Malaysia Airlines Launches 'Complete Overhaul'

Malaysian officials have released a share buy-back plan to take Malaysia Airlines off the stock market, as part of a "complete overhaul" of the embattled carrier.

State investment firm Khazanah Nasional, which owns 69% of the airline, wants to purchase the majority shareholding from investors ahead of a delisting.

The move comes as the company continues to reel from the dual effect of losing two aircraft this year - the disappearance of MH370 and the crash of MH17 in eastern Ukraine.

The airline struggled with profitability for several years ahead of this year's disasters.

Khazanah Nasional has proposed buying the outstanding stock at 27 sen (£0.0475) a share, 29% higher than the three-month average.

The complete takeover would cost 1.38bn ringgit (£255m). Shares were suspended in Kuala Lumpur ahead of the announcement.

"The proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier," Khazanah said in a statement.

"Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity."

Before this year's disasters, the carrier's financial performance was among the worst in the industry, putting a question mark over its future.

Some industry experts recently voiced concern of its ability to survive without a major cash injection from the Malaysian government.

Branding specialists have said Malaysia Airlines must take dramatic steps such as replacing its senior management and a name change.

As a state-owned flag carrier, the airline must fly unprofitable domestic routes.

Its workforce has a strong union presence that has resisted operational changes, amid the rise of low-cost regional rivals.

Khazanah said the plan required approvals from regulators and Malaysia's finance minister.

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Royal Mail To Change Post Box Collection Time

The collection time at almost 50,000 Royal Mail post boxes will be brought forward to earlier in the day under new plans.

Staff delivering letters are expected to make the pick-ups as part of their rounds.

Some 47,500 post boxes will see collection times as early as 9am, instead of the usual 5pm.

Royal Mail, which was privatised last year, said it will also add around 2,000 new boxes in under-serviced areas such as rural Scotland and Northern Ireland.

New boxes would also be fitted in areas of high pedestrian traffic, including train stations and shopping precincts.

It currently has some 115,000 post boxes around the nation.

The company said where new collection times are imposed, generally between 9am and 3pm, there will still be a late posting box within half a mile.

About 12,000 rural post boxes are already emptied during delivery rounds but the new plan would primarily affect urban and suburban locations.

The new system is designed to improve efficiency, amid a decade-long decline in stamped mail use.

The company said: "Rather than decommission uneconomic post boxes, while staying within the regulated density requirement, Royal Mail will ensure their viability by improving the efficiency of its collections arrangements."

It said consultations have been undertaken with consumer groups and regulator Ofcom has been informed.

An Ofcom spokeswoman said: "Ofcom recognises the need for Royal Mail to become more efficient so it can sustain a universal postal service that consumers value highly.

"While the changes won't affect the majority of postal users, Ofcom expects Royal Mail to communicate clearly with any affected consumers and ensure that their reasonable needs continue to be met."

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Canadian Teachers Swoop On Debt Group Lowell

By Mark Kleinman, City Editor

A giant Canadian pension fund has swooped to buy a big stake in Lowell Group, one of Britain's biggest consumer debt collection agencies.

Sky News understands that Teachers Private Capital (TPC), an investment arm of one of Ontario's municipal retirement schemes, signed a deal on Friday to acquire just over 35% of Lowell's shares.

The deal values the debt collection group at around $1.6bn, and returns a large chunk of cash to TDR Capital, the private equity firm which has owned Lowell since 2011.

An announcement is expected on Monday as a consequence of Lowell's publicly-traded debt securities.

Lowell specialises in debt recovery and other credit management services, a sector which has attracted frequent attention from private equity funds.

The company, which pledges to take "a fair, sensitive and ethical approach to debt recovery", competes with rivals such as Cabot Credit Management and Arrow Global, which floated on the stock exchange last October.

The Financial Conduct Authority assumed responsibility for regulating consumer credit providers earlier this year.

TPC, which is also a significant investor in TDR's funds,  is understood to have been attracted to Lowell's growth prospects and its compliance record with UK financial regulators.

The deal adds Lowell to a portfolio of UK investments made by Ontario's vast teachers' pension fund, which include Camelot, the National Lottery operator; Burton's Biscuits, the owner of Jammie Dodgers and Wagon Wheels; and Busy Bees, the nurseries group.

TPC's investment comes ahead of a potential stock market flotation of Lowell, which could take place as soon as next year.

TDR and TPC declined to comment.

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Malaysia Airlines Launches 'Complete Overhaul'

Malaysian officials have released a share buy-back plan to take Malaysia Airlines off the stock market, as part of a "complete overhaul" of the embattled carrier.

State investment firm Khazanah Nasional, which owns 69% of the airline, wants to purchase the majority shareholding from investors ahead of a delisting.

The move comes as the company continues to reel from the dual effect of losing two aircraft this year - the disappearance of MH370 and the crash of MH17 in eastern Ukraine.

The airline struggled with profitability for several years ahead of this year's disasters.

Khazanah Nasional has proposed buying the outstanding stock at 27 sen (£0.0475) a share, 29% higher than the three-month average.

The complete takeover would cost 1.38bn ringgit (£255m). Shares were suspended in Kuala Lumpur ahead of the announcement.

"The proposed restructuring will critically require all parties to work closely together to undertake what will be a complete overhaul of the national carrier," Khazanah said in a statement.

"Nothing less will be required in order to revive our national airline to be profitable as a commercial entity and to serve its function as a critical national development entity."

Before this year's disasters, the carrier's financial performance was among the worst in the industry, putting a question mark over its future.

Some industry experts recently voiced concern of its ability to survive without a major cash injection from the Malaysian government.

Branding specialists have said Malaysia Airlines must take dramatic steps such as replacing its senior management and a name change.

As a state-owned flag carrier, the airline must fly unprofitable domestic routes.

Its workforce has a strong union presence that has resisted operational changes, amid the rise of low-cost regional rivals.

Khazanah said the plan required approvals from regulators and Malaysia's finance minister.

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Co-op Group Reveals Major Restructure

The struggling Co-operative Group has announced plans for reform of its governance structure.

It said the executive board would be reduced from the current 18 positions to 11, as soon as new rules are registered.

It also said the smaller board would consist of members "qualified to lead an organisation of its size and complexity".

The plan has been formulated to help protect against de-mutualisation of its assets.

The move comes after "disastrous" results for the mutual.

Last year a £1.5bn capital black hole was discovered in its banking arm.

In April, the group revealed a 2013 annual loss of £2.5bn, on the back of a loss of £529m in 2012.

In detailed proposals to be released, the Co-op also plans to give the group's members appropriate powers to hold the board properly to account for performance and ethics.

It said recruitment of new board members would begin immediately.

The proposals, which follow a period of consultation with the society's members, have been reflected in a proposed new rule book and will be put to a vote at a special general meeting on August 30.

Co-op Group chairwoman Ursula Lidbetter said: "These governance reforms represent the final crucial step in delivering the necessary change to restore the group and return it to health.

"This has been a process built on co-operation, focusing above all on creating a society where every member has a voice in shaping the group's future.

"I would like to thank our members for their engagement in building a governance structure that strengthens the society and enhances member engagement and our unique democracy."

More follows…

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British Investigator Goes On Trial In China

A British investigator arrested in China after carrying out a probe for pharmaceutical firm GlaxoSmithKline (gsk) has gone on trial for breaching the country's privacy laws.

A message posted on a state social media account said Peter Humphrey had accepted the charges against him on the first day of his hearing in Shanghai.

Humphrey, 58, along with his naturalised American wife, Yu Yingzeng, 60, are accused of illegally obtaining Chinese citizens' personal information and selling it to companies including GSK.

The charge carries a maximum sentence of three years in prison.

The pair were arrested shortly after completing an internal investigation for GSK - which is now the focus of a separate corruption investigation.

Peter Humphrey reportedly accepts the charges against him

According to the court's official blog, the couple's company, ChinaWhys, purchased phone records, household registration details, and customs information over a four-year period.

Judge Yu Jian said: "The two defendants paid 800 yuan (£80) to 2000 yuan per piece of information. In total, they bought 256 pieces of information."

When asked if the charge was accurate, Humphrey reportedly said: "Generally it looks correct, but in terms of specifics I do not know the Chinese law well, so I cannot comment."

According to an official online report of court proceedings, Humphrey said during cross-examination: "These records are only a small part of our business. Most of our investigations are done using public information and our own wits.

Humphrey was shown on state TV last year after his arrest

"For some projects, we needed to investigate people's backgrounds.

"We asked these other consulting companies to obtain household registration information and we paid them a service fee. We did not pay them for the information."

Humphrey's work for GSK was not mentioned.

The son of Peter Humphrey expected his parents to plead guilty despite lingering doubts of their guilt.

"I expect my parents to plead guilty. Whether they actually committed an offence or not, it's a grey area, I don't know," Harvey Humphrey told Sky News on Thursday.

"They may have done, but it's a small charge and pleading guilty is a good idea as you normally have a more lenient sentence as a result, and trying to plead not guilty and getting a defence for that in China is very difficult."

Humphrey's son expected his parents to plead guilty despite lingering doubts of their guilt.

A covert sex tape of GSK's top boss in China was filmed last year

"I expect my parents to plead guilty. Whether they actually committed an offence or not, it's a grey area, I don't know," Harvey Humphrey told Sky News on Thursday.

"They may have done, but it's a small charge and pleading guilty is a good idea as you normally have a more lenient sentence as a result, and trying to plead not guilty and getting a defence for that in China is very difficult."

In January last year an email was sent to GSK's UK-based chief executive containing a sex tape of GSK China's general manager Mark Reilly and his Chinese girlfriend.

The email accused Mr Reilly of being behind corruption in the company's China operation.

ChinaWhys was tasked with finding out who had sent the email and how the video had been filmed.

GSK suspected a former senior staff member with political connections, but who has denied being the whistleblower.

Humphrey and his wife were arrested shortly after the report was delivered in June, and the GSK bribery investigation was opened.

The trial continues.

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Bosses Who Fix Energy Prices Face Prison

Executives who rig wholesale gas and electricity prices face up to two years in jail under Government plans aimed at driving down the cost of household bills.

Those who fix prices at an artificial level would be committing a criminal offence if the Department of Energy (DECC) gets its way.

Such behaviour is currently investigated by regulators, whose powers extend only to fines.

Energy Secretary Ed Davey said: "Manipulating the energy market is absolutely unacceptable, and these proposals provide a much stronger deterrent - more in line with the approach taken in the financial markets.

"The Government is doing everything it can to help consumers by increasing market competition to drive prices down."

The Big Six energy companies

The move is a response to rising consumer bills and widespread mistrust of the so-called Big Six electricity and gas suppliers

Richard Lloyd, executive director of Which?, said: "Anyone found to be manipulating wholesale energy markets deserves to have the book thrown at them.

"Rumours of market abuse do nothing for consumer confidence in the energy market so we support the Government tightening the rules and bringing in stiffer penalties to deter wrongdoing."

Under the plans it would become a crime to make misleading claims or conceal facts about wholesale energy prices in order to manipulate the market - especially if such an act could affect competition.

Anyone who uses insider information to buy or sell on the wholesale market would also be committing a criminal offence.

The proposals are at consultation stage and could come into force across the UK in spring next year.

Their unveiling follows a study this week which showed rising energy bills was the top concern for households.

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L&G Sees Profit Rise On Pension Reforms

Legal & General (L&G) saw its pre-tax profit rise by 7% for the first half of the year.

The life insurance and pensions provider reported a profit of £636m, up from £594m for the same period last year.

The company credited an increase in demand for retirement products and said that Budget reforms to pensions would help boost earnings further.

In March Chancellor George Osborne made changes to allow people to access their pension pots when they turn 55, without having to buy an annuity.

L&G said the reforms would give greater flexibility to retirees as the company develops new products around the changes.

Group chief executive Nigel Wilson said: "These are strong financial results with dividends once again growing over 20% and a return on equity of 17.6%.

"Strong business performance across a well-diversified range of insurance, savings and investment markets underpins consistent earnings quality and dividend growth and enables us to respond positively to the ever changing political and regulatory landscape."

It comes after Sky News last week revealed that L&G is in talks about creating a £500m investment vehicle that will be used to finance major UK urban regeneration projects.

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UK House Price Average Rose 1.4% In July

UK house prices rose by a more-than-expected 1.4% in July, according to Halifax figures.

The rise takes the average price of a home in Britain to £186,322.

The British mortgage lender said house prices for the period were 10.2% higher than a year ago.

Compared to the previous quarter, the three months to July saw an increase of 3.6%.

UK house prices are on the up again following a monthly drop in June

The monthly rise follows a 0.4% drop in June as Halifax said month-by-month movements remain volatile.

Since December there have been four monthly price increases and four price falls.

Stephen Noakes, mortgage director at Halifax, said: "While supply remains low, housing demand continues to be supported by a continuing economic recovery, growth in employment, improving consumer confidence and low mortgage rates."

Last month a Halifax survey found that 70% of British adults predicted the average UK house price will rise over the next year.

The number of people who said rising property prices will be a barrier to buying rose by six points to 35%.

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Standard Life Profit Rises 12% To £339m

Standard Life has reported a 12% rise in its operating profit for the first half of the year.

The insurance and pension group's operating profit before tax rose to £339m as more UK workers were automatically enrolled in company pension schemes.

The group said it expects to add more than 300,000 new auto-enrolled customers this year.

Chief executive, David Nish said: "We have an excellent track record of succeeding in evolving markets and we are well placed to deal with the far-reaching reforms to the savings and retirement income rules, announced earlier this year by the UK Government."

It comes as the Scottish company reiterated its position on the upcoming referendum, saying there is still no clarity on the economic and financial concerns raised by it.

The company, which was one of the first to lay out contingency plans in the case of a 'yes' vote for Scottish independence, said it maintains its position.

In May, Standard Life said it would be prepared to move some of its operations out of Scotland if the nation voted in favour of a split from the United Kingdom.

The company said relocating parts of its business to England in the event of a 'yes' vote would be a measure taken to protect its market position.

Any relocation could put some 5,000 Scottish jobs at risk.

16.02 | 0 komentar | Read More

HP Suing Autonomy Bosses Over Alleged Fraud

Hewlett-Packard (HP) is to set to sue the former chief executive of Autonomy.

HP has accused Michael Lynch of fraud as an on-going row grows over its troubled purchase of the British software company three years ago.

The US technology giant is also suing Autonomy's former chief financial officer Sushovan Hussain, who tried to intervene in three shareholder lawsuits earlier this year.

After HP settled the case with shareholders over billions of pounds lost in its acquisition of Autonomy, Mr Hussain tried to block the settlement blaming the company for failures.

HP bought Autonomy in 2011 for $11.1bn (£6.6bn), but had to write down $8.8bn (£5.2bn) of the company's value a year later.

It went on to accuse the executives of accounting fraud and now has the backing of shareholders to launch lawsuits against them.

Filling the case at a court on Monday, HP said: "The shareholder plaintiffs who originally sued HP's directors and officers now agree that Hussain, along with Autonomy's founder and CEO, Michael Lynch, should be held accountable for this fraud."

It added: "The notion that (Hussain) should be permitted to intervene and challenge the substance of a settlement designed to protect the interests of the company he defrauded is ludicrous."

Mr Lynch and Mr Hussain have denied any wrongdoing.

The former Autonomy bosses responded: "This breathless ranting from HP is the sort of personal smear we've come to expect.

"As the emotional outbursts go up, the access to facts seems to go down.

"Meg Whitman (HP's CEO) is buying off a bunch of lawyers so she doesn't have to answer charges of incompetence and misdirection in front of a judge and jury."

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F1 Boss Offers Settlement To End Bribery Trial

Formula One boss Bernie Ecclestone has offered a £60m ($100m) settlement to end his trial on bribery charges, a German court has said.

Mr Ecclestone, 83, went on trial in Munich in April over allegations that he bribed a former German banker as part of the sale of a major stake in the motor sport business eight years ago.

The state prosecutor told the court on Tuesday Mr Ecclestone's age and other circumstances supported the acceptance of a settlement.

The British billionaire could have faced up to 10 years in jail and would have had to relinquish control of a business he has built up over the past four decades.

Under German law, judges, prosecutors and the defence can agree to dismiss a case or settle it with a light punishment, although terms for such an agreement are strictly defined.   

Mr Ecclestone has previously admitted making the payment to Gribkowsky, who is now serving a jail sentence, but denied all charges of bribery.

"Gribkowsky did not tell the truth at crucial points," Mr Ecclestone told the court at the start of his trial in April.

His words were in a 100-page statement read out in German on his behalf by his lawyer Sven Thomas.

Mr Ecclestone maintains that he was the victim of coercion by Gribkowsky and that Gribkowsky was threatening to make damaging claims about his tax affairs that could have cost him and his family much of their fortune.

Presiding judge Peter Noll said "the court must review this offer in its entirety" and will rule on it later today.

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HSBC Urges Ring-Fencing Delay Amid CMA Probe

By Mark Kleinman, City Editor

One of Britain's biggest banks is urging the Government to delay a deadline for separating lenders' retail and investment banking operations amid fears that billions of pounds could be wasted on the project.

Sky News has learnt that Douglas Flint, the chairman of HSBC, has written to George Osborne, the Chancellor, and Mark Carney, the Bank of England Governor, in recent days to warn about the potential implications of a competition probe into the industry.

Mr Flint is said by Whitehall sources familiar with the letter's contents to have requested a delay to the 2019 timetable for bank ring-fencing, which was part of Sir John Vickers' Independent Commission on Banking (ICB) report in 2011.

One political insider said that HSBC was not challenging a recent announcement by the Competition and Markets Authority (CMA) disclosing that it was minded to move ahead with a full inquiry into the personal current account and small business (SME) banking markets.

However, the bank is understood to have expressed concern that the CMA could call for structural reforms which would entail the disposal of operations on which it is already spending significant sums in preparation for the introduction of ring-fencing.

The demand for a delay to the ring-fencing deadline until the outcome of a competition probe is known represents the most robust recent intervention by a major bank over one of Britain's key post-crisis reforms to the industry.

Andrew Bailey, the Prudential Regulation Authority chief executive, and Andrew Tyrie, chairman of the Treasury Select Committee and Parliamentary Commission on Banking Standards (PCBS), are also understood to have received Mr Flint's letter.

Legislation to enact the ring-fencing structure had already been passed under the Banking Reform Act, and it is unclear whether there will be any appetite among politicians or regulators to accede to HSBC's request.

Mr Flint's letter will, nevertheless, carry substantial weight in Whitehall because of his status as one of the most respected executives in the UK banking sector.

A public endorser of the ICB reforms in the past, he also chairs the board of the Institute of International Finance, a global association of financial services trade bodies.

The ICB acknowledged that segregating the retail and investment banking operations of the big UK lenders would incur billions of pounds of costs, but argued that it was the most effective way to prevent taxpayers having to step in and rescue banks during a future financial crisis.

A number of key details, including the governance of ring-fenced banks, are expected to be set out in secondary legislation during the next 12 months.

Mr Osborne has also waved through a key PCBS recommendation that regulators be given the power to enforce full separation of universal banks such as Barclays and HSBC if they breach the new rules: a reserve power that Mr Tyrie described as "electrifying the ring-fence".

Sky News has learnt of HSBC's warning to Mr Osborne the day before it reports half-year results, making it the last of the major UK banks to do so.

HSBC declined to comment on Sunday.

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Portugal's Banco Espirito Santo Gets Bailout

Portugal has announced a multi-billion euro rescue plan for struggling lender Banco Espirito Santo.

4.9bn euros (£3.9bn) will be pumped into its largest listed bank which under the plans will be split into two.

A "good bank" called Novo Banco will take healthy assets, whilst a "bad bank" will be formed to take exposure to risky ones.

Depositers and senior bondholders will be protected by the creation of Novo Banco.

Junior bondholders and shareholders, which includes the Espirito Santo family, will bear the bad bank's losses.

It comes after Banco Espirito Santo reported a record loss of 3.6bn euros (£2.8bn) for the first half of the year last week.

Portugal's central bank said the money used to rescue the troubled lender will come from a bank resolution fund created in 2012, which the state will lend 4.4bn euros (£3.5bn).

It said the public would not shoulder the cost as the loan will be temporary and it expects the state to be reimbursed when Novo Banco is eventually sold to private investors.

Carlos Costa, the central bank's governor, said: "The plan carries no risk to public finances or taxpayers."

A setback for Portugal, it comes just months after the country emerged from a 78bn euro (£62bn), three-year bailout from the European Union and the International Monetary Fund.

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HSBC Sees Pre-Tax Profit Drop 12% To £7.3bn

HSBC's pre-tax profit dropped by 12% to £7.3bn in the first half of the year.

For the same period in 2013, the bank made £8.3bn.

It comes as HSBC said it has increased its provision for payment protection insurance (PPI) compensation by £115m.

Last week Lloyds Banking Group and Barclays upped their compensation pots for the mis-selling of PPI.

More follows...

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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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Brady And Ex-M&S Boss To Get Tory Peerages

By Mark Kleinman, City Editor

David Cameron is to hand peerages to The Apprentice star Karren Brady, the former Marks & Spencer (M&S) boss Sir Stuart Rose and a multimillionaire Conservative donor in a wave of appointments that could revive a festering row about membership of the House of Lords.

Sky News can exclusively reveal that Ms Brady and Sir Stuart have been lined up as Conservative members of the upper house.

A Government insider said that Michael Farmer, a co-treasurer of and long-standing donor to the Tories, is also expected to be made a peer when the new list is unveiled.

The appointments of Ms Brady and Sir Stuart will bring two of Britain's most prominent businesspeople into the Lords at a time when the main parties are battling to secure high-profile support from business leaders in the run-up to next year's General Election.

Mr Farmer is less well-known outside the City but earned the nickname 'Mr Copper' after making a fortune from the commodities markets.

He has donated several million pounds to Conservative coffers in recent years and became co-treasurer of the party in 2012.

Another source said Joanna Shields, the former Facebook executive who went on to run Tech City, the London-based hub for technology businesses, had also been mentioned in recent days as a potential appointee, although her presence on the final list could not be verified.

Ex M&S boss Sir Stuart Rose (left, middle) has also been lined up as a peer

The timing of an announcement is unclear, although sources indicated that it could come as soon as next week.

Around 20 new peers are expected to be appointed, with the majority selected by Mr Cameron and Nick Clegg, the Liberal Democrat leader.

New members of the Lords are subjected to a strict vetting process, which the Government source said had now been completed in relation to the latest nominees.

The forthcoming arrivals will increase membership of the Lords to more than 850, reinforcing its status as the second-largest legislative chamber in the world, behind only China's National People's Congress.

The frequent appointment of new peers has sparked criticism about the cost to taxpayers and the ability of the Lords to function effectively as a legislative scrutineer.

It has also led to rows about the propriety of handing peerages to prominent party supporters and donors.

A number of leading business figures, including Lord Myners, the former M&S chairman, and Lord Davies, who ran Standard Chartered, were parachuted into the Lords during the banking crisis and took on ministerial roles.

Both Ms Brady and Sir Stuart have appeared at Conservative annual conferences in recent years, with the West Ham United boss also taking on a role as small business adviser to the Government.

Sir Stuart, who has taken on a string of jobs since leaving M&S including the chairmanship of Ocado, the online grocer, has also been advising the Government on NHS reform.

Reports this week said that Michael Cashman, the ex-EastEnders actor, would be one of three new Labour members of the Lords, while David Willetts, the former universities and science minister, and the former energy minister Greg Barker are said to be in line for peerages after the next election.

A Downing Street spokesman declined to comment, while none of the prospective new peers could be reached for comment.

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Campaigners Call For 'Staycation' Tax Cut

By Frazer Maude, Sky News Reporter

Campaigners fighting for a reduction in VAT for the tourism industry say it could offer the UK economy a £4bn boost.

The popularity of domestic holidays, or 'staycations' has been fuelled by the recession.

In fact a recent survey by Barclays projects that they may be worth over £108bn to the UK economy by 2017, and that our spend on holidays at home will increase by 25% over the next four years.

But tourism chiefs say the UK isn't competing on a level playing field with the rest of Europe.

In France, Germany, Spain and Italy, VAT paid by tourists is set at 7 or 10%. Here it's 20%.

Cuts in the rates in Europe have shown to be successful, and those campaigning for the same to happen here say a cut to 5% would boost investment, jobs and visitor numbers.

Patrick Dempsey, managing director of Whitbread Hotels and Restaurants, said: "We fully support the initiative to cut tourism tax. A cut would deliver a huge financial boost for tourism around the UK and 120,000 new jobs with 8,000 already being created by Premier Inn by 2018."

'Staycations' in the UK were made more popular by the recession

Another report shows that the UK is ranked 138 out of 140 countries for price competitiveness, and is one of only four countries in the EU not to reduce tourism VAT.

Graham Wason, chairman of the Cut Tourism VAT Campaign, said:  "This new research is the economic proof the Treasury has asked for to prove what every other country in Europe knows - that cutting VAT on holidays is profitable for governments.

"Many of our coastal towns are ignored but cutting VAT would help them thrive. More than 60 cross-party MPs have signed our parliamentary motion and more than 1,000 companies and groups are backing the campaign."

But there is little sun on the horizon from the Government.

The Treasury told Sky News in a statement: "The Government recognises the importance of the tourism and hospitality industry, and is providing additional support to businesses in a number of ways.

"For example, from April 2014 businesses and charities have been able to benefit from up to £2,000 off their employer national insurance contributions bill and over £1bn of business rates support has been provided, benefiting all ratepayers.

"While we keep all taxes under review, we do not have any plans to introduce a VAT cut for the tourism sector."

The campaigners won't be deterred, and say they will continue to lobby the Government for the same breaks that their European rivals are getting.

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