New Car Sales Accelerate By 18% In March

New car registrations were up almost 18% in March compared to the same period last year.

A total of 464,824 cars were registered in the month, the highest level for a decade - nearly 15,000 a day.

Last month's figure and the previous high, recorded in March 2004, were the two best registration periods since 1999 when the motor industry ditched the August new number plate for a twice-yearly system.

The sales speed-up in March has taken year-so-far sales to 688,122, a rise of 13.7% on the total for the first three months of 2013.

Trade body SMMT said the surge reflects a return to confidence to Britain, especially as more than half of the total went to private buyers.

"New car registrations surged 17.7% in March to 464,824 units, a surprisingly strong level of growth and a reflection of intensifying consumer confidence and the availability of great new products," SMMT chief executive Mike Hawes said.

"Given the past six years of subdued economic performance across the UK, there is still a substantial margin of pent-up demand that is contributing to a strong new and used car market."

The month of March is the traditional registration high point, however the industry expects growth to continue.

"There has never been a better time to buy a new car thanks to attractive finance deals and advanced technologies that often make new cars cheaper to run," Mr Hawes said.

"We expect the market to continue to perform positively for the rest of the year, albeit at a more modest rate."

The best-selling car remains the Ford Fiesta, with 25,753 registered in the month.

That was 58% above the next best-seller, the stablemate Focus (16,860), and the Vauxhall Corsa (16,231).

VW Golf, Vauxhall Astra and Nissan Qashqai were the next best models, along with the VW Polo, Fiat 500, BMW 3 Series and Toyota Yaris.

Alternative fuel vehicles (AFVs) saw a rise of 35% year-on-year, however the "green vehicle" total was still below 2% of all cars put on the road.

There is now expected to be a surge in AFVs sales, amid an increased awareness of air pollution.

Diesel-powered cars, whose exhaust emission particulates are known to be harmful, made up 47.8% of sales in March.

Many heavily-populated areas of Britain have been blanketed in thick smog this week, due to atmospheric conditions and vehicle pollutants.

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House Of Fraser Bought By Chinese Tycoon

A Chinese tycoon has bought British high street chain the House of Fraser, according to sources.

Reuters said a 89% stake was bought by Sanpower, a Nanjing-based conglomerate controlled by Yafei Yuan.

Sources have told Sky News an announcement is expected imminently.

House of Fraser will now seek strategic growth in mainland China as part of a wider, global expansion.

The deal values the department stores at more than £450m.

The two sides are thought to have been in secret discussions for several months.

This follows a protracted search for investors led by House of Fraser's chairman, Don McCarthy.

Just months ago the company was tipped for a public flotation.

But Sky News City Editor Mark Kleinman reported in February that Mr McCarthy apparently had no desire to chair a publicly-listed company.

Sports Direct and Newcastle United owner Mike Ashley was also tipped as a making a possible move for the company.

The British group enjoyed strong Christmas trading, with like-for-like sales at its 61 stores up more than 7% during the three weeks to December 28 and more than 4% in the nine weeks to the same date.

Established during the 1850s, House of Fraser was taken private in 2006 for £351m by a consortium led by Baugur alongside Mr McCarthy and entrepreneur and philanthropist Sir Tom Hunter.

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Microsoft XP And Office 2003 Security Warning

Britain's data protection watchdog has warned owners of Microsoft's Windows XP and Office 2003 products of future potential security flaws.

The warning from the Information Commissioner's Office (ICO) comes as the software giant is set to end official support of the products on April 8.

Despite Windows XP being considered an aged operating system, it still powers nearly a third of all PCs worldwide, according to NetMarketShare.

UK software firm AppSense believes three-quarters of UK firms have XP within their networks, while Gartner says many businesses have up to 20% running on XP.

The ICO said once official support ends, no update release to overcome flaws will be issued, risking data breaches of machines used by businesses and private users.

The watchdog said the problem will get worse over time as more vulnerabilities are gradually discovered.

It said that will increase opportunities for attackers to exploit and potentially gain unauthorised access to systems.

ICO technology group manager Dr Simon Rice also warned that the issue is not limited to these two products.

He said: "Organisations regularly end support for their older products.

"And those with supported systems still need to be vigilant, as vulnerabilities will be discovered over time."

Dr Rice urged businesses to be prepared for the ending of support.

He said: "As a responsible data controller, it is your organisation's responsibility to make sure you have the measures in place to keep people's details safe."

He added: "Where you cannot apply a (software) update, you may need to put additional measures in place to mitigate the risk."

Approached by Sky News, a Microsoft spokesperson said warning about the end of support was announced some time ago.

It said the user notifications raised the issue of potential virus and security risks.

:: Microsoft has given advice for users of both Office 2003 and Windows XP on its website.

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Lloyds Seeks Approval To Boost Pay Of Top 400

By Mark Kleinman, City Editor

Lloyds Banking Group is to seek approval to boost the pay packets of up to 400 of its most senior staff in a move which could stoke political tensions over bankers' remuneration.

Sky News has learnt that the taxpayer-backed lender will disclose in documents ahead of its annual general meeting (AGM) that it wants the flexibility to pay the higher-than-expected number employees up to 200% of their salaries in bonus awards.

The 400 executives, who are known as 'code staff' by regulators because of their designation as the holders of the most important jobs at the bank, can only be paid the equivalent of their base salaries without shareholder approval under new European Union rules.

The move by Lloyds to seek approval to double the level of variable pay will put the Treasury in a delicate position as it strives to avoid being seen to endorse bumper bonuses, particularly at banks in which it has a direct ownership interest.

One route allowing it to navigate this dilemma would involve UK Financial Investments, the agency which manages taxpayers' stake, abstaining on the remuneration-related votes at Lloyds' AGM, although final decisions are not thought to have been taken.

Approximately 75 of Lloyds' staff are being awarded allowances which, in line with similar deals at other banks, count towards their base pay and will enable higher bonuses to be paid from this year.

Antonio Horta-Osorio, the bank's chief executive, will receive a £900,000 allowance in deferred shares which will boost his guaranteed annual pay to £2.6m.

Lloyds, less than 25% of which is now owned by the taxpayers after a £4.2bn sale of Government shares last week, has identified the 400 eligible employees in accordance with definitions imposed by the European Banking Authority.

The new EU rules have prompted major banks operating in Europe - including Barclays, Goldman Sachs, HSBC and Morgan Stanley - to devise new monthly or quarterly payments, drawing criticism from politicians in Brussels.

George Osborne, the Chancellor, has mounted a legal challenge to the pay ratio cap, arguing that it will do little to curb risk-taking and may damage the City of London.

Lloyds' move to seek approval for the higher payments will be disclosed in the circular to shareholders ahead of next month's AGM, which Treasury sources said was expected to be distributed in the coming days.

The bank is also understood to be tabling a resolution that will ask investors to approve the ability to pay a scrip dividend for the first time since it was bailed out by taxpayers following the merger of Lloyds TSB and HBOS in 2008.

Lloyds has already said that it hopes to resume dividend payments in the second half of 2014 and anticipates becoming a distributor of chunky payouts to shareholders in the coming years.

Sources said that the Lloyds documentation would also include a resolution seeking approval for the bank to draw up a prospectus for a possible sale of shares to the general public.

Such a plan, which is unlikely to be launched by the Treasury until the autumn, could see billions of pounds of shares offered to retail investors.

Lloyds declined to comment on Thursday.

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High Streets Show 'Resilience' After Crash

Around 80% of high street stores left vacant after the collapse of successive retail chains have now been filled, new research suggests.

Accountancy giant Deloitte said Britain's high streets were recovering at a greater pace than rival locations such as shopping centres and retail parks.

Britain's retail environment suffered a major change in the wake of the financial crisis more than five years ago, with a number of household names disappearing.

Chains including Woolworths, HMV, Blockbuster, Comet and Jessops vanished from the retail landscape but Deloitte said "great resilience" was being shown in re-occupancy.

It examined almost 30 major administrations since 2009 and used research from the Local Data Company to track the status of around 5,900 shop premises.

Around two-thirds of the shopfronts were left vacant at some point, but many have since been filled, it said.

Like property price variations, however, regional shop vacancy rates are evident.

Deloitte said the North West vacancy level stands at 32% whereas in London the figure is 18%.

Out-of-town shopping zones have apparently been hit hardest, in the downturn.

While the average high street vacancy rate across the country is 20%, it is 29% at shopping centres and 37% for retail parks.

The better high street re-occupancy rate is aided by lower refurbishment costs in comparison to large out-of-town locations.

Deloitte found that the average vacancy rate for the High Street is 20%, but it rises to 29% for shopping centres and 37% for retail parks.

"The results of this research are surprising and seem to challenge a number of myths around the state of the high Street," Deloitte director and report author, Hugo Clarke, said.

"They would suggest that far from being dead, the high street appears to be showing great resilience and a capacity for re-invention.

"It seems that a structural shift is taking place with the high street emerging as an unexpected winner."

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Dawlish: Damaged Railway Reopens After Repair

David Cameron has paid tribute to workmen after they completed a £35m repair project on the badly-damaged rail line at Dawlish.

A 300-strong team has spent weeks repairing the line, which was badly damaged on February 4 when the sea wall was breached during storms.

The line which links Exeter, Plymouth and Penzance was forced to close after part of the wall collapsed.

Storms caused a 100m breach in the sea wall at Dawlish

The Prime Minister said: "This is a great day for the hard-working people of Dawlish, and for businesses and commuters across the South West whose lives have been turned upside down by the devastating loss of their train line."

Half of Dawlish train station has been rebuilt after the storms

Shipping containers were put into place in Dawlish to act as a temporary sea wall, but they suffered damage after further storms in February and engineers also discovered a cliff face just south of the village in Teignmouth had sheared away above the track.

Mr Cameron said: "Back in February when I visited the town to see the damage for myself, I promised to do everything I could to get to this vital artery back up and running as quickly as possible.

The coast-hugging line bore the brunt of the severe weather

"I am delighted to say that promise has been delivered today. A promise which says that the South West is well and truly open for business."

As part of the repair work, half of Dawlish station has also been rebuilt, new cabling has been installed and the sea wall breach has been fortified with more than 6,000 tonnes of concrete.

A team of 300 workers spent weeks fixing the line

National Rail chief executive Mark Carne said: "Our army of engineers has done an amazing job of putting back together a railway that was ravaged by the elements.

"They have overcome every obstacle thrown at them, winning many battles along the way to restore this critical piece of the network, ahead of schedule, and in time for the Easter holidays."

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Cowdery Nets £200,000 Profit After FCA Fiasco

By Mark Kleinman, City Editor

The founder of the closed life insurer Resolution has netted a profit of almost £200,000 on shares he bought after last week's botched launch of a probe into the sector by the City regulator.

Sky News can reveal that Clive Cowdery, one of the wealthiest and most prominent tycoons in the insurance industry, is sitting on the paper windfall after swooping for 1.2m shares last Friday.

He acquired the shares at an average of just under 274p, in the wake of a newspaper report that the Financial Conduct Authority (FCA) would be investigating millions of so-called "zombie" life insurance policies dating back to the 1980s.

The report wiped billions of pounds from the value of listed insurance companies, including Resolution, which saw its shares slump by as much as 16% at one point on Friday before recovering to close down 7%.

The partial recovery came after the FCA corrected some details of the newspaper report, but insurers were furious that it took the regulator more than six hours to issue the clarification.

Later on Friday, the watchdog issued a further statement to say that its board would be appointing a law firm to conduct an inquiry into the fiasco, which has also drawn the ire of George Osborne, the Chancellor.

Andrew Tyrie, the Conservative MP who chairs the Treasury Select Committee, has called the FCA's actions "an extraordinary blunder".

Mr Cowdery's share purchases last week were an indication of his belief in the continuing strength of Resolution, which will shortly be renamed Friends Life, according to people close to him.

The company announced last month that its founder would step down from the board at its annual meeting.

He is expected to establish another life insurance acquisition vehicle focused on Germany, Italy or the Netherlands next year, although he has said he remains interested in further opportunities in the UK.

An ally of Mr Cowdery said that his £200,000 gain on the shares he acquired for £3.3m last week was modest in the context of the sums he spends annually on his think tank, the Resolution Foundation.

Mr Cowdery, who now owns shares in Resolution worth roughly £28m, has fared far better from the recent share trades than his boardroom colleagues.

Andy Briggs, the company's chief executive, bought 47,000 shares at 313p ahead of last Friday's fall in Resolution's share price.

Tim Tookey, the finance director, acquired 20,000 shares at 315p on March 25 and a further 175,000 shares two days later at 320p.

Both men are nursing significant paper losses on those holdings although neither has any intention of selling the shares in the short term.

The insurance industry has been left reeling by both last Friday's FCA fiasco and Mr Osborne's Budget announcement that pensioners will no longer be effectively forced to buy an annuity.

A spokesman for Mr Cowdery and Resolution both declined to comment.

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Vodafone Creates 1,400 Jobs With 150 Stores

Vodafone has confirmed plans to open 150 new stores this year, creating 1,400 UK jobs.

The company said the £100m expansion was part of its previously announced £1bn investment commitment to the UK market.

Vodafone, which has 19 million customers in the country, had pledged in June last year to increase its UK expenditure by 50% as it fought strong competition from the likes of EE and O2.

Its capital investment programme, the company said, was one of the largest in its history and aimed at delivering Vodafone's commitment to provide indoor and outdoor coverage using 2G, 3G and 4G services to 98% of the UK population by 2015.

UK chief executive Jeroen Hoencamp said: This year we'll invest more than ever before to provide our customers with the strongest network and best services in the UK.

"We're also committed to putting our brand and our people where our customers want us: right at the heart of their high street and shopping centre."

Vodafone said the opening of the new stores would take the total number of Vodafone-branded UK outlets to more than 500.

It planned to open the first of the 150 stores in Notting Hill, Fulham, Walthamstow, Wembley, Ilford, Perry Barr and Bicester.

The announcement was welcomed by Prime Minister David Cameron.

He said in a statement: "It is a sign that our long-term economic plan to create jobs and build a stronger, more competitive economy is working."

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China Confirms 'Mini Stimulus' To Boost GDP

The Chinese government has announced measures to help boost living standards and its economy at the same time.

The total cost of the so-called 'mini stimulus' was not disclosed but the investment programme aimed to deliver social housing to replace shantytowns in many cities while railway construction would also be accelerated.

China's top economic official Li Keqiang said other measures included more tax breaks for small businesses.

There is pressure on the world's number two economy as it risks missing its GDP growth target of 7.5% for 2014, with official output surveys showing little sign of confidence picking up.

China has the world's longest high-speed rail line

The programme announced by Premier Li also showed that policymakers were highly reluctant to opt again for a strategy of massive spending and borrowing, such as the one unleashed following the financial crisis of 2008.

While the stimulus helped China's economy recover rapidly - with growth of more than a staggering 70% since 2008 - the resulting credit boom created a huge debt burden of 230% of GDP.

That debt mountain contributed to GDP growth slowing to a 14-year low of 7.7% in 2014 as spending was cut back.

Since becoming head of the ruling Communist Party in November 2012 and state president in March last year, President Xi Jinping has mounted an austerity campaign among top officials and a highly publicised crackdown on corruption that has seen some high-ranking officials sacked or charged.

China's huge export market has also been hit by factors outside its own control - namely the slow world economic recovery which dented demand for its products.

The targeted measures announced call for slum clearance to be accelerated with the China Development Bank, the country's biggest policy lender, issuing home financing bonds to help finance new social housing.

Western China has missed out on high speed rail investment

The authorities will also create a special fund worth up to 300 billion yuan (£29bn) annually to boost rail construction - a key policy aimed at reducing pollution from road traffic - with high speed bullet train lines also improving vital internal trade links.

China plans to build more than 4,000 miles of railway in 2014 alone.

The announcement represented a 25% increase in track extensions while the authorities also confirmed that western China would benefit from 80% of the investment.

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Asos Profit Plunges 22% Despite Sales Boost

Online fashion retailer Asos has seen its half-year pre-tax profit plunge by 22%, despite retail sales being up by a third in the UK.

The fall comes as the firm steps up expenditure on IT and distribution facilities for future growth expectations.

Asos said its pre-tax profit was £20.1m in the six months to February 28, down from £25.7m in the same period last year.

In March the company warned that investments in Germany and the UK to help distribution would impact profit.

It also said start-up costs in China would affect the bottom line.

Last month, the firm said the outlay would disproportionately hit first half-profit and forecast a full-year profit of around £65m.

On releasing the H1 figure the company said: "Asos is not and has never been about the short-term, the scale of the global opportunity remains as exciting as ever."

Barnsley is the main UK warehouse centre for the group.

Around two-thirds of group sales are from the UK and the European Union.

Some analysts wonder if the firm's international growth ambitions may cause overreach.

Its international sales growth of 14% is low relative to other divisions, working from a small base.

Asos was launched in 2000 and listed on London's AIM exchange in 2001. In 2010 it launched American, German and French sites.

The company, which targets people in their 20s, has also had to contend with the rise of Boohoo recently.

Its rival aims to provide fashion for teenagers and people in their early 20s, and its share price jumped 50% on flotation last month.

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Bedroom Tax Causing 'Hardship And Distress'

The Government's benefit reforms are causing "severe financial hardship and distress to vulnerable groups", a committee of MPs from across the political divide has said.

The removal of the spare room subsidy, labelled the 'bedroom tax' by some critics, sees social tenants with spare rooms receive reduced benefits.

But the changes mean that disabled people cannot easily move home, the House of Commons Work and Pensions Committee concluded.

Ministers have been urged to change the policy to exempt anyone whose home has been adapted for their disability, and those on higher levels of disability benefit.

Some carers living with disabled people are also struggling to help their loved ones as a result of the annual benefits cap of £26,000, according to the committee.

It recommends the cap should also not apply to homeless people who have no say in where they are given temporary accommodation or how much it costs.

The committee's chairman, Dame Anne Begg, said: "The Government has reformed the housing cost support system with the aim of reducing benefit expenditure and incentivising people to enter work.

The 'bedroom tax' was controversially introduced in April last year

"But vulnerable groups who were not the intended targets of the reforms and are not able to respond by moving house or finding a job are suffering as a result.

"The Government's reforms are causing severe financial hardship and distress to vulnerable groups, including disabled people."

The committee said discretionary housing payments (DHPs), which local authorities can award to those facing hardship, are not a solution for many claimants because they are temporary.

Dame Begg added: "Using housing stock more efficiently and reducing overcrowding are understandable goals.

"But 60% to 70% of households in England affected (by the policy) contain somebody with a disability and many of these people will not be able to move home easily due to their disability.

"So, they have to remain in their homes with no option but to have their housing benefit reduced."

A Department for Work and Pensions spokesman said: "Our reforms are necessary to restore fairness to the system and make a better use of social housing. Unreformed, the Housing Benefit bill would have grown to £26bn in 2013-14.

"We have given councils £345m since reforms came in last year to support vulnerable groups, especially disabled people.

"The removal of the spare room subsidy means we still pay the majority of most claimants' rent. But we are saving the taxpayer £1m a day which was being paid for extra bedrooms and are freeing up bigger homes for people forced to live in cramped, overcrowded accommodation."

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Nationwide - Home Prices Up 10% In Last Year

Average house prices have risen by nearly 10% in the last year, according to a property survey.

Nationwide said year-on-year prices were up 9.5% in March, the biggest annual jump since mid-2010.

The March figure was up on the 9.4% recorded in February and the 8.8% rise in January, the building society said.

The average house price in Britain reached £180,264 in March, it added.

The figure was still around 3% lower than the unadjusted inflation peak recorded by the lender in 2007.

Nationwide chief economist Robert Gardner said: "There is little doubt that the recovery in the housing market is now firmly established, with activity levels picking up and house prices recording their 15th successive monthly increase in March.

"(But) there are some tentative signs of moderation."

On Monday, the Bank of England (BoE) released mortgage lending data that showed approvals slowed in February, possibly reflective of the woolly weather across Britain.

Mr Gardner said a combination of greater credit availability, green shoots of growth and low mortgage rates were all boosting property demand.

However he warned of the continued lag of housing stock supply.

"The number of new homes being built in England is still around 40% below pre-crisis levels, and this was already insufficient to keep up with the increase in the number of households being formed," he said.

Last month, Chancellor George Osborne said the Government will extend its Help to Buy scheme of providing equity loans to buyers of newly built homes until the end of the decade.

BoE governor Mark Carney has played down suggestions that the housing market is overheating.

But the bank refocused its Funding for Lending scheme away from mortgage lending and dedicated it exclusively to business lending at the start of this year.

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Shares Up As FCA Clarifies Pension Probe

The City regulator has revealed that it will not individually review millions of pension and saving policies, prompting a share price rise for financial providers.

The Financial Conduct Authority (FCA) clarified the position in its 2014-15 business plan, released on Monday morning.

It comes after almost £2.5bn was wiped off the value of insurers on Friday.

The share price plunge followed comments by FCA director of supervision Clive Adamson to a newspaper about pensions started between the 1970s and the turn of the century.

The Daily Telegraph reported the FCA was planning an inquiry into 30 million policies sold during the period, valued at £150bn.

The chairman of the Commons Treasury Committee, Andrew Tyrie, described the fiasco as an "extraordinary blunder".

In its business plan the FCA said: "We will assess whether firms are operating historic - often termed 'legacy' or 'heritage' - products in a fair way and whether they have adopted strategies that exploit existing customers."

It added: "We have increased our focus on the market for retirement products, such as annuities, with the launch of a major competition study and work to tackle poor sales practices."

An FCA spokesperson told Sky News on Monday it would look into general business behaviour in the sector.

This would include how fairly legacy customers are treated compared with new policyholders, the quality of communications given and what exit fees are imposed.

As a result of the clarification, Britain's big insurance companies enjoyed a share price boost.

In late afternoon trades Resolution was up 1.38%, Aviva up by 1.68%, Legal & General eased but was still 0.63% up and Prudential was 0.23% higher.

Meanwhile, Sky News has learnt that the FCA will this week set out plans for an inflation-busting increase in its budget.

Sky's City Editor Mark Kleinman revealed that its annual funding requirement for 2014-15 would be just under £450m, approximately 3% above the £432.1m it said it required last year.

The increase, which is designed to cover the cost of delivering the regulator's new competition objectives, will hit the pockets of the biggest banks and insurance companies hardest.

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Osborne Pledges 'Full Employment' For UK

What Does 'Full Employment' Mean?

Updated: 2:35pm UK, Monday 31 March 2014

By Ed Conway, Economics Editor

George Osborne has today committed to "fight for full employment in Britain". But what does "full employment" actually mean?

The answer, as with so much else in the world of politics and economics, depends on who you ask.

According to those who drafted post-war jobs legislation in the 1940s, it meant "the maintenance of a high and stable level of employment". To economists these days it means the lowest level unemployment can get to before it starts pushing up inflation (though they prefer to call it NAIRU, the non-accelerating inflation rate of unemployment, which tells you just about everything you need to know about economists). Today the NAIRU is thought to be somewhere between 5% and 6%, though opinions differ.

To George Osborne, on the other hand, it means something very specific: attaining the highest employment rate among the Group of Seven leading developed economies.

That the Chancellor is able to apply an entirely new definition to something that sounds so specific is a cursory reminder: "full employment" has never quite meant what it sounds like. It has never meant eliminating unemployment, for one thing. Even John Maynard Keynes, one of the forefathers of the policy (in its post-war embodiment) never believed one could entirely wipe out unemployment, since even in a Utopian society people would still have time between jobs ("frictional unemployment", he called it).

For what it's worth, the Chancellor's pledge is quite ambitious – though not extraordinarily so. Britain's employment rate is 71.1%, which is fourth in the G7. If one uses alternative statistics the UK is actually joint-second, but either way, getting the rate up above Germany's 73.5% might be difficult, if not impossible.

Whether it makes economic sense for the Chancellor to adopt this target (ironically at the very same time as the Bank of England ditches its own unemployment target) is moot. But, frankly, it is probably not worth dwelling on for all that long. After all, as with so many of Mr Osborne's strategies, this move is about 90% political. And on that front, it's a fascinating move.

For it represents an audacious attempt to steal back a totemic political brand which has belonged to the Labour party for most of the past 70 years. As the Chancellor pointed out in his speech, "full employment" was first introduced into the UK system with the 1944 White Paper on Employment. That paper, which came at more or less the same time as the foundation of the state school system and the NHS, was a key plank of the post-war economic settlement. Alongside the new welfare state, the Government would commit to ensuring everyone with the capability and the desire would get a job. Though both Labour and Conservative politicians designed the original policy, it was the Labour party, from Clement Attlee onwards, which became most closely associated with it.

And when, in the 1970s, that post-war Keynesian settlement frayed amid cripplingly high inflation rates, the Conservative party swiftly washed its hands of the "full employment" policy altogether. Though Margaret Thatcher continued to carry round her own annotated copy of the 1944 White Paper in her handbag, the Tories had broken with it, as Nigel Lawson wrote in his memoirs.

"The twofold error of previous Governments," he wrote, "had been the commitment to full employment, come what may, and the false teaching of the neo-Keynesian economic establishment that the route to full employment was ever more monetary (and fiscal) expansion."

In short, the "full employment" branding became toxic. Though Labour has occasionally name-checked it in the years since, and John Major briefly flirted with it as a policy, it has rarely been regarded as a vote-winner in recent years.

All of which is what makes George Osborne's adoption of the term so intriguing. Whether it will be successful is another matter. "Full employment" has meant lots of things over the past seventy years, but the overriding (and ultimately negatively tainted) definition was the pursuit of high employment above almost all other considerations. George Osborne's definition is quite different – a high employment rate in comparison with other economies.

This is messaging, not policy. But you can't deny the boldness of the political objective: to underline the remarkable falls in UK unemployment (if not productivity) in recent years and to undermine Labour, which has always assumed ownership of the phrase.

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Royal Mail Sell-Off 'Cost Taxpayer Millions'

Taxpayers lost out on more than £1bn due to the Government's low valuation of Royal Mail shares during its privatisation, the National Audit Office has found.

The public spending watchdog concluded ministers showed "deep caution" when pricing the shares last year.

As a result, on the first day of trading alone, Royal Mail's new shareholders benefited to the tune of £750m - money which could have gone to the public purse.

Royal Mail shares, which were sold at 330p each, are now trading more than two-thirds higher than the price at which they were sold by the Government. Today they were trading at 565p.

The NAO report concluded the Business department should not have relied so heavily on their City advisers while the chairwoman of the Public Accounts Commitee Margaret Hodge accused Vince Cable's department of being "clueless".

The Government sold £2bn of shares in October, amounting to 60% of the company, and favoured priority investors such as Standard Life, Fidelity and BlackRock hoping they would be long-term investors.

Business Secretary Vince Cable has defended the sale

In the event, the 12 priority investors sold all or some of their holdings, making a significant profit, within the first few weeks of trading.

Amyas Morse, head of the NAO, said: "The department was very keen to achieve its objective of selling Royal Mail and was successful in getting the company listed on the FTSE 100. Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer.

"The Government retained 30% of the company. It could have retained even more and allowed the taxpayer to participate further in the rapidly increasing share price and thus limit the cost to the taxpayer."

The report does, however, say the Business Secretary was right to reject bankers' gold-plated valuations of Royal Mail of more than £9bn.

Defending the sell-off, Mr Cable said: "Achieving the highest price possible at any cost and whatever the risk was never the aim of the sale.

How the sale broke down

"The report concludes there was a real risk of a failed sale attached to pushing the price too high, and a failed sale would have been the worst outcome for taxpayers and jeopardised the operation of Royal Mail going forward.

"The report also comprehensively demolishes the argument that the Government should have relied on the price valuations of some banks who were pitching for the contract to sell Royal Mail.

"The NAO confirms we have protected taxpayers from the risk of needing to offer ongoing support to the company as well as safeguarding the vital six-day-a-week service that customers and businesses around the country rely on."

Critics of the sale have seized on the axing of 1,300 jobs and a hike in stamp prices in recent days as evidence of the folly of privatisation.

Royal Mail employees received 10% of the business

Unite national officer Brian Scott said: "This report is startling proof that the Government sold off the country's family silver on the cheap.

"The privatisation of Royal Mail was wrong in every way. The loser is the UK taxpayer and the tragedy is that money that should be flowing into the Treasury for schools and hospitals is going into the pockets of private investors."

Some 10% of Royal Mail was handed free to employees during the privatisation.

Taxpayers were left with a 30% stake that is now worth around £1.6bn.

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Under-Fire FCA Seeks Budget Hike From City

By Mark Kleinman, City Editor

The City regulator will set out plans for an inflation-busting increase in its budget this week, just days after sparking fury from insurers over the launch of a probe into some industry practices.

Sky News has learnt the Financial Conduct Authority (FCA) will say on Monday it has calculated an annual funding requirement for 2014-15 of just under £450m, approximately 3% above the £432.1m it said it required last year.

The news will be disclosed in the FCA's business plan, which will also set out some of the priority areas for its work during the next 12 months.

The increase, which is designed to cover the cost of delivering the regulator's new competition objectives, will hit the pockets of the biggest banks and insurance companies hardest.

Sources said they would be expected to foot a disproportionate chunk of the rise, which could further inflame tensions with insurers following Friday's announcement of a review of the treatment of life insurance policy-holders who have so-called closed accounts.

The FCA briefed one newspaper about the impending review by its supervisory division, which led to billions of pounds being wiped off the value of the major insurance companies whose shares trade in London.

Some, including Legal & General, issued statements during the day complaining that a false market had been allowed to develop in their stock.

Martin Wheatley of the Financial Conduct Authority

The FCA took more than six hours to issue a clarifying statement about the terms of its review, after which many of the companies affected saw their shares rebound.

After the stock market closed, the regulator issued a further statement in the wake of an emergency board meeting which is said to have been demanded by furious Treasury officials.

"The FCA Board acknowledges the concerns of the market regarding today's press coverage of the FCA's proposed supervisory work on the fair treatment of long standing customers in life insurance. The FCA put out a statement of clarification this afternoon," it said.

"The board will conduct an investigation into the FCA's handling of the issue involving an external law firm, and will share the outcome of this work in due course."

Reports on Sunday suggested the position of the FCA chief executive, Martin Wheatley, could be threatened by the fiasco, but several leading insurers and fund managers suggested privately they were prepared to await the outcome of the investigation before passing judgement.

The FCA's 2014-15 budget of more than £440m does not take into account the cost of regulating thousands of consumer credit providers, which will transfer to the auspices of the City regulator for the first time this week.

Sky News understands fees will be frozen for thousands of the smallest firms regulated by the FCA, with the minimum charge remaining at £1,000.

The big high street banks pay in the region of £30m each in fees, while major insurers fork out between £10m and £15m to the FCA.

Under changes implemented by George Osborne, the Chancellor, the FCA has to pay to the Treasury the financial penalties it levies rather than using them to reduce industry fees to the extent that occurred in previous years.

The FCA declined to comment on Sunday.

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Osborne: 'Biggest Tax Cuts In Two Decades'

Chancellor George Osborne is set to claim that UK workers and businesses will benefit from the biggest tax cuts in a generation.

Measures include the rise in the income tax personal allowance to £10,000, which comes into effect on Sunday, along with the employment allowance which cuts employers' National Insurance contributions by up to £2,000.

On Tuesday, the corporation tax rate will be cut by 1% to 21% and reforms to business rates will be introduced. The annual investment allowance for firms will be doubled to £500,000.

But the Chancellor will also highlight the introduction of a tough new welfare regime from next week "imposing more conditions on those claiming the dole".

In a speech later today, Mr Osborne will say that Sunday will be "the culmination of this week that sees the biggest reduction of business and personal tax in two decades".

However, he will say that "it's no good creating jobs - if we're also paying people to stay on welfare".

"We inherited a welfare system that didn't work. There was not enough help for those looking for a job - people were just parked on benefits.

Mr Osborne will deliver a speech in Essex later

"Frankly, there was not enough pressure to get a job - some people could just sign on and get almost as much money staying at home as going out to work.

"That's not fair to them - because they get trapped in poverty and their aspirations are squashed.

"It's certainly not fair to taxpayers like you, who get up, go out to work, pay your taxes and pay for those benefits.

"So if Tuesday is when we help businesses creating jobs; and Sunday is when we help hard-working people with jobs; next Monday is when we do more to encourage people without jobs to find them."

The welfare measures include the Help to Work scheme, which requires the long-term jobless to work for their benefits.

But shadow Treasury chief secretary Chris Leslie accused Mr Osborne of "giving with one hand, but taking away much more with the other".

He said: "Analysis of figures from the IFS (Institute of Financial Services) shows that households are already £900 a year worse off because of all tax and benefit changes since 2010."

He added: "Labour would deal with the cost-of -living crisis by freezing energy bills, cutting business rates for small firms and expanding free childcare for working parents. We also want to cut taxes for 24 million people on middle and lower incomes by introducing a lower 10p starting rate of tax."

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Home Sellers 'Getting 93% Of Asking Price'

Homeowners in all regions of Britain are now able to sell their properties at more than 93% of the asking price, according to a new survey.

Hometrack said the rate is even better in some areas, and has now reached a decade-long high in London.

It said sellers in London were obtaining 99.3% of the request price, while the average is typically 96.2%.

The property analysts said throughout England and Wales, houses remain on the market for less than two months before a sale is agreed - the lowest level since 2007.

While in London, the time on the open market is on average just 18 days.

It said March house prices climbed 0.6%, down fractionally on February's level of 0.7%.

Hometrack said prices were up 0.2% in Yorkshire, Humberside and the North West, and up 0.3% in the North East and West Midlands.

It said prices climbed by 0.4% in the East Midlands, 0.6% in Wales, by 0.7% in the South East and London, and by 0.8% in the South West and East Anglia.

Meanwhile, estate agents Knight Frank said London prices climbed 0.8% in March.

Hometrack research director Richard Donnell said: "The real driver of higher house prices is record low mortgage rates and strong demand from first-time buyers and investors who have no property to sell, which is compounding scarcity.

"With average mortgage rates currently at 3% or lower, compared to over 5% before the downturn, households have seen a significant boost to buying power."

New rules are due in April to ensure lenders are satisfied variable rate mortgagees are able to meet increased repayment rates when interest rates climb again.

It said cash buyers and investors make up 40% of the market and will not be affected.

Mr Donnell added: "The gap between supply and demand has been extended for the last five months and points to further price rises in the months ahead."

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RBS Raids Swiss Giant For New Finance Chief

By Mark Kleinman, City Editor

The taxpayer-backed Royal Bank of Scotland (RBS) is close to luring one of the architects of its £45.5bn taxpayer bail-out to become its new finance chief.

Sky News can exclusively reveal that Ewen Stevenson, who works for Credit Suisse, is in advanced negotiations about joining RBS at a critical time for the bank.

Mr Stevenson's appointment as RBS's finance director is subject to approval by the Prudential Regulation Authority (PRA), which insiders said on Saturday was expected within days.

His arrival at the bank, which is 81%-owned by UK taxpayers, will end a search that began last autumn when Nathan Bostock, the current finance director, resigned after just ten weeks in the role.

Mr Stevenson has been co-head of investment banking for Europe, the Middle East and Africa at Credit Suisse since 2012.

Ewen Stevenson currently works for Credit Suisse

Prior to that he ran the Zurich-based bank's global financial institutions group, and in 2008 he helped to draw up the rescue recapitalisations of RBS and Lloyds Banking Group undertaken by the then Labour government.

Assuming his appointment is confirmed, Mr Stevenson would complete an all-New Zealander executive line-up at the top of RBS following Ross McEwan's installation as chief executive late last year.

A source close to the situation confirmed that talks about Mr Stevenson's appointment were at an advanced stage, although they insisted that other candidates remained in the frame.

The new finance chief will have one of the fullest in-trays in British banking.

RBS, which lost more than £8bn last year, is expected to remain in the red for several more years as Mr McEwan and his team reshape the once-global business.

Under plans announced last month, RBS will refocus on UK personal and small business customers, with operations in dozens of overseas markets likely to be sold or closed.

Tens of thousands of jobs will be shed, while Mr McEwan has pledged to abolish teaser rates on banking products in an effort to win back customers' trust.

Chief among the challenges facing Mr Stevenson will be improving RBS's capital position in order to meet tough new standards imposed by regulators.

RBS's US retail bank, Citizens, this week failed a US stress test, potentially delaying its flotation or sale.

The PRA will conduct its own exercise later this year, with some analysts forecasting that RBS may need to raise further capital as it accelerates the run-off of billions of pounds of toxic assets.

Mr Stevenson's arrival at RBS will reunite him with his former Credit Suisse colleague, James Leigh-Pemberton, who now runs UK Financial Investments, the Treasury agency which manages taxpayers' stake in the bank.

Mr Stevenson's proposed pay deal at RBS will also attract attention, although he is likely to be substantially less well-rewarded in his new role than in his current berth.

RBS and Credit Suisse both declined to comment on Saturday.

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Wonga Chair Damelin To Quit As FCA Takes Over

By Mark Kleinman, City Editor

The co-founder of Wonga, the payday lender, is to step down as its chairman just months after handing over the reins as its chief executive.

Sky News has learnt that Errol Damelin is expected to leave Wonga later this year, although he could be persuaded to remain as a non-executive director pending the outcome of discussions with board colleagues.

Egon Zehnder International, the executive search firm, has been handed the task of identifying the new chairman, sources said on Saturday.

News of Mr Damelin's departure comes just days before responsibility for regulating short-term lenders such as Wonga passes from the Office of Fair Trading to the Financial Conduct Authority (FCA).

The co-founder's exit will be a significant moment in Wonga's history as it battles to persuade a hostile group of stakeholders that its business model is justified.

Mr Damelin, who orchestrated Wonga's sponsorships of Newcastle United and Blackpool, owns shares that would be worth hundreds of millions of pounds in the event of a sale or flotation of the company.

He is said by people close to Wonga to have been planning to step back for some time as the company makes the transition from being a data and technology-led company to a fully-regulated financial institution.

Jonty Hurwitz, the company's other co-founder, left its board last year, and also remains a major shareholder.

There are understood to have been tensions between Mr Damelin and other directors of Wonga, notably in relation to the company's future ownership.

Last autumn, Sky News revealed that Silver Lake Partners, one of the giants of the US technology investment sector, had made an approach to Wonga's management and shareholders about a takeover of the company.

Wonga is understood to have rejected the approach on the basis that it significantly undervalued the UK-based group, which has recorded rapid profit growth since it was set up six years ago.

Silver Lake is said to have been mulling a joint bid with Andreessen Horowitz, the early-stage investor in firms such as Facebook and Groupon that is regarded as one of the pioneers of Silicon Valley's investment industry.

The decision not to pursue the offer is said to have sparked disagreement among some directors and investors.

Wonga last year reported a further surge in annual net profit to £62.5m, buoyed by growth at its UK and international operations, underlining its status as one of the UK's most successful technology start-ups.

Its robust financial performance has, though, complicated Wonga's expansion drive.

Referring to the Church of England's desire to participate in the growing credit union movement, Dr Justin Welby, the Archbishop of Canterbury, said he had told Mr Damelin that he wanted to "compete [the company] out of existence".

The remarks sparked acute embarrassment for the Archbishop, however, when it emerged that the Church of England's pension fund was among the investors in one of Wonga's financial backers.

Wonga has sought to counter many of the criticisms levelled at payday lenders by pointing out that it only makes short-term loans to consumers and highlighting the fact that it only lends money to consumers who have been subjected to credit-checks. Customers can also repay loans early with no additional charge.

Last year, the payday lending sector was referred to the Competition Commission amid political anger about the activities of some short-term lenders.

Next Tuesday, the industry will come under the remit of the FCA, which will have powers to ban advertising and impose a cap on interest rates charged by lenders.

In remarks published on its website last summer, Wonga said:

"Since 2007 Wonga has responsibly lent over £2bn and we now have over a million customers.

"We've done that despite declining three quarters of all first loan applications and ensuring a principal default rate (money lent that we don't get back) of around 7%. This is comparable to other forms of short-term credit, such as credit cards.

"We work hard to lend only to the people who can pay us back, and our mainstream services for individuals and businesses are now available across three continents."

The record profits have fuelled speculation that Wonga's management and shareholders will look to float the company on New York's Nasdaq technology stock exchange, although such a move is unlikely in the near term.

The task of finding a new chairman will also not be easy given the political headwinds facing the industry.

Mr Damelin was replaced as chief executive last year by Niall Wass, formerly the chief operating officer.

Wonga declined to comment.

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Network Rail Admits Punctuality Failures

Network Rail has said it is "disappointed" at not hitting its punctuality targets amid reports the firm is expected to receive a record fine for failing to ensure services run on time.

A spokesperson for the operator of Britain's rail infrastructure told Sky News: "Passengers are not currently experiencing the very high levels of train punctuality we had promised.

"While we have been successful in making our infrastructure more reliable, it hasn't been enough to offset the difficulties caused by excessive congestion or bouts of extreme weather.

"Missing our regulatory targets for punctuality is disappointing and our focus for the coming five year period is to restore record levels of performance and spend and invest some £38bn in our railways targeting the busiest parts of our network to relieve congestion and provide more trains, more seats and quicker, greener journeys."

According to the Sunday Telegraph, Network Rail is braced to be fined around £70m from the Office of Rail Regulation after admitting it has failed to ensure that Britain's trains run on time.

The company is expected to tell regulators on Monday that only 89.9% of trains are currently reaching their destination on time, or less than 10 minutes late.

Official targets say 92.5% should arrive on time.

Robin Gisby, Network Rail's managing director of network operations, told the Sunday Telegraph that growth in demand from passengers had spiralled beyond all expectations in recent years, leaving his organisation "playing catch up".

Projects planned and funded five years ago to improve punctuality by upgrading rail infrastructure and increasing capacity had been outstripped by the rise in passengers, he added.

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