BA Owner IAG Announces Profits Of £182m

International Airlines Group, the owner of British Airways and Iberia, has announced a half year operating profit of £182m (€230m).

The company says the results are £208m (€230m) better than 2013, when it made a £26m loss.

IAG's chief executive, Willie Walsh, told Sky News the turnaround in Iberia had been "stunning" and said it was buying eight Airbus A350-900 aircraft for the airline, as well as eight A330-200 planes.

Mr Walsh said: "Iberia has taken significant steps to restructure its business and the progress made so far means that we can bring new long haul aircraft into the airline's fleet.

"These orders demonstrate our commitment to make Iberia competitive."

More than 3,000 jobs have been cut at the Spanish airline and nearly 1,600 more losses have been announced.

IAG's second quarter operating profit was £301m (€380m), up some £107m (€135m) on last year, as the lucrative spring and summer seasons deliver a big increase in passenger numbers.

Thousands of jobs have been cut at Spanish carrier Iberia

Mr Walsh also told Sky that BA and Iberia were both taking action over the current outbreak of the ebola virus in some African countries.

"Anyone flying into the areas is provided with a briefing from our health services," he said.

"That's a comprehensive briefing which outlines all the issues that people should be aware of.

"I'm satisfied that the measures at the airports where outbreaks have been identified are working, and are working well."

Mr Walsh also defended baggage handling company Swissport, which has been criticised over problems at Gatwick Airport.

Some passengers have faced long delays collecting their bags, with some told to go home without them.

He said: "I think Swissport is a good company - they provide us with services around the world ... To be fair to them, it's not all their fault because Gatwick was affected by some adverse weather which meant schedules were running well off plan and aircraft were arriving at a time where they did not have resources in place.

"I apologise to any of our customers who've been affected by the services provided to us by Swissport.

"But ... all the handling agencies at Gatwick are working to ensure all that all of our customers, and customers of other airlines can get away on their holidays."

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Lloyds' Libor Fine To Help Armed Forces

Millions of pounds of fines imposed on Lloyds Banking Group for manipulating lending rates will go to military good causes.

The Prime Minister, along with the Chancellor George Osborne, made the announcement on a visit to a Royal Marines base in Poole, Dorset.

"Lloyds bank have been fined £100m for manipulating the market," Mr Osborne said.

"That is a terrible thing to have done but I'm making sure the money is being put to good use.

"It's going to help soldiers returning with injuries, to make sure they get long-term care; it's going to help families while their loved ones are away in the military.

"In other words, people who have demonstrated the worse of values in the City are going to be supporting those who've demonstrated the very best of British values in the Armed Forces."

Lloyds apologised for manipulating the Libor rate

The UK's Financial Conduct Authority (FCA) fined Lloyds £105m, and it was also heavily fined by US regulators, with the overall penalty coming to £218m.

Lloyds manipulated Libor - the interest rate banks charge one another - and also tried to rig fees payable to the Bank of England under a scheme supporting banks during the financial crisis.

The Libor rate - the basis of trillions of dollars of financial transaction - is set daily and is also a reflection of an institution's credit worthiness.

So if it is low, the perception is a bank is a safe bet to deal with.

The implication is that during the 2008 bank crisis the rate may have been manipulated to make some banks look healthier than they were.

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

It said: "The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings."

More than £2bn has now been paid by banks globally to regulators over alleged manipulation, including £390m by RBS.

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High Street Revival 'Has Shown Little Impact'

By Frazer Maude, Sky News Correspondent

The self-titled "Queen of Shops" has come under fire after her Government-backed bid to revive the High Street has shown little impact.

Wolverhampton was one of 12 town centres chosen to pilot retail guru Mary Portas' High Street revival. It got a £100,000 share of the £1.2m in funding.

That helped finance the opening of five retail outlets. Three of them have been a success, one has diversified, and the fifth went under.

Nick Pitt, manager of the local shopping centre, chaired the Wolverhampton Portas Project. He sees it as a success for the town centre.

"A hundred thousand pounds is good value. And it rallied businesses around to come together in a very selfless way to help people get into business," he told Sky News.

"It was quite a humbling experience. I see people who'd never had the opportunity before to have their own shop and now they have.

"And those people are still helping us now to help other people get into business. And we're determined to do it again."

The celebrity trouble shooter was brought in by the Government two years ago to breathe new life into our struggling High Streets.

But some of her key recommendations, like a reduction in business rates and free parking, were ignored.

Some £1.2m in funding was set aside two years ago to boost business

Labour MP and chair of the Government's Business Select Committee, Adrian Bailey, is critical of the scheme, saying: "Overall, and I would emphasise it time and time again, you will not change the basic problems of the High Street just by putting in these sort of pilots.

"You've got to change the business rates and those obstacles which are deterring people from moving into the High Street in order to provide an imaginative variety of retail offers that people will want to buy into."

Mary Portas was not available for interview, but her CEO David Wood issued a statement to Sky News on her behalf.

It said: "We think there's some justified criticism of the way Government originally implemented the programme and the lack of infrastructure to support the town teams.

"There's also justified criticism of the way the majority of the recommendations were accepted but nothing was done - for example we spoke in the report about parking, business rates, landlords, town-centre-first planning approvals and the like but little was done."

Penny Maudaunt, the newly appointed High Streets Minister, says the scheme has been successful.

"There has been a huge amount of really good work that's gone on locally," she said.

"The pilots have been experiments. There have been a lot of good ideas, some ideas that may not have worked so well, but there are a number of ideas that have worked very well for particular areas and what we have to do is replicate that in other High Streets."

But many businesses say the areas that need tackling are the very ones that Ms Portas highlighted months ago, and which the Government ignored.

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US Shares Tumble Amid Weak Corporate Results

US stocks have tumbled about 2%, in a major sell-off following lacklustre US corporate earnings.

The approaching end of the Federal Reserve's economic stimulus, weak eurozone data and the Argentine debt default were also blamed for the slump.

The Dow Jones Industrial Average tumbled 317.06 points (1.88%) to 16,563.30, erasing all its gains this year.

The S&P 500 sank 39.40 (2.00%) to 1,930.67, a seven-week low.

The Nasdaq, meanwhile, plummeted 93.13 (2.09%) to 4,369.77.

The rout followed anaemic earnings from companies such as Whole Foods Market, Kraft Foods, Nike, ExxonMobil and Chevron.

Shares in tech giants such as Apple, Facebook and Google also took a hit.

The CBOE Volatility index, sometimes referred to as Wall Street's fear gauge, jumped 27.2% to close at 16.95, its highest level since April 11.

European stock exchanges fell earlier on Thursday after eurozone data renewed deflation fears.

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BA Owner Reveals Half Year Profits Of £182m

International Airlines Group, the owner of British Airways and Iberia, has announced half year operating profit of £182m (€230m).

The company says the results are £208m (€230m) better than 2013 when it made a £26m loss.

IAG boss Willie Walsh told Sky News the turnaround in Iberia had been "stunning" and said it was buying eight Airbus A350-900 aircraft for the airline, as well as eight A330-200 planes.

Mr Walsh said: "Iberia has taken significant steps to restructure its business and the progress made so far means that we can bring new longhaul aircraft into the airline's fleet. These orders demonstrate our commitment to make Iberia competitive."

More than 3000 jobs have been cut at the Spanish airline and nearly 1,500 more losses have been annouced.

IAG's second quarter operating profit was £301m (€380m), up some £107m (€135m) on last year, as the lucrative spring and summer seasons deliver a big increase in passenger numbers.

More follows...

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RBS Warns Over 'Adverse Impact' Of Independence

RBS has said Scottish independece could have a "material adverse impact" and "significantly impact its credit ratings".

Sources say it is but a re-statement of the position set out in the bank's full-year results and annual report.

The referendum on Scottish independence takes place next month, on September 18.

The bank - 80% owned by the taxpayer - said earlier this year in its annual report that "uncertainties" of a 'Yes' vote "could also impact the fiscal, monetary, legal and regulatory landscape to which the Group is subject".

The report continued: "Were Scotland to become independent, it may also affect Scotland's status in the EU.

"The occurrence of any of the impacts above could significantly impact the Group's costs and would have a material adverse effect on the Group's business, financial condition, results of operations and prospects."

Sky News understand that at least two UK banks are also said to be discussing internally the prospect of warning over the implications for payments systems and infrastructure if Scotland votes to break away.

Britain's two state-backed banking giants are also stepping up talks with the Bank of England about contingency planning ahead of September's referendum.

As reported last week, some executives at Lloyds Banking Group and Royal Bank of Scotland (RBS) are advocating a scenario under which the central bank would make a public statement ahead of September's vote guaranteeing deposits and liquidity.

Insiders said that Lloyds and RBS, which are 25% and 80%-owned by British taxpayers respectively, have told Bank of England officials at recent meetings that they are keen for it to do so.

Both banks are headquartered in Scotland.

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'Vultures Force' Argentina To Second Default

The failure of negotiations between Argentina and two hedge funds has seen the country default on its debts for the second time in 13 years.

The funds - NML Capital and Aurelius Capital Management - had refused to accept a reduction in what they were owed, preventing a deal being struck.

They had spent the last two days locked in talks in New York with a US court-appointed mediator as they sought a compromise, but a deal was not reached by a Wednesday midnight deadline.

The South American country owes the hedge funds around £1.5bn (£0.9bn) and owes another group of creditors $539m million (£318m).

Argentine economy minister Axel Kicillof held firm to his government's position that it could not accept a deal with hedge fund creditors it described as "vultures."

President Cristina Fernandez de Kirchner calls hedge funds 'vultures'

Argentina previously said it wanted to pay the second group an agreed amount but an American judge blocked the payment unless it also paid the two US hedge funds the full amount it owes them at the same time.

Argentine President Cristina Fernandez de Kirchner had long refused to negotiate with hedge funds because of how they treated the country after the last major default.

Court-appointed mediator Daniel Pollack said a default could hurt bondholders who were not part of the dispute as well as the Argentine economy, which is suffering through a recession, a shortage of dollars and one of the world's highest inflation rates.

"The full consequences of default are not predictable, but they are certainly not positive," Mr Pollack said.

Ratings agency Standard and Poor's had already placed Argentina in "selective default".

Mr Kicillof was described as being furious, and said the money was available but had been frozen as a result of the court order by US District Judge Thomas Griesa.

Argentina's economic woes have prompted protests

"Who believes in the ratings agencies? Who thinks they are impartial referees of the financial system?" he said.

"Argentina paid. It has money. It is going to continue to pay. The one who is responsible for this situation is Judge Griesa."

President Fernandez also described the hedge fund creditors, often calling them "vultures" for picking on the carcass of the country's record $100bn (£60bn) default in 2001.

There was no immediate reaction from the hedge funds.

Analysts said a default would deepen the economic malaise gripping Argentina which has resulted in soaring inflation and increased unemployment.

Its 2001 default, the largest in history at the time, plunged Argentina into an economic and social crisis that it is still battling to overcome.

The default may increase pressure on Ms Kirchner to seek political and economic solutions to Argentina's problems, in a region where the country is in dispute with the UK over the ownership of the Falkland Islands.

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Lloyds Banking Group Takes New £600m PPI Hit

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

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

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

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

The bank now expects expects a slow down in complaints in the future.

Chief executive Antonio Horta-Osorio said: "We continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity, by investing in the products and services our customers need and further strengthening and de-risking our balance sheet, reducing costs and increasing efficiency."

More follows...

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British Gas Half-Year Profit Squeezed By 26%

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

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

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

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

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

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

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

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

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

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

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

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

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

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Watchdog To Confirm Bank Bonus Clawback Plan

By Mark Kleinman, City Editor

The UK banking watchdog will confirm on Wednesday that it is introducing the world's toughest rules for clawing back bankers' pay, even as it offers a fig-leaf to the industry by dropping some of its most punitive proposals for reform.

Sky News has learnt that the Bank of England's Prudential Regulation Authority (PRA) will announce that bonuses paid by the biggest banks operating in the City will be subject to a period of clawback lasting for at least seven years from the point of award.

This will allay fears that clawbacks would begin only when three year or five year bonus deferral periods have ended, which would have meant that bankers faced at least a decade before they could be certain that variable pay was not at risk of being reclaimed by their employers.

The PRA will also disclose that it has also abandoned a proposal contained in a consultation paper published in March for the new rules – which come into effect on January 1 next year – to be applied retrospectively.

Under its original plan, the regulator wanted firms to claw back pay awarded prior to next year but with a six-year limit in accordance with a statute of limitations for employment contracts.

A senior lawyer who spoke to Sky News on condition of anonymity said they had been briefed that the draft rules applying to awards made before 2015 would not be included in the final clawback policy statement to be published by the PRA on Wednesday.

Concerns about the legality of the six-year limit had been overcome, allowing the PRA to propose a longer clawback period, the legal source said.

The new framework for clawing back bankers' pay will be the toughest in the global banking industry.

It is expected to trigger claims from London-based international banks that they will be placed at a significant disadvantage in overseas financial centres, where foreign rivals will not be subject to the same stringent rulebook.

However, the PRA's revised plans suggest that it has heeded some of the industry's warnings about the enforceability of its original proposals.

Senior bank executives are also likely to be privately relieved at the reduction in the overall period in which bonuses are at risk, and at the decision to abandon retrospective application.

Sources said the new rules would apply only to so-called code staff – defined by regulators as bank employees who take material risks – and only to level one and two firms, which are the biggest in the sector.

As Sky News revealed earlier on Tuesday firms will be required to amend the employment contracts of affected staff.

The PRA has, though, decided that the circumstances in which clawback must be applied are narrower than those outlined in its consultation paper in March.

Sources familiar with the matter said the final rules would be limited to misconduct or misbehaviour by individuals, and a material failure of risk management by the firm or business unit where the employee worked.

An earlier proposal to also apply clawback where there has been a material downturn in financial performance is understood to have been dropped.

The Bank of England declined to comment on Tuesday.

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Barclays Ups PPI Mis-Sell Provision By £900m

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

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

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

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

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

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

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

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

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

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

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

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

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

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Ofgem Pledge 'Will Reduce Electricity Bills'

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

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

The proposals, which will be consulted upon for eight weeks, are set to come into effect in April 2015 and run until 2023.

They will affect five out of the six energy companies: UK Power Networks, Northern Power Grid, SP Energy Networks, SSE Power Distribution and Electricity North West.

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

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

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

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

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

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

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

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BP Warns Of Impact Of Sanctions On Russia

Oil giant BP has voiced fears that any further international sanctions imposed on Russia could have an "adverse impact" on the company.

It said the plan to tighten economic restrictions by the west, over the ongoing Ukraine crisis, may harm its relationship and investments in Russia's state-owned oil firm Rosneft.

The comments from BP come as it released its second quarter results, showing a profit of $3.635bn (£2.14bn).

The 28-member European Union is set to finalise a new raft of measures on Tuesday to block Russian banks' access to its markets. New sanctions have also been imposed by Japan, which Russia's foreign ministry said would harm their bilateral relations.

BP owns 19.75% of Rosneft, which is Russia's largest oil company, and the source for almost 9% of its annual profits.

BP is a top-tier FTSE 100 firm and a key company for UK pension funds to invest in.

In 2011 BP signed an Arctic exploration deal with Rosneft

On Monday, Russian foreign minister Sergei Lavrov said his country had no intention of imposing tit-for-tat sanctions.

Mr Lavrov said: "I assure you, we will overcome any difficulties that may arise in certain areas of the economy, and maybe we will become more independent and more confident in our own strength."

His comments came as a panel of judges in The Hague ordered the company to pay $50bn (£29.4bn) in damages to shareholders of the now defunct oil firm Yukos.

They said that officials under President Vladimir Putin manipulated the legal system to bankrupt Yukos, which was formerly owned by Mikhail Khodorkovsky.

Yukos, once Russia's largest oil company, was broken up after Mr Khodorkovsky was arrested in 2003.

It was declared bankrupt and auctioned off - with Rosneft buying most of its assets.

Rosneft said that it expected no claims to be made against the company in connection with the Hague court ruling, which Russia contests.

It said it was not a defendant in the case and that the ruling would not have a negative impact on its "commercial activity and assets".

On Tuesday, Russia's foreign ministry announced that new sanctions imposed by Japan would harm their bilateral relations.

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Lloyds 'Risks Criminal Action' In Rigging Case

The Bank of England (BoE) governor has warned Lloyds Banking Group that "clearly unlawful" conduct over fee manipulation may amount to criminal behaviour as it was fined more than £200m.

Some £70m of the penalty related to efforts by Lloyds to rig fees payable to the BoE under a taxpayer-backed government programme aimed at supporting banks during the financial crisis.

In a letter dated July 15, Mark Carney told Lloyds chairman Lord Blackwell that attempts to reduce payments under this special liquidity scheme (SLS) were "reprehensible".

Mr Carney criticised attempts to reduce Lloyds' payments to the SLS scheme

Lloyds was fined a total of £218m by UK and US regulators over manipulation of the critical global interest rate Libor benchmark and the repo rate - used to calculate fees due to the BoE for its support.

It has also paid a £7.76m compensation figure to the BoE over the now-defunct SLS.

The UK regulator, the Financial Conduct Authority (FCA), fined Lloyds £105m, while the US Commodity Futures Trading Commission (CFTC) fined Lloyds £62m and the US Department of Justice penalty was £51m.

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

MPs pursued the issue of Libor-fixing with BoE officials in 2012

It said: "The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings."

The CFTC said the "unlawful conduct of Lloyds" undermined the integrity of Libor, which is the basis of trillions of dollars of financial instruments.

The FCA said the SLS manipulation happened between April 2008 and September 2009.

The regulator said more than a dozen individuals at Lloyds, including seven managers, were directly involved in or were aware of, the Libor manipulation.

Barclays was the first bank implicated in rate-fixing of Libor

Lloyds would have been hit by a 30% larger FCA fine if it did not settle at an early stage.

More than £2bn has now been paid by banks globally to regulators over alleged manipulation, including £290m by Barclays and £390m by RBS.

FCA director of enforcement and financial crime Tracey McDermott said: "Colluding to benefit the firms at the expense, ultimately, of the UK taxpayer was unacceptable."

On Friday, Sky News City Editor Mark Kleinman revealed the 25% taxpayer-owned group would seek to clawback bonuses paid to at least 15 former employees implicated in the inter-bank rate scandal.

The BoE said the latest case demonstrated the need for the Fair and Effective Markets Review, launched last month, which aims to restore public confidence in financial markets.

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House Prices Force Adults To Live With Parents

By Gerard Tubb, North Of England Correspondent

Millions of young workers have been dubbed the "clipped wing generation" because they are forced to live with their parents by rising house prices.

Housing charity Shelter has published census data showing almost two million workers aged 20-34 in England alone - a quarter of the total - are living with parents or grandparents.

A YouGov poll found 48% of them say housing costs are to blame.

At the Coast and Country Housing Association headquarters in Redcar, out of 11 people working in one office, nine were aged 20-34 and four of them were still living at home.

Laura Wood is living at the family home while she saves up for a deposit

Laura Wood, 26, moved back into the family home after graduating and has lived there ever since while she saves up for a deposit on a house.

"It's obviously difficult when you mum's still asking what time are you going to be in, where are you going what are you doing, so I don't feel like I'm 26 half of the time," she said.

Her co-worker Liz Wilson, 65, still has her 30-year-old son living at home and says the problem of unaffordable housing is forcing her to stay at work.

"I can't retire because we have to provide a larger property for him to have his own room, his own space, and as such we can't downsize," she said.

Unaffordable housing is forcing Liz Wilson, 65, to stay at work

Campbell Robb, Shelter's chief executive, accused the Government of not doing enough to help.

He said: "The 'clipped wing generation' are finding themselves with no choice but to remain living with mum and dad well into adulthood, as they struggle to find a home of their own.

"Rather than pumping more money into schemes like Help to Buy, we need bolder action that will meet the demand for affordable homes and not inflate prices further."

In a statement, Housing Minister Brandon Lewis said measures including the Help to Buy scheme were addressing the issue.

"We're determined to ensure anyone who works hard and wants to get on the property ladder has the help they need to do so," he said.

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Former CBI Chief To Aid Osborne Markets Probe

By Mark Kleinman, City Editor

A trio of heavyweight figures including a former head of the CBI will this week be appointed to scrutinise a Government-led probe into financial markets launched in the wake of a string of major trading scandals.

Sky News can reveal that Sir Richard Lambert, who ran Britain's biggest employers' group until 2011, is to be an independent member of the Fair and Effective Markets Review, which was disclosed by George Osborne, the Chancellor, in June.

Sir Richard will be one of three independent members of a practitioners' panel to be chaired by Elizabeth Corley, chief executive of Allianz Global Investors, one of the world's biggest fund managers.

The other independent members, who will examine the panel's work, will be Gay Huey Evans, a former Barclays executive and one-time chairman of the International Swaps and Derivatives Association; and Jonathan Moulds, who previously ran the European operations of Bank of America Merrill Lynch.

The Bank of England is expected to announce their involvement in the next few days, according to a person close to the situation.

Sir Richard's involvement comes just weeks after he recommended the creation of a new body to improve standards in the UK banking industry in an attempt to restore trust in it.

He and the other independent members will oversee the work of a group of serving City executives whose input is seen by the Treasury as crucial to restoring the international reputation of London's financial markets.

Mark Carney and George Osborne at the Mansion House in June

A number of sub-groups will be formed to examine different areas of financial sector activity, with the international competitiveness of the UK likely to be an important preoccupation for those involved.

Major banking groups have been hit by massive fines during the last two years, dealing a blow to the industry's efforts to rehabilitate its image in the aftermath of the global financial crisis.

Lloyds Banking Group, which is part-owned by UK taxpayers, is expected to announce on Monday that it is to pay more than £200m for its role in the Libor rate-rigging affair.

Banks and other financial institutions have also faced penalties for misconduct in setting benchmark prices for commodities and product mis-selling, while a major inquiry into fraud in foreign exchange markets is expected to result in huge fines later this year.

Among the objectives of the new investigation will be to inform the broader international debate about trading practices.

The Chancellor is determined to be viewed as a hardliner on City miscreants, and has already said that he wants to make the manipulation of financial benchmarks a criminal offence.

In his Mansion House speech in June, Mr Osborne said the Fair and Effective Markets Review would form an important element of moves to improve conduct in banking.

"The integrity of the City matters to the economy of Britain. Markets here set the interest rates for people's mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy.

"I am going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them."

Mark Carney, the Governor of the Bank of England, said the probe would help the City to "build true markets...that are open and transparent, where access extends beyond a privileged few, and where all who wish to trade have common information and commonly accessible prices".

The review will also be jointly led by the Financial Conduct Authority, whose chief executive, Martin Wheatley, said: "Confidence and trust are critical to financial markets – and robust, reliable benchmarks are the bedrock of market integrity.

"I welcome this review, which will ensure that key markets operate with the highest standards of integrity."

The Treasury and Bank of England declined to comment on the names of those involved in the review.

None of the independent members of the practitioners' panel could be reached for comment.

The review is expected to report back by the end of summer next year.

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Delays Expected Over Passport Staff Strike

Would-be travellers waiting for new passports are at risk of further delays as Passport Office staff go on strike today.

Members of the Public and Commercial Services Union (PCS) are walking out over staff shortages and pay issues, dating as far back as 2010.

Last month, the Home Office redeployed hundreds of staff to deal with a backlog of 30,000 applications, with some people waiting up to two months for passports that are meant to be processed within three weeks.

It said that about 360,000 passport applications are currently going through the system.

Appearing before a committee of MPs in early July, Passport Office chief executive Paul Pugh said 170,000 passports were being issued each week, and he expected the number to increase by 10,000 a week "over the summer".

A worker revealed the scale of the passport processing backlog in June

The Passport Office said it had faced the highest demand in applications for the last 12 years.

But PCS general-secretary Mark Serkwotka said: "The staffing crisis in the Passport Office has been obvious for everyone to see and it shouldn't have taken a committee of MPs to force the chief executive to meet us to discuss it.

"We are still a long way off getting a commitment from the agency that it will work with us to put the proper resources in place to ensure these backlogs do not reoccur year after year."

In June, the Passport Office boss admitted there are 480,000 passport applications "outstanding", as union representatives said the agency had "lost control" of the backlog.

Mr Pugh told the Home Affairs Select Committee they had received 3.6 million passport applications since January this year, which was significantly higher than usual.

The passport backlog controversy went viral on social media in June, after a worker posted pictures of the scale of the delay in the Liverpool office.

Home Secretary Theresa May then suggested the Passport Office may be brought under the control of Home Office ministers.

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National Parks To Be Protected From Fracking

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

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

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

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

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

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

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

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

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

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

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

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

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

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UK Economy Emerges From Six-Year Downturn

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

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

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

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

Consumer spending is still driving growth

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

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

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

The construction sector was damaged by a weak May

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

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

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

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

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

Ed Balls accuses ministers of creating a cost of living crisis

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

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

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

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

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

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

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

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

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

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

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

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

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Housing Shortage Sees More Tenants Evicted

By Mark White, Home Affairs Correspondent

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

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

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

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

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

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

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

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

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

The number of tenants seeking help over eviction has nearly doubled

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

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

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

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

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

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

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

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

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

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Gatwick Passengers Suffer Baggage Delays

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

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

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

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

"Baggage operations are now returning to normal."

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

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

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

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

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

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

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

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

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