Surge In First-Time Buyers 'To Fall Away'

A report suggests the number of first-time buyers rose 45% in the year to July but the surge in transactions will slow as property prices rise.

The latest First Time Buyer Monitor from LSL Property Services shows that plunging mortgage rates - partly a result of Government schemes to boost lending - helped 26,100 step on to the property ladder in the month.

That was a rise of more than 8,000 on the same month in 2011 and the best performance since November 2007, the report said.

The figure was released on the day the Halifax House Price Index registered a 0.4% increase month-on-month in August, 5.4% year-on-year in the three months to August, and suggested housing costs would continue to climb gradually during 2013.

The LSL report highlighted the improving affordability of first-time buyer mortgages as the Funding for Lending Scheme (FLS) meant banks were able to pass on cheaper credit to borrowers.

Other initiatives such as NewBuy and Help to Buy have been aimed at giving people with smaller deposits a leg-up.

But the study also pointed to strong house price growth over the period, which LSL warned threaten to stall the growth in buyers.

It said the average purchase price for a first-time buyer rose 8% in the last year to £146,726 in July, with deposits now representing a far greater proportion of the income of a first-time buyer.

LSL put the figure at equal to 83.1% of annual income, up 5.0% on July last year.

David Newnes, director of LSL Property Services, said: "There is simply not enough housing stock to match continued demand.

"If supply fails to keep pace with demand the housing market will become increasingly unsustainable.

"Prices will rise sharply, and future first-time buyers will be left in the lurch."

He added: "There is a desperate need for further cheap property in order for the run of success to continue."

Recent data has revealed a strong increase in the construction of properties as firms build on the improving economic outlook but analysts say the progress amounts to little in terms of supply against high demand.

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US Job Stats Drive Market Stimulus 'Frenzy'

Stock markets endured a rollercoaster after the release of US employment figures - a crucial indicator on when the Federal Reserve will ease its economic stimulus.

US employers added 169,000 jobs in August and much fewer in July than previously thought, according to the official data.

The slowdown in hiring was initially seen as complicating the Federal Reserve's decision this month on whether to start slowing its monthly $85bn of bond purchases to boost the economy.

Fears over the so-called 'tapering' of asset purchases has gripped financial markets for months, reflecting the addiction to cheap credit in the world.

The Dow Jones industrial average rose on opening - alongside the FTSE 100 and other major European markets - but then fell back, closing with little change.

However the yield on the 10-year US Treasury note fell to 2.87% from 2.95% as investor expectations eased about the prospect of rising central bank interest rates.

The UK's 10 year debt yield - the interest rate the country pays to service its debts - also fell back from a two-year high to below 3%.

The US Labor Department said while the unemployment rate dropped to 7.3% in August, the lowest in nearly five years, it fell because more Americans stopped looking for work and were no longer counted as unemployed.

The proportion of Americans working or looking for work fell to its lowest level in 35 years.

July's job gains were just 104,000, the fewest in more than a year and down from the previous estimate of 162,000.

Employers have added an average of 148,000 jobs in the past three months, well below the 12-month average of 184,000.

Market strategist at ETX Capital Ishaq Siddiqi said: "It's unwise to say tapering is off the cards in September but it definitely has given the Fed and the market food for thought."

Meanwhile, US oil prices closed at a two-year high of $110.53 a barrel amid fears of escalating tensions in the Middle East and hope for continued stimulus from the Fed. 

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Royal Mail To Pledge City Dividend Bonanza

By Mark Kleinman, City Editor

Royal Mail will pledge to pay hundreds of millions of pounds in dividends to City shareholders in an attempt to win private sector support for its £3bn privatisation, Sky News has learnt.

The company will make the promise as part of a Government statement announcing its intention to float the centuries-old postal operator on the London Stock Exchange, which is expected to be made towards the end of next week.

Sources close to the planned listing of Royal Mail said on Friday that the company was likely to commit to a specific shareholder payout for the current financial year, as well as a general intention to distribute up to about 50% of its profits in the form of dividends in subsequent years.

A valuation of £2.5bn - £3bn would see employees' stake worth up to £300m

The details are still being finalised and could yet change ahead of an announcement, one insider said.

Royal Mail's board is understood to have backed the dividend pledge in principle and is expected to meet next Wednesday to agree further details relating to the privatisation.

The dividend pledge is designed to reassure major City institutions about the attractiveness of Royal Mail as an investment proposition at a time when the threat of industrial action has again reared its head.

Postal operators in other European markets tend to pay out at least 40% of their earnings in dividends although Royal Mail would be expected to retain a large chunk of its future profits as it continues to invest in the modernisation of the company.

The share giveaway to staff will encompass 10% of Royal Mail's equity

"There will be an explicit and robust statement on the company's dividend policy, as you would expect," said a person close to Royal Mail.

However, the commitment on dividend payouts may also ignite further hostility from unions which have criticised the sell-off plans and accused ministers of transferring Royal Mail's economic value to the private sector while having nationalised its historic pension liabilities.

The Communication Workers Union (CWU) is preparing to hold a vote on national strikes at Royal Mail, saying it believed industrial action was "inevitable" without compromise from the company on issues including pay, jobs, pensions and the impact of any sell-off.

The Communication Workers Union is preparing to vote on national strikes

The union has been lobbying for a ten-year pay and conditions offer that would be underwritten by the Government.

The result of the ballot will be revealed in early October and the first strike could be held on October 10 if there is a vote in favour of industrial action.

A lack of progress settling the row could potentially lead to a dispute spilling into the festive season, Royal Mail's most profitable and crucial trading period.

The conflict has escalated despite a commitment made in July by Vince Cable, the Business Secretary, to hand 150,000 Royal Mail employees free shares in the company likely to be worth roughly £2,000-per-worker.

As a further sweetener, staff will be guaranteed a proportion of the retail element of the initial public offering (IPO).

Strikes could be held in October if employees vote for industrial action

The share giveaway to staff will encompass 10% of Royal Mail's equity, in accordance with the Postal Services Act that paved the way for the sell-off of the company two years ago.

At an overall valuation of between £2.5bn and £3bn, that would value the employees' stake at up to £300m.

Members of the public will also be able to buy shares in Royal Mail through intermediaries, a website and in Post Office branches.

Royal Mail and the Department for Business, Innovation and Skills both declined to comment, although one source said an announcement about the flotation could yet be delayed depending on external factors.

The Government has vowed that the threat of a strike will not deter it from selling shares during the current financial year.

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Surge In First-Time Buyers 'To Fall Away'

A report suggests the number of first-time buyers rose 45% in the year to July but the surge in transactions will slow as property prices rise.

The latest First Time Buyer Monitor from LSL Property Services shows that plunging mortgage rates - partly a result of Government schemes to boost lending - helped 26,100 step on to the property ladder in the month.

That was a rise of more than 8,000 on the same month in 2011 and the best performance since November 2007, the report said.

The figure was released on the day the Halifax House Price Index registered a 0.4% increase month-on-month in August, 5.4% year-on-year in the three months to August, and suggested housing costs would continue to climb gradually during 2013.

The LSL report highlighted the improving affordability of first-time buyer mortgages as the Funding for Lending Scheme (FLS) meant banks were able to pass on cheaper credit to borrowers.

Other initiatives such as NewBuy and Help to Buy have been aimed at giving people with smaller deposits a leg-up.

But the study also pointed to strong house price growth over the period, which LSL warned threaten to stall the growth in buyers.

It said the average purchase price for a first-time buyer rose 8% in the last year to £146,726 in July, with deposits now representing a far greater proportion of the income of a first-time buyer.

LSL put the figure at equal to 83.1% of annual income, up 5.0% on July last year.

David Newnes, director of LSL Property Services, said: "There is simply not enough housing stock to match continued demand.

"If supply fails to keep pace with demand the housing market will become increasingly unsustainable.

"Prices will rise sharply, and future first-time buyers will be left in the lurch."

He added: "There is a desperate need for further cheap property in order for the run of success to continue."

Recent data has revealed a strong increase in the construction of properties as firms build on the improving economic outlook but analysts say the progress amounts to little in terms of supply against high demand.

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Snowden: NSA And GCHQ Crack Encyption Codes

US and British intelligence agencies have unlocked much of the online encryption that protects the privacy of internet users' personal data, online transactions and emails.

Many internet users assume that their online information, including medical records and bank details, is safe from snoopers but fresh documents released by US whistleblower Edward Snowden appear to show otherwise.

Classified briefings between the National Security Agency and its UK counterpart GCHQ, obtained by The Guardian newspaper, show the agencies celebrating their success at "defeating network security and privacy".

A 2010 GCHQ document states: "For the past decade, NSA has lead an aggressive, multi-pronged effort to break widely used internet encryption technologies.

"Vast amounts of encrypted internet data which have up till now been discarded are now exploitable."

Whistleblower Edward Snowden handed the documents to the Guardian

The documents reveal various covert methods have been used to break down internet security, including a NSA programme, costing $250m (£160m) a year, which works with technology companies and internet service providers to insert weaknesses into their product designs.

Supercomputers have also been used to break encryption with "brute force" and in some cases companies say they were forced by the government to hand over their master encryption keys or build in a back door.

For at least three years, one document says, GCHQ has been working to develop ways into protected traffic on the "big four" service providers, named as Hotmail, Google, Yahoo and Facebook.

By 2012, GCHQ had developed "new access opportunities" into Google's systems, according to the document, which Google has denied.

Through these covert partnerships, the agencies have inserted secret vulnerabilities - known as backdoors or trapdoors - into commercial encryption software.

The agencies defend code-breaking saying it is necessary to counter terrorism and gather foreign intelligence.

But security experts say the internet is being undermined as "cryptography forms the basis of trust online".

GCHQ and the NSA says code-breaking is necessary to prevent terrorism

Bruce Schneier, an encryption specialist at Harvard's Berkman Center for Internet and Society, told The Guardian: "By deliberately undermining online security in a short-sighted effort to eavesdrop, the NSA is undermining the very fabric of the internet."

The documents are among more than 50,000 shared by The Guardian with The New York Times and ProPublica, the non-profit news organisation.

The full extent of the NSA's decoding capabilities is known only to a limited group of top analysts from the NSA and its counterparts in Britain, Canada, Australia and New Zealand.

Only they are cleared for the Bullrun encryption-cracking programme, the successor to one called Manassas - both names of an American Civil War battle.

A parallel GCHQ counter-encryption programme is called Edgehill, named for the first battle of the English Civil War of the 17th century.

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Royal Mail To Recruit 21,000 Staff For Xmas

Royal Mail is to recruit more than 21,000 seasonal staff to help sort the Christmas post.

The company estimated 18,000 of the posts will be in England, 2,000 in Scotland, 700 in Wales and 400 in Northern Ireland.

The temporary jobs would be available between early November and January 2014 and support Royal Mail's permanent 124,000 postmen and women who sort and deliver the mail all year round.

Royal Mail's managing director of operations and modernisation, Mark Higson,said: "Christmas is the busiest time of the year for Royal Mail and we plan all year round to help ensure we deliver the best possible service to our customers.

"Every Christmas, we make a substantial financial commitment in additional resources to handle the festive mailbag, including the recruitment of thousands of temporary workers."

The annual drive for festive posties is held against a backdrop of unrest in the ranks, as the Communication Workers Union (CWU) prepares a vote on national strikes over the Government's plans to privatise the Royal Mail.

The CWU, which announced the ballot on Monday, said it believed industrial action was "inevitable" without compromise from the company on issues including pay, jobs, pensions and the impact of any sell-off.

The result of the ballot will be revealed in early October and the first strike could be held on October 10 if there is a yes vote.

A lack of progress on settling the row could potentially lead to a protracted dispute spilling over into the festive season, Royal Mail's most profitable period.

The union's move is a major challenge to the planned privatisation, which ministers are expected to press ahead with in the coming months that would see staff secure free shares worth an estimated £2,000 each.

The CWU says the arrangement offers its members little in terms of guarantees over their future.

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Ryanair To Cut Flights Amid Profit Turbulence

Ryanair is to reduce flying schedules this winter after seeing its profit hopes dented by growing headwinds including weaker summer demand.

Shares in the no-frills carrier plunged by 14% soon after it issued the profit warning, just a month after chief executive Michael O'Leary had said that the heatwave in northern Europe in July had put people off travelling abroad to seek summer sunshine.

The airline said on Wednesday that a weaker pound, increased competition and Europe's continued economic problems were also having an impact on fares and the amount of money it makes per passenger.

Michael O'Leary wants to cut costs

It planned to respond to its weaker outlook by selectively reducing its winter season capacity and rolling out lower fares and "aggressive" seat promotions in markets including the UK.

The strategy will cut its annual traffic forecast by 500,000 to 81 million while profits will be at the lower end of its previous forecast of between £483m and £508m.

The announcement prompted share slides across the airline sector in early trading, with rival easyJet losing 7%.

Thomson Holidays owner TUI Travel and British Airways parent firm International Airlines Group were both 4% lower.

Airlines across Europe have been struggling with weak economies, high fuel prices and costly fleet upgrades.

Ryanair announced in July that it was raising charges for hold baggage as part of its campaign to eradicate the suitcase from its flights in a bid to save costs.

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Ex Co-Op Bank Boss Refuses Blame For Losses

The former boss of the Co-operative Bank and Britannia Building Society has told MPs he foresaw the "disastrous" failure of Co-Op to buy Lloyds branches.

Speaking to the Treasury Select Committee, Neville Richardson's evidence highlighted the financial problems behind the Co-op's failed plan to buy 632 Lloyds branches, known as Project Verde.

Mr Richardson said: "I have to say quite unequivocally that if I had known that Verde was going to be as all-consuming as it became I would not have been for it all.

"Because the disastrous consequences I warned of with the other programmes and Verde coming down the line were just being multiplied by Verde and the distraction Verde was creating."

The Co-operative bank announced a £709m pre-tax loss in the first half of the year and the group said there will be "no quick fixes" as it embarks on a four-year turnaround plan.

The group hopes to partly fill a £1.5bn hole in its cash reserves by raising £500m from its own bondholders.

Lloyds chief executive Antonio Horta-Osorio speaks to Sky's Jeff Randall

Mark Taber, who runs the Co-operative Action Group, an organisation made up of bondholders who are contesting the restructuring plans which could see them lose up to 60% of their investment told Sky's Jeff Randall: "The Co-op promised 12 weeks ago that they were conscious of the different interests and would look at alternative proposals and also pay for financial advice for them.

"We were promised they'd speak to us when these results come out, now they're saying they won't. It seems as if the Co-op group is trying to railroad people into a proposal. It's a very dangerous strategy."

Andrew Tyrie MP, who chairs the select committee, said: "There appears to be a yawning gulf between the evidence the Committee heard ... from Mr Richardson and the evidence we heard previously from Mr (Andrew) Bailey. The committee will be investigating this a good deal further."

In a rare broadcast interview with Sky's Jeff Randall, the chief executive of Lloyds banking group, Antonio Horta-Osorio, defended his company's due diligence procedure over the proposed sale.

He said: "We checked their finances and (those of) everybody in the market. If you look at the Co-operative group bonds which reflect the risk of the Co-operative group, until February of this year the risk was considered by the market to be as good as the average of the UK banks."

Lloyds, which is being forced to dispose of the branches as a condition of its bailout, confirmed in July that the branches would be re-branded as TSB Bank.

It is seeking an extension from the European Commission to dispose of them via an initial public offering.

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UK Car Registrations Continue Surge In August

The UK car market grew by almost 11% in in August, the Society of Motor Manufacturers and Traders (SMMT) has said, continuing an 18-month streak of rises.

65,937 new cars were registered in the UK in August, up 10.9% on July, SMMT figures showed. 

The news will be welcomed by economists and government ministers looking for evidence that the UK is emerging from the financial crisis. 

The best selling cars in the UK in 2013 were the Ford Fiesta (75,413), the Ford Focus (57,129) and the Vauxhall Corsa (53,284), the figures showed.  

Mike Hawes, SMMT Chief Executive, said: "UK new cars registrations have now risen consecutively for a year and a half.

"Private fleet buyers are clearly capitalising on attractive deals and new technologies against a backdrop of increasing economic confidence. 

"Ahead of the September plate change, August always has far fewer registrations, but the 10.9% rise this month bodes well."

The figures showed that some 1,391,788 cars had been registered in the UK in the year to date. 

The car manufacturing industry has been hit hard by the financial crisis.

In October 2012, car manufacturer Ford laid off some 4,300 workers across Europe - 1,400 in the UK - as it sought to cut costs in the face of weakening demand for vehicles. 

Related stories: 

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Banks Pay Up Over Rate Swap Mis-Selling

The Financial Conduct Authority (FCA) has confirmed an acceleration in the number of companies being compensated for the mis-selling of interest rate swaps.

The regulator announced that banks had paid out £500,000 to date but said the figure was set to rise rapidly.

The bill is the latest faced by banks, which are also compensating customers for mis-sold payment protection insurance (PPI).

Two British banks have also been fined for manipulating the London Interbank Offered Rate, or Libor market benchmark.

Interest rate swaps, investigated by Sky News, were designed to protect smaller companies against rising interest rates but when rates fell, they had to pay large bills, typically running to tens of thousands of pounds.

In its first update on how banks are responding to claims, the FCA said that by the end of August 10 offers of redress had been accepted by businesses totalling £0.5m.

The FCA said another 210 offers of redress were with customers and a further 1,700 were due to be sent shortly.

Barclays had reached the redress offer and acceptance stage for 92 sales, with 68 at HSBC, 13 at Lloyds and 20 at RBS.

The banks have taken on 2,800 staff to review more than 30,000 cases and the FCA expects most customers will be told by the end of the year about the result of their review.

More than 25,000 sales or 85% of the total are being assessed.

FCA chief executive Martin Wheatley said: "With 85% of cases now under review, banks have made progress.

"But like the thousands of affected small businesses, we want to see redress paid quickly to those who have suffered loss as the result of mis-selling."

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20% Of Workers Earn 'Below Living Wage'

One in five British workers now earns below the so-called living wage, it has been claimed.

According to the Resolution Foundation 25% of women and 15% of men were paid below the living wage in April last year, when the wage benchmark was calculated as £7.20 an hour outside London and £8.30 in the capital.

The think tank said it meant that a total of 4.8 million Britons, 20% of employees, were paid at a level below the rate deemed necessary for a basic standard of living, an increase from 3.4 million in 2009.

Unlike the minimum wage, it is up to employers to decide whether their staff are paid the living wage, which is currently £7.45 an hour or £8.55 in London.

The report found 77% of employees aged under 20 earned less than the living wage, with 67% of restaurant and hotel workers paid below the benchmark.

The report's author Matthew Whittaker, who is senior economist at the Resolution Foundation, said: "For most of the working population real wages have been flat or declining for many years and as a result more and more people have dipped below the level of the living wage.

"This means an increasing struggle to keep up with the cost of living.

"Britain has a sorry story to tell on low pay. Only a handful of our close competitors do worse and the large majority have much lower rates of low pay - sometimes half as much.

"The challenge for all parties is to find ways of boosting rates of pay, especially for those who earn less, without putting economic growth at risk."

A Government spokesman responded: "We encourage employers to pay above the national minimum wage when they are profitable and when it's not at the expense of jobs, which is what the Low Pay Commission takes into consideration when it sets the national minimum wage.

"Despite being in tough times, this Government is doing absolutely everything it can to help people on low pay with the cost of living.

"That's why we're taking two million people out of tax altogether, cutting income tax for those on low incomes and freezing council tax."

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Olympus Scandal: UK Launches Prosecution

The Serious Fraud Office (SFO) is to prosecute Olympus and its UK subsidiary in connection with the accounting scandal at the Japanese camera and medical equipment maker.

The news was confirmed two months after a Japanese court handed suspended jail sentences to three former Olympus executives for engineering a scheme to hide about $1.7bn (£1.1bn) in losses.

The actions - dating back to the 1990s - were uncovered in 2011 by the company's-then new chief executive Michael Woodford who blew the whistle and was subsequently sacked in an affair that was to shake Japan's corporate governance infrastructure.

An Olympus statement said: "Having completed its investigation, the SFO has decided to bring a prosecution against the company and Gyrus Group Limited, a UK subsidiary.

"We will decide our response after carefully reviewing the content of the charges."

The whistleblower: former chief executive Michael Woodford

The SFO said: "Gyrus Group Ltd and Olympus have been charged with offences of making a statement to an auditor which was misleading, false or deceptive, contrary to section 501 Companies Act 2006.

"Gyrus Group faces four charges and Olympus faces one charge."

Olympus was fined £4.4m by the district court in Tokyo over its for its actions while Japanese regulatory penalties and other charges, including back tax demands, reportedly top £32m.

Olympus said the allegations against it in Britain related to the fiscal years 2009 and 2010.

Its statement continued: "After a hearing date before the Magistrates' Court, it is expected that the matter will be transferred to the Crown Court for the future steps of the proceedings."

The company added that it was difficult to estimate the level of fines in Britain, should the prosecution result in a guilty verdict.

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Vodafone's $130bn Windfall After Verizon Deal

Vodafone has confirmed it is selling its stake in America's largest mobile phone company in the third largest corporate deal in history.

Verizon Communications will buy the British firm's 45% stake in their joint US venture Verizon Wireless for $130bn (£84bn), in an agreement which could provide a boost to the UK economy.

Verizon Wireless is most profitable mobile service provider in the US and the new agreement is the culmination of Verizon Communications' decade-long attempt to win full control of it.

Under the terms of the deal, Vodafone would get $58.9bn (£38bn) in cash, $60.2bn (£39bn) in Verizon stock, and an additional $11bn (£7bn) from smaller transactions that would take the total deal value to $130bn, Verizon said.

The deal marks the British telecom giant's exit from the large but mature US mobile market.

The windfall would allow the FTSE 100 company to plot further expansion and return cash to shareholders.

There is speculation it would issue a special dividend which could yield investors up to £40bn in total - cash that might find its way back into the economy, partly through tax.

However, there is also the possibility of controversy over the way the deal is arranged amid reports that Vodafone's tax liabilities will be minimised by completing the transaction through its Luxembourg subsidiaries and other offshore companies.

Verizon Communications will have full control of Verizon Wireless

Margaret Hodge, chairwoman of the Commons Public Accounts Committee which has investigated corporate tax avoidance, said she wanted the deal to be examined in detail.

"Clearly there are concerns on this deal," she said.

"I just want some assurance that HM Revenue and Customs (HMRC) will be going through this deal with a tooth comb to ensure that the taxpayer gets the proper benefit under the law of the tax that Vodafone should pay on this massive windfall profit that they are making."

Mrs Hodge urged HMRC to ensure there was no "aggressive tax avoidance" in the way the deal was done.

Vodafone chief executive Vittorio Colao told Sky News: "We apply standard rules and we have to apply standard laws in all the countires.

"If this transaction happened in the UK, under UK standard rules this transaction would not be taxable. These rules have been there for years.

"Now the transaction happens in Netherlands which are the exactly the same rules as the UK. Now the important thing is there are £54bn going back into our shareholders many millions fo whom are UK and will benefit from transaction."

The only larger deals in corporate history were Vodafone's $183bn acquisition of Mannesmann in 2000 and internet giant AOL's $182bn takeover of Time Warner in 2001.

Verizon has had a long-standing interest in buying out its partner, but the two companies have never managed to agree on a price until now.

Analysts said Verizon wanted to pay around $100bn for Vodafone's stake, while Vodafone had been pressing for the higher sum.

Vodafone shares, which rose sharply last week, rose 4% in early trading on Monday before extending those gains past 12% in the afternoon.

The change is not expected to have much of an effect on Verizon consumers or on its operations as Vodafone had little influence on Verizon Wireless' operations.

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Microsoft To Pay £3.2bn For Nokia Phones

Nokia shares have soared by 45% following confirmation Microsoft is to buy the Finnish firm's mobile phone business for 3.8bn euros (£3.2bn) to try and expand its share of the smartphone market.

In addition to the purchase of the devices and services unit is a 10-year licence to use Nokia's patents at a cost of 1.7bn euros (£1.4bn) - with the option of extending the agreement indefinitely.

The deal was reflected strongly when the Helsinki Stock Exchange opened for business as investors bought in to a marriage which analysts believed should have happened sooner.

Nokia - once the darling of the mobile phone sector - tied with Microsoft two years ago when it ditched the Symbian operating system in favour of Windows software for its top smartphones.

But those devices still languish behind premier products from the likes of Apple and Samsung in terms of sales.

Steve Ballmer is set to leave Microsoft

Nevertheless, the latest market share research showed Nokia was the second largest seller of all mobile phones in the second quarter of the year - behind Samsung - with 14% after selling 60.9 million devices in the three months to June.

While Microsoft overtook BlackBerry for the first time in the smartphone operating system market, taking the third spot, it had just 3.3% of the business.

The deal was seen as aiding Microsoft's transition from a software firm to one that was much more serious about cracking the mobile market.

It was confirmed that 32,000 Nokia employees would transfer to Microsoft on completion of the sale - expected early next year.

Microsoft CEO Steve Ballmer - who confirmed last month that he was soon to retire - said of the deal: "We are very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together.

"We are receiving incredible talent, technology and IP (intellectual property)."

Nokia confirmed Stephen Elop would step aside as president and CEO to become executive vice president of Nokia devices and services.

Chairman Risto Siilasmaa will stay in his current role and assume the duties of interim CEO.                 

Elop is expected to join Microsoft at the close of the transaction, along with several Nokia vice presidents.

The announcement marked the second mega deal for the telecoms sector in a day after UK-based Vodafone confirmed the sale of its 45% stake in US group Verizon Wireless for $130bn (£84bn) - netting its investors a £54bn cash and shares windfall.

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Bank Complaints Hit Record Amid PPI Scandal

Complaints about financial firms have surged to a record high as the effects of mis-selling continue to weigh on banks.

The Financial Ombudsman Service (FOS), which settles disputes between consumers and financial firms, said new complaints rose 15% to 327,035 between January and June on the prior six months.

That was driven by a 26% hike in complaints about payment protection insurance (PPI), where people were charged for loan insurance which they did not need or could not claim on.

The ombudsman said some lenders continue to drag their heels on repaying mis-sold PPI, causing "long waits and unnecessary delays" for customers.

Complaints about Lloyds Banking Group were almost five times higher than a year earlier, at 129,293.

They also rose 38% on the prior six months to make the part-nationalised lender the most complained-about group.

The FOS upheld 80% of complaints against Bank of Scotland, owned by Lloyds, while 86% of complaints against sister firm Lloyds TSB were also upheld in customers' favour.

Lloyds was fined £4.3m in February by the Financial Services Authority for delaying PPI compensation to 140,000 customers.

The group released separate figures showing complaints it received fell 36% to 548,403 in the first half on a year earlier - including a 39% drop in PPI complaints.

Barclays was the second-most complained about group in the FOS figures, with 44,223 cases lodged with the ombudsman, up 81% on a year earlier.

It was followed by Royal Bank of Scotland (RBS), responsible for 22,940 complaints and HSBC, which saw 18,444 complaints lodged with the regulator.

Complaints about PPI made up more than 80% of those received by the ombudsman, with new PPI complaints hitting 266,228.

FOS chief executive Natalie Ceeney said: "Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers.

"But, more positively, we are seeing encouraging signs from some major businesses that are starting to recognise the value of getting things right for their customers - with an increased focus on sorting out problems and concerns as quickly as possible."

The banking industry has so far set aside more than £18bn to cover the cost of PPI - more than double the cost of the Olympic Games.

Customers typically complain directly to an institution before then appealing to the ombudsman if they are still unhappy.

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Lenders To Fork Out £1bn For Iceland Losses

By Poppy Trowbridge, Business and Economics Correspondent

British banks, building societies and credit unions have begun making multimillion pound payments to cover the costs of the Icelandic banking crisis.

When the banking crisis struck Iceland in 2008, hundreds of thousands of British savers had deposits in Icelandic banks, many through accounts at Icesave which went bankrupt.

At the time, concern mounted over the potential losses for UK customers so the UK Government stepped in to ensure that no one lost their money.

British banks are now repaying the Government for that expense, by writing out cheques for up to £1.089bn of this compensation.

Anthony Browne, chief executive of the British Bankers Association, said: "The UK banking industry is today picking up the tab for £1bn of the costs of the Icelandic banking crisis. This money ensured that no savers who had money in Icelandic banks lost out.

"We hope it gives confidence to consumers that if there is ever another bank failure that their savings will be protected."

Mr Browne says the fact the banks are able to make these repayments now shows that the industry is returning to health.

The money will be paid in three instalments, over three years from today and are required under the Financial Services Compensation Scheme which protects customer deposits in the event of bank failure. 

The scheme now covers all customers' savings up to the value of £85,000 should another bank go into insolvency.

Joe Rundle, head of trading at ETX Capital, told Sky News: "The news is actually positive for the vast majority of savers who are guaranteed by the compensation scheme.

"It is our inherently sturdy, transparent and reassuring compensation scheme which provides comfort and confidence to savers who need protection, especially in times like this."

However, he added: "It couldn't come at more difficult time for the UK banking sector which is evolving rapidly.

"UK banks will ultimately end up having to raise more capital to fund this repayment which will be met with disappoint by shareholders."

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Free Childcare Scheme Set To Be Extended

By Tadhg Enright, Sky News Correspondent

A free childcare scheme starting today for 130,000 toddlers will be extended to 260,000 young children from September next year.

Children in around 40% of working families will qualify for up to 15 hours of free early education every week once the scheme is extended to anyone who meets the same eligibility criteria for free school meals.

Deputy Prime Minister Nick Clegg said: "All the evidence shows that if you take two children - two five-year-olds hanging up their coats next to each other on the first day of school - the poorer child will already be behind their better off classmate before a single lesson has been taught.

"Without this help, children suffer and the whole class suffers as teachers have to focus more of their efforts on children who are frustrated and left behind through no fault of their own.

"I believe that every British family, whatever its structure, background and circumstances should be able to get on in life."

Mr Clegg said that adopted children, those in care and youngsters with a disability or special educational needs will also benefit from the changes to be brought in next September.

Critics however are concerned that the budget will not rise to match the doubling of numbers benefiting from the scheme.

Nick Clegg promoting the Government's free childcare offer in March

The Government will spend £534m on the scheme this year which will rise to £760m in 2014.

Welcoming the announcement, the Pre-school Learning Alliance warned the Government plans would fail if they were not properly funded.

Chief executive Neil Leitch said: "This is a tremendous initiative that will help to support young children who statistically run the risk of being marginalised throughout their entire life."

But he added: "Our fear is that should this well-intentioned initiative be grossly under-funded, the Deputy Prime Minister will not achieve the brighter start in life for these children that he wants."

Anand Shukla, chief executive of the Family and Childcare Trust, voiced fears that nursery closures could impede the delivery of free childcare.

"We are concerned that loss of nursery provision in children's centres is impacting on local authorities' ability to find sufficient places for the offer," he said.

New research by the Family and Childcare Trust, to be published later this month, indicates that a minimum of 108 nurseries across England have closed or were never commissioned as they were supposed to be, he added.

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Vodafone Nears $130bn Verizon Windfall

Vodafone may confirm as early as this afternoon that it is selling its stake in America's biggest mobile phone comany in a $130bn (£84bn) deal which could boost the UK economy.

The FTSE 100 mobile phone firm confirmed the value it was seeking for its stake in Verizon Wireless - its joint US venture with Verizon Communications - in a new statement on Sunday.

The statement said that talks were at an advanced stage and it is understood that the cash and shares agreement now only needs the approval of the Verizon Communications board.

If an agreement is reached, Verizon would own its wireless business outright after buying Vodafone's 45% interest.

Vodafone said there was no certainty that a final deal would be reached, but such a windfall would allow the company to plot further expansion and return cash to shareholders in what could prove to be a major boost for the UK economy.

There is speculation Vodafone would plan to issue a special dividend which could yield investors up to £40bn in total - cash that might find its way back into the economy, partly through tax.

Price growth correct at 08.12 BST Monday September 2

However, there is also the possibility of controversy over the way the deal is arranged amid reports that Vodafone's tax liabilities will be minimised by completing the transaction through its Luxembourg subsidiaries and other offshore companies.

The buyout, if finalised, would be one of the biggest corporate deals in history - second only to Vodafone's $172bn acquisition of Mannesmann in 2000, according to research firm Dealogic.

Verizon has had a long-standing interest in buying out its partner, but the two companies never managed to agree on a price.

Analysts said Verizon wanted to pay around $100bn for Vodafone's stake, while Vodafone had been pressing for the higher sum.

Vodafone shares rose 4% in early trading on Monday following gains last week when confirmation of the discussions emerged.

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Data Watchdog Warning Over Staff Home Working

The data watchdog has warned employers about security breaches caused by staff working from home, after it fined a council £100,000 for posting sensitive information about vulnerable children.

The Information Commissioner's Office (ICO) hit Aberdeen City Council with the penalty over what it called a "serious data breach" by social services.

The breach of data occurred after a council employee accessed documents, including meeting minutes and detailed reports, from her home computer.

A file transfer programme installed on the machine automatically uploaded the documents to a publicly-accessible website.

The sensitive information revealed details about several vulnerable children and their families, including details of alleged criminal offences.

The files were uploaded between November 8 and 14, 2011 and remained available online until February 2012.

They were only taken down when another member of staff spotted the documents after carrying out an online search linked to their own name and job title.

The breach was later reported to the ICO.

The ICO's investigation found that the council had no relevant home working policy in place for staff and did not have sufficient measures in place to restrict the downloading of sensitive information from the council's network.

ICO assistant commissioner for Scotland Ken Macdonald said: "As more people take the opportunity to work from home, organisations must have adequate measures in place to make sure the personal information being accessed by home workers continues to be kept secure.

"In this case Aberdeen City Council failed to monitor how personal information was being used and had no guidance to help home workers look after the information.

"On a wider level, the council also had no checks in place to see whether the council's existing data protection guidance was being followed."

He added: "The result was a serious data breach that left the sensitive information of a vulnerable young child freely available online for three months.

"We would urge all social work departments to sit up and take notice of this case by taking the time to check their home working setup is up to scratch."

The council is now in the process of agreeing an undertaking with the ICO, which commits the organisation to improving its compliance with the Data Protection Act.

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Wonga To Waive Dividend Despite Record Profit

By Mark Kleinman, City Editor

Wonga, the financial services company which has found itself at the heart of the controversy over the payday lending industry, will on Tuesday announce that it made record profits of more than £1m-a-week last year.

Sky News understands that the privately-owned group will report annual earnings of roughly £65m for 2012, an increase of approximately 50% on the previous year, buoyed by a huge spurt in customer numbers and ongoing international expansion.

The results will reinforce Wonga's status as one of the UK's most successful technology companies, although they will also provide further ammunition for critics of the sector weeks after it became the target of a broadside from the Archbishop of Canterbury.

Errol Damelin, Wonga's founder and chief executive, will say on Tuesday that Wonga will maintain its record of eschewing a dividend and ploughing the company's earnings back into product development and a push into new markets.

Referring to the Church of England's desire to participate in the growing credit union movement, Dr Justin Welby 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.

Dr Welby subsequently sought to clarify his remarks by praising Mr Damelin's track record as a businessman and denying that he was seeking to portray Wonga as an irresponsible company.

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

In 2014, the industry will come under the remit of the Financial Conduct Authority, and the City regulator will have powers allowing it to ban advertising and impose a cap on interest rates charged by lenders.

In remarks published on its website last month, 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."

Wonga, which is planning to launch in Spain, declined to comment on its 2012 results ahead of Tuesday's announcement.

The record profits will fuel 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.

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Lenders To Fork Out £1bn For Iceland Losses

By Poppy Trowbridge, Business and Economics Correspondent

British banks, building societies and credit unions have begun making multimillion pound payments to cover the costs of the Icelandic banking crisis.

When the banking crisis struck Iceland in 2008, hundreds of thousands of British savers had deposits in Icelandic banks, many through accounts at Icesave which went bankrupt.

At the time, concern mounted over the potential losses for UK customers so the UK Government stepped in to ensure that no one lost their money.

British banks are now repaying the Government for that expense, by writing out cheques for up to £1.089bn of this compensation.

Anthony Browne, chief executive of the British Bankers Association, said: "The UK banking industry is today picking up the tab for £1bn of the costs of the Icelandic banking crisis. This money ensured that no savers who had money in Icelandic banks lost out.

"We hope it gives confidence to consumers that if there is ever another bank failure that their savings will be protected."

Mr Browne says the fact the banks are able to make these repayments now shows that the industry is returning to health.

The money will be paid in three instalments, over three years from today and are required under the Financial Services Compensation Scheme which protects customer deposits in the event of bank failure. 

The scheme now covers all customers' savings up to the value of £85,000 should another bank go into insolvency.

Joe Rundle, head of trading at ETX Capital, told Sky News: "The news is actually positive for the vast majority of savers who are guaranteed by the compensation scheme.

"It is our inherently sturdy, transparent and reassuring compensation scheme which provides comfort and confidence to savers who need protection, especially in times like this."

However, he added: "It couldn't come at more difficult time for the UK banking sector which is evolving rapidly.

"UK banks will ultimately end up having to raise more capital to fund this repayment which will be met with disappoint by shareholders."

16.01 | 0 komentar | Read More