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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.

The UK’s creating jobs, but can’t get the workers

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.

Vodafone beats estimates, as UK stocks look to play catch up

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.

Powell reiterates 3 rate cuts for 2024

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.

Powell comments knocks sentiment to US stocks

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’s 20th birthday present with stock at record high

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.

Corporate earnings on both sides of the Atlantic to set the tone for markets

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.

Caterpillar and McDonalds to test the appetite for stocks beyond tech

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.

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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.

Could volatility in Chinese shares lead to political unrest?

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. 

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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.’

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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.’

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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.

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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.  

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