The new energy price cap has been announced this morning

By Suzanne Evans, Director, Political Insight

The new energy price cap has been announced this morning. Energy regulator Ofgem has raised it by 80% to £3,549, with effect from October. The increase means winter energy bills are now set to be more than triple what they were a year ago, and will cost more than 11% of a household's median disposable income, according to the Office for National Statistics (ONS). Ofgem blames the increase in energy bills on the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the covid-19 restrictions, and were then driven to record levels as Russia reduced gas supplies to Europe. “We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many," Jonathan Brearley, CEO of Ofgem, said in a statement. Talking earlier today to both Sky News and the BBC, he said: “The regulator has done everything that it can," adding that when the new Prime Minister is in place, the government needs to take "urgent and decisive action" to tackle rising energy costs. Ofgem has also announced new rules around energy customers’ direct debits to ensure they are set at the right level. "The changes will stop suppliers from building up excessive customer credit balances and using them in a risky way as working capital," it said. The next energy price cap review will take effect in January.
 
The government is working "flat out" to develop options for further support after Ofgem's new energy price cap announcement, Chancellor Nadhim Zahawi has said, so that “the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible." "I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners,” he added.
 
Labour party leader Sir Keir Starmer has issued his reaction to Ofgem's announcement, saying the energy price cap rise will be "devastating" for people across the country and will cause "real pain for so many households". He said Labour has a "fully costed plan" to freeze energy bills, and under his leadership, the party is "on the side of working people". Speaking to Sky News, shadow chancellor Rachel Reeves said the announcement “will strike fear into the hearts of some families right across the country. "That's why Labour have called for the government to take autumn and winter and to pay for that with an extension of the windfall tax on the massive profits that North Sea oil and gas companies are continuing to make,” she said. "That is the right and the fair thing to do is what Labour would do if we were in government now."
 
British Gas is to donate 10% of its profits to help poorer customers manage rising gas and electricity bills for the “duration of the energy crisis”. The company’s owner, Centrica, said it would donate £12m this autumn into an existing support fund which will see thousands of households get grants of between £250 to £750. Customers in fuel poverty and with less than £1,000 in savings are eligible to apply. Centrica CEO Chris O’Shea said: “This increased investment in supporting our customers adds to the financial support and advice we already offer and ensures more grants will be available as we go into this winter. We’re proud to have put together a £25m-plus customer support package, which will grow.”
 
Over 40% of firms said the prices they paid for goods and services had risen in July, compared with June, the Office for National Statistics (ONS) says. As a consequence, a third of UK firms now plan to hike their prices next month. Other ONS figures released this morning show that 6% of UK businesses had been affected by industrial action in July 2022. The human health and social work activities industry reported the highest percentage of businesses affected by industrial action in July 2022, at 10%. The ONS also said that in early August 2022, more than 1 in 10 (11%) businesses reported a moderate or severe risk of insolvency. The official statistics body has also published its latest data on consumer spending, showing reduced activity in the latest week, with UK credit and debit card purchases falling 4 percentage points. Spending fell across the board, driven by large falls in “delayable” and “social” spending which fell by 8% and 4% respectively, suggesting Brits are cutting back on non-essential purchases as the cost of living rises.
 
Around 115,000 Royal Mail postal workers are on strike today in a dispute over pay. It is the first of four days of industrial action, with walkouts also planned for 31st August, and 8th and 9th September.
 
The Competition and Markets Authority has ordered the breakup of a merger between waste management firms Veolia and Suez, claiming local councils will face higher charges for recycling and rubbish collection because of the €13bn deal. Both firms supply waste, water and recycling services to local councils and companies, and the CMA says Suez's UK waste management services business and its UK industrial water operation unit, as well as Veolia's European mobile water services operations, must all be offloaded to buyers it will have to approve. ""Local authority budgets are already under strain, and this deal is likely to lead to them paying more and receiving a lower-quality service," said CMA inquiry group chair Stuart McIntosh. “We will now work with Veolia to ensure that appropriate buyers are found so that business, councils - and ultimately taxpayers - will not lose out". Veolia had already tried to placate the CMA by selling Suez's waste business to Australian private equity house Macquarie for around £2bn.
 
The government is reviewing whether a plan by Czech billionaire Daniel Kretinsky to lift his stake in Royal Mail beyond 25% would be in the national interest, Sharecast News reports.  Kretinsky's Vesa Equity holds 22% of the company and is its biggest shareholder. Now, Business Secretary Kwasi Kwarteng has told Royal Mail he was exercising new powers to look into the matter under the National Security and Investment Act. The law came into force this year to give the government greater say over deals where national interests might be involved. Royal Mail and Vesa both said they would cooperate with the review. Kretinsky, dubbed the "Czech sphinx", is a major investor in West Ham United football club and also holds stakes in French newspaper Le Monde, as well as retail giants Sainsbury's and Macy's. His Royal Mai stake is worth around £150m. The government recently used the new law to review French tycoon Patrick Drahi's stake-building in telecoms giant BT. It ultimately said he could keep his 18% shareholding.
 
Guarantor lender Amigo Holdings, which was forced to stop lending in November 2020 because of mis-selling claims, has announced that it plans to start lending again by late February 2023. In update for the first quarter, Amigo said customer numbers slid to 61,000 from 118,000 in the same period a year earlier, while revenues tumbled 68% to £10.4m, reflecting the pause in lending and loan book reduction. Pre-tax profit declined 85.3% to £2.2m.
 
Shell's consumer business - Shell Energy Retail - has been ordered by regulator Ofgem to pay back £536,970 after it overcharged customers on its default tariffs. Shell will automatically issue £106,000 in refunds to affected customers, while those with prepayment meters will have the cash added as credit. Ofgem has also ordered Shell to pay £400,000 to its voluntary consumer redress fund and £30,970 in goodwill payments to customers. Ofgem said: "Tariff updates were sent to prepayment meters to amend rates in response to changes in the level of the price cap, but due to a variety of operational issues, not all meters were successfully updated to the revised rates. The result of this issue was that over 11,000 prepayment customers paid above the rates allowed under the price cap at the time. The average amount being refunded to affected customers is £9.40."
 
Lidl GB has announced plans to buy up out-of-shape fruit and vegetable crops that were affected by the hot weather conditions, but which are still perfectly safe to eat. Ryan McDonnell, the CEO of Lidl GB, called on other supermarkets to follow suit to support farmers. “Farmers across the country are facing a big challenge this year due to the extreme weather conditions experienced over the summer months. Whilst the crop coming out may look and feel a bit different to what we’re all used to, it’s still the same great British quality,” he said.
 
Recruitment firm Hays plc has issued its earnings results and reported an increase in annual profit of 128%. Revenues for the financial year ending June 2022 rose 32% on a like-for-like basis to £1.19 billion, an increase in the company's pre-pandemic revenue of £1.13 billion in 2019. London-listed Hays has operations across the globe, with the business in Germany taking 26% of the net fees and 35% of the total operating income, contributing the lion’s share of profit growth. Hays' UK and Ireland operations accounted for 22% of fees and 21% of operating profits, rebounding by 277% after suffering during covid lockdowns.
 
FTSE 250 finance company JTC has agreed to buy New York Private Trust Company (NYPTC), a non-deposit trust company headquartered in Delaware in the US, for an undisclosed sum. NYPTC offers a broad range of fiduciary services, including trust services, estate administration services and white label trust services to high net worth and ultra-high net worth individuals and families and corporate clients.

American-owned Cummins is creating new jobs and building a new £14 million Powertrain Test Facility at its Darlington plant. The Indiana-headquartered firm produced 66,000 engines at the County Durham site last year, where it employs more than 1.500 people.

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