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The labour market is at the heart of the Bank of England’s thinking on inflation and interest rates. There are some aspects of the current cost of living crisis that the Old Lady can do nothing about.

It can neither control energy prices nor ease bottlenecks in global supply chains. But it can send out a message to individuals and firms that it is serious about getting inflation back to around its 2 per cent target.

The Bank’s aim will be to imprint that expectation in the minds of unions and employees, so they do not try for exorbitant pay increases.

When the pandemic struck, most forecasters expected dole queues to lengthen. Instead, there has been something of a jobs miracle

When the pandemic struck, most forecasters expected dole queues to lengthen. Instead, there has been something of a jobs miracle

Firms may also be less inclined to try to hike their prices if they believe the Bank is clamping down in earnest.

Thanks to decades of price stability, we have forgotten that inflation is one of the great economic evils. It corrodes living standards, eats away at savings. 

For the UK, as an exporter of services and an importer of goods, it creates adverse terms of trade. One of the blights of the 1970s was industrial unrest and wage demands that created a self-fulfilling spiral.

When the pandemic struck, most forecasters expected dole queues to lengthen. Instead, there has been something of a jobs miracle, with unemployment incredibly low. This has not been accompanied by generous pay awards – yet.

It is an ominous sign, though, with a dash of black humour, that economists at the National Institute of Economic and Social Research have voted to go on strike over a pay offer of 2 per cent. 

As they would well know, with inflation at 5.1 per cent, that is a pay cut in real terms. They are not alone. Average pay is not going up by enough to keep pace with the cost of living.

Possibly there is a lag in perception as workers outside the economic think-tanks may not yet have fully grasped the damage that is coming to their real incomes.

Rather than demanding bigger salaries, employees have seemed obsessed with lifestyle issues such as the right to work from home forever after.

But it’s only a matter of time, and staff are in a strong bargaining position to demand more. The balance of power in the workplace has shifted dramatically in favour of employees.

Businesses are already suffering from staff shortages and live in dread of ‘The Great Resignation’. One recruitment company estimates more than 9m people are looking for a new role this spring.

Combine that with older workers quitting during the pandemic and firms are under intense pressure to pay more to attract and keep good people.

All the more reason for the Bank to make very clear that it does not intend to let high inflation become embedded in the system.

This means that, barring a major shock, more interest rate rises are on the way on top of the rise from 0.1 per cent to 0.25 per cent last month. But let’s keep a sense of proportion: rates will remain very low and are simply being shunted out of emergency mode.

That is precisely what should happen as the economy recovers.

Lloyd’s move

If the Lloyd’s of London insurance market decides to move out of its Lime Street headquarters it will be a sad day. The Lloyd’s building opened just after the Big Bang in 1986 swept away the cobwebs from the fusty old City.

Towering over nearby Leadenhall Market, it embodied the spirit of the 1980s in all its brash, exhilarating excess.

Its gleaming metal was a confident symbol of optimism and modernity.

As the City’s old-school jobbers and brokers were joined by a tide of American bankers, Richard Rogers’ masterpiece declared that the 300-year insurance market steeped in tradition was still a formidable presence.

As a young financial journalist I drank in the thrilling sight of it, teeming with underwriters, on my way in and out of the office each day.

The transparency of the architecture, with its ducts, pipes and lifts made visible, was not always mirrored in the workings of the market itself.

There was chicanery, scandal and ruinous losses for some members, who were known as ‘Names’.

They were well-to-do individuals who were personally liable down to their last cufflink or earring, but never expected that to happen. The market was reformed and bounced back, as it will post-pandemic.

But underwriting on Zoom is just not the same. Leaving the Lloyd’s building really will be the end of an era.

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Some households have been waiting months for their outstanding credit balances to be moved from their collapsed energy supplier to their new provider.

The regulator has confirmed there is currently no timeframe in place for the millions of customers that have moved from a collapsed supplier to an existing provider to receive their credit.

This will come as a further concern to households, many of which are struggling with energy bills since the crisis started in August of last year, with some relying on credit to help them get through the winter months. 

One This is Money reader, Ian, has been affected by this, after his supplier, Avro Energy went bust. 

Shock: Homes may have to wait months to get credit sent over from collapsed suppliers

Shock: Homes may have to wait months to get credit sent over from collapsed suppliers

He was with Avro Energy when it collapsed on 22 September last year, affecting 580,000 customers. At the time, his account was in credit but he is still waiting for the money.

He said: ‘My account was taken over by Octopus Energy and I have been making payments to it.

‘However each time I log on to my account it states, “once Avro’s administrators issue your final bill, we’ll update your Octopus balance and your transfer will be complete.”‘

‘It is now January and no details are forthcoming. To me this appears to be an inordinate amount of time.’

This is Money contacted Octopus which, within the same day, contacted Ian and transferred the credit amount.

It explained the reason for the delay is often due to issues with the data given by the collapsed company.  

An Octopus spokesperson said: ‘We have issued the customers final bill today to complete the transfer of his Avro credit to his Octopus Energy account. His final bill is now in his inbox and we’ve added his Avro credit to his Octopus account balance.

‘The reason why his transfer took longer was because he was part of a small cohort of customers that came over to us with complex errors in their data from the Avro systems.

‘Over 90 per cent of Avro customers have been issued final bills and are now set up and billing normally as Octopus Energy customers. 

‘The remaining 8 to 10 per cent have more complex data or billing issues that we are working quickly to solve and we expect to have any remaining customers’ bills out over the coming weeks.

‘The data for customers who left Avro prior to Octopus Energy taking over and were owed a credit are now being imported into our systems with refunds being processed in batches over the coming weeks. 

‘We will attempt to return any credits to the bank account used with Avro in the first instance.

‘The Avro transfer was the largest Supplier of Last Resort process that has ever been done, and delivered in a very speedy manner considering the size and organisation of the data we have been given.

‘Our team has been working 24/7 to sort out these issues, and we have transferred all customer accounts and their direct debits over to us, and we are working with the Avro administrator to iron out all remaining errors over the coming weeks.’

Octopus Energy is working hard to return credit balances to new customers, as will be the case with many of the remaining suppliers who have taken thousands of customers on in recent months.  

Many consumers will be struggling with their energy bills right now and relying on credit

Many consumers will be struggling with their energy bills right now and relying on credit

How does the Supplier of Last Resort process work and how does this affect credit balances? 

Those who find their energy supplier has ceased trading are automatically moved to a new provider by Ofgem under the Supplier of Last Resort process.

This has affected millions in recent times as over 25 suppliers have collapsed, equivalent to half the market, due to soaring wholesale costs.  

Suppliers of Last Resort work with administrators to determine the final credit balances of customers of failed suppliers and these will be communicated to customers.

This process also assures that all credit balances are protected. 

However, how quickly this can be done, depends on a number of factors, according to Ofgem.

This includes the quality of the data held by the failed supplier, the number of customers being migrated as part of a Supplier of Last Resort appointment, the arrangements made between a supplier and the administrator for the failed provided, as well as any third party service providers to the failed supplier.

Ofgem said, for this reason, there is no set period within which this process needs to be completed.

An Ofgem spokesperson said: ‘Our priority is to protect consumers and we engage regularly with all appointed Suppliers of Last Resort to monitor progress on migrating and onboarding customers to make sure this is being done quickly and efficiently.’ 

Can consumers do anything to speed the process of getting credit back?  

There has been a number of issues coming from the energy crisis with many households not sure on what they should do if their supplier ceases trading.  

One of the main questions has been how people can reclaim credit if they had overpaid with their previous supplier.

Some people have now been waiting months for their funds to reach their new supplier and are beginning to wonder what they can do to speed the process up.

This is especially important at present as many are struggling to pay their ever increasing energy bills at a time when wholesale costs are soaring. 

Experts say consumers can go to the Ombudsman but it is unlikely they will rule in their favour

Experts say consumers can go to the Ombudsman but it is unlikely they will rule in their favour

Rory Stoves, energy expert at Energy Helpline, said: ‘The guidance doesn’t actually offer any time frame for how long a company has to move customers over, only that it should be done as quickly as possible.

‘One of the mitigating factors is the number of customers that need to be moved, and, for example, as Octopus inherited over half a million customers, this is likely to be part of the issue.

‘There is also the issue of the quality of the data received by a supplier from the company that has gone bust and Avro Energy were not renown for being great at that side of things.

‘These two factors are probably causing many of the problems that some ex-Avro Energy customers are currently suffering from.

‘If a customer is getting frustrated, the best bet is to kick start an official complaint and then if no resolution is found within eight weeks, they can go to the ombudsman.

‘However, given the current factors, it would be difficult for the ombudsman to conclude Octopus Energy has don’t anything wrong – especially as they took on so many customers at a difficult time.

‘The new energy supplier will be working hard to get the issue resolved as soon as possible, as it is in their best interests to do so, and while the existing price cap and wholesale energy market exists, the customer will not be losing out.

‘If, however, this does drag onto April, then the customer may have a claim, as they could be materially losing out as a result of not being able to switch, when the price cap is hiked on 1 April.’

Any customers concerned about their credit balance can contact their existing supplier to see if it might be able to advise a time scale. 

Otherwise, it appears households will just have to sit tight to receive their credit balances back. 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.


The golden rule of successful investment is to align your portfolio with the level of risk you wish to take. 

But in 2022 this will be more than usually tricky. 

Stock markets face an array of challenges, with higher interest rates, surging inflation and the threat of new Covid variants among them. 

Geopolitical concerns include the possibility of full-blown conflict over Ukraine and tensions between the US and China over Taiwan, whose foundries supply the microchips on which the world depends. 

Yet Rathbones, the investment manager, points to ‘healthy household balance sheets and precipitous corporate cash piles’, adding that it expects returns on shares ‘to moderate, but not to disappoint investors’. 

Here are ways to make the most of your investments in the months ahead, whatever your appetite for risk. 

LOW RISK 

You might consider yourself to be sheltered from storms if you have a mix of deposit accounts, National Savings & Investments and only a small amount in shares and investment funds. 

But this strategy could be derailed if you are unknowingly exposed to areas that are more hazardous than they seem – and inflation can take a big toll on deposits. 

You should think about whether any funds you hold are still suitable for you. 

Online investment service Interactive Investor has a recommended list and fact sheets on funds, which you can use to check. Many UK investors have become over-reliant on the fortunes of US tech giants, like Amazon and Microsoft, without realising. The value of these ‘Big Tech’ shares – which is largely based on future profits – could be lessened if interest rates move rapidly upwards, providing richer rewards elsewhere. 

You may be uncertain about the prospects for Big Oil amid the de-carbonisation drive. 

But there is a global need for BP and Shell’s products, and these businesses also have the resources to spend on renewable fuels. Ben Yearsley of Shore Financial Planning suggests the Liontrust Special Situations fund as a route to these and other British stalwarts. 

And another big British name – BT – could be at the centre of bid excitement this year. If you are one of the 800,000 or so loyal small shareholders, why not keep the faith for a bit longer?

MEDIUM RISK 

A balanced portfolio is every investor’s aim. But in the past two years it was easy to be diverted by the gains on US markets. 

As a result, many have too little invested in the UK which Wall Street regards as undervalued. 

Tech stocks represent just 1 per cent of the FTSE 100, which is dominated by old-economy stocks, against 40 per cent for the S&P 500. 

The willingness of the British to splash out on property seems set to continue, which could be good news for housebuilders, along with Kingfisher, owner of DIY retailer B&Q. 

Shares in life insurers may be due for a reassessment in light of their profitability. Anyone holding Fidelity Special Situations and Fidelity Special Values has stakes in these sectors.

Yearsley says JO Hambro UK Dynamic may be a useful addition since it could be ‘a beneficiary of a recovering UK economy, increased dividends and takeover activity’. 

Popular: The willingness of the British to splash out on property seems set to continue

Popular: The willingness of the British to splash out on property seems set to continue

Inflation fears are perhaps exaggerated. Nevertheless, if faith recedes in the ability of central banks to control inflation, volatility could result. 

But if you can afford to be sanguine about market gyrations, a British name that’s part of a US group could be your 2022 flutter. Walgreens Boots Alliance would apparently like to sell Boots. 

Shore Capital says Sainsbury’s or Tesco may pounce. Also interested could be private equity groups Bain or Clayton, Dubilier & Rice, which last year snapped up Morrisons.

HIGH RISK 

You may be inclined to shrug off inflation anxiety, but even some at the audacious end of the investment spectrum are looking for some safety-first holdings. 

Popular options in this zone are the Capital Gearing and Ruffer investment trusts which aim to protect your money through a mixture of index-linked bonds, shares and cash. Ruffer (one of my portfolio buffers) also holds BP and Shell. This could allow you to take a contrarian stance on tech stocks. So ingrained is technology in our lives that sections of Wall Street remain bullish about Amazon, Microsoft and T-Mobile. 

The clamour for microchips – which will be amplified by the growth in artificial intelligence, augmented reality and 5G – is good news for Marvell Technology and Nvidia, held by the Blue Whale Growth fund. 

If you own Tesla, Daimler would be another bet on electric cars, while Watches of Switzerland (pictured above) is a way to back demand for the luxury wristwatch. The most assiduous purchasers of such luxury goods come from Asia. Yearsley’s fund pick – Matthews Asia Innovative Growth – is a play on the spending power of these consumers. Investing for the long-term tends to make sense, whatever your readiness for a gamble.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.