introduction of measures such as a living wage.

"They also need to develop robust policies that make healthy food affordable, rather than peddling 'cheap' food that is costing us dear in terms of our health and our environment."

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BlackBerry Slashes Jobs In Face Of $1bn Loss

BlackBerry has confirmed it will cut 40% its global workforce as it said it expects to report that it has lost almost $1bn in its second quarter.

The smartphone company said it will lay off 4,500 employees as it tries to slash costs by 50% and shift its focus back to competing mainly for the business customers most loyal to its brand.

The Canadian-based firm had been scheduled to release its net earnings for the quarter next week but warned on Friday that it expects to post a staggering loss of between $950m and $995m.

Shares in the company plunged as low as $8.01 when the stock reopened for trading on Friday, before closing down 17% at $8.72.

Thorsten Heins, president and CEO of BlackBerry, said in a statement: "We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."

BlackBerry boss Thorsten Heins says the changes are hard but 'necessary'

BlackBerry said last month that it would consider selling itself and reiterated on Friday that a special committee of its board of directors continues to "evaluate all options".

The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007. Since then, BlackBerry has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10. The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand, but BlackBerry's market share continues to lag behind its rivals.

BlackBerry, formerly known as RIM, was once Canada's most valuable company with a market value of $83bn in June 2008.

Canada's industry minister James Moore said in a statement: "Our thoughts are with those who have lost their jobs at BlackBerry, it is always a cause for concern for our Government."

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Food Price Rises 'A Source Of Stress'

Rocketing food prices are a "source of stress" for four in 10 UK consumers, while a third say they are struggling to feed themselves or their family.

Almost eight in 10 shoppers (78%) are worried about the increasing cost of food, with almost half (45%) spending a larger proportion of their available income at the supermarket compared to a year ago, the survey of 2,028 consumers for Which? found.

Food prices have risen over and above general inflation by 12.6% over the past six years, according to the Office of National Statistics, while incomes have stagnated.

The poll found 60% are worried about how they will manage their future spending on groceries if prices continue to rise.

A separate survey by the consumer watchdog found one million more households are feeling financial pressure compared to a year ago, leaving 9.5 million households struggling to cope with the cost of living. It found 40% are likely to cut back spending on food in the next few months.

Richard Lloyd, Which? executive director, said: "While people seem to have accepted their grocery bill going up, stagnating incomes and rocketing food prices are causing stress and worry and leaving people wondering how they are going to cope.

"Supermarkets need to make it much easier for consumers to spot the best deal by ensuring pricing is simple and making special offers genuinely good value for money.

"Politicians need to put consumers at the heart of their economic policies to tackle the rising cost of living and to support growth and prosperity."

Dan Crossley, executive director of the Food Ethics Council charity, added: "As the global food system becomes more deeply trapped in the strangleholds of resource constraint, climate change and population growth, rising food prices are an almost inevitable fact of life.

"Food businesses and government need to start planning now for that future by taking urgent action to tackle the issue of food affordability, including the introduction of measures such as a living wage.

"They also need to develop robust policies that make healthy food affordable, rather than peddling 'cheap' food that is costing us dear in terms of our health and our environment."

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