Oil Find Near Gatwick May Be 'World Class'

The estimated size of an oil find near Gatwick Airport has been upgraded to 100 billion barrels by a company backing exploration of the area.

UK Oil & Gas Investments (UKOG) said the Horse Hill-1 well in the Weald Basin was now thought to hold 158 million barrels per square mile.

In May 2014, the British Geological Survey estimated the Weald Basin to hold around 4.4 billion barrels of shale oil.

UKOG described the find as a possible "world class" resource with the potential for "significant daily oil production".

The site at Horse Hill in Sussex

The company's chairman David Lenigas claimed it would create "many thousands of jobs" but cautioned that it would take a long time to begin production. 

He said: "You've got to work through government process and to work with the local community. Everybody expects you to snap your fingers and all of a sudden the magic panacea is there. The key thing is there is a potential resource of significance here - but the fast track or slow track nature is really going to be determined by Westminster".

But Solo Oil PLC, another stakeholder in the exploration, was cautious about the potential. 

UK Oil and Gas insist there will be no fracking at Horse Hill

Solo Oil chief executive Neil Ritson told Sky News: "We're not actually putting out that number of a hundred billion barrels. I know that a leading academic - Professor Fraser at Imperial - is talking about 40 billion.

"Certainly those numbers are possible, but that's not where we are at the moment. It's early days."

The US-based firm which studied the reservoir estimated that recovery of the oil would be limited at between 3% and 15% of the total.

Local residents are concerned about damage to the countryside

It also insisted there was no need to use the controversial extraction process, known as fracking, to get access to the oil.

Mr Lenigas said:  "Horse Hill is a conventional well, with conventional testing and we've got permission from the government authorities for a conventional programme. There will be no fracking at Horse Hill."

But local campaigners believe fracking will be necessary at some point in the future.

Anti-fracking campaigner Charles Metcalfe said: "South East England is the most densely populated corner of England. To start drilling holes all over the place will completely change the nature of our countryside forever. And if the result is that you're not getting very much oil out of it, then that's awful".

Environmental group Greenpeace urged people to focus on clean technologies.

Greenpeace's chief scientist Dr Doug Parr said : "To gleefully rub your hands at a new fossil fuel discovery you need to turn the clock back to the 19th century and ignore everything we have learnt about climate change since. We already have more than enough coal, oil, and gas reserves to fry the planet".

The UK currently produces 770,000 barrels of oil per day, compared to 11.1 million in the United States and 11.7 million in Saudi Arabia.

The announcement helped shares in UKOG rise more than 300% during trading on Thursday. 

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Stallone Thanks UK Piracy Police After Arrest

Sylvester Stallone has thanked British police after a man was arrested on suspicion of leaking top films online, including Expendables 3.

The 26-year-old from Halifax was arrested at his workplace in Leeds on Thursday and is being questioned by detectives from the Police Intellectual Property Crime Unit (PIPCU).

The suspect is believed to be involved in obtaining high-quality films, only available at the cinema or unfinished-unreleased movies, and posting them on the internet.

His actions are estimated to be costing the film industry millions of pounds.

Expendables 3 was reportedly downloaded over 2 million times in the first week it was posted online.

Video: Stallone: Piracy Killing Hollywood

At the film's premiere in London last summer Stallone said that online piracy made him "sad". 

"I think it's unfortunate because, it isn't about me, I'm OK, but really there's thousands of people that won't make movies, that won't get a chance because they've lost a lot of money, that's the trouble."

Following news of the arrest, the star said: "I'd like to thank the Police Intellectual Property Crime Unit (PIPCU) at the City of London Police for working with US Homeland Security Investigations to apprehend the suspect in this case. It is important to protect the rights of creatives around the world from theft."

Matthew Etre, US Embassy London's Attaché for US Homeland Security Investigations (HSI) said: "Tackling virtual piracy remains a top priority for law enforcement. Too often these types of crimes are regarded as immaterial because they are seemingly without victims; however, when a business suffers a loss, it is felt at all levels, from the C-suite to the mailroom.

"In cases such as this, preventing piracy is akin to protecting people's livelihoods. This arrest is yet another success story highlighting what strong, collaborative relationships between law enforcement agencies can accomplish."

The arrest stems from a probe initiated in July 2014 by HSI special agents in Los Angeles after the agency received a tip regarding possible movie piracy from film industry representatives. 

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Gatwick Oil Find: Questions And Answers

An exploration firm has announced the discovery of billions of barrels of oil reserves at a site near Gatwick airport.

The announcement by London-listed UK Oil & Gas Investments (UKOG) has raised a number of questions including:

1. How big is the field?

UKOG says drilling at Horse Hill-1 on the Weald Basin points to 158m barrels of oil per square mile and that altogether there could be up to 100bn barrels beneath the South of England.

2. How much oil could be extracted?

UKOG admits only a fraction of the potential 100m barrels would be recovered - between 5% and 15%.

But it says this is still a significant amount and by 2030 the field could be meeting 10% to 30% of the UK's oil needs.

3. How does this compare with North Sea oil production?

Pretty well. The North Sea has produced around 45bn barrels in 40 years. By comparison the Weald Basin could produce up to a third of that - 15bn barrels.

4. And how does that compare with the likes of Saudi Arabia and the US?

It doesn't. Saudi Arabia produces 11.7m barrels of oil per day, and the US 11.1m. Both dwarf the current UK figure of 770,000 barrels per day.

5. How far down does the Weald oil lay?

UKOG says most lies within the Upper Jurassic Kimmeridge formation at a depth of between 2,500ft (762m) and 3,000ft (914m), so quite a long way down.

6. Will the day-to-day running of Gatwick be affected?

All being well, no - unless there is a major incident, of course. Gatwick Airport is around 2m (3km) away from Horse Hill.

7. Will oil production at Horse Hill involve fracking?

UKOG has consistently stated that it is not intending to frack, which involves pumping water, sand and chemicals into rocks at high pressure to free the oil and gas trapped within.

It says the oil at Horse Hill is held in rocks that are naturally fractured, which "gives strong encouragement that these reservoirs can be successfully produced using conventional horizontal drilling and completion techniques".

8. What obstacles is UKOG likely to face?

There will undoubtedly be some local opposition and concerns raised by environmentalists. Worries about fracking led to large-scale protests when Cuadrilla drilled at Balcombe in West Sussex, in 2013.

9. Who will benefit from oil production at Horse Hill?

If the figures are correct, the whole country. It's claimed 1000s of jobs will be created and UKOG's shares more than quadrupled on the announcement, so it has already done rather well.

10. What next?

"The operator... is now focussed on flow testing the Portland Sandstone and Kimmeridge Limestone sections of the well, to establish producibility and thereby seeking to quantify an overall net discovered resource," UKOG Chief Executive Stephen Sanderson said in a statement.

In other words, further drilling and testing are needed to confirm the initial results.

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Tories To Freeze Train Fares For Five Years

Rail fares will be frozen in real terms for five years if the Tories win the General Election, David Cameron has pledged.

The Prime Minister said extending the Retail Price Index inflation cap on regulated ticket prices until 2020 would save the average commuter £400.

The coalition has imposed the same restrictions for the past two years, and also removed the "'flex" train that allowed operators to increase some fares by more than inflation as long as others went up by less.

According to the Conservatives, the policy means commuters are already paying £75 less than they would have been.

The announcement is part of an effort to blunt the Labour attack over the cost of living, and accusations that most people are not benefiting from the economic recovery.

Video: Prime Minister Explains Fare Rises

Mr Cameron, who is campaigning in the south west today, said: "The cost of commuting is one of the biggest household bills that hardworking families face and it is something we are determined to bear down on.

"It shouldn't just be taken for granted that people across the country who get up early and come home late, spend a large amount of the money they earn travelling to and from work.

"Because of the difficult decisions that we have taken to repair the economy, we have been able to hold down commuter fares for the past two years.

Video: Passengers Want 'Value for Money'

"If elected in May, we would freeze them in real terms for the next five."

But Mick Cash, leader of the Rail, Maritime and Transport union, said: "This latest stunt would still mean annual fare increases that would institutionalise the harsh reality that the British passenger pays the highest fares in Europe to travel on rammed out and unreliable trains.

"The only solution is to end the rip off of rail privatisation which would allow us to free up the hundreds of millions of pounds drained off in profits to invest in services and cut fares."

:: Click here to make your own Government with our Shaker Maker: http://news.sky.com/election/shakermaker#/

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HSBC Tax Scandal: France Starts Criminal Probe

HSBC has expressed outrage at being placed on €1bn bail amid a criminal investigation in France into historical tax issues.

The UK-listed bank said it was informed on Wednesday that French magistrates were examining the "conduct of its Swiss private bank in 2006 and 2007 for alleged tax-related offences."

Its statement said the court's decision is "without legal basis and bail is unwarranted and excessive".

The bank added that it intended to appeal and "defend itself vigorously in any future proceedings".

Activities at the private bank are being examined in several other countries including Germany and Argentina in the wake of the publication of stolen files.

Video: HSBC Boss 'Sorry' For Tax Scandal

The papers claimed the Swiss operation had helped clients in more than 200 countries, including Britain, evade and avoid tax.

The accounts in question were said to contain £77bn ($119bn).

HSBC chief executive Stuart Gulliver apologised earlier this year for past practices at the Swiss arm.

He and chairman Douglas Flint told a committee of MPs in February they had completed a series of reforms to help restore trust and confidence.

Video: HSBC Whistleblower Speaks Out

Argentina last month stepped up its tax evasion row with HSBC by demanding it repatriates $3.5bn (£2.32bn) of cash allegedly moved from the country to its Swiss private bank.

The country's tax authorities issued the request weeks after the Central Bank of Argentina temporarily suspended HSBC Bank Argentina's operations of transferring money and assets abroad for a period of 30 days.

Argentina accuses HSBC of aiding more than 4,000 clients to evade taxes by shifting assets offshore.

HSBC Argentina denied the claim - insisting it respected Argentine law.

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China Forms TPG Duet In Cirque Du Soleil Bid

By Mark Kleinman, City Editor

One of China's biggest conglomerates is backing a bid by the American buyout giant TPG to win control of Cirque du Soleil, the live entertainment company which is one of Canada's most prominent global exports.

Sky News has learnt that Fosun International, which recently snapped up a 5% stake in the tour operator Thomas Cook, has joined forces with TPG to bid for the globally renowned performance troupe.

Final bids were lodged for Cirque du Soleil last week, according to people close to the process, with the Fosun-TPG bid up against a rival offer from CVC Capital Partners and Providence Equity Partners, two private equity firms.

The two bids are understood to be for a controlling stake in Montreal-based Cirque du Soleil despite initial indications that Guy Laliberte, its founder, was hoping to sell only between 20% and 30% of the company.

If TPG's bid is successful, the presence of a Chinese partner such as Fosun could help Cirque du Soleil to make a significant impression in China, one of a number of prospective growth markets that it has been looking to break into.

Fosun and TPG have worked together before, most notably last year on a takeover of Chindex International, a China-focused hospital operator which was listed in New York.

The Chinese conglomerate has made a significant impact in the global leisure and tourism sector, having recently led a takeover of Club Med, the international holiday resort group.

The auction of a stake in La Cirque du Soleil, which has earned a reputation for staging some of the world's most spectacular live shows, comes after it has recently fallen on tougher financial times.

Set up by street performers in Quebec in 1984, Cirque du Soleil describes itself as offering "a dramatic mix of circus art and street performance".

Millions of people have seen the company's range of hit shows in London, which have been staged at the Royal Albert Hall for more than a decade, and other cities including Las Vegas.

Notable for its daring acrobatics and flamboyant costumes, Cirque du Soleil was valued at $2.7bn when Mr Laliberte sold a 20% stake to Istithmar World, the investment arm of Dubai World, and Nakheel, a Dubai-based real estate developer, in 2008.

However, after Dubai was forced into a sovereign debt restructuring, Mr Laliberte bought back part of the stake he had sold in a transaction valuing Cirque du Soleil at just $2.2bn.

Analysts and company executives have reportedly said that the company expanded too quickly, spending over-zealously on new performers, executives and shows in a way which diluted the brand's international distinctiveness.

Reports had suggested that Live Nation Entertainment, IMG and AEG Live, were also likely to submit offers for Cirque du Soleil, although it was unclear whether any had done so.

Goldman Sachs is handling the auction for Cirque du Soleil.

The decision by CVC and Providence to bid jointly is intriguing because the two firms are pitched against each other in an unrelated auction of Stage Entertainment, a European theatre operator.

Providence is a big shareholder in Ambassador Theatre Group, which is seen as the leading contender to buy Stage.

TPG declined to comment on Thursday.

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Canada Pension Fund Omers Eyes Equiniti Deal

By Mark Kleinman, City Editor

One of Canada's biggest pension funds is plotting a takeover of Equiniti, the outsourcing group responsible for administering the pensions of millions of British civil servants.

Sky News understands that Omers Private Equity, which counts the Vue cinema chain among its investments, has sounded out Equiniti's current owner about a deal.

Sources said Omers was among a number of parties to have approached Advent International in recent weeks.

Employing more than 3000 people, Equiniti is a specialist in business process outsourcing, and has been owned by Advent since 2007.

Rothschild, the investment bank, is being lined up to evaluate a sale or public listing of Equiniti, which could value it in the region of £1.5bn.

Previously owned by Lloyds TSB, Equiniti counts more than half of the members of the FTSE-100, including HSBC, Marks & Spencer and Shell, among its clients.

Its examination of a flotation or sale has emerged just weeks before the General Election, when the role of rival outsourcers such as G4S and Serco is likely to be the subject of political debate.

Originally a registrar business focused on the administration and payment of shareholder dividends at companies such as Barclays and Tesco, it has diversified into services including pension and benefits administration, and technology to support loan servicing and complaints handling.

The company's chief executive, Guy Wakeley, joined just over a year ago, replacing Wayne Story, who quit shortly after Royal Mail's £3.3bn flotation.

The ensuing controversy around the postal operator's valuation ensnared Equiniti, which was dogged by complaints that the outsourcing group had failed to process 'Sell' orders sufficiently quickly.

Criticisms of Equiniti posted on Twitter and other internet forums during the privatisation had been investigated and been found to be invalid because investors had failed to understand correctly the procedures for selling Royal Mail shares, sources said at the time.

Equiniti describes itself as "the leading provider of shareholder services in the UK based on revenues and the number of underlying shareholder and employee records administered, providing services to more than 1,000 corporate clients and 17 million shareholders".

It boasts that its longest-standing client relationship has existed for 177 years, while earlier this week it was hired to manage a major contract for the UK Passport Office.

The company has been acquisitive under Advent's ownership, with its most significant deal taking place last October when it took control of MyCSP, which administers civil service pensions.

Advent and Omers declined to comment.

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Easyjet 'Rescue' Flights For Kids After Strike

Easyjet is laying on "rescue" flights to bring schoolchildren home after a French air traffic strike saw hundreds of flights axed.

The budget carrier is running five special flights: Luton to Paris, Paris to Barcelona, Barcelona to Luton, Gatwick to Madrid, and Marrakech to Gatwick.

Larger planes may be used to ease delays caused by the two-day controllers' strike, which started on Wednesday.

Easyjet, one of the worst-hit airlines, had to cancel 331 flights on Thursday and 248 on Wednesday.

Others, including Ryanair, Flybe and BA, were also affected by the industrial action.

Passengers queue at Nice airport during the strike

Ryanair axed more than 250 flights on Wednesday alone. The Irish carrier's services from the UK to Alicante and Malaga in Spain were among those hit.

French air traffic controllers are set to stage further stoppages in the next few weeks. The first will be from 16-18 April and the second from 29 April to 2 May.

An Easyjet spokesman said: "We recognise that there are a number of passengers across the network who have been affected by these cancellations and still require flights as soon as possible.

"We are operating five rescue flights, prioritising the repatriation of three groups of schoolchildren."

Nathan Thorne, 23, from Goole on Humberside, has been trying to get home from Limoges to Leeds Bradford since his Ryanair flight was cancelled.

He and his younger sister have been unable to get another flight home until next Thursday, when the next strike begins.

Mr Thorne said: "All the flights before next Thursday are booked up and the Eurostar train is extremely expensive."

The controllers were striking over restructuring proposals and government plans to change the retirement age.

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M&S Sourcing Chiefs Set For Lavish Payday

By Mark Kleinman, City Editor

Two brothers hired to boost the efficiency of Marks & Spencer's (M&S) clothing business are in line for multimillion pound paydays which could make them the company's best-paid employees over a three-year period.

Sky News can reveal that Mark and Neal Lindsey, who were recruited just over a year ago, will receive a fixed proportion of the savings generated by the improvement in M&S's gross margin, in addition to basic salaries of £400,000 each.

The retailer said earlier this month that it remained on course to record a gross margin improvement of between 150 and 200 basis points, which analysts say would translate into an increase in profits worth tens of millions of pounds.

Sources said on Friday that the Lindseys had been hired on a three-year contract, with one adding that while their payout for 2014-15 would be substantial, it was likely to be far higher in the subsequent two years.

M&S refused to disclose the brothers' remuneration arrangements to Sky News because they are not on the company's main board.

However, company insiders said that their financial rewards would be aligned with the long-term interests of M&S shareholders, who have been boosted by third-quarter results showing the first improvement in general merchandise sales for more than three-and-a-half years.

One person close to the retailer insisted that the Lindseys would not be the highest-paid M&S employees for 2014-15, but conceded that their bonuses were directly tied to margin improvements in the general merchandise business.

A number of institutional shareholders have told Sky News that while they welcomed greater efficiency within the business, they were keen to understand the potential scale of the rewards that could accrue to them over the duration of their contract.

Unlike at banks and insurance companies, listed businesses in other sectors are not obliged to disclose - even anonymously - the remuneration of their most highly-paid employees.

The two sourcing chiefs were lured out of semi-retirement by M&S after an impressive track record as the architects of rival Next's widely-envied supply chain.

As the Hong Kong-based sourcing directors for general merchandise, the Lindseys have specific responsibility for clothing and footwear, overseeing M&S's network of regional sourcing offices around the world and its large London-based central sourcing team.

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.

Speaking on 2 April, Marc Bolland, M&S's chief executive, said: "We have made strong progress over the quarter.

"We continued to deliver on General Merchandise gross margin, and are pleased that we have achieved this whilst also improving General Merchandise sales.

"M&S.com has returned to growth, as planned, with further improvement in customer metrics."

M&S shares were trading at just over 574p on Friday afternoon, giving the company a market value of £9.3bn.

The shares are up by 30% over the last 12 months.

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US Predator Eyes Bid For £6bn Smurfit Kappa

By Mark Kleinman, City Editor

A US paper-manufacturing giant is weighing a £6bn-plus takeover bid for Ireland's Smurfit Kappa as a wave of global deals fuelled by cheap debt continues to gather pace.

Sky News has learnt that International Paper Co is working with advisers at Deutsche Bank on a possible bid for Dublin-listed Smurfit, which specialises in the production of corrugated packaging.

Shares in Smurfit rose sharply early this week amid speculation of a bid approach from either International Paper or Amcor, an Australian rival.

Sources cautioned this weekend, however, that no formal approach had yet been made to Smurfit's board by International Paper, adding that the prospective bidder may yet decide not to pursue a deal.

One City source said that the American company, which has a market capitalisation of nearly $24bn (£16.4bn), had been looking at pitching an offer at about €36-a-share if it did press ahead with a proposal.

At that level, Smurfit's equity would be valued at more than £6bn, although with the company's debt and a conventional takeover premium included, a bid could be worth more than £8bn.

Smurfit's shares fell back after their initial surge last week to close at €28.91, although they are still up by more than 67% over the last 12 months.

If International Paper does lodge a bid for Smurfit Kappa, it would be the latest in a string of major takeover deals following the strongest start to a year for mergers and acquisitions for almost a decade.

In recent weeks, Heinz and Kraft Foods have agreed to merge in a $100bn (£68.3bn) deal, Royal Dutch Shell agreed to acquire BG Group in a takeover worth £47bn - the largest-ever transaction involving two London-listed companies - and the generic drug-maker Mylan offered to buy rival Perigo for $29bn (£19.8bn).

The timing of International Paper's interest is nevertheless likely to surprise analysts, some of whom played down the prospect of a bid for Smurfit earlier this week.

The Irish company's shares have soared in the last six months, while hopes of a broad economic recovery in the Eurozone, from where a significant proportion of its revenues derive, remain faint.

Smurfit operates in 32 countries, employing 42,000 people and boasting more than €8bn (£5.8bn) in revenue last year.

It makes packaging for clients in sectors as diverse as the retail flower market, tobacco manufacturers and high-value automotive goods.

There are already links between the Irish company and its purported predator: Paul Stecko, a non-executive director at Smurfit, spent 16 years with International Paper.

The packaging industry has already seen significant levels of corporate activity in recent months, with a £4.3bn agreed takeover of the UK's Rexam by Ball Corporation of the US.

The company declined to comment on Saturday, while International Paper did not respond to a request for comment.

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Kurt Geiger To Try On Another New Owner

By Mark Kleinman, City Editor

The upmarket shoe retailer Kurt Geiger is preparing to try on another new owner less than a year after its last buyout.

Sky News understands that the company's management and their backers at Sycamore Partners, an American private equity firm, have hired bankers at Goldman Sachs to explore a sale of part or all of the business.

An outright sale would be the latest in a string of deals involving Kurt Geiger, which prides itself on its celebrity customer base and which operates footwear concessions in department stores including Harrods and Selfridges.

Jon Hamm, the Mad Men actor, and ‎the model Rosie Huntington-Whiteley are among prominent fans of the brand.

The price tag attached to the fashion label, which is moving into the children's footwear market, is unclear‎ although analysts said it could be in the region of £300m, roughly equivalent to last year's estimated sales figure.

The brand was bought by Jones Group, a US fashion company, in 2011 in a deal worth £215m.

Jones' subsequent troubles led it in April last year into the arms of Sycamore, which days later sold a stake to Kurt Geiger chief executive Neil Clifford and other senior managers.

At the time, Mr Clifford said:

"We believe our company has tremendous potential for growth in the UK and internationally, and we will continue to invest in new opportunities alongside our department store and brand partners."

In a recent interview with The Times‎, Mr Clifford raised the prospect that Kurt Geiger could abandon its US operations, citing the need for substantial infrastructure investment to make a success of the move.

Preparations for another sale could take several months, with Kurt Geiger expected to appeal to private equity firms for investing in the luxury goods and retail industries, as well as international fashion houses.

A stock market listing is another possible alternative.

In addition to its hundreds of concession operations, Kurt Geiger sells its own brands‎ such as Carvela in more than 70 stores around the world.

Kurt Geiger's first shop opened on London's Bond Street in 1963, but it took until 2007 before its first significant overseas expansion into Europe and the Middle East.

Four years after that, the business was sold to Jones Group by Graphite Capital, a private equity firm which had bought it from Barclays' buyout arm in 2008.

Prior to Barclays, Kurt Geiger had been owned by Mohamedd Fayed, the then owner of Harrods.

Sycamore Partners and Goldman Sachs both declined to comment.

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'Google Tax' In Force To Tackle Avoidance

Multinational companies that shift their profits offshore to avoid tax now face being slapped with a levy.

The diverted profits tax (DPT), which has now come into force, aims to crack down on the controversial practice which has sparked criticism of companies like Google, Starbucks, Amazon and Apple.

Only last month, a financial watchdog highlighted its continuing concerns that multinational companies trading in the UK were not paying the right amount of tax.

Members of the Commons Public Accounts Committee said evidence given by Google, Starbucks, Amazon and large accountancy firms showed the use of tax avoidance measures was "widespread".

In 2013, Facebook paid just £3,169 in tax, while Amazon paid £10m, Apple £11m and Google £11.6m.

Video: 18 March: Multinationals Targeted

At the same time, the total revenues of the four companies in the UK was more than £17bn.

Meanwhile, it was revealed Starbucks paid no corporation tax between 2009 and 2012.

Despite sales of £400m in 2011, the coffee giant claimed it had made a loss in those years and so paid no tax.

There has been mounting pressure to tackle tax avoidance in the face of the austerity-driven spending squeeze.

The so-called "Google Tax" will see firms charged 25% on profits artificially siphoned offshore.

It is expected to make £25m for the Treasury this financial year, rising to £360m by 2020.

Other changes being introduced from April 1 include reducing the rate of Corporation Tax paid by companies from 21% to 20%.

These were highlighted by Chancellor George Osborne as 100 leading business figures gave their backing to the Conservatives and said Labour would damage Britain's economic recovery.

He said: "Their message is positive: under David Cameron's leadership, we have an economic plan that is working and creating jobs.

"Today that plan sees corporation tax cut again to 20%, and a new diverted profits tax so those low taxes are paid."

Labour's shadow business secretary Chuka Umunna has hit back at the open letter, saying: "No one will be surprised that some business people are calling for low taxes for big businesses."

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Tories Woo New Backers As Boots Boss Says No

By Mark Kleinman, City Editor

The Conservatives have embarked on a fresh attempt to court backing from the business community hours after the publication of a letter warning against "a change in (economic) course" pursued by a Labour administration.

Sky News can reveal that Lord Feldman, who chairs the party's board and was responsible for organising a pro-Tory letter in Wednesday's Daily Telegraph, has urged other business leaders to add their support for a Conservative government.

"I hope you have seen the Daily Telegraph today that has published a letter with over 100 business leaders supporting the Conservative's policy to lower corporation tax to 20% effective today," Lord Feldman wrote in an email to company executives obtained by Sky News.

"I am writing to ask if you would consider adding your name as a signatory to this letter.

"It is clearly important to send a signal that the business community is behind the Conservatives' long-term economic plan, and does not want to see a change of course."

Sky News also understands that the boss of Boots, the high street health and beauty retailer, was asked to sign the original letter but declined, just weeks after being attacked by Ed Miliband for predicting that a Labour election victory could be "disastrous" for the UK economy.

Stefano Pessina, who runs the US-headquartered Walgreens Boots Alliance, opted not to put his name to the letter because as a Monaco resident he is not entitled to vote in UK elections.

In a statement, a spokeswoman for the company, which employs tens of thousands of people in the UK, said: "As Stefano Pessina is not a UK citizen and does not vote in the UK, he would not sign any letter to support a political party in the UK General Election.

"Furthermore, he has not previously signed any letters to back political parties on such occasions.

"As a businessman, international entrepreneur and investor, Stefano naturally takes a keen interest in the overall business environment in the countries in which he leads businesses.

"With this in mind, he has previously expressed views regarding certain business policies and recommendations, especially regarding the UK economy to which he has been very committed and highly supportive for 20 years."

Mr Pessina was stung by the Labour leader's accusation in February that he was "avoiding his taxes", an allegation he strongly denied.

Although Mr Pessina and others approached about the letter declined to sign it, its publication will reinforce the widely held perception that the Conservatives enjoy far stronger support from the business community than Labour.

Under the Tory-led coalition, corporation tax has been reduced to 20% following a string of annual cuts which Labour has pledged to reverse in order to favour tax cuts for smaller companies.

It is unclear whether the Conservatives plan to publish an updated version of the letter once new signatories are added.

George Osborne, the Chancellor, said the letter represented an "unprecedented intervention" in a General Election campaign.

"A hundred business people, employing over half a million people and leading some of Britain's best-known companies, from Primark to the Prudential and from BP to Britvic and Mothercare have spoken out," he told Sky News.

Some observers suggested, however, that after weeks of corralling support, the Tories would have been disappointed to enlist support from the chief executives of only three FTSE-100 companies: Associated British Foods, BP and Prudential.

The festering row about business support for the main parties further deepened on Wednesday when Chuka Umunna, the Shadow Business Secretary, said that Paul Walsh should not become the next president of the CBI after opting to show support for the Conservatives.

Sky News revealed in February that Mr Walsh, the former chief executive of Diageo, was being lined up to succeed Sir Mike Rake, and his appointment is expected to be confirmed later this month.

A CBI spokesman said: "The CBI is a politically neutral organisation and its senior post holders will always act impartially.

"The CBI has made no announcement about its next president."

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Miliband: Epidemic Of Zero-Hours Contracts

By Jason Farrell, Senior Political Correspondent

Workers on zero-hours contracts will be able to demand a regular contract after 12 weeks under proposals announced by Ed Miliband.

The Labour leader promised to outlaw the "exploitative" contracts in a commitment to be included in Labour's election manifesto saying: "We have got to end the epidemic of zero-hours contracts.

Speaking at an event in Huddersfield, Mr Miliband said: "You shouldn't be left at the beck and call of an employer who can ask the world of you but give you no security in return. It's not fair, it's not good for businesses and we will put a stop to it."

The proposal strengthens Labour's previous policy on the contracts, which sought to give workers the right to a regular contract after 12 months.

:: For full coverage of General Election 2015 click here

Video: Zero-Hours Contracts

The announcement comes after Prime Minister David Cameron admitted that he could not live on a zero-hours contract during questioning from Jeremy Paxman on Sky News' Battle For Number 10 programme.

Mr Miliband said zero-hours contracts have become a symbol of a low-wage, low-skill economy.

In reference to Mr Paxman's interview with the Prime Minister, the Labour leader said: "If Cameron can't live on it, nor should you - Labour will give workers a legal right to a regular contract, not a zero-hours contract.

"Today I can announce that in our first year of government after the election, Labour will legislate for a new principle: If you are working regularly, you have a legal right to a regular contract."

Mr Miliband first set out the 12-week proposal in 2013 at the Trades Union Congress (TUC) conference, but later backtracked.

Video: Zero Hours 'Gone Too Far'

A spokesman for the party leader said the change back to 12 weeks would incorporate 92% of people on the controversial employment terms.

The proposal is expected to include exemptions for employees such as so-called bank nurses, who request a zero-hours contract so they can work at another hospital as well as their usual job.

Mr Miliband was asked by a worker at the Huddersfield factory what was to stop employers only providing work for 11 weeks to dodge the provision. He replied a "legal mechanism" would be put in place to prevent it.

The Coalition Government sought to prohibit exclusivity clauses in zero-hours contracts, but the Labour Party argues this does not go far enough.

A Conservative spokesperson accused Labour of "presiding over zero-hours contracts" for 13 years.

Video: Osborne Under Fire Over Zero Hours

"Zero-hours contracts account for just one in 50 jobs in our economy," the spokesperson said.

"This Government has already banned the abusive ones - and all the while Labour presided over zero-hours contracts with no safeguards for three terms and 13 years while they were in power."

Speaking on the campaign trail Boris Johnson, who is running for MP in Uxbridge, said he would rather people were in work than left feeling "ill-used by society, left out, unable to express themselves with their self-esteem sinking and sinking."

:: Watch the seven-way leaders' debate live and in full from 8pm on Thursday on Sky News, on Sky channel 501, Virgin Media channel 602, Freeview channel 132, Freesat channel 202, and on the Sky News website.

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Insurer Hastings Motors Towards £1bn Listing

By Mark Kleinman, City Editor

The owners of Hastings, one of the UK's fastest-growing insurers, have appointed investment bankers to steer the company towards a £1bn post-lection flotation.

Sky News understands that Hastings has appointed Goldman Sachs and Credit Suisse to oversee a review of the company's options to take place during the coming months.

Although any deal is unlikely to take place until later this year at the earliest, it will still mark a rapid exit for Goldman's merchant banking arm, which acquired just under 50% of Hastings in October 2013.

The appointment of Goldman bankers to work on a prospective flotation means that the Wall Street firm will earn money from its advisory work as well as the return on its investment in Hastings.

Insiders said that the insurer, which was valued at approximately £700m by its most recent deal, is expected to seek a valuation "significantly closer" to £1bn in a future transaction.

Just under half of Hastings is owned by the company's founders, with the balance held by management, including Gary Hoffman, the chief executive, and employees.

Under Mr Hoffman's leadership, Hastings has demonstrated rapid growth, reporting that customer numbers had reached 1.65m by the end of September last year, up from 1.35m 12 months earlier.

The company, which is due to announce another round of financial results next week, also reported significant increases in net revenue and market share, with adjusted pre-tax profit in the year to date up by 18%.

A stock market listing is expected to be the default choice for Hastings' management and shareholders, although recent takeover activity in other areas of the insurance sector will mean that they also remain open to an outright sale.

During the last deal, Goldman invested £150m in return for just under 50% of Hastings' equity, with Neil Utley, its chairman, crystallising a fortune worth tens of millions of pounds from the sale of part of his stake.

Hastings also raised approximately £420m from a bond sale at the same time.

Based in Bexhill, East Sussex, Hastings employs more than 1500 people, over 80% of whom are understood to be shareholders in the company.

Mr Hoffman led the turnaround of Northern Rock during its period in Government ownership following the run on the mortgage lender in the autumn of 2007, which heralded Britain's banking crisis.

He then spent two years as chief executive of NBNK Investments, a vehicle set up to acquire retail banking assets, but which was rebuffed in favour of the Co-operative Group in the contest to buy 632 branches from Lloyds Banking Group.

That deal collapsed amid a financial crisis at the Co-operative Bank, leading to the branches being rebranded as TSB and listed on the stock market.

A Hastings spokesman declined to comment on Wednesday.

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M&S Reveals Like-For-Like Sales Up 0.7%

Marks & Spencer has revealed like-for-like sales of food and clothing are up 0.7%, the first rise in sales for 14 quarters.

The retailer issued a trading statement for the 13 weeks to 28 March, which also revealed that total like-for-like UK were up 0.7%, group sales were up 1.9% and international sales were down 3.8%.

The lift in sales, the first rise in more than three years of trading, has been attributed to a customer response to changes in "product quality and styling" and an increase in the sale of more full-price items.

Food sales were also helped by record Valentine's Day trading.

The group said its spring and summer collections have been well received, including its much talked about suede skirt.

M&S is pleased with the response to its 70s-style suede skirt

M&S shares opened up 4% after the fourth quarter sales figures beat City expectations. Analysts had expected a 1.2% drop in like-for-like sales.

The company said that online sales returned to growth of 13.8%, with traffic numbers and customer satisfaction ratings continuing to improve since distribution problems hit Christmas trading.

Marc Bolland, chief executive, has faced increasing pressure to turn around the clothing business.

He said: "We have made strong progress over the quarter. In food we delivered another excellent performance, with sales growth ahead of the market.

"We continued to deliver on general merchandise gross margin, and are pleased that we have achieved this whilst also improving general merchandise sales."

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Energy Firm Pays Heavy Price For Overcharging

Energy firm E.ON is to hand £7.75m to Citizens Advice for customers who were overcharged after price rises.

The sum is on top of the £400,000 E.ON has already paid back money to others who may have been affected.

Regulator Ofgem said the penalty reflected the company's "repeated failing" on billing rules.

It wrongly imposed exit fees and overcharged customers following price rises in January 2013 and January 2014

Under Ofgem rules firms are not supposed to apply exit fees if a customer signals their intention to move supplier within the standard 30-day notice period of a price increase.

Video: Energy Firms Fail On Cuts Promises

This is the case even if the switch occurs after the rise.

Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "(Our) rules give customers a chance to avoid exit fees and higher costs when suppliers put up prices.

"These are important customer protections and it is vital that suppliers play by the rules so customers are encouraged to engage in the market."

Video: Consumers 'Duped' Over Energy Deals

In November 2012, E.ON, one of the UK's six biggest energy suppliers, was required to pay £1.7m for similar failings.

Ms Harrison commented: "It's absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty."

The errors in respect of price rises in January 2013 and 2014 affected direct debit and standard credit customers. The average amount paid back was around £8 and £12 respectively.

Video: Your Energy Cost Explained

The mistakes also resulted in around 11,500 prepayment customers - traditionally the poorest - missing out on an average refund of £3.42.

E.ON is aiming to reimburse them by the end of April.

Last May E.ON was ordered to pay back a record £12m for mis-selling.

Video: Energy Bills: What We're Paying

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Temasek Snaps Up Stake In UK's Funding Circle

By Mark Kleinman, City Editor

A fast-growing peer-to-peer lending platform is to sell a stake in itself to Temasek, the Singaporean sovereign wealth fund, as part of a fundraising that will catapult it into the ranks of Britain's most valuable technology start-ups.

Sky News can exclusively reveal that Funding Circle is in advanced talks with Temasek Holdings about plans to raise well over £50m in new capital to accelerate its expansion.

Temasek, which has invested in some of the world's most valuable technology companies, including China's Alibaba, plans to invest roughly £30m as part of the deal, sources said on Thursday.

An arm of Blackrock, the world's biggest money manager, and Baillie Gifford, the Edinburgh-based asset management group, are also expected to participate in the deal, which will value Funding Circle at in excess of $1bn (£675m).

The funding round, which is likely to close within weeks, will cement Funding Circle's status as one of the UK financial technology, or fintech, sector's most exciting prospects.

Funding Circle's existing investors include funds such as Index Ventures, Accel, Union Square Ventures and Ribbit Capital.

They each stand to make substantial gains on the value of their holdings in the company, which was founded less than five years ago.

Funding Circle, which is also backed by the Carphone Warehouse co-founder Sir Charles Dunstone, describes its mission as being to "revolutionize the outdated banking system and secure a better deal for everyone".

Since opening for business, it has lent close to £600m and counts more than 30,000 individuals, the UK Government and local councils among those providing capital through the platform.

Pressure from the Government on banks to refer borrowers to peer-to-peer lenders when their loan applications are rejected by high street stalwarts is fuelling a rapidf growth in demand in the sector.

"Too much business lending is concentrated in the big banks," Vince Cable, the Business Secretary, said last year.

"If we're to have a properly functioning business lending market, they need to be challenged by new banks, peer-to-peer lenders and other alternative providers."

Last year, Funding Circle announced an agreement with Santander UK to refer small business borrowers to the tech company.

Samir Desai, the peer-to-peer lender's chief executive, said:

"This partnership recognises our role as the only marketplace that caters for, and is dedicated to, small businesses. In Santander we have found a fellow challenger brand that shares our commitment to putting small business customers' needs first. They have created a blueprint for other banks to follow."

Since then, other banks have struck similar deals with Funding Circle and its competitors, which offer higher interest rates than high street banks because of their lower fixed-cost bases.

Investors' enthusiasm for the peer-to-peer lending industry has also been fired by the successful initial public offering of Lending Club, the world's biggest peer-to-peer platform.

Funding Circle and Temasek declined to comment on Thursday.

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Pru Boss 'Irritated' By Labour Letter Row

By Mark Kleinman, City Editor

A row over company bosses' political affiliations ahead of the General Election deepened on Thursday amid allegations that Labour was trying to undermine the leaders of some of the UK's biggest businesses.

Friends of the Prudential chief executive, Tidjane Thiam, told Sky News that he was "irritated" at suggestions from Labour sources that he was reconsidering his backing for a pro-Conservative letter which appeared in The Daily Telegraph this week.

The letter, which was originally signed by 103 business leaders, expressed support for Tory economic policies and warned that a "change of course" could jeopardise Britain's economic recovery.

Despite indicating that Labour was unconcerned by bosses' backing for the Tories, one Labour aide suggested on Thursday that Mr Thiam had "regretted" his decision to sign the Telegraph letter.

That provoked a robust response from people close to the Prudential chief, who is leaving his role this year to head the Zurich-based banking group Credit Suisse.

Video: Labour 'Wants Business To Succeed'

"He made his views clear and they speak for themselves, so he is unlikely to be happy at anyone else trying to misrepresent his position," a friend of Mr Thiam said.

Labour had earlier seized on a decision by Pascal Soriot, chief executive of the drug-maker AstraZeneca, to withdraw his association with the pro-Tory letter.

Mr Soriot did not say why he had signed the letter, but issued a statement saying: "Neither I nor AstraZeneca endorse any political party and while I support such policies my name should not be used in the context of the letter."

Labour aides also tried to claim that the chief executive of Ladbrokes had also changed his mind about being a signatory but omitted to mention that Richard Glynn, whose name appeared on the list of supporters, stepped down this week.

Video: Business Leaders Back Tories

His successor, Jim Mullen, said he would not sign any similar letters during an election campaign.

A Conservative Party source said that Labour was trying to "intimidate or undermine" business leaders from speaking out on the economy.

Sky News revealed earlier this week that Stefano Pessina, the boss of Walgreens Boots Alliance, had been approached but declined to sign the letter just weeks after being attacked by Ed Miliband for saying that a Labour government could be "disastrous".

In Thursday's seven-way party leaders' debate, David Cameron referred to the support from business leaders as evidence for the need to keep the Tories in government.

Video: David Gauke Discusses Open Letter

The festering row about business support for the main parties was also reignited this week when Chuka Umunna, the Shadow Business Secretary, said that Paul Walsh should not become the next president of the CBI after opting to show support for the Conservatives.

Sky News revealed in February that Mr Walsh, the former chief executive of Diageo, was being lined up to succeed Sir Mike Rake, and his appointment is expected to be confirmed later this month.

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Sluggish US Economy Adds Only 126,000 Jobs

By Sky News US Team

A slow US economy added a lower-than-expected 126,000 jobs in March, though the unemployment rate held steady, as predicted, at 5.5%.

Friday's jobs reports broke a run of 12 consecutive months in which the economy added more than 200,000 jobs.

It was the smallest jobs gain since December 2013, said the Labor Department.

Job gains in February and January this year were also revised down by 69,000.

US manufacturing and construction activity is anaemic, while hiring at restaurants is down as the country emerges from a harsh winter.

Average hourly wages rose a modest 7 cents to $24.86 (£16.68) an hour.

The disappointing report could hold back the Federal Reserve from raising interest rates in the middle of this year.

Cheaper oil has hurt manufacturers as energy firms rein in orders for equipment, and has yet to show an impact on consumer spending. 

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Woman Loses Silicon Valley Gender Bias Claim

By Sky News US Team

A technology chief executive has lost her claim of sex discrimination in a $16m lawsuit against a Silicon Valley venture capital firm.

Gender was not a substantial reason that Ellen Pao lost her job at Kleiner Perkins Caufield & Byers, found the six men and six women of the San Francisco jury.

Jurors also rejected a claim that Kleiner retaliated against Ms Pao by firing her after she sued in 2012.

The result came after more than two days of deliberation and over four weeks of testimony in the closely watched case against a firm that was an early backer of the likes of Google and Amazon.

Ms Pao alleged harassment by male colleague Ajit Nazre (C)

The 45-year-old plaintiff, now interim chief executive of social news website Reddit, testified she and other women were passed over for advancement and endured harassment in a male-dominated culture at Kleiner.

Ms Pao, who has a law degree and MBA from Harvard, said male senior partners took the credit for her work on successful investments.

But Kleiner said she was fired from her $560,000-a-year job in October 2012 because she lacked leadership and interpersonal skills.

She alleged the discrimination began after she complained about harassment from married male colleague Ajit Nazre, with whom she says she was pressured into having an affair in 2006.

Kleiner boss John Doerr said Ms Pao had a 'female chip on her shoulder'

Ms Pao, who joined Kleiner in 2005, testified during five days on the witness stand that she and other women were barred from work trips on private jets and ski resorts.

One juror asked her if it was "professional to enter into an affair with a married partner?"

Ms Pao also said she was not invited to an important Kleiner dinner with former US Vice President Al Gore.

She is married to Alphonse "Buddy" Fletcher, a Wall Street financier who is embroiled in his own discrimination lawsuit.

Mr Fletcher, who is African American, sued Manhattan's exclusive Dakota building in 2011, alleging its management was racist in questioning his ability to pay for a fourth unit in the complex.

But the Upper West Side landmark, outside of which former Beatle John Lennon was shot dead in 1980, says it refused to sell him another apartment purely over concerns about his finances.

Mr Fletcher's hedge fund is bankrupt.

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Google Can Be Sued In The UK Over Web Tracking

Google has lost a Court of Appeal battle to stop British consumers from suing it in the UK.

A group called Safari Users Against Google's Secret Tracking accuse Google of bypassing security settings on Apple's browser to track their online browsing and to target them with personalised advertisements.

On Friday three appeal judges dismissed Google's appeal over a High Court ruling against it, and ruled claims for damages can be brought over allegations of misuse of private information.

The ruling is a victory for the group of Safari users who have complained about the "clandestine" tracking of their internet use between summer 2011 and early 2012.

The group says Google collected private information without their knowledge using cookies - the text saved on computers and other devices to identify a user to Google.

Video: 2014: Assange Criticises Google

Dan Tench, a partner at law firm Olswang, which represents the group, said the case decides "whether British consumers actually have any right to hold Google to account in this country".

The appeal judges unanimously ruled that misuse of private information was a civil wrong, enabling legal action to go ahead.

The judgement said: "On the face of it, these claims raise serious issues which merit a trial.

"They concern what is alleged to have been the secret and blanket tracking and  collation of information, often of an extremely private nature... about and associated with the claimants' internet use, and the subsequent use of that information for about nine months.

"The case relates to the anxiety and distress this intrusion upon autonomy has caused."

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One Quarter Of Students Consider Sex Work

By Becky Johnson, North Of England Correspondent

Nearly a quarter of students in the UK have considered sex work as a way to fund their time at University.

A study carried out by academics at Swansea University has found that 5% of students have actually worked in the sex industry.

More than half of those said they did so in order to pay for basic living expenses.

In a lap dancing club in Liverpool one of the dancers who calls herself "Isobel" when at work told Sky News she began working as a stripper when she realised how much money she could earn.

She is on one of the most competitive courses at a top university and says the bar job she had previously meant working many more hours a week, which interfered with her studies.

"What I earn in a week is what I'd earn in a month in the bar job, so it just kind of made sense to me to work here rather than do that." she said.

"I think it's a no-brainer for anyone really. Rather than doing all those hours I do less than half the amount of time for a lot more money - three times as much money. It's crazy."

Other students are prepared to go further, advertising themselves as escorts on adult-only websites.

One student who works as a prostitute agreed to speak to Sky News on the condition that we did not reveal her identity.

"I think it is still very much stigmatised and that can make life very difficult for student sex workers," she said.

"It isn't something for everybody, and that's totally fine, but it was the best choice of the choices that I had available to me."

"Obviously I think there should be a better funded education system - I think there should be grants for students.

"But at the minute while we don't have any of that support or money in place this is the best option."

The debate over the cost of going to university will continue ahead of the General Election, with Labour pledging to cut tuition fees by a third to £6,000 a year.

In the three years since fees were raised to £9,000 the students union at Manchester University has been contacted by more students who are working in the sex industry.

Women's Officer Jess Lishak told Sky News: "We've definitely seen an increase in the people we see in our advice centre that are turning to sex work.

"In terms of the reasons for that, there's a huge variety and I think it's too complex to break down to just fees, just austerity, just cuts. They all play a part".

The Student Sex Work Project has found that while 56% of students who engage in sex work said they do so to pay for basic living costs, 45% said it was to avoid debt and 39% said it was to reduce debt at the end of their course.

Dr Tracey Sagar, who jointly led the research, said: "We now have firm evidence that students are engaged in the sex industry across the UK.

"The majority of these students keep their occupations secret and this is because of social stigma and fears of being judged by family and friends.

"And, we have to keep in mind that not all students engaged in the industry are safe or feel safe.

"It is vital now that universities arm themselves with knowledge to better understand student sex work issues and that university services are able to support students where support is needed."

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Premier League May Dump Sponsorship

By Mark Kleinman, City Editor

The Premier League is considering abandoning its long-running title sponsorship‎ arrangements when Barclays' 15-year association with English football's top flight ends next year.

Sky News has learnt that the Premier League is in talks with its shareholders, the 20 clubs, about moving to a 'partnership model' which would involve alliances with a handful of brands in different industries.

The idea, which is at an early stage, would signal an evolution of one of the ‎most lucrative commercial deals in British sport.

Barclays has‎ held the title sponsorship rights to the Premier League since 2001, when it took over from Carling, the lager brand.

Some leading clubs ‎are said to favour abandoning the existing structure because they believe they could earn more money from a series of partnership deals.

The prospective changes were discussed at a meeting on Thursday.

Sources indicated on Friday that the Premier League was continuing to discuss title sponsorship opportunities with companies including Diageo, which has been examining a tie-up with its Guinness brand.

A decision is likely in the next few months, with Premier league sources suggesting that strong competition for a deal meant that a title sponsorship remained the likeliest outcome.

‎In a memo to staff on Thursday, Barclays said that it would not renew its £40m-a-year agreement:

"Since we took on the sponsorship under the Barclaycard brand in 2001 the Premier League's popularity has grown exponentially around the world.

"The sponsorship has been very successful for Barclays, but having carefully considered whether it is the right partnership for us given where we are as a business and a brand today, we have concluded the time is right to pass the baton on.

"The core consideration informing this decision was the balance between the benefit to Barclays and our brand versus the likely investment required to carry on.

A source close to Diageo said it remained interested in a deal, while other potential sponsors, including a major automotive company, are also in talks.

The news that the League may decide to operate without a title sponsor comes six weeks after it signed a record-breaking £5.1bn live broadcast rights deal with companies including Sky plc, the owner of Sky News.

A Premier League spokesman declined to comment.

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Co-op Bank Trims Annual Losses To £264.2m

The troubled Co-operative Bank says it has "stabilised", with losses cut to £264.2m in 2014 though its turnaround plan will result in more branch closures.

It also confirmed, alongside its results, a Sky News story of Thursday evening that chief executive Niall Booker had agreed to stay on until the end of 2016.

Mr Booker took over in 2013 as the Co-op Bank faced the threat of collapse, following the emergence of a £1.5bn black hole on its balance sheet and a wider governance crisis at the Co-op Group, the UK's most prominent mutual.

The disclosure of his new deal and the Co-op Bank's results come three months after it was the only one of eight UK lenders to fail stress tests set by the Prudential Regulation Authority (PRA), an arm of the Bank of England.

The pre-tax loss marked a strong turnaround on the £1.3bn it initially reported for 2013.

The bank said today it had since revised its 2013 loss figure to £688.3m because of a gain to the value of  debt on its books.

And the Co-op said that while its recovery was on track, it was to speed up the sale of unwanted assets which included a "closed book" of residential mortgages that were "particularly susceptible to a severe economic stress".

It axed 15% of its staff in 2014 and closed 72 branches.

The bank said it planned to close an additional 57 branches in 2015.

Mr Booker said: "Over the course of 2014 the management team has continued to take significant steps to implement the strategy and to turn the bank around.

"The Co-operative Bank is stronger than a year ago and we end the year with a strengthened capital position, ahead of schedule in the reduction of non-core assets and having made progress reducing underlying costs and improving the day-to-day management and governance.

"However, we are in the early stages of the turnaround and there is still much to do to transform the organisation into a sustainable business.

"There are a number of matters where the bank does not yet meet FCA and PRA regulatory requirements and expectations.

"The revised plan, accepted by the regulators, seeks to address this."

The Co-op said current account numbers fell 4% in 2014 following the bank's much-publicised woes and admitted it faced "considerable work" to recover its market share in a "very competitive" field.

There was concern among customers at hedge funds gaining control of a significant stake under its restructuring.

There was bad PR, too, amid sex and drug revelations concerning the bank's former chairman, Paul Flowers, whose financial competence was questioned by MPs after he failed to correctly state the size of the Co-op Bank's balance sheet.

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Swiss Bank Nets Coutts International From RBS

A Swiss bank is to buy Royal Bank of Scotland's (RBS) international private banking and wealth management arm, though it is unlikely to raise a significant sum for the part-nationalised lender.

The amount to be paid by Union Bancaire Privee (UBP) for Coutts International was yet to be fully determined, RBS said, but added it would take a £200m charge as part of the agreement.

Coutts International, which is separate from the British-based division of Coutts, manages assets of more than $30bn (£20.2bn) and its sale will also come as something of a relief at a time when tax authorities are scrutinising the activities of banks and individuals following the tax scandal at HSBC's Swiss private bank.

German officials are already examining Coutts' operations in Switzerland.

The sale also forms part of RBS's decision to create a UK-focused bank in the wake of its rescue by taxpayers at the height of the banking crisis.

Earlier this week, it confirmed a 25% stake sale in its US operation Citizens, raising $3.2bn (£2.2bn). 

The bank said of its Coutts International deal today: "The sale comprises client relationships outside the British Isles and associated staff.

"RBS will continue to service UK Private Banking and Wealth Management client needs, together with those of international clients with a strong connection to the UK, from the British Isles through its Coutts and Adam & Company brands.

"The transaction is subject to regulatory approvals."

The sale includes relationships managed from Switzerland, Monaco, UAE, Qatar, Singapore and Hong Kong.

The price paid, RBS said, would  be determined in part by assets under management on closing.

As at 31 December, assets under management at Coutts International were approximately 32bn Swiss francs (£22.3bn).

Total risk weighted assets were 2bn Swiss francs (£1.4bn).

But RBS warned: "The resulting capital benefit to RBS is expected to be modest after writing off goodwill related to the business and taking into account anticipated exit and restructuring costs.

"In the Q1 2015 results, the business to be sold will be treated as a disposal group, resulting in an expected charge in the order of £200m.

Alison Rose, chief executive of commercial & private banking at RBS, said: "Last year we set out a clear strategy to create a truly UK-focused bank.

"This announcement is another important step in that process. Following an extensive review, it was clear that the bank we are building would not be the most appropriate owner of the business being sold."

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Alliance Trust Defends Chair's Share Purchase

By Mark Kleinman, City Editor

The chairman of Alliance Trust acquired thousands of shares in the company weeks after an activist shareholder had privately indicated that it was preparing to call for a boardroom shake-up.

Sky News can reveal that Karin Forseke, a former deputy chairman and senior independent director of the Financial Services Authority, bought the shares - worth approximately £25,000 - on 9 March, three days after Alliance Trust published its full-year results.

Ms Forseke's acquisition of the shares came roughly three weeks after Elliott Advisors had written to Alliance Trust's board on 19 February to signal that it was on the verge of being left with "no option other than to seriously consider bringing these issues [about management and performance] directly to other shareholders".

A meeting took place between Elliott representatives and Alliance Trust to discuss the results on March 12, at which people close to the FTSE-250 company said its shareholder did not raise the issue of requisitioning motions on which investors will vote at its annual meeting next month.

Elliott's decision to nominate a slate of directors was then made public on Sunday 15 March, the day after which Alliance Trust's shares closed up 2.7%.

Ms Forseke requested, and received, formal permission from colleagues for her 9 March share purchase, and there is no suggestion of impropriety on her part.

However, the implications of her share-buying activity, which is disclosed in public filings, may spark surprise in the City given Elliott's reputation as an aggressive activist for change at the companies it invests in.

One observer expressed surprise that directors had been given permission to trade in the shares given the contents of Elliott's letter to the board in February.

Elliott has been a shareholder in Alliance Trust since 2011.

In a statement issued to Sky News, a spokesperson for Alliance Trust said: "Alliance Trust was in a closed period from 31 December 2014 to the date of announcement of our results on 6 March 2015 so directors could not deal during that period.

"Karin requested permission to purchase an additional 4,895 shares through our normal share dealing procedures to add to her existing holding of Alliance Trust shares in her pension plan following the announcement of our results.

"She received that permission on 9 March and the purchase then took place on Wednesday 11 March before the meeting with Elliott and at a time when we had no knowledge that they intended to requisition the company.

"She currently has a holding of 107,227 shares. We encourage directors to hold shares in the company as a way of ensuring alignment of interests with other investors."

The battle between Elliott and Alliance Trust is shaping up to be one of the most fractious confrontations between a blue-chip UK company and an activist shareholder for some time.

Alliance Trust has raised doubts about the independence of the three directors nominated by Elliott and accused the hedge fund of behaving disruptively in order to facilitate an exit from its shareholding.

Elliott's other investments in Britain have included National Express, Game Digital and - briefly - the supermarket chains Wm Morrison and J Sainsbury.

Elliott declined to comment.

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UK Airlines Bring In New Cockpit Safety Rules

By Charlotte Lomas-Farley, Sky News Correspondent

New safety rules have been introduced in the UK after 150 people on board the Germanwings Airbus A320 were killed when it crashed in the French Alps.

The UK's aviation regulator, the UK Civil Aviation Authority, has contacted all British airlines to get them to review all relevant procedures.

Here is a breakdown of how the safety rules affect different airlines:

:: Thomas Cook, Thomson and easyJet - from Friday, all three are changing their safety procedures to ensure that two crew members are in the cockpit at all times.

:: Virgin Atlantic and Monarch - both airlines say that while a two crew policy has always been common practice, they are in the process of making this formal policy.

Video: How Airlines Deal With Pilot Stress

If a pilot or co-pilot needs to leave the cockpit for any reason then a cabin crew member will stand in.

:: Jet2 and Flybe - both carriers already implement a two people in the cockpit at all times policy, as does Ryanair.

:: British Airways - the airline has refused to comment on the policy of its cockpit manning levels. The airline has insisted it does not discuss security issues.

Video: Shock In Co-Pilot's Hometown

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Major Power Outage Suffered Across Amsterdam

Hospitals, trains, trams and the metro were all hit by a major power cut in the Dutch capital Amsterdam and the surrounding area.

The electricity network operator, Tennet, said the regional outage was caused by a grid "overload" at a high-voltage power station in the town of Diemen.

Power was restored a few hours later.

The outage had led to traffic jams across the capital as a result of traffic lights turning off, and the electric-powered tram system was brought to a standstill, as thousands of commuters were stranded.

Schiphol airport was switched to backup power and all flights were diverted to airports in Belgium and Germany because of the cut.

Hospitals were also forced to rely on backup power while many trains were stranded due to signal failures.

The ANP news agency said the outage covered large parts of the province of North Holland, including the nearby broadcasting centre of Hilversum.

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Miliband's NHS Pledge At Campaign Launch

Labour leader Ed Miliband has launched his party's General Election campaign with a promise to safeguard the future of the NHS.

The event in east London came after Mr Miliband and Prime Minister David Cameron answered questions in the Battle For Number 10, the first showdown of the campaign.

Launching the party's push for power in the "tightest general election in a generation", Mr Miliband said: "The Tories say this is as good as it gets.

"We say Britain can and must do better than this."

Referencing the special programme broadcast on Sky News and Channel 4, the Labour leader claimed the PM's performance showed he was "rattled", "running from his record" and "living in a different world".

Video: Scottish Labour Campaign Launch

The election on 7 May is a choice between "two different visions" for Britain, Mr Miliband said.

"A Tory government that looks out only for the few, or a Labour government that will stand up for working families in every part of our country," he claimed.

At the heart of the launch was a promise of a "double lock" to protect the health service.

Video: TV Showdown: Leaders Vie For Votes

Mr Miliband said Labour would act to ensure health services are not threatened by privatisation and pledged to provide £2.5bn in extra cash, paid for by taxes on expensive properties and tobacco companies and a crackdown on tax avoidance.

A new profit cap - usually 5% - would be imposed on outsourced healthcare contracts worth more than £500,000, private firms would be prevented from "cherry-picking" lucrative treatments and the NHS would be the "preferred provider" for all services.

Mr Miliband said: "Just think about how far backwards the NHS has gone in the last five years.

Video: The Battle For Number 10 In Full

"People waiting longer and longer to see a GP. Ambulances queuing up outside hospitals, because A&E is full. Even a treatment tent erected in a hospital car park.

"For all the promises, for all the air-brushed posters, David Cameron has broken his solemn vow to the British people when it comes to our NHS."

He admitted the race for Downing Street would be neck-and-neck and could "come down to the wire".

Video: Miliband Grilled By Paxman

Mr Miliband said: "I know our opponents will throw everything they have our way, because they're desperate to hang on to power.

"But we know we can win this fight on behalf of the British people."

Scottish Labour leader Jim Murphy has also launched the party's campaign in Glasgow.

Video: 'Let People Underestimate Me'

Addressing activists, Mr Murphy called on them to help Labour "consign David Cameron and his austerity to the dustbin of history".

In response to Mr Miliband's remarks, Conservative MP and Health Secretary Jeremy Hunt said: "We can only have a strong NHS if we have a strong economy, but Ed Miliband doesn't have an economic plan.

"We all know Labour want to 'weaponise' the NHS but this is another policy from Ed Miliband that looks ill-thought through. It risks higher infection rates, higher waiting times and chaos for our NHS.

Video: Miliband Says People Are Worse Off

"This incompetence is exactly why Ed Miliband is simply not up to the job."

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Amazon Wins Approval To Test Delivery Drones

By Sky News US Team

Amazon has won approval from US federal regulators to test a delivery drone outdoors.

The Federal Aviation Administration has issued an experimental airworthiness certificate allowing test flights over private, rural land in Washington state.

Under the provisions, the flights must be conducted at 400ft (120m) or below during daylight hours. 

The company had asked for permission to fly at altitudes up to 500ft (150m).

The drone must also remain within the line of sight of the pilot and observer. The person flying the aircraft, meanwhile, must have a private pilot's certificate and current medical certification.

Amazon must also provide monthly data to the FAA on the number of flights conducted, pilot duty time per flight, unusual hardware or software malfunctions and other information.

The Seattle company had asked the FAA for permission to fly drones for package deliveries last July, but it faces public concern about safety and privacy.

The approval is a win for Seattle-based Amazon and advances its plans to deliver packages using small, self-piloted aircraft.

As part of Amazon Chief Executive Jeff Bezos' plan to deliver packages under a program dubbed Prime Air, the company is developing drones that fly at speeds of 50mph (80kph), operate autonomously and sense and avoid objects.

Amazon also is working with NASA on an air traffic management system for drones.

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Tesco Shops For Store Ownership In £733m Deal

Tesco and British Land have completed a property exchange deal worth a combined £733m as both companies look to strengthen their core businesses.

Britain's biggest retailer, which remains the subject of probes over its £263m profits overstatement scandal last year, has been implementing a separate UK recovery strategy under new chief executive Dave Lewis.

Tesco said it had regained sole ownership of 21 superstores, which it did not identify, that were part of a joint venture with the property firm and were all subject to rent increases linked to retail price index (RPI) inflation.

In exchange for the superstores, British Land will take over Tesco's stake in three shopping centres, three retail parks and three standalone stores which are held in two other joint ventures between the two firms.

Tesco will continue to lease the stores at these sites at market rents which are not subject to RPI-indexed increases and the chain was also to receive £96m from British Land.

Mr Lewis said: "Last year we identified the opportunity to increase the proportion of our stores we own as freehold.

"This transaction with British Land allows us to increase our ownership and thereby insulate more of our businesses from indexed rent reviews.

"We have a long way to go but it's a transaction which takes us in the right direction. This agreement makes our business simpler and stronger."

Since joining Tesco in September last year, he has had to overcome the fallout from the scandal over supplier payments and arrest a decline in market share on the shop floor.

His plans to combat the challenge offered by hard discounters are to result in big cost savings including thousands of job losses.

Charles Maudsley, British Land's head of retail, said of the deal: "This mutually beneficial transaction clearly demonstrates the great relationship we enjoy with Tesco.

"It plays to our strengths of managing multi-let assets and gives Tesco more control of their stand-alone portfolio.

"We see significant opportunity to add value and drive returns through asset management and development."

The company said it had taken control of three shopping centres including Peterborough's Serpentine Green and three retail parks.

They were the Kingston Centre in Milton Keynes, York's Clifton Moor and the Woodfields Retail Park in Bury.

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Osborne Rejects Public Service Cuts Fears

George Osborne dismissed fears over spending cuts to public services raised by the Office for Budget Responsibility.

Speaking on Sky News, Mr Osborne said the cuts were necessary but did not pinpoint exactly where the axe would fall.

He said: "People know that we have been careful with public money, we want to go on doing that at the same pace we have been doing that over the next couple of years."

The Office for Budget Responsibility (OBR) report released on the day of the Budget says the Conservatives' cuts leave "a rollercoaster profile of implied public services spending through the next parliament".

The OBR report projects a "much sharper squeeze" on spending in 2016-17 and 2017-18, which would be followed by a sharp increase in 2019-20.

Discussing his plans for a further £12bn welfare savings cuts, Mr Osborne said: "I'm not suggesting that these things are easy, but they are necessary if we are going to go on living within our means.

Video: Balls: Rollercoaster Budget Cuts

"We've saved £21bn in this parliament and we need £12bn in the next ... People can judge me by my track record.

"I'm a Chancellor who's made these sensible, balanced decisions and we can see the benefits in this massive moment for the UK, when debt as a share of national income is falling."

Shadow chancellor Ed Balls criticised Mr Osborne's cuts as "extreme" and told Sky News: "I think it is risky and dangerous. That is not what Labour will do. We will have a balanced plan to get the deficit down in the next parliament, to cut the Budget deficit, to get the national debt falling."

However, he admitted: "We will have to make sensible spending cuts and we will have some tax rises on the highest incomes, from the people at the top and also we will have a focus on raising people's wages.

Video: Budget 2015: Video Highlights

"We are going to scrap the police and crime commissioners and save £250m in police budgets, £500m savings in local government, £230m in education and defence procurement ..."

The Lib Dem today unveiled their own Budget to distance themselves from their coalition partner's Budget. 

George Osborne's no-gimmicks, no-frills Budget has set the dividing lines between the parties ahead of May's election.

He claimed Britain was "walking tall again" after five years of austerity.

Video: The Budget In 77 Seconds

Shadow Business Secretary Chuka Umunna said: "I'm not sure that I would want my public services to be on a roller coaster, I would want to have decent provision for my constituents and all across the country."

Mathew Hancock, the Conservative Business Enterprise and Energy Minister, responded to the criticism.

He said: "We have a plan to deliver and anyone who wants to spend more money or go more slowly will see the debt rising as a proportion of GDP, and that is exactly the sort of mistake that got us into this mess in the first place."

Mr Osborne's Budget did have some sweeteners for first time buyers and savers, including the first £1,000 of savings being tax free for a basic rate tax payer.

Video: Analysis: Your Budget Need-To-Know

He also announced a help-to-buy ISA under which first-time buyers saving for a deposit will receive a 25p top-up from the Government for every pound they put aside up to a maximum of £3,000, on top of savings of £12,000.

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FCA Bosses Face MPs' Ire Over Insurance Probe

By Mark Kleinman, City Editor

The heads of the City watchdog will be severely criticised next week by a panel of MPs over its handling of a briefing which wiped billions of pounds from the value of British insurance companies.

Sky News has learnt that the Financial Conduct Authority (FCA) will be accused of a "dereliction of duty" in a report to be published by the Treasury Select Committee.

John Griffith-Jones, the FCA chairman, and Martin Wheatley, its chief executive, are expected to be singled out for criticism by the MPs, a source said on Friday.

The regulator's handling of news of a planned inquiry into the sale of millions of closed-life insurance policies last March sparked chaos in the London stock market, with shares in companies such as Aviva, Friends Life and Legal & General falling sharply.

The story in The Daily Telegraph, which sparked fears of a draconian regulatory clampdown, was subsequently clarified by the FCA but not until more than six hours of trading had elapsed.

George Osborne, the Chancellor, and Andrew Tyrie, the TSC chairman, expressed disquiet over the incident, while the FCA's non-executive directors immediately ordered an inquiry to be led by Simon Davis, a partner at the law firm Clifford Chance.

Mr Davis' report, published in December, criticised the FCA's approach to information disclosure and made a string of recommendations that the watchdog subsequently agreed to implement.

It said that the regulator's briefing had been "high risk, poorly supervised and inadequately controlled. When it went wrong, the FCA's reaction was seriously inadequate and fell short of the standards expected of those it regulates."

The source said the TSC report would echo many of Mr Davis's criticisms and recommendations, including a prohibition on the disclosure of potentially market-sensitive information until its general dissemination.

Next week's report will not directly call for the resignation of either Mr Griffith-Jones or Mr Wheatley, they added.

However, they said there had been some disagreement between TSC members, with some calling for a tougher rebuke of the FCA's leadership.

Since Mr Davis's report, a number of senior FCA executives have left the organisation, including Clive Adamson, the former head of supervision, and Zitah McMillan, the former communications and international director who has since resurfaced in a senior role at a major payday lender.

The FCA said in December that their departures were the result of a restructuring rather than Mr Davis's report.

Mr Adamson, Mr Wheatley and Ms McMillan were all criticised in Mr Davis's report, alongside David Lawton, the FCA director of markets.

All four forfeited their bonuses for last year as a result, while any discretionary payouts for the current year are also under threat because of the £3.8m cost of the inquiry.

Mr Tyrie said in December that the report's findings illustrated a regulator "pursuing the wrong strategy in the wrong way".

"The Committee will, among many other things, examine whether these errors were a one-off or whether they reveal something amiss, perhaps seriously amiss, with the standards and culture of the FCA. We will also examine remedies, both those proposed or already announced, and others."

A TSC spokesman and the FCA both declined to comment.

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