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Thursday's Business and Politics round-up

20 Sep 2018

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Good morning,

There was a lack of “responsibility and accountability” for the problems rail passengers faced back in May, the Office of Rail and Road (ORR) has concluded, adding that passengers were “badly treated.”

The timetable chaos caused severe disruptions on Northern Trains in the north west of England and Govia Thameslink (GTR) routes into London. Northern cancelled up to 310 scheduled trains each weekday, while GTR cancelled up to 470 over a period of seven weeks.

The regulator added that track manager Network Rail and the Department for Transport had also made mistakes and were partly responsible for the problems. 

This comes just days after the Government announced it will be carrying out a major review of Britain’s railways.

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No luck of the Irish

Prime Minister Theresa May attended a dinner at EU leaders’ summit in Salzburg last night, during which she rejected the revised solution to the issue of the Irish border that was proposed by EU’s chief negotiator Michel Barnier a day earlier.

Mr Barnier said on Tuesday that he was “ready to improve” his “backstop” plan to ensure there is no return to a hard border on the island of Ireland if the two sides fail to find an agreement by the deadline of March 2019. However, Mrs May insisted the EU must rethink its stance on the issue.

Mrs May is opposed to the UK being split into two customs territories if checks take place on the Irish Sea. But the Financial Times reports this morning that UK Government might be in the process of re-considering this option.

The Irish border is one of the last remaining sticking points in the negotiations on the withdrawal treaty. European Commission President Jean-Claude Juncker commented after last night’s dinner that a Brexit agreement was still “far away”, reflecting on the complexity of this issue.

Meanwhile, Mrs May is yet to sell her Brexit plan to UK Parliament and it’s looking like it will be a difficult task, with many in her own party opposing her Chequers proposal. Prime Minister’s proposal includes the UK signing up to a common rule book for trade in goods and a combined customs territory, while having freedom to diverge on Single Market rules for services.

A two-day Brexit summit will take place in mid-November – the UK and EU remain hopeful that a withdrawal agreement will be signed then.

Through the roof  

UK inflation rose at an unexpectedly sharp rate in August, reaching 2.7%, the highest level in six months, according to the latest figures by the Office of National Statistics (ONS). This comes despite widespread expectations amongst economists that the Consumer Price Index (CPI) would decline from 2.5% in July to 2.4% in August. Meanwhile, wages grew by 2.9% in the three months to July.

Contributing factors to the rising inflation are thought to include higher prices for transport, clothing and computer games. On the other hand, prices remained more stable for furniture, household goods and communications. Rising inflation reflects the fall in the value of sterling over the summer, which resulted in higher petrol prices and cost of other imports.

Commenting on the figures, IoD’s Senior Economist Tej Parikh highlighted that they show “that meaningful wage growth is still a distant prospect for the time being.” He added, “While prices remain sticky, businesses are struggling to find the margins to offer inflation-beating wages amidst the cumulative burden of business rates and other regulatory costs.”

Labour's cards on the table

Labour party is calling for bans on gambling adverts during live sports coverage, with Tom Watson, Labour’s shadow culture secretary, saying the UK needed to “face up to the negative effect the explosion of gambling advertising has had.”

The ban would likely cost British bookmakers and broadcasters millions of pounds a year.

Labour party is also exploring introducing a compulsory levy on 1% of bookmakers’ gross gambling profit and introducing rules to stop people using credit cards to pay for bets.

Research has shown that viewers were exposed to 90 minutes of betting adverts during this year’s World Cup. Meanwhile, Rachel Cassidy from Goldsmith’s University has estimated that gambling advertising increased by 600% from 2007 to 2013.

While it’s not clear whether the Government would considers supporting these plans, the gambling problem has been on its radar – the Government has recently decided to cut the maximum stake on fixed-odds betting terminals from £100 to £2. 

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