Full story: Energy bill support for UK businesses to be cut by Jeremy Hunt
Alex Lawson
The chancellor, Jeremy Hunt, is poised to announce a cut to the financial support offered to businesses to help with their energy bills, our energy correspondent Alex Lawson reports.
A new scheme to provide support for businesses, charities and public sector organisations at a less generous level than the current scheme is expected to be presented in the House of Commons on Monday.
The existing scheme, which began in October, caps the unit cost of gas and electricity for all businesses until the end of March.
The Treasury is expected to replace that scheme with an initiative that offers a discount on wholesale prices rather than a fixed price.
Energy-intensive industries such as steel, glass and cermaics producers are expected to get a larger discount than those in other sectors.
Hunt met industry groups last week to discuss the scheme, which he described as “unsustainably expensive”.
The government said last week the energy scheme was “one of the most generous in Europe”, but added “no government can permanently shield businesses from this energy price shock”. The cost has been estimated at about £18bn for the six months until the end of March.
The new scheme is expected to run until March 2024, helping to avoid a “cliff-edge” end to support, which businesses had raised concerns about.
Hunt has been handed a fillip from falling gas prices in recent weeks which, if sustained through the rest of the year, could significantly reduce the cost of policies to cut energy bills for consumers and businesses.
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Jasper Jolly
Rishi Sunak has reportedly restarted efforts to persuade the Japanese investor SoftBank to list the computer chip designer Arm in London.
SoftBank has been considering listing Arm, which has its headquarters in Cambridge, for months, with New York thought to be the lead candidate.
Arm produces designs for the chips embedded within 95% of the world’s smartphones. Before it was bought by SoftBank in 2016 it was a member of London’s FTSE 100 index, and its central role in the smartphone economy means it is seen as the most important British tech company.
Sunak met the Arm chief executive, Rene Haas, and the chief legal officer, Spencer Collins, last month in Downing Street. Masayoshi Son, the founder of SoftBank, Arm’s Japanese owner, joined via video, according to the Financial Times.
Gerard Grech, CEO of Tech Nation, says getting Arm to list in London would be seen as a “significant vote of confidence in the UK market”.
Listing on two exchanges (London and Wall Street) could “potentially increase its access to capital”, Grech argues, adding:
“The UK is globally recognized for cultivating start-ups and scale-ups, helping them to become the new generation of global companies, like Cambridge-based Arm.
Despite market jitters, the outlook for the UK is positive, currently home to 144 unicorns – companies with valuations of $1 billion or more – and 237 futurecorns, fast-growing companies which are predicted to be the most valuable businesses in the next few years. More than any other European counterpart.
SEC charges McDonald’s former CEO with misleading investors over departure
Some breaking news from the US: The Securities and Exchange Commission has charged Steve Easterbrook, the British former CEO of McDonald’s Corporation, with making false and misleading statements to investors about the circumstances leading to his exit from the company in November 2019.
Easterbrook has agreed to pay $400,000 over the charge from US regulators that he failed to disclose improper relationships with employees at the company, without admitting or denying the findings.
McDonald’s was also charged for shortcomings in its public disclosures related to Easterbrook’s separation agreement.
The SEC say that McDonald’s terminated Easterbrook in 2019 for exercising poor judgment and engaging in an inappropriate personal relationship with a McDonald’s employee in violation of company policy.
However, McDonald’s and Easterbrook entered into a separation agreement that concluded his termination was without cause, which allowed him to retain substantial equity compensation that otherwise would have been forfeited. In making this conclusion, the SEC say, McDonald’s exercised discretion that was not disclosed to investors.
Subsequently, in July 2020, McDonald’s discovered through an internal investigation that Easterbrook had engaged in other undisclosed, improper relationships with additional McDonald’s employees, the SEC adds.
In August 2020, the fast food chain launched legal action to recover tens of millions in compensation and severance payments from Easterbrook.
According to the SEC’s order today, Easterbrook knew or was reckless in not knowing that his failure to disclose these additional violations of company policy prior to his termination would influence McDonald’s disclosures to investors related to his departure and compensation.
Washington D.C., Jan. 9, 2023 —
The Securities and Exchange Commission today charged Stephen J. Easterbrook, former CEO of McDonald’s Corporation, with making false and misleading statements to investors about@SECGov $MCDhttps://t.co/BvPNSkxJZ3— Carl Quintanilla (@carlquintanilla) January 9, 2023
The SEC’s order finds that Easterbrook violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
It adds:
Without admitting or denying its findings, Easterbrook has consented to entry of the SEC’s cease-and-desist order, which imposes a five-year officer and director bar and a $400,000 civil penalty.
After being charged with Public Disclosure Violations, McDonald’s has consented to the SEC’s cease-and-desist order without admitting or denying its findings. The company will not receive a financial penalty, due to the “substantial cooperation” it provided to SEC staff during the investigation.
Business Secretary Grant Shapps has said ministers are seeking a more “collaborative approach” with the unions, as they try to resolve the current wave of public-sector strikes.
Shapps said the Government would be publishing all its evidence to the pay review bodies as they prepare their recommendations for 2023-24 so the process was “completely transparent”.
He told BBC Radio 4’s The World at One:
“It is a new year. We are very keen to see these strikes come to a conclusion. We want to see a collaborative approach,”
But Unite, one of the unions involved in talks with Steve Barclay, the health secretary, today has described what was put on the table at this morning’s talks as an “insult” to members.
Onay Kasab, Unite’s national lead officer, told reporters that the talks had gone “not well” after he emerged from his meeting with Barclay. Kasab went on:
Unfortunately, the government have missed yet another opportunity to put this right. We came here in good faith. What they want to talk about is productivity.
Our members are working 18-hour shifts. How you become more productive with that I do not know.
Andrew Sparrow’s Politics Live blog has all the details:
Annual cost of hot baths predicted to rise over £1,000 in 2023
The jump in energy costs last year has driven up the cost of hot baths, boiling the kettle or running kitchen appliances, research from Yorkshire Water today shows.
The annual cost of taking hot baths is predicted to rise by almost 90% to £1,023 this year, Yorkshire Water reports, while households spent 80% more boiling their kettles last year and the yearly cost of using a dishwasher went up from £133 in 2021 to £237 in 2022.
The company said that although water rates have stayed the same over the last year, the cost of using it in the home has gone up due to gas and electricity prices rocketing.
Their calculations found that running a bath is the most expensive domestic use of water, costing £542.88 in 2022, a 79% rise since 2021 (£303.70).
Following closely behind is using a dishwasher, costing £236.60 in 2022, up from £132.68 in 2021. Using a washing machine cost £222.77 in 2022 – an annual increase of 95%.
It cost households £18.69 to boil their kettles in 2022 compared with £10.37 in 2021 – an 80% increase, the research estimates.
The delay to today’s announcement on energy support for non-domestic users has been “bad news”, says Craig Beaumont, chief of external affairs at the Federation of Small Businesses.
The government’s plan had been expected in mid-December, and Beaumont told Sky News that the delay caused “huge upset over the Christmas period” when businesses wanted to know what their bills would be from this spring.
The FSB are concerned that Jeremy Hunt’s new package will be much less generous than the original support (which caps energy costs) which runs from last October to the end of March.
An FSB survey last month found that 24% of members would either close, shrink their business or have to restructure in some way if the energy relief came in at the lower end of expectations.
Beaumont says:
This is a huge deal for all small businesses across the country.
Beaumont points out that small firms would be vulnerable to rising prices, if the government moves from a fixed energy price to a fixed small discount. So if Vladimir Putin goes on the offensive again, small businesses would be at significant risk from rising wholesale prices, he adds.
Jasper Jolly
Goldman Sachs is expected to start one of the biggest rounds of redundancies in its history this week.
As many as 3,200 jobs could go, as Goldman looks to cut costs.
The bank is expected to begin informing people that they will lose their jobs on Wednesday.
The world’s big investment banks enjoyed a boom in 2021 and early 2022 as companies embarked on a huge number of mergers and acquisitions after coronavirus lockdowns.
However, the number of takeovers has dropped significantly as interest rates have risen and company valuations have plummeted. More here:
Full story: Energy bill support for UK businesses to be cut by Jeremy Hunt
Alex Lawson
The chancellor, Jeremy Hunt, is poised to announce a cut to the financial support offered to businesses to help with their energy bills, our energy correspondent Alex Lawson reports.
A new scheme to provide support for businesses, charities and public sector organisations at a less generous level than the current scheme is expected to be presented in the House of Commons on Monday.
The existing scheme, which began in October, caps the unit cost of gas and electricity for all businesses until the end of March.
The Treasury is expected to replace that scheme with an initiative that offers a discount on wholesale prices rather than a fixed price.
Energy-intensive industries such as steel, glass and cermaics producers are expected to get a larger discount than those in other sectors.
Hunt met industry groups last week to discuss the scheme, which he described as “unsustainably expensive”.
The government said last week the energy scheme was “one of the most generous in Europe”, but added “no government can permanently shield businesses from this energy price shock”. The cost has been estimated at about £18bn for the six months until the end of March.
The new scheme is expected to run until March 2024, helping to avoid a “cliff-edge” end to support, which businesses had raised concerns about.
Hunt has been handed a fillip from falling gas prices in recent weeks which, if sustained through the rest of the year, could significantly reduce the cost of policies to cut energy bills for consumers and businesses.
RMT general secretary Mick Lynch has arrived at the Department for Transport (DfT) building in central London ahead of talks with ministers about the ongoing pay dispute.
When asked whether he was feeling positive about the meeting, Mr Lynch told reporters: “I’m always positive.” (via PA Media).
Moody’s Analytics predict that the Bank of England will raise UK interest rates by half a percent in both February and March.
That would lift Bank Rate to 4.5%, for the first time since October 2008, putting more pressure on businesses and households with borrowings.
Moody’s Analytics says:
“With CPI inflation falling to 10.7% in November from 11.1% there is now greater certainty that October likely marked the peak. However, December’s CFO survey adds to the evidence, also apparent in service sector inflation and in private sector wage growth, that domestically generated price pressures are developing persistence.
The BoE will therefore need to remain focused on inflation risks in early 2023 and we expect interest rates to rise to 4.5% by the central bank’s March meeting.”
1.4m households could face rate rises when renewing fixed mortgages this year
More than 1.4 million households face the prospect of higher repayments when they renew their fixed-rate mortgages this year, according to new data from the Office for National Statistics today.
The ONS reports that most of the fixed rate mortgage deals which end in the next 12 months were set at interest rates below 2%.
Data from Moneyfacts last week showed that the average five-year fixed deal is around 5.58%, with two-year fixed mortgages averaging 5.75%. The Bank of England raised its Bank Rate to 3.5% in December; it is expected to hit 4.5% this summer.
The ONS says:
The majority of fixed rate mortgages in the UK (57%) coming up for renewal in 2023 were fixed at interest rates below 2%.
Those deals that are due to mature through the course of 2024 will be from two-year fixed rate deals made in 2022 and five-year fixed rate deals made in 2019, when mortgage rates were generally higher than 2%.
Mortgage and Bank of England interest rates started to increase during 2022 – and at least 1.4 million
UK households face the prospect of interest rate rises when they renew their fixed rate mortgages this year.➡️ https://t.co/HwWjla2Iwl pic.twitter.com/QKvIRIYbOU
— Office for National Statistics (ONS) (@ONS) January 9, 2023
Private renters are also facing an increase to their housing costs, the ONS adds, as rental price inflation is at its highest rate in the UK since records began in 2016.
Around a quarter (26%) of all renters surveyed between 7 and 18 December 2022, reported their rent payments had gone up in the last six months, according to data from the ONS’s Opinions and Lifestyle Survey (OPN).
Private renters are also facing an increase in housing costs.
Rental price growth is at its highest rate in the UK since records began in 2016. pic.twitter.com/d68N9T3beR
— Office for National Statistics (ONS) (@ONS) January 9, 2023
Battery start-up Britishvolt in talks to sell majority stake
More energy news: troubled UK battery startup Britishvolt is in talks to sell a majority stake to a consortium of investors.
The development could be a lifeline for Britishvolt, which aims to build a giant battery factory in north-east England.
In a statement this morning, Britishvole says it is “in discussions with a consortium of investors concerning the potential majority sale of the company”.
It adds:
The discussions aim to secure legally binding terms that would provide Britishvolt with the long-term sustainability and funding necessary to enable it to pursue its current plans to build a strong and viable battery cell R&D and manufacturing business in the UK.
Britishvolt was on the brink of administration last autumn, after struggling to find investors to fund a £3.8bn “gigafactory” in Blyth, Northumberland, to build electric car batteries. It has been seeking
Last summer, the project was put onto “life support” to cut spending, after Britishvolt’s funding pressures escalated.
Eurozone unemployment sticks at record low despite energy crisis
Unemployment in the eurozone remains at a record low, despite the economic damage caused by soaring energy prices.
The euro area’s unemployment rate was unchanged at 6.5% in November, with the absolute number of people without jobs falling by 2,000 to 10.849m, statistics body Eurostat reports.
ING’s senior eurozone economist, Bert Colijn, says the eurozone’s labour market remains strong despite the region’s slowdown.
Colijn explains:
Unemployment was unchanged from October at 6.5%, the lowest rate since the data series began in 1998, with many of the larger countries seeing the rate decline, such as France, Italy and Spain, however large increases in Austria and Portugal offset these developments.
Overall, the resilient labour market is a positive for Europeans who are already seeing incomes come under pressure due to high inflation. This dampens the negative economic consequences of the inflation shock.
Oxford Economics predicts that the eurozone is falling into “a shallow recession”:
Positive developments in energy markets mean the risk of a sharp downturn in the eurozone during the winter has diminished greatly. Our view remains that the eurozone economy will experience a shallow recession between Q4 2022 and Q1 2023: https://t.co/6XtCGnDWKp pic.twitter.com/j8hVRfOimc
— Oxford Economics (@OxfordEconomics) January 9, 2023
