David Ritchie, the chief executive of housebuilding giant Bovis Homes, yesterday joined the growing chorus of dissenters who are losing faith in the government's efforts to kick start the economy.
David Ritchie, the chief executive of housebuilding giant Bovis Homes, yesterday joined the growing chorus of dissenters who are losing faith in the government's efforts to kick start the economy.
The chief executive of the UK's most profitable builder of residential homes said: "Corrective economic actions, which have worked historically, have not yet seen a positive response.
"Confidence is low, bad news predominates."
Ritchie's remarks, which appeared in the company's latest trading update, are notable as pressure intensifies on Gordon Brown, the prime minister, to take further steps to help home-owners and businesses as the avail- ability of credit continues to be squeezed.
Since the financial crunch began bleeding into the wider economy, impacting spending and employment and wreaking havoc in the residential property market, the plethora of government measures have included bank bailouts, a VAT reduction, and a series of interest rate cuts that have seen the borrowing cost tumble by a cumulative 3.5 percentage points since October to 1.5%, the lowest level in the Bank of England's 315-year history.
But the magic of interest rate cuts does not appear to have yet borne fruit - neither for the high street consumer or the house buyer. Nor have they done much to turn the tide of pessimism.
While further cuts are expected over the next few months, possibly reducing the base rate to zero before the end of the year, only a handful of lenders have agreed to pass on the latest cut - thereby, in turn, hampering any potential recovery in the embattled property market.
The credit crunch has not only bludgeoned house prices but has also led to a dramatic slump in the number of new homes built and sold.
Bovis yesterday said completed sales fell to 1817 homes during 2008 compared with 2930 in 2007.
The average sales price fell to £150,800, down from £179,500 the previous year, partly as a result of an increased proportion of social housing, which now accounts for 33% of sales, compared with 22% in 2007.
For 2009, Bovis said it had 425 sales reservations at January 1, down 48% on the same date the previous year.
Meanwhile, HSBC and Lloyds TSB this week said customers would benefit fully from the latest cut, but Nationwide said that only borrowers on a standard variable rate and tracker mortgages would see their monthly payments fall.
HBOS, the UK's biggest mortgage lender, announced it would pass on only half the value of the cut.
However, Kent-based Bovis yesterday said it had taken "decisive action" and will not pay a final dividend for 2008 and that it will continue to cut jobs.
Bovis also said in its trading update yesterday that pre-tax profit before exceptional items would be in line with the board's expectations.
Ritchie said the company's costs this year could be as much as 50% lower than 2007 levels, helping it combat what has turned into the worst housing downturn in a quarter-of-a-century - a slump that has already forced rival Taylor Wimpey, the UK's biggest homebuilder, into survival talks with creditors.
He said headcount at Bovis will fall by about 60% by the end of the first quarter this year, compared with the start of 2008.
On Thursday, rival Persimmon said it would not pay a final dividend and would instead focus on conserving cash after it also reported a sharp decline in sales.
UK house prices fell 15.9% in 2008, making it the worst year on record, according to Nationwide Building Society on Tuesday. House prices in Scotland fell by 8.1%, according to the same survey.
