Published: 02 March 2023
By Suzanne Evans, Director, Political Insight
The Treasury Select Committee has asked the four biggest British banks - Lloyds Banking Group, NatWest, HSBC and Barclays - why they offer less than 1% interest on easy access savings accounts, despite the Bank of England benchmark rate rising to 4%. "While consumers are always advised to shop around for the best deals, it is difficult to avoid the conclusion that our biggest banks are taking advantage of their most loyal customers to increase profits and CEO pay," said Harriett Baldwin, chair of the committee. Top executives from the lenders were previously hauled before the committee last month to answer criticism they were too slow to pass on the benefits of central bank rate hikes to savers, but quick to boost boardroom pay. Meanwhile, Stuart Haire, the CEO of Skipton Group, has also criticised rival high street lenders for failing to pass on higher interest rates to savers, telling City A.M: “We’ve followed the interest rates up on our savings range whereas…the market practice has been for people to maybe leave the savings rates down, which then supports the margins and the profits of the institutions who could make more profit”. “Shame on them,” he said.
The government made £2.4bn by selling mortgages from collapsed lenders to investment firms, a report funded by Matin Lewis, founder of the MoneySavingExpert website has suggested. Some 200,000 mortgages were sold to firms which cannot offer new deals, leaving homeowners stuck on high rates as other lenders will not accept them. The finance guru is calling on the government to free so-called "mortgage prisoners". The Treasury said it would consider all proposals put forward.
Jaguar Land Rover (JLR) owner Tata Motors is reportedly seeking £500m from the government in state subsidies to build a battery factory in Somerset, it was reported yesterday. The Indian conglomerate has asked for the money in the form of grants and support packages such as assistance for energy costs and research funding. Tata is said to be choosing between a potential UK site and another in Spain, where the government is offering large grants to companies considering battery production, in the hopes that it can attract the new industry with the potential for cheap solar power. A source told the Guardian: "If JLR, as the UK's biggest motor manufacturer, can't make a business case to build electric batteries in this country, who else is going to build batteries in this country?" They added that while the government had already offered JLR a funding package that was larger than those from rivals in the EU, higher energy costs for industry than other European nations were a key issue, given the needs of a gigafactory, hence no final decision had yet been made. However, a senior car industry source also said there was "no financial logic" to JLR supplying its UK factories with batteries from Spain as the cost of transporting the batteries by sea and road would be likely to negate any savings from cheaper labour. "There is zero arbitrage," the source said. "I think they are just positioning to get money." A £500m subsidy, first reported by the Financial Times, would represent a very large investment for the UK government in a single project. Its "automotive transformation fund", the key vehicle for supporting the UK industry's shift from internal combustion engines to electric vehicles, is only worth £1bn in total.
City A.M. says Renewable UK has sent a “damning” submission into the government’s consultation on its Levelling Up and Regenerations Bill, which includes amendments to the planning framework around onshore wind turbines, saying proposals to revive onshore wind will do nothing to remove the current de facto ban. The trade body says that because the government’s proposed new planning rules still require local plans showing areas suitable for wind energy development, and a very broad wording on community consent – meaning that, theoretically, one person could potentially still object to a project to stop it going ahead – the risk to potential investors of supporting onshore wind in England remains high. Renewable UK said: “We suggest in our submission that it should be the responsibility of developers and community groups to work together to identify suitable areas for wind farms – expecting local authorities to do it will delay our ability to take vital action against climate change.” It is calling on ministers to reverse the planning rule introduced in 2015 which says no onshore wind farm can go ahead unless the local authority has drawn up a detailed local plan identifying suitable areas for onshore wind development; and that “there must be national deployment targets for onshore wind and a policy framework supportive in place to deliver on these commitments.” Only 11% of local authorities have drawn up plans to include onshore developments, according to analysis from Dr Rebecca Windemer at the University of the West of England, and there are no specific generation targets for ramping up generation, unlike offshore wind – which has a 50GW target in the UK’s energy security strategy following Russia’s invasion of Ukraine. Reflecting the stringency of the current rules, just two small onshore wind turbines were installed in England last year, Renewable UK says.
The Competition and Markets Authority (CMA) has provisionally cleared the £5.4bn takeover of UK satellite giant Inmarsat by US firm Viasat, saying that while the companies compete closely in the aviation sector – specifically in the supply of satellite connections for onboard wifi – the deal does not substantially reduce competition for services provided on flights used by UK customers. The CMA said the merged company will likely face “significant competition” from both emerging and established players as the sector expands, such as SpaceX’s new competitor Starlink, as well as established firms such as Intelsat and Panasonic. “This competition has led us to provisionally conclude that airlines and their UK customers will not be adversely affected by the deal,” it said.
The Federation of Small Businesses (FSB) has called on Chancellor Jeremy Hunt to immediately tackle the “childcare crisis” in the upcoming budget, saying the high cost of childcare is increasingly forcing parents out of the workforce. Childcare providers face insufficient funding, the FSB told City A.M., and are either having to shut down or pass on costs to parents. The trade body wants the government to expand the free childcare entitlement to 45 weeks.
A legal bid to protect tenants from so called "ghost landlords" has failed, the BBC reports. In a landmark ruling, the Supreme Court stated that a landlord is the person a tenant signs their contract with, and not the property's owner. The National Residential Landlord's Association (NRLA) welcomed the decision, saying it gives much needed clarity for those worried they could be responsible if secondary companies let out their home in poor conditions, for example in the ‘rent-to-rent’ marketplace, where a company rents a whole home from a landlord, and then let rooms individually for profit. Critics say having a "ghost landlord" in this way often leaves properties in poor condition and tenants with nowhere to turn, and that some owners are using such companies to avoid legal repercussions. The court said that rogue landlords can face other sanctions such as fines and banning orders and it is up to parliament to decide whether these are sufficient.
ITV has agreed to invest in architectural tech company Resi as part of ITV AdVentures Invest, its Media for Equity investment fund. The deal involves ITV extending up to £3m of advertising inventory across ITV’s channels and ITVX in return for a minority equity stake in Resi. It will be the first time the brand has been advertised on television. ITV has made similar deals with a "diverse portfolio” of brands, including location app what3words, online menswear brand Spoke, wellness brand Feel and Europe's biggest new car buying marketplace Carwow, the broadcaster said in a press release. ITV AdVentures Invest was launched in 2021, and focuses on partnering with early stage digital and direct-to-consumer businesses.
Meanwhile, ITV has reported lower annual profits due to tougher economic conditions and the investment made in its ITVX streaming service. Adjusted operating profit to fell 12% £717m, while total revenue grew 7% to £4.3bn. "While in the short term the advertising outlook is challenging, we expect linear advertising revenues to remain resilient and continue to be highly cash generative. This underpins our continued growth investment in ITVX and Studios, which power ITV," the company said.
Dettol and Nurofen maker Reckitt Benckiser (RB) has posted a pre-tax profit of £3.07bn for the 12 months to the end of December 2022. Net revenue at the FTSE 100 company rose to £14.5bn from £13.2bn. CEO Nicando Durante said: "We are now 28% larger than we were in 2019. Our healthy balance sheet underpins our financial strength”. RB made a £260m loss the year previous.
Upmarket London department store Selfridges has played down reported concerns that its £1.7bn debt pile could cause it problems. The Telegraph reported that the Thai and Austrian owners of Selfridges have built up the debt since taking control of the store last autumn, when the Weston family sold Selfridges Group for around £4 billion. When contacted by City A.M., a spokesperson for Selfridges said: “Selfridges enjoyed the best Christmas ever in 2022, and we remain very confident about 2023 and beyond”.
FTSE 100 miner Glencore has been fined $700m (£582m) over the corruption scandal that saw the company’s execs pay more than $100m in bribes to officials in Africa and South America. A New York court has ordered Glencore to pay a $428.5m fine and forfeit a further $272m, after the commodities giant agreed a plea deal last May. The deal saw Glencore agree to pay $700m to US authorities after it admitted paying more than $100m in bribes to officials in Brazil, Venezuela, and five African countries, from 2007 to 2018.
Online estate agent Purplebricks Group has officially put itself up for sale. London-listed Purplebricks has a market capitalisation of £23.2m and, since its strategic review announcement last month, has received interest from several parties that the board wishes to pursue, it says. Sky News has also reported that Purplebricks founder and former CEO Michael Bruce has been considering floating an offer to regain control over the company – he stepped down nearly four years ago.
Despite pre-tax profits for the year ending 31st December growing 21.8% to £827m, British housebuilder Taylor Wimpey nevertheless flagged weaker sales and lower order book for 2023, reflecting a slowdown in the housing sector. The FTSE 100 firm’s order book - a key industry measure that gauges future sales performance - stood at £2.15bn as of 26th February, down from £2.90bn a year earlier.
Pret A Manger is giving staff their third pay rise in 12 months from April, amounting to a 19% bump in year-on-year pay for shop staff. By raising base pay to above the rate of inflation, the chain said its baristas would be among "the highest paid in the industry", able to earn up to £11.80-£14.10 an hour based on location and experience. It said that by April, for entry level staff, the rise amounts to a 15% pay rise year-on-year.
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