Published: 15 March 2023
By Suzanne Evans, Director, Political Insight
Ahead of today’s Spring Budget, Chancellor Jeremy Hunt has confirmed that the Energy Price Guarantee will be extended at its current level. The energy bills support package, which caps average household bills at £2,500, will now remain at its current rate from April until June. It had been due to rise to £3,000 next month, raising concerns householders would face a potential £900 hike to their energy bills as the £400 discount expired and the subsidy package tapered off to £3,000. Hunt is also expected to deliver a ‘back to work’ budget that encourages parents, the over 50s and disabled people with into employment, hence likely changes to pension allowances and childcare support – numerous media reports say he is expected to splurge £4bn expanding provision to one and two year olds. Other policies announced in advance include more funding for carbon capture projects, and support for veterans. The Office for Budget Responsibility will also publish its updated forecasts for the UK economy.
The Government is considering bringing in a price floor for the Energy Profits Levy, or windfall tax, amid fears Equinor could pull out of the huge Rosebank oil and gas field development, Politics Home has reported. The Norwegian energy giant is said to be concerned about the lack of stability in the British tax regime, compared to its home market, which has higher taxes but an established investment allowance and a calmer political climate. The field, 130km off the coast of the Shetland Isles, is 80% owned by Equinor, with the remaining 20% held by Ithaca Energy. It is potentially the source of 500m barrels of oil and gas equivalent, however a final investment decision has not yet been made. Under the new price floor proposals, the windfall tax will be switched off when oil and gas prices return to ‘normal levels,’ however what constitutes ‘normal levels’ for the price floor has not yet been agreed. The government is also considering plans to expand the scope of the investment relief – set at 91p in the pound – to include carbon capture and storage if tagged onto existing oil and gas fields to reduce emissions. Equinor refused to comment on the speculation, but told City A.M. it was keen for a stable investment climate to be established. A spokesperson said: “In general, predictable framework conditions are important for an industry with a long-term horizon. Sudden and surprising changes in taxes will affect our discussions on investments going forward.” An announcement on the price floor could be made in today’s Budget.
Security minister Tom Tugendhat has called on the National Cyber Security Centre to look into TikTok amid concerns around potential cyberattacks, saying he has not ruled out a ban on the Chinese-created video app. The EU Commission and the White House have recently ordered their staff to delete the app from their work phones. India introduced a blanket ban on the app in 2020, along with 58 other Chinese apps. Former US President Donald Trump tried to do the same, but was blocked by the courts. Parliament opened and then shut down its own Tik Tok account last year because of concerns about the firm’s Chinese links. Tugendhat told Sky News it was "absolutely essential" to keep Britain's diplomatic processes "free and safe", and added that understanding exactly what the "challenges" that apps pose, what they ask for, and how "they're reaching into our lives" is incredibly important. He also told Times Radio: "We need to make sure our phones are not spyware”. TikTok has faced allegations it hands users' data to the Chinese government.
More than 860 technology investors and founders representing over £560bn in capital and funds under management have written an open letter to Rishi Sunak and banking regulators saying ‘thank you’ for the rescue of Silicon Valley Bank UK. The rescue by HSBC – for just £1 – was coordinated hours after SVB UK teetered on the brink of insolvency. Signatories to the letter included Richard Reed of Jam Jar, the venture capital fund, Chris Sheldrick, founder of What3Words, Tim Weller, the Trustpilot chair, and Niklas Zennstrom, the CEO of tech investor Atomico. It said the rescue of SVB UK would "preserve the momentum and energy of the UK tech sector and its wider significance to the whole of the UK, keeping UK tech innovators at the forefront of job creation, economic growth and finding solutions to the world's biggest problems".
Nevertheless, Bank of England (BoE) officials are to be grilled on 28th March by MPs on the Commons’ Treasury Select Committee over the collapse of Silicon Valley Bank and the cut-price rescue of its UK arm by HSBC. In a letter to BoE Governor Andrew Bailey, committee chairman Harriett Baldwin asked him to detail how SVB UK was supervised before the collapse and how HSBC was chosen to take over the bank. She also asked ‘what lessons can be learnt’ from the episode about the regulation of the banking system. In a further letter to Andrew Griffith, Economic Secretary to the Treasury, she asked what other support was considered for SVB UK at the time of the HSBC rescue, as well as whether smaller banks serving ‘strategic sectors’ of the economy needed more regulation. Meanwhile, Sir John Vickers, former chief economist at the Bank, said ‘more can be done’ to strengthen regulations brought in after the 2008 financial crisis, the Daily Mail says.
Retailers were cautious about hiring extra workers in the run up to Christmas, the British Retail Consortium (BRC) has claimed. “Low consumer confidence and falling sales volumes meant many retailers were more cautious in hiring additional workers in the run up to Christmas,” BRC CEO Helen Dickinson said. The latest Office for National Statistics Labour Market figures reveal there were just 3.12m retail jobs in quarter four of 2022 down 14,000 year-on-year – the lowest quarterly average in over a decade.
Asda’s £60m October 2022 takeover over of 132 Co-op petrol stations is facing further scrutiny from The Competition and Markets Authority (CMA), which launched a Phase 1 investigation at the start of this year amid fears the deal was likely to push up fuel prices. Asda, which is owned by the billionaire Issa brothers and TDR Capital, said that these concerns would not arise in these areas because the merger would enable Asda to “bring its low-cost pricing model to more customers”. Asda now has five days to offer legally binding proposals to address the competition concerns identified and if the watchdog does not deem the explanation valid it will launch an in-depth, Phase 2 investigation.
More job cuts have been announced at newspaper and magazine publisher Reach, with more than 400 roles at risk of redundancy, the company and the National Union of Journalists said yesterday. The owner of the Daily Mirror and multiple regional news websites is axing jobs in response to falling advertising revenues amid the cost of living crisis. Last week it reported a 28% fall in underlying pre-tax profits. According to the NUJ, 420 roles in total will be put at risk, with 192 editorial roles being cut from the workforce. The announcement comes just two weeks after the conclusion of a redundancy process announced in January that saw 80 jobs go.
London-listed events company Hyve has agreed to be bought by private equity firm Providence Equity in a deal that values the exhibition business at around £481m. Under the terms of the transaction, Hyve shareholders will receive 108p a share in cash, a premium of 40.8% to the closing Hyve share price on 17th February, which was the last business day prior to the movement of Hyve's share price on 20 February.
FTSE 250 gambling software company Playtech has announced a "landmark" strategic partnership with Hard Rock Digital (HRD), the global vehicle for interactive gaming and sports betting for Hard Rock International and Seminole Gaming. Playtech CEO Mor Weizer said: "For Playtech, this partnership significantly advances our position in the North American market and is very much in line with our B2B strategy."
McLaren Group, the supercar manufacturer and Formula One team-owner, has received a £70m funding boost from investors in the first stage of a wider capital-raising plan. Sky News has learnt that the Surrey-based automotive group has been handed the funding by a group of its existing shareholders. Sources said the share sale was part of a broader effort to fortify McLaren's balance sheet, with as much as £500m now being sought by the company to fund its business plan into the electric vehicle era.
NatWest is implementing a daily limit of £1,000 and a 30-day payment limit of £5,000 on cryptocurrency exchanges, saying it is helping “protect customers losing life changing sums of money” after £329m was lost by UK consumers last year.
Cryptocurrency exchange Binance has announced it will end British pound deposits and withdrawals on 22nd May. It said: “We regret to inform you that our GBP fiat partner, Skrill Limited, has informed us that it will stop offering GBP fiat services, namely deposits and withdrawals via Faster Payments and card, to Binance users.” Binance users will be unable to open accounts on the exchange with GBP deposits, however, existing users will still be able to access their GBP balances, according to Decrypt. Binance added: "This change affects less than 1% of Binance users”.
Online rail ticket seller Trainline saw revenues surge 74% in its last fiscal year, driven by international ticket sales as European routes opened up to competition, offsetting a UK performance hit by rail strikes, it said. Group net ticket sales rose 72% to £4.3bn in the 12 months to February 28, with those at Trainline's International Consumer unit more than doubling to £915m. "A key driver is the arrival of carrier competition on key European routes, particularly in Spain where we are increasingly positioning ourselves as the aggregator of choice," Trainline said this morning.
Construction group Costain has swung to a full-year operating profit on increased revenue. In the year to the end of December 2022, the company reported an operating profit of £34.9m from a loss of £9.5m a year earlier, while adjusted pre-tax profit rose to £34.2m from £26.3m. Revenues were ahead 25.2% at £1.4bn.
Meta Platforms, the parent company of social media giants Facebook and WhatsApp, has announced it will lay off an additional 10,000 employees, having already let go of 11,000 workers during a previous round of redundancies in November last year. The move is part of its ongoing effort to increase efficiency and improve financial performance. According to a regulatory filing with the Securities and Exchange Commission (SEC) on Monday, Meta was expecting to save $3bn to $5bn from the layoffs and facilities consolidation charges.
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