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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

UK firms fear CO₂ shortages; agricultural inflation soars; US jobless claims drop – as it happened

United States United Kingdom BCC Which Ofgem CPAG Liz Truss ​​Rishi Sunak British Chambers of Commerce
The CF Fertilisers site on Teesside
The CF Fertilisers site on Teesside Photograph: Ian Forsyth/Getty Images

Closing post

Time to wrap up, ahead of tomorrow morning’s grim energy price cap announcement.

Here’s today’s main stories, on the energy crisis:

And also on the UK’s looming carbon-dioxide crisis:

The cost of living squeeze:

And also:

The Lancashire town of Burnley suffers the highest inflation rate in the UK – 11.5%, due to high poverty levels, poor home energy efficiency and greater reliance on private car use.

My colleague Mabel Banfield-Nwachi reports that pressure on households is rising:

Families are leaning on local services, charities and the generosity of others to help them afford even the basics. However, the leader of Burnley council, Afrasiab Anwar, says there is only so much goodwill they can rely on as more people struggle to get by and local services are stretched.

In 2020, the council set up a charity in partnership with other local organisations to support the community during the pandemic. People could call Burnley Together for support to set up a debt repayment plan, get emergency food parcels, and advice on what benefits they were eligible for. It was supposed to be a short-term solution. Two years later, its services are expanding.

“The frightening thing is that it’s not just who you’d typically regard as people who need that support. It’s working families that are struggling to make ends meet and it’s only going to get harder in autumn,” says Anwar. “It’s not just those who are the most vulnerable, it’s going to hit everybody.”

Since 2010, the council’s funding has dropped by 36%, approximately £5m a year. “For a small council like ours, that’s massive,” Anwar says. “The government always talks about levelling up, but we have not seen that. We’ve gone backwards.”

Here’s the full piece:

Two fifths of people in the UK have struggled with food and energy bills in past three months – and most people think the government is failing to help.

A new survey from polling company YouGov has found that:

  • Four in ten Brits have struggled with food bills (42%) and energy bills (41%) in the past three months

  • A quarter (23%) have already had to cut back on key essentials

  • Three quarters (77%) say the government is doing too little to help those struggling with the recent rise in the cost of living, including two thirds (64%) of Conservative voters

Nearly 60% of lower income households, earning under £20,000, are already struggling to meet energy bills even before the price cap rises in October. A similar proportion were finding it hard to pay for food.

YouGov poll on the rising cost of living

Stocks have opened higher in New York, as investors await to hear from US central bank chief Jerome Powell at the Jackson Hole economic symposium tomorrow.

The Dow Jones industrial average of 30 large US companies has gained 136 points to 33,105, while the broader S&P 500 is up 1%.

Stocks rallied during August, on hopes that the Federal Reserve might ‘pivot’, and slow the pace of its interest rate increases as the US economy slowed.

Powell, though, may use Friday’s speech to reiterate the Fed’s hawkish position, and also acknowledge that inflation has not proved as transitory as he thought last year….

Royal Mail is also bracing for more than 100,000 postal workers to strike on Friday in a dispute over pay.

The industrial action is being described as the biggest strike of the summer so far, after staff overwhelmingly voted for take action as they seek a “dignified, proper pay rise”.

Friday’s strike is due to be followed by further stoppages on Wednesday August 31, Thursday September 8 and Friday September 9.

The Communications Workers Union said management imposed a 2% pay rise on employees, well below inflation.

“In an economic climate where inflation looks set to soar to 18% by January 2023, the imposition will lead to a dramatic reduction in workers’ living standards”.

Royal Mail said it has “well-developed contingency plans” to minimise disruption, focused on getting mail delivery back to normal as quickly as possible after strike action.

The postal group says its pay package is worth up to 5.5%, (2% plus 3.5% subject to agreeing new terms).

Royal Mail faces national security probe over Czech billionaire Kretinsky's stake

Royal Mail is facing a national security investigation into a plan by Czech billionaire Daniel Kretinsky to increase his stake in Royal Mail to more than 25% of the company.

The UK government has informed the postal operator that business secretary Kwasi Kwarteng “reasonably suspects” that Kretinsky’s Vesa Equity group plans to increase its stake, currently around 22%.

Kwarteng, the minister for business, energy and industrial strategy (BEIS), has said he will exercise his powers to look into the matter under the National Security and Investment Act.

Vesa Equity, ultimately controlled by Kretinsky and his business partner Patrik Tkac, said separately it had voluntarily contacted the government to inform it of its intention to increase its stake in Royal Mail.

This is the second stake to attract Kwarteng’s attention – earlier this week, the government said it wouldn’t take action over billionaire Patrick Drahi’s 18% stake in BT.

Updated

Eurozone 'in shallow recession', warns UBS

The energy crisis means the eurozone is already slipping into recession, warns investment bank UBS.

It predicts eurozone GDP will shrink in the current quarter, and again in October-December, before picking up early next year.

Given the prospects of further significant energy price increases across the Eurozone - particularly in Germany - and the marked decline in the PMIs in July/August, we now expect the Eurozone to suffer negative q/q growth in Q3 and Q4 2022, followed by modestly positive growth in Q1 2023.

This week’s flash PMIs, or purchasing managers surveys, showed that France and Germany’s private sectors are both contracting this month.

Energy firms refusing to supply small UK businesses over bankruptcy fears

Major energy firms are refusing to supply small businesses out of concern that they could go bust, while some are demanding £10,000 up front, business owners and industry experts have told the Guardian.

In the latest sign of the deepening energy crisis, business owners said they were struggling to find a supplier in the run-up to the busy October period for renewing gas and electricity contracts, leaving them facing “extortionate” bills or demands for a deposit.

Suppliers named as having refused service, or asked for a downpayment, include SSE, Scottish Power, E.On Next, Drax and Ecotricity.

Business owners called for urgent action from the government, warning that sectors such as hospitality, which already struggling with inflation and the lingering effects of the Covid-19 pandemic, are at particular risk.

Teresa Hodgson, landlord of the Green Man pub in Denham, near Uxbridge, was initially told by her supplier SSE that it could not give her a quote for energy because prices were increasing so fast.

“When I did pin them down, they said before we can go any further, we want £10,000 deposit,” Hodgson said.

“When I asked why, because they’ve never had an issue with me, they said: ‘We don’t think a lot of pubs are going to make it this year and we need security.’”

“There were other suppliers who just wouldn’t entertain it at all because it’s hospitality,”

Here’s the full story, by my colleagues Rob Davies and Joanna Partridge:

Back in the UK, “Bills included” has become the most popular search term for people looking online for a place to rent, according to data that highlights how alarmed many tenants are about the prospect of a big rise in energy costs.

The website Rightmove said properties where monthly outgoings were included in the rent had for the first time overtaken ones that accepted pets and those with gardens as the most desirable for prospective tenants.

It is thought that most UK private rental properties do not include utilities in the rent, though student houses are among those that are often let by landlords on a bills-included basis.

US jobless claims fall despite slowing economy

We also have better than expected news on the US employment front.

The number of Americans filing new claims for jobless support has fallen to a one-month low of 243,000 last week.

That’s less than forecast, with the previous week’s reading revised down too (to 245,000 from 250,000).

It suggests that American companies are not laying off staff, despite the slowing economy and rising interest rates.

The US economy shrank less than first thought in the last quarter, updated figures show.

US GDP fell at an annualised rate of 0.6% in April-June, not the 0.9% drop first estimated.

The improvement is due to upward revisions to consumer spending and private inventory investment that were partly offset by a downward revision to residential fixed investment.

That still means two quarters of negative growth in a row – a technical recession.

The minutes of last month’s European Central Bank meeting, where it raised interest rates for the first time in a decade, show that policymakers are concerned about the fall in the euro (to a two-decade low versus the dollar), and the weakening economy.

The minutes, released this lunchtime, also show that the decision to raise rates by a hefty 50 basis points (not just 25bp) was broadly supported.

ING have picked out some highlights:

  • Concerns about the weak euro came on top of the policy-relevant discussion, with “Members widely noted that the depreciation of the euro constituted an important change in the external environment and implied greater inflationary pressures for the euro area...”

  • Recession is still a forbidden word in the ECB’s dictionary as it was only used nine times. However, there were many phrases like downturn or contraction, pointing to the same direction.

  • Wage growth remains key for the ECB to identify second-round effects as “Members agreed that the persistence of inflation depended, to a large extent, on the behaviour of wages. Wage growth, also according to forward-looking indicators, had continued to increase gradually over the last few months but still remained contained overall.”

Farmers hit by record inflation, driving up food prices

The input costs paid by UK farmers has jumped at a record pace, leading to unprecedented increases in charges for food products such as oats and milk.

The price index for agricultural inputs leapt by 33.1% in the year to June, government data shows, led by fertilisers and soil improvers which more than doubled (+128%), energy and lubricants (+66%) and animal food (up around 33%).

This forced farmers to lift their own prices by around 25% year-on-year, with the output value of oats soaring by 88%, wheat up 54%, rapeseed up 66% and milk by 41% in the year to June.

UK agricultural input and output costs
UK agricultural input and output costs Photograph: UK government

This is even before the closure of ammonia production by CF Fertilisers raises fresh worries about rising costs, and even potential livestock culls.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, explains:

Farmers may once again face the difficult decision of having to cull animals if a backlog builds up for abattoirs and if a solution to the looming CO2 shortage isn’t found quickly.

Farms have been trying to absorb the eye-watering rise in costs, by finding new ways of working. Although input costs rose by 33.1% the value of agricultural output rose by 24.9% in the year to June. This still represents a horrible rise in prices which has been feeding through to our grocery bills.

The value of some agricultural products have soared much higher than the headline rate such as oats, up 88%, oilseed rape up 66% and milk up 41% in the year to June, and only forage plants saw a reduction in output value.

Although the rise in farmers input costs have been slowing down a little, they are still on an upwards trajectory and this latest fertiliser production crisis will add fresh impetus to the storm they are facing.

Updated

A shortages of carbon dioxide could leave farmers unable to send animals for processing for food, creating a ‘serious animal welfare risk’, Farmers Guardian reports.

Nick Allen, chief executive of the British Meat Processors Association, explained:

We knew back in June that the closure of CF Industries’ Cheshire plant would leave UK CO2 supplies vulnerable to anything going wrong with their remaining Billingham plant and that we would be heavily reliant on overseas suppliers to make up the shortfall.

Since then, ammonia producers in Italy and Germany have cut production which sent European food and drink companies scrambling to secure tightening supplies of the gas at the end of July.

Whilst we are in a much better position now than we were a year ago, if CF Industries follows through on its threat to close Billingham the British meat industry will have serious concerns.

Without sufficient CO2 supplies the UK will potentially face an animal welfare issue with a mounting number of pigs and poultry unable to be sent for processing.

Here’s the full story: ‘Serious animal welfare risk’ as CF Fertilisers halts CO2 production at last UK plant

Updated

The Social Guarantee, a group promoting interest in Universal Basic Services (UBS), has criticised British Gas’s pledge to donate 10% of profits to struggling customers as “farcical”.

They say the UK needs a public energy company to give everyone access to affordable energy:

Updated

UK retailers hike prices at fastest rate since 1985

UK retailers are lifting their prices at the fastest rate since the mid-1980s, adding to the cost of living squeeze.

Average selling price inflation in the year to August sped up to its fastest pace since 1985, the CBI’s latest industrial tends report shows.

Firms are expecting to rise at a similarly quick rate in September too, adding to the inflationary pressures hitting shoppers.

Surprisingly, British retailers also reported their strongest month for sales in August in nine months, confounding forecasts for a fall as the cost-of-living squeeze hits household.

But, retailers are the gloomiest they’ve been since the first pandemic lockdowns over two years ago, meaning many plan to cut investment.

Martin Sartorius, principal economist at the CBI, says the sector needs more support:

While retail sales returned to solid growth in the year to August, firms remain pessimistic about their business situation over the next three months – to the greatest extent since the first Covid-19 lockdown in 2020.

This gloom is reflected in retailers’ investment intentions, which continue to be resolutely negative.

Firms now need support from the government in order to encourage investment and create sustainable growth. Crucially, business rates reform and a more flexible apprenticeship levy will help with dwindling business confidence.

Updated

Full story: CO2 producers urged to meet UK food needs after halt in production

The government has urged CO2 producers “to do everything they can” to meet food and drink industry demand, after one of the UK’s largest suppliers confirmed it was going to pause production at a key factory.

CF Industries, which accounts for 60% of the UK’s CO2 supplies, said soaring energy prices meant it would have to “temporarily halt” production at its remaining UK ammonia plant, which creates the gas as a byproduct.

The plant in Billingham, Teesside, is essential to industries ranging from beer to meat to fizzy drinks.

CF Industries said the shutdown was the result of tough market conditions, noting that current prices for natural gas used in the process were “uneconomical” after rising to twice the level they were a year ago. It expects prices to continue rising in the months ahead.

Gas prices jump on supply worries

British and European wholesale gas prices have risen today, intensifying the energy crunch, as supply concerns increase.

Uncertainty about Russian gas flows pushed up prices, with a three-day shutdown of the Nord Stream 1 pipline for maintenance scheduled for next week.

Russia’s Gazprom said today that said no turbines used on the Nord Stream 1 gas pipeline were undergoing maintenance in Canada, a day after a Canadian minister was quoted as saying five turbines were there.

Nord Steam 1 is already running at just 20% capacity, and there are concerns that it might not resume operation next month after the temporary shutdown (from 31st August to 2nd September).

UK wholesale gas for delivery next month has jumped almost 10% today to 600p per therm, which would be highest settlement price ever. A year ago it was around 110p/therm.

UK gas prices for next-month delivery
UK gas prices for next-month delivery Photograph: Refinitiv

UK wholesale gas for Q1 2023 has risen 14% to 790p per therm, while the summer 2023 contract is up 13.6% at 660p/therm, showing that prices are expected to remain very high next year.

The Dutch contract for September delivery a European benchmark, rose by €15.95 to €315.95 per megawatt hour (MWh) this morning, the highest since March when the Ukraine war sent prices soaring, while the December price was €30.55 higher at €319.75 euros/MWh.

Electricity prices in Germany and France are at new records too.

Several of EDF’s nuclear power reactors in France, which have been offline for repairs, have seen their restart pushed back to at least mid-November in an adjustment of outage schedules, Reuters points out, further delaying 5.2 gigawatts (GW) of supply at a time of historically low availability

Updated

UK pubs and farms alarmed by latest CO₂ production halt

Britain’s drinks and food industry is, understandably, worried that there could be shortages of carbon dioxide once CF Fertilisers UK halts production of ammonia and CO₂.

Emma McClarkin, chief executive of the British Beer and Pub Association, said the timing of this news “couldn’t be worse”.

Pubs and brewers are already dealing with severe headwinds and pressures on their supply chains, McClarkin pointed out, adding:

“This decision raises serious concerns for the sustainable supply of CO₂ to the brewing and pub industry.

“A guaranteed supply is essential for operations across pub and brewing businesses.”

National Farmers Union president Minette Batters said it was monitoring the impact of the move both on the production of fertiliser, of which ammonia is a key ingredient, and CO₂ (used to stun livestock before slaughter).

She said the move was “extremely worrying and is a sign of the pressure the fertiliser and energy markets are under.”

Updated

CF Fertilisers UK also said yesterday it has not yet determined the exact date when it will begin the temporary shutdown of the ammonia plant – and doesn’t expect any job losses:

At this time, CF Fertilisers UK do not anticipate any impact on employees regarding this announcement given the substantial level of activity that will continue to occur at Billingham.

CF is planning to import ammonia to produce fertiliser and nitric acid at the site.

Updated

Other fertiliser plants across Europe such as Group Azoty and PKN Orlen’s Anwil in Poland have also limited ammonia and nitrogen production due to the price of gas.

This is likely to lead to shortages, driving up prices and making fertiliser more expensive, as Reuters explains:

“Nitrogen supply availability will continue to worsen in Europe on elevated gas prices...We do not expect ammonia to price off EU gas. As prices are pulled higher by the EU (and Asia), demand destruction will accelerate,” analysts at Scotiabank said in a research note.

Ammonia prices could rally by around 30%, while urea and urea ammonium nitrate (UAN) could rally between 50% and 65%, they added.

UK urges businesses to meet CO₂ demand once CF Fertilisers pauses production

CF Fertilisers plant in Billingham, Cleveland.
CF Fertilisers’ plant in Billingham, Cleveland. Photograph: Owen Humphreys/PA

The UK government is calling on industry to ensure it meets demand for carbon dioxide after a major producer said it would pause its operations, due to high natural gas and carbon prices.

A government spokesperson said.

“Since last autumn, the CO₂ market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles,”

“While the government continues to examine options for the market to improve resilience over the longer term, it is essential industry acts in the interests of the public and business to do everything it can to meet demand.”

Yesterday, CF Fertilisers UK said it would halt ammonia production, which produces CO₂ as a byproduct, at its Billingham Complex in Cleveland, Teeside.

The company blamed soaring gas prices – an example of how the energy crisis is making some business operations uneconomical.

At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level.

The current cost of natural gas at NBP is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead.

Once its ammonia plant is safely shut down, CO2 production will also stop until the plant is restarted, CF Fertilisers explained.

CO₂ is used for a wide range of industrial processes, from carbonating fizzy drinks and beer to the humane slaughter of animals including pigs and chickens.

It is also used by hospitals and nuclear power plants.

Last year, Britain faced a crisis in CO2 supplies when high energy prices, combined with annual maintenance shutdowns, brought UK production to a near halt.

The government was forced to use taxpayer money to fund a three-week bailout for CF Industries, which accounts for 60% of the UK’s CO2 supplies, to stave off supply chain chaos before a three-month deal was agreed.

Then in February, a new industry-led deal was agreed to keep CF Fertiliser’s plant in Billingham, County Durham, operating.

Updated

Six percent of UK businesses reported that they had been affected by industrial action last month.

This was broadly stable with June, according to the Office for National Statistics’ latest business insights survey.

The human health and social work activities industry reported the highest percentage of businesses affected by industrial action in July, at 10%.

More than a quarter of businesses affected by industrial action reported their workforce were unable to perform their roles.

Updated

Firms plan price rises to pass on energy costs

Almost a third of UK companies plan to hike their prices next month, which will add to the inflation pressures hitting the economy.

The ONS reports that 29% of companies expect the prices of the goods or services they sell to increase in September 2022, compared with 26% who expected to raise prices in August.

More than 40% of firms said the prices they paid for goods and services had risen in July, compared with June:

Updated

UK consumers cut back as inflation hits budgets

UK consumers cut back last week, according to the latest real-time indicators from the Office for National Statistics.

Consumer behaviour indicators mostly showed reduced activity in the latest week, with UK credit and debit card purchases falling 4 percentage points.

Spending fell across the board, driven by large falls in “delayable” and “social” spending. They fell by 8 and 4 percentage points, respectively, suggesting people cut back on non-essential purchases as the cost of living rose.

Visits to “transit stations” were 77% of their pre-coronavirus levels, an eight-week low, as industrial action on the railways caused disruption, while traffic on the roads picked up.

Transactions at all Pret A Manger stores regions decreased last week. They fell sharpest at regional and London stations (down 29 and 14 percentage points respectively) – a sign that fewer people, such as commuters, were travelling.

Updated

Here’s our news story on Shell paying half a million pounds for overcharging thousands of prepayment meter customers on default tariffs over the past three years.

Ukraine war, energy crisis knock German business sentiment to lowest since June 2020

Germany’s business confidence deteriorated this month, although by less than feared, as companies faced rising energy costs and fears of gas shortages.

The Ifo Institute’s business-climate index fell to 88.5 points in August from a revised figure of 88.7 points in July – a smaller drop than expected, but still the lowest since June 2020.

Ifo president Clemens Fuest said German companies were less satisfied with their current business, and still very pessimistic about the outlook.

High uncertainty due to the Ukraine war, the energy crisis and fears of an economic downturn in the third quarter all hit morale.

Fuest added:

A bleak mood hangs over the German economy.

IFO has told Reuters that a German recession is “still on the cards”, with high inflation hitting trade sentiment. Encouragingly, though, supply chain bottlenecks have eased, (but aren’t yet fixed).

And IFO fears German GDP will fall in the current quarter, putting it halfway into recession – after a small rise in the last three months (see earlier post).

Updated

Resolution: radical action needed to avoid energy catastrophe

Britain’s next prime minister must adopt radical ideas - such as discounted power tariffs, energy bill freezes or a “solidarity” tax hike for higher earners - to protect households from the energy price shock, the Resolution Foundation thinktank warns.

In a new report this morning, Resolution lays out how tens of billions of pounds in new government support must be targeted at households least able to cope with surging energy costs.

Otherwise, thousands could see their power cut off and health endangered, while millions could fall behind on bills, run up arrears, and damage their credit ratings.

Resolution warns that typical energy bills will cost around £2,000 more this year than last year – money that many families simply don’t have.

Low-income households, who spend twice as much of their family budgets on energy bills as high-income families, will be hit harder this winter.

The UK’s four million customers on pre-payment meters face the toughest conditions as they can’t spread their energy costs and could face bills of £613 in January.

Resolution explains:

Even after the £67 energy bill rebate, this is equivalent to a totally unaffordable 44% of their typical monthly disposable income.

Even though £30bn has been committed to help families, the UK faces “a winter catastrophe”, with the cost of energy around £881 higher than forecast back in May, it says.

Jonny Marshall, a senior economist at the Foundation, says:

“A catastrophe is coming this winter as soaring energy bills risk causing serious physical and financial damage to families across Britain,”

“The new prime minister will need to think the unthinkable in terms of the policies needed to get sufficient support to where it’s needed most.”

Resolution also points out that a freeze on energy bills, like tax cuts, would help richer households, while lump-sum payments for low-income groups still don’t target those with high energy use (such as large families).

A new social tariff on energy bills for low-and-middle income households would target help where it’s needed:

A 30 per cent bill reduction for those on benefits, or with no-one in the household earning over £25,000 (with smaller savings for those with no-one earning over £40,000) would cost £15.4bn, but benefit 94 per cent of the poorest half of households (compared to 45 per cent if entitlement was limited to those on benefits).

Alternatively, the goverment could combine a universal 30% cut in the price cap with a solidarity tax on higher-income households.

A solidarity tax of a 1 per cent increase in all income tax rates would see the large costs of a universal price reduction (£23.5bn) partially offset by a tax increase of £9.5 billion, with 60 per cent paid by the top fifth of households.

In better news, Germany’s economy managed to keep growing in the last quarter, despite the energy crisis and disruption from the Ukraine war.

German GDP rose by 0.1% in April, updated figures show, an upgrade on the previous estimate that Europe’s largest economy stagnated.

Dr Georg Thiel, president of the Federal Statistical Office, says:

Despite difficult framework conditions in the global economy, the German economy held its ground in the first two quarters of 2022.

In the first quarter of 2022, the German economy had grown by 0.8%.

Household spending rose by 0.8% in April-June as lockdowns were lifted, the report adds:

Despite large price increases and the energy crisis, consumers took the opportunity to travel and go out more, for example, in the second quarter of 2022 after nearly all Covid-19 restrictions had been lifted.

However, business surveys have suggested that Germany’s private sector shrank in July and August, putting it on track for recession.

Updated

Shell Energy to refund thousands of overcharged customers

Shell is to repay £106,000 to more than 11,000 of its UK customers on pre-payment accounts who were overcharged on its default tariffs.

The energy giant’s consumer business, Shell Energy, overcharged 11,275 prepayment customers over three years from January 2019. The blunder was due to operational errors related to the implementation of its default tariffs.

Regulator Ofgem says Shell Energy will refund £106,000 to the affected prepayment customer accounts, plus a £400,000 payment to its voluntary consumer redress fund.

Ofgem’s director of retail, Neil Lawrence, said overcharging customers can create extra stress:

Ofgem expects suppliers to adhere to the terms of contracts they have with customers, particularly ensuring they pay no more than the level of the price cap.

Households across Britain are already struggling with rising energy bills and living costs.

Overcharging by suppliers can cause additional and unnecessary stress and worry at what is already a very challenging time for consumers across the UK.

Ofgem said it had decided not to take formal enforcement action against Shell Energy as the firm self-reported the issue and had put in place steps to address the failings.

Updated

British Gas has announced it will donate 10% of its profits to help its poorer customers manage rising gas and electricity bills for the “duration of the energy crisis”.

Ahead of Friday’s price cap announcement, the company’s owner, Centrica, said it would donate £12m this autumn into an existing support fund.

Grants of £250 to £750 would be given to poorer customers, and the pledge to donate 10% of profits every six months would last for the duration of the energy crisis “backdated to the start of 2022”, it added.

The Centrica boss, Chris O’Shea, said:

As a responsible business we want to do more to support our customers during this difficult time. This increased investment in supporting our customers adds to the financial support and advice we already offer and ensures more grants will be available as we go into this winter.

But there’s a significant point. This donation is based on British Gas’s retail supply profits of £98m in the first half of the year.

Its parent company, Centrica, made adjusted operating profits of £1.3bn in the first six months – because producers, not suppliers, are the ones benefitting from the surge in gas, oil and electricity prices.

Here’s the full story, by my colleague Nadeem Badshah:

Updated

More than 70% of disabled households have been plunged into debt this year by the cost of living crisis, with four out of five saying the government has not done enough to help, research suggests.

Families caring for a child or adult with disabilities are “frustrated” at the lack of urgency from ministers over their increasing financial pressures, according to national disability charity Sense.

Some 83% believe that the government is not doing enough to support them, while almost three quarters – 72% – say the crisis has left them owing money, a poll carried out by Censuswide on behalf of the charity shows.

Just over 1,000 parents or family members caring for a disabled person were surveyed; 55% said they had to borrowing money from friends or relatives to pay bills, and 77% said the crisis was affecting their mental health.

Two in five (40%) also say they will go without food to save money, according to the research.

Sense has announced that it will give 1,000 households, including someone with complex disabilities, a £500 grant to help them deal with rising costs.

It is the first time the charity has provided financial support on this scale, Sense said.

Updated

While households and businesses face rocketing bills, the jump in energy prices is a boost to companies which produce it.

Harbour Energy, the UK North Sea’s biggest oil and gas producer, has reported a surge in profits for the first half of the year.

Harbour made pre-tax profits of almost $1.5bn for the first half of 2022, up from $120m in the first six months of last year, with revenues almost doubling.

Earnings were lifted by the jump in oil and gas prices following the Ukraine war, along with a foreign exchange gain of $360m.

It is boosting its share buyback programme by 50% to $300m, funnelling more money to investors, and also declaring an interim dividend of $100m.

CEO Linda Cook says Harbour is taking steps to lift supplies:

Our Tolmount project alone – brought onstream in April – has increased UK domestic natural gas supply by over 5%.

At a time when many are struggling with high energy prices, we are increasing investment by c 30% compared to last year, focusing on doing what we can to deliver reliable, domestic oil and gas from our existing portfolio in a safe and responsible manner.

Updated

UK faces ‘cost of doing business’ crisis

Unlike housholds, British companies are not covered by Ofgem’s price cap, so are more exposed to wholesale energy markets.

And that means firms face a “cost of doing business crisis”, ministers have been warned, with many commercial energy bills poised to rise more than fourfold this autumn.

The Financial Times has the details:

New estimates by consultancy Cornwall Insight show that businesses looking for a new contract this autumn will have to pay more than four times the price they paid for their electricity in 2020.

Paul Wilson, policy director at the Federation of Small Businesses (FSB), said the government needed to intervene to prevent thousands of companies from going to the wall. “We don’t have the luxury of waiting any longer . . . winter could spell the end for many businesses and they need help now,” he said.

“If we don’t address the cost of doing business crisis we’ll keep on seeing costs being passed on to hard-hit consumers, or even worse people will lose their jobs.”

Updated

This chart, from Reuters’ David Milliken, shows how UK wholesale gas prices have jumped sharply in recent weeks:

Updated

Government must raise its energy bills discount, warns Which?

The government must raise its energy bills discount by at least 150% or risk pushing millions of households into financial distress.

That’s the message this morning from Which?, the consumer watchdog, ahead of tomorrow’s energy price cap announcement from Ofgem.

Which? says the government’s financial support for all households must increase from the current £400 to £1,000 – or from £67 to £167 a month from October to March.

The existing support package is inadequate to protect living standards for those on the lowest incomes and would lead to considerable financial and social hardship, it points out.

When the package was drawn up, in May, the energy price cap was predicted to reach around £2,800 in October. But with gas prices soaring since as the Ukraine war continues, the cap is expected to rise to £3,554 in October and £4,650 in January.

But Which? warned that even a 150% increase in help would be insufficient for families on the lowest incomes, and said the Government must also provide them with an additional one-off minimum payment of £150 to ensure the most vulnerable have the support they need.

Rocio Concha, Which? director of policy and advocacy, said:

While increased support will provide relief for many, it is not a long-term solution. The government and regulator must urgently undertake a wide-ranging review of retail energy pricing – including the price cap – to build a fair and affordable system for consumers.

The government must also develop a programme to urgently improve the insulation of homes – as this will help to reduce people’s energy costs for years to come.

Updated

Introduction: Covid-style support for energy bills demanded

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

Calls for government support to help businesses and households through the misery of soaring energy bills are growing today, as the economy heads towards a winter of misery.

The British Chambers of Commerce, which represents UK firms, is pushing for Covid-style support for small companies facing ruin from energy bills, through “Government Emergency Energy Grants for SMEs”. It also calls for a reduction in VAT on energy bills.

It has written to Boris Johnson, chancellor Nadhim Zahawi, and Conservative leadership candidates Liz Truss and Rishi Sunak, with a five-point plan to keep businesses afloat, as their energy prices surge.

The BCC warns that the government is running out of time to offer businesses and households the support they need, as consumer confidence hits a 50-year low and the Bank of England predicts a recession.

Shevaun Haviland, director general of the BCC, says ministers need to act to protect jobs and livelihoods, and create a “vibrant and prosperous society” for all.

Good business is good for our communities, and we must support firms and the individuals that run them to ride out this economic storm.

In June, we gave the government until the autumn budget to get its house in order, but the latest economic projections released since then have been worse than expected. We simply cannot afford to see another month of the same old news.

The BCC is proposing that:

  1. Ofgem to be given more power to strengthen regulation of the energy market for businesses

  2. Temporary cut in VAT to 5% to reduce energy costs for businesses

  3. Covid-style support by introducing Government Emergency Energy Grant for SMEs

  4. Temporarily reverse NICs [the increase in national insurance contributions] and put money back into the pockets of businesses and workers

  5. Government should immediately review and reform the Shortage Occupation List (SOL) to help bring down wage pressures and fill staffing vacancies

Anti-poverty campaigners are also warning that poorer families can’t cope with the jump in bills, with Ofgem expected to lift the price cap on bills in Great Britain by around 80% tomorrow.

The head of Scottish Power has proposed a two-year freeze on energy bills, at an estimated cost of £100bn, but neither candidate to become prime minister are supporting the plan.

Sunak said he was “nervous and sceptical” about the plan, while a government source close to the Truss campaign said the proposal was “irrelevant” because both candidates had ruled out a price freeze.

The Child Poverty Action Group (CPAG) fears families on low incomes will “fall through the ice” this winter without extra Government help, as they are set to face an estimated £1,000 shortfall on their energy bills.

CPAG is calling for a cost-of-living support boost worth at least £1,500 for families with children if the price cap rises to £3,554 in October, and again to £4,650 in January, as forecast.

Alison Garnham, CPAG chief executive, says millions of lower-income families are at risk:

With a £1,000 shortfall just for energy bills, many struggling families will fall through the ice this winter unless the government makes more help available fast.

Over the next few months families will need extra support that covers their costs and reflects family size, and social security must rise to match inflation from April.

Four million children are already in poverty with many others now perilously close to it. Leaving their families to sink cannot be an option.

We’ll be tracking the latest developments though the day…

The agenda

  • 7am BST: German Q2 GDP

  • 7.45am BST: French business confidence for August

  • 9am BST: Ifo survey of German business climate

  • 9.30am BST: Weekly UK business and economic activity surveys

  • 11am BST: CBI distributive sales survey of UK retailers

  • 12.30pm BST: ECB Monetary Policy Meeting Accounts

  • 1.30pm BST: US weekly jobless figures

Updated

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