Co-op Sells Farming Business To Wellcome Trust

The Co-operative Group is to sell its farming business to the Wellcome Trust for £249m.

The net proceeds of the sale will be used to reduce the group's debt and invest in the Co-op's core retail and consumer services divisions.

It leaves the Co-op to focus on its food shops, funeralcare and insurance businesses.

As part of the deal 15 farms spanning 40,000 acres of land will be sold, bringing the Co-operative's 118 years in farming to an end.

Co-op's Interim Group chief executive Richard Pennycook said: "In the Wellcome Trust we have a buyer whose values are closely aligned to those of The Co-operative. 

"They have a proven track record in managing a sustainable investment portfolio, the proceeds of which are used to fund improvements in biomedical science and learning."

He added: "The Wellcome Trust has acquired an excellent farming business characterised by the quality and professionalism of colleagues and high levels of customer service.

"I expect the farming business to continue to thrive under their committed long-term ownership."

Charitable body the Wellcome Trust owns property valued at around £1.8bn.

The organisation's chief investment officer Danny Truell said: "The Trust's philosophy is to provide long-term investment for the businesses and property we hold in good times and in bad.

"We will take this approach to running Farmcare Trading as a going concern, giving a business that is already strong and successful the support and resources it needs to grow, to the benefit of employees, tenants, partners and local communities."

Co-op's latest sale comes after the group sold its pharmacy stores to Bestway for £620m last month.

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Campaigners Call For 'Staycation' Tax Cut

By Frazer Maude, Sky News Reporter

Campaigners fighting for a reduction in VAT for the tourism industry say it could offer the UK economy a £4bn boost.

The popularity of domestic holidays, or 'staycations' has been fuelled by the recession.

In fact a recent survey by Barclays projects that they may be worth over £108bn to the UK economy by 2017, and that our spend on holidays at home will increase by 25% over the next four years.

But tourism chiefs say the UK isn't competing on a level playing field with the rest of Europe.

In France, Germany, Spain and Italy, VAT paid by tourists is set at 7 or 10%. Here it's 20%.

Cuts in the rates in Europe have shown to be successful, and those campaigning for the same to happen here say a cut to 5% would boost investment, jobs and visitor numbers.

Patrick Dempsey, managing director of Whitbread Hotels and Restaurants, said: "We fully support the initiative to cut tourism tax. A cut would deliver a huge financial boost for tourism around the UK and 120,000 new jobs with 8,000 already being created by Premier Inn by 2018."

'Staycations' in the UK were made more popular by the recession

Another report shows that the UK is ranked 138 out of 140 countries for price competitiveness, and is one of only four countries in the EU not to reduce tourism VAT.

Graham Wason, chairman of the Cut Tourism VAT Campaign, said:  "This new research is the economic proof the Treasury has asked for to prove what every other country in Europe knows - that cutting VAT on holidays is profitable for governments.

"Many of our coastal towns are ignored but cutting VAT would help them thrive. More than 60 cross-party MPs have signed our parliamentary motion and more than 1,000 companies and groups are backing the campaign."

But there is little sun on the horizon from the Government.

The Treasury told Sky News in a statement: "The Government recognises the importance of the tourism and hospitality industry, and is providing additional support to businesses in a number of ways.

"For example, from April 2014 businesses and charities have been able to benefit from up to £2,000 off their employer national insurance contributions bill and over £1bn of business rates support has been provided, benefiting all ratepayers.

"While we keep all taxes under review, we do not have any plans to introduce a VAT cut for the tourism sector."

The campaigners won't be deterred, and say they will continue to lobby the Government for the same breaks that their European rivals are getting.

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RAC Gears Up For Float With Rake Appointment

By Mark Kleinman, City Editor

The CBI president Sir Mike Rake is in talks to become chairman of the RAC breakdown recovery service ahead of a potential £2bn stock market listing.

Sky News has learnt that Sir Mike is a leading candidate to chair the company, which is owned by the private equity firm Carlyle.

Bankers said that the RAC was expected to make an announcement about its new chairman this week, with Sir Mike understood to be the frontrunner.

Carlyle has not yet formally decided to pursue a stock market flotation, and is continuing to evaluate its options in the wake of the recent listing of the AA, its larger rival.

Assuming that Sir Mike does accept the role, it would add another significant boardroom position to his portfolio.

The deputy chairman of Barclays, he recently ruled himself out of the running to succeed Sir David Walker at the helm of the bank.

He also chairs BT Group, is a director of McGraw-Hill, the US-based owner of the Standard & Poor's ratings agency, and is on the board of various charities.

The RAC's next chairman will replace Rob Templeman, a businessman who has earned handsome rewards from the turnaround of various retail and consumer businesses, including Debenhams and Homebase.

Sky News reported last month that Carlyle had held preliminary talks with a number of other private equity groups about a £2bn sale of the RAC, although insiders insist that a flotation remains the likelier outcome.

In May, Carlyle appointed Lazard, the investment bank, to advise it on options to exit its investment, on which it hopes to have doubled the value of the RAC.

Since then, banks including Barclays, Citi, Goldman Sachs and JP Morgan have been hired to act as bookrunners for an initial public offering (IPO).

The RAC, founded by the Royal Automobile Club in 1897, has more than seven million members, and has about 2,000 patrols which attend 2.5 million breakdowns every year.

The RAC, which is owned by the same private equity group as Addison Lee, the London-based taxi company, is chaired by Rob Templeman, who is expected to step down ahead of a flotation.

Its chief executive is Chris Woodhouse, with whom Mr Templeman worked at Debenhams, the department store chain.

Aviva sold the RAC in 2011 to focus on its core insurance operations but was widely regarded to have undervalued the RAC by offloading it for £1bn.

Last November, the RAC paid its owners a £163m dividend as it emerged that the company was on track to make £145m in pre-tax profit last year, almost double its 2010 earnings.

It recently announced the launch of its first mobile electric vehicle charging unit and has begun selling telematic tracking devices, a growing trend among motor insurers.

An RAC spokeswoman declined to comment on the appointment of a new chairman.

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High Street Revival 'Has Shown Little Impact'

By Frazer Maude, Sky News Correspondent

The self-titled "Queen of Shops" has come under fire after her Government-backed bid to revive the High Street has shown little impact.

Wolverhampton was one of 12 town centres chosen to pilot retail guru Mary Portas' High Street revival. It got a £100,000 share of the £1.2m in funding.

That helped finance the opening of five retail outlets. Three of them have been a success, one has diversified, and the fifth went under.

Nick Pitt, manager of the local shopping centre, chaired the Wolverhampton Portas Project. He sees it as a success for the town centre.

"A hundred thousand pounds is good value. And it rallied businesses around to come together in a very selfless way to help people get into business," he told Sky News.

"It was quite a humbling experience. I see people who'd never had the opportunity before to have their own shop and now they have.

"And those people are still helping us now to help other people get into business. And we're determined to do it again."

The celebrity trouble shooter was brought in by the Government two years ago to breathe new life into our struggling High Streets.

But some of her key recommendations, like a reduction in business rates and free parking, were ignored.

Some £1.2m in funding was set aside two years ago to boost business

Labour MP and chair of the Government's Business Select Committee, Adrian Bailey, is critical of the scheme, saying: "Overall, and I would emphasise it time and time again, you will not change the basic problems of the High Street just by putting in these sort of pilots.

"You've got to change the business rates and those obstacles which are deterring people from moving into the High Street in order to provide an imaginative variety of retail offers that people will want to buy into."

Mary Portas was not available for interview, but her CEO David Wood issued a statement to Sky News on her behalf.

It said: "We think there's some justified criticism of the way Government originally implemented the programme and the lack of infrastructure to support the town teams.

"There's also justified criticism of the way the majority of the recommendations were accepted but nothing was done - for example we spoke in the report about parking, business rates, landlords, town-centre-first planning approvals and the like but little was done."

Penny Maudaunt, the newly appointed High Streets Minister, says the scheme has been successful.

"There has been a huge amount of really good work that's gone on locally," she said.

"The pilots have been experiments. There have been a lot of good ideas, some ideas that may not have worked so well, but there are a number of ideas that have worked very well for particular areas and what we have to do is replicate that in other High Streets."

But many businesses say the areas that need tackling are the very ones that Ms Portas highlighted months ago, and which the Government ignored.

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Brady And Ex-M&S Boss To Get Tory Peerages

By Mark Kleinman, City Editor

David Cameron is to hand peerages to The Apprentice star Karren Brady, the former Marks & Spencer (M&S) boss Sir Stuart Rose and a multimillionaire Conservative donor in a wave of appointments that could revive a festering row about membership of the House of Lords.

Sky News can exclusively reveal that Ms Brady and Sir Stuart have been lined up as Conservative members of the upper house.

A Government insider said that Michael Farmer, a co-treasurer of and long-standing donor to the Tories, is also expected to be made a peer when the new list is unveiled.

The appointments of Ms Brady and Sir Stuart will bring two of Britain's most prominent businesspeople into the Lords at a time when the main parties are battling to secure high-profile support from business leaders in the run-up to next year's General Election.

Mr Farmer is less well-known outside the City but earned the nickname 'Mr Copper' after making a fortune from the commodities markets.

He has donated several million pounds to Conservative coffers in recent years and became co-treasurer of the party in 2012.

Another source said Joanna Shields, the former Facebook executive who went on to run Tech City, the London-based hub for technology businesses, had also been mentioned in recent days as a potential appointee, although her presence on the final list could not be verified.

Ex M&S boss Sir Stuart Rose (left, middle) has also been lined up as a peer

The timing of an announcement is unclear, although sources indicated that it could come as soon as next week.

Around 20 new peers are expected to be appointed, with the majority selected by Mr Cameron and Nick Clegg, the Liberal Democrat leader.

New members of the Lords are subjected to a strict vetting process, which the Government source said had now been completed in relation to the latest nominees.

The forthcoming arrivals will increase membership of the Lords to more than 850, reinforcing its status as the second-largest legislative chamber in the world, behind only China's National People's Congress.

The frequent appointment of new peers has sparked criticism about the cost to taxpayers and the ability of the Lords to function effectively as a legislative scrutineer.

It has also led to rows about the propriety of handing peerages to prominent party supporters and donors.

A number of leading business figures, including Lord Myners, the former M&S chairman, and Lord Davies, who ran Standard Chartered, were parachuted into the Lords during the banking crisis and took on ministerial roles.

Both Ms Brady and Sir Stuart have appeared at Conservative annual conferences in recent years, with the West Ham United boss also taking on a role as small business adviser to the Government.

Sir Stuart, who has taken on a string of jobs since leaving M&S including the chairmanship of Ocado, the online grocer, has also been advising the Government on NHS reform.

Reports this week said that Michael Cashman, the ex-EastEnders actor, would be one of three new Labour members of the Lords, while David Willetts, the former universities and science minister, and the former energy minister Greg Barker are said to be in line for peerages after the next election.

A Downing Street spokesman declined to comment, while none of the prospective new peers could be reached for comment.

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HSBC Urges Ring-Fencing Delay Amid CMA Probe

By Mark Kleinman, City Editor

One of Britain's biggest banks is urging the Government to delay a deadline for separating lenders' retail and investment banking operations amid fears that billions of pounds could be wasted on the project.

Sky News has learnt that Douglas Flint, the chairman of HSBC, has written to George Osborne, the Chancellor, and Mark Carney, the Bank of England Governor, in recent days to warn about the potential implications of a competition probe into the industry.

Mr Flint is said by Whitehall sources familiar with the letter's contents to have requested a delay to the 2019 timetable for bank ring-fencing, which was part of Sir John Vickers' Independent Commission on Banking (ICB) report in 2011.

One political insider said that HSBC was not challenging a recent announcement by the Competition and Markets Authority (CMA) disclosing that it was minded to move ahead with a full inquiry into the personal current account and small business (SME) banking markets.

However, the bank is understood to have expressed concern that the CMA could call for structural reforms which would entail the disposal of operations on which it is already spending significant sums in preparation for the introduction of ring-fencing.

The demand for a delay to the ring-fencing deadline until the outcome of a competition probe is known represents the most robust recent intervention by a major bank over one of Britain's key post-crisis reforms to the industry.

Andrew Bailey, the Prudential Regulation Authority chief executive, and Andrew Tyrie, chairman of the Treasury Select Committee and Parliamentary Commission on Banking Standards (PCBS), are also understood to have received Mr Flint's letter.

Legislation to enact the ring-fencing structure had already been passed under the Banking Reform Act, and it is unclear whether there will be any appetite among politicians or regulators to accede to HSBC's request.

Mr Flint's letter will, nevertheless, carry substantial weight in Whitehall because of his status as one of the most respected executives in the UK banking sector.

A public endorser of the ICB reforms in the past, he also chairs the board of the Institute of International Finance, a global association of financial services trade bodies.

The ICB acknowledged that segregating the retail and investment banking operations of the big UK lenders would incur billions of pounds of costs, but argued that it was the most effective way to prevent taxpayers having to step in and rescue banks during a future financial crisis.

A number of key details, including the governance of ring-fenced banks, are expected to be set out in secondary legislation during the next 12 months.

Mr Osborne has also waved through a key PCBS recommendation that regulators be given the power to enforce full separation of universal banks such as Barclays and HSBC if they breach the new rules: a reserve power that Mr Tyrie described as "electrifying the ring-fence".

Sky News has learnt of HSBC's warning to Mr Osborne the day before it reports half-year results, making it the last of the major UK banks to do so.

HSBC declined to comment on Sunday.

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Boris Says EU Exit Might Be Best For Britain

Britain could be better off if it "quits" the European Union than if it remains a member, Boris Johnson has said.

The London Mayor made his comments ahead of the publication of a new report, which finds London's economy would not suffer significantly if the UK headed for the exit.

Mr Johnson, who will make a speech on the report on Wednesday, is expected to set out an eight-point plan for reform of the EU, which will far exceed the renegotiation deal being attempted by the Prime Minister.

"When you look at the cost of EU social policy, the stagnation of the EU economies, the continuing absurdities of some Brussels regulation, we are plainly getting to the stage where it might well be better to quit an unreformed EU than to stay in," Mr Johnson wrote in his column for The Daily Telegraph.

Mr Johnson will go further than the PM on renegotiation terms

"As it happens, I have no doubt that we can lead the campaign for reform. But if we are going to succeed, we need to build on our alliances, and to appreciate how our friends on the continent see things." 

It comes amid increasing speculation over whether the London mayor will stand for MP in 2015 and a possible subsequent bid for the Tory leadership should David Cameron fail to deliver at the ballot box next year.

The comments could also pit Mr Johnson against Chancellor George Osborne, also a potential leadership contender, who will be giving a speech on Tuesday.

Mr Johnson will be effectively pitting himself against Mr Osborne

And it will put pressure on Mr Cameron to be clear about whether he will campaign to leave the EU if he fails to gain a better deal for the UK come a promised in-out referendum in 2017.

The report, which has been drawn up by Mr Johnson's senior economic adviser Gerard Lyons, will say a British exit from the European Union is "definitely a viable option".

It is expected to find the capital's GDP of £350bn, which accounts for about a fifth of the UK economy, can be expected to grow to £640bn by 2034 if Britain stays in a reformed EU. However, it finds if Britain exits the EU, London's GDP would still grow to £614bn by 2034.

Mr Clegg is also calling for a migrant 'limit'

It comes as Nick Clegg calls for a limit on the number of migrants arriving from new EU countries.

He wants EU countries to be able to close the door if there are too many people from the new member states trying to come in.

All three main parties are attempting to respond to voters' concerns on immigration, which remains high on the agenda ahead of next year's General Election, and was capitalised on by UKIP at this year's local and European elections.

Polls have consistently shown that around half of voters think immigration is an important issue for Britain.

However, when asked what issues were most important to people and their families, less than a fifth of those asked put immigration at the top.

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Rising Energy Bills Top Concern For Households

Rising energy bills are the number one concern for European households, according to a report by Kingfisher.

Europe's largest home improvement company and owner of B&Q said that 65% of homeowners say increasing energy prices are their primary household concern.

In its survey of 17,000 people across nine countries, Kingfisher found it was more than double the 23% who were worried about mortgage or rent repayments.

Due to the level of concern, it said people are eight times more likely to prioritise energy efficient changes in their home, compared with two years ago.

According to the company, 31% intend to update their homes' energy efficiency, compared to just 4% in 2012.

Kingfisher chief executive, Sir Ian Cheshire said: "Rising energy prices are a very real fear - right across Europe, a bigger concern even than worries about paying the rent or mortgage.

"There is a staggering increase in the number of people who intend to prioritise energy efficiency and it is soaring bills that is driving this agenda."

The findings come following a move last week by energy regulator Ofgem to control electricity pricing for the next eight years from 2015.

The watchdog said the plans will lead to a £12-a-year reduction in household bills.

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HSBC Sees Pre-Tax Profit Drop 12% To £7.3bn

HSBC's pre-tax profit dropped by 12% to £7.3bn in the first half of the year.

For the same period in 2013, the bank made £8.3bn.

It comes as HSBC said it has increased its provision for payment protection insurance (PPI) compensation by £115m.

Last week Lloyds Banking Group and Barclays upped their compensation pots for the mis-selling of PPI.

In the six months to June 30, HSBC also saw underlying revenue fall by 4% to £18.6bn.

Group chief executive Stuart Gulliver said: "There are indications that interest rates could start to rise as early as the fourth quarter of 2014 in the UK and the first half of 2015 in the US, which given the size of our commercial surplus has positive implications for our revenues."

Looking ahead, he said: "We remain broadly positive about the economic outlook for the majority of our home and priority markets.

"The UK in particular should maintain a firm recovery."

On Sunday Sky News revealed that HSBC is urging a delay in ring-fencing amid a probe into the industry by the Competition and Markets Authority.

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Portugal's Banco Espirito Santo Gets Bailout

Portugal has announced a multi-billion euro rescue plan for struggling lender Banco Espirito Santo.

4.9bn euros (£3.9bn) will be pumped into its largest listed bank which under the plans will be split into two.

A "good bank" called Novo Banco will take healthy assets, whilst a "bad bank" will be formed to take exposure to risky ones.

Depositers and senior bondholders will be protected by the creation of Novo Banco.

Junior bondholders and shareholders, which includes the Espirito Santo family, will bear the bad bank's losses.

It comes after Banco Espirito Santo reported a record loss of 3.6bn euros (£2.8bn) for the first half of the year last week.

Portugal's central bank said the money used to rescue the troubled lender will come from a bank resolution fund created in 2012, which the state will lend 4.4bn euros (£3.5bn).

It said the public would not shoulder the cost as the loan will be temporary and it expects the state to be reimbursed when Novo Banco is eventually sold to private investors.

Carlos Costa, the central bank's governor, said: "The plan carries no risk to public finances or taxpayers."

A setback for Portugal, it comes just months after the country emerged from a 78bn euro (£62bn), three-year bailout from the European Union and the International Monetary Fund.

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