The Sky News Business Round-Up And Look Ahead

Sky's Naomi Kerbel offers a round-up of what's coming up in the week's business news.

:: Monday October 7

The Help-to-Buy mortgage guarantee scheme launches this week, three months earlier than planned following David Cameron's announcement at the Conservative Party conference.

:: Tuesday October 8

Tuesday is the deadline for applications for institutional and retail investors to make offers to purchase shares in the Royal Mail. It is expected the offer will be between 260p and 330p per share which would give it a market capitalisation of between £2.6bn and £3.3bn.

:: Wednesday October 9

Greggs, the UK high street bakery releases its interim results on Wednesday. It has 1,671 shops with its best seller being the sausage roll, selling approximately 140 million each year.

:: Thursday October 10

G20 finance ministers and central bank governors meet in  Washington DC on Thursday. The U.S economy and budget deadlock is likely to dominate the agenda.

:: Friday October 11

Royal Mail Group is expected to announce the offer price and size for its IPO on Friday with conditional dealings commencing on the London Stock Exchange.

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Twitter IPO: Company Hopes To Raise $1bn

Twitter has unsealed the documents for its initial public offering of stock, saying it hopes to raise up to $1bn.

It generated $317m (£200m) in revenue in 2012, driven largely by advertising.

Twitter had more than 215 million active users as of the end of June, up 44% from the previous year - compared to Facebook's nearly 1.2 billion and LinkedIn's 240 million.

But the company revealed that it lost $69.3m in the first six months of 2013, compared with a loss of $49.1m for the same period last year.

The losses come as Twitter rolls out a massive infrastructure and staffing expansion programme.

The company's total income in 2012 more than doubled from 2011, with 87% of the revenue comes from ad sales.

The San Francisco-based social network unsealed the papers with the Securities and Exchange Commission (SEC) on Thursday.

Last month Twitter announced that it had filed confidential initial public offering (IPO) papers with the SEC to start the process of going public.

The newly released document showed that private investors have ploughed $759m (£470m) into the company and it still has $375m (£230m) cash reserves remaining.

Twitter did not say which stock exchange it plans to list its shares on, however the company said it intends to use the ticker symbol "TWTR".

Facebook is listed on the Nasdaq exchange in New York.

The underwriters of the offering are Goldman Sachs, Morgan Stanley, JP Morgan, BofA Merrill Lynch, Deutsche Bank Securities and CODE Advisors.

Twitter's expansion plans have seen huge growth in staff across Europe, with many based at the regional headquarters in Dublin.

Its UK subsidiary gains all of its revenue from services rendered to the Irish intermediary.

Last year Sky News revealed that its UK company was fined by the business regulator for failing to file accounts on time.

Companies House also dissolved its sister company, TweetDeck, earlier this year for repeated failures to file accounts.

Afterwards, an Irish chartered accountant was made director of Twitter UK and San Francisco-based CEO Dick Costolo resigned his role in the British arm.

:: Twitter recently advertised for a tax manager to "implement and monitor transfer pricing strategy" to minimise the amount of tax paid in its Europe, Middle East and African businesses.

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Help To Buy: Doubts Over Success Of Scheme

By Poppy Trowbridge, Business and Economics Correspondent

The second phase of the government mortgage guarantee scheme Help to Buy is due to launch next week, three months earlier than expected - but experts are sceptical the initiative will help buyers.

Lack of capacity in the housing market and claims by banks which say they are not ready because they haven't received essential information from the Government threaten to leave many would-be buyers empty-handed.

Exclusive research by Sky News shows interest from potential buyers has skyrocketed since the Government surprised the market.

Property website Rightmove says clicks on its Help to Buy pages numbered 14,807 on Saturday, the day before last Sunday's surprise announcement.

When David Cameron revealed, on the eve of the Conservative Party conference, that the launch date had been brought forward from January - clicks, measuring potential buyer interest, spiked to 59,571.

Now, almost a week later, they remain far above average at 23,660.

But there is concern that pent-up demand cannot be met by existing market services.

Sky News has learned that the two taxpayer backed banks, Lloyds Banking Group and RBS, are not able to guarantee a launch date. Sky News understands both are waiting for further details from the Government.

Barclays has issued a statement saying it, too, is undecided.

"Whilst we cannot take a decision over participation in the new scheme before the terms are set, we are encouraged by the tone of the discussions so far," the bank said.

Estate agents are also worried that capacity to deal with a surge in interest is lacking.

Robert Ellice, of Clarke Hillyer, told Sky News: "At the moment we've got big delays in the whole process anyway, mortgages are still taking a long time to be offered and taking a long time to be verified on values."

Does that mean hopeful homebuyers will have to wait for Westminster to work out the finer details before others can catch up?

Mortgage manager Ray Boulger said: "The first details of mortgage rates under this scheme we are expecting on Tuesday from Halifax, but they are likely to be the only lender offering these mortgages for probably some weeks.

"From a buyer's perspective the good news is there will be 95% mortgages available from the biggest lender in the country, the bad news is there will be no competition."

He added: "But it is a start, you have got to start somewhere."

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HTC One Smartphone Wins At T3 Gadget Awards

By Stuart Duggan, at the T3 Awards

HTC was the big winner at the T3 Gadget Awards with the company's HTC One smartphone picking up three prizes.

The Android handset beat both the Apple iPhone 5 and the Samsung Galaxy S4 to win Phone of the Year - and also claimed Gadget of the Year and the T3 Design Award.

The Sky+HD 2TB set-top box won entertainment gadget of the year.

Samsung, Apple, Google and Sony were also recognised at the seventh annual T3s at Old Billingsgate in London.

Apple won two awards: Tablet of the Year and Computer of the Year for the iPad Mini and the Mac Book Air 11 inch.

Felix Baumgartner won Tech Moment of the Year

Sony also got two prizes: for Digital Camera and TV of the Year.

Google took home Innovation of the Year for Google Glass while Samsung was named Tech Brand of the Year.

Other winners included Netflix, who won Digital Media Service of the Year.

Tech Moment of the Year was awarded to Felix Baumgartner for his daring skydive from the edge of space a year ago.

On any other year his fellow nominees would have had a very good chance: the Curiosity Rover reaching Mars, Gangnam Style hitting one billion YouTube views, goal line technology being introduced in football, the battle between the Xbox One and PS4 at E3 and the UK launch of 4G.

The iPad Mini won the award for Tablet of the Year

But it's difficult to compete with a man who fell to Earth from 128,097 feet.

"Fearless Felix" broke the sound barrier during his sky-dive in October last year, free-falling for four minutes and 19 seconds before landing smoothly in New Mexico.

T3 gave a new award last night with TED curator Chris Anderson getting their first ever Tech Legend prize.

Meanwhile, Michael Acton Smith, the creator of Moshi Monsters, won the Outstanding Contribution To Tech prize.

T3 magazine's editor-in-chief Kieran Alger said: "Chris Anderson's TED initiatives provide inspiration for a generation of enquiring tech minds while Michael Acton Smith's army of Moshi Monsters has brought fun to a mind-boggling 80 million people across the planet.

"They're both hugely deserving recipients."

Jason Bradbury from The Gadget Show was named Tech Personality of the Year.

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Twitter IPO: Company Hopes To Raise $1bn

Twitter has unsealed the documents for its initial public offering of stock, saying it hopes to raise up to $1bn.

The company revealed that it lost $69.3m in the first six months of 2013, compared with a loss of $49.1m for the same period last year.

The losses come as Twitter rolls out a massive infrastructure and staffing expansion programme.

Meanwhile it said revenue more than doubled to $254m (£160m) from $122m (£72m).

Total 2012 revenue was $317m (£196m) - with 87% of its revenue comes from advertising.

Last month Twitter announced that it had filed confidential initial public offering (IPO) papers to start the process of going public.

On Thursday, the San Francisco-based social network unsealed the papers with the Securities and Exchange Commission.

The documents showed that private investors have ploughed $759m (£470m) into the company and it still has $375m (£230m) cash reserves remaining.

Twitter did not say which stock exchange it plans to list its shares on, however the company said it intends to use the ticker symbol "TWTR".

The micro-blogging site said that at the end of June it had 218 million active users, which was up from 10 million in 2010.

The underwriters of the offering are Goldman Sachs, Morgan Stanley, JP Morgan, Bank of America Merrill Lynch, Deutsche Bank Securities and CODE Advisors.

The IPO has been long expected. The company has been ramping up its advertising products and working to boost ad revenue in preparation.

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Carpetright Boss Quits Amid Profit Warning

High street furnishing chain Carpetright has issued a profit warning and parted company with its chief executive.

The firm said CEO Darren Shapland will step down from his role with immediate effect, replaced by chairman and founder Philip Harris.

Mr Harris will become full-time executive chairman.

The firm added that as a result of a combination of a softer UK market and a further step down in the Netherlands, it was likely full year profit will be significantly below previous expectations.

In the 10 weeks to September 29 sales at stores open over a year were down 2.5% in the UK and down 7.6% in the Rest of Europe division - made up of the Netherlands, Belgium and Ireland.

More follows...

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O2 Owner AEG To Appoint New European Chief

By Mark Kleinman, City Editor

The owner of the O2, the site in southeast London that has become one of the world's most popular entertainment venues, is poised to name a new boss of its European operations.

Sky News understands that Anschutz Entertainment Group (AEG) will on Thursday appoint Tom Miserendino as the president and chief executive of AEG Europe.

Mr Miserendino has worked for AEG for more than a decade, most recently as the head of AEG Live, the group's touring and concert arm.

He is expected to take over the company's operations in one of its most important regions outside its home US market on December 1, insiders said on Wednesday.

AEG's flagship venue in Europe is the O2 on the Greenwich Peninsula, which will next month host the season-ending ATP World Tour tennis championship, in which the top eight players in the men's game will compete for the final trophy of the season.

The company also owns a number of other sites in Scandinavia and Germany, which Mr Miserendino will oversee.

He will take over from Jay Marciano, one of AEG's top executives, who relocated to the group's Los Angeles headquarters earlier this year when he was promoted to the role of chief operating officer.

The management reshuffle followed an aborted attempt to sell the entire company for as much as $10bn, a sale process which attracted interest from bidders around the world.

Philip Anschutz, AEG's founder, said the auction had failed to attract offers of sufficient value.

Outside Europe, AEG owns and operates venues including the Staples Center in LA and the Mercedes-Benz Arena in Shanghai.

It also owns sports franchises such as the Los Angeles Kings National Hockey League outfit and the Major League Soccer team for which David Beckham played during his time in the US, LA Galaxy.

AEG was unavailable for comment.

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Payday Lenders Facing Unlimited Fines

Tougher controls on payday lenders could see unlimited fines for companies which break the rules.

The Financial Conduct Authority (FCA), which will take over regulation of consumer credit from the Office of Fair Trading (OFT) in April 2014, said the sanctions were among a host of proposed new rules that would go out to consultation.

The organisation, which will cover tens of thousands of firms offering services such as overdrafts, credit cards and debt advice, was formed six months ago with the promise of strengthening protection for consumers.

Among its other recommendations: Limiting to two the number of times a payday loan can be rolled-over, banning misleading adverts and compulsory affordability checks for all loan applicants.

Payday loan firms have come under intense scrutiny in recent months after a damning report by the OFT found "deep-rooted" problems.

The Competition Commission is carrying out a full-scale investigation of the industry and will reveal its findings next year.

The OFT, which referred the £2bn industry to the commission, is worried firms are emphasising the speed of the loan over cost and are "skimping" on affordability checks.

There have also been complaints of payday firms unexpectedly draining people's bank accounts through a type of recurring payment called a continuous payment authority.

Payday firms would be limited to doing this twice per customer under the proposals.

The FCA's chief executive Martin Wheatley said: "Today I'm putting payday lenders on notice: tougher regulation is coming and I expect them all to make changes so that consumers get a fair outcome.

"The clock is ticking," he added.

Payday lenders have said they have been working to improve standards and ensure loans are given only to those who can afford them.

Russell Hamblin-Boone, chief executive of the Consumer Finance Association (CFA), which represents many short-term lenders, said: "The CFA and its members have always supported well-designed, well-implemented regulation in order to protect consumers and drive up standards.

"Our tough code of practice and independent monitoring, which is unique in the industry, has paved the way for FCA regulation, so we look forward to seeing the detail of the draft rulebook."

The FCA has asked for feedback from consumers as well as lenders before implementing its rules next year.

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US Shutdown: White House Talks Inconclusive

President Barack Obama has held talks with congressional leaders over the partial US government shutdown, but there was no breakthrough and both sides blamed each other.

The hour-long meeting at the White House came on the second day of a shutdown that has halted federal services and left many government workers unable to go to work.

Mr Obama stood firm on his demand that Republicans agree to reopen the government and raise the debt limit.

"The president remains hopeful that common sense will prevail," a White House statement said.

The shutdown has closed iconic monuments and parks across the US

Funding for much of the government was cut off on Tuesday after a Republican effort to halt a health care law known as Obamacare stalled the spending bill.

House Speaker John Boehner described the White House talks as polite but said no progress had been made.

"All we're asking for here is a discussion and fairness for the American people under Obamacare," he said.

However, Senate Majority Leader Harry Reid said the President and Democrats in Congress will not accept changes in the health care law in order to pass spending legislation needed to reopen the government.

Some 800,000 federal employees are unable to do their jobs

"We're locked in tight on Obamacare," he said.

Public anger has mounted as the shutdown closed some of America's most popular tourist attractions and forced 800,000 employees - nearly a third of the federal workforce - to stay at home.

Director of National Intelligence James Clapper told Congress the shutdown was damaging the ability to guard against threats.

With no solution in sight, it was not clear how long the shutdown might last.

The shutdown could go on for another two weeks

And an even a bigger showdown looms over raising the nation's debt ceiling.

A historic default on the national debt would occur if Congress does not agree to raise the $16.7trn debt ceiling by an October 17 deadline.

In an interview with CNBC before the meeting, an "exasperated" Mr Obama said he would not negotiate with Republicans until the government is reopened and Congress votes to raise the debt limit.

He said: "If we get in the habit where a few folks, an extremist wing of one party, whether it's Democrat or Republican, are allowed to extort concessions based on a threat (to) undermine the full faith and credit of the United States, then any president who comes after me, not just me, will find themselves unable to govern effectively."

Mr Obama, who met with bank chiefs on Wednesday, said Wall Street should be worried about the debt ceiling.

"I think this time's different. I think they should be concerned," the president said.

"When you have a situation in which a faction is willing potentially to default on US government obligations, then we are in trouble."

A short-term shutdown would slow US economic growth by about 0.2 percentage points, Goldman Sachs has estimated.

A weeks-long disruption could weigh more heavily - 0.4 percentage points - as furloughed workers scale back personal spending.

Mr Obama has scrapped stops in Malaysia and the Philippines as part of a planned trip to Asia as the shutdown heads into a third day.

Since the last shutdown in 1996, Congress had passed more than 100 temporary funding bills, almost all of them without controversy.

The streak was broken because Republicans have held up the current measure in the hope of derailing or delaying Obamacare.

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US Shutdown Is 'Ideological Crusade' - Obama

President Barack Obama has urged Republicans in Congress to reopen the government, saying "one faction of one party" does not get to "hold the economy hostage over an ideological crusade".

Speaking from the White House Rose Garden more than 12 hours into a government shutdown, Mr Obama said the longer an impasse continues, the worse the impact will be.

America woke up to the shutdown after a deeply polarised Congress failed to agree a new budget in a dispute over Mr Obama's signature healthcare law.

Mr Obama blames the shutdown on the Republicans

The president said shutting down the government will not accomplish some Republicans' stated goal of "rolling back efforts to provide health insurance for those who don't have it".

Earlier Tuesday, Mr Obama sent federal workers a letter lamenting that they had become "punching bags" in Washington's partisan fiscal fights.

"This shutdown was completely preventable. It should not have happened," Mr Obama said in the letter.

As the shutdown entered into force, "closed" signs and barricades sprang up at the Lincoln Memorial, museums and federal workplaces across the country.

Some of America's most famous tourist attractions, such as the Statue of Liberty and Ellis Island in New York, and Alcatraz Island near San Francisco were closed to the public.

Almost all of Nasa shut down, except for Mission Control in Houston. Even the National Zoo's popular panda cam went dark, shut off for the first time since a cub was born there in late August.

The shutdown affects national parks such as Yellowstone

Up to 800,000 government employees are furloughed, and more than a million others could be asked to work without pay.

Meanwhile, workers classified as essential government employees, such as air traffic controllers or Border Patrol agents, continue to work. 

Republicans in the House said on Tuesday they would push for a series of small funding bills aimed at reopening portions of the government, including national parks.

The White House rejected the plan, saying it showed an "utter lack of seriousness" on funding the federal government.

The government's return to full operation will depend on how long it takes politicians to bridge their differences - and there was no immediate sign of compromise on Capitol Hill.

For now, Democrats and Republicans keep blaming each other.

The Republicans had insisted on delaying the healthcare reform - dubbed Obamacare - as a condition for passing a bill.

But this approach was rejected by allies of the president in a series of back-and-forth moves between the Republican-controlled House and the Democrat-dominated Senate.

House Speaker John Boehner said Mr Obama refused to negotiate

The Democrats accused the Republicans of succumbing to the Tea Party hard-line conservatives and seeking to gain political advantage at the expense of citizens.

Senate Majority Leader Harry Reid said: "The government is closed because of the irrationality of what's going on on the other side of the Capitol."

House Speaker John Boehner, a Republican, said he did not want a government shutdown, but added the healthcare law "is having a devastating impact ... Something has to be done."

Meanwhile, Obamacare itself was unaffected and enrolment opened for millions of people shopping for medical insurance.

The House of Liberty can be seen only from a distance

Online insurance marketplaces at the heart of the healthcare overhaul struggled to handle the volume of consumers on Tuesday, resulting in some glitches.

The shutdown, meanwhile, is likely to further alienate citizens already largely disillusioned by their ruling class and for the most part disappointed with the president's performance, according to the latest polls.

The political dysfunction on Capitol Hill also raised fresh concerns about whether Congress can meet a crucial mid-October deadline to raise the government's $16.7trn debt ceiling.

This would force the country to default on its obligations, dealing a potentially painful blow to the economy and sending shockwaves around global markets.

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Cameron: 'We'll Boost Aspiration With Reforms'

By Jon Craig, Chief Political Correspondent

David Cameron will round off the autumn party conference season with a pledge to create a "land of opportunity" in Britain.

The Prime Minister will vow that the Conservatives will "finish the job" the coalition has started in "clearing up the mess" created by Labour.

In his speech at the end of the Tory conference in Manchester, he will promise to boost aspiration with sweeping reforms of education, welfare and the economy.

After major announcements this week on Help-to-Buy, welfare, GPs' hours and a petrol price freeze, Mr Cameron will call for a second term with a Tory majority.

"This party at its heart is about big people, strong communities, responsible businesses, a bigger society - not a bigger state," he will say.

"It's how we've been clearing up the mess. And it's how we're going to build something better in its place. So let's stick with it and finish the job we've started."

David Cameron wants to point towards a more positive future

Mr Cameron will begin his speech by declaring: "Our dreams are about helping people get on in life, aspiration, opportunity. These are our words, our dreams.

"I believe it is the great Conservative mission that as our economy starts to recover we build a land of opportunity in our country today."

But he will say finishing the job is about more than clearing up the mess, adding: "It means building something better in its place.

"In place of the casino economy, one where people who work hard can actually get on.

"In place of the welfare society, one where no individual is written off.

"In place of the broken education system, one that gives every child the chance to rise up and succeed.

"Our economy, our society, welfare, schools, all reformed, all rebuilt - with one aim, one mission in mind: to make this country, at long last and for the first time ever, a land of opportunity for all."

Mr Cameron will say it makes no difference whether you live in the North or the South, are black or white, or a man or a woman, what school you went to, what background you have, or who your parents were.

"What matters is the effort you put in, and if you put the effort in you'll have the chance to make it," he will say. "That's what the land of opportunity means. That's what finishing the job means."

On aspiration, Mr Cameron will say: "You don't help children succeed by dumbing down education. You help them by pushing them hard.

"Good education is not about equality of outcomes, but bringing the best out of every single child.

"You don't help people by leaving them stuck on welfare, but by helping them stand on their own two feet.

"Why? Because the best way out of poverty is work - and the dignity that brings."

In a strongly pro-business message, Mr Cameron will say: "We know that profit, wealth creation, tax cuts, enterprise - these are not dirty, elitist words, they're not the problem.

"They really are the solution because it's not government that creates jobs, it's businesses.

"It's businesses that get wages in people's pockets, food on their tables, hope for their families and success for our country."

Mr Cameron will say there is no short cut to a land of opportunity, no quick fix and no easy way to do it.

"You build it business by business, school by school, person by person, patiently, practically, painstakingly," he will say. "And under-pinning it all is that deep, instinctive belief that if you trust people and give them the tools, they will succeed."

And in a rallying call to his party to fight for an outright Tory victory in 2015, he will say: "It requires a strong government, with a clear mandate, that is accountable for what it promises and yes, what it delivers.

"And let me tell everyone here what that means. When the election comes, we won't be campaigning for a coalition.

"We will be fighting heart and soul for a majority Conservative Government - because that is what our country needs."

:: Watch David Cameron's speech live on Sky News from 11am.

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Tesco Confirms China Deal And UK Progress

Tesco is to pay £345m to secure a joint venture with a state-backed retailer in China and confirmed progress in restoring growth to its core UK business.

However shares in the UK's biggest retailer were the biggest fallers on the FTSE 100 - losing 4.5% of their value in the first hour's trading on Wednesday - after it confirmed continuing troubles

While it reported a 23.5% drop in group pre-tax profits to £1.39bn in the six months to August 24 amid tough times in Europe and Asia, Tesco said its performance in the UK had strengthened, particularly in food.

Chief executive Philip Clarke has been spending £1bn overhauling the group's stores to arrest plunging like for like UK sales.

That decline was stopped in the last half year, Tesco said, with sales measured as flat against the same period in 2012.

Tesco becomes a solo operator in China to a minor stakeholder

It announced the investment in its UK stores after being accused of taking its eye off the ball in the country - instead concentrating on a diversification of its UK business and looking abroad for growth.

It recently got out of the US and confirmed today it was folding its 134 stores in China into a partnership with China Resources to become the second-biggest player in the market there.

Tesco is to hold a 20% stake in the venture having struggled to get to grips with the demands of the Chinese consumer.

The deal allows Tesco's boss to devote more efforts to the battle to retain its leading market share of over 30% in Britain.

Sainsbury's is growing its UK market share

Rival Sainsbury's continued to pile on the pressure as it reported like-for-like sales excluding petrol rising 2% in its second quarter.

The UK market - while dominated by Tesco - has witnessed a surge in competition with the likes of Aldi, Lidl and Waitrose challenging the other major players Morrisons, Sainsbury's and Asda.

Philip Clarke, chief executive of Tesco, said: "Despite continuing challenges, we have made further progress on our strategic priorities.

"Our performance in the UK has strengthened through the half, particularly in our food business, as we have continued our work to Build a Better Tesco," he added.

The group suffered a 71% tumble in European trading profits to £55m and admitted the hit was worse than expected after conditions worsened in countries such as Ireland, Turkey and Poland.

Profits also fell sharply across Asia, down 12.4% to £314m, excluding China.

Tesco admitted the overseas woes would offset some of the benefit of its UK profits improvement over the full-year.

More follows...

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Foreign Banks Warn Over Bonus Cap Exodus

By Mark Kleinman, City Editor

Some of the biggest foreign banks operating in the UK have warned London's main banking watchdog that a European cap on bonuses would lead to an overseas exodus of their senior managers.

Sky News understands that a number of US and other banks headquartered outside the European Union have warned the Prudential Regulation Authority (PRA) that the imposition of an enforced pay ratio has already prompted senior executives to demand a relocation away from London.

Officials say that the warnings have prompted serious alarm at the PRA, which is concerned that major banks could be denuded of much of the senior management expertise required to operate under the regulator's aegis.

News of the overseas banks' warnings comes just days after Sky News revealed that the Chancellor, George Osborne, was taking legal action at the European Court of Justice to try to overturn the bonus cap.

Despite the challenge, banks operating in London will be forced to adopt the new rules from next year pending its outcome.

The PRA has already made clear its opposition to moves to restrict bonuses to - at most - 200% of base salaries, arguing that it risks increasing instability in the banking system by driving up fixed costs.

British-based lenders have also criticised the cap, saying that they will have little choice but to inflate basic pay if they are to compete with rivals unaffected by the new restrictions.

George Osborne is taking legal action to try to overturn the bonus cap

Andrew Bailey, the PRA's chief executive, said earlier this year that the cap would "reduce the discipline in the system but it won't reduce overall remuneration" and warned that it "will institute an unhelpful culture of banks spending their time finding ways to get around the rules".

Without a successful legal challenge, UK regulators have little scope to overturn or ignore the cap despite the fact that regulators and many Westminster-based politicians agree that it will be potentially counter-productive.

A PRA consultation paper on the latest European Capital Requirements Directive will be published in the coming weeks.

Douglas Flint, the chairman of HSBC, has paved the way for Europe's biggest lender to increase salaries in time for the introduction of the new ceiling.

Last week, a Treasury spokesman said the new rules would "make banks themselves riskier rather than safer [and] may undermine responsibility in the banking system rather than promote it".

"Regulation of pay in this manner goes beyond what is permitted in the EU Treaty. That's why we are challenging these rules in the European Court, to ensure the legislation respects the EU Treaty and actually achieves what it's meant to: a more stable banking system that serves the economy, businesses and consumers."

The PRA declined to comment on its discussions with overseas banks on the issue.

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US Shutdown: Deadline Passes Without Approval

US Government Shutdown Q&A

Updated: 5:51am UK, Tuesday 01 October 2013

:: Why is this happening now?

Normally the US federal budget is decided in March. Although it is proposed by the executive, headed by the president, it has to be put into law by the legislative branches of government – the House of Representatives and the Senate.

One element of the 2013/14 budget has upset the Republican Party more than any other.

Obamacare, as it has been called, is a healthcare plan that aims to provide greater access to affordable health insurance for poorer sections of society.

Several Republicans oppose it as it increases state spending and, they feel, interferes in what should be private matters.

In March, because the Republican majority House of Representatives and Democrat dominated Senate could not agree on a 2013/14 budget bill, a compromise was reached that kept the federal budget funded for a further six months while negotiations continued.

That six months was up on Monday at midnight. With no compromise reached and no bill approved to fund state spending, no money will be available to pay for non-essential services.

:: Why should the Republican Party do this?

American politics has become more partisan in recent years than at any time in recent history.

The 'Tea Party', a particularly right-wing, libertarian element of the Republican Party, has been increasingly determined to impose itself on the operation of the state.

Among its key aims are the reduction of the impact that government has on the life of an individual, and the reduction of government spending.

As well as believing federal government spending should be slashed in general, they believe Obamacare is in opposition to everything they stand for.

As a result, many Republicans who are allied to the Tea Party are so determined to stop Obamacare, they are prepared to effectively hold a gun to the head of government by refusing to back a federal funding bill that funds Obama's health care plans.

They want it thrown out or heavily watered down and this is their way of fighting for what they want.

:: Could this happen in the UK?

It is one of the particular characteristics of the US federal government system that the executive (i.e. the president and his cabinet), can be made up of people of a different political hue to the main chamber – the House of Representatives.

In the UK, the head of Government (i.e. the Prime Minister), only normally comes from the largest party, or grouping, in the main chamber (i.e. the House of Commons).

As a result, it would be rare for a Prime Minister in Britain to be opposed by the main chamber.

In America, the system of checks and balances that was put in place following the American Revolution means that a US president does not need the support of Congress.

This stops the President becoming too powerful, but can also mean that the head of state finds it impossible to push through legislation, as is happening at present.

:: What will happen next?

After the failure to reach a compromise, more than 800,000 federal government employees will be told not to come to work until a deal has been done.

Certain 'essential' government services, such as national defence, will still be provided but many of those deemed unessential will not.

With no funding approved, the federal government is also not allowed to borrow extra money.

As a result, in about two weeks it will effectively reach its credit limit and will be unable to pay interest on the debts it owes.

Many economists believe this could be disastrous for the US as world markets will lose confidence in its ability to pay its bills, with many investors potentially pulling out.

The consequences of that are hard to gauge but some fear it could trigger another world downturn.

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Minimum Wage Rises As Rogue Firms Targeted

Employers who fail to pay the statutory minimum wage face being named and shamed from today as the latest increases come into effect.

The adult rate has risen by 12p an hour to £6.31 and by 5p to £5.03 an hour for 18 to 20-year-olds.

The minimum for 16 and 17-year-olds increased by 4p to £3.72 while the apprentice rate goes up by 3p to £2.68.

The Government estimates that 890,000 people will receive a pay rise because of the changes.

Business Secretary Vince Cable said the Low Pay Commission recommended a rate which supported low paid workers without damaging their chances of getting a job.

"As signs of an economic recovery start to emerge, we need to do more to make sure that the benefits of growth are shared fairly across the board.

"That is why in addition to their ongoing annual remit, I am asking them (the commission) to extend their expertise to help the Government and business understand how we can deal with the issue of low wages in the economy.

In particular I have asked them to look at what economic conditions would be needed to allow the national minimum wage to rise in the future by more than current conditions allow," he said.

Unions have demanded the proceeds of growth are shared with workers.

TUC general secretary Frances O'Grady said: "Years of below-inflation rises mean that the UK's lowest-paid workers are now facing an historic living standards crisis.

"As the recovery takes hold we will need to see far bigger increases to the minimum wage to ensure that ordinary people and not just the super rich benefit from economic growth.

"This will need more than any one-off pre-election boost - we will need sustained stronger rises if the real value of the minimum wage is to be restored."

The Resolution Foundation think-tank said the minimum wage will be falling in real terms for the fifth year in a row despite the increase, because it is not keeping pace with rising prices.

Campaigners called for more companies and organisations to pay a so-called living wage, currently set at £7.45 an hour for the UK and £8.55 for London.

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America 'On Precipice' Of Government Shutdown

The US government is almost guaranteed to shut down on Monday night after House Republicans voted in favour of a temporary spending bill that includes a one-year delay for Obamacare.

The Republican-led House of Representatives passed the proposal by 231 votes to 192 in one of two amendments attached to a Senate spending bill passed on Friday night.

"I don't think we're near the precipice of a shutdown," said House Minority Whip Steny Hoyer. "We are on the precipice."

The White House and the leader of the Democrat-controlled Senate said they would not accept the plan.

"To be absolutely clear, the Senate will reject both the one-year delay of the Affordable Care Act (Obamacare) and the repeal of the medical device tax," said Senate Majority Leader Harry Reid.

"After weeks of futile political games from Republicans, we are still at square one."

Some White House staff may be told to take leave without pay

President Barack Obama also said he would veto the plan, resulting in the federal government technically running out of money on Monday night and forcing the first partial government shutdown in almost 20 years.

Nearly a million government employees will be forced off work without pay, and museums and national parks will close.

The row between the Democrats and Republicans over government funding has been rumbling on since 2010.

Since then there have been negotiations between the parties that have led to short-term stop-gap funding bills rather than longer term budgets.

The last time the federal government shut down was under the Clinton administration in 1995, when services ground to a halt for 28 days. It nearly happened again in April 2011.

If the shutdown does go ahead then a third of the government's 2.1 million employees will be kept off work - possibly without back pay.

Obamacare has been a divisive measure among Americans

National parks and the capital's Smithsonian museums will be closed, pension and benefits cheques will be stopped and passport applications will not be processed.

While 1.4 million troops would stay at work, they would not get paid.

The Pentagon's top financial officer Robert Hale has said that high-priority missions such as Afghanistan would not be affected.

However, he said that roughly half the Defense Department's civilian work force would be place on unpaid leave.

Training and a range of maintenance work would be cancelled.

Obama has told Republicans not to 'burn the house down'

Government agencies have compiled a list of essential workers, and critical services such as air traffic control would continue.

The Affordable Healthcare Act was passed into law in 2010 and has since been upheld by the Supreme Court.

It is a measure that has caused particular ire among Republicans and they have continually attempted to reverse it.

Mr Obama said Republicans should not threaten to "burn the house down because you haven't gotten 100% of your way".

He said: "No one gets to hurt our economy ... just because there are a couple of laws [they] don't like."

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Auto-Enrolment 'Success' Amid Tough Economy

Fewer people than expected have opted out of the auto-enrolment pension scheme since it was launched almost a year ago, according to a report which has identified a new mood of financial stoicism among the public.

The study - by pension provider Nest and researchers the Futures Company - concluded that the tough economy had triggered a fundamental shift in the way consumers handle their finances.

It said that more than 1.6 million people had been placed in workplace pensions since the roll out of auto-enrolment started last October with larger firms.

Three-fifths (61%) of people surveyed for the report, who are yet to be placed in a workplace pension, plan to stay in it, showing a sharp increase from less than half (47%), when similar research was carried out in 2011.

Just under one fifth (18%) of consumers disagree with the idea of auto-enrolment, marking a downward shift from 27% in 2011.

Auto-enrolment began over fears too few were saving for a longer retirement

So far, the rate of people staying in schemes once they have been opted in has been higher than many pundits had expected, the study said, with around nine in 10 people who are being auto-enrolled remaining in their pensions.

In trying to explain what was described as the "surprisingly low" opt-out rates, the report pointed to "growing evidence that the recession has changed consumer attitudes towards money".

The survey found that more than half (57%) of people would never spend money as freely as they did before the financial crisis, marking an increase from 48% a year ago and 43% in 2010.

Despite some more optimistic news about the economy in recent months, the report found that people are still keeping a tight control on their purse strings as living costs remain high compared to wage growth, with just 29% saying they do not pay off their credit card balance each month, down from 52% in 2011.

Survey: Consumers have become more wary about spending large sums

Of the workers questioned who have now been placed in a workplace pension, around half (51%) of those who had remained in said they felt it was time to start saving for retirement while a similar proportion (48%) agreed it made financial sense because the employer also contributes.

However, around one in seven (13%) also said they had remained in their pension because they had been "too busy" to opt out.

The drive to get more people saving for their future aims to head off a looming retirement saving crisis, amid fears that people are living for longer but not putting enough aside for their later years.

Up to nine million workers are expecting to be newly saving into a pension or saving more as the reforms roll out.

Charles Counsell, executive director of automatic enrolment at the Pensions Regulator said auto-enrolment had got off to an "excellent start".

He said: "Automatic enrolment has been successfully rolled out to more than 2,000 of the UK's largest employers and well over 1.5 million people are now saving for their retirement as a direct result."

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Chancellor: 'Jobless Must Work For The Dole'

The long-term unemployed will have to earn their benefits by doing full-time unpaid community work from next year.

From April, people still without work after two years on the coalition's Work Programme will face three options if they want to remain on the dole.

They will have to do community work such as litter picking, visit a job centre daily or take part in compulsory training to tackle problems like illiteracy.

Those who break the rules of the new Help to Work scheme, for example by failing to turn up without a good reason, could lose their benefit for four weeks.

A second offence would see them lose it for three months.

The Chancellor wants the jobless to earn their benefits

Chancellor George Osborne will unveil the tough US-style initiative in his speech to the Tory conference later today, pledging to end the "something for nothing" culture.

Ahead of his address, he insisted on Sky News that the policy was not a return to the Conservative "nasty party" of old - describing the move as "compassionate".

"This is not about punishment, this is about help," he stressed, but also said: "What we are saying is there is no option of doing nothing any more.

"We are saying we are going to help you into work but we are going to ask for something in return. I think it is a very compassionate approach to people who previous governments just ignored."

Amid concern that job centres will be over-stretched, he added that they would have extra money to police the scheme.

Potentially, around 200,000 long-term Jobseeker's Allowance claimants could be eligible for the new initiative.

But ministers believe the numbers on it will be significantly lower, as many of those working covertly will decide it is no longer worth trying to claim benefits and drop out.

The scheme, devised by Work and Pensions Secretary Iain Duncan Smith, will cost around £300m - with the money likely to be found from departmental underspends.

Sky's chief political correspondent Jon Craig described the new conditions as "a tough crackdown".

Labour's shadow chief secretary to the Treasury, Rachel Reeves, said: "It's taken three wasted years of rising long-term unemployment and a failed Work Programme to come up with this new scheme.

"But this policy is not as ambitious as Labour's compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months and every adult unemployed for more than two years."

During his speech later, Mr Osborne is not expected to unveil specific action on living standards, despite pressure to respond to Labour leader Ed Miliband's energy price freeze pledge last week.

Instead, the Chancellor will stress the need to stick with the coalition's economic plans, warning that the UK still has not fully recovered from the credit crunch.

He told Sky: "Our economic plan is helping Britain turn a corner. We have dealt with the problems we inherited, we have still got a long way to go ...

"By contrast the Labour party got us into this mess and all I hear from them is that they want more borrowing and more spending. A set of gimmicky announcements isn't going to cover up the fact that they don't have a credible economic policy."

:: The Chancellor's speech to the Conservative Party Conference in Manchester will be broadcast live from 11.30am on Sky News.

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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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Ex-Barclays Chief In Frame For Lloyds Role

By Mark Kleinman, City Editor

One of the architects of the legislation that will force Britain's banks to ring-fence their high street lending operations is being considered as a surprise candidate to chair Lloyds Banking Group.

Sky News can reveal that Martin Taylor, a member of the Independent Commission on Banking (ICB) in 2010-11, is on a list of names approached about taking over from Sir Win Bischoff next year.

Mr Taylor's presence on the shortlist to chair Lloyds has emerged less than a fortnight after George Osborne, the Chancellor, began reducing the taxpayer's stake in the bank, raising £3.2bn from the sale of a 6% stake.

His name is an unexpected one to feature in the reckoning to succeed Sir Win is a surprise given that his last term in a UK bank's boardroom ended in ignominy at Barclays in 1998.

Lloyds has been searching for a new chairman for just over four months but is in no hurry to identify a replacement for Sir Win, who will not step down until its annual meeting next year.

The task of finding a new figurehead for the bank's board is likely to have been made significantly easier by the fact that the Treasury has begun selling its shareholding. A surge in Lloyds' share price during the last year would, if maintained, pave the way for further disposals ahead of the next general election.

The chairmanship of Lloyds is one of the most high-profile in British boardrooms. Sir Win, a former boss of Citi, the Wall Street bank, was appointed four years ago to replace Sir Victor Blank, who was forced to step down in the wake of Lloyds TSB's rescue of HBOS.

That deal resulted in taxpayers pouring more than £20bn into Lloyds to save the combined group, leaving UK Financial Investments, which manages the Government's stake, to threaten to vote against Sir Victor at its annual meeting in 2009.

Mr Taylor was a trenchant critic of banks' behaviour during the year-long probe into the structure of the industry that was chaired by Sir John Vickers.

He argued forcefully for the system of ring-fencing that will be adopted before 2019 by the major lenders, although Lloyds will be relatively unaffected by the policy because of its limited investment banking operations.

Last year, Mr Taylor recounted how he had been "among the first to succumb to the myth of (former Barclays boss Bob) Diamond's indispensability" as he outlined the need for a cultural overhaul of British banking.

If Mr Taylor was chosen as Lloyds' next chairman, he would have to step down as an external member of the Bank of England's Financial Policy Committee (FPC), which he joined only a few months ago. One banker said this weekend there was unlikely to be any question over conflicts of interest with either the ICB or FPC if Mr Taylor did take the Lloyds role.

Since being forced out of Barclays in 1998, Mr Taylor has served as an adviser to the international arm of Goldman Sachs, chairman of WH Smith and then of Syngenta, a Swiss-based agricultural chemicals producer.

The search for Sir Win's successor is being led by Tony Watson, the former fund manager who is Lloyds' senior independent director.

David Roberts, the bank's deputy chairman and another former Barclays executive, is seen as a strong candidate to land the role although it is unclear whether he wants it.

Lord Davies, the former trade minister, has also been linked with it although he has made it clear he is not interested and was this week part of the consortium which agreed to buy a stake in 314 Royal Bank of Scotland branches.

Odgers Berndtson, the headhunting firm, is leading the search, while Lloyds is also about to announce the appointment of a chairman of TSB, the 631-branch network it is spinning off as an independent bank.

Lloyds declined to comment on Saturday.

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Cameron Launches State-Backed Mortgages Plan

David Cameron will announce that state-backed mortgages to help people on modest incomes get onto the property ladder will start within days - three months earlier than planned.

The mortgage guarantees will allow buyers to acquire a newly built home or an existing property worth up to £600,000 with a deposit of only 5%.

The second stage of the Help to Buy scheme aims to boost mortgage availability by reducing the risk for lenders because the Government takes on the risk of default when it guarantees a proportion of a loan.

Mr Cameron says the 'earlier the better' for the scheme's launch

Mr Cameron believes that will help solve the skewed market that means people on good wages struggle to buy even modest properties because they cannot scrape together the massive deposits needed or find a mortgage.

The scheme was due to start in January next year but the Prime Minister will say at the Conservative Party conference today that people will be able to start applying for the new mortgage guarantee from next week.

Mr Cameron said: "Young people who've got a decent job and have got decent earnings - they cannot buy a house or a flat, because they have to have a £30,000, £40,000 or £50,000 deposit.  Now, if you haven't got rich parents, you can't get that sort of money.

"So we're going to launch the Help To Buy Scheme - it's not coming in next year, it's coming in next week, because I'm passionate about helping people who want to own their own flat or home.

"You take a nurse married to a teacher. They're both earning £25,000 - that's pretty close to average full time earnings. If they want to buy a £200,000 house, they're going to have to find a £40,000 deposit.

"Now, they can't do that, unless they've got rich parents. That's not right. That's not an aspiration nation."

But the scheme has attracted widespread concern, with some claiming it may lead to more problems than it solves.

Liberal Democrat Business Secretary Vince Cable warned the scheme "could inflate the market" and said he feared there was a "danger of getting into another housing bubble".

Former Bank of England governor Lord King said the scheme is "too close for comfort" to a general scheme to guarantee mortgages.

Mr Balls says the Government focus should be on affordable homes

Labour's shadow chancellor Ed Balls said: "If David Cameron is serious about helping first-time buyers he should be bringing forward investment to build more affordable homes. Rising demand for housing must be matched with rising supply, but under this government housebuilding is at its lowest level since the 1920s.

"Unless David Cameron acts now to build more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder.

"You can't deal with the cost of living crisis without building more homes, so it's no wonder that for millions of families this is no recovery at all."

The first stage of Help To Buy was launched in April and offers loans to give people the chance to buy a new-build home with a deposit of just 5%. The scheme has been credited with spurring a surge in home sales and driving up prices.

:: Watch Conservative Party conference coverage on Sky News from 2pm

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