Minimum Wage: Britain 'Can Afford' To Pay More

Britain can afford to increase the amount its lowest-paid workers earn, the Chancellor has announced.

George Osborne said an above-inflation rise in the national minimum wage - currently set at £6.31 an hour - would "secure a recovery for all".

He has not revealed how much the wage could increase by, although he said it would need to rise by more than 10% to £7 an hour to match improvements to the economy.

"I believe Britain can afford an above-inflation increase in the minimum wage, so we restore its real value for people and make sure we have a recovery for all and that work always pays," he told the BBC.

The Chancellor says the minimum wage may need to rise to £7 an hour

Prime Minister David Cameron has also said the Conservatives have taken "difficult decisions" to "fix the economy" and could now afford to put "more money in people's pockets".

However, Labour accused Mr Osborne of "flailing around under pressure", while a Liberal Democrat source said the Chancellor had "dragged his feet" on making an announcement.

Chris Leslie, the Labour Treasury spokesman, said: "The Tories cannot hide from the fact that working people are on average £1,600 a year worse off since they came to office.

"We need action now to earn our way to higher living standards and tackle the cost-of-living crisis."

Any increase to the minimum wage would be recommended by the Low Pay Commission (LPC), which talks to businesses and looks at economic data before suggesting a rate.

The LPC, which is independent and overseen by Business Secretary Vince Cable, reviews rates each year and reports to the Government in February.

 It has been handed the Government's latest analysis on jobs and the economy ahead of its report next month.

The Government sets the rate based on the LPC's recommendation, with HM Revenue & Customs handling enforcement. 

An increase to the minimum wage would likely take effect in the autumn.

The Federation of Small Businesses backed an increase to the minimum wage but said it should rise by no more than the rate of inflation - currently 2%.

Its national chairman John Allan said: "The Low Pay Commission will recognise that in some industries, such as retail and social care, small businesses operate very fine margins and are still struggling with rising costs in areas such as utilities and business rates.

"At the same time, the recovery remains on a fragile footing in certain regions of the UK."

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Cinema Shake-Up Goes On As Odeon Boss Exits

By Mark Kleinman, City Editor

The shake-up of one of Britain's biggest leisure industries will continue on Friday with the departure of the boss of Odeon UCI Cinemas.

Sky News understands that Rupert Gavin, who has run the privately-owned group for eight years, is to leave a year after its owner abandoned its latest attempt to sell the company.

Mr Gavin will be replaced by Paul Donovan, a former executive at Vodafone and Eircom, the Irish telecoms group.

The management change marks the latest significant move at the top of the cinema sector.

Steve Wiener, the chief executive of Cineworld, is leaving at the same time that the company embarks on a merger with Cinema City International, a Polish-based competitor.

Vue Entertainment, one of the other big players in the UK industry, was sold last year to a Canadian pension fund, while the much smaller Everyman chain floated on the London stock market.

Odeon UCI is owned by Terra Firma Capital Partners, the private equity group headed by Guy Hands.

Mr Hands bought and lost control of the music company EMI in acrimonious circumstances, but has enjoyed better fortune with some of his other investments.

A person close to Mr Hands said that Mr Gavin would become an adviser to Terra Firma and join the board of Garden Centre Group.

The outgoing Odeon UCI boss will also spend more time at Incidental Colman, his privately-owned theatre and entertainment group.

Terra Firma has tried to sell or float Odeon UCI on several occasions but buyers and stock market investors have refused to meet Mr Hands' asking price.

Insiders say the private equity group is now likely to hold onto the business for several more years.

During his time at the company, Mr Gavin has built it into the largest multiplex operator in Europe.

A statement announcing the changes is expected later on Friday. Terra Firma could not be reached for comment.

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Shell Shares Tumble After Profit Warning

Shares in Royal Dutch Shell dived by more than 4% in early trading after the oil firm warned of a "significant" profit miss.

It cut its forecasts for earnings on a current cost of supplies basis to $2.9bn (£1.8bn) from market expectations of about $4bn, leaving full year results about 23% lower at $19.5bn (£11.9bn).

The company gave provisional, unaudited, figures of net profit of $1.8bn (£1.1bn) for the quarter, down from $6.7bn in the same period a year ago.

Shell blamed a mix of lower than expected production, higher than forecast costs and a worse than expected performance by its refining division.

Shell's most profitable businesses have not performed as expected

The company's new chief executive, Ben van Beurden, said the results were "not what I expect from Shell."

It was his first update to investors - having only taken over the running of the Anglo-Dutch energy major two weeks ago ahead of the retirement of Peter Voser.

He added: "Our focus will be on improving Shell's financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery."

The company said it had a "high level of maintenance activity" in the final quarter of 2013, disproportionately at its most profitable operations, including where it sells gas it has transformed to liquid form.

Earnings were also hurt by the weaker Australian dollar, its American production activities operating at a loss and by pipeline shutdowns in Niger, where vandalism has damaged output.

The profit warning fed into investor concerns about wider fourth quarter earnings following a slew of results in the US after-hours on Thursday which missed analysts' forecasts.

The news saw Britain's FTSE 100 - where Shell's A and B shares together make up around 8% - open broadly flat, knocking upwards contributions from miners.

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Exchanges Group ICE To Unveil Libor Reforms

By Mark Kleinman, City Editor

Administration of the tainted interbank borrowing rate Libor will be handed over next month following approval from the City regulator.

Sky News understands that the US-based IntercontinentalExchange Group (ICE) will announce on Friday that it has received the go-ahead to begin overseeing the daily setting of some of the world's most important financial indices.

The handover will take place in early February in the wake of an escalating scandal which has seen some of the biggest global banks fined hundreds of millions of pounds for failing to prevent traders attempting to manipulate Libor and related benchmarks.

As part of the changes, which will see the British Bankers' Association relinquish oversight of Libor, ICE will announce that Andre Villeneuve, a City grandee, will become chairman of ICE Benchmark Administration Limited.

Mr Villeneuve is a former chairman of LIFFE, the futures market owned by NYSE Euronext, which was itself subsumed by ICE in an industry-reshaping merger last year.

So far, four banks - Barclays, Royal Bank of Scotland, Rabobank and UBS - have been fined close to £2bn by regulators for their role in the global rate-rigging scandal, with a queue of others waiting to settle.

The European Commission has also fined a string of large banks in recent months, adding to the costs for the industry of resolving the rate-rigging scandal.

A review of the rates by Martin Wheatley, chief executive of the Financial Conduct Authority (FCA), found that the rate was open to manipulation and made a series of recommendations including sharply reducing the number of rates set as part of the process.

As the new Libor administrator, ICE will still be subject to FCA regulation and supervision.

The FCA is expected to say on Friday that it has approved the handover of Libor, according to insiders.

ICE could not be reached for comment, while the FCA declined to comment.

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Fastest Growth In Retail Sales Since 2004

Brisk business for smaller retailers ahead of Christmas helped sales volumes grow at their fastest annual pace since 2004 in December.

Figures from the Office for National Statistics (ONS) measured 2.6% growth during December to show an annual increase of 5.3% - easily topping the forecasts of economists.

The performance suggests a bigger contribution to GDP growth from consumer spending in the fourth quarter of 2013, after the sector was credited with driving recovery during the previous three months.

However, it will also raise more concerns about consumer debt levels and the extent to which people are digging into savings.

The surge in business for small stores may have been a result of the storms ahead of Christmas - prompting consumers to shop locally.

Debenhams had a poor Xmas despite department stores seeing strong trade

Small stores were found by the ONS to have outperformed their bigger rivals, with the amount spent in them increasing by 8.1% against growth of 2.6% for larger stores, compared with December 2012.

The figures follow news of upbeat trading from the likes of Argos, Halfords, Primark and Next over the festive season, though Marks & Spencer and Debenhams struggled.

The extent of their woes was laid bare by the ONS, which measured department store sales volume growth of 11.7% in December - the highest year-on-year growth since January 2000.

The slew of results from major chains suggested retailers who embraced online and high demand for gadgets and cheap fashion enjoyed robust trading.

The ONS said internet sales increased 11.8% by value compared with the same month last year, with average weekly spending online standing at £675.4m.

The statistical body also reported that the 2.6% growth in sales volumes month-on-month equalled the previous high set in February 2010.

The overall amount spent in shops was up 3.6% compared with the same month last year, with food stores improving by 2.2% and non-food stores by 4.4%.

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Google Unveils Contact Lens For Diabetics

A new contact lens that monitors glucose levels in tears could help diabetics avoid the pain and inconvenience of having to prick their fingers to draw blood as many as 10 times a day.

Nearly 400 million diabetics worldwide have to monitor their blood sugar and tweak their insulin dose to keep their levels under control, or face potentially dangerous complications.

The contact lens has been developed by Google at its secretive X lab during the past 18 months.

The device looks like a normal contact lens, but inside is a minuscule glucose sensor and wireless transmitter. Sandwiched in the lens are two glitter-specks loaded with tens of thousands of miniaturised transistors, while the lens is ringed with a hair-thin antenna.

Shrinking the parts to such a small size was a major task, according to Brian Otis, one of the lead researchers.

Google is looking for partners to bring the lens to market

Vision is not obscured because the embedded electronics are outside the eye's pupil and iris.

"We're testing prototypes that can generate a reading once per second," Mr Otis said.

"We're also investigating the potential for this to serve as an early warning for the wearer, so we're exploring integrating tiny LED lights that could light up to indicate that glucose levels have crossed above or below certain thresholds."

Dwight Holing, of the American Diabetes Association, warned the device must provide accurate and timely information as "people with diabetes base very important health care decisions on the data we get from our monitors".

Research began several years ago at the University of Washington, and other medical devices are being designed elsewhere.

Google is now looking for partners with experience bringing similar products to market. It declined to say how many people worked on the project, or how much has been invested in it.

It will take at least another five years before the lens can reach the market.

An early, outsourced clinical research study with patients was encouraging, but there are many potential pitfalls to come, said University of North Carolina diabetes researcher Dr John Buse, who was briefed by Google on the lens.

"This has the potential to be a real game changer," he said. "But the devil is in the details."

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Silk Road: Millions In Bitcoins Forfeited

US prosecutors have announced the forfeiture of $28m (£17m) worth of Bitcoins seized from Silk Road, a hidden online marketplace that was used to shop for drugs and other illegal activities.

Preet Bharara, the US Attorney for the Southern District of New York, announced the forfeiture of 29,655 Bitcoins as well as the forfeiture of the Silk Road site.

It is the largest ever forfeiture involving the e-currency, a statement by Mr Bharara's office said.

Silk Road's owner and operator, Ross Ulbricht, was arrested in October in San Francisco after a federal investigation that started in 2011.

Ross Ulbricht denies the charges

He has been charged with computer hacking conspiracy, narcotics trafficking conspiracy, and money laundering.

Ulbricht, allegedly known online as Dread Pirate Roberts, denies the charges.

Mr Bharara's statement said the Bitcoins were forfeited "because those assets allegedly were used to facilitate money laundering and constitute property involved in money laundering".

The website, dubbed the eBay of the drug trade, used a privacy-protecting Tor network and Bitcoins which allowed buyers and sellers around the world to shield their identities.

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Miliband Promises 'Reckoning' With Big Banks

Is The Banking System Broken?

Updated: 12:36pm UK, Friday 17 January 2014

By Joel Hills, Business Presenter

Folklore at Tesco has it that any internal business pitch to the former boss Sir Terry Leahy which didn't include the word "customer" in the first sentence was bound to end in failure and, on occasion, humiliation.

Sir Terry's time at Tesco is in the process of being reassessed, but there's surely no doubting that the supermarket's spectacular growth in the late 90s was down, in great part, to Tesco's obsession with delivering what customers wanted (no quips about horse burgers, please).

The reason banks are so unpopular, of course, is that they have demonstrably failed to put their customers at the heart of what they do.

In fact they have, on the whole, treated us appallingly.

As Bill Michael of KPMG put it to a group of bank bosses at their annual conference in 2012, far from treating their customers like kings, banks had behaved as if we were "captive geese that can be force-fed, or sold more product to - whether appropriate or not".

Here's the remarkable thing though: the litany of recent scandals and abuses (Payment Protection Insurance, interest rate swaps, Libor-fixing, money laundering, tax avoidance) doesn't seem to have cost the big banks any customers.

Take Barclays. Broadly speaking, the bank has the same number of personal accounts and business accounts today that it did before the financial crisis.

Now the likes of Barclays, Lloyds, RBS and HSBC will tell you that's because ultimately we are all satisfied with the service we are getting from them. Ed Miliband believes it indicates there is something seriously wrong.

The Labour leader's view - that the market isn't functioning properly - is one some of the bosses of smaller banks share.

Last October, a month after the new seven-day switch guarantee was introduced, I chaired a session at the British Bankers' Association's 2013 conference.

Jayne-Anne Gadhia, the chief executive of Virgin Money, complained that the playing field was still horribly skewed in favour of her rivals. 

Paul Lynam, the chief executive of Secure Trust bank, also thinks he's kicking a ball uphill and struggles to steal business from his much bigger rivals as a result.

Interestingly, while both of them share Ed Miliband's diagnosis of the problem, they both also think his prescription of forced branch sales and market share caps are wrong-headed.

Mr Lynam's grumble is that bigger banks can lend more freely than he can because they can borrow more cheaply (they're still too big to fail and therefore continue to enjoy an implicit taxpayer guarantee) and they are not obliged to retain as much capital to protect themselves against losses as he is (Basel rules – don't worry, I'm not going there).

He also believes that the Payments System is deeply flawed.

Now stay with me, please, because his last point is important. Think of the Payments System like the National Grid, but instead of moving gas and electricity around the country the Payments System moves money.

If Mr Lynam wants to send a payment on behalf of one of his customers to a customer at another bank he has to use the Payments System. Here's the rub: the Payments System is effectively owned by the big banks and they charge Mr Lynam up to 40 pence to "clear" each transaction. He says the real cost is closer to 1p.

The whole issue of competition in banking is nuanced and fiercely contested, but it is also desperately important that it's resolved.

It is imperative that we all have faith that the banking system is working well and in our interests.

Perhaps Mr Miliband's suggestion of a full, independent competition inquiry, however long, isn't such a bad idea.

After all, the Competition Commission investigation into the supermarket sector in 2008 went some way to sorting fact from myth and, I would argue, helped to restore some public trust in the likes of Tesco. And public trust in our banks has surely never been so low.

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Ex-HBOS Bankers Engineer £400m Polypipe Float

By Mark Kleinman, City Editor

A group of former executives from the collapsed mortgage lender HBOS are engineering a potentially-lucrative flotation of Polypipe, a fast-growing British manufacturer.

Sky News has learnt that Caird Capital, a firm set up in the aftermath of the banking crisis, is working with Deutsche Bank, Numis Securities and Canaccord Genuity on a public listing that could value Polypipe at more than £400m.

A flotation is expected to take place in the coming months and will underline the revival in the fortunes of Graeme Shankland, who was involved in many of the biggest deals in which HBOS invested its own cash in the period before the 2008 banking crash.

Caird has already made a handsome return from the sale of stakes in Vue Entertainment, the cinema chain, and David Lloyd Leisure, the health and fitness clubs operator.

Polypipe, which manufactures plastic piping for use in houses, has been a beneficiary of the improved performance of the housebuilding sector, which in turn has been aided by Government measures such as its Help To Buy scheme.

Caird is a joint venture between HBOS's rescuer, Lloyds Banking Group, and Coller Capital, a private investment firm.

Polypipe, which was acquired by HBOS in 2007 from an American private equity group, has also been bolstered by housing regulations requiring the use of plastic, rather than copper or concrete-based, piping.

In 2012, the most recent year for which financial results are available, Polypipe made £49m in profit on turnover of £282m, with margins understood to have improved again last year.

Founded in 1980 and headquartered in Doncaster, the majority of its sales are generated in the UK although it also has operations in France and Italy.

People close to Polypipe, which employs nearly 2,000 people, stressed on Friday that a decision about its future would be determined by the company itself.

A flotation is the preferred option, which would entail Polypipe returning to the stock market after a 15-year absence, although a sale remains possible.

Mr Shankland was one of the architects of the Integrated Finance strategy that saw HBOS acquiring stakes in companies to which it also lent money.

The precise structure under which he and his Caird colleagues are incentivised is unclear, although he told The Sunday Times last month: "We get a carried interest should the fund perform beyond a certain hurdle rate.

"We can see we would get to a point where the team could participate - it's a small share of the proceeds once investors have got a certain return."

In total, HBOS spent about £1.8bn on the company stakes which were transferred to Caird, with Mr Shankland confident that their sale could generate as much as £2.3bn.

A spokesman for Polypipe declined to comment.

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Bingo Hall Burden: MPs Call For Tax Cuts

By Adele Robinson, Sky News Correspondent

The UK's bingo hall business will "stagnate" if the Government does not cut tax on it, campaigners say.

More than 50 MPs are backing calls to reduce duty and bring levies on the game in line with other forms of gambling.

Bingo hall profits are currently taxed at 20% compared with a 15% rate for most other gambling activities.

Campaigners estimate that reducing bingo duty is expected to raise around £40m for the Exchequer over four years.

Miles Baron, from the Bingo Association, says investment is vital for growth.

"By building new clubs and investing in new clubs, attendances would improve that would generate more income, that would generate new taxes, that would employ more people ... this is at the heart of the community, this is a vital and important part of some people's social repertoire."

Campaigners claim gambling taxes are forcing more and more clubs to close

The Government says it would have to carefully consider before reducing the rate because its priority is to cut the budget deficit.

Jim Cunningham, Labour MP for Coventry South, says if more support is not given then the "social service" side of bingo will be lost.

"The implications can be that some of these places may have to close because they're not profitable and if that happens then there is a problem for some of these elderly people, during the day in particular, to find somewhere else to go."

Nearly 400 bingo clubs across England, Scotland and Wales are hosting free bingo games this weekend to support the campaign to cut tax.

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