Published: 22 August 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Scotland’s First Minister Nicola Sturgeon is calling for the planned energy price cap rise to be cancelled and says rising costs are a “looming disaster”. “This will cause loss of life if real action is not taken to stem this crisis,” she told the BBC yesterday, adding that renationalising energy companies should be "on the table" to tackle the crisis caused by rising power costs. Last week, the Scottish government estimated 36% of homes will be in fuel poverty, defined as meaning the cost of heating is more than 10% of household income, after tax and housing costs.
The National Grid Electricity System Operator (ESO) is understood to be working on a plan for people to be paid for turning off high-energy appliances during peak times this winter. The plans, reported in yesterday’s Sunday Times, will need approval from energy regulator Ofgem, but are said to include giving people with smart meters up to £6 per kilowatt hour (kWh) saved for not using appliances like tumble dryers, dishwashers and electronics between certain times. The newspaper said the ESO hopes the scheme could be up and running by October. A spokesperson has since told Sky News: "We are developing a new service that will be available for consumers to benefit from across this winter and will be announcing further information soon." A trial with Octopus Energy earlier this year paid customer as little as 20p per kWh saved.
The Financial Conduct Authority (FCA) has informed buy now pay, later firms (BNPL) such as Klarna and Clearpay that they could be committing a criminal offence over misleading and harmful adverts. BNPL companies offer interest-free, short-term loans to consumers to help spread payments for goods such as clothes, but the FCA said the benefits of BNPL were being emphasised in ads without fair and prominent indications of any relevant risks, such as the consequences of missed payments and the impact on credit scores. Adverts also failed to make clear when charges become payable, the FCA said, all of which means they could be misleading consumers or leading them to take on debt they cannot afford to repay. The FCA also raised concerns over financial adverts on websites and social media, including “influencers” promoting such products, that could be breaching regulatory rules. Although BNPL loans are unregulated, the regulator can intervene in how they are advertised.
The pound continues to fall against the US dollar this morning, after trading at a four-week low on Friday, dented by a fresh wave of negative sentiment surrounding the British economy. At the time of writing this morning it is trading down slightly at $1.1792, but up slightly against the euro at €1.1796. Yahoo Finance says the currency has come under pressure because UK public borrowing hit £4.9bn in July — much larger than the £2.8bn expected – taking the total for 2022-2023 so far to £55bn, which is £3bn more than forecasts.
We should know this morning whether or not barristers have voted to go on an all-out strike in England and Wales next month, as a ballot by members of the Criminal Bar Association (CBA) closed at midnight. Courts have seen several days of disruption over lawyer walkouts in recent weeks - some 6,235 court cases were disrupted during 19 days of industrial action between 27 June and 5 August according to Ministry of Justice (MoJ) data - but this would be an indefinite, uninterrupted strike beginning on 5th September as part of an ongoing row with the government over pay and legal aid cuts. The CBA is asking for a 25% rise in pay for legal aid work, when they represent defendants who could not otherwise afford lawyers. Criminal barristers are due to receive a 15% fee rise from the end of September, with the MoJ saying the increase would see the average barrister earn about £7,000 more annually. But members of the CBA have rejected the offer, saying it would not kick in immediately or apply to existing cases. The BBC says that criminal barrister and former Conservative MP Anna Soubry posted on Twitter that more than 500 trials could not go ahead last year due to a shortage of criminal barristers. Since 2006 their fees have been cut by 28%, she said, adding: "We can't recruit or retain."
Cineworld confirmed this morning that it is considering filing for bankruptcy in the US and the UK, according to the Wall Street Journal. Shares in the cinema chain went into freefall on Friday, plummeting from 20p to 3.4p, although they are up to 4.3p at the time of writing this morning. Before the pandemic Cineworld shares were trading at £1.97. The chain operates 751 sites in 10 countries including the Cineworld and Picturehouse chains in the UK, all of which are currently still open for business as usual. The firm is labouring under a $4.8bn (£4bn) debt burden and has reportedly hired lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process.
The London-based international broker dealer arm of US bank Citigroup, Citigroup Global Markets, has been fined £12.5m fine by the Financial Conduct Authority (FCA) for failing to monitor suspicious trading. Banks are required to implement rules introduced in 2016 and known as the market abuse regulation (MAR) to monitor for potential insider trading and market manipulation, but until January 2018, the dealer failed to identify significant gaps in its arrangements, systems, and procedures for trade surveillance, the FCA said in a statement. The FCA also said that when the firm had spotted its failings, it "took 18 months to identify and assess the specific market abuse risks its business may have been exposed to". During the period covered by the FCA's enforcement action, the broker-dealer earned about £2.6bn in revenue from arranging or executing trades on markets. Because Citi co-operated with the FCA and agreed to resolve the case, the fine was cut by 30% from an original punishment of £18m. Citi was also fined $400m by US regulators in October 2020 over long-term deficiencies in its risk and control systems.
Canadian pension fund Caisse de depot et placement du Quebec (CDPQ) is reportedly in talks with Vodafone to buy the residual 21% stake it owns in Indus Towers, India's largest mobile tower installation company. According to The Economic Times, both sides have had preliminary management meetings and a formal due diligence is expected to start as the stake sale process has been revived in recent weeks.
Shares in Just Eat Takeaway.com surged on Friday after it announced it was selling its Brazilian business stake for €1.8bn (£1.5bn) to Dutch investment company Prosus. Just Eat said the sale will improve profitability and help pay off its heavy debt pile. However, Prosus made a previous bid for Just Eat back in 2021, offering £4.9bn in attempts to derail its merger with Takeaway.com, so this is what one analyst called a ‘material haircut.’ Just Eat recently reported heavy half-year losses of €134m, and took a €3bn impairment charge as it wrote down the value of its US subsidiary Grubhub. It bought Grubhub last year, but is now also considering a partial or full sale of that business too.
A guitar used by Foo Fighters frontman Dave Grohl is expected to fetch up to £30,000 at auction, the BBC reports. Grohl played the Gretsch White Falcon guitar in the 1997 video for Monkey Wrench, although it was originally owned by the band's rhythm guitarist Pat Smear and was used on their second album The Colour And The Shape. The guitar is being sold at auctioneers Gardiner Houlgate of Wiltshire, on 7 September, along with a Polaroid photograph taken by Smear of actress Drew Barrymore playing it.
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