Has Europe entered the age of the cuckoo clock? Timothy Garton Ash uses a quotation from Harry Lime in the Third Man (pictured right) as part of his Guardian article on Europe’s economic future. “In Italy for 30 years under the Borgias, they had warfare, terror, murder, bloodshed - they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, 500 years of democracy and peace, and what did they produce? The cuckoo clock”. Garton Ash wonders whether Europe has now entered its age of the cuckoo clock. He points to the growth rate of 10 per cent in India and China, which compares to an average of 2 per cent in Europe. He points out that in the 14th century China was scientifically and technologically more advanced than Europe, yet it was Europe that produced the scientific, agrarian and industrial revolutions that led the world into modernity. This was the diversity of a restless, often violent competition between cities, regions, states and empires. Now Europe has chosen a path of peaceful, consensual management of diversity with enormous transaction costs. He wonders if this path is capable of producing a dynamism capable of matching the US or Asia and concludes that Europe is set for a long period of relative economic decline. This will be tolerable as long as we are conscious that we have chosen social solidarity and an easier lifestyle. If we mobilise the maximum reforms that our political systems and societies permit: then we can still live quite well. After all, Florence is not doing so badly after 500 years of decline. Guardian 25.05.06
Changing work patterns is as important as pensions; Hamish McRae expresses some cynicism about the government’s pension proposals. He says that we manage to attack politicians for the wrong things. Instead of getting worked up about the notion of working until you are 68 to get £3 more in your pension the legitimate complaint against Labour is that it seriously damaged what had been a very good company pension system. When he was first elected, Gordon Brown announced that he planned to take £50bn out of private pensions over the next decade with the result that there are now about 43 per cent of private sector workers in a private pension scheme; when he was elected the figure was some 57 per cent. Coping with changing demography is not just about pensions or indeed the retirement age. It is also about work and lifestyles. The original state retirement age was introduced by Bismarck 120 years ago when he fixed it at 70 to cope with people’s failing ability to cope with physical labour. Our idea of fixed factory or office life came out of the need for these places of work to be staffed at the same time. But now the communications revolution has led to a radical change in the way we work and the shift has hardly begun. Broadband is only just being rolled out but the flexibility it offers comes in the nick of time to give societies a tool to cope with an ageing workforce. So the policy should not just be fixing pensions; it should also be removing barriers to work for people who want to do so. One idea might be to halve income tax for people who work beyond the normal retirement age. McRae suspects that would end up getting more revenue, not less. Independent on Sunday 28.05.06
Manufacturers more confident than they have been for 10 years; the latest survey by the EEF manufacturers’ organisation says that their members are more confident about orders and exports than they have been for the last ten years. In the second quarter of 2006, 22 per cent more manufacturers reported a rising order book than declared that their orders were falling - the highest balance since 1996. The findings confirm those of the purchasing managers’ index. However UK companies are still not as confident as their continental counterparts and there are worries about a smaller domestic recovery as well as margins and rising costs. Even so, most City analysts believe that the Bank of England’s Monetary Policy Committee will concentrate more on the drop in equity prices and the rise in the value of sterling as signs that inflationary pressures are under control. Reuter’s surveyed 40 economists with a majority forecasting that the next interest rate move will be a rise by the end of the year. Philip Shaw of Investec predicts a move to 4.75 per cent in August, but the majority think that the MPC will hold fire to see how the data unfolds over the next few months. Financial Times 05.06.06
Banks return to the high street; just when there is growing concern about the effect of the internet and the out-of-town supermarkets on the future of Britain’s high streets there comes news that the banks are returning. The FT says that banks such as HSBC and HBOS are embarking on large branch-opening programmes whilst others including: Abbey, Northern Rock and Royal Bank of Scotland are planning smaller programmes. Alan Gemes, vice-president at Booz Allen Hamilton, the consultants, says, “Banks in the UK are rethinking the purpose of the branch and are opening new ones. In the past the branches have been about transactions, whereas many of the banks have realized that branches are a privileged selling position”. The move is a U-turn after years of closure and under investment by the banks during which grand old banks were turned into wine bars, restaurants and night clubs. Research by the University of Nottingham shows that between 1995 and 2003, banks closed 22 per cent of their branches and building societies shut 5 per cent. The new branches look like shops with piped music, comfy sofas and bright lighting. However there is a snag. The new occupants of their old branches do not want to give them up and some landlords are reluctant to have banks and building societies on their prime pitches. Financial Times 05.06.06
FT advocates less government intervention; in an editorial comment on the National Audit Office report on the Small Business Service the FT says that people do not start businesses in the hope of closer contact with civil servants. They do so because they have the skills or the bright ideas and want the freedom to get on with working for themselves. The less that small business hears from the government the better. Discussing the report itself the FT says that it is damning; painting a picture of a departmental unit seriously adrift. Acknowledging that there are daily examples of mis-management it should not be surprising that “this backwater” is badly run. The SBS operates in a tangle of aims, targets and themes that is complex and useless. The only part of SBS work that makes clear sense is the advisory service (now run by regional development agencies) and the website giving all sources of government business advice in one place. On the question of making the UK the best place to start a business it has no clout because it is not important politically and has no financial power over other government departments. This matters because government spends more than £2.6bn each year supporting small businesses through 265 separate departmental programmes and 3,000 schemes across all levels of government. The FT says that the money could be better spent elsewhere in government, or be used to help small businesses through tax cuts. Financial Times 24.05.06
New regulator will ensure cuts in government red tape; the Sunday Times profiles Rick Haythornthwaite (pictured right), the first chairman of the new Better Regulation Commission (BRC), which together with the Better Regulation Executive (BRE), has replaced the Better Regulation Taskforce. He insists that the two new bodies have very different roles with the BRE working within government departments to reduce their enthusiasm for creating red tape, whilst the BRC has been entrusted with the task of making sure that it happens. He says, “We are in a very privileged position in that we are independent, we are evidence-based, we sit outside government and therefore we can say things in a very objective and clear way”. The commission is an independent body funded by the Cabinet Office and has 18 members drawn from the public, private and voluntary sectors. He hopes that within the next 12 to 18 months people will see evidence of the positive changes being made to the way that regulation is carried out. The Commission has already written to Tessa Jowell, the culture secretary, to complain about the way that her department implemented the changes to the licensing act. Haythornthwaite says that the licensing act had been intended to simplify a complex regime but it lost its way and imposed a lot more burden than was necessary. What started off as a simplification programme to allow for a Mediterranean-style café culture was hijacked for a lot of other political purposes, not least to tackle binge drinking. Sunday Times 28.05.06
New minister postpones third sector action plan; Ed Miliband (pictured right), the newly appointed minister for the third sector, has delayed the publication of the government’s action plan for social enterprise to allow him enough time to “put his own stamp” on it. Making the award of social enterprise of the year to the Hoxton Apprentice (sponsored by the New Statesman and Edgeupstarts) he said that he wanted the action plan to reflect his own priorities and a period of “listening and learning”. He also promised a renewed focus within government on the sector; “My job is to work with the DTI and the regional development agencies to make sure we don’t lose focus on social enterprise”. Regeneration 26.05.06
COMMUNITY AND BUSINESS AFFAIRS
Business needs to speak up for business; Todd Stitzer, chief executive of Cadbury Schweppes (pictured left), says that business bashing has become a sport. Writing in the FT he says that business is not trusted largely because “we have allowed others to characterise our actions and motives, while we have focused on business”. Young people today are interested in the wider world and its future more than ever before and they are not seeing business as a place where they can feel at home. He instances the recent film The Constant Gardener as an example of how Hollywood sees business. Stitzer says business has to change this. It must declare its values starting by defining and articulating them, auditing the performance against them and changing where necessary. Then the values have to be communicated “loudly and proudly”. He says that right from the beginning the Cadbury brothers wanted to be “a force for good in a troubled world”. But they were also hard-headed and successful business people. Cadbury Schweppes still passionately believe that it is possible to pursue commercial goals and behave in line with values. A main board corporate social responsibility committee was established in 2001. However that was not enough to stop perceptions of the company being changed from hero to villain in the debate on obesity and consumer health. Cadburys recorded its strenuous disagreement mindful that in the past, business has allowed the argument to pass by default. Stitzer says that it is a counsel of despair that cannot continue. “We need to be our own messengers. We need to communicate what we think is important, what we stand for, what we are struggling with and what we are trying to do”. Financial Times 01.06.06
Supermarkets - the saga continues; following the battle between Tesco and Sainsburys about who is the greenest, Asda and Waitrose have now joined in the fun. Waitrose are ploughing a separate path concentrating on the work of the Waitrose Foundation in working with South African citrus fruit farmers. The Foundation is a partnership between the supermarket and the members of the supply chain. In the past year the Foundation has ploughed back £330,000 into educational projects on the farms and expects to raise this to £500,000 over the next six months. Some 25 educational schemes have been launched on ten farms, which teach skills as well as developing activities for the period when fruit is out of season. The scheme covers grapefruit, clementine and lemons and more recently, avocados. Waitrose say that there has been a very strong response from customers. On the green front Tesco announced a plan to move goods off the roads and on to the rail network but ran into a storm with its claim that it would be “the first UK retailer to move significant volumes from road to rail”. Wal-Mart owned Asda pointed out that it had been transporting goods from south coast ports to northern depots by train since 2003. Guardian 29.05.06
Sunday Times asks which Cameron means business; the Sunday Times Business News runs a whole page feature examining Tory leader David Cameron’s relations with business. It says that the green, caring, social-conscience image fostered by the Conservative leader has led many to think that the Tories have abandoned big business. On the other hand this has not prevented business money flooding into Tory coffers and last week George Osborne, the shadow chancellor, hosted a party for 500 City guests. However the article quotes named and anonymous business leaders who feel befuddled by Cameron’s attacks on people like Sir Terry Leahy, the boss of Tesco, and Philip Green, boss of BHS. Neil Goulden, chief executive of Gala Coral, says, “I don’t see any difference nowadays between Tony Blair and David Cameron. I don’t think they are against business, they just don’t understand it. It’s a fairly sad state of affairs”. Outlining the thinking behind the Tories emphasis on corporate social responsibility Osborne says, “Corporate social responsibility is not hostile or anti-capitalist but modern and pro-business”. He goes on to say that the Tories want to use business for the delivery of public services but “If we’re going to trust business with the delivery of public services, businesses need to have the best reputation within British society. So this stance is very pro-business”. Times 28.05.06, Financial Times 05.06.06
High prices blamed for tourism decline; research by the World Travel and Tourism Council (WTTC) shows that Britain has dropped one place to sixth in the list of the world’s leading tourism economies. Furthermore it is forecast that it will drop to seventh in the next few years. Although tourists continue to flock to attractions such as the London Eye and the Tate Modern, the WTTC says that UK tourism will only grow at 2.4 per cent over the next ten years, less than the 3.5 per cent - the average expected for the EU as a whole - and substantially less than the 4.2 per cent forecast for the rest of the world, with the emerging tourism markets of China, India and Brazil set to expand the most. Jean-Claude Baumgarten, president of the WTTC, said that the UK’s image as an expensive destination would not help it claw back lost ground. He also said that the government had to modernise tourism infrastructure, such as increasing capacity at Heathrow, to stimulate growth. Paul Deighton, chief executive of the London Olympic Games Organising Committee, said that with 500,000 visitors expected on every day of the event the Games represented a “huge opportunity” for tourism. The WTTC says that tourism contributes 9.4 per cent of the UK’s GDP and employs 2.6m people- 8.6 per cent of total employment. Financial Times 03.06.06
‘Entrenched mindsets’ afflict Oldham’s communities; a review of Oldham’s progress since the riots five years ago says that there has been great progress but the “mindset of deeply entrenched communities” was hampering change. Professor Ted Cantle (pictured right), who chaired the Home Office Inquiry into the riots in Burnley, Bradford and Oldham, has written the 66-page report, which is published by the Institute of Community Cohesion. He praised the work of Oldham Council and the Oldham Partnership but “the onus for change…should now pass to Oldham’s many communities,” many of which seemed reluctant to change. Assessing the report Sir Peter Hall, professor of planning and regeneration at UCL, writing in Regeneration says that the problem remains that the communities are deeply segregated: they live apart and their children are educated apart. However he quotes one local expert, Pasha Shah, who says the real problem is the wealth of the divided communities. He thinks both interpretations are right. He instances the experiences in London areas such as Southall and Tower Hamlets where, in common with the North, the initial Asian migration was economically driven. In the 1960s, people from poor village backgrounds got jobs at Heathrow or the East End clothing workshops; in the North in the textile mills. Local people often did not want the jobs. However in London there were other jobs for white families and their children. In the North when the textile mills closed two communities, mutually suspicious, faced long-term unemployment and suspicion. He accepts that London has not escaped entirely as demonstrated by the recent local elections in Barking and Dagenham. Guardian 27.05.06, Regeneration 02.05.06
Church report sees business as “greedy and unwelcome backdrop”; writing on the Comment page of the Times, Edward Lucas dissects Faithful Cities - the Church of England’s new report on urban poverty. He says that, mercifully, the committee of clerics, do-gooders and hand-wringers (not an entrepreneur among them) who wrote the report do not repeat all the pseudo-Marxist gobbledygook of Faith in the Cities 20 years ago. But there is one glaring absence. The real poverty-busters - the people who create wealth and jobs - feature nowhere at all. Business appears only as a greedy and unwelcome backdrop. Lucas says that the authors of the report grudgingly admit that Britain has got richer in the past 20 years but show a bizarre misunderstanding of the economic system that has lifted millions out of poverty. Instead of encouraging capitalism the report bangs on about “faithful capital” (which seems to mean a collective conscience). Using the C-word ties the authors up in knots and Archbishop Rowan Williams in his foreword moans that it has a “doubtful aura”. Lucas concludes that this queasiness is paradoxical. “Capital” is the only word in the report that is meaningful and counters poverty. Britain’s inner cities could do with more capital, and fewer reports. Times 25.05.06
Mystery over future of Social Exclusion Unit; the Guardian looks at the future of the Social Exclusion Unit set up in 1997 under the aegis of the Cabinet Office but moved to the ODPM in 2002. Tony Blair’s appointment letter to Hilary Armstrong as minister for the cabinet office and for social exclusion took a fortnight to emerge and says that he wants her to chair a new cabinet committee and to publish an action plan in the autumn. However there was only a passing reference to the SEU with the suggestion that she should talk to Ruth Kelly in her new role as secretary for communities and local government. Critics say that the SEU has been starved of resources to follow through on its reports and that other government departments have successfully resisted its interventions. Now the word is that Matthew Taylor, the Number 10 policy director, sees the Downing Street strategy unit as the driver of future work on social exclusion. However John Hills, the director of the Centre for Analysis of Social Exclusion at LSE, says that the SEU deserves credit for creating a focus across government on poverty and disadvantage and that Armstrong will need the backing and muscle of such a team. Guardian 31.05.06
Warning about Social Fund; a report by the Joseph Rowntree Foundation says that the Social Fund is failing to help those on low incomes who need money in an emergency, causing some of them to turn to commercial lenders instead. The report says that there are problems with the rate at which people have to repay the Social Fund loans from their benefits, which further reduces the incomes of some of the poorest members of society. It calls for immediate reforms including more flexible repayment rates, a faster appeals procedure and for the fund to be better advertised. Financial Times 01.06.06
Lords’ committee worries about South East building plans; an all-party House of Lords sub committee on Water Management has expressed concern about the effects of the Government’s building plans on the water supply in the South East. It criticises the Deputy Prime Minister in his previous role as the minister responsible for the built environment, for failing to consult the water companies about his plans to build 1m new homes in the South East over the next 20 years. The report also makes recommendations about water conservation including a major cutback in the “unacceptably high” level of leaks from the water companies alongside a more coherent and better funded promotion of sensible water use. Sunday Times 04.06.06, Evening Standard 06.06.06
Barker report to be published this month; speaking to the CBI President’s dinner the Chancellor confirmed that the report on planning reform written by Kate Barker will be published in interim form in the next few weeks. He also told the employers that there would new legislation in the Pre-Budget report in the autumn. He said that while much had been done on planning reform, in particular to boost housing supply, “In frankness I believe we have much more to do. We must make our system quicker, more flexible and more responsive”. Financial Times 06.06.06
Inflow of Polish workers will stay high for years to come; the latest figures from the Home Office show that 375,000 people have been accepted under the Workers’ Registration Scheme from the new EU member states in Eastern Europe since they became members in May 2004. The figures for the first quarter of the year are 45,660 - a 6 per cent increase from 2005. According to Liam Byrne, the newly appointed minister for nationality, citizenship and immigration (pictured left), “Accession nationals are continuing to come to the UK to fill gaps in the labour market. The UK continues to thrive, with one of the highest rates of employment and lowest rates of unemployment in the EU”. He highlighted the construction, agriculture, hospitality and catering and food-processing industries. He forecast that “Migration flows clearly will not keep rising for ever but with a continued massive disparity between pay levels in the UK and Eastern Europe, the UK’s openness to migration and the development of job agencies to facilitate the process, we suspect the inflow will stay high- perhaps for years to come”. Independent 24.05.06
Skills shortages holding industry back; a number of new reports all point to a shortage of skills afflicting much of industry and thus undermining the potential for growth. The latest concerns have been raised by North Sea contractors, the building industry and waste management companies. They follow similar worries raised by the electricity supply and nuclear industries. The common factor is the worsening shortage of engineers and technicians, in spite of the recent increase in unemployment. Whilst pay has remained constrained across the economy as a whole, in sectors with acute recruitment problems pay has begun to rise more sharply as employers poach from each other. In construction the availability of cheap craft workers and technicians from Eastern Europe has helped to fill skill gaps and it is estimated that up to 10 per cent of all vacancies have been filled this way. Low recruitment in the 1990s as power companies prepared for privatisation is thought to have put off the young from pursuing engineering and left the industry with an ageing workforce. A lot of effort is going to encouraging young people to acquire qualifications, and according to the Universities and Colleges Admission Service there has been a 2.4 per cent increase since 2001, but this figure is still 18 per cent lower than in 1997. The number of people starting apprenticeships has increased by 16.7 per cent to more than 175,000 in the year to the end of March 2005 but, again, this is well below the levels of the 1970s and 1980s. Financial Times 01.06.06
Construction industry needs to recruit extra 348,000 workers; Construction Skills, the employer-led sector skills council for the industry, says that with the number of large, high-profile projects due to come on stream. It estimates that the total value of this work is £36bn and that construction output will increase by almost 13 per cent over the next 42 months. In employment terms 87,000 recruits will be needed each year with the main demand coming fir managers, clerical staff, architects, engineers and other design and technical professionals. The industry has been recruiting in eastern Europe, particularly in Poland, but fears that it may have reached the limit on the availability of migrant workers to fill skill gaps. Many of the major projects are in London and the South East including the 2012 Olympic Games, big port projects at Shellhaven, Felixstowe and Harwich, and the Thames Gateway. London projects include large-scale commercial and transport projects including the extension of the East London Line and redevelopments around Euston and Victoria stations. Employment is expected to rise by 14per cent in the south east and by 11 per cent in London. It is also expected to rise by 12 per cent in Wales, which is the location of a £3.2bn social housing repair programme and by 13 per cent in Northern Ireland, where there is a big public investment drive. Financial Times 05.06.06
Law firms seek new strategies to retain staff; major law firms in the City are starting to worry about junior staff seeing jobs elsewhere as less stressful or more rewarding. Tony Angel, managing partner at Linklaters, warns that it is “one-dimensional” to think healthy pay increases are the answer and cites the facts that Linklaters offers emergency childcare, time off in lieu and even a concierge to go to their houses to “collect the washing machine or meet the plumber”. He says “What we are seeing is a much greater demand from ‘Generation Y’ for greater flexibility in their lives. It’s just not pressure for pay”. Mr Angel reckons the proportion of junior lawyers who go on to be partners has fallen at most firms during the last decade. Whilst he thinks the traditional partnership model is still viable Linklaters have set up working parties at their main world-wide offices to look at what a law firm will look like in ten years time. Critics still point to the recruitment practices of the profession and that the big firms are not doing enough to recruit ethnic minorities or women, even though 60 per cent of all newly qualified solicitors are women. David Childs, the managing partner at Clifford Chance, admits, “People work very, very long hours. There is an issue: is this model sustainable in the long term?” Financial Times 05.06.06
Training funds used to remedy school failures; business is losing out on much needed cash for employee training because the government is concentrating resources on fixing the failures of the school system according to the Public Accounts Committee. The MPs warn that the country cannot close the “skills gap” unless more money is spent on training people at work. Edward Leigh, the chairman (pictured right), said that the £6.7bn the government spent on training each year needed to be redirected - “too much of the public funding is still being used to give people aged 16 to 19 the basic literacy and numeracy skills they should have got in school”. The PAC Report points to research showing that in 2003 almost 60 per cent of 16 year olds and 80 per cent of 19 year olds had literacy and numeracy skills below level two ( the equivalent of five good GCSEs). However they also criticise employers for not spending more than an estimated £23bn a year, including the cost of employees’ time, on training. Business groups reacted angrily to this comment with the CBI claiming that the real figure was £33bn. Financial Times 25.05.06
Mayor toughens up green building code; developers in London will be forced to build greener, more fuel-efficient homes in large projects under targets announced by Ken Livingstone. The level of energy required from on-site renewable sources such as wind turbines, solar power or ground-source heat pumps is to be increased from 10 to 20 per cent. In the review of the London Plan, new developments will be required to connect to smaller, decentralised power plants that can pipe heat and power to homes. Buildings will be required to include the infrastructure for connection to such plants and large developments could even require new plants. The plan will also propose the first statutory carbon emissions reduction targets for London, aiming at a 20 per cent cut by 2015 and 60 per cent by 2050. The mayor expects the changes to have a widespread impact on planning. Though only large-scale developments come to the mayor, the plan has legal weight and local boroughs’ plans must also be in “general conformity” with the plan. The Economist points to the fact that the typical London household generates 5 per cent less carbon emissions than the national average, even though Londoners are 25 per cent richer. One problem with enforcing eco-friendliness is the cost, with roof solar panels taking more than 100 years to pay for themselves. This on top of higher house prices may push people put of the capital whilst Tony Arbour, the chair of the London Assembly’s planning committee, worries that strict environmental standards may even put subsidised housing beyond the reach of the poor. Financial Times 30.05.06, Economist 03.06.06
Diamonds are not for ever; London is to lose its position as one of the world’s most important diamond sorting centres as De Beers takes the rolling and mixing operation back to Africa. Up to 200 staff at De Beers’ diamond trading centre in Charterhouse Street could lose their jobs under a deal with the Botswana government to build a new facility there. This is part of a wider commitment to allow greater local involvement in important producing areas such as South Africa, Namibia and Botswana. Since the 1930s, De Beers has brought its rough diamonds to Britain so that they can be sorted by highly trained staff. The British operation will continue to sort Russian diamonds until 2008 and there could be some work from a new mine in Canada. The London office, which currently employs 700, will continue to act as the centre for selling and marketing. Guardian 24.05.06
Confusion reigns over Young’s brewery sale; the announcement that Young’s, the brewers who have been centred in Wandsworth for 175 years, have made an agreement to transfer their beer production to Charles Well’s Bedford brewery has been followed by bad feeling from prospective purchasers of the Wandsworth site. At the same time as it announced the merger with Charles Wells it said that it had reached an agreement to sell the 5.5-acre Ram Brewery site for a rumoured £80m. A number of the disappointed bidders accused the company of running a “shambolic” auction. Financial Times 27.05.06
Planners call for Heathrow to ‘retire’; the Town and Country Planning Association has proposed that Heathrow should be closed and replaced with a new airport on an artificial island in the Thames Estuary. The TCPA says that Heathrow’s history is “a series of minor planning disasters that together make up one of the country’s truly great planning catastrophes”. Sir Peter Hall, the president of the TCPA says, “Heathrow is 60 years old this week and there should be a plan to gradually phase it out. We believe that the government looked briefly at [building an airport in the Thames Estuary] three years ago and rejected it, but we don’t believe they gave it serious enough consideration. The government is going to face a crisis in air capacity in South East England. This is the best solution by a long way”. Building such an airport would also ensure that suitable rail links to European destinations could be created, helping to ease environmental concerns. Independent on Sunday 28.05.06
London house price boom; according to Knight Frank, the estate agent, house prices in upmarket areas of London are experiencing the fastest pace of house price rises for 5½ years. Annualised price growth for prime central London property - flats and penthouses with an average value of £1.5m and houses with a value of close to £3m- showed a 16.6 per cent in May, the sharpest since October 2000. In Chelsea (which Knight Frank dub “uber-prime”) prices climbed by 19.5 per cent in the first five months of 2006. A typical Chelsea flat in SW3 gained £4,659 every week since January. Liam Bailey, head of residential research, says that they expected the boom to last until May. Financial Times 31.05.06
London cost of living at record high; the cost of living in London has risen by more than 5 per cent over the last year outstripping the official national inflation rate of 1.8 per cent according to a report by GLA Economics - a unit of the Greater London Authority set up by the mayor. The living wage for Londoners has risen from £6.70 to £7.05 an hour. Without tax credits, housing benefits or council tax benefits, the figure would be as high as £9 an hour - 79 per cent ahead of the National Minimum Wage of £5.05. The GLA said that the increase was driven by rising costs of fuel, NHS charges, household services and council tax. It also included a 9 per cent annual increase in childcare costs because of a change in the way it was calculated. Independent 30.05.06
The FT says that Bloomsbury is on the up; the FT speculates that a number of new developments could see Bloomsbury become a fashionable area. The development of King’s Cross and the revamping of St Pancras as a home for Eurostar are seen as two of the factors that will have an effect. Another is that the retailing situation, which has been seen as a negative factor, is about to change. The once dilapidated Brunswick centre is due to reopen this summer following a complete renovation. It will house London’s biggest Waitrose, restaurants including Carluccio’s and Strada, and a small repertoire theatre, the Renoir. Agents say that it could do to Bloomsbury what the Conran shop did for Marylebone. However the article quotes one anonymous restaurateur “A shopping centre will just bring in a lot of rubbish clientele, parking chaos and noise”. On the other hand a local estate agent says “Bloomsbury never changes that much, it just gets better”. Financial Times 03.06.06
Westfield look to Olympic win; the Estates Gazette says that Westfield, the Australian retail giant, looks to have won the development rights battle over the £4bn Stratford City Olympic Village site. The battle between the various shareholders has gone on for six months and the final decision was made following a 42-day deadline imposed by London & Continental Railways, the owners of the land. On 28th April, LCR terminated the contract with the Stratford City consortium comprising the Reuben brothers (50 per cent), Westfield (25 per cent) and Stanhope (25 per cent). Westfield is believed to have offered £100m for the Reuben brothers after rejecting their own offer for its stake in the consortium. It will also pay £30-40m to Stanhope and its former chairman, Sir Stuart Lipton. Even so the matter still may not be settled. The FT says that Westfield will need partners for the housing and the office elements of the scheme and LCR could still refuse to accept the outcome. An LCR spokesman said “we will need to make a careful assessment of the controlling party’s ability to take the scheme forward in a timely and effective manner”. The Mayor of London has made no secret of his support for Westfield to be the development partner. Estates Gazette 03.06.06
Four shortlisted for 2012 contract; the Olympic Delivery Authority has announced a shortlist of four companies and consortia from whom the partner to manage the infrastructure will be chosen later in the summer. They are Bechtel; CLM consortia comprising CH2M Hill International, Laing O’Rouke and Mace; G3 consortia comprising Amec, Balfour Beatty and Jacobs and Legacy comprising Bovis Lend Lease, Capita Symonds and Kellogg Brown & Root. Regeneration 26.05.06
Covent Garden for sale; the Covent Garden Market Limited Partnership, a joint venture between Scottish Widows Investment Partnership and Henderson Global Investors has appointed agents to sell the Covent Garden piazza and market hall. The site, which comprises the 55,000 sq ft piazza and 200,000 sq ft of retail and offices, is expected to go on offer at £350m (the Estates Gazette forecasts £400m). Scottish Widows bought the site from Dutch insurer Aegeon when it was breaking up Guardian Royal Exchange. They, in turn, had bought the site from the GLC who has owned it since 1962. Covent Garden Market moved to Nine Elms in 1973. An estimated 30 million tourists visit Covent Garden each year. In addition to the market buildings the estate includes properties in surrounding streets including Henrietta Street, Maiden Lane, Wellington Street and Tavistock Street. Times 26.05.06, Estates Gazette 27.05.06
Shell looks at redeveloping the Shell Centre; six months after an agreement with development partner Lend Lease collapsed, Shell have reactivated plans to redevelop the area around the Shell Centre on the South Bank. The company has invited around 5 agents to pitch to advise it on the 5.5-acre site. It will retain and occupy its freehold 26-storey tower fronting the Thames. After a prolonged planning battle Shell and Lend Lease got permission for a 640,000 sq ft Arup-designed scheme in 2004 which would have seen 240,000 sq ft of offices on the empty podium site next to the tower and the redevelopment of the lower and groundfloors of the “wings” adjoining the tower to create 400,000 sq ft of shops and leisure space. Another option would be to demolish the wings to make way for a much larger scheme. In another piece of Shell related property news the Tchenguiz brothers are said to be on the verge of selling Shell Mex House, the former head office of Shell UK, to Indian investors, the Kandhari family. Estates Gazette 27.05.06
Eurostar developments; London & Continental Railways and Network Rail have announced details of the redevelopment of St Pancras International station ahead of the start of Eurostar services in 2007. They will plan to build 82,000 sq ft of shops in five zones; a boulevard housing Europe’s longest champagne bar, a gastropub and a “world-class” brasserie, being considered by Gordon Ramsey and the Ivy group; a fresh-produce market; and an arcade of high street shops. LCR said that 70 per cent of the space would be filled by September. In another development Eurostar have announced that will be occupying a new office building in the King’s Cross Regent Quarter scheme, next to St Pancras. The new building will be used for staff training and administration. They also plan to move their head office from Waterloo. Estates Gazette 26.05.06
Over 45 per cent of the City under foreign ownership; a survey of foreign ownership of buildings in the City of London shows that it has leapt from 20 per cent in 1998 to 45 per cent at the start of 2006. Investors from Germany have been the most active owning 18 per cent of the entire market – up from 8 per cent in 2000. The second largest international owners are the Americans with 7 per cent, followed by the Irish and Japanese with 3 per cent each. In the same vein the report, which was compiled by Colin Lizieri, professor of real estate and finance at Reading, says that foreign ownership of homes in central London has jumped from 25 per cent in 2004 to almost 40 per cent in 2005. Michael Marx, managing director of Development Securities, which sponsored the report, suggests that the foreign ownership of City offices has the potential for creating greater volatility as some overseas investors are less likely to hold them for the long term. Financial Times 31.05.06
Omega looks for Aldgate prelet; Omega Land is seeking a 100,000 sq ft prelet to kickstart the second phase of Aldgate Union - a 300,000 sq ft scheme including a 16-storey tower on the City borders. The first phase of the scheme is being developed by the Royal Bank of Scotland for its own use. Omega Land is the new development arm of the Morgan Stanley Real Estate Fund. Estates Gazette 03.06.06
New office scheme for Ludgate Hill; Land Securities have appointed Ken Shuttleworth, former partner of Norman Foster (pictured left), to design a 500,000 sq ft scheme to replace Hillgate House and 50 Ludgate Hill. A planning application will be submitted in September. Estates Gazette 03.06.06
Shortlist for Euston revamp; four developers have been shortlisted for the £1bn-plus scheme to redevelop Euston station. The mixed-use scheme will definitely include shopping and leisure but may also feature housing and offices and will have a footprint equivalent to that of Canary Wharf. Depending on the height of the project, the scheme could total between 100,000 sq m and 400,000 sq m. The four developers on the shortlist are British Land, Chelsfield, Development Securities and the US developer Hines. There are also four developers on the smaller redevelopment of Victoria station - Land Securities, Hammerson, Development Securities and Stanhope. Times 03.06.06
City aims to become shopping magnet; the City of London Corporation is drawing up plans to lure thousands of people to go shopping in the Square Mile at weekends. During the week the City has developed as a shopping centre based on its 300,000 office workers and the Corporations instances the fact that Tiffany’s most successful UK store is in the Royal Exchange. Now it wants to lure new retailers such as John Lewis and Harvey Nichols and it points to the over 1m sq ft of new retail space coming forward - the equivalent of a large out-of-town shopping centre. The first of the space will be at One New Change followed in the longer-term by Bucklersbury House and 14 Cornhill. However there is one problem in the City’s growing opposition to new homes being built in the Square Mile. Only 1,000 homes will be allowed in the next decade-on top of the current population of 7,000. City planners are loath to allow new flats because residents often oppose new office blocks on their doorstep. Financial Times 27.05.06
£150m development scheme for the Barbican; Heron International and Berkeley Group have won a contract to work with the Corporation of London on a £150m project to develop a new residential tower and new facilities for the Guildhall School of Music and Drama at the Barbican. The scheme will include a new concert hall, training theatre, studio theatre and office space. There will be a residential tower, to be about 30 storeys tall, built on the school’s annexe. As part of the scheme, Milton Court (pictured right), previously the City Morgue and a fire station, will be redeveloped. A planning application will be lodged this summer and it is anticipated that work will be completed by 2009. Times 02.06.06
Casino developer offers Chinese community centre; United Leisure Gaming have submitted plans to convert the Hippodrome in Leicester Square into a casino. As part of the package they have offered space to the local Chinese community for use as a Community Centre. It had been feared that the current centre in Gerrard Street would be forced to close when the lease runs out in 2008. The two-storey space has been offered on a rent-free basis for 20 years. West End Extra 19.05.06
Grapevine is produced twice monthly (except August and December when there is one issue) by Brian Wright on behalf of GLE.
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