Here are this week’s headlines:
- Theresa May pledges to end “rip-off energy prices once and for all”.
Reported by Anna Flaherty
Whilst the energy cap had already been promised in the Conservative manifesto, it was not mentioned in the Queen’s speech, leading many to believe that the cap would not be delivered. The cap will extend to a further 12 million customers, saving most approximately £100 a year. As a result, the owner of British Gas, Centrica, has seen its lowest drop in its stocks since 2003 as a result of this announcement.
Questions have also been raised as to whether this is a responsibility for Ofgem (the regulator) to manage, rather than the government. The two entities were conflicting over this issue when Theresa May originally promised lower energy costs in her election bid. Ofgem insist that legislation needs to be enacted to prevent energy companies from seeking appeals, whilst the government has stated that the regulator already has the necessary power to carry out the task.
The regulator also believes that a more limited approach should be taken, where only 2.2 million “vulnerable” customers would be protected by the cap. The Labour party have pointed to this weakness in the Conservative’s plans, saying more needs to be done. Members of the energy industry have also said that her proposal is “not the best answer”, with the CBI’s director general suggesting that a better solution would be to phase out standard variable tariffs.
- Catalonia Referendum and Independence
Reported by Sarah Mullane
Carles Puigdemont, the President of Catalonia, has vowed to declare the region an independent state “over the weekend, or early next week.”
This decision follows a well-documented week of turbulence and violence in the region, as Catalonians rallied for their right to a referendum on independence from Spain. Catalan officials have reported that an overwhelming 90% of voters backed independence in the referendum on Sunday 1st October. However, earlier in the week the Spanish Constitutional Court had suspended the referendum law needed for the decision to be legally binding, now declaring the vote to be illegal. The referendum has since also been confirmed “not legal” under Spanish law by the European Commission.
Spanish Prime Minister Mariano Rajoy had last week pledged to “stop at nothing” to halt the referendum, drafting thousands of police in from across Spain in an attempt to stop the ballot. The lead-up to the vote saw more than a million referendum materials confiscated by police and the threat of prosecution for any officials involved in the running of the campaign. On the day, violence erupted as police smashed their way into polling stations, using rubber bullets to deter independence voters and wrestling protestors down flights of stairs. The Catalan government urged European institutions to “condemn the violence,” as it initiates contact with the EU about “the violation of fundamental rights.”
A split from Spain could spell chaos for the Country, as Catalonia is one of the wealthiest and most productive regions in the Country. With a population of 7.5 million people alone in Barcelona, the area boasts its own language and culture, as well as holding its own parliament and a high level of autonomy. With the Spanish region now in crisis, it is hard to predict how the next few weeks will unfold.
- L’Oréal’s uncertain future
Reported by Spencer Yap
The world’s biggest cosmetics company, L’Oréal, is currently facing uncertainties after the death of Liliane Bettencourt. The Pairisian heiress holds a controlling stake of 33% in the company, which market value has grown by €100bn since its founding in 1909. The shares pass onto her daughter, Françoise Bettencourt-Meyers, who reaffirmed the family’s commitment to the company and CEO Jean-Paul Agon. This does well to calm any negative speculation surrounding the company especially following flourishing performance under Agon’s leadership with an operating profit of €4.5bn last year, with sales of €26bn.
However, there is still one question that looms above the company; whether Nestlé would change it’s stake in the company. Currently the food company holds a 23.2% stake in the L’Oréal, as a result of a deal struck between Mrs Bettencourt and Nestlé in the 70’s to prevent the socialist agenda that could have nationalised L’Oréal. The deal holds that neither party can increase their stakes during Mrs Bettencourt’s lifetime or less than 6 months after her death.
Pressure to divest arises from shareholders, who have whined about Nestlé’s loss of market share to its competitors. Especially Third Point, an activist hedge fund which recently purchased a $3.5bn stake in Nestlé, have actively sought after divestment in L’Oréal. Third Point said “it could be divested in a tax-efficient way through an exchange offer whereby Nestlé would give shareholders L’Oréal shares for their Nestlé shares.
Nestlé’s Chief Executive, Ulf Mark Schneider, refused this saying that the stake in the cosmetic company constitutes a good investment with an average of 12% annual returns for the past 42 years. However, Nestlé at the same time might want to follow the actions of Unilever, who is shifting from food production to faster-growing sectors such as shampoo and skin creams. But this would be a stretch without Bettencourt’s approval, who shows no willingness to sell.
- Edward Heath would have been questioned over abuse claims
Reported by Jutha Cheewat
Sir Edward Heath, the former Prime Minister, was accused of historical child abuse as part of the Operation Conifer in 2015. He would have been interviewed over seven claims, including the alleged rape of a male under 16.
The investigation dated back from 1961 when Sir Edward was Lord Privy Seal, when he allegedly raped and indecently assaulted an 11-year-old boy in London. In 1962, Heath also allegedly indecently assaulted a 10-year-old who he had encountered in public in Kent.
Other claims appear to be relevant to paid sexual encounters. In 1992 he allegedly assaulted an adult male, after consent was withdrawn, in a hotel. The findings of the investigation will be sent to the Independent Inquiry into Child Sexual Abuse.
Sir Edward Heath, who led the Conservative government in the 1970s, died at the age of 89 in 2005.
One of his closest advisers told the BBC that Heath was completely asexual. Other friends, including Mr Seligman, criticised the investigation and told the BBC “They are still just allegations and I do not believe them”.
The investigation has been heavily criticised but the police have confirmed that this is neither a fishing trip, nor a witch hunt. They will not succumb to media pressure.