News

UK unemployment continues to edge up

2012-02-17T11:53:32+00:00

UK unemployment rose by 48,000 to 2.67 million in the three months to December, official figures have shown, the smallest rise in almost a year.

Women made up two-thirds of that increase and there was a new record in the number of people working part-time who want full-time jobs.

The unemployment rate edged up to 8.4%, the Office for National Statistics said, the highest for 16 years.

There was also a new record for the number of jobless young people.

The number of 16 to 24-year-olds without a job rose 22,000 to 1.04m, taking the unemployment rate to 22.2%. This figure includes young people in full-time education who are also looking for work.

The number of people claiming Jobseeker's Allowance in January increased by 6,900 to 1.6 million.
Growth hopes

With the number of job vacancies rising to 476,000 in the three months to January, economists suggested the worsening employment outlook had eased.

"This supports hopes that the economy will return to modest growth in the first quarter and avoid recession," said Howard Archer of IHS Global Insight.

"Admittedly claimant count unemployment rose... but this is well down on the increases seen a few months ago."

Graeme Leach, chief economist at the Institute of Directors, said: "The labour market isn't signalling recession but it's hardly suggesting recovery either."

The figures came as the Bank of England published its quarterly report on inflation. It said the UK economy would "zigzag" this year, dipping in and out of growth, but avoid going back into recession.

"We are moving in the right direction," the Bank's governor, Sir Mervyn King, said, pointing out that the process would involve "a painful adjustment".

'Squeezed' families

Prime Minister David Cameron described the latest rise in unemployment as "disappointing", but pointed out that the number of people in work had risen, too.

"We need to get the economy growing faster. We are rolling up our sleeves and helping people to get jobs," he said.

Labour's shadow chancellor, Ed Balls, accused the government of "complacency".

"If we don't act, we will pay a long-term price as a society because you can't just get rid of long-term unemployment quickly.

"We saw that in the 1980s. I fear that we are making the same mistake again and I do think the government's got to... start talking about what can be done."
More in work

Joblessness continued to rise in all parts of the UK, apart from Wales, where it fell 3,000 to 134,000.

However, the proportion of the workforce in paid work also rose across the UK.

The number of people in jobs went up by 60,000 in the last three months of the year to 29,13 million.

This meant the employment rate rose by 0.1 percentage points in the three months to December to 70.3%.

The apparent contradiction - in the rise in both unemployment and employment - is explained by the fact that there has been a rise in the number of part-time workers and the number of people classified as economically inactive has dropped.

The inactivity number fell by 78,000 to 9.29 million. This included a drop in the number of people categorised as long-term sick or retired, who went back into the workforce.

Rent costs rose in January, says LSL

2012-02-17T11:49:10+00:00

The cost of renting a home in England and Wales increased in January, a survey has suggested.

The average rent rose by 0.1% last month from December, to £712 a month, according to LSL Property Services, which owns Your Move and Reeds Rains.

It is the first increase in January that the firm has ever seen.

Rents rose fastest in the West Midlands and South West, with the biggest declines being seen in Wales and the South East.

Rents increased 0.8% in London, with the average monthly rent in the capital now £1,032.

The cheapest average monthly rent was in the North East, at £512.

"The rental market burst back into life unseasonably early in January, with tenants on the move trying to take advantage of what is usually a quieter period for the rental market," said David Newnes, director of LSL Property Services.

"The depth of the underlying demand sustained a higher level of competition for rental property during the Christmas period, preventing more severe falls in rents than we'd normally see during the period."

Inflation dives as economy put on ‘negative outlook’

2012-02-14T10:33:13+00:00

Hard-pressed families felt some relief last month as official figures revealed the rate of inflation fell to its lowest level in just under two years.

The retail prices index (RPI), which includes housing costs, fell from 4.8% to 3.9% in January.

It's important to understand the rate of inflation dropping does NOT mean prices are dropping, it means prices are RISING less quickly.

The consumer prices index (CPI) rate of inflation fell to a 14-month low of 3.6% in January, from 4.2% in December, as the previous year's VAT hike from 17.5% to 20% fell out of the year-on-year comparison.

The CPI rate has now fallen 1.2 percentage points since November, the largest fall over two consecutive months in just over three years.

The figures come a day ahead of the Bank of England's quarterly inflation report, which is expected to confirm its belief that inflation will hit the 2% target and possibly fall further in early 2013.

The data adds further weight to the Bank's decision last week to pump an extra £50 billion into the economy through its quantitative easing programme.

The VAT effect had a pronounced impact on transport costs, which applied the greatest downward pressure to overall prices in January.

The fall was also driven by softer rises in the cost of crude oil, which led to lower price increases in petrol and diesel, new car sales and maintenance.

Ratings concern

Meanwhile, Britain's AAA credit rating was put on a "negative outlook" by ratings agency Moody's last night amid fears over weaker growth prospects and potential shocks from the eurozone crisis.

Chancellor George Osborne says the assessment is a vindication of the Government's tough austerity measures and "a reality check for anyone who thinks Britain can duck confronting its debts".

Moody's downgraded the ratings of six countries and also put France and Austria on the same caution as the UK amid violent protests in Greece over stringent measures to secure a fresh bailout.

Explaining its decision on the UK's prospects, it pointed to "increased uncertainty regarding the pace of fiscal consolidation in the UK due to materially weaker growth prospects over the next few years".

"Any further abrupt economic or fiscal deterioration would put into question the government's ability to place the debt burden on a downward trajectory by fiscal year 2015-16," it says.

It also predicts the "high risk of further shocks (economic, financial, or political) within the currency union are exerting negative pressure".

Osborne says: "This is proof that, in the current global situation, Britain cannot waiver from dealing with its debts. Moody's are explicit that it is only the Government's 'necessary fiscal consolidation' that is stopping an immediate downgrade, which would happen if there were any 'reduced political commitment to fiscal consolidation including discretionary loosening'.

Home sales expected to rise

2012-02-14T10:00:54+00:00

Surveyors expect sales of homes in England and Wales to rise in the final weeks of a stamp duty holiday.

Sales expectations for the next three months were at their highest level since May 2010, the Royal Institution of Chartered Surveyors' (Rics) said.

The 1% stamp duty rate for first-time buyers, on properties worth between £125,000 and £250,000, is being reintroduced on 24 March.

Surveyors said that the mild winter had also helped activity.

Fewer surveyors than before expect prices to fall in the coming months, although more still expect prices to fall than to increase.
'Improved tone'

Chancellor George Osborne took the decision to reintroduce the stamp duty rate in last November's Autumn Statement, pointing out that the policy - introduced in March 2010 by the previous Labour government - had not helped many more people buy a home.

On Monday, the Council of Mortgage Lenders (CML) said that a pick-up in first-time buyer numbers at the end of 2011 could be the result of people trying to get on the property ladder before the concession expired.

And now the Rics survey has suggested that the "improved tone" among surveyors about activity in the market and price expectations could be at least partially due to the same reason.

"With first-time buyers no longer exempt from stamp duty as of the end of March, it seems that some are looking to purchase homes before the deadline and, as a result, surveyors are relatively optimistic for the coming months," said Michael Newey, Rics' housing spokesman.

He pointed out that first-time buyers still faced difficulties securing a mortgage.

Following the end of March, the end of the stamp duty concession could partially unwind this extra activity of the coming weeks, the Rics report suggested.
Prices

The government's own house price survey - compiled by the Department for Communities and Local Government (DCLG) - confirms that UK house prices stagnated last year.

It says they rose by 0.1% in 2011 to take the average house price to £205,269, leaving them 5% below the peak recorded in April 2008.

The trend in prices was far from uniform. Values fell by 1.6% in Wales, 4.6% in Scotland and 8.1% in Northern Ireland.

But in England they rose by 0.5%, with London prices rising the most - up by 4.4%.

Other recent surveys have shown a similar picture for last year.

    The Nationwide said prices rose by 1% in 2011.
    The Halifax said they fell by 1.3%.
    The Land Registry said prices fell by 1.3% in 2011 in England and Wales.

'Surprisingly brisk'

The Rics survey said the weather was a significant factor in the recent pick-up in activity which had been noted, primarily, by surveyors in the north of England.

Before the cold snap in February, the winter had been mild, and that had encouraged more people than a year earlier to go house-hunting, some said.

"It has been a reasonably busy start to the year. The kind weather has meant that viewers can travel some distance," said surveyor Francis Brown, of Richmond, North Yorkshire.

Edward Waterson, a surveyor in York, said: "There has been a surprisingly brisk start to the year, despite the economy.

"Buyers have appeared to get the bit between their teeth and a shortage of stock is forcing them to make decisions and stick to them."

UK house prices rose 0.6% in January, Halifax says

2012-02-06T11:24:01+00:00

UK house prices increased by 0.6% in January, according to the latest survey from the Halifax.

The change means that the average cost of a house was £160,907 last month, the bank said.

House prices are 1.8% lower than a year ago, according to the Halifax's measure.

The bank said prospects for the housing market over the coming months depended on whether the debt crisis in the eurozone would affect the UK economy.

"If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012," said Martin Ellis, Halifax's housing economist.
Static

The Halifax, now part of Lloyds Banking Group, said that the price of the average home in the UK was very similar to the average value in the middle of 2011.

This had held up owing to the low level of interest rates, the lender said.

And Tracy Kellett, managing director of UK buying agent BDI Home Finders, said: "House prices are being held artificially high by two key factors - an extreme lack of stock and historically low interest rates.

"Throughout 2012, we are likely to see a further widening of the north-south divide. Prices will be hit hardest where the economy is feeling it the hardest."
Annual view

House prices in the three months to January fell by 0.9% when compared with the previous three months, the Halifax said. This three-month on three-month comparison is often thought to be a better measure of underlying conditions in the market.

Last week, the latest survey from the Nationwide building society valued the average home at £162,228. It said that prices fell by 0.2% in January compared with December.

The Nationwide said the annual rise in house prices in January was 0.6%, notably different to the 1.8% fall recorded by the Halifax.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months.

Credit card borrowing fades as payday loans rise

2012-02-06T11:01:18+00:00

Demand for credit cards is "feeling the strain" as UK borrowers turn to other forms of finance, a report has said.

Households paid off some unsecured debts in 2011, but were still left with an average debt of about £7,900, PricewaterhouseCoopers (PwC) said.

But credit cards were facing a "mid-life crisis" as people used debit cards, digital payments and payday loans instead.

A separate report described the payday loan expansion as "phenomenal".

However, there are no official figures that can chart the reported rise in payday loan use.
Youngsters choice

The number of credit cards in circulation and total credit card borrowing both fell in 2011, the PwC report said.

It suggested that UK consumers were turning to other forms of payment, even though the average credit card balance stood at about £1,000.

Debit card use had increased by 10% last year, while many people - especially the younger generations - were happy to use digital payments, such as using their mobile phone.

"The challenge for banks is how to sustain market presence in the face of competition from ambitious giants and other new entrants," the report said.

This could include a return to annual fees for credit cards, the PwC suggested.
Credit squeeze

The amount of debt being written off by credit card companies fell from its 2010 peak, according to the report.

However, the tighter lending criteria introduced by these providers could have pushed some people to other forms of borrowing, such as people who were refused a credit card getting payday loans instead.

PwC suggested that, given a choice, some consumers now saw these high-cost, short-term loans as a better option.

"Mainstream lenders should be alert to the possibility that what may have begun as a relationship of necessity, may ensure as consumers are pleasantly surprised at the convenient and innovative service they receive from these smaller, more agile providers," the report.

This was backed up by a forecast by the Ernst & Young Item Club, which predicted that this shift to payday lending would continue - especially to poorer borrowers. It described the rise in payday loans as "phenomenal".

"Households that fall outside of the credit terms of traditional lenders are increasingly looking toward other credit providers, regardless of the cost," said Neil Blake, the club's senior economic adviser.

"With banks expected to further tighten lending conditions, we expect the shift towards alternative lenders to continue unabated."

Water Bills To Increase By 5.7% This Year

2012-01-31T14:37:02+00:00

The average water bill in England and Wales will rise by 5.7% from April this year, the water regulator Ofwat has announced.

The increase - which is 0.5% above inflation - will add £20 to the average 2012/13 bill, taking it to £376.

Ofwat defended the rise, saying it was necessary for a multi-billion pound investment programme and was roughly in line with inflation.

It was also far less than the 10% that water companies had asked for.

The watchdog's CEO Regina Finn said: "We understand that any bill rise is unwelcome, particularly in tough economic times. Inflation feeds through into water bills, and this is driving these rises.

"We will make sure customers get value for money."

The impact of the new charges will vary for households depending on the company that supplies them and whether or not they have a water meter, Ofwat said.

Southern Water is increasing its prices the most, by 8.2%, or £31, over the year, while Dwr Cymru Welsh Water is only putting its prices up by 3.8%, or £16.

Annual rises between 2010 and 2015 are being used to fund a £22bn investment programme.

This includes better sewerage treatment works, improving the quality of drinking water, boosting environmental standards, better protection against flooding and reducing water wastage and leakage.

Ms Finn added: "Companies are investing £22 billion by 2015 - more than £935 for every property in England and Wales.

"This will deliver benefits to us all - from continuing to improve reliability of supplies to cleaner rivers and beaches.

"If companies don't deliver on their investment promises, we will take action."

Debt increases by 50 per cent in a year for typical family

2012-01-31T13:48:55+00:00

The typical amount of debt owed by a family has soared by almost 50 per cent when compared to this time last year.

According to insurance company Aviva Family Finances, in January 2012 the average UK family owes £7,944 in unsecured borrowing on overdrafts, credit cards, loans and other forms of credit. This represents a significant increase – 48 per cent more than the same period last year when the average debt was £5,360.

According to the survey, the increased amount of debt is equal to 32 per cent of a typical net annual income, and is due to rising inflation affecting household income.

Credit card debt makes up the greatest portion of money owed. The families questioned owe, on average, £2,314 on their credit cards.

Furthermore, it is those couples who are planning to start a family who owe the most – typically more than £15,000.

Aviva based their research on interviews conducted with 10,000 people aged between 18 and 55.

Louise Colley, Aviva’s head of protection sales and marketing, said: “While average incomes have increased over the past year, the prices of essential goods and services have also increased, meaning that families are struggling to keep up.

“Many appear to have acclimatised to this economic environment by shopping around and seeking to minimise their spending in certain areas. However, at the same time there are still a worrying number of families with insufficient savings or large debts.”

UK National Debt Tops £1trn For First Time

2012-01-24T16:28:43+00:00

The latest figures from the Office for National Statistics showed the nation's total debt rose to 64.2% of GDP in December, taking it over £1,003.9bn.

It was a 14% rise on the same time a year ago when Government debt was £883bn, and the highest figure since records began in 1993.

December's figures also showed UK public sector borrowing fell to £13.7bn.

It was lower than the £14.9bn forecast thanks to stronger tax receipts.

The amount compares to the £18.1bn borrowed by the Government in November 2011.

Analysts said Chancellor George Osborne was on course to meet his fiscal targets.

Commenting on the statistics, RBS economist Ross Walker told Sky News: "We now have three-quarters of the year's data... and we're heading for a small undershoot in terms of the borrowing figures for this year."

However, experts also warned that the uncertain economic outlook could derail the Treasury's plans.

Howard Archer, from IHS Global Insight, said: "The public finances saw clear improvement in December compared to a year earlier.

"However, it seems inevitable that the public finances will be increasingly pressurised over the coming months by muted economic activity eating into tax revenues and pushing up unemployment benefit claims.

"There remains a very real danger that the Chancellor will before long face the difficult decision of accepting further slippage in his fiscal targets or imposing more fiscal tightening on a struggling economy."

Debt Management Companies wound up after Insolvency Service investigates

2012-01-20T10:56:58+00:00

Following an investigation by the Insolvency Service, two debt management review companies have been wound up in the public interest by Edinburgh’s Court of Session.

Cost Reduction Services (2010) Ltd and Cost Reduction Services (UK& NI), both based in Glasgow, were judged to be misleading for clients.

According to the investigation, Cost Reduction Services (2010) Ltd ran two types of businesses:

-    A debt and expenditure review for businesses and individuals, which claimed to save clients between £500 and £1,500 per month and for which they were charged £3,585

And

-    The “Easyearn Franchise” where clients bought debt and expenditure review franchises for £15,000 per territory with the promise of a return of £46,000 a year, generated by the fees from the reviews, without requiring any effort on their part.

The Insolvency Service determined that some of the franchisees who were guaranteed their money back in 50 or 100 days if the scheme didn’t work were misled by the company’s online information. The website displayed false testimonials and unrealistic earnings forecasts of up to £100,000 a year.

Furthermore, they discovered that only 13 clients had actually signed up for the review service from July 2010 to January 2011. This generated revenue of only £38,780.

Only five of 20 franchisees earned anything from the investment, and none of the money-back guarantees were honoured.

The Supervisor of Company Investigations (North) – which is part of the Insolvency Service and carries out confidential enquiries on behalf of the Secretary of State for Business – Scott Crighton said of the Court’s judgment: “This should send a clear and simple message that The Insolvency Service will take action against unscrupulous companies and ensure that those who run companies in this way do not get away with these sorts of practices.”

The company took £357,500 in franchise fees, and at least £71,000 was expended for the personal benefit of its sole director, who was also paid £34,000 in salary, expenses and commission, which included £14,000 paid one week before he caused the company to cease trading.

An additional £158,000 was taken from the fees in unexplained cash withdrawals and unreceipted debit card expenditure.

Cost Reduction Services (UK & NI) was incorporated with the intention of carrying on the same business and displayed the same misleading client testimonials on its website. According to investigators, however, it had only been involved in limited activity.