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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Lidl limits sales of tomatoes, cucumbers and peppers – as it happened

Ofgem United States Jeremy Hunt ​​Rishi Sunak Brexit Cornwall Insight United Kingdom
Man buying fruit and veg in Lidl supermarket.
Man buying fruit and veg in Lidl supermarket. Photograph: Islandstock/Alamy

Closing summary

Time to recap.

Lidl has become the latest major supermarket chain to ration sales of some fruit and vegetables after an increase in shoppers looking for them after rival retailers implemented their own restrictions.

The UK’s sixth-largest supermarket chain said it had introduced a buying limit of three items per customer on peppers, tomatoes and cucumbers after a “recent increase in demand”.

Lidl says it acted after an increase in demand, following restrictions at rival supermarkets.

A Lidl spokesperson says:

While we still have good availability across the majority of our stores, due to a recent increase in demand we have taken the decision to temporarily limit the purchase of peppers, tomatoes and cucumbers to three items per person.

“This will help to ensure that all of our customers have access to the products they need.”

Here’s the full story:

Another supermarket chain, Morrisons, is in the spotlight today, as debts rise and profits fall under its private equity owners.

Pressure is mounting on Chancellor Jeremy Hunt to rethink his plan to cut energy bill support in April.

Charities and opposition parties say it is a mistake to allow typical household energy bills to rise to £3,000 per year from April, up from £2,500 per year at present. That increase is due to planned changes to the government’s Energy Price Guarantee in April – when winter fuel bill support worth £400 per home will end.

This morning, energy regulator Ofgem announced that its energy price cap was being cut by £1,000 per year, meaning average bills would be around £3,280 per year from April, down from £4,279/year in January.

Ofgem CEO Jonathan Brearley said many households face a very tough time, adding that there is “a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations.”

The pound has rallied on reports that Rishi Sunak has sealed a deal with the EU to end the dispute over the post-Brexit Northern Ireland protocol. Sterling has gained a cent against the US dollar to $1.205 this afternoon.

A report has warned that Rishi Sunak’s government is hiding £28bn of “stealth cuts” to public services over the next five years, such as education, healthcare, childcare and transport.

In the City, Primark owner Associated British Foods has lifted its financial expectations for this year.

ABF now expects its adjusted operating profit and adjusted earnings per share will be “broadly in line with the previous financial year”.

ABF which also runs agriculture, ingredients, sugar and grocery businesses, says Britons started shopping early for the summer, and has also benefited from easing inflation.

Associated British Foods (ABF) said people were planning for their holidays despite the cost of living crisis, with strong sales of luggage and beachwear such as sunglasses, swimwear, beach footwear and even shorts.

John Bason, ABF’s finance director, said the company had seen an increase in sales of luggage and “people buying for hot summer holidays – and they’re doing it in January”.

The total value of all homes across the UK has reached a record high of £8.7tn, estate agent Savills reported, but rising mortgage costs are likely to lead to a dip in 2023.

And Elon Musk has fired another 200 staff at Twitter including the executive behind the revamp of its paid-for premium service, according to a report.

Over in Washington, the World Bank has estimated that the two major earthquakes that hit Turkey on 6 February caused about $34.2bn in direct physical damage.

However, total reconstruction and recovery costs facing the country could be twice as high, the World Bank said today, adding that Turkish economic growth will be lower than forecast too.

Reuters has more details:

The bank estimates that the earthquakes would also shave at least half a percentage point off Turkey’s forecast gross domestic product growth of 3.5% to 4% in 2023, Humberto Lopez, World Bank country director for Turkey, told reporters.

The situation in Syria, which was also affected by the quakes, was “really catastrophic”, said Anna Bjerde, World Bank Group vice president for Europe and Central Asia. The bank will release a separate damage estimate for Syria on Tuesday.

Bjerde said the initial rapid damage assessment for Turkey of $34.2 billion was equivalent to about 4% of its economic output in 2021, but that did not include indirect or secondary impacts on the growth of its economy, or the most recent earthquake a week ago.

“Our experience is that reconstruction needs can run as high as two to three times the estimated direct physical damage,” she said.

UPDATED: The pound has continued to climb against the US dollar, touching $1.205 after a government source said the the UK and the EU have agreed a deal on the Northern Ireland protocol.

That’s a gain of a cent, or 0.85%, today, and the highest since last Thursday.

Raffi Boyadjian, lead investment analyst at XM, says the pound was the strongest performer against the US dollar this morning, amid optimism of a Brexit breakthrough.

The much-hated protocol has been an ongoing source of dispute between London and Brussels since the divorce as well as between Republicans and Unionists in Northern Ireland.

A deal could remove barriers for the flow of goods between Britain and the province, paving the way for stronger post-Brexit relations between the UK and EU.

Sterling is still sharply lower compared to its pre-EU referendum levels (it was worth almost $1.50 on the day of the Brexit vote, before plunging as voting results came in).

Andrew Sparrow’s Politics Live blog has all the action:

Updated

Minister Graham Stuart has blamed Labour for high energy bills which are set to soar further from April, our environment reporter Helena Horton writes.

At the Conservative Environment Network (CEN) Net Zero Conference in Westminster this morning, Stuart refused to apologise to the British public for rising bills.

When asked by the Guardian if he would take responsibility on behalf of the government for sluggishness on insulation, heat pump insulation and renewables investment, he refused and instead blamed the previous Labour government.

Stuart said:

“Well, I’m pleased to say that the government has taken unprecedented intervention this winter. Right now the government is paying more than half of families’ bills through this winter. That’s the current scale of intervention.

I’ve already given the numbers on energy efficiency, which has been transformational since the rather dire position we inherited both on renewables and efficiency from Labour.”

When it was pointed out that Conservative MPs have criticised the government’s lack of action he said: “but that’s exactly why it’s so good to have CEN members of parliament because they push the government to go further.”

[currently, typical household energy bills are limited to £2,100 per year, with homes receiving £400 of support this winter on top of the £2,500 energy price guarantee. Without that, average bills would have been capped at £4,279/year from January under the Ofgem cap].

Updated

Some chefs at Italian restaurants across the UK are rationing tomatoes, or even introducing tomato-free pizza due to shortages and soaring costs.

My colleague Miranda Bryant explains:

Italian restaurants across Britain are having to ration tomatoes, increase prices and in some cases remove the pomodoro from their menus entirely as costs soar.

The price of tomatoes has increased as much as fourfold in the past year, from £5 a case to £20 a case, according to the Federazione Italian Cuochi UK (FIC UK), a chefs’ association.

The price of canned tomatoes has doubled, it said, from £15 a case to £30. The cost of that insalata staple the iceberg lettuce has also soared, from around £7 a box to £22.

More here:

The UK government continues to be criticised for planning to reduce energy bill support in April, meaning average bills will rise from £2,500/year to £3,000 despite Ofgem cutting its price cap today.

UNISON national energy officer Matt Lay argues the government should think again about its changes to the Energy Price Guarantee, saying:

“Wholesale energy prices have fallen so it’s only right the cap should fall too.

“But while prices remain high, the government is wrong to reduce the level of support. This harsh move condemns millions of struggling families to bill and pre-paid meter hell. Ministers should use next month’s budget as an opportunity to think again.

“Better still it’s time the government upped its game, started insulating homes properly and boosted the energy efficiency of every household in the land.”

Pound over $1.20 on Brexit deal hopes

Back in the financial markets, the pound has risen a little today as traders anticipate a breakthrough deal on the Northern Ireland protocol.

Sterling has gained half a cent to hit $1.20, up from last Friday’s one-week low.

Against the euro, it’s up 0.25% at €1.1356.

Ursula von der Leyen and Rishi Sunak are meeting in Windsor this afternoon, after the EC president arrived in London to discuss a revised deal on the Northern Ireland protocol.

Our Politics Liveblog has all the latest details:

A breakthrough deal on NI could mark a line in the sand when six and a half years of damaging Brexit uncertainty finally comes to an end, says Kallum Pickering, senior economist at Berenberg bank.

Pickering predicts that the pound and the London stock market could both rally if a deal is announced, and crucially approved by MPs:

Lifting the threat of a tit-for-tat trade war with the UK’s biggest market, the EU, is exactly what its businesses and financial markets need. It would improve confidence and unlock business investment which has been badly held back by the risk of a UK-EU trade dispute.

While the UK will suffer a lasting impact on its growth potential following its decision to increase the barriers of trade with the EU, the major factor holding the UK economy back since the referendum has been uncertainty. If this comes to an end, we expect the UK’s healthy fundamentals – well capitalised banks, cash flush households and firms, and well-regulated markets – to re-assert themselves. A breakthrough deal would suit our above consensus real GDP calls for the UK over the next three years.

After a mild 0.8% (0.7%) contraction in 2023 we expect the UK to grow by 1.6% (0.9%) in 2024 and by 1.7% (1.5%) in 2025 (Bloomberg consensus in brackets).

On the announcement of a deal, and then again following any sign-off in UK parliament, we would expect to see modest positive moves for both sterling and UK equites.

Updated

Full story: Lidl becomes latest retailer to ration sales of salad ingredients

Lidl has become the latest major supermarket chain to ration sales of some fruit and vegetables after a surge in shoppers looking for them after rival retailers implemented their own restrictions.

The UK’s sixth-largest supermarket chain said it had introduced buying limit of three items per customer on peppers, tomatoes and cucumbers after a “recent increase in demand”.

While Tesco, Aldi, Asda and Morrisons have already implemented rationing protocols, Lidl had held off, instead posting signs telling shoppers there may be delays in some of its produce being restocked.

A spokesperson said.

“As advised to our customers through signage in our stores last week, adverse weather conditions in Spain and Morocco have recently impacted the availability of certain salad items across the supermarket sector,”

More here:

Jay Rayner, the Observer’s restaurant critic, wrote about the causes of the UK’s food shortages last weekend.

He pointed out that the UK now has a dysfunctional food system, hit by the running down of British agriculture, as the large companies which control almost all the sector drove such tight deals that many producers had already collapsed.

Brexit then hit the sector, leading to a seasonal workers’ scheme that only granted six-month visas when they were needed for nine months.

And then, the energy crisis made it uneconomical to heat glasshouses.

Jay writes:

Last week APS Group, one of the largest tomato growers in the country, admitted it had left some of its glasshouses unplanted for the first time in almost 75 years.

Some will argue that the supermarkets are refusing to pay more because they can’t pass on the costs to already hard-pressed consumers battling a cost of living crisis; that to suggest we should pay more for our food when so many are reduced to using food banks is a grossly insensitive argument made from a place of affluence. But if we structure our food system so that those in poverty can access it, we will only further damage our agricultural base. We need on the one hand to deal with the functioning of our food system and on the other with poverty, with a chronically unequal distribution of wealth.

We need to stop talking about food poverty and just call it poverty.

Here’s the full piece:

Updated

Supermarket bosses meeting food minister over fruit and veg shortage

Food minister Mark Spencer has summoned supermarket chiefs to explain “what they are doing to get shelves stocked again” amid shortages of fresh fruit and vegetables, PA Media reports.

The meeting comes as consumers continue to face restrictions when buying certain fresh produce items at many supermarkets, now including discount chain Lidl, or bare shelves as retailers grapple with supply problems.

Spencer says:

“The current situation – caused by recent poor weather in North Africa – shows how dependent we can be on certain trade routes for some types of food.

“I know families expect the fresh produce they need to be on the shelves when they go in for their weekly shop. That is why I am calling in supermarket chiefs to find out what they are doing to get shelves stocked again and to outline how we can avoid a repeat of this.

“As we do our shopping, we should all give our thanks to the UK’s tens of thousands of farmers and food producers for keeping us fed throughout the year and particularly showing their mettle keeping the nation going during the pandemic.”

Over the weekend, the National Farmers Union warned that shortages of some fresh fruit and vegetables such as tomatoes and cucumbers could be the “tip of the iceberg”.

Rising energy costs have deterred UK farmers from growing crops such as tomatoes, peppers, cucumbers, and aubergines in heated glasshouses, NFU’s deputy president Tom Bradshaw explained, while “shock weather events in Morocco and Spain” have hit imports.

KPMG: Social energy tariff would need 'real urgency' from government

The UK government needs to move fast if it decides to introduce social tariffs for energy, as many charities are calling for.

Simon Virley CB, vice chair and head of energy and natural resources at KPMG, says that a social energy tariff for low-income customers are a ‘viable’ way of targeting help at needier customers.

But, he warns, ‘real urgency’ is needed from ministers, if they heed Ofgem’s call today for the issue to be examined urgently.

Virley explains:

“Although milder weather and lower demand for gas over the winter have helped keep the estimated cost of energy support down for the Government, across the industry suppliers are seeing increasing levels of debt as more consumers struggle with their bills.

The Government needs to be thinking about what follows the current universal support and find a way to target support for energy bills on those who need it most. Social tariffs are a viable way of doing this and are already used in other sectors like broadband and water.

But if the systems to manage such a programme are to be up and running in time for April 2024, when the current Energy Price Guarantee is due to end, there needs to be a real urgency to move forward with some of the key policy decisions to make this happen on time.”

Lidl limits sales of tomatoes, cucumbers and peppers

A branch of Lidl supermarket in south London.
A branch of Lidl supermarket in south London. Photograph: Justin Tallis/AFP/Getty Images

Lidl has become the most recent supermarket to add purchase limits to certain fruit and vegetables, as the UK is hit by food shortages.

The discount grocer will be limiting the sales of peppers, tomatoes and cucumbers to three per customer, the BBC reports.

A Lidl spokesperson told the BBC that “adverse weather conditions in Spain and Morocco” had impacted the availability of certain salad items.

Lidl says:

“Whilst we still have good availability across the majority of our stores, due to a recent increase in demand we have taken the decision to temporarily limit the purchase of peppers, tomatoes and cucumbers to three items per person.

“This will help to ensure that all of our customers have access to the products they need.”

Last week,Tesco, Aldi, Asda and Morrisons all announced restrictions on purchases of salad ingredients, prompting environment secretary Thérèse Coffey to call for people to “cherish” seasonal foods such as turnips.

Food and farming minister Mark Spencer is understood to be meeting the bosses of UK supermarkets on Monday, to discuss their plans to get shelves stocked again and to avoid a repeat of the current shortages.

Updated

Dame Clare Moriarty, Chief Executive of Citizens Advice, warns that this April will “spell catastrophe for millions of households” unless the government drops plans to lift the energy price guarantee to £3,000, from £2,500 at present.

Moriarty reiterates that otherwise, the number of people who can’t afford their energy bills will double (as she warned the Today programme earlier).

Unless the government changes course on planned reductions to the level of support for households under the Energy Price Guarantee, we estimate the number of people unable to afford their bills will double, from one in 10 to one in five.

The government must keep the EPG at its current level of £2,500. Recent drops in wholesale prices mean they have the headroom to do this. The alternative is millions more people unable to keep their house warm and keep the lights on.

It is ‘absurd’ that energy customers will face a jump in energy bills in April, if government support is reduced as planned, says Age UK.

Caroline Abrahams, charity director at Age UK, says higher bills will be ‘distressing and alarming’ news for struggling households:

“Despite today’s announcement and the fact that wholesale energy prices are reported to be falling, we seem to be in the absurd position in which older people will face considerably higher bills come April.

This will be distressing and alarming for those on low and modest incomes, who are already struggling to make ends meet.

We urge the Government to maintain its energy support beyond April at a level which avoids a further hike in bills, a rise which is hard to understand & even harder to forgive if you’re an older person who has already been forced to cut your spending on essentials to the bone.

Longer term the Government should introduce an energy social tariff so that older people no longer feel forced to self-disconnect or live in cold homes due to the fear of huge bills.”

Updated

"Awful impact" of cost of living crisis shown

The UK’s cost of living crisis is hitting people’s mental health and forcing people to skip meals, figures from the Office for National Statistics show.

The ONS’s latest data on the impact of winter pressures in Great Britain found that one in five adults were “occasionally, hardly ever, or never” able to keep comfortably warm in the second half of January.

The report also found:

  • Around 1 in 11 (9%) adults reported they had often or sometimes run out of food and could not afford to buy more in the past month.

  • Around 1 in 8 (13%) reported they had cut down meal size or skipped meals in the past month because there was not enough money for food; 21% of these adults reported they had done so on more than 14 days in the month.

  • Of those waiting for NHS treatment; around 7 in 10 (70%) reported it had negatively affected (either strongly or slightly) their life and around 2 in 10 (18%) reported an appointment had been cancelled or delayed in the past month.

  • Around 6 in 10 (58%) adults who had sought a GP practice appointment received one within a week, 16% within one to two weeks, 8% within two to three weeks, and 5% more than three weeks.

  • Around a third (34%) agreed (strongly agreed or agreed) that increases in the cost of living had negatively affected their mental health.

The data “lays bare the awful impact the cost-of-living crisis is having on our lives”, says Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.

Morrissey says struggling households face ‘a tough few months’, before energy costs fall (hopefully) this summer.

The soaring costs of these most basic of items – food and fuel have put our budgets under immense pressure and as well as taking a toll on our physical health, it is having a clear impact on our mental wellbeing too.

There are signs that inflationary pressures are starting to ease but that won’t bring respite any time soon – food inflation remains eye-wateringly high at over 16% and it will take some time before we see any decrease in our energy costs. For pensioners on a low, fixed income, this raises a real risk people will go without food or heat. This isn’t just incredibly difficult to live with, it could also exacerbate health conditions. The good news is that, as we move out of winter into spring, our heating and lighting needs will start to lessen which could start to bring down costs as we go through the year. However, for those who are still barely clinging on financially they continue to have a tough few months ahead.

Updated

Ed Miliband MP, Labour’s shadow climate and net zero secretary, argues that a “proper windfall tax” should be rolled out to prevent energy bills rising in April.

Responding to Ofgem’s energy price cap announcement, Miliband says:

In a few weeks’ time, Rishi Sunak’s government plans to allow the energy price guarantee to rise to £3,000.

All the while, the oil and gas giants rake in the windfalls of war and Rishi Sunak’s Conservatives refuse to implement a proper windfall tax that would make them pay their fair share.

Labour would use a proper windfall tax to stop prices going up in April.

Rishi Sunak is too weak to stand up for the British people. Only Labour is on your side – with a mission to tackle the cost of living crisis now, and a long-term plan to cut bills for good by making Britain a clean energy superpower.

Updated

Interactive Investor has calculated that the poorest 10% of households face spending 26% of their budget on energy bills from April, if the government’s energy price guarantee rises from £2,500 to £3,000 a year as planned.

That’s up from 16% for poorer households in an average-sized house at present, the platform says.

Myron Jobson, senior personal finance analyst at Interactive Investor, warns that UK households face another “awful April”, as people face unprecedented financial pressures.

Tumbling energy prices are a positive sign that the energy crisis is finally coming to an end, and bodes well for projections of the energy price cap falling below the government’s energy guarantee ceiling by summer. Bill payers would have been paying 157% more, on average, on energy bills than they did in winter 2021/2022 from April if the guarantee wasn’t in play. However, the stark reality is many households will still be spending more on energy than they have ever done before until July.

The price guarantee means the state is paying the difference. It is an expensive initiative for the government to maintain and comes at a time when it is upping taxes and cutting public spending to plug a sizeable blackhole in the public’s finances. The support was always meant to be a short term solution, but it expires at a time when other areas of core household expenditure, from council tax to broadband and water and sewage bills, is set to increase.

It is a worrying sign of finances being stretched and financial resilience being tested like never before.

Updated

Scope: Disabled people face "eyewatering energy costs” and need social tariff

Disabled people are being hit hardest by “eyewatering energy costs”, disability equality charity Scope warns.

James Taylor, director of strategy at Scope, says disabled people must be offered a social energy tariff that would cut their bills.

Taylor also points out that keeping the energy price guarantee at £2,500 from April, rather than lifting it to £3,000, would also help.

“We’re inundated with heart-breaking calls from disabled people who haven’t eaten for days, who can’t afford energy to charge wheelchairs and stairlifts, but are still racking up huge energy debts.

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. At the same time government support is being stripped away.

Extending the existing price guarantee of £2,500 would have been a sensible short-term response from government, instead they are increasing it which will push more disabled households into making impossible decisions.

We need a long-term solution because life costs more if you are disabled. The government must introduce a discounted, social energy tariff for disabled people.”

Ofgem CEO: urgent need to examine social tariff for vulnerable customers

Many households will be deeply concerned by the prospect of energy bills rising in April, says Ofgem’s chief executive, Jonathan Brearley.

Brearley explains that the 23% cut in Ofgem’s energy price cap announced this morning reflects a ‘fundamental shift’ in the energy market.

That shift could mean significant falls in enegy bills in the summer, he says:

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.

However, today’s 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.

If the reduction in wholesale prices we’re currently seeing continues, the signs are positive that the price cap will fall again in the summer, potentially bringing bills significantly lower.

However, prices are “unlikely” to fall back to the level we saw before the energy crisis, Brearley warns.

And the Ofgem CEO says there is a case to urgently examine if the most vulnerable customers should receive a ‘social tariff’ – meaning lower bills for those on low income.

Brearley says:

Even with the extensive package of government support that is currently in place, this is a very tough time for many households across Britain.

Where people are struggling, we urge them to contact their supplier to make sure they are getting all the help and support they are entitled to. We also think that, with bills continuing to be so high, there is a case for examining with urgency the feasibility of a social tariff for customers in the most vulnerable situations.

In January, 95 charities and non-profit organisations wrote an open letter to chancellor Jeremy Hunt calling for a “social energy tariff” that would provide cheaper gas and electricity for low income households.

Earlier this month, the Conservative MP Sir Robert Buckland said an energy social tariff should be introduced for the most vulnerable members of society.

Updated

Liberal Democrat leader Ed Davey MP has repeated his call for the government not to lift its limit on average bills to £3,000/year in April.

Ofgem announcement today that the energy price cap has been reduced to £3,280 for the average households shows that the government can afford to ditch the rise in the energy price guarantee to £3,000, Davey insists.

He says:

“This confirms the government could easily afford to reduce energy bills in April instead of increasing them.

“People are already struggling to afford their rents and mortgages, food shopping and bills.

“It is unforgivable that the Conservatives are choosing to push desperate families over the edge by hiking their energy bills by another £500.

“Ministers must listen to our calls for an energy rescue package to save families and businesses from this cost of living cliff-edge, funded through a proper windfall tax.

Martin Lewis of MoneysavingExpert believes there is a ‘good chance’ that Jeremy Hunt will be persuaded not to raise the government’s Energy Price Guarantee to £3,000/year for a typical household from April, from £2,500 at present.

Campaining groups are calling on the government to rollout an effective programme to insulate people’s homes, to cut energy usage and bills.

Greenpeace UK’s climate campaigner, Georgia Whitaker, said:

“Millions of cash-strapped households are facing a very steep cliff edge after being dealt a devastating double blow of yet another bill price hike just as financial support is stripped away. But it is the government’s abject failure to deliver a proper plan, programme or funding to insulate homes and decarbonise heating that will push them all over the edge.

“Ministers seem to have abandoned all plans to tackle fuel poverty along with the millions plunged into it. But the solutions to the cost-of-living and energy crisis are the same as those needed to tackle the climate crisis. Struggling households will be left in freefall unless the government delivers a properly funded green homes scheme that reduces energy usage and keeps bills down for good.”

Here’s Connor Schwartz, warm homes campaigner at Friends of the Earth:

“Though the new Ofgem price cap won’t have an immediate impact on people’s bills, it’s a stark reminder that energy remains incredibly unaffordable and that we are still at the whim of volatile global gas markets. Clearly, there is an ongoing need for action from the government to support people through this crisis and to prevent the next one.

“While some predictions say energy bills might finally start to drop later in the year, they’ll still be double what they were a year ago. This is hardly reassuring to those who are barely getting by. And even if the government does extend its energy price guarantee beyond April, which it should, it’s only a sticking-plaster solution that fails to address the root causes of the energy crisis.

“The government must not delay any further in rolling out a street-by-street insulation programme. Not only is this the best solution to lower bills permanently and help those struggling most, it’s also badly needed for the sake of our planet.”

Government: Suppliers should pass on cheaper energy costs

The UK government says it expects customer to pass on cheaper energy costs in the coming months.

A Department for Energy Security and Net Zero spokesperson says current support (which becomes less generous in April) will have saved the typical household around £1,000 by the end of June.

“Government support will continue to help households with their energy bills.

“We know this is a difficult time for families, which is why the Government has covered around half of the typical household’s energy bill this winter, and by the end of June the Energy Price Guarantee will have saved a typical household in Great Britain around £1,000 since it began in October. In the meantime, we’re committed to helping people with rising costs by reducing inflation and growing the economy.

“The cost of energy has already been falling and we expect this to drop further over the coming months, which we fully expect suppliers to pass onto their customers.”

Updated

Energy consumers across Great Britain have yet to feel the benefits from falling wholesale costs this year, points out Richard Neudegg, director of regulation at Uswitch.com.

Responding to this morning’s announcement that the energy price cap will drop from £4,279 to £3,280 per year from April, Neudegg says:

“This significant fall in the Ofgem price cap should mark a turning point for the energy market, and could be the last quarter in which the cap is priced above the current Energy Price Guarantee level.

“Yet, with the Energy Price Guarantee still set to rise by 20% to £3,000 a year for average consumption and the end of the £400 Energy Bills Support Scheme, households will be facing higher bills from April.

“Wholesale prices have dropped more than 50% since December 2022 but consumers have yet to feel the benefit.

Neudegg argues that suppliers need to offer households more fixed deals again, to bring stability to the market:

“Now is the time for fixed deals to return to the market to get the benefits of falling wholesale prices to consumers as soon as possible. After 18 months of sky-high energy bills, households need stability as well as choice in who their energy provider is and what they pay.

“A return to fixed deals will bring the benefits of competition back to the market, giving consumers the chance to vote with their feet and choose a supplier with the best deal and customer service, as well as locking in more price certainty.

“Current intervention, including the market stabilisation charge implemented by Ofgem, is actively dissuading suppliers from offering competitive deals that consumers desperately need.”

TUC: government must cancel April's increase in energy bills

The TUC have calculated that energy bills will rise 9.5 times faster than wages this year.

Energy bills will be 52% higher in April 2023 than they were in April 2022, the trade unions group says, once the government’s price guarantee rises to £3,000 per year.

That’s because a year ago, Ofgem lifted the price cap on default tariffs to £1,971 per year from April 2022.

Since last April, nominal wages (excluding inflation) are forecast to have grown by 5.5%.

TUC General Secretary Paul Nowak has added his voice to those urging Jeremy Hunt to keep average bills at £2,500 per year – the current level.

Nowak says:

“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.

“Families across Britain are at breaking point. Prices are skyrocketing, but wages are failing to keep pace with the cost of living.”

Ofgem says that, from 1 April, the price cap per unit of electricity will fall from 67p per kilowatt hour to 51p, plus a 53p per day standing charge.

For gas, the unit cost will fall to 13p per kWh from 17p with the standing charge at 29p per day, up 1p.

Around 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, my colleague Alex Lawson explains.

Updated

Here’s the full story on today’s Ofgem announcement:

Cost of energy bill support to fall 90%, says Resolution Foundation

Ofgem’s price cap announcement confirms that the cost of government energy support is set to fall by 90% in the next financial year to just £1.4bn, the Resolution Foundation has calculated.

Resolution Foundation explains:

The level of the price cap will not affect consumers as it is above the level of the EPG, which is due to rise to £3,000 in April.

Based on current market pricing, the price cap is set to fall below the level of the EPG from July onwards as big falls in wholesale gas prices since last summer finally feed through into lower household bills.

As a result, the cost of the EPG in 2023-24 – which will only likely apply between April and June this year – is set to be just £1.4 billion, 90 per cent lower than the £12.8 billion forecast made at the Autumn Statement.

Emily Fry, economist at the Resolution Foundation, points out that families face a significant increase in bills from April – unless Jeremy Hunt heeds calls to keep the EPG at the current level of £2,500/year for an average bill.

“The latest Ofgem price cap is a stark reminder of the lag between falling wholesale gas prices, and falling household energy bills.

“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.

“The Chancellor should prevent this coming energy bills spike by maintaining the level of the EPG at £2,500 for a further three months.”

Updated

The 23% cut in the energy price cap announced this morning won’t mean a 23% cut in average bills in Great Britain from April.

As Ofgem points out, its new energy price cap is still above the government’s own guarantee on bills – which goes up from £2,500 to £3,000 in April.

The regulator says:

In light of the increase in wholesale prices across 2022, the government announced the energy price guarantee (EPG) which came into effect on 1 October 2022. The EPG protects consumers, reducing the unit cost of electricity and gas so that a typical dual fuel direct debit bill for a domestic consumer reaches a target level.

From 1 April 2023, the energy price guarantee is expected to increase from £2,500 to £3,000 for a typical dual-fuel, direct-debit domestic consumer and will be extended until April 2024. That means from 1 April 2023, a typical household in Great Britain will see an increase in their bills, however the EPG still reflects a discount relative to the underlying price cap.

The EPG sets maximum prices, not maximum bills. For an individual customer, the amount they will pay under the EPG varies depending on how much energy they use, where they live, and how they pay for their energy.

Updated

Ofgem energy price cap cut to £3,280

Newsflash: The price cap on the amount suppliers in Great Britain can charge for energy will fall by around £1,000 to £3,280 from April – but average bills are actually set to rise this spring.

The energy regulator Ofgem has just announced that its quarterly cap on household bills for average dual-fuel direct-debit customers will fall by around 23% for the three months from 1 April, from £4,279 for the January to March quarter.

But, as we’ve been covering this morning, consumers will not actually pay the average price cap, due to the government’s energy price guarantee (EPG) which limits maximum costs on energy.

Importantly, both the Ofgem cap and the EPG apply to average unit energy prices – there is no limit on the maximum bill which a customers can run up.

The EPG is due to beome less generous in April, rising to £3,000 for the typical bill, creating what Liberal Democrat leader Sir Ed Davey called a ‘cost of living cliff edge’.

Today’s Oftem announcement is significant to taxpayers, though, as it will be used to calculate how much the government will pay energy suppliers to limit typical bills to £3,000 from April.

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, which have been inflated by the war in Ukraine but fallen back since.

But, as Citizens Advice chief executive Dame Clare Moriarty has predicted the number of people who cannot afford their energy bills will double from April, the cost of living crisis will continue to grip the UK.

Updated

Citizens Advice: millions of people face catastrophic impacts from rising bills

Dame Clare Moriarty, chief executive of Citizens Advice, fears that many households face an ‘unsustainable’ increase in energy costs from April.

Moriarty told the Today Programme that today’s price cap announcement from Ofgem will be “largely irelevent” to billpayers. That’s because the government’s energy price guarantee (EPG) limits average bills to £2,500 per year, well below Ofgem’s cap of £4,279.

Most people are going to see a £900 increase in bills from April, she points out, when the EPG goes up to £3,000 and the £400 payments to help with bills are stopped.

Moriarty warns:

We know that is going to be unsustainable for very many people.

Citizens Advice estimates that the number of people who cannot afford their energy bills will double, from one in 10 people to one in five.

That’s why it is calling on the government not to allow bills to rise in April, and to keep the energy price guarantee at £2,500.

An increase of £900 per year on energy bills will drag ‘a very large number of people’ into bill payment problems, Moriarty warns.

Citizens Advice believes there will be three million people who would be paying more than 10% of their income on energy who won’t be eligible for targeted support from government.

Moriarty says:

We are talking about literally millions of people who are going to see catastrophic impacts.

She insists the government should continue to provide ‘meaningful’ support until this summer, when the energy price cap is likely to fall further.

In other energy news, the Australia-based company Recharge Industries has finalised a deal to take control of collapsed battery maker Britishvolt.

Recharge outbid rivals to win the batle to buy Britishvolt, which had hoped to build a £4bn gigafactory in North East England to build batteries for electric cars.

The deal was finalised three weeks after Recharge, an Australian company that sits under New York-based investment firm Scale Facilitation, was nominated as preferred bidder, placing a huge opportunity, and burden, on a startup yet to construct a project.

Scale Facilitation’s Australian-born founder and chief executive, David Collard, told the Guardian the factory and an associated supplier park, where components are manufactured, were still a focus.

Collard said:

“We’re working closely with one of the leading UK fund managers looking to team [up] on the development.”

Recharge also plans to build a battery factory in Geelong, a former car manufacturing hub in Australia, free from Chinese and Russian materials.

Britishvolt was planning to build its 30GWh factory in phases to take advantage of rising EV demand ahead of the UK’s 2030 ban of new petrol and diesel cars. The plant, located near Blyth in Northumberland, was expected to employ about 3,000 people when operating at full capacity.

More here:

An online portal has opened to help 900,000 more households across England, Scotland and Wales to access the £400 support available from the Government to help with energy bills.

Households without a direct relationship to an electricity supplier, such as those living in park homes and care homes, can now apply on the online portal to receive the support as a one-off, non-repayable lump sum under the “alternative funding” route of the Government’s Energy Bills Support Scheme (EBSS AF).

A dedicated customer helpline is available to assist eligible customers without online access – 0808 175 3287 for applicants in Great Britain, or 0808 175 3894 for applicants in Northern Ireland.

The EBSS Alternative Funding scheme is aimed at care home residents and others in care facilities/sheltered accommodation,park home residents, those in houseboats and caravans, social and private tenants who pay for energy through a landlord on a commercial supply, homes on a heat network/private wire, “off-grid homes”, and farmhouses used for wholly domestic purposes.

To check eligibility and apply for the £400 of support, people need to search for “Apply for energy bill support if you do not get it automatically” in the search bar on GOV.UK or in an internet search engine, the Department for Energy Security and Net Zero.

Minister at the Department for Energy Security and Net Zero, Amanda Solloway, said:

We understand the pressure households are under which is why we’ve already stepped in to pay around half of people’s energy bills this winter, and from today, thousands more will be able to apply securely for their £400.

Today I’m urging everyone who couldn’t get their EBSS discounts in the regular way to apply via our secure channels. If you don’t have a direct contract with an electricity supplier, it’s essential you submit your application as soon as possible. The sooner you do, the sooner help can get to you.

MoneySavingExpert’s Martin Lewis has also been urging Jeremy Hunt to reverse his plan to raise energy bills from April.

Lewis wrote to Hunt this month, warning that 1.7m more households could be plunged into fuel poverty if he didn’t commit to freezing energy prices at the current levels.

And on Friday afternoon, Lewis warned it seems “especially futile” to subject people to the financial and mental health damage of a 20% rise in average bills from April, given the Ofgem price cap is expected to fall below the Energy Price Guarantee this summer.

UK facing a cost-of-living cliff edge in April, Davey warns

Liberal Democrat leader Sir Ed Davey is urging the government not to raise the energy price guarantee to £3,000 from £2,100 in April.

Davey says its essential to continue to support people though the cost of living crisis.

He tells the Today Programme that some people could see their bills rise by £900 per year (once the £400 from the Energy Bills Support Scheme is removed)

Davey explains that people in his constituency of Kingston and Surbiton, in South West London, can’t pay their food bills, or their rent, leading to a huge increase in people coming to food banks.

Millions of families, and pensioners, are finding it so hard out there….

This is a crisis. I think we are facing a cost-of-living cliff edge in April.

Things have been getting worse, not better.

Davey claims the decision to raise energy bills in April shows how ‘out of touch’ the Conservatives are, adding:

They have the cash to not just freeze the energy price guarantee but to cut it, and that’s what Liberal Democrats are arguing for.

Q: But why cut it for people who can very well afford it, and remove the incentive to use less energy?

[Earlier this month, National Audit Office (NAO) reported that a “significant number” of households in Great Britain received financial support they did not need through the government’s £69bn package to cushion the blow of rising energy bills]

Davey says there is a consensus across political parties that if you try to target energy support you will miss millions of families who need the help.

Davey says the Liberal Democrats would also target more help to poorer families by increasing the Warm Homes discount and the winter fuel allowance.

He says:

You’re right, we do need to make sure that the least well off in society get the most help.

But actually, whether it’s ordinary households or in fact businesses who are strugging and who can’t afford these higher energy bills that the government are putting forward, we do need some serious help out there.

Moving to renewable energy, and insulating people’s homes, are the best way to pull down energy bills in the long term, Davey adds.

Updated

Households face a considerable increase in average energy costs from April, agrees Robert Buckley of data analysics firm Cornwall Insight.

Speaking on Radio 4’s Today Programme now, Buckley points out that average bills are currently capped at £2,100 per year – based on the government’s energy price guarantee of £2,500 for an average home, plus £400 from the Energy Bills Support Scheme.

Buckley points out, though, that “hopefully the weather should be milder” from April, meaning customer would be using less electricity and gas.

Q: Looking ahead, how might the wholesale price of energy change, and how will that affect domestic bills?

If the market stays the same, the Ofgem price cap will come down to around £2,100 [in the summer] and stay there, Buckley explains.

That would be around double the levels before the pandemic and the Ukraine war, which pushed up energy costs, he says.

BP set for clash over CEO Bernard Looney’s huge bonus

Soaring energy prices have been a painful blow to many millions of households and businesses, but a boon for energy producers.

And it means that the boss of BP, Bernard Looney, is in line for a bonus worth more than £11m.

My colleague Rupert Jones explains:

BP is set for a clash with investors after it emerged that its chief executive could be in line for a special bonus of up to £11.4m. The payment, in shares, would be on top of his £1.38m salary and annual bonus for 2022.

Strong growth in BP’s share price means Bernard Looney is set for a multimillion-pound payout from a three-year share award plan set up in 2020, when countries around the world were in lockdown and the company was cutting jobs amid a global collapse in demand for oil.

The picture now is very different: this month BP announced that its annual profits had more than doubled to $28bn (£23bn) after a sharp increase in gas prices linked to the Russia-Ukraine war. Its share price has now risen above £5.50.

BP has been consulting investors in the run-up to the publication of its annual report in early March, in which Looney’s remuneration will be confirmed. The company has previously acknowledged that some shareholders had talked about the need to improve transparency on executive pay.

One leading shareholder told the Sunday Times, which first reported the potential bonus, that payouts towards the top of the range offered by the incentive scheme would amount to “quite a blatant grab” given the rally in oil and gas prices.

More here:

Updated

Energy bill rises 'to push 1.7m homes into crisis'

Around 1.7m more homes will be pushed into crisis if the government presses on with plans to reduce energy support in April, the Daily Mirror reports.

Its front-page story reports that critics are calling on Jeremy Hunt to scrap a £500 rise in the annual bill [the increase in its energy price guarantee (EPG) from £2,500 to £3,000] and to keep a £60-a-month support payment.

That support payment, called the energy bills support scheme, was worth £400 over the winter for all households.

The Mirror says:

Charity National Energy Action said the changes would mean the number of households in fuel poverty rising from 6.7m to 8.7m.

Fuel poverty is classed as when households have to spend at least 10% of their income on energy.

National Energy Action director Peter Smith said: “Even if the Government does scrap their EPG hike, we are still hugely worried due to the planned removal of the Energy Bill Support Scheme.”

More here.

Updated

Introduction: Ofgem to announce price cap changes today

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

Britain’s energy regulator is due to announce its latest cap on the amount which energy suppliers can charge households – but bills are set to rise in April, regardless.

Ofgem is expected to announce that the limit which energy suppliers are able to charge domestic customers will drop by around £1,000 per year, to around £3,300 for a typical household, from April.

That cut will affect the maximum unit cost of electricity and gas for those on variable-rate tariffs. It follows the sharp fall in wholesale energy costs since last summer, after hitting record levels after the Ukraine war began.

Cornwall Insight predicted this month that the Ofgem energy price cap would hit £3,294 from April, and then drop further this summer – to about £2,150 from July until the end of the year.

Currently, the Ofgem price cap is £4,279 a year, after being raised in January. But the government is currently limiting prices, at a level where the average home pays £2,500 a year (with a £400 energy grant pushing down costs to £2,100).

That limit is to rise to £3,000 a year in April, though, with Jeremy Hunt resisting pressure to stick to the £2,500 limit.

So, households face paying more for energy for April – and Ofgem’s price cap will remain a theoretical limit, unless it falls below £3,000 today.

But today’s energy price cap does still matter, though. It will dictate the cost of the government’s energy price guarantee to taxpayers, and probably reignite debate about whether ministers are providing enough support to strugging households.

Danni Hewson, AJ Bell head of financial analysis, says:

In the UK energy prices are still front and centre in all our minds as we look ahead to next week’s unveiling of the new energy price cap.

Unless the cap falls below £3,000 the number is moot and despite falling wholesale costs it seems unlikely Ofgem will give us all a gift-wrapped bonus just yet.

Also coming up today

City investors will have Brexit on their minds, with prime minister Rishi Sunak expected to unveil a Brexit deal with the EU today that will revise Northern Ireland’s trading arrangements.

Sunak will hold face-to-face talks in the UK with the European Commission president, Ursula von der Leyen, as they aim to finalise a deal to revise the Northern Ireland protocol, the part of the Brexit deal that sets out trade rules for the region.

A breakthrough would end the bitter dispute between the two sides, and remove the prospect that the UK brings in legislation to unilaterally override the protocol, triggering a trade war with Brussels.

Under the current agreement, goods are checked as they arrive in Northern Ireland and can then be moved to Ireland. The UK wants goods entering Northern Ireland to be split into two different lanes – green for those going just to Northern Ireland and red for those destined for Ireland.

But, it’s not yet clear if eurosceptic Conservative MPs, or the Democratic Unionist Party, will back the plan….

European stock markets are set to open higher, after dropping last week as fears of more interest rate rises by America’s Federal Reserve hit shares.

The agenda

  • 9am GMT: Ofgem expected to announce quarterly price cap

  • 10am GMT: Eurozone business and consumer confidence reports

  • 1.30pm GMT: US durable good orders for January

  • 3pm GMT: US pending home sales for January

Updated

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