A Tory tax pledge shows what Labour has to do; the Times looks at the economic options open to the Prime Minister following what it says must have been his most difficult week in politics following the reported early election. The Conservative recovery began with the promise of a sweeping cut in inheritance taxation. This is not the only pledge on tax that has the potential to be immensely popular. Whilst countries such as Germany and the USA have only witnessed modest rises in state expenditure, and some such as Ireland and Denmark have reduced it, state expenditure in the UK over the past decade measured as a portion of national income has risen from 37.4 per cent to 44.9 per cent. The impact of a larger state on individuals is becoming more evident. While there has been an increase in overall incomes this has been offset by the effects of higher taxes and expenditure on essential items such as fuel bills. The conclusion is that net household income as a proportion of gross income has fallen by five per cent since 1997 and disposable income has declined by two per cent. People are working harder and longer for superficially better wages that are buying them less in practice. That is why there is a thirst for relief from taxation. Times 08.10.07
The Election delay may have helped the chancellor; Stephen King, managing director of economics at HSBC examines the options for the chancellor as he prepares to deliver both the pre-Budget report (PBR) and the Comprehensive Spending Review (CSR). The PBR and the CSR, which are taking place early and before the October inflation numbers, have been stripped of much of their short-term political impact. The current state of public finances suggest that Mr Darling was never going to pull off a string of vote-winning initiatives. Even before the subprime / Northern Rock / housing jitters of the past few weeks, the signs were that the Government was a little short of money. Unfortunately, however, it looks as though the economy will be sagging in 2008. The Chancellor had already admitted in an interview with the FT “….it would be prudent to assume that [the credit squeeze] will have some effect on us here”. He hinted that the Treasury’s own projections for economic growth would have to be scaled back. Lower growth means less revenue and, hence, either more borrowing or less spending. No one knows how the economy will progress in coming months. Gordon Brown must now be planning to play the long game. The dream narrative, then, is a repeat of 2005. when the Bank of England cut rates to reinvigorate the economy. Brown has until May 2010 to hold a general election, so a minor economic hold-up in 2008 might not be a significant problem, even if Brown were to suffer a dose of mid-term blues. Independent 08.10.07
Forecast of 6,000 job losses in the City; in just eight weeks the mood in the Square Mile has gone from an exuberant high fuelled by four years of unprecedented deal activity to a dispirited low following the US sub-prime crisis. A new report by the Centre for Economics and Business Research (CEBR) forecasts that City workers face 6,500 job cuts and reduced bonuses next year. Jobs in the Square Mile surged by 11,000 in the first half of the year as the roaring debt markets fuelled hedge fund activity, sales of structured credit products and private equity-driven takeovers. A slowdown in Britain’s financial services sector always causes grave concern at the Treasury because City profits and bonuses are a major source of Government revenue. Firms in the City have been hit with higher costs from write-downs caused by the sub-prime crisis. The CEBR says the easiest way to offset this is to slash bonus payments. This will have a consequent effect on the housing market and luxury retailers but the CEBR believe that there will be enough left in the bonus pool to avert a slump in these markets. London has thrived as a financial centre by attracting firms from outside the UK to base their international operations in the UK. That leaves London exposed to the fortunes of the institutions in Europe and the US. Switzerland’s UBS has already announced a cut of 1,500 jobs in its global fixed-income division and there is a lot of attention on Merrill Lynch in the US which has just admitted to $5.5bn of write-downs. Further information - Click here Independent 08.10.07
Poorer homes face “payment shock”; Standard and Poor’s are warning that some of the UK’s poorest homeowners could see their mortgage costs rise by as much as 60 per cent over the coming months as the credit crunch feeds through to consumers. UK mortgage holders who are soon to come off fixed-rate mortgages can expect a “payment shock”- particularly if they have a poor credit history and fall into the so-called sub-prime group. “Borrowers who took out two-year fixed-rate mortgages from late 2005 are facing one of the largest payment shocks since the 1990s, even if they are able to refinance”. The problems are expected to hit sub-prime borrowers hardest because the mortgage companies that provide these loans have always been much more reliant on the money markets. The Council of Mortgage Lenders (CML) has calculated that about 2m fixed-rate mortgages- about 17 per cent of the total British market- will be ending before the end of 2008The CML say that anyone renewing their borrowings will have to do so at “significantly higher” rates which, if the credit crunch continues, could see costs rise by 26 per cent or an extra £167 a month on a loan of £85,000. Otherwise the CML is a little more optimistic about future trends. Further information - Click here for Standard & Poor and here for CML Guardian 29.09.07
Review launched of what it means to be a British citizen; to coincide with the first citizenship ceremony taking place at Wembley stadium the government has announced an official review of what it means to be a British citizen. Lord Goldsmith, the former Attorney-General, has been asked by Gordon Brown to carry out a review of the legal aspects of citizenship and to attempt to clarify the current “complex and confusing” network of rights and responsibilities that come with being granted citizenship. The review, which is due by next March, will also consider boosting the weak incentives currently offered to long-term foreign nationals resident in the UK to become British. The decision to hold the citizenship ceremony at Wembley stadium marks a new initiative by Brent Council, which held the first citizenship ceremony in 2004, to persuade other local authorities to hold them in high-profile venues and local schools. Brent feel that there has been a cooling of enthusiasm for the ceremonies in central government. The moves come as the latest annual citizenship survey shows that 85 per cent of people in the country feel strongly that they belong to Britain, with people of Bangladeshi, Indian, Pakistani and Caribbean origin feeling even stronger ties to the country. However the survey also shows that people feel that there is now more racial prejudice in Britain than five years ago, with the figure rising from 43 per cent in 2001 to 56 per cent in 2007. Further information - Click here Guardian 05.10.07
£50m to defuse community tensions; Hazel Blears, the communities secretary, has announced a £50m programme to help local authorities boost integration together with the creation of specialist teams to tackle tensions in communities sparked off by changing patterns of migration. The money, which until now has been £2m a year, will be channelled over three years to groups that promote integration rather than bodies that represent a single faith or community. The change in approach is to be accompanied by guidance to local authorities that they should only spend money on translating documents into foreign languages where necessary, and a much greater emphasis on teaching English. The package of measures is contained in the government’s official response to the report earlier this year from the Commission on Integration and Cohesion, with an admission by ministers that the recent eastern European migration had proved “a shock to the system”. The new initiatives include information packs for new migrants about what is expected of them. Ms Blears is also to push ahead with the promotion of citizens’ days in local authorities, following the success of the pilots in four cities, which are designed to promote a strong sense of citizenship and celebrate local and national heritage. The shift in funding to groups that promote integration has been criticised by the National Association for Voluntary and Community Action, which fears that it could trigger a crisis for some ethnic groups. However Ted Cantle, who heads the Institute of Community Cohesion and led the inquiry into the disturbances in the northern towns, defends the approach, arguing that with 300 languages spoken in London schools and 120 in most UK cities, the point has passed where every group is going to get its own community centre. Further information - Click here Guardian 06.10.07
40,000 centenarians forecast for 2031; more people are living beyond the age of 100 than ever before according to the latest data from the Office for National Statistics (ONS). The ONS says that there are currently 9,000 centenarians- a 90-fold increase since 1911 and 7.5 per cent more than in 2005. The rise is attributed to improvements in hygiene, sanitation, food, housing and living standards, as well as advances in medical treatment. The government’s statisticians forecast that there will be 40,000 in 2031. The proportion of the population over 70 has been rising and the over-90s are the fastest growing group. Further information - Click here Guardian 29.09.07
Big business ‘failing to tackle climate change’; the UK’s major companies are failing to face up to climate change, with less than half of the FTSE 350 companies introducing schemes to reduce greenhouse gas emissions, according to the second annual report of the Carbon Disclosure Project (CDP). The findings of the report have stimulated an unlikely coalition of leading environmental agencies, UK companies and cross party MPs to write to the environment secretary, Hilary Benn, and the business and enterprise secretary, John Hutton, arguing for standardised carbon reporting. The letter argues: “Current reporting levels are still too low, and what is disclosed is not comparable because of the use of different calculation methods. The lack of transparency… undermines the comparative advantage that should accrue to companies with good carbon reporting and control”. The 50 signatories to the letter include BT, the Co-operative Bank, United Utilities, Friends of the Earth, John Gummer MP and the Local Authority Pension Fund Forum. Further information - Click here Guardian 09.10.07
CSR seen as enhancing company image; new research shows that 44 per cent of the public and 66 per cent of politicians see companies’ corporate social responsibility (CSR) programmes as being overwhelmingly about image rather than contributing to the community or motivating employees. Two other survey results are that 11 per cent of the public is about helping local communities and 10 per cent of the public think CSR is just to impress shareholders. The report’s authors say that CSR is basically about companies moving beyond a base of legal compliance to integrating socially responsible behaviour into their core values, in recognition of the business benefits in doing so. The government’s approach is to encourage and incentivise the adoption of CSR. For example, the Pensions Act Amendment legislation came into effect in July 2001 and requires trustees of occupational pension schemes to state their policy regarding social, environmental and social considerations when investing funds. More than 80 per cent of FTSE 100 companies now report on social and environmental issues. Cara Berry, managing director of BPRI, who undertook the research with BRMB, says: “our report is no reason to give up on CSR, but it is a wake-up call. Companies need to stop exploiting CSR to gain positive media coverage or purely to build brand image as this trivializes what are often good motivations for undertaking CSR”. Further information - Click here Daily Telegraph 27.09.07
Darling backs supplementary business rate; speaking at a fringe event at the Labour Party Conference Angela Eagle, economic secretary to the Treasury, said that the government was set to approve the idea of a new tax on business to pay for local infrastructure provided a way can be found to prevent councils using it to reduce council tax for residents. This was subsequently confirmed by the Chancellor in his pre Budget report on 9th October. In another speech at a fringe meeting John Healey, the local government minister, revealed that guidance to English councils detailing their new duty to promote economic development will be published in the next few months. The new duty was announced in the Treasury’s review of sub-national economic development and regeneration published in July. Further information - Click here Regeneration 05.10.07
Rolls-Royce decision seen as ‘slap in face’; the decision by Rolls-Royce to locate its new test centre in Germany has been branded “a slap in the face” by the union representing two-thirds of its 13,000 UK workers. The aero-engine company- one of the UK’s largest manufacturers- decided to site the new £30m centre in Brandenburg in Germany, after being given a better financial package than was available in the UK. The company had considered locating the new centre in Derby, home of most of the company’s UK manufacturing but Brandenburg is not only in east Germany but is in an area of high unemployment and thus benefits from big government grants, permitted under the EU’s state subsidies scheme. Rolls-Royce are emphasizing that no jobs will be lost in the UK and that the new jobs being created would only total 70. Financial Times 29.09.07
100,000 Parisians sign up for self-service bike scheme; so far 100,000 Parisians have paid £20 for an annual access card for the Mayor’s Le Vélib scheme which makes bicycles available at low cost. There are currently 14,000 bikes with another 6,000 coming into service in January. The success of the scheme has had a number of consequences both political and romantic. It is seen as almost guaranteeing the re-election of Paris mayor Bertrand Delanoë next March. However there is some antagonism to the hundreds of electric billboards that have sprung up all over the city as part of the price of the deal with JC Decaux for running the cycle scheme. On the romantic side the computer-controlled cycle ranks have become meeting places and have given rise to hundreds of blogs as well as much activity on Facebook and YouTube. Further information - Click here Times 26.09.07
Housing boom pushes young workers out of the market; a new Hometrack survey of housing affordability shows that in some areas of the UK half of young workers are priced out of home ownership and on a national level a quarter are priced out. The south west has the greatest proportion of young households priced out of the market (34 per cent), followed by London (31.5 per cent) and the south east (30.2 per cent). In some areas such as Kerrier, Penwith and Carrick in Cornwall and South Buckinghamshire in the south east more than 50 per cent of young workers- those too rich for housing benefit, but too poor to buy cannot afford a home. Young buyers in Kensington must spend 9.2 times their annual salary to buy a two or three bedroom house, whilst those in Camden must pay 7.1 times and in north Cornwall 6.9 times. The UK national average is 4.3. Even a stagnant housing market in 2008 offers little hope. Even if house values dropped by 10 per cent, one in five workers would still be unable to buy. Even given the government target for three million new homes, most of them affordable, to be built before 2020 it would be 2014 before the number of new homes caught up with the backlog that had formed since the 1980s. Further information - Click here Times 06.10.07
Developers queue up for Brown’s ‘eco-towns’; more than 30 developers, local authorities and regeneration bodies have applied to build Gordon Brown’s low-carbon “eco-town” settlements. However the Department of Communities and Local Government (DCLG) expects the final figure to be a lot bigger after a final flurry of applications before the 23rd October deadline. The figure emerged as Brown said that a positive response from the industry had encouraged him to double the number of eco-towns to be built across Britain from five to 10. The DCLG says that the schemes must be zero-carbon rated, provide between 5,000 and 20,000 homes on mainly brownfield sites, and include 30-50 per cent affordable housing. It will decide which schemes to carry forward in December and will help fund the schemes from next April. Two early runners are Gallagher Developments’ and English Partnerships’ proposed new town of Northstowe on the former Oakington Barracks in Northstowe in Cambridgeshire and the Coltishall Group’s proposal for a 10,000 home scheme on the former RAF base at Coltishall in Norfolk. Further information - Click here Estates Gazette 29.09.07
UK ranked sixth place to do business; the latest 2008 edition of the World Bank’s Doing Business ranks the UK as the sixth-best place to do business behind Singapore, the USA, Hong Kong, and Denmark. The rest of the top ten is Canada, Ireland, Australia and Iceland. The report finds eastern Europe and the former Soviet Union have outstripped east Asia in the ease of doing business. Egypt is praised as the leading reformers. The positions are determined by examining ten indicators of business regulation such as government requirements in business start-ups, operation, trade, taxation and closure. Further information - Click here Times 26.09.07
Moves to improve business innovation; the Sainsbury Report on science and innovation has had a lot of attention for its proposals about schools but the coverage of early-stage high-tech companies has been almost ignored. The government has announced that it has accepted Sainsbury’s proposal that to help new businesses attract equity finance a scheme will be established to channel initial “proof of concept” funding through regional development agencies. The Small Business Research initiative will be reformed to make better use of public procurement to drive innovation; the Higher Education Innovation Fund will be reformulated to give more money to what the Review calls “business-facing universities”- teaching-orientated institutions with links to small and medium-sized companies. Further information - Sainsbury Review, BERR and Small Business Research Initiative Financial Times 06.10.07
Business still ignoring the ‘grey pound’; Jonathan Guthrie investigates why business is still ignoring the “free-spending, pleasure-seeking older generation”. He quotes Daren Carter, managing director of In Retirement Services: “People of 65 to 70 no longer see retirement as God’s waiting room. It is the next phase of their lives. Their children are better off than they were at the same age. So they are interested in using their assets to live well”. Carter believes the trend will accelerate as the baby boomers born in the two decades following the war enter their sixties. By 2020 the majority of Britons will be over 50, many with high disposable incomes and significant wealth. Guthrie says that unfortunately, consumer business may be hampered from grabbing a slice of this market by the innate conservatism of the young and feckless. He thinks there are three strategies open to businesses wooing the grey pound. The first is to place generic advertising in media preferred by the old. A good example is that Saga Magazine carries campaigns for leading car makers as well as Stannah stairlifts. The second is to put over-50s individuals in your adverts such as Jane Fonda for L’Oréal. Third is to create products specifically for this age category such as Unilever’s Dove pro-age beauty products. Outside cosmetics this has been exemplified by Saga itself, a private equity-owned group that targets the 50-plus market in media, travel and financial services. Its operating profits have risen from £40m in 2001 to £130m in 2006. Financial Times 01.10.07
UK is world’s second biggest consumer; the UK is ranked the second highest consumer in the world with France and behind the US as the world’s biggest consumer of natural materials and goods. The report, which has been produced by the New Economics Foundation, calculates that if everyone in the world wanted to live like the UK, three more planets like Earth would be needed to sustain the current population. Consumption rates in the US would require five more Earths. The report has been issued to mark the moment that the world starts living beyond sustainable levels this year, plunging global consumption into the red. The “ecological debt” is defined as when a country’s consumption exceeds its annual resources such as food, land and ability to absorb waste to sustain a population. There is also a close connection with China in that UK spending on imports from China rose by 18 per cent to £15.6bn. As a result China is becoming the “environmental laundry” for the western world. Further information - Click here Guardian 06.10.07
Ageism still endemic in the workplace; despite the introduction of legislation to stamp it out the Employers’ Forum on Age says that ageism is still endemic in the workplace. Almost two out of three workers had witnessed ageist behaviour in the past 12 months. Owen Warnock, an employment law partner at Eversheds, said many firms were continuing discriminatory practices in the hope that, if challenged at a tribunal, they could show they were justified. Further information - Click here Times 01.10.07
Most employers keen to hire older workers; a study by the Department of Work and Pensions (DWP) says that most employers are keen to hire older workers. They believe that it is better to retain older workers for their experience. Further information - Click here Regeneration 05.10.07
Number of failing schools rises by 18 per cent; Number of failing schools rises by 18 per cent; the number of schools judged as failing has jumped by 18 per cent in a year, stoking fears that the large increase in public spending on education is not being used effectively. Ofsted, the independent schools inspectorate, said that 246 schools were in “special measures” at the end of last term compared to 206 a year ago. The rise in the number of schools in special measures, which is Ofsted’s worst category, comes after the introduction two years ago of a tougher inspection regime. Schools minister Lord Adonis said that schools in this category had one year to improve or they would “face closure”. However he claimed that the long-term picture remained encouraging: “Since 1997-98 we have more than halved the number of failing schools- in the summer of 1998 there were 515, compared to 246 today”. The proportion of inspected schools placed in special measures has fallen because more schools are being inspected. Stricter monitoring can also create the impression that public services are becoming worse. Further information - Click here Financial Times 29.09.07
Secondaries are ‘squandering pupils’ talent’; Lord Adonis, the schools minister, has made his long-awaited speech to the Headmasters’ and Headmistresses’ Conference where he appealed for the help of the independent schools in developing the city academies programme. He told them that a quarter of England’s secondary schools were squandering their pupils’ talent and letting them down on exam results. He said there were 800 schools that were failing to meet government targets, which aim to see 30 per cent of 16-year-olds achieving five or more good GCSEs, including English and maths. The development of the seven-year-old academy programme was a direct response to failing schools. He outlined a number of ways in which the independent schools could become involved. He announced that Woodard Schools, the group that runs Lancing, Ardingly and Hurstpierpoint colleges in west Sussex, will sponsor three academies in the same area. He also announced that other top private schools had pledged their support including Dulwich, Wellington, Millfield, Marlborough and Harrow. A second route was for independent schools to become academies and he announced that Birkenhead High School for Girls, a top performing school in the league tables, would become the fifth private school to join the state sector as an academy. A third way was either for state schools to offer more boarding places as well as the pilot scheme where top private schools offer boarding places to children from troubled backgrounds. Further information - Click here Independent 03.10.07
Sainsbury report calls for incentives for science teachers; Gordon Brown has announced a “major campaign” to support schools science including a £5,000 incentive for science graduates to retrain as physics, chemistry or maths teachers. The proposal is one of the key recommendations in the Treasury-commissioned report on the UK science and innovations system by Lord Sainsbury, which was launched on 5th October at a Downing Street reception for science and business leaders. The government will spend £8m, in addition to £2.5m already allocated, to double the number of science and engineering clubs in secondary schools from 250 to 500. The Technology Strategy Board, which co-ordinates research and development on behalf of British business, will get £1bn to distribute over the next three years. The Sainsbury review and the government response were welcomed by science and business leaders. Further information - Sainsbury Review and DIUS Times 06.10.07
Oxford University aims to raise £1bn; Oxford University is preparing to launch its biggest-ever fundraising campaign, which is expected to have a target of over £1bn. The money will fund scholarships and bursaries for students from poorer backgrounds, as well as teaching posts and a series of major building projects. The campaign, which rivals the efforts of Cambridge University, who raised £1bn in 2005, is being presented as essential in maintaining the university’s place as a world leader. Unusually, the initiative will link separate campaigns and appeals launched by individual colleges. In his recent annual oration John Hood, the university’s vice-chancellor said that “inadequate funding” was stopping the university reaching its full potential. Further information - Click here Times 06.10.07
MPs warn that FE colleges waste millions; England’s further education (FE) colleges are wasting millions of pounds of taxpayers’ money by spending more than they need to on basic items such as stationery, MPs have concluded. A report by the Public Accounts Committee concludes that colleges might be able to save more than £75m - about three per cent of spending - if they made procurement more efficient. The committee says that procurement remains a neglected “Cinderella service” among colleges, tying up resources that could be ploughed back into frontline services to pupils. However, Julian Gravatt, director of funding at the Association of Colleges, said that the report was “a bit hard” on further education institutions. “The Gershon review has kick-started an improvement and the issue has been addressed quite rapidly. College procurement is becoming more professionalised” he said. Gravatt attacked the idea that cuts of more than £75m could easily be achieved at England’s 384 colleges, since many of the things they bought were not ripe for cost-cutting. One instance was exams “which we can’t buy solely on the basis of which is the cheapest”. In spite of the report the FE colleges have been doing better. The success rate among students has risen from 59 per cent in 2000 to 77 per cent in 2005-06. Further information - Click here
Has oil production reached its peak? the Guardian looks at the debate within the oil industry as to whether production is reaching its peak and the world is sleepwalking into economic catastrophe. David Strahan says that at the time of going to press oil was $80 a barrel. That is an eightfold increase in less than a decade, and several analysts are forecasting $100 oil by the end of next year. The reasons are not just the usual short-term vicissitudes but also the gnawing realisation that global oil production is approaching some fundamental geological limits. For many years the issue has languished on the fringes of the environmental debate but increasingly senior figures are starting to speak out. James Schlesinger, a former US Energy Secretary, told the Irish chapter of the Association for the Study of Peak Oil (ASPO) that they were no longer a tiny minority and that “You can declare victory”. Even the “omerta” amongst oil company leaders is starting to crack. Thierry Demarest, chairman of Total, declared last year that production would peak in 2020 whilst Lord Oxburgh, the former chairman of Shell UK, expects demand to outstrip supply within 20 years and that the oil price could well hit $150. It is no surprise that most senior oil executives refuse to accept that their business will soon start to contract, but the evidence is becoming increasingly hard to ignore as companies struggle to maintain production or find fresh reserves. Part of the problem is that they are largely excluded from the areas of the greatest potential, such as the Middle East, and confined to mature areas such as the North Sea. However there are severe doubts about OPEC’s reserves buttressed by the leak last year of internal documents from the Kuwait Oil Company (KOC). For the past two decades KOC has been telling the world that it has about 100bn barrels of proved reserves but the documents show that this figure is actually 24bn. The only country with the capacity to raise production is Iraq and Alan Greenspan, former head of the US Federal Reserve recently conceded that the was not just “largely about oil” but all about peak oil. Opponents claim that there remains lots of oil to be discovered in areas such as west Africa or the Artic, where Russia, Canada, Denmark and Norway are now scrambling to establish territorial claims. Further information - Click here Guardian 03.10.07
World’s biggest offshore wind farm given go-ahead; the London Array, the world’s largest offshore wind farm, that will occupy a site of 90 square miles off the coast of Kent, has finally been the given the go-ahead by the government and should be ready to provide clean power for a quarter of London’s homes by 2010. However a sharp increase in costs during the 18 months of waiting for permission could still push the project off-course. One particular problem is that the surge in wind farms all round the world is causing shortages of vital materials. The main reason for the delay was local opposition to an electricity sub-station near Faversham. The consortium developing the wind farm, which is led by Shell and Eon, is reluctant to talk about the plan for 341 turbines until it has tied up a range of commercial contracts and received approval from the National Grid to provide new, high-powered overhead cables. Ministers have given the go-ahead amid mounting concerns that dozens of renewable energy projects vital to help meet Britain’s carbon emissions and to meet Kyoto protocol targets are stuck in the planning system. Eon is in the middle of a £1bn spending programme on wind, tidal and biomass projects around Britain. It already has a wind farm running at Scoby Sands, off the coast of Great Yarmouth, and has plants in the Solway Firth and the Humberside Gateway under development. Further information - Click here Guardian 05.10.07
Crossrail- the funding saga is over; following a great deal of heated negotiation to ensure a deal could be done before the comprehensive spending review a formula has been found to finance the east-west Crossrail scheme. Although it had been expected that the Treasury would pay a third of the £16bn costs with another third coming from fares and the final third from supplement to the business rates the Prime Minister was adamant that the likely beneficiaries of the scheme should pay more. Accordingly contributions have come from BAA and Canary Wharf with last minute agreement from the City of London Corporation to pay £250m. It is thought that City companies will pay a further £100m. Apart from being seen to have “sweated” the City the government was sensitive to criticism from other parts of the country that the project represents another huge investment in London, particularly in the wake of the row about the bill for the 2012 Olympic Games. Nonetheless theft says the fact that the institutions have been prepared to come up with the cash is a mark of how badly the City feels it needs Crossrail. Without the scheme it is thought that the limitations of the London transport system would hold back the most productive part of the UK economy. The London Plan predicts 440,000 new jobs in financial and business services by 2016 with consequent strains on the transport system. One of the obvious gainers is Canary Wharf, where employment is forecast to grow to 125,000. However with the greater capacity provided by Crossrail Canary Wharf could eventually support 225,000 jobs. Further information - Click here Evening Standard, Financial Times 04.10.07
However, there are critics of the new scheme; the FT says that there are many critics who believe that the £16bn Crossrail scheme is the wrong route for the capital. The biggest criticisms are that it will not link with the new international rail terminal at St Pancras, it will not go to Stansted airport, which is growing quickly and needs better connections to central London, and it will not connect with the north-west corridor route to Milton Keynes and Northampton, which has been one of the main centres of new housing development. Michael Schabas, a director of Superlink, which proposes branches to Crossrail, said a connection to Stansted was crucial. He went on: “It doesn’t make sense to build this expensive tunnel just to run trains to Shenfield and Abbey Wood. The route through the middle of London is 90 per cent right, but it doesn’t go anywhere useful at each end”. However supporters of the scheme point to the fact that it links to the main economic centres of Heathrow, the West End, the City and Canary Wharf. It also links with Eurostar at Stratford and it is critical to the development of the Thames Gateway, which will have a large part of the new homes and currently has poor transport links. Financial Times 04.10.07.
Crossrail could lead to development bonanza; according to Ben Webster, the Times’ Transport correspondent, Crossrail will generate a wave of investment in dozens of new office towers accommodating 200,000 workers as well as a huge expansion of London’s commuter belt, cutting journey times by half-an-hour from dozens of towns in the Home Counties. The £16bn project, to be completed by 2017, will be the largest expansion of the capital’s transport system for 40 years, carrying 70,000 people an hour from Berkshire, Buckinghamshire, Essex and Kent directly into Canary Wharf, the City and the West End. The line’s 38 stations will bring an extra one-and-half-million people within 60 minutes of London’s key areas. It will underpin the development of thousands of new homes in the Thames Gateway area. Times 06.10.07
Have cash factors put Crossrail spur on ice? the Evening Standard says that a wrangle over money is leading to claims that part of the project may be delayed. Government departments are arguing over funding for the spur to Abbey Wood in south east London, which would not only serve some of the poorer areas of London but Canary Wharf as well. There was controversy about the spur earlier in the year when the government proposed dropping Woolwich as one of the stations on the spur but was forced to do a U-turn after protests from MPs. One of the reasons being given for delaying the spur is that it would enable the government to save money by putting £1bn of expenditure into the next spending round. Another fear that was emerging about the Crossrail funding package was that small firms would have to pay a disproportionately large part of the supplementary business rate. Evening Standard 08.10.07
City recruits fundraising team for Crossrail; the City of London has recruited Harvey McGrath, former chairman and chief executive of the Man Group and now chairman of London First, to join a campaign to raise £150m from big business to help pay for Crossrail. The City, which agreed to contribute £200m of its own funds to help break the impasse over funding, has also been given the job of raising a further £150m from London’s largest companies. Michael Snyder, chairman of the corporation’s policy and resources committee, will lead the fundraising drive. Sunday Times 07.10.07
BAA threatens to cut back on investment in London airports; after failing to secure the passenger price increases it was seeking BAA has threatened to cut back on investment in its three London airports. This has come about because the Competition Commission recommended that BAA be allowed to levy an 18 per cent increase on passenger levies- a lower sum than BAA was hoping for. In addition to new investment Ferrovial, the Spanish construction company that bought BAA last year, was hoping for a larger increase to help pay for the £10bn it took on to finance the purchase. Ferrovial is currently selling off non-terminal property and is thought likely to sell off Gatwick and Glasgow airports. In its submission to the Competition Commission BAA said that the new passenger charges would also limit investment at Heathrow. Plans are in place to rebuild terminals 1 and 2 in time for the 2012 Olympics but that could be scrapped. The Times 04.10.07
London’s share of global forex still growing; the latest triennial survey from the Bank of International Settlements shows that London’s share of the global foreign exchange market continues to grow while New York’s share has slipped. The UK’s share of foreign exchange trading volumes jumped from 31.3 per cent in 2004 to 34.1 per cent in April 2007. London has benefited as the preferred trading centre for Asian central banks, which have built up huge foreign reserves in recent years. Further information - Click here Financial Times 26.09.07
World’s largest medical research lab for London? the Times gives more detail on the bid by a consortium of funders of clinical funders to buy a site at the side of St Pancras station to build a world-class medical science centre to be named the British Library Science Site (Bliss). The government’s Medical Research Council (MRC) has joined forces with the Wellcome Trust, Cancer Research UK and University College London in the bid for the 3½-acre site, valued at least £28m, and being sold by the Department of Media, Culture and Sport. The consortium has made it to the final round and will learn within weeks if it has been successful. Other bidders plan residential, hotel, retail and office projects. The consortium bid foresees the largest laboratory of its kind in the world, accommodating 1,500 leading researchers in different fields. If successful the Bliss campus would become the new home for the National Institute for Medical Research (NIMR), which the MRC has controversially decided to move from Mill Hill to Central London. Until the St Pancras site became available the MRC had planned to locate the new institute on the site of the National Temperance Hospital in Hampstead Road. It is understood that the Bliss bid is not the highest and that some exceed £50m. However the Department is not obliged to sell to the highest bidder, only to get “best value” for the taxpayer. Times 01.10.07
Mega-merger creates biggest NHS trust; a mega-merger of some of London’s leading teaching hospitals and Imperial College to create the UK’s first academic health science centre has taken place to ensure that the UK remains at the forefront of academic medicine and treatment. St Mary’s NHS Trust and Hammersmith Hospital, which already embraces the Charing Cross Hospital, will join with Imperial College and its medical school to create the Imperial College Healthcare NHS Trust, the largest single NHS organisation in the country with a combined teaching, research and treatment budget of close to £1bn a year. The merger resembles that of the powerful academic health centres in the US, such as those at Stanford, Harvard and the John Hopkins Hospital in Baltimore, the top-ranked US hospital for 17 years running. Imperial is rated as one of the world’s top five universities for bio-medical research while Hammersmith and St Mary’s Trusts rate in the top three in the UK for quality of care and clinical performance. The UK has the scope to create five or six academic health science centres, with University College hospitals, and Guy’s and Thomas’s already exploring such links in London. Further information - Click here Financial Times 06.10.07
Victoria could be next art hot spot; the FT says that if you are tired of the cutting-edge cool of the East End or the fusty traditionalism of Cork Street, it might be time to pocket your passport to Pimlico and head for London SW1. Victoria is bidding to become London’s latest haven for art dealers. Although the area is usually seen as more of an en route area than a destination the situation could change next January when international auction house Phillips de Pury open their new European headquarters in the former sorting office in Howick Place at the back of the Army and Navy store. Just as interesting as the location is the person behind it- the building has been bought and developed by Alessandro Cajrati Crivelli, who created the headquarters of some of Milan’s leading fashion houses, such as Armani, Brioni and Zegna. Also of significance is the fact that the new Saatchi Gallery is due to open at the Duke of York’s Barracks off King’s Road in January. Further information - Artnet and Saatchi Financial Times 29.09.07
London Transport has its fans; A poll of world travellers by TripAdvisor has revealed that world travellers believe that London’s transport system is one of the safest and most efficient public transport systems in the world. The underground and the ever-cheerful London cabbie come in for particularly high praise. The Independent says that the findings may come as something of a shock to the city’s commuters. Part of the reason for the London’s popularity is the comprehensive extent of the Tube network. Two out of five polled said that the most important factor was that public transport went everywhere they wanted to go. On cleanliness London came in fourth, with Washington DC first, Tokyo second and Paris third. Los Angeles was considered to have the worst transport. Further information - Click here Independent 05.10.07
Paris launches challenge to the City; Christine Lagarde, France’s economy minister, has unveiled a series of measures designed to promote Paris as a financial centre. Using the fact that France’s banks have come through relatively unscathed in the weeks since mid-August her proposals include a new market with lighter disclosure requirements- the minimum under EU rules- that will operate in English to encourage new listings. An end to “gold-plating” or embellishing European financial regulations, cut regulatory red tape and modernising the law on securitisation, so Paris can win a share of the hedge fund market. She has also set up a committee of senior industry figures to identify and eliminate obstacles to the growth of financial services in Paris. She says that her aim is not to knock London off top spot but to lift Paris out of the second tier of centres for international finance. She wants to copy from London “that semi-incestuous relationship between the exchanges, bankers, insurers, lawyers and accountants” Lagarde spent five years in Chicago as head of Baker & Mackenzie, the international law firm. Financial Times 05.10.07
Old Bond Street is the most expensive shopping street; a survey of the most expensive shopping streets in America and beyond has found, for the first time, that Old Bond Street where average annual rents per square $1,400 with the most expensive street in New York being Fifth Avenue at $1,350. The research by Colliers International highlights the gulf not just between New York and the rest of the US- the second most expensive street in the USA is San Francisco’s Union Square where rent is on a par with Rodeo Drive in Los Angeles at just $485 per square feet per year. As the two mega cities of London and New York pull away from their domestic rivals so their rivalry becomes more potent. Earlier this year Mayor Bloomberg commissioned McKinseys to look at why New York might be losing its edge to London. Last month Manhattan poached Diana Torres, a senior executive from Think London, a group that promotes the capital, and gave her the job of promoting competitiveness within New York. Further information - Click here Guardian 06.10.07
Olympics undermining City office development; a report by Cushman & Wakefield says that the spiralling costs of construction in the lead-up to 2012 Games is undermining City office development deals. A shortage of skilled labour, soaring prices of raw materials and a growing list of Olympics-related projects have given the building industry huge bargaining power over developers in the pricing of new schemes in the capital. Building costs estimates have risen by about 25 per cent over the last year. The surge in costs coupled with the recent credit crunch has turned the City office investment market into a virtual dead zone since the end of July, with little prospect of improvement until the new year. A total of £5.4bn was spent on buying City office space in the third quarter, an eight per cent rise on the year before. However, all but £350m of the deals took place before the start of August. City skyscraper projects with planning but still to get off the ground include Land Securities ’20 Fenchurch Street, a 37-storey tower rising to 525ft and nicknamed the “Walkie-Talkie” owing to its concave shape. Similarly a start date has still to be fixed for the Shard of Glass at London Bridge whilst the backers still wait for development finance. A third scheme, the Pinnacle, a 288m City skyscraper nicknamed the “Helter Skelter” because of its twisted shape, still depends on securing the final slice of finance although a construction contract has been placed with work due to start in 2009. The only significant office deal to have taken place since August was the £240m sale by Legal and General of Bucklersbury House between Cannon Street and Bank stations, which in 2013, is due to become Walbrook Square, the City’s largest new office and shops scheme in 25 years. The scheme has been bought by Metrovacesa of Spain. Times 01.10.07
Blears sends Lambeth tower to inquiry; Hazel Blears has referred the £200m skyscraper planned for Doon Street on the South Bank to a public inquiry. The 472ft high scheme is 30ft higher than the London Eye and will contain 329 one or two bedroom flats for sale as well as a state-of-the-art leisure centre including a swimming pool. There was strong concern about the impact on views from St James’s Park and from the courtyard of Somerset House as well as the listed National Theatre and Royal Festival Hall. English Heritage had complained about its “negative impact”. Blears has specifically singled out the lack of affordable housing in the Coin Street Builders’ scheme. Lambeth Council said the exception was justified to pay for the leisure centre and Ian Tuckett, executive director of Coin Street Builders said: “We need the profit from the private flats to pay for the leisure centre, which is a requirement from Lambeth Council. We are confident that we will be able to persuade Ms Blears that this is a well thought-out scheme and it should be approved”. Since 2003 Lambeth has only built 1,451 affordable homes- a third short of its target of 2,140. Further information - Click here Evening Standard 28.09.07
Mayor fights Southwark over massive housing scheme; Ken Livingstone told the Labour Party conference that he would use his legal powers for compulsory purchase a key site needed to enable a controversial housing scheme to go ahead at the back of City Hall. The Berkeley scheme which involves eight cylindrical towers of between 12 and 19 storeys and has won planning permission on appeal, has been described as “aesthetically dreadful and horrible” by Simon Hughes, the local MP and has aroused concern in Unesco’s World Heritage sites about the effects on the Tower of London across the river. Southwark Council, which owns half the site, is refusing to sell to Berkeley saying that they want an arts centre included in the scheme. Ken Livingstone claims that the council’s position is driven by the Lib Dem and Conservatives wishing to protect their voter base. Estates Gazette 29.09.07
Network Rail and Sainsbury’s join the Guardian at King’s Cross; Network Rail is to join the Guardian in taking offices at Parabola Land’s 500,000 sq ft King’s Place development in York Way at King’s Cross. The rail company is taking 40,000 sq ft and will be joining Wolverine Worldwide, who is also taking 40,000 sq ft. The Guardian and the Observer will be moving into 150,000 sq ft next year. In another move J Sainsbury have announced that they are to give up their head office at Holborn Circus in the City and move to King’s Cross in 2011. The company, which is in discussions with Delta Two about a takeover, has agreed to take office and retail space at Argent’s King’s Cross Central. One of the reasons given for the move is to operate from greener offices. Estates Gazette 29.09.07, Property Week 04.10.09.
Ally Pally development plans are stalled; a £55m redevelopment scheme for Alexandra Palace has been blocked by a High Court judge because of a “fatal flaw” in the consultation process. The ruling was a victory for the Save Ally Pally campaign, which claimed that it had been denied a proper chance to comment on the final proposals for the 130-year landmark and birthplace of television in north London. The judge quashed the Charity Commission’s order permitting the Palace trustees to enter into a 125-year lease with Firoz Kassam’s development company, Firoka Group. They planned to refurbish the exhibition halls, add a 150-bed hotel, bars and restaurants, and provide leisure facilities. Further information - Click here Times 06.10.07
grapevine is produced twice monthly (except in August and December when there
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Next issue on 25th October 2007
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