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Adrian Montague also said some bosses in line for payouts of ‘50% of salary, very substantial bonuses’ No comment yet.
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Water firm boss tells MPs company's survival depends on special treatment from the industry regulator.
Graham Watson's insight:
Absolutely pathetic. For the CEO of a water company even to ask this is, frankly, embarrassing, shows little awareness of the fundamental nature of running a business - and contempt for the regulator, and the company's customers.
His argument is that if fines levied by OFWAT are too high, then the company won't attract the necessary investment and will go out of business. Shame on the executives responsible for running the company over the last 20 years, and well-rewarded for doing so.
I suspect the regulator will not be captured to this degree. The moral hazard issues involved are staggering and that is why Chris Weston's behaviour verges on the contemptible.
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Health policy experts support the ‘most favored nation’ plan but doubt it will withstand likely legal challenges
Graham Watson's insight:
This is an interesting move - President Trump has signed an Executive Order to force pharmaceutical companies in the United States to match the lowest price for the drug abroad. His instinct is that the big pharma companies have been able to price gouge in the US at the expense of US consumers and he wants this to end.
He argues that under the present system, US consumers are effectively subsidizing research and development of drugs for the whole world and he wants this to stop. The distribution argument is actually quite compelling on first sight: the President claimed: “Even though the United States is home to only 4% of the world’s population, pharmaceutical companies make more than two-thirds of their profits in America,”
That said, a mastery of Maths isn't his strong point.
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T&Cs show limitations to the promises of 12 free seat reservations, insurance and monthly access to a sale
Graham Watson's insight:
Ryanair has joined Wizz Airlines and EasyJet Plus in offering a subscription-based model for its customers. For £79 per month, Ryanair are offering 12 free seat reservations, but Which? are of the view that the terms and conditions attached mean that this might not be the bargain that it seems.
For the airlines, such models are interesting in that they represent a new revenue stream and guarantee cash flow, and this sort of pricing is now much more common across a range of sectors, something noted in Diane Coyle's excellent "The Measure of Progress". However, as ever 'caveat emptor' applies.
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Ofgem review showed more than 34,000 customers were erroneously billed more for standing charges
Graham Watson's insight:
The regulator has intervened to force 10 energy companies to pay compensation for overcharging, with firms billed more than they should have been for standing charges. The net result of this was that they contravened the existing price controls.
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Ørsted cancels fourth stage of Hornsea project off Yorkshire coast, which was expected to include 180 giant turbines
Graham Watson's insight:
The push to transition to renewable energy may also hve stalled with the news that Danish firm Ørsted have shelved plans to build a fourth stage of their Hornsea project in the North Sea because of fears about rising costs.
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Move prompted by looming retirement crisis would help ensure consistent, reliable services
Graham Watson's insight:
Another labour market shortage, with a potential shortage of train drivers meaning that the government is going to lower the average age at which people can train to be a driver to 18, in the hope of increasing the supply of workers. The majority of cancellations stem from driver shortages.
At a more advanced level, D&S factors in the sector help explain why train drivers have recently been on strike.
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Associated British Foods’ sale of Allied Bakeries would bring together two of the UK’s biggest breadmakers
Graham Watson's insight:
More merger activity hoves into view with iconic British brands Hovis and Kingsmill contemplating joining forces. Associated British Foods (ABF), which owns the Kingsmill parent Allied Bakeries and Hovis’s private equity owner, Endless, a discussing a potential sale of the bakeries arm. The argument is that both are struggling and that this would generate "cost efficiencies" - i.e. economies of scale.
The immediate issue is that this is likely to attract the attention of the competition authorities. It would see the 2nd and 3rd largest players in the sector merging and push current market leader, Warburtons, into second place.
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Professionals call for a fundamental transition including controlling flight numbers
Graham Watson's insight:
Not much economic theory, more of a rallying cry, with a campaign group - Call Aviation to Action - alarmed that the aviation sector isn't doing enough to tackle carbon emissions, and in doing so is missing the opportunity to initiate radical change
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As big companies and informal miners blame each other for the damage to rivers and forests, mining risks long-term harm to those living nearby
Graham Watson's insight:
The negative externalities of emerald extraction in Colombia is laid bare in this Guardian article with different stakeholders - big business and informal miners blaming one another for pollution from resulting emerald extraction.
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The slowdown in the market was expected due to the lowering of thresholds at which buyers need to start paying stamp duty at.
Graham Watson's insight:
D&S basics - with the impact of an indirect tax - in this case Stamp Duty - have the expected effect on the housing market.
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Labour to press on with pylons as study shows underground cables more costly | Energy | The Guardian
IET report says running cables below ground about four and a half times more expensive than overhead lines
Graham Watson's insight:
Lots of lovely Microeconomics here - opportunity cost, renewable energy and energy security for a start. However, to what extent do pylons generate negative externalities? My impression is that people who say this don't have much of a case.
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The tax would be applied to manufacturers of milk-based drinks and dairy-based substitutes, under the plans.
Graham Watson's insight:
It looks like the government are going to extend the sugar tax to include milkshakes and other dairy-based substitutes, like yoghurt drinks, to try and reduce sugar consumption and tackle obesity.
Manufacturers will complain but its interesting to note that only 89% of soft drinks are now subject to the sugar tax because of the reformulation of these drinks and it's thought that this will be the main way that sugar consumption is reduced. |
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Tunisian company BIOHEAT says it is transforming the country's olive waste into an eco-friendly and efficient energy source, and that it is catching on with business owners.
Graham Watson's insight:
This Reuters clip shows how an innovative Tunisian firm, Futura, is using olive waste to replace fossil fuels. Founder of the company Yasir Khifi estimates that 1 kg of olive waste can replace 4kg of wood, and in combustion it also reduces carbon emissions by 30% too.
Tunisia is a major olive oil producer, and reusing the waste in a variety of diverse forms, not least in heating pizza ovens.
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The president promises sweeping price cuts "almost immediately", but experts say these are unlikely.
Graham Watson's insight:
This BBC article suggests that President Trump's attempts to intervene and limit US drug prices is less straightforward than it might appear. Experts can't see the US government negotiating sizeable reductions in drug prices in the immediate term.
Of course, whether any meaningful action is taken will depend upon the President's attention span above all, but industry insiders think that lower drug prices could also have implications for the level of research in the sector, and ultimately negligible effect on price.
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Exclusive: Campaigners call for energy profits levy to be made permanent to enable ‘just transition’ from fossil fuels
Graham Watson's insight:
Campaign group, Oil Change International (OCI ), want the government to commit to making the energy profits levy a permanent feature of the tax environment and use hypothecate the tax to foster speed the green transition away from fossil fuels.
Even now, fossil fuel producers are in receipt of £17.5bn a year in UK government assistance, according to the campaign group Global Justice Now (GJN), although I wonder if any of you might be able to make an economically valid defence of this position.
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Researchers call on UK government to close advertising ‘loopholes’ that are ‘driving excess calorie intake’
Graham Watson's insight:
This Guardian piece highlights the apparent impact of fast food advertising on children's eating habits, suggesting that the advs increase the consumption of fatty foods.
However, I'm going to play the sceptic here and suggest that the study doesn't strike me as massively rigorous, or terribly comprehensive; the sample size is small and I'd be interested in looking at the methodology to see how they've controlled the experiment for all other factors too.
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Environment Agency recommends rationing water as UK sees driest start to spring in 69 years
Graham Watson's insight:
D&S, agriculture and food prices. The low levels of rain this spring - the driest spring for 69 years - are likely to impact food production, and, consequently, food prices. You heard it here first!
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Emissions from abandoned coalmines, oil and gas wells globally are larger than any single country except China, the US and Russia
Graham Watson's insight:
An interesting environmental aside, this Guardian article highlights the fact that abandoned infrastructure is a major methane polluter - larger in fact than all bar the 3 largest polluters (China, US, Russia).
Unsurprisingly, it's abandoned fossil fuel infrastructure is the most polluting form of abandoned infrastructure.
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A cocoa-growing area in southeastern Nigeria is seeing an influx of new entrants into the sector, known as 'cocoa boys,' who are being drawn by rising cocoa prices.
Graham Watson's insight:
Lovely Reuters clip showing how prices allocate resources, with the rising price of cocoa attracting entrepreneurs into the sector. These new cocoa farmers, known as "cocoa boys" have left other jobs to become farmers in response to the higher price of cocoa. You might think about how this reallocates resources in both labour and product markets.
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The deal is the latest example of a UK-listed company being taken over by a US rival.
Graham Watson's insight:
It's happening: Doordash has agreed a £2.9bn takeover of Deliveroo, consolidating the sector and creating a larger rival for Just Eat and Uber Eats. The deal values Deliveroo at 180p a share, well below the IPO price of 390p, and there are also concerns about another firm being taken over by a US company.
Will Shu, Deliveroo's CEO is recommending the deal to shareholders, not least because he will trouser over £172m, but because the new entity"will have the scale to invest in product, technology and the overall consumer value proposition."
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Such a takeover would be one of biggest deals ever in oil and gas industry
Graham Watson's insight:
Wow! This would genuinely be a mega-merger, if Shell decided to bid for BP, prompted by the latter's falling share price. The combined company would be likely to have a value around £200bn, and considerable market power in many markets.
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Watchdog considers crackdown amid record complaints from pet owners
Graham Watson's insight:
It seems as thought the Competition and Markets Authority is going to intervene and potentially impose a price cap in the sector. Prices have risen by 60% in 8 years, compared to general service sector inflation of 35%.
It's argued that one of the causes of this has been a change in market structure and increased market concentration with large firms consolidating and the suggestion is their demands on their employees might be driving practitioners to limit the services that they offer to customers, and in doing so boost their employers profits.
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Federal funding was critical to Tesla’s survival. Yet the Doge boss now derides subsidies as government overreach
Graham Watson's insight:
A fascinating perspective on Elon Musk and government intervention with the author, Christopher Marquis, noting the irony in his current position as head of the “department of government efficiency” (DOGE) looking to cut government spending when his companies have greatly benefitted from the largesse of the state.
It's a similar story with Apple too - something Mariana Mazzucato's "Entrepreneurial State" is good at exposing - and it suggests that we often overlook the role of the public sector in bringing about innovation.
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Nearly 30% of total spending by biggest chains over four weeks was on special offers and discounts, says Kantar
Graham Watson's insight:
Unusually, it seems as though there's a price war in UK grocery retailing, with Kantar reporting that the last 4 weeks has seen significant spending on promotions. You wouldn't expect this to be the case in an oligopoly - and Year 13 economists should be thinking about why that's the case - however, lengthy periods of price stability are interspersed with short periods characterised by intense competition and it seems that's what happening at the moment. |
More on Thames Water's appearance before the Environment Select Committee - not only does cashflow look like a real issue but, surprise, surprise, it seems that a number of executives are on for sizeable bonuses of “50% of salary, very substantial bonuses”, with the CEO potentially going to be given a bonus of up to 156% of salary.
And yet, there he is ask for clemency from the regulator. Shameful.