Brevia Consulting is providing a weekly round-up and analysis of the UK headlines. This week, read about Ofgem announcing its energy price cap for Q4 2022, Treasury Select Committee Chair Mel Stride penning a letter to the Chancellor and the OBR regarding an emergency budget, and the latest meeting of the National Drought Group.
OFGEM SETS OCTOBER PRICE CAP AT £3,459
Ofgem has set its Q4 2022 price cap at £3,549, which will come into effect on 1 October 2022.[1] This is just £4 lower than the final Cornwall Insight prediction of £3,553.75.[2] The announcement of the new price cap comes only days after Keith Anderson, CEO of Scottish Power, reportedly met with both Business Secretary Kwasi Kwarteng MP and Scottish First Minister Nicola Sturgeon to present a £100bn plan to freeze the energy price cap at the current level for two years.[3] With the next Conservative Party leader due to be announced on 5 September, the winner will face a colossal challenge in the first month of their premiership. The current favourite, Liz Truss, has ruled out a price cap freeze and promised instead to support households through tax cuts and eliminating green levies on energy bills.[4]
MPs RAISE EMERGENCY BUDGET CONCERNS
The House of Commons Treasury Select Committee has written to the Chancellor and the Office for Budget Responsibility (OBR) about a potential emergency budget once a new Prime Minister is in place.[5] The OBR usually has ten weeks’ notice of a budget in order to provide an independent forecast of the economy and the UK’s fiscal position, but sources suggested Liz Truss, who is the heavy favourite to be the next PM, may announce an emergency budget in September.[6] In his letter, Mel Stride, Chair of the Committee, sought an assurance that the Treasury is assisting the OBR on a forecast to be published alongside any emergency budget. Without such a forecast, Stride says, the Chancellor would be ‘flying blind’. Truss has now backtracked on her plan for an emergency budget, instead planning a ‘targeted fiscal event’ in her first weeks in office.[7]
GROWING CONCERNS OVER PROLONGED DROUGHT
The Environment Agency has warned that England’s drought could continue into next year, adding further concerns to the possibility of extended restrictions.[8] The National Drought Group, comprised of the Environment Agency, water companies and other representatives from the sector, met on Tuesday this week to discuss the response to the ongoing drought. Whilst there had been hopes that the rain in the coming weeks and months would ease pressures, the group has warned of continuing shortfalls next year.[9] The announcement has raised questions over the lack of sufficient preparedness to alleviate the drought, particularly following recent and expected rainfall. Currently six water companies have announced hosepipe bans, but concerns over the impact of a prolonged drought are growing, particularly for businesses that are already grappling with the ongoing energy crisis.[10]
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Notes
[1] Ofgem, ‘Ofgem updates price cap level and tightens up rules on suppliers’, 26 August 2022, Link
[2] Cornwall Insight, ‘Cornwall Insight release final predictions for October’s Price Cap’, 22 August 2022, Link
[3] BBC News, ‘Scottish Power’s £100bn plan to freeze energy bills for two years’, 24 August 2022, Link
[4] Huffington Post, ‘Rishi Sunak Rejects Calls From Energy Firms To Freeze Price Cap At Current Rate’, 24 August 2022, Link
[5] Treasury Committee, ‘Treasury Committee writes to Chancellor and OBR on potential emergency budget’, 23 August 2022, Link
[6] Bloomberg, ‘Liz Truss Plans Emergency Budget Without Checks to Tackle Surging Energy Costs’, 22 August 2022, Link
[7] Daily Mail, ‘Liz Truss backtracks from plans for ’emergency budget’ – but vows to still push ahead with tax cuts – ahead of latest Tory hustings clash with Rishi Sunak tonight’, 23 August 2022, Link
[8] Environment Agency, ‘National Drought Group agrees further steps to manage drought now and in the long term’, 24 August 2022, Link
[9] Sky News, ‘Water chiefs brace for drought in England to last into next year’, 23 August 2022, Link
[10] 9 Business Green, ‘’New normal’: Businesses urged to prepare for risk of prolonged drought’, 24 August 2022, Link
