I did my undergrad degree 11 years ago now - went on to get married, have kids and accrue a fair amount of professional experience. Post-divorce, I'm now looking at doing an MRes and progressing to a PhD.

I've looked into the financial side of things and the practical side of things and I think I can do it - my kids are upper primary school age so by the end of the PhD will be secondary age and more independent.

My concern is that due to the fact I am settled here with my family, I don't want to relocate and would be doing my MRes and PhD at the same uni as my undergrad degree. The uni isn't the best in the country for this area of research but it is a decent university which has academics who are respected in my area of interest.

Is it still considered a negative not to swap universities?

Your question should really be, 'what am I going to after the PhD?', because that's when you would have an issue with location. Whilst it's considered negative to stay at the same institution for all degrees when you are looking for academic jobs post PhD (but won't matter that much really), it's even harder to then stay on as a post doc and eventual academic position at that same institution.

I know a couple of people who have done this, but only for teaching positions, not research ones. It's more likely if you take a technical or management role post PhD.

So, if you don't want to continue in academia after your PhD it doesn't matter if you do your PhD at your undergrad institution. If you do want to stay in academia after your PhD, then consider whether you would relocate in the future, because if the answer is no, you may need to rethink about whether a PhD is the right thing for you anyway, because eventually you would most likely have to move.

Of course also consider the dire state of the job market for people with PhDs, both in and out of academia.

Of course if you just want to do the PhD for the sake of it, then disregard all the above and just do it at your local uni.

This ridiculous and frankly idiotic obsession within academia that you must move around different universities is one of many many reasons why I will be bailing from academia once I finish submitting the hard bound thesis and finish this last paper.
ToL is correct to warn you about this.
I wish I had more positive news but academia is simply and depressingly full of examples of rank stupidity like this.
You will find this out when you start.

You can add the brainless obsession with chasing journal impact factors, awarding prizes for designing posters and an unhealthy obsession with university league tables to that.

Bookmark me on this. It will all drive you to drink if you let it :-D

I think it depends on your department and maybe on your field. Several in my department did their UG/masters/PhD there and now work there or have moved elsewhere. I was under the impression that is wasn't so important these days.

OK. Then it must definitely depend on the field. It could be worth trying to find out specifically from someone in your field kateprec.

But it is thinking quite far ahead... I mean, you could do the MRes regardless and then see about moving elsewhere (or staying) for the PhD. Even if you get 1+3 funding, I should think it should be possible to swap to another institute at the start of the PhD as long as they are in the same doctoral college (and these are usually regional I think - e.g., Leeds, Sheffield and York... Manchester, Liverpool, Lancaster).