The energy price cap on household bills is to fall to an annual average of £2,074 between July and September, removing some of the financial pain inflicted by the unprecedented surge in gas and electricity costs.
Industry regulator Ofgem made the announcement against a backdrop of good news for the cost of living crisis – with wholesale energy prices falling.
They spiked last year after Russia’s invasion of Ukraine, which saw both oil and natural gas costs shoot up – a situation that was made worse by the imposition of sanctions on the Kremlin by Western governments.
The new cap figure compares to the £3,280 level set by Ofgem for March-June.
Updates and reaction as new price cap announced
However, that cap is currently irrelevant.
That is because the government’s energy price guarantee (EPG), which limits the amount suppliers can charge per unit of energy used, ran throughout the autumn and winter months and remains in force until 1 July.
That keeps bills at around an average annual level of £2,500.
There is no further taxpayer support on the table from July onwards.
The price cap, which is reviewed every three months, will take over again from then. A typical bill should be around £500 cheaper on a 12-month basis.
Current projections predict a stable outlook for energy bills at around the £2,000 level but such a sum remains more than £1,000 above the pre-pandemic average and much will depend on the potential for further wholesale market shocks.
Gas supplies remain the core worry for prices ahead.
Day-ahead wholesale costs peaked at an industry measure of 570p per therm last August but are currently at 66p.
Longer term contracts are more expensive, with year’s end delivery at double that level at around 129p.
That reflects the likelihood of increased demand as winter approaches.
Simon Cran-McGreehin, head of analysis at the Energy and Climate Intelligence Unit, said of Ofgem’s announcement: “Whilst the falling price cap is a relief for households, this gas crisis will linger, with wholesale price forecasts suggesting that the average household energy bill might not get below £1,700 a year for the rest of this decade.
“That’s around £600 (about 50%) above where it was before the gas crisis.”
He also warned: “If we don’t get on with insulating homes, installing heat pumps and building more renewables, gas demand will remain high and that means bills will too.”
The cost of living crisis is set to linger.
While fuel bills have fallen back – with energy set to follow – the latest inflation data showed food costs continuing to rise at an annual rate of almost 20%.
Economists have pointed to a rise in so-called core inflation, which strips out volatile elements such as food, as putting further pressure on the Bank of England to maintain its cycle of interest rate hikes.
They make the immediate pressure on budgets worse by adding to borrowing costs but are designed to dampen demand, and therefore prices, in the economy in the longer term.
Daily Telegraph inches closer to sale after bank seizes control of parent firm
The Daily Telegraph newspaper has inched closer to a sale after Lloyds Banking Group seized control of its parent firm over unpaid loans and placed it in the hands of receivers.
Sky News has previously reported how the bank was understood to have undertaken the drastic move and was in the process of appointing investment banks to handle an auction of the press pack.
It is understood to value the Telegraph, its sister Sunday paper and The Spectator magazine at £600m.
They are contained within the profitable Press Acquisitions division of B.UK Ltd, which is controlled by the Barclay family.
The division also includes the Telegraph Media Group.
Lloyds appointed AlixPartners to act as receiver over B.UK after years of talks about refinancing a family business loan dating back before the financial crisis of 2008 came to nothing.
AlixParters said of the current position: “Bank of Scotland [part of Lloyds] has made this appointment under its rights as a lender, to consider alternative strategies to repay a facility… that remains in default despite extensive discussions to resolve the situation.”
The statement added that the process ahead “may involve sales of the Telegraph and Spectator businesses”.
It concluded: “The receivership over the shares in B.UK is in no way related to the financial health or performance of the Telegraph or Spectator businesses and we do not anticipate any operational changes to the businesses or their employees.
“Neither the Telegraph Media Group nor the Spectator are entering administration.
“In the meantime, the day-to-day running of all operating subsidiaries held by B.UK Limited will continue as normal.”
The Barclays have maintained ownership of the newspapers since 2004.
The expected sale, while not guaranteed, would attract high levels of interest given its subscriber base and profitability.
Sky’s City editor Mark Kleinman expected a bidding frenzy for the titles.
“It’s not often that we get national newspapers of the calibre of the Telegraph titles coming onto the market,” he said.
“I would expect a pretty hot bidding war to take place over the next few months.”
Of the potential bidders, he said: “I think we will get some interest from Lord Rothermere, the owner of the Daily Mail.
“We’ll almost certainly hear speculation that Rupert Murdoch, the owner of course of The Times and The Sun, may want to throw his hat into the ring.”
Given the papers’ political affiliations, he also expected some Conservative party donors to express interest in the auction.
The competition regulator would be expected to take a keen interest should it feel that the successful bidder already has enough of a share of the market.
Bank of Scotland said of its actions: “Due to debts being in default and with no sign they would be repaid, Bank of Scotland was regrettably left with no other choice but to appoint receivers over B.UK. Limited.
“The Receivers subsequently initiated changes to the directors of certain B.UK subsidiaries, with independent directors appointed to Ellerman Investments Ltd, Telegraph Media Group Limited and Spectator (1828) Limited.
“The decision to appoint receivers is an act of last resort and follows numerous discussions with B.UK’s parent company, Penultimate Investment Holdings Limited (PIHL).
“The aim of these discussions, which were held over a long period and undertaken in good faith, had been to find a consensual solution and repayment of PIHL’s borrowing to Bank of Scotland.
“Unfortunately, no agreement could be reached, which prompted the appointment of Receivers. While the Receivers are now in place, the Bank remains willing to continue discussions to find a suitable solution.”
A spokesperson for Barclays said: “We can confirm that discussions with Lloyds Banking Group remain ongoing.
“We hope to come to an agreement that will satisfy all parties. As AlixPartners made clear, this situation is in no way related to the financial health or performance of the Telegraph or Spectator businesses”.
BT chief Philip Jansen to see £1.1m salary frozen until retirement
The boss of BT Group is to freeze his £1.1m salary until he retires from the FTSE 100 telecoms operator.
Sky News has learnt that Philip Jansen’s base pay will be maintained at the same level at which it was set when he joined the company in 2019.
City sources said the decision would be set out in BT’s annual report, which is expected to be published as soon as Thursday.
Mr Jansen’s annual salary was fixed for five years upon joining, meaning the existing arrangement was due to expire at the end of this calendar year.
However, an insider said it would be renewed on a rolling basis and would apply until he eventually leaves the company.
In total, Mr Jansen is understood to have been paid approximately £3m in BT’s last financial year, slightly down on the previous 12 months.
News of the pay decision comes just weeks after BT signalled that its workforce would shrink by as many as 55,000 people by the end of the decade amid a boom in artificial intelligence and as its full-fibre broadband rollout comes to an end.
Hedge fund founder swells Tory coffers with £1m donation
Daily Telegraph inches closer to sale after bank seizes control of parent firm
Under Mr Jansen, BT has accelerated its transformation, although its share price performance has led City analysts to speculate that it is vulnerable to a takeover.
The telecoms tycoon Patrick Drahi has built a 25% stake in the company, although he again ruled out mounting a full bid.
The company declined to comment ahead of the publication of its annual report.
Wall Street giants vie to sell Telegraph and Spectator titles
A group of banks including the Wall Street behemoths Goldman Sachs and JP Morgan are vying for the prized mandate to sell The Daily Telegraph and its sister Sunday newspaper.
Sky News understands that the investment banks are on a shortlist to be picked by Lloyds Banking Group in the coming days to handle the sale of the titles, along with the current affairs magazine, The Spectator.
Sources said they expected advisers to be selected by Lloyds in the coming days if it finalises a plan to seize control of the assets from their long-standing owners, Sir Frederick Barclay and his family.
Lloyds is understood to believe the titles are worth in the region of £600m.
Britain’s biggest high street lender has appointed AlixPartners to act as receiver over B.UK Ltd, a Bermuda-based entity, which ultimately controls the companies which own two of the UK’s best-known newspapers.
Sky News revealed on Tuesday night that Lloyds is being advised by Lazard on its options for the assets, and that another investment bank will be chosen to kick off an immediate process to sell the Daily and Sunday Telegraph titles.
The decision to take control of the Barclay-owned companies comes after years of talks about refinancing loans made to the family by HBOS prior to its rescue by Lloyds during the 2008 banking crisis.
People close to the bank said that Charlie Nunn, Lloyds’ chief executive, was now taking “decisive action” to resolve the situation.
A sale process would be among the most hotly contested media auctions in Britain for years and would formally end the Barclay family’s nearly two decade ownership of the broadsheet newspapers.
Lloyds is expected to take control of a cascade of companies within the group, including Press Acquisitions, which controls the newspapers, as early as Wednesday.
Barring a last-minute agreement with the current owners, Lloyds would then remove directors appointed by the Barclay family, including Aidan Barclay, the chairman of the newspaper group.
Click to subscribe to The Ian King Business Podcast
However, the bank does not plan to place Telegraph Media Group or Press Acquisitions into administration themselves.
The newspaper titles are not remotely close to insolvency and indeed are said to be performing strongly, with a well-regarded management team led by chief executive Nick Hugh.
“It is an attractive asset that is likely to be straightforward to sell,” said one insider.
A sale for £600m, or anywhere close to it, would trigger a substantial writeback for Lloyds since it had written down the loan years ago.
Read more business news:
UK to have one of highest inflation rates in G20 this year, new forecast shows
Cyber gang issues ultimatum to BBC, BA and Boots after hack
Aidan Barclay is the nephew of Sir Frederick Barclay, the octogenarian who along with late brother Sir David engineered the takeover of the Telegraph in 2004.
Sir Frederick is currently embroiled in a £100m court battle over his divorce settlement.
The Barclays previously owned the Ritz hotel in London, and still own Very Group, the online retailer.
The bombshell move has been triggered by Lloyds’ dissatisfaction with the Barclays’ approach to repaying a loan which dates back to the pre-crisis era of large corporate loans issued by HBOS.
Lloyds’ intention to force the Barclay-owned entity into receivership was first reported by The Times on Tuesday evening.
A spokesperson for the Barclay family said: “The loans in question are related to the family’s overarching ownership structure of its media assets.
“They do not, in any way, affect the operations or financial stability of Telegraph Media Group.
“The businesses within our portfolio continue to trade strongly, are run by independent management teams, are well capitalised with minimal debt and strong liquidity.
“They have no liability for any holding company liabilities, continue to operate as normal and are unaffected by issues in the holding company structure above them.
The spokesman added that Telegraph Media Group had been “performing extremely well and now has over 750,000 subscribers”.
“The company recorded a 25% increase in operating profit during 2021, has recently successfully acquired Chelsea Magazine company, and is progressing strongly towards meeting its targets.
“Speculation about the business entering administration is unfounded and irresponsible.”
Lloyds and AlixPartners declined to comment.
Sports8 months ago
‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
Technology2 years ago
Game consoles were once banned in China. Now Chinese developers want a slice of the $49 billion pie
Sports2 years ago
Team Europe easily wins 4th straight Laver Cup
Politics2 years ago
Have the last few wobbly weeks seen a turning point for Johnson as PM?
Business8 months ago
Bank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway
Politics2 years ago
Yvette Cooper promoted and Lisa Nandy to shadow Gove on levelling up brief in Labour reshuffle
Business8 months ago
Liz Truss’s ‘favourite’ economist says chancellor ‘took his eye off ball’ and ‘overstepped the mark’ with mini-budget
Videos8 months ago
World leaders come together for Queen Elizabeth’s funeral