Published: 01 September 2023
By Suzanne Evans, Director, Political Insight
Marks and Spencer is taking legal action against the Government for rejecting the retailers plans to rebuild its flagship Marble Arch store. Despite having received planning permission from Westminster City Council and backing from London Mayor Sadiq Khan to demolish the current store and replace it with a shop featuring a cafe, offices and a gym, Michael Gove, Secretary of State for Levelling Up, Housing and Communities, overruled the local planning authority on grounds of heritage and environmental concerns following complaints from campaigners, including Save Britain’s Heritage. At the time, M&S CEO Stuart Machin described Gove’s decision as “utterly pathetic,” and said the refusal left the retailer with “no choice but to review its future position on Oxford Street”. Now, Sacha Berendji, operations director at M&S says the retailer believes Gove has wrongly interpreted and applied planning policy to justify his decision, hence it has been “forced” to launch a Judicial Review against the decision. “It is hugely disappointing that after two years of support and approvals at every stage, we have been forced to take legal action to overcome a misguided agenda against our scheme, and we will be challenging this to the fullest extent possible,” she said.
Ofgem is to ban electricity generators from artificially inflating energy prices by switching off their supplies ahead of periods of peak demand in order to extract higher prices for power generation. The move follows an Ofgem investigation into the practice, which effectively manipulates the electricity market at the expense of billpayers, and which is said to have cost households some £3bn last winter. The National grid Electricity System Operator (ESO), (a separate business within the National Grid Group) relies on the so-called ‘balancing mechanism’ to match demand and supply across the country to prevent blackouts and power surges. To achieve this, it pays generators to turn supplies off at times of low demand, and on at times of peak demand, typically in the evenings when consumption spikes. These balancing costs tripled in the winter of 2021/22 to over £1.5bn between November 2021 and February 2022, compared to average annual winter balancing costs of just under £500m for between 2017 and 2020. The record-breaking daily costs peaked above £60m on Wednesday 24 November 2021, driving up the ESO’s overall balancing costs, which are ultimately paid for by consumers. Now, the new ban on this, dubbed the Inflexible Offers Licencing Condition (IOLC), will see firms face penalties if they breach licence conditions, including fines of up to 10% of their regulated turnover. The new conditions will come into force on 26th October this year. Eleanor Warburton, Ofgem’s acting director for energy systems management and security, said: “We believe the new licence condition strikes the right balance between protecting consumers and ensuring they pay a fair price for their energy while also enabling a competitive electricity market that provides fair returns for generators. We’ll be monitoring the effectiveness of it to ensure it’s doing what it was designed to do.”
Meanwhile, the National Grid will again pay people to cut their electricity use to help prevent power shortages this winter, following the success of the service last winter. Under the demand flexibility service (DFS), homes that signed up with their suppliers were paid, usually via money off their bills, for turning off appliances such as ovens and dishwashers during a specific period when electricity demand is high. Some 1.6m British homes joined the scheme last winter, saving over 3,300 megawatt hours (MWh) of electricity, which is enough to power around 10m homes.
Most high street banks appear to have heeded warnings from the Financial Conduct Authority (FCA) that those of them not passing interest rate rises on to savers would face “robust action”. Since then, HSBC has lifted the interest rate on its instant access account to 2% from 1.7%, and Natwest now offers 1.75%, up from 1.4% at the beginning of August. Lloyds meanwhile is now offering 1.4%, up from 1.1 per cent. Barclays, however, hasn’t changes its 1.5% rate on its easy access accounts.
The FCA warned firms at the beginning of August that they would face “robust action” if they could not justify to the regulator how their rates offered customers ‘fair value’. Having received the responses from the banks, the FCA says it will now “analyse the information” before publishing an update later this autumn. “We welcome the development of a more competitive market and encourage people to shop around for the best deal,” the watchdog said.
The average UK house price fell by 0.8% month-on-month in August, the fastest rate since 2009, according to Nationwide Building Society, which said house prices are now 5.3% below their August 2022 peak, and that the average property value is now £259,153.
British factories suffered their weakest month since early in the Covid-19 crisis in August, with orders shrinking dramatically, according to the S&P Global/CIPS UK manufacturing Purchasing Managers' Index (PMI). The survey data showed orders dropped for a sixth month in a row, falling to 43.0 from 45.3 in July., the lowest reading in 39 months, and the 13th month in a row the PMI has been below the 50 mark, which denotes growth in activity.
Direct Line has this morning agreed to pay redress to motor and home insurance customers who have been overcharged when renewing their policies by a total of some £30m because it made errors calculating new insurance rules brought in by the Financial Conduct Authority (FCA) last year. In a statement this morning, the insurance group said it would now undertake a “past business review” to identify “all instances where a customer has been overcharged and provide appropriate redress”.
FTSE 100 British defence company BAE Systems is setting up a local entity in Ukraine, The Guardian reports. BAE said it would work directly with Kyiv to explore potential partners for a plan to produce 105mm light artillery guns in the country and to better understand Ukraine’s requirements. BAE has manufactured much of the equipment that Britain and other governments have provided to Ukraine to defend itself against Russia’s invasion, and in May became the first country to start supplying Kyiv with long-range cruise missiles. “The best weapons that are currently helping our warriors defend Ukraine should be produced in Ukraine,” Ukrainian president Volodymyr Zelenskiy, tweeted after a meeting with BAE CEO Charles Woodburn.
FTSE 100 mining company Glencore is facing a multi-billion-pound claim for damages by almost 200 major investors who accuse it of lying to cover up corrupt activities when it listed on the London Stock Exchange in 2011, and in its 2013 prospectus for its merger with Xstrata. Investment giants Fidelity, Vanguard and Legal & General are among the claimants who have filed a 200-page document with allegations of “widespread bribery, corruption and fraud” at the High Court, the Financial Times says, along with pension funds including Scottish Widows, Ontario Pension Board, BP and Shell, as well as sovereign wealth funds such as GIC, Norges Bank, Mubadala, Kuwait Investment Authority and Oman Investment Authority. The suit focuses on alleged bribery connected to copper and cobalt acquisitions in the Democratic Republic of Congo; Glencore’s oil trading business in West Africa, South Sudan, Brazil and Venezuela; and alleged fuel oil price manipulation in the US. Glencore, which declined to comment on the FT report, has not yet filed its defence and there is no clear timeline for the case to go to court. Last year, Glencore, which has its headquarters in Switzerland, was ordered to pay £281m following an investigation by the UK’s Serious Fraud Office which found it had paid £23m in bribes to gain preferential access to oil in Africa. The company pleaded guilty in the landmark case, saying the conduct was “inexcusable and has no place in Glencore”. Glencore shares are trading 1.88% up this morning, at the time of writing.
PwC, the administrators for Wilko, confirmed yesterday that over 200 jobs will be lost immediately after M2 Capital’s bid to buy the entire group timed out. “It is now clear that no viable offer structure put forward includes the group in its entirety,” PwC said in a statement. However, PwC has also begun consulting creditors on the terms of a deal with Doug Putman, the owner of HMV, that insiders say would see him acquire more than 300 of the value retail chain’s 400 stores and preserve more than 8,000 out of 12,500 jobs there.
The Bank of London has amassed £300m in deposits within six months of taking client money, making it comfortably the UK’s fastest growing SME-focused challenger bank, City AM reports. CEO Anthony Watson said that the bank has been “inundated with demand” since securing its banking licence in February this year. The bank launched in 2020, and does not lend its customers’ funds, meaning deposits are immune from the risks of a bank run. At its most recent valuation, Bank of London was valued at $1.1bn (£87m), maintaining its ‘unicorn’ status despite a wider downturn in venture capital funding.
Easyjet CEO Johnan Lundgren has demanded a “full independent review” into the National Air Traffic Services (NATS) failure earlier this week. The incident, which wrecked travel plans for some 250,000 people, “must not happen again,” he said. More than a quarter of flights were cancelled on Monday, and the knock-on effects were continuing yesterday. “Passengers deserve to see a full independent review, which not only results in meaningful improvements to prevent an incident of this scale happening again but also considers a wide range of issues beyond this incident, including staffing levels required at NATS to deliver today’s flying and what modernisation is needed to deliver the flying of tomorrow,” Lundgren said.
Rail strikes this weekend: Members of train drivers’ union Aslef have walked out today and will refuse to work overtime tomorrow. The 24-hour walkout will severely affect timetables, with trains starting later and finishing earlier than usual, with some areas having no trains all day. Trains are expected to be affected at 14 different operators: Avanti West Coast, c2c, Chiltern Railways, Cross Country Trains, East Midlands Railway, Great Western Railway, Greater Anglia, LNER, Northern Trains, South Eastern, South Western Railway, Transpennine Express, West Midlands Trains and GTR (including Southern, Gatwick Express, Thameslink and Great Northern). 20,000 RMT members will also take industrial action tomorrow.
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