Planning applications validated by EDDC for week beginning 20 December

6m UK homes may be unable to pay energy bills after price hike, charity warns

The number of UK households living in fuel poverty could climb to the highest level on record by this spring unless the government moves to soften the blow of a looming record high energy bill hike, according to a fuel poverty charity.

Jillian Ambrose 

Around 4 million homes in the UK were already classed as fuel poor before a surge in global energy market prices triggered one of the steepest ever energy bill hikes in October, but campaigners are braced for a record increase in the numbers unable to pay their energy bills following another hike this spring.

The charity National Energy Action warned that the double blow to household bills could cause at least 2 million more homes to slip into fuel poverty compared with the start of 2021, taking the total to 6 million households. This would be the highest level of fuel poverty across the UK since records began in 1996.

The looming energy price hike has not yet been finalised by the regulator but Adam Scorer, chief executive of National Energy Action, told the Observer that the number of households in fuel poverty would “skyrocket” in April. This is expected to deepen the UK’s national energy crisis and compound the “year of the squeeze”, predicted by the Resolution Foundation last week, which threatens to trigger a “cost of living catastrophe” for hard-pressed families.

Households are already paying record prices to put petrol in their cars, and can expect the cost of consumer goods to rocket as fuel prices and supply-chain disruptions take their toll on major companies.

“Those on lowest incomes and in less-efficient homes will not just face financial hardship but intolerable living conditions, ill health and, for too many, a shortened life,” Scorer said. “This is not just conjecture. It will happen and we’ve had enough time to see it coming and act.”

Energy market prices climbed steadily over 2021 before leaping to record highs in October and fresh record highs in December. The market rally has fuelled one of the steepest energy price hikes in the history of the UK’s liberalised energy market.

Ed Miliband, shadow secretary of state for climate change and net zero, said: “Working people are being hit by a cost-of-living crisis which has seen energy bills soar, food costs increase and the weekly budget stretched. The government must take urgent action to support those people struggling to pay bills.”

Senior officials from the Department of Business, Energy and Industrial Strategy, the Treasury and No 10 have met with the industry regulator, Ofgem, and executives from the UK’s biggest energy suppliers in recent weeks to thrash out a plan to avert the looming national energy crisis. No measures have so far been agreed, and further meetings are scheduled for this week.

The government’s energy price cap could allow the average energy bill to rocket further to almost £2,000 a year when it is reset in April, from £1,138 in the previous year, to help cover the cost of dozens of failed energy suppliers, according to industry experts.

Labour has called for VAT on energy bills to be cut as a first step to help every household this winter, and the party would also “ramp up ambition with our plan to retrofit 19 million homes” to make them more energy efficient and help bring down household bills.

“It is a moral and social scandal that fuel poverty exists in modern Britain. But with national leadership, we can beat it – and ensure everyone has the warm, secure home they deserve,” Miliband added.

A government spokesperson said protecting consumers was its “top priority” which is why it was keeping in place the energy price cap, alongside schemes such as the £500m household support fund, the warm home discount, winter fuel payments for over-65s and cold weather payments.

Meanwhile several Conservative politicians have written to the prime minister, urging him to scrap taxes on rapidly rising energy bills. About 20 Tory MPs and peers have written in the Sunday Telegraph asking for help for consumers facing fuel poverty, including Craig Mackinlay, chair of the net zero scrutiny group of Conservative MPs, former work and pensions secretary Esther McVey, and MPs Robert Halfon and Steve Baker.

They argue that high energy prices “are felt most painfully by the lowest paid” and suggest VAT on energy bills and environmental levies which fund renewable energy schemes.

Mortgages at 7 times salary for first time since Northern Rock

Mortgages for up to seven times a person’s salary will be offered for the first time since Northern Rock was nationalised in 2008.

George Nixon 

The new lending criteria, from the online lender Habito, available from yesterday, has raised fears of people taking on huge debt at a time of economic uncertainty and rising house prices, with energy bills forecast to jump by 50 per cent in the spring.

Habito, which in March launched Britain’s first 40-year fixed-rate mortgage, said that it would lend up to £1.5 million to borrowers. A deposit of 10 per cent of the purchase price is required.

It is open to couples buying jointly but only one of them will be able to borrow seven times their income; the multiple for the other income will be limited to five.

Since the 2008 financial crisis, banks have largely only lent up to four times someone’s income.

Under post-crisis Bank of England rules, only 15 per cent of a lender’s mortgage book a year can be lent out to people borrowing more than four and a half times their income.

The announcement came on the day that the former HSBC chairman Sir Douglas Flint warned borrowers against taking out too much debt to get on the property ladder because interest rates could rise several times over the coming 12 months.

“I personally don’t think this is the time to encourage people to overleverage [borrow too much] in the housing market,” he told The Mail on Sunday. “House prices, as a multiple of average income, are at an all-time high.”

Someone earning £80,000 would be able to borrow £560,000 under Habito’s affordability criteria, enough for a 90 per cent mortgage on a home worth about £622,000.

If they were limited to borrowing four and a half times their income, the largest loan they could borrow would be £360,000 to buy a £400,000 property with a 10 per cent deposit. It is available on fixed-rate mortgages of between 15 and 40 years. The average term is 25, Habito said.

Andrew Montlake, from the broker Coreco, said: “You could find yourself stuck with the lender for the long term, unable to remortgage elsewhere if circumstances change.

“It may seem tempting just to use this for a short-term solution to getting on to the housing ladder but that could prove an expensive mistake.”

Borrowers must have a 12-month employment history, and either earn £25,000 and be employed in certain sectors such as the police, fire and health services; or be accountants, engineers, lawyers or teachers; or earn £75,000 a year.

James Daley, of the consumer group Fairer Finance, said: “The most important thing if Habito start doing this is they need to make sure that they are lending in a way that is affordable for borrowers.

“I do think it’s a dangerous moment. We could have seen this emerge a few years ago, but the timing when we appear to be in a time of rising interest rates doesn’t seem the best. If they get it wrong, they’ll be the face of the next borrowing crisis.”

Daniel Hegarty, Habito’s chief executive, said: “As a lender that considers every applicant’s case individually we’re confident that with suitable criteria in place, in the right circumstances, eligible customers can safely and securely boost their borrowing to buy the home that truly suits their needs and their life plans.

“Fixed-for-life mortgages are already popular in other parts of the world, including [the US] and Europe, and we agree with the British government that longer-term fixed-rate mortgages can help steady the housing market by providing more certainty to borrowers.”

A Tale of two Headlines about Developers and Housebuilding

  1. Britain’s biggest housebuilders make £7bn of profit in pandemic
  2. Shortages and planning delays hinder UK housebuilding – survey

Britain’s biggest housebuilders make £7bn of profit in pandemic

Britain’s biggest housebuilders rake in more than £7bn of profits in two years as coronavirus pandemic boosts property demand

  • Buyers stormed into the market in search of more spacious homes 
  • This so-called ‘race for space’ boosted profits at a string of developers 
  • Nationwide said house prices rose by more than 10 per cent in 2021 

Calum Muirhead 

Britain’s biggest housebuilders have raked in more than £7billion of profits in two years as the pandemic boosted property demand. 

Buyers, encouraged by a stamp duty holiday and record low interest rates, stormed into the market in search of more spacious homes. 

This so-called ‘race for space’ boosted profits at a string of developers from Barratt Developments and Taylor Wimpey to Redrow and Bellway. 

Analysis by the Mail shows eight housebuilders in the FTSE 100 and 250 are on course to have made more than £7billion in profits across 2020 and 2021 – according to reported pre-tax profit figures and forecasts by analysts. 

The property market froze when the pandemic struck in early 2020 but roared back as restrictions eased and a stamp duty holiday was granted. Last week Nationwide said house prices rose by more than 10 per cent in 2021 – the biggest annual increase since 2006. 

The price of an average property now stands at a record £254,822 – up 16 per cent since the start of the pandemic. 

Persimmon, the biggest housebuilder listed on the London Stock Exchange, is expected to amass a profit of more than £1.76billion over the two-year period. 

Barratt Developments is forecast to achieve nearly £1.3billion, while London-focused developer Berkeley is predicted to make just over £1billion and Taylor Wimpey £994m. 

Bumper profits are also expected among the mid-cap builders, with Newcastle-based Bellway in line for nearly £865m, Welsh company Redrow £577m and Vistry Group, formerly Bovis Homes, £432m over the two-year period. 

The weakest of the bunch is Surrey-based Crest Nicholson, which is only expected to report £116.1m in profits. 

However, Covid has not helped share prices in the sector, with most builders struggling to recover pre-pandemic levels. 

There are signs that the boom time could be coming to an end. Property transactions fell 52 per cent month-on-month in October, shortly after the end of the stamp duty holiday. 

While the figure rebounded by 24.3 per cent in November, it was still 16.4 per cent lower than at the same time in 2020. 

The cooling could also be accelerated by last month’s interest rate rise, which will push up the costs of mortgages.

Shortages and planning delays hinder UK housebuilding – survey

Worsening shortages of materials and labour combined with planning delays will hamper efforts to increase housebuilding in Britain in the next 12 months, according to an industry report.

Julia Kollewe 

Planning remains a major barrier to increasing the supply of new homes over the next year, according to a survey conducted by the industry body the Home Builders Federation, the construction finance provider Close Brothers Property Finance and the builders merchant Travis Perkins.

Delays in securing planning permission were cited as a problem by 94% of small to medium-sized developers.

Boris Johnson’s government has pledged to increase housebuilding to 300,000 new homes a year by the mid-2020s to tackle Britain’s chronic housing shortage. The 243,000 homes built last year was the highest number in 30 years, but the report casts doubt on the target being met.

Seventy-eight per cent of housebuilders said the supply and cost of materials such as bricks, timber and cement, posed a huge problem, compared with just 20% this time last year.

“In March we were paying £9 a sheet for 9mm oriented strand board [a type of engineered wood], and up until recently we were paying £32 a sheet. Every single product has gone up,” said one firm that took part in the survey. Another said that in order to secure materials in short supply they have to be bought in bulk in advance, using cash that could be used elsewhere in the business.

Worker shortages and rising wages were cited by 59% of builders as a major issue, compared with 19% last year.

The coronavirus pandemic has sparked a global supply chain crisis that has led to ships being stuck at ports and shortages of goods ranging from cars to bricks.

The UK construction industry has grappled with shortages of skilled workers for years as a result of ageing workforces, but the double shocks of Brexit and Covid have exacerbated these problems.

Many firms highlighted the lack of eastern European workers at the lower end of the trades. The labour shortages have resulted in considerable wage inflation, something that smaller firms are less able to absorb than larger builders.

An estimated 800,000 people are employed in the UK’s homebuilding industry either directly or indirectly in planning, design and construction of new properties.

The report did contain one bit of good news: an increase in the number of apprentices employed by housebuilders.

Almost 60% said they employed apprentices in their business, compared with just a third last year. Firms in the north were leading the way, with 88% hiring apprentices, compared to 59% in the Midlands and 52% in southern England.

Stewart Baseley, executive chairman of the Home Builders Federation said: “SMEs [small and medium enterprises] are literally having to put their businesses on hold whilst local authorities delay the start of construction as their planning departments don’t have adequate capacity to process applications effectively. Allied to concerns on materials and staff, planning delays threatens the demise of even more SME builders.”

Many of those surveyed felt that the planning process disadvantaged smaller firms in particular, partly because larger builders have the financial clout to absorb the costs of long and complex planning processes, and because councils make the planning process smoother for large housebuilders, as larger schemes enable local housing targets to be met more easily.

Frank Pennal, the chief executive of Close Brothers Property Finance, said: “The combined challenge of both labour and material shortages, rising costs and planning delays are a serious risk to the delivery of new homes across the UK.

“Developing homes takes months and years and while some of these issues might only be short term, they risk leaving a lasting legacy on the provision of new homes.”

Liz Truss ‘insisted’ on £1,400 taxpayer-funded lunch at Tory donor’s private club

Ms Truss is reported to have previously used the same venue to host “fizz with Liz” dinners with MPs and “biz for Liz” receptions with potential donors, in preparation for a likely leadership bid.

[Has Simon Jupp had his “fizz with Liz” invite yet or does he only merit “tea with Truss” in the Commons tea-room? – Owl]

Liz Truss insisted on hosting a lunch at an “incredibly expensive” private club owned by a Tory donor, overruling her officials’ advice to go somewhere more suitable.

Leaked correspondence has revealed the foreign secretary “refused to consider anywhere else” and requested taxpayers’ cash for a £3,000 event with Joe Biden’s trade representative.

Her civil servants were so alarmed at the cost – and the venue owners’ close links to the Tories – that the proposal was referred to the top official at the Department for International Trade (DIT).

But Ms Truss, then the trade secretary, “explicitly asked that we book 5 Hertford Street”, which is owned by the millionaire aristocrat Robin Birley, a donor to Boris Johnson’s leadership campaign and the half-brother of Zac Goldsmith, the environment minister.

The venue agreed to reduce the bill to £1,400, but on condition of immediate payment – which meant civil servants had to use an emergency process to pay up straight away.

A receipt showed Ms Truss and her companions enjoyed two bottles of dry gin, three £153 bottles of Pazo Barrantes Albarino, a Spanish white wine, and two bottles of the French red Coudoulet de Beaucastel, at £130 a bottle.

The correspondence, revealed by The Sunday Times, comes as Ms Truss launches a little-disguised campaign to succeed the prime minister, should he be toppled by disillusioned Tory MPs.

The lunch, last June, was condemned by Labour MPs. One, Nia Griffith, tweeted: “Yet again Tory Minister seems to have had scant regard for concerns raised by professional civil servants.”

And Luke Pollard alleged: “One rule for the current PM and those wanting to be the next Tory PM and another for the rest of us.”

Ms Truss was accompanied by nine other people, including the trade representative Katherine Tai, as the UK sought to speed up talks for a post-Brexit trade deal with Washington.

However, President Biden has slammed the brakes on negotiations – and has also refused to lift tariffs on UK steel, even as an agreement was reached with the EU.

Often considered to be London’s most exclusive club, 5 Hertford Street hosted Prince Harry’s first date with Meghan Markle, but posted six-figure losses last year.

Ms Truss is reported to have previously used it to host “fizz with Liz” dinners with MPs and “biz for Liz” receptions with potential donors, in preparation for a likely leadership bid.

An email shows an official described the club as “obviously incredibly expensive and more than I understand we’d usually expect to pay for such a venue”.

Colleagues proposed “another option – a Soho restaurant called Quo Vadis – which costs only £1,000”, it stated.

The email continued: “However, [the special adviser] refused on behalf of SoS [secretary of state] to consider anywhere else and is insisting that we book 5 Hertford Street and claims SoS would find Quo Vadis inappropriate.”

One official explained the cost would have to be released eventually, but added: “Should this raise any enquiries upon publication I am confident that we can justify the spend as we have to pay immediately to guarantee the discount which represents real VFM [value for money].”

A DIT spokesperson said: “This was a diplomatic working dinner attended by the previous international trade secretary, senior UK officials, and US counterparts from our largest single trading partner.”