Give us clarity on Net Zero, city firms tell the PM

Top City firms have criticised Prime Minister Rishi Sunak over an apparent lack of “long term clarity” on net-zero policies, City AM reports. In a letter to Sunak, investors and banks worth more than £1.5tn in assets said: “We are writing to express concern at government’s recent public statements and policy signals, which risk undermining the UK’s leadership in the clarity, certainty, and confidence of policymaking toward meeting the UK’s commitment to net zero”.  “This shift blurs regulatory visibility for investors and risks the ability of the finance sector to make the large-scale, transformative investments required to accelerate net-zero delivery and unlock growth in the UK,” it added, noting that: “Recent public debates have cast doubt on the UK’s 2030 phase-out of new petrol and diesel cars and 2035 phase-out of gas boilers, while the reforms to the UK’s carbon markets, energy efficiency standards for the private rented sector, and plans to issue new oil and gas licences in the North Sea all cast uncertainty on government’s commitment to the UK’s near and longer-term climate targets”. Despite a 2019 commitment for net-zero by 2050, the Government has wavered on a number of climate commitments in recent weeks, including criticising London’s Labour Mayor Sadiq Khan for pressing ahead with yesterday’s controversial expansion to outer London of the Ultra Low Emission Zone (ULEZ). Having previously committed to ban the sale of new petrol and diesel cars by 2035, and new oil and gas boilers by 2025 and 2026 respectively, these polices have recently been pushed back, while Grant Shapps, the Energy and Net Zero secretary now promises to “max out” the UK’s oil reserves. The letter was organised by the UK Sustainable Investment and Finance Association, which includes Jupiter Asset Management, Scottish Widows, Aegon, and Royal London.

Meanwhile, regional gas distribution company Cadent has warned that the Government’s plans to electrify heating and decarbonise the power grid through a mass heat pump rollout are “not deliverable”. Angela Needle, director of strategy at Cadent, told City A.M. the company estimates that up to half the UK’s homes will need hydrogen boilers instead. “If you think about every home is going to need an electric heating system… the electricity network outside their house is going to have to be upgraded, and there are some homes we know are very difficult to electrify,” she said. The government is targeting annual heat pump rollouts of 600,000 per year within five years, and has offered £6,000 grants to households via its £450m Boiler Upgrade Scheme, however just 33,000 heat pumps were installed last year, well below targets.

The Financial Conduct Authority (FCA) UK's has warned it is being impersonated by scammers asking people to hand over money or sensitive information, such as bank account PINs and passwords. So far this year, there have been reports of more than 7,700 such instances, almost double the amount reported in 2021, it said. The most common tactic used by fraudsters was to tell people they were owed compensation, and then ask for bank details or a processing fee to arrange "payment". The FCA said it did not contact people in this way, and that anyone asked for personal information should hang up the phone or ignore the email.

Pubs lost out on more than £22m in trade over the bank holiday weekend because of staff shortages, according to the British Beer and Pub Association (BBPA), which is blaming Brexit. Emma McClarkin, CEO of the BBPA, claims that tougher immigration laws and restricted numbers of low skilled workers entering the UK since Britain left the EU mean pubs “are not trading to full capacity and in turn that means lower sales and less revenue generated for the treasury”. The BBPA is now calling on the Government to implement solutions to solve the staffing crisis by making changes to the youth mobility scheme and widening the shortage occupation list. Hospitality has had the highest vacancy rate of any sector, over the past two years, with the most recent Office for National Statistics (ONS) figures, which show the average overall vacancy rate is at 3.2%, the rate within hospitality is 5.1%. A separate cross-industry survey conducted by the BBPA, the British Institute of Innkeeping, Hospitality Ulster and UKHospitality, concluded that 61% hospitality businesses are currently experiencing staff shortages, with 42% reducing opening hours on weekends due to a lack of team members

The overall amount borrowed to buy a home was around 30% lower this last Spring than in the year before, according to UK Finance data, which attributes the dip to “the significantly greater affordability challenges currently faced by borrowers”. The cost of mortgage borrowing has risen sharply in recent months because of rising interest rates, hitting a 15-year peak in July. They have since fallen, but remain well above where they were in early 2021. The data also showed a record number of borrowers choosing to refinance with their existing providers, therefore avoiding new affordability tests. 84% of remortgaging deals were internal transfers compared to an average of 77% across 2022, UK Finance said. April’s figure of 88% was a record monthly high. Eric Leenders, managing director of personal finance at UK Finance also noted that although higher, mortgages “continue to be largely affordable because of the ‘stress tests’ applied when the mortgage was originally taken out”.

Meanwhile, research from online property portal Zoopla suggests that the number of UK homes sold this year is expected to fall to the lowest level in more than a decade. House sales reaching completion are expected to fall 21% year-on-year to about 1m in 2023, the lowest level since 2012, it said, adding that over the last four weeks, demand for homes had been 34% lower than the average for the same period over the last five years.

Calls are growing for the UK to scrap the 0.5% stamp duty tax charged when trading in stocks and shares to reinvigorate capital markets, City AM reports. James Ashton, CEO of the Quoted Companies Alliance, said getting rid of it would be a “bold” move to give London’s stock markets some much needed life, while Richard Wilson, CEO of retail investment platform Interactive Investor, says the move would encourage pension funds into equity markets rather than bonds. Nick King, a research fellow at the Centre for Policy Studies and author of the recent report aimed at invigorating London’s stock markets, Retail Therapy, said the tax “not only means less liquidity in the market, but that all our pension funds and savings end up being smaller, through a thousand tiny cuts of the knife. Pension companies are increasingly cost conscious, and stamp duty is another unnecessary barrier to investing in UK shares”. Over the weekend, China slashed its stamp duty on shares and Ashton described the tax as “a dampener that doesn’t even exist on Wall Street.”  The Treasury collected £3.7bn from the tax in 2022-23, after a £4.4bn windfall the year before.

The Financial Conduct Authority (FCA) has temporarily suspended trading in shares of Superdry Plc on request, after the fashion retailer said its annual results would be delayed.  "The board confirms that the delay is a result of normal procedures taking longer than anticipated during the first year that RSM UK Audit LLP are auditing the company," Superdry said in a statement, adding that it expects to request the listing's restoration on the release of its annual results before the end of the week.

Redundancies for 12,500 workers at collapsed retail chain Wilko have been suspended while administrators consider rescue bids for the business, the GMB trade union said yesterday. The GMB met with PwC after calling for an urgent meeting with Business Secretary Kemi Badenoch, claiming they had been told by potential rescuers of the business that they were having “difficulties” engaging the big four accountancy firm.

Direct Line has appointed Adam Winslow as CEO, succeeding Jon Greenwood who has been acting CEO since January. Winslow currently leads Aviva's UK and Ireland general insurance business. Previously, he was CEO of Global Life at AIG Life and Retirement (now Corebridge).  He will pick up the reins at Direct Line early next year.