Blame it on the Chinese; Jeremy Warner examines the reasons for the Bank of England’s Monetary Policy Committee’s (MPC) decision to increase the interest rate to 5.75 per cent at its July meeting. Although this has been met with the usual barrage of complaints, rising rates are only painful if you are among Britain’s debtors. This is admittedly a strongly growing cohort, but there are still approximately six times more savers than debtors. Despite five rate rises in less than a year, it is still tough to find deposit rates that, after the payment of tax, protect savings from the present level of inflation. This phenomenon has helped fuel the growth in debt and now provides one of the chief justifications for rising interest rates. Monetary conditions have been too loose for too long which has led to now clear signs of over-heating in the economy. The number of savers may outnumber the number of debtors, yet with half-million-pound mortgages now relatively commonplace, the total size of debt dwarfs savings. So far, the present tightening cycle has had zero effect on consumer spending and house prices. People have chosen to borrow more and save less rather than curtail spending habits. This may now change, especially if the MPC raises rates still further to six per cent. The immediate impact may be inflationary as employees seek to recover disposable income through higher wage claims. Yet as consumption slackens, the labour market will become looser and wage demands less easy to sustain. For high-street retailers, things could become ugly. Further information - Click here Independent 06.07.07
This is as good as it gets for the economy; Larry Elliott looks at the economic legacy that Alistair Darling (pictured right) is inheriting from Gordon Brown. The summer of 2007 is as good as it gets for the economy, for the time being at least. The Tories are determined to carry on pinning all the economic woes on Brown, especially as a decade is a long time for a chancellor to hold the reins. The latest figures from the Office for National Statistics show the two faces of the economy. Growth in the first quarter was robust at 0.7 per cent, continuing the recession-free expansion since Black Wednesday in 1992. However, Britain ran a balance of payment deficit equivalent to 3.6 per cent of GDP in the first quarter. The shortfall would have been even higher if it were not for the profits made by City speculators. Years of current account deficits mean that the gap between Britain’s assets and its liabilities now stands at a record £302bn. Nobody can predict when or why, the markets will cease to turn a blind eye to Britain’s tendency to live beyond its means. That will result in a long overdue fall in sterling and a squeeze on incomes as the price of imports goes up. There are already signs that consumer spending, currently propped up by debt, is on the wane with trading warnings from Marks & Spencer and Ryanair. Larry Elliott thinks that a big financial crisis is possible and that Labour would cop some flak. However in terms of crisis, voters tend to go for reassurance and solidity, someone like Roosevelt. Cameron doesn’t exactly come across as FDR. Guardian 02.07.07
World will face oil crunch ‘in five years’; the International Energy Agency (IEA) has warned that the world is facing an oil supply “crunch” within five years that will force up prices to record levels and increase the west’s dependence on OPEC. The IEA says that supply is falling faster than expected in mature areas, such as the North Sea or Mexico, while projects in new provinces such as the Russian Far East, face long delays, Meanwhile consumption is accelerating on strong economic growth in developing countries. The problem is exacerbated by the fact that supply from non-members of OPEC will increase at an annual pace of one per cent, or less than half the rate of demand. Further information - Click here Financial Times 10.07.07
Nestlé chief fears ‘significant and long-lasting’ food inflation; food prices are set for a period of ‘significant and long-lasting’ inflation because of demand from China and India and the use of crops for biofuels, according to Peter Brabeck (pictured left), chairman of Nestlé, the world’s largest food company. Although several food companies have warned about the short-term outlook for prices Brabeck’s comments are the among the starkest warnings that a long period of rising food prices could stoke broader inflationary pressures. Corn prices have risen by about 60 per cent and wheat by about 50 per cent over the last 12 months. Sugar, milk and cocoa prices have also surged. Reports from two international organisations have also forecast food price rises of between 20 and 50 per cent over the next decade. The OECD has warned that biofuel demand is creating a fundamental new demand for agricultural commodities. However Julian Jessop, chief international economist at Capital Economics, said that new technologies would emerge that required less raw materials for biofuels. In any case if there were a switch to biofuels the prices of conventional fuels would drop. Further information - OECD Financial Times 06.07.07
Brown plans a “serious redesign” of government’s links with business; John Hutton (pictured left), the new secretary of state for the Department of Business, Enterprise and Regulatory Reform (DEBRR), says that Gordon Brown is aiming to exploit David Cameron’s perceived neglect of employers by spearheading a “serious redesign” of the government’s links with business to woo the corporate vote. Hutton vowed that his new department would be “aggressively pro-business”. Employers may take this pledge with a pinch of salt, not least given business concerns about rising levels of taxation and regulation during Brown’s decade-long reign as chancellor. However Hutton insists that the changes to government, including the restructuring of his own department and the creation of a Business Council, were not simply cosmetic. Reacting to criticism that there are no small businesses on the 15-strong Business Council Hutton responds that he had “heard the criticism and will try to meet it…The Council has been set up by the Prime Minister specifically to do the job he wants it to do, but the department is not going to ignore the voice of small business”. The revised department has lost science and innovation which have joined up with skills and universities from the old Department for Education and Skills to create a new “Department of Innovation, Universities and Skills” to be led by John Denham. The DEBRR will have six ministers- three full-time and three part-time in that they are shared with other departments with four of them as Ministers of State. They include Stephen Timms, switching from the Treasury to become the minister for competitiveness and consumer affairs, Sir Digby Jones, former director-general of the CBI, as minister for trade and investment- a shared post with the Foreign Office, Pat McFadden, as parliamentary under secretary dealing with employment law and regional policy, Lord Drayson, who will also be shared with the Ministry of Defence and Gareth Thomas, who will be a parliamentary under secretary. Further information - Click here and here for DEBRR Financial Times 03.07.07
One in ten Britons born abroad; a report from OECD says that foreign-born people now make almost one in ten of the UK population following a decade of high levels of immigration. In 2005 the proportion of foreign-born people was 9.7 per cent or about 5.8m. Indians made up the largest group with 570,000 followed by the Republic of Ireland 417,000 and Pakistan 217,000. Since May 2004 an estimated 630,000 migrants from the eastern European EU states have registered for work together with an unknown number of self-employed workers from the eight states. The OECD report says that in 2002 there were only 24,000 Polish citizens in the UK, rising to 110,000 in 2005 and to 229,000 in 2006 - including those who had taken British nationality. The report also documents a fall in the number of asylum seekers although Britain remains the second-most-popular destination after France. In 2002 110,000 asylum applications were received but new laws plus a general decline in applications across western Europe saw this number drop to 30,800 in 2005. Further information - Click here Times 26.06.07
BT named company of the year by BitC; companies who have trailblazed environmental issues won the top awards at Business in the Community’s annual awards ceremony. BT was named company of the year whilst BSkyB won the climate change award and Barclays took the energy environmental leadership award. BT took the Impact on Society award for its record in reducing carbon emissions by 60 per cent since 1996 and planting 250,000 saplings for customers opting for paper-free billing. It was also commended for allowing 11,000 of its UK staff to work from home and equipping 64,000 to work flexibly. The international climate change award went to BSkyB, which achieved carbon neutrality last year just months after James Murdoch, chief executive, set it as a target. Rupert Murdoch has subsequently announced that the rest of the News International empire will follow suit. Adele Blakeborough of Community Action Network won the Marks and Spencer Sieff award for individuals based in the community who have successfully collaborated with business. In 2005 she established a partnership with Permira, the venture capital group, which has released staff and invested money to help social enterprises achieve commercial success. Academy Internet won the small business award for its work in establishing partnerships with four organisations in its home city of Brighton. Further information - Click here and here for BitC Financial Times 03.07.07
Hedge fund manager donates £230m; Chris Hohn (pictured left), founder of the Children’s Investment Fund and a hedge fund manager with TCI, gave £230m to his charitable foundation last year, making him one of the UK’s most generous philanthropists, with even more expected this year. The size of the donation is one of the largest single acts of charity made by a Briton, more than double the £100m given by Sir Tom Hunter, three years ago, and the £100m donated this year by David and Heather Stevens, founders of the Admiral insurance company. However, the donations pale in comparison to those by US billionaires. Warren Buffett, last year pledged $31bn to the Bill and Melissa Gates Foundation, which already has $35bn from Mr Gates, the founder of Microsoft. The size of the donations is a result of the phenomenal returns Hohn has generated for investors in TCI, which has more than $10bn under management. Last year he made more than 40 per cent, while in 2005 TCI returned more than 50 per cent. Financial Times 02.07.07
UK attracts record number of investments; according to data released by the Department for Business, Enterprise and Regulatory Reform (DEBRR) the UK won a record 1,431 investment projects from overseas companies in 2006-07 - a 17 per cent increase on 2005-06 and more than 80 per cent over 2003-04. The USA was the biggest overseas investor with 540 projects, followed by France with 95. In terms of jobs created, India with 5,130 was second only to the USA (13,326) with services, including financial and IT sectors, accounting for a third of the jobs, with manufacturing, R&D and distribution following. Although the government does not publish the value of these investments - which includes merger and acquisition activity - they are broadly in line with estimates published by OECD. They put investment into the UK in 2006 at $183.6bn, putting it second to the USA in global rankings. This is down by about $50bn on a record-breaking 2005, but much of the decline can be attributed to the restructuring of Royal Dutch Shell. The DEBRR figures also tally with a survey published by Ernst & Young, which highlighted the growing concentration of investment in London and the south east. OECD figures also show that the UK is the fifth largest outward investor with $79.8bn leaving these shores in 2006. The first four are the US, France, Spain and Switzerland. Further information - GNN, Ernst & Young and OECD Independent 04.07.07
Brown proposes regional select committees; as well as appointing ministers for each region of England Gordon Brown (pictured right) has proposed that House of Commons select committees should be set up to scrutinise the economies and public services of the nine English regions. The proposal is contained in the Green Paper The Governance of Britain. It is thought that the proposal will be further backed up by the review of sub-national economic development and regeneration that has been undertaken by the Treasury and is due to report in the next few days. This is expected to propose greater powers for the regional development agencies in return for more scrutiny by elected politicians. In his speech to the House on 4th July the Prime Minister said: “I propose that to increase the accountability of local and regional decision-making, the house should consider creating committees to review the economies and public services of each region - and we will propose a regular question time for regional ministers”. Tessa Jowell, formerly secretary of state for culture, and now minister for the Olympics, has been appointed the minister for London. Further information - Click here Regeneration 06.07.07
Tories still have doubts about the RDAs; Alan Duncan (pictured right), the shadow business secretary, says that the regional development agencies must “justify their existence” to escape being axed by a Conservative government. In a bid to hit back at Gordon Brown’s attempt to brand Labour as the natural party of business, Duncan suggests that the billions of pounds poured into the nine regional bodies might be better used to help business directly. He also attacks the lack of small business representation on the new Business Council and claims that the government has neglected SMEs and that he is their champion now. He also attacks the name of the new Department for Business Enterprise and Regulatory Reform. Financial Times 10.07.07
IPPR points to North-South split in leading cities; according to a new study produced by the Institute for Public Policy Research (IPPR) England’s cities are polarised between dynamic, fast-growing economies and laggards blighted by high unemployment and low skills. London, despite its booming financial services sector, does not make it into the top five - largely due a relatively high percentage of the working age population claiming work-related benefits. Adhering loosely to a north-south divide Reading heads the list of top-performing cities, followed by Bristol, Southampton and Cambridge. While York makes it into the top five, three of the bottom-five cities are in the north-east, which lags behind many other English regions. The bottom five cities are Newcastle, Sunderland, Birmingham, Middlesbrough and Liverpool. The most economically successful cities tended to have high rates of employment, better educational achievement and lower rates of benefit claim. Further information - Click here Financial Times 09.07.07
Luton Airport abandons expansion plans; Albertis, the Spanish infrastructure giant, which bought Luton Airport in 2005, has announced that it has scrapped plans to treble the size of the airport. Two years ago Albertis announced that it planned to increase Luton’s capacity to 15m passengers a year by 2012 within the existing footprint of the airport. At the same time it said that it would subsequently replace the current runway with a longer strip with the aim of increasing passenger volumes to 30m by 2030. Now, however, Albertis have announced that they do not believe that there is enough time within their existing lease, which runs to 2028, to earn a return on the £1.5bn investment the expansion would require. They will publish a new development plan, focused only on the current site, by the end of the year. The announcement leaves the Department of Transport wit a serious headache as they try to solve the growing problem of air traffic congestion in the south east. Ministers expect UK passenger numbers to increase by 250 per cent between 2002 and 2020, with around two-thirds continuing to pass through airports in the south east. The air transport white paper, published in 2004, backed plans for Luton’s expansion but also proposed expanding Heathrow and Stansted. However both Heathrow and Stansted are encountering serious opposition from environmental campaigners and local residents, whilst further afield, Manchester’s expansion has been turned down. Albertis’s change of heart will also bring problems to easyjet, which uses Luton as its main hub, and Ryanair. Further information - Click here Independent 07.07.07
A good beginning for business; In his first interview with the press, Alastair Darling (pictured right) has dismissed French-style economic patriotism, and stressed the importance of the City whilst showing himself aware of business priorities and corporate realities. The FT says that Darling’s emphasis on Brownite economic stability is natural enough. Equally welcome is his rejection of an instant clampdown on the tax treatment of private equity. He made it clear that any changes to the tax system would be considered in the context of the economy as a whole. Beyond the Treasury, companies can be satisfied with John Hutton’s first week as business secretary. His record as a minister who can stand up to cabinet colleagues in defence of his department makes him well placed to be the champion within government that the business lobby has sought. It is such a promising beginning that Hutton’s expressed desire for Labour “to be the natural party of business” has some resonance. However the FT says it may not be all smooth going. Sir Digby Jones, now trade and investment minister and former head of the CBI looks eager to ruffle feathers around Whitehall in a way that his new colleagues may resent. Financial Times 05.07.07
Stephen Timms to be Minister for Enterprise; under the government reorganisation Stephen Timms (pictured left) has been appointed as the minister for competitiveness and consumer affairs. He will also be minister for enterprise, ending a run of six small business ministers under Labour and reflecting Gordon Brown’s preference for enterprise as the overall brand for promoting entrepreneurial activity. Timms, who was previously chief secretary to the Treasury, and has been a minister at Work and Pensions, Education and from 2002-04 was Minister of State at the Department of Trade and Industry. At the rebranded Department for Business, Enterprise and Regulatory Reform he will work closely with Pat McFadden, who has switched from the Cabinet Office bringing regulatory reform with him. The CBI welcomed the change but queried the definition of business and enterprise. Lucy Findlay, head of the CBI’s enterprise group, hoped that the use of the word enterprise meant that there would be new emphasis on growing businesses. “The Department of Trade and Industry and the Small Business Service focused too much on start-ups. We have a lot of good start-ups but not enough are growing”. The Federation of Small Business joined the CBI in welcoming the addition of the better regulation brief to the new department. Further information - Click here Daily Telegraph 03.07.07
Revenue looks at Enterprise Management Incentives scheme; HM Revenue & Customs have launched a survey into whether Enterprise Management Incentives (EMI), a highly successful share options scheme for small businesses, is providing the Treasury with value for money. Officials are believed to be worried that EMI’s tax breaks may be attracting companies with existing schemes rather than encouraging new companies to start offering share option schemes. The most recently published official data show that 7,250 small businesses were operating EMI schemes as of June 2006. These were creating share options for 100,000 employees, a 45 per cent rise in just two years. Further information - Click here Financial Times 07.07.07
Boot camp for internet entrepreneurs; some of Europe’s leading internet entrepreneurs are planning a boot camp in London in September where funding of up to £34,000 will be available. Successful applicants will spend a week surrounded by what the organisers call “the best and the brightest people in the European start-up scene” with the aim of fostering European web businesses to rival those created in the US. The scheme is being backed by venture capital groups as well as people involved in some of the best known names in the sector such as Skype and Bebo. Some of the background can be found on the blog site of Saul Klein, formerly a senior executive at Skype and now a venture capitalist. Further information - Click here and here for Seedcamp Financial Times 07.07.07
Fear of job stampede offshore ‘unfounded’; fears that hundreds of thousands of high-quality British jobs have been outsourced to low-cost emerging economies such as India are largely unfounded according to a new report from the Work Foundation. Research shows that 5.5 per cent of job losses across Europe were due to offshoring in the first three months of this year compared to 3.4 per cent last year, but it suggests that the speed is not dramatic- especially in Britain where jobs in call centres are going up rather than down. IT services, which are generally seen as the main source of offshoring, are third (£122m) behind travel (£626m) and transport (£289m) as the largest services imported from India. The report notes that Britain imports four times more IT services and 16 times more business services from Germany and says that labour costs are only one factor taken into account when a business looks at the benefits of different locations. Further information - Click here Guardian 09.07.07
Welcome for package of support for university students; John Denham (pictured left), the new Secretary of State for Innovation, Universities and Skills has announced a package of measures for student support. The system of top-up fees introduced three years ago gave a boost to university finances and redressed the balance between taxpayers, parents and students so that those who gain the financial reward from having a degree make a contribution to financing it. However while it provided protection to the poor, it is far less generous to those families described as the “near-poor”: too rich to be subsidised, yet poor enough to worry about money. The proposals address these difficulties. The number of students who can secure a full grant will be increased as the level of household income needed will be increased from £18,360 to £25,000. There is additional assistance through grant funding higher up the scale. Those who qualify for a financial allowance during sixth form will have similar assistance if they enlist for higher education. However the Times says that this should not be the end of the matter. Britain’s universities have to compete in an extremely vigorous international market in which India and China are starting to make an impact. The UK is fortunate that Oxford and Cambridge are two of the world’s leading universities and that it has 29 of the world’s top 200 universities. However that record will not be maintained if funding is artificially restricted. When the legal cap on top-up fees expires in 2010, ministers have to be prepared to raise that threshold radically or abandon the notion of a maximum price altogether. If not, Britain will start trading a reduction in the quality of education that it offers for a rise in the numbers entering degree courses. Further information - Click here Times 06.07.07
Truancy warning on raising school leaving age; fears have been expressed that plans to raise the school leaving age to 18 by 2013 in England could lead to some young people becoming needlessly criminalised. The warning has been given by Rathbone, a charity which supports youngsters who are not in mainstream schools, as they launch an inquiry with the Nuffield Review of 14-19 education and training into why many young people are not in education, employment or training (“Neets”). In particular Rathbone say that they are worried about the effects of a legal requirement to attend school, a view that is backed up by Dr Geoff Hayward of the Nuffield Review, who says “There’s a danger we’re going to create a situation where we have mass truancy after the age of 16”. Each year 200,000 youngsters leave school in England and Wales between the ages of 16 and 18 and many of these enter the Neet group. Rathbone and Nuffield hope that their 14-month review, which will report back in October 2008, will help establish why many young people drop out. Jim Knight, the schools minister, said: “We’re not criminalising young people - far from it. What we are doing is giving young people the options and support they deserve. The fact is that 87 per cent of 16-year-olds already participate in education or work-based learning, so the prospect of mass truancy is greatly over-stated. Further information - Click here BBC News Online 03.07.07
Secondary pupils to be taught British values; children are to have new citizenship classes covering British history, community cohesion and Europe. Ministers have agreed to implement recommendations made in a report by Sir Keith Ajegbo (pictured right), a former head teacher and a government adviser, who argued that children had to be taught Britishness alongside cultural diversity. Lord Adonis, the schools minister, said: “Learning about the make-up of British society and British values will promote greater understanding and tolerance”. The changes will be unveiled as part of a new curriculum for secondary schools that follows a review by the Qualifications and Curriculum Authority. 11 to 14-year-olds will study the same 12 subjects - including English, maths, science, foreign languages and music - but the aim will be to reduce the overlap between subjects and the amount of detailed scrutiny of factual information. From September there is a new legal obligation on schools to promote community cohesion. As part of this, schools in all-white areas will be told that they should twin with those serving a more multi-cultural community. Furthermore from the age of 11 children will be given lessons in how to open a bank account and buy a house. The plan links with the initiative to give children their own trust funds, which will mean that from September all children at the age of five will receive £500. Further information - Click here Observer 08.07.07, Times 09.07.07
Farmers say UK could be biofuel leader; Britain’s farmers have an opportunity to move from a subsidy-based sector into a successful market-driven one by growing crops for biofuels, according to industry leaders. But the UK is already falling behind the US, Germany and France in the green fuels market. Paul Temple, vice president of the National Farmers’ Union (NFU), dismissed suggestions that the switch to biofuels was driving up food prices as “absolute nonsense” put about by the food processors and said that biofuels provided benefits for town and country. The NFU says that Britain needs to move faster to catch up with the US, which is producing “tens of millions of tones” of energy crops and gaining valuable experience on how to be more efficient in production methods and processing. Europe produced 268m tones of cereals last year, of which 3.5m tones were used for bioethanol, and the target for 2007 is 5m tonnes. But even with ambitious plans for future growth the NFU says that there is little chance of distorting food prices - at least in the short term. A United Nations report, produced in the first week of the month, argues that the rush growing crops for energy would drive deforestation, push small farmers off the land and lead to serious food shortages and increased poverty unless carefully planned. Further information - Click here and here for the UN Guardian 09.07.07
Sir Nicholas Stern becomes HSBC’s climate adviser; HSBC, the world’s third largest bank, has appointed Sir Nicholas Stern, author of the Treasury’s groundbreaking report on climate change, as its special adviser on the issue. Sir Nicholas will become a special adviser to HSBC chairman Stephen Green on the implications of climate change to the bank and its clients. HSBC was one of the first large companies in the UK to pledge to become carbon neutral- a move that has been followed by BSkyB, Barclays, Aviva and Man Group. Further information - Click here Financial Times 03.07.07
Business wants clear policy on climate change; government policy on climate change is so vague and inconsistent businesses are unable to make sensible investment decisions on environmental issues, says a survey of large and medium-sized companies conducted by PwC. A large majority of the participating 151 firms said that the best way to reduce carbon emissions would be through more regulation, followed by taxes and tax breaks to encourage better environmental practices. Glyn Barker (pictured left), a managing partner of PwC, said that it might seem surprising that businesses appeared to welcome further regulation, “But corporate leaders recognise that customer and investor pressure is not enough to change their behaviour fast enough given the urgency and scale of action required”. The main influences on corporate behaviour were government regulation as well as customer demands, cost savings, keeping up with competitors and, to a lesser extent, attracting and retaining staff. There was concern about the plethora of tax and regulatory initiatives on environmental issues and the government’s constant policy changes. There was also criticism over the lack of co-ordination between Whitehall departments, between central and local government and between London and Brussels. Further information - PwC Financial Times 05.07.07
McDonald’s to recycle chip oil; McDonald’s has announced plans to recycle the cooking oil from its restaurants to provide the power for its 155 UK delivery lorries by the end of the year. The fast-food group, which to date has been running trucks on 95 per cent diesel and five per cent biodiesel, will initially use a blend of 85 per cent biodiesel and 15 per cent rapeseed oil. McDonald’s said that the net effect would be a 78 per cent cut in kits carbon emissions. Further information - Click here Financial Times 02.07.07
New Chancellor’s views of London’s role in the economy; Alistair Darling has emphasised his determination not to pander to leftwing Labour prejudices against the City including no hasty action on the tax structure that is helping private equity firms and he also talks of the benefits that the UK gains from the favourable tax status for non-domiciles. He says that he is determined to be as strong a champion of the City of London as Brown and expresses few qualms that the City is pulling away from the rest of the country in terms of economic dynamism. He says he has no doubt that the City is the engine behind the UK economy and that it is a fact of life that financial services will remain dominant. On Crossrail he sticks to the previous Treasury argument that he wants to see it built but that it depends on the private sector supporting the project. He says: “The verbals are great and if we could cash them in, we’d probably be building two Crossrails”. Financial Times 04.07.07
New Treasury minister promises to be voice of the City in Whitehall; Kitty Ussher (pictured right), the new minister for the City, has promised that the government will make no decisions affecting the financial services sector without full consultation and debate. In her first speech in the Square Mile she said that her top priority would be to ensure the views, analysis and concerns of the industry were fed into the heart of government. Ussher, who was chief economist at Britain in Europe, said that she believed that London had been strengthened as a global financial centre by Britain’s membership of the EU. She would campaign for effective competition in financial services in the EU, starting with meetings with the relevant commissioners at the end of the week. Further information - Click here Financial Times 10.07.07
Mayor gets tough on London housing targets; Ken Livingstone (pictured left) has forced Islington Council to scrap its planning blueprint because it is 94 houses short of his London Plan target. In a move that will have far-reaching effects for all London boroughs, Islington has been forced to throw out its plan- which proposed 1,066 homes- because it did not comply with the borough’s target of 1,160 homes a year for the next ten years. The mayor said that he wanted to send a message to other boroughs that he would not compromise his targets for new and affordable housing. The mayor’s influence over local planning strategies will increase if the GLA Bill, which proposes handing the mayor power to veto local authorities, becomes law. Ironically GLA research shows that Islington is a leading provider of affordable homes. In 2005-06, it built 776 homes, of which 66.7 per cent were classed as affordable. Only Tower Hamlets and Haringey, which ensure 84.9 per cent of its new homes are affordable, recorded higher figures. Further information - Click here Estates Gazette 07.07.07
British Museum plans £100m exhibition space; the British Museum has announced plans to build a £100m complex to house its blockbuster shows. The new 1,000 sq metre space will enable more people to visit the popular large-scale exhibitions such as Persia and Michelangelo that the museum has held in recent years. The need for the space is illustrated by the British Museum’s next show, The First Emperor, when the largest number of terracotta warriors from X’ian seen outside China will come to the Museum. For that show, for which 30,000 tickets have been sold two months before it opens- the former British Museum reading room has been adapted as a temporary exhibition space. However it had to turn down the Tutankhamen exhibition in November, now to be staged by the former Millennium Dome. The new space, which will be created from the former offices of the British Library at the back of the building, will also include a new conservation centre and be used as a training resource for conservators. Much of the funding will be sought from private sources although government assistance is being sought for the conservation centre. Further information - Click here Guardian 05.07.07, BBC News Online 05.07.07
Report urges consolidation of London markets; a report commissioned by the GLA from the URS engineering and environmental consultancy recommends the consolidation of the five principal wholesale markets into a single market based at New Covent Garden in Vauxhall. An alternative would be to consolidate Billingsgate and Smithfield at New Spitalfields which the report says be “less unpopular” than New Covent Garden and has the virtue of all three sites being owned and run by the City of London. The report says that the release of the land and buildings at Smithfield, Billingsgate, New Spitalfields, and Western International in Hounslow would make up to 80 acres of land available for redevelopment over the next 10 years. The report calls for Billingsgate to be relocated first - freeing up the 13-acre site on the edge of Docklands, which experts believe could accommodate up to 4m sq ft of commercial development. Further information - Click here Estates Gazette 07.07.07
Metronet praises the work of its rival; Metronet’s chief executive has admitted that the main private contractor on the London Underground should have approached its multibillion-pound programme in the same way as Tube Lines, its successful smaller counterpart. Metronet, whose contract covers the Bakerloo, Central, Victoria and Waterloo & City tube lines, is in dispute with London Underground about its claim for £992m to cover unexpected cost increases. It is expected to submit a further claim for about £1bn for overspending on its other contract area - Metropolitan, District and Circle lines. On the other hand Tube Lines, which has a contract for the Jubilee, Northern and Piccadilly Lines, is expected to complete the first 7½ years of its 30-year contract near to budget. The arbiter for any disputes on the public-private partnerships is Chris Bolt, who, in a report in November said that Metronet had been acting neither economically or efficiently. Financial times 09.07.07, Economist 30.06.07
Murdoch may leave Wapping; the FT has learnt that Rupert Murdoch’s News International is seeking huge new premises in London for its four national newspapers: The Times, The Sun, the News of the World and The Sunday Times. This will mean leaving Wapping where, twenty-one years ago, Rupert Murdoch revolutionised British newspapers by converting old docks into modern printworks where journalists could type articles into computers that could be sent directly to printing presses. Property industry sources say that they believe that agents have been instructed to find 350,000 to 400,000 sq ft of space on the South Bank, in the City or in Paddington. There is some uncertainty about the future of the Wapping site, which is next to St Katherine’s Dock, a marina development in great demand. The printworks on the site is moving to a north London location next year and previous plans had involved News International still using part of the site. There will be great demand to use the site for residential development but one agent quoted by the FT says that Tower Hamlets Council will want to keep a significant commercial element. Financial Times 06.07.07
Tour de France in London declared ‘phenomenal success’; Judging by the press and TV coverage of the Tour’s prologue through the major attractions and streets of central London, watched by 1m spectators, and then the first stage from Greenwich to Canterbury, watched by 3m spectators, the Mayor’s hopes that it will trigger a cycling boom may be achieved. Many editorials gave strong praise both to the Mayor and Transport for London (TfL), who organised it, with even Le Figaro moved to call London the world capital of sport. The Mayor expressed the desire that the Tour should return to London soon after the Olympic Games in 2012 but Christian Prudholme, the race organiser, said that whilst the race would return “after a respectable interval” he did not know when that would be but “one thing is certain. It is not possible for us not to return”. Apart from the tourism revenues one of the Mayor’s justifications for bringing the Tour to London was to stimulate the take-up of cycling. TfL reports that there has been an 83 per cent increase in London cycle journeys since 2000. Londoners make an average of 480,000 journeys a day on a bike and a further boost is expected following the Tour de France. In 2000 TfL spent £5.5m to encourage cycling, but in 2007-08 it will spend £36m. By 2010, the 500km London cycle network will have expanded to 900km. Financial Times 02.07.07, various BBC News Online and Google News Now
MPs warn that Olympic costs are likely to overrun; the Public Accounts Committee has published a report claiming that the London Olympics are likely to break their £9.3bn budget and that extra funds will have to be raised from the Government, the National Lottery and London residents. The report also expresses concern about the legacy use of the Olympic Park venues and the drain of National Lottery cash from other good causes. Edward Leigh, the committee’s chairman, said: “It is worrying that strong arrangements for monitoring progress and managing risk are not so far in place”. The committee believes that the cost of building the infrastructure will rise and that the security budget will go up. They will also query why the London 2012 organisers originally said that the project management costs would be £100m, but soon revised that figure to £400m. The government is likely to shrug off the criticism as historic, claiming that much progress has been made since the committee questioned officials from the Department of Culture, Media and Sport three months ago. Further information - Click here Observer 08.07.07, Financial Times 10.07.07
Grosvenor plans overhaul of public areas; the Grosvenor Estate is planning a major overhaul of large parts of its central London estate based mostly in Mayfair and Belgravia. Following a public realm strategy produced for the 300-acre estate by Jan Gehl, the Danish architect and planner, Grosvenor have appointed BDP to mastermind eight public realm schemes. The first project is likely to be a revamp of Brown Hart Gardens between Oxford Street and Grosvenor Square where it is planned to turn the current inaccessible raised open space into a new square with a stronger link to Oxford Street through Lumley Street. Gehl recommends adding a restaurant or café, retail such as a garden centre and events such as outdoor theatre. Another key project will focus on Elizabeth Street, close to Victoria Coach Station, which Gehl says should be upgraded to “a principal shopping street with an urban feel”. The remaining six masterplans will cover: Mount Street between Park Lane and Berkeley Square; North Audley Street between Oxford Street and Grosvenor Square; Park Street, W1, off Oxford Street; Eaton Square, residential area next to the King’s Road; Ebury Street; and Kinnerton Street and Motcomb Street. Estates Gazette 23.06.07
Minerva’s plans for Young’s brewery in Wandsworth; Minerva has announced its vision for a “new urban quarter” for Wandsworth on the site of the former Young’s Ram brewery. Minerva bought the 6.5-acre site for £69m last August and plans to convert the historic brewery, which closed in 2006 after 175 years, into a residential-led, mixed-use development. The planning application will be submitted in September following consultations with local residents, Wandsworth Council, the GLA and English Heritage. The ERP-designed scheme will comprise 700 flats spread across two residential towers of 29 and 39 storeys and a mix of low-rise homes, 180,000 sq ft of restaurants, shops and a microbrewery. Mark Cherry, Minerva’s investment director, said that they wanted to produce an environment similar to Marylebone High Street. Further information - Click here Estates Gazette 30.06.07
P&O submit plans for Waterloo; P&O Estates and Morgan Stanley Real Estate have submitted revised plans for the redevelopment of Elizabeth House, next to Waterloo Station. The Allies & Morrison-designed 1.43m sq ft scheme now consists of two office towers of 28 and 22 storeys (originally 36 and 27 storeys) and a 33-storey residential tower, which has been almost halved from the original 54 storeys. Further information - Click here Estates Gazette 30.06.07
Changes on the South Bank; Land Securities has announced that it is selling its site at 20 Blackfriars Road where it had been planning a 42-storey residential tower. An overseas investor has bought the site for £90m. The sale signals a change of direction for Land Securities who recently bought a four-acre estate at Thomas More Square on the Towers Hamlets side of the City for £250m. The Estates Gazette also quotes ‘observers’ who say that Land Securities may have sold the site because consent for the residential tower and an adjacent office tower was not guaranteed. Southwark Council has yet to decide whether the area is suitable for high-rise schemes. Land Securities are also awaiting the decision of the public inquiry into the proposed Walkie-Talkie 525ft tower in Fenchurch Street. There is speculation that the delays brought about the inquiry would mean that the Walkie-Talkie would come on the market in 2009 at the same time as two other similar schemes and this may cause a delay. Estates Gazette 07.07.07
Apple looks for new in West London; buoyed by the success of the iPhone Apple has refined its search for a London base and has put the search for a 60,000 sq ft Mayfair HQ on hold in favour of a 300,000 sq ft office campus in West London between Paddington and Heathrow. It is considering two Development Securities’ schemes at Paddington Central and next to Hammersmith station. Apple had been in negotiation for a 60,000 sq ft prelet at 60 Great Portland Street but under the new plans the Apple HQ will be consolidated over its flagship store in Regent Street. DTZ, who are acting as Apple’s advisers, say that: “Rather than continuing to acquire buildings, Apple wants to find one it can grow into over the next few years”. A source tells the Estates Gazette “Apple anticipates massive expansion in support of the iPhone. It also mirrors what Apple has done in the US”. In the US the iPhone, which combines mobile phone, camera, internet browser and iPod in one, sold more than 700,000 in just three days. It will be launched in the UK later this year. Further information - Click here Estates Gazette 07.07.07
Royal Military Academy in Woolwich to become ‘urban village’; Durkan estates, the private housing arm of the Durkan Group, has won planning permission from Greenwich Council to turn the 18th century Royal Military Academy at Woolwich into a £120m “urban village”. The 21-acre site on the south bank of the River Thames will house 334 homes and leisure facilities. Further information - Click here Estates Gazette 07.07.07
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Next issue on 26th July 2007
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