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Morrisons has warned it expects “industry-wide” price rises ahead and revealed some product shortages while reporting half-year results showing a 43% slump in profits.

The UK’s fourth-largest supermarket chain by market share said the price hikes were to be “driven by sustained recent commodity price increases and freight inflation, and the current shortage of HGV drivers”.

However, it expected to help “mitigate” the increase in costs, signalling that the continuing price war in the sector will limit higher bills at tills as the major chains battle the challenge posed by discounters such as Aldi and Lidl.

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The company, currently at the centre of a takeover battle, said it was already seeing a squeeze in some products including water, carbonated drinks, juice, crisps, pet food and wine.

Chief executive David Potts said the lorry driver shortage was such that its own drivers were picking up goods from delivery companies on occasions.

Nevertheless, he expressed confidence over its most important season ahead, declaring: “Christmas is going to be biblical”.

Morrisons revealed the extent of its supply struggles as profits over the first half of its financial year to 1 August were damaged by further COVID-19 costs totalling £41m.

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It reported £80m of lost earnings from its cafes, fuel and food-to-go as pandemic measures bit and demand remained constrained.

The firm’s bottom line statutory profit before tax figure came in at £82m, compared with £145m in the same six-month period last year, as a result.

Total sales rose by almost 4% to £9.1bn during the period aided by a surge in online sales during the pandemic and its wholesale business.

Morrisons said that online like-for-like sales growth, which includes its Amazon partnership, was up 48% but overall like-for like sales growth, excluding fuel, declined slightly by 0.3% as competition in the sector continued to bite.

Shopping trolleys are parked at a Morrisons supermarket in south London
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Morrisons saw store sales come under pressure from tough competition

The company told investors that profit guidance for the full 2021-22 year had been maintained but there would be no interim dividend given the takeover situation.

Morrisons had revealed on Wednesday that it was in talks with the two US private equity suitors and the Takeover Panel, which governs takeover deals, regarding an auction procedure.

However, it may not be needed as the Morrisons board revealed it was to recommend a £7bn bid from Clayton, Dubilier & Rice (CD&R) after rejecting an earlier offer of £5.5bn.

CD&R’s latest offer is worth 285 pence per Morrisons share.

A rival consortium led by Softbank-owned Fortress Investment Group could still trump that bid.

Fortress had earlier offered £6.7bn.

Morrisons shares were trading at almost 293p on Thursday – indicating that investors were clinging to hope of a counter bid.

But John Moore, senior investment manager at Brewin Dolphin, said: “The Morrisons board recommending the 285p per share offer from CD&R should bring a conclusion to the bidding war for the supermarket, which has highlighted the appetite from private equity and trade investors for comparatively cheap UK companies over the last 12 months.”

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Millions urged to read energy meters this weekend to avoid overpaying as price cap falls again

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Millions urged to read energy meters this weekend to avoid overpaying as price cap falls again

Millions of people are being urged to send meter readings to their energy supplier this weekend to ensure they don’t overpay.

The regulator’s price cap drops 12.3% on Monday 1 April, from a typical £1,928 per year for a dual-fuel household to £1,690 – an average saving of about £20 per month.

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People without a smart meter who are on a standard variable tariff (SVT) should send readings so their company has an up-to-date record when the prices change.

“If you delay submitting your readings, some of your energy usage could end up being charged under the higher rates we’re currently facing,” said Ben Gallizzi, energy spokesman for comparison site Uswitch.

This could happen as firms will estimate usage if they don’t have recent readings.

However, if you have a smart meter you shouldn’t have to worry as it’s set up to automatically ensure you are billed correctly.

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Uswitch says a week of energy at the current rates is £4.65 more expensive for the average household than the incoming rates.

About 10 million customers are thought to be on a SVT without a smart meter.

The combination of the cheaper rates and warmer weather is estimated to mean the average household will spend £127 on gas and electricity in April, compared with £205 in March.

Nearly a fifth of people without a smart meter have not submitted a reading in the last three months and 4% haven’t done it for a year, according to a Uswitch survey of 2,000 people.

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Twelve percent of these customers said they didn’t know where their meter was, while 14% didn’t know how to take a reading.

People without a smart meter are advised to read their meter every month to improve the accuracy of their bills.

The price cap is set by energy regulator Ofgem and is being cut again from the extreme highs of recent years – when it reached over £4,000 – thanks to a drop in wholesale prices,

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Ofgem also launched a consultation on the energy price cap this week, floating options such as a cap based on vulnerability and when energy is used.

The cap, which affects England, Scotland and Wales, was introduced in January 2019 to prevent people on variable tariffs being ripped off.

Initially it was changed a couple of times a year but since 2022 it has been updated every three months.

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‘Modest’ £63 rise in statutory sick pay is overdue, MPs say

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'Modest' £63 rise in statutory sick pay is overdue, MPs say

A “modest” increase in statutory sick pay (SSP) is overdue, according to a committee of MPs who say it must strike a balance between workers’ needs and what employers can afford.

The Work and Pensions Committee recommended a rate in line with the flat rate of Statutory Maternity Pay.

That would see SSP rise from the current weekly level of £109.40 to £172.48 per week.

The MPs also wanted to see SSP paid in combination with usual wages, in order to encourage phased returns to work.

The cross-party committee argued too that all workers should be eligible for SSP, not just those earning above the lower earnings limit of £123.

The government responded to the report by saying that a 6.7% increase would take effect next month.

In making their case, the MPs said they understood that the COVID pandemic and its immediate aftermath were not the right times to be placing additional financial burdens on employers.

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But they noted that a record 185.6 million working days had been lost to sickness or injury in 2022 – a time when the cost of living crisis was gathering pace.

Committee chair Sir Stephen Timms said it was clear the time had come to significantly bolster the support that many people depended on when they were unable to work.

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“Statutory sick pay is failing in its primary purpose to act as a safety net for workers who most need financial help during illness,” he wrote.

“With the country continuing to face high rates of sickness absence, the government can no longer afford to keep kicking the can down the road on reform.

“The committee’s proposals strike the right balance between widening and strengthening support and not placing excessive burdens on business.

“A growing number of workers are now classified as self-employed and a new contributory sick pay scheme for self-employed people would be a welcome step towards ensuring they are they are no worse off financially during periods of sickness than employees on SSP.”

Companies, while sympathising with staff generally over sickness, have long complained about rising costs including for business rates and minimum pay rules.

Lobby groups have warned that the burden already risks being passed on in the form of higher prices, placing the rate of inflation under strain.

A Department for Work and Pensions spokesperson said of the report: “Statutory Sick Pay will increase by 6.7% from April.

“Our £2.5bn Back to Work Plan is tackling sickness absence and getting people back working, while we are expanding access to mental health services and supporting those at risk of long-term unemployment.”

TUC general secretary Paul Nowak responded: “The COVID-19 pandemic showed that our sick pay system is in desperate need of reform.

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“It beggars belief that ministers have done nothing to fix sick pay since.

“It’s a disgrace that so many low-paid and insecure workers up and down the country – most of them women – have to go without financial support when sick.

“The committee is right that ministers urgently need to remove the lower earnings limit and raise the rate of sick pay.

“Wider reform is also needed to remove the three days people must wait before they get any sick pay at all.”

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Boohoo, ASOS and Asda sign new agreement as CMA urges fashion industry to review ‘green’ claims and practices

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Boohoo, ASOS  and Asda sign new agreement as CMA urges fashion industry to review 'green' claims and practices

The competition regulator has urged UK fashion businesses to give accurate information about how environmentally friendly their clothes are after three fast-fashion firms signed a new agreement.

The Competition and Markets Authority (CMA) had initiated an investigation into Boohoo, ASOS and George by Asda over concerns about the way products were marketed as eco-friendly.

Its initial review of the fashion sector had identified concerns of possible greenwashing – making items appear environmentally friendly when they are not.

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But the firms have pledged to provide clear, prominent and transparent information about any environmental claims made about products, such as using terms like organic or recycled, rather than ambiguous ones like eco, responsible, or sustainable, with no further explanation.

Use of natural imagery such as green leaves or logos to suggest non-existent environmental benefits will also be avoided by the brands.

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Environmental information must be expressed in plain language, be easy to read, and clearly visible to shoppers.

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Any statements about fabric composition must be similarly clear and specific: the percentage of recycled or organic fibres must be clearly displayed.

If a brand has a specific range of clothes, designed to have less of a negative environmental impact than other products, then companies must provide detail on minimum requirements for items to be included in the collection.

Minimum percentages of recycled material, for example, should be made clear.

Any environmental targets set by fashion businesses must be supported by a clear and verifiable strategy with customers able to access more details about the goals.

Information must be provided on what the target is aiming to achieve, the date by which it is to be met, and how the company will reach it.

“A turning point for the industry”

These pledges “set a benchmark for the industry”, the CMA chief executive Sarah Cardell said, and build on already established marketing regulations.

In an open letter, the CMA called on fashion businesses to familiarise themselves with the new undertakings.

“This also marks a turning point for the industry… we expect the sector as a whole – from high street to designer brands – to take note and review their own practices,” Ms Cardell said.

More guidance for the fashion industry is to be published by the CMA, it said.

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