Treasury Sources Tight-Lipped On Budget

Budget 2014: New £1 Coin Is Blast From The Past

Updated: 8:51am UK, Wednesday 19 March 2014

By Jon Craig, Chief Political Correspondent

George Osborne will use his Budget to announce a major change for the nation's pockets, with a new pound coin to be introduced in 2017.

The new coin, aimed at stamping out forgeries and counterfeits, will replace the £1 coin that was introduced more than 30 years ago and resemble the pre-decimalisation 12-sided "threepenny bit".

According to the Treasury, the new coin will be the most secure in the world.

The new coin will be revealed in a Budget the Chancellor hopes will provide the springboard for a Tory victory at next year's General Election.

Mr Osborne will raise the rate at which people start paying income tax to £10,500, which he claims will benefit all but those on incomes of over £100,000.

But he will reject calls from senior Tories to raise the threshold at which people start paying tax at 40p in the pound, already due to increase to £42,286 next year.

Labour has already started its response putting up posters this morning claiming: "hard-working people are £1,600 worse off with the Tories."

Speaking on Wednesday morning, Ed Miliband said: "I hope we don't see complacency from the Chancellor today because I think so many families across the country are incredibly hard pressed. They are seeing their wages falling, they faced 24 Tory tax rises since 2010.

"What I hope we see from the Chancellor is an understanding of the difficulties families are facing an a response to make life easier and better for them."

The Chancellor will have to respond to Labour's charges that the Tories are out of touch, ordinary families are facing a cost of living crisis and only the rich are benefiting from the economic recovery.

Mr Osborne posted on Twitter on Wednesday morning: "Today I will deliver a Budget for a resilient economy - starting with a resilient pound coin."

Mr Osborne will go on the attack against Labour, claiming the opposition was to blame for the economic crisis when in government and has been proved wrong in opposing the Coalition's austerity measures.

"This will be a Budget for a resilient economy," a Treasury source told Sky News.

"The Government's long-term economic plan is providing economic security by dealing with our record deficit and helping businesses create new jobs at record rates.

"As a country, we have held our nerve, the plan is working, but the job is very far from done. Britain is still borrowing too much.

"We have to invest more and export more, and support growth in every region of our country and all parts of our economy."

The new £1 coin is backed by organisations including the Automatic Vending Association, which said the cost for adapting existing machines would be "minimal".

Kelvin Reynolds, of the British Parking Association, added: "Parking operators have long expressed concerns about a rise in counterfeit £1 coins and the inconvenience this causes to motorists when coins are rejected by parking payment machines and the losses incurred as a result."

The current £1 coin has been in circulation for much longer than the normal lifecycle of a modern British coin.

Its technology is no longer suitable for a coin of its value, leaving it vulnerable to ever more sophisticated counterfeiters.

The Royal Mint estimates about 3% of all £1 coins - around 45 million in total - are now forgeries, although in some parts of the UK, the number is as high as 6%.

Around two million counterfeit £1 coins are removed from circulation annually - a direct cost to the banks and cash handling centres, as well as the economy.

As with all British coins, the new-look £1 piece will feature the Queen's head on one side.

A public competition will be held to decide the design for the reverse, or "tails", side.

Introduced in 1937, the threepenny bit was in the first group of coins ever to feature the portrait of HRH Queen Elizabeth II.

It was the first British coin to use a 12-sided shape, which enhanced its popularity during the Second World War as its distinctive size and shape made it the easiest coin to recognise during the blackout.

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Osborne Close To Landmark China Banking Deal

By Mark Kleinman, City Editor

George Osborne is closing in on a landmark deal that would see the City become one of the world's most important offshore centres for trading the Chinese currency.

Sky News understands that the Government hopes to announce by the end of the month the establishment of a London-based clearing bank that would act as a hub for offshore renminbi (RMB) payments.

The move would be significant because of the rapid growth in the volume of international RMB transactions as China's financial system and economy have become less insular.

The Chancellor has made it clear that increasing the City's share of trading in the China's currency represents a vital growth opportunity.

A London-based institution would effectively "oil the wheels" of the clearing process, reducing transaction and settlement costs, a source said.

A number of the country's vast state-owned lenders, including Bank of China and Industrial and Commercial Bank of China, have been vying to be appointed as Beijing's clearing bank in London, according to insiders.

A decision about the chosen institution could be made public within days.

The Treasury is understood to have been hoping to get a deal wrapped up in time for Wednesday's Budget statement, although that was now unlikely, a City source said.

In a speech in Hong Kong last month, Mr Osborne said the UK and China had an economic "two-way relationship of equals".

"Gone are the days when the British finance minister was only interested in securing greater market access to China.

"Now almost two thirds of all RMB payments outside of China and Hong Kong take place in London," he said.

The Chancellor said he was unashamed about having secured agreements establishing a swap line with China's central bank and allowing Chinese banks to apply to set up UK-based wholesale branches.

"Now London firms are able to invest directly in Chinese stocks and shares in RMB - something that's just not currently possible anywhere else in the West - thanks to our agreement with the Chinese Government last year.

"Ultimately what we all want to see is RMB being used more and more as a currency of choice in the world.

"The UK and Chinese Governments are in active discussions about the appointment of a renminbi clearing bank in London."

City sources cautioned that the Prudential Regulation Authority (PRA), the banking oversight arm of the Bank of England, would also need to approve any deal.

The PRA is leading the consultation on rule changes that would mean Chinese banks operating in the UK as branches rather than subsidiaries, effectively entailing lighter-touch regulation by the UK authorities.

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Budget 2014: New £1 Coin Is Blast From The Past

By Jon Craig, Chief Political Correspondent

George Osborne will use his Budget to announce a major change for the nation's pockets, with a new pound coin to be introduced in 2017.

The new coin, aimed at stamping out forgeries and counterfeits, will replace the £1 coin that was introduced more than 30 years ago and resemble the pre-decimalisation 12-sided "threepenny bit".

According to the Treasury, the new coin will be the most secure in the world.

The new coin will be revealed in a Budget the Chancellor hopes will provide the springboard for a Tory victory at next year's General Election.

The new £1 coin will have 12 sides and is due to enter circulation in 2017

Mr Osborne will raise the rate at which people start paying income tax to £10,500, which he claims will benefit all but those on incomes of over £100,000.

But he will reject calls from senior Tories to raise the threshold at which people start paying tax at 40p in the pound, already due to increase to £42,286 next year.

Labour has already started its response putting up posters this morning claiming: "hard-working people are £1,600 worse off with the Tories."

Speaking on Wednesday morning, Ed Miliband said: "I hope we don't see complacency from the Chancellor today because I think so many families across the country are incredibly hard pressed. They are seeing their wages falling, they faced 24 Tory tax rises since 2010.

"What I hope we see from the Chancellor is an understanding of the difficulties families are facing an a response to make life easier and better for them."

Labour's poster response

The Chancellor will have to respond to Labour's charges that the Tories are out of touch, ordinary families are facing a cost of living crisis and only the rich are benefiting from the economic recovery.

Mr Osborne posted on Twitter on Wednesday morning: "Today I will deliver a Budget for a resilient economy - starting with a resilient pound coin."

Mr Osborne will go on the attack against Labour, claiming the opposition was to blame for the economic crisis when in government and has been proved wrong in opposing the Coalition's austerity measures.

"This will be a Budget for a resilient economy," a Treasury source told Sky News.

"The Government's long-term economic plan is providing economic security by dealing with our record deficit and helping businesses create new jobs at record rates.

"As a country, we have held our nerve, the plan is working, but the job is very far from done. Britain is still borrowing too much.

"We have to invest more and export more, and support growth in every region of our country and all parts of our economy."

The new £1 coin is backed by organisations including the Automatic Vending Association, which said the cost for adapting existing machines would be "minimal".

Kelvin Reynolds, of the British Parking Association, added: "Parking operators have long expressed concerns about a rise in counterfeit £1 coins and the inconvenience this causes to motorists when coins are rejected by parking payment machines and the losses incurred as a result."

The current £1 coin has been in circulation for much longer than the normal lifecycle of a modern British coin.

Its technology is no longer suitable for a coin of its value, leaving it vulnerable to ever more sophisticated counterfeiters.

The Queen's head will continue to feature on one side of the coin

The Royal Mint estimates about 3% of all £1 coins - around 45 million in total - are now forgeries, although in some parts of the UK, the number is as high as 6%.

Around two million counterfeit £1 coins are removed from circulation annually - a direct cost to the banks and cash handling centres, as well as the economy.

As with all British coins, the new-look £1 piece will feature the Queen's head on one side.

A public competition will be held to decide the design for the reverse, or "tails", side.

Introduced in 1937, the threepenny bit was in the first group of coins ever to feature the portrait of HRH Queen Elizabeth II.

It was the first British coin to use a 12-sided shape, which enhanced its popularity during the Second World War as its distinctive size and shape made it the easiest coin to recognise during the blackout.

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Media Boss Desmond Eyes £700m Channel 5 Float

By Mark Kleinman, City Editor

The media tycoon Richard Desmond is considering a stock market flotation of Channel 5 even as bidders firm up offers of up to £700m for the terrestrial broadcaster.

Sky News has learnt that Mr Desmond is working with investment bankers from Goldman Sachs on the possible listing.

The exploration of a flotation raises the prospect of Mr Desmond, one of Britain's most colourful media owners, heading a public company for the first time in his long career.

City sources said Goldman had taken the idea of a listing of Channel 5 to Mr Desmond in recent weeks and that he had agreed to allow the Wall Street bank undertake work on it.

Goldman is understood to have begun sounding out institutional investors and received a broadly favourable response, although their ultimate appetite to buy shares in the TV business would depend on the valuation attached to Channel 5.

The analysis of a listing is at an earlier stage than a concurrent sale process being run by  Barclays' investment banks, which has drawn interest from more than 20 potential buyers.

Among those initially competing in the sale process were BSkyB, the owner of Sky News, and US media groups including Discovery Networks, Scripps, the owner of UKTV, and Viacom.

It is unclear whether any of the bidders are prepared to meet Mr Desmond's reputed £700m asking price, or whether a flotation of Channel 5 is being used as a 'stalking horse' option to maintain tension in the bidding process.

Banking sources said that seven parties remained in the auction last week, with that number expected to be narrowed further in the next few weeks.

Among the media and communications groups which are not currently in the process are BT and ITV, with the latter having publicly ruled out any interest in a takeover.

Mr Desmond has turned around the financial performance of Channel 5 since he paid just over £100m for the broadcaster of Big Brother and its celebrity offshoot in 2011.

The tycoon, who also owns the Daily Star and Daily Express and their Sunday sister newspapers, has cut costs and improved the performance of Channel 5's advertising sales operation.

He has also been assessing the sale of the Health Lottery, which he owns, believing that any buyer would have a ready-made platform for submitting a competitive bid for the National Lottery licence when it enters its next tendering process.

A spokeswoman for Mr Desmond's Northern & Shell holding company declined to comment while none of those understood to be interested in bidding for Channel 5 would comment.

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MPs Attack Sale Of Royal Mail Postcode Database

The Government has been slammed for selling a valuable database of every British postcode and address in last year's flotation of the Royal Mail.

Ministers were strongly criticised for including the register, which contains 1.8 million postcodes and all 28 million addresses, to help boost the share price in the initial public offering (IPO).

The cross-party Commons Public Administration Committee said the Postcode Address File (PAF) was a "national asset" which should have been retained and made publicly available to benefit businesses and the economy.

It said the PAF's sale achieved only "short-term gain" in last autumn's IPO and was an "unacceptable and unnecessary consequence of privatisation".

The committee said losing the database to the private sector has the potential to thwart economic innovation and growth.

Unions were highly critical of the Royal Mail privatisation

Committee chairman Bernard Jenkin said: "The sale of the PAF with the Royal Mail was a mistake. Public access to public sector data must never be sold or given away again."

The PAF holds all known Royal Mail delivery points in the UK.

The committee said an immense amount of work went into collecting the database and said it was of "huge direct value" to the economy.

The Royal Mail flotation was widely criticised for having an undervalued opening price.

The Government sold shares last October for 330p each, valuing the company's equity at £3.3bn.

Shares rose to more than 500p within a week of the sale, drawing more criticism of the float price.

Sky News City Editor Mark Kleinman later revealed investment bank JP Morgan had previously told the Government that the Royal Mail could be worth near to £10bn - 200% up on the float price.

Business Secretary Vince Cable opposed a planned pay rise the firm's boss

The PAC added: "The Postcode Address File was included in the sale to boost the Royal Mail share price at flotation.

"This takes an immediate but narrow view of the value of such data sets."

"The PAF should have been retained as a public data set, as a national asset, available free to all, for the benefit of the public and for the widest benefit of the UK economy.

"Its disposal for a short-term gain will impede economic innovation and growth. This was an unacceptable and unnecessary consequence of privatisation."

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Vodafone Shares Up In £6bn Spanish Ono Deal

Mobile phone giant Vodafone has seen its share price rise, after agreeing to buy Spanish cable operator Ono for £6bn.

Vodafone's shares were up almost 2% in early Monday trades in London.

The deal comes after it sold off its US joint-venture stake to Verizon for $108bn (£69bn).

"The combination of Vodafone and Ono creates a leading integrated communications provider in Spain and represents an attractive value creation opportunity for Vodafone," chief executive Vittorio Colao said.

"Demand for unified communications products and services has increased significantly over the last few years in Spain, and this transaction ... will accelerate our ability to offer best-in-class propositions in the Spanish market."

The deal is due to be completed in the third quarter of this year, subject to regulatory approval.

Ono has nearly 2 million customers but has struggled to compete in Spain with rivals such as Telefonica and Jazztel, which bundle in-home services.

British-based Vodafone already has about 14 million customers in Spain, but has faced fierce competition.

It has previously admitted southern Europe has been a problem region for growth in the wake of the eurozone crisis.

Sky News City Editor Mark Kleinman earlier revealed Vodafone initially approached Ono over the sale last February but was rebuffed at first.

Ono is owned by a large group of investors, including the private equity firms Providence Equity Partners, Thomas H Lee Partners, CCMP Capital Advisors, and Quadrangle Capital.

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Morrisons Suffers Staff Payroll Data Theft

Data from supermarket chain Morrisons' staff payroll system, including bank account details, has been stolen and published on the internet, the company has confirmed.

In an email sent to staff and seen by Sky News, the company called it an "illegal theft" of data.

The information has since been taken off the website that published the details.

A data disk was also sent to a regional newspaper with the stolen data.

The theft included names, addresses and bank account details of an unspecified number of staff. It employs around 100,000 people.

The email warned that "this affects colleagues from all levels of the organisation".

Morrisons, which became aware of the theft on Thursday, said: "Initial investigations suggest that this theft was not the result of an external penetration of our systems.

"We can confirm there has been no loss of customer data and no colleague will be left financially disadvantaged."

The email warning was sent to senior staff who were asked to inform workers

So-called insider threats have become a serious concern for companies in recent years, due to the volume of data stored and its accessibility.

Sky News has confirmed that the data watchdog, the Information Commissioner's Office (ICO), has been alerted to the theft and may launch a probe.

An ICO spokesman said: 'We have been made aware of reports that Morrisons have suffered a potential data breach, and we will be making enquiries."

Morrisons, which is Britain's fourth biggest supermarket group, said it had called in police and cyber crime experts.

The criminal inquiry into the data theft from Bradford-based Morrisons is being led by West Yorkshire Police.

Detective Chief Inspector Nick Wallen said: "We are aware of the situation and are supporting Morrisons and their investigation into these matters."

It has also started communications with banks handling staff accounts and a credit rating agency, and has set up a helpline for employees.

The group has come under pressure recently over its performance in the ultra-competitive sector.

On Thursday, it launched a counter-attack in the supermarket price war after losing more than just ground to its rivals in its last financial year.

The chain, which has struggled amid strong challenges from discounters and because of its slow response to the online grocery and convenience markets, confirmed a pre-tax loss of £176m for 2013/14 after a profit of £879m in the previous 12 months.

Like-for-like sales fell 2.8% in the period, and its share price suffered a 10% drop on Thursday.

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RBS Delays AGM Over Dividend Share Talks

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is to delay its annual shareholder meeting by several weeks as it seeks to cancel a special Government-owned share that prevents it paying dividends.

Sky News has learnt that RBS has decided to hold its 2014 AGM in late June amid advanced talks between the Treasury and the European Commission about the fate of the so-called Dividend Access Share (DAS).

Last year's AGM took place in May, while the event was traditionally held as early as April.  The decision by directors of RBS to delay the 2014 meeting was taken in the last few days.

The DAS was put in place as part of the £45.5bn taxpayer bail-out of RBS in 2008, and removing it would be a crucial step on the bank's long journey back to normality.

Doing so, however, will not be cheap for the state-backed lender.

The DAS, which confers enhanced dividend rights on RBS ahead of ordinary shareholders, was valued in the Treasury's books on March 31 last year at just under £1.5bn.

People close to the talks between the Treasury and Brussels said there was a realistic chance that an agreement could be reached by the end of June about the terms under which the DAS could be bought out without breaching state aid rules.

The cancellation of the DAS requires a vote that would only involve RBS's minority shareholders because of its status as what is known as a related-party transaction, meaning that the Government cannot vote on it.

The value of the DAS fluctuates based on a range of market data, including the RBS share price, the expected volatility of the stock over various time periods and the riskiness of the B-shares in RBS owned by the Government.

RBS's shares closed on Friday at 299.5p, suggesting that the cost of cancelling the DAS could be recorded at a lower level at the end of the month than it was last year.

That is because the cost reduces as RBS's share price rises, with a provision for cancelling the DAS altogether if the market price of RBS's ordinary shares exceeds 650p for at least 20 out of 30 consecutive trading days.

"The theoretical valuation does not necessarily reflect the price RBS would be prepared to pay to remove the DAS," the Treasury said in its annual report last year.

The DAS effectively acts as a block on dividend payments to ordinary investors because at least £1.8bn must be paid to the Treasury before any payout to other shareholders can take place.

Ross McEwan, the new RBS chief executive, is keen to resolve the issue of the DAS and said last month that "discussions with the UK Government...are well-advanced. A successful restructuring of the DAS will represent a significant step towards the normalisation of RBS's capital structure".

Insiders cautioned that the delay to the AGM did not offer a guarantee that the outstanding issues could be resolved in time and it remained uncertain whether the DAS-related resolution would be put to a vote on the same day.

The intention to do so is designed to avoid the cost of staging a separate investor meeting on another date.

Even if there is a vote on the DAS in June, the payment of the cancellation fee might not take place until ordinary dividends start being paid again.

With RBS not forecast to be profitable until 2016 and regulatory approval required for a resumption in dividend payments, that could mean the Treasury faces a three-year wait for the money.

News of the AGM delay comes weeks after Mr McEwan unveiled an annual loss of £8.2bn for 2013, and announced plans for an overhaul of RBS to focus it more clearly on improving service to personal and small business customers.

Delaying its AGM will also provide RBS with more time to resolve an issue that has provoked significant debate in Westminster: whether it should seek shareholder approval to pay out higher bonuses under new European rules.

Ed Miliband, the Labour leader, has demanded that the Government should block any attempt by RBS executives to secure approval for payments of up to twice the level of employees' salaries in bonus awards.

Mr McEwan has said that RBS needs the ability to pay competitively, implying that the bank will seek approval for the higher threshold, since every one of its rivals has said that they intend to do the same.

RBS declined to comment.

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Childcare Tax Break: Details To Be Unveiled

Details of a planned £1,200 childcare tax break for families is expected to be unveiled in next week's Budget, according to Sky sources.

Help with the expense of childcare is one of the things people have been pressing for said Sky's Political Correspondent Anushka Asthana, and is part of the Government's drive to help families as well as business.

Figures recently revealed the cost to families for part-time childcare is more than the monthly mortgage repayment.

It follows a consultation on tax breaks for families, and will replace the current childcare voucher system which means everybody who is working, including the self-employed, will be able to qualify for it.

The current voucher system depends on whether an employer agreed to it, and at the moment only 5% do.

It came as Chancellor George Osborne warned  of more "difficult decisions" to come in Wednesday's Budget.

Writing in The Sun on Sunday, he confirmed he will use his Commons statement to outline details of the Government's promised cap on welfare payments.

Details of the cap on welfare payments will also be unveiled in the Budget

And he underlined the need to "not waver" from plans to tackle the budget deficit and deal with Britain's debts.

He wrote: "That plan has delivered economic stability and low mortgage rates for families and it has laid the foundations for economic recovery."

But the deficit remained too high, which was why workers in the public sector faced another year of pay restraint and welfare spending would be capped from 2015.

"None of these decisions are easy, but the alternatives are worse," he wrote.

In a sideswipe at his opponents, Mr Osborne said: "Ed Balls and Ed Miliband haven't learned any lessons from the last time they crashed the British economy.

"The question is simple: Why would you give the keys back to the people who crashed the car?"

But Mr Balls, Labour's shadow chancellor, accused Mr Osborne of being "out of touch", and argued ordinary people had yet to see any improvement in their standard of living.

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Morrisons Suffers Staff Payroll Data Theft

Data from supermarket chain Morrisons' staff payroll system, including bank account details, has been stolen and published on the internet, the company has confirmed.

In an email sent to staff and seen by Sky News, the company called it an "illegal theft" of data.

The information has since been taken off the website that published the details.

A data disk was also sent to a regional newspaper with the stolen data.

The theft included names, addresses and bank account details of an unspecified number of staff. It employs around 100,000 people.

The email warned that "this affects colleagues from all levels of the organisation".

Morrisons, which became aware of the theft on Thursday, said: "Initial investigations suggest that this theft was not the result of an external penetration of our systems.

"We can confirm there has been no loss of customer data and no colleague will be left financially disadvantaged."

The email warning was sent to senior staff who were asked to inform workers

So-called insider threats have become a serious concern for companies in recent years, due to the volume of data stored and its accessibility.

Sky News has confirmed that the data watchdog, the Information Commissioner's Office (ICO), has been alerted to the theft and may launch a probe.

An ICO spokesman said: 'We have been made aware of reports that Morrisons have suffered a potential data breach, and we will be making enquiries."

Morrisons, which is Britain's fourth biggest supermarket group, said it had called in police and cyber crime experts.

The criminal inquiry into the data theft from Bradford-based Morrisons is being led by West Yorkshire Police.

Detective Chief Inspector Nick Wallen said: "We are aware of the situation and are supporting Morrisons and their investigation into these matters."

It has also started communications with banks handling staff accounts and a credit rating agency, and has set up a helpline for employees.

The group has come under pressure recently over its performance in the ultra-competitive sector.

On Thursday, it launched a counter-attack in the supermarket price war after losing more than just ground to its rivals in its last financial year.

The chain, which has struggled amid strong challenges from discounters and because of its slow response to the online grocery and convenience markets, confirmed a pre-tax loss of £176m for 2013/14 after a profit of £879m in the previous 12 months.

Like-for-like sales fell 2.8% in the period, and its share price suffered a 10% drop on Thursday.

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