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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Rishi Sunak says he cannot fully insulate people from cost of living crisis – as it happened

Tube ​​Rishi Sunak RMT London United Kingdom Brexit TfL Transport for London Treasury Committee

Summary

Britain’s Chancellor of the Exchequer Rishi Sunak, as he speaks at a Parliamentary Treasury Select Committee today
Britain’s Chancellor of the Exchequer Rishi Sunak, as he speaks at a Parliamentary Treasury Select Committee today Photograph: PRU/AFP/Getty Images

Time for a recap

Chancellor Rishi Sunak has warned that the government cannot fully insulate people from the cost of living crisis.

Questioned by the Treasury Committee over the government’s £15bn cost-of-living package, Sunak said that it wasn’t possible, or advisable, to try to fully make up for rising living costs.

Sunak also argued that the package would make a very significant difference, especially to those struggling most.

But the chancellor faced heavy criticism from opposition MPs, who said he had rushed out the package to protect Boris Johnson and distract from the Sue Gray report into Partygate (which he denied).

Labour MP Siobhain McDonagh said it was a mistake to give second home owners two £400 reductions to their energy bills (let alone a triple payment for those who own three properties), while Rushanara Ali MP said Sunak was wrong to take part in Operation Save Big Dog.

Sunak also said he backed Johnson to remain as prime minister, despite fierce criticism from former Treasury minister Jesse Norman and theP M’s anti-corruption tsar John Penrose today ahead of tonight’s confidence vote.

Sunak also tried to play down concerns that his package will be inflationary, saying the government’s priority was to help those who most needed help.

He didn’t agree that the pound risked turning into an emerging market currency, as one Wall Street bank fears, but did acknowledge that the UK faces a short-term inflation problem fuelled by high energy prices and a tight labour market pushing up wages.

Despite criticism, Sunak said he was considering whether to include electricity generators in his new windfall tax (which will fund a portion of the package).

He also insisted the Treasury wasn’t seeing signs of businesses in distress, despite warnings that 500,000 UK firms are at risk of collapse.

In other news.....

Transport troubles have hampered the return to work for many after the jubilee weekend, with more flight cancellations and a tube strike causing widespread disruption.

EasyJet cancelled a further 37 flights on Monday, as the staffing issues that have plagued the airline over half-term continued. Thousands more passengers had their travel plans upturned, after more than 80 flight cancellations by the airline on Sunday.

The airline blamed a “challenging operating environment” for the cancellations, which left some customers stranded abroad at the end of the half-term holiday.

A strike on the London underground today has also caused disruption in the capital, with commuters struggling to get to work (although many may have followed advice to work from home).

Commuters wait at a bus stop outside Victoria train station this morning,
Commuters wait at a bus stop outside Victoria train station this morning, Photograph: Hollie Adams/AFP/Getty Images

Petrol prices soared by almost 6p a litre at UK forecourts last week and hit record highs over the Jubilee bank holiday weekend, with drivers warned they could exceed 180p this week.

Ryanair is facing accusations of racial discrimination after forcing South Africans to take a test in Afrikaans before boarding flights home from the UK and Europe.

More than 3,300 workers at 70 UK companies, ranging from a local chippy to large financial firms, start working a four-day week today no loss of pay in the world’s biggest trial of the new working pattern.

Bonuses paid to the UK’s bankers, insurance brokers and other financial sector workers have hit a record high and are rising more than six times faster than average wages in the UK.

Elon Musk has accused Twitter of committing a “material breach” of his $44bn agreement to buy the company and has threatened to terminate the deal.

It’s the clearest indication yet that the world’s richest man is preparing to walk away from the takeover.

And new details have emerged over how Covid bounce back loans were misused.

You can keep track of tonight’s no-confidence vote in Andrew Sparrow’s Politics Live blog, here. GW

Peter Hourston, research assistant at the Institute for Government, hoped Sunak would have been quizzed about claims that technical problems prevented him from raising benefits in line with the current inflation rate.

Did dated IT systems means ministers had to stick with last September’s reading, as the chancellor said last month?

The session wrapped up with Sunak resisting being drawn on the failure of multiple retail energy firms since wholesale prices began to climb last summer.

On measures to keep bills down, he says the government has cut VAT on insulation materials, and on technologies such as heat pumps.

Rishi Sunak batted away questions from the Treasury Committee about whether he will include electricity generators in his windfall tax, as it’s a live tax issue.

But he says the Treasury is “working urgently” to assess the size of the extraordinary, or excess, profits which generators are making.

Q: A figure of £10bn excess profits has been banded around - but SSE told me they don’t recognise it, says SNP MP Alison Thewliss...

Sunak says he doesn’t recognise it either -- and won’t say what he thinks the figure is (despite saying that there are ‘extraordinary’ profits).

He won’t say when a decision will be made, but it won’t be months away (ie, it will be sooner).

Q: You say the levy would end early if oil and gas prices return to more normal levels - what would that be in practice?

Rishi Sunak replies that Brent crude has averaged around $60 or $70 per barrel over the last few years -- and that’s a level that oil companies also see as more normal.

There’s also a sunset clause which means the levy expires in three years.

Brent crude is currently trading just below $120 per barrel, and hasn’t been below $70 this year:

Q: Why did you change your mind over a windfall tax?

Sunak says he took a pragmatic approach-- oil and gas producers are benefitting from high oil prices, partly driven to the Ukraine war, so it was right to introduce a levy on profits, but in a way that encourages investment.

Rushanara Ali: Sunak shouldn't have been dragged into Operation Save Big Dog

Q: Wouldn’t have been better to draw up the cost of living package in time for the spring statement - when the Office for Budget Responsibility could have assessed it - rather than two months later to distract from lawbreaking from the prime minister, asks Labour MP Rushanara Ali.

Sunak denies any political pressure was placed on Ofgem, saying the Treasury was in regular contact with the energy regulator, and that he acted once there was clarity about how energy bills would rise in the autumn.

Ali points out that this clarity suddenly came in a week when the PM was in trouble, and a day after the Sue Gray report was released.

Sunak argues that the OBR’s process of assessing government policy doesn’t lent itself to rapid policymaking -- ie, the Treasury would have had to propose the package weeks before the spring statement.

Ali is unconvinced, and unimpressed. She welcomes the announcement, but the issue is the way the government operates. It’s not acceptable that MPs are not being given the OBR’s independent assessment of the cost of living package.

She tells Sunak that the government is playing fast and loose with big decisions that need proper consideration and proper scrutiny, and that the £15bn cost-of-living package is a political decision, not an economic one.

It was a mistake to take part in ‘Operation Save Big Dog’, Ali tells the chancellor severely.

“I think we expect better from you, and you shouldn’t be dragged into his mess, frankly.

Sunak, who has repeated his denial that the timing was untoward, says he’s pleased Ali welcomes the package.

Onto the main issue gripping parliament -- Boris Johnson’s confidence vote tonight.

Q: Former financial secretary to the Treasury Jesse Norman has called for Johnson to resign - does the chancellor agree?

Sunak (who backed Johnson this morning) does not, but says Norman did a very good job at the Treasury and he’s grateful for that.

Q: Do you agree with Norman that it’s grotesque for the PM to claim he is vindicated by the Sue Gray report? (As Norman wrote in a letter this morning).

Sunak repeats that he disagrees with Norman, and supports the prime minister.

Q: Political stability play an important role in economic stability, so do you agree with Norman that breaching the Northern Ireland protocol would be economically very damaging, politically foolhardy and almost certainly illegal?

Sunak insists that’s not the intention - the plan is to reach a sensible settlement with the UK’s partners over the problems with the Protocol.

Q: Do you agree with Boris Johnson’s anti-corruption tsar, John Penrose, that the prime minister broke the ministerial code and should resign (as Penrose did this morning).

Sunak repeats that he disagrees.

Andrew Sparrow’s Politics Liveblog has all the latest on tonight’s ballot:

Updated

Labour MP Angela Eagle reminds Rishi Sunak that some Tory MPs slated his cost of living package.

Craig Mackinlay called it “tripe”, while Richard Drax accusing Sunak of “throwing red meat to socialists” -- Eagle smiles that she didn’t know Sunak was ‘one of us’.

Q: How can you claim you’re fiscally conservative when you’re funding this package primarily through borrowing?

Sunak insists that his overall economic policy is fiscally responsible, meaning the UK is on a trajectory for borrowing to fall from its peak, and for debt to fall sustainably.

So, there’s headroom to respond to economic shocks.

Sunak: Can't fully insulate people from rising cost of living

Q: If energy bills rise by even more than expected in autumn, will you provide more support?

Sunak doesn’t rule it out, saying the government is always responsive to the situation on the ground.

But he points out that the energy price cap is an average, so it doesn’t make much difference if it’s a bit higher or lower than expected.

[Ofgem predict the energy price cap will surge from £1,971 to £2,800 a year in October].

Sunak also repeats his earlier point, that it’s not possible to fully insulate people from the cost of living and inflation.

He adds that if the energy price cap is lower than expected, the government won’t claw any of its support back.

Labour MP Emma Hardy is concerned that council tax payers who don’t pay by direct debit must fill in forms to receive the £150 rebate announced earlier this year.

The Treasury’s Dan York-Smith says this is to reduce the risk of fraud.

Sunak challenged over giving two £400 payments to second-home owners

Labour MP Siobhain McDonagh challenges Rishi Sunak over his decision to allow second-home owners to receive two £400 discounts on their energy bills.

She explaind that there are 772,000 households who own two homes - they’ll receive £620m between them.

Another 61,000 people own three homes -- and will share a £73m “taxpayer-funded windfall”.

Rishi Sunak agrees that some people who don’t need the help will get the rebate - but that’s a consequence of deciding to give some support on a universal basis, given the scale of the challenge.

Q: How much will you get?

Sunak says he’s giving his rebate to charity (as he said last month).

But you’re being philanthropic with other people’s money, McDonagh replies. She quotes Margaret Thatcher’s view, that there is no such thing as public money, there is only taxpayers’ money.

Q: How can it be right that someone on the Sunday Times Rich List, or indeed any MP or minister, gets this rebate?

Sunak says that Labour’s policy of a VAT cut on energy bills would also help wealthy families, and that middle-incom families need support too.

And he denies that the package was rushed out to distract from Sue Gray’s Partygate report -- although McDonagh argues that if the Treasury had drawn up its plans properly they’d avoid giving a £1,200 rebate to those who own three homes.

Sunak: Not seeing signs of business distress

Q: Why was there no support for businesses in last month’s cost of living package, asks Conservative MP Kevin Hollinrake.

Rishi Sunak says that consumer price inflation is being caused by firms lifting their prices.

He says the government is providing support for companies, such as business rate holidays, and the employment allowance tax cut [which lets companies reduce their annual National Insurance liability by up to £5,000].

He also points to the government’s Help to Grow support campaign, and the support for energy-intensive industries.

Q: The Federation of Small Business says 200,000 firms are in “serious trouble”, and that another 300,000 “have only got weeks left” - is that a concern?

Sunak says the government tracks business insolvencies and business profitability, and isn’t seeing signs of distress.

Firms have, in aggregate, around £100bn in excess deposits, he explains.

Q: But other countries are offering more support to businesses, aren’t we an outlier?

Sunak say the UK’s support packages are comparible to fellow countries, but it is more targeted at households.

Q: Are you braced for having to provide more support in the autumn?

Sunak says the new package is significant, and was rolled out once the government knew how much energy bills would probably rise in autumn.

But it’s not possible, or advisable, to try to fully make up for rising living costs, he adds.

Q: Will the cost of living package prevent an increase in child and pensioner poverty, asks Anthony Browne MP.

Sunak says it will make a very significant difference, and the biggest difference for the most vulnerable.

Browne is concerned that the package will create a ‘cliff edge’, where people on universal credit will lose some benefits.

Sunak replies that wherever you draw a line, someone will fall the other side of it.

Dan York-Smith, director of strategy, planning & budget at the Treasury, says the household support fund was extended (until March 2023) to help families who can’t get targeted support.

Updated

Q: Are you concerned about sterling, given Bank of America’s warning last week that the pound is showing ‘emerging market’ characteristics?

Sunak says he has confidence in the UK’s economic outlook. In the short term we are experience high inflation, as are many other countries, mainly due to external factors such as the energy price shock, and the tight labout market, he says.

But core inflation is still very elevated, and broad-based, the chancellor says.

But he insists the UK has the “tools and determination” to get inflation down -- on the fiscal side, monetary policy side, and supply side.

Updated

Q: How much extra borrowing will be needed to pay for the £15bn cost of living package?

Rishi Sunak says it depends on any possible levy electricity generators, given their extraordinary profits.

Sunak: Package will have a minimal impact on inflation

The session begins with chair Mel Stride asking about the inflationary impact of the chancellor’s £15bn support package.

Rishi Sunak says fiscal policy should be responsible, at a time when interest rates are likely to be rising and inflation is already high.

He explains that the cost of living package is temporary, and partly backed by revenue (the levy on North Sea oil and gas producers, which could raise £5bn).

Q: But some of the support [the £650 payment to poorest households] is targeted at people who have the most propensity to spend - won’t that add to inflation?

Sunak replies that the package won’t fuel extra demand, insisting that it will have a minimal impact on inflation - and that the Office for Budget Responsibility should give its assessment at its next forecasts.

[Of course, has this announcement been made at a fiscal event, we would have got the OBR’s verdict too].

The chancellor says it’s a responsible package, helping people in need to buy things that are absolutely necessary.

But he won’t spell out what ‘minimal means’, saying that people understand what minimal means.

A little bit like ‘Brexit means Brexit’, Mel Stride replies.

Sunak to face MPs over cost of living package

In Parliament, the Treasury Committee is about to question the Chancellor of the Exchequer on the £15bn cost of living support package announced late last month.

That package included a one-off £650 payment for 8 million families on means-tested benefits, as well as doubling the support for energy bill payers from £200 to £400.

The hearing starts at 1.45pm BST, and we’ll add a live feed to the top of the blog.

Commenting ahead of the session, Mel Stride MP, Chair of the Treasury Committee, said:

“It is very welcome to see such a bold package introduced by the Chancellor to support households with the rising cost of living. Overall, this looks like an impressive and generally well-targeted intervention.

However, there are inevitably questions that arise, not least around the impact that the Chancellor’s intervention might have on inflation.”

The package is partly funded by a 25% windfall tax on North Sea producers -- or an ‘Energy Profits Levy’. It includes 90% tax relief for firms that invest in oil and gas extraction in the UK.

The committee says MPs may also ask about financial support for businesses and the likelihood of further measures being required later in the year.

The Labour party has accused Rishi Sunak of causing uncertainty and damaging investment plans by threatening to also impose a windfall tax on British electricity generators.

They say the chancellor is damaging the investment environment for new energy projects by threatening to extend the levy to electicity generators.

Updated

Commuters entering Liverpool Street station today
Commuters entering Liverpool Street station today Photograph: Tolga Akmen/EPA

The National Union of Rail, Maritime and Transport Workers says today’s industrial action is a show of strength by workers to protect pension rights and jobs on the underground.

Here’s RMT general secretary Mick Lynch:

“I congratulate our station grade and revenue control staff members on London Underground for taking strike action in defence of their pensions and jobs.

“The effectiveness and industrial power of these members cannot be underestimated.

“TfL, London Underground Limited (LUL) and the Mayor of London have had ample opportunity to negotiate with the union properly to avert this strike action today.

“Their intransigence and stubbornness have left RMT members no choice but to act decisively.

“We will not rest until we have a just settlement to this dispute and we urge the Mayor to stand up to the Tory government who are cutting funding to TfL rather than try to pick a fight with tube workers.”

Downing Street has criticised today’s strike action on the London Underground, calling it “deeply disappointing”.

The Prime Minister’s official spokesman said.

“This sort of action is deeply disappointing and not what the public want to see, not what we want to see for businesses still trying to recover post-pandemic, people’s lives being disrupted in London,”

“Obviously industrial relations at TfL (Transport for London) are a matter for TfL and the mayor but it’s clear that under the current funding settlement TfL must take all reasonable steps to avoid industrial action.”

Gatwick Airport has apologised to a passenger with a disability who was left waiting on a plane for over an hour and a half after landing last weekend.

Victoria Brignell, from Shepherd’s Bush, west London, was returning home on Saturday following a holiday in Malta when her plane arrived at Gatwick. She is paralysed from the neck down, and was left stranded on a plane for more than 90 minutes after airport staff failed to arrive.

Airport staff have a responsibility to help people with disabilities on and off planes - and Gatwick Airport has offered its sincere apologies and described the delay as “unacceptable”.

Sonia Sodha of the Observer tweeted that the incident was ‘really unacceptable’ and an ‘appalling service’ to people with a disability.

Ms Brignell explained that her chair was ready for her outside the plane, but the contractors who should have assisted her did not turn up.

“Shortly after landing the BA airline staff came up to me and said they’re sorry but the people who are meant to help get me off the plane would not be there for 50 minutes.

“Time passed and I was then told it would be another half an hour on top of that. In the end I was waiting an hour and 35 minutes.

“I am paralysed from the neck down so I can’t use my arms or legs. To get off a plane I need two people to lift me from the airplane seat into an aisle chair, which is a specially designed narrow wheelchair to push me along the aisle off the plane, and lift me into my wheelchair waiting outside.

“My wheelchair arrived promptly, but the people who were supposed to help me get off the plane didn’t turn up - they were busy elsewhere.”

Paralympian Baroness Tanni Grey-Thompson tweeted transport secretary Grant Shapps that this shows the reality of being a disabled person.

Commuters on a London Overground service
Commuters on a London Overground service Photograph: Tolga Akmen/EPA

Alexandra Farmer, an employment law adviser at WorkNest, explains the legal situation for workers:

“If an employee can’t get into work because of tube strikes but the workplace is open and work is available they have no right to be paid for the day. A refusal to attend work could in theory lead to disciplinary action, however, if there is a genuine reason why it is difficult to travel to work, this is an unlikely outcome.

Employers can also help staff to cope with the disruption:

“If your employees can work from home then this is an obvious solution. If the employee could take the day as a holiday or as unpaid leave then do so. In the future if we know strikes are likely then pre-plan.

If you have shift workers, plan rotas around people’s commuting capabilities and more creative solutions may be to arrange taxis or minibuses for employees when public transport is off.”

Travel disruption hasn’t prevented the London stock market opening after the Bank Holiday break.

Stocks have rallied, with the FTSE 100 up 97 points or 1.3% at 7629 points, as European markets start the week in a bullish mood.

The pound is hold its earlier gains too.

Shane O’Neill, head of interest rate trading at Validus Risk Management, says:

“Despite news that Boris Johnson faces a no-confidence vote, the pound is performing well this morning, up against both the dollar and the euro – the FTSE 100 and UK rates have also moved higher on the open as traders come back to work after the long weekend.

Though it is tempting to see this as an increase in political uncertainty, if Johnson survives there can’t be another vote for a year – potentially providing some stability to Whitehall.

As for whether or not Johnson will survive, it seems likely that he will. There needs to be 180 votes against him for a loss and with no obvious alternative, Rishi Sunak’s star has fallen following the revelation of his wife’s non-dom status and the cost-of-living crisis, and the Tories polling so poorly – safe money is on Boris Johnson surviving for a little while longer. The whole scene is likely to play second fiddle to the more pressing market matters of sticky inflation and upcoming central bank meetings.”

Motorists face 'shock and awe' as fuel prices jump

Holidaymakers who drove, rather than flew, faced record prices at the pumps over half term.

Petrol prices soared by nearly 6p per litre over the half-term school holiday, lifting the average price to a record 177.9p per litre on Sunday, up from 172.1p on Friday May 27.

This added around £3 to the cost of filling a typical 55-litre family car.

Diesel prices rose from 182.7p per litre to 185.0p per litre over the same period.

AA fuel price spokesman Luke Bosdet said:

“Shock and awe is the only way to describe what has been happening at the pump during the half-term break.

“Little wonder that nearly half of drivers stayed at home for the Jubilee extended bank holiday.

“The forces behind the surge have been oil jumping back above 120 US dollars a barrel for the first time since late March, combined with petrol commodity prices being boosted by summer motoring demand.”

The Brent crude oil price over the last six months
The Brent crude oil price over the last six months Photograph: Refinitiv

Updated

EasyJet has scrapped a further 37 flights today, with Gatwick the worst affected.

These included flights from destinations such as Bilbao, Madrid and Seville in Spain, Milan and Palermo in Italy, Geneva and Zurich in Switzerland, and Malta.

An easyJet spokeswoman said:

“EasyJet is operating over 1,700 flights today carrying almost 300,000 customers.

“Unfortunately, due to the ongoing challenging operating environment around 37 flights have been cancelled today ahead of customers arriving at the airport.

“We are very sorry and fully understand the disruption this will have caused for our customers.”

EasyJet customers have been recording the disruption on social media, for example:

A police officer talks to a commuter at the shuttered entrance to Victoria underground tube station this morning
A police officer talks to a commuter at the shuttered entrance to Victoria underground tube station this morning Photograph: Hollie Adams/AFP/Getty Images

Updated

In the financial markets, the pound has strengthened this morning as City traders digest the news that Boris Johnson will face a vote of no confidence tonight.

Sterling has gained three-quarters of a cent (or 0.6%) against the US dollar to $1.256, and is almost half a eurocent higher at around €1.17.

However, that only recovers the pound’s losses on Friday, so isn’t a major bounce.

Here’s Andy Bruce of Reuters:

And the BBC’s Faisal Islam:

Neil Wilson of Markets.com says the question is whether the Tories have the stomach to depose their leader, or stick with a man who has “become an election liability”.

I don’t see how he can survive for much longer – either today or once the Tories get beaten in the Wakefield and Tiverton and Honiton by-elections this month.

There is a definite question about why the rebels have moved early instead of waiting for the trouncing the Tories will be get in those contests...whips doing whip stuff like encouraging rebels to send letters early? If a confidence vote were held the day after wipe-out in Wakefield and Devon BoJo wouldn’t stand any chance, so the timing looks like it’s been coordinated by the whips and Number 10.

Technically, if BoJo survives today’s vote he cannot be challenged for another year, but rules are made to be broken...(1922 chairman Brady this morning hinted they could alter the rules).

Andrew Sparrow’s Politics Live blog has all the latest details:

Updated

It could take several days for airlines to clear the backlog of passengers caused by the flight cancellations last weekend.

Travel consultancy The PC Agency has estimated that at least 15,000 passengers were affected by “last-minute changes” to flights on Sunday.

Chief executive Paul Charles said this caused “major knock-on effects” and “it will take three days to clear the backlog”.

He told the PA news agency:

“We’re now seeing the impact of the weekend’s cancellations with knock-on effects for tens of thousands of travellers.

“So many flights were never rescheduled after the pandemic, so there often isn’t the frequency of flights to get passengers back quickly if they are affected.

“We’re going to see a large number of compensation claims from those stuck abroad.

“Sadly it can take three days to get flights back to normal and get people back.”

BRITAIN-TRANSPORT-UNDERGROUNDA pedestrian walks past the shuttered entrance to Victoria underground tube station in London on June 6, 2022, during a 24-hour strike by nearly 4,000 London Underground station staff. (Photo by HOLLIE ADAMS / AFP) (Photo by HOLLIE ADAMS/AFP via Getty Images)
A pedestrian walks past the shuttered entrance to Victoria underground tube station this morning.... Photograph: Hollie Adams/AFP/Getty Images
A pedestrian walks past the shuttered entrance to Maida Vale underground tube station.
....Maida Vale underground tube station was also closed Photograph: Hollie Adams/AFP/Getty Images

London commuters have been struggling to get to work this morning, and get children to school, as the Tube strike disrupted services.

Tracy Brown, 45, a mother-of-three from Acton, told PA Media that the strike had made the morning rush even harder:

“Getting three children ready in the mornings for school is hard enough without a Tube strike making things harder.

“I am fed up of running around to get my children to school on time because some people are so greedy.”

Paul Glennon, 52, a construction worker in central London, confirmed that buses had been packed:

“It is back to reality for all of us. No more parties and parades.

“I have spent my whole morning getting on and waiting for packed buses in the rain. Bloody nightmare.”

At Paddington station at about 7.40am, construction worker Miguel Basantes, 54, said he needed to get to work in Hampstead:

“It is chaos.

“In Liverpool Street there was crowds of people and I was waiting for 20 or 30 minutes.

“I don’t know how to get to work.”

The RMT, which called the strike, says Transport for London proposals mean 600 jobs will be lost, working agreements will be torn up, and a looming threat to pensions remains in place.

TfL said no proposals have been tabled on pensions or terms and conditions, and nobody will lose their jobs because of the proposals it has set out. But it has proposed not recruiting into around 500 to 600 posts as they become vacant.

London Underground industrial actionPeople waiting at a bus stop in Paddington in London, as Members of the Rail, Maritime and Transport union (RMT) are taking industrial action in a dispute over jobs and pensions. Picture date: Monday June 6, 2022. PA Photo. See PA story INDUSTRY Tube. Photo credit should read: Danielle Desouza/PA Wire
People waiting at a bus stop in Paddington in London this morning Photograph: Danielle Desouza/PA
London Underground industrial actionPeople waiting tp board a bus in Paddington in London, as Members of the Rail, Maritime and Transport union (RMT) are taking industrial action in a dispute over jobs and pensions. Picture date: Monday June 6, 2022. PA Photo. See PA story INDUSTRY Tube. Photo credit should read: Danielle Desouza/PA Wire
People waiting at a bus stop in Paddington in London this morning Photograph: Danielle Desouza/PA

Second weakest May car sales in 30 years

UK car sales have slumped again, as shortages of computer chips hampers production and the cost of living squeeze hits spending.

New car registrations fell by over 20% last month, year-on-year, to just 124,394 units.

That’s the second weakest May in three decades (after May 2020, when sales plunged during the pandemic lockdown).

Trade body the SMMT reported that:

The decline, compared with the first full month of reopened showrooms in May last year, demonstrates the impact of continued global supply chain disruptions, with the market -32.3% below the 2019 pre-pandemic level despite strong order books.

Twice as many battery electric cars were sold than diesel, as motorists shifted to greener cars.

BEV sales rose by 17.7% to 15,448, and made up 12.4% of the month’s registrations, as manufacturers prioritise their supply. Diesel sales halved year-on-year, to just 7,614.

Updated

Travellers in Yorkshire also face disruption today as Arriva bus drivers begin industrial action over a pay offer.

Arriva Yorkshire said Unite union members were expected to strike from 02:00 BST on Monday “for an undisclosed period of time”.

Unite says the offer of a 4.1% pay increase to its 650 members was “pitiful” and well below the current inflation rate (CPI hit 9% in April, while the retail prices index shows prices rising by 11.1% over the last year).

The company called the strike action “unjustified”.

As the FT’s Northern Correspondent Jennifer Williams points out, many passengers won’t have alternative transport options:

Updated

More flights have been cancelled today, as the aviation industry struggles to cope with the rise in demand for travel amid a severe staffing shortage.

PA Media has the details:

After cancelling dozens of flights over the weekend, easyJet scrapped a further 26 due to arrive at or depart from Gatwick on Monday.

These included from destinations such as Bilbao, Madrid and Seville in Spain, Milan and Palermo in Italy, Geneva and Zurich in Switzerland, and Malta.

British Airways axed more than 100 short-haul flights at Heathrow on Monday, although the airline stressed that passengers affected were given advance notice.

Tui Airways is cancelling six daily flights at Manchester.

More air travel chaos looms this summer

The half-term travel disruption will have made passengers nervous about planning summer holidays.

And unfortunately, air traffic control delays in Europe are expected to bring further travel chaos to UK airports in the months ahead.

Europe’s air traffic agency has warned that the number of flights will exceed the capacity of control centres to handle them across large parts of the continent this summer, and urged some countries to review their operations to avoid sudden disruption.

Reims in eastern France, Munich and Athens face particularly acute problems, but Eurocontrol is worried that much of Europe, including the UK, was operating close to capacity. The FT has more details.

Great Northern, which runs rail services in the south east England including Thameslink, has warned passengers to expect delays due to the tube strike.

Great Northern services to and from Moorgate are being disrupted by industrial action on the Tube network.

Old Street station is expected to remain closed for the rest of the day.

Highbury & Islington is not currently being served by Great Northern.

You will need to make your way to an alternative station in the area.

Please be aware that Southern, Thameslink and Great Northern trains and stations in the London area will be extremely busy. Other National Rail operators are likely to be affected as well.

Please leave at least 20 minutes of additional time for your journey.

Commuters queue to board packed buses at Victoria Station as a tube strike impacts the Monday morning rush hour today.
Commuters queue to board packed buses at Victoria Station as a tube strike impacts the Monday morning rush hour today. Photograph: Leon Neal/Getty Images
Commuters queue to board packed buses at Victoria Station as a tube strike impacts the Monday morning rush hour today.
Commuters queue to board packed buses at Victoria Station as a tube strike impacts the Monday morning rush hour today. Photograph: Leon Neal/Getty Images

London underground disruption: latest status

An electronic sign at Waterloo Station in London.
An electronic sign at Waterloo Station in London. Photograph: Beresford Hodge/PA

The Circle, Victoria and Waterloo & City underground lines are all currently closed due to the tube strike strike.

Many other lines are disrupted, with services not running into central London, as this map shows:

London underground map, during tube strike June 6th
London underground map, with disrupted lines in colour Photograph: TFL

TFL’s status updates website shows that (at 8.40am):

  • Bakerloo Line: Service operating between Queen’s Park and Harrow & Wealdstone, approximately every 10 minutes.
  • Central Line: Service operating between White City and West Ruislip / Ealing Broadway, approx. every 20 minutes and between Liverpool Street and Epping / Hainault via Newbury Park, approx. every 15 minutes. No service on the rest of the line due to strike action by RMT.
  • District Line: Service operating between Whitechapel and Upminster, approx every 10 mins, between Edgware Road and Wimbledon, approx every 10 mins and between High St Kensington and Ealing Broadway / Richmond, approx every 15 min.
  • Hammersmith and City Line: Service operating between Hammersmith and Whitechapel, approximately every 10 minutes.
  • Jubilee Line: Service operating between Finchley Road and Stanmore, approximately every 5 minutes and between Stratford and Canning Town, approximately every 10 minutes with some stations closed.
  • Northern Line: Service operating between Edgware and Golders Green, between Archway and High Barnet and between Finchley Central and Mill Hill East, approximately every 6 - 8 minutes with some stations closed. Service operating between Morden and Kennington, approximately every 7 minutes with some stations closed.
  • Piccadilly Line: Service operating between Earl’s Court and Heathrow Terminals 2 & 3 and between Acton Town and Raynes Lane, approx. every 20 minutes with some stations closed.

Updated

There’s a long queues for buses this morning at Victoria Station as the tube strike disrupts journeys, reports the BBC’s Sarah Morris:

Commuters at Waterloo Station in London this morning, as members of the Rail, Maritime and Transport union take industrial action in a dispute over jobs and pensions.
Commuters at Waterloo Station in London this morning, as members of the Rail, Maritime and Transport union take industrial action in a dispute over jobs and pensions. Photograph: Luke O’Reilly/PA

Frustrated commuters have gathered around the entrance to Waterloo underground station after the Tube was shut by today’s strike, PA Media reports.

One commuter, Charlotte from Surbiton, said she was unsure if she would be able to complete her journey to Canary Wharf.

She said:

“We’ll see if anything opens up, and I’ll go home if it doesn’t”

“I’m pretty sure everyone will be delayed coming in today.”

She said she had been traveling for almost an hour already, adding that she didn’t feel like the strike was justified.

“I don’t necessarily see the reason for the strike”.

“It doesn’t necessarily feel like it’s justified to cause this much disruption, especially when London is getting up and running again. It seems like a big setback for the city.”

Full story: Travellers in London told to avoid tube as strike begins

Jubilee line trains parked at the London Underground Stratford Market Depot in Stratford, east London.
Jubilee line trains parked at the London Underground Stratford Market Depot in Stratford, east London. Photograph: Stefan Rousseau/PA

London’s transport operator warned people to expect “severe disruption” on the tube today as 4,000 station staff are due to walk out in a 24-hour strike that will shut down much of the network.

Transport for London said there would be problems across all lines from the start of service on Monday to 8am on Tuesday, with a limited number of stations open. It advised against travel on the tube throughout that period “unless necessary”.

The RMT union has called the strike in protest against TfL plans to cut 600 jobs to reduce costs. Only London Underground station staff will be involved, rather than the 10,000 RMT members who walked out in March.

Sources close to the union said the scale of the walkouts meant the entire tube network should close on safety grounds. TfL said:

“Safety is our top priority and we will be doing all we can to safely keep as many services running for our customers as possible.”

Some tube stations had already shut temporarily over the platinum jubilee holiday weekend because of staff not working overtime as part of separate industrial action by RMT that started on Friday and is due to continue until 10 July.

Introduction: Thousands of Britons stuck at airports as tube strikes add to travel disruption

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

The UK’s travel chaos continues today. Flight cancellations and a tube strike in London means that half-term holidaymakers and people returning to work after the jubilee weekend face face more disruption.

Tens of thousands of British travellers are estimated to be stuck at airports across Europe after up to 200 flight cancellations over the weekend, following a week of misery for families.

The disruption means some children, and teachers, will be unable to return to school in time for today’s classes -- in the middle of the exam season.

EasyJet cancelled another 80 flights on Sunday, mainly affecting Gatwick airport, after 25 departures and 22 arrivals were cancelled on Saturday. The airline says:

“We are very sorry and fully understand the disruption this will have caused for our customers.

We are focused on getting them to their destination as soon as possible.”

Eurostar passengers faced travel misery on Sunday too, as a power supply failure at Paris Gare du Nord meant all services to/from Paris are subject to major delays and cancelations.

A strike on the London underground is expected to cause travel chaos in the capital too, as many workers return to the office after the long Bank Holiday break.

Transport for London say they will keep as many stations as possible open, but expect the strike to cause severe disruption and the closure of many Tube stations.

Members of the Rail, Maritime and Transport union are taking industrial action in a dispute over jobs and pensions.

The government has criticised the travel sector’s failure to handle the surge in demand as pandemic restrictions have been relaxed, with airlines struggling to take on more employees fast enough.

The aviation industry says recruitment is being held up by security checks, but transport secretary Grant Shapps argues that staff cuts during the pandemic had gone too deep.

He told the BBC:

“The industry itself needs to solve it.

The government doesn’t run airports, it doesn’t run the airlines. The industry needs to do that.”

“We’ll work with the industry very hard ... to make sure we don’t see a repeat of those scenes.”

London’s mayor, Sadiq Khan, said Brexit had caused the chaos. He called on the government to relax immigration rules to allow airport and airline workers who returned to their EU countries of origin following Brexit to come back to the UK.

Also coming up today

The UK parliament’s Treasury Committee will hold a hearing with chancellor Rishi Sunak, to discuss the £15bn cost of living package announced last month.

The Committee will ask Sunak whether the measures could cause higher inflation, whether support was sufficiently targeted to lower income households, and what impact the Energy Profits Levy will have on investment in the UK.

They’ll also ask what further measures may be required later in the year, given the calls for an emergency budget to help households.

European stock markets are expected to open higher.

The agenda

  • 9am BST: UK new car sales for May
  • 1.45pm BST: Rishi Sunak appears before Treasury Committee on cost of living support

Updated

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