Economic growth renews pressure for interest rate rise; the UK economy continued to grow in the second quarter renewing concerns that, even despite the credit market turmoil, the Bank of England may eventually be forced to raise interest rates again. According to the Office for National Statistics the annual growth rate remains unchanged at three per cent but gross domestic product went up by 0.8 per cent over the first quarter. Excluding North Sea Oil and the public sector, private sector growth is running at 3.7 per cent with banking, legal services, recruitment agencies and accounting turning in especially strong performances. Business services accounted for over half the total economic growth. The economy’s dependence on business services has increased sharply over the past fifteen years, rising from a quarter of the economy to a third in 2004. Normally such rapid growth would spur the Bank of England to increase interest rates, as it is a faster rate than the economy can sustain without triggering inflation. But analysts believe that the Bank will want to wait to see the emerging impact of its five rate rises since August last year, the development of inflation, which has fallen below the Bank’s two per cent target, and the short-run impact of the recent financial turmoil. Expectations are that the Bank will sit on its hands for some time before changing rates again. Further information - Click here Financial Times 25.08.07
Brown and Darling face four economic challenges; Phil Thornton, lead consultant at Clarity Economics, writes about the challenges that face Gordon Brown
(pictured right) and Alistair Darling in the run-up to the Pre-Budget report and the Comprehensive Spending Review, which are due next month. He says that this will be the chance for the new chief executive and his finance director to sketch out their long-term vision. He identifies four main challenges that face them. The first and the second relate to the housing shortage. Brown’s chancellorship created the ultimate vote winner- permanently rising house prices. Now, however, he is looking for a supply side solution: building more homes. He has announced plans to raise the house-building target from 200,000 houses a year to 240,000. This will require a speedier planning system, which is vital to long-term growth. The third challenge is global warming where the government seems to have gone cool on Sir Nicholas Stern’s proposals for an economic solution either through carbon trading or increased taxes. The fourth challenge is the low level of savings and the attendant pensions crisis. There are already signs that the households are starting to run down their savings to cope with higher taxes and slowing wage growth. This means that the current generation is unlikely to have enough money to fund the retirement that they were hoping for. Independent on Sunday 20.08.07
Personal debt exceeds annual output of the economy; a report by Grant Thornton claims that debts on mortgages, overdrafts and credit card balances has risen to £1,345bn - higher than the UK’s expected gross domestic product in 2007. Stephen Gifford, Grant Thornton’s chief economist, said: “Fortunately, most consumer debt is secure and can be repaid over several years, otherwise we would be technically bankrupt. Britain’s huge level of consumer debt is symptomatic of the country’s well-established buy-now-pay-later culture. We can no longer generate enough GDP to cover the amount we owe”. Another survey from moneyexpert.com finds that around seven per cent of adults- an estimated 2.5m- are “very concerned” about their ability to keep on top of their debts. It also finds that a quarter if consumers have added to the amount they owe over the last three months. Further information - Click here for Grant Thornton and here for moneyexpert.com Guardian 23.08.07
Five rate rises bring housing boom to a standstill; the latest monthly survey of the housing market by Hometrack says that Britain’s house-price boom ground to a 
halt in August as five interest rate rises in a year resulted in the slowest growth in 20 months. Hometrack say that this is the fifth consecutive month of slower growth in property prices and warn of a weaker market to come. Richard Donnelll, head of research at Hometrack, says: “The housing market faces a testing time over the rest of the year. The increases in interest rates have pushed average debt servicing costs to a 15-year high and this will take its toll on levels of market activity and house price inflation over the next 12-18 months”. Hometrack say that the annual rate of house price inflation dropped from 5.9 per cent in July to 5.4 per cent this month, a lower rate than was reported by Nationwide and Halifax, which both said house prices were up by 10 per cent on a year ago. London, the driving force behind the boom, was the only region to record an increase in prices, but the 0.1 per cent was well down on the recent high of 1.8 per cent in March. Other housing indicators report on similar lines. The number of new mortgage approvals fell by one per cent although because of the increase in remortgaging according to the British Bankers Association the actual amount of lending went up by 12 per cent. On the other hand Rightmove, Britain’s biggest property website, has claimed that the housing market is going through a “typical soft landing” and that there is no reason to panic. Miles Shipside, Rightmove’s commercial director, said that he expected house price growth in single figures across the UK this year. He went on: “A slowdown is good for the long-term health of the – affordability needs to come back”. Further information - Click here for Hometrack and here for British Bankers' Association Guardian 27.08.07, Times 01.09.07
Manufacturing at best since 1995; according to the latest survey conducted by the Engineering Employers and Grant Thornton, Britain’s manufacturing sector is enjoying its best performance for more than a decade. The balance of companies reporting higher orders and output reached its highest level since early 1995. There are now a growing number of companies planning to increase investment and to take on more employees. Despite the high value of the pound and the danger of a credit crunch Steve Radley, the EEF’s chief economist, says: “Long gone are the days when a strong currency and increases in interest rates would have stopped manufacturing companies in their tracks”. Further confirmation of manufacturing’s health came in the results of the latest survey from the Chartered Institute of Purchasing who report that UK manufacturing reported a three-year high in August, driven by the sector’s fastest growth in output since 1994. Further information - Click here for EEF and here for CIPD Financial Times 03.09.07, 04.09.07, Guardian 03.09.07
Record numbers opt to live abroad; a record 385,000 people, including just under 200,000 British citizens, left Britain last year - the highest number since data was 
first collected in 1991. The main destinations were Australia, New Zealand and India followed by France, Germany and Greece. The figures are one part of the evidence that the British population is rapidly changing due to migration and a rising birth rate. The figures show a large increase in the number of foreign nationals leaving Britain with the number of non-British EU citizens emigrating tripling to 63,000 suggesting that the recent arrivals from central and eastern Europe are choosing to return home- although 149,000 central and eastern Europeans came to the UK in the same period. The total inward immigration into the UK was 574,000, which shows a fall over the record numbers in 2005. However the data from the Office for National Statistics shows that the overall UK population is continuing to grow strongly as immigration remains high and the number of births increased. The UK population reached 60.6m in mid-2006 - up some 349,000 or 0.6 per cent on the previous year. The number of births has been rising steadily, from 663,000 in the year to mid-2002 to 734,000 in the year to mid-2006. The ONS said that this reflected an increase in the number of women of child-bearing age and in fertility. A quarter of the births were to parents born outside the UK. Further information - Click here Independent 23.08.07
Major supermarkets seek ‘green crusaders’; the Guardian points out that the three biggest supermarket groups -Tesco, Asda and Sainsbury’s - are all looking for new directors of corporate responsibility to lead their green crusades. The vacancies at Sainsbury’s and Asda are the result of resignations whilst Tesco have decided to split the responsibilities with their government affairs director and appoint someone to take responsibility for improving their green credentials. Over the past two years the big grocers have all announced a stream of initiatives on everything from using less carrier bags to generating wind power and fighting obesity. The CSR director has moved from being regarded as something of a box-ticking backwater of a job to a high profile position as consumers have become more aware of the supermarkets’ effect on the environment. Guardian 20.08.07
Co-op ballots its members on ethical issues; the Co-op supermarket group is balloting millions of its members and shoppers on ethical and environmental issues to determine new green priorities. The retailer said that it was consulting members to discover what issues meant most to them and to make it clear that some seemingly sensible changes had negative repercussions that it could not support. One specific issue that it has raised is the new aeroplane stickers introduced by Marks and Spencer and Tesco for airfreighted exotic fruit and flowers. The Co-op deems this “lazy thinking” because of the detrimental effect on growers and farmers in less developed countries. Further information - Click here Guardian 03.09.07
Local business tax could be ‘boon’ for cities; a report by the Institute for Public Policy Research’s Centre for Cities says that a supplementary local business tax could raise up to £11bn for local authorities over a 30-year period for local infrastructure. The government is considering proposals to allow councils to charge businesses a supplementary rate (SBR) after it was recommended in the Lyons Report on Local Government. Following the removal of the Poll Tax business rates were “nationalised” in the 1990s and the money levied was distributed by Whitehall to councils on a per capita basis. Councils have argued ever since that this has lead to a decrease in business contributions to local infrastructure improvements. In London the levy could raise £400m a year but could bring in even more if councils were allowed to borrow against the levy. In Greater London this could raise over £6bn in the form of a 30-year loan guaranteed against the future revenue from the SBR. This money could then be used to fund key projects such as Crossrail. A spokesman for the Treasury said they would publish proposals for consultation later in the year. Further information - Click here Regeneration 31.08.07
FT survey says regional agencies are failing; an FT survey of local business organisations shows that they claim that regional development agencies (RDAs) have a barely adequate understanding of business needs and are often hard to work with. The level of dissatisfaction is revealed as the government is proposing to give the eight RDAs, which spend almost £2.3bn a year in public funds, extra powers and a stronger role in co-coordinating other regional bodies. About a fifth of the 40 chambers of commerce and regional branches of the Engineering Employers Federation (EEF) said that their RDA understood the needs of business well or very well. More than a quarter said the understanding was bad or very bad. Just over a third said they found it easy to deal with their RDA. The eight RDAs were created in 1999 with London set up a year later to promote economic growth and narrow the gap between north and south. They are run by boards of local representatives chaired by business leaders. A Whitehall review last month proposed that new responsibilities for housing, planning and environment could soon be handed to the RDAs and the regional assemblies abolished. Business has traditionally supported the addition of planning powers for the RDAs but the negative image presented by the FT survey could mean that many in the private sector will question enhancing their role at the present time. Whilst some RDAs were highly praised by the business organisations, a recurring criticism was that the people running them were ill equipped to deal with the commercial world. Allan Clarke, chief executive of One North East, speaking for the RDAs, said that they had met all the targets set for them by central government and underperforming regions had made progress in raising their growth rates. A lot of their work, such as the partnerships with higher education, would take 10-15 years to bear fruit. They had shown themselves able to respond to emergencies such as the recent flooding “but we do have to account for public money and on occasions may be seen as a bit slower in moving than we would like”. Financial Times 27.08.07
Ministers to get update on London’s flood defences; plans for a new Thames barrier are being considered by ministers, amid fears that global warming will increase 
the threat of London succumbing to floods. Proposals for a £20bn system of flood defences to the east of the current barrier at Woolwich are being drawn up with one possible site being Sheerness in Kent. Another idea being explored by Environment Agency officials is to open up land east of London, making them emergency flood plains. Rising sea levels are increasing the threat to London. The current Thames barrier is designed to offer protection against a one-in-2,000-year chance the capital will flood. But, by 2030, the chances of flood defences being overwhelmed will be halved to one in 1,000 years. An Environment Agency spokeswoman said that one-in-1,000 year flood still represented “a very high level of flood protection”. She said that the Thames Barrier and other flood defences would continue to protect London until 2030 but said the agency had to look at possible improvements to cope with possible changes into the next century. A decision on the new barrier has to be taken in the next two years. Independent 27.08.07
Confusion over housing targets for the south east; Government inspectors have proposed an annual housing target for the south-east of 32,000. This figure came in their comments on the proposed regional strategy for the area prepared by the regional assembly for the south east. They had put forward a figure of 28,900 whilst the Government Office for the south east had put forward a figure of 38,000, reflecting the overall government aim of 3m new homes by 2020 set by the July green paper. The House Builders Federation warned that the new figure was less than official household growth projections and that 40,000 would be a more appropriate target. The Campaign to Protect Rural England (CPRE) said that large areas of countryside such as Thornton Basin Heaths would be threatened; it also expressed concern about the inspector’s call to review the green belt around Guildford, Oxford and, possibly, Woking. However the leaders of the county councils in the region, many of which are opposed to ad hoc development, saw the new target as a victory. Ian Wright, parliamentary under-secretary of state for communities and local government insisted that the 38,000 had never been a government target. He said that the current round of regional plans would be reviewed again in the run-up to 2011. Further information - Click here Financial Times 30.08.07
Salford features in list of affordable ‘top’ towns; sponsored by the Royal Bank of Scotland Calpea Analytics have compiled a list of what they describe as the 20 British towns and cities where housebuyers can secure the trappings of a middle-class lifestyle at bargain prices. The list is headed by Beverley in east Yorkshire, followed by Maidstone, Chester, Perth and Salford. The researchers say that Salford, where the average house price is £145,906, has attracted interest from investors since the BBC announced that it would be moving some of its services to the town, which is also the home to the Lowry museum and the Imperial war Museum North. Further information - Click here Times 03.09.07
Government defends business tax regime; the government has responded to the controversy caused by a National Audit Office report that 
220 of the largest 700 companies in the country did not pay corporation tax in 2005-06. HM Customs & Excise said: “It is ridiculous to suggest that business does not pay its fair share of tax. Businesses are using capital allowances and deductions that government has put in place to stimulate investment, create jobs and build economic stability. These are not loopholes- these are properly policed business reliefs”. The government emphasised that corporation tax was only one of a number of taxes paid by businesses, including business rates levied by local councils and national insurance contributions. The Revenue & Customs also highlighted the success of the UK’s competitive tax regime in luring foreign direct investment. However this was disputed by John Redwood, the leader of the Conservative party’s policy group on economic competitiveness, who said that the UK had to consider lowering tax rates closer to the rates of countries such as Ireland and the Netherlands. He went on “we have been losing a lot of business to the Netherlands”. Further information - Click here Financial Times 29.08.07
Europe’s push for start-ups; the FT marks the opening of Seedcamp- a week-long series of master classes for high-technology start-ups from across Europe - by looking at European attitudes towards high-tech start-ups. It quotes Saul Klein, the founder of Seedcamp, as saying that Europeans can compete with the US “by putting in some extra groundwork to compensate for national barriers and risk-averse cultures”. The FT says that the lack of investment parity reflects the unfamiliarity of European institutions with venture capital and the attractions of private equity. The region has venture capital of $6.4bn compared to $20bn in the US, according to Library House using 2006 figures. London has shown promise recently both as an incubator and as a service centre for European high-tech start-ups. The media hype is of hip young people who spend their days building disruptive websites in East End lofts and their nights partying. A more sober view is that London has a pool of bright, cosmopolitan workers and boasts the outposts of several Silicon Valley-based venture capitalists. The financial muscle of the City of London is one reason why the UK accounts for the lion’s share of venture capital investment committed in Europe. Britain won $2bn in investment in 2006, whilst France, thanks to tax breaks for unquoted investment, won $840m with Israel close behind. One of the sillier calumnies is that Europe lacks role models. Yet Europeans have fostered some big, fast-growing businesses. The UK has fostered lastminute.com, Skype and last.fm. France has Kelkoo and Meetic, and Germany has alando.de and Jamba. Financial Times 30.08.07
Banging the drum for co-ownership; the Guardian runs a feature on the benefits of employee co-ownership. It says that despite the success of the John Lewis Partnership, employee-owned companies are only slowly emerging as a credible business model. It quotes data from Equity Incentives, a company providing a share plan service for private and quoted companies, which set up an employee ownership index in 1992. This shows that £100 invested in the index would have been worth £349 by the end of June 2003; the same £100 invested in the FTSE all-share index would have grown to £161. The article covers well-known firms such as St Luke’s and Arup Consulting, which have adopted co-ownership and looks at firms who have recently adopted it. These include Wilkin & Sons, the makers of Tiptree jam, and Sunderland home associates. Another example is Loch Fyne Oysters (separate from Loch Fyne restaurants), which was bought by more than 100 staff in 2003 after they borrowed £2m from the Baxi Partnership and £1m from the Royal Bank of Scotland. The firm now has an annual turnover of £10m. Further information - Click here for Employee Ownership Association and here for Baxi Partnership Guardian 20.08.07
Northern Ireland has best start-up survival rate; the latest report from the Department of Business, Enterprise and Regulation (BERR) shows that Northern Ireland has the best survival rate for start-up businesses, with 79 per cent of start-up businesses still trading after three years. On the other hand London has the lowest survival rate with 67 per cent of start-ups surviving. The figures come from an analysis of VAT-registered businesses. They show that at the start of 2006 there were approximately 4.5m business enterprises in the UK - an increase of 125,000 over 2005. Almost all of these were small (0-49 employees) with 27,000 having 50-249 employees and 6,000 having 250+. In total SMEs account for 58.9 per cent of employment and 51.9 per cent of turnover. The Sunday Times looks at the reasons for Northern Ireland’s success. It says that this is due to successive years of economic buoyancy with public spending higher per head than anywhere else in the UK and high levels of business support. In London there is stiffer competition with far more businesses being launched each year. The regional breakdown of the statistics is done every other year with the next one due next year. Further information - Click here Sunday Times 26.08.07
Internet bites into audience for traditional media; for the first time the new social networking sites are putting pressure on the business models in companies in 
television and radio, with internet usage eating into the consumption of traditional media for the first time. According to Ofcom’s annual Communications Market Report UK citizens spend an n average of 50 hours a week on the phone, surfing the net, watching television or listening to the radio. Yet while internet and mobile phone usage continues to grow, the average amount of time spent watching television has dropped by four per cent since 2002, while radio listening has dropped two per cent. There has also been an eight per cent drop in the use of fixed-line telephony compared with five years ago. Internet advertising increased by 47 per cent to over £2bn in 2006- more than ITV and Channel 4’s combined advertising revenue. James Thickett, director of research at Ofcom, warned that the television industry’s reliance on advertising revenues could come under further pressure with the rising penetration of digital video reorders which allow viewers to fast forward through the adverts. Over 78 per cent of digital video recorders users said that they use fast forward for the adverts. Further information - Click here Independent 23.08.07
The Poles find problems in their new version of rickshaws; a fast-growing Polish rickshaw company is giving rivals a run for their money by developing a new form of pedicab which rivals are denouncing as dangerous. Bartek Miernik and Tomasz Mysko started their company, Traditional Rickshaws, with 15 machines 18 months ago; now they have 60. Their design has turned the rickshaw back-to-front with the passengers sitting in the front where they can see more easily whilst the rider is at the back. The machines, which are made for them in Poland where costs are lower, are rented out to riders on a weekly basis. However rival operators are claiming that the machines are dangerous as there is nothing to protect the passengers. Transport for London, the capital’s transport regulator, plans to bring in mandatory licensing but can only do this under current legislation if rickshaws are deemed to be hackney carriages. There is a test case pending in the High Court. In the meantime the two Polish entrepreneurs are planning to expand overseas in California. Financial Times 27.08.07
Good news for UK film industry; more people went to the cinema in July than in any month for the last 40 years. Bad weather, a procession of big budget sequels 
and the lack of big sporting events were seen as the most obvious causes. According to industry figures 21.8m saw a film in July, up 33.7 per cent on July 2005. The previous highest mark was January 1970. The new Harry Potter movie took almost £39m; ahead of Shrek the Third with £31.6m and the Simpson’s Movie with £16.9m.Two other related developments are the development of film tourism from both within the UK and from overseas. The UK Film Council says that “film tourists account for ten per cent of all visitors to the UK.” Popular attractions include Harry Potter settings including Alnwick Castle, Gloucester Cathedral and King’s Cross station; Trainspotting and the West Highland Line; Gosford Park at Beningborough Hall in north Yorkshire as well as Notting Hill and the Portobello Road area. Lincoln Cathedral, which stood in for Westminster Abbey in the Da Vinci Code, has seen a massive increase in tourists whilst the Rosslyn Chapel has seen a 72 per cent increase. There has also been a major growth in the number of Indian films being made in the UK to cater for the millions of non-resident Indians in the UK, USA, Canada and Australia. Britain is now the biggest market for Hindi films outside India with 2m tickets sold each year. Sunday Times 26.08.07, Independent 27.08.07, Times 27.08.07 and Independent 29.08.07
Broadband spurs the number of ‘techno commuters’; there is a growing breed of “techno commuters” using fast, newly affordable broadband connections to hold down city jobs without sacrificing rural isolation. Homeworkers, defined as “people who work, mainly in their own home, or in different places using home as a base” made up 11 per cent of the workforce in 2005 according to new statistics produced by the Office for National Statistics. Some eight per cent were defined as teleworkers, using the ONS definition of homeworkers who use both a telephone and a computer. Work Wise UK, a not-for-profit initiative backed by the CBI and the TUC to promote wider adoption of smarter working practices, believes that this can be extended to 50 per cent of the workforce within five years. The UK leads the world in the availability of affordable broadband connections, with 99.6 per cent of the population having access to terrestrial broadband- ahead of South Korea, Japan, France and the US. Work Wise UK argues that such practices could improve productivity and reduce traffic congestion, overcrowding and pollution. However the Equal Opportunities Commission has recently warned that the UK was significantly lagging behind its European competitors in allowing flexible working practices. Phil Flaxton, chief executive of Work Wise UK, said that in Germany and Sweden, the percentage of companies practicing flexi-time was 90 per cent, almost double that of the UK at just 48 per cent. In Germany, Sweden and Denmark 40 per cent of employers had staff involved in teleworking- compared to 20 per cent in the UK. Further information - Click here National Statistics and here for Work Wise UK Financial Times 03.09.07
CBI warns about status check costs; the CBI has written to the Home Secretary warning that a draft EU directive on illegal workers could inflict far-reaching damage to the British labour market and “significant costs” for employers and taxpayers unless the government arranges an opt-out. The draft directive would impose harsh penalties-including imprisonment- on company bosses breaking the rules. Employers who fail to check the status of employees can be fined, made to forfeit EU subsidies and disqualified from public contracts. Employers face jail in the most serious cases, such as knowingly using the victims of human traffickers or for repeated offences. The CBI’s complaint centres on the bureaucratic and costly nature of the proposals rather than the sanctions, which it says are similar to those planned by the government. It contrasts the “threat” posed by the red tape required by the Brussels plan with the “workable” nature of the UK plans. Ministers have until 13th September to decide whether to decide to use the opt out. However the FT says it is understood that the government is divided on the issue with the Foreign Office reluctant to use the opt out whilst the Department for Business, Enterprise and Regulatory reform is lobbying against the measure. Financial Times 15.08.07
Up to 5,000 City jobs at risk; the Centre for Economics and Business Research (CEBR) is forecasting that as many as 5,0000 City jobs could be at risk as result of the credit crisis, and bonuses for the remained look set to slide sharply from their record levels of recent years. The forecast mirrors growing fears of a shakeout on Wall Street, where bosses at big investment banks are understood to be looking at potential cost cuts. Professionals working in the debt markets, particularly those involved in marketing and trading mortgage-backed securities could be most at risk, with one in three Wall Street jobs going in these areas, according to consulting firm, the Options Group. The CEBR says that City jobs in private equity, hedge funds and the derivatives markets are all at risk. “Because of the credit crunch, banks and other financial institutions are having to dig into their own pockets to fund their obligations” said Jonathan Said, senior economist at CEBR, “and cost cuts are inevitable…the first cost you cut in bonuses, and the second is jobs”. Independent 23.08.07
Ofsted says childcare ‘slowly improving’; daycare standards in England have improved slightly over the last year according to an Ofsted survey of 27,200 childcare 
organisations. It says that 57 per cent of providers were judged to be good or outstanding but that in more than four out of ten children were in childcare settings that were no better than satisfactory. The proportion of providers found to be inadequate was four per cent- the same percentage as in 2005-06. Where establishments were providing government-funded early education for children aged three to four, 60 per cent were judged good or outstanding. The education offered in nurseries will be reviewed after a Durham University study suggested that the government’s overhaul of early years education has made no difference to youngsters’ development and skills at the start of school. Further information - Click here for Ofsted and here for Durham University Guardian 29.08.07
Record number of university students; official figures show that almost 346,000 students will start university this autumn- a record number passing the previous record set in 2005 when 335,912 had places confirmed. UCAS figures show that there are still 109,210 students still eligible for clearing who will be searching for places on the 36,000 courses, which still have places. Further information - Click here Independent 23.08.07
Academy results above UK average; exam results for 14-year-olds at city academies have improved by twice the national average in English, maths and science, according to the Department for Children, Schools and Families. The results compare favourably with those of their predecessor schools. The proportion of academy children achieving key stage three level five has increased by 20 per cent in English and maths and 15 per cent in science between 2001 and 2007. Further information - Click here Regeneration 31.08.07
Conflicting information on primary school pupils; two reports on primary schools give conflicting evidence on antisocial behaviour. According to the Times children 
under ten were the prime suspects in nearly 3,000 crimes last year. The information was obtained from 32 of the 43 police forces in England and Wales by BBC Radio 5. However a report produced buy academics from Nottingham and Oxford universities, Birkbeck College and the Institute of Education in London says that primary schools that push their pupils academically reduce antisocial behaviour. The researchers, who tracked about 3,000 children to the age of ten, also say that there is new evidence to show that some pre-school experience outside the home before the age of two has long-term benefits, encouraging children to be kind and considerate. Those that attended good pre-schooling, most often found in nursery schools and centres integrating early learning with day care and other services, showed better behaviour at the age of ten. Further information - Click here Guardian 03.09.07
Housebuilders win battle for ‘Merton Rule’ relaxation; according to the Estates Gazette the government is likely to amend the so-called “Merton rule”- named after the London borough that established it in 2003. The rule requires any new building to reduce its carbon emissions by 10 per cent by use of renewables produced onsite. More than 150 local authorities have introduced or are about to. In the absence of a proper interest in renewables from central Government, the Merton rule has become central to tentative moves towards a low carbon future. Even the housing minister, Yvette Cooper, last year urged all local authorities to adopt it. However the housebuilders were always hostile to the onsite provision as evidenced by Liz Peace, chief executive of the British Property Federation: “The property industry is committed to achieving green targets, but investing in inefficient onsite renewables is not always the best way to do this. The industry must not be straitjacketed into a single method that may not work”. However contrary to a piece in the Guardian, which predicted that the Merton Rule would be scrapped, the Estates Gazette predicts that when the new planning guidelines are issued in the autumn the housebuilders will be able to call on offsite power sources. Guardian 29.08.07, Estates Gazette 25.09.07
London aims to be the first green city; the mayor has invited energy and utility management companies to bid for a contract to give 100 of the capital’s public sector office buildings a green makeover at a cost of about £10m. The mayor wants to prove that increasing the efficiency of large buildings cannot only cut carbon emissions but also achieve cost savings. It is hoped that this will lead to all 900 buildings run by the Greater London Authority using the same techniques and that this will copied by the private sector. London will be the first of the 16 cities, including New York and Tokyo, which signed up to a deal, developed by the Clinton Climate Initiative, to make buildings more efficient. The mayor’s advisers believe the contract can pay for itself over time and could stimulate a new market in improving energy efficiency in corporate buildings. Further information - Click here for GLA and here for C40 Cities Financial Times 31.08.07
Tax rebate mooted for green homes; a report by the New Local Government Network (NLGN) should investigate ways of encouraging people to take advantage of proposals to ease planning restrictions on environmentally-friendly energy sources. The NLGN says that in addition to grants offered by the government covering 30 per cent of the costs of installing micro-generation equipment, councils should encourage wider take-up of the technology by introducing “substantial” tax rebates for compliant homes. Alternatives could include capital loans that would help cover the high costs of installing the technology and be repayable over the life of the equipment. The report’s author, James MacGregor, said: “Council tax rebates and capital loans would incentivise people to engage in the process”. Further information - Click here Regeneration 31.08.07
Britons rely on the car for 80 per cent of travel; the Department of Transport’s annual national travel survey reveals that private motoring now accounts for four-fifths of all journeys and that a quarter of all car trips were for less than two miles. The proportion of households without access to a car fell from 30 per cent in 1996 to 25 per cent in 2006. The proportion of people using domestic flights at least once a year increased from eight per cent to 12 per cent. Further information - Click here Guardian 31.08.07
Ken discovers Poland and Polish voters; faced with the prospect of Boris Johnson, as his potential Tory opponent at the next mayoral election in 2008, the Mayor (pictured left) 
has started to court new voting blocks in the capital. The Guardian reports that on 25th July he hosted a reception for Polish community leaders and the Polish press, which he followed up by a visit to POSK, the Polish cultural institute in west London. There have also been meetings between his staff and the Polish press. As EU citizens the Poles are entitled to vote in UK elections. At present they comprise one per cent of the 5.3m Londoners eligible to vote but according to Wiktor Moszczynski of the Federation of Poles in Great Britain, “we estimate that there are at least 150,000 Poles within Greater London. The fact that there are 55,000 Polish electors in London, 8,000 Polish-speaking children in London state schools, nearly 70,000 paying national insurance and nearly 60,000 on the increasingly unpopular Worker Registration Scheme is further evidence that many are considering a long-term stay”. Guardian 27.08.07
Tories give cautious backing to TfL tube contract; the Tories have said they have “no objection” to giving the public sector control of big private London Underground maintenance contracts as long as the bidding is fair and services are improved. The comments give a qualified green light to Transport for London’s bid to take over the contracts operated by Metronet, the failed infrastructure company responsible for maintaining the majority of the tube network. TfL indicated their interest in a letter to Ernst & Young, the administrator of the failed company. The bid would seek temporary public control for up to two years, but TfL are not ruling out making the step permanent. Such a move would unwind one of Gordon Brown’s most cherished policies. The public-private partnership was driven through in the face of strong opposition from Ken Livingstone, the Mayor of London. The Department of Transport is seeking to stress their independence from the process although reasserting public control over the contracts could face a number of significant legal and financial hurdles. Rothschild has been appointed to value the operation and will report at the end of this month when the Ernst & Young will consider whether to invite formal bids. It has also emerged that the National Audit Office is considering setting up a probe into the London Underground public-private partnership. Investigators are currently gathering information and the FT says officials believe that an official investigation is likely and this would present Gordon Brown with a potentially embarrassing inquiry. Financial Times 27.08.07, 29.08.07, 30.08.07
Midtown lobby group formed; four major stakeholders in London’s Midtown (the Holborn area between the West End and the City) are teaming up to launch the Midtown Business Club. The group comprises Land Securities, the Royal Bank of Scotland and agents CB Richard Ellis and Farebrother. It has emerged from the Holborn Business Improvement District, which is focusing on improvements in the public realm. The new group will concentrate on marketing the Midtown name as well as lobbying on issues such as transport and infrastructure. It will hold its first meeting on 12th September. Estates Gazette 01.09.07
Woody Allen analyses his love for London; Woody Allen has talked to the press at the Venice Film Festival on why he has now finished three films in London, including his latest Cassandra’s Dreams. He says of London: “The weather is cool and the skies are grey, which is very good for the kind of dramas I do”. He also said that he believes that the city best matches his melancholy temperament, as well as affording him artistic freedom. Times 03.09.07
New Olympic planning application gets the nod; the Olympic Planning Committee has given its approval for the new planning application for the 2012 Games. The 
10,000-page document outlines the proposals for all of the buildings needed for the Games, as well as detailing the infrastructure that will be left behind. The plan now goes to the Greater London Authority and the Government for final approval. It contains 26 planning conditions-legally enforceable pledges such as commitments over environmental standards during construction and that the ODA will attempt to find funding for the local employment initiatives when current money runs out- as well as a statement by the five “Olympic boroughs” that they are broadly happy. For the boroughs, attention now turns to the Legacy Masterplan Framework, due in 2009, which will determine what happens after the Games. The boroughs have now won a place at the Legacy Steering Group, headed by Olympics and London minister Tessa Jowell (pictured right) and the London mayor Ken Livingstone. The boroughs remain anxious that to offset the costs the Government may try to maximise the revenue by selling off the land. Further information - Click here Regeneration 31.08.07
Olympic Park in this year’s Open House; the first major public viewing of the site of the London 2012 Olympic Park is one of the highlights of this year’s Open House weekend taking place 15th-16th September. There will be a total of 660 of London’s most exceptional buildings, parks and other spaces available for view including the Home Office and four of the buildings designed by Lord Rogers- Lloyd’s of London, the Channel 4 Headquarters; Chiswick Business Park; and the offices of Rogers, Stirk & Harbour in Hammersmith. Further information - Click here Estates Gazette 01.09.07
Warnings of potential office glut in the City; the prospect of falling bank profits could result in a doubling of office vacancies in the City to more than 10 per cent according to a “worst-case” scenario produced by Savills. It assumes that a big fall in profits in the big investment banks will see them cutting back on demands for space. Brokers have issued a slew of profit forecasts for Wall Street’s biggest banks, which are some of London’s biggest tenants. If banks produce two successive quarters of shrinking profits, Savills say that take-up could “fall back to 2003 levels (about 3m sq ft in the City) and lead to a major release of tenant-controlled space as banks shed staff and try to cut costs. This would drive the City vacancy rate up from its current level of 6 per cent, to just over 10 per cent in 2008 and 2009”. This could trigger a sharp fall in rents as landlords struggle to let new buildings. There are a number of major speculative schemes due to come on stream at that time including Minerva’s Walbrook, a 445,000sq ft project due for completion in 2009. Another similar scheme is British Land’s 593,000sq ft Ropemaker building close to Moorgate also due for completion in mid-2009. Further information - Click here Times 31.08.07
Land Securities submit new Victoria plan; a reworked scheme for a £2bn redevelopment of a site north of Victoria Street have been submitted to Westminster Council by Land Securities. The scheme has been reworked following Westminster’s wish to improve views of Buckingham Palace. As a result the 350ft Portland House the tallest building in the City of Westminster will be demolished and replaced by a 275ft Wilkinson Eyre designed 400,000 office block. This will also act as a link to LandSec’s adjacent Cardinal Place scheme. In all there will be 2.9m sq ft of mixed-use space in seven buildings. Apart of the trade-off for the demolition of Portland House LandSec are proposing two 440ft KPF residential towers on Victoria Street. LandSec will start looking for partners next year. It is estimated that the scheme will take eight years to build. Estates Gazette 18.08.07
Funding problems force delay for the Shard; the timetable for completing the Shard of Glass, intended to be Britain’s tallest building, has been put back at least a year to 2012 as the backers struggle to secure finance. The owners of the New London Bridge House project, a 1,016ft skyscraper, has aimed to secure about £360m this summer to fund construction, but the Times says that sources are saying that concern in the City about the financial credibility of Simon Halebi, one of the original investors, which, coupled with the souring debt market is making it hard to gain finance. Simon Halebi is thought to be sitting on a £150m loss after buying the Esporta fitness chain for £470m, only for Société Générale, his main bank lender for the purchase, to put the holding company into administration this month. A source close to the project said, “this is a more fundable deal than most. Originally it was planned for 2010. It may take a couple of years longer. If there is finance in the autumn and it goes up by 2011 it can be completed in 2012. The earliest is 2012. No one anticipated the time over planning inquiries and Mr Halebi”. Times 27.08.07
Mercers plans for Covent Garden; a joint venture company set up by the Mercers Company and Shaftsbury has submitted plans for the regeneration of 2 acres of Covent Garden north of Long Acre. The Longmartin scheme proposes three mixed-use schemes totalling 246,000 sq ft with frontages to Long Acre, Upper St Martin’s Lane, Shelton Street and Mercer Street. The application includes 88,000 sq ft of retail, restaurants and bars, 62,000 sq ft of offices and 30 flats. It will also create a pedestrian route through the site. Completion is expected in 2009. Estates Gazette 18.08.07
Guy’s Hospital looks to sell off part of its site; the Guy’s and St Thomas’ NHS Foundation Trust is investigating selling part of the Guy’s Hospital estate as a means of financing new facilities. It has invited seven consortia of consultants- mad up of architects, agents and healthcare professionals- to pitch for the role of technical adviser on its estate strategy. One option is a partial or full sale of the Guy’s Hospital site to make way for a mixed-use scheme. The site could be worth £100m. Another suggestion is to convert the 34-storey Guy’s Tower- the home of the King’s College dental school, into luxury flats. One source tells the EG: “The most obvious ides is to sell the site and build a purpose-built hospital in a cheaper location”. Estates Gazette 18.08.07
Planners approve South Bank tower but inquiry likely; Lambeth Council has granted planning permission for a new 43-storey tower in Doon Street at the back of the National Theatre on the South Bank. However following opposition from English Heritage (EH) and others the scheme is likely to go to a public inquiry. The proposed £200m scheme will be built by Coin Street Community Builders and designed by Lifschutz Davidson Sandilands scheme. It will have 329 flats as well as office, leisure and educational space. It will provide a new home for the Rambert Dance Company and include a swimming pool and leisure centre for local residents. The height was shortened to 472ft following initial opposition from conservation bodies as well as English Heritage. EH have maintained their opposition saying that they are concerned about the number of tall buildings springing up on the South Bank. They also believe that it will destroy views from St James’s Park and Somerset House. They are pressing for a public inquiry. There has also been criticism from the Commission for Architecture and Built Environment (CABE) although they did welcome the design and the fact that it would bring back into use a space that has been derelict for 50 years. The scheme is one of a number of towers proposed for the South Bank. They include the Shard at London Bridge, Multiplex’s Castle House at the Elephant, the 42-storey Beetham residential tower at Blackfriars Bridge and a possible 50-storey tower to be developed by St George at Vauxhall. Estates Gazette 25.08.07, Financial Times 31.08.07
Multiplex win contract to build City’s tallest tower; following the award of the building contract to Multiplex Arab Investments will go ahead with the construction of the City’s tallest skyscraper in 2008. The 945ft Pinnacle will be built in Bishopsgate and will be completed in 2010. Planning permission has already been granted for the 1m sq ft scheme and demolition work has begun. Estates Gazette 01.09.07
Another hedge fund opts for Regent Street; a hedge fund- Och Ziff Capital Management- has set a record for rental levels on Regent Street by taking the second floor of the old Dickins and Jones building at more than £90 per sq ft for the 26,000 sq ft space. Ironically the previous highest rent was also a hedge fund in the form of Bridgepoint Capital who sublet the top floor of 30 Warwick Street, which has frontage onto Regent Street, where they agreed to pay £62.50 per sq ft 18 months ago. Estates Gazette 18.08.07
Live/Work units are challenged to prove they work; all 75 leaseholders in Persimmon Homes’ Union Wharf Scheme have been informed by Hackney Council that they are in breach of planning laws because the flats they are living in were built on condition that the tenants worked in them. Hackney Council said that business rates had not been paid on any of the flats. According to the Estates Gazette the battle in Hackney is being closely watched by other councils concerned that employment land is being eroded by the new planning class. Due to its high house prices, its proximity to the City, and a large supply of former industrial buildings, Hackney has, since 2003, received 915 applications from developers wanting to build live/work schemes. This is despite the fact that four years ago, the council revoked its live/work supplementary planning guidance. Estates Gazette 18.08.07
Murdoch thinks about leaving Wapping; Rupert Murdoch’s News International has appointed accountants Deloitte to advise on options for its “Fortress Wapping” site. The media giant has also held discussions with four developers over the future of the 14-acre estate, which it has occupied since leaving Fleet Street in 1986. The are believed to include Land Securities, which is buying the nearby Thomas More Square estate; the Kuwaiti-based Mesila House, which owns the neighbouring 2-acre Tobacco Dock; and Canary Wharf, which is keen to carry out more large-scale developments outside Docklands. The publisher has been looking for an alternative 400,000 sq ft London HQ since the beginning of the year. Shortlisted options include the King’s Cross development (where the Guardian is moving), Canary Wharf and Ballymore’s Arrowhead scheme in Docklands. Estates Gazette 01.09.07
Largest residential planning application gets the go-ahead; Barking Riverside, the UK’s largest residential planning application has received the go-ahead following a Section 106 agreement between Bellway and Barking and Dagenham Council. Bellway, together with its joint venture partner English Partnerships, now has outlined planning consent to build 10,800 homes on a 73-acre site at Barking Reach in the Thames Gateway. The scheme, which includes an extension to the Docklands Light Railway, will comprise at least 30 per cent family accommodation, with 41 per cent allocated to social housing. Construction will take place in four phases with the first house due to be completed in 2008. Details of the first 4,000 KCAP-ML and Sheppard Robson-designed homes will be submitted to the London Thames Gateway Development Corporation in the next six months. Further information - Click here Estates Gazette 18.08.07
grapevine is produced twice monthly (except in August and December when there
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Next issue on 27th Septmeber 2007
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