Business
Public won’t be told to cut energy use
The government has decided not to launch a public information campaign on reducing energy use this winter after the prime minister’s office raised objections, the BBC has been told.
A source said there was a “reasonably well-developed plan” to encourage household energy-saving.
But Climate Minister Graham Stuart denied a Times report that a campaign had been blocked by Downing Street.
He said UK energy was secure despite a National Grid warning of blackouts.
Its message about possible power cuts was based on a worst-case scenario of gas shortages if the energy crisis in Europe escalates.
The Department for Business, Energy and Industrial Strategy (BEIS) was considering plans to encourage households to switch off their appliances and heating to conserve energy whenever possible during winter.
However, the BBC was told the department was stopped from taking the plan forward because of objections from the prime minister’s office and the Department of Health and Social Care (DHSC).
DHSC sources said they did not believe they had played any specific role in any decision, but indicated there might be broad “concern about the elderly being afraid to turn on their heating”.
The Times newspaper reported that Downing Street’s intervention came on Thursday when National Grid issued its warning.
The UK is heavily reliant on gas to produce electricity, with gas-fired power stations generating more than 40% of the country’s electricity.
In the “unlikely” event that gas supplies ran extremely low, homes and businesses in the UK could face three-hour planned blackouts, National Grid said.
The government says National Grid has drawn up plans to launch a voluntary service to reward users who reduce demand at peak times.
Speaking on BBC Breakfast, Mr Stuart said he was “confident the government has done everything in its power” to make sure energy rationing would not be necessary this winter.
But he added: “We make plans for all scenarios.”
During the Conservative leadership campaign, Prime Minister Liz Truss pledged there would be no energy rationing this winter.
On Thursday, when asked if she could guarantee there would be no blackouts, Ms Truss said: “We do have a good supply of energy in the UK.”
In a statement, BEIS said: “There are no plans for the government to tell the public to reduce usage for the sake of our energy supplies.
“The UK has a secure and diverse energy system and we are confident that the steps we are taking will protect security of electricity and gas supplies.”
When asked to comment, Mr Stuart indicated there had been discussions within BEIS, but confirmed there would not be a government-led effort to get people to reduce usage, saying “it has been decided that there will not be a campaign”.
Mr Stuart also denied that a well-developed campaign had been prepared and then blocked by the prime minister’s team.
How will the demand flexibility system work?
National Grid wants to be able to reduce British energy demand at peak times if there is going to be a shortage.
This winter, starting in November, it is going to have 12 trial days where it asks customers who have signed up via their energy suppliers to reduce the amount of energy they are using at particular times of day.
They would be given a day’s notice that they would be asked to do this.
In return, they would be paid for using less energy. National Grid has not yet decided how this will work but has suggested that for the trial days customers might be able to make back £10 a day.
Expect National Grid to announce more details later this month with customers being able to sign up from 1 November as long as their energy suppliers are participating in the scheme.
The Times newspaper had reported that the prime minister had rejected plans for a £15m public information campaign, which was signed off by Business Secretary Jacob Rees-Mogg.
It suggested Ms Truss was “ideologically opposed” to the campaign amid concerns it would be too interventionist.
In her speech to the Conservative Party conference on Wednesday, the prime minister said her conservatism was about “freedom”.
“I’m not going to tell you what to do, or what to think or how to live your life,” she said.
Some question whether a campaign is needed at a time when many people are already changing their behaviour and saving energy where they can.
But those with knowledge of a campaign say they don’t understand the logic of blocking it. “Slightly mystifying,” they say.
In a tweet, Conservative MP Guy Opperman said he would he “fully behind” an energy-saving campaign that would help people and the taxpayer save money.
“This is not Nanny state,” he wrote, arguing it was about “preserving supply, saving money for everyone, and encouraging localism”.
Stew Horne, head of policy at not-for-profit organisation Energy Saving Trust, said the government needed to consider how to reduce demand this winter to increase energy security.
He said the European Commission had recently announced plans to reduce peak demand by 5% across EU member states. In Italy, central heating use will be reduced and households have been asked to turn down their thermostats to reduce energy demand.
Mr Horne said he “would welcome consideration of similar measures to improve energy security”.
Russia’s invasion of Ukraine has caused turmoil and volatility in the energy markets, sending fuel bills rocketing, and tightening supplies of oil and gas globally.
Ahead of winter, countries across Europe are scrambling to shore up supplies, as gas flows from Russia are restricted.
Since taking office Ms Truss’s government has been seeking to boost energy security, with a ban on fracking for shale gas in England lifted last month, and a new oil and gas exploration licensing round launched on Friday.
This comes after government stepped in with an energy support package to help people with soaring bills.
Reports /TrainViral/
The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.
“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.
Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.
Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.
Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.
In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.
However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.
The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.
But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.
As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.
The USO is a potential sticking point for both the government and unions.
Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.
How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.
Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.
Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.
‘Unconditional commitment’
Mr Kretinsky has committed in writing to honouring the USO, but only for five years.
And after that, in theory, the new owners could just walk away from it.
However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.
“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.
Another potential stumbling block for the deal, however, is how the company will be structured.
Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.
Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.
To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.
It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.
If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.
Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.
“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.
“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”
Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.
The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.
Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.
“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”
He said if the management, union and employees work together, “we will be successful”.
Another concern is the potential break-up of the business.
The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.
Mr Kretinsky has promised not to split off GLS or load the parent company with excessive debt, although borrowings will rise if the deal goes through.
But he has a way to go to convince the CWU.
“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.
However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”
The union cannot stop this deal but the government can block it under the National Security and Investment Act.
Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.
Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.
Who is Daniel Kretinsky?
Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.
He then made serious money in Central and Eastern European energy interests.
This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.
He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.
The Czech businessman is worth about £6bn, according to reports.
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