Tesco Appoints New Chairman 'At Critical Moment'

Troubled supermarket Tesco has appointed John Allan as its new chairman, replacing Sir Richard Broadbent.

Mr Allan, who takes up his role on 1 March, is currently on the boards of electrical retailer Dixons Carphone and Royal Mail but will step down from those posts.

He said of the Tesco job: "I'm very pleased to be taking on this role at such a critical moment for the business and look forward to working with the new executive team and the board."

Mr Allan will be paid £650,000 a year as part of a three-year contract with Britain's biggest supermarket chain.

He is also chairman of property company Barratt Developments and payment processing firm Worldpay, but is expected to continue in those roles.

Video: 8 Jan: Tesco Boss On Turnaround

Sir Richard announced his resignation in October after a £263m accounting blunder involving rebates to suppliers.

The fall-out from the affair led to the suspension of eight executives, and a shake-up of Tesco's commercial practices that partly caused a £500m profit warning in December.

Tesco's sales have also been hit, with the company facing tough competition from discount stores like Aldi and Lidl.

Under Tesco's new chief executive Dave Lewis, the firm has cut jobs, introduced price reductions across hundreds of lines, and said it would close 43 loss-making stores.

It has also scrapped plans to build 49 more shops.

Video: Tesco: Difficult Changes Are Ahead

Last week, industry figures suggested Tesco had returned to sales growth for the first time in a year.

Statistics for the 12 weeks ending 1 February by Kantar Worldpanel showed a 0.3% increase in sales compared to the same period last year, with the chain attracting an additional 236,000 shoppers.

However, it was not all good news for Mr Lewis, who took over in September following the departure of Philip Clarke.

Despite the increase in sales, Tesco's overall market share fell to 29%, down by 0.2 percentage points compared with last year as the effects of the supermarket price war continued to be felt.

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Rolls-Royce To Develop Sports Utility Vehicle

The luxury carmaker Rolls-Royce has announced it will develop its first sports utility vehicle (SUV) designed to "cross any terrain".

The announcement was made via an open letter from Rolls-Royce chairman Peter Schwarzenbauer.

The company has revealed few details about the new model, but said it decided to develop a luxury off-roader following consultations with clients.

"Many discerning customers have urged us to develop this new car - and we have listened," the company said in a statement.

"At Rolls-Royce Motor Cars we are uniquely focused on the desires of our customers and are driven by our own thirst to innovate.

Jaguar Land Rover announced the development of its first SUV in January

"So we challenged our engineers and design team, led by director of design Giles Taylor, to create a different and exceptional new car."

The vehicle will be developed at the company's base in Goodwood.

Video: What's All The Fuss About?

Rolls-Royce has gradually expanded its range of vehicles beyond luxury limousines such as the Phantom model, released in 2003.

The smaller Ghost II became available in late 2014, and the Wraith Coupe entered showrooms in 2013.

Last month, Jaguar Land Rover announced the creation of 1,300 new jobs after the company said it would develop its first SUV vehicle in Britain.

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1. Gallery: Rolling Back The Years

   The first design sketches of a new Rolls-Royce to be launched in 2010 have been released by the luxury car company. Known as the RR4, the new vehicle will be smaller than the existing Phantom and will be powered by a new engine unique to Rolls-Royce.

It's a far cry from the oldest-surviving Rolls. This 1904 10 horsepower two-seater dates from the company's first year of production.

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Energy: Big Six Profit From Switching Failure

A competition inquiry into the energy market has found suppliers routinely charging loyal customers up to £234 more per year.

The Competition and Markets Authority's (CMA) update on its continuing probe into the sector also contained criticism of the energy regulator's powers - as reported by Sky News on Tuesday evening - saying excessive regulation at Ofgem may be creating barriers to new market entrants.

The key finding in the CMA's updated Issues Statement for consumers concerned the power of switching supplier, with the regulator declaring that long-term customers - many of them vulnerable - were paying a higher price for failing to move between energy companies.

It said 95% of dual fuel customers of the so-called big six suppliers could have saved an average of between £158 and £234 a year by switching.

It found that the big six - British Gas, SSE, Scottish Power, E.ON, npower and EDF - earned 12% more from a customer on a standard - instead of fixed - dual fuel tariff.

Video: Should You Trust Comparison Sites?

The CMA said those on the cheapest fixed rates could save up to £235 annually across the whole market.

The report stated: "The evidence that we have seen to date also suggests that the gross margins that the six large energy firms earn are higher for customers on the SVT (Standard Variable Tariff) than for those on non-standard tariffs over the last three years." 

While the Issues Statement does not contain any formal conclusions by the CMA, the ongoing designation of industry regulation as a key focus will embarrass Ofgem at a time when its leadership is under intense political pressure.

Labour has vowed to freeze prices for 20 months if it wins the General Election in May, a pledge which sparked fury among big six suppliers.

They recently cut standard gas tariffs by up to 5.1% in response to a 30% dip in wholesale prices but argue raw energy makes up less than 50% of a bill and they have to pay up to three years up front for their supplies.

They point to the growing cost of green levies and network costs.

Crucially for the big six suppliers, the CMA found that their average profit margin across gas and electricity is 3.3%, with gas being the more profitable of the two.

But the report questions whether the market is working for consumers as almost half of households have been with the same supplier for more than 10 years.

This week, the Government launched a campaign with the slogan "Power To Switch", which is designed to encourage consumers to shop around to find cheaper energy deals.

More follows...

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London Population Growth Drives Homebuyers Out

By Jonathan Samuels, Sky News Correspondent

London's population is set to reach a record high of 8.6 million people, with housing expected to be a major General Election issue.

With limited space and prices that have gone through the roof, one survey suggests bricks and mortar could be as significant as the NHS in the ballot this May.

According to research by estate agents Your Move and Reeds Rains, one in six tenants (16%) say housing say housing is the issue most likely to affect their vote.

Sky News visited what has been billed as the smallest house currently on the market in the UK. The tiny one-room home in Islington is just over 150 square feet, with an asking price of £275,000. 

You have to climb on to the kitchen surface to get into bed, the dining room is a pull-out table, and you can touch opposite walls at the same time.

Video: London Homes Become Unaffordable

"Obviously the price is quite absurd but I don't think the project is absurd," says architect Chris Dyvik, who took inspiration from caravans and boats.

"You might see similar types of compact units being built. People need to be creative in London to survive with these housing prices."

It is unlikely anyone would live in such a place for more than a few nights at a time, but the fact that such a small space can command such a big asking price means questions continue to be asked about London's property bubble.

Last year, some 60,000 30-somethings left London, the highest number ever. Soaring house prices have put homes out of reach for most first-time buyers.

According to the Office for National Statistics, 67% of the 25 to 34 age group were homeowners in 1991. By 2012 this had dropped to 43%.

George Cheetham got fed up with prices going up and up during the buying frenzy in London last year.

"Week-by-week, house prices grew," he said.

"You'd go for a viewing in the same street one week and by the next it had gone up by about £10,000."

He moved to Bristol, buying a three-bedroom flat with a garden, something which would have been impossible in the capital.

"It just didn't seem a realistic market to buy in, it was very easy for us to say enough is enough" he said.

Soaring prices have been partly driven by foreign investors.

Estate agent Savills estimates up to 70% of newly-built properties in central London are bought by foreign investors, with many flats in prime locations lying empty.

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1. Gallery: Property: What £1m Can Buy You

   We take a look at what £1m can buy you around the UK. For example this one bedroom flat in Chelsea's Lennox Gardens, London, at exactly £1m. All photos courtesy of rightmove.co.uk

The modestly-sized flat is being sold in one of London's most sought-after areas. Pic: rightmove.co.uk

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Is Greece Edging Closer To Euro Exit?

No-one expected the Eurogroup summit to end all the differences between Greece and the eurozone countries behind its bailout.

But, equally, no-one really expected it to end in the kind of acrimony we saw earlier in Brussels.

In the event, what we have witnessed is yet another demonstration of what happens when the euro collides with democratic politics.

It all comes back down to the key issue Syriza campaigned on in the Greek elections last month: ending the current €240bn bailout programme and replacing it with something more humane.

Most of Greece's euro counterparts have insisted that to do so is simply impossible - that if Greece wants to borrow more cash and continue to enjoy financial support from the European Central Bank, it must sign up to an extension of the existing programme, due to expire at the end of the month.

Video: There Is 'Substantial Disagreement'

However, doing so represents what Yanis Varoufakis, the Greek finance minister, has described as a red line.

Instead, he would rather agree to a separate "bridging loan" without the full conditions attached to the existing bailout (but with, he insists, "some conditionality, to build trust").

He claims that he was privately given such a promise by the European Commissioner in charge of the economy, Pierre Moscovici, last week.

But, in Mr Varoufakis' rendering, at the Eurogroup meeting on Monday afternoon, Mr Moscovici's draft proposal was replaced by Eurogroup head, Jeroen Djisselbloem, with something else entirely - an alternative communique that pledged that Greece should continue with the existing programme.

A copy of this document, with Mr Varoufakis' disapproving penmarks scrawled all over it, was leaked to the press.

In chaotic scenes, the meeting broke down within minutes.

Given it was billed as the make-or-break moment for the euro, the collapse of talks looks, on the surface of it, to be deeply worrying.

However, the reality is that Monday's deadline was always a self-imposed one.

The talks will continue in the coming days, and there is likely to be another Eurogroup meeting to confirm things as soon as something can be hatched behind the scenes.

But with every setback, worries grow that Greece could be edging slowly towards a possible default - or indeed a chaotic exit from the single currency.

There are still many more levers to be pulled by both sides between now and then. But the fact that a key meeting could break down so easily is a reminder that things will hardly be plain sailing in the coming weeks.

In other words, things are likely to get even worse before they get any better.

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Greece Facing 'Disaster' As Talks Break Down

Greece has been warned of an impending "disaster" after crisis talks between the country's finance minister and Eurozone counterparts broke up without agreement in Brussels.

The country rejected a draft proposal put forward by European finance ministers that would see an extension of Greece's international bailout package.

Dutch finance minister Jeroen Dijsselbloem, who chaired the meeting, says Athens now has until Friday to request an extension or risk seeing the bailout expire at the end of the month.

If that happens the Greek state and its banks could face a looming cash crunch.

Greece's finance minister, Yanis Varoufakis, said negotiations will continue, adding he has "no doubt" an agreement will be reached that would be "therapeutic to Greece and for Europe".

Video: Greeks Back New Economic Strategy

But he added his country will not implement recessionary measures such as pension cuts and VAT hikes.

Greece's anti-austerity Syriza government recently swept to power on a promise to scrap the bailout as it stands.

But with Greece running out of money, Maltese finance minister Edward Scicluna said the country faces "disaster" unless it extends the bailout, which is due to end on 28 February.

"Greece has to adjust, to realise the seriousness of the situation," he said.

"It all depends on the realisation by Greece of the real seriousness of the situation because time is running out."

Video: What Is Greece's Future In Europe?

Mr Dijsselbloem said a "positive outcome" was still possible if Greece asked for the extension by the end of the week.

He said further talks are dependent upon Greece requesting a bailout.

"Given the timelines we have... we can use this week but that is about it," he said.

"The general feeling in the Eurogroup is still that the best way forward would be for the Greek authorities to seek an extension of the programme."

Mr Varoufakis and other European finance ministers are scheduled to remain in Brussels for routing talks on the EU economy today.

Video: Lamont: Write Off Greece's Debts

Sky's Economics Editor Ed Conway said: "The talks have broken down in rather acrimonious fashion.

"The ball is once again in Greece's court. European finance ministers leaving the talks said it was now up to Greece and its prime minister and ministers to request an extension to the deal.

"Otherwise the Eurogroup are not going to continue talking and there is the real prospect increasingly of Greece either defaulting or leaving the euro.

"The big problem is that Greece is potentially going to run out of money quite soon."

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Ex-HSBC Boss Lord Green To Quit Industry Body

Lord Green is to step down from a financial services industry body amid claims HSBC enabled tax avoidance while he was in charge.

A former trade minister in the coalition government, the peer will step down as chairman of TheCityUK's Advisory Council with immediate effect.

He was the chairman of HSBC from 2006 to 2010, and is facing considerable pressure to answer questions about the behaviour of the bank's Swiss division.

Sir Gerry Grimstone, who will be succeeding Lord Green in his TheCityUK role, said: "Stephen Green is a man of great personal integrity who has given huge service to his country and the City.

"He doesn't want to damage the effectiveness of TheCityUK in promoting good governance and doing the right thing, so has decided to step aside from chairing our Advisory Council."

Video: HSBC Claims Timeline

Sir Gerry also stressed that Lord Green's departure "was entirely his own decision".

In a speech to the Welsh Labour conference in Swansea, Ed Miliband warn that "he will not back down" in his campaign on tax avoidance.

The Labour leader also launched a fresh attack on the Prime Minister, who he claimed is "turning a blind eye" to the practice, which mainly benefits the rich and powerful.

Mr Miliband welcomed Lord Green's decision to step down.

Video: Fierce Clashes Over HSBC At PMQs

He said: "I think it is right that he has done that. I think the bigger question is David Cameron and the questions he has got to answer.

"He has still not accounted for why he appointed Lord Green in the first place, when it was already public knowledge about what happened at HSBC.

"He has still not explained whether over the three years or so that Lord Green was a minister, whether he actually asked about what was going on about HSBC when it was public knowledge.

"The questions are mounting for David Cameron to answer."

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HSBC Issues Apology Over Banking Standards

HSBC has taken out adverts in national newspapers offering "sincerest apologies" over past activities at its Swiss operations.

In the open letter to its customers, shareholders and colleagues, HSBC's group chief executive Stuart Gulliver described recent media coverage about practices at the Swiss Private Bank eight years ago as a "painful experience".

However, the Business Secretary has said he wants greater assurances about tax transparency.

Vince Cable told Sky's Murnaghan programme that what emerged is "striking and unacceptable" - and he has called on former HSBC boss Lord Green to answer specific allegations about the business.

The full-page HSBC advert states: "We would like to provide some reassurance and state some of the facts that lie behind the stories.

The advert was published in the Mail On Sunday and The Sun On Sunday

"The media focus has been on historical events that show the standards to which we operate today were not universally in place in our Swiss operations eight years ago.

"We must show we understand that the societies we serve expect more from us. We therefore offer our sincerest apologies."

The bank added that since 2008 it had established a "much tighter central control around who are our customers".

It said it had also implemented tougher standards around tax transparency.

Earlier this week Mr Gulliver sent a memo to the bank's staff saying the revelations were painful and frustrating.

The adverts come amid a political row over tax avoidance, with Labour leader Ed Miliband on Saturday vowing to carry out an inquiry into the UK's tax authority should his party win power in the next General Election.

Mr Miliband argued that people not paying their fair share of tax had left "a £34bn hole in the nation's finances".

Promising an "aggressive" review into Her Majesty's Revenue and Customs (HMRC) if his party wins in May, Mr Miliband pointed to suspicions of "sweetheart deals" with wealthy firms.

And the shadow chancellor, Ed Balls, has told Sky News a "crackdown" is needed because there had only been one prosecution out of more than a thousand cases of tax avoidance at HSBC's private Swiss arm.

"Was that because the Conservatives were back-peddling, brushing it under the carpet? Was it because the HSBC boss had now become a minister? Was it because their donors were involved in that HSBC activity? I think we need answers from David Cameron and George Osborne, and we need them soon," he added.

This week, Mr Miliband seized on allegations about tax avoidance by HSBC clients to brand Prime Minister David Cameron a "dodgy Prime Minister, surrounded by dodgy donors".

Speaking on Sky News, Mr Cable said: "I think the worst period we went through was 10 years ago, when all the leading banks were offering industrial-scale tax avoidance to British citizens to avoid British tax - and they were doing it out of London.

"There are still things happening that should definitely not be happening."

After a week of clashes between Mr Miliband and Mr Cameron, the former Tory chancellor Ken Clarke said there needs to be agreement on a "more sensible and defensible" system for funding political parties.

Mr Clarke told The Observer newspaper that the Conservatives should break their reliance on wealthy donors and embrace the need for more state funding of politics.

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Rival Firm Snaps Up Zolfo Cooper In £60m Deal

By By Mark Kleinman, City Editor

The consolidation of London's professional services industry will accelerate this week when a division of Zolfo Cooper, an adviser on corporate restructurings, is snapped up in a deal worth just under $100m (£65m).

Sky News has learnt that AlixPartners, a New York-based advisory firm, is close to agreeing a takeover of the UK and European arm of Zolfo Cooper, an independent player in a sector increasingly dominated by global heavyweights.

Insiders said that AlixPartners had scheduled a board meeting on Sunday to approve the deal, with an announcement about the transaction expected as early as Monday.

If completed, the takeover will bring together two of the most prolific City advisers on the restructuring of companies which have run into financial or operational difficulties.

Zolfo Cooper has in recent weeks been working on a deal to secure the future of Intertain, the leisure group behind the Walkabout chain of bars.

The company is owned by Better Capital, the investment vehicle set up by Jon Moulton, who was forced to place another of his companies, City Link, into administration on Christmas Eve.

Zolfo Cooper's European operations are operated using the firm's name under licence from the US firm of the same name.

The takeover of its London-based operations is expected to crystallize significant payouts for its partners, although they are likely to remain with the combined group.

Among the firm's other assignments are the restructuring of Stemcor, the steel trading company which is part-owned by Margaret Hodge, the Labour MP who chairs the Commons Public Accounts Committee.

Last year, Zolfo Cooper also worked on a deal which saw dozens of Strada restaurants change hands.

For AlixPartners, the acquisition will be an important step towards achieving a five-year target of becoming the "leading global advisory, consulting, and interim management firm specialising in restoring, protecting, and enhancing corporate performance and value".

Employing more than 1200 people, AlixPartners is itself majority-owned by CVC Capital Partners, the private equity group which is the largest shareholder in Formula One motor racing.

CVC took control of AlixPartners in June 2012, with the financial terms of the deal remaining undisclosed.

Private equity investors have shown increased interest in professional services groups, while the big four accountancy firms have also been diversifying their offering by swallowing specialist players in areas such as cyber-security, investor relations and restructuring.

AlixPartners and Zolfo Cooper both declined to comment on Sunday.

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Rolls-Royce Warns Of Oil Hit As Revenues Dip

The engineering firm Rolls-Royce has warned of the impact falling oil prices could have on its customers while confirming its first fall in annual revenues for a decade.

The company, which announced plans in November to cut 2,600 jobs, has been hit by defence spending cuts, global economic uncertainty and falling commodity prices.

It reported a 6% drop in underlying revenues to £14.6bn for 2014 and said underlying profits were 8% lower at £1.62bn.

The company, which has major bases in Bristol and Derby, said it expected 2015 to be tougher than expected as the recent slide in oil prices - by more than 50% - had resulted in "increasing uncertainty" for many of its customers.

The announcement represented the second downgrade on its expectations for the year in four months - with profits for 2015 now expected to be in the range of £1.4bn to £1.55bn.

That represents a 14% drop on its previous guidance.

Chief executive John Rishton said: "2014 has been a mixed year during which underlying revenue fell for the first time in a decade, reflecting reduced spending by our defence customers, macroeconomic uncertainty, and falling commodity prices."

Rolls, the world's second-largest maker of aircraft engines after US group General Electric said it was seeing lower demand for the turbine engine-based power systems and associated services which it sells to oil and gas companies.

Demand for the engine equipment used in power generation, construction and mining projects had also been hit, the company said.

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