The Times - UK (2022-05-17)

the times | Tuesday May 17 2022 7

News

Ofgem has come under fire for extend-

ing rules that will effectively prevent

energy suppliers from offering deals

that are significantly cheaper than the

price cap if wholesale costs fall.

Martin Lewis, the founder of Money

Saving Expert, said that the changes

“sell consumers down the river” and

were “killing hopes of firms launching

cheaper deals”.

Citizens Advice, the charity, said the

changes, which include a plan to

change the energy price cap every three

months, rather than every six, from Oc-

tober, would “make it harder for people

to save on their energy bills, even if

wholesale prices drop”.

The regulator said that the rules were

needed because otherwise energy sup-

pliers that had bought energy in ad-

vance for their customers might be un-

able to recoup their costs. This could

lead to more suppliers failing, resulting

in further costs to consumers.

“We do not consider that we should

prioritise the lowest possible prices for

consumers at the present time over the

need to enable efficient suppliers to

finance their businesses,” Ofgem said.

Lewis, who presents a money-saving

show on ITV, was so incensed by the

plans that he launched into a foul-

mouthed rant at Ofgem.

He later apologised on social media,

writing: “I’d like to formally apologise

to the Ofgem staff for losing my rag in

a background briefing just now and say-

ing its changes are a ‘f***ing disgrace’.”

He added: “I should’ve behaved better.

My ire’s institutional not individual.”

However, he did not withdraw his criti-

cism of the proposals.

The energy market has been thrown

into chaos by steep increases in whole-

sale prices over the past year that trig-

gered dozens of supplier failures.

As wholesale prices have risen, mil-

lions of households have moved to

standard tariffs limited by the price cap,

which lags behind changes in the

wholesale market and has prevented

Ofgem under fire

for not making

low bills priority

Emily Gosden, Andrew Ellson companies from passing on the price

increases straight away. Fixed-price

tariffs, which typically reflect current

wholesale prices, have become more

expensive than standard tariffs.

The regulator is worried about what

will happen when wholesale prices fall

again, since the time lag in the price cap

means there will be a delay in passing on

these savings to standard tariff custom-

ers. If some companies start offering

cheap fixed-price tariffs, millions of

households could switch away from the

standard ones before suppliers have had

a chance to charge them for the expen-

sive energy they have already bought.

Last month Ofgem introduced a

charge so that suppliers poaching a cus-

tomer when wholesale prices fell had to

pay the losing supplier a fee — effec-

tively deterring them from offering sig-

nificantly cheaper deals. Now the regu-

lator has increased the fee and said it

will extend how long this system was in

place.

Explaining why he had got so angry,

Lewis wrote: “My breaking point was

when hearing how instead of listening

to calls to scrap its proposed market sta-

bilisation charge, it was making it

harsher to really ‘stop the harmful ef-

fects of competition’. Ie, staggeringly it

aims to effectively stop firms under-

cutting the price cap.

“Combine that with meeting indus-

try’s demand for a new more frequent

‘every three month’ price cap change —

carefully calibrated for the first three

months to include six months of whole-

sale prices so the price factors in the

highest wholesale rates in history so

firms don’t miss out.”

Ofgem said that customers would

still be able to “access significant gains

based on falls in the wholesale market”.

Jonathan Brearley, the chief executive,

said the reforms would ensure that con-

sumers were paying a “fair price” while

ensuring “resilience across the sector”.

The proposals made the “price cap

more reflective of current market

prices” and any price falls would be de-

livered more quickly to consumers.

Junk food deals U-turn set

to increase food spending

Chris Smyth

Boris Johnson’s decision to scrap a ban

on “buy one, get one free” deals will

make the cost-of-living crisis margin-

ally worse, the government’s own cal-

culations suggest.

Banning promotions on unhealthy

food would have saved consumers

money by reducing impulse buys of

calorific snacks, according to an impact

assessment drawn up by the govern-

ment.

Health campaigners renewed their

assault on Johnson’s U-turn in light of

the figures, saying the decision would

be bad for family finances as well as

public health. Jamie Oliver is among

campaigners who have accused John-

son of “throwing away” a world-leading

plan to reduce child obesity.

However, the decision has been

broadly welcomed by Tory MPs who

are unhappy with “nanny-statism” and

increasingly worried about the cost of

living. Ministers said they wanted to

“understand [the policy’s] impact on

consumers in light of an unprecedented

global economic situation”.

However, an impact assessment

published when Johnson’s obesity plan

was announced in 2020 concluded that

multibuy deals resulted in shoppers

spending more as they were tempted

into buying food they did not need.

The assessment concluded that the

promotions resulted in £75 of addition-

al spending per year for an average

household. Although this was offset by

£61 in savings, “the total impact of

multibuy promotions is an overall addi-

tional expenditure of £14”.

The assessment rejected the argu-

ment that the deals allowed people to

build up stockpiles of food and save on

future shopping trips, saying there was

evidence that people ended up raiding

the cupboard more when they knew it

contained biscuits.

Obesity U-turn is weak, shallow and

immoral, William Hague, page 25

Let them drink gin, Giles Coren, page 26

News

Brussels is warned

development, it was just a mutually

beneficial, functional economic

evolution on the island of Ireland.

“There are some – by no means

all – in Unionism who see the all-

island economy as the slippery slope

towards political union.”

Patterson noted a softening of

tone last week in the appearance of

the DUP’s Edwin Poots on Nolan

Live, a BBC Northern Ireland

current affairs show, where the

Belfast South MLA’s emphasis was

on removing customs checks on

goods coming from Great Britain

into Northern Ireland and not

transiting onward to the Republic.

This would be technically

possible, Patterson said, but it would

require the British government to

gather data it has not gathered

before to assure the Brussels

authorities that such goods would

not enter the EU single market.

Julie Gibbons, president of Newry

chamber of commerce, said the last

thing Northern Ireland needed after

the challenges of the pandemic and

war in Ukraine was “a lack of a

functioning executive with political

parties refusing to return to

Stormont over the protocol”.

She said: “We need mature

politics where all parties work

collectively to come up with

creative solutions. The business

community deserves and

desperately needs stability.”

Peter Murray is manager of the

thriving Buttercrane shopping

centre that attributes up to 20 per

cent of its turnover to business from

southern shoppers. The protocol

has been an issue for some suppliers

to retail, he said, but most of the

problems have been sorted out over

the past 18 months. “The whole

drama of all that has gone, we’ve

come to terms with the mechanics

of importation, the clearance

documents and the longer lead

times... it’s not a big issue for

business now,” he said. “People

came up with their own solutions.”

Seamus Gilroy’s Pancake

Junction counter in the Buttercrane

centre is a food business on a much

smaller scale, but he has seen little

impact from Brexit. He has had to

get disposable gloves and multi-

coloured sprinkles from different

suppliers but has been otherwise

unimpeded. “Wasn’t the protocol

the deal that Boris Johnson called

oven-ready?” he asked. “And now it

has to be changed? You can’t really

have a border between north and

south now like in the Seventies. It

would be bombed to bits and start

the whole thing off all over again.

“The absence of an assembly is

shameful. It is bad for everyone.

There should be no pay and possibly

fines for people if they don’t work.”

Stephen O’Brien is Irish political editor

the EU, at the

moment, so on the face

of it this demand is

more theoretical than

practical. But the fear

is that the UK will

drop some product

regulations, meaning

that the two regulatory

regimes could diverge.

However,

compliance with

European standards is

rarely enforced at the

border. Rather, legal

liability for ensuring

conformity is placed

on the importer and

policed in countries

where the products are

sold. So it should be

possible to come up

with a solution.

The EU has

signalled that it is

willing, if the UK is

serious about making

the protocol work, to

amend European

legislation, as it did

with medicines this

year to allow drugs and

treatments approved

by UK regulatory

authorities into

Northern Ireland.

Contentious rating:

removing brussels

subsidy powers

What does the UK

want?

The UK would prefer

to replace the EU’s

“state-aid” rules with

the much looser

subsidy controls in the

trade and co-operation

agreement negotiated

after the protocol. This

would strip out the

need to “notify” the

European Commission

of all subsidies that

might have an impact

on trade with Europe’s

single market.

The commission can

block subsidies it does

not like, potentially

cutting Northern

Ireland off from post-

pandemic recovery aid

or tax breaks.

Brussels’ decisions

are taken without

arbitration and

enforced by the

European Court of

Justice, with no

representation for the

UK or Northern

Ireland. The EU insists

that it would not block

any of the subsidies

envisaged by the UK,

as European

governments are

implementing similar

or identical policies.

The protocol says

EU law applies and the

UK accepts that EU

judges would have the

final decision. To

remove EU law would

take Northern Ireland

outside the single

market, creating a new

Irish border or checks

between Ireland and

the European

mainland.

It is understood the

UK would be happy for

a “Swiss model” of

arbitration on subsidy

disputes that gives the

ECJ the role as final

arbiter on points of law

but allows settlements

to be negotiated.

How likely is a

compromise?

These demands are

seen as “ideological”

and would require

rewriting the protocol

with the consequence,

in the EU’s view, of

undermining the single

market. If they stay on

the table, the EU

would see it as a

marker of the UK’s

refusal to endorse

the “implementation of

the protocol”.

Maros Sefcovic, the

EU’s lead negotiator,

notes that businesses

and most parties in

Northern Ireland do

not make the demand,

which is seen as a

fixation of Eurosceptic

Conservatives.

The EU refusal to

rewrite the protocol is

a red line but,

importantly, not for all

time. If the protocol

can be made to work

on customs checks and

express or green lanes

then future changes,

such as adding extra

layers of arbitration to

lessen the ECJ’s direct

role, would be possible.

Contentious rating:

JOSHUA BRATT

The head boy Pupils of Bourne Primary

School, South Ruislip, in Downing Street

for Middlesex Day, which remembers the

actions of the West Middlesex Regiment in

the 1811 Battle of Albuera in Spain. Below,

Boris Johnson visits Thales in Belfast, the

makers of Nlaw and Starstreak missiles