Pension funds will take a £30bn hit from Michael Gove’s Leasehold changes, it is claimed

Pension funds are braced for a hit worth tens of billions of pounds because of Michael Gove’s proposed changes to the Leasehold system, Sky News reports. The Secretary of State for Levelling Up, Housing and Communities wants to impose a £250 cap on ground rent, transitioning to 'peppercorn' levels over a 20-year period, which the insurance and pensions industries believe s will cost the sector in the region of £30bn. That figure is understood to mirror the Treasury's internal estimate of the cost to investors, according to insiders. Last month, The Sunday Times reported that Gove had been forced to water down his reform blueprint after an intensive industry lobbying campaign and opposition from some cabinet colleagues, and concerns from Government lawyers about the prospect of legal challenges to moves to retrospectively amend property rights. However, in an interview with the Financial Times on Thursday, Gove signalled that he would push ahead with his plans as soon as next week. The Treasury declined to comment on Sky’s story.  

Thames Water has submitted a new spending plan – known as PR24 - to water regulator Ofwat. It includes a request to hike bills by 45% over the next five years to an average oof £52.25 a month in order to avoid renationalisation amid debts of £18bn which have put it on the verge of collapse. It wants the extra income to spend nearly £20bn fixing leaks and sewage spills. Ofwat will make a draft decision on the request in June. Thames Water CEO Chris Weston said: “Our business plan focuses on our customers’ priorities. As part of the usual ongoing discussions relating to PR24, we’ve now updated it to deliver more projects that will benefit the environment. We will continue to discuss this with our regulators and stakeholders.” Meanwhile, the Telegraph reports that Thames Water and a group of lenders to its parent company, Kemble Water holdings Ltd, have drafted in lawyers as the suppliers’ future remains in jeopardy.  A £190m debt is due to be repaid by the end of April but the deadline is likely to be missed. Freshfields Bruckhaus Deringer and Linklaters have been instructed by lenders and Thames Water respectively. Sir Adrian Montague, chairman of Thames Water, began his career at Linklaters and was formerly a partner at the law firm. It has been revealed that some lenders could lose up to 40% of their money if the company is nationalised.

House Prices: The average asking price of a home in Britain is close to a record high after the biggest annual increase in a year, according to property website Rightmove. Asking prices for residential properties rose by 1.7% in the four weeks to 13^th April when compared with the same period last year, it said, taking the average new seller price to £372,324, only £570 pounds of a record hit in May 2023.

Electric Cars: Almost eight in 10 new EVs are being sold at an average 11% discount, according to Auto Trader, which says some 77% of new EVs listed on its site had prices cut last month, up from 55% a year earlier. Although a similar proportion of petrol cars were also discounted, Auto Trader said EV prices were being cut more sharply, with about 31% of EVs taking price cuts of at least a tenth, compared to 24% of petrol cars. The Government has mandated that 22% of vehicles sold by major car makers must be electric this year, a proportion that will rise ahead of a complete ban on new petrol and diesel vehicles in 2035. This, said Ian Plummer, commercial director of Auto Trader, means discounting will increase as car makers must hit these targets. “Manufacturers and retailers are fighting harder than ever to tempt customers… and that trend only looks set to accelerate as manufacturers struggle to meet strict zero emissions vehicle mandate targets in a much more competitive landscape,” he said, adding that the arrival of cheaper Chinese models in the UK would also “shake up the market and bring down prices for consumers”.

The Canal & River Trust (CRT) is introducing a surcharge for “continuous cruisers” of up to 75% above the standard fee over the next five years for the largest boats, which house boat owners with no fixed mooring say will price them out of the canals. The CRT told The Guardian: “As the cost of looking after the canal network spirals, we must raise money from all sources. Boats are central to the network and we try to keep their contribution affordable – the average licence costs around £850 a year”. It added: “We will do all we can to support those struggling wherever possible and have a welfare support team who can help boaters who are facing financial difficulties or other challenges.” A continuous cruising licence costs on average under £200 a month currently, the newspaper says.

Heathrow Airport: Flights could be delayed or cancelled at over the early May bank holiday weekend because of a planned strike by refuelling staff, the Unite union says. 50 workers from AFS Aviation are due to take part in 72 hours of industrial action beginning on 4^th May over "drastic cuts" to terms and conditions for new staff members since January. Heathrow says it has contingency measures in place if the industrial action goes ahead. Unite members at AFS refuel aircraft at Heathrow from 35 different airlines including Virgin, Delta, Emirates and Air France. Unite General secretary Sharon Graham said: “AFS is behaving appallingly by attacking the T&Cs of new members of staff – those it views as the easiest to intimidate."

Asda news:  

• Britain's third largest supermarket group has reported a 24% jump pre-tax profits for its 2023 year end to £1.08bn. Total sales, excluding fuel, rose 7.1% to £21.9bn. Asda is owned by brothers Zuber and Mohsin Issa and private equity firm TDR Capital but…

• TDR Capital is reportedly closing in on a deal to buy Zuber Issa's stake. Bloomberg on Friday cited people familiar with the discussions as saying that the agreement for Issa's 22.5% stake would give TDR majority control and could be announced in coming weeks.

• Meanwhile, the supermarket stands accused of having “forged ahead with a botched IT transition despite being warned in advance that thousands of workers would be paid incorrectly”, The Telegraph says. The newspapers says the changeover has impacted 30,000 employees and “left some hundreds of pounds out of pocket”. Problems relating to the payroll first arose last month, the newspaper says, and Asda has been unable to fix the issue since. Internal systems are said to have been “inundated with complaints” as some employees were underpaid while others were overpaid. Last month, store managers made £200 petty cash payments to affected staff.  A spokesman for trade union the GMB said: “GMB reps have been meeting with Asda management consistently over this issue. We have asked for simple things to protect colleagues – for example, adequate levels of petty cash to cover any underpayments. We have also asked for a public apology from [Asda co-owner] Mohsin Issa who had overseen what is fast becoming a shambles”. An Asda spokesman said: “The first payroll run with a large-scale systems migration rarely passes without any issues in any industry. For Asda colleagues, we unreservedly apologise to those impacted and continue to work with colleague representatives, including our unions, to rectify any outstanding issues – as a top priority. For the April payroll, Asda can confirm that the number of payroll queries was significantly reduced.”

Ocado shareholders are pushing for a potential shift from its London listing to the New York Stock Exchange, according to yesterday’s Sunday Telegraph. Formerly valued higher than major UK retailers such as J Sainsbury, Marks and Spencer and Wm Morrison combined, Ocado's market capitalisation had dwindled from £22bn to less than £3bn.

Tyman: New York-listed building products manufacturer Quanex has agreed terms to buy London-listed peer Tyman for £788m. The window and door product manufacturer will de-list from the London Stock Exchange.

Elite Emergency Medical Services has been sold out of administration, saving almost 500 jobs. The Tamworth based private ambulance company has not revealed the identity of the buyer.

Chill Brands: CEO Callum Sommerton has been suspended over “allegations around the use of inside information,” the firm announced this morning. London-listed Chill manufacturers tobacco alternatives including CBD pouches, and has appointed law firm Fieldfisher to investigate the claims against Sommerton. The firm said it was also engaging with relevant authorities including the Financial Conduct Authority.

National Express owner Mobico has announced the departure of its CFO James Stamp after accounting issues caused the firm to delay publication of its full-year results twice. He will stand down at the group’s AGM on 11^th June., to be replaced by Helen Cowling, a veteran CFO with experience at Octopus, Selecta Group and Ideal Standard International BV, on an interim basis.