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Outsourcing giant Serco has raised its revenue and profits forecasts for 2020 as a result of the growth in work with the global pandemic.
Updating the London Stock Exchange in an unscheduled announcement, the company, which is involved in providing the UK government’s test and trace scheme, said it had achieved strong revenue growth in the three months from July.

It highlighted extensions to its contracts to provide test sites and call handlers, which the firm said was “an indication of our customer’s satisfaction with the quality of work we have delivered”.
Serco also said it was looking after an increased number of asylum seekers on behalf of the Home Office, and that its new prisoner escorting contract “has been successfully mobilised”.

Image: The firm has defended its ‘limited and specific’ role in the test and trace programme
The latest figures show the group expects a trading profit, before any one-off costs, of between £160m and £165m, compared with previous estimates of £135m to £150m.

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Full-year revenue is expected to be around £3.9bn – up from £3.7bn previously predicted.

The expected growth in profits is likely to fuel the political controversy around the use of private contractors in the troubled testing system.

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Earlier this week, Sky News revealed the government is paying individual private sector consultants million-pound wages to work on its test and trace programme.
It has also previously emerged that there were more than 1,000 consultants from Deloitte working on the scheme, at day rates of up to £2,360.
The Serco profits announcement comes a day after NHS test and trace recorded its worst ever week for contact tracing as cases of coronavirus continue to rise.
Data showed 62.6% of close contacts of people who tested positive for COVID-19 in England were reached through the system in the week ending 7 October .

Image: The contractor’s involvement in the NHS scheme has been controversial
But responding to the criticism, Serco has defended its “limited and specific” role in the test and trace programme, taking issue with “suggestions that we are responsible for the whole programme and / or that we have failed in our obligations”.
The company said it was “proud to be playing a part” in the NHS scheme and employed around 9,000 people to support it.
It added: “However, the part we play, although important, is limited and specific.”

Coronavirus: How many have tested positive where you live?

The company pointed out it was one of five suppliers running fixed and mobile testing sites and was one of two main contractors on the tracing side.
It said: “We are not involved in other parts of the process, for instance the design and management of the overall programme, the NHS app, the IT systems, the booking of tests, the provision of test kits, the test laboratories, delivering test results, or the identification of contacts of people who have tested positive.
“We believe that our operational delivery has been outstanding, and that we have delivered our obligations to the customer to their satisfaction, evidenced by the fact that they have extended our contracts for both test sites and tracing call capacity.”
Serco added in its statement that it had also benefitted from contracts in the US, Australia and the Middle East.
Shares in the group were up 13% during trading.

British Airways is to be fined £20m after losing the personal and financial details of more than 400,000 customers in a cyber attack.
The fine is considerably lower than the £183m fine which the Information Commissioner’s Office (ICO) had initially notified the company of last year.

According to the ICO, the regulator took into account “representations from BA and the economic impact of COVID-19 on their business before setting a final penalty”.
It comes as the company’s chief executive told MPs back in September that the business was “fighting for its survival” as a consequence of the pandemic.
The ICO said it took into account the economic impact of its initial fine as part of its regulatory action policy, which is currently under review.

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Announcing the £20m fine, Elizabeth Denham, the information commissioner, described British Airways’ “failure to act” as “unacceptable” and said the fine was the biggest it had ever issued despite the £163m reprieve.

The credit card details of 429,612 customers were compromised in the incident back in 2018. The ICO confirmed that this “included names, addresses, payment card numbers and CVV numbers of 244,000 BA customers”.

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“Other details thought to have been accessed include the combined card and CVV numbers of 77,000 customers and card numbers only for 108,000 customers.
“Usernames and passwords of BA employee and administrator accounts as well as usernames and PINs of up to 612 BA Executive Club accounts were also potentially accessed,” the regulator said.
BA was criticised for failing to prevent and mitigate the risk from cyber attacks, which the ICO said would not “have entailed excessive cost or technical barriers” and some of which were already available through Microsoft, which BA was using.
The investigation also found that BA itself failed to detect the attack on 22 June 2018 and was only alerted to it by a third party more than two months later on 5 September.
“It is not clear whether or when BA would have identified the attack themselves,” the regulator stated.
“This was considered to be a severe failing because of the number of people affected and because any potential financial harm could have been more significant.”
A spokesperson for British Airways, which is owned by Madrid-headquartered International Airlines Group, said: “We alerted customers as soon as we became aware of the criminal attack on our systems in 2018 and are sorry we fell short of our customers’ expectations.
“We are pleased the ICO recognises that we have made considerable improvements to the security of our systems since the attack and that we fully co-operated with its investigation.”

Wetherspoon founder Tim Martin has lashed out at the “ever-changing raft of ill-thought-out” coronavirus regulations as the pub chain sank to a £105.4m loss.
His renewed criticism came as the company’s delayed results also revealed that sales fell by 30% from £1.82bn to £1.26bn in the year to 26 July.

Image: Restrictions imposed under Tiers 1, 2 and 3 of England’s lockdown system
Lambasting the government’s handling of the COVID-19 crisis, Mr Martin argued that the UK should adopt the Swedish approach to allow his pubs to open again properly.
The firm’s chairman pointed out that like-for-like sales in the 11 weeks since 26 July have been 15% below those of last year, with strong sales in the first few weeks, followed by a marked slowdown since the introduction of a curfew and other restrictions.
His comments came after Marston’s warned that 2,150 jobs are at risk after the government tightened coronavirus restrictions.

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Meanwhile, a hospitality chief has said 250,000 jobs are under threat in London from additional curbs being imposed on the capital from this weekend.

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Mr Martin said: “For the two months following reopening, it appeared that the hospitality industry, in difficult circumstances, was adapting to the new regime and was getting ‘back on its feet’, albeit in survival mode.”

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But he added: “It appears that the government and its advisers were clearly uncomfortable as the country emerged from lockdown.
“They have introduced, without consultation, under emergency powers, an ever-changing raft of ill-thought-out regulations – these are extraordinarily difficult for the public and publicans to understand and to implement.
“None of the new regulations appears to have any obvious basis in science.
“For example, a requirement for table service was introduced – which is expensive to implement and undermines the essential nature of pubs for many people – pubs have now become like restaurants. Customers can approach the till in a shop, but not in a pub – which is, in no sense, ‘scientific’.
“In addition, face-coverings, for which the health benefits are debatable, need not be worn while seated, yet must be worn to go to visit the bathroom – another capricious regulation.”

Where jobs have been lost in the UK

Mr Martin argued the “most damaging regulation” was the 10pm curfew, which he said had “few supporters outside of the narrow cloisters” of Downing Street and its meetings of scientific advisers.
He said: “This has meant that many thousands of hospitality industry employees, striving to maintain hygiene and social-distancing standards, go off duty at 10pm, leaving people to socialise in homes and at private events which are, in reality, impossible to regulate.
“In marked contrast to the consistency of the comparatively successful Swedish approach, which emphasises social distancing, hygiene and trust in the people, the erratic UK government is jumping from pillar to post and is both tightening and tinkering with regulations, so we are now in quasi-lockdown which is producing visibly worse outcomes than those in Sweden, in respect of both health and the economy.”

A lack of economic planning for a pandemic may have cost the taxpayer billions of pounds through fraud and error, a Westminster watchdog has said.
The failure to prepare forced the Treasury to quickly design the financial support schemes from scratch when the country went into lockdown in March, according to the Commons Public Accounts Committee.

This was despite a pandemic having been identified as a top national risk for years.
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Image: The crisis meant HMRC was forced to switch staff from frontline tax collection
MPs said it was “very worrying” that HM Revenue and Customs (HMRC) had estimated for the furlough scheme alone, £3.5bn of the £35.4bn paid out by mid-August may have been fraudulently claimed or paid in error.

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The committee’s report said: “With at least some thinking about the economic risks of a pandemic in advance, it may have been possible to build in stronger safeguards against fraud and error, while still providing much-needed support to businesses and their employees.”

The government is now being called on to publish a list of the companies which received furlough cash in the interests of transparency.

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The committee also said the COVID-19 crisis had meant HMRC had been forced to switch staff from frontline tax collection to implement and run the various coronavirus support schemes.
As a result, the department estimated the revenue it collected through its compliance work in the first three months of the tax year 2020-21 was down 51% on the same period the previous year, and may never be recovered.
Arguing that the government should have been better prepared, committee chairman Meg Hillier said: “Our finding of the astonishing lack of economic planning for a pandemic shows how the unacceptable room for fraud against taxpayers was allowed into the government’s hastily drawn up economic support schemes.
“I would like to see the government publish a list of the companies which received furlough money.
“Where taxpayers’ money is being used, transparency should be a given. HMRC must act now to minimise fraud and error and ensure that taxpayers do not pay time and time again in the years to come.”

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A government spokesman said: “The government’s number one priority from the start of the outbreak has been on protecting jobs and getting support to those who need it as quickly as possible.
“Our income support schemes have provided a lifeline to millions of hard working families across the UK and we make no apology for the speed at which they were delivered. Without them lives would have been ruined.
“Our schemes were designed to minimise fraud from the outset and we have rejected thousands of fraudulent claims. We will not tolerate those who seek to defraud taxpayers and will take action against perpetrators – including criminal prosecution.”

The risk of exposure to the coronavirus on flights is very low, according to a US Department of Defence study.
This will be seen as a positive sign for the airline industry as it tries to rebound from the pandemic’s crushing effect on travel.

When a seated passenger is wearing a mask, an average 0.003% of air particles within the breathing zone around a person’s head are infectious – even when every seat is occupied, the study suggests.

Image: A United Airlines passenger jet taxis at Newark Liberty International Airport. File pic
The testing assumed there was only one infected person on the plane and it did not simulate the effects of passenger movement around the cabin.
Experts conducted the study on a United Airlines Boeing 777 and 767 aircraft and claim it showed that masks helped minimise exposure to infection when someone coughed, even in neighbouring seats.

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It found about 99.99% of particles were filtered out of the cabin within six minutes due to fast air circulation, downward air ventilation and the filtration systems on the aircraft.

And it estimated that a passenger would need to fly 54 hours on a plane with someone who has coronavirus to receive an infectious dose.

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“These results … mean your chances of COVID exposure on a United aircraft are nearly non-existent, even if your flight is full,” said United Airlines chief customer officer Toby Enqvist.
The study was led and funded by Transportation Command, which operates Patriot Express flights that use commercial planes like United’s for members of the military and their families.
It took place over six months and involved 300 tests during 38 hours of flight time and 45 hours of ground testing.

Image: Aviation has been one of the hardest-hit sectors during the pandemic, with demand falling substantially
The International Air Transport Association (IATA) said it had identified only 44 flight-related COVID-19 cases since the beginning of 2020, versus some 1.2 billion passengers who have travelled during that time.
IATA director general Alexandre de Juniac said “nothing is completely risk-free” but the published cases of potential inflight COVID-19 transmission show that “the risk of contracting the virus on board appears to be in the same category as being struck by lightning”.
The pandemic has hit the aviation industry hard – and in the US, the number of trips taken by air is still down 65% on where it was a year ago.

Amid claims that England’s crucial COVID-19 contact tracing scheme has failed, Sky News can reveal that the government has been paying a five-person team of management consultants £25,000 a day to work on that part of the system.
The team from Boston Consulting Group (BCG) helped mastermind the creation of the contact tracing systems.

They were only a fraction of the private sector consultants working on the test and trace system, however, they are believed to have been among the most expensive.
Two members of the team were being paid day rates of £7,360 while the remaining three were being paid £4,160 – though the consultancy gave the government a 10% discount for the job.

Data can save lives, data can cost lives – and this latest testing blunder will likely prove it

The revelation, based on confidential documents seen by Sky News, underlines the extent of how much the government is paying for the work of individual high-flying executives on the system, which is supposed to help track down the contacts of those who have caught COVID-19.

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There are around 40 BCG executives in total working on Test and Trace, on day rates ranging from £2,400 to £7,360.

The individual consultants may not receive this full sum, but the firm charges on the basis of an individual’s time.

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Fresh figures published by Test and Trace today show that in the latest period for which there is data, the week to 7 October, the proportion of contacts successfully reached in England dropped to 62.9% – the lowest since the creation of the system.
The fall may be associated with the data problems a couple of weeks ago, when a spreadsheet error at Public Health England meant around 16,000 cases were not rapidly passed to the tracers.

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However, it means the system is now falling far below the objectives set out by public health officials, who would like 80% of contacts to be reached.
Dr Layla McCay, director at the NHS Confederation, said: “If the NHS is to continue to be able to cope, with the added challenges of winter, we will either need to see a swift and significant improvement in the test and trace system, or more draconian measures over even larger parts of the country.”
Shadow health secretary Jonathan Ashworth said: “Today the new figures show just 62% of contacts were reached.

Image: Labour’s Jonathan Ashworth claims the taxpayer is not getting value for money
“That’s equivalent to 81,000 not reached, circulating in society, even though they’ve been exposed to the virus.
“This is another record blow and yesterday we learnt that consultants working on Test and Trace are being paid over £6,000 a day to run this failing service.
“In a single week the government is paying these senior consultants more than they pay an experienced nurse in a year.
“So can the secretary of state explain why such huge sums of money are being paid to consultants to run a service that is only getting worse?”

The government is demanding the extension of London’s congestion charge zone and further fare hikes as part of a £1bn proposal to rescue the capital’s transport authority for the second time this year.
Sky News has learnt that ministers have told Transport for London (TfL), which is chaired by the London mayor Sadiq Khan, that it will have to introduce the reforms if it is to secure a bailout package ahead of a funding deadline in the coming days.

The conditions demanded by the government are understood to include broader fare increases and the removal of remaining free travel entitlements for children and pensioners as TfL stares into a financial abyss deepened by the coronavirus pandemic.

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Additional COVID-19 restrictions to be introduced in London this weekend, which will further limit social interactions, are likely to exacerbate TfL’s funding crisis.
A source close to the Department for Transport said that TfL had been offered additional funding of roughly £1bn – equivalent to less than two months’ cost of running the capital’s transport network.

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The source added that TfL was holding out for a new rescue deal worth roughly double that sum.

Mr Khan has warned that the body would run out of money by October 17 without a fresh funding deal in place.

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He wants a £5.7bn package to help secure the network’s future for the next 18 months.
An emergency meeting of TfL’s finance committee was due to be held by the end of this week, although the precise timing was unclear on Thursday night.
A person close to the mayor said negotiations were continuing about a deal to keep TfL services running, but added: “Conditions such as extending a £15 congestion charge to the North and South Circular and taking free travel away from children and older people would be totally unacceptable to the mayor and he would not ask Londoners to accept them in these exceptionally difficult times.”
The City Hall insider’s response to the proposals lays bare the scale of the tensions between the mayor and the government, with TfL hypothetically just days away from having to file a Section 114 notice – a process which would effectively declare it insolvent.
It came within days of having to do so before securing a £1.6bn bailout in May.

Image: TfL’s costs were still running at £600m a month during the lockdown earlier this year
That deal gave the government the right to nominate two board representatives and paved the way for a more comprehensive review of the transport authority’s finances being conducted.
Older Londoners who hold a Freedom Pass can still travel without charge for most of the time, although since June they have had to pay during morning peak hours, which TfL said was “to help support social distancing on the public transport network and help control the coronavirus”.
TfL said it remained in talks with Whitehall departments about further changes to travel charges for under-18s.
Andrew Gilligan, the former journalist who worked with Boris Johnson during his tenure as the London mayor, and Claire Moriarty, a former DfT civil servant, were named as the government’s special board representatives in July.
Sky News subsequently revealed that the DfT had drafted in KPMG, the accountancy firm, to conduct the review of TfL’s business plan and funding requirements.
The financial strain on TfL, which is expected to lose £4bn this year, is posing an early test for Andy Byford, the authority’s new commissioner, who stepped down from the equivalent role in New York earlier this year.

Where jobs have been lost in the UK

The transport authority put 7000 of its staff on furlough earlier this year, and has halted hundreds of construction projects in a bid to save money.
It has asked commuters to “reimagine their journeys where possible”, including walking or cycling as alternatives to public transport.
A TfL spokesperson said on Thursday: “We continue to discuss our immediate funding requirements with the government and hope these discussions can be concluded successfully soon, so we can help London through this next phase of the pandemic.
“We are doing what we can to minimise costs and aim to continue operating a full service across our network while our funding discussions continue.”
The DfT said: “The government continues to engage with Transport for London and the mayor on the impacts of COVID-19 on TfL’s finances.
“These discussions are ongoing and will ensure London has a safe, reliable network while delivering a fair deal to UK taxpayers.
“Discussions are underway, and it would be inappropriate to disclose further details at this stage.”
Earlier this week, dozens of business leaders including the chief executives of British Land and the New West End Company wrote to Rishi Sunak, the chancellor, to urge a swift resolution to TfL’s funding crisis.
“Beyond the immediate need, TfL needs to have a more diverse and robust funding arrangement over at least a 5-year period, which make it less reliant on uncertain fare income,” they wrote.
“We hope that the agreement you reach with TfL this autumn will reflect this.”

A UK pub chain owned by Heineken has been fined £2m over its treatment of landlords.
Star Pubs & Bars was found by the Pubs Code Adjudicator (PCA) to have committed 12 breaches over three years by forcing pub tenants to sell “unreasonable” levels of Heineken products despite their requests to no longer be tied to the firm.

The ruling is a first for the PCA since the pubs code came into force in 2016.

Image: Heineken took control of Star when it bought Punch Taverns in 2017
It aimed to give tenant landlords greater flexibility over the historic so-called “beer tie”, which had forced them into selling only a pub company’s own beers and ciders in exchange for lower rent.
The regulator said that in this case up to 96 tenants, who had requested a free-of-tie option, were told that 100%of the keg beer they sold had to be Heineken brands.

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The investigation also found that Star had told its own code compliance officer to “ensure the code is interpreted to the commercial benefit of Heineken UK”.

The PCA accused Star of refusing to engage with the investigation and of being negligent in its responsibilities.

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Pubs code adjudicator Fiona Dickie said: “The report of my investigation is a game-changer. It demonstrates that the regulator can and will act robustly to protect the rights that parliament has given to tied tenants.
“I will be holding discussions with all the companies I regulate following my findings about how they will ensure they are code-compliant.
“My message is that if anyone previously had any doubts about my resolution to act when I find breaches, they can have no doubt now.”
Star accused the PCA of failing to meet its requests for guidance on code issues.
Its managing director, Lawson Mountstevens, responded: “We are deeply disappointed and frustrated at the outcome of this investigation.
“There are many aspects of the report that we fundamentally disagree with and we are actively considering an appeal.
“This penalty is unwarranted and disproportionate, and comes at a time when the entire sector is in serious financial crisis as we work around the clock to support our pubs and licensees to keep their businesses afloat.”

Aviva, one of Britain’s biggest insurance companies, is facing an embarrassing rebuke from the City watchdog over its handling of a controversial plot to cancel high-yielding preference shares that sparked outrage among thousands of ordinary investors.
Sky News has learnt that the results of a probe by the Financial Conduct Authority (FCA) into Aviva’s plan to cancel £450m of preference shares in 2018 are close to being made public.

Sources said on Thursday that the regulator did not intend to impose a fine on the company, but that it was expected to deliver “pointed criticism” of its board’s handling of the situation.

Image: Bank of England governor Andrew Bailey announced the investigation while head of the FCA
“There will be a severe slap on the wrist over the company’s governance,” said one insider.
Aviva’s decision to cancel the preference shares at well below their market value caused uproar, and led to Andrew Bailey – the then FCA chief executive and now governor of the Bank of England – disclosing that the watchdog was examining its decision in the context of whether it had committed market abuse.

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The insurance giant, which owns the old Norwich Union business and is one of the City’s largest asset managers through its Aviva Investors division, performed an abrupt U-turn within days.

It ended up having to pay £14m in compensation to investors who sold their preference shares for less than their true value.

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Mr Bailey demanded that other companies considering redeeming such instruments for less than the market price make those risks clear to investors.
Preference shares are attractive to investors because of the dividends they pay regardless of a company’s performance.
The affair represented another sorry chapter for Aviva, which has lurched from one governance crisis to another in recent years – a state of affairs which has been particularly embarrassing for a company that opines so frequently on events in other blue-chip boardrooms.
Insiders said an announcement from the FCA, alongside a response from Aviva, were likely to be published in the coming weeks.
One said on Thursday that Aviva was privately furious about the regulator’s conclusions that its board had been dysfunctional in its handling of the preference share debacle.
It was unclear whether the company intended to challenge that assertion.

Image: Amanda Blanc took over as Aviva chief executive in July in a move widely welcomed by investors
While there will be relief at the company that there is no financial penalty being imposed on it, the strength of the FCA’s rebuke will nevertheless be humiliating.
It is likely to be a particular embarrassment to Sir Adrian Montague, the City grandee who served as Aviva’s chairman for five years, before retiring earlier this year.
Sir Adrian, who has also chaired 3i Group, the private equity investor, recently chaired a taskforce set up to devise solutions to the debt crisis facing millions of companies in the wake of the coronavirus pandemic.
He was replaced at Aviva by George Culmer, the former chief financial officer of Lloyds Banking Group.
Mr Culmer has moved swiftly to address investors’ concerns about Aviva’s strategy, installing the former boss of AXA UK, Amanda Blanc, as its chief executive, and streamlining the group by selling non-core assets.
The resolution of the preference share issue will come five months after Mel Stride, the Treasury Select Committee chair, wrote to the FCA to seek an update on its inquiry into Aviva.
Christopher Woolard, the FCA’s acting chief executive, responded by saying that “when the FCA is proposing to exercise its regulatory enforcement powers in a contested case, the Financial Services and Markets Act 2000 requires the FCA to give statutory notices (a warning notice and decision notice) to the subject of the action”.
It was unclear on Thursday whether the rebuke being issued to Aviva constituted a formal exercising of the FCA’s powers.
The FCA declined to comment but an Aviva spokesman told Sky News: “We are not commenting on this story.
“In line with our previous comments it was a disappointing episode for which we are sorry and lessons have been learned.
“We recognise the uncertainty created for preference shareholders two years ago whilst we were considering our options and we subsequently made discretionary goodwill payments to impacted preference shareholders.”

It is the dog that has not barked so far during this pandemic.
Scores of businesses have gone bust and hundreds of thousands of people have lost their jobs.

However, to date, there has not been a rise in the number of people defaulting on their mortgage during the COVID-19 crisis.

Image: The Bank of England releases results from a credit conditions survey every three months
The latest Credit Conditions Survey from the Bank of England, a quarterly survey of banks and building societies, reveals that the default rate on secured loans to households was unchanged during the three months to the end of September.
That is the good news. The bad news is that, according to those surveyed, the default rate is expected to go up during the final three months of the year.

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And that, in turn, means that households and businesses are likely to find it harder to obtain credit in coming months.

The survey found that, while the availability of secured credit such as mortgages is expected to remain unchanged over the three months to the end of November, lenders have been tightening their credit scoring criteria for mortgage borrowers during the most recent quarter and are expected to continue doing so during the current quarter.

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Similarly, the availability of unsecured credit – such as personal loans – to households is expected to fall during the current quarter, with lenders likely to tighten their lending criteria. The availability of credit to businesses, both large and small, is also expected to fall during the final three months of the year.

Where jobs have been lost in the UK

This is likely to lead to disappointment for some would-be borrowers.
The survey found that lenders expect demand for mortgages to remain unchanged and for demand among those households seeking to remortgage to rise.
Demand for credit cards and other forms of unsecured lending is also expected to rise during the current quarter, as is demand for credit from medium-sized businesses, although not from small or large firms.
The survey, carried out during the first 18 days of September, also confirms a growing trend that has already been picked up – that would-be mortgage borrowers with deposits of less than 10% of the purchase price are struggling to obtain credit.
It suggests that a lot of would-be borrowers, especially first-time buyers, will be unable to take advantage of the Chancellor Rishi Sunak’s temporary cut in some – but not all – levels of stamp duty on house purchases.

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CBI boss stands behind Winter Economic Plan

As Andrew Montlake, managing director at the mortgage broker Coreco, put it: “The expectation of higher default rates and stricter credit scoring criteria in the fourth quarter is a sign of the direction the wind is blowing.
“In some cases lenders are already raising rates to stave off demand.
“It’s understandable that demand for secured loans for house purchase increased in the third quarter as the economy was on ice for much of the second.
“We’re now starting to see demand for mortgages drop off at higher loan-to-values, as first time buyers with small deposits are increasingly aware that the chance of getting a mortgage agreed are somewhere between slim and zero.”
The trend is borne out by the latest UK Mortgage Trends Treasury Report from the data provider Moneyfacts.

Track the economy’s recovery from lockdown

It finds that there are 153 fewer mortgage products available since the beginning of September while the total number of products available is at its lowest since May 2010. Meanwhile, the average rate on a two year fixed rate mortgage has risen by 0.14% during the last month and the five year fixed rate by 0.13%.
At the same time, the number of mortgages available on a 95% loan-to-value basis has shrivelled away to almost nothing, with many mortgage lenders now unprepared to lend more than 85% of the value of a property.
That the banks are becoming more cautious, though, can hardly be a surprise.
UK lenders reported some £18bn worth of extra loan losses during the first six months of the year alone and, while it recently revised its forecast lower, the Bank is still expecting loan losses related to COVID-19 to come in at “somewhat less than £80bn”.
That, though, was based on the forecasts in the Bank’s most recent Monetary Policy Report, published on 6 August, which were for a 9.5% contraction in UK GDP for the whole of 2020.
And that forecast is beginning to look optimistic.
The Organisation for Economic Cooperation and Development has predicted a contraction in GDP of 10.1% this year and growth of 7.6% next year – making the UK among those likely to be hardest hit among leading economies.
So it would be no surprise to see forecasts of expected loan losses starting to rise again.
Put all of these things together and it is hard to escape the conclusion that the mini housing boom unleashed by Mr Sunak is petering out.
Google searches for property portals like Rightmove, On The Market and Zoopla, which are normally a good indicator of housing market activity, have started to drift lower.
Meanwhile, the latest residential market survey from the Royal Institution of Chartered Surveyors suggests that, although the upturn in sales is expected to continue over the coming three months, there is a growing expectation that sales will fall during the next year, particularly once the furlough scheme finishes.
This may be as good as it gets, for now, for the housing market. Should activity start to slow, expect mounting calls on Mr Sunak to extend the temporary reductions in stamp duty ahead of their scheduled expiry at the end of March next year.