Published: 07 September 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Incoming Prime Minister Liz Truss is reported to have drafted plans which will effectively freeze energy bills for a typical UK household at or below the current level of £1,971, in an effort to help with the soaring cost of living and tame inflation. Under the proposals, energy regulator Ofgem will effectively be sidelined, and the energy price cap abolished, meaning the planned 80% rise in the cap from October to £3,548 a year, will not go ahead. Under Truss’s plan, energy suppliers will be obliged to charge households a reduced rate for their energy and the government will guarantee financing that will cover the difference with what they would have charged under the previous system, according to documents seen by Bloomberg, which says the proposals could cost £130bn over the next 18 months. Truss's team is also understood to be working on a scheme to cap wholesale energy prices, a move that would help UK businesses lower their energy bills, with a further £40bn earmarked for this. Jacob Rees-Mogg, who is set to become Business Secretary in Truss’s government, apparently held talks with the CEOs of energy companies on Monday to discuss the plans, and found them receptive to the idea, which means they will avoid a windfall tax and see the shortfall in their revenue covered by the taxpayer, a source present said. The fact Truss had already pledged to remove a green levy of about £150 a year from bills during her Conservative Party leadership campaign, and Boris Johnson’s administration had promised another £400 in government subsidies to help families, together with the new aid package, the average household will effectively see their bills frozen, government officials said. The price that energy companies are allowed to charge consumers will be set by ministers will likely be reviewed every quarter, the official added.
Analysts say that new PM Liz Truss’s plans to freeze energy bills are what caused Sterling to rise from a two-year low yesterday. The pound jumped as much as 0.7% against the dollar to $1.598 in afternoon trade after sliding to its lowest since March 2020 on Monday. Sterling had declined for three months in a row and amid soaring inflation and the threat of a recession.
Nicola Sturgeon has announced new laws in Scotland to bring in rent and rail fare freezes. Rail fares on ScotRail - which was brought into public ownership earlier this year - would be frozen until at least March 2023, she said, and the rent freeze would apply to both the private and social rent sectors. The Scottish Association of Landlords said her government was "attacking landlords for political reasons".
British construction companies have suffered a second straight month of contraction amid global uncertainty about the outlook for the inflation-hit economy, according to the S&P Global/CIPS construction purchasing managers’ index (PMI) for construction. The index score was 49.2 in August, up fractionally from 48.9 in July. A number below 50 indicates a contraction, while one above that mark signifies growth. New orders grew at the weakest pace since June 2020 and fears about the industry and the wider economy hit confidence, according to Andrew Harker, economics director at S&P Global Market Intelligence.
The Office for National Statistics (ONS) has published its latest data on mergers and acquisitions (M&A) deals involving a change in majority share ownership. There were 333 completed M&A transactions in Q2 (April to June) 2022, a sizeable decrease of 116 deals compared with Q1 (January to March) which saw 449 deals, and 167 fewer than Q2 in 2021, when 500 companies exchanged hands. The ONS figures also report an increased in the numbers of UK companies acquiring foreign companies abroad. In Q2 2022 this totalled £4.5 billion, £1.7 billion more than in Q1. The total value of foreign companies acquiring UK companies has also risen to £16.1bn in Q2 2022, up £0.5bn on Q1. UK companies acquiring other UK companies was valued at £2.9 billion in Q2 2022, £0.9 billion less than in Q1. The ONS attributes the overall decrease in M&A activity to the indirect effects of the pandemic and possibly because of increased economic uncertainty arising from the Russian invasion of Ukraine.
Hundreds of jobs have reportedly been put at risk as Avonside Group - a roofing services company backed to the tune of some £12m by NatWest - has collapsed into insolvency proceedings. According to Sky News, Manchester-based Avonside, which employs 450 people on a full-time basis, with a further 1,200 contract labourers on its books, has so far failed to find a rescue buyer. Begbies Traynor Group, the restructuring firm, had been seeking to complete a takeover of Avonside last week. Sky’s sources say NatWest reckons it is likely to recover more of its loan through an insolvency process, although a person close to the bank insisted it was a "director-led process". As well as roofing, Avonside installs plumbing, heating and solar power on behalf of leading housebuilders such as Taylor Wimpey. The company's biggest shareholder is Tony Burke, its executive chairman, although he is said to have fallen out with other investors in recent months.
Halfords has been fined £30,000 by the Information Commissioner’s Office(ICO) for sending marketing emails to nearly 500,000 people without their consent, following complaints about a 'Fix Your Bike' government voucher scheme sent on 28 July 2020. The government scheme allowed people to use a voucher worth up to £50 towards the cost of repairing a bicycle in any approved retailers or mechanics in England. However, the ICO said Halfords' marketing email encouraged people to book a free bike assessment and to redeem the voucher at their chosen Halfords store, hence it was advertising a service provided by the company, so Halfords could not rely on legitimate interest to send the marketing email, as it had claimed.
Historic British watchmaker Fears is set to open a new HQ and factory in Bristol where the firm was originally founded in 1846. Cases, dials and straps - currently imported from Germany, France and Belgium – are now expected to be made at the new UK facility.
InterContinental Hotels said yesterday that it has been hit by a cyber-attack that meant booking channels and other applications have been "significantly disrupted" since Monday. "IHG hotels are still able to operate and to take reservations directly," the chain said. The Holiday Inn chain owned by the group is also affected.
Volkswagen (VW) is pushing ahead with plans to list a minority stake in its prized Porsche sports car brand this year on the Frankfurt Stock Exchange. The initial public offering (IPO) could become one of Europe's and Germany's largest floats in years, with the listing valuing the luxury car brand between €60bn (£51bn) to €85bn. VW is planning the float for the end of this month or at the start of October, although the group's supervisory board said this was "subject to further capital market developments". However, Porsche's chief financial officer Lutz Meschke said the debut of the Stuttgart-based subsidiary will only backtrack in the event of severe geopolitical problems that would make the importance of a listing fade in comparison. “You never know what will happen regarding geopolitical issues, but if a potential IPO would be stopped now, we are talking about severe problems," he told reporters on a media call. "By then a potential IPO would not be a real issue." VW said it would use the proceeds from the listing to accelerate the company's transition to electric vehicles and self-driving cars.
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