The government needs to sharply increase the discounts it gives UK citizens to tackle rapidly rising energy bills, according to consumer rights champion Which?.
Rebates given to fight a cost-of-living crisis and rocketing inflation should increase across the board from £400 ($472) to £1,000, and for families on the lowest incomes the increase needs to include an extra £150, Which? said on Thursday.
Which? said its recommendation was only for the period up to March, and it came as the next price cap rise is set to be announced on Friday by regulator Ofgem.
Analysis by energy industry consultant Cornwall Insight indicates that households will face an 80 per cent rise in bills going into the winter period. Annual energy bills are tipped to hit £3,554 from October, and then rise to £4,650 from January.
Which? is calling on the government and Ofgem to begin an immediate review of retail energy pricing, including the price cap.
“With energy bill predictions continuing to spiral, the government must increase the Energy Bills Support Scheme by at least 150 per cent, or risk pushing millions of households into financial distress this winter,” said Rocio Concha, Which?'s director of policy and advocacy.
“While increased support will provide relief for many, it is not a long-term solution. The government and regulator must urgently undertake a wide-ranging review of retail energy pricing — including the price cap — to build a fair and affordable system for consumers.
“The government must also develop a programme to urgently improve the insulation of homes — as this will help to reduce people’s energy costs for years to come.”
Which? said the government’s financial support for all households must increase from the current £400 to £1,000 — or from £67 to £167 per month from October to March — after Cornwall’s analysis.
The existing support package is inadequate to protect living standards for those on the lowest incomes and would lead to considerable financial and social hardship, it said.
Which? warned that even a 150 per cent increase would be insufficient for families on the lowest incomes, and said the government must provide them with an additional one-off minimum payment of £150 to ensure the most vulnerable have the support they need.
It said the additional support would only be a temporary solution until March, when energy prices are expected to rise again and remain high throughout 2023.
Assuming Cornwall’s figures are correct it will mean that between October and April — which includes the coldest months of the year — the average household will pay the equivalent of £4,102 per year for their gas and electricity.
It would be a massive jump from today’s £1,971, which is already a record, and much higher than the £1,138 seen last winter.
Half of UK households could be in fuel poverty in January as a result of rocketing energy prices, EDF Energy's managing director Philippe Commaret has said.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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