PROPTECH-X ‘Proptech & Property News’: Rishi Sunak does nothing as interest rate rises to 5% | Labour and ESG what does it mean

The Bank of England moves the base rate by 50 points to 5%, highest rate for fifteen years, more rises likely.

Despite Rishi Sunak stating that he was ‘on it’, as he hid away inside an Ikea warehouse, there seems no end to the woe for mortgage borrowers in the UK, as variable rates, two year fixed rates and five year fixed rates look to rocket further.

Today most of the members of the Bank of England fiscal panel voted for a 0.5% hike in interest rates, with only two voting for no rise. This means that for some their monthly mortgage payments have increased by 50% in the the past 14-months.

If you add in the uptick in utility bills, cost of food and the economy rate of 8.4%, homeowners are going to really feel the squeeze. As are the 720,000 plus mortgage holders who will be looking to re-mortgage by the end of the year, and first time buyers eyeing rates of 6.3% or more.

With the housing market already slowing, this huge intervention by the Bank of England will be like a hammer blow to many agents, causing financial problems akin to 2008, and the depression triggered by the global bank failings.

Both the PM and the Chancellor of exchequer who are multi-millionaires look suddenly exposed and out of touch with the financial realities of the people they govern. Andrew Bailey Governor of the BoE may say that a short sharp interest rate trajectory will cure all, and Hunt may say we need to tough it out, but the reality is people will lose their homes and businesses will fail, as consumers have less cash to spend. The bigger problem is that all indicators pint to an autumn with a likely base rate of 5.75%, rising to 6% by Christmas, as inflation is out of control.

The rental sector will also be hit, as landlords re-financing or looking to finance new inventory will pass on the higher cost of property funding to the tenants.

Maybe if Mr Bailey was earning the minimum wage of £9.50 an hour, and not £600,000 a year, or PM Rishi Sunak (and his wife) did not have a £530M fortune, or if Jeremy Hunt the Chancellor did not have a £15M personal fortune, their world view of toughing it out, would be very different. When the PM understands doing nothing is going to see the decimation of the conservative party at the next general election, he will act. My thoughts that will happen too late, and we will be in a spiralling economic depression.

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Where does the Labour party really stand on ESG

The Labour Party has traditionally placed a strong emphasis on social and environmental issues, aiming to address economic inequality, promote social justice, and tackle climate change. But in recent weeks it seems to be backtracking on this.

Some key areas that the party has in the past focused on in relation to ESG include:

1. Climate Change and Environment: The Labour Party has highlighted the urgent need to combat climate change and reduce greenhouse gas emissions. In the past, they have proposed ambitious targets for decarbonizing the economy, increasing renewable energy generation, investing in sustainable infrastructure, and supporting green jobs.
2. Social Justice: The Labour Party has advocated for policies that aim to reduce social inequalities and promote fair access to opportunities. This includes initiatives to address income disparities, improve workers’ rights, strengthen social welfare programs, and enhance social mobility.
3. Corporate Responsibility: The Labour Party has supported measures to enhance corporate responsibility and governance. This includes promoting transparency in business practices, ensuring fair pay and working conditions, encouraging responsible supply chains, and advocating for greater accountability in executive compensation.
4. Financial Regulation: Labour has historically called for stricter financial regulations to prevent market abuses, promote stability, and protect consumers. They have highlighted the importance of robust oversight and regulation to prevent misconduct and ensure ethical behavior in the financial sector.
5. Sustainable Investment: The party has expressed support for sustainable investment practices that prioritize long-term value creation and ESG considerations. This includes encouraging institutional investors to take ESG factors into account when making investment decisions and supporting the development of green finance initiatives.

If we look at the labour official website we learn what their official position, but increasingly Starmer is finding that he is having to walk that political tightrope between policy and reality. Also on a personal level I feel that the digital age is a polarised opposite of a gree future, as IoT just means more tech, carbon and resources to run the twilight world we live in and the communities we are part of. The planet burns, whilst we whave more and more screen time.

Taken from ‘A green and digital future – The Labour Party’

‘We know we (Labour) can rise to the challenges of the green and digital future, and seize its opportunities. British tech is world-leading: our start-ups attract more investment than those in any other European country. Global leaps in foundational technologies such as deep learning, protein folding and semiconductor design have all taken place because of British universities and companies. Nicholas Stern’s review on the economics of the climate emergency, published in 2006 under the last Labour Government, was a watershed moment in focusing the whole world’s attention on the climate crisis[3]. And our green economy is now worth more than £200 billion[4].

But we also know that under this Conservative Government action is already falling a long way short of what is needed and we are already seeing increasing evidence of catastrophic consequences for our people and planet. The UK is off track to meet even the inadequate targets the Government has set to reach net zero. Climate delay is now the greatest obstacle we face. We have lost tens of thousands of green jobs and risk losing hundreds of thousands more. Simultaneously, the digital divide in our country continues to persist, and the prospect of universal broadband access retreats ever further into the distance.

The people of Britain need to see words matched with action. Tackling the climate and ecological crisis must be the defining mission of the next decade. We need a clear strategy to reduce the vast majority of UK emissions by 2030, acting to protect our planet and our children’s and grandchildren’s futures, while seizing the economic benefits that come with a fairer, greener economy. We need to stem the loss of jobs seen under the Conservatives and buy, make and sell more in Britain so that the economic benefits of decarbonisation are felt here at home – with good, unionised jobs spread fairly across the country. And at the same time we need to close the digital divide and give people in every part of the UK the access and the skills they need to navigate and flourish in an ever-changing digital world.

The Conservative status quo

The coming decade is crucial to tackling the climate and ecological crisis. The latest findings from the Independent Panel on Climate Change (IPCC) were the starkest warning yet that the crisis is here right now and is the biggest long-term threat we face[5]. The extreme weather events of recent months will only become more frequent, and urgent action is required both to drive down emissions and to adapt to and protect communities from the changes to our climate that are already baked in.

The greatest obstacle we face is not climate denial but climate delay. Tackling the climate and ecological crisis requires not just words but action: political commitment, leadership and implementation[6]. While the Conservatives acknowledge the challenge, they are not rising to it; they seem to be in denial about the scale and urgency of the crisis. Instead, they are making it harder to achieve decarbonisation: axing vital home retrofit initiatives, cutting subsidies for renewables and electric vehicles, and privatising the Green Investment Bank. They are toying with opening a new coal mine in Cumbria and approving a major new oil field in the North Sea.

As a result, the UK is set to miss its legal climate targets significantly: the Climate Change Committee (CCC) has assessed that only 12% of the emissions reductions we need by 2030 are currently “fully on track”[7]. Electric vehicles are a case in point: by 2030 we will need 433 public charging points per parliamentary constituency for widespread adoption. Right now there are just 32 on average[8].

The global transition to net zero has already begun. Those countries which seize the initiative will both mitigate the worst of the risks and benefit from the most significant of the opportunities. If the Conservatives continue to drag their feet over the course of the next decade as they have during the last, the UK can expect to witness an unmanaged, unplanned, and unfair transition, worsening inequality both in our country and around the world. The OBR has concluded that delaying the transition to net zero by 10 years will double its cost[9]. The people and businesses of Britain cannot afford another decade of Conservative inaction and nor can the planet.

For too long, our country has been held back by a lack of investment in the backbone of a modern economy – the infrastructure of public transport, housing, communications and energy systems – and in our domestic manufacturing industries. And the investment that has occurred has been highly geographically uneven. More delay means we risk losing out on the green job opportunities of the future.

Over the last decade the UK has lost nearly 75,000 jobs in green technologies[10], from solar power to onshore wind, renewable electricity and bioenergy, and above all, energy efficiency. Looking ahead, the Trades Union Congress estimates that a further 368,000-667,000 jobs could be offshored from Britain if we fail to meet our climate targets and fall behind other countries on climate action – with jobs in North-West England, Yorkshire and the Humber and the West Midlands being most at risk[11].

The Conservatives’ track record here is ominous, with the Green Homes Grant scheme axed despite the potential of retrofitting to create tens of thousands of jobs; and international comparisons showing the UK as second from bottom in the G7 when it comes to green infrastructure investment[12].

We see a similar picture concerning the digital jobs of the future. The Conservatives have wasted a decade and squandered the world-leading position our broadband infrastructure was left in by the last Labour government.[13] In Spring 2020, only 12% of UK homes and offices had access to full-fibre broadband[14].

Conservative commitments on rollout have been rolled back: their 2019 manifesto promised “full fibre and gigabit-capable broadband to every home and business across the UK by 2025”[15], but within a year of the election that had been scaled back to just 85% of all homes[16] – and now there are doubts as to whether even this will be achieved[17]. Experts estimate that a one-year delay would mean missing out on £10 billion in productivity gains, and a two-year delay would mean missing out on nearly £30 billion. Yet again, the country cannot afford the price of Conservative delay[18].

If our digital sector is to flourish and generate the jobs of the coming decade, we must have a government which backs it with the right incentives for talented people to work here and to encourage investment for innovation and growth. Yet at present we are not making enough of our world-leading higher education sector: UK universities generate lower Intellectual Property-related income, fewer spinoffs and fewer patents than US counterparts for each pound of research resource spent[19]. The Government is set to miss even its modest target on Research and Development investment[20] – an area where we are already below the OECD average and behind countries like South Korea, Germany, the United States and France[21].

On current trends we also risk an ongoing digital divide. There are still 9 million adults in the UK who cannot use the internet, with a stark north-south divide: 53% of people in the North East rarely or never use the internet compared to 35% in the South East[22]. The COVID-19 pandemic, which forced so much of our lives online – from working and learning to accessing key services – has only sharpened that divide. Addressing it is a moral and economic imperative. As Tim Berners-Lee, the creator of the world wide web, has said: “We cannot afford not to do it”[23]. Yet the Conservatives fail to grasp this, demonstrated by their callous decision to cut allocations of laptops to disadvantaged pupils at the height of the pandemic by 80%[24]. With that attitude, we risk seeing the digital divide still stubbornly in place at the end of the decade just as it was at the start.

A stronger green and digital future

The climate emergency is not only the single greatest challenge facing our country; it is also our single greatest opportunity to build a more just and prosperous future.

We need to seize the opportunities of the digital revolution and take on the climate and ecological crisis. We have to act now to transition away from fossil fuels and clean up our environment. We can do this, by ensuring that existing industries such as steel and automotive can transition to a clean future, while also creating new secure, unionised jobs of the future. If we take the initiative and help British businesses and workers prepare, we can secure new jobs in every part of the country. 

We should do all we can to back a flourishing, homegrown manufacturing sector, as well as a thriving energy industry with security of supply: led by renewables, nuclear and other low carbon energy sources. We started the industrial revolution – now let’s own the digital and green ones. By harnessing technological change and building it in Britain again, we can make our economy more competitive, our jobs better and our country happier and better off. We need to change how we heat our homes with a range of low carbon heating systems; ensure that we have cleaner air and green spaces for our communities; and deliver public transport for every community.

The UK needs to have cut the substantial majority of emissions and to have reversed the decline of nature by 2030. Our country should be in its rightful position as one of the world leaders in the green economy, not lagging at the back of the G7 pack. We owe it to both current and future generations to act urgently, doing what is needed in the coming decade to avert catastrophe. This will both protect the planet and mean that our children grow up with cleaner air, with our country’s great nature and wildlife restored and flourishing, with warmer and more secure homes, and ultimately – handled properly – with a fairer and more equal society.

Urgent action within the next 10 years would also enable Britain to seize the economic opportunities of the move to net zero. Experts are agreed that clean energy infrastructure investment has the strongest positive impact both on emissions and on our overall prosperity[25]. The Government’s own projections make clear that the low carbon economy could grow 11% each year to 2030, far outpacing the 1-2% growth projected for the wider economy[26], but that will only happen with targeted investment and coordination.

As our economy heals from the damage inflicted both the pandemic and the Conservatives’ hapless response to it, we have the opportunity to shape that recovery so that we are both generating good jobs – both in the industries of the future and by supporting our existing industries to decarbonise – and on track to meet our net zero targets. Last year Labour’s Green Economic Recovery report showed how accelerating £30 billion of currently-planned infrastructure spending as a rapid COVID-19 stimulus package could support 400,000 clean, green jobs across the country[27].

We also need to buy, make and sell more in Britain to ensure that the benefits of these new industries are always felt on our own shores[28]. With a strategic steer from Government, our great automotive industry could be world-leading in making the shift to Electric Vehicles (EVs). That requires certainty: that the new gigafactories we need to produce batteries domestically can be rolled out over the coming decade; that EV charging points will be spread right across the country by 2030; and that EV ownership is affordable for everyone, including those on low and middle incomes[29]. By 2030 we need to see British electric cars rolling off production lines in Sunderland and South Wales; British homes powered by domestically-produced wind turbines off the coasts of Scotland and Teesside; and British hospitals, schools and railways built with clean steel manufactured in Rotherham and Hartlepool.

As we make the transition, we need to ensure that public investment yields a long-term return and benefits whole communities. In the 1980s, the Conservatives squandered the economic dividend of North Sea Oil, with communities losing out and distant shareholders making excessive profits. This time, we need to ensure that workers and communities reap the benefits and dividends of the green transition.

The UK is the most regionally imbalanced economy in Europe, and many of our communities still bear the scars of forced deindustrialisation: never again should workers be forced to bear the costs of transition and reap none of its rewards.

It is therefore essential that the transition to net zero is managed, fair, and prosperous so that local communities and workers benefit, with workers and their trade unions leading the change in their workplace and industry. No-one should be left behind. That means Government working with trade unions to make sure that businesses and workers have been supported to adjust; that our country is resilient in the face of future economic and climate-related shocks; and that while we act to address existing inequalities in the labour market we also guard against creating new ones.

As the IPPR’s Environmental Justice Commission notes, a net zero transition can only be successful if it is “owned and importantly informed by the public … People are experts in their own lives and aspirations. They have experiences and knowledge which are hugely valuable in designing better policy.”[30] We must also prioritise health and wellbeing, so that we are breathing cleaner air and the country’s wildlife and biodiversity is not just preserved but restored and flourishing once more.

Britain needs to be at the cutting edge of technological development if we are to prepare for and benefit from the digital future. That will require being much more ambitious about how much we spend – private and public sector alike – on research and development[31]. The UK led the First Industrial Revolution, and we can still lead the Fourth Industrial Revolution. To do so, we need a serious industrial strategy for the next decade – something which has been so sorely lacking in the decade just gone – to give every region of the country the tools to start, scale and invest in the world-leading digital firms of tomorrow[32].

A key part of that means ending the delay to broadband rollout so that universal access is a reality for people in the UK as soon as possible. Getting that right would mean that there are opportunities in every part of the country as well as the security that comes from having closed the digital divide, with no-one left behind. We should ensure that everyone has the knowledge and skills needed to benefit from technological advancements and to navigate with confidence the online world.

Our green and digital futures are interlinked, with progress on one helping accelerate progress in the other: right now, for instance, the Royal Society estimates that just 2% of the potential for digital technologies to enable greater flexibility in energy demand is being exploited. By acting strategically and in a joined-up manner the UK could be seizing many more green and digital opportunities[33].

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Proptech and Property News in association with Estate Agent Networking.