Published: 10 November 2022
By Suzanne Evans, Director, Political Insight
A third survey now suggests house prices are dropping. The Royal Institution of Chartered Surveyors (RICS) said this morning that a net balance of 2% of property professionals reported house prices were falling across the UK as a whole, rather than rising, ending a sequence of positive readings running for 28 months in a row. However, property professionals based in Scotland and Northern Ireland reported an upward trend in house prices despite the pace of growth being softer than earlier in the year. New buyer enquiries fell for the sixth month in a row in October, the RICS added, and survey feedback on buyer demand was negative across Britain. The average time from listing to completion also hit 18 weeks, up from 16 weeks a year ago. In contrast, the rental market is still booming as the gap between supply and demand intensifies. A net balance of 46% of survey participants noted an increase in tenant demand, and rents are expected to be around 4% higher in a year’s time. Nationwide and Halifax each previously reported a less-than 1% fall in property prices in October.
Analysis of a survey by The Recruitment and Employment Confederation (REC) has concluded that British employers cut their hiring of permanent staff via recruitment firms for the first time in nearly two years in October. Hiring of temporary workers stagnated and wage growth for permanent new staff was its weakest in a year and a half. "The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year," REC CEO Neil Carberry said. "We will need to watch how this story develops over months to come, but so far this data suggests heightened employer caution, not a retreat from the market." Starting salaries also increased at the slowest pace in 18 months and temporary pay growth was the weakest since May 2021.
The Investment Association (IA), whose 250 members manage assets worth £10 trillion, has written to remuneration committee chairs of FTSE 350 companies, calling for restraint in pay packages put forward for approval at annual meetings next year. "With the cost-of-living crisis hitting UK households, investors want to see companies show restraint on executive pay and bonuses, ensuring that executive pay packets are balanced against the experiences of their wider workforce, customers, and other stakeholders," Andrew Ninian, IA director for stewardship and corporate governance, said this morning. With UK inflation more than 10% at a 40-year high, the IA said pay increases in line with rising prices may not be appropriate; may harm the retention and motivation of employees below the executive level; and could affect whole workforce productivity. Research by PwC shows CEOs from the top 100 UK companies have already seen their pay rise by nearly a quarter on average, with average total pay increasing from £3.2m in 2020/21 to £3.9m in 2021/22, primarily driven by an increase in annual bonuses. This is at a time when many employees are being offered below-inflation pay rises, and analysis by lobby group the High Pay Centre suggests CEOs are on average earning 93 times more than employees on the lowest levels of pay.
A majority of the 300,000 Royal College of Nursing (RCN) members have voted for strike action for the first time in 106 years. "Anger has become action – our members are saying enough is enough," RCN General Secretary Pat Cullen said in a statement. "This action will be as much for patients as it is for nurses. Standards are falling too low." The RCN says NHS nurses have seen their salaries cut by up to 20% in real terms over the last ten years and is asking for a pay hike of 5% over inflation. The walkout will involve RCN members in more than half of hospitals and community teams across the UK, but emergency care will remain staffed while other services, such as cancer care, are also likely to be protected. Health workers in other unions, including junior doctors, midwives, paramedics, ambulance staff, hospital porters and cleaners, and physiotherapists, are also voting on industrial action. Unison and the GMB unions are set to announce their ballot results later this month. The NHS currently has a record 7 million patients on waiting lists for hospital treatment. The RCN says it will pay nursing staff on the picket line £50 a day.
The political response to the nurses’ strike announcement: A spokesman for Prime Minister Rishi Sunak said the RCN's demands would amount to combined pay rises costing £9bn which would be "simply not deliverable," and Health Secretary Steve Barclay accused the nurses of having unrealistic expectations and of ignoring the realities of the country’s struggling economy. Speaking on Sky News, Education Secretary Gillian Keegan told nurses there is “no point” in going on strike, as a bigger pay rise would “fuel inflation” and force the Government to “raise a lot more money”. On Sunday, Cabinet Office minister Oliver Dowden said on the same channel that the NHS would prioritise essential services in the event of strike action. “We have well-oiled contingencies in place and the Department of Health is across how we would deal with a scenario like this should it arise,” he said. Some three weeks ago, ahead of the ballot, Labour leader Keir Starmer said he didn’t want to see a strike by nurses but that he could “completely understand” why they were calling for a pay rise, while shadow health secretary Wes Streeting said that potential strikes by healthcare staff would “certainly not” be “in the best interest of patients” and “not in the interest of the NHS”. Neither have come out against the strikes since, however. Streeting tweeted yesterday: “There were no strikes in the NHS during 13 years when Labour was last in government. If we were in office today, we would be talking with the RCN and doing everything we can to prevent these strikes going ahead”.
WH Smith is to reinstate dividend payments of 9.1p per share after its annual profit slightly beat market expectations due to a rebound in travel demand from lockdown lows, and despite rail strikes. disrupted business at its shops at train stations. Dividends were suspended in 2020. “While there is economic uncertainty, travel patterns globally continue to improve and this, combined with the strength of the Group's growth opportunities, means that we are well positioned for a year of significant progress in 2023", said CEO Carl Cowling. The company reported a £73m profit for the year ended in August 2022, one million more than expected, and up from a loss of £55m a year ago.
Marks and Spencer yesterday warned of a “gathering storm” after reporting a 24% dip in profits for the six months to 1st October as a result of rising costs and squeezed consumer budgets. The chain reported profit before tax and adjusting items of £205.5m, despite an 8.5% revenue increase across the business. Total food sales increased 5.6% over the period while clothing and home sales - long a big struggle for M&S - rose 14%, its first market share gains in clothing and home since 2012, Sky News says. The company also said it was looking for help on business rates in the coming autumn statement from the Chancellor next week - the profit performance reflects the lack of business rates relief it received from the government during the time of Covid restrictions. Its joint online venture with Ocado Group also made a loss of £700,000 in the first half of the year as delivery volumes declined from their pandemic peak and the business invested in its offering. The company has also lost out because of its withdrawal from Russia following Vladimir Putin's invasion of Ukraine. M&S shares, down 49% in the year to date, slumped by a further 6% on the news, a dip not helped by a further announcement saying the resumption of dividends was being deferred.
Wetherspoons’ shares slumped as much as 8% yesterday after it revealed it was selling 39 more pubs across the UK as sales slow and costs surge. The Spoons’ also said it is facing around £10m in higher interest costs., as well as higher costs for staff, food and repairs because of rising inflation. However, it said it expects cash flow to remain in line with expectations for the year to the end of July, and net debt is now £745m, lower than at the July year end. Meanwhile, like-for-like sales in the 14 weeks to 6 November came in 9.6% higher than in the same period last year, and 0.4% up from pre-pandemic levels, leading boss Tim Martin to say: “the company remains cautiously optimistic about future prospects.”
Vodafone has agreed a joint venture (JV) deal with infrastructure fund manager Global Infrastructure Partners (GIP) and private equity firm KKR to hold its 81.7% stake in Vantage Towers, valuing the mobile towers business at €16.2bn. As part of the agreement, Vodafone will contribute its shares in Vantage Towers into the JV by way of a capital increase against new JV shares. The consortium will obtain a shareholding in the JV of up to 50% by acquiring JV shares from Vodafone for cash. The joint venture will make a voluntary takeover offer for the outstanding Vantage Towers shares held by minority shareholders, funded through new debt in the JV and equity from GIP and KKR, Vodafone said. Vodafone will receive minimum net cash proceeds of €3.2bn and a maximum of €7.1bn, depending on the take-up in the voluntary takeover offer and subject to GIP and KKR raising further equity before closing to increase their stake in the JV to 50%.
National Grid says it expects to invest up to £40bn in its energy networks between 2022 and 2026, with a strong focus on decarbonisation. The news came as it reported a 50% jump in half-yearly profits, which rose to £2.1 bn in the six months ended Sept. 30.
Ithaca Energy made a lacklustre debut on the London Stock Exchange yesterday as the North Sea oil and gas producer launched Britain's largest initial public offering of 2022. As Europe's fifth biggest IPO of the year began trading, Ithaca's shares fell as much as 11.6% below their 250p issue price, touching a low of 221p shortly after midday.
Russian steelmaker Evraz now finds itself without an auditor, after EY announced yesterday that it had ended its relationship with the company, due current sanctions because of key role Evraz plays in the Russian steel industry, and in turn the industry's support of the Russian military. "So far, the company has been unable to find a UK audit firm or a UK auditor willing to replace EY as the company's statutory or the group's auditor," the board said. Last week, sanctions were also extended to two Evraz shareholders - Alexander Abramov and Alexander Frolov - both described as business associates of Roman Abramovich.
According to Sky News, David McDowall, BrewDog's president and COO is quitting to become the new boss of Stonegate, which trades from 4,500 pubs across Britain and is owner of the Slug & Lettuce and Be at One chains, among others. McDowall has worked for BrewDog in senior roles for the last eight years, and replace Simon Longbottom, Stonegate's long-serving boss.
Revolution Beauty CEO Adam Minto has quit with immediate effect, as an investigation continues into the troubled makeup business. A probe was launched in September into Revolution's failure to complete its auditing quickly enough, as the firm also warned over lower profits. Law firm Macfarlanes LLP and consultants Forensic Risk Alliance started the investigation after auditor BDO raised "serious concerns" over its inability to publish an audit report for the latest financial year. Shares in the company were suspended on the London Stock Exchange as a result.
Elon Musk has sold just under $4bn worth of Tesla stock after completing his $44bn takeover of social media platform Twitter. According to filings by the US Securities and Exchange Commission, Musk sold 19.5m shares in the electric car maker between Friday and Tuesday for $3.95bn. The reason for the sale was not disclosed. Shares in the company are now down more than 52% year to date. Neil Wilson, chief market analyst at Markets.com, said: "Tesla shares were always going to come under pressure as Musk used his stock to fund the [Twitter] purchase." Separately, Tesla is recalling over 40,000 of its vehicles in the US because of a potential problem with their power-steering.
Facebook and Instagram owner Meta has confirmed it will slash around 13% of its global workforce to cut costs. In a message to employees, CEO Mark Zuckerberg said the company will be letting go of more than 11,000 people. Those affected will be paid 16 weeks of basic pay plus two additional weeks for every year of service, with no cap. In the US, Meta will continue to cover the cost of healthcare for people and their families for six months.
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