Shareholders Slam £23m Burberry Boss Pay Deal

More than half of shareholders at the annual general meeting (AGM) for luxury retailer Burberry have rejected a pay deal worth up to £23.6m for the chief executive.

Some 52% of votes cast in the non-binding ballot did not support the remuneration report for Christopher Bailey or the other executive directors of the 158-year-old retailer's plan.

Included in the payment is his annual salary of £1.1m – which has not changed since his last role – and a golden handshake worth £7.25m provided to Mr Bailey if he loses his job.

It would also include his £440,000 allowance, which Burberry said does not include allowances for clothing or a company car.

A large part of the package includes a performance-based bonus and participation in the firm's executive share plans, any awards from which will vest from 2017.

Chairman John Peace defended Mr Bailey's pay at the meeting, arguing that the pay is comparable with competitors.

Burberry defended the pay deal for CEO Christopher Bailey

He said: "We know the amount paid to Christopher is a lot of money but much of it is performance related."

Mr Bailey took on the role of chief executive alongside his role as chief creative officer last May. He joined the firm in 2001.

Burberry also defended Mr Bailey ahead of the AGM.

It said: "The board believes that Christopher's vision and leadership will keep Burberry on the forefront creatively, digitally and financially."

But the Institute of Directors (IOD) said the revolt was a "warning shot" over pay concerns.

IOD director of corporate governance Dr Roger Barker said: "Burberry shareholders have fired a warning shot with today's vote.

"They are clearly not convinced that executive pay at the company has been transparently linked to tough performance targets.

"The onus in now on the board to urgently engage  with shareholders to convince them they are responding to their understandable concerns."

Burberry also mentioned in its 2013/14 annual report that Mr Bailey's promotion would "create further value for shareholders in the next exciting stage of its evolution".

Earlier this week, the Investment Management Association gave Burberry an "amber top" rating on the proposed pay policies, hinting that its members, who account for 15% of the stock market, should carefully read into Mr Bailey's awards before making a final decision.

As well as the controversial pay deal, other issues debated at the London AGM include the directors' remuneration policy and report.

The meeting comes after shares in the designer brand rose 2% on the FTSE 100 early on Thursday, when like-for-like sales were up by 12% in the three months from June 30.

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World Cup Betting Set To Smash £1bn Barrier

Bookmakers are expecting to smash betting records for Sunday's Fifa World Cup, as punters embrace placing wagers through mobile devices.

Ladbrokes, Britain's second biggest bookie, has predicted an industry-wide taking for the tournament to break the £1bn barrier.

It said an estimated £40m would be waged with it on Sunday's final, beating the figure gambled on the 2012 Champions League final between Chelsea and Bayern Munich.

Market leader William Hill said that its prediction of seeing £200m in bets for the full tournament has already been smashed.

The total is double that achieved by it during the 2010 tournament and shows the growth in football betting among younger gamblers who have grown up on a diet of live televised matches.

It said: "On top of the predicted turnover having been obliterated, the pre-tournament forecast of 17 million bets being placed has been broken as well."

It said Germany are 4/6 to win the World Cup while Argentina is at 6/5.

Bookmakers had viewed the World Cup as an opportunity to build market share before the introduction of new taxes over the next year - expected to cost the industry about £400m.

William Hill said the best game for punters was the Brazil v Croatia match, after it enhanced the price of Brazil winning to even money.

On Wednesday, bookies said that four gamblers struck gold after laying money on Germany to beat Brazil by 7-1 in the semi-final.

Meanwhile, the biggest single bet for the market leader was in the group stages when a punter in Nevada put down $350,000 (£200,000) for Argentina to beat Iran.

In addition to a greater turnover compared to the last tournament, the biggest difference is how bets have been placed this year.

Ladbrokes said: "The most memorable thing about this tournament for the industry will be the fact that it has been the biggest event for mobile betting by some way in history.

"That's because a total of 60% of digital bets have been placed via mobile devices."

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MPs: Taxpayer Short-Changed On Royal Mail Sale

By Mark Kleinman, City Editor

The controversy over the £3.3bn privatisation of Royal Mail has erupted again as an influential group of MPs has criticised Vince Cable over his handling of the sale.

In a coruscating report, the Business, Innovation and Skills (BIS) Select Committee endorsed the view of the National Audit Office (NAO) that taxpayers had been left short-changed by Royal Mail's flotation.

The MPs said that Mr Cable and his officials had been gripped by "a fear of failure", placing undue emphasis on the risks of a strike by Royal Mail workers when pricing shares in the company at 330p last autumn - well below the projections of some investment banks.

Cable was criticised for referring to the share price increase as 'froth'

Confirming Sky News' exclusive report earlier this week the Committee said Mr Cable had been wrong to label the instant post-privatisation surge in Royal Mail's share price as "froth".

"The Secretary of State's initial use of the term referred to the 'immediate aftermath' of the flotation. This was subsequently extended to months and then possibly years," the report said.

"As a result we do not find the argument of 'froth' as a credible response to the significant increase in the share price."

The MPs added that the Government had been served poorly by its City advisers, who they argued had made insufficient effort to maximise Royal Mail's value during the privatisation process.

And they said that taxpayers would miss out on future increases in the value of potentially lucrative property assets.

Friday's report comes nine months after Royal Mail was sold in the biggest state sell-off for a generation.

It threatens to prolong the debate over the sale even as ministers contemplate the future of taxpayers' remaining 30% shareholding in the company.

The Government sold 60% of Royal Mail to outside investors last October, including a significant chunk to more than a dozen so-called priority investors who were earmarked as long-term shareholders.

These institutions, some of which sold their stakes within days of the flotation after the shares surged, included the Kuwait and Singapore sovereign wealth funds as well as the asset management arm of Lazard; ministers' independent adviser on the sale.

Shares in Royal Mail surged more than 35% on the first day of trading

The BIS Committee's recommendations include a ban on independent advisers to the Government being allowed to buy shares during future asset sales.

People close to Lazard pointed out that its fund management arm is segregated from the advisory business which worked on the sale.

The post-flotation hike in Royal Mail's share price, which included a rise of more than 35% on the first day of trading, sparked criticism that the stock had been undervalued at a cost to taxpayers of at least £750m.

Although the shares have retreated from their post-privatisation peak, they were trading on Wednesday at around 474p, roughly 45% higher than the price at which they were sold by the Government.

Mr Cable embarked on an attempt to head off criticism over the sale earlier this week when he announced that Lord Myners, the former City minister, would undertake a review of the structure of Government privatisations.

Chuka Umunna, the shadow business secretary, said Mr Cable had presided over a "first-class short-changing of the taxpayer".

"Taxpayers have been short-changed to the tune of hundreds of millions of pounds while large City investors, who were placed at the front of the queue by ministers, have been laughing all the way to the bank at the public's expense," he said.

"There are a huge number of questions which ministers need to answer on the mistakes which have been made."

A further report on Royal Mail's sale is expected to be published by the Commons Public Accounts Committee within weeks.

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Church Of England Severs Ties With Wonga

The Church of England has announced it has withdrawn its investment from controversial payday lender Wonga.

It comes a week after the firm agreed to pay £2.6m in compensation to 45,000 customers after it was found to have sent letters from two fake law firms.

In a statement the Church of England said: "The Church Commissioners no longer have any financial or any other interest in Wonga.

Wonga recently paid £2.6m customers that received fake lawyer letters

"The Church Commissioners estimate that if they had had to sell their entire venture capital holdings they might have lost £3-9m to remove the exposure to Wonga, which was worth less than £100,000.

"The Commissioners are pleased that another way forward has been agreed given their fiduciary duties to clergy pensioners and to all the parts of the Church they support financially."

The statement continued: "The Commissioners' focus remains the mission they share with the Archbishop of Canterbury - supporting the ministry and growth of the Church of England. 

Complaints about payday lenders have doubled since 2012

"The Commissioners will also continue to seek ways, consistent with their fiduciary duties, to support the Church's priority of promoting responsible credit and savings."

The declaration comes a year after the leader of the Church of England -  the Archbishop of Canterbury - vowed to "compete" Wonga out of existence, when it was first revealed the Church invested in the company.

The Most Rev Justin Welby said in July 2013 that he wanted to force Wonga out of business by expanding the Church of England's credit union plans.

The number of complaints about payday lenders has doubled since 2012. The most common complaint was from people who had been pestered for cash even though they had not taken out a loan.

In almost two thirds of cases that the Financial Ombudsman took on, the office found in favour of the consumer.

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Public Sector Strike Threatens Huge Disruption

Unions: Workers Can't Feed Their Families

Updated: 1:33am UK, Thursday 10 July 2014

Unions say they are angry at 'abysmal pay', working conditions and pensions. Here is a snapshot of each union's main complaints.

:: Unite

Members: 70,000 from various sectors, ranging from industry and manufacturing to education and agriculture.

Unite national officer for local government Fiona Farmer said: "Our members have endured four years of pay cuts in real terms and they voted overwhelmingly to strike on July 10 to drive home the message to ministers that poverty pay in local government must end.

"The depth of feeling on the pay issue is reinforced by the fact that local government unions, GMB and Unison, and members of the National Union of Teachers are all taking action on tomorrow.

"Poverty pay is widespread across local councils. Household bills continue to soar, but our members' buying power is constantly being eroded. The national minimum wage will soon overtake local government pay scales; members are choosing between heating and eating."

:: NUT

Members: 300,000 qualified teachers

Christine Blower, General Secretary National Union of Teachers, said: "Despite months in talks with Government officials, the real issues of our dispute have not been addressed. Teacher morale is at a low ebb.

"Changes to pay, pensions and a workload of 60 hours are unacceptable and unsustainable. Thousands of good, experienced teachers are leaving or considering leaving their job and a teacher shortage crisis is looming.

"The fact that teachers are prepared to take strike action is an indication of the strength of feeling and anger about the Government's imposed changes. Strike action is a last resort but, due to the intransigence of the coalition Government, it is one which we cannot avoid."

:: Unison

Members: 1.3 million workers from a range of roles within all public service areas, including people employed by public service authorities, private companies and community organisations.

Dave Prentis, Unison General Secretary, said: "Unison's local government and school members in England, Wales and Northern Ireland hold their first one day strike over an abysmal 1% pay offer. Faced with soaring food, fuel and housing costs, they have had to put up with three years of frozen pay, and now yet another below inflation offer.

"They have seen the value of their pay fall by nearly 20% since the coalition came to power and many struggle to make ends meet, to feed their families and pay their bills. Our charity is seeing more and more people asking for help and we know that many have had to resort to food banks to put food on the table.

"This is a national disgrace that these workers, who keep vital services running for their communities should be paid so badly, that they can't pay all their bills. And the lowest paid are still waiting for £250 promised by the Chancellor for two years' running. They have now voted to take strike action; that is not something they do lightly. But they are saying enough is enough. Work should pay enough for people to be able to live on."

:: GMB

Members: 617,000 workers, including school meal servers, street cleaners, binmen and carers.

GMB National Secretary, Brian Strutton, said: "We have tried sensible discussions, we've sought to negotiate reasonably, we've said we are willing to accept ACAS arbitration rather than go on strike - but to everything we've tried the employers have said 'no'. So we have no choice.

"GMB members serving school meals, cleaning streets, emptying bins, looking after the elderly, helping children in classrooms and in all the other vital roles serving our communities are fed up with being ignored and undervalued.

"Their pay has gone up only 1% since 2010 and in October even the national minimum wage will overtake local authority pay scales. Their case is reasonable, the employers won't listen and don't care, no wonder they have turned to strike action as the only way of making their voices heard."

:: PCS

Members: 270,000 civil servants.

A PCS spokesman said: "We're striking because, as well as tens of thousands of job being cut from the civil service since 2010 and the ongoing threat of more of the civil service being privatised, wages have been frozen and capped to such an extent that by next year incomes for many civil servants will be 20% lower than they would have been if they'd kept pace with increases in the cost of living. That is a huge hit in salary to take.

"There are other endemic issues, such as unequal pay. For example, staff in the Passport Office - in the eye of the storm at the moment - can be paid £3,000 less than their colleagues doing similar work elsewhere in the Home Office.

"Across the civil service, women are paid 10% less than men, 14% less for part-time workers. We've tried to negotiate but the Government refuses. Faced with this, it's inevitable that people will want to take industrial action."

:: RMT

Members: 80,000, of whom 361 TfL (Transport for London) backroom staff will be on strike.

RMT's Acting general secretary Mick Cash said: "While the political class, the bankers and the idle rich have all got their snouts in the trough, of course we are right to stand up and fight for the millions of workers told to take a hit despite the fact that they had no part in creating the financial crisis.

"We would be foolish not to maximise the unity of the trade union movement in the face of an aggressive, anti-union government that is mired in its own cesspit of scandal. We will take no lectures in morality from them.

"The front line of defence against cuts and austerity is the organised working class and that is why the Tories and big business want to tighten the legal noose around our necks. They will have a fight on their hands."

:: FBU

Members: 44,000 firefighters

Matt Wrack, FBU general secretary, said: "The government must realise that firefighters cannot accept proposals that would have such devastating consequences for their futures, their families' futures  - and the future of the fire and rescue service itself.

"We have tried every route available to us to make the government see sense over their attacks.

"Three years of negotiations have come to nothing because the government is simply unwilling to compromise or even listen to reason despite a huge amount of evidence showing their planned scheme is unworkable."

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PM Plots Anti-Strike Law Amid National Walkout

Unions: Workers Can't Feed Their Families

Updated: 1:33am UK, Thursday 10 July 2014

Unions say they are angry at 'abysmal pay', working conditions and pensions. Here is a snapshot of each union's main complaints.

:: Unite

Members: 70,000 from various sectors, ranging from industry and manufacturing to education and agriculture.

Unite national officer for local government Fiona Farmer said: "Our members have endured four years of pay cuts in real terms and they voted overwhelmingly to strike on July 10 to drive home the message to ministers that poverty pay in local government must end.

"The depth of feeling on the pay issue is reinforced by the fact that local government unions, GMB and Unison, and members of the National Union of Teachers are all taking action on tomorrow.

"Poverty pay is widespread across local councils. Household bills continue to soar, but our members' buying power is constantly being eroded. The national minimum wage will soon overtake local government pay scales; members are choosing between heating and eating."

:: NUT

Members: 300,000 qualified teachers

Christine Blower, General Secretary National Union of Teachers, said: "Despite months in talks with Government officials, the real issues of our dispute have not been addressed. Teacher morale is at a low ebb.

"Changes to pay, pensions and a workload of 60 hours are unacceptable and unsustainable. Thousands of good, experienced teachers are leaving or considering leaving their job and a teacher shortage crisis is looming.

"The fact that teachers are prepared to take strike action is an indication of the strength of feeling and anger about the Government's imposed changes. Strike action is a last resort but, due to the intransigence of the coalition Government, it is one which we cannot avoid."

:: Unison

Members: 1.3 million workers from a range of roles within all public service areas, including people employed by public service authorities, private companies and community organisations.

Dave Prentis, Unison General Secretary, said: "Unison's local government and school members in England, Wales and Northern Ireland hold their first one day strike over an abysmal 1% pay offer. Faced with soaring food, fuel and housing costs, they have had to put up with three years of frozen pay, and now yet another below inflation offer.

"They have seen the value of their pay fall by nearly 20% since the coalition came to power and many struggle to make ends meet, to feed their families and pay their bills. Our charity is seeing more and more people asking for help and we know that many have had to resort to food banks to put food on the table.

"This is a national disgrace that these workers, who keep vital services running for their communities should be paid so badly, that they can't pay all their bills. And the lowest paid are still waiting for £250 promised by the Chancellor for two years' running. They have now voted to take strike action; that is not something they do lightly. But they are saying enough is enough. Work should pay enough for people to be able to live on."

:: GMB

Members: 617,000 workers, including school meal servers, street cleaners, binmen and carers.

GMB National Secretary, Brian Strutton, said: "We have tried sensible discussions, we've sought to negotiate reasonably, we've said we are willing to accept ACAS arbitration rather than go on strike - but to everything we've tried the employers have said 'no'. So we have no choice.

"GMB members serving school meals, cleaning streets, emptying bins, looking after the elderly, helping children in classrooms and in all the other vital roles serving our communities are fed up with being ignored and undervalued.

"Their pay has gone up only 1% since 2010 and in October even the national minimum wage will overtake local authority pay scales. Their case is reasonable, the employers won't listen and don't care, no wonder they have turned to strike action as the only way of making their voices heard."

:: PCS

Members: 270,000 civil servants.

A PCS spokesman said: "We're striking because, as well as tens of thousands of job being cut from the civil service since 2010 and the ongoing threat of more of the civil service being privatised, wages have been frozen and capped to such an extent that by next year incomes for many civil servants will be 20% lower than they would have been if they'd kept pace with increases in the cost of living. That is a huge hit in salary to take.

"There are other endemic issues, such as unequal pay. For example, staff in the Passport Office - in the eye of the storm at the moment - can be paid £3,000 less than their colleagues doing similar work elsewhere in the Home Office.

"Across the civil service, women are paid 10% less than men, 14% less for part-time workers. We've tried to negotiate but the Government refuses. Faced with this, it's inevitable that people will want to take industrial action."

:: RMT

Members: 80,000, of whom 361 TfL (Transport for London) backroom staff will be on strike.

RMT's Acting general secretary Mick Cash said: "While the political class, the bankers and the idle rich have all got their snouts in the trough, of course we are right to stand up and fight for the millions of workers told to take a hit despite the fact that they had no part in creating the financial crisis.

"We would be foolish not to maximise the unity of the trade union movement in the face of an aggressive, anti-union government that is mired in its own cesspit of scandal. We will take no lectures in morality from them.

"The front line of defence against cuts and austerity is the organised working class and that is why the Tories and big business want to tighten the legal noose around our necks. They will have a fight on their hands."

:: FBU

Members: 44,000 firefighters

Matt Wrack, FBU general secretary, said: "The government must realise that firefighters cannot accept proposals that would have such devastating consequences for their futures, their families' futures  - and the future of the fire and rescue service itself.

"We have tried every route available to us to make the government see sense over their attacks.

"Three years of negotiations have come to nothing because the government is simply unwilling to compromise or even listen to reason despite a huge amount of evidence showing their planned scheme is unworkable."

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Moulton In Talks Over Unipart Rescue Deal

By Mark Kleinman, City Editor

The City financier Jon Moulton is in talks to rescue Unipart Automotive, Britain's biggest independent car parts supplier, in a deal that could save more than 1,500 jobs.

Sky News can reveal Better Capital, the investment firm headed by Mr Moulton, is competing against Euro Car Parts, another major company in the sector, about a transaction which could take place this week.

A third bidder is also understood to be in talks about a deal, without which Unipart Automotive faces the prospect of administration.

Sky News disclosed earlier on Tuesday that Unipart Automotive's owners had lined up KPMG by filing a notice of intention to appoint the professional services firm as administrator after a period of poor trading.

Unipart Automotive employs roughly 1,600 people, the vast majority of whose jobs would be saved if, as expected, KPMG reaches a deal to sell the company to one of the three interested parties.

KPMG has been tipped as administators if necessary

Mr Moulton's interest follows his attempt to take control of MG Rover when the British car maker was put up for sale by BMW nearly 15 years ago.

Unipart Automotive, which is part-owned by Unipart Group and controlled by H2 Equity Partners, a Dutch private equity firm, has a network of 200 branches across the UK. Unipart Group sold a majority stake in 2011.

Mark Dixon, Unipart Automotive chief executive, said in response to Sky News' earlier report: "In response to current press speculation I can confirm that Unipart Automotive Limited are currently in detailed discussions with three parties in respect of the sale of the business.

"We are very hopeful of concluding this transaction in the next 36 hours.

"A notice of intention to appoint administrators has been filed, but merely with the intention of protecting Unipart Automotive while we complete this sale process."

According to the company's website, it is the largest independent supplier of car parts, workshop consumables and garage equipment to the after-market.

Unipart Automotive completed a refinancing in May which included new injections of capital from its shareholders in an attempt to buy the company breathing space.

KPMG declined to comment.

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Goodwin Helps Rack Up £400,000 RBS Legal Bill

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) has spent hundreds of thousands of pounds on law firms acting for Fred Goodwin and other former directors during the early stages of legal actions brought by thousands of its shareholders.

Sky News has learnt that the bank has already spent well over £400,000 on separate legal advisers to represent a quartet of RBS's ex-bosses including Mr Goodwin and Sir Tom McKillop, its former chairman.

The bill is being footed by the bank – which effectively means that RBS is being subsidised by taxpayers to fight the case of the bosses who led it into the biggest British state bail-out in history.

The £400,000-plus figure emerged during a case management conference held as part of pre-trial preparations last week, according to people familiar with the situation.

It is common practice for companies to pay the legal fees for current and former directors in legal cases of this nature, although the nature and scale of RBS's rescue may reignite public anger over the issue.

Legal sources say that the £400,000-plus spent representing Mr Goodwin and other former directors to date will look modest in the context of their eventual bill if a trial runs – as is predicted – for many months.

A trial date has yet to be set although insiders say that it could get underway next year.

RBS has previously estimated that it could spend as much as £42m in total on legal fees, a figure which includes separate representation for the director defendants.

Mr Goodwin and Sir Tom stepped down in the autumn of 2008 as Alastair Darling, the then Chancellor, insisted on their resignations as a condition of the bank's rescue.

Guy Whittaker, the former finance director, and Johnny Cameron, who ran RBS's investment banking arm, are also defendants in a number of the shareholder actions.

There are four main investor groups bringing claims against RBS, in which they allege that the bank misled them about the state of its finances when it raised £12bn from them in a rights issue in the spring of 2008.

Months later, RBS received an emergency £45.5bn capital injection from the Government as it teetered on the brink of outright collapse.

The claimants include the RBoS Shareholder Action Group, which comprises 38,600 claimants, including funds owned by fellow state-backed lender Lloyds Banking Group; another group which includes Aviva and Standard Life, the insurance companies; and a third which is acting for dozens of institutional investors.

RBS itself is being represented in the series of shareholder lawsuits by Herbert Smith Freehills, one of the City's leading firms.

In a statement, RBS said: "While RBS and its former directors made some business decisions that have been criticised, this does not mean that they misled investors or acted illegally.

"We believe we have strong defences to the claims that are being brought against the bank and that is why we intend to defend these vigorously and to protect the interests of our shareholders including UK taxpayers."

It declined to comment separately on the cost of legal advice for Mr Goodwin and other former directors.

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Network Rail Punctuality Fine To Pay For Wifi

Network Rail (NR) has been ordered to return £53.1m to the Treasury after it "failed to deliver" on major routes.

The Office of Rail Regulation (ORR) said that during 2013/14  long-distance and major commuter line punctuality was 86.9%, "significantly short" of the average target of 92%.

The fine will be used to part-fund a pledge to spend up to £90m improving free wifi access on routes across England and Wales.

Commuters on routes into London from Bedford, Brighton, Kent and Portsmouth are expected to benefit from connections at least 10 times faster than those currently available, along with those using services into Leeds, Sheffield and Manchester.

Rail unions criticised the "crazy money merry-go-round" that saw NR funds taken back after failing to meet planned improvements in performance in the five years to March 2014.

TSSA leader Manuel Cortes said: "All the politicians are doing is taking taxpayers' money from Network Rail and recycling it through the Treasury - this time to spend on one of their pet projects, faster wifi that should be paid for by the private rail companies.

"Once again, passengers lose out while private rail firms are laughing all the way to the bank."

ORR chief executive Richard Price said the money was ordered to be returned as NR had been specifically funded to improve train punctuality.

"But it did not deliver its commitments for passengers who travel on long-distance and LSE services," he added.

London and South East England (LSE) passenger services in 2013-2014 saw punctuality levels of 89.6% against a target figure of 93%.

Between 2009 and 2014, the ORR said around 73,100 additional late trains over and above funded obligations, while for the LSE area there were some 265,500 additional late trains.

However, the ORR said NR did achieve infrastructure targets, bringing in rail enhancement plans on time and within budget.

NR chief executive Mark Carne, who joined in February, blamed increased passenger numbers, in part, for the punctuality problems. 

"We accept that we have fallen short of the regulatory targets for train punctuality and that this is, in part, down to our failure to reduce infrastructure faults quickly enough," he said.

"At the same time, the sharp increase in passenger demand has led us to run more trains at peak times, even when we know this will lead to a more congested railway and punctuality targets may suffer."

There were more than 1.5bn passenger journeys on the network in 2013-2014, up from around 1.2bn in 2008-2009. 

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M&S To Dress Up Sales Numbers Amid Web Woes

By Mark Kleinman, City Editor

Marks & Spencer (M&S) will signal renewed confidence in a turnaround of its key womenswear business on Tuesday, even as overall sales remain depressed amid problems with its revamped website.

Sky News understands that Frances Russell, the retailer's director for womenswear, informed colleagues last week that the chain had hit sales targets for the three months to the end of June.

Margins are also understood to have improved during the quarter, with fewer promotions against the same period last year, sources said.

An email circulated to M&S managers by Ms Russell did not contain precise sales data, which would have been deemed price-sensitive information, according to one rival who was briefed on its content.

However, her reference to the division - the most closely-watched at M&S by analysts and shareholders - having met targets will offer a glimmer of hope to Marc Bolland, M&S's chief executive.

His ambition of turning the company into a leading international multichannel fashion retailer has been beset by difficulties since he joined from the supermarket chain Wm Morrison in 2010.

A key new distribution centre at Castle Donington has been hit by technical problems, while issues with M&S's new website are understood to be costing it tens of millions of pounds of lost revenue.

Meanwhile, flagship clothing collections have received a mixed response, with some popular products ordered in insufficient quantities and others received poorly by M&S customers.

Ms Russell's email referred to the impact of the difficulties caused by the new internet operation, hinting at tensions within M&S as executives fight to halt flagging sales.

The company's general merchandise division, which comprises clothing and homewares, has reported 11 consecutive quarters of falling like-for-like sales, and analysts predict a 1.5% decline for the first three months.

Tuesday's trading update will come hours before M&S holds its annual meeting - a fixture of the British retail industry calendar - at Wembley Stadium.

The company has not previously tended to disclose its clothing performance as part of the general merchandise division, but did so at its fourth-quarter trading update in April.

The company said then that like-for-like clothing sales had risen by 0.6% but that overall GM sales were down by 0.6%.

Executives are understood to believe that it would now be inconsistent not to repeat that breakdown of figures, although M&S is unlikely to spell out womenswear's performance in such granular detail.

Last week, the company outlined changes to its executive team's responsibilities.

Laura Wade-Gery, who oversees the web operation, was promoted to run the UK store operation, which prompted surprise among analysts given the problems with the relaunched website.

M&S, which has continued to see strong growth in its food business, declined to comment on Ms Russell's email.

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Tory Donor Ross In Frame To Chair Ofsted

By Mark Kleinman, City Editor

David Ross, the co-founder of the Carphone Warehouse high street chain, is a leading candidate to become the next chair of Ofsted, the education watchdog.

Sky News can exclusively reveal that Mr Ross, who has donated hundreds of thousands of pounds to the Conservative Party, is among a number of names being considered for the role by Michael Gove, the Education Secretary.

If Mr Ross is offered the post, it could ignite a political row with Labour at a time when Ofsted's handling of the 'Trojan Horse' schools extremism row has sparked furious divisions within the Government.

It could also spark opposition from within the Coalition - David Laws, a Liberal Democrat, is Mr Gove's deputy at the Department for Education (DfE).

Mr Gove decided in February not to renew the term of Baroness Sally Morgan, the current Ofsted chair and a Labour Peer, triggering claims - denied by Mr Gove - that the leadership of one of Britain's most important quangos was being damaged by political interference.

More recently, the education watchdog has been ordered to step up school inspections in the wake of the Trojan horse affair in Birmingham.

An investigation into some schools in the city saw five of them downgraded to inadequate and placed in special measures amid claims of takeovers by hardline Muslims.

Mr Ross is principally known for his involvement in the creation of Carphone Warehouse, which he set up during the 1980s with Sir Charles Dunstone.

In recent years, he has also become a prominent figure in the education sector, sitting on the council of Nottingham University and founding a series of academy schools through the David Ross Education Trust.

Friends of Mr Ross describe him as being "incredibly passionate" about education.

Academic results at the schools in his network were improving significantly since he began working with them, according to a spokesman.

Havelock Academy in Grimsby was Mr Ross's first academy, opening in 2007. His network now stands at 25 academies, educating 8,500 children at primary and secondaries, with a special school and a grammar school also part of the group.

Mr Ross's status as a donor to the Conservatives is nonetheless likely to be contentious if he does land the Ofsted role.

The precise sums given by Mr Ross are unclear but they are understood to amount to several hundred thousand pounds over the last decade.

A source close to the businessman said he had not given a "substantial" sum for some years.

Asked in February about whether Theodore Agnew, a financier who has also given substantial sums to the Tories, was a contender for the role, Mr Gove said that no candidate "should be ruled out on the grounds of political allegiance".

It is unclear whether Mr Agnew is being considered for the Ofsted chairmanship alongside Mr Ross, or who the other remaining candidates are.

The Carphone Warehouse co-founder, whose fortune is estimated at £892m by The Sunday Times Rich List, also made headlines in 2009 when he was cleared by City regulators of any impropriety over the mortgaging of some of his shares in the retailer.

DfE officials are being assisted in the selection process by GatenbySanderson, a recruitment firm.

A spokesman for Mr Ross declined to comment. The DfE also refused to comment.

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CBI's Rake Bows Out Of Race For Barclays Job

By Mark Kleinman, City Editor

The CBI president Sir Mike Rake has bowed out of the race to become the next chairman of Barclays, even as the bank attempts to contain the fall-out from a string of new regulatory probes.

Sky News has learnt that Sir Mike told Sir John Sunderland, the non-executive director leading the search, in the last couple of weeks that he no longer wished to be considered as a potential successor to Sir David Walker.

Headhunting sources said that Sir Mike, who also chairs BT Group, had concluded that he would be unable to commit to other roles if he became chairman of Barclays.

His decision makes it likely that Barclays will opt for an external appointment to replace Sir David at a critical point of the turnaround strategy being implemented by Antony Jenkins, the bank's chief executive.

In May, Mr Jenkins outlined plans to cut around 20,000 jobs by the end of 2016 in an attempt to improve the performance of its investment bank and deploy capital where it can generate more productive returns.

Since then, however, his efforts have continued to be hampered by new regulatory investigations.

Last month, the New York attorney-general Eric Schneiderman accused Barclays of misleading investors in its 'dark pool' - a private stock-trading platform - and issued a civil lawsuit against the bank.

Just weeks earlier, Barclays was fined £26m by the City watchdog after one of its traders was found to have sought to manipulate the daily gold price-fix.

The bank also faces months of uncertainty about the outcome of a Serious Fraud Office inquiry into fees paid to Middle Eastern investors during the financial crisis.

The ongoing regulatory woes make the appointment of a credible figurehead as Barclays' chairman especially important.

Sir David joined just under two years ago and vowed to assist with an overhaul of culture and standards at the bank.

He insisted, however, that he would only be prepared to stay for three years, and in February Spencer Stuart, a search firm, was appointed to identify his successor.

One of Britain's most prominent businessmen, Sir Mike has been on the board of Barclays since January 2008, becoming senior independent director in 2011 and then deputy chairman in July 2012.

His decision to withdraw from the search for a new chairman has echoes of the summer of 2012, when Barclays was reeling from the Libor rate-rigging scandal that triggered a £290m fine and the departure of chairman Marcus Agius and chief executive Bob Diamond.

Sir Mike also pulled out of the race then, with Sir David Walker, another City grandee, eventually getting the nod.

The fact that Sir John had assumed oversight of the recruitment process for a new chairman had been interpreted in the City as a signal that Sir Mike was keen on the role; searches for public company chairs are typically overseen by the senior independent director.

Institutional shareholders in Barclays are understood to have expressed mixed views about Sir Mike's candidacy.

Some are understood to have been unhappy at the prospect of him replacing Sir David because of his vocal support in the past for Mr Diamond's leadership of the bank.

His six-and-a-half years on the Barclays board had also led a number of investors to demand a fresh pair of eyes to replace Sir David, particularly in the wake of a new row over pay at this year's annual meeting.

Just over one-third of shareholders decided not to support Barclays' remuneration report, reflecting anger at the payment of a £2.4bn bonus pool despite a slump in annual profits.

Sir Mike's withdrawal from the search for a new chairman leaves Tim Breedon, the former boss of Legal & General, as one of the few potential non-executives who could step up to replace Sir David.

It is unclear which external candidates are under consideration for the chairmanship.

Barclays declined to comment on Saturday, while Sir Mike could not be reached.

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Tory Donor Ross In Frame To Chair Ofsted

By Mark Kleinman, City Editor

David Ross, the co-founder of the Carphone Warehouse high street chain, is a leading candidate to become the next chair of Ofsted, the education watchdog.

Sky News can exclusively reveal that Mr Ross, who has donated hundreds of thousands of pounds to the Conservative Party, is among a number of names being considered for the role by Michael Gove, the Education Secretary.

If Mr Ross is offered the post, it could ignite a political row with Labour at a time when Ofsted's handling of the 'Trojan Horse' schools extremism row has sparked furious divisions within the Government.

It could also spark opposition from within the Coalition - David Laws, a Liberal Democrat, is Mr Gove's deputy at the Department for Education (DfE).

Mr Gove decided in February not to renew the term of Baroness Sally Morgan, the current Ofsted chair and a Labour Peer, triggering claims - denied by Mr Gove - that the leadership of one of Britain's most important quangos was being damaged by political interference.

More recently, the education watchdog has been ordered to step up school inspections in the wake of the Trojan horse affair in Birmingham.

An investigation into some schools in the city saw five of them downgraded to inadequate and placed in special measures amid claims of takeovers by hardline Muslims.

Mr Ross is principally known for his involvement in the creation of Carphone Warehouse, which he set up during the 1980s with Sir Charles Dunstone.

In recent years, he has also become a prominent figure in the education sector, sitting on the council of Nottingham University and founding a series of academy schools through the David Ross Education Trust.

Friends of Mr Ross describe him as being "incredibly passionate" about education.

Academic results at the schools in his network were improving significantly since he began working with them, according to a spokesman.

Havelock Academy in Grimsby was Mr Ross's first academy, opening in 2007. His network now stands at 25 academies, educating 8,500 children at primary and secondaries, with a special school and a grammar school also part of the group.

Mr Ross's status as a donor to the Conservatives is nonetheless likely to be contentious if he does land the Ofsted role.

The precise sums given by Mr Ross are unclear but they are understood to amount to several hundred thousand pounds over the last decade.

A source close to the businessman said he had not given a "substantial" sum for some years.

Asked in February about whether Theodore Agnew, a financier who has also given substantial sums to the Tories, was a contender for the role, Mr Gove said that no candidate "should be ruled out on the grounds of political allegiance".

It is unclear whether Mr Agnew is being considered for the Ofsted chairmanship alongside Mr Ross, or who the other remaining candidates are.

The Carphone Warehouse co-founder, whose fortune is estimated at £892m by The Sunday Times Rich List, also made headlines in 2009 when he was cleared by City regulators of any impropriety over the mortgaging of some of his shares in the retailer.

DfE officials are being assisted in the selection process by GatenbySanderson, a recruitment firm.

A spokesman for Mr Ross declined to comment. The DfE also refused to comment.

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CBI's Rake Bows Out Of Race For Barclays Job

By Mark Kleinman, City Editor

The CBI president Sir Mike Rake has bowed out of the race to become the next chairman of Barclays, even as the bank attempts to contain the fall-out from a string of new regulatory probes.

Sky News has learnt that Sir Mike told Sir John Sunderland, the non-executive director leading the search, in the last couple of weeks that he no longer wished to be considered as a potential successor to Sir David Walker.

Headhunting sources said that Sir Mike, who also chairs BT Group, had concluded that he would be unable to commit to other roles if he became chairman of Barclays.

His decision makes it likely that Barclays will opt for an external appointment to replace Sir David at a critical point of the turnaround strategy being implemented by Antony Jenkins, the bank's chief executive.

In May, Mr Jenkins outlined plans to cut around 20,000 jobs by the end of 2016 in an attempt to improve the performance of its investment bank and deploy capital where it can generate more productive returns.

Since then, however, his efforts have continued to be hampered by new regulatory investigations.

Last month, the New York attorney-general Eric Schneiderman accused Barclays of misleading investors in its 'dark pool' - a private stock-trading platform - and issued a civil lawsuit against the bank.

Just weeks earlier, Barclays was fined £26m by the City watchdog after one of its traders was found to have sought to manipulate the daily gold price-fix.

The bank also faces months of uncertainty about the outcome of a Serious Fraud Office inquiry into fees paid to Middle Eastern investors during the financial crisis.

The ongoing regulatory woes make the appointment of a credible figurehead as Barclays' chairman especially important.

Sir David joined just under two years ago and vowed to assist with an overhaul of culture and standards at the bank.

He insisted, however, that he would only be prepared to stay for three years, and in February Spencer Stuart, a search firm, was appointed to identify his successor.

One of Britain's most prominent businessmen, Sir Mike has been on the board of Barclays since January 2008, becoming senior independent director in 2011 and then deputy chairman in July 2012.

His decision to withdraw from the search for a new chairman has echoes of the summer of 2012, when Barclays was reeling from the Libor rate-rigging scandal that triggered a £290m fine and the departure of chairman Marcus Agius and chief executive Bob Diamond.

Sir Mike also pulled out of the race then, with Sir David Walker, another City grandee, eventually getting the nod.

The fact that Sir John had assumed oversight of the recruitment process for a new chairman had been interpreted in the City as a signal that Sir Mike was keen on the role; searches for public company chairs are typically overseen by the senior independent director.

Institutional shareholders in Barclays are understood to have expressed mixed views about Sir Mike's candidacy.

Some are understood to have been unhappy at the prospect of him replacing Sir David because of his vocal support in the past for Mr Diamond's leadership of the bank.

His six-and-a-half years on the Barclays board had also led a number of investors to demand a fresh pair of eyes to replace Sir David, particularly in the wake of a new row over pay at this year's annual meeting.

Just over one-third of shareholders decided not to support Barclays' remuneration report, reflecting anger at the payment of a £2.4bn bonus pool despite a slump in annual profits.

Sir Mike's withdrawal from the search for a new chairman leaves Tim Breedon, the former boss of Legal & General, as one of the few potential non-executives who could step up to replace Sir David.

It is unclear which external candidates are under consideration for the chairmanship.

Barclays declined to comment on Saturday, while Sir Mike could not be reached.

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