Pension Firms 'Lose Billions' After Speech

Mixed Reaction To Budget Measures

Updated: 3:22pm UK, Wednesday 19 March 2014

Reaction to the Budget has been split, with industry praising measures to cut energy costs and unions criticising an "obsession" with austerity.

Paul Kenny, general secretary of the GMB, said: "This Budget reeks of the stuck-up complacency of the well-heeled elite.

"The Budget is doing very little to get the 912,000 unemployed aged 16-24 into proper jobs. As some 246,000 have been out of work for over a year, there is a grave danger of seeing a lost generation."

Public and Commercial Services union general secretary Mark Serwotka said: "This Government's obsession with austerity is causing misery for millions of people while the over-hyped economic recovery benefits only a wealthy few."

Dave Prentis, leader of Unison, said: "The Chancellor has run out of time and ideas. His claims that people are feeling the benefits of his austerity agenda are wearing thin."

Len McCluskey, Unite general secretary, said: "This was a blue rinse budget for the stockbroker belt who will celebrate their tax reductions and help with their savings."

TUC general secretary Frances O'Grady said: "There was nothing for the young who continue to face the worst job market in decades and unaffordable housing."

Matthew Reed, chief executive of The Children's Society, said: "Raising the personal allowance and lifting three million people out of taxation may appear a positive move.

"For hundreds of thousands of working families that depend on housing benefit to top up their meagre earnings, this will gain them very little."

Friends of the Earth campaigner David Powell said: "Merely weeks after promising action on flooding and global warming, the best the Chancellor can manage is a U-turn on his own reckless flood defence cuts, and caving in to big business lobbying on pollution tax."

British Chambers of Commerce director general John Longworth said: "Business wanted a Budget that was disciplined, focused, and geared toward the creation of wealth and jobs - and that's what the Chancellor has delivered.

"By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain's growing economic recovery into one that is felt in homes and on high streets."

Terry Scuoler, chief executive of manufacturers' organisation EEF, said: "The Chancellor said this would be a Budget for manufacturers and he has delivered on his word.

"The Government clearly recognises the need to make the competitiveness of the UK a priority. We now have some of the building blocks in place which will help re-balance the economy."

John Allan, chairman of the Federation of Small Businesses, said: "The Chancellor delivered a Budget to maintain positive momentum in the economy, while incorporating fiscal prudence."

Simon Walker, director general of the Institute of Directors, said: "This is a responsible and imaginative Budget which should promote growth, exports and investment. It will be widely welcomed across the business community."

CBI director general John Cridland said: "This was a make or break Budget coming at a critical time in the recovery and the Chancellor has focussed his firepower on areas that have the potential to lock in growth."

Local Government Association chairman Sir Merrick Cockell said: "Much more can be done to build new homes, create jobs and stimulate the economy if local government's hands were untied by the Chancellor to drive this through at a local level."

Dot Gibson, National Pensioners Convention general secretary, said: "Pensioners will be concerned that benefits such as the winter fuel allowance, cold weather payments and the Christmas bonus have all been placed into the welfare cap, which could lead to cuts in the future, at a time when fuel bills in particular are continuing to rise."

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Budget 2014: The Key Points You Need To Know

The Chancellor George Osborne has delivered his fifth budget. Here are the key points.

Savings

:: Tax-free ISAs to be boosted to £15,000 per year from July. Junior ISAs up to £4,000 a year.

:: Stocks and shares ISAs can be tranferred to new single ISA scheme.

:: Premium Bonds cap lifted from £30,000 to £40,000 in June, and to £50,000 next year.

:: 10p rate of tax for savers to be abolished.

:: Zero tax band to cover £5,000 of savings.

Reliefs

:: Alcohol escalator to be scrapped for all alcohol duties, instead a rise with inflation.

:: Scottish whisky duty to be frozen as it is "a huge British success story".

:: Cut of 1p in duty per pint of beer.

:: Export finance lending interest rate to be cut by a third and lending doubled to £3bn.

:: From 2015, all long haul air passenger flights carry same, lower, band B tax rate.

:: Right to Build scheme for builders of their own homes including £150m of finance to support it.

:: New £200m fund for councils "to bid for" to fix potholes across Britain.

:: Additional £140m help for flood damage.

:: September's fuel duty rise will not be brought in.

Taxes

:: Duty on fixed-odds betting terminals to rise to 25%.

:: Horse race betting levy to be extended to bookmakers based offshore.

:: Bingo duty will be halved to 10% "to protect jobs and protect communities".

:: Tobacco duty to remain at 2% above inflation and escalator will not be stopped.

:: Increased disclosed tax avoidance schemes scrutiny for the wealthy.

:: City fines over Libor rate-rigging to continue going to military charities and emergency service charities.

:: From midnight anyone buying home over £500,000 through corporate entity to pay 15% stamp duty to "avoid abuse".

:: "We will expand the tax on residential properties worth over £2m to those worth more than £500,000."

:: Private jets, previously not taxed, will see tax levied on flights.

Income Tax

:: Personal tax allowance rises to £10,500 next year, giving average saving of £800.

:: 40p tax rate threshold to rise from £41,450 to £41,865 from next month and then up by further 1% to £42,285 next year.

:: Transferable tax allowance for married couples rising to £1,050.

Pensions

:: All retirees on defined contribution pensions to be offered free, impartial, face-to-face advice.

:: No need for pensioners to buy annuities if they do not wish to.

:: Removal of all remaining tax restrictions on how pensioners have access to their pension pots.

:: Income requirement for flexible draw-down from £20,000 to £12,000, raised cap draw-down limit from 120% to 150%.

:: Lump sum small pot level lifted five-fold to £10,000.

:: Almost doubling total pension savings as a lump sum to £30,000.

:: £20m  to be spent in next two years working with consumer groups over pension advice.

:: New Pensioner Bond paying market leading rates, issued by National Savings and Investments, open to everyone aged 65 or over. Available from January next year.

 

Spending and Welfare

:: Foreign aid to be 0.7% of national income.

:: Public sector spending reduction to reach £1bn by 2015-16.

:: A permanent cap on welfare, excluding state pension, set at £119bn in 2015-16, rising in line with forecast inflation to £127bn in 2018-19.

Growth

:: Independent OBR growth forecast revised upwards to 2.7%, up from 2.4% in Autumn Statement.

:: Growth next year is also revised up to 2.3%, then 2.6% in 2016 and 2017, with growth expected to return to long-term trend of 2.5% in 2018.

:: 1.5 million new jobs forecast in next five years.

Borrowing

:: Deficit this year of 6.6% reduced to 5.5%  next year, then expected to be 4.2%, 2.4% and finally 0.8% in 2017-18. Following year forecast surplus of 0.2%.

:: Expect to borrow £108bn this year, £12bn less than forecast last year. No borrowing from 2018-19.

:: OBR forecasts public debt to be 74.5% of GDP this year; 77.3% next year; peaking at 78.7% in 2015-16 - lower than the 80% previously forecast - before falling to 78.3% in 2016-17, then falling to 76.5% and then 74.2% in 2018-19.

:: The new £1 coin to thwart forgery and "In honour of our Queen".

Jobs

:: Support for more than 100,000 new apprenticeships.

:: New Alan Turing Institute for computing "big data" to boost Britain's IT prowess.

Business

:: New allowance for ultra high pressure, high temperature oil field for North Sea oil and gas.

:: Tax relief of up to 25% for touring theatrical productions.

:: VAT relief on fuel for air ambulances and inshore rescue boat services across Britain, and a new air ambulance for London.

:: Accept recommendation to move collection of Class 2 NICs into self-assessment, abolishing for 5 million people "this wholly unnecessary bureaucracy".

:: Corporation tax - high street stores will get £1,000 off their rates, and businesses the £2,000 Employment Allowance.

:: From next year, corporation tax to drop from 21% to 20% and under-21s taken out of the jobs tax.

:: Business rates discounts and enhanced capital allowances will be extended for another three years.

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Budget 2014: New £1 Coin Is Blast From The Past

By Jon Craig, Chief Political Correspondent

George Osborne will use his Budget to announce a major change for the nation's pockets, with a new pound coin to be introduced in 2017.

The new coin, aimed at stamping out forgeries and counterfeits, will replace the £1 coin introduced more than 30 years ago and resemble the pre-decimalisation 12-sided 'threepenny bit'.

According to the Treasury, the new coin will be the most secure in the world.

It is backed by organisations including the Automatic Vending Association, which said the cost for adapting existing machines would be "minimal".

The new £1 coin will have 12 sides and is due to enter circulation in 2017

Kelvin Reynolds, of the British Parking Association, added: "Parking operators have long expressed concerns about a rise in counterfeit £1 coins and the inconvenience this causes to motorists when coins are rejected by parking payment machines and the losses incurred as a result."

The current £1 coin has been in circulation for much longer than the normal life cycle of a modern British coin.

Its technology is no longer suitable for a coin of its value, leaving it vulnerable to ever more sophisticated counterfeiters.

The Royal Mint estimates about 3% of all £1 coins - around 45 million in total - are now forgeries, although in some parts of the UK, the number is as high as 6%.

The Queen's head will continue to feature on one side of the coin

Around two million counterfeit £1 coins are removed from circulation annually - a direct cost to the banks and cash handling centres, as well as the economy.

The new coin will be revealed in a Budget the Chancellor hopes will provide the springboard for a Tory victory at next year's General Election.

Mr Osborne will raise the rate at which people start paying income tax to £10,500, which he claims will benefit all but those on incomes of over £100,000.

But he will reject calls from senior Tories to cut the rate at which people start paying tax at 40p in the pound, already due to rise to £42,286 next year.

Mr Osborne hopes this year's Budget will win over voters

The Budget comes in a week in which two senior Conservatives, Michael Gove and Baroness Warsi, have attacked the influence of old Etonians in David Cameron's inner circle.

And so the Chancellor will have to respond to Labour's charges that the Tories are out of touch, ordinary families are racing a cost of living crisis and only the rich are benefiting from the economic recovery.

Mr Osborne will go on the attack against Labour, claiming the opposition was to blame for the economic crisis when in Government and has been proved wrong in opposing the Coalition's austerity measures.

"This will be a Budget for a resilient economy," a Treasury source told Sky News.

"The Government's long term economic plan is providing economic security by dealing with our record deficit and helping businesses create new jobs at record rates.

"As a country, we have held our nerve, the plan is working, but the job is very far from done. Britain is still borrowing too much.

"We have to invest more and export more, and support growth in every region of our country and all parts of our economy."

As with all British coins, the new-look £1 piece will feature the Queen's head on one side.

A public competition will be held to decide the design for the reverse, or 'tails', side.

Introduced in 1937, the threepenny bit was in the first group of coins ever to feature the portrait of HRH Queen Elizabeth II.

It was the first British coin to use a 12-sided shape which enhanced its popularity during the Second World War, as its distinctive size and shape made it the easiest coin to recognise during the blackout.

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Treasury Sources Tight-Lipped On Budget

Budget 2014: New £1 Coin Is Blast From The Past

Updated: 4:15am UK, Wednesday 19 March 2014

By Jon Craig, Chief Political Correspondent

George Osborne will use his Budget to announce a major change for the nation's pockets, with a new pound coin to be introduced in 2017.

The new coin, aimed at stamping out forgeries and counterfeits, will replace the £1 coin introduced more than 30 years ago and resemble the pre-decimalisation 12-sided 'threepenny bit'.

According to the Treasury, the new coin will be the most secure in the world.

It is backed by organisations including the Automatic Vending Association, which said the cost for adapting existing machines would be "minimal".

Kelvin Reynolds, of the British Parking Association, added: "Parking operators have long expressed concerns about a rise in counterfeit £1 coins and the inconvenience this causes to motorists when coins are rejected by parking payment machines and the losses incurred as a result."

The current £1 coin has been in circulation for much longer than the normal life cycle of a modern British coin.

Its technology is no longer suitable for a coin of its value, leaving it vulnerable to ever more sophisticated counterfeiters.

The Royal Mint estimates about 3% of all £1 coins - around 45 million in total - are now forgeries, although in some parts of the UK, the number is as high as 6%.

Around two million counterfeit £1 coins are removed from circulation annually - a direct cost to the banks and cash handling centres, as well as the economy.

The new coin will be revealed in a Budget the Chancellor hopes will provide the springboard for a Tory victory at next year's General Election.

Mr Osborne will raise the rate at which people start paying income tax to £10,500, which he claims will benefit all but those on incomes of over £100,000.

But he will reject calls from senior Tories to cut the rate at which people start paying tax at 40p in the pound, already due to rise to £42,286 next year.

The Budget comes in a week in which two senior Conservatives, Michael Gove and Baroness Warsi, have attacked the influence of old Etonians in David Cameron's inner circle.

And so the Chancellor will have to respond to Labour's charges that the Tories are out of touch, ordinary families are racing a cost of living crisis and only the rich are benefiting from the economic recovery.

Mr Osborne will go on the attack against Labour, claiming the opposition was to blame for the economic crisis when in Government and has been proved wrong in opposing the Coalition's austerity measures.

"This will be a Budget for a resilient economy," a Treasury source told Sky News.

"The Government's long term economic plan is providing economic security by dealing with our record deficit and helping businesses create new jobs at record rates.

"As a country, we have held our nerve, the plan is working, but the job is very far from done. Britain is still borrowing too much.

"We have to invest more and export more, and support growth in every region of our country and all parts of our economy."

As with all British coins, the new-look £1 piece will feature the Queen's head on one side.

A public competition will be held to decide the design for the reverse, or 'tails', side.

Introduced in 1937, the threepenny bit was in the first group of coins ever to feature the portrait of HRH Queen Elizabeth II.

It was the first British coin to use a 12-sided shape which enhanced its popularity during the Second World War, as its distinctive size and shape made it the easiest coin to recognise during the blackout.

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Tax-Free Childcare 'To Help 2 Million Families'

A childcare tax break is to be expanded, with working parents set to receive more money for longer than previously planned.

The scheme will be worth up to £2,000 per child per year when it launches in autumn next year - £800 more than the £1,200 originally proposed.

It was only expected to apply to children under the age of seven, but parents will now be entitled to the money until their son or daughter's 12th birthday.

Nearly two million families could benefit from the scheme - twice as many as the present voucher scheme, which is only available where adopted by an employer.

David Cameron and Nick Clegg will unveil details of the childcare scheme

However, it has been criticised for excluding couples where one parent does not work and for applying to richer households with incomes of up to £300,000.

David Cameron said the policy, which effectively covers 20% of childcare costs up to a maximum of £10,000 a year, would help "hard-pressed families" and "provide financial security for the future".

Earlier this month, the Family and Childcare Trust said parents now spend more on part-time childcare than their mortgage repayments.

The Prime Minister is due to unveil details of the package during a joint appearance with his deputy Nick Clegg, who added: "We want to ensure everyone can get on and succeed."

However, Labour's Lucy Powell, the shadow minister for children, said the proposals were "too little, too late".

"Mr Cameron has cut support for children and families by £15bn since he came to office," she said.

"This Government has done nothing in this Parliament to help parents experiencing a cost-of-living crisis."

As well as the childcare tax break, the Government is to give an extra £50m to nurseries looking after the most deprived three and four-year-olds.

Families claiming Universal Credit will also have 85% of their childcare costs met, up from 70%.

The announcement comes as the Chancellor prepares to unveil this year's Budget.

George Osborne, who will set out the Government's spending plans for 2014-15 next Wednesday, has warned of "difficult decisions" to come.

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Bank of England Recruits Habgood As New Chair

By Mark Kleinman, City Editor

The Treasury will name Anthony Habgood as the new chairman of the Bank of England's supervisory body on Tuesday, furthering a shake-up of its leadership since the arrival of Mark Carney as its Governor.

Sky News has learnt that a statement is expected to be made by the Treasury on Tuesday morning appointing Mr Habgood to a beefed-up role amid a series of challenges to the central bank's authority.

Mr Habgood is not a career banker, although he did serve on the board of National Westminster Bank prior to its takeover by Royal Bank of Scotland.

He is currently the chairman of two FTSE-100 companies: Whitbread, owner of the Costa Coffee chain, and Reed Elsevier, the academic publisher and event organiser.

Mark Carney has carried out a shake-up at the bank since becoming governor

Mr Habgood will succeed Sir David Lees, who has chaired the Bank of England's board, which is known as its Court, since 2009.

His arrival will come at a difficult time for the Bank, which said two weeks ago that it had suspended an employee as part of an investigation into its own role in the potential manipulation of foreign exchange markets.

The Bank's oversight committee subsequently announced that it had asked Lord Grabiner QC to lead a review on its behalf, which it hopes will allow it to overcome the perception that it has been slow to address critical governance issues.

The Court has nine independent directors, with the chair officially designated by the Chancellor.

Among the other members of the Court are Sir Roger Carr, the chairman of BAE Systems; John Stewart, chairman of Legal & General and Dave Prentis, general secretary of the Unison trade union.

The nature of the changes to the Court's role was unclear on Monday.

One source familiar with the changes said there would be a clear signal that Mr Carney was acknowledging the need for more robust oversight of the Bank of England's work.

Andrew Tyrie, the Conservative MP who chairs the Treasury Select Committee, has been a particularly vocal critic of the Court, telling the Financial Times this month that the Bank needed "a board worthy of the name".

Mr Carney is expected to announce a range of other reforms to the Bank of England's structure on Tuesday, including appointments aimed at more effectively integrating its regulatory and monetary policy powers.

Since assuming responsibility for regulating banks operating in Britain last year, the Bank has become an even more powerful decision-making body.

The Bank of England and the Treasury declined to comment.

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Alibaba: Chinese Web Giant's Massive US IPO

A Chinese e-commerce business is bidding to list itself on one of the US stock exchanges in what could be the biggest IPO of 2014.

Alibaba Group is a privately-owned firm which incorporates a search engine, business-to-business web portals, online retail sites, payment service platforms and cloud computing services.

It was estimated to have generated more than £170bn in sales in 2012 and is believed to serve more than half of all online transactions in China.

The firm had looked at listing on stock exchanges in Hong Kong and London but has now ruled them out.

It is thought the group will use New York, rather than other exchanges such as the NASDAQ.

Speculation about a New York listing for Alibaba began last September.

The news comes two days after another Chinese tech giant, Twitter-like service Weibo, announced plans for a $500m (£300m) US listing.

A statement from the company said: "Alibaba Group has decided to commence the process of an initial public offering in the United States.

"This will make us a more global company and enhance the company's transparency, as well as allow the company to continue to pursue our long-term vision and ideals."

Analysts say the listing is expected to raise up to $15bn (£9bn), which would make it the technology industry's largest IPO since Facebook in 2012.

Talks between the world's largest online retailer and the Hong Kong Stock Exchange broke down last year.

Alibaba wanted an alternative class share structure to give selected minority shareholders extra control over the board, but the Hong Kong bourse declined to change its rules.

The firm did not rule out returning to the Chinese sub continent for a listing in the future.

It is not known why London was ruled out.

The Wall Street Journal reported Alibaba could launch its IPO as soon as April, which could allow trading to begin by the third quarter.

The report said up to five banks may be given lead underwriting roles.

Alibaba operates China's most popular e-shopping platform, Taobao, which has more than 500 million users.

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HS2 Chairman Urges MPs To Speed Up Plans

The chairman of HS2 has called on politicians to accelerate the construction of the high-speed line to reduce the £50bn cost of the project.

In a new report, Sir David Higgins has proposed a fast-tracked building timetable for the northern, phase two, section of the highly controversial project.

Currently the scheme's first phase, which will see a new line connect London to Birmingham, is set for completion 2026.

The second phase, which will take the line in a Y-shape to the North West and North East, is due to be completed around 2032/33.

But now Sir David said building work on both phases should be started at the same time and the second phase completed six years earlier than planned - by 2027.

In addition, he said the line should stretch 43 miles further north than planned, to a new transport hub at Crewe in Cheshire.

He also proposed a brand new station at London Euston, but added that plans to link HS2 with HS1, the London to Kent Channel Tunnel high-speed rail link, should be reconsidered.

Sir David believes that speeding up the project would help keep costs under control because it will reduce uncertainty and limit the impact of inflation.

The current whole-line cost, including contingencies, is £42.6bn, with £7.5bn for the trains.

Mr Cable supports Sir David's proposals because of 'economic benefits'

Business Secretary Vince Cable expressed support for Sir David's proposals, saying there was clearly a "compelling argument" for speeding up the project.

In an interview with The Observer, the Liberal Democrat said: "Creating jobs outside London, and closing the gap between north and south, has been one of this Government's top priorities.

"On every visit I make to the north of England, I've heard businesses and council leaders make a compelling case for getting to the north more quickly by accelerating parts of the HS2 build.

"That would ensure the economic benefits can be shared sooner by everyone around the country and deserves serious consideration by government."

But shadow chancellor Ed Balls is concerned about the costs with other former Labour grandees expressing reservations about the scheme.

Last week, Mr Balls said Sir David needed to show that costs "have come down markedly".

Anti-HS2 groups have also cast doubt on the possibility of bringing forward the phase 2 work while the revamped Euston plan was seen as merely bringing "more wealth and work into London".

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Morrisons Suffers Staff Payroll Data Theft

Data from supermarket chain Morrisons' staff payroll system, including bank account details, has been stolen and published on the internet, the company has confirmed.

In an email sent to staff and seen by Sky News, the company called it an "illegal theft" of data.

The information has since been taken off the website that published the details.

A data disk was also sent to a regional newspaper with the stolen data.

The theft included names, addresses and bank account details of an unspecified number of staff. It employs around 100,000 people.

The email warned that "this affects colleagues from all levels of the organisation".

Morrisons, which became aware of the theft on Thursday, said: "Initial investigations suggest that this theft was not the result of an external penetration of our systems.

"We can confirm there has been no loss of customer data and no colleague will be left financially disadvantaged."

The email warning was sent to senior staff who were asked to inform workers

So-called insider threats have become a serious concern for companies in recent years, due to the volume of data stored and its accessibility.

Sky News has confirmed that the data watchdog, the Information Commissioner's Office (ICO), has been alerted to the theft and may launch a probe.

An ICO spokesman said: 'We have been made aware of reports that Morrisons have suffered a potential data breach, and we will be making enquiries."

Morrisons, which is Britain's fourth biggest supermarket group, said it had called in police and cyber crime experts.

The criminal inquiry into the data theft from Bradford-based Morrisons is being led by West Yorkshire Police.

Detective Chief Inspector Nick Wallen said: "We are aware of the situation and are supporting Morrisons and their investigation into these matters."

It has also started communications with banks handling staff accounts and a credit rating agency, and has set up a helpline for employees.

The group has come under pressure recently over its performance in the ultra-competitive sector.

On Thursday, it launched a counter-attack in the supermarket price war after losing more than just ground to its rivals in its last financial year.

The chain, which has struggled amid strong challenges from discounters and because of its slow response to the online grocery and convenience markets, confirmed a pre-tax loss of £176m for 2013/14 after a profit of £879m in the previous 12 months.

Like-for-like sales fell 2.8% in the period, and its share price suffered a 10% drop on Thursday.

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RBS Delays AGM Over Dividend Share Talks

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is to delay its annual shareholder meeting by several weeks as it seeks to cancel a special Government-owned share that prevents it paying dividends.

Sky News has learnt that RBS has decided to hold its 2014 AGM in late June amid advanced talks between the Treasury and the European Commission about the fate of the so-called Dividend Access Share (DAS).

Last year's AGM took place in May, while the event was traditionally held as early as April.  The decision by directors of RBS to delay the 2014 meeting was taken in the last few days.

The DAS was put in place as part of the £45.5bn taxpayer bail-out of RBS in 2008, and removing it would be a crucial step on the bank's long journey back to normality.

Doing so, however, will not be cheap for the state-backed lender.

The DAS, which confers enhanced dividend rights on RBS ahead of ordinary shareholders, was valued in the Treasury's books on March 31 last year at just under £1.5bn.

People close to the talks between the Treasury and Brussels said there was a realistic chance that an agreement could be reached by the end of June about the terms under which the DAS could be bought out without breaching state aid rules.

The cancellation of the DAS requires a vote that would only involve RBS's minority shareholders because of its status as what is known as a related-party transaction, meaning that the Government cannot vote on it.

The value of the DAS fluctuates based on a range of market data, including the RBS share price, the expected volatility of the stock over various time periods and the riskiness of the B-shares in RBS owned by the Government.

RBS's shares closed on Friday at 299.5p, suggesting that the cost of cancelling the DAS could be recorded at a lower level at the end of the month than it was last year.

That is because the cost reduces as RBS's share price rises, with a provision for cancelling the DAS altogether if the market price of RBS's ordinary shares exceeds 650p for at least 20 out of 30 consecutive trading days.

"The theoretical valuation does not necessarily reflect the price RBS would be prepared to pay to remove the DAS," the Treasury said in its annual report last year.

The DAS effectively acts as a block on dividend payments to ordinary investors because at least £1.8bn must be paid to the Treasury before any payout to other shareholders can take place.

Ross McEwan, the new RBS chief executive, is keen to resolve the issue of the DAS and said last month that "discussions with the UK Government...are well-advanced. A successful restructuring of the DAS will represent a significant step towards the normalisation of RBS's capital structure".

Insiders cautioned that the delay to the AGM did not offer a guarantee that the outstanding issues could be resolved in time and it remained uncertain whether the DAS-related resolution would be put to a vote on the same day.

The intention to do so is designed to avoid the cost of staging a separate investor meeting on another date.

Even if there is a vote on the DAS in June, the payment of the cancellation fee might not take place until ordinary dividends start being paid again.

With RBS not forecast to be profitable until 2016 and regulatory approval required for a resumption in dividend payments, that could mean the Treasury faces a three-year wait for the money.

News of the AGM delay comes weeks after Mr McEwan unveiled an annual loss of £8.2bn for 2013, and announced plans for an overhaul of RBS to focus it more clearly on improving service to personal and small business customers.

Delaying its AGM will also provide RBS with more time to resolve an issue that has provoked significant debate in Westminster: whether it should seek shareholder approval to pay out higher bonuses under new European rules.

Ed Miliband, the Labour leader, has demanded that the Government should block any attempt by RBS executives to secure approval for payments of up to twice the level of employees' salaries in bonus awards.

Mr McEwan has said that RBS needs the ability to pay competitively, implying that the bank will seek approval for the higher threshold, since every one of its rivals has said that they intend to do the same.

RBS declined to comment.

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