Vladimir Putin was today accused of turning energy ‘into a weapon’ by suggesting he will pump more gas into Europe if Brussels approves Russia’s controversial pipeline bypassing Ukraine as Britain’s looming energy crisis got worse for millions who face paying between £500 and 800-a-year more for their energy in 2022.
Wholesale gas prices surged to a record 400p yesterday – a 37% increase in 24 hours and 600% up on January – but dropped to around 274p after the Russian President’s intervention yesterday.
Rising energy prices could add 30% to bills next year and are also fuelling concerns about inflation, leaving UK households facing a further financial squeeze because of rising prices, labour shortages and gaps in global supply chains. Petrol prices are up, food prices are increasing, house prices are growing and taxes such as national insurance and council tax are also about to go up all faster than wages.
The cost of electricity and gas is also hitting power hungry industries such as steel, glass and chemicals, meaning consumers will soon be paying more for a huge number of products including cars and building materials.
Gas prices in Britain are closely linked to Europe’s supply from Russia because the UK now only gets around 50 per cent of its supplies from North Sea fields. Prices are rising amid claims Moscow is deliberately withholding supplies while the amount of gas in storage in Britain is low because of a long winter. Electricity prices are also rising, not helped by the amount generated from renewables dropping due to low winds and a poor summer for sunshine.
Putin is believed to be deliberately withholding gas supplies as leverage with the EU, who he wants to sign off on his new Nord Stream 2 gas pipeline, run by state energy Gazprom, that bypasses Ukraine. Sending the price of a therm tumbling by £1, Putin said: ‘Let’s think through possibly increasing supply in the market, only we need to do it carefully. Settle with Gazprom and talk it over’.
In response Jennifer Granholm, the US secretary of energy, said the US was watching Russia ‘carefully’, adding: You don’t want to see energy made into a weapon’.
Britons could see their energy bills rise by 30% next year, analysts have said, as suppliers are predicted to ‘fall like dominoes’.
Research agency Cornwall Insight has predicted further volatile gas prices and the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer. The forecast is approximately 30% higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.
Joe Malinowski, founder of TheEnergyShop.com, warned of a ‘gas bill explosion’, adding: ‘As things currently stand, we are headed for another increase of at least £500. If things don’t settle down soon, increases of £600, £700 or even £800 cannot be ruled out.’
Wholesale gas prices surged to a record 400p yesterday – a 37% increase in 24 hours and 600% up on January – but dropped to around 274p after the Russian President’s intervention yesterday.
Putin said that Russia was ready to increase gas supplies, before raising the controversial pipeline his country wants to build, cutting out Ukraine
Map showing points of origin and destination of the Nord Stream pipe (solid line) and Nord Stream 2 pipeline (dotted line) between Russia and Germany. Putin hoped Nord Stream 2 would be finished two years ago, allowing Russia to bypass Ukraine, which carries 50% of gas from Russia
Analysis of price rises in the last year shows the cost of a second-hand car has risen more than £1,600, a tank of fuel is up more than £10 and the price of a pint of beer is creeping close to £4
Exclusive research for the Daily Mail by the Centre for Economics and Business Research (CEBR) also yesterday revealed how inflation will cost the typical family of four an extra £1,800 by the end of this year. Meanwhile, a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900
Customers of small energy firms could face even bigger increases if their supplier fails. Mr Malinowski warned that ‘energy suppliers are falling like dominos’ and without political action ‘the outcome will be terrible for consumers’.
Britain is facing a bleak winter of soaring energy costs, with gas prices rising by a staggering 37 per cent in a single day and pushing more energy firms to the brink of collapse while the National Grid warned of electricity shortages as the country faces its worst crisis since the first Covid outbreak last year.
More UK energy suppliers set to fail as wholesale prices soar leaving consumers with rocketing bills
Britain’s retail energy sector will see more failures from suppliers and increased market consolidation due to a sharp rise in wholesale energy prices, rating agency Moody’s said.
The sector faces pressures on profitability and an increased risk of credit negative political intervention, the agency added.
Nine British energy suppliers ceased trading last month alone. Smaller suppliers with less capital are struggling amid record wholesale power and gas prices across Britain and Europe, while price caps prevent the full rises from being passed on to consumers.
Experts believe that if gas prices remain at around this level, which is now predicted, the average household energy bills could jump by as much as a third or £420 to almost £1,700 a year from April. Today the cheapest fixed gas and electricity deal available in the UK is £1,700 – a month ago it was £1,177.
Ofgem will automatically move customers when companies go to the wall. But energy market rules demand that customers whose supplier goes bust must be offered a fair deal by the new supplier – not the same one they had – meaning they are likely to pay significantly more.
‘More (failures) will follow with Renewable Obligation payments due in October,’ Moody’s said.
British ministers are also looking at a range of options to help companies such as National Grid Plc (NG.L), Centrica Plc (CNA.L), EDF (EDF.PA) that have taken on a flood of customers from failed suppliers.
Profitability at those firms will be affected until higher prices are passed on to customers, Moody’s said.
While Boris Johnson brushed off the crisis and used his Manchester Tory conference speech to set out his vision for a ‘high wage, high skilled, high productivity’ economy, the price of wholesale gas surged by £1 a unit to 400p per therm this morning – up 37 per cent in a day and 600 per cent higher than the start of 2021.
Prices reversed course hours later, sending the UK contracts back to £2.87, after Russian President Vladimir Putin sought to stabilise the gas market by saying that state-backed monopoly exporter Gazprom could increase supplies to Europe. Critics accused Mr Putin of trying to stave off allegations that Moscow is trying to ‘weaponise’ gas supplies amid tensions between Russia and NATO powers over Ukraine.
On a day of worsening news, National Grid’s chief executive John Pettigrew told the FT that Britain will face tighter electricity supplies this winter due to a lack of capacity in the system and a colder winter predicted, which means the cost of electricity will increase as gas prices spike to record high.
Investment experts Moody’s also warned that more UK energy firms will go to the wall, which will push hundreds of thousands of people on to more expensive tariffs with new providers. While Britain’s Energy Intensive Users Group, which represents steel, chemical and fertiliser firms, said production at some plants is already being halted ‘at times of peak demand’ due to energy prices. They have called on the Government to give financial support to keep businesses in the way a taxpayer-funded deal to curb CO2 shortages was done to keep two fertiliser plants running last month.
The explosive rise that will hit households and businesses is being fed by fears that a cost of living crisis has arrived as global oil prices also jumped to a three-year high of $83 a barrel. And as a result new figures show average petrol prices have hit 136.10p per litre, the highest level since September 2013.
Despite all this, the Prime Minister gave only a cursory mention of the crisis rocking Britain and merely indicated there are ‘difficulties’ to come – instead giving a rambling keynote speech to the Tory faithful at the party conference which was instead packed with jokes and almost entirely devoid of new policies.
Business leaders slammed Mr Johnson’s speech, with the Confederation of British Industry warning that his economic policies could stoke inflation while the British Chambers of Commerce accused him of failing to provide firms with urgent answers ‘to the problems they are facing in the here and now’.
Trade union leaders also lined up to condemn Mr Johnson. Unite’s new general secretary Sharon Graham raged: ‘Without serious action, this speech is nothing more than headline-chasing by a prime minister desperate to deflect from the serious and growing cost-of-living crisis happening on his watch.’
How inflation threatens families and the public finances
Headline CPI inflation has been spiking, reaching 3.2 per cent in August, and is expected to reach double the Bank of England’s 2 per cent target
With inflation set to peak above four per cent, this will likely cause the price of everyday goods – from food to fuel – to rise.
Supermarket food shop
Last year, the average household spent £277 a month on food expenses, but the latest inflation reading suggests this could increase to £285 a month this year.
Price of a pint
The average price of a pint in the pub across the country could soon pass £4, the ONS has said.
In August this year – when the UK’s headline CPI inflation rate hit 3.2 per cent – average petrol prices reached 134.6 pence a litre, making an average tank of unleaded petrol cost around £74.
That price hike is compared with 113.1 pence a litre a year earlier, when travel was reduced due to the coronavirus lockdown restrictions.
If inflation tips over the 4 per cent mark, the average price of a tank of fuel could hit £78, and that is without factoring in any supply chain pressures or global issues which make the cost rise further.
How inflation has hit other countries
Inflation has long been seen as one of the biggest threats to economies.
In extreme examples, it has spiralled out of control and sparked panic.
The German Weimar Republic effectively collapsed after the value of the mark went from around 90 marks to the US dollar in 1921 to 7,400 marks to the dollar in 1921.
In Zimbabwe between 2008 and 2009 the monthly inflation rate was estimated to have reached a mind-boggling 79.6billion per cent.
Although inflation has faded in the minds of Britons who have become used to ultra-low interest rates and stable prices, it caused chaos in the 1970s.
Deregulation of the mortgage market, the emergence of credit cards and an overheating economy drove the rate to an eye-watering 25 per cent in 1975.
People would rush to buy goods with their wages after pay-day, as the costs were rising so quickly.
Strikes erupted as there was pressure for pay packets to keep pace with prices.
Unemployment rose as the economy tipped into recession, and the government had to pump up interest rates in a bid to bolster the pound and control the surge.
That meant mortgage interest payments spiked into double digits.
And as a result servicing the national debt became a serious problem.
Manuel Cortes, general-secretary of the TSSA transport union, added: ‘As ever, this political jester came up with nothing but hot air.’ Another critic said: ‘Britain burns while Johnson fiddles’.
Even Thatcherite think-tanks denounced the speech. Matthew Lesh of the Adam Smith Institute said: ‘Boris’ rhetoric was bombastic but vacuous and economically illiterate. Shortages and rising prices simply cannot be blustered away with rhetoric about migrants.’
Mark Littlewood of the Institute of Economic Affairs added: ‘Unnecessarily restricting the supply of labour may lead to wage increases, but these will be passed on in price increases. A strategy to make things more expensive will not create a genuinely high wage economy, merely the illusion of one.’
Business leaders slammed Mr Johnson’s speech as Lord Wolfson, CEO of Next and a Brexiteer Tory life peer, warned of ‘real panic and despondency’ in the restaurant, hotel and care industry because of a lack of staff. When asked about the Government’s feeling that British business needs a ‘shock’ to get it off its reliance to foreign labour and retrain Britons to do the jobs, Lord Woolfson said: ‘That approach leads to queues at petrol stations and pigs being unnecessarily shot’.
With inflation rising, nearly two-thirds of UK manufacturers expect to raise their prices in the run-up to Christmas after being hit by mounting cost pressures, the British Chambers of Commerce has said. And just as Mr Johnson denied the country had fallen into chaos, investors singled out the £2trillion gilt market to sell Government bonds – a sign the markets are gloomy about the UK’s economic outlook.
Labour party chairwoman Anneliese Dodds said the Prime Minister’s speech was ‘vacuous’ and that he ‘talked more about beavers than he did about action to tackle the multiple crises facing working people up and down the country’. SNP Westminster leader Ian Blackford thundered: ‘For all the waffle and deflection, the prime minister cannot escape the fact that millions of families are poorer and worse off as a direct result of his government’s damaging policies.’
As Britain faces a winter crisis, it also emerged today:
- MailOnline research reveals the cost of supermarket staples such as pasta, tinned food and meats have all risen by up to 44% because as inflation grips supermarkets;
- Nearly two-thirds of UK manufacturers plan to raise their prices in the run-up to Christmas due to rising inflation, according to the British Chambers of Commerce;
- New research reveals how inflation will cost the typical family of four an extra £1,800 by the end of this year, while a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900;
The price of gas reached a record 400p per therm yesterday morning – up 100p in 24 hours – before dropping again to 377p. Reuters reported that prices dropped this afternoon after Vladimir Putin gave a statement that Russia would gas supplies to Europe via Ukraine.
The shocking gas price increase came amid growing concerns about supplies from Russia and predictions of a cold winter in Europe that pushed the market price up by a fifth in 24 hours. The price was 277p at the close on Monday, 150p a month ago and below 50p from February to May. Critics have questioned whether Russia is squeezing the market in a plan to make more money all executed by Moscow, using Gazprom, the state-owned gas firm.
Tom Marzec-Manser, an analyst at ICIS, said: ‘This is just ridiculous. Almost impossible to even justify or qualify how and why it’s moving so fast and so high.’ Phil Hewitt of EnAppSys, the consultancy, said: ‘This (gas) price level is currently the price for the whole of winter. This is extreme pricing’. ‘An energy crisis is unfolding with winter in the northern hemisphere still to begin,’ said Stephen Brennock of PVM brokerage.
Boris Johnson said he would unleash the ‘unique spirit’ of the country as he set out on the ‘difficult’ process of reshaping the British economy.
The Prime Minister used his Conservative Party conference speech to say he has the ‘guts’ to reshape society, addressing issues which had been dodged by previous administrations.
With shortages of lorry drivers and other workers hitting supply chains, leading to empty shelves and queues at petrol stations, Mr Johnson defended his strategy of restricting the supply of cheap foreign labour after Brexit.
And despite a looming National Insurance rise for millions of workers in April to fund a £12 billion annual investment in health and social care, Mr Johnson insisted his new approach would ultimately create a ‘low-tax economy’.
‘That’s the direction in which the country is going now – towards a high-wage, high-skilled, high-productivity and, yes, thereby a low-tax economy. That is what the people of this country need and deserve.
‘Yes, it will take time, and sometimes it will be difficult, but that is the change that people voted for in 2016.’
Boris Johnson yesterday insisted Margaret Thatcher would also force tax hikes on the country to pay for the NHS and social care – as he faced down business fury over supply chain chaos as critics said his speech was ‘bluster’ and ‘economically illiterate’
Setting out the need for the health tax hike, Mr Johnson said: ‘We have a huge hole in the public finances, we spent £407 billion on Covid support and our debt now stands at over £2 trillion, and waiting lists will almost certainly go up before they come down.
The festive stock-piling begins: Aldi’s frozen turkey crowns are ALREADY selling 1,500 a day, Xmas puddings are up 45% and they’ve ordered 250,000 ‘Chocolate Orange bombes’ – as Britons hoard ‘up to £2,000 of food per family’
Panic-buying Britons are already stockpiling for Christmas, with budget retailer Aldi selling 1,500 frozen turkey crowns a day and pudding sales up 45 per cent as families hoard as much as £2,000 worth of food for the winter holiday amid a supply chain crisis.
Industry experts have been warning Britons to buy their Christmas dinner in advance and even keep it in the freezer as fears grow over supermarkets running out of festive items including pigs in blankets and other party foods in the run up to December 25.
A shortage of butchers could mean that farmers will be forced to ‘throw pigs in a skip’ because they can’t be slaughtered and carved – with 150,000 animals under threat of being culled in the next week.
The meat crisis is compounding woes caused by a lack of HGV drivers, availability of fuel at petrol stations and labour shortages that could lead to a lack of choice this year, with many essential Christmas gifts and foods scarce or missing completely.
And with Cabinet Ministers failing to reassure people that supermarkets will be fully stocked this Christmas, and Boris Johnson even insisting it’s ‘not the job of government to come in and fix every problem’ when quizzed about the supply chain crisis, families are now taking matters into their own hands by stocking up on anything with a shelf life just in case.
Staff from supermarket chain Aldi told consumer journalist Harry Wallop at a Christmas showcase that frozen turkey crowns are already 1,500 a day and pudding sales are up 45 per cent on last year. The retailer also revealed that 250,000 ‘Chocolate Orange bombes’ have been ordered from its supplier in anticipation that the dessert is likely to be Aldi’s biggest hit this Christmas.
Marks and Spencer said sales of their frozen Christmas food have rocketed by 500 per cent in total on last year as families stockpile, with more than 25,000 turkeys sold by the start of October and sales of their party food growing by 40 per cent per week.
Iceland revealed this week that people have already begun filling up on festive frozen food, with turkey sales up by 409 per cent compared to this time last year while the the word ‘Christmas’ reached over 17,000 searches across its website in the past week alone.
And Tesco executives have reportedly warned the Government that it is worried about panic-buying in the run-up to Christmas being ‘far worse’ than stockpiling that took place at the start of the pandemic last year, according to trade magazine The Grocer.
Desperate to ensure Christmas is normal this year after the chaos of Covid last year, single mother Pat Smith, 26, has splurged £2,000 on food already, clearing shelves at six supermarkets and grabbing 24 multipacks of crisps to her overflowing trolley rather than just one.
It comes as Ipsos Mori polling reveals panic-buying, the energy crisis, a shortage of HGV drivers and fuel are some of the biggest concerns Britons have about this winter, with 54 per cent of families worried they can’t afford Christmas this year.
Richard Harrow, chief executive of the British Frozen Food Federation, said: ‘Frozen food sales grew rapidly during the pandemic and we are now seeing evidence of a growing awareness of frozen food’s quality, convenience and ability to reduce food waste.’
James Withers, of Scotland Food & Drink, told the Independent that families should ‘plan ahead’ and freeze what they can as early as possible to avoid having missing ingredients to a traditional Christmas dinner.
‘Ultimately, now I think we have just run out of time,’ he warned.
‘I don’t think there is anything that can be done now to get the Christmas trade where it should be. That’s despite warnings being sounded since the summer of the scale of the potential labour shortage we might face.’
Polling shared with MailOnline by Ipsos Mori indicates that panic is sweeping the nation, with 75 per cent of people stating panic-buying was something they were worried about affecting their Christmas negatively, closely followed by the energy crisis (70 per cent).
A lack of HGV drivers to deliver food, presents and other goods was also of serious concern (68 per cent), followed by inflation at 62 per cent. Six in ten people are also worried about the impact of the current fuel crisis, while 54 per cent of people admitted they are concerned they could catch Covid.
Bridget Williams, Ipsos Mori’s research director, said: ‘Despite Boris Johnson’s plans to ”save Christmas”, the majority of people are currently concerned about the impact of all these crises on Christmas this year. As well as likely shortages of food, drinks and presents to buy, there are concerns about a squeeze in household incomes with rising prices, particularly amongst women and families with children.’
‘Covid pushed out the great bow wave of cases and people did not or could not seek help, and that wave is now coming back – a tide of anxiety washing into every A&E and every GP.
‘Your hip replacement, your mother’s surgery … and this is the priority of the British people.’
The rising tax burden has caused concern among the Tories, but Mr Johnson told activists in Manchester: ‘I can tell you – Margaret Thatcher would not have ignored the meteorite that has just crashed through the public finances.
‘She would have wagged her finger and said: ‘More borrowing now is just higher interest rates, and even higher taxes later.”
The 44-minute keynote address came as the Government implemented its £20-a-week cut in universal credit as the temporary uplift in the benefit over the pandemic ended.
Mr Johnson used his speech, which was largely devoid of major policy announcements, to spell out what his ‘levelling-up’ agenda means.
‘The idea in a nutshell is you will find talent, genius, care, imagination and enthusiasm everywhere in this country, all of them evenly distributed – but opportunity is not,’ said Mr Johnson.
‘Our mission as Conservatives is to promote opportunity with every tool we have.’
Families who have already endured Covid-related uncertainty over last 18 months face a triple-blow of rising energy bills, soaring food prices and incoming tax hikes all fuelling inflation. Experts also predict that interest rates may rise faster than predicted to combat inflation, pushing up the price of mortgages and other borrowing.
Exclusive research for the Daily Mail by the Centre for Economics and Business Research (CEBR) reveals how inflation will cost the typical family of four an extra £1,800 by the end of this year, while a retired couple can expect to see living costs rise by more than £1,100, and a lower income couple could be stung by nearly £900.
Meanwhile, a Money Mail poll reveals that one in two households have already started making cutbacks due to concerns over the rising cost of living.
But while many Britons are fear a financial hit, Prime Minister Boris Johnson yesterday insisted that he is not worried about rising prices because he believes they will be temporary, and insisted it is ‘not his job’ to fix every aspect of supply chains in the UK.
Asked about the situation during the Conservative Party conference, he told the BBC yesterday: ‘Actually I think that people have been worried about inflation for a long time and it hasn’t materialised.’
When pressed on the UK’s HGV driver shortage he attempted to deflect attention back to the private sector, saying ‘it’s not the job of government to come in and try and fix every problem in business and industry’.
Referencing Margaret Thatcher’s 1980s dictum – which ironically she used to stress the need to control inflation in a market economy – Mr Johnson said: ‘In a famous phrase, there is no alternative. There is no alternative.
‘The UK has got to – and we can – do much, much better by becoming a higher-wage, higher-productivity economy.’
But he admitted that Christmas might only be better from a ‘low base’ amid fears of ongoing shortages – after it was effectively cancelled during the pandemic last year.
Furious business chiefs accused the Prime Minister of ‘buck-passing’, while cabinet ministers told MailOnline they were concerned about ‘complacency’ creeping in over inflation.
In a stark warning of the bumpy road ahead this winter, the Bank of England has already flagged that inflation could hit 4 per cent by the end of the year, while supermarkets say food prices could increase by 5 per cent.
The energy price cap has now also increased, pushing up bills for more than 15 million households by an average of close to £140 a year.
And the soaring cost of wholesale gas has seen many suppliers go bust – forcing millions of customers on cheap deals onto more expensive tariffs linked to the price cap.
Meanwhile, new figures show pump prices have hit 136.10p per litre, the highest level since September 2013.
As living costs soar across the country, consumer polls suggest as many as half of Britons have already started cutting back, fearing they may have to penny-pinch now in order to save up for what could be a pricey Christmas.
Others have started shopping early – hoping to beat the price rises – with Aldi’s already selling 1,500 frozen turkey crowns a day, while Christmas pudding sales are up 45 per cent.
A survey, carried out by Consumer Intelligence, found many had started to scale back spending within the last one to three months — with most fearing rising food and energy prices.
Meanwhile, analysis of price rises in the last year alone shows the cost of a second-hand car has risen more than £1,600, a tank of fuel is up more than £10, the price of a pint of beer is creeping close to £4 and a bottle of prosecco has risen 55p to £8.
The new month of October also marked the end of the furlough salary support scheme as well as the withdrawal of an extra £20-a-week for struggling households receiving Universal Credit.
Boris Johnson defied rising panic over inflation and supply chain chaos as he vowed to push on with tax rises and ‘Levelling Up’ wages.
In a rambling keynote speech to the Tory faithful that was littered with jokes but short on detail, the PM admitted there are ‘difficulties’ to come.
However, swiping at David Cameron and Theresa May, he insisted there will be no more ‘drift and dither’ about fundamental reform of the country – arguing that was what people voted for in the 2016 referendum.
He said businesses must not be allowed to use cheap immigrant labour as an ‘excuse for failure to invest in people, in skills and in the equipment the facilities the machinery they need to do their jobs’.
Dismissing criticism over huge tax hikes to bail out the NHS and social care, Mr Johnson said his predecessor Margaret Thatcher would not have kept borrowing after the ‘meteorite’ of the pandemic left national debt over £2trillion.
He also summoned the spirit of Churchill and US Open tennis champion Emma Raducanu as he spelt out his determination for Britain to be a ‘trailblazer’.
But the address came amid an increasingly grim economic backdrop, with warnings that more energy suppliers face going bust as natural gas costs spiked by another 40 per cent.
The UK’s government’s borrowing costs rose to the highest level since May 2019, as markets took fright at the prospect of inflation going even higher.
In further worrying signs, the latest PMI figures suggested the economy recovery stalled last month – with the construction sector barely growing at all.
Meanwhile, the CBI warned that the premier’s determination to drive up wages would put the country on a ‘pathway to higher prices’ unless he has comes up with a way to boost productivity.
In the only crumb of policy, Mr Johnson announced a £3,000 ‘Levelling Up’ premium for talented maths physics chemistry teachers to go and work in deprived areas.
He did try to soothe anxiety in Tory ranks by saying he wanted there to be ‘low tax’ in the longer term, as well as promising not to ‘jam’ homes in the South East and to fight ‘woke’ historical revisionism.
But the PM is facing growing unrest over his blunt denial that the country is in ‘crisis’ with petrol stations running dry, spiking inflation and labour shortages.
Amid warnings that millions of families with struggle to make ends meet this Christmas, he has argued it is ‘not his job’ to ‘fix’ all the problems for industry.
Mr Johnson told party members his changes to the economy after Brexit will at times be ‘difficult’ but insisted they will result in a fairer ‘low tax’ system.
He said: ‘That’s the direction in which the country is going now – towards a high-wage, high-skilled, high-productivity and, yes, thereby a low-tax economy. That is what the people of this country need and deserve.
‘Yes, it will take time, and sometimes it will be difficult, but that is the change that people voted for in 2016.’
He added: ‘To deliver that change we will get on with our job of uniting and levelling up across the UK – the greatest project that any government can embark on.’
Mr Johnson opened by telling the party faithful he was pleased to be back ‘cheek by jowl’ and the country had opened up ‘faster than any other major economy in the world’.
He said that was down to the ‘unbeatable’ NHS – and referred to his experience in hospital as his life hung in the balance.
Mr Johnson set out the scale of the challenge the country faces, with warning that NHS waiting lists will ‘go up before they come down’ as the end of the pandemic unleashes ‘a tide of anxiety’ about health concerns.
Carrie Johnson gave her husband a good luck kiss before he delivered his leader’s keynote speech during the Conservative Party conference at Manchester Central Convention Complex. Mrs Johnson is expecting her second child with the PM
Mr Johnson admitted reforming the economy could be ‘difficult’, but hardly referred to supply chain carnage that have been causing empty shelves in some supermarkets (pictured in Ely)
Boris woos maths, physics and chemistry teachers to deprived areas with £3,000 salary ‘premium’
Boris Johnson attempted to woo the country’s top science and maths teachers to some of the most under-achieving areas.
The Prime Minister used his party conference speech in Manchester to unveil plans for a £3,000 ‘premium’ for educators to take on challenging pupils.
He spoke of the wildly differing life chances in areas of the country that are often close to each other.
He branded it ‘an appalling waste of potential that is holding this country back’.
The Prime Minister explained to Tory delegates his drive to ‘level up’ the country, saying: ‘The idea in a nutshell is you will find talent, genius, care, imagination and enthusiasm everywhere in this country, all of them evenly distributed but opportunity is not.
‘To level up, on top of the extra £14 billion we’re putting into education, on top of the increase that means every teacher starts with a salary of £30,000, we’re announcing a levelling-up premium of up to £3,000 to send the best maths and science teachers to the places that need them most.’
He said he would govern for ‘the NHS nurses and the entrepreneurs’, making clear that ‘structural change’ is the way forward.
Mr Johnson said a ‘tide of anxiety’ is washing into A&E departments and GP practices, as he defended his multi-billion pound tax hike to pay for NHS and social care.
He recalled lying in a hospital bed last year and seeing a hole in the ground, noting: ‘They seemed to be digging a hole for something or indeed someone, possibly me.
‘But the NHS saved me and our wonderful nurses pulled my chestnuts out of that Tartarian pit, and I went back on a visit the other day and I saw that the hole had been filled in with three or four gleaming storeys of a new paediatrics unit.
‘There you have a metaphor for how we must build back better now. We have a huge hole in the public finances, we spent £407billion on Covid support and our debt now stands at over £2 trillion, and waiting lists will almost certainly go up before they come down.
‘Covid pushed out the great bow wave of cases and people did not or could not seek help, and that wave is now coming back – a tide of anxiety washing into every A&E and every GP.
‘Your hip replacement, your mother’s surgery and this is the priority of the British people.’
Mr Johnson’s speech was littered with jokes, including one about Michael Gove’s dancing in an Aberdeen nightclub.
Government borrowing costs soar after gas costs spark inflation alarm
The government faces higher borrowing costs as investors take fright at the spectre of inflation.
The 10-year gilt yield hit its highest level since May 2019 at 1.152 per cent on Wednesday.
The spike came as the day price of British wholesale gas contracts soared again.
Peter Chatwell, head of multi-asset strategy at Mizuho International, said there were mounting concerns that the Bank of England will need to raise interest rates sooner.
‘This all comes down the repricing which is taking place at the very front end of the curve – so the possibility of a hike in just under a month’s time,’ Mr Chatwell said.
‘That’s the difficult thing for the market and that’s why it is linked to very near term developments in energy prices.’
‘Let’s here it for Jon Bon Govey,’ the Prime Minister told the conference hall.
He continued: ‘How have we managed to open up ahead of so many of our friends?
‘The answer is because of the rollout of that vaccine, a UK phenomenon, the magic potion invented in Oxford University … distributed at incredible speeds to vaccination centres everywhere.
‘We vaccinated so rapidly that we were able to do those crucial groups one to four, the oldest and most vulnerable, faster than any other major economy in the world.
‘Although the disease as sadly not gone away, the impact on death rates has been astonishing.’
He urged those present to ‘get’ a jab and invited them ‘try’ a so-called ‘fist pump’ with their neighbour.
The Tories have been holding their first in-person conference since the 2019 general election, after the pandemic wreaked havoc on normal life.
But the proceedings have been largely dominated by events elsewhere, with petrol stations running dry and worries about labour shortages in crucial sectors causing months of misery.
Cabinet ministers are behind the premier on the need to push ahead with change, although they admit that
But there is increasing unrest about huge tax rises being brought in to bail out the NHS and social care.
Senior figures also fear ‘complacency’ over inflation – on track to hit double the Bank of England’s 2 per cent target – despite Mr Johnson saying he is not ‘worried’ about it.
No formal announcement is expected on the national living wage, but there are reports it will be lifted by 5 per cent to £9.42 within weeks.
CBI director general Tony Danker warned that Mr Johnson had failed to give any detail of how he would achieve his ‘vision’.
‘Ambition on wages without action on investment and productivity is ultimately just a pathway for higher prices,’ he said.
‘It’s a fragile moment for our economy. So, let’s work in partnership to overcome the short-term challenges and fulfil our long-term potential. It’s time to get around the table, roll up our sleeves and get things done. It’s time to be united.’
What are the higher costs coming down the track for Britons over the coming years?
National insurance rise – from April
The rates of national insurance are due to be pushed up by 1.25 percentage points from April, in a move that will cost households hundreds of pounds.
The move will raise £12billion a year, which will initially go on bailing out the NHS and clearing backlogs after the pandemic. However, in the longer term it is meant to be used for social care.
Boris Johnson has promised that no-one will pay more than £86,000 towards their care costs. However, that does not include accommodation and some other costs, with fears of a ‘postcode lottery’ as local authorities set different rules.
Initially the hike will look like a NI rise on pay slips, but later it will be billed a ‘health and social care levy’.
Ministers insist it is fairer than other tax options because it falls on business as well as individuals.
To raise the equivalent amount in income tax would require an increase in individuals’ tax of 2 percentage points.
A typical basic rate taxpayer earning £24,100 will contribute £180 in extra NI in 2022/23.
A higher rate taxpayer earning £67,100 will contribute £715. For the first time, the NI will be charged on people working over the state pension age of 66.
Universal credit – £20 uplift ends 6 October
The Government introduced a temporary £20 increase to universal credit payments in response to the pandemic in April last year, but the scheme is set to officially end on 6 October.
Close to six million people currently claim universal credit, almost double the three million before the pandemic, with almost 40 per cent of them classed as being in employment.
Thanks to the boost, a single person aged 25 or over has gone from earning £317.82 to £409.89 a month, a difference of £23 a week or £1,104.84 a year.
In that case, the £23 a week boost made up more than a fifth of the amount they were paid.
Citizens Advice has warned that a third of people on universal credit will end up in debt when the uplift is removed, with the average shortfall set to be of around £50 a month.
Research by another charity, Turn2us, has found that over half of people on universal credit will struggle to pay their bills when the cut comes into effect, with a further one in four unable to afford their rent or mortgage payments.
‘Due to the way Universal Credit is tapered as earnings increase, it’s not just a case of people picking up an extra couple of hours of work to help fill the gap, instead they will likely have to make tough decisions about what to pay for and what to cut from the household costs,’ notes Laura Suter, head of personal finance at AJ Bell.
‘Anyone who will be hit by the cut should check they’re getting all the benefits they’re entitled too – Citizens Advice is a good first port of call for help navigating the system.’
Thomas Lawson, chief executive at Turn2us, said: ‘The £20 per week cut to Universal Credit was already going to leave many families struggling to keep up with the cost of living.
‘This, now combined with a sudden surge in energy prices, could spell disaster and plunge thousands more people into financial insecurity or even poverty; especially those of us whose financial resilience has been worn away by the pandemic.’
Green revolution – coming years
Homeowners are set to be hit with a new environmental tax on gas as ministers try to force them to abandon the fuel in favour of green alternatives.
Climate change levies currently added to domestic electricity, which average £159 per year, are expected to be axed and new payments added to gas to entice people to replace their central heating boilers and cookers.
The move is intended to encourage the take up of heat pumps and other electric alternatives as they seek to make the UK net zero for carbon emissions by 2050.
Ministers insist the change will mean no overall increase to bills and could help increase the take-up of electric cars as it become cheaper to charge them at home.
However critics doubt that will be the case, and the change comes at a time when UK gas prices have hit a record high.
Mr Johnson has also pledged to make all the UK’s electricity supplies ‘green’ by 2030, although again the government argues this will cut prices for households rather than increase them.
Stamp duty holiday – already over
The full stamp duty holiday came to an end in June, with the nil-rate band – the portion of a property purchase buyers don’t need to pay stamp duty on – reduced from £500,000 to £250,000.
The tax break, which saved buyers up to £15,000 on their house purchases up until then, was cut back, with the maximum saving currently capped at £2,500.
But from the 1 October, that went too, as the nil-rate band will revert to the normal £125,000.
Stamp duty has been blamed for pushing house prices higher over the past year, with many experts anticipating a drop in demand, and hence prices, after its end.
And demand did indeed fall off a cliff between June and July, with the number of property transactions plummeting by 63 per cent, according to official figures from HMRC.
But many believe prices will hold up well in the coming months thanks to cheap mortgages and demand continuing to be driven by people looking to relocate to larger homes in the countryside in the wake of the pandemic.
‘While there is likely to be a surge of property purchases pushed through before the deadline and a small drop in the month after, the early signs are that the property market isn’t headed for a large crash – particularly while borrowing is still so extraordinarily cheap,’ Suter said.
VAT reduction – already over
The reduced VAT rate on food and soft drinks for hospitality businesses was introduced during the pandemic to help out struggling pubs and restaurants, and has been extended a couple of times.
However, it will now come to a close at the end of the month – and could see businesses hike prices to customers.
On 30 September 2021 the current 5 per cent reduced rate will rise to 12.5 per cent, which will last until 31 March 2022, when it will rise back to the old standard rate of 20 per cent.
‘Many hotels and restaurants decided to keep this reduction for themselves rather than pass it on to customers, to help shore up their finances post-pandemic,’ said Suter.
‘With food and energy costs rising it has provided a cushion for businesses and may have helped them put off increasing prices.
‘But once the rate shoots back up it will be another squeeze on margins for businesses and means we’ll probably see higher prices when going out to eat or booking a trip away.’
Energy price cap – from October 1
On top of seeing much of Government support scrapped, many families and businesses are also facing rising energy bills thanks to the energy price cap.
Some 11 million households on their suppliers’ default energy tariffs will see an increase of £139 a year to £1,277, while bills will also increase by £153 to £1,309 a year for 4 million pre-payment meter customers.
The increased bills will start from 1 October and last for the following six months until the cap is reviewed again.
‘Usually you’d be far better off getting off your provider’s standard variable tariff and locking in a fixed-rate deal, but the energy market is so barmy at the moment that no one is offering a fixed deal for a cheaper price than the energy cap,’ Suter says.
‘This means everyone needs to face up to rising energy bills, just as we head into the colder months.
‘If your deal has ended you need to weigh up whether you want to secure a fixed-rate deal now, at a higher cost than your current price, with the expectation that you’ll be protected from rising energy prices.
‘Or you can stick with the energy price cap rate and gamble that recent gas price rises end soon.’
Households struggling to pay their bills can also contact their supplier or ask for help from a debt advice charity.
Rising inflation and food costs
Inflation fears were fuelled again this month, when the headline CPI rate recorded its largest jump ever in August to 3.2 per cent – with the Bank of England predicting it could soar above 4 per cent by the end of the year.
Contributing to the rise was a jump in the price of food and drinks, partly as a result of the supply chain crisis gripping the country.
Food and non-alcoholic drink prices rose 1.1 per cent between July and August, and by 0.3 per cent over the year, according to the latest figures by the Office for National Statistics.
The average price of a pint in the pub across the country could soon pass £4, the ONS said.
Last year, the average household spent £277 a month on food expenses, but the latest inflation reading suggest this could increase to £285 a month this year, according to analysis by Royal London.
‘Anyone who has been to the supermarket recently will have noticed that their weekly bill has been rising,’ said Suter.
‘A combination of shipping issues, driver shortages, supply chain issues and a leap in demand have all lead to a spike in prices – in July we saw the largest monthly rise in food costs.
‘While you can’t directly combat rising prices, you can reduce your food bill. There are lots of offers out there for using online grocery delivery services for the first time, which can get decent discounts on a shop.
‘Or you can go back to the old fashioned methods of sticking to your list, meal planning and budgeting.’
How to survive the big squeeze: Bills and prices are soaring, but don’t panic! Here personal finance experts share top tips for making crucial savings
ByBen Wilkinsonand Amelia Murray For The Daily Mail
Back to basics
After the pandemic disrupted our spending and saving habits, now is a good time to draw up a fresh household budget.
Our survey found that of those households cutting back, more than half were saving by not spending on luxuries such as eating and drinking out.
Three out of four said their cutbacks should be enough to keep them from struggling with money.
Laura Suter, head of personal finance at investment broker AJ Bell, says: ‘If you’re facing a fall in income or rising bills — or a toxic double whammy — then you need to get a grip on your finances and look at what you can afford.
‘It’s not a particularly pleasant job but it’s essential to avoid getting into financial strife further down the line. You need to look at what you have coming in, after tax, then list everything you’re spending in an average month.
‘Once you’ve listed it all, it will be clear whether you can afford your lifestyle or if you need to make cutbacks.’
Sarah Coles, personal finance analyst at investment service Hargreaves Lansdown, adds: ‘The huge benefit of having everything written down like this is you can see where you’re spending money and not getting an enormous amount out of it, which will help you identify the best ways to cut costs.’
She says you will need to identify the bills you are overpaying for. And while there aren’t many cheap energy deals at the moment, you can still save on everything from car insurance to mobile contracts and broadband packages.
The money expert also suggests cancelling direct debits you don’t get enough out of — gym membership or subscriptions, for instance. And finally, avoid impulse purchases by waiting an hour or even a day before you buy something.
Homemade lunch saves £30 a week
Lunching for less: Emma Thomson is making her own soups
Emma Thomson, 32, has replaced monthly salon trips to get her nails, eyebrows and eyelashes done with doing her own treatments, saving herself £65 a month.
She has also stopped buying meal deals and juices for lunch every day, boosting her income by another £30 a week, in favour of making her own soups by the batch that last for days.
Emma, who makes personalised gifts for a living, has been hit by rising business and living costs, which is why she has had to make savings where she can.
During the pandemic she saw her import duty and postage costs increase, which prompted her to tighten the purse strings.
Emma, who lives in Essex, says: ‘There is nothing you can do about it so you just need to find ways to cut back.’
Shoppers have been warned that food prices are going to rise thanks to the supply chain crisis.
Yet Andrew Hagger, expert at personal finance site Moneycomms, says thinking about what you spend at the supermarket can lead to big savings.
He says: ‘Food shopping is where a lot of money is wasted — use up stuff that’s in your cupboards and freezer.
‘Always plan your meals for the week, make a list and stick to it.’ He also suggests shopping at budget stores Aldi or Lidl.
Research by industry magazine The Grocer last month found Aldi to be the cheapest supermarket, with an average trolley of goods costing £45.12, compared to £51.32 at Asda and £70.18 at Waitrose.
Ms Coles adds: ‘We all swear by certain brands, but it’s worth downshifting at the supermarket to own-brands or budget alternatives to see if you notice the difference.
The most expensive brands will be at eye level, where you’re naturally drawn. Before you pick anything up, check the top and bottom shelf for a cheaper alternative.’
Meanwhile, Rebecca O’Connor, head of pensions and saving at Interactive Investor, says there’s money to be saved by bulk buying, explaining: ‘Always look for the cost per 100g or 1kg rather than offers like ‘three for two’.’
Sort Christmas now
There are fears that the supply backlog might mean we cannot get our hands on turkeys and Christmas presents later in the year.
However, there are still 11 weeks to go, so you have plenty of time to get everything in order for the big day.
Ms Suter says: ‘Try to work out how much you think Christmas will cost, then you can start setting aside a small amount each week to save for presents or food.
‘Hosting Christmas and buying all the food for family can feel a bit daunting. But you can make a list of non-perishable items and, starting now, add a few to your weekly shop in the run-up to the 25th to help spread the cost.’
Ms Coles says if you start shopping now, you can save on presents: ‘Take advantage of one‑day sales. Of course, this includes Black Friday, but if you want something from a specific store, it’s worth following them on social media and joining any clubs or newsletters they offer, so you’ll find out about their flash sales, too.’
She suggests using the CamelCamelCamel online price tracker which shows you historic deals on Amazon so you can see if you are getting a genuine bargain.
She also recommends using a cashback website such as TopCashback or Quidco to make extra money when shopping as normal, and also searching the internet for discount vouchers at that particular retailer.
Current offers include up to 14.45 per cent off at department store Harvey Nichols or up to 25 per cent off at Currys PC World.
I’m letting a room to pay the bills
Lodgings: Naomi Bennett has been letting out her spare room to make ends meet
Naomi Bennett, from South London, has been letting out her spare room to make ends meet.
And she is now considering renting out her own room and sleeping on the sofa to cover rising energy costs.
Naomi, 39, has also increased the nightly rate from £25 to £30 for her spare room.
She says she’s not a big spender — some of her clothes are a decade old — which makes it difficult to cut costs.
She says: ‘I’ve been shopping at Iceland for frozen meat to save money on fresh food. I’m not sure it is enough but I’ve cut back everywhere I can.
‘It is worrying. I’ve also got my blankets and hot water bottles to hand so the heating doesn’t need to come on.’
Naomi, who runs a video streaming platform, has also had to take on a consultancy job to keep afloat, but it means she is now juggling both roles and working more than 60 hours a week.
She says: ‘You can’t even shop around so you have to cut costs or find extra income. I’m lucky I have a spare room and am healthy.
‘But I worry about older people such as my dad who could get ill if they try to cut costs by turning off their heating.’
Save your energy
The energy crisis means households can no longer save money by switching tariffs using a price comparison site.
So for now, the best way to save money on your bills is simply by using less energy.
Ms Coles suggests turning down the thermostat by one degree, not overfilling the kettle, turning appliances off rather than leaving them on standby, switching to energy-efficient LED bulbs and fitting draught-proofing to windows and doors.
By switching your thermostat off ten minutes earlier, you’ll save five hours of heating every month, or around £5, Mr Hagger says.
Ms O’Connor says her family have started batch-cooking for the week on a Sunday, when they make banana loaf cake for lunchboxes, stews and curries.
She says cooking like this will save energy on oven use if you use a microwave to reheat meals, and it will save costs on recipe book food which can involve expensive ingredients
She also recommends: ‘Some people who have traditional fires are bulk-buying wood for fires to avoid reliance on gas central heating.
‘This might be cost-effective if it means you are keeping the heating off in other rooms. Bleed your radiators and also switch them off in rooms you aren’t using and close the doors to keep heat in.’
Find a fuel fix
The petrol crisis has made some households think twice about their car use. And our experts say savings can quickly be made by easing off on the fuel you use.
Mr Hagger says: ‘Don’t use the car for non-essential short trips — consider walking or cycling as it is cheaper and better for your health.
If your car has an economy or efficiency drive mode then use it more. It may reduce the performance of your car but will lower your fuel costs.’
Sharing lifts to and from school or work also means you’ll save half the cost of petrol, says Ms O’Connor.
But it might be too soon to consider an electric car. Ms O’Connor says: ‘The surge in demand for electric vehicles may now be reflected in their price, so it might not be a cost-effective switch since the fuel crisis started. It may also be harder to get a good price for a petrol vehicle.’
Tightening my belt for 6 months
Cutting back: Counsellor Sam Robertson has swapped eating out for nights in
Counsellor Sam Robertson has swapped eating out for nights in due to Britain’s uncertain financial future.
Sam, 47, has lived through two recessions that she says are always in the back of her mind. It is why she is being careful with her money — because of the uncertainty.
She says: ‘We used to go out for dinner once or twice a week — and we were lucky to do so. Now we may get a steak from Waitrose if it’s on offer.’
Sam, who lives in East Sussex, also doesn’t stray far from home to keep travel costs down and uses cashback site Kindred when shopping online, earning around £400 in the past few months.
She says: ‘After Freedom Day it was nice to go to the pub — but not every day. I think it will be at least six months before we can be more carefree with our spending.’
Use spare time
If you cannot bear to make any more cutbacks, you could always bring in some more money.
Ms Suter says: ‘You could use your spare time to start a side hustle. Perhaps you have a hobby or skill that you could turn into a money-making plan, or you could take on an extra job in the evenings or weekends.
‘If that doesn’t appeal then use this as an opportunity to sort out your house and sell things you no longer need. There are lots of websites that make this process pretty easy, and it can help declutter and boost the coffers at the same time.’
Rachel Springall, from finance data analysts Moneyfacts, points out that you can earn free cash by switching bank accounts.
She says: ‘At the moment, HSBC will pay £110 cash plus provide a £30 Uber Eats voucher when bank customers switch to its Advance Bank Account, plus there is no monthly fee to pay.
‘While this is very tempting, it’s important that consumers look at all the features and charges to ensure it’s the right choice for their day-to-day banking needs.’
She also suggests using the Stocard smartphone app which stores all your loyalty cards in one place so you don’t miss any points or offers.
Get free help
There’s no shame in claiming every penny of support you are entitled to get from the Government.
Ms Suter says the charity Citizens Advice is a good place to start: ‘The benefits system is headachingly complicated to navigate, but there is lots of help you might not be accessing, like help paying energy bills in the winter or money towards childcare costs.’
Ms O’Connor adds: ‘If you are paying for childcare, are you always using the tax-free childcare scheme to pay for it?
‘Have you claimed relief for working from home during the pandemic in this year’s tax return? Are you eligible for any credits or allowances, such as Carer’s Allowance, that you aren’t claiming?’
You can find out about benefits you could receive at entitledto.co.uk.
The Government also last week announced a £500 million Household Support Fund for struggling families. The money will be available from this month in England through your local authority.
The Warm Home Discount Scheme also offers up to £140 off energy bills for struggling households.
Build a safety net
Once you have your finances in better shape, it is time to think about creating a savings safety net in case you hit hard times.
Ms Suter says: ‘If you know you’ll have spare cash each month then automatically transfer it into a savings account on payday to stop it being spent.
‘Setting a savings goal is always a good idea, whether it’s a specific amount of money or a particular thing you know you’ll need to pay for. Having a target in mind can help you get into the habit and stop you dipping into your savings pot.’
If you save routinely you can access some of the better interest rates in the savings market by opening a regular saver account.
The top rate is currently 3.5 per cent from Skipton Building Society — much better than the poor rates of as little as 0.01 per cent currently offered on easy-access accounts.
Ms Coles says if you’re lucky enough to get a pay rise, you could consider saving that before you get a chance to spend it.
She says you should also check the small print of your savings account, adding: ‘If you miss payments in some instances, your interest rate plummets.’
Ms Springall, from Moneyfacts, suggests using the auto-savings app Chip. She says: ‘Chip works out how much money users could save and sends a text message as a notification before transferring the cash to a separate pot.
‘Users can even see how long it would take them to save towards a certain goal, making it effortless to start building a savings fund.’