UK will struggle to resist global trend for higher interest; writing in the Independent Jeremy Warner, the Business and City editor, says that the latest clutch of statistics confirm a much more upbeat view of the British economy than we have seen for some time. Many of the problems of the high street, which have instructed calls for a renewed easing of monetary policy, are as much structural as cyclical. The internet is making significant inroads into traditional high street sales and one leading expert predicts that as much as a quarter of the present retail market will be online within ten years. With other, newer industries growing strongly the Treasury forecast of 2 to 2.5 per cent growth for this year already looks pessimistic. Nor does the forecast of 2.75 to 3.25 per cent for next year look as ridiculous as it did two months ago. Warner thinks that the only case for lowering rates would be if we were far further forward in the cycle than everyone else. But today we are more a part of the global economy than ever before and almost everywhere else in the world interest rates are rising- even in the US, which has been experiencing a consumer and housing boom of proportionately equal duration and magnitude. Independent 03.05.06
The bear’s bear finds some honey; Stephen Roach, the chief economist for Morgan Stanley (pictured right) and a man renowned for his ability to find a cloud in any silver lining, has suddenly announced that “I am feeling better about the prognosis for the world economy for the first time in ages”. Roach, who is also called the “bear’s bear”, said that the reason for his conversion was when the finance ministers and bank governors of the G7 countries agreed an appendix outlining the problems that need fixing to the communiqué issued after their meeting in Washington last month. The Guardian says that the main problem is that the US has been consuming too much and Europe and Asia too little. The result is that the US has built up a trade deficit worth 7 per cent of its GDP, and has been allowed to do so because central banks in Asia have been willing to buy US assets (shares, bonds and companies) in return. Roach’s fear has been that at some point America’s creditors would balk at the size of the deficit and stop buying US assets, triggering a run on the dollar so pronounced that it would bring the global financial markets and the world economy down with it. He still worries about the prospect but says, “What really worried me was that the imbalances were mutating and nobody seemed to care”. Guardian 06.05.06
Business unhappy about Trade and Industry changes; business groups have warned that the results of the sweeping government reshuffle could be to create uncertainty as well as a hold up in vital policies. Although less worried about the infighting in the government leading industry bodies told the FT that they were concerned about the shake-up of ministerial jobs, particularly at the Department of Trade and Industry. Alan Johnson (now Secretary of State for Education and Skills) has been replaced by Alastair Darling (pictured right) after only one year in the post. In total the DTI has lost four ministers and gained three new ones. Alan Johnson was seen as understanding employers’ needs and according to Miles Templeman of the Institute of Directors “was just getting to grips with DTI issues in very complex areas, such as energy. Now a new guy has got to come in and start afresh”. There are currently a number of major reviews under way at the DTI including energy, pensions and air transport. Financial Times 09.05.06
The Apprentice shows what’s wrong with Blair’s Britain; Jonathan Freedland writes a comment piece in the Guardian analyzing the relevance of the Apprentice TV programme featuring Sir Alan Sugar. Freedland believes that the programme will convey to future generations exactly what Blair’s Britain was like. Firstly it illustrates why we were so absorbed by reality TV with the stand-up rows and the full-throated conflict. On the plus side is the programme’s diversity. Last year’s final four were all from migrant backgrounds of one kind or another. One of this year’s stars has been Syed Ahmed, Bangladesh-born and East London-raised, whose “arrogance has lit up the screen”. The Apprentice visibly celebrates this ethnic variety and sees the dynamism and resilience of a migrant heritage as a strength. Another factor is that it is a true meritocracy with the MBA graduates falling by the wayside their places taken by those who rely on wits and street savvy. However the most notable conclusion is the reverence for profits. A decade ago thinkers around New Labour were dreaming of a new bottom line. Instead of short-term gains for the shareholders, what if companies considered the wider interests of their ‘stakeholders’ including their workers, the larger community and, even, the environment? What if their success was not measured in pounds, shillings and pence but in the social and environmental benefits that they brought? The Apprentice is confirmation that the dream has died- if it ever lived. “Surallan” gives no points for being nice to each other or the planet. Only money talks. For in Blair’s Britain, no less than Thatcher’s, profit is to be worshipped: it is the only currency that counts. Guardian 03.05.06
Personal bankruptcies to hit 100,000; personal bankruptcies have soared to 23,351 in the first quarter of the year leading experts to predict that they could surpass the 100,000 mark for the whole year. The number of corporate liquidations also rose in the quarter- up by 17 per cent from a year ago with manufacturers of chemicals particularly hit, presumably because of energy costs. Pat Boyden of PricewaterhouseCoopers said: “We are paying the price of a spend now, worry later culture. Record personal insolvencies are the result of a debt culture that has become endemic in the UK”. However a Treasury spokesman was more sanguine about the corporate side: “The rate of company insolvency remains near historic lows, while new businesses continue to start up at a rate of 4,000 a week”. Independent 06.05.06
CBI calls for minister to take charge of patents; Sir Digby Jones, the outgoing director-general of the CBI (pictured right), has called for a Whitehall organization to take charge of patents, copyright and other intellectual property issues and to be headed by an IP minister. He argues that the UK is taking the issues too casually and success in moving towards high value-added, branded products could be threatened by counterfeiting and copying in lower-cost countries. The CBI also calls for small businesses to get tax breaks to cover the cost of applying for patents. The call for a new minister comes in the CBI’s submission to the Gowers review of intellectual property launched by the Treasury last December. Financial Times 08.05.06
Report backs Sunday trading; a report commissioned by the Department of Trade and Industry says that the economy will benefit by £1.4bn a year from large retailers open for longer on Sundays. Significant benefits would include higher sales, better prices, more convenience and less road congestion. The report, which was prepared by Indepen Consulting, says that the growth in part-time and weekend working “brings into question previous arguments regarding the need to restrict Sunday trading to protect workers’ interests”. It does concede some local shops would have to close if bigger competitors were allowed to stay open longer. Financial Times 06.05.06
COMMUNITY AND BUSINESS AFFAIRS
Government drops compulsory OFRs; announcing a package of amendments to the Companies’ Bill, Alun Michael, the then Industry Minister (pictured right), also announced that following consultation the government was not going to reinstate the statutory Operational and Financial review (OFR). The Minister said that the reason why OFRs, which would have forced companies to make annual statements about social and environmental issues, were to be scrapped was that they would have placed a burden on business that could not be justified. Instead, companies would have to produce a “business review”- a slimmed down OFR- to comply with European law. But this report would not have to meet statutory reporting standards. Ministers have agreed to give directors a US-style “safe harbour” protection, shielding them over untrue or misleading statements in reports. The CBI welcomed the moves but Friends of the Earth, which had launched a legal action against the original decision to stop OFRs, said: “There is nothing here which will provide justice for the victims of corporate irresponsibility or guarantee high environmental standards for UK companies”. At the same time the Cabinet Office announced measures to limit ministerial powers under the Legislative and Regulatory reform Bill.
Financial Times 04.05.06, Guardian 04.05.06
OFT refers supermarkets to Competition Commission; the Office for Fair Trading has referred the supermarket sector to the Competition Commission after raising concerns earlier in the year about supermarkets “banking” land, wider planning issues and the moves by the big chains into the fast-growing convenience sector. It will be the third investigation since 1999. Following the earlier announcement the major supermarkets have all been making efforts to stress their corporate responsibility activities. Last week J Sainsbury announced the appointment of Anna Ford, the former newsreader, as a non-executive director with a remit to focus on issues such as sustainable fish stocks. Sir Terry Leahy, the chief executive of Tesco, is about to announce his plans to transform Tesco into a “better neighbour”. It is thought that this will concentrate on environment, health and local communities. Tesco has already unveiled a £100m environmental fund to research and develop sustainable energy sources to power some of its stores and cut its fuel bills. It also plans to build its first supermarket made entirely from recyclable materials in Norfolk. Tesco is likely to come under the closest scrutiny from the inquiry as it owns 58 per cent of the 319 sites listed by the OFT and it is also the biggest operator in the convenience store market. Financial Times 09.05.06
Barriers facing responsible investment; the FT’s Fund Management section carries an article on the barriers faced by social, ethical and environmental (SEE) issues in investment. The authors, who work for Insight Investment, say that although the issue has come a long way in the last few years, there are substantial barriers and the consequences of ignoring them could prove significant. They argue that since the change to the 1995 Pensions Act that came into effect in 2000 a number of the UK’s biggest asset managers and pension funds have taken modest steps to address the SEE agenda. These investors have opted for ‘engagement’ to encourage better corporate management of SEE risks and enhanced financial analysis to more fully incorporate SEE issues into investment decisions. However some difficult barriers are impeding progress. The financial consequences of many SEE risks are uncertain and intangible making them hard to analyse. They also tend to be long-term and difficult to incorporate in the short-term horizons that the investment industry tends to use. It is looking increasingly possible that the biggest SEE risk of all, climate change, will have a detrimental effect on the long-term prospects of the pension funds; yet the way their assets are managed gives no weight to this long-term risk. One common feature of many SEE risks is that they arise from structural failures in the markets. For instance carbon emissions result from the failure of the markets to attach a price for them, creating incentives for companies to externalise carbon costs, rather than reduce emissions. FT Fund Management 08.05.06
Returning local government to a central position; Sir Michael Lyons, in the interim report on his inquiry into the future of local government, calls for greater freedoms to return to local government to restore it to a central position in British life. Local authorities need to become “place-shapers”, working with others, including business to shape regions and drive improvements. To achieve this hundreds of central government targets and much else will need to be reduced because they are “crowding out” local action. This, in turn, has created an unhealthy situation where local councils are “too often focussed on the wishes of ministers rather than their own citizens’ needs and preferences”. In its place there should be fewer targets, a clearer contractual relationship between central and local government over what money is provided to deliver specific outcomes, more power for councils over transport, skills and infrastructure investment. Other changes could include a new statutory duty on local agencies to co-operate with the local authority- strengthening its role as an enabler-and a big revamp of the role of local councillors. He proposes smaller wards, clearer scrutiny rights, and other measures aimed at making them more representative, better rewarded and more highly valued. Sir Michael told the FT in advance of the ministerial reshuffle, that he thought getting the incentives and the framework right was more important than a wholesale reorganisation of boundaries. There will be White Paper on Local Government in the summer, which is expected to highlight city-regions. Sir Michael’s full report, which will concentrate on finance, will be published in December. Financial Times 08.05.06
Returning financial power to local councils; Sir Michael Lyons (pictured right) was originally asked to look into the thorny question of council tax, which, the FT says was a way of kicking the issue into the long grass before last year’s General Election. It also helped to abandon the pending property revaluation. However it soon became clear that any such investigation could not proceed without looking at the role and structure of local government, which is the subject of the interim report with finance to be covered in the final report in December. However some clues do appear. The interim report implies that as part of a possible return to local authorities of the power to set the business rate there will be a much stronger voice for business on how it is spent. Alternatively councils could become entitled to a share of the revenue gained from growth in the business tax base, giving them a further direct incentive to improve the local economy. Business reaction was mixed with general approval from London First and anxiety from the British Chambers of Commerce that “cash-strapped local authorities would come to view business as cash cows that can be tapped for money without political backlash”. Financial Times 08.05.06
There are now more than 250,000 second homes; there are now more than 250,000 second homes in England according to research by Savills Residential Research. Parts of Cornwall and inner London account for six out of ten council areas with the highest number of second homes. The National Housing Federation said that there were links between housing affordability and second home ownership. Research by the Joseph Rowntree Foundation also points out that families are being priced out of the housing market in rural areas. Regeneration 28.04.06
Thurrock will join Greater London; Nick Raynsford MP (pictured right), the former local government minister, has predicted that regeneration of Thurrrock has made the borough such a vital area for growth in the London area that it will be incorporated into the capital. He argues that regeneration along Thurrock’s riverside is key to the economic and social future of the capital as a whole. Thurrock lies on the eastern edge of the London boundary and Raynsford says, “The eastern boundary of London is likely to change. The Thames Gateway redevelopment will drive a review. Thurrock will be subsumed into London’s boroughs”. Thurrock Borough Council said that it was the role of the Thurrock Thames Gateway Urban Development Corporation to comment. The UDC said that it was “open-minded” about a move. Regeneration 28.04.06
Plans to fund new railway by tariff on new homes; a consortium of public bodies is drawing up plans to fund a new east-west rail link between Ipswich and Oxford by using a flat rate tariff on all new developments. The scheme, which is modelled on the infrastructure tariff in Milton Keynes, would place a levy on each of the 95,000 new homes planned for the corridor by 2021. The consortium includes all the local and county authorities on the route as well as the relevant regional assemblies and regional development agencies. The ODPM gave the project the go-ahead in April. Regeneration 05.05.06
Empty shop space at seven-year high; a survey by the Royal Institute of Chartered Surveyors (RICS) says that last year’s slump in consumer spending has left property companies nursing the largest rise in vacant retail floorspace for at least seven years. The largest rise in empty space has been in central London. Independent 05.05.06
Employers prefer workers from new EU states; new research from the Joseph Rowntree Foundation says that migrant workers are filling jobs that indigenous UK workers are not prepared to do and for much lower wages. A survey of 1,000 migrants and employers shows that three quarters of employers believe that EU enlargement two years ago was a good thing. In findings that will confirm the view of the Bank of England that immigration keeps down wage inflation the survey says that employers are using highly qualified migrant workers for low-skilled and low-wage work. Employers said that they valued the migrant workers filling vacancies in low-skilled jobs, especially in the building, hospitality and agricultural sectors. Employers told the JRF that they found migrant workers reliable compared to UK workers whom some described as “lazy”. The survey also found that migrant workers tolerated low-skilled work and poor conditions because the pay was significantly better than in their own countries. Independent 01.05.06
Poll shows Britons put work and fun ahead of babies; a poll conducted by ICM for the Guardian shows that Britain’s low birthrate is being driven by a generation of potential parents who would rather get rich and have fun than start a family. The findings shed light on the changes in social attitudes behind a major demographic shift in countries across Europe. According to the Office for National Statistics, about 20 per cent of British women reaching the end of their fertile life are childless, compared to 10 per cent in the 1940s. In 2004 the UK fertility rate was 1.77 children per woman, considerably lower than the 1960s peak of 2.95 children although an increase over the 1.63 record in 2001. The poll shows that 61 per cent thought that it was more important to live comfortably and only 32 per cent said that bringing up children came ahead of material success. Only 24 per cent think there is too little government support. Guardian 02.05.06
Over 65 employment rights challenge fails; the House of Lords has found against a legal challenge aimed at gaining employment rights for workers over 64. Two workers had argued that that it was unfair that workers lose their statutory protections of redundancy pay and unfair dismissal once they are 65. However, because age discrimination has not yet been made illegal, they had to argue their case on grounds of sex discrimination. Under the new age discrimination regulations, which will take effect on October 1, people over the age of 65 will have the right to claim redundancy pay if they are sacked. Financial Times 04.05.06
What is the future of the Learning and Skills Council? An article in the Education Guardian looks at the future of the Learning and Skills Council (LSC) in the light of the pending reforms both of 14-19 education and the review of local government coupled with city-regions. The article says that whilst small-scale structural reform can take place before the next election, radical reform will have to await the Labour manifesto. One small change that could take place is that local authorities will take the lead role for learning up to the age of 25 with the LSC review concentrating on an appropriate regional structure for 25+ learning. On the city-regions front Ken Livingstone, is expected to have a greater say over the governance of the London LSC and any other city-regions such as Birmingham or Manchester would expect similar arrangements. If the Lyons review of local government recommends more single-tier unitary authorities they could also get responsibility for funding 3-24 learning. This would question the very existence of the LSC as £6.5bn of its £9bn budget is spent on 16-24-year-olds. The three options would seem to be 1) retain the LSC for 25+ learning but with nine regional offices replacing 47 local offices; 2) transfer the £2.5bn budget for 25+ learning directly to the regional tier with the RDAs coming in where there is no city-region; or 3) merge the LSC’s 25+ funding with the Higher Education Funding Council. This would also keep 25+ learning within the remit of the DfES. Guardian 02.05.06
LSC warms to elected mayor but not unelected RDA; after some months of battling Ken Livingstone’s plans to take control of skills education in London the Learning and Skills Council has softened its opposition. In an interview with Regeneration Rob Wye, the LSC strategy director (pictured right), said that “Livingstone is a democratically elected politician, and he has got a mandate”. However he continued to oppose a similar proposal from the South West Regional Development Agency (Swerda), “The South-West is different, [Swerda] is a worthy organisation but it hasn’t got an elected mandate”. Regeneration 05.05.06
Specialist Schools to seek new leader; amidst a plethora of stories about sponsors of city academies not paying up the Independent runs a story that the government is searching for a new “champion” to promote the Prime Minister’s independently run trust schools and academies. Adverts have appeared for a new Schools Commissioner who will be a civil servant and be based in the Department of Education and Skills at a salary of £100,000+. Their main tasks will be to match up schools to suitable sponsors and partners and also to ensure that schools operate “fair access” admissions policies. A draft code for potential sponsors has been drawn up which suggests that they should exclude any company involved with alcohol, tobacco or gambling or providing adult entertainment services. The Guardian runs a front page lead story claiming that only four of the 27 city academy schools have received their full £2m sponsorship. Independent 03.05.06, Guardian 03.05.06
MPs attack lack of scientific vision; a report from the Select Committee on Science and Technology carries a scathing attack on the government for lacking the vision and ability to protect core subjects in the national interest. It believes that Britain faces an exodus of scientists, mathematicians and engineers from universities if higher education is left to market forces alone. The report, Strategic Science Provision in English Universities, has been written following the recent decision by Sussex University to close its chemistry department. The committee blames the Higher Education Funding Council (HEFC) for being a “toothless tiger” in failing to intervene when key university departments are threatened with closure. Ruth Kelly, the education secretary, had called on the HEFC to monitor provision of undergraduate subjects that could be considered to be of “national strategic importance”, including Chemistry and Arabic, after several departments had closed for lack of demand. Phil Willis, the chairman of the select committee (pictured above), said “it is scientific negligence because the government has a duty to protect strategic sciences across the nation. They can’t tell HEFC to deal with the situation without giving them the powers to assess and intervene”.Times 04.05.06
Ministers urged to promote sustainable consumption; the Sustainable Consumption Roundtable has urged ministers to take urgent action to widen the appeal of environmentally friendly goods and services. In a new report, the Roundtable, which is a joint exercise between the Sustainable Development Commission and the National Consumer Council, says, “A critical mass of citizens and businesses is ready and waiting to act on the challenge of sustainable consumption. But to act, they need the confidence that they will not be acting alone, against the grain and to no purpose”. It says that Britain does boast some success stories such as sustainable wood products, Fairtrade coffee, dolphin-free tuna and energy-efficient white goods such as dishwashers. However the government could do more such as forcing car adverts to include fuel efficiency and restricting the sale of inefficient appliances. It could do more by setting an example by making its buildings and transport carbon-free by 2012 and withdrawing higher mileage expense allowances for NHS staff with more powerful cars. Ed Mayo, of the National Consumer Council (pictured above), said: “Some 80 per cent of our environmental impact as consumers comes from four everyday decisions- how we run our homes, what food we eat, how we get around, and holiday travel. Solutions start here”. Guardian 02.05.06
Public backs law to enforce climate change; a poll commissioned by Friends of the Earth shows that 75 per cent of the public would support a new law designed to lessen carbon dioxide emissions. Support for legally binding targets was strongest in the West Midlands. The results were issued to coincide with a concert to launch the charity’s Big Ask campaign. David Miliband, the minister for communities (pictured left), and David Cameron, the new Conservative leader (pictured right), were attending the concert. In an interview with the Independent David Cameron says that he supports binding year-on-year targets. He also defends the use of a car to follow him when cycling to the Commons to carry his shows, suit and box files. He says that the amount of paper work is too big for the panniers on his bike. Independent 01.05.06
New poverty gauge may hit London; a leading Labour London MP has expressed concern that the Treasury’s plans to adjust the Indices of Deprivation to take account of tax credits could hit London. Karen Buck, the chair of the London Poverty Commission and a former transport minister (pictured right), argues that in the London economy there are few jobs that pay low enough wages for employees to qualify for tax credits. London boroughs account for 12 of the 15 local authorities with the lowest level of tax credit take-up. Islington has the sixth lowest proportion of people receiving tax credits, yet is rated the sixth most deprived local authority by the ODPM.
Regeneration 05.05.06
Heathrow passes air pollution tests; plans for a third runway at Heathrow are back on the agenda after air pollution tests, commissioned by British Airways, showed that EU pollution limits are not being breached. A government White Paper in 2003 turned down a third runway at Heathrow on the grounds that nitrogen dioxide levels in the areas around the airport would exceed the limits set down in an EU directive, which comes into force in 2010.It said that the earliest a third runway could be considered was between 2015 and 2020. The BA tests, which were conducted by AEA Technology and analysed at its National Environmental Technology Centre, showed that the limits were not being breached in five of the eight test sites. The five were all in the residential areas and the three that exceeded the limit were in the airport, on the perimeter and next to the M4. Pete Lockley of the Aviation Environment Federation said that the tests had been undertaken using inadequate equipment and that the real question was whether the levels would remain below the legal limit if a third runway was built. The department of Transport is due to publish a review of the White Paper by the end of the year and the issue will be an early test for Douglas Alexander, the new Transport Secretary. Independent 06.05.06
MPs warn of shortfall in Eurostar funding; with the opening of the final, high-speed link into St Pancras MPs have warned that there are problems with the forecasts of a big increase in passengers on which the project is based. Following the terror attacks and the growth of low-cost air travel annual passenger revenues are expected to be £40m lower than first predicted. Department of Transport officials sought to re-assure the Public Accounts Committee that with work on the 15-year, £5bn project there would be no more calls for the £285m commitment for any last-minute overruns. However Rob Holden, Chief Executive of London & Continental Railways, told the FT that because of structural problems with St Pancras, most of the reserves would be used and the overall cost would be higher than £5.2bn. The new link will bring the journey time to Paris down to 2 hours 15 minutes and less than two hours to Brussels. A previous Commons report had described the economic case as ‘marginal’ but the Government has stressed its broader benefits in terms of regeneration around King’s Cross and Stratford as well as the Olympics. It also provides Britain with a high-speed railway of the kind that other European countries already have. Financial Times 04.05.06
London small businesses lack contingency plans; half of the capital’s businesses do not have contingency plans to deal with a terrorist attack or emergency such as the explosion at the Buncefield oil depot according to the London Business Survey undertaken by the CBI and KPMG. Only 47 per cent of businesses with turnover of less than £5m- which accounts for 98 per cent of businesses in London- had a contingency plan, with another 27 per cent drawing up continuity plans. Sir Ian Blair, the Metropolitan Police Commissioner (pictured right), has warned that the terror threat in the capital is as strong as ever. The CBI said that the importance of such plans was illustrated by research showing that four out of five businesses that were severely affected by an emergency shut within 18 months. The sectors that were least prepared to deal with a disaster were retailers, hotels and restaurants. The survey found that 56 per cent of businesses with turnover between £6m and £20m had a plan whilst the figure rose to 79 per cent for companies with a turnover of more than £20m. Financial Times 03.05.06
ODA acquires Stratford City freehold; as the squabbling continues amongst the shareholders of the Stratford City development, the Olympic Delivery Authority has acquired the freehold for the site from English Partnerships. The ODA said that if the battle between the Reuben Brothers, Westfield and Stanhope continued it could also acquire the development rights and the long leases held on part of the site by London & Continental Railways (LCR). The ODA would then go out to tender to find a new developer for the work, which includes around 2,300 homes and media facilities. In a later development LCR gave 42 days notice that it was terminating its contract with the Stratford City consortium saying that it had “very little faith that this could all get sorted out”. It has also appointed Jones Lang La Salle to advise it on finding a new partner for the development. A leader in the Estates Gazette says that L&CR have rightly called time on the consortium. Although the partners say that that things will be sorted out in the 42-day cooling off period the EG says that enmities now run too deep because anything Olympic-related must be given to experienced teams, all of whom must have demonstrated the ability to fund, plan and build more than a garden shed. Estates Gazette 29.04.06, Regeneration 05.05.06, Estates Gazette 06.05.06
London Olympics team aims for £750m in sponsorship; Lord Coe (pictured left) and the London Organising Committee for the 2012 Games are aiming to raise £750m towards the cost of the games by selling intellectual rights, VIP packages and tickets to British companies. Although branding will be the obvious selling point there are other factors such as improved government relations, boosting staff morale or simply blocking a rival. The kernel of the London marketing plan was devised by Sir Keith Mills, vice chairman of the Organising Committee and the creator loyalty schemes Air Miles and Nectar. In conjunction with the International Olympic Committee he has shortlisted 10 sectors that will compete to be “tier one” sponsors- each paying between £50m and £100m. The sectors, which include banking, automotive, utilities and telecommunications have been agreed to avoid the rolling Olympic sponsors including McDonalds and Samsung. The first sponsor is likely to come from the banking sector. The £100m paid to the 2010 Vancouver Winter games by Bell Canada is being cited as a cause for optimism. About 20-30 tier-two and up to 50 tier-three sponsors will be unveiled in the second half of next year. Independent 05.05.06
Public inquiry into Olympic site gets underway; the nine-week public inquiry into the compulsory purchase of the land required for the 2012 Olympic site in the Lower Lea Valley began on May 9. Only 30-40 objections are expected after the London Development Agency concluded a series of last-minute land deals giving them control of 90 per cent of the land. One of the deals was with Forman & Field, the salmon smokers, who have been one of the leaders of the opposition, who are to move to Fish Island in Bow. The costs to the LDA of acquiring the land, paying disturbance costs and buying sites to relocate the businesses is about £750m which is additional to the stated £2.375m funding package for the Games. However the LDA said that the Lea Valley would have been a priority even if the Olympics had not acted as a catalyst for the process. Once the Inquiry is complete a final decision will be made by Alastair Darling, the new secretary of state for trade and industry in November with a deadline of July 2007 for all the present occupiers to have left the site. Guardian 09.05.06
Help me doctor I keep seeing green Elephants; Southwark Council has announced that it aims to set new standards in environmental development in the £1.5bn redevelopment of the Elephant & Castle. Under the plans to be announced shortly there will be a host of green features including combined heat and power stations and boreholes to provide water for toilets and showers. There will also be a system to extract heat from the area’s drains using heat exchanges. The King’s Cross development includes proposals for wind turbines on many commercial buildings. Southwark Council is to invite bids to form a “multi-utility service company” which will introduce a single system of sustainable energy, water management and broadband infrastructure. The aim is for the development to be “carbon neutral”- so the site emits no more carbon dioxide than at present even though the total space will increase from 2m sq ft to 6.5m sq ft. Financial Times 02.05.06
More hotels in and around the City; an article in the Estates Gazette looks at how the City’s working patterns, including 24-hour trading and a growing residential market on the fringes, are now leading to more hotels. Recently opened hotels have included Threadneedles, a boutique hotel in former bank premises by the Bank of England (pictured right), the Renaissance Group’s Chancery Court Hotel in the old Pearl Assurance HQ in Holborn and the refurbished Great Eastern. (others include the Crowne Plaza in a former Unilever building at Blackfriars and the Rookery in Cowcross Street at Farringdon). Now Travellodge, which has already opened a hotel at Liverpool Street Station, has just started work on a 392-bed hotel at 1, City Road, just north of Finsbury Square. In addition there are strong rumours that the former Willis Faber offices in Trinity Square (former head office of the Port of London Authority) will be turned into a chic hotel. Another conversion on the way is Three Quays, the former offices of Tate and Lyle and the ED&F Man, into an apart-hotel with a mix of serviced accommodation, apartments, retail and public space. One fly in the ointment is the revival of the City office market because office occupiers can deliver higher values. However Richard Kauntze of the British Council for Offices predicts that there will be more conversions from offices to hotels, and more new-build for larger hoteliers. The EG says that both the Hotel du Vin and the Intercontinental chains are looking for opportunities. Estates Gazette 06.05.06
Middlesex Hospital back on the market; University College London Hospitals NHS Trust has put the 3-acre Middlesex Hospital site back on the market with the hope that it can be sold by the end of July. The site was originally put on the market in 2004 but was withdrawn after delays in moving to the new Euston Road hospital and extended consultations with the City of Westminster. Westminster has now published a planning brief, which earmarks the site for a 500,000sq ft development, of which 50 per cent must be housing. A building of more than six stories will also be unacceptable. However, the EG quotes one bidder as saying that 750,000 sq ft should be possible. It is understood that the Trusts Agents have already started talks with at least 10 bidders. The agents are seeking unconditional bids in excess of £100m. Estates Gazette 22.04.06
Mayor presses TfL to get Shard of Glass moving; the FT says that the Mayor is pressing Transport for London (TfL) to commit to taking space in the so-called Shard of Glass- the 1016ft tower planned at London Bridge, which will become the tallest skyscraper in Western Europe. There is existing planning permission but the developers do not propose to start until there is a major office pre-let. The tower, which will have luxury flats on its highest floors, has already signed up Shangri-La, the Singapore hotelier, to operate a large hotel in the centre. It is understood that TfL is looking for 300,000 sq ft but there is concern that although that would be sufficient for the Shard to proceed, the likely £45 per sq ft will be among the highest rents south of the river. In the meantime it is understood that the Shard consortium is poised to announce a tenant for its neighbouring 600,000 sq ft office block next to the Shard. It has agreed a deal with PwC, the professional services firm, who occupy a 1960s building that needs to be demolished to make way for the Shard, to move to Little England, an office block in Aldersgate Street in the City. It is thought that they will eventually take up 400,000 sq ft in the second building. Financial Times 29.04.05
Helter Skelter gets the go-ahead; the City of London Planning Committee has given the go-ahead for the ‘Helter-skelter’ skyscraper following English Heritage withdrawing its opposition. Following objections from the Civil Aviation Authority the height of the tower was reduced by 60 feet to 945ft- taller than the Canary Wharf tower but shorter than the proposed Shard of Glass tower planned for London Bridge. The building is nicknamed the Helter Skelter because of the twisty shape of the design produced by Kohn Pedersen for the German fund manager Difa. Transport for London said that it would be seeking a huge contribution for transport improvements under Section 106. The standard rate would be £636,000 but TfL claims that it needs £2.5m. Evening Standard 26.04.06, Estates Gazette 29.04.06
Advertising agencies move east; the global wave in advertising is seeing a number of cutting-edge advertising agencies leaving Soho to set up shop in areas such as Clerkenwell, Shoreditch and Spitalfields. One of the main factors that drew the agencies to Soho was proximity to production companies but the rise of digital media is making location less important. By heading east the agencies are hoping to save money but showing that they see themselves as part of advertising’s new wave. The industry still remains concentrated in Soho- of the 144 agencies in London, 55 have a W1 postal code, 15 are in WC1 and 14 in WC2. But there are 19 agencies with East London postal codes, 10 of them in EC1, which includes Clerkenwell (statistics from the Institute of Practitioners in Advertising). Some of these agencies are regarded as “hot shops” such as Mother and Naked as well as the London office of Wieden, the US agency responsible for Nike. Financial Times 29.04.06
King’s Cross development faces homes problem; Islington Council has decided that it will only allow no more than 200 homes on the 2.27 Triangle site- the only part of Argent’s King’s Cross redevelopment that falls in the borough. Camden Council, the Mayor of London and the Government Office for London had all approved proposals for 246 homes as part of a 286,329 sq ft mixed-use development on the Triangle site. Argent said that there would be a period of “number-crunching” to see if the scheme is viable with 200 homes. This would then lead to either asking Camden to amend its consent, or an appeal against Islington’s decision. Argent said that this could lead to a delay on how they progress the site. Estates Gazette 29.04.06
Fears of London office glut; construction of speculative office space, which has soared by 57 per cent over the last six months, has triggered fears that the market will be oversupplied. The Times says that the latest issue of the Crane Survey produced by Drivers Jonas says that some 9.82million sq ft is being developed across central London, of which 6.3million sq ft is speculative. The biggest schemes are being developed by British Land and Land Securities, both FTSE 100 companies, who are deemed big enough to bear any risks of delay in finding tenants. Times 04.05.06
Law firms could lead the demand for City space; research by Atisreal and Lighthouse Global says that the proposed City tower schemes will benefit from up to 2m sq ft of requirements from law firms over the next three years. The study found that 88 per cent of law firms expect to increase their headcount by the end of 2009. Of these firms 39 per cent were expecting growth in excess of 20 per cent. This would translate into 6,750 additional jobs and equate to 2m sq ft of extra space. Atisreal says that tall buildings will be strong candidates for law firms’ requirements as shown by the fact that in the three existing tall buildings - Citypoint, Tower 42 and 30 St Mary Axe (pictured left) - 44 per cent of the space is let to lawyers. The latest announcement is by Everards who have announced that they have chosen Land Securities’ One Wood Street as their new headquarters. They plan to move into the 165,000 sq ft scheme in 2007. Estates Gazette 29.04.06
Victoria attracts more electronic media; Microsoft has announced that they are to take 82,000 sq ft at Land Securities’ Cardinal Place in Victoria for its MSN UK operation. This follows the news that Google is moving to Belgrave House and news that the Daily Telegraph is moving to Victoria Plaza. Estates Gazette 29.04.06
Grapevine is produced twice monthly (except August and December when there is one issue) by Brian Wright on behalf of oneLondon.
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