Today’s Daily Business News will be the last until 6^th January. Political Insight wishes you a very Merry Christmas and a Happy New Year.

Water bills are going up by 36% on average over the next five years, Ofwat has confirmed this morning. The increase will add around £31 per year to bills, taking the average annual cost from £440 to £597. The increase is much higher than the 21% increase initially proposed by the water regulator, but below the water companies' request for an average 40% rise to fund investment in their aging infrastructure. Customers of Southern Water and Severn Trent Water will see the biggest bill hikes. Southern, which had sought an 83% hike, was awarded a 53% increase, while Severn Trent will be allowed to charge customers 47% more. Thames Water, which is in significant debt and at risk of bankruptcy and renationalisation, sought a 53% increase, but has been given permission to add 35% more to bills. It has also been fined £18.2m by Ofwat for making two dividend payments to shareholders last year which were not linked to performance, in breach of its licence conditions. Water companies, which were privatised in 1989, are required to renew agreements on pricing, investments, and what returns investors can make with Ofwat every five years. Ofwat said it had approved "substantial improvements" for both customers and the environment through a £104bn upgrade to water infrastructure to “turn around their environmental record and improve services to customers”. "Water companies now need to rise to this challenge,” Ofwat CEO David Black said. "Customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills." In response to the price hikes, Rob Wilson, Chairman of water watchdog CCW, and Senior Advisor to Political Insight, said on LinkedIn that the bill increases were “eye watering”. “Consumers understand the need for investment to improve services, but they don’t trust companies to deliver it. There will also be anger at what looks like a reward for the poor performance in recent years and the historic abuses of bonuses and dividends,” he added. The increases take effect from April next year.

Energy regulator Ofgem is to get more powers from the Government to force companies to compensate customers directly when things go wrong. The process for automatic compensation claims could also be simplified and response times for complaints could also be shortened under the proposals, the Telegraph says. The move is part of a review into the future of the regulator, which the Government said is “no longer fully equipped to protect consumers in today’s market.” “Sky-high bills” during the cost of living crisis had forced it to act, it said. Before the General Election, the now Energy Secretary Ed Miliband promised household energy bills will be £300 lower by 2030 because of the UK’s switch to green power. However, bill will go up in January by £21 on average because of Ofgem’s price cap, rising from £1,717 a year to £1,738. And, as reported here yesterday, Jeremy Pocklington, permanent secretary of the Department for Energy Security and Net Zero, has told MPs that bill-payers face an additional £517 charge to pay for the cost of levies Miliband’s giant – and unproven - carbon capture schemes. Millions of pensioners have also, of course, been forced to pay more having lost the Winter Fuel Allowance which was scrapped as a universal payment shortly after Labour took office.

Factory output fell sharply in the quarter to December, according to the latest Industrial Trends survey from the Confederation of British Industry, which notes project cancellations and falling orders since Chancellor Rachel Reeves’ maiden Budget. Output was the worst it has been since August 2020, when the UK was in the midst of Covid lockdowns. Total order books are reported to be below "normal", with the CBI measure falling from -19 in November to -40 in December, well below the long-term average of -13%. Export order books also plummeted, to -37% from -27%. CBI lead economist Ben Jones said that that “domestic business confidence has collapsed in the wake of the Budget,” meaning “manufacturers are heading into 2025 with no expectation of any near-term improvement”. Conditions were “looking more challenging than at any time since the Covid pandemic in 2020,” he added, and that the sector is “facing a perfect storm” of domestic troubles, alongside “weakening external demand” and “political instability in some key European markets and uncertainty over US trade policy”. Almost every type of factory suffered, the CBI found, with those making furniture, glass and ceramics, and cars among the hardest hit.

450 driving examiners will be recruited to cut "sky-high" wait times for tests, Lilian Greenwood, the Minister for the Future of Roads has announced. “No one should have to wait six months when they're ready to pass" their driving test, she said, adding she aimed to reduce waiting times to seven weeks by December 2025. Other plans put forward by The Driver and Vehicle Standards Agency (DVSA) to reduce the backlog include reducing the ‘money back’ period for test cancellations from 10 working days to three; and extending the length of time learner drivers who fail a test due to multiple serious or dangerous faults. Currently, they can rebook after just 10 days. There will also be a review of a system that allows third parties to book test slots, which are then sold on to learners at higher prices, a system one driving instructor told the BBC was an "absolute nightmare". The DVSA wants only driving instructors or businesses that employ driving instructors to be allowed to use the service to book car driving tests. Figures released by the Department for Transport (DfT) earlier this year indicated that the number of driving tests taken reached a record level in the 12 months to the end of March, at 1.9m.

The Observer is now owned by Tortoise Media. Tortoise has pledged to invest £25m in the newspaper - including £5m from former owner The Scott Trust, which maintains a 9% stake in the business. Lucy Rock has been appointed editor of the Observer's print edition, the first woman to oversee the newspaper in more than 100 years, since former owner Frederick Beer installed his wife Rachel, the aunt of war poet Siegfried Sassoon, as editor in 1891. A digital editor is yet to be appointed. Both will report to Tortoise editor-in-chief James Harding. The sale has angered journalists at The Observer and sister paper The Guardian. They went on strike for four days this month in protest at the sale, and the National Union of Journalists is discussing further walkouts, as well as a potential no confidence vote in Katharine Viner, editor-in-chief of The Guardian. Tortoise has said it will keep all 70 Observer staff on, but has also offered voluntary redundancy to any who do not want to stay.

Meanwhile, National World, the media group whose titles include Yorkshire Post and The Scotsman, is to be taken over by Irish media group Media Concierge. Media Concierge currently holds a 26% stake in National World and its offer for the remainder values the company at approximately £65.1m. It has promised there will be no “material” job losses across editorial and production teams, which account for around two-thirds of employees at National World, nor does it plan to close any local news brands. The deal is expected to complete during the first quarter of 2025. National World has been listed on the London Stock Exchange since September 2019 and will be delisting.

Amazon has reached a settlement with thousands of UK delivery drivers who claimed they were not self-employed, as the US tech giant insisted, but employed, and therefore deserving of employment benefits such as holiday pay and the minimum wage. The Guardian reports the settlement could cost Amazon and its delivery service partners millions of pounds; the claim, a class action suit brought by solicitors Leigh Day, argued 3,000 drivers were entitled to an average of £10,500 per year in compensation, plus payment of their legal fees. However, the total cost of the settlement and the exact number of drivers compensated has not been disclosed. Leigh Day asserted that Amazon's control over drivers' working conditions effectively made them employees under UK law, as Amazon's app dictated drivers' routes and delivery times, leaving them with little autonomy. Additional costs such as vehicle rental, insurance, and fuel for reattempting undelivered parcels, also reduced their earnings significantly. The case followed a landmark 2021 Supreme Court ruling that ride-hailing app Uber was required to classify its drivers as workers, granting them access to basic employment rights.

Mike Ashley’s Frasers Group got planning permission for a new 275-acre HQ and retail site to be built on Warwickshire green belt land last night, after local Councillors voted it through by seven votes to five. The Labour-led Rugby Borough Council agreed with planning officers that the project be approved because the economic benefits outweighed the “harms” to green belt land, as reported here on Monday.

Inflation in the eurozone was 2.2% in November, less than previously estimated, according to the latest revised data from Eurostat. That puts it up from 2% in October, and down from 2.4% a year earlier. Across the European Union, inflation came in at 2.5% last month, up from 2.3% in October and down from 3.1% during the same period a year ago, after hitting a three-year low of 1.7% in September. The lowest annual rates were registered in Ireland (0.5%), Lithuania and Luxembourg (both 1.1%). The highest annual rates were recorded in Romania (5.4%), Belgium (4.8%) and Croatia (4.0%).

The US Central Bank, the Federal Reserve, cut interest rates for the third time in a row yesterday, but Chairman Jerome Powell warned there would be fewer rate cuts than expected next year. "We are in a new phase of the process," he said at a press conference, after setting interest rates iin a range between 4.25% to 4.5%. "From this point forward, it's appropriate to move cautiously and look for progress on inflation." US stocks fell sharply: The Dow Jones Industrial Average closed 2.58% lower, suffering its 10th session of declines in a row and marking its longest streak of daily losses since 1974; the S&P 500 lost almost 3%; and the Nasdaq fell 3.6%. UK stocks have followed suit this morning: at the time of writing the FTSE 100 is down 1.24%, and the FTSE all-share 1.22%. The Bank of England is convening this morning to decide the UK’s interest rate. It is expected to keep it on hold at 4.75%.