27 March 2014 Last updated at 05:23

Business Live: "Big six" face competition probe

    06:00: Ben Morris Business Reporter

    Is the energy market competitive and properly serving households and firms? We'll get the view of regulators at 07:00. Stay with the Business live page.

    06:00: Howard Mustoe, Business Reporter

    Good morning! The US Federal Reserve has rejected plans by Citigroup to buy back shares as it fails a test on whether it could carry on lending in an economic downturn. Get in touch via twitter on @bbcbusiness and via email: bizlivepage@bbc.co.uk.

    ENERGY MARKET 06:01:

    The energy regulator OFGEM will publish its review into the energy market at 07:00. It may recommend a full review of the market by the new Competition and Markets Authority. That agency could order the break-up of the "big six" electricity and gas suppliers, if it judges the market to be uncompetitive.

    ENERGY MARKET 06:07: Radio 5 live

    "We want to make sure our energy companies can't profiteer and fleece consumers," Energy Secretary Ed Davey tells Wake up to Money. He thinks more can be done to encourage competition. "Figures in November showed that the domestic gas market was not as competitive as it should be," he explained.

    PENSION CHANGES 06:12: Radio 5 live

    From today, almost half a million people have new options for their pension savings. Among the changes, new pensioners are now allowed to take a maximum of £30,000 from their pension savings as a lump sum. However, "buying an annuity is still a good option," says Tom McPhail, Head of Research at Pensions Advisors Hargreaves Lansdown, on Wake up to Money.


    If you are wondering about how the pension changes affect you, this feature by BBC personal finance reporter, Kevin Peachey is a good place to start. You can find links to other helpful articles there too.

    CITIGROUP 06:31:
    Citibank sign

    The US Federal Reserve rejected plans by Citigroup to buy back shares and boost dividends for shareholders. The Fed objected to Citi's plan for coping with a severe economic downturn. It is the second time in three years that Citigroup's plans to return cash to shareholders have been rejected.

    ENERGY MARKET 06:37: Radio 4

    More on today's Ofgem review into the energy market, this time from Craig Lowrey, a consultant at UX Energy Services. A call for the break-up of the six largest energy suppliers "may exacerbate concerns in terms of the reluctance to invest in energy infrastructure", adding to worries about future energy supply, he tells the Today programme.

    AIRBUS ORDER 06:45:

    Airbus, the European jet manufacturer has signed a deal to supply 70 planes, worth more than $10bn (£6bn), to China. The deal was signed during a state visit to France by the Chinese president, Xi Jinping.

    Amazon logo

    Amazon has won the approval of a very big and very sensitive customer, according to the Financial Times. The US Department of Defense says that Amazon's cloud computing services meet "stringent security and compliance requirements", says the FT. Cloud computing allows firms to rent computer storage and services from another firm, rather than buying expensive hardware and software themselves.

    ENERGY MARKET Breaking News

    Ofgem has proposed an investigation of the energy market by the Competition and Markets Authority. It will look at whether there are "barriers to effective competition" in the UK energy market. You can view the full Ofgem report here.

    ENERGY MARKET 07:15: Radio 4

    Dermot Nolan, the chief executive of Ofgem, says this review by the Competition and Markets Authority will be good for investors and consumers. "I think it's a process that will give clarity and surety to investment," he says. "If you look at what investors are saying - they say there's a lack of clarity now."

    ENERGY MARKET 07:14:

    Here's some highlights from the Ofgem report. It says that retail profits at the "big six" rose from £233m in 2009 to £1.1bn in 2012 with "no clear evidence of suppliers becoming more efficient". It also says those suppliers were "consistently setting higher prices for consumers who have not switched" to competitors.

    ENERGY MARKET 07:29: Radio 4

    More from Dermot Nolan, the chief executive of Ofgem, speaking on the Today Programme: On whether there will be a breakup of the six largest suppliers, "it's possible, (but) I couldn't guess what the Competition and Markets Authority will do". The investigation will take some time, so meanwhile, "we'll be keeping the pressure on" suppliers, he said.

    ENERGY MARKET 07:33: Radio 5 live

    The Ofgem report does not accuse the "big six" firms of colluding over prices. But it did find "possible tacit co-ordination". On 5 live Ofgem chief executive, Dermot Nolan, says "evidence has strengthened that prices are going up at the same time and to the same extent".

    ENERGY MARKET 07:37: Radio 5 live

    Dermot Nolan, chief executive of Ofgem is on 5 live. Adam Parsons asks whether the "big six" should split their retail supply businesses from energy production. "There are concerns about that particular area," Dermot says. "We are not saying this is the end of the big six, but they should be studied more clearly," he adds.

    UKRAINE 07:42:
    Pressure dials

    Ukraine's interim government will raise gas prices for domestic consumers by 50% to try to secure an International Monetary Fund aid package. Ukraine buys more than half of its natural gas from Russia's Gazprom, and then sells it on to consumers at below market prices.

    HELP TO BUY 07:46: Radio 4

    Lord Adair Turner, former chairman of the defunct City regulator, the FSA, talked about Help to Buy on the Today Programme. There's a "danger" it will lead to more borrowing and that it's being used as a "hair of the dog" remedy after the housing market crash during the crisis, he says. Few new houses combined with more credit will lead to higher prices, he said.

    ANNUITIES 07:57: Radio 4

    Lord Turner also talked to the Today Programme about pensions, in particular the potential dangers of pensioners being given greater control over their pension pots. "What the government is saying is if you blow it, just be aware that you will live the whole of your retirement on £7,000 a year," he said. He would have preferred a measure that encouraged buying an annuity at a later stage in life to make the product more cost-effective.

    ENERGY MARKET 08:10:

    The big energy firms are responding to that news of a full competition investigation into their industry. In a statement the chief executive of E.ON in the UK, Tony Cocker, says the probe is "the only way to restore full public confidence to the energy sector and depoliticise the whole issue".

    Chief executive of King ringing the opening bell at the New York Stock Exchange

    Shares in Candy Crush-maker King slumped 15% on their first day trading on the New York Stock Exchange. There is concern that it is too reliant on a handful of titles. While it owns more than 180 games, just three - Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga - accounted for 95% of its total revenue in the fourth quarter of 2013.

    ENERGY MARKET 08:21: Radio 4

    British Gas owner Centrica's chief executive Sam Laidlaw is on the Today Programme. "We completely understand why the regulator wants to provide assurance the sector is working as efficiently as possible," he says. "What's happening is we've had huge pressure on the bill with increases of wholesale gas prices," he said. He doesn't agree that the market is fundamentally flawed.

    ENERGY MARKET 08:23: Radio 4

    Centrica boss, Sam Laidlaw on the Today Programme, dodges the question on whether British Gas would match SSE's commitment to freeze prices until 2016. British Gas cut its prices in January and "reserves the right" to be competitive, he says.

    ENERGY MARKET 08:30: Radio 5 live

    Angela Knight, chief executive of Energy UK, which represents the energy companies, has just been on 5 live. She welcomes the competition inquiry and hopes it will look at the "ballooning amount of investment" that has to be made by energy firms. She also wants the cost of government policy, like green tariffs, to be reviewed.

    ENERGY MARKET 08:44: Radio 4

    "The lights will stay on," said Energy Secretary Ed Davey, talking to the Today Programme. He was responding to an earlier warning from Centrica's chief executive Sam Laidlaw that investment in the industry could be hurt if it is made less profitable. "We are having to ramp up investment and we are achieving it," Mr Davey says.

    ENERGY SHARES 08:48:

    Two of the "big six" energy firms are listed in London. SSE is down almost 2%. British Gas owner Centrica is down 0.3%.

    PENSION CHANGES 08:52: Radio 4

    "I trust pensioners to make the right decision," said Nigel Wilson, chief executive of Legal & General on the Today Programme, talking about the new pension rules. Even so, there must be more saving or future pensioners won't have a lot to live on, he said. It's something on which "we need to make radical changes."

    UKRAINE 09:04:
    A general view of the gas production and transporting station on a gas-field near the Ukrainian city Poltava, some 330 km east of the capital Kiev 04/01/06

    The International Monetary Fund has announced a bailout package for Ukraine worth between $14bn and $18bn. The deal is tied to tough economic reforms. That includes an agreement by the government to raise gas prices for domestic customers by 50%.

    MARKET UPDATE 09:13:

    Shares are lower early trading in London. The FTSE-100 is 0.6% lower. Babcock International is the biggest loser, down more than 4%. Shares fell after it announced the purchase of helicopter services firm Avincis for £920m. Elsewhere, in Frankfurt the Dax is 0.3% lower and in Paris the Cac-40 is 0.4% lower.

    ENERGY MARKET 09:22: BBC News Channel
    BBC News

    Shadow Energy Secretary, Caroline Flint has just been on BBC News. She says if Labour wins the next general election, it will not wait until the end of the competition review to take action. "We will have a price freeze. We will modify the licences to make sure that happens," she says, while Labour is already proposing the break-up of energy firms.

    BT broadband

    BT has topped the UK's list of the most complained about broadband providers for the first time, according to the latest figures from regulator Ofcom. EE came in second. Virgin Media had the lowest level of complaints.

    Via Twitter Ben Thompson Business correspondent, BBC News Channel

    tweets: "Bank of England urging banks to 'consider risk of future interest rate spikes when they approve mortgages' to reign in 'dangerous lending'"

    RETAIL SALES 09:55:

    UK retail sales rose 1.7% in February, according to the Office for National Statistics. That's a rebound from January when sales fell 2.0%. If you look at the three months to the end of February, retail sales were up 1.6% compared to the previous three month period.

    ENERGY MARKET 10:18: BBC News Channel

    Will the competition review of the energy market cause firms to delay investments and could "the lights to go out" as a result? That question was put to Tim Yeo, chair of the Energy Select Committee on BBC News. "There is a danger because we are running a very tight margin of capacity," he said. He was also critical of Ofgem saying it could have made today's decision "two years ago".

    ENERGY MARKET 10:24: BBC News Channel

    More strong stuff from Tim Yeo, chair of the Energy Select Committee: "The gas investment which we urgently need may be delayed because of this prolonged period of uncertainty." Mr Yeo thinks we should just "cut to the chase" and split the supply and generation of energy now. He suspects that's what the review will recommend anyway.


    The government has ended its contract with Atos, the firm which carries out work assessments for disability claimants. The contract was due to end in August 2015. "They will be paying a substantial amount of compensation," Disabilities Minister, Mike Penning said on BBC News. He blames Atos management for not being able "to work the contract correctly".

    ENERGY MARKET 10:59: BBC News Channel
    Mike Cherry

    On BBC News Mike Cherry, National Policy Chairman for the Federation for Small Businesses welcomes the competition inquiry into the energy market. He says it "can not be right" that small businesses that want to switch energy suppliers have to provide current bills and tariffs to the competitor before they are made an offer.

    ENERGY MARKET 11:15:
    Energy saving light bulb with cash

    It is one of the largest regular bills that a household has to pay, behind mortgage or rent, and council tax. So, where does your money go when you pay your gas and electricity bill?

    ATOS 11:30:
    Man with disabilities at work

    The government has ended its contract with Atos - the firm that carries out work assessments for disability claimants. Atos has been criticised for the number of assessments it has made as well as waiting times. The contract with the French company was due to end in August 2015. Disabilities Minister Mike Penning said a new company would be appointed in early 2015, and Atos would not receive "a single penny of compensation".

    UKRAINE 11:44:
    Arseny Yatseniuk

    Ukraine will see the price it pays for Russian gas soar by almost 80% from 1 April, according to Prime Minister Arseny Yatseniuk. He says that rise is pushing the country to "economic and financial bankruptcy". The Prime Minister also said he expects inflation of up to 14% this year.

    BANK FINE 11:58:

    Bank of America will pay a $9.3bn (£5.6bn) fine to settle claims it sold faulty mortgage bonds to US government-backed mortgage giants, Fannie Mae and Freddie Mac. The lender still faces a lawsuit from the US Justice Department and several other probes into mortgage-backed securities it sold during the housing boom, says Reuters.

    ANA planes on tarmac

    All Nippon Airways (ANA) has made the biggest order for aircraft in the company's history. It plans to buy 70 jets, with a list price of 1.7tn yen ($16bn; £10bn). Europe's Airbus will supply 30 planes and 40 will be supplied by US aircraft maker Boeing.

    MORTGAGES Via Twitter Hugh Pym Chief economics correspondent, BBC News

    tweets: "Bank of Eng FPC: mortgages at loan to income ratios above four times accounted for highest share of new mortgages Q3 since records began 05"

    Vladimir Putin

    President Vladimir Putin says Russia will launch its own national payment system in response to Visa and MasterCard boycotting some Russian banks over the annexation of Crimea, according to the Interfax new agency. The Russian government and Central Bank are working on the system, it says. "Such systems operate in countries like Japan and China, and very successfully too," Interfax quotes the Russian President as saying.

    ENERGY MARKET 12:37:

    EDF Energy chief executive Vincent de Rivaz isn't keen on the idea of breaking-up energy firms, saying integrated suppliers are more secure. "We need to show the benefits to customers of businesses that invest, generate, trade and supply energy," he said. "We help ensure security of supply in an increasingly complex and volatile world energy market at a time when recent events in Ukraine remind us that this remains an issue."

    US GROWTH 12:50:
    Ford plant

    The US economy grew a bit faster than previously thought in the final quarter of last year. GDP expanded at an annual pace of 2.6% according to the latest revision. Last month the Commerce Department reported growth of 2.4%.

    13:00: Howard Mustoe, Business Reporter

    That's that for the live page today, so thanks for joining us. Come back for more business morsels tomorrow from 06:00.


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