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| Carillion crisis: Unions call for national taskforce to protect workers - live updates | |
| (35 minutes later) | |
| Over in parliament, chancellor Philip Hammond has been quizzed about the Carillion crisis. | |
| Labour MP Helen Goodman asks about what protection is being provided to the Official Receiver, which took control of Carillion’s operations after it fell into liquidation yesterday. | |
| Hammond confirms that the government has given the Receiver an indemnity, to protect it from any losses. It also has a credit line to cover costs, which can be recovered from government departments in teh future. | |
| Helen Goodman asks chancellor about the indemnity on the Carillion Receiver that I reported last night --Hammond: Treasury has provided a line of credit to official receiver [for provision of public services], recovering cost from Departments which would have paid for services | |
| Q: What exposure does the government have to Carillion, though loans to the company or support for exports? | |
| Hammond says he isn’t aware of any direct exposure to Carillion, but will check. | |
| The TUC says its proposed Carillion taskforce would have five priorities: | |
| involve unions to give Carillion workers certainty on their jobs, pay and pensions; | involve unions to give Carillion workers certainty on their jobs, pay and pensions; |
| bring Carillion’s public-sector contracts back in-house to ensure consistent delivery; | bring Carillion’s public-sector contracts back in-house to ensure consistent delivery; |
| support transfer of private sector contracts to alternative providers with jobs, pay and pensions protected; | support transfer of private sector contracts to alternative providers with jobs, pay and pensions protected; |
| fund a training and financial support package for at-risk workers and apprentices; and | fund a training and financial support package for at-risk workers and apprentices; and |
| perform a risk assessment on other large outsourcing firms to avoid another crisis. | perform a risk assessment on other large outsourcing firms to avoid another crisis. |
| BREAKING: Britain’s trade unions are calling for a ‘national taskforce’ to be set up, to protect UK firms from the collapse of Carillion. | |
| The TUC, which represents many UK trades unions, says the government needs to take urgent action to protect workers at Carillion, and across the wider economy. | The TUC, which represents many UK trades unions, says the government needs to take urgent action to protect workers at Carillion, and across the wider economy. |
| It also wants ministers to conduct ‘risk assessments’ of other large outsourcing firms, to see if they are facing similar problems | It also wants ministers to conduct ‘risk assessments’ of other large outsourcing firms, to see if they are facing similar problems |
| Yesterday the West Midlands mayor, Andy Street, the former boss of John Lewis, said he had set up a taskforce to assist Carillion suppliers and subcontractors. The TUC are pushing for a much larger initiative, though. | Yesterday the West Midlands mayor, Andy Street, the former boss of John Lewis, said he had set up a taskforce to assist Carillion suppliers and subcontractors. The TUC are pushing for a much larger initiative, though. |
| TUC General Secretary Frances O’Grady says: | TUC General Secretary Frances O’Grady says: |
| “We urgently need a national taskforce involving unions to safeguard jobs, services, and pensions. | |
| “Workers can’t be left at the back of the queue. Each and every worker at Carillion needs to know where they stand. They have bills and mortgages to pay, and deserve certainty on their future. | “Workers can’t be left at the back of the queue. Each and every worker at Carillion needs to know where they stand. They have bills and mortgages to pay, and deserve certainty on their future. |
| “And we have to ensure that there aren’t more Carillions on the horizon. That means an immediate risk assessment of all large outsourcing firms with government contracts. Public services are already under pressure, and can’t take another hit like this.” | “And we have to ensure that there aren’t more Carillions on the horizon. That means an immediate risk assessment of all large outsourcing firms with government contracts. Public services are already under pressure, and can’t take another hit like this.” |
| The Treasury have created a little video to show how they’re helping Britons cope with inflation: | The Treasury have created a little video to show how they’re helping Britons cope with inflation: |
| Stats out today show #inflation was 3% in December. We’re helping families with the cost of living by ✂️ cutting taxes, ❄️ freezing fuel duty and 💷 increasing the National Living Wage ☟ pic.twitter.com/FFbGDgw70y | Stats out today show #inflation was 3% in December. We’re helping families with the cost of living by ✂️ cutting taxes, ❄️ freezing fuel duty and 💷 increasing the National Living Wage ☟ pic.twitter.com/FFbGDgw70y |
| No mention of the public sector pay cap, though, or the surge in import costs cause by the weak pound.... | No mention of the public sector pay cap, though, or the surge in import costs cause by the weak pound.... |
| Getting back to Carillion....and the Bank of England has reassured MPs that Britain’s financial system won’t be shaken by the firm’s collapse. | Getting back to Carillion....and the Bank of England has reassured MPs that Britain’s financial system won’t be shaken by the firm’s collapse. |
| Sam Woods, deputy governor for prudential regulation, told the Treasury committee that he has checked banks and insurance groups’ exposure to Carillion on Friday - as it tried (in vain) to reach a rescue deal with its creditors. | |
| Woods said: | Woods said: |
| “The direct exposures are entirely manageable across all institutions.” | “The direct exposures are entirely manageable across all institutions.” |
| It’s harder to tell what the full impact will be, though, as smaller firms (such as Flora-tec and Van Elle) count the cost. | It’s harder to tell what the full impact will be, though, as smaller firms (such as Flora-tec and Van Elle) count the cost. |
| Woods says | Woods says |
| “Will there be a wider indirect issue with all the suppliers?... That is a more difficult one. I am not massively worried about it.” | “Will there be a wider indirect issue with all the suppliers?... That is a more difficult one. I am not massively worried about it.” |
| Aberdeen Standard Investments chief economist Lucy O’Carroll warns that inflation will only fall slowly this year: | Aberdeen Standard Investments chief economist Lucy O’Carroll warns that inflation will only fall slowly this year: |
| “Today’s headline number doesn’t amount to a hill of beans in isolation. But it’s more interesting in the context of what’s been happening with inflation lately. It appears to be steadying around 3%, and could stay close to this level for the next few months. | “Today’s headline number doesn’t amount to a hill of beans in isolation. But it’s more interesting in the context of what’s been happening with inflation lately. It appears to be steadying around 3%, and could stay close to this level for the next few months. |
| Looking a little further into 2018, inflation is likely to drift down gradually as the rise in prices caused by the pound’s decline falls out of the numbers. | Looking a little further into 2018, inflation is likely to drift down gradually as the rise in prices caused by the pound’s decline falls out of the numbers. |
| Ian Kernohan, Economist at Royal London Asset Management, is also hopeful that UK inflation has passed its peak: | Ian Kernohan, Economist at Royal London Asset Management, is also hopeful that UK inflation has passed its peak: |
| “Last month saw CPI inflation fall slightly to 3%. Much of the recent rise in inflation was driven by sterling’s devaluation during 2016. | “Last month saw CPI inflation fall slightly to 3%. Much of the recent rise in inflation was driven by sterling’s devaluation during 2016. |
| “However, this factor will begin to fade and inflation should fall back towards the 2% target over the coming year, with Producer Prices figures already showing input price inflation falling sharply.” | “However, this factor will begin to fade and inflation should fall back towards the 2% target over the coming year, with Producer Prices figures already showing input price inflation falling sharply.” |
| But Hannah Maundrell, editor in chief of money.co.uk, remains cautious: | But Hannah Maundrell, editor in chief of money.co.uk, remains cautious: |
| “We can finally breathe a small sigh of relief as inflation has slightly fallen. We’re by no means back to the luxury of low inflation but the fact it hasn’t risen again gives us a slight helping hand. | “We can finally breathe a small sigh of relief as inflation has slightly fallen. We’re by no means back to the luxury of low inflation but the fact it hasn’t risen again gives us a slight helping hand. |
| “We aren’t out of the woods yet though, for many of us prices are still rising faster than wages, so purse strings will still be tight. The cost of everyday items like food and household goods as well as transport continue to push up the cost of living, so budgeting is key. | “We aren’t out of the woods yet though, for many of us prices are still rising faster than wages, so purse strings will still be tight. The cost of everyday items like food and household goods as well as transport continue to push up the cost of living, so budgeting is key. |
| BBC economics correspondent Andrew Verity has dug into the inflation data, and spotted some big cost increases: | BBC economics correspondent Andrew Verity has dug into the inflation data, and spotted some big cost increases: |
| A few little horrors from the inflation numbers: Coffee, tea and cocoa up 9.5%. Oils and fats (including butter) up 11.1%. Electricity up 11.4% | A few little horrors from the inflation numbers: Coffee, tea and cocoa up 9.5%. Oils and fats (including butter) up 11.1%. Electricity up 11.4% |
| But BlackRock’s Rupert Harrison (a former top Treasury official) hopes that the worst is over: | But BlackRock’s Rupert Harrison (a former top Treasury official) hopes that the worst is over: |
| As expected UK inflation seems to be peaking - positive for the consumer outlook https://t.co/s0t7MFEBM6 | As expected UK inflation seems to be peaking - positive for the consumer outlook https://t.co/s0t7MFEBM6 |
| Fund manager BlackRock, incidentally, is one of the firms who short-sold Carillion’s shares -- the resulting profits mean it isn’t too worried about a cost of living squeeze..... | Fund manager BlackRock, incidentally, is one of the firms who short-sold Carillion’s shares -- the resulting profits mean it isn’t too worried about a cost of living squeeze..... |
| The pound has dropped by 0.2% following the inflation figures, as City traders calculate that it makes an early interest rate rise less likely. | The pound has dropped by 0.2% following the inflation figures, as City traders calculate that it makes an early interest rate rise less likely. |
| This has pushed the FTSE 100 index up to 7791 points, a whisker away from a new all-time high. | This has pushed the FTSE 100 index up to 7791 points, a whisker away from a new all-time high. |
| This drop in inflation shows that the impact of the pound’s sharp tumble after the Brexit vote is now fading. | This drop in inflation shows that the impact of the pound’s sharp tumble after the Brexit vote is now fading. |
| Nancy Curtin, chief investment officer at Close Brothers Asset Management, explains: | Nancy Curtin, chief investment officer at Close Brothers Asset Management, explains: |
| “Consumers will breathe a sigh of relief that escalating living costs are showing signs of abating. The Brexit vote brought with it the side effect of depreciating sterling, and the subsequent rise in import costs, pushing inflation well beyond the Bank of England’s target. | “Consumers will breathe a sigh of relief that escalating living costs are showing signs of abating. The Brexit vote brought with it the side effect of depreciating sterling, and the subsequent rise in import costs, pushing inflation well beyond the Bank of England’s target. |
| These effects are dissipating somewhat, and core inflation remains lower still. | These effects are dissipating somewhat, and core inflation remains lower still. |
| But she also warns that real wage growth “remains elusive”, so household budgets will remain tight until earnings accelerate. | But she also warns that real wage growth “remains elusive”, so household budgets will remain tight until earnings accelerate. |
| Britain’s financial ‘pinch’ seems to be easing, says Richard Lim, chief executive of Retail Economics: | Britain’s financial ‘pinch’ seems to be easing, says Richard Lim, chief executive of Retail Economics: |
| “The good news is that inflation appears to have peaked. We expect inflation to fall fairly sharply, to around 2.5% by Spring, which will ease the pressure on household budgets. | “The good news is that inflation appears to have peaked. We expect inflation to fall fairly sharply, to around 2.5% by Spring, which will ease the pressure on household budgets. |
| “That said, food inflation remains near four-year high and petrol prices rose sharply as the continued impact of Brexit and rising commodity prices fed through supply chains. | “That said, food inflation remains near four-year high and petrol prices rose sharply as the continued impact of Brexit and rising commodity prices fed through supply chains. |
| This is from James Tucker of the Office for National Statistics: | This is from James Tucker of the Office for National Statistics: |
| Rising air fares having a smaller impact on headline #inflation than last year and falling cost of various toys and games helped nudge down inflation in December. Partially offset by rising tobacco prices, because of duty increases. | Rising air fares having a smaller impact on headline #inflation than last year and falling cost of various toys and games helped nudge down inflation in December. Partially offset by rising tobacco prices, because of duty increases. |
| The UK government will be relieved to see Britain’s inflation rate fall, says Dennis de Jong, managing director at UFX.com: | The UK government will be relieved to see Britain’s inflation rate fall, says Dennis de Jong, managing director at UFX.com: |
| “Amidst the negative headlines around the collapse of Carillion, there is some more positive news for Prime Minister Theresa May this morning, as December’s inflation figure has eased slightly from its six-year high in November. | “Amidst the negative headlines around the collapse of Carillion, there is some more positive news for Prime Minister Theresa May this morning, as December’s inflation figure has eased slightly from its six-year high in November. |
| “With inflation dropping, and sterling back to its highest level since the Brexit referendum, there is a growing feeling of optimism around the British economy at the moment, with many predicting inflation will fall closer to the Bank of England’s 2% target in 2018. | “With inflation dropping, and sterling back to its highest level since the Brexit referendum, there is a growing feeling of optimism around the British economy at the moment, with many predicting inflation will fall closer to the Bank of England’s 2% target in 2018. |
| “However, with wage growth lagging well behind, it will be a long time before this positive news translates into people having more money in their pockets.” | “However, with wage growth lagging well behind, it will be a long time before this positive news translates into people having more money in their pockets.” |
| Good news for households -- Danske Bank analysts suggest Britain’s inflation rate may have now peaked. | Good news for households -- Danske Bank analysts suggest Britain’s inflation rate may have now peaked. |
| 🇬🇧Signs that #UK core inflation has peaked, perhaps because $GBP depreciation effect has peaked. In our view, #inflation is set to move lower (unlike the latest projections from Bank of England) $GBPUSD $EURGBP #brexit pic.twitter.com/iGqB6EpKqt | 🇬🇧Signs that #UK core inflation has peaked, perhaps because $GBP depreciation effect has peaked. In our view, #inflation is set to move lower (unlike the latest projections from Bank of England) $GBPUSD $EURGBP #brexit pic.twitter.com/iGqB6EpKqt |
| Bad new for workers -- WorldFirst economist Jeremy Cook fears wages won’t overtake inflation for some time | Bad new for workers -- WorldFirst economist Jeremy Cook fears wages won’t overtake inflation for some time |
| Inflation slips but real wages are still negative, long road to travel before workers are getting richer. Keys for the Bank of England now are wages and productivity, less so movements in CPI. | Inflation slips but real wages are still negative, long road to travel before workers are getting richer. Keys for the Bank of England now are wages and productivity, less so movements in CPI. |
| Economist Rupert Seggins flags up that ‘core inflation’, which strips out volatile factors like food and energy, has dropped. | Economist Rupert Seggins flags up that ‘core inflation’, which strips out volatile factors like food and energy, has dropped. |
| UK inflation slowed to 3%y/y in December, as expected, with air fares the primary reason. More importantly, core inflation slowed by more than expected to 2.5%y/y. pic.twitter.com/XyhPTFI2l7 | UK inflation slowed to 3%y/y in December, as expected, with air fares the primary reason. More importantly, core inflation slowed by more than expected to 2.5%y/y. pic.twitter.com/XyhPTFI2l7 |
| But financial journalist Simon Read points out that high street saving accounts aren’t keep pace with the cost of living. | But financial journalist Simon Read points out that high street saving accounts aren’t keep pace with the cost of living. |
| Inflation drops but still leaves savers with shrinking nest eggs https://t.co/3L2ivvQUWh | Inflation drops but still leaves savers with shrinking nest eggs https://t.co/3L2ivvQUWh |
| Despite December’s dip in inflation, the cost of food, household goods and transport services pushed the cost of living up. | Despite December’s dip in inflation, the cost of food, household goods and transport services pushed the cost of living up. |
| The Office for National Statistics says the downward effect on inflation came mainly from air fares, along with a fall in the prices of a range of recreational goods, particularly games and toys. | The Office for National Statistics says the downward effect on inflation came mainly from air fares, along with a fall in the prices of a range of recreational goods, particularly games and toys. |