Lunchtime news Monday 27 October 2023

Gordon Brown has called for a cut in interest rates to stimulate the economy. The Prime Minister said inflation was coming down – allowing the Bank of England to respond with further cuts to bring down the cost of borrowing to families and businesses. And in a speech today, he will pledge to crack down on the jobless – despite fears that unemployment may rise to three million. ‘The very moment in an economic downturn when we need to invest in human capital is no time to slow down welfare reform,’ he will say. The speech is to mark the day incapacity benefit is replaced by the new employment and support allowance.

Thousands of homes are being seized by banks using a legal loophole. Some with debts of as little as £1,000 have been served with charging orders, which allow creditors to demand the sale of a property. It comes a week after Yvette Cooper, the chief secretary to the Treasury, told banks to cut repossessions following predictions that two million householders would fall into negative equity by 2010. The Ministry of Justice said that 97,026 charging orders were granted by courts in England and Wales last year, a 10-fold increase since 2000.

And the Prime Minister’s flagship plan for a string of eco-towns across Britain has been dealt a critical blow, with only two of the 10 sites promised now expected to be built. The plans are now in jeopardy thanks to a combination of the credit crunch, a collapsing construction industry and fierce local opposition. Officials at the Department for Communities and Local Government have concluded only ‘one or two’ of the 15 shortlisted projects are genuinely viable, according to a source close to the discussions. The final decision on how many should go forward is yet to be taken by Margaret Beckett, the new housing minister. But she failed to mention either eco-towns or the government’s wider target to build three million new homes by 2020 – which housing experts are also now openly questioning – when she made her first speech to the Home Builders Federation’s annual conference last week.

House prices are expected to tumble by an average of £40,000 by the end of next year. A study shows a peak-to-trough fall in house prices of up to 20 per cent by December 2009, taking the figure back to 2004 levels. The figures come from the Centre for Economics and Business Research, which predicts the market will not show any signs of stability until 2010. However, the organisation believes prices and sales will see a new boom in 2011 and 2012. The CEBR puts the average house price peak at £196,000 in 2007 with a predicted figure of £57,000 by next Christmas. Some 1.5million properties were bought in 2007. That is expected to plummet to 916,000 this year and 900,000 in 2009.