Published: 20 April 2023
By Suzanne Evans, Director, Political Insight
Britain’s oil and gas sector is set for a steep decline in production and capital expenditure according to the latest data from industry watchdog The North Sea Transition Authority (NSTA), and operators are blaming the Government’s imposition of so-called windfall taxes, City A.M. reports. Chancellor Jeremy Hunt hiked the windfall tax from 25% - 35% last November, and extended it to 2028 without any prospect of early closure. Now, industry body Offshore Energies UK has raised concerns about the effects of the toughened levy, saying in a statement that it has significantly eroded “investor confidence and the capital available to invest in the decade ahead”. “These factors undermine both UK energy security and the offshore energy sector’s ability to accelerate the transition to a low carbon economy,” it added. Mark Lappin, a member of Brindex, a rival association for independent North Sea operators, agreed the country has been left at the mercy of overseas imports to meet its supply needs as a result of poor policy making. “Domestic supply is better for jobs, better for Treasury receipts, better for energy security, and better for emissions than shipping stuff around the globe,” he said, also citing stringent taxes and “frequent fiddling with the investment regime” as factors that are putting off North Sea oil and gas companies despite generous investment relief. “We need a state of stability, and we need to be able to plan for our projects, and if the tax levels are particularly high, that will clearly affect investment,” he said. NSTA calculates annual crude oil production will more than halve over the current decade, and that gas production will drop more than 40% over the same period, with a 5% decline this year. This will come alongside a sharp drop in predicted capital expenditure, which NSTA expects to more than halve over the ten-year window, as decommissioning costs increase by some 43%.
Transport secretary Mark Harper told the Transport Select Committee yesterday that HS2’s Euston developments were “significantly” greater than the initial budget allocated and that there had been “some very significant challenges there about the design work that was undertaken.” The £1.2bn tunnel from Old Oak Common has been paused until 2024. While being questioned, he fell back repeatedly on inflationary pressure as a key cause of thee setbacks. When the project was started, the budget was £55.7bn. In 2018, a government sponsored review by civil engineer Douglas Okervee estimated costs would rise to upwards of £106bn.
The average UK house price increased by 5.5% in the 12 months to February 2023, slowing from 6.5% in January 2023, the Office for National Statistics (ONS) said. The typical property value was £288,000 in February, which is £16,000 higher than 12 months earlier, but £5,000 below a recent peak in November 2022. It has also revealed that private rental prices paid by tenants in the UK rose by 4.9% in the 12 months to March 2023, up from 4.8% in February 2023; and released holiday home data showing that in 2021, 447,000 people stayed in a holiday home, an increase of 4.7% since 2011.77.0% of these were aged 50 years and over, the ONS said.
A poll of more than 1,000 business decision makers by YouGov suggests that nearly half of them believe Artificial Intelligence (AI) could replace humans. 44% of the C-suite executives surveyed thought AI could perform tasks to a similar or better quality than humans.
UK defence engineer Babcock says it may have to take a hit of up to £100m on a Royal Navy frigate contract after inflation pushed build costs higher, leading to argument’s with the government over who should pick up the bill. The FTSE 250’s Babcock said it had been "unable to reach agreement with our customer as to who is responsible for the additional costs under the contract" and had started a dispute resolution process which may lead to an arbitration.
German discount supermarket Lidl has won its trademark lawsuit against Tesco over the use of a yellow circle on a square blue background to promote its “Tesco Clubcard Prices” discount scheme. Judge Joanna Smith said in a written ruling from the High Court in London that Tesco had “taken unfair advantage of the distinctive reputation” for low prices held by Lidl, which has a very similar trademark. She has issued an injunction ordering Tesco to stop using the Clubcard logo.
Heathrow Airport has launched an appeal against a decision by the Civil Aviation Authority (CAA) that it must reduce the average per passenger charge it imposes on airlines, accusing it of "undermining" the investment needed to improve the facility. "We believe the CAA has once again focused on driving down charges to airlines, which will not be passed on to passengers, and is undermining the investment needed to deliver the airport service and resilience consumers want," it said. In February, the CAA said the current £31.57 maximum price per passenger must fall by around 20% to £25.43 in 2024 and remain at that level until the end of 2026. The Competition and Markets Authority (CMA) will now review the airport’s grounds for appeal and decide if one can proceed. Virgin Airlines has also lodged an appeal with the CMA – saying that “the CAA did not go far enough in its final determination, resulting in excessive Heathrow charges that expose a fundamentally broken regulatory framework.” A spokesperson from British Airways owner International Airlines Group told City A.M. the “decision was based on inaccurate passenger forecasts and penalises consumers. Heathrow’s charges are still far higher than those of other major airports across Europe, making the UK uncompetitive”.
Meanwhile, Heathrow Airport is facing a further eight days of walkouts by security staff. Unite the Union have announced walkouts on May 4, 5, 6, 9, 10, 25, 26 and 27. Heathrow says the strikes will not disrupt travel for the tens of thousands of overseas visitors heading into London for the Coronation of King Charles III.
Workers at pharmaceuticals giant GSK are set to strike having rejected a 6% pay increase and a one-off lump sum of £1,300, which the Unite union said is significantly below what it described as the current true inflation rate of 13.5%. "Strike action will inevitably result in widespread disruption across GSK's operations, but the company has brought this dispute on itself," said Unite national officer Tony Devlin. "GSK has effectively stuck two fingers up to its workforce by walking away from the pay negotiations." Unite said the strike action came on the back of GSK's latest operating profit announcement of £8.15b - a 26% year-on-year increase. "This is an incredibly wealthy company that can fully afford to pay its workers a fair pay offer," Unite's general secretary Sharon Graham said. “This is a classic example of a company seeking to further boost its profits at the expense of its workers”.
GSK has also snapped up Canadian drug maker Bellus Health in the biggest deal since the demerger of its consumer health arm Haleon last summer. The FTSE 100 pharma giant paid £1.6billion in cash for Bellus, which works out at more than double its Monday closing price on Wall Street.
FTSE 100 miner Glencore has upped its bid for diversified mining firm Teck Resources, stating it was willing to improve upon its previous $22.5bn offer for the group.
Jaguar Land Rover says it plans to invest £15bn in electric and autonomous vehicles over the next five years, turning its Halewood plant in the UK into an all-electric production facility.
The Competition and Markets Authority (CMA) has said proposals from Alphabet Inc's Google to give app developers the freedom to break away from Google Play's billing system looked to be sufficient to address its concerns about in-app payments. In June, the competition regulator ruled that Google's complete control over in-app payments unfairly restricted developers by forcing them to use Google Play's billing system, reducing competition and hurting users.
Sandwich chain Subway is reportedly being pursued by some of the world's largest buyout firms with an eye to joint bids in the region of $10bn (8.3bn). According to Sky News, Advent International, Bain Capital and TPG are considering teaming up in a so-called "club deal" as the auction of Subway nears the conclusion of a second round of bidding. In the UK, Subway trades from more than 2,000 sites. The company confirmed its shareholders were "exploring a possible sale of the company" earlier in the year. Subway ended 2022 “exceeding global sales projections and achieving eight consecutive quarters of positive same-store sales growth," it said.
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