House Prices: Bank Given New Help To Buy Role

By Ed Conway, Economics Editor

The Bank of England is to be given effective control over the loan-to-value ratios of mortgages eligible for the Government's new Help to Buy scheme, it has emerged.

As of next September, the Bank's Financial Policy Committee will be able to impose swingeing fees on high-debt loans in the Treasury's mortgage guarantee scheme, potentially ruling out 95% loan-to-value products.

The news came after the Chancellor announced that he will give the Bank the right to review the scheme on an annual basis, instead of only after three years, as had been originally intended.

Under the original conception of the scheme, in which the Treasury will part-finance deposits to help prospective homeowners onto the housing ladder, buyers would only have to provide a 5% deposit, with the Government helping provide a further chunk.

However, Sky News understands that in an annual review, starting next September, the Bank will also be able to call for a specific increase in the fees banks will have to pay if they want to lend out a 90-95% loan-to-value mortgage.

Although the Bank only has the power to recommend the fee changes, Treasury insiders say they would be highly likely to implement them.

The other lever the Bank can pull is to recommend lowering the price of properties eligible for the scheme from £600,000.

According to documentation sent out to mortgage lenders, banks will be charged three different fees depending on the scale of loans they plan to extend under the scheme: one for an 80-85% loan, one for a 85-90% loan and another for a 90-95% loan.

Should the Bank's FPC become concerned about households overextending themselves, they could recommend an inordinate increase in the fees for the highest debt mortgages, effectively ruling them out in the market.

The development underlines the scale of concern in the Treasury and Bank that the Help to Buy scheme could have the potential to overheat parts of the housing market which already look unaffordable.

Research by Sky News has found that the average property in Kensington & Chelsea is now worth almost 30 times the average salary of those living in the area; this compares to an average ratio of 6.1 times across England and Wales.

According to Nationwide house prices rose by 4.3% in Britain over the past year – though the increase in London was 10%.

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Church Consortium Wins RBS Branch Sale Race

Royal Bank of Scotland is to sell 314 branches to a consortium backed by the Church of England in a deal forced on the bank because of its taxpayer bailout.

It will see Williams & Glyn's, a bank brand that has been dormant for nearly 30 years, soon return to the UK high street to become a new competitor in the market.

The consortium includes Corsair Capital, Centrebridge Partners and the Church Commissioners for England - the church's pension fund.

The deal will give the church a role in high street banking after the Archbishop of Canterbury Justin Welby slammed controversial payday lenders for their rates before learning that the church had actually invested in Wonga, the country's best-known payday firm.

The Archbishop of Canterbury wants banking to have a moral compass

The new player, whose executives include former trade minister Lord Davies, has pledged to put lending to small business at its heart, give more funds to the community and cap its bonuses at 100% of annual salary.

RBS confirmed the investors would pay £600m for part of the business with the remainder being raised in a stock market listing at a future date.

RBS chairman Sir Philip Hampton said: "We are delighted to be working in partnership with these investors to establish a new challenger bank for UK customers.

RBS chairman Sir Philip Hampton

"Williams & Glyn's will play an important role in the UK banking landscape and will be an excellent new addition to the market, with a particular strength in small business banking - a sector that is so crucial to the UK's economic recovery.

"Much has been done already in building the standalone business, and today's announcement provides more certainty for our customers and employees ahead of a flotation."

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets.

Lord Davies, who is vice chairman of Corsair Capital, said today: "We are delighted to have been selected by RBS.

"The Consortium views this as an opportunity to create a genuine challenger bank, which will be a vibrant, healthy competitive force in UK banking and a new financial services provider to the UK public and small and medium sized businesses.

"There is a great history in the Williams & Glyn's brand and the business has an opportunity to be at the forefront of the UK banking industry whilst making an active contribution to the community from its strong regional network."

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Marriage Tax Breaks For Four Million Couples

David Cameron says four million couples will benefit from the Government's new £1,000 marriage tax allowance.

Ahead of the start of the Conservative Party conference, the Prime Minister said the scheme - starting in April 2015 - will be worth up to £200 a year for married couples, including 15,000 in civil partnerships.

They will receive the benefit at the end of the tax year in 2016.

It will work by letting people transfer £1,000 of their personal tax allowance to their spouse or civil partner - an increase on the £750 allowance promised in the Tory manifesto, which would have seen couples gain £150.

The new allowance, which is not available to couples which include a higher rate taxpayer, is aimed at couples where one partner has not used all of their personal allowance or does not work at all.

Labour's shadow chief secretary to the treasury, Rachel Reeves, said that the marriage tax break would not even help two-thirds of married couples and said he was out of touch if he "thinks people will get married for £3.85 a week".

She said: "And even for the minority who might benefit, it will be far outweighed by what David Cameron's Government has already taken away in higher VAT and cuts to child benefit and tax credits. In most cases, the extra payment will be paid to men, even though it is women who have disproportionately lost out so far."

The PM says 'nothing would be possible' without his wife Samantha

The announcement comes after a trade-off that allowed the Liberal Democrats to announce free school meals for all children under eight earlier this month.

The proposal, which Downing Street said shows the Government values commitment by recognising marriage and civil partnerships in the tax system, makes good on promises Mr Cameron made when he was running for leadership of the party in 2005.

In an article in today's edition of The Daily Mail, he said: "I believe in marriage. Alongside the birth of my children, my wedding was the happiest day of my life.

"Since then, Samantha and I have been a team. Nothing I've done since - becoming a Member of Parliament, leader of my party or Prime Minister - would have been possible without her."

He said that the new measures would apply "if you're gay or straight - and in a civil partnership or a marriage. This summer I was proud to make Equal Marriage the law. Love is love, commitment is commitment".

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Google Overhauls Search Engine Formula

Google Inc has overhauled its search formula that runs the internet's dominant search engine, to better cope with longer, more complex queries from web users.

The company secretly launched its latest "Hummingbird" algorithm about a month ago in a bid to keep pace with the evolution of internet usage, Amit Singhal, senior vice president, said.

Google is describing it as the most dramatic alteration to its search engine since it revised the way it indexes websites three years ago.

As search queries get more complicated, traditional keyword-based systems begin deteriorating because of the need to match concepts and meanings in addition to words.

Mr Singhal, writing in a separate blog post, said: "Remember what it was like to search in 1998? You'd sit down and boot up your bulky computer dial up on your squawky modem, type in some keywords, and get 10 blue links to websites that had those words.

"The world has changed so much since then: billions of people have come online, the web has grown exponentially, and now you can ask any question on the powerful little device in your pocket."

"Hummingbird" is the company's effort to match the meaning of queries with that of documents on the internet, said Mr Singhal from the Menlo Park garage where Google founders Larry Page and Sergey Brin conceived their now-ubiquitous search engine.

It is a change that could have a major impact on traffic to other websites.

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Jobless 'To Be Forced To Work' For Benefits

Work and Pensions Secretary Iain Duncan Smith will announce tough new conditions on the payment of unemployment benefits at the Conservative Party conference next week, according to reports.

The Daily Mail reported that the long-term unemployed will be told that they must do an unpaid full-time job or lose their benefits.

The paper said it was expected that claimants who go through the Work Programme - the Government's main back-to-work scheme - but fail to find a job will be required to take part in unpaid community work or work experience.

Mr Duncan Smith has said people should not live a life on benefits

Refusal to do so could mean the loss of welfare payments.

Mr Duncan Smith told the Mail: "It's not acceptable for people to expect to live a life on benefits if they're able to work."

He added: "Benefits should be a safety net - but not something that gives claimants an income out of reach of many hard-working families."

Mr Duncan Smith also announced the Government's benefits cap is now fully in place across Britain.

The controversial cap - which limits benefits to £500 a week for couples and lone parents and £350 a week for single adults - is a key plank of Mr Duncan Smith's welfare reforms. It is expected to affect about 40,000 households.

The cap covers the main out-of-work benefits - jobseeker's allowance, income support, and employment and support allowance - and other benefits such as housing benefit, child benefit and child tax credit and carer's allowance.

It was piloted in four London boroughs last April before being introduced across the country from July.

Mr Duncan Smith defended the cap, arguing that it restores fairness to the system, ensuring households where no one is working cannot claim more than the average family earns.

Critics say that it penalises out-of-work families in areas with high housing charges, forcing them to move out to cheaper areas.

But Mr Duncan Smith told the Daily Mail: "We have now successfully delivered a cap on benefits so that out-of-work households know they can no longer claim more than the average family earns and we have returned fairness to the benefits system."

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Chancellor Acts As House Prices 'Accelerate'

As a report highlights accelerated house price growth in September, it has been revealed that the Chancellor has asked the Bank of England to keep a closer watch for evidence of a price bubble.

According to the latest Nationwide House Price Index, UK prices rose 0.9% month-on-month, leaving them 5% higher than in September 2012 - the strongest pace of growth since July 2010.

The growth was largely fuelled by prices in London and South East England, Nationwide said.

Its chief economist Robert Gardner said: "There are also signs that the pickup is becoming increasingly broad-based.

"For the first time since 2007, all thirteen UK regions experienced annual house price growth in the third quarter of 2013.

George Osborne needs housing supply to rise

"However, the southern regions of England continued to see the strongest rates of growth – especially London, where the annual rate of growth reached double digits in the three months to September. 

"The gap between house prices in the North and the South of England reached a new high in the third quarter, rising above £100,000 for the first time.

"The typical property price in the South of England is now 74% above its Northern equivalent," he said.

On the prospect of a bubble, Mr Gardner added: "The acceleration in house price growth from the subdued pace prevailing throughout 2011 and 2012 has been surprisingly quick, though house prices are still some way below their previous peaks in most parts of the country.

"Overall, UK house prices are still around 8% below their 2007 highs.

"Only in London are prices at an all-time high, 8% above the previous peak."

It is against that backdrop that George Osborne has given the Bank of England greater powers to prevent the Government's Help to Buy scheme from causing a property boom - with borrowers over-stretching themselves.

From January the Help to Buy initiative will provide mortgage guarantees on properties worth up to £600,000 but the Bank's Financial Policy Committee (FPC) will now make annual reviews and could recommend that the cap is reduced.

It was initially due to only assess the scheme after three years.

The FPC could also make loans more expensive by recommending that the Treasury raises the fees paid by lenders for the guarantees.

The Business Secretary Vince Cable previously voiced concerns on Sky News over the second phase of Help To Buy.

But Mr Osborne insisted: "Let's not pretend there's a housing boom," saying it was important to "go on trying to fix specific problems in our financial system."

The Bank has previously said there is no evidence of a bubble but said it would be watching closely so it could intervene if necessary.

More follows...

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OFT: Children Pressured To Buy Online Games

Warning Over Smartphone Kids' Apps

Updated: 5:56am UK, Thursday 26 September 2013

By Niall Paterson, Media Correspondent

I've always tended to view video-gaming as something of a solitary pursuit, or at the very least one enjoyed with friends in my bedroom, out of sight of Mum and Dad.

This wasn't always necessarily to do with the violent or graphic content of the titles my parents unwittingly purchased - although if they'd seen the brutality of Speedball 2, the adult content of Leisure Suit Larry, or even the hundreds of mammals sacrificed as I attempted (in vain) to complete Lemmings, I imagine I'd have been shoved outside and back on the Space Hopper quicker than I could say "carpal tunnel syndrome". 

But at least the financial costs of my sweaty-palmed play were limited to the cost of the game itself (and, perhaps, the occasional copy of Computer & Video Games magazine).

Not so nowadays.

The Office of Fair Trading's investigation into in-game purchases of bolt-ons and bonus items makes for distressing reading if you've ever handed your iPad to an ankle-biter.

In essence, it concludes children are being encouraged or even made to feel pressurised into paying over and above the cost of the app, even in games which are specifically targeted at kids.

It also finds a blurring of the distinction between real-world and in-game currency; and unfair and aggressive commercial practices "to which children may be particularly susceptible".

There's also prima facie evidence consumer protection laws may already have been broken.

The industry will now mull over the OFT's eight key recommendations. But I imagine some will choose to resist.

After all, given the profusion of free apps and games, many people are increasingly unwilling to pay even a quid for what might, ultimately, only prove to be a couple hours of entertainment.

So, understandably, developers are seeking other revenue streams - and some will argue that encouraging kids to ask their parents for an in-game item is no different to the advertising campaigns that turn kids into pester-factories every Christmas.

And what of the parents in all of this? Isn't this just more evidence that mum and dad need to be a little more aware of what their kids are up to online?

There's a degree of validity in that argument, as there is when the case is made that parents need to educate their kids a lot better about when and where not to click.

But I know as well as any 1980s gamer that they can't always know what we're up to; nor are most sufficiently tech-savvy to educate their kids about the dangers, fiscal or otherwise, of life online.

But let's be clear - those behind these titles are savvy enough for all of us.

And, although not literally coin-operated, clearly many developers are so cash-motivated that they've chosen to turn a blind eye to the dangers of in-game purchasing.

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Asda 'Mental Patient' Costume Withdrawn

Supermarket chain Asda has withdrawn an item advertised online as a "mental patient fancy dress costume", following a barrage of criticism.

The costume, which is designed to look like a blood-splattered straitjacket, was on sale for £20 through the supermarket's clothing arm George.

Many people took to Twitter to express their disgust at the description, including former footballer Stan Collymore - who has suffered well-documented problems with depression.

Stan Collymore was among those expressing anger over the Asda product

He wrote: "Dear ASDA, nice stereotype of "Mental patients". Something you'd expect from the ###. A f****** joke".

"Do you actually realise how many people are hanging themselves because of being frightened of the stigma? Wording is CLEAR. MENTAL PATIENT."

Charity Rethink Mental Illness posted on its Twitter account: "Hi @Asda please explain: 'Everyone will be running away from you in fear in this mental patient fancy dress'."

Asda was quick to respond to the criticism on Twitter

Former spin doctor Alastair Campbell also commented on the item on the social media website, writing: "Look what Asda's selling... what possesses these people?"

And MP Mike Thornton tweeted: "This is unbelievable!!"

Asda was quick to react to the criticism by confirming the Halloween costume had been withdrawn from sale.

The chain posted on its own Twitter account: "We're deeply sorry one of our fancy dress costumes has upset people. This was an unacceptable error - the product was withdrawn immediately."

Asda added: "We'd like to offer our sincere apologies for the offence it's caused and will be making a sizeable donation to @MindCharity."

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Mandelson Criticises Miliband Energy Plan

Ed Miliband's new energy policy risks taking the Labour Party backwards in the eyes of voters, Lord Mandelson has warned.

Labour's former business secretary said the party leader's pledge to freeze energy bills could undo the industrial policy he worked hard to shape under Tony Blair.

"At the business department I tried to move on from the conventional choice in industrial policy between state control and laissez-faire," Lord Mandelson said.

"The industrial activism I developed showed that intervention in the economy - government doing some of the pump priming of important markets, sectors and technologies - was a sensible approach."

But following Mr Miliband's speech yesterday at the party's annual conference, he added: "I believe that perceptions of Labour policy are in danger of being taken backwards."

Energy companies were unsurprisingly united in their criticism of the plan, which went down well with the party's grassroots at the conference in Brighton.

Mr Miliband's policy went down well with core Labour supporters

Neil Woodford, a fund manager at Invesco Perpetual, the biggest shareholder in British Gas owner Centrica, labelled the policy "economic vandalism."

He told Sky's Jeff Randall Live: "Any chance of a serious business investing in this sector has been killed by Miliband's statement.

This could destroy up to £200bn of much-needed investment. The political risk is simply too high. Worse still, there will be a huge negative impact on the wider UK economy."

Mr Miliband has defended the proposals, saying he was doing "the right thing by the country".

"My job is to stand up for the public interest, not the interest of any one company or any six companies but the whole of the public, the whole of this country, and that's what I have done in the policy I've talked about," he said.

"It makes me think of the banks. The banks used to threaten, the banks used to conjure up scare stories, the banks used to talk about the impact of regulation, and the Conservative Party supported them.

"Actually we should have had tougher regulation, and so it makes me think that actually we've got to do the right thing by the country, and that's what I'm going to do."

And the policy was supported by another fellow New Labour architect - Alastair Campbell.

The former party spin doctor said in a tweet: "Peter M wrong re energy policy being shift to left. It is putting consumer first v anti competitive force. More New Deal than old Labour."

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eBay And Argos Strike 'Click & Collect' Deal

eBay and Argos have joined forces to offer a "Click & Collect" service as retailers rush to cash in on the growth of online shopping.

At least 50 merchants using the online marketplace will participate in a trial of the service, which will enable eBay customers to collect their goods from a choice of 150 Argos stores.

The companies said the trial - which is expected to last six months - would deliver what customers wanted in terms of choice, convenience and speed as a study reported a continuing decline in store numbers on the UK's high streets.

Its statement cited research from Econsultancy that 40% of UK shoppers used some form of Click & Collect service over Christmas 2012.

Devin Wenig, the president of eBay said: "At eBay we continue to find new ways to connect buyers and sellers.

Argos has been transforming itself towards a stronger online offering

"Traditional retail isn't going away, it is transforming. Smart retailers are innovating, re-imagining the store and what it means to shop."

John Walden, managing director of Argos added: "Few companies move as many products as effectively as Argos through a national network of local stores, served by friendly and well-trained colleagues.

"Having pioneered Click & Collect in the year 2000, it now accounts for around a third of our business and continues to grow.

"eBay, an innovator in digital and leading online marketplace connecting sellers and consumers, is already a strong partner with Argos and a logical partner for the trial."

John Walden and Devin Wenig see strong demand for 'click & collect'

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Free Wi-Fi Hotspots Allow Adult Content

By Becky Johnson, Sky Correspondent

More than half of free wi-fi hotspots in the UK allow unfiltered access to adult content, prompting calls for tighter restrictions.

Researchers went into 179 cafes, restaurants, hotels, retailers and public spaces in Birmingham, Manchester and London, and attempted to log on to websites that are legal, but have explicit content.

The study found 30% of cafes and restaurants have no filtering in place to prevent access to pornographic sites, while 20% fail to restrict customers from accessing online sex dating websites.

In addition 53% do not restrict online stores selling knives and swords, and 80% granted full access to drug-related content.

Graeme Coffey from mobile security firm AdaptiveMobile, who carried out the research, said: "For every parent across the UK this report will come as an unwelcome surprise.

"In the last two years there have been two convergent trends: a big increase in public wi-fi or 'hospitality wi-fi' and greater access to smartphones, gaming consoles and tablets with a wi-fi capability, the kind of device a child could have.

"Most people will instinctively block adult content when it comes to filtering, but what these results show is that we should also be looking at content related to drugs and violence which are just as harmful but frequently overlooked."

Seamus Kelly, the father of two teenagers, was surprised to find out the cafe he visits in Manchester's Northern Quarter has unrestricted internet access.

He told Sky News: "I think in some ways the biggest issue is not knowing what they're looking at.

"If it's at home you might have a certain amount of control over the system, but when it's out not only do you not have control but you've also got absolutely no idea what they may or may not be coming across and it is quite worrying."

Outside a cafe in south Manchester a group of 15 and 16-year-olds told Sky News they have all had smartphones from the age of 13 and frequently use wi-fi to go online.

They admitted they know people who use sites their parents would not allow them access to.

Earlier this year David Cameron backed a campaign by children's charities calling for a ban on adult content on all public wi-fi.

John Carr is among the world's leading authorities on children's and young people's use of the internet.

He told Sky News: "Virgin, O2 and Sky already block access to adult content and the other major wi-fi providers in the UK - BT,  Arqiva and Nomad - have announced their intention to do the same by the end of this year.

"There is also some talk about developing a 'kitemark' to allow shops, hotels, trains, buses that provide wi-fi access to confirm that they provide a filtered service."

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Miliband Warns Energy Firms After Backlash

Ed Miliband has warned energy firms they will be "part of the problem" unless they support his move to freeze gas and electricity prices.

The Labour leader has now written to the "Big Six" energy companies after pledging on Tuesday to hold prices for two years if he wins power at the next election.

Firms have warned the move could lead to energy shortages and power cuts as the industry is starved of the investment it needs and business chiefs have also been critical.

But Mr Miliband insists it is time to "reset the market" and warned the industry he would not help guarantee funding for its development if it does not fall in line.

Ed Miliband insists it is time to "reset the market"

His plans would see a price freeze from 2015 until 2017 while the sector is reformed, with watchdog Ofgem axed, firms split into generation and retail arms and competition increased.

In his letter, the Labour leader wrote: "I appreciate that you will not welcome all aspects of this package but it is my firm view that without resetting the market we are not going to see the public consent that is required to underpin the scale of taxpayer backed guarantees for which you have argued.

"I am prepared to make the case for sharing the risks of such investment, but that must be against the backdrop of a market that customers believe works for them.

"You and I know that the public have lost faith in this market. There is a crisis of confidence. We face a stark choice.

"We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution."

Mr Miliband announced the 20-month price freeze in his conference speech as he sought to show only his party could tackle a "cost-of-living crisis".

Energy firms argue they need money to overhaul UK power stations

Pitching the next election as a battle between Tories representing the "privileged few" as ordinary families and small businesses suffer, he repeatedly declared: "Britain can do better than this."

"I will lead a government that fights for you," he vowed as he insisted he would relish a contest with David Cameron based on leadership and character.

Labour claims the freeze, to last from May 2015 until January 2017, would save the typical household £120 and an average business £1,800.

The party leader will be quizzed about the policy today as he tours television studios and later answers activists' questions before the conference closes.

Consumer group Which? has said it will "give hope to the millions worrying about how they can afford to heat their homes" but the CBI warns it will damage Labour's "pro-enterprise credentials".

The energy sector's umbrella group, Energy UK, accused Mr Miliband of "posturing to no purpose" and warned the freeze could have drastic consequences.

Chief executive Angela Knight said: "Freezing the bill, may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000 plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone."

Energy giant Centrica blamed price rises on higher commodity costs, increases in regulated transport and distribution charges and environmental cost and taxes.

A spokesman said: "If prices were to be controlled against a background of rising costs it would simply not be economically viable for Centrica, or indeed any other energy supplier, to continue to operate and far less to meet the sizeable investment challenge that the industry is facing.

"The impact of such a policy would be damaging for the country's long term prosperity and for our customers."

SSE claimed price freezes would lead to "unsustainable loss-making retail businesses" and suggested the Government's energy policy costs be put into general taxation instead of on bills.

"This would wipe £110 off the average person's bill and shift the cost away from those who can't afford to pay and on to those who can," a spokesman said.

Simon Walker, director general of the Institute of Directors, said: "We should think very, very carefully before piling more distortion on an already grossly distorted energy market. Price controls only add greater uncertainty to companies who we need to take the financial risks of energy investment.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "When the government fixes prices, it always ends in a disaster for consumers.

"Ed Miliband is sticking by the green taxes and expensive subsidies that drive up the price of energy, so at best this new policy would just store up massive price hikes for another day. At worst it could create a crisis and force the government to bail out the sector."

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Waterproof iPhone Advert: 'Owners Fooled'

A fake Apple advert claiming the new iOS 7 software makes iPhones and iPads waterproof has apparently fooled some users into destroying their devices.

The "advert" circulating on social media sites claims that updating devices with the operating system installs a "smart switch" that cuts off the phone's power supply when water is detected.

This, it claims, "prevents any damage to your iPhone's delicate circuitry".

The advert looks remarkably similar to an authentic Apple advertisement, with the same plain white background and minimalist font and style.

It seems some users have been fooled into dunking their expensive gadgets into water to test out the promised feature, only to render their devices useless.

iOS7 came out at the same time as a new range of iPhones

One user wrote on Twitter: "Whoever said iOS 7 was waterproof **** you."

Another wrote: "OK whoever said iOS 7 is waterproof GO **** YOURSELF."

The prank idea is believed to have originally started on the controversial forum 4Chan.

The iOS 7 software was released last week, and is available as a free upgrade for newer models of the iPhone and iPad.

It provides a series of new features including an overhaul of the interface.

It was released shortly before the new iPhone 5S and 5C models went on sale.

The 5S features a fingerprint unlocking device for extra security. However, a group of German hackers has found a way to bypass the measure.

The group, known as the Chaos Computer Club, says a fingerprint of the phone user, photographed from a glass surface, is enough to create a fake latex finger that could unlock the phone.

Apple has not yet commented.

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Labour's £800m Tax Break For Small Business

By Jon Craig, Chief Political Correspondent

Ed Miliband will later offer an £800m tax break to smaller companies and pledge to make Labour "the party of small business".

The first act of a Labour government, if it wins the next General Election, will be to reverse a hike in small business rates due in April 2015 and to freeze the levy the following year, the party leader will say.

Labour calculates the move will be worth an average £450 over two years to 1.5 million businesses, including shops, pubs and hi-tech start-ups, and up to £2,000 for some firms.

It would be paid for by scrapping the coalition Government's planned cut in corporation tax from 21% to 20%.

In his speech to Labour's conference in Brighton, Mr Miliband will say he wants growth in the UK economy to benefit "hard-working families" including small business owners, and not just the "privileged few".

Borrowing a slogan from Ronald Reagan's successful 1980 bid for the US presidency, he will say voters should ask themselves in 2015: "Am I better off now than I was five years ago?"

He will also risk a backlash from countryside campaigners by launching a "road map" for the construction of a generation of new towns in England in a bid to solve the housing crisis.

Labour insiders did not identify areas which might come under consideration for new towns, but said Mr Miliband wants to ensure families are given better access to new homes, and communities which want to grow are helped to do so.

The Labour leader will accuse David Cameron and George Osborne of "boasting" about fixing the economy when the proceeds of growth have only gone to a minority.

He will argue life for ordinary families has been getting harder, thanks to a "cost of living crisis" caused by soaring bills and wages which fail to keep pace with inflation.

"Too many of the jobs we're creating in this country are just too low-paid, too many of the gains in our economy are just scooped up by a privileged few, including those with big bonuses," he will say.

"And too often you are left being charged over the odds. They used to say 'a rising tide lifts all boats'. Now the rising tide just seems to lift the yachts."

Mr Cameron has often said his economic policies are designed to help the UK compete in a "global race" for prosperity.

But Mr Miliband will accuse the Conservatives of pursuing a "race to the bottom", in which prosperity for a few is bought at the cost of worsening wages, conditions and workplace rights for the majority of workers.

Ed Miliband says he wants growth to benefit 'hard-working families'

Labour would instead offer "a race to the top", with support for small firms to become the wealth and job creators of the future.

"You've made the sacrifices. But you've not got the rewards. You were the first one into the recession, but you are the last one out," he will say.

"Will the pain be worth it for the gain under this Government? No. They aren't going to solve the cost of living crisis. Because for them, it is not an accident of their economic policy, it is their economic policy.

"David Cameron talks about Britain being in a 'global race'. But what he doesn't tell you is that he thinks the only way Britain can win is for you to lose.

"For the lowest wages, the worst terms and conditions and the fewest rights at work - a race to the bottom. The only way we can win is a race to the top."

Mr Miliband will say 80,000 big businesses have already benefited to the tune of £6bn in reductions in corporation tax under the coalition Government, while 1.5 million small firms will have seen their business rates rise by an average of almost £2,000 by the end of this Parliament.

Labour's decision to hold business rates at 2014 levels for two years would affect properties and commercial premises with an annual rental value of £50,000 or less.

The Labour leader out in Brighton at the weekend

This would mean some franchise-holders operating branches of major multinationals benefiting from the change.

The move would save small firms a total of £250m in 2015/16 and £540m in 2016/17, according to figures from the House of Commons Library.

Halting the 1% cut in corporation tax would raise an estimated £340m in the first year and £785m the next, but Labour insists that any extra money will be passed on in further cuts to business rates and not taken as additional tax revenue for the Treasury.

Explaining his decision to target tax breaks on small firms, Mr Miliband will say: "Most of the jobs of the future are going to be created in a large number of small businesses, not a small number of large businesses.

"And most of the new jobs that British people will be doing in 15 years' time will be in new companies.

"That's why we have to support our small businesses, the vibrant, dynamic businesses that will create wealth in Britain."

He will also caution activists at Brighton that a Labour government would not have funds to lavish on spending hikes.

"We won't be able to win the race to the top by spending money we don't have," he will say.

"You know and I know that the next Labour government will face tough times, and there's no point in pretending otherwise.

"We have to deal with the deficit and that means we need to win the race to the top in a different way, based on the jobs we create, the businesses we support, the talents we nurture, the wages we earn and the vested interests we take on."

:: Watch Mr Miliband's speech live on Sky News from 2.15pm.

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BlackBerry 'Agrees' To $4.7bn Sale To Fairfax

Troubled smartphone maker BlackBerry has agreed in principle to a buyout by its largest shareholder for $4.7bn (£2.93bn).

The company said it had "signed a letter of intent agreement under which a consortium to be led by Fairfax Financial Holdings Limited has offered to acquire the company subject to due diligence".

Fairfax boss Prem Watsa is a former board member who owns 10% of BlackBerry.

BlackBerry last week confirmed plans to cut 40% of its global workforce as it said it expected to report massive losses of almost $1bn (£620m) in its second quarter.

The smartphone company said it would lay off 4,500 employees in an attempt to slash costs by 50% and shift its focus back to competing mainly for the business customers who are most loyal to the brand.

Blackberry's all-touchscreen Z10 has not matched the sales of its rivals

Mr Watsa said: "We believe this transaction will open an exciting new private chapter for BlackBerry, its customers, carriers and employees.

"We can deliver immediate value to shareholders while we continue the execution of a long-term strategy in a private company."

Shareholders will receive $9 (£5.60) in cash for each share.

The agreement with Fairfax allows BlackBerry to "go shop" for better offers for the firm should they become available during the due diligence process, which is expected to take until November 4.

BlackBerry's market share has dwindled in recent years, with Android devices from the likes of Samsung, and Apple's iPhone gobbling up increasing numbers of customers.

BlackBerry and its physical qwerty keyboard once dominated the market

It now holds just 2.9% of the market, according to research firm IDC, compared with 20% in Autumn 2009 when it was the dominant smartphone for business people.

BlackBerry, formerly known as RIM, was also once Canada's most valuable company, with a market value of $83bn (£52bn) in June 2008.

The firm was hoping to turn things around with a fresh operating system and two new devices - the Z10 and Q10.

However, the phones, which were launched earlier this year, have failed to capture the public's imagination in the same way as rival handsets.

BlackBerry revealed in August that it would consider selling itself, and chief executive Thorsten Heins reiterated last week that a committee of its board of directors was continuing to "evaluate all options".

The company also said it planned to focus on offering only two high-end devices and two entry-level handsets going forward.

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BlackBerry Slashes Jobs In Face Of $1bn Loss

BlackBerry has confirmed it will cut 40% its global workforce as it said it expects to report that it has lost almost $1bn in its second quarter.

The smartphone company said it will lay off 4,500 employees as it tries to slash costs by 50% and shift its focus back to competing mainly for the business customers most loyal to its brand.

The Canadian-based firm had been scheduled to release its net earnings for the quarter next week but warned on Friday that it expects to post a staggering loss of between $950m and $995m.

Shares in the company plunged as low as $8.01 when the stock reopened for trading on Friday, before closing down 17% at $8.72.

Thorsten Heins, president and CEO of BlackBerry, said in a statement: "We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."

BlackBerry boss Thorsten Heins says the changes are hard but 'necessary'

BlackBerry said last month that it would consider selling itself and reiterated on Friday that a special committee of its board of directors continues to "evaluate all options".

The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007. Since then, BlackBerry has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10. The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand, but BlackBerry's market share continues to lag behind its rivals.

BlackBerry, formerly known as RIM, was once Canada's most valuable company with a market value of $83bn in June 2008.

Canada's industry minister James Moore said in a statement: "Our thoughts are with those who have lost their jobs at BlackBerry, it is always a cause for concern for our Government."

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Food Price Rises 'A Source Of Stress'

Rocketing food prices are a "source of stress" for four in 10 UK consumers, while a third say they are struggling to feed themselves or their family.

Almost eight in 10 shoppers (78%) are worried about the increasing cost of food, with almost half (45%) spending a larger proportion of their available income at the supermarket compared to a year ago, the survey of 2,028 consumers for Which? found.

Food prices have risen over and above general inflation by 12.6% over the past six years, according to the Office of National Statistics, while incomes have stagnated.

The poll found 60% are worried about how they will manage their future spending on groceries if prices continue to rise.

A separate survey by the consumer watchdog found one million more households are feeling financial pressure compared to a year ago, leaving 9.5 million households struggling to cope with the cost of living.

It found 40% are likely to cut back spending on food in the next few months.

Richard Lloyd, Which? executive director, said: "While people seem to have accepted their grocery bill going up, stagnating incomes and rocketing food prices are causing stress and worry and leaving people wondering how they are going to cope.

"Supermarkets need to make it much easier for consumers to spot the best deal by ensuring pricing is simple and making special offers genuinely good value for money.

"Politicians need to put consumers at the heart of their economic policies to tackle the rising cost of living and to support growth and prosperity."

Dan Crossley, executive director of the Food Ethics Council charity, added: "As the global food system becomes more deeply trapped in the strangleholds of resource constraint, climate change and population growth, rising food prices are an almost inevitable fact of life.

"Food businesses and government need to start planning now for that future by taking urgent action to tackle the issue of food affordability, including the introduction of measures such as a living wage.

"They also need to develop robust policies that make healthy food affordable, rather than peddling 'cheap' food that is costing us dear in terms of our health and our environment."

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Osborne Faces Scepticism Over Lloyds Sale

By Mark Kleinman, City Editor

George Osborne is facing scepticism from inside his own department about the prospect of a multibillion pound sale of Lloyds Banking Group shares to the general public.

Sky News understands that some Treasury officials are expressing private concerns about the complexity of a retail offering of part of the Government's remaining 33% stake in Lloyds.

A mass public sale of shares in the bank is widely-seen as likely in the early months of next year following last week's successful placing of a 6% stake through a deal which raised £3.2bn.

The Chancellor must convince Treasury officials of the sale

The Chancellor wrote to Andrew Tyrie, chairman of the Treasury Select Committee, following the transaction, saying that he would "consider all options for later sales of our shareholding in Lloyds, including a retail offering to the general public".

The idea is backed by many of Mr Osborne's allies, who believe that such a sale would be politically beneficial in the run-up to the next general election.

However, some Treasury officials believe that the likely requirement to publish a full prospectus as well as the delay between doing so and executing an actual sale of shares would be far riskier than further transactions such as last week's.

Value-for-money for British taxpayers would be the "overriding consideration" when planning future disposals, the Chancellor told Mr Tyrie.

Andrew Tyrie, chairman of the Treasury Select Committee

A public offering would not necessarily involve a giveaway of the shares, although that idea has been advocated by a number of think-tanks.

There remains significant demand among institutional investors for Lloyds shares, and any retail offering would encompass only part of the Treasury's remaining stake in the bank, said one insider.

A decision will in any case not be made for months, since UK Financial Investments, which manages taxpayers' shareholding in Lloyds, said last week it wold not seek to further reduce its stake for at least 90 days.

It is possible to waive that commitment but it is seen as unlikely.

The Times reported in May that Treasury officials had similar reservations about a public offering of a stake in Royal Bank of Scotland, although RBS shares - unlike those of Lloyds - are trading at a significant loss on the taxpayer's investment.

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BlackBerry Slashes Jobs In Face Of $1bn Loss

BlackBerry has confirmed it will cut 40% its global workforce as it said it expects to report that it has lost almost $1bn in its second quarter.

The smartphone company said it will lay off 4,500 employees as it tries to slash costs by 50% and shift its focus back to competing mainly for the business customers most loyal to its brand.

The Canadian-based firm had been scheduled to release its net earnings for the quarter next week but warned on Friday that it expects to post a staggering loss of between $950m and $995m.

Shares in the company plunged as low as $8.01 when the stock reopened for trading on Friday, before closing down 17% at $8.72.

Thorsten Heins, president and CEO of BlackBerry, said in a statement: "We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

"Going forward, we plan to refocus our offering on our end-to-end solution of hardware, software and services for enterprises and the productive, professional end user."

BlackBerry boss Thorsten Heins says the changes are hard but 'necessary'

BlackBerry said last month that it would consider selling itself and reiterated on Friday that a special committee of its board of directors continues to "evaluate all options".

The BlackBerry, pioneered in 1999, was the dominant smartphone for on-the-go business people and other customers before Apple debuted the iPhone in 2007. Since then, BlackBerry has been hammered by competition from the iPhone as well as Android-based rivals like Samsung.

In January, the company unveiled new phones running a revamped operating system called BlackBerry 10. The Z10 and Q10 were designed to better compete for customers and rejuvenate the brand, but BlackBerry's market share continues to lag behind its rivals.

BlackBerry, formerly known as RIM, was once Canada's most valuable company with a market value of $83bn in June 2008.

Canada's industry minister James Moore said in a statement: "Our thoughts are with those who have lost their jobs at BlackBerry, it is always a cause for concern for our Government."

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City Funds In Last-Ditch Bid For RBS Branches

By Mark Kleinman, City Editor

A consortium of City investors has tabled a last-ditch bid to win control of 315 Royal Bank of Scotland (RBS) branches by pledging a substantially-higher payment to the taxpayer-backed lender.

Sky News understands that W&G Investments, a vehicle set up specifically to buy the branch network, tabled a revised offer within the last 48 hours even as RBS began leaning towards backing a rival bid involving the Church of England's pension fund.

The revised offer is not understood to include a substantial hike to the £1.1bn up-front cash payment promised by W&G in its original bid.

However, it is said to have altered its proposal to mean that RBS would receive additional payments on completion of a deal that would take the total value of its offer to well over £1.5bn.

Headed by Andrew Higginson, a former Tesco finance director (and non-executive director of BSkyB, the owner of Sky News), W&G's backers include leading fund managers such as Old Mutual, Schroders and Threadneedle.

RBS favours an alternative bid from a consortium led by Corsair Capital, an investment firm whose executives include Lord Davies, the former trade minister.

The branch network is being sold under the state aid deal that resulted from RBS's bail-out by British taxpayers in 2008, with the bank set a deadline of this autumn to offload it.

However, RBS is keen to retain a stake in the branches to share in a potential increase in value ahead of a flotation in what amounts to a bet on the recovery of the UK economy.

Unlike W&G's proposal, which would involve an outright takeover of the RBS branch network, the Corsair bid would entail buying just 49% with the remainder being listed on the stock exchange at an unspecified future date.

Sky News revealed in July that the Corsair bid was being backed by the Church Commissioners for England in an attempt to establish an ethical dimension in the group's vision for the small business-focused bank.

An earlier deal to sell the network, codenamed Project Rainbow, which comprises all RBS-branded branches in England and NatWest branches in Scotland, fell through last year when Santander UK pulled out citing concerns about IT systems.

Santander had initially agreed to pay £1.65bn for the branches, which include £19bn of assets, 250,000 small business customers and approximately 5,000 staff.

W&G and RBS both declined to comment.

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Food Price Rises 'A Source Of Stress'

Rocketing food prices are a "source of stress" for four in 10 UK consumers, while a third say they are struggling to feed themselves or their family.

Almost eight in 10 shoppers (78%) are worried about the increasing cost of food, with almost half (45%) spending a larger proportion of their available income at the supermarket compared to a year ago, the survey of 2,028 consumers for Which? found.

Food prices have risen over and above general inflation by 12.6% over the past six years, according to the Office of National Statistics, while incomes have stagnated.

The poll found 60% are worried about how they will manage their future spending on groceries if prices continue to rise.

A separate survey by the consumer watchdog found one million more households are feeling financial pressure compared to a year ago, leaving 9.5 million households struggling to cope with the cost of living. It found 40% are likely to cut back spending on food in the next few months.

Richard Lloyd, Which? executive director, said: "While people seem to have accepted their grocery bill going up, stagnating incomes and rocketing food prices are causing stress and worry and leaving people wondering how they are going to cope.

"Supermarkets need to make it much easier for consumers to spot the best deal by ensuring pricing is simple and making special offers genuinely good value for money.

"Politicians need to put consumers at the heart of their economic policies to tackle the rising cost of living and to support growth and prosperity."

Dan Crossley, executive director of the Food Ethics Council charity, added: "As the global food system becomes more deeply trapped in the strangleholds of resource constraint, climate change and population growth, rising food prices are an almost inevitable fact of life.

"Food businesses and government need to start planning now for that future by taking urgent action to tackle the issue of food affordability, including the introduction of measures such as a living wage.

"They also need to develop robust policies that make healthy food affordable, rather than peddling 'cheap' food that is costing us dear in terms of our health and our environment."

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