![Containers at the Port of Felixstowe, the busiest container port in the UK.](https://media.guim.co.uk/182d3dbfe7391480661ccffbcfd31d196866082c/0_328_4923_2954/1000.jpg)
Closing summary
Time to recap
Unions have warned that the strike at Britain’s largest container port will escalate unless workers are given an improved pay offer, which could lead to disruption until Christmas.
Felixstowe port workers are holding the fourth day of an eight-day walkout, in a pay dispute.
Unite general secretary Sharon Graham told them:
“The company [Felixstowe Ports] is making an absolute fortune. it could pay 50 per cent more on your wages and still be in profit. We are asking for 10 per cent. What is the problem?
Felixstowe handles around 40% of UK container traffic, so the industrial unrest could disrupt supply chains.
Asked if disruption could continue until Christmas, she said: “I think in a sense that’s a question for the employer in some ways”, adding:
“Yes, obviously and unfortunately I have to say, if they don’t come back to the table this action will continue, and that’s not good for the public, it certainly isn’t good for these workers and I’d also say it’s not good for the employer.”
In other news…
The TUC is calling for the UK’s minimum wage should be increased to £15 an hour as soon as possible to help millions of low-paid workers struggling amid the cost of living crisis.
The energy industry’s favoured plan to shield Britain’s households from the soaring cost of energy will cost more than £100bn over two years, according to the boss of one of the UK’s largest power operators.
But Rishi Sunak, the underdog in the race to become the next Conservative party leader, said he was “nervous and sceptical” about Scottish Power’s proposal to freeze bills, and cover the cost through government borrowing or higher bills in future years.
The Isle of Man’s government has taken action, though – agreeing to freeze electricity prices until March 2023 to shield residents and businesses from a sharp increase in bills this winter.
More than 3 million households in England and Wales were still waiting to receive the £150 energy rebate on 1 July, research has found, several months after the scheme to help pay for soaring gas and electricity bills was launched.
UK imports from Russia have hit a record low, with no Russian fuel being shipped into Britain for the first time on record.
Britain has stopped importing energy from Russia. A historic milestone.
— Samuel Ramani (@SamRamani2) August 24, 2022
Oil prices have rallied after Saudi Arabia hinted that Opec could cut production, pushing Brent crude back over $100/barrel.
Thousands more homeowners who paid a doubled ground rent on their property will get a refund after the competition watchdog cracked down on “unfair” leasehold practices.
Asda is to remove “best before” dates from almost 250 fresh fruit and vegetable products as it joins a movement among supermarkets to help customers cut waste and save money.
Updated
Unite have also warned Felixstowe Ports’ owner, multi-national giant CK Hutchison, that they will ‘expose’ its corporate greed.
Unite general secretary, Sharon Graham, says “very single client, every investor, every decision maker at CK Hutchison” is being looked into.
“The ultimate owner of CK Hutchison is Li-Ka Shing, Hong Kong’s richest businessman and the 31st richest man in the world. All of the accounts of Li-Ka Shing are being looked into. All the tax havens in the Cayman Islands, are being investigated.”
Addressing the striking dockworkers today, Graham added:
“The company [Felixstowe Ports] is making an absolute fortune. it could pay 50 per cent more on your wages and still be in profit. We are asking for 10 per cent. What is the problem?
Engineer Stefan Long, who was among the striking workers at Felixstowe, says port employees feel very strongly about the need for a fair pay rise, saying:
“If we can’t reach an agreement that’s worthwhile even balloting us as the members on, then it’ll go as far as it needs to go.
“People feel so strongly about this, it speaks for itself.”
The 33-year-old, who lives in Ipswich with his wife, said they have had to “readjust our lifestyle” as costs rise, with his energy bill soaring from £80 to £220 per month.
“We’re cutting back on everything, absolutely everything,” he said.
“You see the margins shrinking and I feel for those who’ve got husband, wife, two children, three children. How are they going to get by?
How are they going to feed their children and heat their homes?”
Back in the US, the number of agreed home sales fell again last month – another sign that the housing market is cooling.
Pending home sales, a measure of signed contracts on existing homes, slipped 1% from June to July, and were down 19.9% year-on-year.
Pending home sales slip 1% in July, but realtors group says market may be 'at or close to the bottom' https://t.co/uQLt8QRKC2
— CNBC (@CNBC) August 24, 2022
Britain’s short-term borrowing costs have hit a post-financial crisis high.
The yield, or interest rate, on two-year UK government debt has jumped over 20 basis points to as high as 2.955%, the highest since November 2008.
Investors are demanding a higher rate of return for holding UK gilts, as they calculate that interest rates will jump as high as 4% by next May.
That would be more than double their current level, as the Bank of England tries to cool inflation.
UK Bonds/Gilts/Treasuries.
— Threadneedle Street (@Threadneedle99) August 24, 2022
2 year bond below. Yields/rates rocket to new decade highs.
[Indicate higher anticipated interest rates, much higher mortgage rates, soaring business refinance rates, higher borrowing costs, lower stock values.]#ftse #mortgages #inflation pic.twitter.com/D1Tpah4Sa2
![Workers at a picket line outside the Port of Felixstowe on the fourth day of an eight-day strike by Unite union workers at the UK's largest container port in Suffolk](https://media.guim.co.uk/f27a97b25d6371c262569ebcc759028bba4a4670/0_0_5568_3712/1000.jpg)
The Isle of Man’s government has agreed to freeze electricity prices until March 2023 to shield residents and businesses from a sharp increase in bills this winter.
The intervention announced on Wednesday will mean local customers are likely to pay some of the lowest electricity prices across the British Isles over the coming months.
Residents had been bracing for a 70% rise in tariffs that would have added another £500 to the average annual household bill from this autumn.
Under a deal struck between the government of the crown dependency and the island’s electricity provider, Manx Utilities, the increases will instead be added to customers’ bills over a longer period of time from April.
Back on the UK energy crisis… Bloomberg points out that governent funding cuts have hit the rollout of home insulation, which will bite Britain this winter.
Top @BloombergUK chart action on why UK household bills are soaring — including this stark graph on home insulation rates following government funding cuts: https://t.co/NXHmQISqRA via @Elena_Mazneva pic.twitter.com/Z4dKXUlDhe
— Alex Wickham (@alexwickham) August 24, 2022
The UK launched a ‘transformational’ energy efficiency scheme in 2013, but then cut the funding in 2015.
The US housing market continues to cool, with applications for new mortgages hitting a 22-year low last week.
The number of mortgage applications dropped by another 1.2% last week, as rising interest rates hit demand.
Applications to refinance loans were down 83% year-on-year, as higher mortgage rates made this less attractive to home owners.
Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, explained:
Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity.
Last week’s purchase results varied, with conventional applications declining 2 percent and government applications increasing 4 percent, which is potentially a sign of more first-time homebuyer activity. The average purchase loan size continued to trend lower, as purchase activity at the high end of the market is weakening,”
MBA: Mortgage Applications Decrease in Latest Weekly Survey https://t.co/UJDuy5pWkB pic.twitter.com/8KNkmkcBFN
— Bill McBride (@calculatedrisk) August 24, 2022
🇺🇸 #Housing #Recession | #Mortgage purchase applications index fell for the third straight week, reaching the lowest since April 2020 ⚠
— Christophe Barraud🛢🐳 (@C_Barraud) August 24, 2022
*Link: https://t.co/4FZ81wPwJk pic.twitter.com/1wPdjBdl0T
Here’s more details of the measures agreed to cut gas use in Germany, from Reuters.
From September 1st, public buildings - with the exception of social institutions like hospitals - are to be heated to a maximum 19 degrees Celsius, and the heating could be turned off entirely in corridors and foyers.
Meanwhile, buildings and monuments will no longer be illuminated for purely asthetic purposes and businesses could be banned from keeping their shopfronts illuminated at night.
A ban is also planned on the heating of private swimming pools.
Unite have also announced a pay deal for 700 workers at food giant Heinz.
They say the package is worth 11% – a 5.5% increase on base rates, plus one-off cost of living payments totalling £1,200. Staff are also getting an extra three days off over Christmas.
Felixstowe port disruption 'could continue until Chistmas'
![Unite general secretary Sharon Graham speaks to her members on a picket line at one of the entrances to the Port of Felixstowe in Suffolk, Britain's biggest and busiest container port, today](https://media.guim.co.uk/4df668281eaf50c01ce248143058071daf289eae/0_0_3000_2000/1000.jpg)
A strike at Britain’s largest container port will escalate unless workers are given an improved pay offer, a trade union boss said as she signalled that disruption could continue until Christmas.
PA Media reports that Sharon Graham, general secretary of the Unite trade union, addressed a flag-waving crowd of striking workers gathered on a roundabout near dock gate number one at the Port of Felixstowe in Suffolk.
Almost 2,000 dockers have walked out in a dispute over pay, and on the fourth day of an eight-day strike Graham joined some of them on the picket line.
Ms Graham said that disruption at the port “is not necessary” and bosses “just need to pay the 10%” increase in wages that the union is requesting for workers.
She said the employer had made multi-million pound profits but were “asking these workers to take a pay cut”.
Asked if disruption could continue until Christmas, she said: “I think in a sense that’s a question for the employer in some ways.”
But she continued:
“Yes, obviously and unfortunately I have to say, if they don’t come back to the table this action will continue, and that’s not good for the public, it certainly isn’t good for these workers and I’d also say it’s not good for the employer.”
A Felixstowe port spokesperson has claimed that “a lot of our employees feel let down by Unite”, but don’t feel comfortable crossing the picket line and coming to work:
“Many want to work and are angry that they have not been allowed to vote on the latest company offer.
“Unite say they are a democratic union but their words don’t match their deeds and they are promoting a national agenda at the expense of many of our employees.
“The port has offered a deal worth 8.1% to 9.6% this year. The strike imposed on them by Unite is an effective pay cut of 2.2%.
![A man carrying a Unite the Union flag surfs around the Port of Felixstowe in Suffolk today](https://media.guim.co.uk/8e8a5392c02fd124e779451cb0389ae6421713c7/0_92_3064_1838/1000.jpg)
Back in the City, shares in UK industrial software developer Aveva have surged by almost 37%, after French industrial conglomerate Schneider confirmed it is considering a full buyout.
Schneider already owns almost 60% of the FTSE 100-listed Aveva – according to Bloomberg, Schneider has been studying a potential deal to acquire its remaining shares and take the company private.
In response, Schneider told the City:
Schneider Electric confirms that it is considering a possible offer for the entire issued, and to be issued, share capital of the Company not currently owned by Schneider Electric.
No proposal has been made to AVEVA yet and there can be no certainty that any offer will be made, nor as to the terms on which any offer will be made (should one be made).
![Iceland, Reykjavik, cityscape, dusk, elevated view](https://media.guim.co.uk/d4eddbd0fa2265f38fa922768e7e5a27a081d390/0_333_4992_2995/1000.jpg)
Over in Reykjavík, soaring inflation has prompted Iceland’s central bank to raise borrowing costs to a six-year high.
Seðlabanki Íslands has raised Iceland’s key deposit rate by 75 basis points to 5.5%, as it tries to dampen inflationary pressures.
It’s Sedlabanki’s eighth hike since May 2021, when it became the first central bank in Western Europe to hike borrowing costs.
Announcing the move, Iceland’s monetary policy committee said the inflation outlook has continued to deteriorate.
Inflation rose to 9.9% in July and is forecast to peak at nearly 11% late this year. The bleaker inflation outlook reflects stronger economic activity than was forecast in May, as well as more persistent house price inflation and higher global inflation. In addition, inflation expectations have risen even further by most measures.
The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to raise the Bank’s interest rates by 0.75 percentage points. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore be 5.5%. https://t.co/8G1FkcRRES pic.twitter.com/odvXAYDnY2
— Central Bank Iceland (@centralbank_is) August 24, 2022
The German government has responded to Europe’s gas crisis by approving a series of energy-saving measures, including limits on the use of lighting in public spaces.
Economy minister Robert Habeck announced the move this morning, but also warned that more is needed.
Reuters has the details:
“Overall the measures save energy. However, not to the extent that we can sit back and say, ‘That’ll do now,’” Habeck told reporters in Berlin after a meeting of the cabinet.
“They will roughly reduce gas usage by 2-2.5%,” he added.
The cabinet also on Wednesday approved legislation that will prioritise energy transport on the nation’s railways, Habeck announced together with Transport Minister Volker Wissing.
Updated
UK wholesale gas prices are rising sharply again today, after a rare dip on Tuesday.
Gas for delivery next month has jumped 10%, back towards Monday’s six-month high. At 544p per therm, it is around five-times more than a year ago.
Gas for delivery tomorrow is up 17% at 480p/therm, compared with around 100p in August 2021.
Imports of a wide range of Russian products fell by at least 90% in June, compared with their pre-Ukraine invasion levels.
There were no imports of refined oil, crude oil, gas, coal, coke and briquettes, but also the UK didn’t import any processed fertilisers, metal ores and scrap, aircraft, animal feeding stuffs or beverages from Russia in June.
The ONS explains:
Notably, there were no imports of any fuels in June 2022, with refined oils decreasing by £281 million (100%) compared with the monthly average for the 12 months to February 2022.
Imports of crude oil decreased by £105 million (100%), gas decreased by £95 million (100%) and coal, coke and briquettes decreased by £18 million (100%).
Imports of inorganic chemicals fell almost 100%, with cereals down 99% and organic chemical imports down 97%. Imports of wood and cork products fell 95%, with iron and steel imports dropping 89%.
However, imports of ‘miscellaneous metal manufactures’, and some mechanical machinery parts did rise. But the increase was small in value, driven by higher prices and additional import duties.
![UK imports from Russia in June 2022](https://media.guim.co.uk/e46abc61a9d1d1cda37024d4cf7535bfe15930e0/0_0_595_758/392.jpg)
Back in the financial markets, oil continues to climb after Saudi Arabia hinted that Opec could cut production.
Brent crude has now risen back to $101.30, a three-week high, adding to yesterday’s jump.
![The Brent crude oil price](https://media.guim.co.uk/0304eed4a7d93be2d04e70acdb9130817b92aafc/0_0_580_343/500.jpg)
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, points out that this could dampen hopes of cheaper petrol:
Although oil prices have dropped from February highs amid signs of the global slowdown, prospects for sustained relief from eye watering prices at the pumps still remain elusive as crude oil marches back up again over supply concerns.
UK imports from Russia plunge 97% to record low
Imports of goods into the UK from Russia shrank to just £33m in June, the lowest since records began in January 1997.
Thats a decrease of 96.6% compared with the average monthly imports in the 12 months before Russia invaded Ukraine invasion six months ago, in February.
Back in January and February, for example, imports from Russia were worth £1.8bn per month:
Imports of goods from Russia fell to £33 million in June 2022 – the lowest on record. This is following the Russian invasion of Ukraine and the subsequent economic sanctions applied by the UK Government https://t.co/kEZDVjvbm0 pic.twitter.com/ZZHKZDPZhP
— Office for National Statistics (ONS) (@ONS) August 24, 2022
In a sign of the impact of economic sanctions, the UK didn’t import any fuels from Russia in June for the first time in at least 25 years, according to the latest research from the Office for National Statistics.
There were no imports of fuels from Russia in June 2022 for the first time since records began in January 1997 https://t.co/kEZDVjvbm0 pic.twitter.com/ducdjk6AeL
— Office for National Statistics (ONS) (@ONS) August 24, 2022
The UK announced import bans on a range of Russian products including iron and steel, silver, gold, wood products and high-end goods, and high additional tariffs on other items, following the Ukraine war.
Those sanctions, and ‘self-sanctioning’ by traders voluntarily seeking alternatives to Russian goods, both hit imports.
The ONS also reports that UK exports to Russia slightly increased in June 2022, but were 67% below their pre-invasion average:
Exports of most commodities to Russia had decreased substantially by June 2022, with machinery and transport equipment decreasing by £118 million (91.3%).
Chemicals were the only commodity exported to Russia that increased over this period, driven by an increase of £39.1 million (61.8%) in exports of medicinal and pharmaceutical products, which are exempt from sanctions.
UK sales of animal and vegetable oils and fats to Russia fell to zero in June.
Although exports to Russia slightly increased in June 2022, they dropped by £168 million (66.9%) compared with the monthly average before the Russian invasion of Ukraine. pic.twitter.com/149WDyxKMz
— Office for National Statistics (ONS) (@ONS) August 24, 2022
Updated
UK gas producers say they have boosted domestic production by over a quarter this year, a time when cuts to Russian supplies of oil and gas sent prices soaring.
Offshore Energies UK, which represents the UK offshore energy industry, reports that gas output jumped 26% in the first half of 2022, compared with a year ago – enough to heat almost 3.5 million UK homes for a year, they say.
UK gas production rose by 3.5 billion cubic metres in January-June, to 16.831 billion cubic metres of gas, thanks to the start-up of new fields in the southern North Sea, including Harbour’s Tolmount field and IOG’s Saturn Banks project.
There has also been much less planned shutdown activity, as suppliers kept plans running to maximise energy supply.
OEUK sustainability director Mike Tholen says we must “prepare for the worst and hope for the best” to support UK energy security this winter.
“If we are to continue our efforts to protect UK gas supplies, which remains the backbone of our energy mix for electricity, heating and industrial processes, we need politicians of all parties to support energy produced here in the UK with all the benefits that brings for taxes, energy security and jobs.
It’s all the more important at a time when we can’t afford to tighten supplies even further, which is what will naturally happen if domestic production of gas isn’t maintained.”
The FT’s Chris Giles points out that the UK’s windfall tax on North Sea suppliers didn’t prevent production increasing:
UK gas supplies - a tale in two parts from our lobby group of North Sea produces
— Chris Giles (@ChrisGiles_) August 24, 2022
Part 1: March 2022 - windfall taxes would undermine security of supply
Part 2: August 2022 - Actually - we quite like making windfall profits even if the government takes a bigger share pic.twitter.com/qgKhQ0okIz
The cost of helping households and businesses through the energy price shock would lead to the third large increase in UK national debt in 15 years (following the 2008 financial crisis, and Covid-19).
But as Resolution Foundation’s Torsten Bell points out, there’s a difference this time – the cost of borrowing is going up.
How much we end up borrowing is hugely uncertain because future energy prices are. But £100bn/2 yrs is eminently plausible given 1) we're £30bn+ in already 2) lots more will be required given the catastrophe to come 3) no sign of solidarity taxes that are alternative to borrowing https://t.co/mGGDEJuLzK
— Torsten Bell (@TorstenBell) August 23, 2022
I should add, this third major ratchet of public debt in 15 years won't be like the last two - after the financial crisis + in the pandemic we got used to debt rising but debt interest costs falling. This time both will be heading up together
— Torsten Bell (@TorstenBell) August 23, 2022
The yield, or interest rate, on 10-year UK government bonds is over 2.5% today, compared with less than 0.5% through most of 2020.
Plus, rising inflation is pushing up the interest rate on index-linked gilts, adding to the deficit.
That world is obviously the one when the interactions between fiscal/monetary policy get... messy
— Torsten Bell (@TorstenBell) August 23, 2022
Sunak: important to get grip on inflation
Tory leadership underdog, Rishi Sunak, also warned that failing to get to grips with inflation would be damaging, as he rejected calls from senior energy industry figures to freeze the energy price cap (see last post).
He told the Today Programme that he was “sceptical” about plans that appeared to be complacent about the risk to inflation, and which would drive up government borrowing.
“I think that is a gamble with savings, with their pensions, with mortgage rates, in making inflation become more embedded, and I don’t think that will help anybody if that happens because inflation makes everybody poorer, it’s pernicious. I want to get a grip of inflation quickly.”
[UK inflation is already a 40-year high of 10.1%, with investment bank Citi warning it could hit 18% early next year]
Shifting his sights on his opponent and frontrunner for the Conservative leadership and prime minister, Liz Truss, he said he was “nervous and sceptical about plans that are complacent about that risk”.
“But also those plans that seem to think and seem to suggest there are no trade offs involved in governing,” he went on.
“Governing is hard, Governing involves choices, it involves difficult trade offs.
“Plans whether they come from my opponent or energy companies or anyone else that seem to suggest you can have absolutely everything you want, you don’t have to make a difficult choice, you can have lots of tax cuts, you can help people with the cost of living, borrowing doesn’t matter, inflation will take care of itself, that all sounds a bit too good to be true, and I think most people listening most things when they are too good to be true they probably are.”
Updated
More than three million households in Britain were still waiting to receive a £150 payment to help with energy costs on 1 July, a BBC Freedom Of Information (FOI) request has revealed.
That rebate was announced in February, when Rishi Sunak launched a £9bn package to cushion a £700-a-year rise in energy bills in April.
The BBC explains:
Councils were expected to start paying the £150 rebates from April, but have until September to do so.
Halfway through that period, 97% of households who pay by direct debit in England and Wales had got the payment.
But only half of those who pay in other ways had received it.
This group typically includes lower-income households.
The payment is available to homes in council tax bands A to D, or up to E if a householder has a disability.
Sunak: Borrowing many tens of billions to freeze bills would be risky
Rishi Sunak, one of the two candidates to succeed Boris Johnson as prime minister, has criticised proposals for a blanket freeze on energy bills.
Speaking on Radio 4’s Today Programme, Sunak warned that high energy costs are a challenge that will be with us for some time – and said he would focus help on the poorest households.
Asked why he didn’t favour a freeze on energy bills (as proposed by Scottish Power, and both the Labour and Liberal Democrat parties), Sunak argued that the cost would be a risk, given the ‘scale and duration’ of the challenge.
Sunak said:
We need to make sure that what we’re doing is not only affordable, but also isn’t going to make inflation worse.
At a time when we’re already borrowing an enormous amount of money, I think embarking on policies and programmes that add not just tens of billions, but tens and tens and tens and tens of billions of pounds on a permanent basis to our borrowing are risky.
Sunak’s plan is to cut VAT on energy bills, and building on his existing support package with more support for lower-income households and pensioners.
The former chancellor said that his cost-of-living package, announced back in May, had provided ‘considerable support’ of up to £1,2000 for the most vulnerable, which at the time would have covered the rise in bills [but is now inadequate].
That’s my track record on this, and as prime minister I would do exactly the same thing.
Is that a hint that poorest households could be shielded from rising bills under a Sunak government?
Has Rishi Sunak dropped a big hint he would basically entirely cover the energy bills rise for the poorest?
— Kate Ferguson (@kateferguson4) August 24, 2022
Says as chancellor he stumped up £1,200 for the poorest - around the same as the price rise then
“That’s my track record - as PM I would do exactly the same thing”
Although he does add that you can’t keep borrowing tens of billions without fuelling already rocketing inflation
— Kate Ferguson (@kateferguson4) August 24, 2022
Should Brits be told to use less energy this winter to ameliorate rocketing bills?
— Kate Ferguson (@kateferguson4) August 24, 2022
Rishi Sunak: “We have to look at all options”
The Institute for Government also warned that more energy bill support will be needed beyond this year, costing tens of billions of pounds more.
In their new paper outlining the government’s options, they say:
So far support is all focused on winter 2022/23, but current projections are for energy prices to be just as high, if not higher, next year.
The new prime minister will need to be ready to provide further support again. Offsetting the same proportion of bills next year would cost around £90bn. Given how long the crisis is expected to last, the government should also look at other measures to deal with the high energy bills, including investing in energy efficiency.
If the new PM wants to support households to the same extent as Johnson it would cost £23bn this year and £90bn next according to new research from @tompope0 @gemmatetlow @ollybartrum https://t.co/oqNL5i5Hlr
— Hannah White (@DrHannahWhite) August 24, 2022
Link to the full report here https://t.co/2SxlEgAlqA
— Hannah White (@DrHannahWhite) August 24, 2022
Updated
Ministers could face an additional £23bn price tag for covering extra household energy costs of £900 this autumn, rising to £90bn next year, a new paper by the Institute for Government has found.
The paper, looking at the options for Liz Truss or Rishi Sunak in No 10, also warned the government should plan for prolonged rises in energy bills by going a lot further in making public appeals to use less gas – for example by informing consumers about the cost savings from turning down thermostats – and in committing to building more energy efficient homes to help protect consumers.
No 10 and Kwasi Kwarteng, the business secretary and close ally of Truss, have been resisting appeals to the public to use less energy. However, the next prime minister, likely to be Truss, faces some very difficult choices on entering office on how far to subsidise energy bills.
Updated
The BBC’s Simon Jack has more details of Scottish Power’s pitch to ministers:
3/ ...for the next two years.
— Simon Jack (@BBCSimonJack) August 23, 2022
£100 billion is Scottish Power’s best estimate of the difference between what it will actually cost to buy the energy and the current cap of £1971.
Sources close to the company said that Kwasi Kwarteng, tipped to be the next Chancellor....
4/ ..if Liz Truss is next PM, was broadly receptive to the idea. Sources close to Kwasi Kwarteng wouldn’t be drawn on his enthusiasm. “We had a meeting about it – that’s all”.
— Simon Jack (@BBCSimonJack) August 23, 2022
The so called deficit fund would be repaid through bills over the next 20 or so years...
5/ The presence of Ress-Mogg was seen as important as he's a key ally of Liz Truss,
— Simon Jack (@BBCSimonJack) August 23, 2022
Energy cos are urging ministers to consider energy crisis needing COVID scale intervention. The furlough scheme which paid the wages of 11 million people cost around £70 billion.
Keith Anderson, Scottish Power’s CEO, has STV News that the cost of energy must be frozen “now” ahead of a meeting with First Minister Nicola Sturgeon yesterday.
He proposed the same plan he set out before UK business secretary Kwasi Kwarteng and fellow UK minister Jacob Rees-Mogg, to freeze bills at current levels – at a cost of £100bn.
Scottish Power has proposed a £100bn plan to freeze energy bills for two years in the face of a crisis that is “bigger than the Covid pandemic”.
The energy giant, which supplies gas and electricity to more than five million customers, has warned that the looming jump in energy prices will be “truly horrific” for many people.
Shielding UK households from fuel bills crisis 'forecast to cost £100bn'
The head of one of the UK’s largest energy groups is proposing a £100bn rescue plan to protect households from rising bills over the next two years.
Keith Anderson, chief executive of Scottish Power, has proposed capping household energy bills at about £2,000 a year.
Anderson’s proposal, which the Financial Times reports was made to business secretary Kwasi Kwarteng last week, underlines the scale of the crisis engulfing Britain from the unprecedented surge in gas prices.
Under the Scottish Power proposal, suppliers would cover the gap between the cap and the wholesale price of gas and electricity by borrowing from a “deficit fund”, which the government would arrange through commercial banks.
The cost would then be gradually paid off by the public – with through government borrowing or spread acoss bills (or a combination of the two).
The FT adds that:
People familiar with the discussions said the “mood music” in the government had shifted in recent weeks as gas prices have climbed, with Russia cutting supplies to Europe in retaliation for sanctions related to its invasion of Ukraine.
Wednesday's FT: "Shielding families from fuel-bill shock reckoned to cost £100bn" #BBCPapers #TomorrowsPapersToday https://t.co/7FuHsAaBL7 pic.twitter.com/iXNps1d8d2
— BBC News (UK) (@BBCNews) August 23, 2022
Ofgem is due to announce on Friday that the UK’s energy price cap will rise by roughly 80% in October, to around £3,550, from £1,971 today.
The cap is expected to jump again in 2023, with analysts at Cornwall Insight forecasting a rise to £4,101 in January – which could drive UK inflation as high as 18% early next year.
Updated
Introduction: Brent crude back at $100/barrel on Opec cut hint
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
The threat of Opec production cuts has lifted Brent crude back to $100 per barrel, adding to the inflationary pressures on economies.
The benchmark oil price settled over $100/barrel for the first time in over a week last night, after Saudi Arabia dropped a heavy hint that the Opec group could cut production.
Brent had fallen as low as $91.50 earlier this month, down from $125/barrel in June.
And this has prompted Saudi energy minister prince Abdulaziz bin Salman to float the idea of OPEC+ output cuts to support prices.
![The Brent crude oil price during 2022](https://media.guim.co.uk/ce7b4dc1c2b9c088ce98b1fbd760c0a7f3abf6b7/0_0_751_436/500.jpg)
Prince Abdulaziz warned there was “extreme” volatility and lack of liquidity in the oil market. That (he argued) means futures prices don’t reflect the underlying fundamentals of supply and demand, which could prompt the group to tighten production when it meets next month to consider output targets.
Prince Abdulaziz added:
“Witnessing this recent harmful volatility disturb the basic functions of the market and undermine the stability of oil markets will only strengthen our resolve.”
Oil markets seemed to get the message, with Brent crude jumping almost 4% on Tuesday, and holding its gains this morning.
Brent crude back above $100/bbl.
— Rory Johnston (@Rory_Johnston) August 23, 2022
Thank your local OPEC representative. pic.twitter.com/08MRasxFqq
As I end my shift Brent crude is up 3% and within sight of $100, a day after the Saudi energy minister raised the prospect of an #OPEC+ cut. Was this classic OPEC jawboning? Don't know but, from an OPEC perspective, it seems to have worked! 🛢️📈
— Alex Lawler (@AlexLawler100) August 23, 2022
David Madden, Market Analyst at Equiti Capital, suggests any Opec move could depend on the progress of nuclear talks with Iran:
WTI and Brent crude are powering ahead as OPEC+ announced that it might consider cutting oil production, if or when, Iran boosts its output.
Western governments are engaging in talks with Iran about its nuclear programme, it is understood that little progress has been made, so OPEC might not be forced to act.
Also coming up today
The TUC is pushing for the UK’s minimum wage to be increased to £15 an hour, as soon as possible, to help millions of low-paid workers struggling amid the cost of living crisis.
My colleague Richard Partington has the details:
In a move that opens a fresh policy gap between unions and Keir Starmer’s Labour party, the TUC has thrown its weight behind calls for a more ambitious legal floor on pay rates. The union body said the government needed to draw up plans to get wages rising as workers suffer the biggest hit to living standards on record.
It said too many workers were living “wage packet to wage packet”, and a £15 minimum should be in place by at least 2030 but could be achieved sooner with a government that was serious about getting wages rising after years of sluggish pay growth.
The minimum wage is now set at £9.50 for those aged 23 and over, with lower rates for those who are younger.
The agenda
9.30am BST: The impact of sanctions on UK trade with Russia: June 2022 (from the Office for National Statistics)
Noon: Weekly US Mortgage Applications
1.30pm BST: US Durable Goods Orders
3pm BST: US pending homes sales
3.30pm BST: US crude oil inventories
Updated