Sainsbury’s to close two Argos distribution sites risking 1,400 jobs - The Guardian

Sainsbury’s is planning to close two Argos distribution centres, putting up to 1,400 jobs at risk, and will ditch the catalogue shop’s Milton Keynes head office and three remaining Habitat showrooms to cut costs.

The retailer said it expected to close the warehouses in Basildon, Essex and Heywood, Greater Manchester, by 2026 leaving three non-food warehouses that will serve both Sainsbury’s and Argos.

The changes are part of a £90m rejig of the Sainsbury’s group’s distribution network, which will also involve investment in additional automation at a warehouse in Daventry, in Northamptonshire.

Sainsbury’s said the changes would create a “simpler, more modern network to significantly improve availability, reduce stock and enable faster customer deliveries”.

The retailer’s cuts come as traditional supermarkets hunt for ways to trim costs to invest in keeping prices competitive amid soaring food price inflation, higher energy bills and labour costs.

On Tuesday, Marks & Spencer said it was spending £60m on raising minimum pay for store staff by almost 7% to £10.90 an hour, well above the legal minimum. Sainsbury’s and some other grocers now pay a minimum of £11 an hour.

Sainsbury’s has pledged to deliver £1.3bn of cost savings in the three years to September 2024 – such as closing cafes, fresh food counters and high street Argos stores – as it spends £550m on keeping down prices by March this year. It bought Argos in 2016.

The latest market share figures out this week showed both German-owned discounters Lidl and Aldi growing by more than 25%, while Sainsbury’s sales rose by 6.2% in the three months to 19 February – on a par with its close rivals Tesco and Asda.

No jobs are at risk from the closure of Argos’s Milton Keynes head office, where Sainsbury’s said just 11% of desk space was regularly used. Staff working there are expected to move to one of Sainsbury’s other offices.

skip past newsletter promotion

after newsletter promotion

Simon Roberts, the chief executive of Sainsbury’s, said: “As with any major change to our business, we have not taken the difficult decision to start this consultation lightly. As part of our plan to create a simpler business, we previously set out our intention to integrate our Argos and Sainsbury’s logistics networks.

“Over the last few years, we’ve been working hard to transform this network as we make our business simpler, more efficient and more effective for customers. This also allows us to reduce costs, so we can invest where it will make the most impact for our customers.”

Adblock test (Why?)

https://news.google.com/rss/articles/CBMic2h0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy8yMDIzL2ZlYi8yOC9zYWluc2J1cnlzLXRvLWNsb3NlLXR3by1hcmdvcy1kaXN0cmlidXRpb24tc2l0ZXMtcmlza2luZy0xNDAwLWpvYnPSAXNodHRwczovL2FtcC50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvMjAyMy9mZWIvMjgvc2FpbnNidXJ5cy10by1jbG9zZS10d28tYXJnb3MtZGlzdHJpYnV0aW9uLXNpdGVzLXJpc2tpbmctMTQwMC1qb2Jz?oc=5

2023-02-28 18:51:00Z
1799259444

A quarter of British shoppers struggle as grocery prices soar - The Guardian

A quarter of British people say they are struggling financially as fresh food inflation hits the highest level on record after the weakening pound made imports from Europe more expensive.

Shop price inflation rose to a fresh high of 8.4% in February, up from 8% in January, according to the British Retail Consortium (BRC), driven by new highs in the cost of food. Fresh food prices rose to 16.3% amid shortages of staples such as tomatoes and broccoli, as poor weather in southern Spain and north Africa combined with higher costs for glasshouse growers in the UK and the Netherlands.

Fraser McKevitt, the head of retail and consumer insight at the data analytics firm Kantar, said people were adapting by buying more supermarket own-label goods and visiting discounters such as Aldi and Lidl more often.

Sales of own-label lines rose by 13.2% in February, well ahead of branded products at 4.6%, and McKevitt said this was “a trend that shows little sign of stopping”.

Grocery inflation reached a new high, led by milk, eggs and margarine, with the higher price on basics adding to pressure on households already affected by increased energy bills and higher rents or mortgage rates.

Aldi was the fastest growing grocery chain in the UK, said Kantar, with sales up almost 27%, closely followed by Lidl with growth of just over 25%. In contrast, all the other chains reported growth behind the rate of inflation while Morrisons sales slid almost 1% as the chain continued to struggle. Waitrose booked its first period of growth in almost 18 months.

Overall grocery sales for the UK rose 8.1% in the 12 weeks to 20 February as families bought fewer items or changed behaviour to limit their bills.

skip past newsletter promotion

after newsletter promotion

Tim Steiner, the chief executive of Ocado, where sales rose 7.6% in the three-month period according to Kantar, said grocery retailers benefited from changing behaviour as people switched from dining out to cooking at home more.

The popularity of Valentine’s Day treats suggest many couples followed Steiner’s logic. Sales of steak in supermarkets rose by a quarter in the seven days to 14 February compared with the previous week, while chilled ready-meal sales were nearly one-third higher. Sparkling wine sales doubled.

Adblock test (Why?)

https://news.google.com/rss/articles/CBMiV2h0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy8yMDIzL2ZlYi8yOC9icml0aXNoLXNob3BwZXJzLWdyb2NlcnktcHJpY2VzLWthbnRhctIBV2h0dHBzOi8vYW1wLnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy8yMDIzL2ZlYi8yOC9icml0aXNoLXNob3BwZXJzLWdyb2NlcnktcHJpY2VzLWthbnRhcg?oc=5

2023-02-28 17:27:00Z
1802021716

UK grocery price inflation hits record 17.1% - Reuters

• Summary
• Companies

• Grocery inflation in Feb at highest level ever recorded
• Milk, eggs, margarine show fastest price rises
• Shoppers face 811 pounds rise in annual grocery bill

LONDON, Feb 28 (Reuters) - British grocery inflation hit 17.1% in the four weeks to Feb. 19, another record high, dealing the latest blow to consumers struggling with a cost-of-living crisis, industry data showed on Tuesday.

Market researcher Kantar said prices are rising fastest in markets such as milk, eggs and margarine.

It said UK households now face an additional 811 pounds ($978) on their annual shopping bills if they don't change their behaviour to cut costs.

"This February marks a full year since monthly grocery inflation climbed above 4%. This is having a big impact on people’s lives," Fraser McKevitt, head of retail and consumer insight at Kantar, said.

He said its research found that rising grocery prices are the second most important financial issue for the public behind energy costs. Also a quarter of people say they're struggling financially, versus one in five this time last year.

Latest Updates

• AmericascategoryCanada's economy surprises with Q4 flat line, backing up rate pause, article with image
• Macro MatterscategoryU.S. house price inflation cools further in December, article with image

View 2 more stories

After a tough 2022, British consumers are facing a further squeeze on their finances this year as the government cuts back support on household energy bills and mortgage rates rise.

However, Official data published this month did show overall UK consumer price inflation fell to 10.1% in January, the lowest reading since September, while confidence data from market research firm GfK last week showed consumers had turned more upbeat about their personal finances.

Kantar said that sales of own label products were up by 13.2% in February, well ahead of growth in branded products, which are generally more expensive, of 4.6%.

Kantar said UK grocery sales increased 8.1% over the 12 weeks to Feb. 19, masking a drop in volumes when accounting for inflation.

German-owned discounters Aldi and Lidl were again the fastest growing grocers, partly due to new store openings, with sales up 26.7% and 25.4%, respectively.

Market leader Tesco's (TSCO.L) sales rose 6.6%, with Sainsbury's (SBRY.L) up 6.2% and Asda up 5.9%.

Morrisons was again the laggard, with a sales decline of 0.9%.

UK grocers' market share and sales growth (%)

Source: Kantar

($1 = 0.8295 pounds)

Reporting by James Davey; editing by Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

Adblock test (Why?)

https://news.google.com/rss/articles/CBMiZ2h0dHBzOi8vd3d3LnJldXRlcnMuY29tL2J1c2luZXNzL3JldGFpbC1jb25zdW1lci91ay1ncm9jZXJ5LXByaWNlLWluZmxhdGlvbi1oaXRzLXJlY29yZC0xNzEtMjAyMy0wMi0yOC_SAQA?oc=5

2023-02-28 08:49:00Z
1802021716

Ocado loss widens to £500m; home sellers slash asking prices – business live - The Guardian

Filters BETA

The cooling in the UK property market is likely to be ‘persistent’, predicts buying agent Emma Fildes, founder of BrickWeaver.

Ocado has “unsurprisingly reported disappointing financial results this morning” during volatile times for the supermarket industry, says Chris Daly, CEO of the Chartered Institute of Marketing.

Daly says Ocado is approaching a ‘tipping point’:

While the pandemic prompted a jump in demand for online groceries, a return to in-store shopping and the cost-of-living crisis is affecting consumer spending habits.

With competitors such as Tesco increasingly matching the discounts offered by budget supermarkets, Ocado is approaching a tipping point where it must decide how to position itself.

There are testing times ahead for the supermarket industry, with those companies at the top of the market especially vulnerable to price squeezes. Now, it’s essential Ocado defines its target market, creating coherent, clear messaging that stands out in the competitive market.”

Shares in Ocado have dropped by over 9% at the start of trading in London, the top faller on the FTSE 100 index.

They fell as low as 563p, down from over £13 a year ago.

Richard Hunter, head of markets at interactive investor, says Ocado is “caught between a rock and a hard place”.

That’s because the two elements of its business – its technology solutions arm, and the Retail division – continue to face different tests, Hunter explains:

The Solutions business, on which most of the group’s hopes for future growth and profitability is pinned, has yet to deliver on a sufficient scale to appease investors. The promises of large-scale adoption for its cutting-edge technology has yet to fully materialise, after some considerable time, which has led to investors shunning the stock in their droves. Over the last two years, the share price has fallen by 72%.

Yet progress is evident in this part of the business. UK solutions revenue grew by 13% to £802.7 million over the period, while the International unit saw revenues spike by 122% to £148 million. The latter continues to run at a loss, however, leading the group to attempt to accelerate the rollout of its Ocado Smart Platform to partners. Over the last year, 12 new sites were opened, with 23 now live split between 12 overseas and 11 in the UK. Further deals were signed, most notably with Lotte Shopping of South Korea, and Ocado maintains that the new partner pipeline is strong and that further OSP deals are being sought.

For the Retail business, from which the vast majority of revenues are currently derived, the environment is getting tougher. The so-called “Covid unwind” has had an impact as shopping habits normalise, while given some UK economic hardship, customers have begun to seek cheaper product offerings elsewhere. It is also evident that while customers are still coming to Ocado, it tends to be more selective. As such, even though active customers rose by 13% to 940000, average basket sizes falling from £129 to £118, leaving the Retail part of the business with a 3.8% decline in revenues to £2.2 billion, marginally shy of expectations.

Stock market turbulence has hit earnings at Abrdn, the global investment company.

Abrdn has reported a pre-tax loss of £615m for 2022 this morning, down from a £1.115bn profit in 2021 when markets were

Business was hit by global markets turmoil and runaway inflation last year, as the Ukraine war hit the world economy, knocking global markets down by 20%.

Stephen Bird, chief executive officer of Abrdn plc, says that 2022 was “one of the toughest investing years in living memory”.

But, Bird says Abrdn- created through the merger of Aberdeen Asset Management and Standard Life – is “creating a stronger business model”, and scaling up its UK savings and wealth businesses.

Shares have jumped 4% in early trading.

Ocado’s push to sell its technology to grocery retailers around the world should help it turn its fortunes around, predicts Jocelyn Paulley, retail partner at law firmGowling WLG:

“As Ocado has been experiencing difficulties since the end of the pandemic when demand for its delivery service dropped, this update will be welcome news to investors but they will be wary of a challenging period ahead as shoppers tighten their belts amidst economic uncertainty and increased energy costs eat into the company’s margins.

“However, the food retailer is actively seeking to be a technology partner for other supermarket chains internationally, and if it is able to secure a number of contracts in this area, then this is likely to contribute to a turnaround for the business.”

Ocado struck two new international partnerships last year, with Lotte Shopping in South Korea and Auchan Polska in Poland, to jointly build warehouses.

Although UK home sellers are shaving an average of £14,000 off the original asking price, separate research from Halifax today has highlighted the sizeable house price gains made by millions of homeowners during the past three years.

Halifax’s data showed that the average UK house price went up by 20.4% – or £48,620 – between January 2020 and December 2022, climbing from £237,895 to £286,515.

Owners of larger homes have been the big winners from the pandemic-fuelled “race for space”, while London flat owners have gained the least.

My colleague Rupert Jones explains:

According to the 2020-22 data, the average price for bigger homes grew at almost twice the rate than for smaller properties. When the UK housing market first reopened after months of Covid lockdown, there was an increase in demand for larger homes as buyers sought more space, a garden or better environments for working from home.

As a result, the average price of a detached home soared by 25.9% between the start of 2020 and the end of 2022.

Here’s the full story:

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

Ocado, the online grocery and technology firm, has posted a £500m loss for last year as the cost of living crisis hits spending.

2022 was “a challenging year for Ocado Retail”, the company tells shareholders this morning, reporting that pre-tax losses widened to £500.8m for last year, up from £176.9m in 2021.

That compared to analysts’ average forecast of a loss of 399 million pounds, Reuters reports.

Revenues at Ocado Retail, its joint venture with Marks & Spencer, fell by 3.8% during the year, despite the company reporting record sales over Christmas.

Ocado Retail did swell its customer base, though – active customers increased by 13% to 940,000.

One challenge is that Ocado Retail customers are putting fewer items in their baskets in response to higher prices and the cost of living crisis.

Soaring costs, and the unwinding of the spending boost during pandemic lockdowns, are also biting.

Tim Steiner, Ocado’s CEO, says every company has had its business model tested by a combination of macro-economic and geopolitical headwinds. Ocado has “more confidence” in its model than ever before, he declares.

Steiner tells the City:

Ocado Retail, our UK JV with M&S, has shown its resilience against a backdrop of higher costs and smaller baskets, reflecting the Covid unwind and the UK cost of living crisis, by growing customer numbers and increasing online market share.

As the Covid unwind fades and customer growth continues the business will start to recover the fixed costs of recent capacity commitments.

Ocado’s business also builds robots and software for online grocery deliveries.

The company says that its partners have reported “leading customer satisfaction metrics” and growth ahead of the broader online channel in their respective markets.

Also coming up today

As the UK housing market cools, home sellers are accepting an average discount of 4.5% off their asking prices to find a buyer, property website Zoopla reports this morning.

The average property price in the UK is now £260,800, Zoopla said, which means sellers are taking a cut of £14,100.

It is the highest gap between the asking price and sale price for five years, according to Zoopla, and follows several months of falling house prices.

But, the surge in house prices since the start of the pandemic means sellers have flexibility to accept lower offers, as Richard Donnell, executive director at Zoopla, explains:

“Greater realism on the part of sellers is supporting housing market activity in the face of higher borrowing costs.

Many homeowners are sitting on sizable house price gains made over recent years and have more room to be flexible accepting offers below the asking price. Discounts to asking price have widened and while 4-5% discounts are manageable, if these were to widen further then this would point to a greater likelihood of larger house price falls.

We believe the market remains on track for a soft landing in 2023 with modest price falls of up to 5% and one million housing sales.”

Investors will be watching Westminster, where MPs are scrutinising Rishi Sunak’s new Northern Ireland Brexit deal.

The pound has dipped a little this morning, to $1.294, having gained ground yesterday as the “Windsor framework” was revealed.

Businesses have been welcoming the deal, which should make it easier to import goods from Great Britain into Northern Ireland.

Andrew Lynas, the managing director of Lynas Foodservice, told us:

The uncertainty was the biggest challenge. So this is good progress.”

European stock markets are set to inch higher on the final day of February, its second ‘up month’ in a row.

The FTSE 100 index is expected to open flat, though, having gained 0.75% to 7935 points on Monday.

Michael Hewson of CMC Markets says:

As we come to the end of what looks set to be another positive month for European equities the question being posed is how much further can this year’s rally take us, with the DAX currently up over 10.5% year to date, and the FTSE100 up almost 6.5%?

The agenda

• 7.45am GMT: France’s inflation report for January

• 8am GMT: Switzerland’s Q4 2022 GDP report

• 9.45am GMT: BEIS committee hearing on UK plc 2050

• Noon GMT: India’s Q4 2022 GDP report

• 1.30pm GMT: Canada’s Q4 2022 GDP report

• 2pm GMT: US house price index for December

• 3pm GMT: CB survey of US Consumer Confidence report for February

Adblock test (Why?)

https://news.google.com/rss/articles/CBMilwFodHRwczovL3d3dy50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDIzL2ZlYi8yOC9vY2Fkby1sb3NzLWhvbWUtc2VsbGVycy1hc2tpbmctcHJpY2VzLWJyZXhpdC1kZWFsLWZvb2Qtc2hvcnRhZ2VzLXN0b2NrLW1hcmtldHMtZnRzZS1idXNpbmVzcy1saXZl0gGXAWh0dHBzOi8vYW1wLnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy9saXZlLzIwMjMvZmViLzI4L29jYWRvLWxvc3MtaG9tZS1zZWxsZXJzLWFza2luZy1wcmljZXMtYnJleGl0LWRlYWwtZm9vZC1zaG9ydGFnZXMtc3RvY2stbWFya2V0cy1mdHNlLWJ1c2luZXNzLWxpdmU?oc=5

2023-02-28 07:39:00Z
1800408879

New energy price cap prompts call for help on bills - BBC

Getty Images

By Kevin Peachey

Cost of living correspondent

The amount suppliers can charge households for energy has been cut by regulator Ofgem but bills will still rise in April as government help eases.

Ofgem's announcement itself does not directly affect what customers will pay for gas and electricity but it reduces the costs faced by government.

The typical household bill will rise to £3,000 a year in April.

Campaigners say ministers should stop the increase because Ofgem's new cap reduces the cost of support.

The typical annual household bill is set to rise from £2,100 to £3,000 in April because government help - known as the Energy Price Guarantee (EPG) - will become less generous and a £400 winter discount on all bills ends.

The government currently compensates energy suppliers with the difference between the guarantee and Ofgem's cap.

The energy price cap was £4,279 in January but on Monday, Ofgem announced that the cap would drop to £3,280 in April because of falling wholesale prices.

TUC general secretary Paul Nowak said: "Energy bills are out of control. The government must cancel April's hike. With the cost of wholesale gas plummeting ministers have no excuse for not stepping in."

Emily Fry, economist at the Resolution Foundation think tank which focuses on improving standards of those on low and middle incomes, said: "While consumers won't have to face typical bills of £3,280 this spring, many are still set to see bills rise by a fifth as government support is scaled back."

Chancellor Jeremy Hunt previously told the BBC that although the policy remained under review, he did not think the government had the "headroom to make a major new initiative to help people". Ministers also point out wider support, such as rising benefit payments in April, will help people.

How much you will pay

Under the government guarantee, a household using a typical amount of gas and electricity in England, Wales and Scotland is currently paying £2,500 a year for energy.

Without state support, that annual bill would have been £4,279 since January.

The chancellor has already announced that the EPG will become less generous in April, which means the typical household will be paying £3,000 a year.

Ofgem has now announced what that bill would otherwise have been £3,280 from April to July, without the guarantee.

Ofgem's chief executive, Jonathan Brearley, said that April's rise in bills was "deeply concerning" for many people, but there was some hope ahead.

He said the announcement "reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won't make an immediate difference to consumers, it's a sign that some of the immense pressure we've seen in the energy markets over the last 18 months may be starting to ease".

Tackling It Together

• What can I do if I can't pay my energy bill?
• Who will get £900 to help with energy bills?

'National act of harm'

The EPG began in October last year, and is scheduled to continue to April 2024. Falling wholesale prices mean the potential cost to the government could be billions of pounds less than initially thought but still totalling just under £30bn.

Such figures were, and could still be, highly volatile. The government says the "savings" would be money not borrowed, rather than a pot of money available to spend elsewhere. However, the figures have prompted dozens of charities and campaigners to call on the government to reverse the plan for a typical annual bill to rise from £2,500 to £3,000 in April.

The consumer finance expert Martin Lewis described the rise as a "national act of harm". However, he said he was hopeful the government would cancel the increase.

"I do not know it will cancel that rise but I am more hopeful than I was after some rune reading," he told BBC Radio 5Live. "I think there is a better than 50% chance that it will cancel that rise."

Labour also wants to stop the increase. "Labour would use a proper windfall tax to stop prices going up in April," said Ed Miliband, shadow climate and net zero secretary.

The Liberal Democrats have gone further and want energy bills to be cut. The SNP has also called for bills to be cut, seeking a "minimum" £500 cut to the level of the energy price guarantee.

The government guarantee, like any energy price cap, does not limit the total bill. It limits the cost per unit of energy.

The government also discounted everyone's bills by an additional £400 this winter but this support comes to an end in April. Lump sum payments have also been available in Northern Ireland, which has a more complex market, including many households using heating oil.

People who pay for their energy by cash or cheque on receipt of a bill currently typically pay about £250 a year more than those who pay monthly by direct debit. This difference will be cut to about £200 from April.

Historically, Ofgem has said costs for these customers were higher for suppliers as they were more likely to miss payments.

Customers on top-up prepayment meters will also have a bill that is about £45 a year higher than a typical direct debit customer from April, owing to higher fixed costs.

Family picture

They include mother-of-five Myra Butcher, who told the BBC she had "cut right back" on her energy use over the winter.

The 40-year-old, from the Isle of Wight, who lives in a rented property with a prepayment meter, said she had spent £80 a week heating her three-bedroomed Victorian home over the winter.

Mrs Butcher, whose husband suffers with colitis and cannot work, has three young children and two over the age of 18, and wants the government to continue with the discount scheme it operated this winter - paid via a voucher to those on prepayment meters.

"I'd like to see the scheme continue. A lot of the time working families are getting overlooked. A reduction in energy prices is not going to happen any time soon," she said.

She also managed to get a £50 credit, after the charity that runs her local food bank was given a grant.

How are you being affected by the rising cost of living? Share your experiences by emailing haveyoursay@bbc.co.uk.

Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways:

• WhatsApp: +44 7756 165803
• Tweet: @BBC_HaveYourSay
• Upload pictures or video
• Please read our terms & conditions and privacy policy

If you are reading this page and can't see the form you will need to visit the mobile version of the BBC website to submit your question or comment or you can email us at HaveYourSay@bbc.co.uk. Please include your name, age and location with any submission.

Related Topics

• Money
• Ofgem
• Personal finance
• Energy industry
• Cost of living

Adblock test (Why?)

https://news.google.com/rss/articles/CBMiKmh0dHBzOi8vd3d3LmJiYy5jb20vbmV3cy9idXNpbmVzcy02NDc0ODEzNdIBAA?oc=5

2023-02-27 13:54:57Z
1774893294

UK energy price cap falls to £3,280 from April but bills will still rise - The Guardian

A price cap on the amount suppliers can charge for energy will fall by £999 to £3,280 from April but bills will still rise due to a planned cut in government support.

The energy regulator for Great Britain, Ofgem, said on Monday that its quarterly cap on household bills for average dual fuel, direct debit customers would fall by 23% for the three months from 1 April, from £4,279 for the January to March quarter.

Consumers will not actually pay this figure as the government’s energy price guarantee and its £400 discount scheme subsidise household bills, keeping the price for a typical household at £2,100 a year. However, from April the price guarantee will become less generous and the discount will be withdrawn, meaning the typical annual bill will rise to £3,000.

The chancellor, Jeremy Hunt, who plans to announce the budget on 15 March, faces calls to postpone the cut in support, which will lead to some bills rising by as much as 40% on last year.

Ofgem’s chief executive, Jonathan Brearley, said: “Although wholesale prices have fallen, the price cap has not yet fallen below the planned level of the energy price guarantee. This means that on current policy, bills will rise again in April. I know that for many households this news will be deeply concerning.”

Brearley said the regulator was studying the feasibility of a social tariff for vulnerable customers with “urgency”.

The significance of Monday’s announcement is that the Ofgem cap, which limits what suppliers can charge per unit of energy, is used to calculate how much the government will pay energy suppliers to limit typical bills to £3,000.

As long as the level of the price guarantee is lower than the Ofgem price cap, the government will pay suppliers the difference to cover the cost of buying wholesale energy at prices that have been inflated by the war in Ukraine.

Wholesale gas prices have fallen sharply in recent months but the drop is yet to feed through into household bills because suppliers buy their energy months in advance. As a result, the price cap is expected to fall to about £2,100 from July for the remainder of the year, meaning the government would not have to subsidise bills.

The consumer campaigner Martin Lewis has urged the chancellor to keep support in place until July, so people do not face three months of hardship.

The Liberal Democrat leader, Ed Davey, said: “The Conservatives’ plan to hike energy bills in April will come as a hammer blow to families already struggling with soaring mortgages and rents, shopping bills and tax rises.”

James Taylor, the director of strategy at the disability equality charity Scope, said: “We know budgets are stretched beyond breaking point. In April, disabled households having to find on average another £500 a month is going to be an impossible challenge.”

Holly Holder of the Centre for Ageing Better said keeping the guarantee at £2,500 would be a “vital short-term intervention” and called for a social tariff to be implemented before next winter.

Suppliers are obliged to write to customers a month before a price rise, meaning letters are expected to go out this week.

skip past newsletter promotion

after newsletter promotion

The consultancy Cornwall Insight has said that if the guarantee were to increase to £3,000 as planned, the cost to the government would be £26.8bn, while if it were to remain at £2,500, the cost would be £29.4bn.

The Resolution Foundation thinktank said the guarantee was set to cost £1.4bn for the next financial year, 90% more than the £12.8bn forecast in November’s autumn statement.

Ofgem said that from 1 April, the electricity price cap per unit would fall from 67p a kilowatt hour to 51p, and a 53p-a-day standing charge. For gas, the unit cost will fall from 17p to 13p per kWh, with the standing charge up 1p to 29p a day.

About 4 million prepayment meter customers will pay an additional £45 a year, as energy companies say they cost more to serve. The disparity in the cost between prepay and direct debit customers has been questioned amid the scandal over forced installation of prepayment meters.

For customers who pay via cheque or cash, the cap has fallen by £1,051 from £4,533 to £3,482, meaning they pay about £200 more than direct debit customers.

The cost to bill payers of transferring customers over from 28 suppliers that went bust during the energy crisis, excluding Bulb, fell from £61 to £19 under the new cap calculation.

Ofgem said consumers did not need to take “immediate action” on Monday’s announcement and should contact their supplier if they were struggling to pay bills.

The cap is calculated on a typical household’s energy use and consumers may still pay more than that if they use more energy.

Adblock test (Why?)

https://news.google.com/rss/articles/CBMiTWh0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9tb25leS8yMDIzL2ZlYi8yNy9lbmVyZ3ktcHJpY2UtY2FwLXVrLW9mZ2VtLWFwcmls0gFNaHR0cHM6Ly9hbXAudGhlZ3VhcmRpYW4uY29tL21vbmV5LzIwMjMvZmViLzI3L2VuZXJneS1wcmljZS1jYXAtdWstb2ZnZW0tYXByaWw?oc=5

2023-02-27 09:06:00Z
1774893294