House Of Fraser Bought By Chinese Tycoon

A Chinese tycoon has bought British high street chain the House of Fraser, according to sources.

Reuters said a 89% stake was bought by Sanpower, a Nanjing-based conglomerate controlled by Yafei Yuan.

Sources have told Sky News an announcement is expected imminently.

House of Fraser will now seek strategic growth in mainland China as part of a wider, global expansion.

The deal values the department stores at more than £450m.

The two sides are thought to have been in secret discussions for several months.

This follows a protracted search for investors led by House of Fraser's chairman, Don McCarthy.

Just months ago the company was tipped for a public flotation.

But Sky News City Editor Mark Kleinman reported in February that Mr McCarthy apparently had no desire to chair a publicly-listed company.

Sports Direct and Newcastle United owner Mike Ashley was also tipped as a making a possible move for the company.

The British group enjoyed strong Christmas trading, with like-for-like sales at its 61 stores up more than 7% during the three weeks to December 28 and more than 4% in the nine weeks to the same date.

Established during the 1850s, House of Fraser was taken private in 2006 for £351m by a consortium led by Baugur alongside Mr McCarthy and entrepreneur and philanthropist Sir Tom Hunter.

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Microsoft XP And Office 2003 Security Warning

Britain's data protection watchdog has warned owners of Microsoft's Windows XP and Office 2003 products of future potential security flaws.

The warning from the Information Commissioner's Office (ICO) comes as the software giant is set to end official support of the products on April 8.

Despite Windows XP being considered an aged operating system, it still powers nearly a third of all PCs worldwide, according to NetMarketShare.

UK software firm AppSense believes three-quarters of UK firms have XP within their networks, while Gartner says many businesses have up to 20% running on XP.

The ICO said once official support ends, no update release to overcome flaws will be issued, risking data breaches of machines used by businesses and private users.

The watchdog said the problem will get worse over time as more vulnerabilities are gradually discovered.

It said that will increase opportunities for attackers to exploit and potentially gain unauthorised access to systems.

ICO technology group manager Dr Simon Rice also warned that the issue is not limited to these two products.

He said: "Organisations regularly end support for their older products.

"And those with supported systems still need to be vigilant, as vulnerabilities will be discovered over time."

Dr Rice urged businesses to be prepared for the ending of support.

He said: "As a responsible data controller, it is your organisation's responsibility to make sure you have the measures in place to keep people's details safe."

He added: "Where you cannot apply a (software) update, you may need to put additional measures in place to mitigate the risk."

Approached by Sky News, a Microsoft spokesperson said warning about the end of support was announced some time ago.

It said the user notifications raised the issue of potential virus and security risks.

:: Microsoft has given advice for users of both Office 2003 and Windows XP on its website.

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Credit Card Market Faces Regulator Probe

The City regulator is to undertake a review of the UK's £150bn annual credit card market, with concerns including poor controls on soaring consumer debt levels.

While there is no pre-determined scope for the review, the Financial Conduct Authority's (FCA) chief executive Martin Wheatley confirmed it would begin later this year, with preliminary discussions starting soon.

Mr Wheatley told a credit summit in London he feared some vulnerable consumers were being offered what were akin to "payday loans with plastic".

The FCA said that while 30 million people have at least one credit card, recent research showed almost one-in-three borrowers were considered to be in serious debt.

Soaring debt levels are a major concern for the UK economy

The watchdog was particularly concerned, Mr Wheatley argued, about a considerable number of 'survival borrowers' - those who often feel they have no option but to borrow money through a payday loan or using a credit card, to help pay their bills.

He said: "The key priority here has to be those in the most vulnerable circumstances, many of whom are struggling to manage their credit card commitments, as well as other bills.

"Among the UK's 30 million-plus cardholders, something like 3.7% make minimum payments for 12 months which is the equivalent to more than a million borrowers making 12 or more consecutive minimum payments.

"So, we know it's not uncommon for the most 'at risk' households to hold multiple cards and revolve multiple balances month-by-month.

"There are some obvious questions and challenges here for regulators and industry: why are card issuers providing the means, in some cases, for the most indebted consumers to escalate their way into further debt?

"As part of this review, or market study as we call it, we will be engaging with the industry ahead of time and it's important to say there's no pre-determined terms of reference, outcome or agenda here."

Richard Lloyd of Which? suggests consumers shop around for a card provider

Other questions to be considered include whether consumers who leave their balances every month are subsidising those who pay them off and whether there is sufficient competition in the sector to ensure value for card holders.

According to debt charity StepChange, around 10% of people who visit it for advice and who have an average total debt of £27,000 have five or more credit cards.

The review could potentially recommend new rules to better protect consumers, begin enforcement action against any individual firm found not to be following existing regulations and refer the sector to the new Competition and Markets Authority for a full competition inquiry.

The consumer group Which? welcomed the review.

Its executive director Richard Lloyd said: "Too many credit cards appear to be designed to catch customers out.

"The FCA should investigate how lenders can help put consumers in control by providing clearer information, stopping excessive penalties and encouraging people to shop around without it damaging their credit record."

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Lloyds Seeks Approval To Boost Pay Of Top 400

By Mark Kleinman, City Editor

Lloyds Banking Group is to seek approval to boost the pay packets of up to 400 of its most senior staff in a move which could stoke political tensions over bankers' remuneration.

Sky News has learnt that the taxpayer-backed lender will disclose in documents ahead of its annual general meeting (AGM) that it wants the flexibility to pay the higher-than-expected number employees up to 200% of their salaries in bonus awards.

The 400 executives, who are known as 'code staff' by regulators because of their designation as the holders of the most important jobs at the bank, can only be paid the equivalent of their base salaries without shareholder approval under new European Union rules.

The move by Lloyds to seek approval to double the level of variable pay will put the Treasury in a delicate position as it strives to avoid being seen to endorse bumper bonuses, particularly at banks in which it has a direct ownership interest.

One route allowing it to navigate this dilemma would involve UK Financial Investments, the agency which manages taxpayers' stake, abstaining on the remuneration-related votes at Lloyds' AGM, although final decisions are not thought to have been taken.

Approximately 75 of Lloyds' staff are being awarded allowances which, in line with similar deals at other banks, count towards their base pay and will enable higher bonuses to be paid from this year.

Antonio Horta-Osorio, the bank's chief executive, will receive a £900,000 allowance in deferred shares which will boost his guaranteed annual pay to £2.6m.

Lloyds, less than 25% of which is now owned by the taxpayers after a £4.2bn sale of Government shares last week, has identified the 400 eligible employees in accordance with definitions imposed by the European Banking Authority.

The new EU rules have prompted major banks operating in Europe - including Barclays, Goldman Sachs, HSBC and Morgan Stanley - to devise new monthly or quarterly payments, drawing criticism from politicians in Brussels.

George Osborne, the Chancellor, has mounted a legal challenge to the pay ratio cap, arguing that it will do little to curb risk-taking and may damage the City of London.

Lloyds' move to seek approval for the higher payments will be disclosed in the circular to shareholders ahead of next month's AGM, which Treasury sources said was expected to be distributed in the coming days.

The bank is also understood to be tabling a resolution that will ask investors to approve the ability to pay a scrip dividend for the first time since it was bailed out by taxpayers following the merger of Lloyds TSB and HBOS in 2008.

Lloyds has already said that it hopes to resume dividend payments in the second half of 2014 and anticipates becoming a distributor of chunky payouts to shareholders in the coming years.

Sources said that the Lloyds documentation would also include a resolution seeking approval for the bank to draw up a prospectus for a possible sale of shares to the general public.

Such a plan, which is unlikely to be launched by the Treasury until the autumn, could see billions of pounds of shares offered to retail investors.

Lloyds declined to comment on Thursday.

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UK Wholesale Gas Prices Hit New Low

British wholesale natural gas prices hit a two-and-a-half-year low on Wednesday, as warm weather continues to drive down demand.

Reaching their lowest price since October 2011, gas prices for next-day delivery traded at 48.6p per therm, down 1.75p on the previous day's close.

It leaves the system in excess of 28.1 million cubic metres (mcm), as supply flows are at 220.2 mcm per day and demand is expected to be 192.1 mcm.

The National Grid says that gas demand for this time of year is 25% lower than normal, as meteorologists expect temperatures in Britain to remain above the seasonal average.

One unnamed gas trader told Reuters: "There's plenty of gas around at the moment to satisfy demand, and with the weather expected to stay warm for the next few days,

"I don't see any let-up."

It comes as the so-called big six energy suppliers face pressure to cut bills for UK households.

While the Labour Party has touted price freezes, industry regulator Ofgem recently confirmed a competition inquiry into the energy market, that could see the major players being broken up, separating their retail and wholesale supply arms.

Meanwhile, European concerns over supplies from Russia's top natural gas producer Gazprom, have eased on news that the company is keen to maintain "mutually beneficial relations".

Europe receives half of its gas from Russia via Ukraine and on-going tensions have thrown that into question.

On Tuesday, Gazprom said it was hiking the gas cost Ukraine pays by 44%.

In response, US secretary of state John Kerry on Wednesday denounced the use of energy as a weapon.

"It really boils down to this: No nation should use energy to stymie a people's aspirations," Mr Kerry said.

"It should not be used as a weapon. It's in the interest of all of us to be able to have adequate energy supplies critical to our economies, critical to our security, critical to the prosperity of our people."

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Cowdery Nets £200,000 Profit After FCA Fiasco

By Mark Kleinman, City Editor

The founder of the closed life insurer Resolution has netted a profit of almost £200,000 on shares he bought after last week's botched launch of a probe into the sector by the City regulator.

Sky News can reveal that Clive Cowdery, one of the wealthiest and most prominent tycoons in the insurance industry, is sitting on the paper windfall after swooping for 1.2m shares last Friday.

He acquired the shares at an average of just under 274p, in the wake of a newspaper report that the Financial Conduct Authority (FCA) would be investigating millions of so-called "zombie" life insurance policies dating back to the 1980s.

The report wiped billions of pounds from the value of listed insurance companies, including Resolution, which saw its shares slump by as much as 16% at one point on Friday before recovering to close down 7%.

The partial recovery came after the FCA corrected some details of the newspaper report, but insurers were furious that it took the regulator more than six hours to issue the clarification.

Later on Friday, the watchdog issued a further statement to say that its board would be appointing a law firm to conduct an inquiry into the fiasco, which has also drawn the ire of George Osborne, the Chancellor.

Andrew Tyrie, the Conservative MP who chairs the Treasury Select Committee, has called the FCA's actions "an extraordinary blunder".

Mr Cowdery's share purchases last week were an indication of his belief in the continuing strength of Resolution, which will shortly be renamed Friends Life, according to people close to him.

The company announced last month that its founder would step down from the board at its annual meeting.

He is expected to establish another life insurance acquisition vehicle focused on Germany, Italy or the Netherlands next year, although he has said he remains interested in further opportunities in the UK.

An ally of Mr Cowdery said that his £200,000 gain on the shares he acquired for £3.3m last week was modest in the context of the sums he spends annually on his think tank, the Resolution Foundation.

Mr Cowdery, who now owns shares in Resolution worth roughly £28m, has fared far better from the recent share trades than his boardroom colleagues.

Andy Briggs, the company's chief executive, bought 47,000 shares at 313p ahead of last Friday's fall in Resolution's share price.

Tim Tookey, the finance director, acquired 20,000 shares at 315p on March 25 and a further 175,000 shares two days later at 320p.

Both men are nursing significant paper losses on those holdings although neither has any intention of selling the shares in the short term.

The insurance industry has been left reeling by both last Friday's FCA fiasco and Mr Osborne's Budget announcement that pensioners will no longer be effectively forced to buy an annuity.

A spokesman for Mr Cowdery and Resolution both declined to comment.

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New Consumer Watchdog CMA Goes On The Prowl

By Poppy Trowbridge, Consumer Affairs

Britons now have a new consumer watchdog responsible for ensuring value for money across a wide range of industries.

The Competition and Markets Authority (CMA) has become the UK's primary competition and consumer agency, bringing together the Competition Commission and the Office of Fair Trading.

The CMA is responsible for competition in the energy, banking, payday lending and higher education sectors.

Its chief executive, Alex Chisholm, told Sky News: "There are some markets where we feel there isn't the kind of intense rivalry that you would like to see among firms, or ones where people are exploiting consumers.

"Those are the ones we need to focus on to get firms competing properly, to make sure people are really serving the consumer, because the consumer is sovereign."

The domestic energy market will come under scrutiny from the CMA

The CMA will prioritise reform in the energy market ahead of financial services industry reform - if energy regulator Ofgem recommends a full market investigation in the coming weeks.

"Confidence is really essential, and if you look at energy there has been a real collapse in confidence and trust," Mr Chisholm said.

Surveys show energy is the least-trusted industry, even more so than banking following the financial collapse in 2008.

Last week, Ofgem published a report criticising the excess profits and tacit collaboration by the big power firms.

The CMA has not decided yet whether the 5% profit margin made by energy companies is fair or not, but Mr Chisholm noted reports citing a 3% margin as "a reasonable return".

He added there were "worrying indicators" of collusion by the biggest energy firms to raise prices that do not reflect increases in the businesses' costs.

The oil industry also passes on price fluctuations to consumers

"When the underlying costs go up, you tend to see retail prices go up very quickly, like a rocket," he said.

The energy companies have blamed the increasing cost of buying oil and gas on the global markets for price hikes.

These costs have decreased 10% in the past nine months, he added.

"When wholesale costs go down, they seem to fall like a feather," Mr Chisholm said.

He said competition in the energy market is working at a midway level of what is achievable, leaving room for significant improvement in competitive behaviour.

But any significant reform in the energy market could take three or four years to complete, and would follow an initial 18-month review into the business.

Payday lenders have also been warned they will be looked at

Mr Chisholm added: "It's more important to get it right than to come up with a quick fix."

Using civil and criminal powers, the CMA can now levy fines running into the tens of millions of pounds, break up monopoly companies by forcing them to sell off business divisions.

It can also crack any industry price-rigging cartels it uncovers, as well as launch criminal cases that may lead to jail terms for convicted offenders.

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PM: 'Royal Mail Sell-Off Good For Taxpayers'

The Prime Minister has defended the Royal Mail sell-off, claiming it has been good for the taxpayer, despite a report saying the public purse had lost out.

David Cameron said the sale had benefited the taxpayer in three ways: it had generated money for the country, the Royal Mail was now a "profit-making company paying taxes into the Exchequer" and Britain had a successful business.

The Government has robustly defended the sale against sharp criticism from the National Audit Office, which found that "deep caution" shown by ministers when pricing shares in the Royal Mail last year cost the taxpayer more than £1bn.

Shadow business secretary Chuka Umunna branded the sale a "first-class disaster" and "botched privatisation" before demanding an apology.

The Royal Mail share price since flotation last year

Vince Cable responded in the House of Commons by saying the "last thing" he intended to do was apologise for the Government's undervaluation of the Royal Mail.

The Business Secretary said the Government was right to take a "cautious" approach to the sale and had it not done so it would have put taxpayers' interests at risk.

Royal Mail shares were listed at 330p each and on the first day of trading alone, Royal Mail's new shareholders benefited to the tune of £750m - money which could have gone to public funds. Today they were trading at 565p.

Vince Cable has defended the sale

Mr Cable said: "The last thing I intend to do is apologise. What I do intend to do is to refer to what the report actually said as opposed to the spinning and the froth that is being generated around me."

He said: "A more aggressive approach to pricing would have introduced significantly greater risk and the advice that we received in this respect was unambiguous.

"There was no confidence that a sufficient number of buyers would offer a significantly higher price, a failed transaction and retention of the Royal Mail in public ownership would have been a very poor outcome for the taxpayer as the NAO report confirms."

The NAO report concluded the Business department should not have relied so heavily on their City advisers, while the Public Accounts Committee chairwoman Margaret Hodge accused Mr Cable's department of being "clueless".

How the sale broke down

The Government sold £2bn of shares in October, amounting to 60% of the company, and favoured priority investors such as Standard Life, Fidelity and BlackRock hoping they would be long-term investors.

In the event, the 16 priority investors sold all or some of their holdings, making a significant profit, within the first few weeks of trading.

Amyas Morse, head of the NAO, said: "The department was very keen to achieve its objective of selling Royal Mail and was successful in getting the company listed on the FTSE 100. Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer.

"The Government retained 30% of the company. It could have retained even more and allowed the taxpayer to participate further in the rapidly increasing share price and thus limit the cost to the taxpayer."

Royal Mail employees received 10% of the business

The report does, however, say the Business Secretary was right to reject bankers' gold-plated valuations of Royal Mail of more than £9bn.

Critics of the sale have seized on the axing of 1,300 jobs and a hike in stamp prices in recent days as evidence of the folly of privatisation.

Unite national officer Brian Scott said: "This report is startling proof that the Government sold off the country's family silver on the cheap."

Some 10% of Royal Mail was handed free to employees during the privatisation.

Taxpayers were left with a 30% stake that is now worth around £1.6bn.

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Shares Up As FCA Clarifies Pension Probe

The City regulator has revealed that it will not individually review millions of pension and saving policies, prompting a share price rise for financial providers.

The Financial Conduct Authority (FCA) clarified the position in its 2014-15 business plan, released on Monday morning.

It comes after almost £2.5bn was wiped off the value of insurers on Friday.

The share price plunge followed comments by FCA director of supervision Clive Adamson to a newspaper about pensions started between the 1970s and the turn of the century.

The Daily Telegraph reported the FCA was planning an inquiry into 30 million policies sold during the period, valued at £150bn.

The chairman of the Commons Treasury Committee, Andrew Tyrie, described the fiasco as an "extraordinary blunder".

In its business plan the FCA said: "We will assess whether firms are operating historic - often termed 'legacy' or 'heritage' - products in a fair way and whether they have adopted strategies that exploit existing customers."

It added: "We have increased our focus on the market for retirement products, such as annuities, with the launch of a major competition study and work to tackle poor sales practices."

An FCA spokesperson told Sky News on Monday it would look into general business behaviour in the sector.

This would include how fairly legacy customers are treated compared with new policyholders, the quality of communications given and what exit fees are imposed.

As a result of the clarification, Britain's big insurance companies enjoyed a share price boost.

In late afternoon trades Resolution was up 1.38%, Aviva up by 1.68%, Legal & General eased but was still 0.63% up and Prudential was 0.23% higher.

Meanwhile, Sky News has learnt that the FCA will this week set out plans for an inflation-busting increase in its budget.

Sky's City Editor Mark Kleinman revealed that its annual funding requirement for 2014-15 would be just under £450m, approximately 3% above the £432.1m it said it required last year.

The increase, which is designed to cover the cost of delivering the regulator's new competition objectives, will hit the pockets of the biggest banks and insurance companies hardest.

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Royal Mail Sell-Off 'Cost Taxpayer Millions'

Taxpayers lost out due to the Government's low valuation of Royal Mail shares during its privatisation, the National Audit Office has found.

The public spending watchdog concluded ministers showed "deep caution" when pricing the shares last year.

The Government sold £2bn-worth of shares in October, amounting to 60% of the company.

The NAO points out that on the first day of trading alone, Royal Mail's new shareholders benefited to the tune of £750m - money which could have gone to the public purse.

Twelve priority investors sold all or some of their holdings within the first few weeks of trading.

Royal Mail shares are now trading more than two-thirds higher than the price at which they were sold by the Government.

Business Secretary Vince Cable has defended the sale

Amyas Morse, head of the NAO, said: "The department was very keen to achieve its objective of selling Royal Mail, and was successful in getting the company listed on the FTSE 100. Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer.

"The Government retained 30% of the company. It could have retained even more and allowed the taxpayer to participate further in the rapidly increasing share price and thus limit the cost to the taxpayer."

Business Secretary Vince Cable is the minister under scrutiny and the report does partly vindicate his approach to the sale.

It says he was right to reject bankers' gold-plated valuations of Royal Mail of more than £9bn.

Mr Cable said: "Achieving the highest price possible at any cost and whatever the risk was never the aim of the sale.

"The report concludes there was a real risk of a failed sale attached to pushing the price too high, and a failed sale would have been the worst outcome for taxpayers and jeopardised the operation of Royal Mail going forward.

Royal Mail employees received 10% of the business

"The report also comprehensively demolishes the argument that the government should have relied on the price valuations of some banks who were pitching for the contract to sell Royal Mail.

"The NAO confirms we have protected taxpayers from the risk of needing to offer ongoing support to the company as well as safeguarding the vital six-day-a-week service that customers and businesses around the country rely on."

Critics of the sale have seized on the axing of 1,300 jobs and a hike in stamp prices in recent days as evidence of the folly of privatisation.

Unite national officer Brian Scott said: "This report is startling proof that the Government sold off the country's family silver on the cheap.

"The privatisation of Royal Mail was wrong in every way. The loser is the UK taxpayer and the tragedy is that money that should be flowing into the Treasury for schools and hospitals is going into the pockets of private investors."

Some 10% of Royal Mail was handed free to employees during the privatisation.

Taxpayers were left with a 30% stake that is now worth about £1.6bn.

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Under-Fire FCA Seeks Budget Hike From City

By Mark Kleinman, City Editor

The City regulator will set out plans for an inflation-busting increase in its budget this week, just days after sparking fury from insurers over the launch of a probe into some industry practices.

Sky News has learnt the Financial Conduct Authority (FCA) will say on Monday it has calculated an annual funding requirement for 2014-15 of just under £450m, approximately 3% above the £432.1m it said it required last year.

The news will be disclosed in the FCA's business plan, which will also set out some of the priority areas for its work during the next 12 months.

The increase, which is designed to cover the cost of delivering the regulator's new competition objectives, will hit the pockets of the biggest banks and insurance companies hardest.

Sources said they would be expected to foot a disproportionate chunk of the rise, which could further inflame tensions with insurers following Friday's announcement of a review of the treatment of life insurance policy-holders who have so-called closed accounts.

The FCA briefed one newspaper about the impending review by its supervisory division, which led to billions of pounds being wiped off the value of the major insurance companies whose shares trade in London.

Some, including Legal & General, issued statements during the day complaining that a false market had been allowed to develop in their stock.

Martin Wheatley of the Financial Conduct Authority

The FCA took more than six hours to issue a clarifying statement about the terms of its review, after which many of the companies affected saw their shares rebound.

After the stock market closed, the regulator issued a further statement in the wake of an emergency board meeting which is said to have been demanded by furious Treasury officials.

"The FCA Board acknowledges the concerns of the market regarding today's press coverage of the FCA's proposed supervisory work on the fair treatment of long standing customers in life insurance. The FCA put out a statement of clarification this afternoon," it said.

"The board will conduct an investigation into the FCA's handling of the issue involving an external law firm, and will share the outcome of this work in due course."

Reports on Sunday suggested the position of the FCA chief executive, Martin Wheatley, could be threatened by the fiasco, but several leading insurers and fund managers suggested privately they were prepared to await the outcome of the investigation before passing judgement.

The FCA's 2014-15 budget of more than £440m does not take into account the cost of regulating thousands of consumer credit providers, which will transfer to the auspices of the City regulator for the first time this week.

Sky News understands fees will be frozen for thousands of the smallest firms regulated by the FCA, with the minimum charge remaining at £1,000.

The big high street banks pay in the region of £30m each in fees, while major insurers fork out between £10m and £15m to the FCA.

Under changes implemented by George Osborne, the Chancellor, the FCA has to pay to the Treasury the financial penalties it levies rather than using them to reduce industry fees to the extent that occurred in previous years.

The FCA declined to comment on Sunday.

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'Biggest Tax Cuts In Two Decades' - Osborne

Chancellor George Osborne is set to claim that UK workers and businesses will benefit from the biggest tax cuts in a generation.

Measures include the rise in the income tax personal allowance to £10,000, which comes into effect on Sunday, along with the employment allowance which cuts employers' National Insurance contributions by up to £2,000.

On Tuesday, the corporation tax rate will be cut by 1% to 21% and reforms to business rates will be introduced. The annual investment allowance for firms will be doubled to £500,000.

But the Chancellor will also highlight the introduction of a tough new welfare regime from next week "imposing more conditions on those claiming the dole".

In a speech later today, Mr Osborne will say that Sunday will be "the culmination of this week that sees the biggest reduction of business and personal tax in two decades".

However, he will say that "it's no good creating jobs - if we're also paying people to stay on welfare".

"We inherited a welfare system that didn't work. There was not enough help for those looking for a job - people were just parked on benefits.

Mr Osborne will deliver a speech in Essex later

"Frankly, there was not enough pressure to get a job - some people could just sign on and get almost as much money staying at home as going out to work.

"That's not fair to them - because they get trapped in poverty and their aspirations are squashed.

"It's certainly not fair to taxpayers like you, who get up, go out to work, pay your taxes and pay for those benefits.

"So if Tuesday is when we help businesses creating jobs; and Sunday is when we help hard-working people with jobs; next Monday is when we do more to encourage people without jobs to find them."

The welfare measures include the Help to Work scheme, which requires the long-term jobless to work for their benefits.

But shadow Treasury chief secretary Chris Leslie accused Mr Osborne of "giving with one hand, but taking away much more with the other".

He said: "Analysis of figures from the IFS (Institute of Financial Services) shows that households are already £900 a year worse off because of all tax and benefit changes since 2010."

He added: "Labour would deal with the cost-of -living crisis by freezing energy bills, cutting business rates for small firms and expanding free childcare for working parents. We also want to cut taxes for 24 million people on middle and lower incomes by introducing a lower 10p starting rate of tax."

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Wonga Chair Damelin To Quit As FCA Takes Over

By Mark Kleinman, City Editor

The co-founder of Wonga, the payday lender, is to step down as its chairman just months after handing over the reins as its chief executive.

Sky News has learnt that Errol Damelin is expected to leave Wonga later this year, although he could be persuaded to remain as a non-executive director pending the outcome of discussions with board colleagues.

Egon Zehnder International, the executive search firm, has been handed the task of identifying the new chairman, sources said on Saturday.

News of Mr Damelin's departure comes just days before responsibility for regulating short-term lenders such as Wonga passes from the Office of Fair Trading to the Financial Conduct Authority (FCA).

The co-founder's exit will be a significant moment in Wonga's history as it battles to persuade a hostile group of stakeholders that its business model is justified.

Mr Damelin, who orchestrated Wonga's sponsorships of Newcastle United and Blackpool, owns shares that would be worth hundreds of millions of pounds in the event of a sale or flotation of the company.

He is said by people close to Wonga to have been planning to step back for some time as the company makes the transition from being a data and technology-led company to a fully-regulated financial institution.

Jonty Hurwitz, the company's other co-founder, left its board last year, and also remains a major shareholder.

There are understood to have been tensions between Mr Damelin and other directors of Wonga, notably in relation to the company's future ownership.

Last autumn, Sky News revealed that Silver Lake Partners, one of the giants of the US technology investment sector, had made an approach to Wonga's management and shareholders about a takeover of the company.

Wonga is understood to have rejected the approach on the basis that it significantly undervalued the UK-based group, which has recorded rapid profit growth since it was set up six years ago.

Silver Lake is said to have been mulling a joint bid with Andreessen Horowitz, the early-stage investor in firms such as Facebook and Groupon that is regarded as one of the pioneers of Silicon Valley's investment industry.

The decision not to pursue the offer is said to have sparked disagreement among some directors and investors.

Wonga last year reported a further surge in annual net profit to £62.5m, buoyed by growth at its UK and international operations, underlining its status as one of the UK's most successful technology start-ups.

Its robust financial performance has, though, complicated Wonga's expansion drive.

Referring to the Church of England's desire to participate in the growing credit union movement, Dr Justin Welby, the Archbishop of Canterbury, said he had told Mr Damelin that he wanted to "compete [the company] out of existence".

The remarks sparked acute embarrassment for the Archbishop, however, when it emerged that the Church of England's pension fund was among the investors in one of Wonga's financial backers.

Wonga has sought to counter many of the criticisms levelled at payday lenders by pointing out that it only makes short-term loans to consumers and highlighting the fact that it only lends money to consumers who have been subjected to credit-checks. Customers can also repay loans early with no additional charge.

Last year, the payday lending sector was referred to the Competition Commission amid political anger about the activities of some short-term lenders.

Next Tuesday, the industry will come under the remit of the FCA, which will have powers to ban advertising and impose a cap on interest rates charged by lenders.

In remarks published on its website last summer, Wonga said:

"Since 2007 Wonga has responsibly lent over £2bn and we now have over a million customers.

"We've done that despite declining three quarters of all first loan applications and ensuring a principal default rate (money lent that we don't get back) of around 7%. This is comparable to other forms of short-term credit, such as credit cards.

"We work hard to lend only to the people who can pay us back, and our mainstream services for individuals and businesses are now available across three continents."

The record profits have fuelled speculation that Wonga's management and shareholders will look to float the company on New York's Nasdaq technology stock exchange, although such a move is unlikely in the near term.

The task of finding a new chairman will also not be easy given the political headwinds facing the industry.

Mr Damelin was replaced as chief executive last year by Niall Wass, formerly the chief operating officer.

Wonga declined to comment.

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Network Rail Admits Punctuality Failures

Network Rail has said it is "disappointed" at not hitting its punctuality targets amid reports the firm is expected to receive a record fine for failing to ensure services run on time.

A spokesperson for the operator of Britain's rail infrastructure told Sky News: "Passengers are not currently experiencing the very high levels of train punctuality we had promised.

"While we have been successful in making our infrastructure more reliable, it hasn't been enough to offset the difficulties caused by excessive congestion or bouts of extreme weather.

"Missing our regulatory targets for punctuality is disappointing and our focus for the coming five year period is to restore record levels of performance and spend and invest some £38bn in our railways targeting the busiest parts of our network to relieve congestion and provide more trains, more seats and quicker, greener journeys."

According to the Sunday Telegraph, Network Rail is braced to be fined around £70m from the Office of Rail Regulation after admitting it has failed to ensure that Britain's trains run on time.

The company is expected to tell regulators on Monday that only 89.9% of trains are currently reaching their destination on time, or less than 10 minutes late.

Official targets say 92.5% should arrive on time.

Robin Gisby, Network Rail's managing director of network operations, told the Sunday Telegraph that growth in demand from passengers had spiralled beyond all expectations in recent years, leaving his organisation "playing catch up".

Projects planned and funded five years ago to improve punctuality by upgrading rail infrastructure and increasing capacity had been outstripped by the rise in passengers, he added.

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