M&S Takes Next Turn In New Efficiency Drive

By Mark Kleinman, City Editor

Marks & Spencer (M&S) is turning to the architects of rival Next's widely-envied supply chain in a bid to drive efficiencies that will save it tens of millions of pounds a year.

Sky News has learnt that Britain's biggest clothing retailer has appointed two brothers, Mark and Neal Lindsey, as sourcing directors for general merchandise, with specific responsibility for clothing and footwear.

The appointments will hand the Hong Kong-based duo powerful influence over much of M&S's commercial activity, according to insiders, overseeing its network of regional sourcing offices around the world as well as its large London-based central sourcing team.

Taking up their roles on Monday, they will be charged with boosting M&S's margins at a time when the City remains unconvinced about the long-term prospects of the company.

The Lindsey brothers have a long track record in the secretive milieu of global fashion sourcing, where billions of pounds changes hands as international retailers attempt to squeeze suppliers in order to boost profits.

Although little-known in the UK, they played an important role in assisting Next's rise to prominence on the high street and its establishment as a darling of the City.

The Lindseys oversaw the growth of Next Sourcing Limited, which streamlined Next's supply chain to improve its speed and efficiency, according to analysts.

They are understood to have been recruited by M&S chief executive Marc Bolland, but are expected to report to John Dixon, the executive director for general merchandise.

Their appointment has raised questions internally about the status of Krishan Hundal, the executive with existing oversight of sourcing.

An insider said that his role would continue to be as important as he focused on quality, innovation, packaging, technology, ethical sourcing and delivering on commitments made under M&S's Plan A corporate sustainability project.

An M&S spokesperson confirmed the Lindseys' recruitment.

The move to sharpen its supply chain comes seven weeks after the chain announced disappointing Christmas trading, with like-for-like sales of clothing and homewares down 2.1% in the quarter, despite having overhauled its key womenswear ranges.

Food sales fared better, rising 1.6%.

Mr Bolland said that an "exceptional, unusual and unseasonable" October combined with "unprecedented" discounting on the high street were responsible for the decline in clothing sales.

The decline also came despite a huge two-day general merchandise sale offering 30% off all clothing lines during the weekend before Christmas.

M&S had previously tended to shun such significant pre-Christmas discounts under the leadership of Mr Bolland, although it occasionally ran them under Sir Stuart Rose, his predecessor.

Standard Life Investments, one of the retailer's biggest shareholders, said in January 2013 that disappointing trading meant that Mr Bolland was on borrowed time, although investors have recently been more willing buyers of the shares amid hopes that his strategy is beginning to produce the desired results.

M&S shares closed 1p higher on Friday at 503.5p, while the stock is up by more than 35% over the last year.

The high street bellwether is approaching the tenth anniversary of the most recent takeover bid by Sir Philip Green, the Top Shop and BhS billionaire.

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Cable Demands Talks Over RBS Lending Targets

By Mark Kleinman, City Editor

Vince Cable is to seek talks with the chief executive of Royal Bank of Scotland (RBS) about the introduction of new lending targets at the state-backed institution.

Sky News understands that Mr Cable is "disappointed" that Ross McEwan did not announce specific targets for net lending to small and medium-sized business (SME) customers as part of his overhaul of RBS unveiled on Thursday.

The Business Secretary plans to "follow up with" Mr McEwan to encourage him to reconsider the decision, an aide said.

RBS, which has been criticised for its treatment of SME customers and is now the subject of a formal probe by the City regulator, announced last autumn that it wanted to increase gross lending to SMEs this year by at least 10% to more than £9bn.

This would "ensure we can support thousands more businesses with their expansion plans", the bank said at the time.

However, it has eschewed net lending targets, which take into account loan repayments made by SME customers.

Mr Cable is keen to have a constructive relationship with Mr McEwan, and said on Thursday that he was pleased with the outline of RBS' new strategy, which involves slimming the bank from seven divisions to three: personal and business, commercial and private and corporate and institutional banking.

"I am pleased by the overall direction of travel of RBS, getting away from the disastrous obsession with large and risky casino banking of the Fred Goodwin years, focusing instead on British customers and British business," he said.

"British taxpayers are still paying for the terrible mistakes of the past and I see no sign yet of a turnaround in the continuing decline of net lending to small business.

"The public will simply not understand why big bonuses and large salaries continue to be paid out by a loss-making public enterprise, still underperforming in many areas."

George Osborne, the Chancellor, struck a more conciliatory tone in relation to RBS' new strategy, which analysts said was unsurprising given the role he had played in the departure of Stephen Hester, Mr McEwan's predecessor.

As Sky News revealed, the new RBS structure involves a shake-up of the bank's top management, including the appointment of Alison Rose as the bank's most senior female executive.

RBS has not been the subject of formal lending targets since it was part of the industry-wide Project Merlin initiative in 2011.

Designed to restore trust in the British banking sector, it involved Barclays, HSBC, Lloyds Banking Group, RBS and Santander agreeing to lend specific sums to homeowners and SMEs.

Although the former target was met, the latter was not, exacerbating the tension between the major banks and politicians.

RBS was also forced to sign up to lending targets in the two years which preceded Project Merlin, with Mr Hester's remuneration linked partly to the achievement of those goals.

The bank declined to comment on Friday, although a source close to the bank said that it had not received a formal request from the Treasury or UK Financial Investments (UKFI) to reintroduce net lending targets.

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Gamblers To Set Cash Cap On Machines

New technology will allow gamblers to set limits on how much time and money they spend on gaming machines.

The technology is being installed on gaming machines in England and Wales as part of a code of conduct established by the Association of British Bookmakers (ABB).

The ABB says the code aims to "tackle problem gambling".

The technology will allow customers to set limits on gambling machines, and will also introduce mandatory alerts when a customer has spent £250 or played for 30 minutes.

Staff at gambling venues will also be informed when the limit is reached, while machines will alert the customer and force a 30-second break in play.

The new technology to implement the measures is currently being installed on 33,000 machines across England and Wales.

The ABB said the code, which comes into effect today, has the "full support" of the gambling industry.

ABB chief executive Dirk Vennix said: "The code will help give players more control and encourage responsible gambling.

"It forms part of the industry's ongoing, proactive efforts to be socially responsible, to tackle problem gambling and to ensure a duty of care towards every customer.

"We recognise growing concerns that some customers are spending too much money or too much time on gaming machines. We want to take steps to protect them because one problem gambler is one too many.

"That is why we have put together the code, which introduces revolutionary new harm minimisation measures, the likes of which have yet to be seen anywhere in the world."

Dirk Hansen, chief executive of gambling advice service GamCare, said: "I welcome the ABB's move towards offering greater protections for players, encouraging responsible play and for raising awareness amongst betting shop customers about the help that is available for problem gambling.

"These new measures will not only educate players to the risks associated with gambling but also empower individuals to get support when they need it."

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Dementia: Shop Staff Will Train To Spot Illness

More than 190,000 high street staff will be trained to spot the signs of dementia under a raft of new measures to help people with the condition.

Workers at Marks & Spencer, Argos, Homebase, Lloyds Bank and Lloyds Pharmacy will become "dementia friends" to provide better support for sufferers.

An estimated 800,000 people have already been diagnosed with dementia, but experts expect this figure to soar to 1.7 million by 2051.

Health Secretary Jeremy Hunt said the new package of care would make the UK a world leader in fighting the illness, which he described as "horrific and heartbreaking".

Health Secretary Jeremy Hunt

"(This) is about government, clinicians, business, society and investors coming together to raise our game on every front - from speedy diagnosis to compassionate care, and from help on our high streets to the quest for a cure," he said.

NHS England is to invest £90m in an attempt to diagnose two-thirds of people with dementia by March next year, targeting areas where it can take up to 25 weeks to carry out a diagnosis.

According to the Alzheimer's Society, one in three people aged over 65 will develop the condition, and two-thirds of sufferers are women.

Jeremy Hughes, chief executive of the charity, said: "(This) is a positive step forward to increasing diagnosis rates and ensuring that no matter where you live you will receive a timely assessment.

"Too often we hear about a lack of suitable services available to people with dementia and their carers.

"We welcome the focus on post-diagnosis support which will provide a vital lifeline to thousands who are currently left in the dark, with nowhere to turn for advice or support."

David Cameron has appointed a World Dementia Envoy following agreement between the G8 countries at a dementia summit in London in December.

The Prime Minister has called for international collaboration to urgently find a cure for the condition.

There are around 800,000 people in the UK who suffer from dementia

However, Labour warned the Government must tackle "poor care standards" in order to combat dementia.

Liz Kendall, the shadow minister for care and older people, said: "If his words are to have real meaning, Mr Cameron must do far more to help people struggling to cope with dementia right now.

"£2.7bn has been cut from council care budgets under this Government, hitting the quality of life of hundreds of thousands of people with dementia and their families."

She added: "The Prime Minister cannot credibly claim to show leadership on dementia unless he tackles poor care standards, like the increasing number of 15-minute home visits which are barely enough time to make a cup of tea, let alone help a frail elderly person with dementia get up, washed, dressed and fed."

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Mt Gox Bitcoin Exchange Files For Bankruptcy

One of the world's largest bitcoin exchanges has filed for bankruptcy protection as it admitted hackers may have stolen all of its digital currency.

Mt Gox has revealed 850,000 bitcoins worth about $480m (£286m) are unaccounted for following cyber attacks and said it has 127,000 creditors.

Chief executive Mark Karpeles blamed a weakness in the exchange's computer system for the massive loss, which included 750,000 users' bitcoins and 100,000 of its own.

Debts at the company of £38m dwarf its total assets of £22.5m.

Mr Karpeles gave a grovelling apology in Japanese for the company's collapse, bowing in contrition and wearing a suit instead of his customary T-shirt at a news conference.

"I am sorry for the troubles I have caused all the people," he said.

However, he predicted the currency would continue to grow, claiming the industry is "healthy".

Angry investors are demanding answers over what happened to their bitcoins

Angry investors are demanding answers over what happened to their holdings of cash and bitcoins on the Tokyo-based exchange.

The collapse of the company has shaken the virtual currency world and heaped renewed regulatory attention on the bitcoin.

Created in 2009 as a way to make transactions across borders without third parties such as banks, supporters previously claimed security encryption made the currency immune to theft or counterfeiting.

Mt Gox took down its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties.

Mr Karpeles said the company wanted to file a criminal complaint against what he said was a hacking attack but had no actual means of doing so.

It came as the Japanese finance minister said the collapse of the virtual currency was inevitable and Vietnam banned its use overnight.

Despite the problems facing the currency, the world's first bitcoin retail store has opened in Hong Kong.

However, Ken Lo, the CEO of ANXBTC, the exchange behind the store, said he believes an actual store will help break down some of the barriers to people adopting the virtual currency.

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Royal Mail Announces Stamp Price Increase

The cost of a first class stamp is to rise by 2p to 62p, while second class mail will cost 3p more at 53p, the now-privatised Royal Mail has announced.

The company insists it "thought carefully" about the impact on customers and its business before making the decision to hike the costs.

The increases will come into force on March 31 - two years after the last rise in stamp prices.

It comes after Royal Mail vigorously denied a Sky News story last year by City Editor Mark Kleinman that the firm's boss Moya Greene was paving the way for a stamp price rise.

Stephen Agar, Royal Mail's managing director of consumer and network access, said: "We understand nobody likes to pay more, especially in the current economic climate."

Royal Mail said under current rules, it could have increased second class stamps to 57p.

It pointed out its prices were among the best value in Europe, where the average price of posting a first class letter is 67p and 60p for second class.

In other price changes, the cost of a first class stamp for large letters weighing up to 100g will rise by 3p to 93p, while an equivalent second class stamp will go up by 4p to 73p.

A 60% share of Royal Mail was sold off last year, and ministers have faced continuing accusations they under-valued the business.

It recently emerged that banks estimated its value at £8.6bn when approached in the months before the eventual sale for £3.3bn.

Business Minister Michael Fallon revealed the higher and lower estimates of 21 different financial institutions, on an anonymous basis, in answers to written questions from MPs.

One bank estimated the value could be as low as £2.8bn.

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Branson's Virgin To Pilot New Cruises Venture

By Mark Kleinman, City Editor

Sir Richard Branson is drawing up plans for a secret assault on the international cruises sector which will involve raising hundreds of millions of pounds in funding from external investors.

Sky News can reveal that Virgin Group has appointed the US-based corporate advisory firm Allen & Co to oversee the development of a cruise operation that would eventually aim to compete with industry giants including Carnival Corporation.

Virgin has been working with Allen & Co on a range of potential opportunities across the wider leisure sector, including an investment in a four-star city centre concept called Virgin Hotels.

The development of Virgin Cruises, which is expected to be the name of the new venture, is at an early stage, people close to the project cautioned on Friday.

However, Virgin executives and their advisers have already held detailed talks with banks about raising an estimated $1bn (£598m) of debt to finance the acquisition of the company's first vessels.

They also want to raise in the region of $700m (£418m) of equity by selling stakes in Virgin Cruises to outside investors.

Sir Richard and Josh Bayliss, chief executive of Virgin Management, are understood to believe the global cruises sector possesses many of the same characteristics which have led Virgin to build a significant presence in sectors such as aviation, rail and mobile telecoms.

The cruise market is dominated by fewer than a handful of companies, such as the FTSE-100 group Carnival, Royal Caribbean and Norwegian. Between them, the three companies have a global market share of approximately 80%.

"Cruises is a classic Virgin market, dominated by two or three players and where the product needs to be refreshed," an insider said.

The industry is forecast by Cruise Market Watch, an industry research group, to grow from 21.5 million passengers this year to 22.2 million passengers carried worldwide in 2015.

Virgin Cruises is expected to be headquartered in the US, reflecting North America's status as the world's biggest cruise market, the source said.

Globally, the industry is likely to generate revenue of $37.1bn (£22.2bn) this year, a 2.3% increase on 2013.

The plans for the launch of Virgin Cruises emerge as Sir Richard targets a flotation of his domestic US airline, Virgin America.

The carrier, which recently undertook a debt restructuring covering roughly $300m (£179.8bn) of borrowing obligations, has hired investment banks to prepare the listing.

A successful flotation of Virgin America would echo the model used several times by Sir Richard to take some of his business ventures, such as Virgin Mobile, to the public markets.

He has also frequently sold stakes in his companies to outside investors, including the sale of shares in Virgin Money, his banking operation, to an entity in Abu Dhabi and Wilbur Ross, a prominent US investor.

Other plans involving Virgin companies this year include the opening of the first City Centre hotel in Chicago in the autumn, with other venues expected in US cities served by the group's airlines.

The plan to break into the cruises market comes weeks after the publication of a new biography of Sir Richard by the author Tom Bower.

Mr Bower claimed the company's maiden flight of its space tourism venture was facing further delays, while Virgin insists it is on track to take off this year.

A Virgin spokesman declined to comment.

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'Boiler Room Fraud' Smashed In Police Raids

Suspected fraudsters who led extravagant lifestyles like Leonardo DiCaprio's character in hit film The Wolf Of Wall Street by conning victims out of millions of pounds have been targeted in an international clampdown.

Police swooped in a series of raids stretching from London and Barcelona to the US and Serbia in a move to smash the so-called boiler room fraud, where investors are duped into buying worthless or non-existent shares.

A total of 110 alleged fraudsters were held in what was one of the biggest anti-fraud operations ever staged.

To date, 850 British victims, many of them pensioners and one of whom killed themselves after being defrauded, have been identified.

They lost a total of around £15m - ranging from between £2,000 and £500,000 per person - but police believe this figure is only "the tip of the iceberg" and suspect thousands more people may have been duped.

A suspect's lavish home in Marbella, Spain. Pic: City of London Police

The operation, which was two years in the making, saw 40 officers from City of London Police join 300 of their Spanish counterparts from the Policia Nacional to target a number of organised crime gangs.

It aimed to take out criminal kingpins, as well as scores of conmen who work for them, including lawyers, money launderers and financiers.

The alleged fraudsters spent their ill-gotten gains on sports cars, designer watches, drugs and prostitutes.

One of the suspects was believed to have been paying £40,000 per month to rent an apartment.

An Aston Martin and Ferrari were among the cars seized by police, along with various watches and £500,000 in cash.

One suspect wrapped watches around his slippers

The raids took place earlier this week, but can only now be revealed after a reporting ban was lifted by a Spanish judge.

Speaking near the site of one of the searches in Barcelona on Tuesday, City of London Police Commander Steve Head said: "You see real victims in real communities whose lives have been devastated. Savings that they thought they could rely on in their old age have gone in a heartbeat."

He added: "These people have no conscience in terms of what they do to people's lives. This is not at all a victimless crime. We've seen lives that have been utterly devastated.

"We have dismantled an international network of fraudsters. Make no mistake, this will make a difference to the ability of fraudsters to operate at this level.

"This network has been dismantled, hopefully we have sent a message to those who think that it's an easy crime that it doesn't matter where you are, we will come after you."

Expensive cars including a Ferrari and an Aston Martin were confiscated

In total, the international team executed 35 warrants on offices from where the fraud is said to have been run, as well as the alleged criminals' luxury homes.

The operation closed down 14 boiler rooms in Spain, two in the UK and one in Serbia.

As well as the fraud, the gangs were also allegedly involved in drug dealing, money laundering and gun crime.

Most of the suspects targeted are British and a main group is expected to be extradited back to the UK to face trial.

Commissioner Jose Luis Andre Vega from the Spanish national police, said: "This sort of crime knows no frontiers or boundaries. It's important to investigate this sort of organised crime on an international level."

Of the 110 arrests, there were 84 in Spain, 20 in the UK, two in the United States and four in Serbia, with most of the suspects arrested on suspicion of money laundering and fraud offences.

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Ofgem Tells Energy Suppliers To Return £400m

Ofgem has told energy firms to hand back more than £400m they hold from closed accounts to former customers.

The watchdog has said it "expects suppliers to do more" to return the cash, having found they held at least £202m from around 3.5 million former domestic customers and £204m from 300,000 business accounts.

The regulator, which looked into balances held by the companies and the handling of closed accounts, concluded there was "an unacceptably large amount of money being retained rather than returned to consumers".

Ofgem is also examining whether suppliers' current policies and practices are fully compliant with existing rules, including those requiring firms to treat consumers fairly.

Customers needed to be confident they would not lose out if they closed an account with their present supplier, it said.

The big six energy companies have all raised prices in recent months

It expected suppliers to do all they could to return money to individual consumers, and to tell consumers clearly what to do when closing an account.

Where they were unable to do so, it said suppliers should find ways to use the money to benefit consumers more widely and to clearly explain their plans. 

The big six energy companies are already under pressure having all raised prices in recent months.

The consumer group Which? said it was "shocking" some firms were sitting on millions of pounds of customers' cash.

Most major suppliers recently committed to automatically refund surpluses to current direct debit customers, following pressure from the regulator.

Ofgem interim chief executive Andrew Wright said: "When many people are struggling to make ends meet, it is vital that energy companies do the right thing and do all they can to return this money and restore consumer trust.

"We want to see decisive action by suppliers, individually and collectively, to address this issue and, wherever possible, to ensure the balances they currently hold are returned to consumers.

"Where this can't be done, any remaining sums should be used to benefit consumers more generally, and suppliers need to be very clear with consumers about what they will be doing with this money."

The regulator advised consumers who had switched to another company or changed address to contact their former supplier.

Those about to switch supplier were urged to take a meter reading just before doing so and to give a forwarding address to the company they were leaving.

A spokesman for Energy UK, the trade association for the energy industry, said suppliers tried to ensure customers' money gets back to them but claimed firms were owed far more in unpaid debts.

He said: "The most common reasons energy companies end up holding funds are when the bill payer has moved home or when a customer dies and suppliers have no record of the next of kin."

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Floods Fund: £2m To Support Tourism Firms

Tourism businesses affected by the recent flooding are to get a £2m boost from the Government.

Culture Secretary Maria Miller says the money will fund experts who will visit affected areas and offer practical advice to tourism firms such as how to access business support measures.

The advice sessions will be hosted by VisitEngland and run throughout March.

The fund comes on top of  the £10m set aside by Prime Minister David Cameron last month to help flood-hit businesses generally.

Ms Miller said: "We want to help all those tourism businesses that have been affected by the horrendous floods get back on their feet as quickly as possible.

"Experts will be put on the ground to help small businesses with practical advice and communications while a bespoke Easter marketing will bring people back to the areas hit."

Welcoming the funding, VisitEngland chief executive James Berresford said: "Our message to customers is 'Business as usual'.

"Despite many areas having been affected by bad weather and some travel disruption, the tourism infrastructure is largely unaffected."

VisitBritain chief executive Sandie Dawe said: "International tourism is worth around £1.5bn to the economies of south west England and Wales.

"We are already getting out the message that it is a great time to travel to Britain and will be intensifying that activity over the coming months."

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:: Watch Sky News' special programme 'Battered Britain: From The Air' about the effect of the recent storms on the UK's landscape on Sunday, March 2, at 4pm.

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