Lloyds Banking Group Takes New £600m PPI Hit

Lloyds Banking Group has revealed it has set aside another £600m provision for mis-selling of payment protection insurance (PPI).

The announcement comes as it released its half-year results, which showed an underlying profit rise of 32% to £3.8bn.

The bank, which is 25% owned by the UK taxpayer, said it had "substantially improved" its performance in the six months to the end of June.

Lloyds has now set aside £10.4bn for PPI mis-selling, with an estimated £2bn of the figure for administrative costs.

The bank now expects expects a slowdown in complaints in the future.

Chief executive Antonio Horta-Osorio said: "We continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity.

"By investing in the products and services our customers need and further strengthening and de-risking our balance sheet, reducing costs and increasing efficiency."

The improving profit situation for the bank has strengthened its case to restart dividend payments for the first time in six years, following a £20.5bn taxpayer bailout.

Lloyds said it would ask regulators to begin "modest" dividends in the second half of the financial year.

On Monday, Lloyds was fined £218m by UK and US regulators over Libor manipulation and other rate-rigging incidents.

It also paid the Bank of England (BoE) more than £7m compensation over payments under the now-defunct special liquidity scheme.

It was revealed BoE governor Mark Carney had sent a letter to the Lloyds chairman, describing the action of some bank staff as being "highly reprehensible".

Lloyds apologised for the "unacceptable" actions of individuals involved in the conduct and said the bank's previously lax operating culture was to blame.

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British Gas Half-Year Profit Squeezed By 26%

The parent company of British Gas has reported a large fall in half-year operating profit, which has been blamed on mild weather and the furore over energy bills.

Centrica said British Gas Residential saw its earnings fall 26% to £265m in the six months to June 30, compared to the same period last year.

The drop comes amid ongoing controversy over bill hikes imposed by the so-called big six energy providers, and mild weather.

Chairman Rick Haythornthwaite said the troubles were down to "weather and reflecting the wider political environment".

He also said there had been an effort to restore customer trust in the firm.

Earlier this month British Gas was forced to compensate thousands of customers for providing inaccurate savings estimates in the latest mis-selling episode to blight the utility sector.

The parent company also suffered a significant earnings drop in the period, with operating profit down 35% to £1.58bn.

However the chief executive of Centrica, Sam Laidlaw, expects the dip in profit to be short-lived.

Mr Laidlaw said: "With challenging trading conditions on both sides of the Atlantic in the first half, earnings will be lower in 2014 than in 2013.

"However, the group is well positioned to return to growth in 2015."

Last month energy regulator Ofgem said it has referred the energy market to a probe by the Competition and Markets Authority.

It said the investigation was the best way to ensure that consumers are receiving the best quality, service and price availability.

The big energy providers have come under increasing scrutiny over profits, rising prices and how their wholesale and retail firms are structured.

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Shell Boosts Profit By 33% Amid Asset Sale

Oil giant Shell has seen its share price surge after it reported a 33% increase in quarterly profit.

The Anglo-Dutch company, which is the biggest FTSE 100 firm, beat forecasts to earn £3.6bn in the three months to the end of June.

Shares were up almost 4% in mid-morning Thursday trades.

The profit rise comes after it increased production and was able to sell product at a higher price.

It now plans to sell off certain assets and be more selective about future projects, following a profit warning last January.

The company has already sold off around £5bn in assets and increased output of its deepwater Mars B project in the Gulf of Mexico.

"I am determined to get a tighter grip on business performance management in the company, and improve the balance between growth and returns," CEO Ben van Beurden said.

"Sharper accountability in the company means that we are targeting our growth investment more effectively, focusing on areas of the business where performance improvement is most needed."

The oil company also raised its quarterly dividend and said the value of its share buybacks and dividends for 2014 and 2015 would exceed $30bn (18bn).

The Shell share surge is good news for UK pension holders, as most major funds have holdings in the company.

Global oil companies including Shell have struggled to boost their production in recent years, due in part to declines at existing fields and delays with new projects.

Shell's results follow on from rival BP's results earlier this week, when it reported a profit for the quarter of $3.635bn (£2.14bn).

BP warned that sanctions against Russia could have an "adverse impact" on future earnings, as it owns 19.75% of Russia's largest oil company Rosneft, which account for almost 9% of its profits.

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Ofgem Plan 'Will Cut Energy Bills By £12 A Year'

Energy regulator Ofgem has announced plans to control electricity pricing for the next eight years from April 2015.

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

The proposals, which will be consulted upon for eight weeks, will affect five out of the big six energy companies: UK Power Networks, Northern Power Grid, SP Energy Networks, SSE Power Distribution and Electricity North West.

Ofgem said in a statement: "Today's announcement is all part of our consistent drive to get the best deal for consumers while maintaining a stable regulatory regime which attracts investment as cheaply as possible."

The regulator said the cut was achieved by savings of £2.1bn from the redrafting of the companies' business plans last year.

Initially the five companies' proposals were returned after Ofgem deemed they failed to give customers value for money.

The sixth company, Western Power Distribution, was the first to have its price control agreed after the regulator approved its business plan last November.

Under the proposals £17bn will be spent on upgrading and maintaining Britain's local electricity network.

Ofgem said that in addition to investment it had "challenged the companies to improve customer service and take a more active role in helping vulnerable customers."

It added companies that fail to do this will face penalties.

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Barclays Ups PPI Mis-Sell Provision By £900m

Barclays bank has announced it is making a further £900m provision for mis-selling of payment protection insurance (PPI) to consumers.

The announcement comes as the lender released its latest half-year results, which showed a 7% drop in adjusted pre-tax profit to £3.35bn.

The firm, which has sought to overhaul its internal cultural ethos in the wake of the PPI and Libor-fixing scandals, also saw a drop in some divisional revenue.

Its investment bank saw total income decrease by 18% to £4.26bn, in the six months to the end of June.

Barclays has launched a major restructure of its high risk, high return investment bank as it seeks to improve its retail arm.

The banking giant said its statutory profit - a different measure to adjusted profit - was £2.5bn, up from £1.67bn in the same period last year.

Good returns were seen in its personal and corporate banking and its credit card units.

"We committed to simplify, focus and rebalance the group to deliver higher and more sustainable returns across the cycle, while structurally reducing our cost base and strengthening our capital position," chief executive Antony Jenkins said.

"We are making encouraging progress in executing this plan. Profits before tax in personal and corporate banking and Barclaycard were up 23% and 24% respectively."

In February, there was widespread shareholder concern about the contentious issue of bonuses at the bank.

The bonus figure for 2013 went up by 10% - despite both revenue and profit falling.

Of the £2.38bn "incentives" for staff, two-thirds went to investment banking staff.

The bank also revealed thousands of UK job cuts would occur this year - with 19,000 jobs set to be shed globally over the next two years.

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Bank Of England Gets Tough On City Misconduct

By Mark Kleinman, City Editor

The Bank of England (BoE) has rewritten the City rulebook, introducing tough new restrictions on bankers' bonuses and the threat of stringent penalties including jail terms for errant executives.

Announcing proposals for measures aimed at strengthening accountability in the industry, the Prudential Regulation Authority (PRA) said on Wednesday that the new regime would make London one of the most closely-regulated in the world.

The reforms include eye-catching plans such as an annual MOT for senior bankers; a ban on discretionary payments to individuals who work for banks bailed out by taxpayers; and longer deferral periods for variable pay of up to seven years for top executives.

If implemented, there will also be a ban on bankers transferring their bonus pots from one firm to another when they change employer, which has in the past enabled individuals to escape financial penalty for wrongdoing exposed after they have left their previous firm.

The BoE also confirmed new rules that will oblige the biggest banks to claw back bonuses for up to seven years after the money has been awarded, as Sky News revealed on Tuesday.

Where probes into an individual are already underway at the end of the seven-year period, there is an option to extend the term by up to three years.

The clawback rules will come into effect at the beginning of next year, while the other measures announced by the PRA are subject to a consultation period and will be finalised in the autumn.

They come in the wake of a litany of crises which have shaken public confidence in the banking industry, including the Libor rate-rigging scandal, an ongoing probe into the possible manipulation of foreign exchange rates, and consumer mis-selling episodes in payment protection insurance and identity theft cover.

Last year's report by the Parliamentary Commission on Banking Standards called for some of the measures announced on Wednesday to be even tougher, but they nevertheless represent a significant strengthening of watchdogs' powers.

The PRA, which has drawn up the new rulebook in conjunction with the Financial Conduct Authority (FCA), wants to oversee the creation of two new frameworks for holding bankers to account.

A Senior Managers Regime will clarify lines of responsibility so that executives cannot abdicate responsibility for misconduct which takes place in the area of their bank that they supervise.

There will also be a Certification Regime, which will oblige banks to conduct annual assessments of the fitness and propriety of staff whose decision-making status means they could pose harm to customers.

A proposed ban on discretionary payments to employees at firms bailed out by the taxpayer will include pensions and other payments, which would have affected a payout to Fred Goodwin, former chief executive of Royal Bank of Scotland, when he left in the wake of its £45.5bn bail-out in 2008.

PRA chief executive Andrew Bailey said: "We believe that enhancing individual accountability and improving the alignment of risk and reward should have a positive impact on behaviour and culture within banks and will help to ensure that they are managed in a way that promotes the safety and soundness of individual institutions."

However, the CBI, Britain's most influential business group, sounded a note of caution about the new rules, saying the UK's competitiveness as a financial centre remained of paramount importance.

"We need to be careful we don't create uncertainty which might make it increasingly hard to attract talent to London," it said.

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UK Bankers Face Longest Bonus Clawbacks

By Mark Kleinman, City Editor

Staff at British banks could be made to hand back bonuses more than six years after the money has been paid to them under a regime that will amount to the world's toughest rules on clawing back remuneration.

Sky News has learnt that the Bank of England (BoE)'s Prudential Regulation Authority (PRA) has decided to enforce, and potentially augment, a draconian proposal outlined in March.

In a policy statement to be published on Wednesday, it will confirm that banks will have to amend the employment contracts of senior staff in order to implement the new rules, which will come into force on January 1 next year.

Coming in the wake of a series of market manipulation and mis-selling scandals which have triggered tens of billions of pounds in fines and compensation to consumers, the tougher pay framework is likely to be welcomed in Westminster but spark opposition from bank executives who argue that the City's international competitiveness will be undermined.

In its consultation paper published earlier this year, the regulator proposed that clawback should operate for a six-year period after vesting.

That period is still expected to apply to awards made prior to the beginning of next year, in line with the statute of limitations for employment contracts, Sky News understands.

The PRA is to enforce the bonus policy on bankers

However, insiders said the PRA had also been examining whether bonus awards made after January 1 next year could be reclaimed for up to seven years.

The Bank of England declined to comment on Tuesday on whether it had opted to pursue clawback for post-2014 bonuses over the longer, seven-year period.

Either way, the final details will represent tougher rules for City bankers than those based in other international financial centres such as Frankfurt, Hong Kong or New York.

The tougher regime follows last year's report by the Parliamentary Commission on Banking Standards, which was chaired by the Conservative MP Andrew Tyrie.

Under the BoE's plans, banks will be obliged to reclaim money already paid to employees even where they have not been directly culpable of misconduct.

Lenders will instead be required to demonstrate that they have done so where "there is reasonable evidence of employee misbehaviour or material error; the firm or the relevant business unit suffers a material downturn in its financial performance; or the firm or the relevant business unit suffers a material failure of risk management".

The new framework will mean that many senior employees of UK-based banks will have to wait for at least 12 years - and possibly longer - between the point at which they are awarded a bonus and that at which it can no longer be either cancelled or reclaimed by their employer.

The rules will also apply to the overseas employees of UK-based banks, which the likes of HSBC and Standard Chartered will argue will put them at a major disadvantage in their key Asian operations.

Major lenders already operate lengthy bonus deferrals meaning that share awards do not vest until the end of a five-year period, during which time part or all of the awards can be cancelled under a mechanism called malus.

The new clawback rules would kick in at the end of the initial five years, making a total of well over a decade before bankers can spend bonus awards safe in the knowledge that they will not have to repay it.

The BoE will set out its policy just days after accusing employees of Lloyds Banking Group of "reprehensible" and "possibly criminal" behaviour for attempting to manipulate an emergency funding scheme set up to help banks like it avoid outright collapse during the 2008 financial crisis.

Andrew Bailey is the chief executive of the PRA

In a report published on Tuesday, the think-tank Respublica suggested that bankers should swear an oath that "would put them on the path to absolution".

Speaking in March, Andrew Bailey, the PRA chief executive said: "We have an objective to ensure the safety and soundness of the firms we regulate and we won't allow remuneration schemes to exist that encourage behaviour likely to jeopardise financial stability.

The policy we are consulting on will ensure bonuses can be clawed back from individuals, where they have already been paid, if it becomes apparent they have put the stability of their firms at risk or engaged in inappropriate actions.

"This will provide a clear message to individuals of what is expected from them and the consequences of not acting properly."

Alongside the clawback policy statement, the BoE will also publish further details of the City watchdog's senior managers' regime and other details of its remuneration policies.

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Aldi And Lidl 'Victors In Supermarket War'

Discounters Aldi and Lidl have seen their market share surge as Britain's four biggest outlets suffer in the ongoing bitter supermarket war.

Research firm Kantar Worldpanel said in the three months to June 20, both of the German-based retailers saw significant growth compared to the same period last year.

It said Aldi's share rose from 3.7% to 4.8%, while Lidl expanded from 3.1% to 3.6%.

Meanwhile, supermarket giant Tesco saw its share of the sector fall from 30.3% last year to 28.9% in the period ending in July.

Asda, Britain's second biggest chain, remained flat at 17%, while Sainsbury's also remained static at 16.6%.

Struggling supermarket Morrisons was the biggest faller out of the major retailers, seeing its share fall from 11.5% last year to 11% this year.

Both Tesco and Morrisons recorded sales losses of 3.8% compared to the same period last year, researchers said.

Kantar Worldpanel director Edward Garner said: "Aldi's 32% growth rate has lifted its market share to 4.8%, and this is a new record for the retailer and means it has nearly caught up with Waitrose on 4.9%.

"Similarly, Lidl sales have grown by nearly 20% and it has held onto its record share of 3.6%."

Britain's big outlets have become increasingly embroiled in a price war during 2014 that has harmed their margins.

They have also invested heavily in convenience store and online delivery services.

The hard discounters have avoided entering the online delivery sub-sector, which is seen by analysts as costing the majors more than £100m a year.

Grocery price inflation has also fallen for the 10th consecutive periods and now stands at 0.4%.

Price slashing and deflation in staple items like milk, vegetables and bread have driven food price inflation down to its lowest level since late 2006, when the research first started.
 

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'Dirty Diesel' Drivers Face New Tax In Cities

Drivers of diesel vehicles face having to pay more in taxes and levies as cities around the UK strive to cut air pollution.

In London, plans to introduce a £10 charge for the most polluting diesel cars are being considered by Mayor Boris Johnson.

These could come into force by as soon as 2020.

The Mayor's plans for the Ultra Low Emission Zone (ULEZ) are still subject to full consultation, but it is expected that it will require diesel cars to be Euro 6 standard - no more than five years old.

Older petrol-driven vehicles beyond Euro 4 - more than 14 years old - will also be hit by the ULEZ charge.

The final figure for the ULEZ levy is expected to be a similar amount to the congestion charge.

The hike in motoring costs would be on top of the congestion charge, pushing up the cost to at least £20 to drive into the capital's ultra-low emission zone.

The Department for Environment, Food and Rural Affairs said that unless action is taken, London, Birmingham and Leeds would face dangerous levels of pollution from vehicle exhausts by 2030.

Diesel exhaust emissions are responsible for about a quarter of the 29,000 premature deaths caused by air pollution according to experts from King's College London.

The number of diesel cars in Britain has grown to 11 million, nearly a four-fold increase since 2000, according to the Society of Motor Manufacturers and Traders.

This was largely due to motorists switching to diesel because of greater fuel economy and lower road taxes.

But diesel engines also produce toxins including nitrogen dioxide and particulates, which irritates the lung lining and can cause respiratory disease.

The Labour Party has reportedly planned a countrywide network of low emission zones that would push older diesel cars out of city centres.

Oxford has already introduced a low emission zone for buses and could expand this for other vehicles.

London Mayor environment adviser Mathew Pencharz told The Times: "We want to see an unwinding of incentives that have driven people to diesel.

"Euro engine standards on emissions have not delivered the savings expected, meaning we now have a legacy of a generation of dirty diesels."

All of these initiatives are being driven by the need to meet tighter European regulations on clean air and avoid the threat of heavy fines for breaching them.

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Crashes Push Up Airline Insurance Costs

The global airline industry faces the prospect of huge insurance premium increases, following a spate of crashes.

The warning comes as the sector is forecast to see annual losses hit more than £1.2bn - the most expensive year since the 9/11 attacks in 2001.

The insurance industry has warned of huge premium increases on aircraft cover, as war is now seen as a threat to commercial flight paths.

On July 17, Malaysia Airlines flight MH17 was downed by an apparent missile attack over eastern Ukraine, killing almost 300 people.

Recent conflicts in the Middle East and parts of Africa have increasingly turned underwriters' attention to "war" insurance policies.

On July 24, an Air Algerie flight AH5017 crashed in a remote region of Mali, close to the border with Burkina Faso, with the loss of 116 lives.

And the day before, a TransAsia Airways flight in Taiwan crashed in bad weather, killing 48 passengers.

Nearly 300 people died when MH17 was shot down in eastern Ukraine

Mystery still surrounds the disappearance in March of Malaysia Airlines MH370, which is believed to have crashed in the Indian Ocean with 239 people on board.

Airlines face sudden policy changes in relation to hostile attacks and could include cover cancellations with just days' notice.

The Financial Times said that some companies are demanding exact flight path details and may reconsider cover for flights over areas of conflict.

David Learmount, of Flightglobal, told Sky News that consumers are not likely to be hit by insurance increases, but said they may be affected by changing flight paths and fuel prices.

He said: "If airlines are now flying around Ukraine for example, instead of across the country, the plane will use more fuel and that might impact the cost of flights."

Although some airlines were flying over Ukraine prior to the loss of MH17, carriers are now avoiding the country.

Similar concerns have hit other regions. Emirates Airlines has stopped flying over Iraq and Mr Learmount said "it will lengthen journey time and therefore increase fuel consumption".

As the aviation industry is hit with insurance hikes, Malaysia Airlines is expected to see the highest increases, amid reports that it may seek to rebrand itself after losing the two aircraft this year.

Lloyd's of London, the world's oldest insurance market, said it expects to see a bill running into hundreds of millions of pounds this year due to recent airline disasters.

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Fracking: More Protection For National Parks

Fracking will be allowed in national parks and areas of outstanding beauty only in "exceptional circumstances", ministers say, as new bidding for shale exploration licences opens.

The policy is part of new guidance published by Government which is aiming to offer up vast swathes of Britain for fracking.

The Government has committed to going "all out for shale", claiming development of the gas and oil resource is needed to improve energy security, and boost jobs and the economy.

But opponents say the high-pressure injection of water risks polluting water supplies, damaging the environment and causing minor earthquakes, and argue further fossil fuels should not be extracted due to climate change.

Business and energy minister Matthew Hancock said: "The new guidance will protect Britain's great National Parks and outstanding landscapes, building on the existing rules that ensure operational best practices are implemented and robustly enforced.

"Ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country."

Where an application in National Parks is refused and the developer launches an appeal, Communities Secretary Eric Pickles will consider whether to make the final decision himself to ensure the policy is being properly applied.

But Greenpeace campaigner Louise Hutchins warned: "Eric Pickles' supposed veto power over drilling in National Parks will do nothing to quell the disquiet of fracking opponents across Britain.

"Ministers waited until the parliamentary recess to make their move, no doubt aware of the political headache this will cause to MPs whose constituencies will be affected."

Friends of the Earth energy campaigner Tony Bosworth said: "Today the risk of fracking has spread. This threat to the environment and public health could now affect millions more people.

"Those who thought that fracking would only happen in other places will now worry about it happening on their doorstep."

The shale exploration licences which can be applied for from now provide the first step to start drilling, but do not give an absolute agreement to drill.

Planning permission, permits from the Environment Agency and agreement from the Health and Safety Executive will be required for further drilling.

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GSK Boss Says Pharma Giant May Be Split Up

Drugs giant GlaxoSmithKline (GSK) has revealed a possible spin-off of its consumer healthcare division.

Chief executive Sir Andrew Witty said the carve up may occur if it offered more value as a standalone company.

It comes following an announcement in April that GSK sealed a £4.2bn joint venture deal with Swiss company Novartis, combining their consumer healthcare arms.

Sir Andrew told the Financial Times that the transaction strengthened the businesses and that the new structure would create more options in the long run.

However, despite the recent deal, he admitted he was "willing to accept" that the future may be more financially viable with standalone companies.

GSK's former China boss was embroiled in bribery scandal

GSK is currently enduring a bribery scandal in China.

Investigators claim the country's former head, Mark Reilly, knew of sales staff bribing doctors and hospitals to use its products.

The scandal deepened after a sex tape involving Mr Reilly emerged during an ongoing probe.

Two weeks ago, authorities in China issued formal charges against a British investigator for the company and his Chinese-American wife.

Peter Humphrey and his wife Yu Yingzeng were charged with illegally obtaining and selling private information, according to China's state news agency Xinhua.

The company has also been implicated in alleged malpractice in Iraq and Poland.

Last week GSK also issued a profits warning, in part due to poor sales of its asthma medicine.

It  reported that operating profits fell 10% to £2.2bn in the first half of its financial year, with sales deteriorating by a worse-than-expected 13% in the second quarter alone.

The company blamed weak demand for its lung drugs in the US and the effects of a strong pound on currency exchanges.

The company has now been forced to cut its performance forecast for the full year.

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UK Economy Emerges From Six-Year Downturn

Official figures show the UK economy has emerged from six years of lost growth to return to its pre-crisis peak.

The Office for National Statistics (ONS) said Britain's economy was now bigger than it was before the financial crisis as gross domestic product (GDP) expanded by 0.8% in the second quarter of the year.

The performance matched that of the previous quarter, although today's figure is only a first estimate and subject to revision.

It meant that on an annual basis, growth was 3.1% higher than was measured in the same period last year, leaving total output 0.2% higher than in the first quarter of 2008 - its previous peak.

Consumer spending is still driving growth

The measure of GDP per head - taking account of a growing population and weaker productivity - remains below the peak.

In its April to June calculations, the ONS charted 1% quarter-on-quarter growth in the service sector - which accounts for 75% of total UK GDP - while industrial production rose 0.4%.

However both construction and agriculture made negative contributions of 0.5% and 0.2% respectively. Both were hit by the effects of a very wet winter and spring.

The construction sector was damaged by a weak May

The ONS said only the service industry was now bigger than it was before the crisis, with industrial output and construction still 10% smaller.

Chancellor George Osborne said: "Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan."

He tweeted: "We owe it to hardworking taxpayers not to repeat the mistakes of the past.

"Economy bigger than previous peak in 2008 but long way to go - the Great Recession was one of deepest of any major economy & cost UK 6 years."

However many people reacted to the news with scepticism. Posts of Sky News' Facebook page suggested not everyone feels Britain is out of the economic doldrums.

Ed Balls accuses ministers of creating a cost of living crisis

:: Robert Futsal Brassett: "They may declare it. But it don't feel like it."

:: Dorothy Dougan "Just in time for the General Election how fortuitous. So do we all get pay rise now?"

:: Jax Bell - "So NOW can we all get a decent pay rise,MPs 11% everyone who is on benefits/pension 2.5% Working people in North East 1%. Worst Government Leaders in British History"

:: Josephine Hargreaves - "Really? Come out into the real world & talk to the ordinary people to see if its over!"

:: Kerry Livesey - "Good news but let's hope the low paid workers benefit"

The pace of the recovery will feed into expectations about the timing of an interest rate rise by the Bank of England though its governor Mark Carney recently suggested it would be tied to improved data on wage growth.

While employment has soared in recent months, salary growth has fallen to 0.3% year-on-year and continues to lag inflation - last measured at 1.9%.

The scenario that has left the Bank fearing the impact of any rate rise on consumers, whose spending remains the biggest driver of economic growth.

Labour's shadow chancellor, Ed Balls, said of the latest GDP figures: "At long last our economy is back to the size it was before the global banking crisis - three years after the US reached the same point.

"But with GDP per head not set to recover for three more years and most people still seeing their living standards squeezed, this is no time for complacent claims that the economy is fixed.

"Wages after inflation are down over £1,600 a year since 2010, housebuilding under this government is at its lowest level since the 1920s and business investment is lagging behind our competitors.

"Labour's economic plan will make Britain better off and fairer for the future."

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Housing Shortage Sees More Tenants Evicted

By Mark White, Home Affairs Correspondent

Increasing numbers of private tenants are being evicted or exploited by landlords cashing in on the increase in house prices and the shortage of rented accommodation, according to latest figures.

Citizens Advice (CAB) saw a 38% rise in the number of people turning to the charity for help with eviction notices served on them, despite being up to date with their rent.

CAB recorded 5,000 cases across the country in 2013/2014 where tenants complained about being forced from their homes, even though they were not in arrears. That figure is up from 3,750 the previous year.

Problems in London and the South East are particularly acute, the charity said, where many house prices are the highest in the country.

Private tenant Ryan Herran told Sky News he was being forced from his Muswell Hill home of five years, because he complained about damp and mould in the property and demanded his landlord fix the problem.

After months of wrangling with the owner, he was eventually served with a section 21 eviction order.

"I was actually in shock for a couple of days because I've always been a good tenant and always paid my rent and never engaged in anti-social behaviour," he said.

"I did ring up the property management company and they told me they don't have to give a reason under the section 21 eviction notice. They said they felt they were doing me a favour by at least giving me two months notice."

Mr Herran believes his eviction is motivated by spite and certainty on the part of the landlord that he would easily be able to find another tenant.

The number of tenants seeking help over eviction has nearly doubled

Roger Harding from the homelessness charity Shelter said: "Sadly landlords can evict for no reason, even if you've been keeping up with the rent. 

"We've found many worrying examples where landlords have evicted people simply because they don't want to have to deal with repair issues and that's something we want to see outlawed."

During January to March 2014 house prices rose by 18% in London and 10% in the South East, compared to the same period the previous year.

CAB's figures reveal those rises were mirrored by an increase in private tenants reporting they had been served with eviction notices, despite being up to date with their rent.

The charity said the number of tenants in London and the South East seeking help over eviction notices between January and March 2014 was 900, compared with 400 over the first quarter of the year before.

Landlord Richard Blanco rents out properties across six London boroughs and is also a member of National Landlords Association. He said private landlords are often unfairly maligned.

"There's a small minority of rogue landlords who might try and increase rents but really the most sensible business model for landlords is to maintain the property well and to have a good relationship with tenants and to try to ensure tenants stay as long as possible," he said.

Mr Blanco said, contrary to widespread belief, more than three quarters of private tenants have not faced an increase in rents over the past 12 months.

The Government is in the process of introducing new legislation which it hopes will strengthen the rights of private tenants and help protect them from exploitation, or unjustified eviction.

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Gatwick Passengers Suffer Baggage Delays

Hundreds of people arriving into Gatwick Airport's South Terminal have faced long delays in picking up their luggage, with many being told to go home without it.

An airport spokesman said the overnight disruption was caused by "resourcing issues" involving baggage handlers Swissport.

"Due to resourcing issues with the baggage handlers Swissport there were overnight issues and delays with passengers' luggage," he said.

"Gatwick provided extra staff to help the airlines and their baggage handlers improve their service, as well as providing welfare and water for passengers waiting in the baggage areas, but we are sorry for the delays they faced.

"Baggage operations are now returning to normal."

Passengers of four airlines have been advised to go home without their luggage.

Gatwick said it provided extra staff for airlines to help reduce the delays

Officials at the airport informed passengers of British Airways flights who had waited more than an hour on their bags being returned, and those on Monarch, Thomas Cook or Thompson flights who had been waiting 90 minutes or more, that their luggage would be forwarded to their home address.

It is understood easyJet passengers have also been affected but had not been advised to leave without their baggage.

Some passengers took to social media sites to voice their frustrations over the delays - some up to five hours.

Julian C Adams tweeted: "Such shocking service at Gatwick airport! Waiting for the arrival of baggage for over 2 hours now! #shouldhaveflowntoheathrow."

Sophie Wood ‏tweeted: "3 hrs in #gatwick baggage handling ... Apparent Lack of staff appalling shambles #Gatwick#idiots."

Oliver Webb wrote: "‏@2 hour delays at #gatwick for baggage reclaim. #Swissport to blame apparently. No info from airport staff. Rubbish."

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UK Economy Emerges From Six-Year Downturn

Official figures show the UK economy has emerged from six years of lost growth to return to its pre-crisis peak.

The Office for National Statistics (ONS) said Britain's economy was now bigger than it was before the financial crisis as gross domestic product (GDP) expanded by 0.8% in the second quarter of the year.

The performance matched that of the previous quarter, although today's figure is only a first estimate and subject to revision.

It meant that on an annual basis, growth was 3.1% higher than was measured in the same period last year, leaving total output 0.2% higher than in the first quarter of 2008 - its previous peak.

Consumer spending is still driving growth

The measure of GDP per head - taking account of a growing population and weaker productivity - remains below the peak.

In its April to June calculations, the ONS charted 1% quarter-on-quarter growth in the service sector - which accounts for 75% of total UK GDP - while industrial production rose 0.4%.

However both construction and agriculture made negative contributions of 0.5% and 0.2% respectively. Both were hit by the effects of a very wet winter and spring.

The construction sector was damaged by a weak May

The ONS said only the service industry was now bigger than it was before the crisis, with industrial output and construction still 10% smaller.

Chancellor George Osborne said: "Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan."

He tweeted: "We owe it to hardworking taxpayers not to repeat the mistakes of the past.

"Economy bigger than previous peak in 2008 but long way to go - the Great Recession was one of deepest of any major economy & cost UK 6 years."

However many people reacted to the news with scepticism. Posts of Sky News' Facebook page suggested not everyone feels Britain is out of the economic doldrums.

Ed Balls accuses ministers of creating a cost of living crisis

:: Robert Futsal Brassett: "They may declare it. But it don't feel like it."

:: Dorothy Dougan "Just in time for the General Election how fortuitous. So do we all get pay rise now?"

:: Jax Bell - "So NOW can we all get a decent pay rise,MPs 11% everyone who is on benefits/pension 2.5% Working people in North East 1%. Worst Government Leaders in British History"

:: Josephine Hargreaves - "Really? Come out into the real world & talk to the ordinary people to see if its over!"

:: Kerry Livesey - "Good news but let's hope the low paid workers benefit"

The pace of the recovery will feed into expectations about the timing of an interest rate rise by the Bank of England though its governor Mark Carney recently suggested it would be tied to improved data on wage growth.

While employment has soared in recent months, salary growth has fallen to 0.3% year-on-year and continues to lag inflation - last measured at 1.9%.

The scenario that has left the Bank fearing the impact of any rate rise on consumers, whose spending remains the biggest driver of economic growth.

Labour's shadow chancellor, Ed Balls, said of the latest GDP figures: "At long last our economy is back to the size it was before the global banking crisis - three years after the US reached the same point.

"But with GDP per head not set to recover for three more years and most people still seeing their living standards squeezed, this is no time for complacent claims that the economy is fixed.

"Wages after inflation are down over £1,600 a year since 2010, housebuilding under this government is at its lowest level since the 1920s and business investment is lagging behind our competitors.

"Labour's economic plan will make Britain better off and fairer for the future."

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BSkyB Unveils Plan For European Pay-TV Giant

The owner of Sky News has announced an ambitious plan to create a European pay-television giant that will more than treble the company's potential customer base.

Announcing its full-year results on Friday, BSkyB confirmed that it had reached a deal with 21st Century Fox (21CF) to acquire its 100% interest in Sky Italia and 57.4% stake in Sky Deutschland in deals worth a combined £5.3bn.

The transactions will propel BSkyB into market-leading positions in five countries, including three of the four largest pay-TV markets in Europe, and provide a platform to sell a diverse range of entertainment products in some of the Continent's wealthiest economies.

They will also give the company access to markets in Germany and Italy where seven out of ten homes have yet to sign up to pay-TV services.

In total, BSkyB's potential customer base will increase from 30 million households to more than 97 million.

BSkyB sees an opportunity to grow customer numbers

Jeremy Darroch, BSkyB's chief executive, said: "This transaction will create a world-class, multinational pay-TV business with enhanced headroom for growth and immediate benefits of scale.

"The three Sky businesses are leaders in their home markets and will be even stronger together. By creating the new Sky, we will be able to use our collective strengths and expertise to serve customers better, grow faster and enhance returns."

Completion of the takeover in Germany may involve buying out minority shareholders in Sky Deutschland, who are being offered the same price for their shares as that accepted by 21CF.

The German stake is costing BSkyB £2.9bn, while the Italian takeover comprises £2.1bn in cash as well as BSkyB's shareholding in the National Geographic channel worth about £380m, which 21CF is acquiring.

BSkyB is funding the takeovers through a combination of debt and asset sales, as well as raising 9.9% of its share capital through a placing.

Under the terms of the fundraising, 21CF, which is chaired by Rupert Murdoch, will retain its stake of just under 40% in BSkyB by subscribing for its pro rata position, worth approximately £500m.

BSkyB said the deals would generate annual cost synergies of about £200m.

Friday's announcement underlines the quickening pace of media consolidation on both sides of the Atlantic.

Last week, BSkyB received nearly £500m from the sale of its remaining shareholding in ITV to Liberty Global, the owner of Virgin Media.

21CF, meanwhile, is expected to channel the proceeds from its European disposals into a war chest aimed at sealing a takeover of Time Warner, owner of the Warner Brothers film studio and the CNN news network.

The City's reaction to the terms of BSkyB's acquisitions in Germany and Italy is likely to be mixed, with some analysts sceptical about the prospects of penetrating those markets as effectively as the company has done in the UK.

BSkyB's results for the 2013-14 financial year were stronger than consensus forecasts, with adjusted revenue up 6.5% to £7.6bn.

BSkyB's customers take almost 35 million products

Operating profit slipped by just 5% to £1.26bn despite heavy investment in product development and distribution, and the higher cost of Premier League rights.

Negotiations over the next three-year contract to broadcast live top-flight English football are expected to get underway early next year.

Analysts say the threat of another significant hike in the cost of the rights, or of being outbid altogether, may act as a drag on BSkyB's share price until the outcome of the auction is clear.

However, Mr Darroch pointed to the strongest growth the company had seen for three years, with nearly 35 million products now taken by customers across pay-TV, broadband, telephony, on-demand and mobile services.

BSkyB has also sought to reduce its reliance on the Premier League to attract customers, signing major rights renewal deals with other sports and investing heavily in drama and entertainment content.

Its share price - up 10% over the past 12 months - fell back by 3% in early trading on the FTSE 100 on Friday as investors digested news of the acquisitions and equity-raising.

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Housing Shortage Sees More Tenants Evicted

By Mark White, Home Affairs Correspondent

Increasing numbers of private tenants are being evicted or exploited by landlords cashing in on the increase in house prices and the shortage of rented accommodation, according to latest figures.

Citizens Advice (CAB) saw a 38% rise in the number of people turning to the charity for help with eviction notices served on them, despite being up to date with their rent.

CAB recorded 5,000 cases across the country in 2013/2014 where tenants complained about being forced from their homes, even though they were not in arrears. That figure is up from 3,750 the previous year.

Problems in London and the South East are particularly acute, the charity said, where many house prices are the highest in the country.

Private tenant Ryan Herran told Sky News he was being forced from his Muswell Hill home of five years, because he complained about damp and mould in the property and demanded his landlord fix the problem.

After months of wrangling with the owner, he was eventually served with a section 21 eviction order.

"I was actually in shock for a couple of days because I've always been a good tenant and always paid my rent and never engaged in anti-social behaviour," he said.

"I did ring up the property management company and they told me they don't have to give a reason under the section 21 eviction notice. They said they felt they were doing me a favour by at least giving me two months notice."

Mr Herran believes his eviction is motivated by spite and certainty on the part of the landlord that he would easily be able to find another tenant.

The number of tenants seeking help over eviction has nearly doubled

Roger Harding from the homelessness charity Shelter said: "Sadly landlords can evict for no reason, even if you've been keeping up with the rent. 

"We've found many worrying examples where landlords have evicted people simply because they don't want to have to deal with repair issues and that's something we want to see outlawed."

During January to March 2014 house prices rose by 18% in London and 10% in the South East, compared to the same period the previous year.

CAB's figures reveal those rises were mirrored by an increase in private tenants reporting they had been served with eviction notices, despite being up to date with their rent.

The charity said the number of tenants in London and the South East seeking help over eviction notices between January and March 2014 was 900, compared with 400 over the first quarter of the year before.

Landlord Richard Blanco rents out properties across six London boroughs and is also a member of National Landlords Association. He said private landlords are often unfairly maligned.

"There's a small minority of rogue landlords who might try and increase rents but really the most sensible business model for landlords is to maintain the property well and to have a good relationship with tenants and to try to ensure tenants stay as long as possible," he said.

Mr Blanco said, contrary to widespread belief, more than three quarters of private tenants have not faced an increase in rents over the past 12 months.

The Government is in the process of introducing new legislation which it hopes will strengthen the rights of private tenants and help protect them from exploitation, or unjustified eviction.

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BSkyB Unveils Plan For European Pay-TV Giant

The owner of Sky News has announced an ambitious plan to create a European pay-television giant that will more than treble the company's potential customer base.

Announcing its full-year results on Friday, BSkyB confirmed that it had reached a deal with 21st Century Fox (21CF) to acquire its 100% interest in Sky Italia and 57.4% stake in Sky Deutschland in deals worth a combined £5.3bn.

The transactions will propel BSkyB into market-leading positions in five countries, including three of the four largest pay-TV markets in Europe, and provide a platform to sell a diverse range of entertainment products in some of the Continent's wealthiest economies.

They will also give the company access to markets in Germany and Italy where seven out of ten homes have yet to sign up to pay-TV services.

In total, BSkyB's potential customer base will increase from 30 million households to more than 97 million.

BSkyB sees an opportunity to grow customer numbers

Jeremy Darroch, BSkyB's chief executive, said: "This transaction will create a world-class, multinational pay-TV business with enhanced headroom for growth and immediate benefits of scale.

"The three Sky businesses are leaders in their home markets and will be even stronger together. By creating the new Sky, we will be able to use our collective strengths and expertise to serve customers better, grow faster and enhance returns."

Completion of the takeover in Germany may involve buying out minority shareholders in Sky Deutschland, who are being offered the same price for their shares as that accepted by 21CF.

The German stake is costing BSkyB £2.9bn, while the Italian takeover comprises £2.1bn in cash as well as BSkyB's shareholding in the National Geographic channel worth about £380m, which 21CF is acquiring.

BSkyB is funding the takeovers through a combination of debt and asset sales, as well as raising 9.9% of its share capital through a placing.

Under the terms of the fundraising, 21CF, which is chaired by Rupert Murdoch, will retain its stake of just under 40% in BSkyB by subscribing for its pro rata position, worth approximately £500m.

BSkyB said the deals would generate annual cost synergies of about £200m.

Friday's announcement underlines the quickening pace of media consolidation on both sides of the Atlantic.

Last week, BSkyB received nearly £500m from the sale of its remaining shareholding in ITV to Liberty Global, the owner of Virgin Media.

21CF, meanwhile, is expected to channel the proceeds from its European disposals into a war chest aimed at sealing a takeover of Time Warner, owner of the Warner Brothers film studio and the CNN news network.

The City's reaction to the terms of BSkyB's acquisitions in Germany and Italy is likely to be mixed, with some analysts sceptical about the prospects of penetrating those markets as effectively as the company has done in the UK.

BSkyB's results for the 2013-14 financial year were stronger than consensus forecasts, with adjusted revenue up 6.5% to £7.6bn.

BSkyB's customers take almost 35 million products

Operating profit slipped by just 5% to £1.26bn despite heavy investment in product development and distribution, and the higher cost of Premier League rights.

Negotiations over the next three-year contract to broadcast live top-flight English football are expected to get underway early next year.

Analysts say the threat of another significant hike in the cost of the rights, or of being outbid altogether, may act as a drag on BSkyB's share price until the outcome of the auction is clear.

However, Mr Darroch pointed to the strongest growth the company had seen for three years, with nearly 35 million products now taken by customers across pay-TV, broadband, telephony, on-demand and mobile services.

BSkyB has also sought to reduce its reliance on the Premier League to attract customers, signing major rights renewal deals with other sports and investing heavily in drama and entertainment content.

Its share price - up 10% over the past 12 months - fell back by 3% in early trading on the FTSE 100 on Friday as investors digested news of the acquisitions and equity-raising.

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UK Economy Emerges From Six-Year Downturn

Official figures show the UK economy has emerged from six years of lost growth to return to its pre-crisis peak.

The Office for National Statistics (ONS) said Britain's economy was now bigger than it was before the financial crisis as gross domestic product (GDP) expanded by 0.8% in the second quarter of the year.

The performance matched that of the previous quarter, although today's figure is only a first estimate and subject to revision.

It meant that on an annual basis, growth was 3.1% higher than was measured in the same period last year, leaving total output 0.2% higher than in the first quarter of 2008 - its previous peak.

Consumer spending is still driving growth

The measure of GDP per head - taking account of a growing population and weaker productivity - remains below the peak.

In its April to June calculations, the ONS charted 1% quarter-on-quarter growth in the service sector - which accounts for 75% of total UK GDP - while industrial production rose 0.4%.

However both construction and agriculture made negative contributions of 0.5% and 0.2% respectively. Both were hit by the effects of a very wet winter and spring.

The construction sector was damaged by a weak May

The ONS said only the service industry was now bigger than it was before the crisis, with industrial output and construction still 10% smaller.

Chancellor George Osborne said: "Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan."

He tweeted: "We owe it to hardworking taxpayers not to repeat the mistakes of the past.

"Economy bigger than previous peak in 2008 but long way to go - the Great Recession was one of deepest of any major economy & cost UK 6 years."

The pace of the recovery will feed into expectations about the timing of an interest rate rise by the Bank of England though its governor Mark Carney recently suggested it would be tied to improved data on wage growth.

Ed Balls accuses ministers of creating a cost of living crisis

While employment has soared in recent months, salary growth has fallen to 0.3% year-on-year and continues to lag inflation - last measured at 1.9%.

The scenario that has left the Bank fearing the impact of any rate rise on consumers, whose spending remains the biggest driver of economic growth.

Labour's shadow chancellor, Ed Balls, said of the latest GDP figures: "At long last our economy is back to the size it was before the global banking crisis - three years after the US reached the same point.

"But with GDP per head not set to recover for three more years and most people still seeing their living standards squeezed, this is no time for complacent claims that the economy is fixed.

"Wages after inflation are down over £1,600 a year since 2010, housebuilding under this government is at its lowest level since the 1920s and business investment is lagging behind our competitors.

"Labour's economic plan will make Britain better off and fairer for the future."

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Lloyds To Claw Back Pay As Libor Fine Looms

By Mark Kleinman, City Editor

Lloyds Banking Group is to examine whether it can claw back millions of pounds paid to former executives who will next week be implicated in the global Libor rate-rigging scandal.

Sky News understands that the taxpayer-backed lender's board will discuss the scope for bonus clawbacks shortly after it announces settlements with regulators in the UK and US, which could take place as soon as Monday.

Insiders said that up to 15 Lloyds employees would face investigations as part of disciplinary proceedings to be launched by the bank once the fines, which could be as high as £300m, are confirmed.

Several managers who were involved in Lloyds' Libor rate submissions have already been suspended.

The clawback move by Lloyds, which is 25%-owned by the taxpayer, is expected to be welcomed by George Osborne, the Chancellor.

Royal Bank of Scotland, which was fined £390m manipulating benchmark rates in February last year, deducted £300m from that year's bonus pool to cover part of the cost of the penalties. Additional sums have been docked in subsequent years.

Lloyds was the first of the major banks to cancel outstanding bonus awards to top executives, announcing in 2012 that it would reduce the bonus of former chief executive Eric Daniels after the scale of its payment protection insurance mis-selling became clear.

However, the bank may face a tough challenge to reclaim or cancel bonuses because of the length of time that has passed

Lord Blackwell, Lloyds' new chairman, is expected to examine the issue during forthcoming discussions with board members.

Barclays was the first bank to settle with regulators for manipulating Libor submissions, paying £290m in June 2012.

Bob Diamond, the bank's former chief executive, and Marcus Agius, its chairman, both left their jobs over the scandal.

Since then, though, some banks, including RBS and UBS, have paid substantially higher penalties, and others, such as Deutsche Bank, could also

Lloyds said on Friday that it "notes the recent media coverage regarding potential settlements with a number of government agencies and their investigations into submissions, communications and procedures around the setting of Interbank Offered Rates and other benchmarks.

"LBG confirms that it is in late-stage settlement discussions with a number of agencies. The settlements remain to be agreed and LBG expects they will include the payment of penalties. 

"LBG will update the market on these issues as appropriate."

The bank declined to comment on potential bonus clawbacks or on disciplinary action against employees.

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Facebook Shares Hit Record High As Profit Soars

Facebook shares hit a new record high after the social network posted profits growth of 137% for its last quarter.

All the major indicators of its business health seemingly delighted investors, with revenue from crucial mobile advertising continuing to grow at a strong pace while more people used the service and more often.

The company's shares climbed nearly 5% in extended trading after the results came out - with investors who bought - and held on to - Facebook stock during the company's initial public offering two years ago now being close to doubling their money.

Facebook earned $791m (£464m) in the April-June period - up from $331m in the same quarter a year ago.

Revenue jumped 61% to $2.91bn from $1.81bn with advertising revenue jumping 67%.

Mobile ad revenue is up

Mobile ad revenue, a closely watched figure because of the importance of Facebook capitalising on growing device use, was 62% of Facebook's total advertising revenue for the quarter.

The world's largest internet social network said it now counted 1.32 billion monthly users with almost 63% of them accessing Facebook's service every day in the second quarter, up from 61% in the same period a year ago.

"We had a good second quarter," CEO Mark Zuckerberg in a statement.

"Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world."

Facebook has been growing its share of the worldwide digital advertising market but it is still a long way from catching up to rival Google.

Facebook had a near 6% share of the market compared with Google's 32%, according to researchers eMarketer.

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Storm Failings Cost Power Firms Millions More

The UK's energy regulator says two power network operators are to pay an extra £3.3m for failures related to last winter's storms.

Ofgem said it had now secured a total of £8m from SSE and UK Power Networks (UKPN) after its investigation into the companies' handling of the bitter weather event ahead of Christmas.

The south of England was worst affected by the stormiest December since 1969 - and the windiest since 1993.

The combination of strong winds and heavy rain - running at more than double the seasonal average - brought havoc to many towns and villages as river levels rose and power lines were brought down.

The firms had already paid out £4.7m to consumers who were among one million households left without power at some stage though approximately 16,000 suffered lengthy reconnection delays of over 48 hours.

Yalding in Kent was among the worst affected areas

There were 500 premises in the UKPN and SSE Southern regions that were without supply for over five days - with the firms also slammed for poor communication with those affected and for failing to recall enough staff from their Christmas break.

Ofgem said the British Red Cross - which plays a role of helping vulnerable people during severe weather - would be among the organisations to benefit from the latest instalment of cash.

The watchdog said its new compensation regime - due to come into force next April - would guarantee standard payments of at least £70 for customers left without power for more than 24 hours.

Ofgem said the previous cap of £216 per household would rise to £700.

The announcement was made as the Competition and Markets Authority (CMA) set out details of its investigation into Britain's wider energy market to establish whether the 'big six' providers of gas and electricity need to be broken up.

The CMA must deliver its report by December 2015

It confirmed it had started work but was only releasing details of the scope of its inquiry at this stage.

Roger Witcomb, chair of the Energy Market Investigation Group, said: "Given the importance of energy supply to households, businesses and the economy, we very much encourage submissions on the issues we have identified and whether these cover the areas we need to investigate.

"We are looking to identify the underlying causes, at both wholesale and retail level, which could be leading to the widespread concerns that have surrounded this market in recent years - including rising energy bills, service quality, profitability and uncertainty over future investment.

"This is a market which is very complex so it is important at an early stage to focus the investigation on the most relevant issues."

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Deep Debt Warning Issued As Rate Rise Looms

The number of households creaking with crippling debts may double over the next four years, a think-tank has warned.

The Resolution Foundation forecast of 1.1 million in the most severe 'debt peril' by 2018 was released alongside advice that consumers should prepare themselves for rising interest rates.

The organisation said increased borrowing costs - combined with poor wage growth - risked plunging more families into hardship  with even a "relatively benign" move away from the current bank rate of 0.5% leaving them with repayment problems.

It feared the number of households in "debt peril' - those spending more than half their income on all forms of debt repayments - rising from 600,000 currently to above one million by 2018.

Its projections suggest the number of "highly geared" mortgage holders who are spending more than one third of their income on repayments could balloon from 1.1 million currently to 2.3 million - equating to around one in four households with a mortgage.

Both scenarios are based on assumptions that the Bank of England's base rate, which has been at the historic 0.5% low for over five years, will approach 3% by 2018.

Its governor, Mark Carney, has suggested the timing of any rise is likely to be linked to improved news on wage growth but a 0.25% increase could happen as early as late 2014.

The report said the country needed "shaking from its complacency" and lenders should be upping efforts to identify and help people who would be put at risk by a rise in interest rates, including those not currently in arrears.

It urged the Financial Conduct Authority (FCA) to force lenders to contact around two million mortgage holders who are the most vulnerable to interest rate rises and conduct a 'financial MOT' with such clients.

This initiative would be similar to that involving home owners on interest-only mortgages who have been contacted by lenders amid fears many do not have enough money put aside to pay back their loan when it ends.

Toughened mortgage lending rules are also now in force to help ensure people can afford their deals.

Another suggestion by the Foundation was that the Government set up a "help not to be repossessed" scheme, enabling borrowers who find their mortgages have become unaffordable to switch to a shared ownership scheme.

Matthew Whittaker, chief economist at the Resolution Foundation, said: "It would be a serious mistake to think that the legacy of problem debt built up in the pre-crisis years will simply evaporate with a return to economic growth.

"The magnitude of the stock of debt is simply too large, given expectations that income growth will be gradual at best.

"And while the mortgage market largely remains competitive, tighter lending criteria means that some highly-stretched borrowers face limited choices."

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Ryanair Fury Over €9.6m State Aid Penalty

Ryanair is facing a legal battle with the European Commission after it was ordered to repay almost €10m (£7.9m) in what was found to be illegal state aid.

The no-frills carrier said it had instructed its lawyers to challenge the Commission's findings in relation to three French regional airports.

Its operations at three German airports were cleared by the inquiry.

The Commission, the European Union's executive arm, said Ryanair would have to repay €868,000 related to rebates and marketing arrangements negotiated at Angouleme airport in central France, from where it had ceased operations in 2009.

It found Ryanair had enjoyed "an undue advantage" and should repay the money so as to "remove the distortion of competition".

Similar findings at Pau Pyrenees airport, which Ryanair stopped using in 2011, required a repayment of €2.4m with €6.4m repayable at Nimes airport.

An investigation into Austria's Klagenfurt airport, where airport service and market agreements "appeared to be excessively favourable to Ryanair and therefore could involve incompatible state aid", was continuing.

The airline responded with a statement welcoming the rulings concerning Germany.

Ryanair's Director of Legal and Regulatory Affairs, Juliusz Komorek said: "Today's decisions confirm that Ryanair's airport agreements at Niederrhein Airport comply with the EU State aid rules.

"Following the closure of this case and the earlier six positive decisions at Aarhus, Bratislava, Charleroi, Marseille, Berlin Schönefeld and Tampere airports, we will immediately appeal the decisions in Pau, Angouleme and Nimes cases where the EU Commission mistakenly suggested that the airports' agreements with Ryanair did not fully comply with the EU State aid rules.

"Ryanair has to date carried 86.5m passengers at the 7 airports where our commercial arrangements have been confirmed by the EU Commission and the EU Court to comply with EU law, compared to just 3.4m passengers at the airports where the Commission today suggested that the airport agreements did not comply with State aid rules."

It is not the first time Ryanair has fallen foul of the authorities over the past 12 months.

The operator was ordered to pay fines and damages totaling £6.7m by a French court in October, accusing it of violating the country's labour laws.

It denied registering workers employed in France as Irish employees, preventing workplace councils from functioning and preventing access to unions.

However, the airline has also prioritised a more customer-friendly approach after coming under fire on issues including charges, compensation and baggage fees.

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Govt Accused Of Russian Arms Double Standards

By Alistair Bunkall, Defence Correspondent

The UK Government has been accused of double standards over its continued arms sales to Russia.

It is still exporting £132m of weapons to Russia despite the shooting down of flight MH17 and previously promising to cancel all arms-related contracts to Moscow.

As of May, there were 285 outstanding licences allowing UK companies to export arms either to Russia or another country which might then in time sell weapons to Russia.

The Government responded by saying the licences were only weapons for civilian uses such as clay pigeon shooting.

However, Sir John Stanley, the chairman of Arms Exports Controls Committee, said details showed UK firms were selling missile parts.

William Hague said extant licences would be suspended

When asked on Sky News whether it was certain the arms were not sold for Russian military use, Sir John, a Tory MP, said: "No, I don't think that is an assumption you can make.

"If you look in detail - and we have published the entire list of the exports that are extant to Russia - if you go through the entire list I don't think that components for air to air missiles, components for air to ground missiles, components for missile launchers ... are going to go to any civilian organisation in Russia.

"They must be going to the Russian security services and defence forces."

He has written to the Foreign Secretary, Philip Hammond, asking whether the government plans to revoke the remaining licences.

In March, his predecessor, William Hague, promised "the UK will now, with immediate effect, suspend all extant licences and application processing for licences for direct export to Russia for military and dual-use items destined for Russian armed forces".

Sir John has written to Philip Hammond

However, to date, only 34 of the 285 contracts have been cancelled and the list of arms and parts UK companies still sell to Russia includes sniper rifles, body armour, assault rifles, communications equipment, small arms ammunition and night sights.

In response to the figures, the Foreign Office issued a statement saying the "majority of export licences that remain in place for Russia are for commercial use but we are keeping all licences under review".

"This Government has not approved any licences for the export of rifles or ammunition to the Russian military," the statement added.

On Tuesday, France accused the UK Government of hypocrisy for putting pressure on them over a £1bn arms contract with Moscow.

There were further questions raised for David Cameron over double standards when Labour released figures showing the Conservatives had benefited from £1m of donations from Russian firms and individuals.

Of particular note was the £160,000 payment from Lubov Chernukhin, whose husband was finance minister in Vladimir Putin's first administration, for a tennis match between the Prime Minister and Boris Johnson, with Tory strategist Lynton Crosby as ball boy.

It was an auction prize at a fundraising event.

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PayPal Offers 'Faster, Fairer' Cash To UK Firms

Small firms will soon have access to a new source of funding as a debate continues to rage on the availability of cash support from banks.

From this autumn, PayPal's business customers, including those on its eBay platform, can secure working capital against their future sales in exchange for a single fee.

The arrangement, the payment service said, amounted to "pay when you get paid", meaning a business only had to repay the advance with a share of their PayPal daily sales.

Nothing would be handed back on a day where no sale was made.

The move followed what the company said was a "very successful" launch of PayPal Working Capital in the United States.

It said that since the service began last September, $140m (£82m) in cash advances had been provided to small and medium-sized enterprises (SMEs).

It said money could be available to customers within minutes of the online application being submitted and that no credit checks were needed because the service did not amount to a loan.

It also confirmed there were no interest charges or late payment fees.

The company believed the service would meet a real need at a time when the Government is concerned by SMEs suffering from "long-standing challenges in accessing bank and equity finance".

Cameron McLean, managing director of PayPal UK, said: "Small businesses are the lifeblood of the British economy.

"But seven years after the start of the credit crunch, many of them are still struggling to get funding.

"According to the British Government, around a third of SMEs rely on retained earnings or the owner's own finances rather than bank or equity funding.

"This means that many find it very difficult to finance their present needs or future growth and the problem is acute for smaller, online businesses.

"PayPal is well placed to make a difference ... and we're delighted that our UK customers will be next to benefit from faster, fairer funding."

Paypal announced the service in the wake of past questions over its treatment of customers.

There were complaints about Paypal with-holding cash for up to six months - often citing security, fraud or balance concerns - allegedly pushing some firms to the brink of collapse.

The company responded by promising improved customer support.

Sky News also reported this year how it had updated its terms and conditions to warn users against sharing their computers, tablets and smartphones.

More recently, its eBay parent found itself at the centre of inquiries into a massive cyber attack that compromised the personal data of its 145 million users.

Some customers complained in web forums and on social media that they received no email warning from eBay to change their password, only learning about the cyber attack from the media.

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Gadgets 'Cost Hundreds Of Pounds More In UK'

Consumers in the UK are paying hundreds of pounds more for some gadgets than US shoppers, a watchdog says.

Which? compared the prices - excluding tax - of 13 products ranging from televisions to computer applications, and found Britons were getting a "raw deal".

The prices were calculated on June 18 and show that a Samsung television was £402 more expensive in the UK.

Meanwhile an Apple MacBook Pro 13-inch laptop cost £194 more here than in the US.

The Microsoft Xbox One and the Sony PlayStation 4 were both £57 more expensive in Britain.

The increased prices also apply to digital goods, Which? said, with a 12-month subscription to imaging software Adobe Creative Cloud costing £114 more here than in the US.

The Xbox One is £57 more expensive in Britain than in America

Which? said manufacturers should "play fair" and explain why technology products are more expensive in the UK in comparison with the US.

It is also calling on the Government to raise the threshold for import duty on goods bought online to the same level as that placed on goods brought back from abroad.

The current threshold for customs duty for technology products bought online from a country outside the EU is £135, but travellers can bring home goods worth up to £390 without having to pay duty.

Which? executive director Richard Lloyd said: "UK consumers are getting a raw deal by paying up to hundreds of pounds more for the same tech products on sale in the US.

"Manufacturers should play fair and explain why consumers are paying more for buying in the UK."

Which? said that import tariffs, as well as companies protecting themselves against exchange rate fluctuations, are among the reasons prices are higher.

Technology journalist Ella Williamson told Sky News: "It's not fair on consumers.

"I think a precedent has been set that you can charge more in the UK - and I think that something does need to be done about it."

However she added that rigorous EU testing standards partly contributed to the increased cost.

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Banks Face £1.5bn Hit From PPI Claims Deluge

By Mark Kleinman, City Editor

Britain's largest high street banks will announce next week that they are setting aside more than £1bn in additional provisions to compensate customers who were mis-sold payment protection insurance (PPI).

Sky News can exclusively reveal that Barclays, Lloyds Banking Group and Royal Bank of Scotland (RBS) will use their half-year results statements to the City to disclose that the big four lenders' combined bill for the PPI scandal has soared to well over £20bn.

The new provisions are understood to be being driven by an acceleration in the number of claims which relate to PPI policies sold before 2005, and have prompted urgent talks among bank executives about the conduct of claims management companies (CMCs).

Insiders said that the new top-ups could reach close to £1.5bn between the biggest banks.

To date, the PPI scandal has seen Lloyds allocating £9.8bn for compensation; Barclays has set aside £3.95bn; RBS has provided £3.1bn; and HSBC's bill has reached £2.1bn.

The sizeable new top-ups may revive calls for a so-called time-barring exercise, which would involve imposing a cut-off point for consumers to submit compensation claims.

Banking sources said on Tuesday that Barclays would account for the largest percentage of the additional compensation bill but pointed out that that was largely because it had not taken a new provision since last July, whereas some of its rivals had done so earlier this year.

The total PPI bill for Lloyds, which is 25%-owned by taxpayers, is expected to pass £10bn as a result of its new provision.

The final numbers are still being worked out with each lender's auditors, which are understood to be pushing board members to take a conservative approach to the issue by setting aside substantial sums.

The scale of the new bill will surprise many in the City, particularly after the Financial Ombudsman Service (FOS) said on Monday that new complaints fell by more than 50% during the last three months, prompting it to say that the worst of the scandal had passed.

The FOS said it had received just under 57,000 PPI-related complaints in the second quarter of the year, compared with just over 132,000 in the same period last year.

The latest wave of claims is understood to be particularly concerning to banks because many date back to before 2005, which was the reference point for an unsuccessful judicial review brought by the major banks three years ago.

Executives at major banks argue that the cost of administering even fraudulent or otherwise invalid claims can reach £1000 each, eroding their capital at a time when they are facing political demands to lend more money to small businesses.

Banks are obliged to keep customer records for seven years, meaning that many new claims relate to policies for which neither banks nor customers have an accurate record.

The British Bankers' Association (BBA) had been leading tentative discussions with the City regulator about a cut-off point for claims.

Martin Wheatley, the Financial Conduct Authority's chief executive, told MPs earlier this year that he was sceptical about the prospects of a time-barring exercise.

At the time, the BBA said: "We are working with our members on a number of aspects of PPI complaints. The ongoing work focuses on three issues as a priority: addressing backlogs, making sure that customers can be confident that the offers they receive are right and highlighting that there is no need for them to engage a claims management company.

In January last year, the FCA said it had agreed to talks with the industry about a time limit, but would insist that the banks funded a huge advertising campaign to ensure sufficient awareness of the PPI issue.

The hostility of consumer groups to a deadline appeared to kill any prospect of a deal, and it is unlikely that they would be any more enthusiastic about a deal, analysts suggested.

Barclays, Lloyds and RBS all declined to comment.

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Russia Faces 'Hard-Hitting' Sanctions Over MH17

Russia Only Needs To Create Doubt Over MH17

Updated: 12:50pm UK, Tuesday 22 July 2014

By Katie Stallard, Moscow Correspondent

From a cavernous situation room inside the Russian Ministry of Defence, the Lieutenant-General set out Russia's version of events.

The briefing was carried live on Russian state TV and handed out on DVDs by Russia's ambassador to Malaysia.

They claim to have detected a Ukrainian military aircraft within 3-5km of the Malaysian Airliner on Thursday.

"The SU-25 fighter jet can gain an altitude of 10km, according to its specification," Lt Gen Kartopolov explained (which happens to be the exact altitude at which MH17 was flying).

"It's equipped with air-to-air R-60 missile that can hit a target at a distance up to 12km, up to 5km for sure.

"We would like to get an explanation as to why the military jet was flying along a civil aviation corridor at almost the same time and at the same level as a passenger plane."

They also claim to have detected an unusual increase in Ukrainian radar activity leading up to the incident, and that the airliner came down "within the operating zone" of Ukrainian anti-aircraft missile defences.

He showed satellite images of a Ukrainian base close to Donetsk, pointing out that its surface-to-air missile units were missing on the day of the crash.

He then appeared to claim that one of the units had moved into rebel-controlled territory on the morning of the crash.

Finally, Russia categorically denied supplying the rebels with Buk surface-to-air missile systems, or indeed any other weaponry.

Now, firstly, it's worth saying there is a propaganda war in both directions here, which has been going on for several months, and that both sides are pursuing interests beyond the immediate tragedy of MH17.

But the questions Russia presents "that Kiev must answer" raise a few questions themselves.

The SU-25 "fighter jet" Russia claims to have identified close to the airliner is a ground attack aircraft - according to its manufacturer its maximum service height, without weapons, is 7,000m - 3km short of MH17.

As Russian military analyst Pavel Felgenhauer pointed out, it's also too slow: "They should have at least claimed it was an SU-27," he said.

And if the rebels don't have the Buk missile system, or indeed any other Russian-supplied weaponry - how did they target the dozen Ukrainian military aircraft they have previously boasted of shooting down?

This included an Antonov-26 transport aircraft, flying at an altitude of 6,500m last week.

It is possible of course that the rebels have acquired weapons from Ukrainian military bases, although the government in Kiev insists it can account for all of its missile systems.

And what exactly is the case Russia is setting out? Is it suggesting the Ukrainian SU-25 (despite its technical limitations) shot down the passenger jet in mid-air?

And why? The plane would seem to have been travelling in the wrong direction for Ukrainian forces to have perceived it as a hostile aircraft coming from Russia, and the rebels don't have an air force.

So are they seriously suggesting the Ukrainians deliberately moved their missiles on to rebel-held territory and shot the airliner down as part of some sort of nefarious plan to frame the rebels and turn world opinion against them?

But then Russia doesn't need to prove its case - all it needs is to create one, to insist that there are different versions of events, that there is credible claim and counter-claim.

In much the same manner as a criminal defence barrister, Russia doesn't have to demonstrate that its alleged client is innocent - just to establish enough doubt in the minds of the jury - in this case the international community - that they can't be completely sure.

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Tesco Chief Philip Clarke To Step Down

Tesco's chief executive Philip Clarke is to quit after a string of poor results for the supermarket giant.

The group, which is seeing its worst sales performance in four decades, announced Mr Clarke's departure as it issued a fresh warning on profits.

He will stand down on October 1 and will be replaced by Dave Lewis from Unilever, who is a non-executive director of BSkyB, owner of Sky News.

The retailer is battling to stop a decline in sales figures

Tesco's sales fell by 3.8% in the three months to May 24 on a like-for-like basis, an acceleration of the 3% slide in the previous quarter.

Mr Lewis will receive a basic salary of £1.25m, plus "standard" benefits. He will also receive £525,000 in lieu of his current year cash bonus from Unilever

Mr Clarke, who earned £1.14m in the role, will get a payoff worth 12 months salary.

When Mr Clarke took over from Sir Terry Leahy in March 2011, the Tesco share price stood at 400p, but are now trading at 291p - equating to a shareholder loss of £8.8bn.

Dave Lewis is to bag a salary of £1.25m in his new role

Tesco chairman Sir Richard Broadbent said: "Having guided Tesco through a substantial re-positioning in challenging markets, Philip Clarke agreed with the Board that this is the appropriate moment to hand over to a new leader with fresh perspectives and a new profile."

He added: "Dave Lewis brings a wealth of international consumer experience and expertise in change management, business strategy, brand management and customer development."

Mr Clarke said: "Having taken the business through the huge challenges of the last few years, I think this is the right moment to hand over responsibility and I am delighted that Dave Lewis has agreed to join us.

"Dave has worked with Tesco directly or indirectly over many years and is well-known within the business. I will do everything in my power to support him in taking the company forward through the next stage of its journey."

Tesco's market share has fallen by more than 2% under Philip Clarke

But Sky's City Editor Mark Kleinman said the appointment of Mr Clarke's successor represents a gamble.

He said: "Dave Lewis, a 25-year veteran of Unilever, the consumer goods giant behind Dove, Lynx and Marmite, is the first outsider to take the helm of Tesco in its 95-year history."

Mr Clarke, who had worked his way up from the shop floor to head Tesco, admitted last month the chain's sales figures were the worst he had known in 40 years.

But a trading update said conditions were more "challenging" than predicted.

The group said: "The overall market is weaker and, combined with increasing investments we are making to improve the customer offer and to build long-term loyalty, this means that sales and trading profit in the first half of the year are somewhat below expectations."

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UK Economy Forecast To Outstrip Global Rivals

The UK economy is forecast to grow faster this year than any other country in the group of G7 developed nations.

A report by the Ernst and Young Item Club - an influential economic forecasting group - predicts GDP will hit 3.1 per cent this year.

But it says slow wage growth will keep interest rates on hold until the first quarter of next year.

Its chief economic adviser Peter Spencer said: "The markets are jumping the gun in thinking that rates will rise this year.

Property prices are forecast to leap this year due to a shortage of housing

"Low inflation, the strong pound, and ongoing risks from the eurozone, all suggest caution in raising rates."

The predicted growth in the UK's GDP, driven by business investment rather than consumer spending as has been the case up to now, compares with forecasts this year of 1.8% for Germany and 2% for Canada.

Mr Spencer said: "What a difference a year makes. Last summer any growth looked better than no growth and the outlook remained uncertain.

"But, confidence has now returned and economic uncertainty has dropped well down the worry list."

The report forecasts the UK economy will enjoy "a perfect combination" of consumer spending financed by strong employment, rather than wage growth and borrowing, accompanied by low inflation and low interest rates.

The survey also expects investment in the housing market to rise from 7.6% this year to 13.4% in 2016 as the industry, helped by measures such as the Government's Help to Buy, gains confidence.

But because of a shortage of housing stock the report estimates house prices will jump 9.1% this year, 7.4% next year, before slowing to 4.2% in 2016.

Mr Spencer added: "Investment in our housing stock is much lower than it needs to be in order to put a roof over the head of the UK's growing population."

The property website Rightmove has also raised its forecast for annual house price growth in 2014, despite a fall in values this month for the first time this year.

House prices have fallen 0.8% so far this month, but the firm forecasts annual prices will lift 8% this year, boosted by the Help to Buy scheme.

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Savers To Get Free Advice On Pension Pots

Millions of people are to be given free, impartial advice on how to make the most of their retirement savings.

It follows changes announced by the Chancellor in the Budget, which give savers more flexible access to their pension pots and crucially, not forcing them to buy an annuity, but allowing them to use their money as they see fit.

The radical pensions shake-up sparked concerns at the time this greater freedom could see pensioners blow their savings early in retirement and run out of funds.

Pensions Minister Steve Webb said savers should be able to buy Lamborghinis

Liberal Democrat Pensions Minister Steve Webb came in for criticism for suggesting that if pensioners wanted to "buy Lamborghinis" with their money they should be able to.

There were also warnings of fraudsters offering bogus advice and investment packages.

Acknowledging people needed to make informed decisions, the Government said it would guarantee "free, impartial face-to-face guidance" for individuals reaching retirement.

Mr Osborne told Sky News: "People want to have somewhere they can go to which is impartial.

"Then they will feel better equipped to make choices about which company they then go to, to buy a product that supports them in their retirement."

Assistance to savers will be provided by a range of independent organisations, including The Pensions Advisory Service (TPAS) and the Money Advice Service (MAS) and follows concerns consumers would not trust information given by organisations with a vested interest in selling a financial product or service.

The Government acknowledges people need to make informed decisions

In total, 18 million people will be able to benefit from the changes to pensions should they wish to do so, the Treasury said.

Pensions expert Ros Altmann, the Government's older workers' business champion, said: "The decision that guidance must be impartial and separate from the industry is a real game-changer and will help equip people to make the right decisions for them.

"The challenge is now firmly with the industry to develop the products that people need, rather than simply the products they wish to sell."

Caroline Rookes, chief executive of MAS said: "Planning for retirement is a crucial life stage, and it is important that people feel well-informed and confident in the decisions they make."

As part of the pensions overhaul, people approaching retirement will be given an estimate of when they might die.

A measure of life expectancy, linked to factors such as smoking, eating habits or socio-economic background, will be part of Government backed "guidance" to help pensioners plan how much to spend and save.

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