Key eventsShow key events onlyPlease turn on JavaScript to use this featureClosing postTime to wrap up….. here are today’s main stories so far:Sarah ButlerMorrisons is closing a fruit-packing plant in Bradford, putting 450 jobs at risk in the supermarket’s home city where it traces its roots back to 1899.The debt-laden supermarket chain, which is battling to save costs after a takeover in October 2021 by the American private equity group Clayton Dubilier & Rice, said it was moving operations from the Cutler Heights area of the West Yorkshire city – its first ever fruit-packing plant – to another plant in Thrapston, Northamptonshire, and a distribution centre in Wakefield in the second part of this year.Morrisons said that while the jobs in Bradford were at risk, about 400 roles would be created in Thrapston and Wakefield. More here….The Bank of England definitely has “a positive scorecard” in its fight against inflation, financial services minister Andrew Griffith says.Griffith is apearing before the House of Lords’ Economic Affairs Committee, as it holds an inquiry into the BoE’s forecasting track record.Griffith also told the committee that Britain’s inflation trends have more in common with those in other Western countries than differences (although, the OECD has singled the UK out today as the only place with rising inflation).🇬🇧 UK FINANCIAL SERVICES MINISTER GRIFFITH: UK INFLATION TRENDS HAVE MORE IN COMMON WITH OTHER WESTERN ECONOMIES THAN DIFFERENCESBANK OF ENGLAND DEFINITELY HAS A POSITIVE SCORECARD, IN GOVERNMENT'S VIEW- Reuters News— PiQ () July 4, 2023
How to repair English water after Thames Water crisisCommon Wealth, the think tank, have published a new report today into England’s water sector, in the light of the crisis at Thames Water.In it, Dr Ewan McGaughey of King’s College London outlines how the Water Industry Act 1991 allows any water company that is “likely to be unable to pay its debts” to be placed into administration.A water company which has seriously breached duties such as “improving” pipes (not allowing leaks), or to “cleanse” sewers and ensure they are “effectively drained” (not dumping sewage into rivers and onto beaches) could also be put into administration, the report says.Dr McGaughey explains:
This can lead to the transfer of the water enterprise to a new entity. Where a company is insolvent, shareholders will usually receive no money.
And in the long run, the report (online here) argues that the public ownership for the water industry should be restored.Dr McGaughey writes:
Using “special administration”, the upfront public cost will be minimal since water companies are insolvent if made to carry out duties without subsidies. Frivolous debt may be subordinated. UK and other pension funds should no longer bear the risk of failing water firms, or be able to take dividends through taxpayer subsidies or regulatory subsidies by not paying for pollution.
England should follow the model of Dutch law and ban re-privatisation of water resources, including sewer networks.
Last week, regulator Ofwat said Thames Water has “strong liquidity”, but needs to improve its financial resilience.1/7💧🚿 With Thames Water in crisis, what can be done?Our new briefing from explores how to transition to public ownership to deliver fair bills, clean water and democratically-run services.https://t.co/NT9IeWOxk6— Common Wealth () July 4, 20232/7 The crisis at Thames Water highlights systemic problems with water privatisation. Debt-fuelled dividends for shareholders have damaged infrastructure, with investors prioritising profit maximisation over decent water services.— Common Wealth () July 4, 20233/7 Proposed “social purpose” models do not address the for-profit, private ownership model and structural issues that sit behind many of the sector’s problems, nor will it reduce the cost of funding investment, as investors will still seek high returns.— Common Wealth () July 4, 20234/7 The special administration procedure in the Water Industry Act allows the government to return water companies to public ownership, reducing or eliminating their debts. This can cut the upfront costs of public ownership.— Common Wealth () July 4, 20235/7 Let's move towards democratic public ownership. England should follow the examples of Scotland, and the vast majority of countries, restoring public ownership.We argue to go a step further, and ban water privatisation like the Netherlands has.— Common Wealth () July 4, 20236/7 Directors, shareholders and creditors should be held accountable for breaches of duty.Alongside democratic public ownership, greater transparency can improve future conduct and prevent illegitimate profits.— Common Wealth () July 4, 20237/7 We need a social regulator for publicly owned water that prioritises safe and high-quality water and sanitary services, clean waterways and beaches, and infrastructure investment.It's time to end privatisation and democratise our water system.https://t.co/NT9IeWOxk6— Common Wealth () July 4, 2023Updated at 15.29 BSTOver in parliament, Rishi Sunak has been sidestepping questions about whether he will hit his target of halving UK inflation by the end of the year.Sunak is testifying to the Commons liaison committee, which comprises the chairs of all Commons select committees.My colleague Andrew Sparrow has the details:Q; What are your chances of halving inflation?Sunak says he will leave that to the forecasters.But inflation is “more persistent than people anticipated”, he says.Q: What percentage chance do you think you have of hitting your target?Sunak refuses to say.Q: Do you accept that you are more likely to miss your target than when you set it?Sunak says he does not consider that. He is focused on doing what he can to bring inflation down.Q: Do you have confidence in what the Bank of England is doing?Sunak says of course he supports them. Over the past 20/25 years, their track record has been very strong. He does not think anyone wants to return to a world where the government sets interest rates.Here’s all the action:Updated at 14.56 BSTIneos owner Jim Ratcliffe accuses UK regulator of being ‘hostile to business’Sir Jim Ratcliffe, the owner of the chemicals giant Ineos, has accused Britain’s competition regulator of becoming “increasingly hostile to business”.Ratcliffe took a break from his pursuit of Manchester United to criticise the Competition and Markets Authority for blocking Ineos’s purchase of a concrete additives business being sold by the Swiss chemicals group Sika earlier this year.Ratcliffe said the CMA’s decision was “yet another example of a deal being stopped that would benefit the UK”, the FT reports.Ratcliffe accused the CMA of “building a reputation as an overly aggressive regulator with little regard for the impact of its decisions on UK business”.He also said:
Add to this, the ridiculous North Sea windfall tax and continuing high energy costs and we are seeing a government that is driving business out of the UK.
The CMA was also criticised by Microsoft and Activision Blizzard for blocking their merger earlier this year.The regulator, though, has insisted that “effective merger control is pro-business and pro-growth”.UPDATE: A CMA spokesman said:
“It is critical when approving a potential buyer that we don’t allow new competition problems to develop.
“We note that Ineos is one of only three major suppliers of a key product that Sika and its competitors rely on.”
Updated at 15.38 BSTUK only G7 country with rising inflation, says OECDThe UK is experiencing a sharper inflationary squeeze than other advanced economies, a report from the Organisation for Economic Co-operation and Development shows.The OECD reports that the UK is the only member of the G7 where inflation rose in May.Year-on-year inflation in the G7 fell to 4.6% in May 2023, from 5.4% in April, the OECD reports, which is the lowest level since September 2021.It says:
Inflation declined in all G7 countries apart from the United Kingdom, where inflation edged up, as core inflation continued to rise.
The lowest inflation rates among G7 countries were registered in Japan and Canada, both below 3.5%.In the UK, the Consumer Prices Index including owner-occupiers’ housing costs (CPIH) rose by 7.9% in the 12 months to May, up from 7.8% in April.But headline CPI (which is tracked by the Bank of England) was flat at 8.7% in the year to May.The OECD adds:
Food and energy inflation remained the main contributors to headline inflation in Italy, while core inflation was the main inflation driver in France, Germany, Japan, the United Kingdom and the United States.
Inflation across the G7 Photograph: OECDUpdated at 14.28 BSTThe government minister Johnny Mercer has suggested banks could be “profiteering” by failing to pass on interest rate increases to savers, while continuing to hike mortgage rates.Mercer told Sky News:
Interest rates are going up and the government wants to see those passed on to savers.
You don’t want to see any profiteering like this, particularly when life is really tough for people out there at the moment around interest rates.
Today’s Moneyfacts data showed a four percentage point difference between the average two-year fixed mortgage (6.47%), and the average easy access savings rate (2.45%).Updated at 13.38 BSTFull story: Average rate on five-year fixed mortgage deal in UK climbs above 6%Zoe WoodA typical five-year fixed mortgage deal in the UK now has an interest rate of more than 6%, putting further pressure on borrowers who are hoping to buy a home or reaching the end of their existing deals.Data from the financial information firm Moneyfacts shows the cost of a five-year deal for homeowners rose to 6.01% on Tuesday, up from 5.97% on Monday. It is the highest level since last November, after mortgage rates had been driven up by the mini-budget chaos of last autumn.The average two-year fixed deal is now 6.47%, up from 6.42% on Monday.A chart showing UK mortgage ratesMortgage lenders have been increasing rates and withdrawing deals after the Bank of England raised interest rates by half a point to 5% last month in an attempt to curb high inflation.Threadneedle Street has now raised interest rates 13 times since December 2021. But inflation – which measures the rate at which prices are rising – remained stubbornly high at 8.7% in May. The UK’s official inflation target is 2%.The rapid rise in the base rate is bad news for millions of borrowers whose home loan deals are due to end in the coming weeks and months, as many currently enjoy a rate of less than 2%. The prospect of a huge jump in mortgage payments comes as Britons struggle to cope with higher food and energy bills.More here:Jeremy Hunt has urged UK banks to pass on higher interest rates to savers.The chancellor says the FCA has his “full backing” ahead of the regulator’s meeting with banks to examine the gap between spiralling mortgage costs and savings rates.Increased interest rates must also be passed on to savers. has my full backing to ensure banks are passing on better rates as they should be. https://t.co/7JSWyEWewA— Jeremy Hunt () July 4, 2023Updated at 13.15 BSTThe latest uptick in mortgage rates spells even more misery for borrowers, says Myron Jobson, a senior personal finance analyst at interactive investor:
It is a gut punch to the around 800,000 households with a fixed-rate mortgage deal set to expire in the second half of this year. Higher mortgage rates means borrowers end up shelling out more in interest over the life of their loans. This translates into higher monthly mortgage payments which would weigh heavily on homeowners already struggling to battle the inflationary beast in other areas of expenditure like food bills.
Many borrowers will be desperately rubbing their figurative crystal ball to get an idea of where mortgage rates are heading in the not too distant future. When interest rates are on the rise, deciding between a short- or long-term fixed-rate mortgage deal requires careful consideration. Ultimately the decision between a short- or long-term fixed-rate mortgage depends on your individual circumstances. It is worth consulting a mortgage adviser to explore your options.
Nationwide building society reported last Friday that house prices had fallen by 3.5% in the last 12 months.This “recalibration” in house prices is the only positive outcome of higher rates for buyers, Jobson adds:
The latest increase in mortgage rates threatens to shatter the resilience in house prices in June observed in Nationwide’s latest house price index.
But the combination of higher mortgage rates and already inflated home prices has significantly limited what wannabe homeowners can afford, pushing many of them out of the market. This has a ripple effects on the rental market. With fewer home sales, more people will continue to rent, potentially causing rent costs to go up.
Updated at 13.12 BSTSandra LavilleWater companies must pay to fix illegal sewage discharges rather than pass the cost to customers, lawyers for the charity WildFish are to argue in the high court today.The campaign group will allege at a judicial review that the government’s £56bn plan to reduce raw sewage dumping from storm overflows is illegal. More details here …Updated at 13.11 BSTThames Water fined £3.3m for 'reckless' sewage dischargeA Thames Water’s Mogden sewage treatment works Photograph: Ben Stansall/AFP/Getty ImagesThames Water has been fined £3.3m for a “reckless” incident in which “millions of litres” of undiluted sewage was pumped into rivers near Gatwick airport in 2017.A two-day sentencing hearing at Lewes crown court was told there was a “significant and lengthy” period of polluting the Gatwick stream and River Mole between Crawley in West Sussex and Horley in Surrey on 11 October 2017.The judge Christine Laing KC said on Tuesday that said she believed Thames Water had shown a “deliberate attempt” to mislead the Environment Agency over the incident, such as by omitting water readings and submitting a report to the regulator denying responsibility.Thames Water pleaded guilty on 28 February to four charges relating to illegally discharging waste in October 2017.This penalty comes as the utility giant, which serves 15 million households across London and Thames Valley, faces concerns over its future amid mounting debt.The record fine against a water company for illegal discharge of sewage is held by Southern Water at £90m for nearly 7,000 incidents across Hampshire, Kent and Sussex in a case brought by the Environment Agency in 2021.Updated at 13.10 BSTSainsbury's CEO: Higher wages will fuel food inflationFood prices in Britain will not return to where they were before Russia’s invasion of Ukraine, the boss of Sainsbury’s has warned.Hours after announcing that food inflation was falling, Simon Roberts predicted that a permanent rise in labour costs will mitigate the easing of commodity and energy pressures.Roberts has cautioned that food inflation will still be a challenge going forward as higher labour costs were now fixed into the operating models of food retailers and suppliers.He said that while falls in commodity costs had driven recent price cuts in fresh food products, such as milk, butter, bread, pasta and rice, prices of packaged goods would be more stubborn.Roberts told reporters:
“We should just remember that energy costs are still high and labour costs have been elevated permanently.
“So we would expect inflation to continue to improve, but it’s not going to go back to where it was before because the cost of producing food is clearly elevated from where it was a year or two back.
Basic pay is growing by 7.2% per year, according to the latest labour market data – the fastest rate on record, but still slower than CPI inflation which was 8.7% in April and May.Paul Welch, the CEO of the London-based adviser LargeMortgageLoans.com, fears that mortgage rates will continue to rise until inflation is brought under control.Welch says:
As long as swap rates, the rates which banks pay to borrow money, remain high, then fixed rates for mortgages will continue to rise.
If core inflation doesn’t come down significantly this month, or God forbid rises, then interest rates and swap rates will continue to go up and up. It gives me no pleasure to say that we could realistically see some fixed rates reach 7% before the summer is out.
Currently, 10- and 15-year swap rates are the best value for money, so if you like the stability of a fixed rate and you can afford to fix for the long term, then you could try a 10-year fixed rate mortgage, with a rate of less than 5% currently.
🇬🇧 UK Five-Year Mortgage Rate Breaches 6% for First Time This YearThe average five-year fixed-rate home loan rose to 6.01% on Tuesday, edging closer to the 14-year peak reached at the end of 2022.The average two-year fixed-rate deal rose to 6.47% after breaching 6% for the… pic.twitter.com/0iMx9xvU9C— PiQ () July 4, 2023Updated at 12.09 BSTThe Liberal Democrats’ Treasury spokesperson, Sarah Olney, has urged the government to do more to help borrowers, after the average five-year fixed mortgage deal surpassed 6% this morning.She said:
This is yet more mortgage misery for homeowners on the brink.
Rishi Sunak asking homeowners to hold their nerve is sounding more tin-eared by the day.
It shows this Conservative government is just totally out of touch.
Conservative ministers sent mortgages spiralling through all their chaos and incompetence; now they are refusing to lift a finger to help.
The Lib Dems are proposing a £3bn emergency mortgage protection fund to protect people whose homes would otherwise be repossessed due to rising interest rates.Updated at 11.57 BSTLe Pain Quotidien in Highgate village. Photograph: Roberto Herrett/AlamyThe bakery and coffee chain Le Pain Quotidien has shut nine UK sites with the loss of 250 jobs after falling into administration.BrunchCo UK, the company trading as the high street chain, has confirmed it hired administrators from Kroll.Eight cafes in London and one in Oxford’s recently refurbished Westgate Centre have shut as a result of the insolvency.The Le Pain Quotidien site at St Pancras railway station run by sister company SPQ Holdings Limited will continue to operate.Updated at 10.58 BST