Published: 23 May 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Governments need to subsidise the cost of food and energy for the poorest members of society, the head of the International Monetary Fund (IMF) has told the BBC.
The Treasury must take responsibility for tackling soaring inflation and the cost-of-living crisis, Huw Pill, the Bank of England’s chief economist has said, while urging Chancellor Rishi Sunak to set out his plans to tackle the crisis. The comments are the clearest sign yet of a rift between the Treasury and the Bank as prices rise at their fastest rate for 40 years, The Telegraph claims. Asked about what support he could offer to households, Mr Pill said: “You should ask my friends, colleagues and counterparts at the Treasury. The ball is in their court.” The Bank cannot be “the saviour for all possible events”, Pill told Bloomberg, adding that independence is important to ensure policymakers can “be protected from political forces trying to make us do other things”.
The 2022 Sunday Times Rich List has revealed that billionaire brothers Sri and Gopi Hinduja are the wealthiest people in the UK. The brothers, who run the Mumbai-based conglomerate Hinduja Group, saw their fortune jump by more than £11 billion to over £28 billion. James Dyson moved up to second on the list, followed by David and Simon Reuben and family. Roman Abramovich slipped out of the top 20 and fellow Russians Alisher Usmanov and Mikhail Fridman dropped down the list after the value of their assets was battered by financial measures in response to Russia’s invasion of Ukraine. The List also revealed there are now a record 177 billionaires in the UK with a combined fortune of £653bn.
A group of ‘patriotic millionaires’ have joined protests against the World Economic Forum gathering of the business and political elite in Davos, Switzerland, demanding that governments “tax us now” to tackle the burgeoning gulf between rich and poor, The Guardian says. One of them, Phil White, a former business consultant said: “While the rest of the world is collapsing under the weight of an economic crisis, billionaires and world leaders meet in this private compound to discuss turning points in history. It’s outrageous that our political leaders listen to those who have the most, know the least about the economic impact of this crisis, and many of whom pay infamously little in taxes. The only credible outcome from this conference is to tax the richest and tax us now. Tax the delegates attending Davos 2022.”
Chancellor Rishi Sunak is not attending Davos this year, the Treasury confirmed on Saturday night, nor are any of the Treasury’s junior ministers.
The pay gap between bosses and their employees is expected to widen again this year, having narrowed during the pandemic because of widespread cuts to executive pay, the High Pay Centre says. FTSE 350 CEOs are expected to collect 63 times the average median pay of workers at their companies. The think tank which campaigns for fairer pay structures found that ratio fell to 34:1 in 2021 during the pandemic.
Britain is becoming a less attractive place to invest and risks falling behind France unless the Government becomes more business-friendly, according to The Centre for Policy Studies which interviewed over 100 business leaders and entrepreneurs and found the UK's international standing was slipping as a result of red tape, rising taxes and ministerial complacency. "They warned that the Government has yet to put forward the policies, or produce a narrative, that makes an irresistible case for Britain as a place to do business," the influential thinktank said.
E.On UK boss Michael Lewis said the rise in energy prices is "unprecedented" and that up to 40% of its customers will be in fuel poverty by October. Lewis called on the government to help struggling households, saying a growing number of its customers are in arrears, and 5% are already in fuel poverty. One in eight of E.On’s customers are struggling to pay their bills, even before the weather turns colder and before the new anticipated energy price cap rise in October, he told the BBC's Sunday Programme. “We do need more intervention in October and it has to be very substantial," he said. Lewis also said any windfall tax in the UK should fall upon "those with the broadest shoulders," and that energy regulator Ofgem needed to look again at why prepayment meter customers are having to pay more for their energy than direct debit customers. "We've lobbied for a social tariff. We would like to see the poorest customers getting a better deal, but in the end, this is regulated by Ofgem," he added. A household is considered to be in fuel poverty if it has to spend 10% or more of its disposable income on energy.
Consumer group Which? has found that the price of 265 core groceries soared by more than a fifth over the last two years, at the same time as the availability of supermarket discounts and budget ranges fell. Which? analysed the prices of more than 21,000 groceries, comparing their average prices at eight major supermarkets between the start of December 2021 and the end of February 2022 with the same period two years previously.
Research by Loughborough University suggests that the costs of basic goods and services for a typical family with two young children is some £400 a month higher than last year. Energy prices alone added around £120 to families' monthly costs, the university said. The data is based on what focus groups deem a minimum acceptable standard of living and as well as essentials such as food, rent and heating, includes childcare and petrolcosts, and social necessities such as internet access, school trips and an annual family holiday.
New analysis by real estate advisory firm Altus Group shows that for every £100 earned by large retailers in Great Britain, excluding non-store sales and fuel, £2.91 of that was due to local councils in business rates. However, for large online-only retailers, for every £100 in sales, their total business rates amounted to just 34p. The data comes as the Government closed a consultation into the possible introduction of a revenue-based online sales taxto fund a reduction in business rates. Estimates suggest a 1% ecommerce tax for larger firms with a turnover in excess of £2 million could raise around £1 billion a year. Robert Hayton, UK president at Altus Group, said: “Ringfencing that revenue and targeting it to actually cut rates for retail, leisure and hospitality premises could lead to a reduction in rates of about 9%”.
The government is introducing a £40 million fund to help develop self-driving buses, shuttles, and delivery vans, in the belief the economic potential of autonomous vehicles could lead to 38,000 new roles and be worth around £42bn to the economy. The scheme will offer grants to companies planning to use self-driving vehicles from 2025.
The London Electric Vehicle Company is celebrating 7,000 global sales of its electric taxi. Parent company Geely has invested more than £500m in the business and created an R&D centre and factory in Coventry where they are all built.
Transport Secretary Grant Shapps told The Sunday Telegraph yesterday that ministers are looking at drawing up laws which would make industrial action illegal unless a certain number of staff are working. Shapps says a new law would protect freight shipments of goods such as food and fuel, but unions have vowed "fierce resistance" to any curb on the right to strike, slamming the move as “authoritarian” and “desperate nonsense.” Meanwhile, more than 40,000 members of the Rail, Maritime and Transport union (RMT) at Network Rail and train operators have been voting on whether to launch a campaign of industrial action over jobs, pay and conditions. RMT general secretary Mick Lynch told the PA news agency that he expected support for strikes when the ballot result is announced later this week.
The head of the Trades Union Congress has written to the Insolvency Service calling for it to disqualify the directors of P&O Ferries after they sacked nearly 800 crew without notice. In a letter seen by The Guardian, Frances O’Grady, the TUC’s general secretary, said the Insolvency Service should “initiate disqualification proceedings against the directors of P&O Ferries Division Holdings Limited”.
Neil Carberry, CEO of the Recruitment and Employment Confederationhas said companies should let older staff choose their own hours and work from second homes in places like Spain, to try to stop people from retiringearly, a trend that has been worsened by the pandemic. The UK will face a shortage of workers "for at least the next decade," he told The Telegraph. The Office for National Statistics has said there are half a million fewer 50 to 70-year-olds in work than prior to the pandemic, a phenomenon known as "the great retirement".
Sky News has learnt that big four auditor KPMG could be hit with a roughly-£4.5m penalty as soon as this week over work dating back more than a decade following an inquiry led by the Financial Reporting Council. The fine relates to the firm's work on Derby-headquartered Rolls-Royce, which in 2017 paid more than £670m to settle bribery charges in the UK and US. KPMG’s alleged offences including conspiracy to corrupt and a failure to prevent bribery," the accounting watchdog said five years ago. KPMG was fined more than £14m earlier this month for misconduct on audits on collapsed construction firm Carillion. The auditor has also been fined as a consequence of work it did with Revolution Bars and Conviviality, the chain of off-licences.
The Nationwide Building Society has posted a pre-tax profit for the year ended to April 4 that has almost doubled to £1.6bn from £823m a year earlier. However, CEO Joe Garner warned that price rises were starting to hurt customers. "The emergence of higher inflation, which has been exacerbated by the war in Ukraine, is likely to exert a significant drag on the economy in the near term," Garner said, in his final results. He is handing his job over to former TSB chief executive Debbie Crosbie on 2nd June. Nationwide's reported a £6.9bn increase in gross mortgage lending as it benefitted from a buoyant housing market but warned of a "risk of a downward movement in house prices, given the pressure on household budgets".
House prices are still surging because the number of properties available to buy is 55% lower than the levels seen in 2019. Property search website Rightmove says asking prices rose by 2.1% in May, some £7,400, the biggest May increase since 2014 and the fourth consecutive monthly price record. Prices rose 1.6% in April. Asking prices have now risen more than £55,000 in the past two years to a record high of £367,501. Prices rose only £6,218 in the two years before the coronavirus pandemic. Compared with a year ago, asking prices are now 10.2% higher. However, Rightmove expects demand to fade as the cost-of-living crunch tightens. “We anticipate that the effects of the increased cost of living and rising interest rates will filter through to the market later in the year, and a combination of more supply of homes and people weighing up what they can afford will help to moderate the market," Tim Bannister, Rightmove managing director, said. Currently, the number of buyers contacting estate agents is 14% down on the stamp-duty holiday-fuelled market of this time last year but is still up by 31% compared with the more “normal” pre-pandemic market of 2019, Rightmove said.
HSBC has reportedly suspended Stuart Kirk, global head of responsible investing at HSBC's asset management division, ahead of an internal investigation, after he criticised climate activists, Central bank policymakers and other global authorities for exaggerating the financial risks of climate change.
Donald Trump adviser Wilbur Ross is said to be planning a £700m swoop on online bank Atom, in a deal which would see the Durham firm join the ranks of UK start-ups to go public in the US. The former US commerce secretary is said to be in late-stage talks over a deal which would take Atom Bank public in the US by merging it with a blank cheque vehicle, The Telegraph says. News of the talks was first reported by Sky News. There is no certainty the discussions will result in a deal.
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