Chancellor to deliver parts of his medium-term fiscal plan today, Treasury says

Published

2 years ago

October 17, 2022

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Chancellor Jeremy Hunt will deliver parts of his medium-term fiscal plan later today, the Treasury has said.

In a statement the Treasury said the chancellor was fast-tracking the plans, which will be released in full on 31 October.

It said it followed conversations with Prime Minister Liz Truss over the weekend and a meeting with the governor of the Bank of England and the head of the Debt Management Office on Sunday night.

Politics latest: More U-turns expected on mini-budget

Ms Truss is facing calls to resign from three Tory MPs following the economic turmoil in the wake of the mini-budget.

Tory MPs Crispin Blunt, Andrew Bridgen and Jamie Wallis have publicly stated they believe she should resign, while Labour leader Sir Keir Starmer has called on Ms Truss to face parliament and accused her of being “in office but not in power”.

The Daily Mail reported that Tory MPs will try to oust Ms Truss later this week, with more than 100 ready to submit letters of no confidence.

Last week Ms Truss sacked her chancellor Kwasi Kwarteng and replaced him with Jeremy Hunt as she ditched a major chunk of the mini-budget.

Mr Hunt has insisted the prime minister is still in charge during media appearances over the weekend, though he said a tough package of tax rises and spending cuts was necessary in order to steady the UK economy.

Sir Keir said Ms Truss’s brief news conference to explain her latest U-turn on Friday “completely failed to answer any of the questions the public has”.

He said: “Mortgages are rising and the cost of living crisis is being felt ever more acutely. The Conservative government is currently the biggest threat to the security and the finances of families across the country.

“That’s why the prime minister must come to parliament on Monday, to explain what she plans to do to turn the situation around.

“If the prime minister won’t take questions from journalists, Liz Truss must at least take them from MPs representing the families whose livelihoods she’s putting at risk.”

MPs believe it is simply not sustainable for Truss to remain as PM

I was told by a cabinet source Liz Truss had no option but to sack Kwasi Kwarteng because it was made clear to her he’d lost the confidence of markets and her only hope of steadying the ship was removing him.

But what follows from that is obvious: as a second cabinet source put it to me over weekend, what the markets do in the coming few days will be critical for Ms Truss too.

The firewall provided by the chancellor is now burnt through and if there’s no improvement, the signal will be that the problem is her.

Politically the view settling amongst MPs is that it’s simply not sustainable for her to remain as prime minister.

All eyes are now on Sir Graham Brady, the only person who knows when a leadership election has been triggered, to see what he does. Party rules say Ms Truss has a year’s grace, but they can change the rules.

But there’s also a view, shared by some Truss rivals and backers alike, that the PM has bought a bit of time.

As one cabinet minister told me: “Despite the hysteria, the reality is we need to calm down, let Liz decide her new priorities and Jeremy deliver his budget. Nothing will be gained in the next 14 days by more fratricide.”

But the point is, as Conservative Home’s Paul Goodman put it, it’s over for Ms Truss whether she’s pushed out or not.

Her economic project is finished and her authority is gone. And that makes it very hard to see how she can lead the party into a general election.

I’ll be watching the markets and Sir Graham very closely on Monday.

In a sign of divide within the Tory Party, former culture secretary Nadine Dorries criticised her colleagues.

“I cannot imagine there’s one G7 country which thinks we’re worthy of a place at the table,” she tweeted.

“The removal of one electorally successful PM, the disgraceful plotting to remove another by those who didn’t get their way first time round is destabilising our economy and our reputation.”

To register your interest and share your story, please email TheGreatDebate@sky.uk

Business

United Utilities increases profit by more than £100m as it seeks more bill rises

Published

44 mins ago

November 14, 2024

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United Utilities increases profit by more than £100m as it seeks more bill rises

Water company United Utilities has reported hundreds of millions in profit as it seeks to further increase customer bills.

The utility serving seven million customers in the northwest of England recorded £335.7m in underlying operating profits for the first half of this year, up nearly 23% from £271.1m a year ago.

It comes as the firm has requested bills rise 32% to make them among the most expensive in England and Wales.

Money blog: The massive winter fuel payment ‘cut’ no one talks about

The proposed average annual bill would increase to £584 by 2030 from the £443 typical yearly charge in the 2023/2024 financial year. Since April 2023 bills have been upped 6.4% and then 7.9%.

Bills hikes were behind the rise in revenue to more than £1.08bn from £975.4m in 2023.

Other ways of assessing profit were lower than the underlying operating sum. Profit before tax reached £140.6m while after tax profit topped £103.1m for the six months to the end of September 2024, both lower than a year earlier.

Boss’s pay

Bonus and benefits payments worth £1.416m were paid to two executives on top of £1.128m in base pay, according to analysis of company filings done by the Liberal Democrats.

It’s down compared with 2022/2023 when three executives were given £1.6m in base pay and £2.456m in bonuses and benefits.

The environment

In a year of record sewage outflows into waterways the company was one of just three firms that met the Environment Agency’s top four-star performance ranking.

United Utilities in July came under investigation by water regulator Ofwat for not meeting its obligation to minimise pollution.

In response the company said at the time: “We understand and share people’s concerns about the health of the environment and the operation of wastewater systems, including combined sewer overflows.”

Business

Rachel Reeves to create pension ‘mega funds’ to invest in infrastructure

Published

4 hours ago

November 14, 2024

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Rachel Reeves to create pension 'mega funds' to invest in infrastructure

Pension “mega funds” will be created under government plans to increase infrastructure investment.

Reforms could “unlock £80 billion” of investment, according to Treasury plans, which say fewer but larger funds can get greater returns.

Chancellor Rachel Reeves wants to imitate the way large Canadian and Australian pension schemes work.

She said it marks “the biggest set of reforms to the pensions market in decades” ahead of providing more details in a speech at Mansion House on Thursday evening.

Politics latest: Farage mocked over ‘rare’ PMQs appearance

Almost 90 local government pension pots will be grouped together, with defined contribution schemes merged and assets pooled together.

This is part of the government’s plan to increase economic growth through investing in infrastructure.

Pension schemes get greater returns when they reach around £20bn to £50bn as they are “better placed to invest in a wider range of assets”, according to the government.

This is backed up by evidence from Canada and Australia, the government argues – with Canada’s schemes investing four times more in infrastructure, and Australia three times more than the UK’s defined contribution schemes.

Pensions minister Emma Reynolds told Sky News larger pension schemes are able to invest “in a more diverse range of assets, including private equity, which are higher risk, but over time give a higher return”.

She said the government will not tell pension fund managers they must invest more in private equity but due to the larger scale they will be able to invest in a “broader range of assets, and that’s what we see in Canada and Australia”.

Ms Reynolds added that a Canadian teacher or an Australian professor is currently more likely to be invested in British infrastructure or British high-growth companies than a British saver, which she said is “wrong”.

The chancellor has said the changes would “unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off”.

However, Tom Selby, the director of public policy at financial company AJ Bell, said: “There needs to be some caution in this push to use other people’s money to drive economic growth. It needs to be made very clear to members what is happening with their money.”

The government says the funds will be regulated by the Financial Conduct Authority and will need to “meet rigorous standards to ensure they deliver for savers”.

Local government pensions v defined contributions

The Local Government Pension Scheme in England and Wales will manage assets worth around £500bn by 2030.

These assets are currently split across 86 different administering authorities, with local government officials and councillors managing each fund.

Under the government plans, the management of local government pensions and what they invest in will be moved from councillors and local officials to “professional fund managers”.

This will allow them to invest more in assets such as infrastructure, supporting economic growth and local investment on behalf of the 6.7 million public servants, the government said.

Defined contribution pension schemes are set to manage £800bn worth of assets by the end of the decade.

There are around 60 different multi-employer schemes, each investing savers’ money into one or more funds. The government will consult on setting a minimum size requirement for these funds.

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Businesses cautious – but pensions sector backs plans

Businesses will need to be reassured that the government’s plans are watertight following the fallout from the budget, according to the trade group the Confederation of British Industry (CBI).

The CBI’s chief economist Louise Hellem said: “While the chancellor is right to concentrate on mobilising investment, putting pension reform to work for the government’s growth mission, unlocking investment also needs competitive and profitable businesses.

“With the budget piling additional costs on firms and squeezing their headroom to invest, the government needs to work hard to regain the confidence in the UK as a place businesses and communities can succeed.

“Pension schemes will want to operate within a UK economy that is prospering.”

But key parts of the pensions sector gave their backing to the government’s plans, including Standard Life, Royal London, Local Pensions Partnership Investments and the Pensions and Lifetime Savings Association.

Deputy Prime Minister Angela Rayner said: “This is about harnessing the untapped potential of the pensions belonging to millions of people, and using it as a force for good in boosting our economy.”

Business

Apple sued by Which? over iCloud use – with potential payout for 40 million UK customers

Published

7 hours ago

November 14, 2024

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Apple sued by Which? over iCloud use - with potential payout for 40 million UK customers

Consumer rights group Which? is suing Apple for £3bn over the way it deploys the iCloud.

If the lawsuit succeeds, around 40 million Apple customers in the UK could be entitled to a payout.

The lawsuit claims Apple, which controls iOS operating systems, has breached UK competition law by giving its iCloud storage preferential treatment, effectively “trapping” customers with Apple devices into using it.

It also claims the company overcharged those customers by stifling competition.

The rights group alleges Apple encouraged users to sign up to iCloud for storage of photos, videos and other data while simultaneously making it difficult to use alternative providers.

Which? says Apple doesn’t allow customers to store or back-up all of their phone’s data with a third-party provider, arguing this violates competition law.

The consumer rights group says once iOS users have signed up to iCloud, they then have to pay for the service once their photos, notes, messages and other data go over the free 5GB limit.

“By bringing this claim, Which? is showing big corporations like Apple that they cannot rip off UK consumers without facing repercussions,” said Which?’s chief executive Anabel Hoult.

“Taking this legal action means we can help consumers to get the redress that they are owed, deter similar behaviour in the future and create a better, more competitive market.”

Apple ‘rejects’ claims and will defend itself

Apple “rejects” the idea its customers are tied to using iCloud and told Sky News it would “vigorously” defend itself.

“Apple believes in providing our customers with choices,” a spokesperson said.

“Our users are not required to use iCloud, and many rely on a wide range of third-party alternatives for data storage. In addition, we work hard to make data transfer as easy as possible – whether it’s to iCloud or another service.

“We reject any suggestion that our iCloud practices are anti-competitive and will vigorously defend against any legal claim otherwise.”

It also said nearly half of its customers don’t use iCloud and its pricing is inline with other cloud storage providers.

How much could UK Apple customers receive if lawsuit succeeds?

The lawsuit will represent all UK Apple customers that have used iCloud services since 1 October 2015 – any that don’t want to be included will need to opt out.

However, if consumers live abroad but are otherwise eligible – for example because they lived in UK and used the iCloud but then moved away – they can also opt in.

The consumer rights group estimates that individual consumers could be owed an average of £70, depending on how long they have been paying for the services during that period.

Apple is facing a similar lawsuit in the US, where the US Department of Justice is accusing the company of locking down its iPhone ecosystem to build a monopoly.

Apple said the lawsuit is “wrong on the facts and the law” and that it will vigorously defend against it.

Big tech’s battles

This is the latest in a line of challenges big tech companies like Apple, Google and Samsung have faced around anti-competitive practices.

Most notably, a landmark case in the US earlier this year saw a judge rule that Google holds an illegal monopoly over the internet search market.

The company is now facing a second antitrust lawsuit, and may be forced to break up parts of its business.

And in December last year, a judge declared Google’s Android app store a monopoly in a case brought by a private gaming company.

“Now that five companies control the whole of the internet economy, there’s a real need for people to fight back and to really put pressure on the government,” William Fitzgerald, from tech campaigning organisation The Worker Agency, told Sky News.