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Wednesday, 1 January 2014

David Cameron: Help to Buy triggers £1bn of new home loans

David Cameron claims that more than 6,000 people will move into their own property thanks to the Government's Help to Buy scheme, just three months after it was launched.

Nearly £1bn of home loans have been offered through the Government’s flagship Help to Buy scheme in the first three months since its introduction, the Prime Minister has claimed.

The controversial scheme, which has triggered warnings of a fresh housing bubble, has allowed more than 6,000 homebuyers to put in an offer on a property and apply for a mortgage, David Cameron said.

Those mortgages, once approved, will amount to almost £1bn of new lending, the Prime Minister said. So far 750 purchases have been completed since the initiative was rolled out in October.

“The New Year is often a time when people look to make those big life-changing decisions like moving home or taking that first step on the housing ladder,” Mr Cameron said.

“But too many people have found themselves frozen out of the market in recent years as a result of the size of the deposit required.”

Mr Cameron added: “That is why as part of our long-term economic plan we introduced the Help to Buy scheme, so hardworking people with sufficient earnings can get on, fulfil their aspirations and enjoy the security of owning their own home.”

However, Help to Buy, which offers Britons the chance to get on the property ladder with a deposit of as little as 5pc, has sparked warnings of a fresh housing bubble from economists and also Vince Cable, the Business Secretary.

Property experts have cautioned that initiatives such as Help to Buy are making it easier to purchase homes at a time when there is a shortage of new property coming on to the market.

Bodies such as the International Monetary Fund have warned the UK needs to be “vigilant” to the risks of another housing bubble and suggested the Government may need to consider other measures such as easing planning constraints to boost house building.

Downing Street insisted today that housebuilding is now growing at its fastest rate since 2008 and Help to Buy encourages “responsible lending”.

People wanting to buy a house through the scheme are, on average, seeking to buy properties worth £160,000 – below the UK’s average house price of £247,000.

Applicants face average monthly repayments of around £900 on an income of around £45,000, Downing Street said.

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Thursday, 19 December 2013

Pay to perk up in 2014 as economy recovers-CBI

(Reuters) - More British firms expect wages to rise in line with inflation next year than at any time since the 2008-2009 recession, a survey conducted by a leading organisation of employers showed on Tuesday.The Confederation of British Industry CBI.L said 42 percent of firms believed salaries would grow in line with the Retail Price Index (RPI), the highest proportion since 2009.

Bank of England Governor Mark Carney said in November that wage increases in line with the Consumer Price Index (CPI.L) were likely to come between mid-2014 and the end of 2016.The RPI usually gives a higher inflation figure than CPI - it was at 2.6 percent in the 12 months to October - and is generally used as a basis for private-sector pay deals, although wages have lagged behind in recent years.

"Pay, as we see today, is returning with growth," said Neil Carberry, director for employment at the CBI. Employers remain cautious about pay increases: 39 percent of firms said they planned a pay increase below RPI and only seven percent would raise pay by more than the index.The CBI said companies expecting pay freezes next year fell to a four-year low of 8 percent, down from 16 percent in 2012. In 2009, more than half of firms planned pay freezes as they grappled with the recession.

The report showed 51 percent of companies expected to create jobs over the coming year and only 12 percent thought they would cut the size of their workforce. Jobs for permanent staff also grew more quickly, with a net increase of 18 percent against a rise of 14 percent in temporary positions.

(Reporting by Freya Berry; editing by William Schomberg, Larry King)

Retailers push up discounts in last-minute Christmas sales

High Street chains including M&S, Gap and Debenhams cut prices by up to 75% in battle for shoppers' wallets

Retailers have increased their discounts this week, with nearly three-quarters holding sales or promotions in a last-ditch attempt to attract shoppers.

The average discounts rose to 46% compared with 42% last week and 44% in the same week last year, according to the accountancy firm PwC. Of the 100 high-street retailers it monitors, 72% were advertising sales or promotions of some kind.

Marks & Spencer this week introduced 30% reductions on its knitwear as well as beauty items, nightwear and Per Una clothing. It has launched such pre-Christmas deals before, but this year's event will increase speculation that the retailer is failing to turn around it poor performance in its clothing division, a key part of chief executive Marc Bolland's plan.

Gap extended its discounts to up to 60% from 50% earlier in the week as the clothing chains do battle with hi-tech gadgets, such as tablet computers, for a share of shoppers' Christmas budgets.

Among others, Debenhams has a half-price sale on, Austin Reed is offering up to 60% off some clothing and House of Fraser has cut prices by as much as 75%. Argos has launched a half-price toy sale.

Mild winter weather and a general squeeze on disposable incomes is making trading particularly difficult for fashion stores despite more positive news on the economy.

Mark Hudson, head of the retail and consumer team at PwC, said: "As we all get ready for that frantic last weekend of shopping before the big day, it appears that despite much more positive economic news, the level of discounting seems broadly in line with last year, proving that promotions are still a key weapon to drive footfall."

He said he expected to see further sale activity this weekend. People are expected to spend £12bn on last-minute shopping from Friday to Monday night, but the late run into Christmas means that sales may well be lost. With quarterly rent day for retailers due on Christmas Eve, it is feared that at least some struggling retailers may not make it into the new year.

EU ministers seal banking agreement on eve of Brussels summit

Finance ministers say they have reached deal after lengthy negotiations on how to deal with failing banks in the eurozone

EU finance ministers announced late on Wednesday night that they had reached agreement on a new system for dealing with eurozone banks, under intense pressure to seal the accord on their new flagship policy in advance of a two-day Brussels summit opening on Thursday.

EU officials announced a "crucial breakthrough" on a fiscal backstop for rescuing or winding up failing banks in the Eurozone at 3am on Wednesday. But the details were inconclusive from the meeting of the Eurozone countries and were still being haggled over by all 28 EU finance ministers in Brussels 18 hours later.

All the signs were that Germany had prevailed in its reluctance to assent to any pooled liability for the eurozone banking sector under the new regime of eurozone supervision known as the banking union.

The key issues were: who pays to wind up or recapitalise a failing eurozone bank, and who decides when a bank should be closed down.

EU officials said the breakthrough meant a "common" or pooled eurozone backstop would be available for dealing with troubled banks. The common backstop would not be available until 2025 at the earliest and would consist of a €55bn (£46bn) pot of money raised by the banks themselves via a levy over the decade from 2015.

In the meantime, Germany conceded that the eurozone's €500bn bailout fund, the European stability mechanism, could be used as a last resort for rescuing failed banks if governments did not have enough money.

Earlier the agreement had looked fragile, hedged with conditions and caveats, and was attacked as inadequate by the European Central Bank, whose credibility is at stake as the new supervisor of most of the eurozone banking sector under the new regime.

EU leaders need to agree on the banking wind-up arrangements, known as the single resolution mechanism and the single resolution fund, at their summit on Thursday and Friday if the deadlines for getting the new system operational are to be met. Two weeks of late-night meetings in Brussels and Berlin have pushed issues to the brink.

There will be big problems with getting the deals agreed with the European parliament, and with national ratifications of a new treaty between participating governments on the funding of banking resolution.

The French-led group of southern countries, the European commission and the ECB opposed this.

"It's a choice between a banking union that's not perfect, or nothing," said a senior EU official.

In the transitional decade, from 2015, the issue is what happens in a banking crisis. On German insistence, there will be no European response except as a last resort; nor will there be any escape from adding to national debt burdens to fund a bailout.

The governments concerned would also be able to ask to tap the ESM in an emergency, but according to existing restrictive rules. This was the main German concession.

HMRC 'lost nerve' over big tax avoiders, say MPs

Report highlights how Treasury is owed £35bn in missing tax payments and says HMRC pursued small firms, not global giants

British officials have "lost their nerve" in tackling tax avoidance by global corporations and have presided over a £35bn tax gap as they pursue easy prey such as small businesses and individuals, a committee of MPs says.

In a report that highlighted how the Treasury is owed missing tax payments of £35bn, the public accounts committee added that HM Revenue and Customs has left the state with another multibillion pound shortfall by failing to gather £2.6bn of an expected windfall from Swiss banks.

The findings follow a series of damning reports into HMRC by the committee which have addressed its failings over taking on tax-avoiding corporations such as Google, Starbucks, Vodafone and Amazon.

On Wednesday Vodafone, one of Britain's leading multinationals, made a rare gesture of tax transparency by breaking down its payments on a country-by-country basis.

The company revealed that it paid "little or no corporation tax" in the UK but its direct tax payments – including business rates and national insurance – had dropped by nearly 20% to £275m last year.

Last year HMRC, led by chief executive Lin Homer, promised to launch an unprecedented campaign to increase tax collection, particularly from large corporations.

But in a report released on Thursday the planned income from the Swiss accounts were written into Chancellor George Osborne's budget estimates in last year's autumn statement and said it was "astonished" at HMRC's failure to account for the shortfall.

HMRC brought in £475.6bn in revenue for the government in 2012-13, an increase of £1.4bn over the previous year.

But in real terms, after inflation was taken into account, tax income fell last year, compared to 2011-12, while the "tax gap" – between the amount owed to the Exchequer and the amount collected – grew by £1bn to £35bn in 2011/12.

The shortfall was widely seen as an embarrassment for the coalition at a time when it wanted to be seen as clamping down on wealthy firms and individuals.

Margaret Hodge, the chair of the committee, said that HMRC had not clearly demonstrated it was on the side of the majority of taxpayers and had failed in its ambition to crack down on tax avoidance.

"The tax gap as defined by HMRC did not shrink, but in 2011/12 grew to £35bn. Yet that measure does not capture all the tax government should be collecting. For instance, this figure does not include all the tax revenue lost to aggressive tax avoidance schemes.

"HMRC holds back from using the full range of sanctions at its disposal. It pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations.

"It predicted that it would collect £3.12bn unpaid tax from UK holders of Swiss bank accounts and this figure was built into budget estimates, but in 2013-14 it has so far secured just £440m. We were astonished that HMRC could not give any reasons for such a shortfall."

The report said HMRC needed to show that it was dealing "robustly" with individuals and companies who deliberately mislead it. It noted that just one individual out of 16 identified targets on the so-called Lagarde list of Swiss account holders with potential UK tax liabilities had been successfully prosecuted.

The lack of prosecutions against multinational corporations seemed at odds with HMRC's stance on pursuing tax debt from small- and medium-sized businesses in the UK, the committee noted.

In a reference to widespread criticism of tax arrangements at Amazon and Google, the committee pointed out that tax officials have yet to test how existing tax law impacts on global internet-based companies.

The findings were rejected by HMRC, which accused the committee of "selective and misleading use of figures", particularly when calcuating the tax gap. A spokesman said MPs had highlighted the increase in money which had not been collected instead of calculating a percentage of uncollected tax, which has actually gone down.

"HMRC seeks to collect the tax that is due from all taxpayers, so that everyone pays their fair share in accordance with the tax laws passed by parliament.

"We have secured more than £50bn of additional tax from our compliance work since 2010, including £23bn from large businesses," he said.

Meanwhile, Vodafone revealed that its direct contribution to the UK from taxation dropped 18.6% to £275m in the year 2012-2013 from £338m a year before. The figure includes corporation tax as well as business rates, employers' national insurance and many other items.

Vodafone said it paid "little or no corporation tax" in Britain because its profits in the UK were relatively small at less than £300m and were dwarfed by capital spending of more than £1bn on its UK network and interest costs in excess of £600m paid to British banks.

The company set out the tax it paid in 27 countries compared with a year earlier in unusual detail for a British company. Its biggest direct tax bill was in Turkey, where it paid £454m. Vodafone said it wanted to be open about the tax it paid after it was attacked over its contribution in the UK.

The company said: "As the UK government wants more investment in UK infrastructure and jobs, it allows all businesses to claim relief for the cost of assets used in the business against their profits when determining their corporation tax bills.

"The government also provides relief to all businesses for the cost of interest on their debts to UK banks and financial institutions. Vodafone is no different to any other UK business."

Bank of England switches to plastic pound notes with Churchill fiver

Introduction of polymer £5 note in 2016 and Jane Austen £10 note in 2017 will end 320 years of paper money

Mark Carney, the governor of the Bank of England, has formally announced that Britain will switch to using plastic banknotes in 2016, ending 320 years of paper money.

After a public consultation in which 87% of the 13,000 respondents backed the new-style currency, the Bank said it would introduce "polymer" notes, as it prefers to call them, in two years' time, starting with the new £5 note featuring Winston Churchill in 2016 and the Jane Austen £10 a year later.

Speaking at a press conference in the Bank's Threadneedle Street headquarters, Carney said: "Our polymer notes will combine the best of progress and tradition. They will be more secure from counterfeiting and more resistant to damage while celebrating the history and tradition that is important both to the Bank and the nation as a whole."

The move follows Carney's native Canada, where plastic notes are being rolled out, and Australia, where they have been in circulation for more than two decades.

Carney launched a public consultation on polymer banknotes, seen as cleaner and more durable, shortly after arriving at the Bank this summer. However, the Bank's notes division has been considering plastic money for several years.

Bank officials have been touring shopping centres and business groups around the country with prototype notes to canvas public opinion.

The Bank has promoted its polymer notes, featuring a see-through window and other new security features, as less threadbare and tougher to counterfeit.

It has sought to quell concerns about the environmental impact of printing on plastic by suggesting they can last up to two-and-a-half times longer than the cotton-paper notes in circulation at the moment. The durability will also compensate for the higher production costs and save an estimated £100m, the Bank claims.

Its laboratory tests showed polymer banknotes only begin to shrink and melt at 120C, so they would fare better in washing machines but could be damaged by a hot iron.

Carney has also announced that the Bank will follow new procedures when selecting the historical characters to appear on future notes, to avoid the furore it faced earlier this year, when the announcement of the Churchill £5 note appeared to suggest that no women – other than the Queen – would feature on any denomination.

A new advisory committee, with a majority of independent members, will now suggest a theme – such as scientific achievement – and the public will be invited to suggest specific figures for inclusion. However, the governor will retain the final decision over which person is featured.

"These changes will ensure that the characters on our banknotes are fully representative of the history and diversity of this great nation, while having the necessary public respect and legitimacy."

The move is the latest in a long line of changes for banknotes, first issued in return for deposits by the Bank when it was first established in 1694 to raise money for William III's war against France.

Colour £5 notes replaced white ones in the 1950s; the first portrayal of a monarch came in 1960, when the Queen appeared on a new £1 note; and the introduction of historical figures such as William Shakespeare started in the 1970s.

As part of the preparation for this latest change, banknote officials have already been working with retailers and the operators of vending machines and cashpoints.

Link, which runs the UK cash machine network, said its machines would need new cassettes to hold the plastic notes, because they will be smaller, and not because of the change in material.

The 15% reduction in size for Churchill notes compared with the current Elizabeth Fry fiver brings English notes into line with sizes in other countries. But they will remain larger than existing euro notes and the different denominations of sterling will retain tiered sizes to help blind people differentiate between them.

The Bank concedes no note is counterfeit-proof but says copying the new polymer notes will be slower and more expensive.

Tuesday, 17 December 2013

Mark Carney stands by forward guidance policy

Bank of Englang governor denies approach on future interest rates is confusing for business or consumers

The Bank of England governor, Mark Carney, has robustly defended his forward guidance policy in parliament against critics who argue it is confusing and has done little to persuade markets that an interest rate rise can be delayed for three years while the economy mends.

Speaking to the House of Lords economics committee, Carney said businesses and consumers understood that forward guidance meantinterest rates would stay low until unemployment falls to 7%, which the central bank predicts will happen in 2016.

Carney said: "A return to growth is not the same as a return to normality", and base rates should remain at the historically low 0.5% level until the recovery was established.

He spoke as the Office for National Statistics revealed that the consumer prices measure of inflation slowed to 2.1% in November from 2.2% in October and was at its lowest since November 2009. The move closer to the Bank of England's government-set target of 2% will give policymakers more leeway to leave interest rates at their record low.

Carney told the committee Britain's return to growth was sufficient to justify resisting calls to increase the quantitative easing (QE) stimulus programme, which Threadneedle Street has held steady for the last two years.

MPs have accused Carney of establishing a highly technical policy of forward guidance that relies on several caveats, or knockouts; this reliance has, they say, undermined the simplicity of the message. Forward guidance includes clauses that allow the bank to push up interest rates should it believe inflation is likely to increase sharply.

Markets have estimated that interest rates will need to rise in 2015 in response to a sustained increase in GDP and higher-than-expected inflation.

Carney said forward guidance had reassured households and businesses that credit would remain cheap until the economy was in better shape.

"Forward guidance is having an effect in the real economy. My experience, having met with more than 300 businesses around the country, is that business people understand forward guidance well. This is confirmed by the reports of our network of agents across the nation," he said.

"What matters most for households and businesses is not market expectations of interest rates, but what actually happens to bank rate now and in the future. That is because the interest rates on 70% of mortgage loans to households and more than 50% of loans to businesses are linked to bank rate."

Lord Lawson, the former Tory chancellor, said he was concerned that the central bank's QE programme to stimulate the economy would be maintained long after interest rates began to rise. He was responding to comments by Carney restating the bank's long-held policy that interest rates should increase before the sale of assets under the QE programme.

Lawson, who wants the bank to start selling the QE programme's £375bn of government bonds, said there was disquiet about the long-term effects of QE, which had artificially forced down the interest rate on government debt.

Carney said interest rates would need to rise to cool the economy ahead of a sale of government bonds.

Sterling to go plastic, Bank of England decides

New polymer banknotes to be introduced, beginning with Sir Winston Churchill £5 note in 2016

The Bank of England will announce plans on Wednesday to press ahead with switching to plastic banknotes, starting with the new Sir Winston Churchill £5 note in 2016.

The decision on polymer notes will mark the beginning of the end for 320 years of paper notes from the Bank. The move by Threadneedle Street follows Bank governor Mark Carney's native Canada, where plastic notes are being rolled out, and Australia, where they have been in circulation for more than two decades.

Bank officials have been touring shopping centres and business groups around the country with prototype notes to canvas public opinion and the final decision is due todayon Wednesday.

The Bank has promoted its polymer notes, featuring a see-through window and other new security features as less threadbare and tougher to counterfeit.

It has sought to quell concerns about the environmental impact of printing on plastic by suggesting they can last up to six times longer than the cotton-paper notes in circulation at the moment. The durability will also compensate for the higher production costs and save an estimated £100m, the Bank claims.

Its laboratory tests showed polymer banknotes only begin to shrink and melt at 120C, so they would fare better in washing machines but could be damaged by a hot iron.

The initial plan is to introduce polymer notes one denomination at a time, with the Churchill note in 2016 at the earliest and then the £10 note featuring Jane Austen next in 2017. The notes will continue to feature the Queen and retain their current colouring.

As part of the preparation for this latest change, banknote officials have already been working with retailers and the operators of vending machines and cashpoints.

Link, which runs the UK cash machine network, said its machines would need new cassettes to hold the plastic notes, because they will be smaller, and not because of the change in material. The 15% reduction in size for Churchill notes compared with the current Elizabeth Fry £5 note brings English notes into line with sizes in other countries. But they will remain larger than existing euro notes and the different denominations of sterling will retain tiered sizes to help blind people differentiate between them.

The prospect of polymer notes has raised some concerns for the visually impaired, however, as the popular practice of folding or creasing notes in different ways to identify different denominations will no longer be possible. Polymer notes can be folded but will not stay tightly folded in a particular way.

The Bank's prime task as banknote issuer is to maintain confidence in its money, and the move to polymer is expected to make life drastically more difficult for counterfeiters.

Advances in commercially available laser and inkjet printers over the past decade have helped criminals to produce fakes quickly and more cheaply.

The Bank concedes no note is counterfeit-proof but says the polymer notes will be slower and more expensive to copy.

The notes will be produced at the Bank's ultra-secure plant in Debden, Essex, by a private contractor.

The job is expected to go to either De La Rue, the existing maker of BoE notes, or Innovia, which manufactures most of the polymer notes currently in circulation around the world. The Bank has ruled out importing plastic money from China.

The British Plastics Federation welcomed the Bank's move towards polymer notes. "It's essential all the plastic banknotes are made in the UK. Why not make coins out of plastic? It will save wear and tear on our pockets," said director-general Peter Davis.

Sale of Lloyds Banking Group stake left Treasury £230m down

National Audit Office has scotched claim by George Osborne that Treasury made a profit of £60m from selling Lloyds shares

Taxpayers took a hit of at least £230m through the sale of a stake inLloyds Banking Group, the National Audit Office said on Wednesday, in a report that contradicts government claims that it a made a profit on the privatisation of the bailed-out institution.

On the day the 4.2bn shares in Lloyds were sold in September George Osborne tweeted: "Confirm have sold 6% of Lloyds shares at 75p. Profit for taxpayer & important step in plan to get their money back and repair economy."

The independent state auditor cast doubt upon the claim that a profit of £60m had been secured from selling off 6% of the state-owned stake in the bank, after it examined the borrowing costs incurred by the government when it bailed out the banks in 2008.

"Taking account of the cost of borrowing the money to buy the shares, there was a shortfall for the taxpayer of at least £230m," the NAO said.

Even so, it concluded that the transaction represented value for money. It said the Treasury should take the cost of financing the bailout into account when deciding whether to hold on to shares in Lloyds rather than selling them. The government is yet to sell off any of its 81% stake in Royal Bank of Scotland.

Its calculations could suggest that if the remaining 33% stake in Lloyds were sold off at a similar price and in a similar way then the loss to the taxpayer on the bailout could amount to £1.5bn.

The NAO's calculations show the Treasury could have claimed a higher profit of £120m – using a lower average buying price of 72.2p a share rather than 73.6p – by taking into account fees paid by Lloyds to the Treasury.

The chancellor has said that the next tranche of Lloyds shares is likely to be sold off to the public. The NAO said the move was ruled out in September because it would have taken six months to conduct a share sale this way and might not have produced the best return for taxpayers.

The NAO report, which backs the decision to sell the Lloyds shares and the way the sell-off was conducted, sheds some light on the processes considered by UK Financial Investments, which looks after taxpayer stakes in the bailed-out banks.

The financial secretary to the Treasury, Sajid Javid, focused on the NAO conclusion that the sale was value for money. He said: "The proceeds from the sale have reduced the national debt by over half a billion pounds but, as the NAO also rightly points out, the country has had to pay a high price for the extra debt it has taken on because of the financial crisis."

The NAO said that during 2012 and 2013 UKFI was approached by three potential purchasers and informal discussions took place but no deal concluded. Instead UKFI had concluded a sale to institutional investors was the best option.

Executives from UKFI have previously revealed that they ruled out selling the stake at a price above 75p because demand would have fallen away and it would have required selling 60% of the shares to institutions seen as shorter-term investors, such as hedge funds.

Such short-term investors ended up with 20% of the shares sold after approval from the chancellor. The NAO attempted to analyse if the shares that had been bought had been quickly sold on and found that while one institution had reduced its shareholding by about 10%, there had been no change in two institutions' holdings, and one institution had increased its holding by about 20%.

Amyas Morse, head of the NAO, said: "The programme of sales of the taxpayers' holdings of bank shares has got off to a good start. Sale options were reviewed thoroughly and UKFI looks to have got its timing right. The sale took place when the shares were trading close to a 12-month high and at the upper end of estimates for the fair value of the business".

António Horta-Osório, the boss of Lloyds Banking Group, was handed a £2.3m share bonus last month because of the rise in the bank's shares which closed last night at 76p.

UK housebuilders counter Ed Miliband's land-hoarding claim

Plots are developed as soon as they have planning permission and 557% profit rise 'comes from very low base'

Britain's housebuilders have launched a scathing counter attack againstEd Miliband's claim that they are hoarding land for profit.

The industry said plots are built on as soon as planning permission is secured, and argued that the 557% increase in profits among the nation's four biggest housebuilders this year comes from a very low base following the financial crisis.

Pete Redfern, chief executive of Taylor Wimpey, said: "The industry is only just returning to the point where it is meeting its cost of capital following the most prolonged downturn in housing history.

"The comparison used for profitability is against a point where many in the industry were loss making, so a percentage improvement is rather meaningless."

Britain's chronic housing shortage is expected to push up prices by as much as 8% next year according to the property website Rightmove, unless a flood of new properties are built.

The biggest four developers by turnover – Barratt, Berkeley, Persimmon and Taylor Wimpey – have a collective land holding of almost 300,000 plots.

Miliband is accusing housebuilders of holding on to land to push up values, and claims some "stick-in-the-mud councils" are blocking development.

Redfern strongly rejected the Labour leader's accusation that housebuilders are hoarding land.

"We continue to start all sites as soon as possible once an implementable planning permission is received. Taylor Wimpey specifically and the industry as a whole have only a tiny percentage of sites that have a planning permission, where construction has not been started."

A spokesman for the Home Builders' Federation (HBF), the industry's trade body, said: "Developers don't land bank, all the evidence is there. As soon as developers get a planning permission they want to start on site. Developers are not land hoarders."

One major housebuilder said companies in the sector would be perceived as hugely risky and lose investment if they did not have sufficiently long land bank holdings of typically more than four years.

The HBF said the industry would work with Michael Lyons, the chair of Labour's new independent commission on housing, to improve understanding of the issues.

"We are looking to work with the Lyons Commission to help them understand the complexity of housing delivery going forward."

Lyons said the country needed to build more than 200,000 homes a year by 2020 if demand was to be met and the backlog of under-supply addressed.

Shares in the sector were down on Monday morning, with Persimmon shares 1.7% lower, Barratt down 0.9% and Taylor Wimpey off 0.2%.

Monday, 16 December 2013

House prices could rise by 8% next year, says Rightmove

Number of new properties failing to keep pace with transactions, with prices in London expected to rise by another 6%

House prices could rise by as much as 8% next year unless there is a flood of new properties on to the housing market, according to theproperty website Rightmove.

Its outlook for 2014 predicts that the number of sales and the pace of house price inflation will be up on this year. Rightmove forecasts average asking prices will rise by 6-8% in England and Wales compared with 2013 as the number of new properties coming on to the market fails to keep pace with transactions, putting a further squeeze on supply.

"There's a listing gap to fill. While sales transactions are up 13% so far in 2013, the number of newly listed properties is only up by 2%," said Miles Shipside, Rightmove director and housing market analyst. Rightmove said prices rose 5.4% this year.

Rightmove's latest monthly report on the housing market showed the average asking price in December was £241,455, down slightly on November. In month-on-month terms prices slipped back 1.9%, reflecting a typical winter slowdown but the smallest December fall since 2006.

The website, which advertises about 90% of all homes being sold by estate agents in the UK, said marked local variations in price movements would continue next year. It predicted that some towns and cities would see bigger price rises than the regions around them – a pattern that was seen this year within the more prosperous southern markets where places such as Bath, Bristol, Cambridge and Oxford all pushed up regional averages.

Sunday, 15 December 2013

Standard Chartered forced by Bank to strip top exec of risk role

The Bank of England has forced Standard Chartered to strip its finance director, Richard Meddings, of his responsibility for risk at the emerging markets focused lender

The Bank of England has taken unprecedented action to strip a senior banker of key responsibilities due to concerns over potential conflicts.

Richard Meddings, group finance director of Standard Chartered, has been forced to give up oversight of the lender’s risk department under pressure from officials at the Prudential Regulation Authority (PRA), which is run by the Bank of England.

Mr Meddings is one of the most respected finance directors in the FTSE 100, and the PRA’s action is a sign of the tough approach being taken by regulators to ensure direct lines of accountability at the top of Britain’s largest banks.

The PRA is understood to have told Standard Chartered, the emerging markets focused bank, that it was “not happy” with Mr Meddings’s role, leading the lender last month to confirm it would hand responsibility for risk to its chief executive, Peter Sands.

The move is likely to cause shockwaves in the City as Standard Chartered got through the financial crisis without any taxpayer support and Mr Meddings was one of the main architects, along with Mr Sands, of the 2008 rescue of the British banking system.

One source with knowledge of the talks between the PRA and Standard Chartered said the regulator decided to act as it was concerned about the potential conflict between Mr Meddings’s finance responsibility and his duty to oversee the risk operations.

A spokesman for Standard Chartered stressed the risk unit would continue to be run by Richard Goulding on a day-to-day basis, adding: “This governance change ensures we are well placed to meet future regulatory requirements.”

Earlier this month, Standard Chartered warned its profits were unlikely to meet market expectations as it signalled the end of a decade-long run of record profits.

The profit warning followed a difficult 12 months for the bank in which it was fined $667m (£409m) in the US after an investigation into money-laundering found it had broken sanctions with Iran and other rogue states. More recently the lender took a $1bn writedown on its struggling Korean business, which has been hit by a series of labour disputes.

The interventionist approach taken by the PRA comes as regulators look to ensure important areas such as risk management are properly accounted for in the wake of several reports into the financial crisis that have recommended changes to the way senior bankers are overseen.

The final report of the Parliamentary Commission on Banking Standards called for a new approval regime for senior bankers that would see executives regularly reviewed if they took on additional responsibilities.

Andrew Tyrie MP, who chaired the Commission, said the PRA’s action against Standard Chartered was a welcome development.

“The risk function is crucial in banks and it’s equally crucial the job should be done at a senior level, in that a person should know they are personally responsible. It looks as if the regulator is pushing in the right direction,” he said.

Thursday, 12 December 2013

Wage rises outpaced by inflation for fifth year running, official data shows

The average pay rise improved to 2.2% – from 1.5% a year earlier – but still failed to match inflation at 2.4%
Wage rises failed to keep pace with inflation for a fifth successive year, according to official figures that show a recovery in pay in the year to April 2013.

Average pay rises jumped to 2.2% from the previous year's total of 1.5%, but the recovery still left workers worse off after prices rose by an average 2.4%.

Much of the rise in wages was distorted by City bankers and other well-paid staff delaying salary rises and bonus payments to take advantage of the cut in the top rate of tax from 50p to 45p in the £1.

The decision of people earning more than £150,000 to wait for a change in the tax rate before taking some of their pay could account for much of the failure of average pay to recover during 2012.

The Office for National Statistics said median average annual earnings before tax for full-time employees, where workers were in the same job for at least a year, was £27,000. This was an increase of 2.1% compared with £26,500 in the year ending 5 April 2012.

Median gross annual earnings for men were £29,300, up 1.9% from 2012, and for women were £23,600, up 2.2%. But despite the higher pay rises for women, the pay gap between women and men widened from 9.5% to 10%.

More women work in part-time jobs than men and much of the recovery in employment until the spring this year was in part-time work, probably leading to a lower gross figure. Low pay remains a feature of British working life, according to the figures.

The ONS found there were 203,000 jobs held by over-21s with pay less than the national minimum wage, in breach of low pay rules.