Petrol At £1 A Litre But Not At Supermarkets

The owner of three petrol stations in the West Midlands has cut the price of unleaded petrol below £1 a litre, as supermarkets announce further reductions.

The decision to sell petrol at 99.7p by Harvest Energy garages in Birmingham, Redditch and Walsall sees sub-£1 pump prices in the UK for the first time in more than five years.

Dr Velautham Sarveswaran, who runs the stations, claims he will still make money from the move.

"The supermarkets continue to make a fortune without passing the price cuts to their customers. It is a scandal. They are cheating people," he told MailOnline.

Unleaded petrol costs hit a five-year low last week of 109.8p - with figures provided by Experian Catalist showing that average costs on Sunday had reduced further to 108.9p.

Video: Brent Crude Could Go Below $40

Diesel stood just below 115p a litre.

Analysis showed that with an unleaded price of 99.7p, 57.95p of that figure would go to the Treasury in fuel duty and a further 18.3p would be paid in VAT, with the driver paying just over 20p for the product itself.

Lower petrol prices are a consequence of the plunge in oil costs - with Brent crude losing more than 50% of its value since June last year on a supply glut and fears for the strength of the world economy.

Brent was down at fresh six-year lows of $48.8 a barrel in Monday trading.

Supermarkets confirmed further reductions to their prices - with Tesco taking 2p off their petrol and diesel costs from Monday afternoon.

Asda, Morrisons and Sainsbury's confirmed similar moves from Tuesday.

For Asda customers, the latest reduction means they will pay no more than 103.7p a litre for petrol, with diesel at 110.7p.

While motoring groups welcomed the Harvest price, the AA said it "appears to be a publicity stunt rather than a reflection of general pump prices."

Its president Edmund King added: "There remains a postcode lottery out there when it comes to fuel prices.

"Drivers in rural areas are still paying much more than the 109p average price ... It will still take some time to get down to an average of £1 per litre."

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Morrisons Chief On Brink After Sales Fall

By Mark Kleinman, City Editor

The chief executive of Wm Morrison, the UK's fourth-largest supermarket chain, was said to be on the brink of resigning on Monday amid expectations that it would be the sector's worst performer during the Christmas sales period.

Sky News understands that directors of Morrisons were discussing Dalton Philips' future with an announcement possible as soon as Tuesday, when the company is due to provide an update on its trading performance.

A Morrisons spokesman said it did not comment on management changes.

Sources said it remained possible that boardroom discussions would result in Mr Philips remaining in his post for the immediate future and that directors could express renewed confidence in his ability to improve the company's fortunes.

Sky News reported last week that Andrew Higginson, who was appointed as Morrisons' chairman-designate last year, was likely to take over from Sir Ian Gibson at the helm of the company earlier than had been expected.

Mr Philips, a former executive at Loblaw, Canada's biggest food retailer, became Morrisons' boss in March 2010, and also sits on the board of the Department for Business, Innovation and Skills.

If his departure is announced in the near-term, it would bring the curtain down on a near-five-year period during which Morrisons has struggled to modernise its business in the face of tough competition from supermarket discounters and established rivals.

Last autumn, Morrisons announced thousands of job cuts and the introduction of a new loyalty scheme in a bid to stem the decline in sales.

A major profit warning last March sparked speculation that Mr Philips was likely to step down in the medium term.

Analysts have forecast that the chain will announce a like-for-like sales fall over Christmas of between 3% and 4%, worse than either of its listed peers, Tesco and J Sainsbury.

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City Heavyweights To Join Quindell Revamp

By Mark Kleinman, City Editor

A former finance director of Royal Mail and one-time boss of Prudential in the UK will this week join an attempt to rehabilitate the reputation of the controversial insurance claims outsourcer Quindell.

Sky News has learnt that the company, which has seen its stock market valuation crash from a peak of £2.5bn amid doubts over its financial probity, will name Richard Rose, the chairman of online electrical goods retailer AO.com and cash-and-carry operator Booker Group, as its new chairman.

Jim Sutcliffe, a former boss of the insurer Old Mutual and Prudential UK, is to become deputy chairman.

Banking sources said that Quindell also plans to name Marisa Cassoni, who was finance director of Royal Mail and John Lewis and who is now a director of the Skipton Building Society, as a consultant.

John Tomlins, a former colleague of Mr Sutcliffe, will also join in a consulting role.

The group of heavyweight appointments, which are likely to be announced on Monday, is intended to remove lingering market uncertainties about the state of Quindell's finances and the robustness of its business model.

One of Mr Sutcliffe's current roles is as chair of the codes and standards committee of the Financial Reporting Council, the accounting regulator, which one source suggested should reassure Quindell investors.

The announcement will come, however, amid an ongoing investigation led by PricewaterhouseCoopers into Quindell's performance following months of turmoil at the company.

Quindell's founder, Rob Terry, had promised to revolutionise the insurance industry by taking on a large chunk of its claims processing activities, but eventually quit the board late last year after a row over share deals involving himself and other directors.

David Currie, a former Investec banker, stepped in to replace Mr Terry as chairman, and has been focused on addressing shareholders' concerns about Quindell's corporate governance.

Mr Rose's appointment will mean that Mr Currie will step down as chairman, but he is expected to remain on the board as a non-executive director.

Earlier this month, Quindell said it was in exclusive talks about the sale of one of its divisions, while it is also engaged in discussions about transactions involving other parts of the group.

Quindell, whose financial affairs have become one of the City's most notorious talking points, raised £200m from investors in 2013 in order to become a one-stop shop for car insurers.

It provides a range of services which help insurers assess and treat drivers and passengers, leading to the formation of a joint venture with the RAC, the roadside recovery service.

The partnership was hailed as the beginning of a far-reaching initiative that would involve installing more than 2m telematics black boxes in cars across the UK, but has since been scaled back to a far more limited project.

Quindell has faced persistent questions over the way it books revenues and its financial forecasts, which it has rebutted, but the sense of crisis surrounding it deepened in November, when Canaccord Genuity resigned as its joint corporate broker.

A replacement has yet to be appointed.

Quindell's shares have plummeted by more than 70% in the last 12 months, although they made significant gains last week when it emerged that Toscafund, a prominent City investor, had acquired a 5% stake in the hope that its fortunes would improve.

The company, which is now valued at around £370m, declined to comment on Sunday.

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Big Six Energy Groups To Defy Price Cut Call

By Mark Kleinman, City Editor

Some of Britain's biggest energy retailers are expected to rule out price cuts ahead of the General Election amid an intensifying political row over Labour's vow to impose a 20-month price freeze.

Sky News has learnt that a number of major suppliers will tell ministers in the coming weeks that the time horizons over which they set tariffs render a pre-election cut "illogical and impractical" despite the falling oil price and declining cost of wholesale gas.

They plan to respond to a letter from Matthew Hancock, the Business, Energy and Enterprise Minister, who wrote to the six companies this weekend to demand that prices should be slashed.

"Wholesale gas prices have been falling for months, and are now 30% lower than this time last year," he wrote.

"In a competitive market, I would have expected energy suppliers to cut bills as a result of these low wholesale prices.

"Independent suppliers have done precisely this. However, larger energy suppliers have failed to cut prices across all their tariffs?"

The six firms which dominate the residential supply of energy - British Gas, which is owned by Centrica; EDF Energy; EON; Npower; Scottish Power; and SSE - argue privately that a pledge by Ed Miliband to freeze prices if Labour wins May's election has made it commercially risky to cut prices.

"We are taking pricing decisions now that may have to last for two years," an executive at one of the companies said.

"Anything could happen to wholesale prices during that period which would make supplying energy at lower levels than today wholly uneconomic."

The companies have been summoned for talks with Mr Hancock, who also ordered them to explain whether their fuel-hedging strategies, which protect them against sharp changes in wholesale costs, were a factor in preventing them from cutting prices now.

In his letter, he insisted that he did not want to interfere with a competition investigation into the energy sector, which is expected to report its provisional findings in June.

However, Mr Hancock said that the 'Big Six' needed to explain the lack of action on pricing in order "to maintain market confidence".

Speaking to Sky News, Mr Hancock said Labour's policy was "already an embarrassment".

"The evidence increasingly shows the threat of Labour's high price freeze is responsible for higher household bills now. If that's the case, they should abandon it immediately.

"Hardworking households must feel the benefits of lower gas prices and we cannot let the threat of Ed Miliband stand in the way."

Downing Street sources said on Saturday that Mr Hancock's letter had been approved by both the Prime Minister and the Chancellor.

George Osborne this week vowed to watch utilities and fuel retailers "like a hawk" to ensure that the benefits of lower oil prices were being passed on to consumers.

The intervention of senior ministers over the issue in recent days underlines the extent to which the cost of living will be a central plank of the looming election campaign.

Energy company executives pointed, however, to regulatory requirements which meant that gas and electricity had to be sold under contracts of at least 12 months, with customers informed of prices in advance.

"When the natural gas price soared in 2010, consumer prices were able to be maintained because the cost to companies was already locked in," said one.

"Industry profit margins are around 5%. If the price of oil and wholesale gas remain where they are now for a sustained period, we will be able to pass that on over time."

A director of another of the major suppliers added that wholesale costs accounted for only 50% of consumers' bills, with network costs and those associated with environmental obligations expected to rise, rather than fall, during 2015.

None of the companies contacted by Sky News would comment officially on Mr Hancock's letter.

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RBS In Talks With UKFI Over £2bn Debt Sale

By Mark Kleinman, City Editor

The agency which represents taxpayers' stakes in Britain's bailed-out lenders is in talks with Royal Bank of Scotland (RBS) about a £2bn capital-raising which could eventually dilute the Government's shareholding.

Sky News has learnt that UK Financial Investments (UKFI) is discussing with RBS the terms of an additional Tier 1 (AT1) capital buffer which the bank said it would seek from investors last month.

RBS said when it passed a stress test run by the Bank of England in December that the £2bn AT1 issuance would take place during the course of this year, and would see the instrument convert to shares in RBS if its capital buffer fell to 7%.

However, sources said on Friday that the £2bn capital-raising was being complicated by a clause in RBS's taxpayer bail-out which prevents taxpayers' shareholding being diluted through the launch of such convertible securities.

The issue relates to B-shares held in RBS by UKFI, which were created at the time of its bail-out by taxpayers in 2009.

The bank remains roughly-80% owned by the Government, with apparently little possibility of a substantial share sale at a profit for several more years.

RBS has 51 billion B-shares in issue, which do not carry voting rights but can be converted at a rate of ten-for-one into ordinary shares.

In a prospectus issued in 2009 outlining the structure of these B-shares, RBS said they would include rights which would prevent taxpayers' stake being artificially reduced.

The potential obstacle to the new capital-raising, which was an important element of the PRA's decision to approve RBS's current capital plan, was highlighted last month in a previously unreported research note by Autonomous, a leading analyst of financial institutions.

"As part of the capital plans it had to present as a result of the poor stress test result, RBS signalled that it will issue £2bn AT1s next year," Autonomous said.

"We have previously argued that there are legal obstacles to AT1 issuance by RBS, which we continue to see as a problem.

"However, if the PRA is prepared to accept AT1 issuance as part of RBS's remedial plan, we assume regulators must have sufficient clarity that a legal solution to RBS's AT1 problem can be found."

One source said that RBS, UKFI and the PRA were confident that the issue could be resolved, and pointed out that at the time the B-shares were devised, convertible securities such as AT1s were not conceived as a potentially important part of a bank's capital structure.

Insiders insisted that the taxpayer's interests would be fully protected in any AT1 capital-raising and that they would in any event not face being diluted at the point of issuance.

RBS and UKFI declined to comment.

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Big Six Energy Groups To Defy Price Cut Call

By Mark Kleinman, City Editor

Some of Britain's biggest energy retailers are expected to rule out price cuts ahead of the General Election amid an intensifying political row over Labour's vow to impose a 20-month price freeze.

Sky News has learnt that a number of major suppliers will tell ministers in the coming weeks that the time horizons over which they set tariffs render a pre-election cut "illogical and impractical" despite the falling oil price and declining cost of wholesale gas.

They plan to respond to a letter from Matthew Hancock, the Business, Energy and Enterprise Minister, who wrote to the six companies this weekend to demand that prices should be slashed.

"Wholesale gas prices have been falling for months, and are now 30% lower than this time last year," he wrote.

"In a competitive market, I would have expected energy suppliers to cut bills as a result of these low wholesale prices.

"Independent suppliers have done precisely this. However, larger energy suppliers have failed to cut prices across all their tariffs?"

The six firms which dominate the residential supply of energy - British Gas, which is owned by Centrica; EDF Energy; EON; Npower; Scottish Power; and SSE - argue privately that a pledge by Ed Miliband to freeze prices if Labour wins May's election has made it commercially risky to cut prices.

"We are taking pricing decisions now that may have to last for two years," an executive at one of the companies said.

"Anything could happen to wholesale prices during that period which would make supplying energy at lower levels than today wholly uneconomic."

The companies have been summoned for talks with Mr Hancock, who also ordered them to explain whether their fuel-hedging strategies, which protect them against sharp changes in wholesale costs, were a factor in preventing them from cutting prices now.

In his letter, he insisted that he did not want to interfere with a competition investigation into the energy sector, which is expected to report its provisional findings in June.

However, Mr Hancock said that the 'Big Six' needed to explain the lack of action on pricing in order "to maintain market confidence".

Speaking to Sky News, Mr Hancock said Labour's policy was "already an embarrassment".

"The evidence increasingly shows the threat of Labour's high price freeze is responsible for higher household bills now. If that's the case, they should abandon it immediately.

"Hardworking households must feel the benefits of lower gas prices and we cannot let the threat of Ed Miliband stand in the way."

Downing Street sources said on Saturday that Mr Hancock's letter had been approved by both the Prime Minister and the Chancellor.

George Osborne this week vowed to watch utilities and fuel retailers "like a hawk" to ensure that the benefits of lower oil prices were being passed on to consumers.

The intervention of senior ministers over the issue in recent days underlines the extent to which the cost of living will be a central plank of the looming election campaign.

Energy company executives pointed, however, to regulatory requirements which meant that gas and electricity had to be sold under contracts of at least 12 months, with customers informed of prices in advance.

"When the natural gas price soared in 2010, consumer prices were able to be maintained because the cost to companies was already locked in," said one.

"Industry profit margins are around 5%. If the price of oil and wholesale gas remain where they are now for a sustained period, we will be able to pass that on over time."

A director of another of the major suppliers added that wholesale costs accounted for only 50% of consumers' bills, with network costs and those associated with environmental obligations expected to rise, rather than fall, during 2015.

None of the companies contacted by Sky News would comment officially on Mr Hancock's letter.

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Pay 'Soars' As Job Hunters Spoiled For Choice

A shortage of skills could mean the job hunter "finally becomes king" this year, with pay levels soaring for staff placed by employment agencies.

The finding, in a monthly report on the job market by the Recruitment and Employment Confederation (REC) and professional services group KPMG, was put down to shortfalls in availability - particularly among temporary workers.

The study suggested candidates were becoming choosy about which jobs to take and pay for temporary staff had risen at its strongest rate for three months.

Pay rises until recently had lagged behind the rate of inflation, which left families with a six-year squeeze on their budgets.

Pay levels were held down by the effects of the financial crisis and wider employment landscape.

Bernard Brown, of KPMG, said of the current situation: "A strong year for the UK jobs market finished with a flourish as temporary roles saw an upswing in popularity.

"More than one in three recruiters suggest that employees looking for short-term roles are being increasingly spoilt for choice as organisations search for help in an effort to fulfil customer orders.

"Good news for candidates also extends into the pay packet. Once again, a shortage of skills in key areas has led to a rise in the starting salaries on offer.

"It could mean that 2015 becomes the year in which the candidate finally becomes king."

The report warned that the improved power being enjoyed by job hunters could be short-lived.

Kevin Green, the chief executive of the REC, said: "As we enter 2015 the jobs market continues its strong performance.

"Recruiters are helping an increasing number of businesses find new permanent employees, and skills shortages in most areas of the economy mean that competition for quality candidates is driving up starting salaries.

"Economic growth for 2015 looks sustainable, however the concern now is that political uncertainty could spook the market as we approach a General Election.

"The prospect of increased government intervention in the labour market as promised by the left, questions around Britain's position in the EU which are being posed by the right, and the potential for protracted negotiations around a hung parliament come May could affect business confidence and hence future hiring."

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RBS In Talks With UKFI Over £2bn Debt Sale

By Mark Kleinman, City Editor

The agency which represents taxpayers' stakes in Britain's bailed-out lenders is in talks with Royal Bank of Scotland (RBS) about a £2bn capital-raising which could eventually dilute the Government's shareholding.

Sky News has learnt that UK Financial Investments (UKFI) is discussing with RBS the terms of an additional Tier 1 (AT1) capital buffer which the bank said it would seek from investors last month.

RBS said when it passed a stress test run by the Bank of England in December that the £2bn AT1 issuance would take place during the course of this year, and would see the instrument convert to shares in RBS if its capital buffer fell to 7%.

However, sources said on Friday that the £2bn capital-raising was being complicated by a clause in RBS's taxpayer bail-out which prevents taxpayers' shareholding being diluted through the launch of such convertible securities.

The issue relates to B-shares held in RBS by UKFI, which were created at the time of its bail-out by taxpayers in 2009.

The bank remains roughly-80% owned by the Government, with apparently little possibility of a substantial share sale at a profit for several more years.

RBS has 51 billion B-shares in issue, which do not carry voting rights but can be converted at a rate of ten-for-one into ordinary shares.

In a prospectus issued in 2009 outlining the structure of these B-shares, RBS said they would include rights which would prevent taxpayers' stake being artificially reduced.

The potential obstacle to the new capital-raising, which was an important element of the PRA's decision to approve RBS's current capital plan, was highlighted last month in a previously unreported research note by Autonomous, a leading analyst of financial institutions.

"As part of the capital plans it had to present as a result of the poor stress test result, RBS signalled that it will issue £2bn AT1s next year," Autonomous said.

"We have previously argued that there are legal obstacles to AT1 issuance by RBS, which we continue to see as a problem.

"However, if the PRA is prepared to accept AT1 issuance as part of RBS's remedial plan, we assume regulators must have sufficient clarity that a legal solution to RBS's AT1 problem can be found."

One source said that RBS, UKFI and the PRA were confident that the issue could be resolved, and pointed out that at the time the B-shares were devised, convertible securities such as AT1s were not conceived as a potentially important part of a bank's capital structure.

Insiders insisted that the taxpayer's interests would be fully protected in any AT1 capital-raising and that they would in any event not face being diluted at the point of issuance.

RBS and UKFI declined to comment.

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Tesco To Cut Stores and Jobs In Revival Plan

Tesco has confirmed it is to close 43 unprofitable UK stores and halt construction on almost 50 others as part of a plan to revive its fortunes.

In the wake of four profit warnings last year and the accounting scandal which saw group chief executive Dave Lewis take charge of the UK business, Tesco said it had enjoyed a good Christmas.

Like-for-like sales fell just 0.3% in the six weeks over Christmas - better than analysts predicted - although like-for-like sales in its third quarter were down 2.9%.

But Tesco's sales woes - a result of a lack of focus on its core store offering in the past and the strong challenge from discounters - are only part of the problem for Mr Lewis.

He used the trading update to confirm a number of changes in order to ensure no repeat of the £263m profit over-statement - including new guidelines for supplier negotiations - and outlined plans to streamline the business.

Video: Tesco: Difficult Changes Are Ahead

Its head office in Cheshunt is to close in 2016 while it confirmed the sale of Tesco Broadband and Blinkbox, the video steaming service, to TalkTalk.

Options were being explored for Dunnhumby, the unit which manages its Clubcard loyalty scheme, signalling a likely sale process which could value it at up to £2bn.

Tesco did not disclose the locations of the 43 stores to close but Mr Lewis revealed that a "significant proportion" would be Tesco Express convenience shops.

Mr Lewis told Sky News: "It will be a process which is very individual. This is something that happens on a store by store basis.

"That's where the consulation starts today and that's what you'll see happen progressively over the next few months.

Video: Tesco Cuts: An Expert's Verdict

"We've made some decisions on parts of the portfolio, be it Blinkbox, be it broadband but also on Dunnhumby.

"I'm repeating what I said when we had our first conversation in October. I'm looking at all of the assets of the group, I've got a full review ongoing.

"I'm very clear that we've got too much leverage in the business, too much debt in the business, and I need to do something about that."

Changes to store management and working-hour flexibility structures would deliver savings of £230m annually but result in a one-off cost of £300m, Tesco said.

It also plans to close its final salary pension scheme but said colleagues would soon be offered turnaround-based bonuses.

Tesco confirmed too that it had poached Halfords boss Matt Davies to run the UK business but he would not be able to start work until 1 June.

The announcements were cheered by investors, with Tesco's share price - having taken a battering last year - up almost 14% on the FTSE 100 in early afternoon trading.

Sainsbury's and Morrisons also saw their values shoot up but Halfords lost more than 5% on news of Mr Davies' departure.

On the shop floor, Tesco joined the New Year price war with major rivals by cutting prices from today on hundreds of branded products.

It said the move, resulting in average savings of 25% on brands such as Hovis, Coca-Cola, Marmite and Tetley, was a response to "demands from customers for simpler, lower and more stable prices."

Video: Why TalkTalk Bought Blinkbox

Commenting on the Christmas sales performance, Mr Lewis said: "We are seeing the benefits of listening to our customers.

"In difficult circumstances the team has begun the challenging task of reinvigorating our business. There is more to do but we have taken the first important steps in the right direction.

"Our recent performance gives us confidence that when we pull together and put the customer first we can deliver the right results."

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Morrisons On The Run With Athletics Deal

By Mark Kleinman, City Editor

The UK's fourth-biggest supermarket chain will announce on Friday that it is to take over from Bupa as the long-standing sponsor of the Great North Run.

Sky News understands that Wm Morrison has agreed a multimillion pound deal to become the headline sponsor of more than a dozen running events across Britain.

The four-year contract is designed to promote Morrisons' brand and association with healthy living at a time of intense competition in the UK grocery sector.

The biggest sports sponsorship in Morrisons' history, it will commence this weekend with the Great Winter Run in Edinburgh.

Sources said the company's chief executive, Dalton Phillips, viewed the deal as a valuable marketing platform as Morrisons finds itself fighting discounters Aldi and Lidl and established rivals such as Tesco, Asda and Sainsbury's.

Tesco shares soared on Thursday as its new boss, Dave Lewis, outlined a plan to return the company to growth, including cutting the prices of hundreds of branded food items.

Shareholders responded by pushing up the value of Tesco's listed peers, with Morrisons' shares rising by almost 8%.

Morrisons will update the City next week on its Christmas trading performance, when its board is expected to ask Andrew Higginson, its chairman-designate, to take the reins immediately.

Last year, the company announced that it was axing thousands of jobs in order to cut costs, and introduced a price-matching scheme and loyalty card in the latest salvo in the sector's price war.

Morrisons hopes that sponsoring the televised series of running events will be valuable ammunition in the battle for shoppers' attention.

The rights to the Great Runs series are held by Nova International, a private company chaired by Brendan Foster, the former British Olympic medallist.

Morrisons declined to comment on Thursday.

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