OVER three million struggling households will start receiving letters from the Department of Work and Pensions (DWP) detailing £150 worth of energy bill help.

The Warm Home Discount is a one-off tax-free discount on your electricity bill.

1

If you are eligible, your electricity supplier will apply the discount to your bill. The money is not paid to you.

To qualify you usually need to be claiming one of a number of means-tested benefits during the qualifying week, which is usually in August,

The DWP said it will start sending letters to those who qualified for the scheme from today, October 14.

But do not panic if it does not arrive on your doorstep today, as it may take up until mid-December for it to be posted out.

Miatta Fahnbulleh, minister for Energy Consumers, told The Sun, that today is important for “worried about energy costs”.

She explained: “If you don’t receive [a letter] but think you might be eligible then you can visit gov.uk for an eligibility checker.

“Today we are also launching a helpline, open until February, which you can call to find out whether you meet the criteria.”

Meanwhile, the Post Office is urging families who receive the discount in voucher form to act urgently.

Those who use pre-payment meters often receive the £150 boost in a voucher which can be redeemed at their local Post Office or PayPoint shop.

However, data from the firm showed that last year up to £3million worth of vouchers went unclaimed at their sites.

If this applies to you, it is important to redeem the voucher soon after receiving it as they do expire, some in as little as 30 days.

However, if the voucher is lost or expired, households can contact their supplier to have it reissued.

News of the cash boost comes as Brits remain worried about their energy bills this winter.

Energy regulator Ofgem has raised its price cap, meaning energy bills are set to rise by around £149 a year.

Elsewhere, cuts to the Winter Fuel Payment mean 10million pensioners are set to miss out on £300 worth of fuel support.

How to apply for the Warm Home Discount

You will get the discount automatically if you’re eligible and claim one of the following benefits:

• Housing Benefit
• income-related Employment and Support Allowance (ESA)
• income-based Jobseeker’s Allowance (JSA)
• Income Support
• the ‘Savings Credit’ part of Pension Credit
• Universal Credit

You could also qualify if your household income falls below a certain threshold and you get either:

• Child Tax Credit
• Working Tax Credit

Applications for the scheme opened in October, however, you may not get the help until next March.

To get the cash you’ll usually need to be actively claiming one of a the means-tested benefits listed above in the qualifying week – which is usually in August.

However, if you later launch a successful claim for backdated benefits, you may still be able to qualify after this date and once it’s confirmed.

If you qualify for the WHD, you should receive a letter telling you. 

The Warm Home Discount Helpline number is 0800 030 9322 to provide assistance and help customers who have received a letter regarding their eligibility.

You can also use the government’s free online eligibility checker to see if you are missing out on the help.

This can be found at https://www.gov.uk/check-if-youre-eligible-for-warm-home-discount.

If you are worried about your energy bills, check out The Sun’s article on the full list of support worth over £5,000 here.

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Good morning. China neglected to put numbers on its stimulus plan over the weekend — again. There are a few other opportunities coming up for the central government to announce the specifics, but we are getting pretty close to the end of the year. How long can China leave the world hanging? Email us with your thoughts: robert.armstrong@ft.com and aiden.reiter@ft.com.

Pfizer and Starboard

The FT coverage of the Starboard Value-Pfizer affair has been a lot of fun to read. A week ago we learned that the activist investor had built up a $1bn stake in the drug company — market cap $165bn — and that former Pfizer CEO Ian Read and former CFO Frank D’Amelio had pitched current CEO Albert Bourla and several board members on the activists’ plan. Last Tuesday it came out that Bourla was set to meet with Starboard, and it looked like the activists had Pfizer on the back foot. But then on Thursday it turned out that Read and D’Amelio had had second thoughts and were “fully supportive” of Bourla and the board. 

The final morsel to drop was the fact that Bourla had found out that Starboard was circling from what appeared to be a fat finger email from D’Amelio — with no message — that cc’d a representative of Starboard. Starboard had planned to announce its investment at a conference later this month. Oopsie. 

Over in the Lex column, my colleague Pan Yuk has already pointed out the reason why Pfizer might look like a target for activists. The share price has been falling since Pfizer’s blockbuster Covid vaccines stopped bringing in big revenues. The stock is cheap compared to peers’. The company spent much of the vaccine windfall on the $44bn acquisition of Seagen in March last year, which has yet to pay off. Yuk also points out, however, that while Pfizer is in need of a turnaround, it is not at all clear what can be done. She’s right — but there may be one thing that would work for Starboard. 

Some context first. Below is a list of the 15 largest pharma companies in the world, along with their price/earnings valuations, and expected revenue and earnings per share growth for the next 3 years: 

The reason Pfizer is cheap is clear. It isn’t growing. Revenues are expected to grow at a sub-inflation 1 per cent rate over the next three years; earnings per share growth (supported by some cost cutting and share buybacks, presumably) are expected to average 5 per cent, among the very lowest in the group.

Low growth is not an easy problem to fix in pharma. Most of the time, pharma companies grow because their drugs work, and that depends on science, not corporate finance. Maybe the Seagen acquisition will pay off in the end, or maybe other pipeline candidates will come good. But Starboard can’t control clinical trials. 

It is worth remembering that 15 years ago, Lilly, now the biggest pharma company in the world and still growing fast, was struggling mightily to grow as patents expired and one clinical program after the other went wrong. It had a P/E ratio of 8. Ten years ago, on the other hand, Bristol-Meyers’ cancer drug portfolio was the envy of the industry, its stock was on a rip, and it had a P/E ratio over 40. Now Bristol is looking at falling revenues and is the cheapest big pharma stock (and was, not coincidentally, the target of an unsuccessful Starboard activist campaign in 2019). Fortunes change slowly in pharma, and in unpredictable ways. 

With that said, what can Starboard ask for that might help? A few ideas:

1. Allocate capital differently. Over the past five years — that is, since Bourla has been CEO — Pfizer has generated $98bn in operating cash flow. It has spent $77bn on cash acquisitions, $43bn on dividends, $14bn on capital expenditures, and $11bn on share repurchases (readers who are quick at arithmetic will notice that cash outgoings have exceeded incomings by $48bn or so; this is part of the problem). Cutting the dividend is probably a non-starter for the market. An activist who suggested buying back fewer shares because the stock was so cheap would be caught in something of a contradiction. One could call on Pfizer to do fewer acquisitions and focus on in-house R&D, but that is a project that would take, oh, a decade or two to bear fruit, which is a lot longer than Starboard will want to hang around. 

2. Run the company more tightly. Too late. The company has been pushing a multibillion-dollar cost-cutting plan since 2023.

3. Sell stuff. Too late again. The consumer health and animal health units are gone. Pfizer is already selling down its stake in the consumer health company Halion. It might be able to sell its minority stake in Viiv, which makes HIV medication, to the other partners in the joint venture for a few billion dollars, though.  

4. Fire Bourla. I have no view on whether Bourla has done a good job or not. But if Starboard’s view is that the strategy is wrong, or the company has proven to be poor at M&A, or that capital allocation is suboptimal, or that the company is dragging its feet on the cost-cutting plan, the fastest way for them to prove to the market that things are really different now is to get the boss sacked, and take a few board members with him. I just don’t see what other needle-moving announcements there are for Starboard to make. Am I being insufficiently imaginative? 

Even a new management team and (say) some turnover on the board might not move Pfizer’s stock a ton. But if Starboard could move the shares, say, 10 per cent, they might take their $100mn gain and go home.

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The latest Financial Conduct Authority Retail Mediation Activities Return findings are a stark revelation.

They confirm that the decline in the number of small advice firms is more than a trend — it’s a rapidly accelerating one. In 2023, there were 10% fewer sole traders than in 2022, and 8% fewer firms with two to five advisers.

The numbers have remained steady over recent years, defying expectations. However, consolidation activity, with elderly advisers retiring and exiting, is beginning to kick in.

Although one swallow does not a summer make, there is no doubt small advice firms in the UK have encountered increased challenges, such as:

• Rocketing regulatory requirements;
• Competition from larger firms; and
• Rising demand for digital financial services.

Regulatory changes, such as Mifid II and the Consumer Duty, have imposed more significant compliance burdens on small advice firms, making it harder for them to operate profitably.

Larger firms have more resources to invest in technology and compliance

The growing preference for online and automated financial services further threatens their prospects. Larger firms have more resources to invest in technology and compliance, giving them an increasingly competitive edge.

Going niche

For some small firms, the answer is to specialise in niche markets, offering personalised services. If executed well, this can be a beacon of hope in the face of challenges.

However, niche focuses expose firms to a significant shift in a chosen target market. For instance, companies that specialised in annuities found their business model torpedoed with the arrival of the pension freedoms.

The client will demand a seamless ‘Soup to nuts’ experience driven by great tech

Similarly, the desire to outsource, particularly tech, is the way forward for some. However, this, too, is not without risk.

The Financial Ombudsman Service (FOS) recently upheld a complaint from a client who had lost £100,000 after a missed rebalancing because of delays in moving to a new white-label platform. The FOS found against the firm, arguing its recommendations to move to a new platform in 2020 had been “significantly misrepresented”.

Interestingly, the platform was not subject to the FOS complaint because it did not relate to its services. The advice firm was wholly exposed.

In January this year, M&G decided to sell or wind down its platform. With £16.3bn of assets on it, advisers who adopted it will worry whether a wind-down is more likely. In this case, advisers must find a suitable alternative provider with the same access, investment range, fee model and share classes. This is a significant piece of work for simply backing the wrong horse.

I understand small business owners’ desire to remain in complete control of their business. However, the mounting pressures are huge, so the ability to stay on the front line and look after clients is an impossible circle to square.

Consolidation activity, with elderly advisers retiring and exiting, is beginning to kick in

In reality, absolute control means having total control and ownership of the means of production.

Firms will continue to grow, through either organic growth or acquisitions. These firms will have an in-house investment proposition, which will become an expectation for clients. They will have greater control over their tech. For all the talk about platforms, they are simply a utility and will increasingly be absorbed into the overall value chain rather than being remote from the firm.

The client will demand a seamless ‘Soup to nuts’ experience driven by great tech. In the FOS example above, where the firm switched platform, 891 individual transfer cases were required to be processed manually via an individual processed stock transfer form. This is because the receiving platform could not make electronic transfers.

Clients are increasingly reluctant to deal in ‘wet signatures’. Turning up at the client’s home with another form to sign will fail to cut the mustard.

In 1960, there were around 43,000 butcher shops in the UK; by 2019, that number had dropped to around 6,000. The same can be said for greengrocers and fishmongers.

The advice market gives every indication it is heading that way too.

Tim Sargisson is former chief executive of James Hay and Sandringham Financial Partners, among others

This article featured in the October 2024 edition of Money Marketing. 

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