Record release

24:54Sean Farrington:Just tell us where we are with that. Oil getting all the headlines every morning at the moment, but how much should we be keeping an eye on the price of gas and the impact on the British economy? Well, this is kind of a similar situation to the situation we had in 2022 with the full-scale Russian invasion of Ukraine and the loss of Russian pipeline gas into Europe. We saw prices absolutely spike then as well. We haven't quite gone to those levels on this crisis, But it is a sort of double whammy that we've had these two massive price shocks for gas. And obviously, as you point out, the gas is still a critical component to the power mix.

25:35And that means that it feeds through into domestic and commercial customers' costs and therefore into inflation pretty quickly. And that's the real challenge here. And, you know, there is a limited amount of LNG to be shipped in the world. And we've lost about 20 % of it through this problem. So it's not, it's a less, if you forgive the pun, it's a less liquid market than the oil market. There's less LNG available to divert and to send. And also, so it means that price has to do the rationing. And that's essentially what we're going to start seeing over the next few weeks and months.

26:17Sean Farrington:Given, as you say, the gas price isn't anywhere near the peaks of what we saw with Russia's full scale invasion in Ukraine and hasn't been high enough for sort of long enough yet to have that sustained sort of average, very, very high price. I mean, we were talking two, three, four, five, six hundred pence a therm during the Russia-Ukraine energy price crisis bill. perspective, should there be thinking from the government about stepping in to pay some of people's energy bills? Are we at that point? That's a good question. And I wonder whether governments, not just the UK, but in Europe as well, will be dusting off their emergency policies to sort of try and manage demands, to try to institute some sort of price caps or to just lay out fiscal support for consumers.

27:17You'd imagine that they are. But the point I would make is that governments are not as well funded as they were that first time around. And I think there'll be some reluctance to go down that route again, given the state of fiscal balances at the moment.

27:35Sean Farrington:Jane, from your perspective, when you see the prices on those quotes that are landing on your desk or in your email inbox, does it feel to you like there is an imminent energy price urgent issue? We know that it's been such a key issue for many British businesses and it impacts the whole economy, the way our energy is priced and the high prices that so many pay. but the change that you've seen in the last couple of weeks, is it that material compared to those that we've seen in recent years? Yeah, I mean, I think the issue we've got at the minute is nothing is stable. There's so much instability around in terms of transport costs, energy prices, again, interest rates.

28:23You know, so it's what we want as a small business is just a stable environment so that we can go and think about growth. So the more time I'm having to spend on negotiating energy contracts or working out fuel prices or looking at the cost of importing and exporting steel around the world, it's taken my time away from business development and growing the business and looking at where we have to take it forward. So what we really want is just stability. Every business I talk to and small businesses around the Midlands and there are lots and lots of us, all we really want is a stable environment and having to deal with these peaks and troughs and changes in tariffs, changes in energy prices, changes in interest rates, it just makes everything more difficult to do.

29:12Sean Farrington:Micah, do people expect the government to step in now when they see moves and whatever the context of those price moves? If there's a big jump in something, given what we saw during COVID, where the government paid people, taxpayer pay people's wages for so long, energy price crisis, people's bills to a certain extent, well, they certainly were capped. And a large part of what would have been the energy bill was paid by the taxpayer. Is that has there been a change in mentality in recent years? I would say so. And you do need to remember that just a week ago, we had the Chancellor delivering that spring statement, which, of course, was out of date the moment she sat down from the dispatch box.

29:57But what she was saying there, she was framing things like interest rates in terms of their direct impact on household finances, the cost of living, mortgage repayments and savings, and making a big note of the six interest rate cuts since the general election and how these have reduced financial pressure on families and businesses. But we now know that that reprieve is short-lived. We know that things like the fuel duty freeze, which has been in place since 2011, will come to an end. And we know that the cap on gas and electricity prices will come to an end in June. It's just becoming so difficult for UK households to survive with all these pressures that we do need the government to step in and provide support.

30:43But we also know that the coffers are empty and government debt is at record high levels in the UK.

30:51Sean Farrington:85058, if you've got a question for us, I tell you what, Bill, before you go, Alex has just been in touch saying, why can't Ofgem, the energy regulator, or the government make a rule that GB Energy should have first access to buy North Sea oil and gas at a UK-specific price? That's a really interesting point. And I think whole discussions around reorganising the way that the power market is structured with power essentially priced on gas are probably going to be things that come out of this latest crisis. I think that the sort of rethinking of UK security of supply for energy is going to be a top priority for regulators and for policymakers as well.

31:42Sean Farrington:People might have thought the Russia-Ukraine energy price crisis would have been that moment, Bill. Yeah. No, it's a fair point. But I think the big structural change is that we've shifted away from being heavily reliant on imported LNG and gas. And now we're less reliant on it. But we still are because of the build out of renewables, which has been incredibly successful in the UK. But the problem is that you still have to cover the intermittency of those sources of energy. And that means gas. Yeah, we got into it in one of the shows last week where we spent a bit of time explaining why at the end of the day, it's that last bit of gas that the country might be needing to cover is energy usage that impacts so much of the price that we pay for all of our energy usage.

32:36Sean Farrington:Bill, it's been great to have you on this morning. Thank you so much for your time. No doubt we'll speak again soon. June, Bill Farron-Price, Senior Research Fellow at Oxford Institute for Energy Studies. Micah and Jane aren't going anywhere. We've got plenty more chat to come about the mortgage market. Fast-paced changes there as well. If you've been dabbling in that world in recent days or weeks, you've got your first house in mind and you're keeping an eye on those quotes that could be out there. You're looking to move, looking to renew your mortgage. Do let us know what those conversations have been like, whether with brokers or with the lenders directly, whatever it might be.

33:14Sean Farrington:85058, products being withdrawn there as expectations over interest rates change pretty quickly. Thank you for all your messages about John Lewis as well. We're going to be delving into that department store a bit later. Sandra says, I've bought furniture from John Lewis for about 30 years. It used to be such good quality over the last five or six years. Been disappointed, always bought their sofas. But our most recent one, not as comfortable, won't buy another from them. My recent two visits to the Chichester branch, the layout changed, not so pleasing. Staff always great, says Sandra, who says morning.

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34:32Sean Farrington:Sandra. Wake Up To Money with Sean Farrington. Good morning to you. It is Wake Up To Money on BBC5 Live. Thank you for all your messages, whether it's about John Lewis, as we're going to be talking more a little later in the show. And Nigel saying good morning. We've got a gorgeous John Lewis in Cheltenham, which is a joy to visit. I've tried hard to buy items from them rather than online retailers. They will match prices. I recently bought an expensive Dyson vacuum cleaner. They were very helpful, very competitive on price. Only small complaint is John Lewis and Waitrose. loyalty cards are different.

35:04Sean Farrington:Nigel, thank you for your insights there. On the oil price, Andrew, who seems to work in the pricing market himself, he says, morning, guys. It takes 29 days from field to forecourt, so any crude oil released will take a month for fuel to reach the pumps. Plus 400 million barrels is a sure fix. So that is us talking about the emergency release of 400 million barrels of oil by nations around the world. They have these reserves in place and some of them have been released. And this 400 million barrels is a very significant figure, a record amount. But Andrew making the point, it's a short fix. Not all of it will be for petrol or diesel.

35:43Sean Farrington:Some will be for aviation fuel. We didn't get onto that a little bit earlier, but jet fuel prices are shooting up as well. And he says WTI or Brent. So they're the types of oil that we often talk about. And wake up to money here in the UK. when you look at the headlines, it'll often be the Brent crude oil price that we refer to. So we're talking about the same one all the time. He says it will be high for a while because the market was already expecting the International Energy Agency to do this. That is the agency whose members of countries around the world released those reserves. I've had another question.

36:19Sean Farrington:What is LNG? We were talking LNG. We were talking earlier about gas prices as well. So LNG is that liquid natural gas, the liquefied natural gas that is turned into a liquid and a major amount of it is produced in the Middle East, turned into a liquid and then shipped around the world like oil. Keep your questions coming, 85058. We've got experts galore going to talk mortgages in a moment as well. More on John Lewis a little bit later in the show. Interested in your thoughts. Jane, I don't know if you've noticed this one yourself. Maybe, you know, you're not part of the tourism industry, especially running the metal-forming services business as you do.

37:02Sean Farrington:Bowers and Jones, James, the managing director and owner of that business based in Bilston in the West Midlands. But businesses have not been too happy, it was on the front page of the Times as well this morning, about weather forecasts and how they pop up on the apps and when people search for them, that one cloud appearing on there completely can derail somebody's plans for the day and make you not go out to a certain tourist venue that you might go to. And actually, a drop of rain doesn't materialise over the day, and that can cost businesses a lot of money. Do you, when you get a bit of downtime between running the business, judge what you're going to be doing on the day, the weekend, based on that one symbol sometimes?

37:45Yeah, well, not that I travel much in the UK for tourism, but I do play golf. And, you know, looking ahead, seeing what the forecast is likely to be on a weekend will probably determine whether I pick the golf clubs up and go out or not. But whether that be, you know, I'm looking at it from a perspective of, you know, if there's a 60 % chance of rain on a Sunday afternoon, then I might choose to or not to play golf. But that 60 % chance really just is something that says you might have a few spots somewhere in the afternoon or somewhere in the morning and you don't know. So typically you're waking up in the morning and looking outside and saying, well, what am I going to do today?

38:29And I think from a tourism point of view, you might have people who want to plan ahead a little bit more and say, well, what am I going to do on the weekend? Oh, there's a 60 % chance of rain. Oh, I won't visit that, you know, Snowdonia area or I might not go to that national park or I might not go and visit that stately home because I might get wet on the way or whatever. So yeah, I do think there is an impact of these little symbols and what you make of them.

38:53Sean Farrington:I mean, you golfers, surely you're not fair weather. You've got all the gear. That's half the point of playing golf, isn't it? When you get out there, are you overdressed sometimes compared to the forecast? Well, yeah, that's the point. Yeah, it's sort of like, what do you take and what do you wear? And also, who do you partner with? because there are fair weather golfers out there and the weather we've had just recently and over the winter has just been absolutely shocking. So I'm sort of taking it with a pinch of salt at the minute and saying, right, I'm going to try and get out of course as much as I can.

39:25Sean Farrington:85058, if you feel like that's something that impacts you one way or another, it's just interesting reading this, that the attractions who, you know, got together and written this letter to the Met Office have said they're not questioning the science behind it, whether it's how it's presented. And the Met Office has said that they look forward to ongoing collaboration with the tourism sector. 85058, your thoughts, please? How about on mortgages? So nearly 500 mortgage products have been pulled from the market in the past few days. That's the biggest withdrawal since we had that budget, the quasi-quarteng Liz Trust mini-budget that moved the cost of borrowing so much.

40:01Sean Farrington:Meanwhile, the average rate on two-year fixed mortgages has climbed to above 5%. Let's get the very, very latest. A lot of this data that you might see making headlines often comes from the financial information service Money Facts. And Adam French joins us here in the studio, head of consumer finance there. Adam, good morning. Good morning. So, busy few days. Yeah, just a touch. We have had an incredibly busy few days, particularly for our mortgage data analyst team. They've handled so many changes from lenders, and that's rate increases predominantly, but also hundreds of product withdrawals.

40:37We're now up to over 500 this morning. It's still a sizable amount, but nothing compared to what we saw off the back of the mini budget, it has to be said. So it's the biggest since then, but it's the biggest since then. To give it a bit of historical context, we're not seeing the level of trauma in the market that we saw then. What happened then? Particularly then, so we saw off the back of that, we had in a single day more than 930 products go in a single day. And at that time, there were far fewer products on the market. So that accounted for around 25 % of the market then. whereas now we're looking at more like 6.5 % to 7 % of the market has been withdrawn and within the next few days we're expecting to see, well a few days or weeks, we're expecting to see a lot of those come back onto the market but repriced at a higher rate.

41:20We've already seen that happening a few times as well and that means that overall average rates are increasing as well. So this morning the overall average mortgage rate, so that's core mortgages, all LTVs, all terms, That has gone up to 5.07 % as well from 5.04 % just yesterday. And to give that a bit of context, at the start of the month, that was at 4.89%. So that's a sizable increase in just a couple of weeks.

41:45Sean Farrington:And people might have been, you know, if you're listening to Wake Up To Money and hearing our investors that we have on the show every day who tell us what investors around the world are thinking about interest rates in the UK, they might have started this year, you know, come out at Christmas. if something housing-wise is on their to-do list at the beginning of January, they might have thought that interest rates would be on their way down. They wouldn't have been a loan. I was expecting that as well. We were looking at the spring forecast just a week or so ago. We were, as a team, planning for a potential mortgage rate war, basically, as we thought inflation's coming down, the chances of a base rate will go up loads.

42:24We should be prepared for that. and instead here I am talking to you about rates going up and products dropping off the market.

42:29Sean Farrington:So when this level of products drop off the market that you've seen, what does that mean is really going on here? Why don't they just change the interest rate on the product? The exceptional thing around this, when you see stuff like this happen, is that it's because rates are going up so quickly that just making those incremental changes doesn't feel right for lenders. They're not quite sure where things are going to end up. So they're in a position where they feel better off just pulling products back, waiting a few days, seeing where things like swap rates settle down and then putting them back on the market predominantly at higher rates.

43:06Now, obviously, the hope would have been maybe it was just a spike and actually we can go back on again, not as high as we feared. But those lenders who haven't made that decision, we've seen some lenders make two or three rate hikes in just the past few days, which is pretty exceptional. It has to be said that only happens on very rare occasions. So that gives you some sense of the scale of the challenge these lenders are facing in keeping up with what is increasing borrowing costs on money markets.

43:30Sean Farrington:Do you get a sense, as you speak to these lenders so often, about how individuals are changing their habits at the minute as well? So when there is a little bit of a faster movement and products are being removed, we know that this is one of the most stressful things that people go through in their lives if they're looking to buy a house especially or sell a house or whatever it might be. I detect that you're involved in that in some way yourself. It's such a relaxing experience. The body language that you've shown a few times. It's been a year now and I'm still feeling attention. Right, yeah.

43:59Sean Farrington:I'm not sure you ever sort of get over it or you just put it off for decades when you hear this stuff and you have so much going on in your life. Does it change, do you think, how people behave themselves if there's fast-moving rates? Absolutely. So there's a really interesting research out this morning from the Roran Institute chart surveyors that say sentiment is really shifting. in the housing market as well, and they expect house prices to flatten as a result. And that will be mortgage rates, but also look at the volatility, the economic backdrop right now. We're all unsure what's going to happen.

44:30We're expecting energy prices to go up. All of those things feed into people's buying decisions. So I wouldn't be surprised in the slightest to see a slowdown to some degree. That being said, whilst average rates have gone up, you look at the best buyers at the moment, you can still get mortgages at closer to 4 % or below at sort of lower LTVs. So there are still good deals to be had for people. It's just that they're becoming fewer between and actually those average rates that we're looking at, they are steadily ticking up.

45:02Sean Farrington:And Michael Curry from PensionBee. Michael, you will keep an eye on what those investors around the world are thinking about the prospects for UK interest rates. What might the Bank of England do at its next decision and how everything that's going on in the world at the minute is impacting the cost of borrowing in the UK. How much have those bigger views changed? So away from mortgages, the wider sort of cost of borrowing market? Yes, well, we've seen bond yields absolutely spike, both in the US Treasury yields, gilt yields, those 10-year yields topping record levels. And that is because investors are concerned about inflation and they're expecting inflation to remain higher for longer and they want to be compensated for investing in government debt.

45:49So that is a real concern. That feeds through to everything. And we're also seeing pension. We look at our pension balances and if you've checked your pension app, you will see a marked correction or a fall in your pension balance, which will make people quite worried. I think it's important to remember that a lot of workplace pensions today and personal pensions don't have that much exposure to the oil price and they will correct over time. So it is worth staying calm. But we're also getting back to mortgage rates. We've got 1.8 million people who are expecting to remortgage this year, myself included.

46:26And we were expecting at least two quarter point cuts. Bank of England actually next week, Thursday, they would have been announcing what we thought would be a rate cut. They're definitely not going to cut rates now. Rights are likely to remain unchanged. There's even some talk of interest rates increasing. Now, that is going to put a lot of pressure on households, and it's also going to put pressure on the housing market. And I won't be surprised if we do see a correction in the housing market.

46:55Sean Farrington:Micah, thank you. Adam, thank you as well for your time this morning. Hope eventually those stresses dissipate. I think the nation... It might be a few more weeks yet. Yeah, those 1.8 million people around the country who've got their mortgage on the cards this year, never mind those who might be looking to get onto the ladder for the first time, will be watching all this closely. Thanks, Adam. Adam French there with those very latest numbers from Money Facts on the mortgage market head of consumer finance there. Front pages of so many of the papers, I think almost every single paper today, today is dominated by headlines around Peter Mandelson and the decision-making over his position as US ambassador in the UK.

47:40Sean Farrington:The front of the Guardian, the PM, was told of reputational risk over Mandelson links to Epstein. We've had the first wave of internal documents relating to that appointment. He was sacked last September following revelations about his close friendship with Jeffrey Epstein. And last month, the police launched a criminal investigation into claims Laund Mandelson passed sensitive information to convicted paedophile Jeffrey Epstein while in government. Now, Peter Mandelson remains under police investigation. He's had his passport returned to him by officers, according to his lawyers. He's repeatedly said he does not believe he acted criminally.

48:11Sean Farrington:One of those whose advice was allegedly passed on to Epstein when Mandelson was in government was Nick Butler, who at the time was a political advisor to the Prime Minister, Gordon Brown. We often speak to Nick about oil prices, have done over the years. He's now a visiting professor at King's College London. I caught up with him yesterday and asked him what his reaction was when he heard about all of this. I was really shocked because when you work at that level in government, it's all done on a basis of trust. You rely on each other, you debate ideas quite openly, and you assume that no one is going to send those thoughts on to anybody else outside.

48:52My memo was not, I think, particularly market sensitive, but it was still sent on within 30, 40 minutes to Mr. Epstein. I was shocked by that. But many other memos, including a memo suggesting that the American bank should put direct and hard pressure on the UK Chancellor, i.e. one of Peter Mandelson's colleagues, to change rules about bankers' bonuses. I thought that was shocking too and I'm very disappointed by it and I think I'm very sorry there's been no note of contrition from Peter Mandelson to the people whose trust he broke.

49:34Sean Farrington:What are the consequences of breaking that trust? Well, for him that's a matter for the Metropolitan Police and the law. I'm not a lawyer so I can't and shouldn't comment on that. And I think for the system, it will make people just wonder what people are doing with the information that they pass around. At that level in government, quite a lot of it is market sensitive. And if people trade on it, that's insider trading to me. Does there need to be more investigations into that aspect of it? And how much that goes on, do you think? Yeah, I don't believe much of it goes on I think government is fairly secure The trust works I think you will have to stress to everybody working there As was stress to me and other people that I know That this is government information And that you should not pass it on to anybody Now that was Nick Butler Visiting Professor at King's College London A former political advisor to Gordon Brown Who I was chatting to yesterday The BBC understands Lord Mandelson's position is that he has not acted in any way criminally and was not motivated by financial gain.

50:51Sean Farrington:I've had plenty of messages in this morning about John Lewis, its role in your life and how that has changed. Staff at John Lewis Partnership are awaiting an update on whether or not their annual bonus payment will be reinstated for the first time in four years. Karl McKeever is a retail consultant with us now. Karl, good morning. Just first up, what are you expecting from John Lewis today? Good morning, Sean. Well, I think it should be a positive update. Certainly, there's been lots of good things happening within the business in the last 12 months. And can staff, do you think, where are they on their journey with John Lewis over the years?

51:28Sean Farrington:What's changed? It used to be that that bonus would come, you know, rain or shine, but that's not been the case for a while now. For sure. And I think the bonus was always an important part of the remuneration for partners in the company. but since 2022 that hasn't been paid and people have been essentially helping to you know really shore up the business with its transformation program so if the bonus is awarded I think it will come as a massive motivator and I think again it will underpin all the other good things involved in working for the partnership. Relatively new person in charge at John Lewis now and we've seen decisions about pulling out of the house building business almost all together.

52:09Sean Farrington:I've had Lots of people getting in touch this morning saying, the staff are great, but there's something changed in my store. Or as Jane, our boss on the show this morning, was saying earlier, the Birmingham New Street store's gone. What is the key to John Lewis getting back on its feet the way it once was? Well, John Lewis is really going through a lot of innovation at the moment. And it's not just within the department store's business, but also within Waitrose too. So from a customer's perspective, you may not necessarily appreciate some of the things that are happening. Some of them are very small and technical, such as the introduction of digital shelf-edge labelling in Waitrose stores, that will have a huge impact in terms of saving operational hours, which diverts more staff back into either helping with customers directly or supporting other colleagues and other tasks.

52:54In John Lewis, lots of innovation. Five stores modernised in the last 12 months. Their Blue Water store is performing very, very strongly, having undergone a massive£10 million refit just before Christmas. So I think what we see is that that cycle of innovation, which is crucial to getting brands back on top, is really happening again and quite strongly within the partnership in both brands.

53:17Sean Farrington:For so long, Carl, when maybe John Lewis was having a good time of it, M &S wasn't. Now, M &S is having a better time of it, sort of cyber attacks aside, but we hear from our listeners every time we talk about them how much better things are there. Can John Lewis get that back? Yes, I really do believe they can. I mean, look, they pioneered with the online service. That's now 60 % of sales. They need to do much more now to modernise the department stores, continue the innovation at Waitrose, continue to take cost out of Waitrose and turn that back into cost savings and being even keener on prices for customers.

53:55But I think with a really good new leadership team in place in both parts of the business, and of course under Jason Terry, there's a real hope I think that John Lewis is definitely refinding his mojo

54:08Sean Farrington:Carl thank you for your time this morning Carl McKeever there retail consultant founder of FutureView big thanks to Jane and Micah Wake Up To Money from BBC 5 Live That's it from Wake Up To Money you can download the podcast every Monday to Friday so please make sure you subscribe we'd also love it if you left us a review when you do get in touch keep the conversation going anytime as well on social media. Use the hashtag WakeUpToMoney. A new era of Formula One is about to dawn. I think the biggest step the sport has ever seen. There are new rules, new cars and a brand new team. In Formula One it's just absolute, brutal, pure competition.

54:51And the next generation of star drivers are taking us along for the ride too. I'm going to go like a madman. If you want to make it, first of all, you have to believe that you have what it takes. The biggest shake-up of F1's rulebook has been years in the making. Somebody's going to get it right and somebody's going to get it wrong. I'm Rosamund Pike and this is F1 Back at Base, a new era. Listen on BBC Sounds.