Market Loop - £15bn energy support package revealed

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27th May 2022

Bite-sized business news from the UK and beyond

Good morning Just months after bringing BBC3 back to the screens after six years off the air, the BBC announced that CBBC and BBC4 will be taken off TV screens and moved to online platforms. It’s part of a huge shake up that will see the corporation become a ‘digital first media organisation’. Other changes include merging the BBC News and BBC World News channels and cutting 1,000 jobs.

Today's stories

Rishi dishes - Chancellor unveils £15bn energy support package
Not so fast - Government eyes BT’s biggest shareholder

ECONOMY
Chancellor unveils £15bn energy support package

What happened?
Yesterday the chancellor unveiled a £15bn energy aid package to help support the country’s poorest households. Rishi Sunak also revealed an eagerly anticipated and rebranded windfall tax on energy companies worth £5bn.

The pressure to do more has finally caught up with the government
The cost of living crisis has been dominating headlines all year with 40 year high inflation and soaring energy bills squeezing consumer incomes. The price cap on energy bills rose by 54% to £1,971 for an average household last month and is expected to rise by another £800 in October.

The fresh support announced yesterday includes a £400 energy bill discount for all households this autumn - this supersedes the £200 energy bill loan announced earlier in the year. On top of this:

8m of the poorest households will receive an additional £650 one-off payment.
8m pensioners who get winter fuel payment to also get a £300 payment.
£150 extra payment for people on disability benefits.
Extra £500m for household support fund delivered by local councils, increasing it to a total £1.5bn.

A ‘windfall’ tax is on the way
The scheme will be partially funded through a 25% ‘temporary targeted energy profits levy’ on oil and gas firms’ profits - more commonly known as the ‘windfall’ tax.

It marks a change in policy for the government which was initially resistant, concerned that it could dampen investment in the energy sector.

Big picture
Together with the £22bn package announced back in February - this included one-off £150 council tax rebates - the UK’s total government cost of living support now stands at £37bn. This equates to about 1.5% of GDP, higher than the proportion in France, Germany, Japan and Italy.

Other stories to keep you in the loop

Twitter shareholder sues Elon Musk for tanking the company’s stock
Delivery start-up woes: Getir and Zapp slash headcount
EY plans global audit spin-off in drastic Big Four shake-up
Manchester United report 30% increase in revenues
Justin Timberlake sells song catalogue in deal ‘worth just over $100m’
DIY retailer Wickes avoids post-pandemic slowdown

TELECOMS
Government eyes BT’s biggest shareholder

What happened?
Yesterday the government announced that it would take a closer look at the 18% stake in BT controlled by French billionaire Patrick Drahi over national security concerns.

How did we get here?
Last June Drahi, bought a 12% stake in BT worth £2bn, becoming the telecom company’s largest shareholder. Six months later he increased the position to 18%, prompting speculation that BT could be bought out completely.

Under UK rules Drahi was not allowed to buy anymore of BT for another six months. At the time he ruled out a full-blown takeover, but with the restriction expiring at the end of next month, all bets are off.

What’s behind the move?
Drahi said he believes BT has a compelling opportunity to deliver the expansion full-fibre broadband throughout the UK. BT is planning to invest billions in getting full-fibre broadband connections to 20 million homes by 2026.

Who is Patrick Drahi?
He’s quite the globetrotter holding French, Moroccan, Portuguese and Israeli citizenship and now lives in Switzerland. He founded French media and telecoms giant Altice over 20 years ago and has made investments in telecoms businesses in the US, Portugal and Israel. He has a keen interest in art, owning works by Picasso, Matisse as well as the auction house Sotheby’s. Forbes estimates his net worth at over $7bn.

The government has new powers to scrutinise takeovers
In January new legislation came into force that means the government can examine, caveat or block the takeover of key national assets like BT on security grounds. With Drahi’s June deadline approaching, the government is sending the message that a 100% takeover would be far from plane sailing.

Stat of the day

According to new research Brits are set to spend almost £1,500 each attending weddings this year

Interesting links from around the web

The sky-high cost of returning to the office
Women are doing more thankless tasks at work — here’s how to help fix the problem
The best brunch spots to try in every part of London

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Market Loop - £15bn energy support package revealed

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