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Central government is poised to axe plans to introduce ‘boiler tax’ if targets to fit sustainable heat pumps in homes are missed.

Back in 2020 Boris Johnson, former Prime Minister of the UK, introduced plans to install 600,000 heat pumps per annum by 2028 as part of the government’s plans to phase out gas boilers for their clean heat strategy.

As part of this plan the government were set to introduce a ‘boiler tax’ which, from April, would have included manufactures of fossil fuel boilers face a quota for heat pump installations relative to their gas or oil installations. Companies are required to match or face a fine of £3,000 for every insulation they fall short by.

However, at the beginning of this week ministers announced potential plans to boycott the idea. A government source informed the Sunday Times: ‘Boiler manufactures have saddled with families with indefensible price hikes – this is not right. We’re looking again at the policy and expect manufacturers to do the right thing and remove their price hikes immediately.’

Currently, a formal decision on the matter is yet to be announced. However, energy secretary Claire Coutinho has said that ditching the policy could be the only way to get manufactures to drop their prices again and that the government can still achieve its goal of 600,000 heat pumps through other schemes and incentives.

‘We remain committed to our ambition of installing 600,000 new heat pumps a year by 2028,’ Coutinho said. ‘We want to do this in a way that does not burden consumers, and we’ve increased our heat pump grants by 50% to £7,500 – making it one of the most generous schemes in Europe.’

Despite optimism shown by the government, environmentalists have expressed their disappointment about the decision. The news has come just several months after current Prime Minister Rishi Sunak announced a watering-down of the UK’s net zero policies, which included pushing back the deadline for banning new petrol and diesel cars.

In addition, the news has also been announced as the Labour Party are due to ditch their policy of spending £28bn a year on its green investment plan which details intentions to secure more green jobs and reach climate targets.

Images: Jamie Street and Heidi Fin

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Adam Neumann, founder of WeWork, is trying to buy back the company despite being pushed out as CEO five years ago.

It’s often these points in a movie when people being rooting for the underdog, however, when Adam Neumann expressed interest in buying back WeWork after the organisation declared themselves as bankrupt in November 2023, it wasn’t met with the cheer he’d been looking for.

On Monday, 5th February 2024, lawyers representing Neumann’s new venture, Flow Global, sent a letter to WeWork advisors explaining that he has been trying to meet with the company for months to negotiate a fair deal to buy back the organisation.  

In addition, the letter detailed that if Neumann wasn’t able to buy back the co-working space company, then he would alternatively offer debt financing.  

However, it has been reported that WeWork advisors have been hesitant to revisit the negotiating table with Neumann, WeWork’s former CEO, as they claimed the establishment has had a ‘lack of engagement’ with him and had not provided the information needed to make an offer to purchase the company or finance its debt.

According to the New York Times, who were the first outlet to report on this matter, WeWork has more than $4bn in debt.

In the letter to WeWork, Neumann’s lawyers painted an overview of what the former CEO has in mind should he get the company back.

The letter said: ‘In a hybrid work world where demand for WeWork’s product should be greater than ever, my clients believe that the synergies and management expertise offered by an acquisition could significantly exceed the value of the debtors on a stand-alone basis. WeWork should at least educate itself about that potential and not preclude itself from maximizing value.’

In 2019, Neumann was pushed out of the company after WeWork failed to get on to the US stock market. The organisation was founded in 2010, and with Neumann as the major company stakeholder he was able to discuss an exit package worth almost half a billion – $245m was given in company stock and $200m in cash to leave the company.

Against this backdrop, since WeWork filed for Chapter 11 bankruptcy in November, as a result of rising interest rates amidst a lack of demand for office space, they have faced frustration from their landlords who have taken the company to court over doubts about its stability. This suggests the organisation may not have a choice but to strike a deal with Neumann. Only time will tell. 

Image: Sargent Seal

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Bridges have joined forces with City Development Limited to deliver Yardhouse, an innovative mixed tenure scheme in Wood Lane, London.

The new development, which was conjured up between Bridge, alongside development partner HUB, and Singapore-based real estate developer City Developments Limited (CDL), is set to deliver 209 co-living homes and high-quality amenity spaces.

In addition, two roof terraces, which will provide picturesque views across London will also be included.

However, although the development will provide beautiful scenery, it is also set to deliver 60 new, high-quality, affordable homes for single women – an act that is full of kindness. This decision has only been made possible through a partnership with Women’s Pioneer Housing (WPH), who will likewise be receiving a new HQ through the development.

Speaking of organisations that have helped bring this plan to life, the close collaboration with Hammersmith and Fulham Council played a huge part. Local residents and business owners have campaigned to bring forward a co-living and affordable housing scheme supported at all levels in the borough.

It will replace 36 existing WPH homes and 300 sqm of office space, creating a vibrant and dynamic living environment that aligns with modern lifestyle preferences and better serves the needs of local people.

Commenting on the news, Simon Ringer, Bridges’ head of property said: ‘This landmark deal reflects the strong demand in London for lower-cost, high-quality co-living space.

‘We have worked extensively with the local community to make sure that Yardhouse caters to local needs – in line with our ongoing commitment to support best-in-class developments in needs-driven sectors. We can’t wait to see this pioneering scheme come to life.’

One of the reasons this new deal has been struck is to address the growing demand for sustainable housing solutions, particularly in urban areas.

‘This forward funding deal will be instrumental to our delivery of this next gen co-living scheme,’ Damien Sharkey, managing director at HUB said. ‘We’re thrilled to partner with CDL on its first co-living development in the UK and move forward with the first project in our growing co-living pipeline.’

Damien added: ‘Not only does this further strengthen our commitment to innovative and inclusive housing solutions that meet the evolving needs of communities, but it reinforces our confidence in the resilience of the real estate market and the appeal of this emerging asset class.’

Situated within easy reach of Westfield, White City Place, Television Centre, and Imperial College London’s campus, and with excellent transport links, no better site could be thought of for co-living.

Image: Bridges 

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Instead of being locked away Birchgrove have recently had plans approved to convert a former police station into a 50-unit retirement living community.

Originally opened in 1972, the police station at 209-211 Chiswick High Road closed in 2021 and was sold by the Metropolitan Police to Birchgrove, an organisation dedicated to creating new retirement living spaces, in April 2022.

Following this, redevelopment plans were submitted later in the same year, and, after two public consultations, planning permission has now been granted.

Commenting on the news, Honor Barratt, chief executive at Birchgrove said: ‘After almost two years of consultation we are thrilled to have secured planning permission, and I would like to thank everyone – including the council and local residents – for both their support and suggestions to ensure the development is the best it can be and does Chiswick justice.

‘All too often older people are shoved to the end of a cul-de-sac somewhere, but not here. With our development bang in the middle of Chiswick High Street, our residents will be able to flourish at the heart of the community.’

Plans include one and two-bed self-contained rented apartments, which will be available for people aged 65 and over, with facilities including a 24-hour concierge service, restaurant, license bar, courtyard garden and wellness suite.

One of the reasons the plans were put forward to create this establishment were because Birchgrove believed people in the area could benefit from a dedicated space solely available for those who have retired.

As well as including features such as a restaurant and a garden, plans also include a ground-floor space that will be available for local community groups to hire so they can arrange meetings with members.

In addition, the police will also be provided with a separate dedicated facilities space which will enable officers to charge their body-worn cameras, iPads, and radios, and means a police base will be re-established on the High Road following the station’s closure.

The scheme will also provide a £400,000 contribution towards affordable housing in Hounslow, and has been assessed as highly sustainable – achieving a minimum 77% reduction in carbon emissions over the regulatory baseline.

Image: Birchgrove 

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New research found that the average price of a house increased by £3,785 last month, making it the fourth month of consecutive rises.

This morning, the Halifax House Price Index, the UK’s longest running monthly house price series, published their latest findings which display that typical property values increased by 1.3% in January from December. Experts also found that house prices increased by 2.5% annually – the highest annual growth since January 2023.

Kim Kinnaird, director at Halifax Mortgages said: ‘This is the fourth consecutive month that house prices have risen and, as a result, the pace of annual growth is now 2.5%, the highest rate since January last year.’

‘The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market, has contributed to increased confidence among buyers and sellers,’ Kim said. ‘This has resulted in a positive start to 2024’s housing market.’

Kim added: ‘However, while housing activity has increased over recent months, interest rates remain elevated compared to the historic lows seen in recent years and demand continues to exceed supply.

‘For those looking to buy a first home, the average deposit raised is now £53,414 – around 19% of the purchase price. It’s not surprising that almost two-thirds of new buyers getting a foot on the ladder are now buying in joint names.’

Due to the annual change in the cost of house prices, here are the average costs of buying a house in different areas of the UK:

• East Midlands – £236,862
• Eastern England – £327,270
• London – £529,528
• North East – £169,505
• North West – £229,707
• Northern Ireland – £195,760
• Scotland – £206,087
• South East – £379,220
• South West – £295,399
• Wales – £219,609
• West Midlands – £251,185
• Yorkshire and the Humber – £207,602

Commenting on the news, Daniel Austin, CEO, and co-founder at ASK Partners, said: ‘Today’s data shows that the property sector is beginning to show signs of recovery. With a decline in inflation year on year and the peaking of interest rates, the overall outlook has considerably improved.

‘Rent values have seen sustained growth, positioning real estate as reasonably valued in comparison to gilts and presenting growth potential. In the realm of commercial real estate, factors like physical condition, location, and age significantly influence a property’s value.

‘Well-maintained properties boasting modern amenities tend to command higher prices, while neglected ones may struggle to attract tenants or investors. In the current market, the emphasis has shifted towards the importance of location and quality over the yield on debt or cost. We anticipate opportunistic acquisitions of prime properties in prime locations.’

‘A survey conducted by the Royal Institute of Chartered Surveyors (RICS) uncovered that non-traditional market segments, such as aged care facilities, student housing, data centres and life sciences real estate are yielding the most robust returns,’ Daniel said. ‘Although the lead-up to the general election may pose some uncertainty, a subsequent boost in productivity and a decrease in interest rates are expected. The hope is that any new government can address local planning issues to stimulate construction and guide the economy out of the downturn.’

Images: RosZie and Pavel Danilyuk

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We’ve heard of caravans and motor homes, however a Canada-based company have taken it one step further with an idea we could all benefit from.

Acorn Tiny Homes, a Toronto-based builder of tiny homes that was established in 2021, have released new images of their latest creation: the Paddock Paradise home – a small house that operates on wheels.

The new homes measure at 38 feet long and 10.6 feet wide, yet although they are small, they are able to fit various home comforts inside of them, including a sofa, kitchen, and a bed. The models are designed for year-long living with a wood-framed construction and spray-foamed insulation.  

Offering no less than 436 sq ft of space, the homes are designed to sleep two people but can fit up to four. The full layout includes a living room, kitchen, a pass-through bathroom, a ground-floor bedroom, and a storage attic.

The idea to create such a unique portal home came as research found more people in Canada were looking to simplify and downsize to a smaller property that helped them reduce living costs. In addition, because the models are equipped with wheels, it provides individuals with the chance to travel more.  

Against this backdrop, research from Savills UK, a national estate agent and letting company, found the number of the people looking to downsize has risen markedly since September 2022, suggesting this type of creation would work well in this country.

A survey, which included all of Savills 130 offices that are situated across the UK, found the number of ‘older’ homeowners looking to move from a larger family home into something significantly smaller had increased by more than half over the last six months.

In addition, Acorn Tiny Homes, which was founded by D’Arcy after he experienced a nightmare of a renovation job and believed he could job better, uses 100% sustainable materials when building – a concept various UK organisations are currently working towards.

The Paradise Paddock cost around $230,000 to construct, however once they come liveable, they reduce living costs substantially.

Image: Acorn Tiny Homes 

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David Bridges is set to return to Kier, where he previously worked as chief executive until its sale to private equity group Terra Firma in 2021.

In 2020 David Bridges worked as the chief executive of Kier, a leading provider of infrastructure services, construction, and property developments, until it was sold for £110m to Terra Firma. This decision ultimately resulted in Bridges moving to Homes England, where he has worked as the interim chief investment officer since August 2023.

However, in a shocking turn of events, Bridges recently announced he will be returning to Kier in March as a managing director.

News of the announcement has come just a week after a House of Lords committee criticised Homes England’s ‘undirected and nonstrategic’ investment in housebuilders specialising in modern methods of construction (MMC).

One of the reasons Homes England, the governments leading housing and regeneration agency, has been labelled as ‘undirected’ is because it is set to lose around £68m from its investment in Ilke Homes, which collapsed in summer 2023; lost £3m of £27m invested into House by Urban Splash, which collapsed in 2022; and is also owed over £9m by a subsidiary of Stewart Milne Group that fell apart this month.

Commenting on the news, Leigh Thomas, Kier Property groups managing director said: ‘I am delighted to welcome David back during this exciting time in Kier Property’s growth.

‘David brings a wealth of experience in residential and commercial property and will play an integral role in leading our talented residential regeneration team and help drive our growth strategies through our existing joint ventures in the public and private sectors.

‘In David’s new role, he will sit on our property board and take overall responsibility for the delivery of all our residential projects. I am looking forward to seeing the impact David will once again have at Kier.’

Before working for Kier and Homes England, Bridges has previously held roles at other leading property organisations including Taylor Wimpey, Keepmoat, McCarthy Stone, Linden Homes and Sergo.

In response to getting his new role, David Bridges said: ‘It’s fantastic to be rejoining Kier. I know first-hand what a great company this is, with a people and culture which drives to make a difference. Coupled with my passion to help regenerate towns and cities, I knew this would be a brilliant opportunity.

‘Given the strategic focus of the business, I am confident that learnings from my time at Homes England will really help to deliver on the ambitious growth plans of Kier Property in the residential and regeneration sectors. I look forward to getting started in March.’

Images: Mike Hindle and Ernie Journeys

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Employment rates in the UK are even worse than we thought. Kathleen Brooks, research director XTB, examines new figures from the Office of National Statistics (ONS) and analyses where it all went wrong.

The ONS released its updated Labour Force Data for the three months to November at the start of last week, which incorporates new estimates of the UK population increased response rates. The updated report now suggests that the unemployment rate fell to 3.9% from 4.2% in the three months to November, suggesting that the labour market was even tighter than expected at the end of 2023.

While the unemployment rate was revised down, the economic inactivity rate was higher than previous estimates and average hours worked were also revised down to 31.6 hours per week, from 31.7 hours. This highlights the dichotomy in the post pandemic labour market: there are less people working, those who are working are working fewer hours, and yet there is a huge demand for labour. The revised survey suggests that wage pressure could remain elevated for some time, which supports the Bank of England’s caution when it comes to cutting rates and instead focussing on inflation risks.

There were some other interesting details in the revised report. There was an increase in the relative number of women who were economically inactive and female employment levels dropped. There have been concerns about low response rates to labour force surveys, to combat this and in an effort to get higher levels of accuracy, the ONS will conduct face to face interviews from now on, which should improve the quality of UK labour market data.

There was good earnings news for the UK at the start of the week. Vodafone beat analyst estimates for organic revenue last quarter, rising by 4.7% vs. 4.27% expected. It also reiterated its full year 2024 guidance, and it sees adjusted earnings for this year at EUR 13.3bn, vs EUR 13.2bn expected. This is a solid set of earnings in an earnings season where share prices are rewarded if companies don’t post nasty surprises. The FTSE 100 is expected to open down a touch later this morning.

Fed chair, Jay Powell, was speaking to 60 minutes, a US TV news show, on Sunday night, which could set the tone for markets at the start of the week. He said that the Fed would move carefully on rate cuts. He also said that he does not think that FOMC members will have dramatically altered their forecast for interest rate cuts when they next update the ‘dot plot’ in March. The dot plot forecast three rate cuts for 2024. The market is currently expecting just under 5 rate cuts for 2024, according to the Fed Fund Futures market, and expectations are for US interest rates to end the year at 4.12%, whereas the Fed’s dot plot sees rates falling to 4.6% by year end.  

There has been a rapid re-pricing in expectations for US interest rates in the past few days, after last week’s FOMC meeting essentially ruled out a March rate cut. After Powell’s comments on 60 minutes, there could be a further to go. There is now only a 17% chance of a March rate cut expected by the market, with the first cut expected in May. As usual, there are a large number of Fed speakers this week. If Powell has set the tone for Fed speak, then we could see more FOMC members converge around three rate cuts for this year.

Emini S&P 500 futures have turned lower, and Treasury yields have risen at the start of the week, although they have backed off their highs as we move towards the European session open.  The S&P 500 reached another record high last week and has registered its 13th gain in 14 weeks. US stocks outperformed European indices after a strong rally at the end of the week, triggered by superb earnings from Meta and Amazon. This is the US blue chip index’s longest winning streak since 1986! However, February can be a choppy time for markets, and it is the third worst performing month for the S&P 500 going back to the 90s.

Meta deserves a mention, after reaching a fresh record high last week, and rallying more than 20% on Friday. An interesting Meta fact, during its earnings call last week, the number of mentions of AI and machine learning was at its lowest level for a year. We cannot confirm if there is a link between the all-time high in the stock price, and the fact that AI was mentioned less frequently on this earnings call, or if investors are cooling to the AI theme. However, Meta is a keen reminder that the market likes good results across multiple business lines, and it seems to only love AI if it comes clothed in revenue growth.

We are mid-point through earnings season for last quarter, and although there are more companies who have missed earnings estimates compared to the 5-year average, the level who have surpassed estimates is rising.  The earnings growth rate of the 46% of companies who have reported results for the previous quarter currently stands at 1.6%, however, this level may be improved upon after the earnings reports coming up this week. On a sector basis, those reporting YoY earnings growth include tech, communication services, consumer discretionary and utilities. Those reporting earnings declines YoY include energy, healthcare and financials.

There are also some key earnings releases this week, including analytics AI retail favourite Palantir. There could also be a test of the market’s appetite for stocks beyond tech, with earnings releases for McDonalds, and Caterpillar on Monday. Although the US economy is growing strongly, growth has not been even, and there are signs of weakness, particularly in industrial sectors. Caterpillar is seen as an economic bell weather for demand for industrial equipment. The company announced in October that its order backlog had slumped, and analysts expect slowing sales and orders for Q4. In the past, Caterpillar earnings have tended to signal trends in US growth. The US economy is less tied to industrial trends than it once was, however, a second consecutive slowdown for Caterpillar’s results may not be a good omen for the US economy.

Eli Lily, the largest healthcare firm in the US by market cap, Walt Disney, PayPal and Pepsi also report later this week. They could tell us interesting information about the strength of the US consumer, and also how companies outside of tech are performing. In the UK, BP, the oil major, will report results on Tuesday, followed by Barratt Developments on Wednesday, Unilever and Astra Zeneca on Thursday and BATS on Friday. In Europe, we get Total on Tuesday, Siemens on Thursday along with another dose of earnings from the luxury sector, including Kerring on Thursday and Hermes on Friday. German and French shares reached record highs last week. All eyes will be on whether these earnings reports can help them to sustain further gains, and whether European indices, which have less tech exposure than their US counterparts, can also keep making record highs as we move into February.

Chinese stocks have slumped at the start of the week, even though Chinese officials pledged more support to stabilise the market, without specifying details. This pledge of support has not soothed market fears. The larger index of Chinese shares, including the CSI 300 and the Hang Seng managed to eke out small gains on Monday, however, the index of small and medium sized shares, including the Shenzhen composite and the CSI 1000 are coming under intense selling pressure, the Shenzhen Composite is down some 5.5% and the CSI 1000 has slumped by 7.2%. Volatility in the shares of China’s small and medium sized companies has led to fears about margin calls, and derivates called snowballs that could hit their knock-in levels could exasperate the selling pressure.

The downturn in Chinese shares in recent weeks has been broad based as the economy fails to return to pre-pandemic highs. The Hang Seng is lower by nearly 8.5% YTD while the CSI 300 is down by 7.29%. The contrast with the US could not be starker. The S&P 500 reached a record high at the end of last week, and is up by nearly 4% YTD, while the Nasdaq is higher by 4.1%. The selling pressure is particularly noticeable in the small and medium-sized stock indices. This largely impacts domestic investors and could increase the risk of social unrest. There are reports of investors venting their frustrations with the Chinese market on social media, and so-far signs of official intervention in the market has not had lasting effects. If Chinese officials cannot find a way to stabilise financial markets soon, this could lead to political problems for Beijing, and this is why it is worth watching the Chinese stock markets at this delicate time. 

Images: geralt and Aaron Burden

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Instead of supplying the latest dramas, channel 4 is undergoing some problems of their own. Amidst the biggest round of layoffs seen in the company, the national broadcaster is now looking for a smaller premises. 

Channel 4, a national UK broadcaster, has been based at a HQ in Horseferry Road, Victoria, London, for the last three decades. However, the multi-million-pound company have recently announced that they intend to find a smaller office in central London as they are looking to employ more staff outside the capital city.

At the beginning of this year, Channel 4 revealed they were drawing up plans to axe as many as 200 jobs in its biggest round of layoffs in more than 15 years. The organisation have since confirmed they will be reducing staff numbers by 240.

One of the reasons so many staff members are being let go is because streaming services are currently facing the worst downturn in TV advertising since 2008.

Against this backdrop, the job cuts are set to form part of a five-year strategy, known as ‘Fast Forward’, which aims to shift Channel 4 away from a dependency on traditional TV advertising to digital income streams.

The streaming service have set a target to have 600 roles based outside of London by the end of 2025.

In addition to dismissing hundreds of London-based employees, Channel 4 have also said it would close 40 unfilled roles, making an overall 18% reduction in headcount.

The broadcaster said about 70% of the unfilled roles it was closing came from its legacy operations, and that the overall cuts programme would return the number of employees close to 2021 levels.

Commenting on the news, Alex Mahon, chief executive of Channel 4 said: ‘As we shift our centre of gravity from linear to digital, our proposals will focus cost reductions on legacy activity. It does involve making difficult decisions. I am very sad that some of our excellent colleagues will lose their jobs because of the changes ahead.’

Image: Robert Bye

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Councils have urged the government to extend the Household Support Fund (HSF) beyond April to help protect vulnerable households amid the cost-of-living crisis.

The HSF, which has provided £820 million in government funding for local welfare support over the past year, is set to end on 31st March. The fund has been used to help millions of households facing hardship who would otherwise have struggled to buy food, heat their home or go without other essentials.

More than eight out of ten of the councils that responded to a Local Government Association (LGA) survey said that financial hardship has increased in their areas just as vital local funding used to support vulnerable households is due to end.

Nearly three quarters of responding councils (73%) also said they expect hardship to increase even further over the next 12 months, while just under a fifth expect it to stay the same.

The government has not confirmed if the HSF will be extended, leaving councils, their delivery partners and residents in limbo.

The LGA said this uncertainty was impacting councils’ ability to set their budgets for next year. Any last-minute extension of the fund could come too late for councils, who would have lost experienced staff in anticipation of it ending.

Given record demand for this support, the LGA and councils across the country are calling for the fund to urgently be extended for at least a year, to prevent a cliff-edge in support for vulnerable people which cannot be filled from already overstretched council budgets.

Ending the HSF on 31st March would also coincide with an end to the government’s cost-of-living payments, which means low-income households would be doubly hit by a reduction in support.

The LGA’s survey of its members found that:

• 84% of responding councils said that financial hardship had increased in their area in the last 12 months
• Almost two thirds of respondents said they could provide no additional discretionary funding to replace what is lost from the end of the HSF, whilst just under a fifth said that alongside the fund ending, they would also be reducing their own local welfare discretionary funding due to financial pressures
• Around a fifth of responding councils said they would have to make redundancies if the HSF were to end

The HSF was first introduced in October 2021 and allowed councils to expand the help they could give to vulnerable residents during the pandemic and the cost-of-living crisis. It has been subsequently extended several times.

Since 2021, the HSF has boosted investment in local welfare support by more than £2bn and now funds 62% of local welfare provision, allowing councils to target support to the needs of their communities.

Pete Marland, chair of the LGA’s economy and resources board, said: ‘The Household Support Fund has provided an essential lifeline for our most vulnerable residents, but our survey shows this help is needed now more than ever.

‘Now is not the time to scale back support. Many at-risk households continue to face considerable challenges in meeting essential living costs, with demand for support greater than when the fund was first introduced.

‘Ultimately, councils want to shift from providing crisis support to investing in preventative services which improve people’s financial resilience and life chances, alongside a sufficiently-resourced national safety net.

‘However, without an urgent extension of Household Support Fund for at least a year, there is a risk of more households falling into financial crisis, homelessness and poverty.’

Image: Gio Almonte

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The government must fix the £4bn hole in council funding for 2024/25 or risk severe impact to council services and the prospect of further councils in England facing effective bankruptcy, the cross-party Levelling Up, Housing and Communities (LUHC) Committee has said in a new report.

The Financial Distress in Local Authorities report points to a systemic underfunding of local councils in England, and calls on the next government to reform council tax and the wider funding system for local authorities to ensure council finances are put on a sustainable footing.

The report identifies the range of financial pressures currently faced by councils in England, not least the rising demand for children’s and adults’ social care which are contributing to unmanageable bills for some local authorities.

The report highlights the costs involved in the delivery of services for children and young people with special educational needs and disabilities (SEND) and home-to-school transport. The report calls for the government to commit to a full review of the Education, Health and Care Plan (EHCP) system and to consider reforms to make SEND provision financially sustainable and ensure all children and young people with SEND have access to the services they need.

LUHC Committee chair Clive Betts said: ‘There is an out-of-control financial crisis in local councils across England. Councils are hit by a double harm of increased demands for services while experiencing a significant hit to their real-terms spending power in recent years. Increasing demands on council services such as social care and special educational needs and disabilities provision has resulted in rocketing costs but the levels of funding available to councils has failed to keep track.

‘The government must use the local government financial settlement to help bridge the £4bn funding gap for 2024/25 or risk already strained council services becoming stretched to breaking point. If the government fails to plug this gap, well-run councils could face the very real prospect of effectively going bust.

‘Long-term reform is vitally needed. The funding model for local councils is broken. The business rates system is overly complex and in need of reform. Council tax is outdated and increasingly regressive. Councils being forced to hike up council tax in a forlorn attempt to plug increasingly large holes in their budgets is unsustainable and unfair to local people who are, year on year, seeing less services while paying more.’

The report calls for the next government to embark on a fundamental review of the system of local authority funding and local taxation, exploring all options for removing its current regressive elements and considering options including land value taxes and wider fiscal devolution measures.

On adult social care, the Committee reiterated the call from its July 2022 report on the Long-term Funding of Social Care to urgently allocate more funding to local authorities in the order of several billions each year.

The report draws attention to increasing levels of homelessness which have required local authorities to spend more in fulfilling their responsibilities to those requiring support. The Committee’s report say that a key driver of increased homelessness is the Government’s decision to freeze local housing allowance (LHA) rates at April 2020 levels. The Committee welcomed the government’s recent announcement that it will increase LHA rates from April 2024, but urged it not to subsequently refreeze LHA rates.

Image: Jamie Street

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Almost two-thirds of people buying their first homes have joined forces in an attempt to get on the property ladder, new research has found.

The research, which was gathered by Halifax, unveiled that 63% of first-time buyer mortgages taken our between January and December 2023 were in joint names between two or more individuals.

To collect the data, the leading UK bank analysed their own statistics as well as information from Lloyd’s Bank and the Bank of Scotland – part of the same group.

From the research, Halifax claimed one of the reasons people are grouping together for mortgages is because buyers are facing serious pressures trying to save for a deposit whilst the cost-of-living continues to climb.

Against this backdrop, new figures, that were published on Wednesday 31st January, by Nationwide displayed that the average UK house price has increased by 0.7% month-on-month in January as the outlook for the property market looked ‘a little more positive’.

However, prices of homes are still 02% lower than this time last year.

Nationwide’s chief economist, Robert Gardner, said: ‘There have been some encouraging signs for potential buyers recently with mortgage rates continuing to trend down.’

In addition, the latest figures from Moneyfacts, the financial information service, show that the average rate on a two-year fixed deal has dropped to 5.56%, compared with 5.9% at the start of the year.

Although this news has surfaced as the Bank of England have recently made the decision to retain interest rates at 5.25%, meaning mortgage rates will remain high, if officials eventually decide to bring down interest rates too, this should give sellers even more confidence and ease the pressure on affordability.  

Image: Tierra Mallorca

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The INGENIOUS project, composed of various university scientists, is organising a webinar to discuss the importance of indoor air quality (IAQ) in UK social housing following the Awaab Ishak case. 

Titled: Beyond Awaabs Law: Priorities for Indoor Air Quality Actions in the UK, the webinar, which is being delivered in partnership with Born in Bradford and Stockholm Environment Institute, aims to highlight the multiple dimensions of air quality by going beyond moulds and spores to address the broader issues of indoor air quality. By looking beyond social housing, the webinar discusses indoor air quality in private rented homes and owner-occupied homes with the intention that a wider perspective ensures IAQ improvements cut across all types of houses or housing processes.

Scientists from the University of York, University of Manchester, the University of Sheffield, and the University of Cambridge, will be delivering the webinar, which is timely and aligns with the ongoing consultation process of the 2023 Social Housing law. The UK Housing Secretary launched a consultation on 9th January, 2024, on implementing the Social Housing law, also known as Awaab’s law.

The law was proposed into Parliament after two-year-old Awaab Ishak tragically lost his life in December 2020 due to a respiratory condition caused by mould. The young boy lived with his parents in a damp and mould invested flat in Rochdale and despite applying for help countless times, the landlord refused to address the issue. 

Supported by DEFRA, the INGENIOUS project, is dedicated to unravelling the impact of various household activities on airborne pollutants. Through investigation, the INGENIOUS project strives to uncover these unknowns and develop practical interventions to minimise exposure. This webinar offers a valuable platform to present INGENIOUS observations on indoor pollutants and how these cut across all sorts of housing in the UK.

Considering that there are no existing singular legislative frameworks for indoor air quality, they are subsumed and captured in subtly interpreted ways in other laws. It is hoped that such a webinar will sensitise participants on IAQ and how this is important for the UK housing sector.

Speakers include:

• Prof. Nicholas Pleace – Director, Centre for Housing Policy, University of York
• Prof. Nic Carslaw – Principal investigator, INGENIOUS, Indoor Air Chemistry, University of York
• Dr. Chantelle Wood – Social psychologist, University of Sheffield
• Prof. Sani Dimitroulopoulou – Principal Environmental Public Health Scientist on Indoor Environments within the Air Quality and Public Health Group, Environmental Hazards and Emergencies Department (EHE), UKHSA
• Prof. Sarah West – Centre Director, SEI York

Click here to register for the webinar

Image: Iyus sugiharto

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A controversial decision from the Bank of England’s Monetary Policy Committee as revealed that UK inflation rates will once again stay at 5.25%.  

The battle to lower inflation rates is one that is continuously being fought by the Bank of England. Back in December 2021 the Bank began increasing rates and continued to do so 14 times until August 2023 – when they hit 5.25%.

Although the saying goes ‘what goes up must come down’, unfortunately it can’t be applied here, as the Bank of England are yet to lower rates. This morning, officials from the Bank declared that for the fourth time in a row figures would stay at 5.25%, because it looks as though the UK is on the brink of a recession.

However, this decision was not taken lightly. In a rare three-way split, two members of the Bank’s Monetary Policy Committee (MPC) preferred to increase the Bank rate by 0.25% so the total would sit at 5.5%. One other member preferred to reduce the rate so it would sit at 5%.

In a statement, the Bank said: ‘Six members (which include Andrew Bailey, Sarah Breeden, Ben Broadbent, Megan Greene, Huw Pill and Dave Ramsden) voted in favour of the proposition.

‘Three members voted against the proposition. Two members (Jonathan Haskel and Catherine L Mann) preferred to increase Bank Rate by 0.25 percentage points, to 5.5%. One member (Swati Dhingra) preferred to reduce Bank Rate by 0.25 percentage points, to 5%.’

Below is a video from X (formely known as Twitter) of governor Andrew Bailey explaining why the Bank made the decision to keep interest rates the same:

Governor Andrew Bailey explains today’s decision to hold interest rates at 5.25%. pic.twitter.com/7DUyd2BumC

— Bank of England (@bankofengland) February 1, 2024

Commenting on the news, William Marsters, Sales Trader at Saxo UK, said: ‘Two calls for a rate hike and one call for a rate cut may seem very disjointed from the Bank of England’s MPC. But it is really a reflection of the difficulties the central bank is facing. Markets have set their sights on cuts this year, so much so that both the ECB and the Fed have made a point to realign expectations on the speed and depth.

‘For the BoE, they are still facing the highest nominal inflation rate in the G7 whilst also sporting low growth. Given these factors, the split decision is no surprise. Directional conviction for UK markets may remain elusive until inflation is more under control.’

In addition, other industry professionals have echoed a similar tone. Sekar Indran, Senior Portfolio Manager at Titan Asset Management, claimed the decision has put the Bank of England is a ‘less fortunate decision’.

‘Bailey offered a not-too-dissimilar tone to his peer across the pond, Jerome Powell, stating further evidence of inflation easing is needed before we see a rate cut,’ Indran said. ‘The reality is the MPC is in a less fortunate position than the FOMC with the highest inflation in the G7 and economic growth among the lowest.’

Indran added: ‘The downturn in manufacturing output also shows no signs of abating as per this morning’s PMI data with demand continuing to soften and supply chain disruptions re-emerging.

‘The swaps market continues to price that the US will move first which we would agree with, but we believe the magnitude of cuts may end up being greater in the UK relative to the US, contrary to what the market is pricing.’

News of interest rates staying the same have also left UK households devastated. Throughout this winter thousands of people have had to go without sufficient heating or food as a result of squeezed budgets. According to recent figures from the Joseph Rowntree Foundation (JRF), around one million households have said that since May 2023 they have had to disconnect their fridge or freezer for the first time in a bid to save money.

In addition, figures from JRF also found that in October last year a quarter (2.8m) of UK low-income households ran up debt to pay for food, a third sold belongings to raise cash, and one in six had used community ‘warm rooms’ – heated community areas that began popping up all over the UK last April.

Against this backdrop, Daniel Austin, CEO, and co-founder at ASK Partners, has explained that the Bank of England’s decision might be for the best.

Daniel said: ‘A hold on interest rate rises was expected now that inflation has started to fall. Although there was an effect on the affordability of debt, yesterday’s slight uptick in house prices is a positive indication that prices may have reached their lowest point.

‘This will bring investment capital back into the real estate market from buyers who have been waiting to make opportunistic, distressed purchases.

‘Those with finance in place are well poised to capitalise on the situation but the market in general will benefit from increased activity bringing back buyer confidence. As a lender to property developers and investors, we have seen first-hand the impact that rate hikes have had on borrowers and the market; stabilisation will be welcome news.’

Images: iStock and Etienne Martin

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Research has found that of the millions of homes that were built in England during 2013/14 one in 13 are in a national flood zone.

Aviva, a British multinational insurance company, have recently deep dived into new findings from the Office of National Statistics (ONS) and discovered that 8% – equivalent to 109,017 new homes, face the highest risk of flooding in England.

Experts unveiled that in flood zone three, a area with the highest risk, there is a one in 100 or greater annual probability of river flooding or a one in 200 or greater annual probability of flooding from the sea in any year.

News of these figures being released, which can be found in full here, have also come just weeks after storms in England caused severe damage to people’s homes across the country. Storm Henk, one the latest storms that unleashed hell this winter, caused over 400 homes to be vandalised.

As a result of previous severe weather conditions, new homes are being advised to be constructed with better flooding protection.

‘It’s concerning that almost 110,000 new homes have been built in the last decade in a flood zone, leaving thousands of homeowners and tenants at risk,’ Aviva’s Jason Storah, chief executive for UK & Ireland general insurance, commented.

‘Crucially, these homes are not covered by the Flood Re insurance scheme and many may have been constructed without flood resilience. Not only are these newly built homes at high risk – they also face the prospect of repeated flooding and may not be protected by flood defences to prevent or limit flood damage.’

In addition to the data highlighting concerns over homes being built in high flood risk areas, it also outlined climate concerns. Almost two thirds (61%) of new home residents are concerned about the impact of heat on their home, compared with 46% of residents of homes that were built before 2018.

Storah added: ‘Insurance can play its part by restoring homes and offering financial reassurance, but it cannot replace cherished family possessions or prevent the emotional impact that floods bring. It is paramount that any future plans for new homes include strengthened rules to prevent the development of buildings in current and potential flood zones. But in some low-lying parts of the country, this is more difficult. In these cases, flood resilience should be made mandatory in planning rules and built in from the outset.’

Various new build homes have experienced some damage since they were built. According to the research, one in eight new build residents say their home has been affected by flooding inside and 16% have suffered flooding issues in the garden. However, researchers revealed new homes are not just at risk from flooding but wider construction problems.

26% have suffered a water leak; 18% have been damaged by storms and 15% have been affected by subsidence, severe movement, or tree damage.

‘It’s worrying that many newly-built homes have already suffered a flood within five years of construction. This suggests the homes may have been built in unsuitable locations to standards which are unable to withstand flooding,’ Storah said. ‘But the research reveals wider concerns about construction which could leave these homeowners and tenants at risk from other climate events, including hot, dry weather.’

Storah continued: ‘If we are to prevent more scenes of devastation caused by extreme weather, we need to work collectively to change where and how we build. By building houses that are climate-ready and able to withstand the multiple impacts of climate change we can provide safe and sustainable homes for our future generations.’

Research from the ONS notes that 2022/23 figures do not form part of the at-risk homes approximation as they aren’t available yet.

Image: Nationaal Archief

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The government has announced a last-minute £600m funding package to help deliver key services, amid fears of a wave of council bankruptcies and service failures.

The support package will primarily see an additional £500m added to the Social Care Grant to bolster social care budgets, a key cost pressure for local government.

Ministers said all councils would also see an increase in core spending power of at least four percent before any local choices on council tax, efficiencies or reserves – an increase from the three percent announced in the provisional local government funding settlement.

However, some warned that the funding doesn’t go far enough.

Levelling Up Secretary Michael Gove said: ‘We have listened to councils across England about the pressures they’re facing and have always stood ready to help those in need.

‘This additional £600m support package illustrates our commitment to local government. We are in their corner, and we support the incredible and often unsung work they do day-to-day to support people across the country.’

Shaun Davies, chair of the Local Government Association (LGA), said: ‘The LGA welcomes that the government has acted on the concerns we have raised and recognised the severe financial pressures facing councils, particularly in providing services to the most vulnerable children and adults through social care services and delivering core front-line services to communities.

‘We will continue to work with government to achieve a sustainable long term funding settlement and updated distribution mechanisms, as well as legislative reform where needed, so that local government can play its full part in delivering inclusive prosperity and growth through investment to support people, places, and the planet.’

But Sir Stephen Houghton, chair of the Special Interest Group of Municipal Authorities (SIGOMA), warned that more was needed.

‘This increase in funding is welcome and will help councils in the short-term,’ he said. ‘However, it won’t address the long-term funding gap or the need for reform of the broken local government finance model. This unprecedented increase before the final settlement shows that there is a growing understanding within the government about the crisis in local government finances. These pressures have been well-documented for some time, so it is disappointing that the funding has only been announced at this late hour.

‘More funding will be required to match the current level of demand-led pressures and stabilise the sector. It is welcome that most of the funding will be allocated though the social care grant. Social care, particularly children’s services, is the largest current pressure for the sector and the area most in need of additional grant funding.’

In light of the exceptional circumstances, the Treasury will be providing £500m with further details set out at the upcoming Budget whilst details on the distribution of this funding will be included in the final Local Government Finance Settlement in early February.

The government said the funding had to be used to address the pressures facing councils and improve performance, rather than saved for later use or spent on areas that are not a priority. Separately, councils will be asked to produce productivity plans which will set out how they will improve service performance and reduce wasteful spend – which the government defined as including spending on consultants and HR spending on equality, diversity and inclusion.

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