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The energy price cap will rise to an average annual £1,717 from October, the industry regulator has confirmed as the clock ticks down to the loss of winter fuel payments for millions of pensioners.

The new figure represents a 10% a year – or £12 per month – leap in the typical sum households face paying for gas and electricity when using direct debit.

Ofgem said that the rise was largely due to higher wholesale gas prices and it urged bill-payers to “shop around” as there are fixed rate deals on the market that could offer savings.

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Its decision means the cap, which is adjusted every three months and limits what suppliers can charge per unit of energy, will remain around £500 up on the average annual bill levels seen before Russia’s invasion of Ukraine.

It is, however, set to be £117 lower than the October 2023 level.

That gap may partly explain why chancellor Rachel Reeves likely opted to end winter fuel payments – worth up to £300 annually – for around 10 million pensioners not in receipt of means-tested benefits including pension credit.

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She blamed the measure, revealed last month, on the need to help plug a “black hole” in the public finances left by the Conservatives but has faced a widespread backlash including from within Labour’s own ranks.

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Cuts to pensioners’ winter fuel payments

Charities warn that heating costs remain punitive and a key plank of the continuing cost of living crisis that will force many to choose between heating and eating this winter.

Research by Citizens Advice suggests one in four could be forced to turn off their heating and hot water amid record levels of energy debt.

Energy Secretary Ed Miliband admitted the rise in the cap was “deeply worrying” but defended the cuts.

“The truth is that the mess that was left to us in the public finances is what necessitated that decision around winter fuel payment and us focusing it on those who need it the very most.

“That’s why this government is also driving throughout the coming months to get the people, the 880,000 pensioners who are entitled to pension credit and not getting it to try and get them to take it up, to make them aware of this so they can get the winter fuel payment as well.”

An updated forecast issued by the energy research consultancy Cornwall Insight predicted a further 3% hike in the cap during the peak use months of January-March to £1,762.

SHOULD I TAKE A FIXED DEAL?

Cast your mind back to before the COVID pandemic and you will remember that a reluctance among households to switch suppliers helped give birth to the energy price cap.

The majority of homes were on so-called default tariffs – sometimes through no choice of their own – but those able to choose and the more financially savvy had a fixed rate deal, often changing their supplier once a year to bring down their bills.

But they largely disappeared from view after dozens of suppliers collapsed amid a series of cost shocks, latterly caused by the invasion of Ukraine by Russia, forcing the bulk of households to hunker down and rely on the price cap.

It certainly is not perfect and is ripe for reform, as Ofgem has suggested again today.

A feature of the energy market this year has been the return of fixed rate deals.

They are fewer in number but can offer certainty on what you will pay over the term of the deal.

Ofgem figures show that around one million more households have taken that opportunity since April, bringing the total to five million.

Are they worth it? Is it too late?

The price comparison site Uswitch claimed today that savings of about £125 on the October price cap level are out there.

Emily Seymour, the energy editor at consumer group Which?, cautioned: “As a rule of thumb, we’d recommend looking for deals around the price of the current price cap, not longer than 12 months and without significant exit fees.”

Ofgem chief executive Jonathan Brearley said: “We know that this rise in the price cap is going to be extremely difficult for many households. Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.

“I’d also encourage people to shop around and consider fixing if there is a tariff that’s right for you – there are options available that could save you money, while also offering the security of a rate that won’t change for a fixed period.

“We are working with government, suppliers, charities and consumer groups to do everything we can to support customers, including longer term standing charge reform, and steps to tackle debt and affordability.

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What is GB Energy and what will it do?

“Options such as changing how standing charges are paid and getting suppliers to offer more tariff choices and give customers more control are all on the table, but there are no silver bullets.

“Any change could leave some low-income households worse off, so it’s important we hear views on our proposals and continue working with the government to see what targeted support could help customers.

“Ultimately the price rise we are announcing today is driven by our reliance on a volatile global gas market that is too easily influenced by unforeseen international events and the actions of aggressive states. Building a homegrown renewable energy system is the key to lowering bills and creating a sustainable and secure market that works for customers.”

The government’s energy strategy includes measures to eradicate the country’s dependence on natural gas for heating and electricity through a greater commitment to wind power, including onshore.

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Starmer confident over lower bills

The hope is for lower bills in the future.

Jess Ralston, head of energy at the Energy and Climate Intelligence Unit said: “A lack of progress on energy efficiency and heat pumps means that our reliance on gas hasn’t fallen much in recent years, despite the volatility in the international markets forcing bills to skyrocket.

“The new government has made steps on renewables, but not confirmed its plans for home heating or insulation yet, and there is clearly no time to waste.

“Unless we start to reduce our demand for gas, we will only see our dependence on foreign imports rise. Oil and gas from the North Sea is sold on international markets to the highest bidder so doesn’t help with our bills or energy independence.

“With the removal of the winter fuel payment for some pensioners at the same time as bills going up, it’s likely that some will struggle and it remains to be seen if the government will bring in measures to support those worst hit by the removal of winter fuel payment.”

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WH Smith buyer ‘faces 12-month ban’ on mass shop closures

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WH Smith buyer 'faces 12-month ban' on mass shop closures

The new owner of WH Smith’s high street chain has effectively been barred from launching a wave of mass store closures for at least 12 months amid plans for rapid restructurings at two other retailers it owns.

Sky News has learnt that WH Smith would have the right to cancel a year-long transitional services agreement (TSA) put in place with Modella Capital – which struck a deal to acquire the business in March – if it launched a company voluntary arrangement (CVA) before the first anniversary of the transaction’s completion.

The clause in the TSA, which enables Modella Capital to continue using WH Smith’s systems after it takes ownership, is significant, according to retail insiders.

WH Smith agreed to sell its 480 high street shops to Modella in a £76m deal, ending 233 years of high street history.

Modella plans to rebrand the chain under the name TG Jones after it takes control.

In recent weeks, Sky News has revealed plans drawn up by Modella to launch CVAs at both Hobbycraft and The Original Factory Shop, which it has owned for nine and three months respectively.

Both of those restructuring processes have put significant numbers of stores at risk, and industry executives say that, over time, a sizeable part of the WH Smith high street estate could also be at risk.

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A spokesman for Modella said: “We have a number of exciting plans for the future of TGJones.

“A CVA is not on the agenda, as it is a solvent business.”

WH Smith, which will become a pure-play travel retailer once the Modella deal completes, declined to comment further ahead of the completion of the sale.

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Hovis and Kingsmill-owners in talks about historic bread merger

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Hovis and Kingsmill-owners in talks about historic bread merger

The owners of Hovis and Kingsmill, two of Britain’s leading bread producers, are in talks about a historic merger amid a decades-long decline in the sale of supermarket loaves.

Sky News has learnt that Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, and Hovis, which is owned by investment firm Endless, have been involved in prolonged discussions about a combination of the two businesses.

City sources said this weekend that the talks were ongoing, but that there was no certainty that a deal would be finalised.

Bankers are said to be working with both sides on the talks about a transaction.

A deal could be structured as an acquisition of Hovis by ABF, according to analysts, although details about the mechanics of a merger or the valuations attached to the two businesses were unclear this weekend.

ABF is also said to be exploring other options for the future of Allied Bakeries which do not include a deal with Hovis.

If completed, a merger would unite two of Britain’s best-known ambient food brands, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.

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Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning strength of man.

Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair the bread industry’s financial health in recent decades.

The impact of the war in Ukraine on wheat and flour prices has been among the factors increasing inflationary pressures on bread producers, according to the most recent set of accounts for Hovis filed at Companies House last year.

The overall UK bakery market is said to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.

The principal obstacle facing a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis would reside in its consequences for competition in the UK market.

Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector in the UK, with Hovis on 24% and Allied on 17%, according to industry insiders.

A merger of Hovis and Kingsmill would give the combined group a larger share of that segment of the market, although one source said Warburtons’ overall turnover would remain larger because of the breadth of its product range.

Nevertheless, reducing the number of major supermarket bread suppliers from three to two would be a test of the Competition and Markets Authority’s approach to such industry-reshaping mergers at a time when the watchdog is under intense government scrutiny.

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In January, the government removed the CMA chairman, Marcus Bokkerink, as part of a push to reorient Britain’s economic regulators around growth-focused objectives.

An industry insider suggested that a joint venture involving the distribution networks of Hovis and Kingsmill was a possible, although less likely, alternative to a full-blown merger of the companies.

They added that a combined group could benefit from up to £50m of cost savings from such a tie-up.

In its interim results announcement this week, ABF said the performance of Allied Bakeries had continued to struggle.

“Allied Bakeries continues to face a very challenging market,” it said.

“We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in [the second half of] 2025.”

In a separate presentation to analysts, ABF described the losses at Allied as unsustainable.

The company does not disclose details of Allied Bakeries’ financial performance.

Allied also owns Speedibake, an own-label bread manufacturer.

Hovis has been owned by Endless, a prominent investor in British businesses, since 2020, having previously been owned by Mr Kipling-maker Premier Foods and the Gores family.

At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites and its own flour mill.

Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.

This weekend, ABF and Endless both declined to comment.

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Struggling Aston Martin steers into fresh pay controversy

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Struggling Aston Martin steers into fresh pay controversy

Aston Martin is steering a path towards a twin-pronged pay row with shareholders as it grapples with the impact of President Trump’s tariffs on car manufacturers.

Sky News can reveal that the influential proxy voting adviser ISS is urging investors to vote against both of Aston Martin Lagonda Global Holdings’ remuneration votes at next week’s annual general meeting.

The pay policy vote, which is binding on the company, has attracted opposition from ISS because it proposes significant increases to potential bonus awards to Adrian Hallmark, the company’s new chief executive.

“Concerns are raised regarding the increased bonus maximums, which are built upon competitively[1]positioned salary levels and do not appear appropriate given the company’s recent performance,” ISS said in a report to clients.

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Aston Martin is also facing a meaningful vote against its pay report for last year – which is on an advisory basis only – because of the salaries awarded to Mr Hallmark and other executive directors.

The company’s shares have nearly halved in the last year, and it now has a market value of little more than £660m.

Despite the ISS recommendation, Aston Martin will win the vote by virtue of chairman Lawrence Stroll’s 33% shareholding.

The luxury car manufacturer has had a torrid time as a public company and now faces the headwinds of President Trump’s tariffs blitz.

This week it said it would limit exports to the US to offset the impact of the policy.

Aston Martin did not respond to a request for comment ahead of next Wednesday’s AGM.

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