Marketing Newscast

Government borrowing rose in October to the second-highest level on record. The Office for National Statistics (ONS) has put the amount borrowed to cover the gap between tax revenue and public spending last month at £17.4bn, £4bn more than expected, and the second highest October borrowing since monthly records began in January 1993. The rise has been fuelled by the £9.4bn cost of Chancellor Rachel Reeves’s above inflation public sector pay deals and rising debt interest; the ONS said central government spending rose by £2.5bn to £36.9bn “as pay rises and inflation increased running costs.” As for debt interest payments, the £9.1bn payments made last month are £0.5bn higher than a year ago, and the highest for October since records began in 1997. In total, Britain has borrowed £96.6bn so far this year, 1.1bn more than at the same point last year. The ONS also said borrowing in the previous financial year was £3.2bn higher than Britain’s budget watchdog predicted just a few weeks ago, at £125.1bn. The Office for Budget Responsibility (OBR) expects the total annual deficit to rise to £127.5bn this financial year.

The Treasury has received 11% more in Inheritance Tax (IHT) so far this year, the ONS says. £5bn has been raised from the tax in the first seven months of the year, higher than the £4.6bn received by this point last year, giving the Government its fourth consecutive record yearly receipts.  The Office for Budget Responsibility (OBR) now estimates the Treasury will collect more than £50bn in IHT alone over the next five years. Thresholds for IHT have been frozen since 2020/21, and will remain frozen until at least 2030, and this, together with rising house prices, means the number of estates becoming liable for the payment has increased. By the end of the decade, a tax that was once paid by only a few, is forecast t reach nearly 10% of estates by the end of the decade.

The average UK private rent rose by 8.7% in the year to October, up from 8.4% in the year to September, according to the ONS. In London, rents were up 10.4 per cent year on year.

Commercial property development slumped to a 12-year low in the run-up to Rachel Reeves’s tax-raising Budget, according to analytics business CoStar Group. Only 8m square for of commercial office, retail or warehousing projects started in the three months from July to September, after Labour took power, CoStar says, equalling around 122 football pitches, the lowest amount of development since 2012. Patrick Scanlon, senior director of market analytics at CoStar, said that developers were facing “cliff-edge uncertainty” at the time amid rampant speculation that the Chancellor would launch a record tax raid. He also said that higher interest rates have increased the cost of developing, and that labour costs, which were already rising, are likely to dampen building still further because of the impact of employer national insurance contribution increases.

The nine water companies in England and Wales have been banned by Ofwat from using their customer’s money to fund “undeserved” bosses’ bonuses. Thames Water, Yorkshire Water, and Dwr Cymru Welsh Water have been directly blocked from allowing customers to pay £1.5m of bonuses, while the other six companies have decided voluntarily not to push the cost of executive bonuses worth a combined £5.2m onto customers – their owners will have to pay instead. In a statement, Ofwat CEO David Black said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability”. In the case of Thames Water, the BBC Business Editor Simon Jack notes that CEO Chris Weston, who was hired in January to try and turn around the fortunes of the debt-laden utility, was awarded a bonus of £195,000 for his first three months at the company, taking his total pay for the period to £437,000. It is not clear whether that bonus has been paid out but, technically, Jack says, Thames does not currently have any owners to pay bonuses. Earlier this year, Thames’ owners refused to follow through with a promised cash injection after Ofwat indicated it was not prepared to accept requests for bill rises of 44% above inflation over the next five years. In walking away, they effectively left the company under the control of its lenders. Thames Water declined to comment.

Santander UK has set aside £295m in its quarterly results to pay out to motor finance customers following a landmark court ruling last month. The Court of Appeal concluded that lenders had broken the law by receiving commissions on motor finance deals without obtaining their customer’s informed consent, potentially opening the door to multi-billion compensation claims.

Ford has announced plans to slash 4,000 jobs across Europe, including 800 UK-based roles. The carmaker said the cuts were required as part of its plans to bolster competitiveness amid an industry-wide shift towards all-electric vehicles that has impacted sales.