Osborne Faces Scepticism Over Lloyds Sale

By Mark Kleinman, City Editor

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

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

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

The Chancellor must convince Treasury officials of the sale

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

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

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

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

Andrew Tyrie, chairman of the Treasury Select Committee

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

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

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

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

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

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BlackBerry Slashes Jobs In Face Of $1bn Loss

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

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

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

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

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

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

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

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

The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007.

Since then, BlackBerry has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.

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

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

Industry Minister James Moore said: "Our thoughts are with those who have lost their jobs at BlackBerry, it is always a cause for concern for our government."

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Food Price Rises 'A Source Of Stress'

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

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

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

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

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

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

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

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

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

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

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

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

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Apple Is Coolest Brand As Fashion Fights Back

Apple has retained its title as the coolest brand in Britain as big luxury names returned to the top, according to the CoolBrands annual survey.

Aston Martin, last year in third, was second, and Rolex, a no-show last year, was second. The sportswear brand Nike took fourth place.

The big fashion houses have made a comeback with Chanel, Prada and Alexander McQueen, charting at 13, 14, and 19 respectively this year.

Apple is still the coolest brand in Britain

They replace a number of more everyday items such as ice cream brands, which have been knocked off the list. Haagen-Dazs and Ben & Jerry's, which were at 13th and 15th place on the 2012 list, are nowhere to be seen this year.

Department stores Selfridges and Liberty, last year at 14 and 10, have also dropped off.

The Glastonbury festival was fifth on the list and, after a summer when almost no celebrity was seen without a pair of Wayfarers or Aviators, it is unsurprising that Ray-Ban turned up at number 10 - the brand failed to pass muster for the top 20 in 2012.

Coleen Rooney in Ray-Ban Aviators at the Glastonbury festival

Stephen Cheliotis, chairman of the CoolBrands council, said: "While Apple remained number one this year, question marks remain as to how long they might hold this position in the face of an increasingly competitive set of rivals.

"Overall the top 20 saw a definite swing back to luxury brands as the affordable everyday brands slipped back.

"Fashion brands came back to the fore, with sport and music brands becoming more conspicuous.

"Whether it's due to strong heritage, product quality or quite simply a correlation with the reviving British economy, this year's CoolBrands list shows an increasing number of luxury brands are back at the top of the cool list, reversing last year's trend of affordable everyday luxuries dominating."

Aston Martin comes in at second place

The list is voted by 3,000 consumers and a panel of 38 "key influencers" such as the television chef, Gizzi Erskine, and model Daisy Lowe.

YouTube has dropped to sixth from second place, while Google and Twitter both dropped from their places in last year's top five to seventh and eighth places respectively.

BBC iPlayer dropped from last year's sixth position to 16, Skype fell out of the top 20 altogether, while music streaming service Spotify is the only new digital entry at 20.

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Centrica Shelves £1.5bn Gas Storage Plans

Britain's attempts to keep the gas supply from hitting dangerously low levels has been dealt a blow by British Gas owner Centrica after it shelved plans for two storage projects at a cost of £240m.

The country came within six hours of running out of gas in March after the prolonged spell of cold weather and there were warnings at the time that supply could be affected.

Centrica's decision to ditch the gas storage plans will leave the UK with only around 15 days of gas supply in storage - and make the country increasingly reliant on imported gas.

Germany has around 99 days of gas storage capacity and France has 122 days of supply.

The energy firm had planned a £1.5bn conversion of the Baird depleted gas field off the North Norfolk coast, which would have held 13.5 days of gas on peak demand.

It would have become Britain's second-biggest gas storage site and the projects would have created 1,000 construction jobs.

It also put on hold indefinitely its much smaller project to convert a depleted gas field at Caythorpe in East Yorkshire into a storage facility.

Michael Fallon has ruled out subsidies for storage schemes

Centrica had already spent £240m on acquiring the two sites, plus engineering costs.

The firm said the decision was taken after the Government announced it would not subsidise new gas storage projects.

Centrica said: "This decision was taken in light of weak economics for storage projects and the announcement by the UK Government on September 4 ruling out intervention in the market to encourage additional gas storage capacity to be built."

Centrica commissioned two reports on gas storage, which found subsidising it would have added between 40p and 80p a year to customers' bills over 25 years.

Energy minister Michael Fallon argued the decision not to subsidise gas will save consumers £750m over a decade.

A spokeswoman for the Department of Energy and Climate Change said: "The UK has the capacity to deliver twice the amount of gas required on a normal winter's day, and has coped well with recent extreme winter conditions. Gas storage, while important, only provides a small proportion of UK total supply.

"Subsidising storage risks adding significant costs to consumer bills, with the costs of the subsidy outweighing any benefits to security of supply."

Centrica is also reportedly planning to add an average of £100 to annual bills despite vowing earlier this year to use an earnings windfall from the cold weather to keep a lid on tariffs.

Earlier this year Centrica also pulled out of plans to build the next generation of new nuclear power plants in the UK, leaving French utility EDF to go it alone.

It comes as a report found that a third of households would like to change their energy provider for a firm offering a cheaper deal but are put off of doing so by the time it takes to switch.

According to independent provider First Utility, if a third of households in the UK did switch they would save £1.5bn on their energy bills.

Richard Lloyd, executive director of Which?, said: "Rising energy prices are consistently one of the top worries for consumers, yet we've found people are so bamboozled by the vast array of tariffs that consumers are paying a staggering £3.9bn a year more for their energy simply by not being on the best deals.

"People should switch to save, we've long called for faster, smoother switching."

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Supermarkets Cut Petrol Prices By 2p A Litre

Petrol wars are driving down the price of fuel on the forecourt as two supermarkets announced they were cutting the cost by up to 2p per litre.

Asda announced that from Tuesday it would be taking 2p a litre off the price of petrol and 1p off a litre of diesel.

The supermarket said the cuts would mean that no one would pay more than 131.7p a litre for petrol and 137.7p for diesel.

It had already cut prices by 2p on petrol and 1p on diesel last week.

Asda's announcement was followed shortly by a similar statement from Tesco, which said it would be reducing its petrol by "up to 2p per litre" and cutting the price of diesel by 1p.

This is the second round of cuts from Asda

The cuts were welcomed by the RAC and the AA, who had accused the petrol retailers of keeping prices high and not passing on reductions to drivers.

Campaigners last week said that while oil price spikes caused by the threat of US intervention in the Syrian conflict had been passed on to the consumer, the reductions, when the price dropped again, had not.

However, they said that current analysis showed there was still scope for retailers to pass on reductions of at least 5p a litre in petrol and 2p a litre in diesel over the next two weeks.

Tesco has followed suit and announced it will cut prices from Tuesday

Pete Williams, the RAC's head of external affairs, said: "This is exactly the action we wanted to see as a result of the drop in wholesale prices that has taken place over the past couple of weeks.

"We are now looking for other retailers to follow suit so that motorists benefit wherever they buy their fuel and we expect this to happen over the next few days."

Andy Peake, Asda's petrol trading director, said: "Our national price cap on fuel benefits everyone across the country, meaning that no one filling up at Asda is forced to pay a premium for their fuel because of where they live."

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Labour Wants Bank Levy Hike To Fund Childcare

Working parents with children aged three and four would receive 25 hours of free childcare a week under new Labour plans.

Shadow chancellor Ed Balls has pledged to increase the hours covered by state funding from 15 to 25, where a single parent or both parents work.

The move, unveiled in his keynote speech to the Labour party conference in Brighton, comes after another proposal to extend childcare at primary schools from 8am to 6pm.

Under Labour's plans, which it suggests would be funded through an increase in the bank levy, the 15-hour early years entitlement would also remain universal.

Ed Miliband congratulating Ed Balls after his speech

Mr Balls dismissed Tory claims of a £27bn black hole in his economic plans as "nonsense" as he and Ed Miliband battle to restore public trust in Labour on the economy.

And he also appeared to signal a significant weakening in Labour support for HS2 rail link, suggesting the potential £50bn price-tag might be better spent elsewhere.

"The question is - not just whether a new high speed line is a good idea or a bad idea, but whether it is the best way to spend £50bn for the future of our country," he said.

The shadow chancellow has written to the Office for Budget Responsibility (OBR) asking for an audit of his spending commitments but the watchdog cannot go ahead under its current remit.

He has therefore called on parties to unite and push for a change so that both the opposition and Government can be scrutinised independently.

Ed Balls playing football on Sunday

"This is the first time a shadow chancellor - the first time any political party in Britain - has ever said it wants this kind of independent audit," he told delegates.

"It's a radical change from what's gone before, but the right thing to do to help restore trust in politics."

The call came after Treasury analysis commissioned by the Tories suggested Labour promises would require more than £1,000 in extra borrowing per household in 2015.

OBR chairman Robert Chote warned there would be "practical issues" if its remit was altered, with questions about resources and access to the right data.

And Tory Treasury minister Sajid Javid branded it a "stunt to try and distract attention from the fact that Labour have been found out for making unfunded commitments that would just mean more borrowing and more debt."

"Nothing has changed - it's the same old Labour. Ed Balls and Ed Miliband still want more spending, more borrowing and more debt - exactly how they got us into a mess in the first place."

But Mr Balls insisted Labour would show "iron discipline" if it regained power. "There will be no more borrowing for day-to-day spending," he vowed.

He admitted there would be "tough choices" if it does return to Government in 2015 and that it would not be able to reverse all of the coalition's measures.

Growth and jobs "cannot magic the whole deficit away at a stroke" and the coalition's spending totals for 2015/16 would have to be Labour's "starting point", he said.

"Any changes to the current spending plans for that year will be fully funded and set out in advance in our manifesto."

With the conference focusing on the cost of living, Mr Balls argued that the recovery was not translating into any change for struggling British families.

He accused David Cameron and Chancellor George Osborne of condemning Britain to "three wasted and damaging years" and only helping a "privileged few".

He claimed the Government's bank levy has raised £1.6bn less than the coalition promised and that institutions paid £2.7bn less in overall tax in 2011 compared to 2010.

"At a time when resources are tight and families are under pressure that cannot be right," he told delegates.

"So I can announce today the next Labour government will increase the bank levy rate to raise an extra £800m a year.

"And we will use the money, for families where all parents are in work, to increase free childcare places for three and four- years-olds from 15 hours to 25 hours a week.

"For the first time, parents will be able to work part-time without having to worry about the cost of childcare."

However, he confirmed plans to scrap the so-called "bedroom tax" that cuts housing benefit for council tenants with extra space.

A compulsory jobs guarantee for young people and long-term unemployed would be funded via the tax on bank bonuses and cuts to pension tax relief for top earners, he added.

And he vowed Labour would go ahead with a 10p tax rate paid for by a mansion tax on properties worth more than £2m, as well as improvements to the national minimum wage.

Some have suggested that asking the OBR to assess the credibility of Labour polities would just extend what is already in place.

The Prime Minister's spokesman said there was an "established process" allowing ministers to ask Treasury officials to cost opposition ideas.

This was most recently used by Mr Javid and led him to make the claim about a £27.5bn black hole of unfunded Labour plans.

The tool has been used by all sides - Labour asked for 38 Tory policies to be costed before the last election, including moves on inheritance tax and stamp duty.

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Tesco In Challenge To iPad With Hudl Tablet

Tesco has launched its challenge to the iPad and the Kindle with its own tablet computer, the Hudl.

The Android-operated, seven-inch device is priced at £119, a snip compared to its Apple counterpart but on a par with the Google and Kindle offerings.

It has a high-definition widescreen display, nine hours of video battery life, and 16GB of memory, which can be extended to 48GB.

The tablet, which comes in black, blue, red and purple, goes on sale from September 30. It offers wifi, Bluetooth and a micro HDMI port.

The Hudl goes on sale on September 30

Its closest competitor is the Kindle Fire, which starts at £99. It also has a seven-inch screen, and nine-hour battery life, but just 8GB of storage.

The iPad mini, with a 7.9-inch screen, starts at £269, and also has 16GB of memory.

The supermarket chain's chief executive Philip Clarke made a thinly veiled jab at the more expensive competitors by saying: "The digital revolution should be for the many, not for the few."

The Hudl has an in-built Tesco launcher button, which allows users to shop, see their Clubcard points, watch movies on Tesco's Blinkbox system and listen to music.

It also comes with a range of in-built apps, including YouTube and Google Chrome, and users can download new apps on Google Play.

Mr Clarke said: "We feel the time is right for Tesco to help widen tablet ownership and bring the fun, convenience and excitement of tablets to even more customers across the UK."

Tesco said that the Hudl had been designed from scratch taking into account what customers wanted.

The machines have been built by a manufacturing partner based in China, which also manufactures products for Microsoft, HP, BlackBerry and Sony.

Microsoft is expected to announce new Surface tablet computers, including a version with a smaller screen to compete with the iPad mini at an event in New York on Monday.

The original Surface launched in October but sales have been slow.

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Bank Watchdog Steps Up Bonus Cap Opposition

By Mark Kleinman, City Editor

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

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

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

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

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

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

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

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

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

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

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

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Apple iPhones And iOS 7 Break Records

Apple's new iOS 7 operating system has become the fastest software upgrade in history, according to the industry giant.

More than 200m devices are now running on the new system, which features a fingerprint security scanner and was launched just two days before the new iPhones went on sale.

Apple has also announced a record-breaking nine million sales of the new iPhone 5s and iPhone 5c models three days after they went on sale.

As the new phones went on sale, hundreds of people took to Twitter to say that shops had run out, while Apple's online store pushed back its dispatch date for new phones to October.

Delight as a shopper in Japan secures the new iPhone

Around 1,500 were in the queue outside the door of the Apple flagship store in London on Friday at 8am when the devices went on sale.

In the US, homeless people were hired to queue overnight outside a store in Pasadena, California, to be first in the queue.

The plan backfired when several of them were arrested for fighting.

Tim Cook, Apple's CEO, said: "This is our best iPhone launch yet - more than nine million new iPhones sold - a new record for first weekend sales.

"The demand for the new iPhones has been incredible, and while we've sold out of our initial supply of iPhone 5s, stores continue to receive new iPhone shipments regularly. We appreciate everyone's patience and are working hard to build enough new iPhones for everyone."

Despite the speed of the iOS 7 upgrade, Apple's new-look operating system got off to a rocky start, with users complaining of having difficulties.

Homeless men scuffle in iPhone queue

But many people complained about long download times, while others had to go through multiple attempts to instal the software.

One typical error message read: "Software Update Failed: An error occurred whilst downloading iOS 7.0."

Meanwhile, many other users have reported worse battery performance with the new system.

Apple billed iOS 7 as the most significant iOS update since the original iPhone.

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