Last week, the chair of the environment, food and rural affairs select committee, Sir Robert Goodwill, wrote to the Ofwat chief executive David Black to urge him to ensure water companies clean up their act before bills rise.
The committee recommended that any forward programme “must clearly set out how Ofwat will balance its need to regulate with protecting the financial viability of the water companies”.
Stating that many Ofwat investigations into malpractice in the water sector take several years to complete, undermining public trust in the sector, Goodwill also urged the regulator to give details as to how it will complete investigations in a more timely manner.
With regard to household water bills, the letter emphasised the importance of the effects on consumers of proposals to raise water bills in order to finance the essential investment in new infrastructure. The committee noted that this investment has for many years been “neglected in favour of profit and dividends to shareholders”.
Goodwill wrote that
an increase in bills will produce a justifiable perception of unfairness from consumers who are being asked to shoulder the burden of improvements by companies who have consistently and publicly failed on delivering their core obligations.
Returning to our main story, Thames Water, the Liberal Democrat Treasury Spokesperson and MP for Richmond Park, Sarah Olney, said:
This week the government told me they won’t make their contingency plan in the event of Thames Water’s collapse public.
This is a cover up.
Customers and taxpayers deserve to know what ministers plan to do if this disastrous situation happens.
The bike and car parts retailer Halfords has warned of a sharp fall in profits, blaming “unusually mild and very wet weather” for lower footfall, and reduced sales of winter tyres and car cleaning products.
It said the cycling market has become more challenging and competitive, with more promotions, and more customers buying on credit, leading to weaker profit margins.
Its shared were hammered after the profit warning, plummeting nearly 24%.
Halfords now expects profits before tax to fall to £35m to £40m, a downgrade of at least 17%, for the year to the end of March. It assumes the market will stay tough for the rest of its fourth quarter, including the peak Easter cycling period in March. In January, the firm had estimated profits of between £48m and £53m.
Here is our full story on Tata’s new £4bn gigafactory in Bridgend, which will bring about 4,000 jobs to the region.
Taylor Wimpey, one of Britain’s biggest housebuilders, said it will build fewer homes this year as the housing market remains fairly weak, as it posted a 49% slump in annual profits.
The company said the market stabilised at the start of this year as mortgage rates eased, but a delay in the first interest rate cut and concerns over the economy have tempered hopes of a quick recovery.
Jennie Daly, the chief executive, said:
It is still early in the year and the macroeconomic backdrop remains uncertain, however it is encouraging to see some signs of improvement in the market, with reduced mortgage rates positively impacting affordability and customer confidence.
Revenues fell 20.5% to £3.5bn last year, while profit before tax and one-off items almost halved to £473.8m.
Taylor Wimpey completed 10,848 homes last year, versus 14,154 in 2022. Average selling prices on private homes rose 5.1 to £370,000. It expects to build between 9,500 and 10,000 homes this year.
The firm said it welcomed the Competition and Market Authority’s final report, published on Monday, from its housebuilding market study “with its focus on improving the planning system, adoption of amenities and outcomes for house buyers”. Taylor Wimpey said it would “cooperate fully” with the regulator’s new investigation.
The CMA opened an investigation into eight housebuilders, including Taylor Wimpey, after it found evidence they may be sharing commercially sensitive information that could affect the price of homes, such as sales prices and details of incentives for buyers.
The report concluded that it had “fundamental concerns” over the housebuilding market, pointing to the complex planning system and the limitations of speculative private development as the key reasons for the too few homes being built.
The government set a target of building 300,000 homes a year by the mid-2020s in its 2019 manifesto but only 250,000 were built last year, with many in the sector warning that this is likely to shrink considerably this year.
The CMA found that profits of the 11 largest housebuilders were “generally higher than we would expect for a well-functioning market”. However, it also warned that any measures introduced to tackle profitability in the sector would reduce the number of homes being built and exacerbate supply problems.
The report was also critical of the quality of homes built by some developers.
The luxury carmaker Aston Martin said its annual loss narrowed more than expected because it raised its prices to record levels.
It launched the DB12, an open-top model, last year, with prices starting at $248,086.
The company reported an adjusted pre-tax loss of £171.8m for 2023, compared with £451m the year before. Analysts had forecast a loss of £209m.
Aston Martin said it was on track to hit its longstanding target of a 40% gross profit margin this year.
In other corporate news, mobile phone giant Vodafone has confirmed it is in exclusive talks to sell its Italian business to Switzerland’s Swisscom in a deal worth €8bn (£6.8bn).
The company said:
Vodafone has engaged extensively with several parties to explore market consolidation in Italy and believes this potential transaction delivers the best combination of value creation, upfront cash proceeds and transaction certainty for Vodafone shareholders.
Good morning, and welcome to our rolling of business, the financial markets, and the world economy.
Thames Water is lobbying the government and industry regulator Ofwat to let it increase household bills, pay dividends to shareholders and receive lower fines as it seeks to stave off a potential multibillion-pound taxpayer bailout, the Financial Times reported.
Britain’s largest water company is desperately trying to avoid being taken over under the government’s special administration regime.
Last week the government passed updated water insolvency legislation, suggesting the company could be moving closer to a collapse. Officials at the Department for the Environment, Food and Rural Affairs have drawn up contingency plans for the company’s failure, worried that about the consequences if the company collapsed, as it supplies water and sewage services to a quarter of England’s population. The FT said the secret plan to save the firm is called “Project Timber”.
Ministers hope that Ofwat will allow “regulatory easements” such as reduced fines to reduce the financial pressure on the company, the paper reported.
The current situation was described by one insider as “like a flooded room with only an inch of air at the top”. He added: “The shareholders would be irrational to put any equity in if they don’t win concessions.”
Europe’s largest electrical vehicle battery factory will be built in Bridgewater, Somerset, its Indian owner Tata Group has confirmed.
Construction is to begin immediately, and the factory is expected to start producing batteries in 2026. Tata decided to locate the 4bn facility, which is backed by £500m of government funding, at the 620-acre Gravity Smart Campus. It is the site of a former Royal Ordnance factory that made bombs during World War Two.
The factory will make batteries for Tata Motors and JLR, formerly Jaguar Land Rover, before later expanding to produce cells for commercial vehicles, two-wheelers and energy storage solutions.
Asian shares have lost ground ahead of a barrage of US data on GDP and inflation later. Japan’s Nikkei has slipped 0.08%, Hong Kong’s Hang Seng has lost 1.4% and the Shanghai Composite dropped 1.9%.
Financial markets are now expecting the first interest rate cut from the US Federal Reserve in June, rather than March as anticipated at the start of the year. Traders have pencilled in 77 basis points of cuts against pricing in 150 bps at the start of the year.
The Agenda
10am GMT: Eurozone consumer confidence final for February
1.30pm GMT: US GDP second estimate and PCE price index for Q4 (forecast: 3.3%)
3.30pm GMT: Bank of England policymaker Catherine Mann speech
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2024-02-28 07:41:00Z
CBMiuAFodHRwczovL3d3dy50aGVndWFyZGlhbi5jb20vYnVzaW5lc3MvbGl2ZS8yMDI0L2ZlYi8yOC90aGFtZXMtd2F0ZXItbG9iYnlpbmctaGlnaGVyLWJpbGxzLWxvd2VyLWZpbmVzLWF2b2lkLWJhaWxvdXQtcmVwb3J0LWNsYWltcy1zb21lcnNldC1naWdhZmFjdG9yeS1icmlkZ2VuZC10YXRhLXVzLWdkcC1idXNpbmVzcy1saXZl0gG4AWh0dHBzOi8vYW1wLnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy9saXZlLzIwMjQvZmViLzI4L3RoYW1lcy13YXRlci1sb2JieWluZy1oaWdoZXItYmlsbHMtbG93ZXItZmluZXMtYXZvaWQtYmFpbG91dC1yZXBvcnQtY2xhaW1zLXNvbWVyc2V0LWdpZ2FmYWN0b3J5LWJyaWRnZW5kLXRhdGEtdXMtZ2RwLWJ1c2luZXNzLWxpdmU
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