Published: 08 July 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Boris Johnson announced he would stand down as Conservative Party leader yesterday, following the resignation of some 50 of his Ministers and a long line of Conservative MPs saying they had lost confidence in his leadership. Johnson says he will continue in his role of Prime Minister until the autumn. Meanwhile, there will be leadership contest over the summer, with a new leader in place in time for the Tory party conference in October. However, Johnson is facing calls to go sooner, including from the Labour Party leader Keir Starmer, the Labour Mayor of London Sadiq Khan, and former Prime Minister John Major, although Johnson is ignoring such calls and has begun appointing his new Cabinet. Appointments to date include:
- James Cleverly - Education Secretary
- Robert Buckland – Wales
- Shailesh Vara – Northern Ireland
- Greg Clarke - Local Government & Levelling Up
- Kit Malthouse - Chancellor for the Duchy of Lancaster
Both sterling and the FTSE rose in the wake of Johnson’s resignation. The FTSE 100 rose 1.1% to 7,189.08, while the pound was 0.7% higher versus the US dollar at 1.2008 and 0.9% firmer against the euro at 1.1814.
The Office for Budget Responsibility (OBR) says soaring energy prices and pressures from an ageing population risk tipping the UK into a recession, and that Britain "would need taxes to rise, spending to fall, or a combination of both," to prevent UK debt taking an "unsustainable path" to tripling in 50 years’ time. In May 2022, debt stood at £2.36 trillion, an amount that almost exceeds the size of the UK economy, as it comprises 95.8% of gross domestic product (GDP). The OBR said the UK Government has already spent as much this year – 1.25% of GDP – to help households cope with cost-of-living crisis - as it did supporting the economy through the financial crisis. If it continues extending this support in its energy price spike scenario, then government borrowing would surge by £40bn in 2023-24, the OBR calculated. The OBR believes this should be brought back to 75% of GDP, the level at which it stabilised in the government's pre-pandemic March 2020 Budget. Inflation is also driving up debt interest repayments;in May they hit £7.6bn, the highest level for that month on record and a £3.1bn jump from a year earlier. The OBR also warned that the government’s pledge to ban the sale of new petrol and diesel cars from 2030 could also hit tax revenues, given that fuel duties are currently a major source of revenue, and are set to disappear completely.
More people - mostly women - have been underpaid their state pension than previously thought, the BBC says. The latest government figures estimate 237,000 state pensioners were paid less than their entitlement, with a total of nearly £1.5bn underpaid. This is 105,000 more people affected than the Department for Work and Pensions (DWP) calculated a year ago. The problem dates back to 1985 and relates to the "old" state pension system. Married women who had a small pension of their own could claim a 60% basic state pension based on their husband's record of contributions, but an error at the DWP meant they were not automatically given this money. Some will eventually receive all their entitlement, albeit years later than they should have done, while others will only be able to claim for 12 months of missed payments.
The National Grid has unveiled a £54bn wind power network upgrade which will see miles of new cables and pylons transporting power from offshore wind farms around the UK. National Grid ESO, which runs Britain’s electricity network, said it was the biggest network upgrade in 60 years, and would enable the government to deliver 50GW of offshore wind power by 2030 - a third of the UK's electricity demand - while creating 168,000 jobs. There are now more than 11,000 wind turbines on and offshore, which produce nearly a quarter of the UK's electricity. Currently, most new offshore windfarms build their own link to the grid, the BBC says, but having a "holistic network design" would result in a better connected network and reduce the environmental impact, which would save consumers over £5bn in costs by 2030, according to the Grid.
Strike action by 700 British Airways check-in staff at Heathrow has been suspended after the airline made a "vastly improved" pay offer, unions said yesterday. Unite said an agreement was reached after "extensive" talks, and that its members, along with those from the GMB, will now be balloted on the new pay deal. "We welcome that BA has finally listened to the voice of its check-in staff," said Unite general secretary Sharon Graham, while Nadine Houghton, GMB national officer, added: "All our members were asking for was what they were owed. British Airways finally moving on pay is long overdue. All our members - who are predominantly low-paid women - wanted was to be given back the pay cuts BA imposed on them during the pandemic, threatening them with fire and rehire if they said no." Workers voted to strike when BA said a 10% pay cut imposed during the peak of the pandemic would not be reinstated.
Yesterday, Sainsbury's shareholders voted against becoming a living wage accredited employer, which would mean committing to pay a real living wage by 2023. The resolution, co-ordinated by campaign group ShareAction, required 75% of votes in favour to pass, but was overwhelmingly rejected by shareholders, with just 16.7% of votes. The supermarket’s board recommended that shareholders vote against the resolution. Chairman Martin Scicluna said: "We are proud to have led the way on colleague pay in our industry for the past five years and to pay our colleagues the living wage regardless of where they work in the country”.
Statistics gathered by the Halifax, Britain’s largest mortgage lender, say house prices have now risen every month over the last year, and are up by 6.8%, or £18,849, in cash terms so far in 2022. Across the UK, the average house price in June hit another record high of £294,845.
Budget airline Jet2 has said customers have had to endure a "very much poorer experience" than they should have of late, the BBC reports. Executive chairman Philip Meeson said: "Many suppliers have been woefully ill‐prepared and poorly resourced for the volume of customers they could reasonably expect,” adding that this was "inexcusable, bearing in mind our flights have been on sale for many months and our load factors are quite normal." He called customer service, long queues for security, and a lack of staff and congestion in baggage handling "atrocious". Jet2 announced that pre-tax losses for the last financial year had widened to £388.8m, compared with losses of £341.3m the year before. The airline said: "Group performance for the financial year ending March 31st2023 very much depends on how quickly the broader aviation sector returns to some level of stability, as well as strength of bookings for the remainder of summer and the second half of the financial year, a period for which we still have limited visibility."
Stuart Kirk, the senior HSBC executive who accused central bankers and officials of exaggerating the financial risks of climate change, has resigned. He was suspended in May after making a speech in which he said: "There's always some nut job telling me about the end of the world." In a LinkedIn post yesterday, he said his comments had made his position "unsustainable", adding that: "A cancel culture destroys wealth and progress".
Video-sharing app TikTok is being sued in California after two children died while taking part in a "Blackout Challenge" that makes a sport of choking oneself until passing out, AFP reports. The lawsuit filed last week accuses TikTok software of "intentionally and repeatedly" pushing the Blackout Challenge that led to the deaths of an eight-year-old girl in Texas and a nine-year-old girl in Wisconsin last year. "TikTok needs to be held accountable for pushing deadly content to these two young girls," said Matthew Bergman, an attorney at the Social Media Victims Law Center, which filed the suit.
The global cost-of-living crisis is pushing an additional 71 million people in the world's poorest countries into extreme poverty, a new report published by the UN Development Programme has warned.
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