Supply in demand
Written by Adam Shaw, associate partner
Edited by David Gaffney, partner
Good morning,
Earlier this month, the UK government announced an overhaul of the planning system in England, which it described as “the most significant reforms to housing policy in decades”.
Few issues provoke a more emotional response in politics than local planning, which goes a long way to explaining why the system has barely changed since the implementation of the Town and Country Planning Act of 1947.
When people see plans for new housing in their area, the common reaction is to question what the impact will be on local services and infrastructure, such as schools and transport networks. Furthermore, the issue being decided at a Westminster level is seen by some as an attack on local democracy.
The problem, though, is that as a country, we are not building enough houses. We haven’t for decades. The government has a target of 300,000 new homes a year – the number generally thought to be required to begin reversing the housing crisis, although some commentators have noted that simply building more homes risks an overly simplistic view of the problem and its potential solutions.
Campaigners also argue that relying on big developers to build unaffordable homes is one of the main reasons that the government is falling well short of their ambitious housebuilding targets. According to Shelter, the last time anywhere near 300,000 homes were built in a year, councils contributed nearly half of them. So, the only way the Government can get back to building at this scale again is by building social homes, it contends.
In 2019, 160,000 new homes were registered, a big improvement on recent years, but still not enough to make housing more affordable. And the issue is further exacerbated every year we don’t hit the 300,000 target.
InThe Timestoday, Mark Littlewood highlights the issues this has created: since 1970 UK properties have risen in value by more than 300%, even after taking account of inflation; home ownership has fallen from more than 70% in the early years of the millennium to closer to 60% today; and about one-third of those in the 35 to 45 age bracket are renters, compared to fewer than one-in-ten in 1997.
This has resulted in a crisis in the cost of living and negatively impacts social mobility, as relocating to a relatively affluent area for a new job is beyond the reach of many workers.
The proposals may not be perfect, and Robert Jenrick arguably isn’t the best messenger following recent controversy, but reform is required. Business as usual simply isn’t sustainable.
News
It’s “vitally important” for children to go back to school and the life chances of a generation are at stake, Boris Johnson has said. In a statement, the prime minister said that "the risk of contracting Covid-19 in school is very small and it is far more damaging for a child's development and their health and wellbeing to be away from school any longer".
President Trump has announced fast-track consent for an experimental coronavirus treatment. The US Food and Drug Administration (FDA), under pressure from Trump looking for a breakthrough ahead of the US election, gave emergency authorisation for convalescent plasma for Covid-19, a treatment already used for more than 70,000 patients, despite inconclusive evidence that it helps to defeat the virus. The administration is also said to be considering the emergency use of a vaccine being developed by Oxford University and Astrazeneca. (£)
Demonstrators protesting against the Belarusian president, Alexander Lukashenko, flooded Minsk over the weekend, in defiance of threats from the government that it will use the army to quell the uprising. Unofficial estimates put the crowds at 150,000 people or more. Protests have been ongoing for two weeks since Lukashenko, who has been in power for 26 years, declared victory in an election widely believed to have been rigged.
Sweden is seeing progress in its fight against the coronavirus,possibly because of its decision not to implement tough lockdown measures. Despite cases of the virus surging elsewhere in Europe, the infection rate in Sweden is falling, according to figures from the European Centre for Disease Prevention and Control. One key factor for this is thought to be the emergence of a form of “herd immunity” that is more advanced among Swedes than in countries where lockdowns were implemented.
Business and economy
The Association of British Travel Agents (Abta) has warned that the UK travel industry has reached a "critical point" and is calling for “tailored support” to stem further job losses. The trade body said that 39,000 jobs had already been lost in the sector and 65% of travel firms have had to make redundancies or start a consultation process.
BT is preparing to defend against a takeover after the suspension of its dividend prompted its shares to slump to their lowest level in more than a decade. No formal approach has been made, however, the telecoms group has asked Goldman Sachs to update its bid defence strategy in recent weeks, according toSky News.
Bytedance, the parent company of TikTok, is planning legal action against the Trump administration over the executive order banning American companies from doing business with the social media app. The executive order effectively gave Bytedance 45 days to sell its US operations to an American corporation or face a ban there. In the lawsuit, Bytedance claims the US government has paid “no attention to the facts”. (£)
Columns of note
As the Republican national convention gets underway, theFinancial TimesBig Read looks at the divisions in the GOP. The question it poses is, does the party return to a more moderate footing post-Trump? The GOP is so polarised – you’re either for Trump or not – that it is almost impossible to straddle both sides. Trump has molded the party in his own image, with a strong and vocal base but narrowing appeal. Even if he loses, his legacy will have an impact on 2024 and beyond.
InThe Atlantic, Tom McTague writes that a longing of many for a return to the stability and liberalism of the 1990s and early 2000s is misplaced. McTague argues that today’s problems are the result of that era’s mistakes, among them: China’s seemingly costless entry into the World Trade Organization (WTO), the creation of the euro without the necessary tools to manage it, the removal of Saddam Hussein, Russia’s reaction to Nato expansion, and the failure to anticipate the impact on domestic politics of the sudden mass movement of people from Eastern Europe after European Union enlargement in 2004.
Source: The Times
Markets
The week ahead
The four-day Republican national convention begins today, with President Trump set to give his acceptance speech on Thursday.
Controversy continues to surround the role of the US postal service in the election, andLouis DeJoy, the postmaster general, appears before the House oversight committee today. He is expected to face hostile questioning from the Democratic-controlled panel, which is probing allegations that DeJoy has imposed cost-cutting measures meant to slow the mail, with the intention of aiding Trump in the election.
On Thursday, central bankers meet in the first virtual Jackson Hole Economic Symposium, an annual event where economic issues are discussed. Investors will follow closely speeches from Jay Powell, chair of the Federal Reserve, European Central Bank chief economist Philip Lane, and the Bank of England’s Andrew Bailey.
In corporate news, Virgin Atlantic creditors will vote on a £1.2 billion rescue package that would keep the airline flying. The company has warned that it could run out of money and enter administration if the deal is not approved.
Best Buy, Salesforce, Gap, Abercrombie & Fitch, Bunzl, WPP, Rolls Royce, Provident Financial, Flutter Entertainment, and Hays are among the companies reporting to the market.
What's happening today?
Finals
Base Resources, Clipper, Studio Ret
Interims
Henry Boot
AGMs
Motorpoint, Puma VCT 11, Puma 12, TCS Group 2
EGMs
Kibo EnergyGMs
Keras Res
Annual report
PHSC
UK economic announcements
(11:00) CBI Distributive
International economic announcements
(07:00) Import Price Index
Did you know?
British army tanks come equipped with a kettle as standard so that crews can make tea without leaving the safety of the vehicle.
Parliamentary highlights
House of Commons
In recess until 1 September 2020
House of Lords
In recess until 2 September 2020
Scottish Parliament
No business scheduled