UK rail minister warns over staff shortage threat to Christmas services
The UK government is concerned that Christmas train services could be disrupted because of staff shortages, the rail minister said this morning.
Peter Hendy has told MPs that Department for Transport (DfT) officials will continue to look at the issue throughout the festive period.
Many train drivers and other crew members do not have Sunday working included in their contracts, and numerous rail operators often relying on them volunteering to work extra paid shifts to run timetabled services on that day.
This regularly causes the cancellation of hundreds of trains across Britain, such as on Father’s Day or the day of a major England football match.
Giving evidence to the Commons’ transport select committee, Lord Hendy said the government is worried about “staffing of Christmas services”.
That we are concerned about with several train operators, exacerbated by the fact that inevitably the closures close parts of the railway and put more pressure on others.”
I’ve been through this a lot with Alex [Alex Hynes, director general for the DfT’s rail services group] recently and will continue to be into, right up to and over Christmas.
Hynes said:
Generally as a system, we’re over-reliant on overtime working for train crew.
That’s a risk, which may be worse at Christmas time than other times.
This comes on top of the threat of other Christmas disruption, as train managers at Avanti West Coast are to strike in a dispute over rest day working. Members of the Rail, Maritime and Transport union plan to walk out on 22, 23 and 29 December.
Key events
Kalyeena Makortoff
More from the Financial Conduct Authority, Britain’s financial watchdog, on the scale of the ballooning car finance commission scandal, with the regulator’s chief executive following up on comparisons to the PPI scandal during Martin Lewis’ ITV programme last night.
Yesterday morning, FCA’s top lawyer Stephen Braviner Roman, gave the biggest indication yet that the car finance commission controversy could start to rival the scale of the PPI scandal, which cost banks £50bn.
He told MPs that a landmark court ruling in October, which went wider than the FCA’s investigation into a banned practice known as discretionary commission arrangements (DCAs), had changed the game:
We’ve previously said that looking at DCAs alone, we do not think it’s the scale of PPI. But that was when we were looking at DCAs alone. So I think it would be premature to say it’s definitely not the scale of PPI now.
But the FCA’s CEO Nikhil Rathi then went on Martin Lewis’ Money Live show on ITV last night, adding:
It’s more likely that there will be a redress scheme [set up by the FCA] than when we started this work…. I wouldn’t necessarily say it’s going to be as large as PPI. We’re going to have to see what the courts say, and then come to a view.”
Currently, ratings agency Moody’s is estimating that the issue could end up costing car lenders like Lloyds, Santander and Close Brothers, a collective £30bn.
Investment group behind Subway in talks to buy Gail’s
Sarah Butler
An investment group which has stakes in fast food chains Subway and Burger King’s European businesses as well as Japanese-inspired Danish chain Sticks’n’ Sushi is in talks to take control of bakery chain Gail’s.
McWin Capital is already a shareholder in the up-market bakery chain alongside private equity group Bain Capital and former Pizza Express and Patisserie Valerie owner Luke Johnson.
Gail’s appointed bankers from Goldman Sachs to sell the business for a reported £500m last month and the group has said it plans to open at least about 35 bakeries around the country next year.
Sales for Gail’s parent company Grain Topco, which operates wholesale businesses The Bread Factory and Bertinet Bakery alongside more than 130 Gail’s outlets, increased by 27% to nearly £232m in the year to February, according to the latest accounts of its parent company Grain Topco. However, the group made a £7.4m pretax loss, after a near £13m loss the year before, as costs rose.
UK roofing firms ‘illegally colluded to rig bids’ for school repair contracts – CMA
Several UK roofing and construction services companies “illegally colluded to rig bids” to win contracts for repairing schools, in particular roofing, the competition watchdog said, as it launched an investigation.
The Competition and Markets Authority (CMA) said it has reason to suspect that several companies, including building contractors and technical advisors, worked together to rig bids to secure contracts funded through the government’s condition improvement Fund (CIF). The CMA is particularly concerned about roofing contracts.
The regulator, led by chief executive Sarah Cardell, did not name any of the companies under investigation. It has carried out surprise inspections at several business premises to gather evidence, including physical and digital documents. It is working closely with the Department for Eduction (DfE).
CIF money is awarded every year by the DfE and can involve significant sums of money. During the latest round, it made available almost £450m in funding. Funds are awarded to schools with buildings in poor condition, to address health and safety issues, as well as building compliance.
Juliette Enser, the watchdog’s executive director of competition enforcement, said:
This fund is incredibly important and ensures that essential building improvements can be made to schools throughout England, meaning students are learning in safe and suitable environments.
While no assumptions should be made that competition law has been broken at this early stage, we will be investigating this issue thoroughly. We will now be making enquiries and assessing the evidence to see whether or not bid rigging has taken place – and what further action may be needed.
If the CMA decides that the companies have broken competition law, after assessing the evidence gathered, it will issue what is known as a statement of objections to set out its concerns, and businesses have an opportunity to respond. At this stage, no assumptions should be made that the law has been broken, the watchdog said.
Public procurement represents around a third of public spending and evidence from around the world suggests it is highly vulnerable to anti-competitive behaviour.
Last year, the CMA issued fines totalling almost £60m to firms involved in rigging both public and private sector bids.
The latest investigation comes ahead of the new debarment regime, which is set to come into force in February. This means that any businesses which break competition law could also be banned from bidding on public contracts in the future – in addition to potential financial penalties and director disqualification.
A business that has been involved in anti-competitive conduct may be granted immunity from penalties, or a significant reduction in penalty, in return for reporting cartel activity and assisting the regulator with its investigation. Individuals involved in cartel activity may also be granted immunity from criminal prosecution if they help the CMA. It may pay a financial reward of up to £250,000 in return for information which helps it to identify and take action against illegal cartels.
Holidaymakers on smaller budgets turning to Tunisia and Egypt, says Tui
Here is our full story on Tui:
Cash-strapped consumers are still prioritising spending on holidays but are choosing more affordable destinations including Egypt, Bulgaria and Tunisia for their annual break, according to Europe’s biggest package trip operator.
Tui said new customers with smaller budgets who are not able to find a package holiday in more traditional locations such as Spain are looking elsewhere.
Inflationary pressures have eased, the travel company said, and the average selling price of its holidays have levelled out, although the cost of a trip remains at a “significantly higher level” compared with 2019.
Prices are now “at a level where we think it will remain”, said Sebastian Ebel, the group’s chief executive.
Kalyeena Makortoff
Sweden’s financial watchdog has fined Klarna’s 500m Swedish kroner (£36m) for breaching anti-money laundering rules, in a blow to the buy now, pay later giant as it gears up for a blockbuster stock market listing in the US.
The regulator said Klarna “has been in violation of several key rules”, and that its investigation (covering April 2021 to March 2022) had found “significant deficiencies” including a lack of assessments on how its products and services could be used for money laundering and to finance terrorism.
Daniel Barr, director general at Sweden’s regulator, Finansinspektionen, said:
The anti-money laundering regulations must be followed. It is important to counteract the risk that the firm’s operations could be used by criminals. Our investigation shows that Klarna has not followed the requirements on, among other things, a general risk assessment and procedures and guidelines for due diligence measures. There are therefore grounds on which to intervene against the bank”
While it hit Klarna with a major fine, the regulator said it was not serious enough to issue a formal warning or withdraw the bank’s authorisation.
It will be a blow to Klarna as it prepares for an IPO in the US, which has been expected to easily fetch a multi-billion dollar valuation. But while the fine may put off some potential investors, it’s worth keeping in mind that it sounds like nearly all of Sweden’s largest banks have been fined for anti-money laundering recently – so this can be construed as a general crackdown.
Klarna said:
The decision from the SFSA follows a routine review, initiated in 2022, of Klarna’s compliance with anti-money laundering regulations—not actual cases of money laundering. We have maintained constructive dialogue throughout this process which is part of our commitment to a robust and secure financial environment.
Sterling at 2 1/2 year high versus euro, eyes pre-Brexit levels
In financial markets, the pound has risen against the euro, hitting its highest level in two and a half years.
Sterling is supported by a relatively hawkish Bank of England, as well as political uncertainty in France and Germany, although it dipped against a generally stronger dollar.
The euro dropped as low as 83.35p, its lowest since 22 March, and is now trading at 82.49p.
Jane Foley, head of currency strategy at Rabobank, said:
A little question seems to have popped up over the last few weeks, perhaps amongst the mainstream press, asking whether or not euro sterling could finally go back down to where it was before the referendum in 2016.
That would be on the back of this perception that the ECB is more growth-oriented – or lack of growth-oriented – and we’ve got these political issues, clearly in France and in Germany.
We can sit here and quite easily list out what is wrong with the UK economy and what is wrong with the UK budget … but at least there is a budget. And given the consensus view that the Bank of England will need to be perhaps more cautious than the ECB, sterling is finding a little bit of support.
The Bank of England is expected to leave interest rates on hold next week and be cautious next year. Markets are pricing in three quarter-point rate cuts by the end of next year. In contrast, the European Central Bank is forecast to lower rates by a quarter point tomorrow, and analysts expect the ECB to cut at every meeting at least for the first half of 2025, and possibly beyond.
The ECB is faced with weak economic growth in the eurozone, as well as political turmoil in the two biggest European countries, Germany and France.
Germany’s governing coalition collapsed last month and a snap election is expected on 23 February. In France, the collapse of prime minister Michel Barnier’s government last week left the country’s budget for next year in limbo, with ministers scrambling to prepare stop gap legislation to roll over 2024 spending limits until a new budget bill can be drafted next year.
However, the pound has dipped against the dollar, and was last down 0.34% at $1.2724. The dollar strengthened against major currencies, as traders feared US inflation data due at 1.30pm GMT could come in hotter than expected and disrupt bets on a Federal Reserve rate cut this month.
Britain’s rail network shuts down every year on Christmas Day, with a limited service on Boxing Day.
Many routes will be closed for longer during the festive period because of Network Rail carrying out engineering work.
Peter Hendy, the rail minister, who chaired Network Rail from 2015 until he was brought into the Labour Government, said:
Christmas is a good time to do major engineering work, because the demand is lower over several days.
Network Rail has said passenger numbers at major stations typically drop by 50%-60% during the seven days between Christmas Day and a new year compared with a week in November or early December.
Lord Hendy explained that finishing engineering work on time is vital, as he recalled Christmas 2014 when the reopening of London King’s Cross station was delayed, causing chaotic scenes at Finsbury Park station.
He said:
The lessons of that were very severe, and the rail industry and Network Rail, in particular, has worked extraordinarily hard not to replicate that again, because it was disastrous, and disastrous for passengers.
London Liverpool Street station will be closed from Christmas Day until 2 January because of renewal work at Bishopsgate Tunnel and improvements to the passenger experience. Travellers are advised to use Victoria line Tube services from Walthamstow Central or Seven Sisters.
No trains will call at London Paddington between 27 and 29 December because of preparatory work necessary for HS2’s Old Oak Common station. That means Heathrow Express trains will be unable to run between Paddington and the west London airport.
Some Great Western Railway services will be diverted to or from Euston, but the majority will stop or start at Reading or Ealing Broadway.
Signalling work in the Crewe area between Christmas Day and January 2 will cause significant changes to services, with no trains passing through Crewe station on 27 December. There will be no direct services between Crewe and Liverpool, and a reduced service between Crewe and Manchester, from 28 December until 3 January.
Services in the Cambridge area will be disrupted between 27 December and 5 January, affecting CrossCountry, Greater Anglia, Great Northern and Thameslink.
UK rail minister warns over staff shortage threat to Christmas services
The UK government is concerned that Christmas train services could be disrupted because of staff shortages, the rail minister said this morning.
Peter Hendy has told MPs that Department for Transport (DfT) officials will continue to look at the issue throughout the festive period.
Many train drivers and other crew members do not have Sunday working included in their contracts, and numerous rail operators often relying on them volunteering to work extra paid shifts to run timetabled services on that day.
This regularly causes the cancellation of hundreds of trains across Britain, such as on Father’s Day or the day of a major England football match.
Giving evidence to the Commons’ transport select committee, Lord Hendy said the government is worried about “staffing of Christmas services”.
That we are concerned about with several train operators, exacerbated by the fact that inevitably the closures close parts of the railway and put more pressure on others.”
I’ve been through this a lot with Alex [Alex Hynes, director general for the DfT’s rail services group] recently and will continue to be into, right up to and over Christmas.
Hynes said:
Generally as a system, we’re over-reliant on overtime working for train crew.
That’s a risk, which may be worse at Christmas time than other times.
This comes on top of the threat of other Christmas disruption, as train managers at Avanti West Coast are to strike in a dispute over rest day working. Members of the Rail, Maritime and Transport union plan to walk out on 22, 23 and 29 December.
Blackstone’s £300m bid for Can of Ham canned
A £300m bid to buy a London skyscraper nicknamed the “Can of Ham” has collapsed, in a blow to the City.
The US private equity giant Blackstone could not agree on a price for the building at 70 St Mary Axe – nicknamed Can of Ham for its curved shape – with the current owner Nuveen, a real estate investment group owned by US pension fund TIAA (Teachers Insurance and Annuity Association of America).
Nuveen was reportedly not willing to go below its £322m price tag. The failed deal, first reported by Green Street News, is a sign of the struggling London’s office property market since the Covid-19 pandemic.
Office values have fallen, and deals above £100m are rare, following a move to hybrid working – which means banks, law firms and other companies are downsizing their offices.
Nuveen had tried to sell the building in 2022 for about £400m.
MSCI analyst Tom Leahy said:
There is a gap in price expectations between buyers and sellers . . . suggesting there is further to go before market liquidity returns.
Christmas disruption likely as Avanti West Coast train managers vote to strike
Train managers at Avanti West Coast are to strike in a dispute over rest day working.
Members of the Rail, Maritime and Transport union plan to walk out on 22, 23 and 29 December.
Union members voted overwhelmingly against the company’s proposals.
The RMT general secretary, Mick Lynch, said yesterday:
Avanti West Coast’s proposals have been decisively rejected by our train managers, sending a clear message to management that the current arrangements are unacceptable.
Train managers are being treated unfairly compared to senior managers, who receive significant payments for covering these roles.
Annual rent for newly let UK home £3,240 higher than 2021 – Zoopla
In the UK, the average cost of renting a newly let home is now £3,240 higher than at the end of the pandemic lockdowns, after three years of rental increases outstripping rises in earnings, new research shows.
Rents have risen by 27% since 2021, the online property website Zoopla found, compared with a 19% increase in earnings, taking the annual cost of renting a property to £15,240, up from £12,000 in 2021.
Rental costs began to soar as Covid lockdowns were lifted in 2021, which resulted in average private rents hitting record highs.
The increase in housing costs was blamed largely on demand for rental properties greatly outstripping supply, which led to intense competition among tenants.
Biden considering harsher sanctions against Russian oil trade, says Bloomberg
Joe Biden’s government is reportedly considering new, harsher sanctions against Russia’s lucrative oil trade, just weeks before Donald Trump returns to the White House.
Details of the new measures are still being worked out, but Biden’s team is looking at restrictions that might target some Russian oil exports, Bloomberg News reports, citing unnamed sources.
That step was something Biden had long resisted over fears it could trigger a spike in energy costs, especially in the run-up to last month’s presidential election. But with prices for oil slipping amid a global glut and fears growing that Trump may seek to force Ukraine into a quick deal with Russia to end its nearly three-year-old war, the Biden administration is now open to more aggressive action, the people said…
The US already bans imports of Russian oil but new restrictions on the exports of one of the world’s largest producers — which could involve singling out foreign buyers of its crude — would upend more than two years of policy set after Russia’s full-scale invasion of Ukraine began in February 2022.
Richard Hunter, head of markets at interactive investor, has looked at the outlook for US interest rates, and the moves in UK stock markets.
The US consumer price index is expected later today, where a 0.3% rise is expected in November, annualised to 2.7%, and will be followed by a further reading tomorrow at the wholesale level. Barring any shocks, the likelihood of an interest rate cut is high next week, although expectations have been dialled back on the pace of reductions next year. The twin drivers of a surprisingly robust economy which has shown few signs of heading towards the previously feared recession, alongside some caution that the President elect is likely to introduce some measures which are inflationary, could well keep a lid on the monetary easing path.
In the meantime, the technology stocks which have been at the hub of market strength this year, continue to be in the headlines. Oracle shares dipped by 7% after a disappointing second quarter update, although they remain up by around 70% this year. Alphabet shares are now ahead by 34% in the year to date after a 6% pop in its share price following news that Google had made a major breakthrough in quantum computing power. The influence of mega cap tech stocks is blatantly obvious in the year to date performances, where the Nasdaq has added 31% and the S&P500 26.5%, as compared to a gain of 17% for the more traditional Dow Jones index.
European shares are drifting lower, with the UK’s FTSE 100 down almost 30 points to 8,251, a 0.36% decline. The German, French and Italian markets are flat at the moment. Hunter said:
UK shares also drifted in early trade as any recent year end ebullience has evaporated, at least for the moment. The risk off approach which has permeated investor sentiment has been driven by any number of factors, and the pressure has overspilled to a retailing sector which has increasingly borne the brunt of the potentially damaging measures previously announced in the budget. Both JD Sports and Primark owner Associated British Foods dipped in opening exchanges, with the mining stocks falling again in a sign of investor uncertainty.
The initial decline reduces the performance of the FTSE 100 in the year to date to an increase of 6.7%, with the FTSE 250 having added 6.2% in the same period. While both markets are increasingly accepted to be on extremely cheap valuations compared to global peers let alone historically, investors have continued to seek strong growth returns elsewhere, especially in the US where markets continue to test record highs.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, has looked at Tui.
Holidaymaker TUI delivered a strong finish to the year as full-year operating profits cruised ahead of market expectations. Consumers continue to prioritise travel, meaning more customers have been willing to pay higher prices to enjoy a break away from everyday life.
TUI owns an airline, cruise ships, hotels and resorts, giving more than 20 million customers the choice of over 180 destinations. In some ways, having a wide package holiday business makes it more defensible – there’s more to offer and a lot of cross-selling opportunities. But the drains on cash when you have planes, huge hotels and cruise ships to maintain and fill are enormous, so it was good to see occupancy rates across the business creep higher. Fewer empty rooms mean more efficiencies and higher profits.
Positive booking momentum continued into the new year too. In the airline segment, 62% of seats for the winter season have already been sold. Debt levels have been brought down to a comfortable level, and continued progress on this front could see dividends reinstated in the near to medium term.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said:
Investors look set to show wariness ahead of a key inflation report due out in the US, while they await more detail about support for China’s struggling economy. The FTSE 100 is expected to open a little lower, as a wait-and-see mood prevails.
There’s hope in the air for more clues about China’s latest stimulus plan, which is helping lift markets mid-week. The FTSE is set to edge higher in morning trade as the Central Economic Work Conference begins with new targets expected to be laid out.
With the Politburo having announced a looser monetary stance will be adopted next year, investors are holding out for more fiscal support, bigger spending and lower borrowing. While the plans are still likely to be short on detail this week, the economic priorities set by the conference will be seen as an indicator of how far authorities are willing to go to bolster China’s domestic demand, in the face of looming US tariffs which are set to hamper exports.
Interest rate speculation in the United States is set to heighten when a CPI snapshot of inflation is released later, with the signs are that prices have become more stubborn. Although the consumer price index data, due out later, is not the Federal Reserve’s preferred measure of inflation, it still has influence.
If as expected, the headline rate creeps up a little, by 0.1% on the month, it is likely to increase bets of a rate cut next week. Markets are already pricing in a near 85% probability that the Fed will plump for another 0.25% reduction.
Crude oil prices are trading moderately higher this morning, with Brent crude futures up by 0.2% to $72.36 a barrel while US futures are at $68.76 a barrel.
Streeter said:
Oil prices have edged higher as the Israeli forces have attacked Syria’s naval fleet, amid the political vacuum following the collapse of the Assad regime. The uncertainty about what the future holds for the country, and the wider region has raised concerns about crude supplies. Expectations for firmer detail on China’s economic stimulus programme is also raising hopes of higher demand for energy in the world’s second-largest economy. Brent crude is nudging towards $73 a barrel, rising for the third session in a row.
Introduction: Tui bookings rise on demand for package holidays and higher prices
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Europe’s largest tour operator Tui has hailed a “very good year” and said both winter and summer bookings are up, as it raised its prices and sold more package holidays.
The Anglo-German firm said 20.3 million people travelled with Tui in 2024, compared with 19 million the year before, and revenues climbed by 12% to €23.2bn. Underlying profits rose by a third to €1.3bn from €977m. Profit is expected to rise by between 7% and 10% next year.
Winter bookings have risen by 4% year on year with 62% of holidays sold. Tui raised its prices by 5% and sold more package holidays and dynamically packaged trips, where travellers can book individual components with dynamic pricing.
People have been booking more packaged holidays as they try to control costs amid inflationary pressures, but are still keen to get away. Airlines have been hit more by rising costs and weaker business bookings, but Tui’s holiday business has thrived.
Summer bookings are 7% ahead of last year and Tui has sold 17% of those holidays, similar to this time last year, with prices up by 3%.
Tui said demand remained robust throughout the year despite strong competition, but there was a decline in customers going on long-haul trips in the Netherlands and Belgium.
Sebastian Ebel, the chief executive, said:
We will continue to focus on package holidays and our good cooperation with travel agencies.
It’s US inflation day, and financial markets are on tenterhooks.
We are expecting the annual rate of the consumer prices index to tick up to 2.7% from 2.6%, while the core measure, which strips out volatile items like food and energy, is forecast to have stayed at 3.3%.
The Agenda