US Sees Weak New Job Gains In December

The US economy added 74,000 new jobs in December, a level far below analysts' expections.

The figure takes unemployment to a five-year low, but industry experts had expected the US economy to add 197,000 new jobs last month.

The job creation figure, released by the Labor Department, is watched closely as a sign of the economy's health.

Meanwhile, the unemployment rate in the world's biggest advanced economy dropped to 6.7% - because fewer people were seeking work.

Foreign currencies, such as sterling, immediately strengthened against the dollar.

Analysts played down fears that the lower than expected rate of growth was a sign that the economy is stalling.

Joel Naroff, president of Naroff Economic Advisors, said: "I don't think the Fed is going to be panicked by this."

Dan Greenhaus, chief global strategist at brokerage firm BTIG, said: "We stop short of making larger observations based on this number.

"The economy, based on any number of other indicators, has been picking up steam of late which makes today's number ... curious."

The leisure, manufacturing and services sectors all added jobs in December.

But the construction sector shed 16,000 jobs - the biggest drop in 20 months - during a month when much of the country experienced bad weather.

The overall outlook for the US economy remains positive, with recent figures for consumer spending and industrial output strong.

The economy is predicted to grow by 3% in 2014, up on 1.7% last year.

The Federal Reserve responded to recent positive signs by announcing last month that it would start "tapering" its monetary stimulus programme by $10bn, from $85bn to $75bn.

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Wall Street Giants To Aid £1bn Travelex Sale

By Mark Kleinman, City Editor

The foreign currency provider Travelex has enlisted a pair of Wall Street titans to aid a plan that will involve a £1bn sale or flotation during 2014.

Sky News understands that Travelex has drafted in Goldman Sachs and JP Morgan to work on a deal that could value the stake held by the company's founder, Lloyd Dorfman, at £300m or more.

While a transaction is not imminent, insiders said that the appointment of the two investment banks was a signal that one was likely this year.

Apax Partners, the private equity group, has owned a controlling stake in Travelex since 2005 and is keen to offload its stake, on which it will augment an already handsome profit.

City sources said that JP Morgan was focusing on an initial public offering that would see Travelex make its stock market debut, while Goldman Sachs has been asked to field approaches from potential buyers of the company in addition to assisting with a flotation.

Rothschild was brought in last autumn to help evaluate options for the business.

A stock market listing, which would probably see Travelex join the FTSE-250 index of the public companies ranked between 101 and 350 by size on the London markets, remains the company's preferred route, the sources added.

Travelex was set up in 1976 by Mr Dorfman, who remains its chairman and second-largest shareholder. Mr Dorfman is one of Britain's most successful entrepreneurs, and is thought likely to remain on the board if it decides to pursue a listing.

Travelex has been reshaped since Peter Jackson, its chief executive, was recruited from Lloyds Banking Group in 2010, with the sale of its card management and global payments operations for an aggregate total of nearly £1bn.

Mr Jackson said last year that trading during the crucial summer period had been strong, and the business is understood to have continued to perform well since then.

A Travelex spokesman declined to comment.

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Rolls-Royce Considers Producing Its First 4x4

Luxury car maker Rolls-Royce is considering producing its first four-wheel drive vehicle as it reports its fourth year in a row of record sales.

Chief executive Torsten Mueller-Oetvoes told Sky's Jeff Randall Live programme that if they decide to go ahead with the plan, the new vehicle could be in showrooms in four years' time.

"It's a very interesting segment, and I'm also convinced that we will see in that segment a part of luxury, and for that reason we are currently looking into that," he said.

"There are no firm plans on our hands so far. We have time, our company is basically on the edge of full capacity, and for that reason there's no need to rush."

He said Rolls-Royce is now selling cars in 40 countries. Its biggest markets remain China and the US, but it is also seeing "remarkable growth" in Japan.

The BMW-owned company plans to hire another 100 employees at its Goodwood plant in West Sussex to meet the extra demand - taking the total workforce to 1,400.

But Mr Mueller-Oetvoes denied the firm - which is celebrating its 110th anniversary this year - would need to open a manufacturing plant overseas to further increase production.

"Rolls-Royce belongs to the UK and will always be produced in the UK," he said.

Rolls-Royce has seen a ten-fold increase in sales in the past decade, from 300 cars in 2003 to 3,630 last year.

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Record Online Xmas Sales Boost Festive Figures

Increasing use of tablets and smartphones and speedy delivery times are the major factors behing a sharp rise in online shopping before Christmas.

Web sales growth accelerated to 19.2% compared with the same month in 2012 - the fastest rate for more than three years.

However, overall UK retail sales grew by just 0.4% on a like-for-like basis.

The data from the British Retail Consortium (BRC) survey carried out by KPMG showed online trade represented 18.6% of total non-food sales in December, up from 16.5% the year before.

BRC director general Helen Dickinson said: "More of us clicked into Christmas than ever before, with online non-food sales growth putting in its best performance since March 2010 and accounting for nearly 20% of spending.

"The surge in the use of tablets and smartphones last year, together with the ever-faster delivery times achieved by an increasing number of retailers, has provided a new spur of growth to online shopping."

David McCorquodale, KPMG head of retail, said "Whilst store sales continue to flatline, online sales remain the main driver of growth for the sector, contributing nearly three quarters of the uptick in non-food sales in the last quarter of 2013.

"The winners this Christmas were those retailers with slick multichannel operations, who could offer consumers the flexibility to shop how, and when, they wanted to."

In clothing, online purchases represented 21.2% of sales in December, up from 18% in 2012, while furniture and flooring products bought on the internet represented nearly a third of all sales, at 32.4% - though this was down a little on 32.6% last year.

The figure for electrical goods and toys was 14.4%, up from last year's 11.9% but a fall on the 15.5% who shopped online for these goods in November.

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Energy Consumers 'Worse Off' After Bill Cuts

A consumer group claims households will remain worse off after the last of the major energy firms confirmed reductions to bills after the Government's green levy shake-up.

npower said dual fuel households would receive a £38 discount, expected to affect approximately 2.6 million customers, effective from February 28.

It also confirmed that 500,000 electricity only customers would receive an additional £12 rebate as part of the Government's Warm Homes Discount scheme.

Chief executive Paul Massara said: "This reduction is a reflection of the recent review of two government policies and their impact on household energy bills and it is a welcome start.

SSE will not reduce its prices until late March

"The natural next step would be to review all the impact of all policies that add to business and household energy bills."

The big six announced average price hikes of 6.6% but the recent price reversals would reduce this to 4.4%, according to data from U-Switch.

The price comparison site claimed that despite the bill reductions announced in recent weeks, households would still be out of pocket.

It calculated that average household energy bills soared from £1,212 to £1,281 ahead of Christmas and will fall to £1,264 once all the price changes take effect - leaving consumers £53 worse off.

On Tuesday, SSE confirmed its plans to cut its dual fuel prices by 3.5% from March 24 - taking the levy changes into account.

ScottishPower had previously confirmed a 3.3% decrease from January 31 though firms are facing pressure to implement the cuts to bills immediately.

British Gas has already reduced prices, announcing in early December that it would lower bills by 3.2% on New Year's Day, effectively reducing hikes that saw prices go up by 10.4% for electricity and 8.4% for gas in November.

EDF and E.ON took the levy changes into account in the recent round of price rises, increasing tariffs on average by 3.9% and 3.7% respectively - far less than the increases announced by rivals.

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'Project Cook' Signals Huge RBS Cost Cuts

By Mark Kleinman, City Editor

The new head of Royal Bank of Scotland (RBS) is preparing to take another axe to the lender's cost-base in a move which could herald thousands more job cuts.

Sky News has learnt that Ross McEwan is working on the plans, to be announced alongside the taxpayer-backed bank's annual results in six weeks' time, under the codename Project Cook.

The name is understood to be a reference to Captain James Cook, the English explorer who sailed along the coast of Australia in 1770, and is a nod to the RBS chief executive's success in cutting costs at Commonwealth Bank of Australia, where he ran its retail operations for five years.

Mr McEwan's plans for RBS will not be finalised until next month, when he will announce the details to the City, but he has told colleagues that he expects "very substantial" cost cuts to be identified as part of his review.

The bank's workforce is already one-quarter smaller than the 161,000 people who were employed by it when taxpayers injected £45.5bn to rescue it in 2008.

More than 40,000 people have left RBS since then, many through redundancy, with others leaving as part of the sale of dozens of businesses by Stephen Hester, Mr McEwan's predecessor.

People close to Project Cook said that Mr McEwan would further shrink RBS's markets and international banking operations, as well as setting out plans for greater automation of high street banking services.

Over time, this would result in far more cost-effective operations that would require a smaller headcount, they said.

About 120,000 people now work for the Edinburgh-based bank.

In RBS's third-quarter results statement in November, the bank said that Mr McEwan was launching a review of its operations in an effort "to capture the full potential of its customer businesses".

"The review will aim to improve the bank's performance and effectiveness in serving its customers, shareholders and wider stakeholders.

"This will include detailed plans to realign the Group's cost base, with a cost:income percentage target in the mid 50s, down from 65% currently."

Even if RBS's income remained constant, that shift would entail slicing hundreds of millions of pounds from RBS's cost-base, but the sale of Citizens in the US and other business units will reduce the bank's profitability in the short term.

"The aim is to put more capital and resource into areas where they generate income, and that will be one focus of the review next month," said one source.

Since the November announcement, RBS has been hit by a series of further IT systems breakdowns which have inconvenienced millions of NatWest, RBS and Ulster Bank customers.

George Osborne, the Chancellor, is being kept informed about the progress of Project Cook, as is UK Financial Investments, the agency which manages taxpayers' 81% stake in RBS.

RBS, which declined to comment on Wednesday, is not alone among UK banks seeking to reduce its workforce.

Barclays, HSBC and Lloyds Banking Group have each either carried out or signalled plans to cut tens of thousands of roles as retail banking customers increasingly frequent use online and mobile-based services.

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Co-Op: Regulator Stands By Flowers Decision

A senior City regulator has told MPs he stands by his decision to approve the appointment of disgraced former Co-op Bank chairman Paul Flowers, arguing it was "correct at the time".

Clive Adamson, director of supervision at the Financial Conduct Authority (FCA), said the Methodist minister seemed to be the right person to control the "unruly" board at the bank, despite him later becoming embroiled in a drugs scandal and displaying a lack of knowledge about banking.

He said that Mr Flowers was "not the same individual" as he seemed at a later meeting before the Treasury Select Committee last year, when gave a stumbling performance and seemed unable to give basic facts and figures.

Mr Adamson was quizzed by MPs on the same committee about a 90-minute meeting he and two colleagues at the now-defunct Financial Services Authority held with Mr Flowers ahead of his appointment in 2010.

At the meeting, it was agreed two deputies would be needed to assist Mr Flowers as chairman because of his lack of banking knowledge.

Mr Flowers gave a stumbling performance when he appeared before MPs

He told the Treasury Select Committee: "I stand by the decision I made at the time.

"I am as surprised as all of us as to the events that surrounded Mr Flowers' apparent misdemeanours."

Following close questioning by MPs, Mr Adamson eventually agreed that the FSA overall made a mistake, but insisted he stood by the decision on Mr Flowers.

"With the benefit of hindsight, yes we did get it wrong," he said.

But committee member Jesse Norman likened it to a doctor saying: "The operation was a success but the patient died."

The Co-op Bank last year had to be rescued after a £1.5bn hole was discovered in its finances.

Regulators have announced the launch of investigations that could see former senior managers fined or banned from working in the industry.

Mr Adamson told the committee he was surprised by the former chairman's answers during his appearance before MPs last year, and that at his own meeting with Mr Flowers he had been "much more cogent".

But committee chairman Andrew Tyrie told him: "It is an extraordinary state of affairs that you are asking us to believe."

He criticised the decision to put Mr Flowers in place to oversee the board, saying: "Your solution was to put a financial illiterate in charge of it."

Mr Adamson said he was disappointed that no one "in public life or indeed his other associations" who may have "known more about some of his misdemeanours" ever alerted regulators.

But he admitted that he had never before approved a chairman with such little experience, telling MPs: "There was no hiding the fact that he didn't have sufficient experience so the decision was around how that could be mitigated."

Mr Adamson said Mr Flowers' 1981 conviction for gross indecency was disclosed but it was not considered relevant and he was not questioned about it. He said a separate drink-driving conviction was not known.

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Treasury Takes Step Towards £19bn Lloyds Sale

By Mark Kleinman, City Editor

The agency which manages taxpayers' £19bn stake in Lloyds Banking Group has asked Britain's biggest high street lender to work on plans for a share sale to the general public.

Sky News has learnt that UK Financial Investments (UKFI) wrote to the Lloyds board during the Christmas break to ask it to write a prospectus that would accompany a major retail offering.

The development underlines the Treasury's intention to sell a large chunk of its remaining 33% shareholding in Lloyds this year, although an insider said the timing had not yet been decided.

A formal announcement from the Treasury about a new share sale will not take place until after Lloyds' full-year results at the end of next month.

Antonio Horta-Osorio, its chief executive, is likely to signal then that he has been given regulatory approval to resume dividend payments to ordinary shareholders.

George Osborne, the Chancellor, believes that a sale in which the public can participate could be politically useful as well as delivering a financial boost to the Treasury.

He is understood to be undeterred by the controversy surrounding the privatisation of Royal Mail, which saw some private investors excluded from buying shares.

Shares in Lloyds closed on Tuesday at 82.51p after a trading session in which the stock reached a new 12-month high.

The bank now has a market value of £57.17bn, having risen by more than 63% during the last year and meaning that the Government's remaining 33% stake is worth roughly £19bn.

Analysts believe it will be possible to sell a substantial chunk of Lloyds at a premium to the 73.6p taxpayer break-even price, especially after Mr Horta-Osorio sets out a generous dividend policy.

Mr Osborne has made plain his interest in a sale of Lloyds shares to the public and reiterated that ambition in his autumn statement last month, although he stopped short of spelling out details such as the timing or size.

Institutional investors will also be asked to participate in the sale of the remaining stake given its sheer scale.

The Government offloaded a 6% stake in Lloyds in September in a deal which the National Audit Office concluded had resulted in loss to the taxpayer of more than £200m but which nevertheless represented good value.

That transaction, which yielded £3.2bn for the Government, saw the taxpayer's stake reduced from 39% to 33%.

Insiders said that a team of executives at Lloyds were beginning work on a prospectus and that it was likely to be "broadly ready" within weeks.

Lloyds declined to comment on Tuesday.

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Bank Regulators Kick Off Formal Co-Op Probes

By Mark Kleinman, City Editor

Banking watchdogs are poised to kick off formal probes into last year's crisis at the Co-operative Bank in a move which could lead to significant fines or bans for former directors of the lender.

Sky News understands that the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are likely to confirm this week that they are commencing enforcement investigations into the circumstances which led to the Co-op Bank requiring a £1.5bn rescue package.

An insider said that statements confirming the widely-expected decisions by the two regulators could come as soon as Monday, although they could yet be delayed.

The move to begin formal enforcement investigations could result in substantial financial penalties being imposed on the Co-op Bank as well as former directors if they are deemed to have been reckless in their stewardship of the lender.

The recapitalisation of the bank, which was approved by bondholders last month, saw hedge funds take majority ownership and the Co-op Group left with a 30% stake.

The FCA and PRA inquiries are among a host of investigations launched into the crisis at the previously mutually owned bank, which was left saddled by hundreds of millions of pounds of toxic assets, partly as a result of its merger with the Britannia Building Society in 2009.

The Treasury Select Committee will continue to take evidence on Tuesday about the ill-fated effort by the Co-op to acquire 630 Lloyds Banking Group branches.

A separate probe commissioned by the Treasury and undertaken by an as-yet unidentified figure from the world of banking or law will also take place.

In a statement in November, the Treasury said its inquiry would "cover the actions of relevant authorities (regulators and government) and the institution itself, including prudential issues, governance (including the appointment of senior staff) and acquisitions".

That investigation will not, however, begin until after any PRA and FCA enforcement action has been concluded. A shortlist of candidates to oversee the probe has been drawn up with an announcement about the chosen individual expected in the coming weeks.

The FCA said in November that it "fully agrees that the investigation should be led by an independent person, and looks forward to supporting them in their work. The FCA will make its full resources available to support the investigation".

It said: "The timing of the investigation must not prejudice any other criminal or regulatory proceedings. The FCA is already undertaking work to establish whether it should commence a formal enforcement investigation and expects to reach a conclusion shortly."

The PRA, the arm of the Bank of England which is responsible for maintaining financial stability, issued an identical statement.

Euan Sutherland, the Co-op Group chief executive, has also paved the way for two further reviews.

One, led by Sir Christopher Kelly, will examine historical events at the mutual, while Lord Myners, the former City minister who recently joined the group's board, will assess the need for future corporate governance reforms.

Neither the FCA nor PRA would comment on Monday.

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Janet Yellen: Federal Reserve Boss Is Revealed

Federal Reserve vice chair Janet Yellen will be the new head of the world's most powerful central bank - the first woman to hold the position.

The 67-year-old was Barack Obama's choice and she earned cross-party support in the bitterly divided chamber.

"The American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of American workers and their families," the President said in a statement.

"As one of our nation's most respected economists and a leading voice at the Fed for more than a decade - and vice chair for the past three years - Janet helped pull our economy out of recession and put us on the path of steady growth."

However, the 56-26 vote was still among the closest in the 100-year history of the institution.

"Americans should feel reassured that we will have her at the helm of the Fed as our nation continues to recover from the Great Recession," said Senate Banking Committee chairman Tim Johnson.

"Dr Yellen's leadership will also be critical as the Fed completes Wall Street reform rulemaking and continues to enhance the stability of our financial sector."

Dr Yellen was President Obama's choice

Dr Yellen will replace Ben Bernanke who steps down on January 31 after eight years in the job.

She has built a strong reputation as an academic economist, and as a veteran policymaker at the Fed she is not expected to veer far from the central bank's existing policies.

She has a long-term interest in the impact of joblessness on the economy, and has helped keep Fed policy focused on bringing down the unemployment rate.

She has also been closely identified with the Fed's opening up of its policy thinking, with the central bank communicating what it sees in the economy and the expected direction of monetary policy far more openly than 10 years ago.

Her nomination was contentious even among some Democrats.

Joe Manchin of West Virginia, had been "troubled by the unchecked quantitative easing policies" of the Fed.

"In light of recent news that the Fed will begin to taper its easing by $10bn a month starting in January, I now feel comfortable supporting Vice-Chair Yellen's nomination," he said in a statement.

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House Prices 'Jumped 1.4% In December'

House prices in the UK rose by the biggest amount in more than four years in December, according to mortgage lender Nationwide.

It measured a 1.4% increase in the month - its best performance since August 2009 - leaving annual growth in the year to December at 8.4%.

The surge, Nationwide calculated, raised the average house price to £175,826 but London continues to outperform the rest of the country.

Prices in the capital are now 14% above their 2007 peak with the price of a typical London home at £345,186.

The North of England remains the weakest performing region though each region achieved growth in the three months to the end of December.

The latest data will further fuel concerns that the second phase of the Government's Help To Buy scheme is only likely to raise prices but it appears it is helping the construction industry that was hammered by the financial crisis.

Official figures have shown that new home-building boosted Britain's construction industry in December.

It reported its second-fastest month of growth in more than six years - although it was slightly lower than the previous month.

Construction PMI fell to 62.1 in December from November's reading of 62.6, the index's highest level since August 2007. 

And the upward trend looks set to continue. The number of people attempting to get on the property ladder using the Government's Help to Buy scheme has trebled in the last two months.

In November, figures showed in the first month of the scheme's launch more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage.

Prime Minister David Cameron has said the scheme led to 6,000 extra mortgage applications between October and December.

Separate figures from the Bank  of England showed the number of mortgage approvals at their highest level since January 2008 with almost 71,000 loans handed out in November. 

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Osborne: More Cuts Are Needed In 2014

George Osborne will paint 2014 as "the year of hard truths" by warning voters that only more austerity measures can pay for tax cuts and better job prospects.

In a speech setting out his priorities for the next 12 months, the Chancellor is to warn that despite an improved economic outlook there is "still a long way to go".

He will suggest that Labour wants to take Britain back to "borrowing and spending and living beyond our means - and let the next generation pay the bill".

Prime Minister David Cameron kicked off an economic offensive on Sunday by committing to sustained rises in the state pension until 2020 and emphasising his desire to offer more tax cuts.

He said that easing the burden on lower earners was his priority but faced Labour claims of planning a new "tax cut for millionaires" after failing to rule out cutting the 45p top rate of income tax.

In Birmingham later today, Mr Osborne will tell voters that tax cuts can only be afforded if further significant reductions are made in the public spending the revenues paid for.

"As a result of the painful cuts we've made, the deficit is down by a third and we're borrowing nearly £3,000 less for every one of you and for every family in the country," he will say.

"That's the good news. The bad news is: there's still a long way to go.

"We're borrowing around £100bn a year - and paying half that money a year in interest just to service our debts. We've got to make more cuts.

"That's why 2014 is the year of hard truths. The year when Britain faces a choice.

"Do we say: 'the worst is over; back we go to our bad habits of borrowing and spending and living beyond our means - and let the next generation pay the bill'.

"Or do we say to ourselves: 'yes, because of our plan, things are getting better. But there is still a long way to go and there are big, underlying problems we have to fix in our economy'."

But shadow chief secretary to the Treasury Chris Leslie said: "George Osborne should admit his policies have failed and led to a cost-of-living crisis.

"While millions of ordinary working people are worse off under the Tories, he and David Cameron are paving the way for yet another top rate tax cut for millionaires.

"The reason more spending cuts are needed after 2015 is because his failure on growth and living standards since 2010 has led to his failure to balance the books.

"What we need is Labour's plan to earn our way to higher living standards for all, tackle the cost-of-living crisis and get the deficit down in a fairer way."

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House Prices 'Jumped 1.4% In December'

House prices in the UK rose by the biggest amount in more than four years in December, according to mortgage lender Nationwide.

It measured a 1.4% increase in the month - its best performance since August 2009 - leaving annual growth in the year to December at 8.4%.

The surge, Nationwide calculated, raised the average house price to £175,826 but London continues to outperform the rest of the country.

Prices in the capital are now 14% above their 2007 peak with the price of a typical London home at £345,186.

The North of England remains the weakest performing region though each region achieved growth in the three months to the end of December.

The latest data will further fuel concerns that the second phase of the Government's Help To Buy scheme is only likely to raise prices but it appears it is helping the construction industry that was hammered by the financial crisis.

Official figures have shown that new home-building boosted Britain's construction industry in December.

It reported its second-fastest month of growth in more than six years - although it was slightly lower than the previous month.

Construction PMI fell to 62.1 in December from November's reading of 62.6, the index's highest level since August 2007. 

And the upward trend looks set to continue. The number of people attempting to get on the property ladder using the Government's Help to Buy scheme has trebled in the last two months.

In November, figures showed in the first month of the scheme's launch more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage.

Prime Minister David Cameron has said the scheme led to 6,000 extra mortgage applications between October and December.

Separate figures from the Bank  of England showed the number of mortgage approvals at their highest level since January 2008 with almost 71,000 loans handed out in November. 

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Cameron's Pledge To Guarantee State Pensions

Voters 'Won't Back Tories' In 2015

Updated: 1:13am UK, Sunday 05 January 2014

More than a third of people who voted Conservative in the last general election say they would not vote for the party in the next election, according to a poll carried out by Lord Ashcroft.

The former Tory Party deputy chairman's findings revealed around half of the 'defectors' had switched allegiance to the UK Independence Party, with a fifth aligning themselves with Labour or the Lib Dems and a third undecided.

But in a more positive message for the Tories, 56% of those 'defectors' believe David Cameron is the best of the three main party leaders and say their preferred outcome in 2015 would be a Conservative majority.

The poll showed the 'defectors' significantly outweigh the number of new backers from other parties since 2010, making it more difficult for David Cameron to win an overall majority in 2015.

Commentary on the research, Lord Ashcroft said: "This research shows it is far from impossible for the Tories to win outright. But to do so they will need the votes of everyone who supported for them last time, plus practically everyone who is even prepared to think about doing so next time."

The poll found many voters in all camps gave at least a grudging recognition that the coalition had done well in dealing with the economy.

Mr Cameron and George Osborne were more trusted than Ed Miliband and Ed Balls to manage the economy in the country's best interests by a margin of 57% to 43%.

But it would be "hard" to persuade people that they were feeling the benefits of improved growth rates in their own lives given that the Government had no scope for large giveaways.

In fact a small majority 54% said they expected no improvement or a slight worsening in the economy over the next one or two years - with 46% anticipating a significant improvement.

The findings are from Project Blueprint: Phase 4, the latest round of Lord Ashcroft's research into the Tories' prospects of winning the next election outright.

The Tory peer said the Conservatives need to offer a clear direction to win the next election, not simply highlighting Labour's weaknesses and relying on progress achieved since 2010.

"Drawing a contrast with Labour and highlighting progress on welfare, immigration and the macro economy, important though they are, will only take the Tories so far," he said.

"It needs to be clearer what would be on offer under a new Conservative government. It is one thing to say don't turn back, but we also need to know where we're going."

The poll interviewed 8,053 adults online between November 4 and 10.

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