Cost of living – latest: Millions of O2 and Virgin Mobile customers face 17% price hike – as Aldi opening in new towns
A major train company has cut ticket prices and Aldi is creating thousands of UK jobs – but there is less good news for McDonald’s fans, who saw prices of five products increase; and the owner of British Gas has seen profits soar over £3bn, renewing calls for a windfall tax.
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Key points
British Gas owner reports profits over £3bn, leading to new calls for fresh windfall tax View post
Explained: Are my massive bills fuelling Centrica’s profits? View post
O2 and Virgin Mobile customers face price hikes up to 17.3% in April View post
Aldi to open new UK stores and create 6,000 jobs View post
Britain’s biggest train company cuts some fares by 15% View post
Use our spending calculator to see how much inflation has hit the things you buy View post
Your dilemmas: SO Energy haven’t sent me a bill for nine months – what can I do? View post
Live reporting by Brad Young
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9h ago
12:30
That’s all for today – thanks for following along
We’ll be back on Friday with more news on the cost of living – meantime, scroll down to read about price hikes for McDonald’s customers – and for anyone with an O2 or Virgin phone contract.
We’ve also been posting reaction to Centrica – the owner of British Gas – seeing its profits rise over £3bn while most of Britain struggles to pay its energy bills.
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9h ago
11:59
Nurses to stage new 48-hour strike
Tens of thousands of nurses will stage a 48-hour strike at the start of next month, their union has announced, in a worsening dispute over pay and staffing.
The Royal College of Nursing (RCN) said no services will be exempt, meaning the strike will involve for the first time nursing staff working in emergency departments, intensive care units, cancer care and other services that previously did not take part.
The union has accused the government of refusing to engage in negotiations.
The strike will run continuously for 48 hours from 6am on 1 March.
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10h ago
11:30
Sticking with the big story of the day – and Centrica has defended trebling profits
The boss of British Gas owner Centrica has defended its £3.3bn in profits last year after it was accused of “rampaging energy profiteering”.
The company reported its profits had trebled from 2021 to 2022 and announced a major handout to shareholders.
Campaigners and politicians say energy companies are benefitting from the same high prices which force people to choose between heating their homes and feeding their families.
But chief executive Chris O’Shea suggested the government should pay for people’s bills if they can’t afford them.
He said: “In the past, the old DSS [Department for Social Security] would make direct payments. If you couldn’t afford your rent, they would pay for your rent.
“Something to really give direct help to customers, I think is probably the easiest thing.”
He said the cost of food, rent, mortgages and council tax also hampered people’s ability to pay for their energy.
“There are clearly a bunch of people in the UK that are struggling to pay the bills.”
Mr O’Shea said he would use the profits, which came overwhelmingly from nuclear power plants and energy trading, to help customers and the environment.
“Profits at Centrica have a purpose, and that purpose is net zero, that purpose is helping customers having lower bills going forward.”
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10h ago
11:17
More Royal Maid strikes to take place
Royal Mail workers have voted overwhelmingly to continue with a campaign of industrial action in a bitter dispute over pay, jobs and conditions, the Communication Workers Union announced.
Read more on this breaking story here…
Royal Mail fires warning shot over jobs and pay as union secures new strike mandate
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10h ago
11:10
Are my massive energy bills fuelling Centrica’s profits?
Centrica has followed much larger companies such as BP and Shell in reporting annual results for last year which broke previous records – so are they profiteering? The Press Association has tried to explain all…
Did Centrica make its bumper profit from my energy bill?
Not directly. Centrica owns British Gas which sells energy to about eight million households and businesses.
These customers have been paying record-high energy bills for the last year.
But while British Gas collected these payments from customers, it largely has to spend most of that money paying for the gas and electricity that it buys for its customers.
The company made just £8 post-tax profit per customer, a reduction from £13 the year before.
So no, the massive bill that you paid to British Gas did not contribute much at all to Centrica’s profits. In fact, the company spent more helping customers than it made in profit from British Gas Energy.
Where did Centrica’s profit come from?
This is where it gets more complicated because there is a clear indirect link between energy prices and Centrica’s profits.
The massive jump in energy prices has meant that the price the company can charge for the energy it produces has risen.
This means that while British Gas is not making much of a profit, the parts of Centrica which make energy are combing it in.
For example, the business’s nuclear power plants sold each megawatt hour of electricity they produced for £140 last year, up from £46.60 a year earlier. The company has already sold some of the nuclear power it expects to produce in 2024 for £240 per MWh.
As a result, the nuclear arm swung from a loss of £38m to a profit of £724m.
The company’s gas is also selling for more than it has in the past.
The other big profit centre for Centrica was the company’s trading division. This part of the business buys and sells energy on the market, taking a profit along the way.
Traders can take advantage of volatility in the market, and the last year allowed them to make a massive £1.4 billion in profit, up 1,900% compared with 2021.
What are energy prices doing at the moment?
Both oil and gas prices have eased back from their recent highs. Oil now costs around 86 dollars per barrel, not an unusual level historically.
Gas prices have also dropped significantly from last year’s peaks. But at around £1.30 per therm they are still a little under three times higher than they had been through much of the 2010s.
What will happen to my energy bills?
Most households will see their energy bills soar again in April.
This might seem paradoxical but this is because of the impact of Government support.
At the moment the average annual bill is £2,500 under the Government’s support scheme for households. From April that support becomes less generous and the average bill will rise to £3,000.
Without this support, the average bill would likely have fallen from £4,279 today to £3,338 from the start of April, according to the latest forecast from Cornwall Insight.
What has the government done?
Ministers have hit Shell, BP and Centrica and other oil and gas companies with a 35% extra windfall tax amid their massive profits.
However, this is limited to the companies’ North Sea operations. The government does not tax profits that these companies make abroad.
There is also a separate windfall tax on wind farms, nuclear power plants and other power generators.
Centrica said it expects to pay an extra £2.5bn in windfall taxes over the years that the taxes are in place.
The government is also helping households with their energy bills. At the moment people pay 34p per unit of electricity and 10.3p per unit of gas that they use, a lot lower than would have been the case if the Government had not stepped in.
The government has also offered an additional £400 energy discount to every household in the country and is supporting businesses with their bills.
Will energy and fuel prices go back to their pre-COVID levels?
Gas prices are unlikely to drop back to what we used to consider “normal” prices.
The dispute between Russia and Europe is now so big that it seems unlikely that the gas will start flowing like it used to, even if hostilities cease in Ukraine.
That will leave Europe reliant on liquid natural gas imports for years to come – until it can replace gas with renewable energy.
To make it liquid so it can be transported by ship, natural gas is cooled to -160C. This is an expensive process in its own right, so adds to the price that people have to pay for LNG, compared with gas transported by pipeline.
Therefore, as long as Europe is more reliant on LNG than it has been in the past, gas bills are likely to remain higher.
As for the price of fuel, diesel and petrol prices are falling, according to data from the RAC, although they still have some way to go before coming back to more normal levels.
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11h ago
10:31
Three launches £12 phone tariff for people on benefits
As many big-name mobile phone companies hike prices (see last post), one brand has launched a cheaper tariff for people receiving benefits.
Three UK’s sub-brand Smarty is offering a rolling £12-a-month plan with unlimited calls, texts and data (including 5G).
The tariff, which can be changed or cancelled at any time, is available to people receiving income-based employment support, income-based job seekers benefits, income support, pension credit or universal credit.
“With the cost-of-living crisis continuing to put financial pressure on many of our customers, Three is committed to playing its part in the solution,” said Elaine Carey, Three’s chief commercial officer.
“More than ever, people are in need of support and that should include access to affordable connectivity without restrictions.”
The news comes as O2 and Virgin Mobile customers face price hikes of up to 17.3% in April while BT and EE announced price rises of up to 14.4%.
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11h ago
10:01
Mobile phone customers face price hikes over 17%
O2 and Virgin Mobile customers face price hikes up to 17.3% in the coming months.
Virgin Media O2 uses the Retail Price Index (RPI) measure of inflation for January, plus 3.9%, to determine price rises for the following April.
Customers who are mid-contract will see their airtime bill increase from April.
Prices will rise by 10% on average across all mobile customers, but the higher figure applies to calls, texts and data paid for on O2 Refresh or Virgin Mobile Freestyle plans.
Other providers like BT, EE and Sky have already announced price rises of up to 14.4% in spring.
Ofcom has launched a review of mid-contract, inflation-linked phone and broadband price rises.
Consumer groups have urged broadband firms to drop £200 penalties for customers leaving contracts ahead of price rises.
A Virgin Media O2 spokesperson said: “We know that price increases are never welcome but, unlike other providers, we freeze the cost of device repayments and are only changing our airtime prices, meaning average bills will go up by an effective 10.0% or less than 10 pence per day.
“This is below inflation and reflects the fantastic value we provide for connectivity that is used almost constantly.
“These changes occur as our own business costs rise and we invest heavily in our mobile network to keep pace with ever increasing usage, rollout new technologies like 5G and deliver valuable services that matter to our customers – whether that’s flexible plans, inclusive EU roaming or access to exclusive events and savings through Priority.”
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11h ago
10:00
Your dilemmas: SO Energy haven’t sent me a bill for nine months – what can I do?
SJGrieve
SO Energy hasn’t sent me a bill for my gas & electricity supply since last May, claiming there is a ‘technical problem’. My monthly direct debits and the government’s recent allowances have all been paid in. How do I get SO Energy to resolve this?
Megan Baynes, cost of living reporter says:
The good news here is you have been paying your direct debit, so unless you are wildly out with the estimates for your energy (eg paying £10 for a four-bedroom house), this should be fairly easy to resolve.
It sounds like everything is being paid up, but you want a bill to show how much is being taken off your account – and rightly so.
I contacted SO Energy to see what they could do to help, and they told me: “We would always encourage our customers to reach out to us to resolve any outstanding issues and do encourage them to discuss this matter with us.
“They can contact us on Exec.Complaints@so.energy or by calling 0300 1115 050 and we will look into this matter immediately.”
I would encourage you to make a record of all the times you have contacted them to try and resolve this – it will come in handy later to show you tried to get the situation sorted.
If possible, ask them to install a smart meter at your property so you can keep a close eye on exactly how much energy you are using and ensure when the bill does come, it’s for the right amount.
If after eight weeks this hasn’t been resolved, you can escalate your issue to the Energy Ombudsman.
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12h ago
09:30
Money troubles ‘pushing people to the brink’
A major mental health charity has raised concerns over the effect of unaffordable bills on suicide risk.
Dr Sarah Hughes, chief executive of Mind, warned the number of people who took their own lives increased after the financial crash in 2008.
Mental health has fallen too far down the political agenda, she said.
“The mental health of the nation is probably worse than it has ever been,” said Dr Hughes.
She continued: “We are really worried. This feels like a bit of a perfect storm that we need to take hold of.
“We have got the recovery from the pandemic, we have got the cost of living crisis and we can’t underestimate the impact of the war in Ukraine and global instability.”
Dr Hughes said services need to catch people before their mental health deteriorated.
“We know we can stop someone going into mental health crisis by helping them resolve a benefits problem or legal advice for their housing,” she said.
But the government needs to tackle low income, poor housing and flaws in the benefits system which undermine psychiatric care provided, she explained.
A Department of Health and Social Care spokesperson said the government was investing an extra £2.3bn a year into mental health services and £150m into schemes addressing pressures on urgent and emergency mental health care.
Anyone feeling emotionally distressed or suicidal can call Samaritans for help on 116 123 or email jo@samaritans.org in the UK.
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12h ago
09:00
Spring budget predictions – Higher energy bills and more free childcare predicted
More expensive energy bills, more free childcare and an extended fuel duty cut are among the changes Which? anticipates in the spring budget.
The chancellor, Jeremy Hunt, will present his budget in the House of Commons on 15 March, his second since the controversial mini-budget announced by his predecessor last autumn.
Consumer advice brand Which? has set out what it predicts will be included.
Energy cap rise
Jeremy Hunt plans on raising the energy price guarantee – which meant the average household bill wouldn’t top £2,500 – to £3,000 for the next year.
He has already doubled down on the decision in an interview with the BBC, so Which? predict the plans will go ahead come 15 March.
Tax cuts unlikely
Last November, Mr Hunt announced an extended freeze on personal allowance and income tax thresholds – effectively a tax rise on millions of workers.
Which? believes it is unlikely the chancellor will introduce tax cuts.
Childcare
30 hours of free childcare could be extended to children aged between nine months and three years, the consumer website suggests.
Pensions
A government drive to encourage people aged over 50 back into work could see the chancellor increase the lifetime allowance – a limit on how much you can save untaxed in your pension.
The age at which you can access your pension, currently 66 but set to increase to 68 by around 2045, could also increase sooner.
Fuel duty
A 5p cut to fuel duty introduced in spring is set to end in March, but the budget could see this extended due to prices at the pumps remaining high.
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13h ago
08:26
Wilko plans to ‘cut 400 jobs in fight for survival’
Wilko plans to cut 400 jobs following a fall in sales, The Guardian reports.
The business removed 150 assistant store managers, 95 contact centre workers and reduced hours for team supervisors in 150 stores, according to GMB union figures.
Dozens of head office management roles across retail operations, merchandising, marketing and finance were also given the chop.
One employee told The Guardian the changes came as Wilko struggled to pay suppliers.
“Sales remain poor and rumours are rife about the future of the business,” they said.
The paper reported Nadine Houghton, GMB national officer, as saying “the business is in a fight for survival”.
Earlier this year, the home and garden giant borrowed £40m from restructuring specialist Hilco.
Chief executive Mark Jackson told Sky News: “We’ve already begun our turnaround programme to drive Wilko forward.
“As part of this we quickly identified significant changes to the Wilko operating model to enable us to stabilise the business and then thrive again.
“This includes some planned and considered changes to our management structure at both our stores and head office.
“We can’t comment on the numbers of team members affected as conversations are still ongoing, but it goes without saying, we’re fully supporting any affected individuals.”
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14h ago
07:29
Use our spending calculator to see how much inflation has hit the things you buy
Food prices have really accelerated upwards in recent months, most notably among dairy products but also more recently among meat, fish and carbohydrates like pasta and chips.
Semi-skimmed milk costs 46% more than last year, two pints will set you back £1.31 on average now compared with 90p in January 2022, a rise of 41p. A 1kg block of British cheese is up nearly 40%, from £6.92 on average to £9.55.
Children’s clothes are among the shop-bought goods that have had the highest price rises. They have gone up by 15% on average but some items have seen even more extreme rises.
The price of boys’ jeans have increased by almost 40% to £30.95 in January 2023, compared with £22.31 last year.
How much has your individual spending gone up? Use our calculator to see how much prices are rising on the groceries, clothing, and leisure activities you pay for…
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14h ago
07:13
Ofgem admits its ban on companies like British Gas forcing the installation of prepayment meters only lasts until March
A ban on the forced installation of energy prepayment meters only extends until the end of March, regulator Ofgem has revealed.
The practice was suspended after The Times claimed debt collectors were installing the expensive meters in people’s homes on behalf of energy companies, leaving customers to choose between heating or eating.
British Gas was among those companies hit with the allegations – as we have been discussing, its owner today reported profits of £3.3bn for 2022.
Regulations mean energy providers are very unlikely to disconnect a customer, but prepayment meters pose a risk to those already struggling to pay their bills by incentivising “self-disconnection”.
In simple terms, if a customer can’t afford to top up they will run out of gas and electricity.
Ofgem is set to complete a review of the treatment of vulnerable customers on March 31, which coincides with the end of the prepayment installation ban.
The review could potentially conclude that the ban is extended – or made permanent as many debt charities have demanded.
Read more here…
Energy regulator reveals end to forced installation of prepayment meters is temporary
Sky News
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15h ago
06:20
‘Misleading’ money-saving Huel ads banned
Huel adverts claiming its meal-replacement products could save people money on their food bills have been banned for misleading customers.
Adverts seen on Facebook in August and September 2022 suggested a month’s worth of the vegan shakes and bars, which costs around £50, was cheaper than standard meals – but the figure only accounted for one portion a day.
The Advertising Standards Agency has said the company did not actually show that its products were cheaper than traditional foods.
Read reporter Faiza Saqib’s analysis here…
‘Misleading’ Huel shake adverts banned | Business News | Sky News
Sky News
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15h ago
05:38
Disabled people ‘can’t afford to eat’ while energy giant’s profits soar
Disabled people “can’t afford to eat” due to soaring energy costs while the owner of British Gas reports “obscene” profits, a disability charity has said.
We reported earlier this morning how Centrica earned £3.3bn in underlying operating profits in 2022 – treble those in 2021.
Now Scope, which provides services for and campaigns on behalf of disabled people, has called on the company to discount its rates.
“It’s obscene that energy companies continue to make massive profits as disabled people face devastating situations because they can’t afford enough energy,” said Tom Marsland, policy manager at Scope.
“Life costs a lot more when you’re disabled. We’re being 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.”
Scope and Age UK have signed an open letter to the government asking them to introduce a cheaper social tariff for some energy users.
This is not the only backlash to Centrica’s figures, which the Institute for Public Policy Research called “scandalous” and “underserved.”
Dr George Dibb, head of the Centre for Economic Justice at the thinktank, said the profits “come directly from the pocket” of bill-payers and there was no reason for making higher profits.
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16h ago
04:47
Can a heat pump dryer save you big money – and if so, how much?
Sky News has teamed up with Budgeting Mum, one of scores of experts who gained prominence on social media during the cost of living crisis.
Last time out she brought you a tip on how to knock £173 off an iPhone 12 and highlighted credit options to pay for your phones up front, which could save you money in the long run.
Now she’s turned her attention to whether it’s worth investing in a heat pump dryer – which are more expensive than regular tumble dryers but use less energy.
How many loads would it take to save money. Find out…
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17h ago
04:04
Aldi to create 6,000 jobs and open four stores in UK
Aldi is building new stores in four locations and hiring more than 6,000 workers in the UK.
The discount supermarket will open shops in Huddersfield and Shrewsbury within the next month, and announced plans for two more in Norwich and Newcastle.
Another 450 jobs will be created in 11 of its regional distribution centres.
The news comes after Aldi reported double-digit sales growth for the Christmas period.
It is consistently the cheapest supermarket in the Which? monthly comparison, seeing off competition from its closest rival, Lidl.
The average price of a shopping basket at Aldi in January was £82.03, according to Which?
More than 40,000 people already work for the supermarket in the UK, where more than 990 of its shops are based.
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17h ago
03:57
Britain’s biggest train company cuts some fares by 15%
The biggest train company in Britain is discounting some tickets by up to 15% in a bid to lure commuters back on Mondays and Fridays.
Advance tickets sold by Govia Thameslink Railway (GTR) will be cheaper at peak times at the start and end of the working week on some Southern services.
The move comes after the pandemic led to many office employees working from home two days a week.
The company’s customer services director, Jenny Saunders, said: “We’ve seen a sea change in travel habits because of the pandemic.
“Mondays and Fridays are unsurprisingly less popular with our customers because they bookend the week, but our trains are quieter as a result so we want more people to use them.”
GTR’s trains carry up to 40,000 fewer passengers on Mondays compared with midweek.
Cheaper tickets are being trialled on some services between three major London stations – Victoria, Clapham Junction and East Croydon.
They are also available at stations south of Three Bridges in West Sussex, extending as far east as Eastbourne in East Sussex and as far west as Chichester in West Sussex.
Tickets can be bought up to 12 weeks in advance.
GTR runs Southern, Thameslink, Gatwick Express and Great Northern services.
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17h ago
03:43
British Gas owner reports profits over £3bn
The owner of British Gas has reported £3.3bn in profits for 2022, renewing calls for windfall taxes.
Centrica earned £2.3bn more in underlying operating profits than in 2021, while coming under fire for allegedly using debt collectors to install expensive pre-payment meters in people’s homes.
Trade union Unite accused the company of “rampaging energy profiteering” and called on the government to tax Centrica more in order to give NHS workers a pay rise.
General secretary Sharon Graham said: “British Gas owner Centrica has been coining it in from our massive energy bills while sending bailiffs to prey on vulnerable consumers the length and breadth of the country.”
She continued: “Rishi Sunak should get a grip – pull the plug on rampaging energy profiteering, impose a meaningful, tough windfall tax and give the NHS a pay rise with the proceeds.”
Centrica said it paid nearly £1bn in tax relating to 2022 profits and that it was “extremely disappointed” by the pre-payment meter allegations over the tactics used by the debt collectors it employed.
“We immediately took action to address this and are completing a thorough independent investigation,” it added.
Regulator Ofgem launched an urgent inquiry and banned Centrica from force-fitting pre-payment meters.
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18h ago
03:26
McDonald’s hikes price of five popular menu items
McDonald’s has increased the price of five popular products.
The fast food chain said higher food and energy costs were behind the changes, which see four burgers rise by 19p and medium soft drinks go up by 10p.
Last summer, Mcdonalds hiked the price of a cheeseburger for the first time in more than a decade.
“Like many businesses, the impact of the increase in food and energy costs continues to affect our company and our franchisees,” said a spokesperson for McDonald’s.
Franchisees set their own prices, but McDonalds has laid out the following guidance:
Mayo Chicken, £1.19 (up from 99p)
Bacon Mayo Chicken, £1.79 (up from £1.59)
Bacon double cheeseburger, £2.69 (up from £2.49)
Triple cheeseburger, £2.89 (up from £2.69)
Medium carbonated drink, £1.49 (up from £1.39)
The company said that it was trialling a “saver meal” in the South East of England.
