Published: 28 February 2023
By Suzanne Evans, Director, Political Insight
Standing side by side with Ursula von der Leyen, President of the European Commission, Prime Minister Rishi Sunak yesterday announced the terms of the potential replacement for The Protocol on Ireland/Northern Ireland, what is now being called ‘The Windsor Framework’. Sunak said he had secured major changes to the Protocol as part of the framework, which “delivers smooth-flowing trade within the whole United Kingdom, protects Northern Ireland’s place in our union and safeguards sovereignty for the people of Northern Ireland”. From Sunak’s statement:
· Trade: “Goods destined for Northern Ireland will travel through a new Green Lane, with a separate Red Lane for goods at risk of moving onto the EU. In the Green Lane, burdensome customs bureaucracy will be scrapped. It means food retailers like supermarkets, restaurants and wholesalers will no longer need hundreds of certificates for every lorry. And we will end the situation where food made to UK rules could not be sent to and sold in Northern Ireland. This means that if food is available on the supermarket shelves in Great Britain, then it will be available on supermarket shelves in Northern Ireland. And unlike the Protocol, today’s agreement means people sending parcels to friends and family or doing their shopping online, will have to complete no customs paperwork. This means we have removed any sense of a border in the Irish Sea”.
· VAT and excise: “We’ve amended the legal text of the Protocol to ensure we can make critical VAT and excise changes for the whole of the UK, for example on alcohol duty, meaning our reforms to cut the cost of a pint in the pub will now apply in Northern Ireland. The same quintessentially British products like trees, plants, and seed potatoes – will again be available in Northern Ireland’s garden centres. Onerous requirements on pet travel have been removed. And today’s agreement also delivers a landmark settlement on medicines. From now on, drugs approved for use by the UK’s medicines regulator…will be automatically available in every pharmacy and hospital in Northern Ireland”.
· The Role of the EU: “Today’s agreement safeguards sovereignty for the people of Northern Ireland. The only EU law that applies in Northern Ireland under the Framework is the minimum necessary to avoid a hard border with Ireland and allow Northern Irish businesses to continue accessing the EU market. But I know that many people in Northern Ireland are also worried about being subject to changes to EU goods laws. To address that, today’s agreement introduces a new Stormont Brake. Many had called for Stormont to have a say over these laws. But the Stormont Brake goes further and means that Stormont can in fact stop them from applying in Northern Ireland. This will establish a clear process through which the democratically elected Assembly can pull an emergency brake, for changes to EU goods rules that would have significant, and lasting effects on everyday lives. If the brake is pulled, the UK government will have a veto. This gives the institutions of the Good Friday Agreement in Northern Ireland a powerful new safeguard, based on cross community consent”.
The Response to the Windsor Framework: Sunak is hoping the deal will win the approval of the Democratic Unionist Party (DUP) so power sharing can be restored in Northern Ireland, and the Stormont parliament can get back up and running. However, both the DUP and the backbench Conservative MPs who are members of the pro-Brexit European Reform Group (ERG) have both said they need to look carefully look at the detail, and the legal implications of the new agreement before reaching a decision on it. MPs in Westminster will get a vote on the framework "at the appropriate time", Sunak said. Labour leader Keir Starmer has said his party MPs will vote for it. Meanwhile, the Government has also confirmed that the Northern Ireland Protocol Bill, introduced under former-PM Boris Johnson, has been scrapped on the basis there is now "no legal justification" for going ahead with it.
A row has apparently broken out between City minister Andrew Griffith and the Financial Conduct Authority (FCA). Griffith has reportedly been scathing of the FCA’s planned consumer duty for financial services, which is set to come into force this summer, and will require firms to strengthen consumer protections. In private comments reported by the Financial Times, however, Griffith is said to have noted that the changes will tie firms up in restrictive red tape just as the government was looking to loosen the regulatory burden on the financial services sector post-Brexit. The report let Matthew Nunan, the former head of wholesale enforcement at the FCA and now partner at law firm Gibson Dunn, to tell City A.M: “It is strange, but perhaps not that surprising given recent times, that a government minister is criticising the FCA for doing exactly what the government has told it to do.” “The FCA consumer duty is intended to ensure firms have a goal of delivering good outcomes for clients. To say UK regulated firms should not have such a goal imposed is the kind of comment that almost seems designed to demonstrate that the current government prefers large firms to individual consumers,” he added. Firms have been scrambling to fall in line with the new rules before they come into force in July, in what has been described as one of the biggest shake-ups to consumer regulation in a decade. A spokesperson for the FCA said the consumer duty would “bring about a cultural shift in financial services” and set “higher and clearer standards for firms” as well as “encourage innovation while driving competition and growth in the financial services industry in the UK”. The Treasury has not commented on the matter so far.
Food and Farming Minister Mark Spencer met with the bosses of Britain's major supermarkets yesterday to discuss issues related to a shortage of salad. In a statement he said: "I have also asked them to look again at how they work with our farmers and how they buy fruit and vegetables, so they can further build our preparedness for these unexpected incidents”.
Yesterday, Ofgem cut the energy price cap from £4,279 per year to £3,280 per year for the April-June window, but bills will still go up by an average of £500 because the government’s Energy Price Guarantee will become less generous and a £400 winter discount on all bills ends. A spokesperson for the Department for Energy Security and Net Zero (DESNZ) confirmed there would be no fresh subsidies.
Business confidence continued to falter across the UK service sector, according to the latest quarterly CBI Service Sector Survey. In business and professional services, a net balance of 58% reported strong cost pressures, with 63% expecting costs to continue growing in the next three months. Profitability, meanwhile, dropped for the fifth consecutive quarter, with a balance of -27%, a noticeable widening on November's -11%. That hit business sentiment, although the balance of -20% was an improvement on the previous quarter's -55%. In consumer services, meanwhile, optimism about the business situation was -18%, compared to November's -48%. Profits also fell for a fifth consecutive quarter, with a balance of -48%, while cost growth accelerated in the three months to February, with a balance of 73%, against the previous quarter's 57%. The survey was based on responses from 377 services firms and was carried out between 27th January and 14th February. A balance is the weighted difference between the percentage of firms reporting an increase and those reporting a decrease.
Nearly 90% of FTSE 250 directors have told investment bank and broker Numis they believe British firms are vulnerable to unsolicited foreign takeover bids this year, because of a weak pound and falling valuations. London-listed Wood Group said last week it had rebuffed a number of offers from US buyout giant Apollo, while events firm Hyve said it was mulling a £306m takeover approach from US private equity outfit Providence Equity. “Private equity and strategic buyers are keen to do deals and a significant amount of preparation and outside-in diligence is underway,” Katherine Moir, M&A partner at Clifford Chance told City A.M.
Women make up 40% of board seats at Britain's top 350 listed companies for the first time in 2022, a government-backed report on Tuesday showed, and three years ahead of plan. In February last year, the business-led FTSE Women Leaders Review set the companies a 40% target for women on boards by 2025, up from a previous target of 33%.
Thames Water says it plans to invest £1.6bn over the next two years to upgrade its wastewater treatment plants and sewerage networks to cut discharges into rivers and tackle pollution. The water company, which provides services to 15 million customers across London, the Thames Valley and surrounding areas, also said it was committed to reduce its yearly discharges by 50% by 2030. Water firms are allowed to discharge raw sewage into seas and rivers temporarily if they are inundated by heavy rainfall and risk flooding, but there have been legal controls on the amount they can discharge since 2021. Water regulator Ofwat and the Environment Agency are currently investigating several water companies regarding the illegal discharge of sewage, having given formal notices to Thames Water and others over concerns about the firm's responses to its queries on their sewage treatment operations.
People trying to sell their homes are being forced to accept an average cut of £14,000 on the asking price in order to achieve a sale, according to online real estate firm Zoopla. 41% of properties currently listed for sale on the site have had their asking prices reduced to attract buyers, the website said. Zoopla said annual house price inflation has slowed to 5.3%, down from 8.6% last year.
Pippa Wicks has stepped down from her position as boss of John Lewis and has left the business, the John Lewis Partnership said yesterday. The employee-owned partnership, of which John Lewis is a part, gave no reason for her departure from the role she has held since August 2020. The chain's current retail director Naomi Simcock will succeed Wicks as executive director with immediate effect, on an interim basis.
Twitter is laying off another 200 workers, the New York Times reported yesterday, saying the layoffs will take the company's headcount down to fewer than 2,000 staff. Twitter employed 7,500 people when Elon Musk bought the social media platform for $44bn last autumn.
Canada has joined the EU in banning video app TikTok from all government-issued devices, starting on Tuesday. The decision follows a review by Canada's chief information officer, and the government decision that the app "presents an unacceptable level of risk to privacy and security". A TikTok spokesperson said the company was disappointed by the decision.
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