ROOF Blog archive

The Financial Services Authority (FSA) has written to the chief executives of all mortgage lenders giving them until 31 January to treat customers in arrears fairly or face action. It is the second letter the FSA has sent recently and follows a review which found ‘weaknesses’ in arrears and repossessions handling, particularly from specialist lenders. The letter states that the FSA expects mortgage lenders to urgently review their current policies and procedures to stop adopting a ‘one size fits all policy’.

The Times has learnt that only 15 houses qualified in the first year of a £15 million project to waive stamp duty on the building of hundreds of zero-carbon homes. Critics of the scheme said it failed because the government’s specifications for a zero-carbon home are not practical and ‘too restrictive’, and have questioned the government’s plans that all new homes should be constructed to a zero-carbon standard by 2016. Opponents have said that it would be cheaper and better to subsidise improvements to the air-tightness of existing buildings, but a Treasury spokesperson said that the stamp duty relief has always expected to be picked up in small numbers in the first few years.

House building rates have almost halved during the past year, pushing them to their lowest level for three decades according to government figures. Only 22,000 homes were started in England between July and September, 48 per cent fewer than during the same period last year, and substantially fewer than the previous quarter which saw the number of homes completed down 18 per cent. Housing spokespeople from the Conservative and Liberal Democrat parties said the government’s pledge to build three million homes by 2020 was ‘crumbling’ and called the target a ‘pipe dream’. At the current rate of house building, the government would miss the target by seven years.

Following a ruling by the Employment Tribunal yesterday, millions of carers will have the right to claim against employers who discriminate against them in refusing to offer flexible working. The worker was forced to resign because she wanted to spend more time to care for her disabled son and launched a ‘discrimination by association’ claim. The result has paved the way for approximately 2.5 million people in Britain who are carers as well as maintaining jobs will be entitled to the same treatment as other staff.

A new report out yesterday has highlighted the barriers to independent living for young people with learning disabilities. The research warns that the housing requirement of young people are often overlooked or missed off care assessments altogether. The report shows that thinking ahead to get housing considerations through the community care assessment gate is essential and should be pushed at the transition planning review when students are 13-years-old. The report also argued that care providers and local authorities must make sure their employees have adequate training and the right information so housing needs - both current and in the future - are reviewed regularly and as early as possible.

Standard & Poor’s (S&P) has recorded its highest ever level of arrears in sub-prime mortgages. The ratings agency said that arrears have increased by 24 per cent year on year as a result of house price decline, refinancing problems, and a lack of affordability. Mortgages taken out in 2005 and 2006 now have the highest 90+ day arrears rates and these are ‘rising sharply’. An analyst at S&P said the recent cuts in interest rates should improve the affordability of mortgage payments, however a worsening economic environment is likely to result in further increases in repossessions. It also found that the average time from repossession to sale of properties was around five months.

The slump in house prices eased slightly in November according to the Nationwide’s index. Compared with October’s fall of 1.3 per cent, this month’s price drop of 0.4 per cent ‘moderated significantly’ recent price falls; however, compared with last November’s figures, house prices were down 13.9 per cent. The average house price is now £25,000 less than the previous year, although Nationwide say they are still £25,000 higher than they were in November 2003. It has been estimated that the UK house building industry has shrunk by half since the start of the credit crunch in summer last year.

Meanwhile homeowners desperate to attract buyers have cut asking prices by an average of nearly £17,000 during the past fortnight. Experts say that the cuts indicate a realisation that the housing market is in a dire straight and reverses recent reported increases in prices by owners trying to offset discounts demanded by buyers. In some parts of London, homeowners have dropped asking prices by more than £100,000 according to Globrix’s research.

Treasury minister John Healey warned local councils they would receive no more money than the funding agreement already struck allowed, while council taxes could be capped to stop them passing on higher costs. Councils, particularly in London, have been looking for greater funding to help in the economic downturn, but Healey said that the government would stick with its three-year deal under which councils will receive a 4.2 per cent increase in funding for 2009/10, and a 4.4 per cent increase in 2010/11, as they were not doing enough to make their operations more efficient. He added that reining in council tax was a government ‘top priority’.

More than a third of houses in England still fail to meet the decent homes standards according to the government’s own figures. Research from 2006, containing the latest data, show there were 7.7 million homes that did not meet the standard - or 35 per cent of the total. In the private rented sector nearly half of all homes were non-decent, whereas homes owned by housing associations were the most likely to be decent with only 12.8 per cent failing. The figures are worse than the 2005 survey. The government has set a target that all dwellings should meet the decent homes standard by 2010.

In other research, a government think-tank has found that moves towards sustainable energy in the UK are being hampered by old ways of thinking. Foresight looked at how the country’s buildings and spaces will need to evolve to help cut carbon emissions and argues that the UK is ‘locked in’ to using certain forms of energy not because they are better but because they have historically dominated over the others. This has created inertia, as a new form of energy means changing the infrastructure and regulations to support it. The research suggests buildings should have an energy MOT, suggests moving to decentralised energy systems, and wants buildings upgraded to be more carbon neutral.

Diversity should be at the heart of the development process, and local authorities should look again at the different ways in which people experience buildings and places. New research from the Commission for Architecture and the Built Environment (CABE) argues that planning and architecture professionals need to mirror the diversity of the society they serve, while locals authorities should ‘go beyond their public duties’ on race, gender and disability equality and exceed legal requirements.

The Homes and Communities Agency (HCA) will do everything it can to change the way that housing is supplied and would encourage the development of housing schemes that mixed affordable rented housing with homes at intermediate rents, as it plans to buy land from house builders in a bid to build new developments and boost the stagnant housing market. The agency plans to make land available for development, unlock surplus supplies of public sector land and target the acquisition of private sector land banks.

The National Housing Federation (NHF) has called for a temporary ban on tenants buying social housing to help stop the slump in affordable housing stock. The NHF said that twice as many affordable homes had been sold off than had been built in England between 1999 and 2007, and added that affordable stock had fallen by an ‘unsustainable’ 300,000. Since 1999 the number of social houses fell from 4.3 million to 3.9 million, while the number of households on waiting lists had risen by 61 per cent to 1.61 million. A spokesperson for NHF said that one in 13 of every household in the country is on a waiting list for an affordable rented house, and this is likely to increase to one in ten. The government said it disagreed with the proposal as right to buy had helped thousands of households own their own homes.

The National Housing Federation (NHF) has welcomed the government’s pre-budget report that money for social houses will be brought forward, but called for the funding rules to be changed immediately. The NHF said that unless money is used to pay builders of new social homes higher grant rates, the supply of new affordable housing could dry up next year. HAs currently pay around 60 per cent of the costs of building new social homes through raising cash from private lenders and selling homes on the private market, with government grants covering the remaining 40 per cent. However, the credit crunch has affected badly the ability of the associations to sell on the open market, and the money that the government is bringing forward must be used to pay for increased grants.

Meanwhile new figures for housing association applications to start building new homes is five per cent lower than for the same period last year, according to the National House Building Council (NHBC). New home starts in total in October fell to the lowest level since the early 1980s, and the future looks even bleaker as the NHBC predict as few as 85,000 homes being registered in the 12 months to March 2009, compared with 184,000 for the same period last year. A spokesperson from the NHBC also warned that the country risked losing a generation of skilled workers due to the downturn in demand.

According to a report in The Times, the new lending panel announced in Monday’s pre-budget report to be chaired by chancellor Alistair Darling and Peter Mandelson, business secretary, is to insist that banks sign up to a new code of good lending practice. The panel, set up to monitor lending to business and households, expect the code to be voluntary. But The Times said it had been told that if banks do not improve their performance they could become a legal regulation to be policed by the Financial Services Authority. Mervyn King, governor of the Bank of England admitted that despite the money already put in to the banking system by the government it may not be enough: ‘We may not have come to the end of the recapitalisation process’.

The Organisation for Economic Cooperation and Development (OECD) warned the Bank of England (BoE) needed to press ahead with interest rate cuts, as the treasury is running out of options to produce further tax or spending boosts to help the ailing British economy. Britain has been identified as being among several economies that look particularly vulnerable along with Hungary, Iceland Spain and Turkey. The OECD urged the BoE to continue its policy to cut rates as the ‘negative wealth effects on household consumption from falling house prices and financial wealth may be greater than assumed’.

The Housing Corporation has signed a social housing funding agreement with an arms length management organisation (ALMO) for the first time. Stockport Homes is to receive £1.02 million from the Corporation to fund 17 new homes. Grant agreements were also signed with five other new partners including Barratts, Bovis, and Countryside.

The £9.6 billion regeneration project in the Thames Gateway will not be weakened by the economic crisis, Margaret Beckett said. Building targets for the area include 160,000 new homes by 2016. However, recent news shows that house building has virtually ground to a halt. Never-the-less Ms Beckett announced plans for a new ‘eco-quarter’ within the Gateway, where green technologies will be developed and tested, for the ‘Thames Gateway to become a showcase for sustainable living’ and a prime example of how government intervention and support is helping deal with the global economic pressures.

Alistair Darling announced details of the pre-budget report yesterday. Besides increasing pension credit, income support and jobseeker’s allowance, a number of measures were specified to help homeowners. The recently announced £200 million mortgage rescue scheme where the government buys a home and then rents it back to the former owners, which will help up to 6,000 vulnerable households and is available from January, is to be extended to include those with second charge mortgages also. He also announced an extension of the income support for mortgage interest scheme (ISMI) which helps homeowners pay interest payments on their mortgages if they become unemployed, which would be paid on the interest to loans of up to £200,000 now. A ‘lender panel’ is to be created that would monitor how mortgage companies lend to both individuals and businesses. The chancellor also said that mortgage lenders need to develop ‘creative and sustainable’ solutions to help borrowers stay in their homes such as mortgage holidays or reduced payments, and has told lenders to wait three months before taking action against borrowers unable to make their monthly repayments. Free debt advice to the value of £15 million will be provided, and £775 million of funding for a promised boost social housing will be fast-tracked from the 2010/11 spending review. By 2010 empty properties with a ratable value below £15,000 will be exempt from business rates, which the chancellor estimates could exempt as much as 70 per cent of empty buildings.

Sir James Crosby’s report into mortgage lending was released yesterday giving further impetus to the government’s financial bailout, concluding that lenders’ inability to obtain capital to lend to homebuyers was the ‘sort of market failure that might call for government intervention, perhaps even on a significant scale’. The report suggested that without help the shortage of funds would mean net new mortgage lending would fall below zero. As expected from the interim review, the Crosby report believes the government had to intervene with a ‘large injection of funding’ into the banking system including providing a temporary guarantee, by taxpayers, of mortgage-backed securities to fund further lending.

Improvements to mortgage funding can’t come soon enough for the British Bankers’ Association, which released data today showing that mortgage approvals last month fell by more than half from a year earlier - down 52 per cent on October 2007. The number of mortgage approvals for house purchases fell slightly between September and October this year, but it was still the second lowest number of approvals since the data started in 1997 and down two-thirds from its peak in July 2007. Stamp duty revenues have fallen 40 per cent in the last year also.

The Killian-Pretty review into speeding up the planning application system was published today and contained 17 recommendations to establish a faster and more responsive process. Among the recommendations are a presumption that formal pre-application discussions of major developments are held; making a clearer distinction between community infrastructure levy (CIL) and section 106 agreements; and delegating a larger percentage of applications to planning officers to decide without having to go to committee. A consultation period will now follow and the government must decide which recommendations to adopt and when. David Pretty one of the authors of the report said that the planning application process was too slow and was ‘bogged down in unnecessary red tape… It is crucial, particularly given today’s economic climate, that we tackle this problem.’

The Environment Agency has announced plans to generate enough renewable energy on its own land to power a city the size of York. Up to 80 turbines could be built on the agency’s property generating enough energy to save 200,000 tonnes of carbon dioxide and making up to £2.4 million in revenue each year. The news comes as chairman of the agency called on the government to follow Barack Obama’s example and launch a ‘green new deal’ for the UK economy to produce a long-term strategy for investing in renewable energy, environmental technology, energy efficiency and carbon capture and storage, including coal-fired power stations, and more use of wind, solar and tidal energy. Such a strategy will create jobs in renewable energy and green technology as we face a recession, where there will be ‘pressure to weaken environmental targets’.

A survey of 200 councils in England indicates that regeneration is the sector likely to be hit hardest in the economic downturn. 86 per cent of councils report delays or cancellations to regeneration projects, while 61 per cent said they had experienced delays to housing developments. The worst hit region was the North, where 91 per cent of councils said they had experienced delays or cancellations to projects.

The vast majority of tenants get on well with their landlord according to research by the Deposit Protection Scheme (DPS). Eighty-four per cent of tenants said they get on well with their landlord and nearly a quarter of those described their relationship with them as fantastic. Only 16 per cent of respondents said they did not have a good relationship with them. Since the DPS was established just over 880 cases out of 113,000 repayments have been resolved through the scheme.

And finally, house sellers are resorting to house swapping in order to move home, as a result of the financial crisis. A number of estate agents have been forced into launching a property exchange - matching the homes of people who want to trade up or down but who are unable to sell as the normal property chains remains broken. The operator of one scheme, launched just four weeks ago, said that vendors have been ‘very receptive’ to the concept, while a website with 3,000 properties registered on it has seen the number of visitors on it increase from ‘hundreds’ to ‘thousands’ a day.

House prices around the world fell for the first time in record during the last three months, falling an average of 0.3 per cent compared with the previous quarter. Britain was one of the worst performing of the 44 countries listed, recording falls of 4.6 per cent during the quarter, along with Latvia (6.2 per cent down), Norway (4.5 per cent) and Canada which had a drop of 4.9 per cent. More than half the countries in the index showed quarterly prices falls, with one third now also showing annual price drops.

Social landlords in the 20 areas with the longest social housing waiting lists have bought only 20 properties between them through the government’s £200 million rescue package. Just four local authorities have bought any stock at the national clearing house programme set up in May this year to allow providers to buy up private developers’ unsold stock. In total more than 1,500 homes have been bought across England, but just 18 were in the areas with the highest percentage of households waiting for a social home. A spokesperson for Communities and Local Government said there were more deals in the pipeline to buy up homes ‘at the right prices in the right places’.

Meanwhile, London Councils have called on the government to provide £350 million to help local authorities safeguard the capital’s housing market and provide 4,000 homes for rent. London Councils propose setting up a new housing agency, Homes for London, which would operate separately to normal council housing and which would help boroughs buy existing or planned housing from developers or housing associations which would be offered for five or ten years at intermediate or market rents. The tenants would have the opportunity to buy the property at the end of the tenancy, with profits distributed back to central and local government.

Nine UK building societies have had their credit ratings downgraded by agency Fitch as falling house prices and the worsening economy are ‘likely to hit profits’. Fitch said that it was particularly concerned with the large exposure of building societies to sub-prime mortgages, buy-to-let loans and high loan-to-value deals. The ratings of a society indicate the likelihood of it defaulting on its loan, while a lower rating makes it more expensive for that organisation to raise funds. A Building Societies Association spokesperson said that the downgrades would not necessarily lead to mergers.

Although Bank of England interest rates have been slashed to 3 per cent, many mortgage lenders still haven’t passed the cut on to borrowers, some of whom are paying 7 per cent or more. The ‘list of shame’ by the Guardian, lists Kent Reliance Building Society as topping the standard variable rate with a rate of 7.59 per cent, although it says this figure will drop next month, as do other lenders with rate in excess of 7 per cent. A spokesperson from the Building Societies Association defended some of its members saying there are a whole range of issues that impact on how a mortgage is priced, not just the Bank of England base rate.

This afternoon chancellor Alistair Darling will announce the pre-budget report that is expected to introduce tax cuts, including cutting VAT from 17.5 per cent to 15 per cent, while increasing government spending, in a boost to get the economy back on its feet. Also expected to be announced are a series of measure to stem the number of repossessions, which last week increased 12 per cent on the previous quarter, including a three months’ grace period before lenders start proceedings; allowing owners to sell parts of their homes to councils; and help with mortgage payments for the newly unemployed.

A growing number of older people are being denied proper access to housing choice according to the Home Builders Federation (HBF). Housing minister Margaret Beckett has been urged to ensure that older people are not forgotten in favour of first-time buyers and homeowners as the housing market crisis continues. The HBF said that significant social and economic benefits come from the provision of good quality specialist housing - not least that retirement housing frees up under-occupied family sized housing - with beneficial results to the whole housing chain.

To mark next week’s national empty homes week, the Empty Homes Agency (EHA) has launched a new website and called on the public to report run-down and empty homes, to help bring them back to use. There are enough vacant homes in England to house almost two million people and the EHA wants to make it easier to for people to report homes affecting their local area and encourages the public to report the homes to ‘send a huge message to the government and councils’ that action is needed now.

Rural communities are struggling to adapt to the ‘unprecendeted’ level of migration of non-UK workers into their areas, says charity Business in the Community.While migrants had brought a number of benefits, helped boost the economy and filled gaps left by Britons who ‘prefered to remain jobless’ there had been an increase of 186 per cent in their numbers in rural communities between 2003 and 2007, which was leading to tensions breaking out and posed challenges to community cohesion and in the provision of adequate housing and services.

According to research by the Times more than one in five homes have been put on the market because their owners cannot afford the mortgage repayments. A survey by the National Association of Estate Agents (NAEA) for the Times said that at least 5,000 properties a week are being put up for sale by ‘forced downsizers’, or people who are forced to move to smaller properties because of financial difficulties. Many estate agents said that at least 20 per cent of their sellers were having difficulties paying their mortgages. The number of househunters has also fallen, down 211 to 196 on average a month per agent.

The number of properties repossessed by mortgage lenders rose by 12 per cent to 11,300 in the third quarter of the year according to figures from the Council of Mortgage Lenders (CML). The number of borrowers in arrears also increased by 8 per cent from the previous quarter, while the number of repossession orders issued by the courts went up 3 per cent for the same period. The data indicated that 1.44 per cent of mortgages were at least three months in arrears by the end of September, up from 1.33 per cent at the end of June. The CML said its forecast had not changed in light of the figures but that it would be ‘premature’ to predict what might happen in 2009.

Mortgage lending rose 7 per cent in October according to the Council of Mortgage Lenders (CML). The figure is 44 per cent lower than in October 2007 and the CML said lending would remain weak over the next few months despite the recent interest rate cuts as consumer confidence has been affected. It also warned against placing too much significance on the October rise saying figures had not yet reached the bottom. This year is set to be known as the year which saw the biggest slump in house sales and prices on record.

Boris Johnson has pledged to help Londoners needing affordable housing and cut social housing waiting lists, in his £5 billion draft housing strategy being unveiled today. He said he would identify land belonging to the Greater London authority on which to build new houses, increase shared ownership schemes to help more people get on the property ladder and keep the target set out by Ken Livingstone to build 50,000 affordable homes within three years. Talking on Radio 4 he said that he wanted to remove the target that 50 per cent of all new developments built should be affordable, saying he wanted a more collaborative approach to working with the boroughs.

The government is set to announce a new scheme aimed at addressing the housing crisis among the Gypsies and Traveller communities. Grants totalling £97 million, to be allocated during the next three years, are aimed to create homes for up to 25,000 people. About a third of the money is expected to go to the East of England where around a quarter of the country’s travelling families live but where there are only 16 per cent of the official sites. People on the sites will pay rent and council tax and in return the local authorities will provide rubbish collection, running water, electricity and other services. Communities and Local Government said that a ‘good supply of authorised sites can break the vicious circle of evictions that is costly in terms of both taxpayers’ money and the quality of life for Gypsies, Travellers and the settled communities’.

New guidelines that state that lenders must only use repossession as a last resort came into effect yesterday. The Civil Justice Council has drawn up a pre-action protocol, encouraging households and lenders to settle problems before they go to court, and which give struggling homeowners stronger legal support. The guidelines also urge borrowers and lenders to take reasonable steps to communicate at an earlier stage and discuss issues as they come up.

Housing associations have warned that without urgent government intervention there will be a ‘catastrophic’ collapse in the provision of new social housing. The 1,900 social landlords have urged ministers to change the way they are funded in order to prevent the supply of new, affordable housing drying up completely. They particularly want the limit on how much central funding can be used for development schemes relaxed, as it currently only allows the Housing Corporation to provide only 40 per cent of the cost, with the balance coming from borrowing or sales of private housing.

A new report by Shelter has suggested that the rise in the number of couples who choose to live apart is contributing to the housing shortage and will cause a shortfall of one million houses. The recent collapse in house building will mean at least 500,000 fewer homes being built by the government’s 2020 deadline, a target which Shelter argues already underestimates the number of new homes needed. Added to this is an increase in the projected number of one-person households - rising from 6.8 million in 2006 to 9.9 million by 2026.

New immigration figures being published by the Goverment today will confirm that levels of immigration are continuing at about 200,000 a year, says immigration campaigner Sir Andrew Green. The Government’s own projections show that the UK population will reach 70 million in 20 years’ time.

Of the extra ten million, seven million will be due to immigration, Sir Andrew says.That is equivalent to seven times the population of our second largest city, Birmingham. Almost all the increase will be in England - much of it in the South-East. Sir Andrew welcomed the parliamentary cross-party group on balanced migration led by Frank Field and Nicholas Soames.It iscalling for immigrationto bebrought down to roughly the level of emigration, currently about 120,000 a year.That would stabilise the population of the UK at about 65 million by mid-century, Sir Andrew says.

Borrowers with interest-only mortgages could be faced with crippling debts and negative equity in the falling property market, according to new research. Figures from insurer LV show about 41 per cent of homeowners with such loans - about 530,000, owing £30 billion - gambled on rising property values and cashing in equity to pay off loans. But with recent falls in house prices and further declines predicted, the loans are a serious risk. Mike Rogers, chief executive at LV, said: ‘Almost half a million interest-only borrowers could be in negative equity by the end of 2009. The worst-affected will be those who bought close to the peak of the housing boom in the second half of 2007.’

Ahead of next week’s charities’ financial crisis summit with third sector minister Kevin Brennan, the Association of Chief Executives of Voluntary Organisations (Acevo) has issued a 16-point plan to kickstart the debate about how government can best support the sector. In addition to a £500 million emergency aid package to help charities weather the recession, Acevo’s proposals include suggestions for developing the sector after the economic crisis. It is calling for ringfenced funding to make it easier for cash-strapped local authorities to fund a thriving third sector, the creation of a £250 million social investment bank to provide charities with easier access to money, and for government to further encourage third sector delivery of public services by producing a new action plan.

Immigration minister Phil Woolas has attacked lawyers and charities working on behalf of asylum seekers, accusing them of undermining the law and ‘playing the system’. Woolas described the legal professionals and NGO workers as ‘an industry’, and said most asylum seekers were not fleeing persecution but were economic migrants. ‘The system is played by migration lawyers and NGOs to the nth degree,’ Woolas said. ‘By giving false hope and by undermining the legal system, they cause more harm than they do good.’ But Sophie Brown, chair of the Immigration Law Practitioners Association, said: ‘Lawyers can only work with the law. To say they are undermining the law is an extraordinary comment to make.’

Inflation tumbled at a record pace in October to 4.5 per cent, down from the 16-year peak of 5.2 per cent in September, official figures show. A sharp fall in transport costs, coupled with lower fuel and food prices, helped to push down the Consumer Price Index to the lowest rate since July. Core inflation, which excludes volatile energy and food prices, also fell, from 2.2 per cent to 1.9 per cent. The bigger-than-expected fall helps to explain the Bank of England’s dramatic 1.5 per cent rate cut earlier this month as, until now, the rate-setting Monetary Policy Committee has been concerned about entrenching inflation in the economy if it cuts rates too swiftly. Analysts say that the figure paves the way for more rate cuts.

A flood of unsellable homes has forced down rental prices as homeowners instead turn to renting their properties, according to the Royal Institute of Chartered Surveyors. The number of housing transactions is at the lowest level since records began as banks limit the availability of finance to buyers. Some 50 per cent more surveyors reported an increase rather than a decrease in the number of flats to let in the third quarter of 2008, rising to 68 per cent for houses. Rent prices in London and the Southeast were the worst hit , with the net balance of surveyors reporting rises or falls in rents for London houses falling from a stable zero per cent in the second quarter to minus 53 per cent in the third quarter, while flats fell from a positive 5 per cent to minus 33 per cent.

Ministers will today commit the government to eradicating rough sleeping throughout England by 2012, the first firm deadline for dealing with the most acute manifestation of homelessness since Tony Blair promised in 1997 to reduce the number of rough sleepers to ‘as close as possible to zero’. The official headcount fell from 1,850 in 1997 to about 500 in 2003, when progress stalled. Iain Wright, the homelessness minister, will tell the Crisis annual conference of plans to spend £200 million on schemes to encourage rough sleepers into housing and employment.

The UK is facing a ‘homelessness timebomb’ as a third of people would lose their homes within three months if they lost their job, a survey said. The poll commissioned by the charity Crisis revealed 33 per cent of the working population could face homelessness in as little as three months if they were to join the increasing numbers of unemployed people. Last week the British Chambers of Commerce warned that unemployment could peak at 3.25 million - more than 10 per cent of the workforce - if Government bids to kick start the economy were inadequate. Crisis said: ‘If unemployment continues to rise, the knock-on effect of a rise in homelessness could occur very soon.’

Gordon Brown is preparing to rush through plans for a huge programme of public spending and tax cuts before Christmas. The Prime Minister will claim that world leaders’ agreement with his ‘fiscal stimulus’ plan is proof that this is the way to kickstart the British economy. Mr Brown has come under pressure from the International Monetary Fund to bring forward a programme worth about £30 billion - or £1,000 for every family.

Energy companies will be urged to pass on savings to their customers in the wake of massive falls in oil and gas prices when Ed Miliband, the energy and climate change secretary, meets leaders of the big six providers today. The minister will also ask them what progress they have made in ending unjustifiable premiums demanded from people with pre-payment meters, who are among the poorest and most vulnerable customers. Ofgem, the energy regulator, has given the companies until December 1 to draft firm proposals, or Miliband has said he will consider legislation.

The Governor of the Bank of England was thrown on the defensive yesterday after the deepening economic slump forced it drastically to rethink its forecasts for Britain’s prospects. Mervyn King was forced to deny that he had been caught out by the pace and scale of the country’s slide into a potentially deep and prolonged recession. And he insisted that the Bank was taking effective action to steer the economy, and it should not have been expected to act sooner to shore up growth. ‘I think it’s worked well and I think it will continue to work well,’ he said.

Consumers who switch energy and phone suppliers have been getting a very poor deal since the government abolished price controls, a report by MPs says today. The Commons public accounts committee concludes that a quarter of all people who switched electricity suppliers ended up paying higher bills. The findings come as the government is under pressure to force utility companies to cut fuel bills. Sharp price rises by the big six energy suppliers earlier this year have left the average household facing an annual gas and electricity bill of more than �£1,300 this year. Some companies put up gas prices by more than a third.

Alistair Darling will forecast a short, sharp recession in his crucial pre-Budget report in 11 days’ time, with the economy contracting by more than 1 per cent next year but bouncing back strongly in 2010. The Chancellor said we were going into recession, but he remained confident about getting through it. Mr Darling was speaking on a day when unemployment rose to 1.82 million, its highest level for 11 years. In his Commons statement on 24 November, he is expected to reveal a dramatic increase in public borrowing, up from the �£43 billion for the current financial year he predicted in his March Budget to around �£65 billion. Next year, as the recession bites, it is likely to rocket to more than �£90 billion. The Treasury is still finalising its growth forecasts, but the Bank of England has pointed to a contraction of about 1.3 per cent in 2009, recovering to grow by about 1.7 per cent in 2010 – the likely general election year – and by 3 per cent in 2011. Mr Darling will use some of the soaring borrowing to cut taxes in order to keep the economy moving – but he raised the prospect of tax rises in the medium term.

Britain’s biggest brickmakers have laid off more than 1,200 workers and started to send home hundreds more on a temporary basis as the housing crisis takes its toll on the supplies sector. Hanson has axed 600 staff as it permanently closed two plants, mothballed two others and plans to either halt output for three months or take out shifts at four. The company, owned since last year by HeidelbergCement, already has 500 million bricks stockpiled at yards around the country, equal to sales it might expect in 2009. ‘We believe there will be further reductions in demand by the middle of next year and we do not predict any upturn until the middle or end of 2010,’ said a Hanson spokesman.

The total number out of work has climbed to 1.825 million - the most since November 1997, according to figures released by the Office for National Statistics. The number of unemployed people rose by 140,000 in the three months to September, leaving the unemployment rate up 0.4 per cent to 5.8 per cent. Last month’s figures, for the three months to August, saw the unemployment total rise by 164,000 - the biggest increase for 17 years. Vicky Redwood, an economist for Capital Economics, said that the true current situation was already much worse than the new figures suggested and estimated that the total would reach 3.3 million by 2010.

Taylor Wimpey sees no prospect of recovery in the short term. The company has now shed 1,900 workers this year as it tries to cope with the downturn in the housing market. The figure, revealed by the housebuilder yesterday, is more than twice its previously announced job losses, which totalled 900 at the end of July. Despite cutting prices and offering unprecedented sales incentives, Taylor Wimpey’s sales have slowed further in the second half of the year, with net reservations down to 165 a week, 27 per cent less than in the same period of 2007. The actual sales figure is higher, but the housebuilder warned it was continuing to suffer from ‘above normal’ levels of cancellations. Taylor Wimpey’s order book stood at 6,607 homes at the end of October, 40 per cent down on the same week last year. Pete Redfern, chief executive, said there was little prospect of improvement in trading in the short term and warned that the company may yet have to further write down the value of its land and incomplete building projects. Taylor Wimpey’s shares slipped 19 per cent to 10.75p yesterday amid continuing concerns about its �£1.9 billion of debt.

Gordon Brown promised action last night after credit card companies rejected calls to reduce interest rates, some as high as 69 per cent, after last week’s shock cut in the Bank of England’s base rate. In a clear signal that the prime minister is determined to make credit cards his next battleground , he used his monthly press conference yesterday to call for a ‘new, responsible approach’ to lending. Average interest charged on the approximately 72 million credit cards in circulation has risen to 17.6 per cent from 16.8 per cent a year ago, according to data analysts Defaqto, despite the Bank’s base rate almost halving from 5.75 per cent to 3 per cent over the same period. Store card rates have risen faster, up by 1 per cent over the past six months with the most expensive now charging shoppers more than 30 per cent. Downing Street said last night credit card companies were behaving ‘irresponsibly’. But yesterday PayPal increased the rate on its card from 12.9 per cent to 16.9 per cent, and other leading providers said their rates were likely to remain on hold.

Two hundred thousand skilled jobs in Britain will be closed to non-European migrants from November 27, when the new points-based immigration system comes into effect, the Home Office announced yesterday. The official shortage occupations list, published yesterday, which will be opened to skilled workers from outside Europe, covers 800,000 jobs, compared with the estimated one million vacancies covered by the existing work permit system. The largest occupations being closed to non-EU migrants are doctors, secondary school teachers and most nursing jobs. The flow of skilled migration from outside Europe is expected to fall by between 30,000 and 70,000 people a year as a result of the introduction of the shortage occupation list.

Britain’s housing market was hit by a fresh blow yesterday when it emerged that home sales plunged to a new low last month and the Nationwide Building Society said that its net mortgage lending had fallen by 70 per cent during the past six months. The latest survey from the Royal Institution of Chartered Surveyors showed that estate agents in England and Wales had sold an average of only 10.9 properties per firm in the 12 weeks to the beginning of November, with agents in London struggling to sell one house a fortnight. That is the lowest level of sales since the series began in 1978. Nationwide, Britain’s biggest building society, gave warning that, while its market share was slipping, the entire mortgage lending market would fall by 80 per cent this year. Net new mortgage lending by Nationwide fell from �£3.6 billion to �£1 billion in the six months to September. Its share of the mortgage market slipped from 6.2 per cent to 5.6per cent.

Business leaders would be offered tax breaks by a Conservative government to persuade them to recruit more staff, David Cameron will announce today as he puts plans to ease the ‘pain of mass unemployment’ at the heart of his economic agenda. The Conservatives say the measures – which are expected to include a National Insurance payment holiday for new workers – can be justified by the resulting savings from unemployment benefits. The move follows Gordon Brown’s hint yesterday that the Government is preparing limited tax cuts in the pre-Budget report expected next week.

Jack Straw, the Justice Secretary, has ordered an investigation into a legal loophole that allows lenders to repossess a home without a court order. The inquiry was announced in response to a High Court ruling that supported a decision by GMAC-RFC, the General Motors mortgage lender, to sell the property of a borrower who was in arrears. It confirmed that mortgage lenders could sell a property without a court repossession order if a borrower fell two months into arrears. Frances Walker, of Consumer Credit Counselling Service, said: ‘This case is shocking and extremely disappointing. The fear is that the practice could become more widespread as the housing crisis worsens.’

Banks increase credit card costs

Banks have increased interest rates on credit and debit cards held by tens of millions despite the cost of borrowing falling to its lowest level for more than 50 years. The Bank of England has almost halved its base rate from 5 to 3 per cent since May, but during the same period the average annual percentage rate for credit cards has climbed from 17.2 to 17.6 per cent. More than �£200 billion is owed by Britons in unsecured borrowing, including personal loans, overdrafts and credit and store cards – almost one-fifth of total lending. While the banks have been heavily criticised for failing to pass on the Bank of England’s interest rate cut to their customers, so far providers of ‘plastic’ – which include the same banks – have escaped scrutiny for failing to do likewise with their credit cards.

People living in council houses will no longer be entitled to a subsidised tenancy for life under Whitehall proposals to address waiting lists. New tenants would have fixed-term contracts under the plans, with regular reviews every few years. If a tenant’s financial position improved he or she would be encouraged to take an equity share or to move to the private sector. If they refused they could face higher rents. The right to a council home is also likely to be tied to a requirement to have or be actively looking for a job. The measures are being considered by Margaret Beckett, the new Housing Minister, in the most radical shake-up of the social housing system for decades.

Banks may use the small print in mortgage contracts to prevent borrowers benefiting from future interest rate cuts by the Bank of England. Experts warned yesterday that little-known clauses mean the interest rate paid by borrowers may not fall when the Bank’s rate drops. Last week the Bank cut rates by 1.5 percentage points to 3 per cent. But many bank giants did not cut their rates until ordered to do so by the Prime Minister. With interest rates predicted to fall as low as zero, millions of cash-strapped homeowners are hoping their bills will be slashed. But the small print means they may not.

Tax cuts could be used to push the UK out of recession, Prime Minister Gordon Brown has said, amid mounting speculation they will be included in the upcoming Pre-Budget Report. ‘What I am determined to do is to get all countries around the world trying to get their economies moving again and one way you can do that is by putting more money into the economy by tax cuts or by public spending rises,’ he told GMTV. It is the PM’s strongest hint yet that Chancellor Alistair Darling will use his autumn mini-Budget, due in the coming weeks, to unveil a package of tax cuts, reported to be worth up to £15 billion and aimed at cutting household bills for families hit by the credit crunch.

The Bank of England will warn this week that Britain is on the brink of a deep recession after a marked worsening of the economy in recent months. Separate research published today shows consumer confidence has plunged to record lows as the impact of the credit crunch is felt. According to the survey by the British Retail Consortium (BRC), 84 per cent of people believe Britain is already in recession.The Bank is expected to slash its growth estimates in its quarterly assessment of the economy on Wednesday, raising the prospect of still further interest rate cuts - some economists believe rates could fall to as low as 1 per cent.

The Bank of England slashed interest rates by 1.5 percentage points to 3 per cent yesterday, their lowest level in more than 50 years, as the International Monetary Fund forecast that the UK would be the world’s worst-performing major advanced economy next year. Britain’s economy will shrink by 1.3 per cent in 2009, the IMF said, the first full year of decline since 1991. Ministers have claimed the UK is the best-placed among the developed economies to withstand the rigours of recession, a stance clearly now contradicted by the IMF. The IMF also warned that the advanced nations as a group would suffer recession next year, something not witnessed since the Second World War.

House prices in the UK plunged 15 per cent in the year to October, Halifax said yesterday, as tighter lending continued to deter first-time buyers. Britain’s biggest lender said prices fell 2.2 per cent last month and warned conditions ‘remain challenging’. Would-be buyers welcomed yesterday’s decision by the Bank of England to cut its base rate from 4.5 per cent to 3 per cent. However, analysts believe this will not help first-time buyers, which means prices are likely to fall further. Many economists believe it will take at least a decade for prices to regain record 2007 levels with Andrew Clare, professor of asset management at Cass business school, saying it would take until 2023. The average price of a property in Britain is now 168,176, a fall of almost 4,000 since September and about 30,000 less than in October last year. The annual drop is the sharpest since the index began in 1983 and means that, in the past year, prices have fallen faster than at any point during the crash of the early 1990s.

Some buy-to-let property courses are urging members to cash in on rising home repossessions by persuading desperate homeowners to sell and rent back their properties. More than 20 groups in Britain are promoting the technique as a get-rich-quick method, according to an investigation in Investors Chronicle. Those attending free seminars are put under pressure to sign up to expensive courses which will teach them how to ‘exploit the falling price of property’. Some are told to target homeowners on the brink of repossession as a way of forcing down prices and securing ‘instant tenants’. Courses are being advertised at between 1,500 and 5,000. One company advised evicting tenants after six months to reduce the potential risks from people who might struggle to pay rent.

The CBI warned yesterday that the relationship between businesses and lenders has deteriorated sharply and job losses will be acute if lending restrictions continue. As the Bank of England’s monetary policy committee meet today to discuss a cut in interest rates, and several banks yesterday signalled that they would be unwilling to pass on any cuts, the industry body told MPs that the failure to supply credit to small businesses and to lower interest on mortgage payments would result in a cull of jobs and investment. The Bank of England is under pressure to slash interest rates by at least one point.

A report out from rightwing thinktank Centre for Policy Studies puts the banking crisis blame squarely on the shoulders of Gordon Brown. It argues that the reforms introduced by Mr Brown, including a 2.5 per cent inflation target, were deeply flawed and led to excessive and imprudent borrowing and mortgage lending. The report calls for a substantial interest rate cut, investment in infrastructure projects, reductions in personal and corporate tax and improvements in government guarantees for loans to small companies. The report also predicts a severe recession with ‘vicious’ house price falls.

New housing minister Margaret Beckett has caused alarm by suggesting a new site could be found for the Western Otmoor eco-town. Yesterday’s sustainability report into the locations of the proposed eco-towns had Western Otmoor ranked lowest of the 12 shortlisted sites. Ms Beckett said an alternative site may prove a better option. However, residents are ‘alarmed’ and ‘don’t see how shifting the problem from A to B is actually going to solve anything’. The Local Government Association has threatened legal action over the failure to follow planning procedures.

Affordable housing waiting lists are soaring in second home hotspots, new figures show today. Waiting lists have increased by more than 60 per cent during the past five years in areas where there is high second home ownership. The increase in the number of people waiting to access affordable housing has jumped 115 per cent in the City of London, where one in four properties is owned by someone who does not live there fulltime, although the majority of areas hit by the problem are in rural locations. The National Housing Federation called on the government to find additional ways of freeing up more public land for affordable housing.

Seaside towns have a low share of households in social housing and high levels of private renting, making them more like London than a similar sized town inland, according to a report from Communities and Local Government. Seaside towns had on average 12 per cent of households in social rented accommodation and 16 per cent in the private rented sector, compared with an average in England of 19 and 12 per cent respectively. The report concluded that England’s principal seaside towns are more disadvantaged than the rest of the country.

A new buy-to-let scheme has been set up to protect landlords from repossession. The ‘partnership agreements’ allow buy-to-let landlords with portfolios of up to £5 million and who are facing repossession, retain ownership of a property, by matching them with investors who have money to pump into the housing market. The programme was launched after interest from wealthy investors who were keen to invest in property while house prices are falling. In most cases, the properties will be kept until the housing market improves, and then the profit will be divided between the investor and owner if it is sold.

Communities and Local Government has found just one of the 12 shortlisted eco-town sites is ‘generally suitable’ for the programme. The remaining sites are locations which might be possible ’subject to meeting specific planning and design objectives’, while the bid for a site at Weston Otmoor was described as only suitable with ’substantial and exceptional innovation’. The public consultation on the shortlisted areas was launched today, and following it the government will announce a final shortlist of locations.

According to the Conservatives, Communities and Local Government have ‘buried’ a report into home information packs (Hips). The Tories say the report - which revealed that the packs made the buying and selling process more complicated, showed that few people bothered to read one in any details, and did not cover everything or were unreliable – merely serves to show that the packs have undermined the housing market and increased the cost of buying and selling. Despite some less than flattering descriptions, ministers have decided not to review their use until 2010.

HSBC has been accused of ‘profiteering’ after a senior executive said it was unlikely to pass on the full interest rate cuts expected when the Bank of England’s monetary policy committee meet this week. Meanwhile Abbey has announced today that it is raising its tracker rate by 0.5 per cent, even though the Bank of England is expected to cut rates by at least the same amount. The remarks have been seized on by Lib-Dem spokesman Vince Cable who said that the whole banking industry which ‘owes so much to the taxpayers for their survival’ would be on thin ice if found to be profiteering from its customers.

Oxford should be ‘ashamed’ of itself for failing to find at least 42 caravan pitches during the next decade to house Gypsies and Travellers. Local councils are claiming Oxford doesn’t have room for them, having already 1,000 people waiting to be housed and with ‘no more land to spare’. A local councillor said that is why the council cannot genuinely give over pieces of land to people they are ‘not statutorily obliged to house’. The council has said it will increase the size of an existing site in Redbridge.

Housing associations and lenders are calling for the government to change the way it funds social housing, arguing the current system that combines a grant with income from property sales and borrowing is unworkable in the current economic climate. Opponents of the system say that grants for social housing are not high enough and require cross-subsidisation through selling and private borrowing. Association heads want the government to bring forward the spending of the sums allocated for the three-year affordable housing programme.

Nicola Sturgeon has been accused of leaving homeowners in Scotland at greater risk of repossession after she rubbished the recent safeguards introduced in England and Wales. Interviewed on television, she said that the government was committed to helping homeowners, but in a ‘meaningful way’, arguing that the ‘protocol south of the border’ didn’t change the position of people in difficulty, and claiming Gordon Brown’s announcement was merely spin and misleading. Ms Sturgeon’s refusal to introduce similar protection for Scottish homeowners was labelled ‘disgraceful’.

Spain became the first European country to introduce a mortgage holiday for the unemployed and pensioners yesterday. The moratorium could apply to up to 500,000 families, with a maximum eligible mortgage of 170,000 euros. Analysts are sceptical that the plan will make any real difference as the ‘numbers are moderate’ and they do not expect it to have a big impact on companies and markets. However, it may increase pressure on neighbouring countries to follow suit.