Market failure and government intervention

Figure 1: Average monthly private rent in London rose from £2100 in 2023 to £2250 in 2024, while average rents in England rose by about 9%. Around 4.6 million households in England rent privately. Extract 1: The number of homes available to rent has fallen as some landlords sell up, citing higher mortgage rates and tax changes. At the same time demand has grown because high house prices and interest rates have delayed first-time buyers. Building new homes takes years because of planning delays and shortages of skilled workers. Extract 2: Some campaigners want rent controls that would cap rents or limit annual increases. Scotland introduced a temporary rent freeze in 2022. Critics argue that controls reduce the supply and quality of rented homes, while supporters say they protect tenants from exploitation in a market where they have little bargaining power.

Extract 1: The UK Emissions Trading Scheme (UK ETS) caps total emissions from power, heavy industry and aviation. Firms must hold an allowance for each tonne of CO₂ they emit; allowances can be bought and sold. The carbon price in the UK ETS fell from about £80 per tonne in 2022 to around £35 per tonne in 2024. Extract 2: The cap is reduced each year. A firm emitting 200 000 tonnes of CO₂ but holding free allowances for 150 000 tonnes must buy the rest. Some heavy industries argue that high carbon prices make them uncompetitive against producers in countries without carbon pricing, and could move production abroad ('carbon leakage'). The UK plans a carbon border adjustment mechanism from 2027. Extract 3: Economists estimate the social cost of carbon at well above £35 per tonne. Some argue for a simple carbon tax instead of trading, or for more direct regulation and subsidies for green technology.