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Chancellor Rishi Sunak has warned Britons to brace for even higher energy costs in autumn

   News / 07 Feb 2022

Published: 07 February 2022
Location: London, UK

By Suzanne Evans, Director, Political Insight


Chancellor Rishi Sunak has warned Britons to brace for even higher energy costs in autumn as the price cap of £1,971 is likely to rise further in the autumn, as Ofgem wants to review the price cap every three months, instead of every six months at present. It says the change would help bring some stability for consumers and firms in fast-moving market. Dozens of energy suppliers went out of business in the last six months because of the massive rise in the price that energy companies had to pay for the gas, a cost they were unable to pass on to customers. Now, Ofgem have given itself the power to step in should this happen again over the next six-month period, meaning that bills could go up again before October. Energy bills are set to rise 54% from £693 to a typical £1,971 a year. Nearly three million households were already behind on their energy bill payments even before the price rise last October.
 
The boss of British Gas owner Centrica has also warned that household bills could see a further increase in the autumn on top of the 54% hike set to take place in April. Chief executive Chris O'Shea told Sky News that "nobody really knows" where the wholesale costs of energy - which are running about four times higher than a year ago - will go.
 
The collapse of 28 energy suppliers during the gas price crisis has cost each household about £68, the boss of the energy regulator Ofgem has said. Jonathan Brearley told the BBC that about 10% of the energy price cap rise covered the cost of firms going bust.
 
Shadow climate change minister Ed Miliband has said the fact oil giants BPand Shell are on course to make a combined profit of almost £40bn this year from the rocketing price of petrol and gas means they should face a windfall tax to ease the cost of living crisis. Miliband said the oil and gas industry’s “booming” profits meant it was legitimate to impose a surcharge that would prevent millions of families from suffering hardship. The tax is also supported by Tory MP and former energy minister Chris Skidmore, who called it “the right way to go”, and the TUC, which said it was needed to prevent the growth of food banks and the prospect of fuel poverty for millions of people. A report in the Guardian on Saturday also quoted Tessa Khan, an international climate change and human rights lawyer and founder of campaign group Uplift, as saying it was “obscene” that Shell’s shareholders were getting rich at a time when people face “real hardship”. A report for the left-of-centre thinktank Common Wealth found that Shell and BP have channelled £147bn to shareholders via dividends and share buybacks over the past decade, with rival North Sea producers and the big six energy suppliers contributing another £47bn.
 
Downing Street is in talks with Macquarie Group, the Australian lender, to secure a headline-grabbing £10bn investment in British infrastructure that would represent one of the largest-ever such commitments by an overseas company. Sky News has learnt that officials at Number 10 have been negotiating with executives at the bank about the plan - which would be earmarked for energy and digital infrastructure projects - for a number of weeks. An announcement was expected to be made during a state visit to Australia by the prime minister, which had been tentatively scheduled for the middle of this month. The trip has now been postponed, owing to Mr Johnson's domestic crisis and mounting challenges on the international stage, but is expected to be rearranged if he survives the immediate threat of a leadership challenge, according to insiders.
 
Britain and South Korea will today sign an agreement to reinforce pandemic-damaged supply lines for key products like semiconductors, with trade minister Anne-Marie Trevelyan due to host her counterpart Yeo Han-koo in London. The ministers will also begin work on an improved trade deal as Britain looks to use its exit from the European Union to build stronger ties with faster-growing economies throughout Asia and the Pacific. "This is our Indo-Pacific tilt in action – strengthening ties with one of the largest economies in the world," Trevelyan said in a statement. Today’s meeting is a precursor to formal trade negotiations, which are expected to begin later this year, to improve an existing agreement which effectively keeps in place the terms Britain had as a member of the EU.
 
Private car parks will have to display prices more clearly, introduce a fairer system for appeals and give drivers a grace period for lateness as part of a government crackdown. The BBC says most fines will be capped at £50 - down from £100 currently - although higher financial penalties will remain for more serious breaches such as parking in Blue Badge bays. Operators that do not follow the rules could be barred from collecting fines from motorists, the government said. Minister for Levelling Up Neil O'Brien said: "Private firms issue roughly 22,000 parking tickets every day, often adopting a system of misleading and confusing signage, aggressive debt collection and unreasonable fees designed to extort money from motorists.” Under the proposals, the cap on parking fines in private car parks will fall by 50% in most cases, benefiting millions, the government says. The AA called the plans "much needed".
 
Meta, previously known as Facebook, has been slapped with a £1.5m fine from the UK’s competition watchdog for failing to cooperate with an investigation into its $400m (£295m) takeover of Giphy. The Competitions and Markets Authority (CMA) said on Friday that the social media platform did not alert the regulator in advance of three key staff members leaving the firm, Yahoo Finance UK reports. These individuals had previously been included on a list of key staff provided to the CMA by Meta, reflecting their importance. Failure to report this information was a breach of initial enforcement order (IEO), under which Meta must inform the competition authority of any material changes to the business. These IEOs prevent companies from completing a merger while it is being examined by the CMA. It is the second time the company has been issued a penalty from the CMA. In October, it was fined £50m after it significantly limited the scope of compliance reports, despite repeated warnings.
 
UK consumer confidence hit a seven-month high in January amid improvement in manufacturing output and easing of supply chain challenges. According to the latest business trends report from accountancy firm BDO, the index jumped by 7.84 points to 11.752 following an increase in consumer activity. As well as easing supply chain pressures, fewer concerns around the Omicron variant also helped to boost business outlook, Yahoo Finance UKsays. The figures for January mark a turnaround from December, when concerns over the new COVID strain helped drag the output index down by 3.31 points. The data also showed that businesses also appear confident that the long-term threat of coronavirus is decreasing. BDO’s optimism indexincreased to 104.91 last month, its highest value since July 2021, and 1.10 points above December’s cautious outlook. The index now sits well above the 95 level, which marks positive trend growth.
 
The UK construction sector grew at its fastest pace in six-months in January after higher levels of commercial work, according to the latest data from IHS Markit, which showed business activity rose for the 12th month in a row last month. The IHS/Markit construction purchasing managers index (PMI) came in at 56.3 in January, up from a three-month low of 54.3 in December, marking the strongest output expansion since July 2021. Any reading above 50 indicates growth.
 
The chairman of Britain's biggest supermarket has warned "the worst is yet to come" on rising food prices. Tesco's John Allan told the BBC he was aware people were on very tight budgets and having to choose between food and heating "troubles us". But he said grocers and suppliers were not immune from rising energy costs. Allan also defended Tesco against claims from food poverty activist Jack Monroe that the costs of basic staples were rising faster than other goods.
He estimated supermarket prices could rise as much as 5% by the spring as energy and other costs feed through to the High Street, adding that Tesco's food price inflation in the last three months had been contained to about 1%.
 
The administrators of Bulb Energy are set to appoint Lazard to handle the sale of the business, according to a report by the Financial Times on Friday. Bulb, the seventh largest energy supplier in Britain was last year placed into "special administration" as it was deemed too large to be absorbed by a bigger player. Lazard had sought to find Bulb new investors in 2021 and to sell it to a rival but the process came to nothing, the FT explained. Reports published by Teneoand administrators for Bulb's parent company Simple Energy have shown that it owed £254m to customers when it had to be rescued with a £1.7bn taxpayer loan.
 
Lord Tebbit’s son William Tebbit has sold a multimillion-pound stake in his business converting vegetable oil into fuel for lorries to FTSE 100 energy giant BP.  Lord Tebbit, presided over the phased privatisation of BP as trade and industry secretary under Margaret Thatcher. BP has bought a 30% shareholding in Green Biofuels in a deal that is estimated to value the business at £30m.
 
Waterstones has reportedly entered talks to buy family-owned academic bookseller Blackwell's. According to Sky News, Waterstones, which is owned by US-based hedge fund Elliott Advisors, has secured a period of exclusivity within which to negotiate a deal. Sky first reported earlier this week that Blackwell's had put itself up for sale after scrapping plans to hand over ownership of the business to its employees.
 
A pub said to be the oldest in Britain has gone into administration after 13 centuries. The Metro newspaper says Ye Olde Fighting Cocks in St Albans, Hertfordshire has survived wars, plagues and financial crisis after being established in 793AD, but the business was left devastated when Covid hit and has been unable to survive. Announcing the sad news, landlord Christo Tofallisaid he had been left ‘heartbroken’. In a post on Facebook, Tofalli revealed that ‘things were already extremely tough’ before the pandemic due to escalating business rates and taxations…but we were able to survive and were following an exciting five-year plan and were hopeful for the future…However, the Covid-19 pandemic was devastating and our already tight profit margins gave us no safety net.”
 
Home fitness firm Peloton Interactive is turning the heads of potential buyers such as e-commerce giant Amazon and sports brand Nike, the BBC reports. Sales of Peloton exercise bikes and treadmills soared during the pandemic as people stayed at home but demand has slowed after lockdowns were eased. The company has also faced several other challenges in recent months, sending its shares sharply lower. Amazon declined to confirm or deny whether it is considering making an offer for the US exercise equipment maker. Peloton and Nike did not immediately respond to requests for comment.
 
The US saw strong hiring last month, with employers adding 467,000 jobs, the Labor Department said, much better than analysts had predicted. The jobless rate inched up from 3.9% in December to 4%, but that was due to more people looking for work. Analysts said the robust job creation was likely to add to the pressure on the US central bank to raise interest rates next month.


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