Ed Miliband Proposes New Energy Price Controls

Ed Miliband has proposed new controls on energy prices to give small businesses "equal protection" with households from "unacceptable" treatment by energy companies.

The Labour leader said annual energy bills for small businesses had risen by an average of £10,000 since 2010.

He called for a new regulator to be formed with powers to ban suppliers from changing people's tariffs without their consent, or hitting them with "crippling" back-dated bills.

Sticking to his cost of living agenda, he also reiterated plans for a 20-month price freeze for households and businesses when he addressed the Federation of Small Businesses (FSB) in Manchester later.

He said the move would save small fiirms, on average, £5,500.

"It is unacceptable that companies like yours do not have even basic protections that are available to households under the law from unfair energy contracts," Mr Miliband said.

"Since the turn of the century, the number of people working for themselves has increased by over one million.

"Small businesses are now the bedrock of our economy - and they will be even more so in the future.

"Some of the costs of running a small business have got larger and larger in recent years. The next labour government is determined to tackle this problem, and give every sort of business the chance to succeed."

Mr Miliband also pledged new legal rights for business organisations like the FSB to take cases such as late payment by firms to court on behalf of members.

Labour would also invite the FSB to help set the agenda for the new Competition and Markets Authority's investigations - like Which? and Citizens Advice already do - to ensure a fair deal for consumers and businesses.

It comes after energy watchdog Ofgem on Thursday referred the sector to the CMA amid concerns over profits, price co-ordination and barriers to new suppliers.

The competition inquiry could lead to the so-called 'big six' firms being broken up.

Mr Miliband said following the announcement there could be "no justification for further price rises".

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FCA Probes Millions Of 'Bad Deal' Investments

The City watchdog is to scrutinise millions of finance products sold to consumers over three decades, because of fears they are shackled by unfair terms and conditions.

It is estimated around 30 million policies, including pensions, endowments, life insurance and investment bonds were sold by companies between the 1970s and the end of the century.

The Financial Conduct Authority (FCA) is expected to announce the decision on Monday, as part of its annual business plan.

The investigation, due to begin in the summer, comes amid suspicion new customers receive better deals while long-term customers receive poor service and higher fees.

Many of the suspect policies penalise consumers if they try to swap to better deals offered by rivals.

The share price for many of the big insurance companies fell on Friday, with early trades in Resolution down 7%, Aviva down 6% and Legal & General trading more than 4% lower.

According to the FCA, some people risk losing half of their investments if they change provider from the so-called zombie funds.

The funds are closed to new customers and many of those who invested are suspected of subsidising other products because of the high charges.

FCA director of supervision Clive Adamson told The Daily Telegraph: "We want to find out how closed-book products are being serviced by insurance companies.

"As we are concerned insurers are allocating an unfair amount of overheads to historic funds.

"As firms cut prices and create new products, there is a danger that customers with older contracts are forgotten.

He added: "We want to ensure they get a fair deal. As part of the review we will collect information to establish whether we need to intervene on exit charges."

The FCA was born out of the now-defunct Financial Services Authority, which was abolished by the current Government in the wake of the financial crisis.

Next week it also takes responsibility for the consumer credit market.

Earlier this week, it imposed a £12.4m fine on Santander UK for failings in its investment advice to customers.

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Business Round-Up And Week Ahead

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

: Monday March 31

From Monday, energy suppliers are required to publish the price at which they will buy and sell on wholesale markets up to two years in advance and the cost of a first class stamp goes up from  60p to 62p.

:: Tuesday April 1

The Competition and Markets Authority (CMA) takes on its full powers on Tuesday. Regulator, Ofgem has referred the energy market to the CMA for a full investigation into the competitiveness of the market and air passenger duty is due to rise in line with the Retail Price Index.

:: Wednesday April 2

On Wednesday, ASOS will report half year results. The online clothing retailer has faced stiff competition from other web-based companies like the recently-floated Boohoo which also targets people in their 20s.

:: Thursday April 3

It will be the Chancellor's chance to be grilled on Thursday. George Osborne will give evidence at Treasury Committee on this year's Budget. 

:: Friday April  4

On Friday, the U.S. will release its employment figures. It is expected that the unemployment situation will improve as the market shakes off the effects of severe winter weather. 

Missing something? Tweet your business stories to @SkyNKTweets

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F1 Investors Drive Off With £200m Dividend

By Mark Kleinman, City Editor

Shareholders in Formula One motor racing are in line for a £200m windfall just weeks before Bernie Ecclestone stands trial in a case which could spell the end of his reign at the sport's helm.

Sky News has learnt that the board of Delta Topco, F1's parent, agreed this week to issue a $332m (£199.8m) dividend for last year.

The dividend is technically funded through a redemption of shareholder loan notes, and follows the latest of several financial restructurings undertaken by F1 in recent years.

The biggest recipient will be CVC Capital Partners, the London-based private equity owner of 38% of the sport, which will receive almost £80m.

Among others who will receive windfalls will be the estate of Lehman Brothers, the investment bank whose collapse in 2008 was one of the triggers of the global financial crisis.

Lehman is in line for a payment of approximately $40m (£24m), according to sources close to F1, while Mr Ecclestone, the sport's chief executive, is expected to receive about $17m (£10.2m) by virtue of his 5.3% stake.

F1's other shareholders include the fund managers BlackRock and Waddell & Reed, Norway's sovereign wealth fund and the municipal retirement fund of Texas's teachers.

The dividend plan underlines the continuing financial strength and cash generation demonstrated by F1 despite the broader challenges now confronting one of the world's biggest spectator sports.

Mr Ecclestone's trial on bribery and corruption charges is scheduled to begin in Munich towards the end of next month.

It relates to a $44m (£27m) payment to Gerhard Gribkowsky, a banker who was involved in organising F1's sale to CVC nearly a decade ago.

Mr Gribkowsky has since been jailed and may appear as a witness at Mr Ecclestone's trial.

The F1 chief executive, who has consistently denied any wrongdoing, has conceded that he made part of the relevant payments to Mr Gribkowsky, but said that he had done so because he was concerned that the receipient would make unfounded allegations about his tax affairs to Her Majesty's Revenue and Customs.

He has recently been quoted by British newspapers as saying that he might opt to step down at the end of the year, regardless of the trial's outcome.

The prospective termination of Mr Ecclestone's vice-like leadership is not the only headache facing the sport.

Drivers, executives and media groups complained that engine changes to cars first deployed at the season-opening Australian Grand Prix this month have diminished the sport as a spectacle.

CVC has already made billions of pounds from its original investment in F1, and is waiting to dust off plans to float the company on the Singapore stock exchange.

It has conceded that that idea is unworkable until the legal issues surrounding Mr Ecclestone are resolved.

Sources familiar with the situation said that Delta Topco's board had discussed issuing a substantially higher dividend than the £200m being paid out.

Its decision not to issue additional debt to fund such a move was made with one eye on a revival of the flotation and demonstrated "restraint", one said.

F1's profitability and cash-generative nature has meant that the company's newest investors have already received a series of multimillion pound payouts, suggesting that it would continue to pay attractive dividends if it does eventually pursue a public listing.

Peter Brabeck-Letmathe, the chairman of the Swiss consumer goods giant Nestlé who also chairs F1's parent company, is taking a more hands-on role with the company during the six months that Mr Ecclestone's trial is expected to last.

In a statement issued in January, the board of Delta Topco, F1's parent, said that Mr Ecclestone would step down as a director but remain in day-to-day control of the sport he has run for the best part of four decades:

"Mr Ecclestone has reassured the Board that he is innocent of the charges and intends to vigorously defend the case which will commence in late April 2014," it said.

"After discussion with the Board, Mr Ecclestone has proposed and the Board has agreed that until the case has been concluded, he will step down as a director with immediate effect, thereby relinquishing his board duties and responsibilities until the case has been resolved."

The board said it believed that F1 would be best-served by Mr Ecclestone retaining his management responsibilities but said he would be "subject to increased monitoring and control by the Board".

Approval for significant commercial contracts would become the responsibility of Mr Brabeck-Letmathe and Donald Mackenzie, the CVC founder who is Delta Topco's deputy chairman, the board added.

An F1 spokesman declined to comment on this week's dividend discussions.

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Millions More British Homes 'In Fuel Poverty'

The number of British households living in fuel poverty has risen to almost 4.5 million, according to a new report.

The UK Fuel Poverty Monitor said  the cost of those households meeting their above average fuel bills would put them below the breadline.

In 2011, the most recent year for which Government figures are available, 2.4 million households were said to be in fuel poverty.

The two charities behind the report also accused Westminster of not doing enough to tackle the crisis.

National Energy Action (NEA) and Energy Action Scotland (EAS) found huge variations in the amount of money spent on improving energy efficiency for low-income households.

On average, just £3.52 is invested per electricity customer in England, compared with £36.48 in Scotland, £31.31 in Wales and £27.55 in Northern Ireland, they claimed.

The charities said the VAT from energy bills could be used to bring homes occupied by low-income families up to the standard of new builds.

NEA chief executive Jenny Saunders said: "The only sustainable way to tackle this problem is to invest in our old and cold housing stock.

"Additional resources must be made available to improve the heating and insulation of our poorest households."

The report, released to coincide with national Fuel Poverty Awareness Day, comes after the energy watchdog confirmed a competition inquiry into the household supply market - a move that could lead to the so-called Big Six firms being broken up.

Ofgem accused suppliers of "consistently setting higher prices for consumers who have not switched".

Adam Scorer, director of Consumer Futures, said millions of households are "desperate" for a Government-wide strategy to tackle fuel poverty.

A Department of Energy and Climate Change spokesman said it would set out its long-term commitment to tackling fuel poverty in the spring.

"The Government is doing everything within its power to help hard-pressed families keep their energy bills down," he added.

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'Brit Culture' Test For Video Game Tax Break

By Joe Tidy, Sky News Reporter

UK games developers are to be granted large tax breaks for creating titles that pass a British "culture test".

To become eligible for money back, games will be appraised on several criteria, such as having British characters, a British story and being set in Britain.

Titles will also be rewarded for promoting UK culture and employing British production staff, and can claim back up to 20% of the total costs of production.

The Independent Game Developers' Association (Tiga), which represents the UK video games industry, has campaigned for seven years for the tax breaks.

It says they are worth £188m in extra investment for UK games businesses over the next five years.

The move was first announced in the previous Labour government's final budget in March 2010, but was being blocked by the European Union commission, which spent time deciding whether or not the British industry needed the boost.

Dr Richard Wilson, Tiga's chief executive, said: "This is a superb decision by the EU Commission and magnificent news for the UK video games industry.

"It is also a striking success for Tiga, for its members, and for the wider video games industry that Tiga represents. The tax break will create jobs, boost investment and enable the production of more British video games.

"Tiga built a compelling case which demonstrated that video games are cultural products similar to other audio-visual creations and so merit support and that the UK video game industry is competing on an unlevel playing field because our key global competitors already benefit from tax relief or other forms of government support."

The move could have a major impact on the sorts of games that developers make as companies shift products to take advantage of the tax incentives.

Jason Kingsley OBE is the chief executive of games maker Rebellion, based in Oxford, and said: "We won't be compromising the game just to get tax breaks, but, if it were a choice between creating an American lead character or a Brit, it might swing our decision."

There are other ways to take advantage. For example, Rebellion is currently developing Sniper Elite 3 - a war game set in North Africa during the Second World War.

It will not get any "culture points" for its setting or characters, but it could be considered to be culturally relevant as it is about the war, so Jason and his team are hopeful they will get some money back.

"It doesn't have to be people walking around with bowler hats and driving red buses in London to qualify," he said.

"It's all on a points system - which opens up a lot more possibilities."

It is also hoped that the tax breaks will bring in foreign games makers, who can also get money back through hiring British developers on productions in a similar way to the British film industry. It is estimated that a quarter of British games will be eligible.

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Santander Fined £12m Over Poor Advice Service

Santander UK has been fined £12.4m by the City regulator over poor advice given to its customers.

Details of the penalty were first revealed by Sky News City Editor Mark Kleinman on the Jeff Randall Live programme on Tuesday night.

He revealed that the Financial Conduct Authority (FCA) penalty comes after a 13-month long investigation by its enforcement division.

The fine is the largest suffered to date by Santander UK, which has expanded through acquisition into Britain's fifth-biggest high street bank following takeover deals involving Abbey, Alliance & Leicester and Bradford & Bingley.

Tracey McDermott, FCA director of enforcement and financial crime, said: "Customers trusted Santander to help them manage their money wisely, but it failed to live up to that responsibility.

"If trust in financial services is going to be restored, which it must be, then customers need to be confident that those advising them understand, and are driven by, what they need.

"Santander let its customers down badly."

The penalty is significantly below the FCA's biggest-ever fine of £28m, which was imposed on Lloyds Banking Group in December for incentivising staff to sell billions of pounds of unnecessary products.

City watchdog the FCA imposed its biggest ever Santander UK fine

Kleinman revealed that the City regulator's probe into Santander UK followed a mystery shopping exercise across the banking sector, which exposed failings in the investment advice given to consumers.

As a consequence of the FCA enforcement action, Santander UK announced barely a month later that it was closing its investment advice arm to new customers.

Steve Pateman, head of banking at Santander UK, said: "We regret that elements of Santander UK's historic branch-based investment sales processes did not meet the required regulatory standards and apologise to any customers who have concerns.

"To ensure that any concerns our customers may have are addressed we will be writing to them this summer, to offer them an opportunity to withdraw from their investment or have their sale reviewed.

"Customers need take no action now and should wait to receive letters from us."

Other high street lenders, such as Barclays, had already withdrawn from the market altogether, while Lloyds has closed its mass market advisory service and now provides financial guidance to customers with at least £100,000 to invest.

The exodus of major banks from the investment advice market has provoked fears that millions of British consumers are being left financially disenfranchised.

People close to Santander UK said the bank disputed many of the regulator's judgements about the quality of its investment advice during the 13-month investigation.

It is also understood to have argued that consumers suffered no detriment as a consequence of the failings identified by the FCA, an assertion that the regulator is not understood to have contested.

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Candy Crush Firm Slumps In Market Debut

The British creator of the popular mobile game Candy Crush Saga has been given the cold shoulder in its public trading debut on Wall Street.

The stock price for King Digital Entertainment plc dropped 15.6% on its first day of trading, ending the session at $19 (£11.46).

The slump gives King a market value of $5.98bn (£3.6bn) - well below the estimate of $7.1bn (£4.2bn) made hours before its debut on the New York Stock Exchange.

The initial public offering (IPO) valued the shares at $22.50 (£13.60), but they opened at $20.50, down almost 9%.

The company raised $500m (£302m) in its IPO to help fund future development and expansion.

King has become hugely profitable based on the success of three games - Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga - even though it has 180 titles in total.

Candy Crush Saga is one of three key games for King Digital

The company has more than 324 million monthly unique users, and operates a website with 14 languages.

However many investors have been wary of games firms with a limited range of products.

They cite the demise of one-time market leader on Facebook, Zynga, and its Farmville as an example to avoid.

King has offices in Stockholm and London, and games studios in several European cities.

It was founded in London originally as Midasplayer Ltd in 2003 before King Digital was registered in Dublin last July, to assist in inter-country transfer pricing, and "intended to provide us worldwide tax efficiencies".

Midasplayer directors include Swedes Sebastian Knutsson 45, and Lars Markgren, 50, and Italian CEO Riccardo Zacconi, 46.

Its website, through which players can buy 'freemium' game tokens, is domiciled in Malta.

In January, it posted a blog explaining its reasons to buy the EU trademark for the word "candy" and application for the US equivalent.

It said the reason was to protect its intellectual property (IP) and thwart competitors trading on its name.

In its February US IPO listing document, King warned potential investors that unauthorised distribution or piracy, particularly in Asia, may harm its revenue and entail costly litigation to protect its IP.

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'Big Six' Energy Firms May Be Broken Up

The energy watchdog has ordered a competition inquiry into the household supply market that could lead to the so-called 'big six' firms being broken up.

Ofgem charted a quadrupling in profits between 2009 and 2012 and said it was acting to "remove uncertainty" by referring the sector to a full investigation by the new Competition and Markets Authority (CMA).

Its State of the Market Assessment accused suppliers of "consistently setting higher prices for consumers who have not switched."

It found little evidence of households engaging in the market, with 43% distrusting firms to be open and transparent.

The review also reinforced concerns about excessive profits and barriers to entry for independent suppliers.

It found that retail profits soared from £233m in 2009 to £1.1bn in 2012.

Ofgem said there was clear evidence of suppliers becoming more efficient in reducing their own costs, although further evidence would be required to determine whether firms have had the opportunity to earn excess profits.

The market investigation, Ofgem said, would conclusively determine whether there should be more separation between the largest companies' supply businesses and generation arms, in a bid to provide more clarity on profits.

One of the 'big six, SSE, confirmed on Wednesday it was to legally separate its supply and generation businesses in a bid to improve transparency as it announced a price freeze until January 2016.

While Ofgem found no evidence of collusion on pricing, the review discovered "evidence of possible tacit coordination" in the timing and size of price announcements and new evidence that prices rise faster when costs rise than they reduce when costs fall."

Its chief executive Dermot Nolan said: "Ofgem believes a referral offers the opportunity to once and for all clear the air and decide if there are any further barriers which are preventing competition from bearing down as hard as possible on prices.

"The CMA has powers, not available to Ofgem, to address any structural barriers that would undermine competition.

"Now consumers are protected by our simpler, clearer and fairer reforms, we think a market investigation is in their long-term interests."

More follows...

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Auction House Bonhams Eyes Sale Of Its Own

By Mark Kleinman, City Editor, in Dubai

It has secured a record bid for a painting in Russia and struck the most valuable purchase of an Old Master at auction.

Now Bonhams, the British auctioneer, is considering a deal of a different kind.

Sky News has learnt that the company's shareholders are bringing in City advisers to assess whether Bonhams itself should be put up for sale on the back of record profits.

Sources said on Saturday that Greenhill, an investment bank, had recently been appointed to conduct a strategic review, which will involve examining a range of options for bringing new capital into the business.

Bonhams, which has become a well-known name in the global auctioneering sector, specialises in selling fine art, classic cars and antiques.

It is jointly-owned by two businessmen: Robert Brooks, a former motor racing driver who has chaired the British Racing Drivers' Club, and Evert Louwman, a Dutchman.

Mr Brooks has said in the past that he wants to take advantage of Bonhams' strong balance sheet by building the company into a credible rival to Christie's and Sotheby's, the most famous name in the auction world.

It is unclear whether either of the existing shareholders would countenance an outright sale of their stakes.

Greenhill is expected to recommend the recruitment of a new investor, which is likely to attract interest from major private equity firms and sovereign wealth funds.

A stock market flotation is also expected to be considered although Mr Brooks has previously said that such a move was unlikely.

It is unclear exactly how much Bonhams would be valued at although City sources indicated that it would be several hundred million pounds.

Headquartered on New Bond Street in London, the current Bonhams was formed from a merger with Brooks in 2000, and has established a presence in Dubai, Hong Kong and the US.

The company was founded in 1793, and now claims market leadership in a number of areas, including the sale of Alfa Romeo, Aston Martin and Maserati cars for world record prices.

Last year, Bonhams saw profits more than double to £25m as wealthy buyers looked for alternative investment opportunities in a continuing environment of low interest rates.

Key sales in 2013 included a 1954 Mercedes Formula One car driven by the legendary Argentine racer Juan Manuel Fangio, which fetched £19.6m, and the Madonna Laboris, which became the most expensive Russian painting sold at auction when it attracted a £7.9m bid.

"2013 was a year where we saw the Bonhams brand establish itself further on the global stage," Mr Brooks told a newspaper last week.

'We have put significant investment behind growing a brand that can compete effectively in the key auction markets of the world."

A Bonhams spokesman refused to comment.

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Cable Turns Screw Over Royal Mail Chief's Pay

By Mark Kleinman, City Editor

Vince Cable is demanding that the board of Royal Mail limits a pay rise for its chief executive to the same level awarded to the rest of the newly privatised company's workforce.

Sky News can reveal that the Business Secretary has informed directors of the postal operator that a salary increase of more than 3% for Moya Greene could prompt the Government to vote against Royal Mail's remuneration policies.

The warning has set the scene for an explosive row between Mr Cable and the Royal Mail board, some members of which believe Ms Greene is significantly underpaid as the boss of a FTSE-100 company.

Royal Mail reports its annual results towards the end of May, and will hold its annual general meeting during the summer.

Vince Cable wants to limit a pay rise for Moya Greene

As a 30% shareholder in the company, the Government would deliver a serious blow to the credibility of Royal Mail directors if it voted against their pay report.

Mr Cable and officials at the Department of Business, Innovation and Skills have not yet made a decision about how the Government will exercise its vote.

However, with new executive pay rules drawn up by Mr Cable now in place, it would also undermine his status as an advocate of boardroom reforms if he was seen to endorse even tacitly an inflation-busting pay increase for Ms Greene.

Under a deal struck between Royal Mail managers and the Communication Workers' Union earlier this year, workers will receive a 9.1% pay rise over three years, a deal which included 3% increases in 2013 and 2014.

Royal Mail insiders pointed out on Sunday that Ms Greene did not receive a pay rise last year and has not had one since 2010.

"Since that time, frontline staff have had a three-year pay award of 6.9%, plus a £1000 lump sum, and now the further 9.1% rise and a £200 lump sum," said one ally of Ms Greene.

The company's chairman, Donald Brydon, has argued publicly that she deserves a substantial salary hike, saying in January:

"I think it's only fair to pay Moya the right market rate for her job."

"I'm not in the school that says top executive pay is without fault, there are parts of it that are egregious and wrong. But happily we are so far away from that end of it that to try and right-size her a bit I think is a necessary part of making sure we keep her."

Mr Brydon did not quantify the perceived shortfall in the Royal Mail chief's pay, although Ms Greene is paid less in aggregate than her peers at the helm of companies in the FTSE-100. She is also paid substantially less than her predecessor, Adam Crozier.

Ms Greene was paid a base salary of £498,000, with further sums totalling nearly £1m based on her performance and directors' judgements about her success at modernising the company.

Royal Mail has pledged not to give Ms Greene a significant pay rise until after the current financial year ends.

Some of the company's directors are keen to avoid a public row with Mr Cable, believing that the Government is likely to sell its remaining 30% stake within months anyway.

That would make it much easier to hand Ms Greene a big pay rise, with Royal Mail no longer even partly-owned by the state.

However, some board members believe there is a risk that Ms Greene could leave or be poached if her pay is not increased in the short term.

"The directors have a fiduciary duty to do what is right to keep the best possible leadership in place," a source close to the board said.

For Mr Cable, taking a public stand over pay at Royal Mail is also important because of the criticism he has faced since authorising its £3.3bn privatisation last autumn.

He denied that the company had been undervalued by the Government and its advisers, despite an initial surge in Royal Mail's share price.

While the shares have fallen moderately since their post-flotation high, they closed on Friday at 581.5p, valuing Royal Mail at just over £5.8bn.

The National Audit Office is expected to publish its report on the privatisation process in the next fortnight, with insiders saying on Sunday that it was likely to be critical of the valuation settled upon by the Government.

The BIS Select Committee will then publish its own report on the sell-off, although its cross-party membership may mean that severe criticisms are muted.

Under the reforms instigated by Mr Cable, shareholders in public companies will have a binding vote on future pay policies and an advisory vote on the previous year's remuneration report.

With the AGM season about to get underway, companies such as Barclays are anxiously trying to deflect the prospect of a major investor rebellion.

The Business Secretary has in the past praised Ms Greene as "an exceptionally good CEO" although the pair have clashed before over a £250,000 housing allowance paid to the Royal Mail boss, which she later returned.

If the Government did oppose Royal Mail's pay report, it would be vulnerable to accusations of hypocrisy given that the chief executives of the state-backed Lloyds Banking Group and Royal Bank of Scotland are each eligible for far higher pay deals than Ms Greene.

Such a move could also leave some Royal Mail directors feeling that their positions were untenable because they were not able to act in the interests of all shareholders by securing the services of the company's chief executive.

Royal Mail and a spokeswoman for Mr Cable both declined to comment.

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Co-op Bank Discovers New £400m Shortfall

The struggling Co-operative Bank has discovered a new £400m capital shortfall - in addition to its previous £1.5bn funding gap.

The bank said that in 2013 it was hit with an estimated £400m in payment protection insurance (PPI), interest rate swaps and other mis-selling claims.

It now expects to report a full-year pre-tax loss, when its results are released on April 8, of around £1.2bn to £1.3bn.

The bank added that job cuts hit the 1,000 level last year, or 14% of the workforce.

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Fortnum Boss Warns of Scots Vote 'Disaster'

By Mark Kleinman, City Editor, in Dubai

The chief executive of Fortnum & Mason, the upmarket London-based grocer has warned that a 'yes' vote in the Scottish independence referendum would be a "disaster" for the country.

Speaking exclusively to Sky News, Ewan Venters, a Scot by birth, said that a break-up of the United Kingdom would create a damaging period of uncertainty for businesses.

"I think it would be a disaster. The UK is better as one. We are a small enough island as it is, we don't need to become smaller," he said.

"The consequences of an independent Scotland and an independent England could be very unfavourable economically. That uncertainty is not what the country needs."

Mr Venters, who has run the Queen's grocer since 2012, is one of the most senior English-based Scottish businessmen to articulate his views about the implications of the referendum vote which takes place in September.

A former executive at companies including J Sainsbury and Selfridges, which is owned by the same family as Fortnum & Mason, Mr Venters also criticised the fact that he would not be allowed to take part in the vote.

"It is very disappointing that Scots like myself are not allowed a vote, when someone could be from any nation, move to Scot and be allowed a vote.

Fortnum & Mason is a favourite of the Royal Family

"It is an ill-conceived set-up of the referendum by those in the establishment who know that many of those who have moved away from Scotland to build careers elsewhere are in favour of the union remaining intact."

He is the latest in a growing number of executives and companies to speak out on independence.

In recent weeks, Alliance Trust, Standard Life and Royal Bank of Scotland have highlighted contingency planning being undertaken to prepare for a 'yes' vote.

In its annual report published this week, the defence contractor BAE Systems also said a vote in favour of independence could be disruptive.

Mr Venters, 41, was speaking in Dubai during a trip to mark the opening of Fortnum & Mason's first overseas store, opposite the Burj Khalifa, the world's tallest skyscraper.

Fortnum & Mason, which operated solely from its shop on London's Piccadilly for more than 300 years, was founded in 1707, the year that the Act of Union binding England and Scotland came into being.

Mr Venters wants the Dubai store, which has been developed in conjunction with AKI, a local partner, to be the first step in a carefully and gradually orchestrated expansion of the business.

"It is a very important milestone because customers from this region are hugely important at our Piccadilly store," he said.

"Fortnum has a long history of taking products to customers around the world," he said, which included exporting Christmas hampers to 112 countries towards the end of last year.

Dubai was chosen as Fortnum's first international outpost because of the Emirates' status as the most important luxury retail centre in the world, behind London, he added.

"Tea is the most popular drink after water here. As tea merchants for more than three centuries, we felt it was important to be here," he said.

Mr Venters cautioned against expectations that the Dubai opening would lead to a chain of Fortnum & Mason stores opening around the world, although he has now overseen the launch of two outlets in little more than six months.

Last autumn, the company opened a shop next to the Eurostar terminal at London's St Pancras station, with sales understood to be performing strongly.

"We will carefully consider other opportunities in what I call surging economies rather than emerging markets.

"This is a good moment to look at taking firmer positions in the world on a gradual basis."

"Over half of our business is made up of consumers living in the UK. That trend has increased in recent times as we have tried to make it more relevant to domestic consumers," Mr Venters said.

He described Britain's economy as "two-tier", with London the dominant force, adding that this week's Budget statement by George Osborne was "business-friendly and broadly friendly to working people of Britain by ensuring there's more money in people's pockets".

Mr Venters also waded into the debate about the future of Britain's troubled high streets, calling for a significant increase in residential development in order to stimulate wider usage.

"The opportunity for the high street has never been so good. The drive to buy more online means people are shopping on a more frequent basis.

"With some proactive housing policies on high streets and sensible movement on business rates, there is no reason why you couldn't start to see a revival."

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Leahy Firm Leads Race For £1bn Dubai Group

By Mark Kleinman, City Editor, in Dubai

The private equity firm which employs Sir Terry Leahy, the former boss of Tesco, is leading the race to buy a German industrial group which has key operations in northern England.

Sky News understands that Clayton Dubilier & Rice (CD&R) is heading a field of four remaining bidders for Mauser, a German-based industrial packaging group owned by the ruler of Dubai.

Mauser, which makes drums for transporting medical waste and other hazardous materials, operates two UK facilities, at Batley in West Yorkshire and Littleborough in Lancashire.

The auction of Mauser, which is owned by Dubai International Capital (DIC), was narrowed in the last few days to CD&R, Ardian Partners, Pamplona Capital and Platinum Equity, according to insiders.

Blackstone did not table a formal offer for Mauser, while it is unclear whether Apollo Management, another party which had expressed interest in the group, did so.

The sale of Mauser, which is expected to fetch approximately £1bn, would leave DIC owning only two companies less than a decade after it pursued ambitious plans to become one of the world's leading private equity investors.

DIC is part of Dubai Holding, one of the groups owned by Sheikh Mohammed bin Rashid al Maktoum.

The Dubai-based group acquired Mauser in mid-2007, just as the first signs of stress in global financial markets were becoming apparent.

Dubai was forced to default on sovereign debt repayments in 2009 amid a slump in asset prices but has since successfully restructured its borrowings.

The emirate is now recovering from the financial crisis, with significant construction work resuming and international banks increasing staffing levels from the post-crisis trough of recent years.

Mauser has itself undergone a financial restructuring, announcing in May last year that it had won support from its lenders, which include HSBC and Royal Bank of Scotland, to amend the terms of its debt facilities.

DIC had contemplated a combined auction of Mauser, its UK-based aerospace group Doncasters and Almatis, a German aluminium manufacturer, but has decided to delay selling the latter two businesses.

Among DIC's other troubled investments was Travelodge, the British hotel operator, which it lost control of after its balance sheet became overstretched.

The auction of Mauser is being handled by Bank of America Merrill Lynch.

Mauser and CD&R, which owns companies such as the discount retailer B&M, declined to comment.

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Auction House Bonhams Eyes Sale Of Its Own

By Mark Kleinman, City Editor, in Dubai

It has secured a record bid for a painting in Russia and struck the most valuable purchase of an Old Master at auction.

Now Bonhams, the British auctioneer, is considering a deal of a different kind.

Sky News has learnt that the company's shareholders are bringing in City advisers to assess whether Bonhams itself should be put up for sale on the back of record profits.

Sources said on Saturday that Greenhill, an investment bank, had recently been appointed to conduct a strategic review, which will involve examining a range of options for bringing new capital into the business.

Bonhams, which has become a well-known name in the global auctioneering sector, specialises in selling fine art, classic cars and antiques.

It is jointly-owned by two businessmen: Robert Brooks, a former motor racing driver who has chaired the British Racing Drivers' Club, and Evert Louwman, a Dutchman.

Mr Brooks has said in the past that he wants to take advantage of Bonhams' strong balance sheet by building the company into a credible rival to Christie's and Sotheby's, the most famous name in the auction world.

It is unclear whether either of the existing shareholders would countenance an outright sale of their stakes.

Greenhill is expected to recommend the recruitment of a new investor, which is likely to attract interest from major private equity firms and sovereign wealth funds.

A stock market flotation is also expected to be considered although Mr Brooks has previously said that such a move was unlikely.

It is unclear exactly how much Bonhams would be valued at although City sources indicated that it would be several hundred million pounds.

Headquartered on New Bond Street in London, the current Bonhams was formed from a merger with Brooks in 2000, and has established a presence in Dubai, Hong Kong and the US.

The company was founded in 1793, and now claims market leadership in a number of areas, including the sale of Alfa Romeo, Aston Martin and Maserati cars for world record prices.

Last year, Bonhams saw profits more than double to £25m as wealthy buyers looked for alternative investment opportunities in a continuing environment of low interest rates.

Key sales in 2013 included a 1954 Mercedes Formula One car driven by the legendary Argentine racer Juan Manuel Fangio, which fetched £19.6m, and the Madonna Laboris, which became the most expensive Russian painting sold at auction when it attracted a £7.9m bid.

"2013 was a year where we saw the Bonhams brand establish itself further on the global stage," Mr Brooks told a newspaper last week.

'We have put significant investment behind growing a brand that can compete effectively in the key auction markets of the world."

A Bonhams spokesman refused to comment.

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