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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Mobile Phone Contracts 'Fail' Users - Report

Citizens Advice is calling for an overhaul of rules governing mobile phone contracts, warning that consumers can be "taken to the cleaners".

Its 'Calling The Shots' report found users are facing charges of up to £800 to leave maximum two-year contracts that fail to deliver on coverage or features.

The charity examined the 21,500 mobile phone complaints it dealt with last year, finding the most common problems concerned faulty phones (39%), poor service and exiting contracts (17%), misleading sales practices (16%) and bill disputes (12%).

It said most phone contracts failed to specify a reasonable minimum service they could expect from their phone, meaning customers did not have the right to cancel contracts that did not deliver what was advertised.

It cited examples of people who had paid for contracts that included 3G or 4G but were unable to get coverage - being told, in some cases, to honour full contracts or pay the remainder of as much as £800 to end it early.

Citizens Advice said some customers reported being charged the full amount of their contract to cancel it before they had even received their phone.

It also calculated that the failure of phone providers and Government to put in place a cap on mobile phone bills run up by thieves had resulted in consumers, who had sought help from Citizens Advice, losing a total of £140,000.

It also cited confusion among consumers on who to contact if a phone was faulty, insisting it was the retailer's legal responsibility, and questioned how networks handled people in arrears.

Citizens Advice chief executive Gillian Guy said: "Consumers can be taken to the cleaners for ending a mobile phone contract that doesn't deliver.

"Consumers should only be paying for the service they receive. For consumers to be guaranteed a good deal from their mobile phone providers, clear minimum standards of service and better contract exit rights are needed.

"Nobody should be left to fall through gaps in regulation, so the Government should now look into simplifying how mobile phone users can get redress when they are treated badly."

It advised those stuck with poor service to speak directly to the supplier, with evidence, if possible, to explain why it should be possible to leave the contract.

Sky News has contacted major suppliers to request statements on the Citizens Advice report.

Mobile operator Three replied by email and said: "By focusing on customer experience in every part of our business we're now the least complained about operator according to Ofcom.

"We know that customers still face a number of frustrations which is why we will continue to look for ways of addressing these issues."

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TSB Takeover By Sabadell Moves A Step Closer

TSB is recommending its shareholders accept a Spanish takeover of the bank, with Lloyds confirming it has agreed a price for its remaining stake.

The announcements clear the way for a deal, first reported by Sky News last week, which will value TSB at £1.7bn as Banco Sabadell will pay 340p-per-share though it remains subject to regulatory clearance.

It means investors who bought the stock at the offer price of 260p when TSB floated nine months ago will receive a 31% premium.

Lloyds stands to net £850m from the 50% of TSB is currently holds but it has agreed to provide £450m in support of transition efforts.

It was required to divest of its remaining stake by the end of this year under a European state aid ruling, imposed because of its taxpayer bailout at the height of the financial crisis.

Lloyds chief executive Antonio Horta-Osorio said: "I am delighted to confirm we have agreed terms for the sale of our remaining stake in TSB to Sabadell.

"This is a significant and positive step for the group and will enable us to meet our commitments to the European Commission, well ahead of its mandated deadline".

The deal with Sabadell provides Lloyds with a clean exit from TSB, handing it a further boost just weeks after it was given the green light to pay a dividend for the first time since its 2008 rescue as the taxpayer's stake in the group is gradually sold off.

TSB chief executive Paul Pester will continue in his current role under the agreement, which will also see him join the management committee of Sabadell.

He has been in charge of TSB since 2013 and led its separation from Lloyds Banking Group.

The European Commission ordered TSB's split in a move that was code-named Project Verde.

The branches were to be sold to the Co-operative Group but that deal collapsed after the emergence of a £1.5bn hole in the Co-op Bank's balance sheet.

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Three More Years: Pru Chair To Serve New Term

By Mark Kleinman, City Editor

Prudential will attempt to assuage investors' concerns about the departure of its chief executive by retaining Paul Manduca, its chairman, for a further term at the insurance giant.

Sky News understands that Prudential has briefed leading shareholders in recent days that Mr Manduca has agreed to stay on until 2018.

The development comes as the London-based insurer continues to discuss with regulators the plan to appoint Mike Wells, the head of its US operation, as its new group chief executive.

Mr Wells, who is president and CEO of Jackson National Life Insurance, is set to replace Tidjane Thiam, who is leaving to become chief executive of Credit Suisse, the Swiss banking giant.

The retention of Mr Manduca, who became Prudential chairman in May 2012, for a further three years is expected to be disclosed in its annual report later this month, a major investor said on Friday.

It will provide important continuity at the top of a company which has been lauded by the City for its performance in recent years.

If ratified by the Prudential Regulation Authority (PRA), Mr Wells' appointment will put him at the helm of a vast group with operations in the UK, US and Asia.

He would be the first American to run arguably the best-known of the major UK insurers, which has a market capitalisation of almost £45bn.

Mr Wells would take over at a crucial time, with a new European regulatory framework and a rulebook imposed by the PRA to strengthen accountability among senior managers in the insurance sector.

Mr Thiam's exit surprised the City, following his strong recovery from one of the most disastrous takeover attempts in recent British corporate history.

In 2010, Prudential attempted to buy AIA, a major Asian insurer, in a deal worth $35bn, but the deal was thwarted by objections from shareholders and regulators.

The defeat left Mr Thiam dismayed, and his sense of injustice was compounded when the then Financial Services Authority fined the company and censured him for failing to keep it properly informed about the AIA plans.

AIA, which is run by Mr Thiam's predecessor as the Pru's chief executive, Mark Tucker, has seen its value soar since listing on the Hong Kong Stock Exchange.

Mr Wells is already a member of Prudential's board, which makes a decision by the PRA to reject his appointment as the group chief executive unlikely in the extreme.

He has held senior roles at Jackson for 15 years and joined the Pru's board in 2011.

Prudential declined to comment.

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Income Tax Windfall Boosts Public Finances

A pick-up in income tax receipts for the second month in a row meant Government borrowing fell by more than expected in February.

Official figures from the Office for National Statistics (ONS) showed that public sector net borrowing - excluding the effects of bank bailouts came in at £6.9bn last month, £3.5bn lower than in February 2014.

The figure took the total in the financial year-to-date to £81.8bn, almost 10% down on the same time last year and leaving the Treasury on course to meet its revised borrowing target.

The independent Office for Budget Responsibility (OBR) reduced its borrowing target for 2014/15 to £90.2bn in its latest forecast published alongside the Budget earlier this week.

However, the ONS was also forced to revise up the national debt after admitting a £5.5bn miscalculation over the Government's bailed-out bank assets.

Video: Trade Deficit 'Still Far Too High'

Treasury coffers have been boosted in January and February by a £1.9bn increase in self-assessment tax receipts.

This is partly explained by tax planning which saw individuals defer paying tax on bonuses ahead of the cut in the top rate of income tax from 50% to 45%.

Income tax receipts for the first 11 months of the financial year were up to a record £153.9bn, the ONS said.

Video: UK 'More Equal' Under Coalition

A Treasury spokesman said of the borrowing figures: "The plan is working: the deficit is halved as a share of the economy and the OBR's latest forecasts show borrowing continuing to fall in every year, with debt falling a year earlier in 2015-16.

"But we are still borrowing £1 for every £10 we spend and have more to do".

Labour has accused the Government of placing public services at risk through cuts to meet its borrowing plans in the next Parliament.

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FTSE Hits 7,000 For First Time In History

The FTSE 100 Index has risen to more than 7,000 points for the first time in its history.

World markets were cheered by a small recovery in the price of oil as well as signs of a breakthrough in the Greek debt crisis.

London's top-flight index was also buoyed this week by the prospect of UK and US interest rates remaining lower for longer.

It closed at 7,022.5 as the price of a barrel of Brent crude edged above $55 - still less than half its value last summer.

The FTSE had been on the brink of the landmark after a Budget-inspired rally earlier in the week.

Video: FTSE 100 Hits An All-Time High

It has never before breached the 7,000 mark, which makes the combined value of London's top companies nearly £1.8tr.

In February it passed a record high of 6,950, set at the time of the dotcom boom in 1999.

Peter Cameron, assistant fund manager at Ecclesiastical Investment Management, said: "After 15 long and bumpy years, the FTSE 100 has finally clawed its way back to the levels of the late 1990s and unlike then, when the market was gripped by an irrational technology bubble, this new high should not cause alarm amongst investors.

"A backdrop of inflation tailwinds from declining food and fuel prices, falling unemployment and signs of wage growth finally returning, create a benign outlook for the UK economy in 2015."

The rise boosted Royal Dutch Shell and BP - which feature in many UK pension funds - by about 1%, with exploration firm Tullow Oil climbing nearly 3% and rival BG Group up 2%.

Video: FTSE Plunges

Irish cement firm CRH advanced 6% after Holcim and Lafarge salvaged a planned multi-billion-pound merger to create the world's biggest cement firm.

CRH has agreed to buy €6.5bn worth of assets, which would give anti-trust clearance for the Holcim-Lafarge deal.

The new assets would transform CRH into the world's third biggest building materials supplier.

UK bank TSB also rose 2.2% after agreeing to a £1.7bn takeover by Spanish lender Banco Sabadell in one of the biggest cross-border banking deals since the financial crisis.

Lloyds, which was ordered to sell TSB as a condition of its £20bn bailout during the banking meltdown of 2008, agreed to sell a 9.99% stake to Sabadell. It also says it will sell its remaining 40.01%.

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Ask The Chancellors: Sky News To Host Q&A

By Jon Craig, Chief Political Correspondent

Sky News and Facebook are to host an "Ask The Chancellors" event on Monday, 23 March, with key opinion formers quizzing George Osborne and Ed Balls in a TV showdown.

An audience of entrepreneurs, start-up companies and local businesses will ask tough questions of the Chancellor and shadow chancellor at an event in London hosted by Sky News Political Editor Faisal Islam.

Mr Osborne and Mr Balls will each face 30 minutes of live questioning from the audience in separate sessions, followed by questions asked by Facebook users across the UK. 

After the Q&A sessions there will be live analysis with expert guests, who will give their views on how the politicians have performed.

Ask The Chancellors will be broadcast live on Sky News and all its platforms as well as live streamed to millions on the Sky News Facebook page and YouTube channel.

Video: Chancellor's Debate: It's A Rap

All viewers will be able to get involved via the Stand Up Be Counted and Sky News Facebook pages using the hashtag #AskTheChancellors.

Jonathan Levy, head of newsgathering at Sky News, said: "This is a chance for business people to grill the Chancellor and shadow chancellor on their economic policies in the run-up to the General Election, as well as react to the content of Wednesday's Budget.

"I expect the live Q&As to be probing and impassioned, as the people whose lives and businesses are directly affected by the policies decided by Mr Osborne and proposed by Mr Balls ask the questions."

Mr Balls has been pressing for a TV clash with Mr Osborne since January, when he said he would be very happy to debate with George Osborne "any time, any place, anywhere".

Last weekend Mr Balls ambushed the Chancellor on the BBC's Andrew Marr Show by challenging him face to face and then shaking his hand.

Asked to agree to an encounter, Mr Osborne said: "Well, I'm happy to meet you in a debate."

Mr Balls replied: "We should shake on it and go for it."

Welcoming the announcement of the Sky News/Facebook clash, Mr Balls tweeted: "Looking forward to Sky Q&A - but disappointed George Osborne, like Cameron, running scared of head-to-head debate - despite our handshake!"

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