Business
Cost of living: Families are priced out of London, Assembly told
Kumail JafferLocal Democracy Reporting Service
AFP via Getty ImagesFamilies are being priced out of living in London due to rising costs and a lack of social housing, the London Assembly has been told.
The number of births in London in 2023 was 20% lower than the peak in 2012, with the sharpest decline in inner London, according to the Assembly’s Economy, Culture and Skills Committee.
The committee heard from experts on this trend, with child poverty campaigner Katherine Hill urging London’s mayor to make the capital a “child-friendly city”.
A spokesperson for the mayor said London’s population had “always fluctuated”, and the mayor had been doing “all he can” to support families with the cost of living.
The mayor’s office blamed falling numbers of primary school pupils in inner London on factors including “national falling birth rates, Brexit, housing costs and the impact of the cost-of-living crisis”.
In Pictures via Getty ImagesMs Hill, who is the strategic programme manager for child poverty campaign group 4in10, told the committee on Tuesday: “London rightly prides itself on being a diverse city – that should cut across all parameters, including age.
“In terms of getting people to have children and then stay in London with them, affordable housing and affordable childcare are the absolute key.”
She said families were being “priced out of areas where previously they have been able to live”, primarily due to availability of social housing.
Dr Bernice Kuang, a research fellow in demography at the University of Southampton, claimed Londoners still wanted to have an average of two children, but that this was not feasible for many in the capital.
She blamed a shift from social housing to private renting in inner London, adding that “private rented accommodation is not seen as the place to start a family”.
The mayor’s office claimed Sir Sadiq Khan had “started more new council homes for Londoners than any time since the 1970s and has funded free school meals to all state primary school children”.
Getty ImagesExperts said another reason for the drop in the number of families in London was the cost of childcare.
According to Coram Family and Childcare, parents of three to four year olds in inner London pay an average of £184.96 for 50 hours of childcare, even with the government’s free 30-hour offer, compared with a London average of £126.94.
Ms Dye said availability was often an even bigger problem than affordability, with “childcare deserts in parts of the city”.
The panel also expressed concerns about a lack of public green spaces for children to play in the capital.
‘Fantastic city for children’
The declining number of children born in the capital has forced many primary schools to close.
In February, a London Councils report predicted reception pupil numbers in the city would decrease by 3.6% over the next four years, which translates to 3,195 pupils or 117 classes.
Ms Hill said this would change “how our city feels” and that schools were “the heart of our communities”.
“If we lose them, we’re losing more than figures on a graph,” she said.
However, she acknowledged that “London is a fantastic city for children”, noting free transport and museums for children to take advantage of.
But, she added: “They need a roof over their head to be able to do that.”
Ofcom is facing calls for an “outright ban” on “absurd” mid-contract price hikes after the Government separately asked the regulator to revisit its rules on the practice.
The calls follow O2 unexpectedly announcing it was raising prices by £2.50 a month for existing customers.
On Monday, Technology Secretary Liz Kendall wrote an open letter to Ofcom bosses asking them to review mid-contract price rises again.
She wrote: “As we discussed when we met earlier this month, driving down inflationary costs and protecting consumers are vitally important for this government.
“As such, I welcome both the action you took in January to increase transparency on how in-contract prices are presented in new contracts, and your statement yesterday expressing disappointment with O2’s price rises.
“I strongly agree they are against the spirit of your previous changes on pricing, and all the more disappointing given the current pressures on consumers.”
She added: “Nevertheless, I believe we need to go further, faster. I am keen that we look at in-contract price rises again.”
Ofcom has been given until November 7 to respond to Ms Kendall’s letter.
Ofcom said: “We share the Government’s concern that customers who face price rises must be treated fairly by mobile providers and they are empowered to exercise their right to switch penalty-free if they didn’t agree to them upfront.
“We will respond to the Secretary of State’s specific queries shortly.”
O2 said in a statement: “We appreciate that price changes are never welcome, but we have been fully transparent with our customers about this change, writing directly to them and providing the right to exit without penalty if they wish.”
Ofcom introduced new rules in January to crack down on phone and broadband providers increasing prices in the middle of a contract without warning.
But last week, O2 announced it would be raising its monthly prices by more than originally promised.
It was able to do this because the increase was not linked to inflation, and it has given customers 30 days to leave without penalty providing they continue to pay off the cost of their device.
O2 said it has not gone against the regulation and Ofcom’s rules do not stop providers from raising prices.
The firm said: “A price increase equivalent to 8p per day is greatly outweighed by the £700 million we invest each year into our mobile network, with UK consumers benefitting from an extremely competitive market and some of the lowest prices compared to international peers.”
Alex Tofts, broadband spokesman from comparison site Broadband Genie, said: “What we’re seeing from O2 and price rises from other major providers is a direct result of crude regulation that has been poorly thought out, with its implications not given enough consideration.
“The only real way to protect customers is to outright ban these absurd mid-contract price hikes. Some providers already offer fixed prices, so why can’t those with the biggest profit margins do the same?
“We fully back the call for Ofcom to revisit these regulations. Until then, we urge all consumers to check whether they’re still in contract.
“To be fair to Ofcom, the broadband switching process has become much easier thanks to the One Touch Switch system. One-in-three households are currently free to switch, and with many providers offering competitive new-customer discounts, now could be the best opportunity to protect your budget before further price rises take effect.”
Jennifer Meierhans,Business reporter and
Henry Zeffman,Chief political correspondent
PA MediaChancellor Rachel Reeves has said she will make “necessary choices” in the Budget after the “world has thrown more challenges our way”.
Her Downing Street speech did not rule out a U-turn on Labour’s general election manifesto pledge not to hike income tax, VAT or National Insurance.
When journalists explicitly asked if the government was set to break that pledge she did not answer directly but said she was “setting the context for the Budget”.
Ahead of the speech, shadow chancellor Sir Mel Stride dubbed it an “emergency press conference”, adding “higher taxes are on the way” and called for Reeves to be sacked if she “breaks her promises yet again”.
If there was any doubt about tax rises before this speech, there isn’t now.
Yet Reeves repeatedly refused to get into the specifics of which taxes might go up.
Instead she began the work of explaining why a year after delivering a tax-raising Budget and vowing not to come back for more, she is in fact coming back for more.
The chancellor said she would do what is necessary, not what is popular.
The reasons she gave were poor productivity, for which she blamed Conservative government policy including Brexit, austerity and short-sighted decisions to cut infrastructure spending, persistently high global inflation and the uncertainty unleashed by Donald Trump’s tariffs.
In short, Reeves’ argument is that the failings of others are being visited upon this government, and that it falls to her to confront decisions her predecessors ducked.
She pledged to come up with a “Budget for growth with fairness at its heart” aimed at bringing down NHS waiting lists, the national debt and the cost of living.
“It is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country,” she said.
There are some in government who want this to be a one-and-done Budget, in that they do not want to come back again and again every year, eking out a bit more money in tax to meet the requirements of the independent forecast.
That is seen as an argument for raising billions of pounds through increasing at least one of the income tax rates.
However, no chancellor has increased the basic rate in 50 years and it would be a big risk politically, especially with public trust in politics in general, and Prime Minister Sir Keir Starmer in particular, so low.
There is also the question of whether the prime minister and chancellor could land the argument that none of this was foreseeable before last year’s Budget.
The message from Reeves echoed comments made by Sir Keir to a group of Labour MPs on Monday night.
He told those gathered that the Budget would be “a Labour Budget built on Labour values” and that the government would “make the tough but fair decisions to renew our country and build it for the long term”.
It comes as the Resolution Foundation, which has close links to Labour and was previously run by Treasury minister Torsten Bell, said avoiding changes to VAT, NI or income tax “would do more harm than good”.
Hiking income tax would be the “best option” for raising cash, it said, but suggested it should be offset by a 2p cut to employee national insurance, which would “raise £6 billion overall while protecting most workers from this tax rise”.
Extending the freeze in personal tax thresholds for two more years beyond April 2028 would also raise £7.5 billion, its pre-Budget analysis suggested.
The government’s official forecaster, the Office for Budget Responsibility (OBR), is widely expected to downgrade its productivity forecasts for the UK at the end of the month. That could add as much as £20bn to the amount the chancellor will need to find if she is to meet her self-imposed “non-negotiable” rules for government finances.
The two main rules are:
- Not to borrow to fund day-to-day public spending by the end of this parliament
- To get government debt falling as a share of national income by the end of this parliament
The Treasury declined to comment on “speculation” ahead of the OBR’s final forecast, which will be published on 26 November alongside the Budget.
However, the chancellor confirmed last week that both tax rises and spending cuts are options as she aims to give herself “sufficient headroom” against future economic shocks.
Reeves said in her speech on Tuesday that her commitment to her fiscal rules was “iron-clad”.
The Resolution Foundation urged the chancellor to use the Budget to give herself more fiscal headroom, meaning how much leeway she has to increase spending or cut taxes without being forced to break her own rules.
After the last Budget, Reeves had £9.9bn of headroom – but the think tank said subsequent policy U-turns and changes in the economic outlook have turned that into a £4bn black hole.
The group said Reeves should double the level of headroom to £20bn in order to “send a clear message to markets that she is serious about fixing the public finances, which in turn should reduce medium-term borrowing costs and make future fiscal events less fraught”.
Last month, the Institute for Fiscal Studies (IFS) said there was a “strong case” to increase fiscal headroom.
The think tank said the lack of a bigger buffer created instability, and could leave the chancellor “limping from one forecast to the next”.
BP has said it is ramping up overhaul efforts with aims to sell off more parts of the business and strip out further costs as it posted a smaller-than-feared drop in quarterly profits.
The oil giant reported underlying replacement cost profits, the group’s preferred earnings measure, of 2.21 billion US dollars (£1.68 billion) for the three months to September 30.
This was 3% lower than a year earlier, and 6% down on the previous quarter, but better than the 2.02 billion US dollars (£1.54 billion) expected by most analysts.
Murray Auchincloss, chief executive of BP, said: “We are looking to accelerate delivery of our plans, including undertaking a thorough review of our portfolio to drive simplification and targeting further improvements in cost performance and efficiency.”
The energy giant recently revealed a major cost-cutting drive, with thousands of roles to be axed as it comes under pressure to boost profits.
BP has also been selling off parts of the business to raise cash and said it now expects proceeds from divestment in 2025 to be more than four billion US dollars (£3.05 billion) and completed or announced asset sale agreements to reach around five billion US dollars (£3.81 billion) this year.
Mr Auchincloss said: “There is much more to do but we are moving at pace, and demonstrating that BP can and will do better for our investors.”
BP group said it would buy back another 750 million US dollars (£572 million) before reporting full-year figures, in line with the buybacks seen in the third quarter.
The business earlier this year unveiled a new growth strategy focused on extracting more oil and gas, pivoting away from a focus on green energy and heavily reducing spending on renewables.
It has come under pressure from shareholders to boost profits and cut costs, with activist investor Elliott Management recently taking a 5% stake in the group.
In August, it revealed it expects 6,200 jobs to go – about 15% of its office-based workforce – which is higher than the 4,700 cuts announced at the start of the year, with a focus on artificial intelligence (AI) to help drive cost efficiencies.
BP also said at the time it had already slashed 3,200 contractor roles since January, with another 1,200 to go by the end of 2025.
The third-quarter figures come after fellow FTSE 100 oil giant Shell also saw profits fall amid lower oil prices, although Shell likewise saw profits come in higher than expected, amid a boost from higher sales volumes and trading margins.
Benchmark Brent crude average prices fell 13% year-on-year in the third quarter.
BP’s half-year results in August showed profits tumbled by nearly a third as weaker oil prices weighed on earnings, although it posted a better-than-expected performance for the second quarter.
On Tuesday, it said its customers and products division was helped by higher refining margins, with better-than-expected profit before interest and tax of 1.72 billion US dollars (£1.31 billion), up from 381 million US dollars (£290 million) last year.
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