The New Year started with a warning from the prime minister about “a decisive year for the economy” and the chancellor sending for the power companies to explain their plans for 15 per cent price increases.
‘Outlook is worst since dotcom bust’; the annual survey of leading economists conducted by the Financial Times shows deepening pessimism about the impact of the global credit squeeze and concludes that Britain faces its most difficult economic conditions since the dotcom bubble burst. The survey of 55 top economists shows confidence has tumbled since a year ago. The experts also fear that compared to 2001-02, the scope for financial authorities to mitigate any downturn is far more limited. Nearly nine out of ten think that public finances are not in good order so there is no leeway for discretionary tax cuts or increases in public spending. The government is running a large deficit based on a period of three years between 2004 and 2007 when the economy was performing strongly. Martin Weale, director of NIESR, says: “The public finances are in very poor shape… HM Treasury has managed several years of self-delusion. No doubt it will explain that it did not foresee the credit crisis and use this as an excuse”. The third most mentioned risk to the economy was inflation, which was limiting the ability of the Bank of England to cut interest rates. The unwillingness of the banks to lend was also reducing the Bank of England’s ability to influence monetary conditions. However most of the economists hoped that the Bank would choose to turn a blind eye to short-term inflationary pressures and cut interest rates, since they believed that the coming economic slowdown would control inflation and the economy needed the stimulus of looser monetary policy. Richard Lambert, director-general of the CBI, said that 2008 would be a difficult year, but that it was important not to exaggerate risks and “talk ourselves into something much worse”. Financial Times 02.01.08
Economic Armageddon seems unlikely; Jeremy Warner says that it was hard to find an optimistic voice among the ranks of senior bankers and other City dignitaries who attended the Governor of the Bank of England’s cocktail party just before Christmas. Warner says that in his experience of financial markets, things are never as good as they seem when the boom is in full swing nor as bad as they seem when everyone is down in the dumps. The same is true today when the mood among bankers is one of abject doom and gloom. Over the past four months, many bankers have been forced into staggeringly large bad-debt write-downs. Many of them have found themselves seriously short of capital, while some have been forced into the humiliation of seeking rescue finance from sovereign wealth funds of the Middle East and Asia. Yet a banking crisis even as profound as this one does not necessarily mean there is going to be an economic crisis to match. At first it seemed that central bankers had failed to recognise the gravity of the situation but these policy failings have now been rectified in a manner, which should allow Britain and Europe, and possibly the US too, to escape recession. Even if the US does sink into recession the action in cutting interest rates and swamping the system with liquidity should ensure the likelihood is of a shallow and short-lived one. There is already evidence that credit markets may have over-reacted to events and the fact that the economy is slowing ought to cause inflation to fall further out. Strong economic growth in Asia and Latin America should provide sufficient fuel to the developed West to keep the engine running. A pronounced slowdown, which for many will feel painful, is a certainty. But the economic Armageddon that some commentators foresee continues to seem unlikely. Independent 28.12.07
Other comments
Roger Bootle- “the worst since ERM”; “this is probably going to be the most difficult year that the UK economy has experienced since the ERM crisis of 15 years ago. The US may avoid recession, but if it does it will be a close-run thing. House prices will continue to fall and, as inflation initially stays high, consumer incomes will be squeezed. Unemployment will rise”. Daily Telegraph 02.01.08
CBI/PwC- “City heading for tough times”; the latest survey of UK financial services conducted by the CBI, in association with PricewaterhouseCoopers, says that business levels in UK financial firms fell at their fastest rate in 17 years during the last three months of 2007. The level of business volumes is now at its lowest since March 1991 and business sentiment continues to worsen with half of the companies saying they felt less optimistic than they did in September 2007. Ian McCafferty, the CBI’s chief economic adviser, said that there had been a clear turnaround in the sector. He went on: “The credit squeeze has delivered a sharp shock to business volumes over the past three months, and it seems the difficulties are likely to persist for some time yet”. However he pointed out that the sector remained “very resilient”, and that “profitability, job creation and investment plans are still positive”. Further information BBC News Online 07.01.08
Hamish McRae- “it could be 2009”; Hamish McRae argues that the downturn, which he says will be more serious than the one in the early 2000s (but not as bad as in the early 1990s), may happen in 2009. He says his real concern is not the economy but the state of the public finances. He says that they are dreadful and the budget deficit looks like being over £40bn this year, or more than three per cent of GDP. We are the only large developed country that has a bigger deficit now than it did in 2003. Unlike other countries, we failed to take advantage of the years of good growth to put our public finances on a sounder basis, so our ability to respond by easing fiscal policy has been compromised. Independent on Sunday 06.01.08
British Retail Consortium- “We need a rate cut”; the British Retail Consortium has warned that Christmas sales growth was the weakest for three years. One leading retailer says: “No one did any good over Christmas. In general retail it was very poor… What people are reporting now is totally academic: it is about what is going to happen in the next quarter and it is not looking good”. It was thought that the retail results would have some bearing on this week’s vote on interest rates but most economists thought that the Bank of England would leave rates unchanged until more information on festive spending and new year pay deals was available. Further information Financial Times 08.01.08
Half a million immigrants will boost growth in 2008; the latest United Kingdom Prospects report from the Centre for Economics and Business Research (CEBR) says that a flow of more than half a million migrants into the UK will boost the economy in 2008 by £3.6bn or an extra 0.3 per cent of GDP. CEBR forecasts that with this added contribution GDP growth can be maintained at 1.8 per cent. The influx, largely of young, unskilled workers from eastern Europe, will not only stimulate growth but will keep a lid on wage increases, thus freeing the Bank of England to cut rates. Over the next three years migrants are forecast to add £9bn to the economy, equivalent to 0.2 per cent growth in 2009 and 2010. CEBR also predicts that 330,000 UK nationals will leave the country in 2008. The net migration of 220,000 will underpin long-term demand for new housing. Further information Times 27.12.07
First ‘super-diverse’ cities forecast for 2020; a report produced by Professor Danny Dorling for the Barrow Cadbury Trust says that at least a dozen British cities will have no single ethnic group in a majority within the next 30 years. Leicester will become the first ‘super-diverse’ city in 2020 followed by Birmingham in 2024 and then Slough and Luton. The report reveals that Leicester has seen the proportion of its white population fall from 70.1 per cent in 1991 to 59.5 per cent today. By 2026 it will be 44.5 per cent. Dorling also makes the point that the immigrant and ethnic populations are no longer characterised by large, well-organised Afro-Caribbean and South Asian communities. There are increasing numbers from countries scattered across the world- from Germany to Guyana, from Sweden to Singapore. “It is going to be increasingly difficult to generalise about Britain’s plurality because different cities are experiencing different levels and types of diversity”. Further information Observer 23.12.07
The London forecast; Dorling’s research shows that although Greater London’s population is already diverse with a white population of 67.5 per cent, it is not likely to become plural in the near future. By 2026 the white population is forecast to be 60.7 per cent, with just eight of the London boroughs predicted to become plural. They are Newham, Brent, Croydon, Ealing, Harrow, Hounslow, Redbridge, and Tower Hamlets. Two other boroughs - Waltham Forest (52.2 per cent) and Lewisham (54 per cent) will be near to becoming plural. Observer 23.12.07
Tories claim that government has ‘ditched’ Respect agenda; ministers have been accused by the Tories of airbrushing out of existence, Tony Blair’s Respect agenda, once seen as the spearhead of the government’s campaign against antisocial behaviour. Since Gordon Brown took over, the Respect taskforce has been closed down, and its head, the high-profile Louise Casey, moved to a job inside the Cabinet Office looking at community policing. A youth taskforce has instead been set up inside the Department for Children, Schools and Families, headed by Anne Weinstock, a civil servant specialising in youth issues. A youth action plan will be published by the department in the spring. The changes reflect a view among the prime minister’s allies that Blair’s relentless emphasis on antisocial behaviour produced a negative and distorted image of Britain’s youth. Ministers such as Ed Balls and Ed Miliband are keener to emphasise that young people contribute to society and would benefit from the extension of youth services, including youth clubs. Evening Standard 24.12.07
Anti-poverty drive is failing working families; almost a million and a half children are living in poverty despite having a working parent- as many as when the government came to power according to a new report from the Institute for Public Policy Research (IPPR). The IPPR says that low wages mean the strategy of “making work pay” is failing many families and that the benefit system creates little incentive for a second parent to work. The report urges the government to raise the minimum wage in line with average earnings, enforce it more stringently and extend the adult ate to 21-year-olds. It suggests a higher rate for London. It also suggests changes to the tax credit system. Further information Guardian 03.01.08
City support for charitable work jumps by 40 per cent; the number of City of London staff joining charitable projects sponsored by their employers jumped by 40 per cent in 2007 as the Square Mile boosted its efforts to both behave more altruistically and promote a local skilled workforce. City institutions now spend more than £30m a year on charitable activities for education and children alone, according to research undertaken by the FT. Michael Snyder, chair of the Policy and Resources Committee of the City of London Corporation, which gives more than £10m a year to education, said that the City was inspired largely by “enlightened self-interest”. Projects backed by City employers included helping local children to read; hundreds of hours of free legal and business advice; and a free telephone service for the homeless. Financial Times 24.12.07
US students pay to secure work experience on Wall Street; traditionally American university students used to get paid for spending three months in an office opening mail and making coffee for some of the world’s richest bankers. Then some did it for free. But now a growing number are paying thousands of dollars to secure the best internships on Wall Street. The University of Dreams charges as much as $7,999 (all-inclusive) to place students in summer jobs on Wall Street, despite its current problems. A cheaper option is to work for an investment bank in a lesser-known location. The organisation can also arrange to send students to Barclays in London. A decent internship is crucial to securing a job at a top Wall Street bank as well as in many leading companies. The University of Dreams has 46 staff and 1,200 students on its books. Other brokerages have emerged dealing with voluntary groups and political internships. Further information Observer 06.01.08
North-South divide is out of date; a new report from the Work Foundation says that the traditional divide in Britain between North and South is out of date and the new divide is between cities able to take advantage of the knowledge economy and those that are failing to. The future economic success of the UK “is increasingly dependent on well-educated minds, cheap computers, high-value businesses and sophisticated goods”. Cities and regions that are part of this knowledge economy are thriving, but others are being left behind. Whilst private sector employment is the key, a major factor is how cities have used public sector investment to attract further inward investment from the private sector. Examples include Sheffield and Newcastle. Cities such as Oxford, Cambridge, and York are described as “Knowledge Hubs”. Cities failing to take advantage of public sector investment include Doncaster, Plymouth, and Hastings. Cities with growing knowledge economies include Bristol, Manchester, Leeds, and Northampton. The ‘powerhouses’, where the economy is led by the private sector, are with the exception of Warrington all located in or around London including Milton Keynes, Aldershot, and Reading. London is described as the ultimate powerhouse with 63 per cent of its workers involved in knowledge industries. Further information Financial Times 07.01.08
Now Paris offers electric cars; the Mayor of Paris, Bertrand Delanöe, is implementing a new scheme to fight congestion and pollution: self-service electric-powered cars. The aim is to start with 2,000 vehicles that subscribers can drive off without booking at dozens of sites 24 hours a day and then leave anywhere in the city. The cars are seen as an alternative to the introduction of a congestion charge, which Mr Delanöe, who is running for re-election next spring, has already rejected. Doubts are already being sounded about the viability of Voiturelib’ –free car- however. The Greens have expressed concern about its effect on the bicycle scheme (Vélib) whilst others query the scope for subsidy through advertising space which funds the Vélib. The Mayor’s team calculates that one car will replace between five and ten private vehicles. Only 43 per cent of Paris households have vehicles and 95 per cent of them are parked at any moment. The Vélib has turned Paris into an almost bike-friendly city with the 20,000 bikes having already been used for 11m trips. Ironically the Mayor is threatening penalties against JC Decaux, who operate the scheme, because so many are out of service or are in disrepair from over-use or vandalism. The bicycle scheme has, so far, been unable to solve the saturation of Paris’ commuters as the lack of docking space deters many from picking up Vélibs for the ride to work. Times 02.01.08
Government accused of ‘tinkering’ on reform of business support; ministers have spent £3m on Gordon Brown’s pledge to streamline the £2.5bn-a-year business support system, but so far made fewer than 10 of the promised 2,900 cuts to schemes. After 21 months work on the prime minister’s 2006 pledge to reduce the number of schemes from 3,000 to 100, only a handful of low-profile products have been cut. The Department for Business has drawn up an “initial portfolio of 18 high-level business support offers” but even this is not finalised. The Conservatives intend to challenge the government over the “very slow progress”. Mark Prisk, the shadow enterprise minister, said that he would be writing to ministers to highlight concerns over the government’s “tinkering”. David Frost, director-general of the British Chambers of Commerce, warned that the government’s proposals “will not necessarily bring about the step change in support that is needed. Support needs to be focused on the interests of business and not suppliers and this will require a massive commitment”. To achieve the promised change ministers have to persuade local authorities, regional development agencies and other bodies over which they may have few sanctions to agree to cull schemes. The task is complicated by the ongoing review of regional government. Financial Times 02.01.08
Lord Jones breaks ranks over CGT; Lord Jones, the trade and investment minister became the first member of the government to break ranks and criticise the “unintended consequences” of the chancellor’s capital gains tax reforms. The FT says that the remarks made by the former director-general of the CBI represent the first formal break although other ministers in private have expressed concern. He acknowledged the strength of opposition in the business world to the changes that are due to take effect in April. He said: “It is no secret that many, many aspects of the business community are saying: “The abolition of taper relief and 10 per cent has increased the potential for me paying tax. I don’t like it and what’s more you [the government] created it, it’s an entrepreneurship thing, what are you going to do about it?”. The chancellor has pledged to announce concessions in the new year, having delayed an announcement in December because of the “quite complex nature” of the proposals from the business to mitigate the impact of the changes. The extended delay, allied to a promise by Mr Darling to consult business further, has raised expectations the government will offer a significant u-turn. Financial Times 28.12.07
Small firms stay away from AIM; the value of small companies opting to list on the London Stock Exchange’s junior market AIM (the alternative investment market) has fallen for the first time in five years according to Grant Thornton Corporate Finance. In 2007 AIM hosted £6.5bn in new issues, or 35 per cent less than in 2006. The slump blighted the growth in secondary issues, which increased by at least 50 per cent to £8.6bn, and the total amount raised on the market was almost flat compared to 2006. Grant Thornton reckons that the first half of 2008 is likely to mirror the final quarter of 2007, showing limited growth in fundraising levels as companies shy from making an initial public offering until the market improves. Further information Independent 31.12.07
Small Business Forum resignation; Sean Taggart, managing director of travel company Albatross Travel, has resigned from the Government’s Small Business Forum because of what he sees as the Government’s failure to take its views seriously. He quotes the example of the Forum’s last meeting in October when officials took discussion of the surprise rise in capital gains tax off the agenda. In his resignation letter to competitiveness minister Stephen Timms, Mr Taggart says that the Forum “has become merely a ‘tick-box’ for an SME agenda that appears to focus more on one-off events rather than meaningful long-term dialogue and understanding”. Mr Taggart argues that since the independent Small Business Council- which met regularly with Tony Blair- was scrapped in May, the ability of small firms to influence Government policy has diminished. Daily Telegraph 02.01.08
Labour market prospects sink to 10-year low; the outlook for the UK jobs market is the worst for a decade with unemployment and redundancies expected to rise in the wake of the international credit crisis according to the Chartered Institute of Personnel and Development (CIPD). Their study follows a survey of independent forecasts published by the Treasury, which predicts that the number of people claiming unemployment benefit would rise by 12 per cent to 910,000 by the end of the current year. The CIPD is more pessimistic forecasting that the rise in unemployment will be 150,000 making an overall total of 1.8m- the highest level since 1997. John Philpot, CIPD’s chief economist, warns that the jobs slowdown could prompt “bigger cuts in interest rates than currently anticipated to head off the threat of recession” and prolong the effects of the economic downturn into 2009. It could undermine the government’s flagship programmes such as welfare-to-work. Much would depend on whether the flow of eastern and central European migrants to Britain would slow down. The jobs squeeze would be greatest in the financial sector and there would be more job losses in the public sector. Further information - CIPD and HM Treasury Financial Times 28.12.07
Migrationwatch says migrants ‘trap Britons in life without a job’; a generation of low-skilled British workers risks being trapped in unemployment by record immigration according to a new report by Migrationwatch. The report claims to explode the myth that foreign workers are simply doing the work, which others do not want, or filling newly created jobs. The report claims that a combination of generous benefits and immigrant labour willing to work for low wages will create “an underclass of discouraged British workers”. It says there is little financial incentive for people with families living on benefits to find employment and that more effort needs to be expended on getting the local population into work than encouraging immigration. Sir Andrew Green, the chairman of Migrationwatch, said: “It has been suspected for some time that benefit levels are a real disincentive to take work that is on offer and our research spells out why this may be so”. Further information Daily Telegraph 02.01.08
Inequality laws threaten closure for Norwegian firms; Norwegian businesses have been scrambling to find women directors in order to meet the terms of an amendment to the companies act passed in 2003 which states that public companies must give women 40 per cent of board seats. As the deadline of 1st January approached some companies elected female directors while others may have gone private to avoid the law. On 31st December more than 80 per cent had complied with the legislation. For the other mostly smaller companies, the government has relaxed its threats about automatic closure and a second deadline of the end of February has been fixed. Sigrun Vageng, executive director of the Norwegian enterprise confederation (NHO), says: “They wouldn’t put people out on the streets if companies were one woman short”. Norway has long been a leader in promoting gender equality, however the corporate world remained an exception with less than nine per cent of the 2,800 directors of public companies being women. Although the NHO opposed the new law it has led the campaign to recruit female directors. 590 women were nominated by companies to attend its “Female Future” training courses, of whom half have since become directors. Norway has the highest percentage of female directors in the world at 36 per cent, followed by Sweden and the USA. Financial Times 31.12.07
Government plans crackdown on young benefit claimants; both the government and the Conservative opposition have published ideas on how to halt the sharp rise in the number of young people claiming incapacity benefit to try and prevent them slipping into a life on state handouts. Although the overall numbers of people claiming incapacity benefits have fallen from 2.65m to 2.64m since 1999, the number of people aged between 18 and 24 has jumped from 149,830 to 159,140 over the same period. Peter Hain, the secretary of state for work and pensions, is to hold talks with doctors’ leaders in an attempt to persuade them not to sign off so many young people as unfit to work. It is part of a wider government effort to reduce the number of so-called “Neets”, young people not in education, employment or training. The government also plans to apply tougher “fit for work” tests to existing claimants under 25 rather than merely new ones. Further information Independent 29.12.07
New Zealand heads league table for English-speaking education; according to the latest league table of private schools, published by the OECD, New Zealand’s private schools are nudging ahead of the UK counterparts. The findings could give New Zealand an edge over Britain among wealthy Asians seeking the best education for their children- particularly as New Zealand’s schools are generally cheaper. Among English-speaking nations New Zealand tops the league table of private schools in maths and science- the dominant subject in the latest survey of 15-year-olds. The UK only leads in reading. Traditionally the UK leads the market for international high-school students but in the year-on-year figures for January 2007 the number of foreign students at schools belonging to the Independent Schools Council fell by two per cent to 20,852. The fees charged by UK independent schools have gone up because of rising teacher pay. The strong pound has also increased the costs of UK schools. This year’s annual fees at Eton are £26,490 compared to £15,437 at King’s College, Auckland, one of New Zealand’s most prestigious schools. Further information Financial Times 27.12.07
Gap between schools in rich areas and deprived areas is widening; an analysis of government data by the Conservative Party says that there has been a dramatic widening of the gap in educational performance between rich and poor children in the past year. The divide between pupils in the ten richest and the ten poorest areas of England grew by ten percentage points, compared to fractional increases of less than one percentage point in previous years. The figures also show that the gap widens as pupils progress through school. At age seven the gap is 20 percentage points, however by age 16 this has grown to 43.1 per cent. The figures underscore the massive influence of parental background on school success. More than 65 per cent of children in the wealthiest group achieved at least five good GCSEs, including English and maths, this summer but the figure for pupils from the poorest backgrounds was less than 26 per cent. Times 31.12.07
Nuclear power to get go-ahead? despite the prospect of a renewed legal challenge and a backbenchers revolt ministers are expected to formally give their backing to a new generation of nuclear power stations shortly after the Christmas break. The Prime Minister has already signalled his support. The Independent on Sunday quotes a senior source in the Department of Business and Enterprise as saying that the pro-nuclear decision would be made “within days”. The publication of the long-awaited energy bill, which is supposed to frame the UK’s energy policy for the next 50 years, will follow shortly afterwards. It is thought that the government statement- to be made by John Hutton, the secretary of state for business and enterprise, will not give any details on the numbers of reactors or even give a cast-iron undertaking that any will be actually constructed. Instead it will stress that it is up to the nuclear industry to come forward with ideas. Any new atomic stations are expected to be sited at existing ones in southern England, such as Sizewell in Suffolk, and Dungeness in Kent. However Greenpeace has already written to the Treasury solicitor with evidence that the consultation process has been marred by similar faults that caused the last decision to be invalidated. Professor Gordon MacKerron of Sussex University, who until last year headed the Government’s committee on radioactive waste management, has lent his weight to the challenge saying that he has “serious misgivings about the legitimacy of the consultation process”. He added that the government’s position on the economics of nuclear power is “overly optimistic” and that the “risks are very substantial”. Further information Independent on Sunday 30.12.07, Observer 30.12.07
‘Green fatigue’ leads to backlash against green taxes; British people are now convinced about the dangers of global warming, but are either baffled about how to stop it or are ignoring the issue. Opinion polls reveal much confusion among the public about what Britain should do to combat the problem. Phil Downing, head of environmental research for Ipsos MORI, predicts a backlash: “on one hand we’re told [the problem] is very serious and on the other hand we’re building runways”. “There’s a cynicism that the government is using the green agenda as an excuse for hitting motorists and people who want to fly”. Observer 30.12.07
Germans unhappy with EU’s new emission rules for cars; the European Union’s final proposals for cleaning up Europe’s cars, published on 19th December, mean that in a few years’ time European carmakers will have to meet the world’s strictest CO² emission standards. Transport-related emissions in the EU grew by one-third between 1990 and 2005 and now constitute 27 per cent of the EU total. Of these, the commission reckons cars and vans are responsible for half. At present Europe’s cars emit an average of 160 grams of CO² per kilometre (g/km). There has been some reduction since carmakers were last threatened with legislation a decade ago, but progress has been painfully slow- about 1.5 per cent a year rather than the three per cent needed to meet the voluntary target of 140g/km. The Commission is now insisting that by 2012, the fleet-average emissions from new cars sold in the EU must not exceed 130g/km, with another 10g/km coming from other sources, such as low rolling-resistance tyres, more efficient air-conditioning and greater use of biofuels. The proposals have split Europe’s carmakers. The French and the Italians have so far been fairly sanguine as their fleets are heavily biased towards fuel-efficient small cars, which average 142-147g/km. It will not be easy for them to meet the new rules without increasing the cost of their cheap, low-margin cars. For the Germans it is a different matter. Volkswagen make plenty of small cars, including the BlueMotion Polo with emissions of 99g/km. However Volkswagen also make Audi that competes against Mercedes-Benz and BMW, the two premium marques most threatened by the commission’s plans. Although BMW with its “Efficient Dynamics” package of fuel-saving tricks is bringing down emissions, so that its latest 2-litre diesel, series 3 car produces 177g/km like Mercedes it continues to produce cars that are bigger than the ones they replace with ever more powerful engines. They argue that as long as customers want such cars, especially in export areas such as Russia, the US and China, they will continue to build them. Also they point out that removing the high-end cars would have only a minimal impact, because they are a tiny proportion of the overall fleet. Pressure by the Germans has won a concession on ‘weight dispensation’. However, as things stand, the Germans have no hope of avoiding substantial fines unless they are given longer to comply and are prepared to change the mix of models. The Economist thinks neither looks likely. Further information Economist 22.12.07
London still outpacing other regions; official figures how that London’s economy in 2006 was the fastest growing in the UK for the fifth year running. In cash terms, London was worth £197bn- an expansion of 5.7 per cent over 2005 thanks to strong growth in finance and business services. The FT thinks that the national economy’s growing reliance on London, which contributes 17 per cent of UK output and an even higher proportion of taxation, with only 12 per cent of the population, will worry ministers, whose objective is to spread opportunities across the country. The situation also leaves the economy and public finances vulnerable to a London downturn, which could happen in 2008 if the global credit squeeze takes its toll on the City. The north- east and Northern Ireland enjoyed strong growth, largely thanks to public spending, which accounts for more than 30 per cent of these regional economies, compared to 16 per cent in London. The north-east also benefited from high energy prices, and its chemicals and oil-based industries. However the north-west was the worst performing region for the second year running. Further information Financial Times 15.12.07
Ministers ponder extending Crossrail to Reading; ministers are considering extending the new Crossrail line from Maidenhead on to Reading. The Evening Standard says it understands that the decision is “evenly balanced”. Crossrail is due to be completed in 2017 with a 74-mile route from Maidenhead and Heathrow in the west to Abbey Wood and Shenfield in the east via central London and Canary Wharf. However the route plan has been subject to lobbying from MPs and local politicians, who have been arguing for the scheme to be extended to their constituencies. Department of Transport officials have warned that safeguarding the Reading to Maidenhead route will not guarantee that the extension will be built. However the Crossrail bill would not need amending and it is understood that the extension will not increase costs significantly. Jim Steer, an expert on rail schemes with Steer Davies Gelave takes a contrary view. He claims that the scheme is “perfectly sensible” as it stands and that “a lot of money would need to be spent electrifying the route and a depot will need to be built at Reading”. He says that Reading passengers would prefer to get a high-speed First Great Western train direct to Paddington rather than take a Crossrail train that will make multiple stops before reaching London. Guardian 24.12.07
Livingstone backs green business park; London Mayor Ken Livingstone is backing plans to create a sustainable industries business park near Dagenham Docks. The London Development Agency (LDA) has held talks with Ford officials to try and persuade the car giant to base its worldwide green car division at the site near its diesel engine manufacturing plants. They hope that Ford will eventually produce hydrogen-driven cars there. Talks have begun with universities on basing their environmental technology departments at the business park. The site, which is largely owned by the LDA, would host a plastics and electric product recycling plant. There is also a plan for much of the city’s waste being taken to the site by barge, where there will be facilities to turn rubbish into energy. The LDA has already earmarked £18m for infrastructure upgrades at the site. Livingstone’s advisers believe that the plan will inject £3.5bn into the capital’s economy and create 7,500 jobs. Observer 23.12.07
Cameron Mackintosh is ‘most influential figure in British theatre’; Sir Cameron Mackintosh heads the latest annual list of the theatre world’s 100 most influential individuals compiled by The Stage. The announcement comes after a year when he has spent £35m refurbishing five of his West End theatres and has struck a groundbreaking deal with the Chinese Ministry of Culture to export Mandarin-language versions of his musicals, including Cats, Les Miserables and Mamma Mia, to China at the end of this year. Following the five theatres already refurbished- the Prince of Wales, Prince Edward, Coward, Novello and Gielgud- Wyndham’s is in line for a facelift and there are plans to redevelop the Queen’s. It is hoped to build a new theatre- the Sondheim- as a venue for new work in the space between the Queen’s and the Gielgud. Times 27.12.07, The Stage 28.12.07
2007-the year that the Dome finally delivered; the Independent celebrates the transformation of the ‘desperately unloved’ Millennium Dome into the o2 Arena- the fourth most popular arena in the world. Since Philip Anschutz’s AEG company spent £600m on the site creating two arenas- one housing 23,000 and the other, smaller arena, housing 2,300 as well as an 11-screen cinema, a huge exhibition space, restaurants and bars and its own shopping street. Prince has sold out 21 nights there in August and other concerts have been given by the Rolling Stones, Barbra Sreisand, Elton John and, Led Zeppelin. Bruce Springsteen has just performed there and the Tutankhamun Exhibition opened in November. This contrasts with the opening of the Dome itself in 2000 when few commentators could find anything good to say about the exhibition. The exhibits were bland and uninspiring and it soared recklessly over budget. It tarnished the political careers of virtually anyone who came into contact with it. But there were positives. Richard Rogers’ vast stretched membrane structure, technically a tent rather than a dome, has become one of the world’s most recognised buildings. Independent 28.12.07
East London Line work projected to finish on time; the East London Line closed on 22nd December and will reopen again in June 2010 when it will have become part of the national overground rail network and will link Dalston Junction in Hackney to New Cross Gate, Crystal Palace and west Croydon in south London. It will also take passengers to the North London Line, which serves the main Olympic venues around Stratford. One of the first acts was the demolition of a viaduct across Network Rail’s main line into Liverpool Street, which was obstructing the new line’s progress. The demolition was successfully completed but Network Rail was late reopening the main line. As this coincided with the problems of engineering works on the West Coast Line, Transport for London took steps to assure the public that they should be able to avoid the pitfalls of previous big infrastructure projects and open on time. One of the main reasons is that the new line will run on viaducts constructed in the 1860s to bring trains into the City’s Broad Street station, which closed in 1986. Much of the work needed for the refurbishment of the viaducts has already been done during the lengthy wait for the new line to be given the go-ahead. Financial Times 07.01.08
New York claims back money-raising lead; for the first time in three years the amount of money raised through initial public offerings in New York surpassed that of London suggesting that recent efforts to relax the regulatory regime in the US are paying off. About $54bn (£36.6bn) was raised in 2007 on the New York Stock Exchange and NASDAQ combined, whereas debuts on the London Stock Exchange and AIM raised $52.2bn. However London was ahead on the number of companies with 241 deals compared to 220 in New York. It was also ahead in the number of foreign IPOs with 86 from 22 countries raising ££14.5bn ($19.5bn), which the LSE said was double the £7bn raised by non-US companies in New York. Financial Times 03.01.08
Union chief warns that wildcat strikes could hit the Olympics; Alan Ritchie, general secretary of Ucatt, the building union, has given a warning that London 2012 projects could be hit by widespread industrial action and wildcat strikes because the Olympic Delivery Authority (ODA) has refused to set a single pay structure. The union claims that resentment among workers who are being paid less than those on different projects is likely to trigger strike calls. It claims this is one of the reasons why Wembley Stadium was hit by disruption and delay, whereas the building of Terminal Five at Heathrow was more successful because a single rate was agreed. The ODA said that it would not go further than an outline agreement with the unions covering work on the site. A spokesman said: “The ODA is committed to good employment standards. We have agreed a positive partnership with construction unions under a Memorandum of Agreement, which includes contractors recognising existing construction and allied industries National Working Rule Agreements and pay rates. These are set periodically by a joint employer and union body at a national rather than a workplace level”. Work on building the main Olympic Stadium is due to start in the spring. At the peak of construction work in 2010-11 there will be 10,000 building workers on site. Times 27.12.07
Olympic facelift planned for Stratford streets; Tessa Jowell, the Olympics minister, has announced a £32m programme to spruce up the main routes to the Olympic Park and the other 2012 venues. The programme, called the Look of London, will mean that streets in Stratford will be smartened up with benches restored and painted, graffiti removed and chewing gum blasted away. Other measures being planned include repainting red phone boxes, decorative planting and hanging 2012 banners. The minister said that the responsibility for allocating the funds, which will come out of the main Olympic budget, will be determined nearer the time of the Games. The Conservatives attacked the announcement saying that the money would have been better spent on restoring the cuts made in the budget for VisitBritain. Evening Standard 21.12.07,
Property will be ‘badly hit’ by slowdown; the FT analyses the UK’s economic prospects for 2008 where it finds reasons for cheerfulness but says that the property sector will be hit. It quotes a survey undertaken by Savills in November, which found 22 per cent of developers reporting a decline in business against 12 per cent reporting a rise. Property experts are awaiting the first big cancellation of a big British development in the wake of the credit crisis. Ambitious schemes such as the Shard of Glass and the Heron Tower are proceeding as intended, according to their backers. But the banks’ attitude to property development has switched from zeal to caution since the summer, and developers are struggling to obtain finance for anything but pre-let developments. Experts suspect that there will be few outright announcements that developers are shelving big projects but completion dates are likely to slip. There is also concern that demand for existing office and retail property could be hit by an economic downturn. The credit squeeze is also having an impact on the residential market, where mortgage lenders have sharply tightened their criteria on loans they see as more risky- including on buy-to-let properties. The consequences are likely to be grave for house builders that have relied on buy-to-let to shift their schemes for city centre flats. New construction orders for private housing in the 12 months up to October were three per cent down on the previous year whilst the number of houses changing hands has fallen and surveys show prices slipping for several months. Financial Times 31.12.07
BT Tower to become hotel? BT is in the early stages of drawing up plans to turn the BT Tower in Fitzrovia into a luxury boutique hotel. The secret plans, which involve appointing a team of designers to come up with preliminary ideas, are expected to include a new base of six or seven storeys and the reopening of the revolving restaurant on the 34th floor - closed to the public in 1981. BT outsourced the majority of its property estate to Telereal in 2001 but retained the freeholds to the both the tower and its 300,000 sq ft headquarters at St Paul’s Cathedral. Estates Gazette 15.12.07
Blackfriars residential tower gets go-ahead after cut in height; a 52-storey skyscraper containing 64 flats and a 261-bedroom hotel has been given the go ahead by Southwark planners. It will be built on the banks of the Thames at One Blackfriars Road by the Beetham Organisation. To meet the Mayor’s target of all new homes being affordable, the developer will build a new block next door with 32 affordable flats. Further information Evening Standard 21.12.07
Crown gets the go-ahead for The Quadrant; the Crown Estate’s revised plans for the regeneration of the lower part of Regent Street have been approved. The plans for the Quadrant, which covers the Regent Palace Hotel, the Café Royal and the Quadrant Arcade, include 1m sq ft of mixed development including offices and shops as well as a 44,000 sq ft public realm space. Specific proposals include the restoration of the Café Royal block as a five/six star hotel, the Regent Palace block to offer retail, office and residential accommodation, and a new cultural quarter, including a Visit London ‘tourist showcase’. The historic art deco Atlantic Bar and Grill and the Titanic Restaurant will be preserved. The Quadrant Arcade will offer a new retail mix with offices on the upper floors. By creating a new off-street service area for the Regent Palace and Café Royal blocks it will become possible to pedestrianise Glasshouse Street. There will also be a central energy centre using tri-generation. The first of its kind in central London, it will be fuelled in part by hydrogen, rather than diesel. Following the approval of the Quadrant the Crown Estate said that it would proceed to select a developer for the Metropole site in Northumberland Avenue. This has to include a hotel to compensate for the loss of the Regent Palace. Further information Estates Gazette 15.12.07
Farrell slams Smithfield proposals; speaking at the public inquiry into the proposal for a 380,000 redevelopment of Smithfield’s General Market building Sir Terry Farrell condemned Thornfield’s plans as “monolithic”. He said that the KPF-designed scheme was “massive” in its architectural composition and that its “monolithic” office would overshadow the area. He went on to claim that the proposals would create a “more hostile environment, reinforcing the street’s character as little more than a transport corridor”. “Even if the demolition of the General Market site and substantial alteration of the annex were justified, the proposed replacement buildings are not worthy of their location. They would have significant negative impact on the local townscape and would fail to preserve or enhance the character of the conservation area”. Sir Terry recommended that all the existing Smithfield market buildings should be retained and reused. His evidence followed a two-week defence by Thornfield, who argued that the architect, Lee Polisano, provided a scheme of “the highest architectural and design quality”. Estates Gazette 15.12.07
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