Rumours abound that there will be a windfall tax on energy companies

By Suzanne Evans, Director, Political Insight

Rumours abound that there will be a windfall tax on energy companies, to fund plans by the government to scrap earlier proposals to give people £200 off their bills from October, to be repaid over five years, in favour of a £10bn package to help people cope with soaring prices that will not have to be paid back. Chancellor Rishi Sunak is expected to make an announcement tomorrow, outlining plans for the one-off tax on oil and gas firms that could raise £7bn. Labour has pushed hard for a windfall tax, and the Chancellor has said he would not rule it out. Now the PM is believed to have come into agreement with Sunak. Media reports suggest plans to tax profits from electricity producers, including windfarms and nuclear plants, will not go ahead.  
 
The Telegraph says Boris Johnson and Transport Secretary Grant Shapps are prepared to strike a pay deal with unions to avert a railway strike, by offering a pay rise of around 5% to break the deadlock. Senior rail industry figures say Johnson is keen for an agreement, but the “King Canute-like” Treasury will not grant an exemption to the sector to lift the 2% public sector pay cap, as creating a special exemption for the railways would be likely to spark anger among the likes of nurses, doctors and teachers. The Rail, Maritime and Transport union (RMT) has voted for strike action and The Transport Salaried Staffs' Association is also poised to launch industrial action on the railways this summer. Its chief Manuel Cortes urged Johnson to "stand up to the Treasury" to “prevent a summer of discontent across our rail network”.  A strike by Network Rail workers, the first since 1994, would have significant repercussions for the UK economy as without signal workers, only a handful of services would be able to run, the newspaper says, and the knock-on effect of that could cause power outages and food shortages.
 
A UK-EU trade war would be "shocking" and "unnecessary", the Irish Prime Minister Micheál Martin has said. He called on the UK government to "get into the tunnel and negotiate" over changes to the post-Brexit trade arrangements for Northern Ireland.  The Taoiseach told the BBC that Ireland and the European Union "do not want a trade war" with the UK. The government last week announced plans to override key parts of the Brexit deal within weeks.
 
Business Secretary Kwasi Kwarteng has ordered a detailed security review into the Chinese-backed takeover of Britain’s biggest microchip plant in the clearest sign yet that the deal will be blocked, The Telegraph claims. Kwarteng has called in the sale of Newport Wafer Fab to Nexperia under new legislation that gives him the power to intervene on national security grounds. He overruled the advice of two security investigations to order the review amid growing pressure from Tory backbenchers concerned the deal risks threatening Britain’s interests. Any deal involving Newport Wafer Fab, which is located in south Wales, is particularly sensitive as the company has multiple contracts with the UK government, including defence-related projects.
 
Culture Secretary Nadine Dorries has confirmed that the sale of Chelsea FC to the Todd Boehly/Clearlake Consortium and will “issue a licence that permits the sale". "We are satisfied the proceeds of the sale will not benefit Roman Abramovich or other sanctioned individuals," Dorries said.
 
The Ministry of Defence (MoD) is being urged by members of the Defence Committee to review its practice of outsourcing services. MPs on the committee have concluded that outsourcing appeared to be the default position, with little consideration given to providing services in-house, despite evidence that contractors drop standards and “squeeze” workers to increase profits. The Committee added that the MoD was not always willing to step in and enforce expected standards and described as “an absurd state of affairs” the fact that the Ministry was not allowed to look at a contractor’s previous performance when assessing a bid. This they said needs to be “rectified immediately”. Committee member Mark Francois MP said: “The performance of certain sub-contractors is well-known both within industry and the defence community…Ministers should use the Procurement Bill announced in the Queen’s Speech to change the rules for awarding new contracts.”
 
The head of the World Bank has warned that Russia's invasion of Ukraine could cause a global recession as the price of food, energy and fertiliser jump. The BBC reports that David Malpass told a US business event on Wednesday that it is difficult to "see how we avoid a recession," and that continued coronavirus lockdowns in China are adding to concerns about a slowdown. "As we look at the global GDP... it's hard right now to see how we avoid a recession," Malpass said, adding that “The idea of energy prices doubling is enough to trigger a recession by itself".
 
Inflation is likely to increase at a faster pace for the poorest UK households, possibly rising to as much as 14% in October, compared to 8% for the richest families, an economic research body has warned. Analysis from the Institute for Fiscal Studies (IFS) warned yesterday that the price hikes will disproportionately hit the poorest households, as they spend a much larger share of their total spending on gas and electricity. The bottom 10% of households in terms of income spend on average almost three times as much of their budgets on gas and electricity compared to the highest-income tenth (11% compared to 4%).
 
The Guardian reports that Ofwat is urging water companies to do more to help people who are struggling to pay their utility bills by publishing a new set of guidelines designed to make it easier for households to get help. Seven in 10 households with children that pay water bills believe they will have difficulties finding funds to pay a utility bill over the coming year, according to research carried out by the regulator, while just over half of all water bill payers told Ofwat they believed they may struggle to pay a bill. Guidelines include companies offering flexible payment options for customers with irregular incomes or on zero-hours contracts, as well as working to resolve any repayment problems without beginning action to recover debts. A review of water affordability by Ofwat found that 1.5m households across England and Wales were in water poverty, with a further 3m on the edge of it, meaning they were paying more than 5% of their income after housing costs on water bills.
 
Coventry-based Severn Trent has launched a £30m support package to cut water bills by up to 90% for a further 100,000 cash-strapped customers, PA reports.  Its existing scheme already supports 215,000 customers in need, but the company said its research suggests another 100,000 customers in its area are set to fall into so-called water poverty as finances are stretched by soaring energy bills and living costs. The firm is the UK’s second-biggest water firm, serving 4.8 million homes and businesses in England and Wales, and details of its new support scheme were revealed alongside its full-year results showing underlying pre-tax profits rising 7.5% to £508 million. However, Severn Trent’s results highlighted it’s own cost-base increases as a result of rapidly rising inflation; it paid an extra £50 million in energy bills.
 
More than two in five (44%) landlords say they have supported tenants financially in the past year, such as by reducing or pausing rent, according to the research from The Landlord Works, which helps landlords to manage their property portfolios. This is despite nearly half (45%) of landlords saying any rent reduction would harm them financially. Around four in 10 (38%) said they intend to keep rents the same for the next year despite the financial challenges, but more than half (55%) said they will need to increase rents over the next 12 months. One in four (25%) landlords plan to increase rents on all their properties.
 
Average petrol prices have exceeded £1.70 per litre for the first time. The average price of a litre of petrol at UK forecourts on Tuesday was 170.4p, according to data firm Experian Catalist. Diesel also reached a record high of 181.4p per litre.
 
Fewer cars rolled off the assembly lines in April as the ongoing global shortage of semi-conductors and the war in Ukraine led to a “volatile” month for the UK car industry, Yahoo Finance UK says. A total of 60,554 cars were built, 11.3% fewer than last April, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Other issues included vehicle model changes and broader industry structural changes, said the organisation. Six-in-10 cars exported went to the EU, a 5% increase, while production for the UK grew for the second month in a row, up 60.1%. Production for overseas markets fell 20.8%, driven by a 68% decline in shipments to the US and a 10.4% drop to Asia.
 
Johnson Matthey, the FTSE 250 company which provides catalysts and catalyst systems to reduce emissions from vehicles and industry has entered into a strategic partnership with German energy technology company Enapter to expand its presence in green hydrogen. Enapter is described as a "pioneer and commercial leader in AEM electrolysis," a next generation electrolyser technology that promises to drive down the cost of green hydrogen towards a point where it becomes competitive with fossil fuels. As part of the partnership, Johnson Matthey will invest €20m in Enapter for a 4.3% stake.
 
Volkswagen has agreed a £193m out-of-court settlement with UK drivers impacted by the Dieselgate scandal, in which cars had been installed with illegal devices to defeat emissions testing. The German car manufacturer confirmed that payment will be made to the 91,000 motorists represented by the law firms driving the Volkswagen NOx Emissions Group Litigation in the UK and make a separate contribution to cover claimants' legal costs and other fees, meaning each driver will receive just over £2,000 in total. The group has already paid out more than €30bn (£26bn) worldwide.
 
Media reports say the boss of JD Sports, Peter Cowgill, has either stepped down or been ousted with immediate effect. He leaves the group just months after the retailer was fined more than £4m for breaching competition rules by holding clandestine meetings with takeover target Footasylum. Cowgill, who has led the group since 2004, is to be replaced temporarily by Kath Smith, JD Group’s current senior independent director, who previously spent 25 years as managing director of the Adidas and Reebok brands. It is understood that Cowgill had attempted to block attempts by the board to bring in new blood and split the roles of chair and CEO, which Cowgill has jointly held since 2014. However, the board has now pushed ahead with its plans. The company was also hit by a shareholder revolt over pay last year, when Cowgill was paid almost £6m in bonuses despite the company accepting more than £100m in government support. On his watch, JD Sports and Footasylum were fined a combined total of £4.7m for sharing commercially sensitive information after The Competition and Markets Authority found both sides had deleted phone records and held multiple clandestine meetings. JD bought the trainer retailer Footasylum for £90m in 2019.  
 
Alexander Lebedev, who bought the Independent and Evening Standard newspapers in 2010 before shifting ownership to Lord Evgeny Lebedev, his son, resigned from his position as a director of Independent Print Limited on Sunday, the Telegraph reports. The former KGB agent was sanctioned in Canada, being hit with an asset freeze and visa ban last Friday, because of his links to the Kremlin.
 
Marks & Spencer is to close a further 32 shops as it moves away from multi-floor buildings to more modern edge of town sites with better access and car parking, Yahoo Finance UK reports. The retailer has already closed 68 legacy full-line stores and 19 smaller food stores.
 
Britain’s top jobs - and who gets them - are controlled by a small number of universities, stifling diversity in the workplace, according to Euan Blair, chief executive of apprenticeship company Multiverse. Speaking at the Evening Standard’s SME XPO event in London on Wednesday, Blair, the son of former Prime Minister Tony Blair, said degrees had been used as a “filtering mechanism” at the expense of hiring the best people. “When you really boil it down, essentially we’ve allowed the top jobs in the labour market, and who takes those top jobs, to be determined by a small group of academic institutions. “That’s hugely problematic for society - It has helped embed inequality into the labour market,” he said.
 
Tesla billionaire Elon Musk said in a filing with the US Securities and Exchange Commission that he would seek $13 billion in loans for his Twitter purchase, instead of using nearly double that much debt as previously announced. The filing suggests the sale is back on, after Musk said he had put it “on hold” over concerns about the number of bots and fake accounts on the social media site.

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