Unfortunately, the boast of hardness seems premature. A well-robust plan to prevent the use of deposits as an “interest-free corporate credit card”, as put forward by Ofgem CEO Jonathan Brearley, will be adopted immediately. Some suppliers would have to raise their own funds to replace the deposits they used as working capital, but a firm regulator would insist on doing so. This is not Ofgem’s plan – or at least not yet. Instead, it has entered a world of consultation and data collection. On the one hand, the regulator says it is “willing” to introduce full fencing “as soon as possible”, which means the end of the year. On the other hand, it wants to “better understand the magnitude of the risks to suppliers’ business models”. In other words, it is ready to heed the calls of some parties that full and immediate deposit protection would put some suppliers on the sidelines. The document cited a rate of only 30% as the level of fencing that domestic suppliers “could accommodate” this winter. A 30% result – ringfencing-lite, as it were – would be a sign of regulatory weakness, not cruelty. 94 £ have already been added to household accounts to replace the deposits and green contributions that were missing from failed companies. It would be a shame if that number increased again this winter. Yes, Ofgem must follow due process to avoid legal action. Ultimately, though, he has to deal with screams of delay and long transition periods. Brearley, in a state of reform after two decades of lax regulation at Ofgem, must keep his promises. No setback.
Easyjet and others will not be able to whine
EasyJet shareholders, like some of the booked passengers, are in the dark. The missing element in the airline’s announcement that it was “precautionarily consolidating” a few thousand flights during the summer was an assessment of what the “resilience” measures mean from an economic point of view. “There will be an impact on costs,” the statement said, without offering guidance. Much depends on how many affected passengers will accept the offer of an alternative flight. Past experience has shown that the percentage should be high – players still want to go on holiday – but the difference between 70% and 90% is still large in terms of the compensation bill that easyJet will end up paying. The most that can be said is that, while the Municipality previously believed that the company would break even this financial year, a loss is now on paper. The upward trend says that a terrible summer does not interrupt the long-term prospects for recovery. The power of demand for flights has been proven with sticks, finally. An alternative view is that the outage could have long-term consequences for all airlines. Passengers’ rights are being violated as a matter of course, the consumer organization Who ?, testified to MPs last week. If the current turmoil is acting as a stimulus to rewrite the rules – or just enforce the existing ones – the industry is not in a position to whine. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk
Why it makes sense for Primark to resist complete conversion online
Primark’s operating profit – a retailer that resolutely refused to sell online – will be close to 800 800 million this year, if City analysts’ forecasts are correct. At Asos, the internet pioneer, the corresponding figure could be just 20 20 million, according to last week’s warning. So why does Primark even want to engage in online gaming while experimenting with a click-through service? Well, the answer seems simple. Under click and collect, customers still have to show up at the store, where they can decide to buy extra stuff. If the test with baby clothes and accessories in 25 stores in the North West of England works, the chain should generate increased sales. What will never happen – almost certainly – is turning it into a full online offer at Primark, delivery and all. Finances do not work at the cheap end of the market, the company has always insisted. Given the recent troubles of Asos with high levels of silly returns, one suspects that the belief is greater than ever. Just copy the pieces that work and stay away from hassle. Logical movement.
