As expected the Budget was largely an attempt at creating stability with no major surprises except, perhaps, the level of the growth figures set for the next two years. Many commentators agreed that it was one of the most boring Budget speeches ever heard but as Richard Lambert, director-general of the CBI said: The Chancellor didn’t set the Thames alight, but then he didn’t have anything to set it alight with”. The Chancellor announced 12 more reviews on tax to add to the 16 already announced. Many commentators have expressed concern about the higher than expected forecasts for the growth rate and for the high levels of public borrowing. Further information
Non-Doms and the City; proposals to increase the tax on high-earning “non-domiciled” residents in Britain were watered down after intense lobbying from the business community. The changes were welcome by Michael Snyder, chairman of the City of London’s policy and resources committee. Further information
Small firms; there was great emphasis on enterprise and small business. Whilst there was no drawing back from the changes in Capital Gains Tax (CGT), the Treasury and the Department for Business and Enterprise produced a detailed document called Enterprise Strategy which laid out plans for teaching enterprise in schools and encouraging graduates to become entrepreneurs as well as a variety of other proposals covering community enterprise, public sector purchasing, and a widening of the Enterprise Investment Scheme and the Small Firms Loan Guarantee Scheme. There are further measures on cutting red tape. There was no change to the proposals on CGT and further consultation on “income shifting”. Further information - The Budget and HM Treasury
Climate change; a promised tax on plastic bags, a pledge to make all new buildings zero-carbon, higher charges for flights (even if the Chancellor wants to see Heathrow and Stansted double in size), a crackdown on gas-guzzling cars and a handout to less thirsty ones were not enough to satisfy the green lobby. They were unhappy about the Chancellor’s suspension of the increase in fuel duty for six months. Further information
Other changes included an extension of the London Compact to tackle underperforming schools; a £30m fund to improve science studies; an extra £60m to tackling the UK’s skills gap and a move to ensure that all long-term claimants of incapacity benefit should face a new assessment. Further information
Sources: Financial Times, Times, Guardian, Independent 13.03.08
Deputy Governor says Bank can do nothing about inflation spike; Rachel Lomax, Deputy Governor of the Bank of England, has admitted that there was “nothing that the Monetary Policy Committee (MPC) can do” about higher inflation. Reflecting on the warnings from the Governor and others that inflation is likely to go over three per cent and that a new letter of explanation will be needed for the Chancellor she said: “From next month Consumer Price Index (CPI) inflation is likely to rise more sharply, in particular reflecting the impact of higher utility bills. There is essentially nothing that the MPC can do about this immediate impact on the inflation rate… We are not required to raise interest rates sharply to counteract the rise in inflation which we expect over the next few months. And the purpose of the Open Letter system regime is to give us the opportunity to explain how we intend to use our discretion”. The Independent says that the prospect of inflation exceeding the Government’s target by one per cent is likely to increase tensions with the Treasury. Paul Danes, UK economist at Capital Economics, commented: “The MPC may have to let activity on the high street slow very sharply in order to keep inflation at bay- a message underlined by Rachel Lomax”. Further information
Why has the Treasury taken such risks with the economy? writing ahead of the Budget Anatole Kaletsky wondered why the Chancellor suddenly announced the new tax regime for foreigners in last autumn’s pre-Budget report when the Treasury was well aware that it would open up a Pandora’s box of economic troubles. He says that it was not the Treasury that was responsible for taking such risks with the British economy and the public finances. Treasury officials have consistently opposed any such moves and are known to have advised against it as recently as last summer. However officials at HM Revenue & Customs (HMRC), by contrast, have long been urging Chancellors to move against the non-doms. When Gordon Brown suddenly decided last autumn to back the HMRC position, the balance of power between the two institutions suddenly reversed- and this shift in the institutional dynamics in Whitehall has greatly increased the potential damage from the non-dom reforms. Times 10.03.08
Ernst & Young say UK losing its attraction as a place to invest; a new report by Ernst & Young says that Britain is losing its attraction as a place to invest having slipped from 4th to 6th= in the ranking of the most attractive countries in which to invest. Despite the forthcoming cut in Corporation Tax to 28 per cent only four of the top ten have higher corporate taxes- the USA, India, Japan and Brazil. China, the Czech Republic and Germany have recently cut their rates by considerably more than the UK. Further information Guardian 10.03.08
Chancellor is in thrall to house prices; Hamish McCrae says that the bad news from the US has focused minds on the likelihood that the UK may be going down the same route. The issue is more important than the Budget because if our housing market is in a state of collapse then poor economy will follow and our public finances will be in even more trouble. McCrae says that the peak of the cycle for house prices was in October and November last year and there has been a gradual decline since then. Fewer mortgages are being issued and a lot of mortgages are being re-arranged at higher rates. Therefore there is a good chance that house inflation will go negative this summer and by the end of the year a fall year-on-year of five per cent seems plausible. The difficulty is to know what happens after that. Even the lower cost of borrowing may not stimulate greater demand and unless market conditions return to calm, the rates banks have to pay for money will stay stubbornly high. The most important question is what happens in 2009. If prices fall by up to five per cent this year, there will be few knock-on effects. Some growth in consumption still seems reasonable; perhaps one per cent a year rather than the four per cent people have got used to. Growth rates in 2008 should be at 1.5 to two per cent and that is the figure the Treasury will probably use in the Budget. However they will probably use a higher figure for 2009. If the housing market recovers or does not fall further next year that is plausible. If prices go on falling, it is not. Independent on Sunday 09.03.08
Further evidence of slowing house market; the latest survey of house prices undertaken by the Royal Institute of Chartered Surveyors says that a net balance of 64.1 per cent of surveyors reporting price falls rather than price rises, close to the record of 64.5 per cent recorded in the last market slump in 1990. Further information Guardian 11.03.08
Brown pledges overhaul of public services; writing in the Financial Times Gordon Brown vows to speed up the modernisation of public services with a wider role for professionals and the private sector. The FT says that this is the clearest signal yet that he does not intend to reverse the reforms promoted by Tony Blair. He is writing as the huge wave of investment in public services is about to come to an end. Although hinting at more money for education, the pressure on public finances means that the government is looking for new ways of getting better value from limited resources. The Prime Minister writes: “There can be no backtracking on reform, no go-slow, no reversals and no easy compromises”. When he came to office in June 2007 he was suspected of preferring statist solutions to public sector problems and would scorn the wider use of the private sector to drive up standards. Former Blairite cabinet ministers believe Brown is now pressing ahead with a “New Labour” modernising agenda. Brown has been criticised for an attachment to central targets and league tables, but he says they were vital in the first stages of reform. Now the task is to address underperformance and to “empower both the users of services and all the professionals who deliver them to drive up standards”. Financial Times 10.03.08
Volunteering tsar points to problems caused by red tape; in her first report on volunteering Lady Neuberger, the Lib Dem peer brought in by Gordon Brown to be the government’s volunteering champion, will blame unnecessary child protection checks and other bureaucratic barriers for wasting the potential of volunteers in health and social care services. She accepts that some checks have to be done but: “insurance and other legal considerations do seem to have created a level of risk aversion throughout all management levels in health and social care services”. She instances the case of managers demanding Criminal Records Bureau checks on volunteers to work on hospital radio. She goes on to say that although some changes can be made quickly to make health and other services more attractive to volunteers there needs to be a change in long-term attitudes. Acknowledging that unions are suspicious that volunteers are a way of lowering costs she says that should not happen. “It is about helping to create services that are more people orientated”. She proposes a pilot project, based on a US model, where people with health conditions who have largely recovered help those with the same conditions. Further information Guardian 10.03.08
Business Council warns on tax; interviewed before the Budget Mervyn Davies, chairman of Standard Chartered Bank, warned that the government needs to be “extremely careful” to ensure that its tax policy does not inflict a “hugely damaging” blow on the UK’s competitiveness. He expressed particular concern about the long-term effect of the Treasury’s contentious changes to capital gains tax and the tax regime for wealthy non-domiciled foreigners. The importance of the interview is that Davies is speaking in his role as chairman of the prime minister’s advisory business council. Members of the council, have so far largely avoided public comment. He says that individual members of the council have not been afraid to make their views clear to ministers but it was his personal view that ministers risked jeopardising the UK’s reputation for having a consistent, low taxation regime. However he did express optimism that the City would prove resilient enough to survive the reputational harm inflicted by the Northern Rock crisis. Although there were lessons to be learnt by the industry and the regulators he did not agree that London would be severely damaged as a financial centre going on: “I absolutely believe London is there at the centre of the financial services industry for the next 20, 30, 40 years”. He also said that the Business Council for Britain would be setting up a working group of entrepreneurs to advise on issues affecting small business. The group would focus on the barriers to setting up and growing small businesses. He cited the lack of a US-style venture capital industry to fund start-ups as a “big challenge”. However he thought that the spirit of entrepreneuralism was increasing thanks to television programmes like the Apprentice and Dragon’s Den. Financial Times 04.03.08
Seven out of ten companies train staff in ethical behaviour; the Institute of Business Ethics has produced a survey, which shows that companies are stepping up their training programmes on ethical programmes. Seven out of ten large companies now train their staff in how to apply their codes of conduct compared to less than half four years ago. In the US, the Ethical Resources Centre reports a similar increase in training. Further information Financial Times 07.03.08
Blears still wants elected mayors; addressing the Labour Party Spring Conference communities secretary Hazel Blears called for more directly elected mayors in order to make local government “more visible” to the general public. There are currently 12 elected mayors, with many local councils opposed to the idea because it would introduce celebrity politics and downgrade the role of ordinary councillors. However Hazel Blears believes that that more mayors would bring extra accountability and profile. A city, town or borough can hold a referendum on having an elected mayor by raising a petition bearing the signatures of five per cent of its population. The minister is hoping that councils will follow the campaign in Birmingham- the biggest local authority- for an elected mayor. The push was started by the local Labour Party and has won the support of the Birmingham Post. Blears also appealed to business people to lend their support to elected mayors, of whom London’s Ken Livingstone is the most famous. Other elected mayors range from “Robocop” Ray Mallon in Middlesbrough to others in the London boroughs of Hackney, Newham and Lewisham. Further information Financial Times 29.02.08
Fast rail links would bring £63bn benefits; a review of the case for high-speed rail links by Atkins, the engineering group, says that new lines linking London to Scotland and with the Midlands would bring economic benefits of £63bn. Atkins, who were updating their investigation into high-speed rail commissioned by the government in 2003, say that without the new lines, the current network will run out of capacity by 2026- or even 2016 if the current rate of expansion in rail passenger numbers continues. They looked at three options- a new line for the west coast, the east coast and the full network option that includes both lines. It opts for the third, which generates the highest benefits, worth £63bn, and would cost £31bn to build. They also examine the expansion of the road and air networks as an alternative and find this option wanting. It concludes: “High-speed lines need to be viewed less as a rail project and more as a national transport, economic and environmental project, as the benefits and costs go far beyond the rail industry”. Further information Sunday Times 09.03.08
Airbus contract win safeguards UK jobs; British aerospace companies are celebrating the £18bn order for tanker aircraft placed by the Pentagon with Northrop Grumann ahead of Boeing, who, until now, have been the sole supplier of tanker aircraft to the US military. Northrop has offered an “Americanised” version of the Airbus A330 to be bought from EADS, the parent company of Airbus. Airbus will assemble the aircraft in Europe, and then fly them to Mobile in Alabama for fitting out. Northrop has promised that 58 per cent of the value of the aircraft would come from US companies. The key thing from the British point of view is that the wings for Airbus planes are made in the UK at factories in Broughton in north Wales and Filton, Bristol, The new order is seen as securing 9,000 British jobs according to EADS. Another winner will be Cobham Industries, who are based in Wimborne in Dorset, who will make the hi-tech equipment to transfer the fuel between aircraft. Further information Sunday Times 02.03.08
Poor proposals delay eco-town plans; the government has been forced to slowdown the development of a number of eco-towns because according to Caroline Flint, the housing minister, most of the 60 proposals that had been received were not good enough to go ahead. The eco-town idea was launched by Gordon Brown with five planned by 2016 and ten by 2020. Local residents have been opposing the eco-town plans, which will each have up to 20,000 zero-carbon homes, claiming the developments will swamp rural villages and damage wildlife for little environmental gain. Further information Estates Gazette 08.03.08
Brown opens National Enterprise Academy; on the day before the Budget Gordon Brown launched the National Enterprise Academy that will teach teenagers how to build a successful business and will form a central part of the Enterprise Strategy to be announced in the Budget. As a sign of Government commitment the PM was joined by the Chancellor, the Business Secretary and the Innovation and Skills Secretary at the east London launch. The academy, which is the brainchild of Peter Jones, the mobile phone entrepreneur and Dragon’s Den panellist, will open its doors in September 2009 when around 200 teenagers will embark on a nine-month course. The first academy will be located near Slough and there are tentative plans for a second in the north-west. The Government is splitting the £10m cost with Jones’s charitable foundation. The academy will award a new NVQ and will be part of the new vocational academies that are being created by the skills sector councils. At the same time it is being made known that the Budget and the White Paper will address the issue of women entrepreneurs with special funding for start-ups and an advertising campaign aimed at encouraging women to come forward. Another £30m is being made available to support the expansion of enterprise teaching in primary schools and FE colleges. This is in addition to the £180m already pledged to secondary schools. A further element is a speech being made by John Hutton, the business and enterprise secretary, to the Progress think-tank literally on the eve of the Budget where he will defend large salaries for successful business people and defend aspiration and ambition as “natural human emotions”. Further information - Prime Minister and BERR Daily Telegraph 11.03.08, Financial Times 11.03.08
Tax deadline encourages SME sell-offs; a rush by owner-managers to sell their businesses before the capital gains tax (CGT) rises to 18 per cent on 6th April is artificially raising the volume of M&A transactions according to senior lawyers. Those who have recently completed transactions are reluctant to admit that they have done so because of the CGT increase and there are often other factors involved. However, deals such as last month’s sale of sandwich chain Prêt a Manger would have been significantly less attractive for founders Sinclair Beecham and Julian Metcalfe if it had happened after 6th April. Andrew Harris, European head of private equity at DLA Piper, said that tax-driven transactions had helped make this the busiest January the law firm had experienced. Other lawyers such as Freshfields Bruckhaus Derringer agreed. Financial Times 01.03.08
SMEs need training in management skills; a lack of management expertise and support is holding back growth among the UK’s small business community according to a new report by the British Chambers of Commerce. Almost two-thirds of UK businesses are micro businesses employing four or fewer staff, compared to 53 per cent in the US. A lack of sales expertise, failure to draw up marketing plans and problems with cash flow are all barriers to growth. These could all be solved by raising the level of management expertise. The UK on average spends 1,625 euros per manager per year, compared to 4,438 euros in Germany. It also spends less than Denmark, Norway, France and Spain. David Frost, the director-general of the BCC, says that the government has to provide a stable environment but company owners have to play their part. He says: “The government is responsible for providing young people with the right skills. Once they are in employment it is business that needs to train them to the best of their ability”. Further information Financial Times 08.03.08
Housing market decline could hit enterprise activity; a warning that the sharp decline in house prices could hit entrepreneurial activity has been given by Rebecca Harding, managing director of Delta Economics and UK Director of the Global Economic Monitor. She says that house prices and business start-ups are directly linked because people often use equity in their home as seed capital and that borrowing against property “is often the fuel behind the engine of a start-up business”. Business owners could face a “double whammy”, unable to access funds from their home or borrow against their property. She quotes US evidence where there has been a decline in start-up rates over the past two years just as US house prices started to fall. In the past decade remortgaging property has provided a relatively easy method of gaining quick access to working capital for many people who have taken the plunge and started a business. This has advantages for entrepreneurs, since they do not need to justify a business plan to a bank manager or investors to obtain the funds. Financial Times 05.03.08
Government admits importance of advice from banks and accountants; a survey of almost 10,000 small businesses conducted by the Department for Business, Enterprise and Regulatory Reform finds that only five per cent had sought help from Business Link when setting up. This compared to 16 per cent who turned to their bank and 12 per cent who had gone to an accountant. Further information Financial Times 08.03.08
Blears announces Social Enterprise Unit for DCLG; addressing the Social Enterprise Coalition’s annual conference in Liverpool Hazel Blears, the communities and local government secretary, promised more support in the form of a new funding scheme and the creation of a Social Enterprise Unit in her department. The new unit will concentrate on encouraging local authorities to use social enterprise when delivering regeneration and housing initiatives as well as the transfer of assets. She said that there were currently 55,000 social enterprises in the UK who had a combined turnover of £27bn. Also at the conference Phil Hope, the minister for the third sector, announced that a £10m Risk Capital Fund for social enterprises. In addition the Department of Health would provide an additional £27m for its Social Enterprise Investment Fund, making the pot £100m. Further information- communities.gov.uk and cabinetoffice.gov.uk Regeneration 29.02.08
Microsoft launches small business service; Microsoft has unveiled a new service designed to repel Google’s incursion into one of its core markets, selling software applications to small and medium-sized businesses. The new scheme delivers a service over the internet for small companies to do things like manage corporate e-mail and let workers collaborate on documents, rather than requiring them to buy the software. Users of the new service will be charged a flat annual subscription fee per worker. The new Microsoft services involve two of its main server products- the Exchange e-mail software and Sharepoint, which is used to manage documents centrally and make it easier for workers to collaborate. Financial Times 03.03.08
League table of slow payers; the Institute of Credit Management has launched the first-ever league table of the time that every single UK public limited company takes to pay its bills. The Institute said the issue of payment times would become increasingly important as the economy slowed. The tables, which were compiled by the Credit Management Research Centre at Leeds University (CMRC), show that United Utilities takes the longest time to pay its bills with an average time of 99 days, although the water company insisted that the figure refers to the parent company and the actual average figure across the whole group was 33 days. Nick Wilson, director of the CMRC, said: “We took our figures from annual company accounts, the ones that are publicly available. Our research shows payment times are definitely lengthening overall as adverse economic conditions and the credit squeeze starts to take its toll”. One problem is that the supermarket chains release information only for their holding companies, which do not trade and are therefore registered as having no payments. The average payment time is 44 days for all plcs. For the 350 biggest companies in the FTSE 100 and the FTSE 250 it is 34 days. Further information Financial Times 04.03.08
Fears of 10,000 job losses in the City; the extent of potential job losses in London’s financial sector could be even greater than feared amid an uncertain outlook for global markets and the continuing losses in the banking sector from the US sub-prime lending crisis. Some forecasters say at least 10,000 jobs will be lost this year and many are warning that this figure could rise rapidly. A slow start to what is normally the busiest period in the investment banking calendar has damped morale, although recent market volatility has supported trading business. Duncan McKenzie, director of economics at the International Financial Services London research group, said City headcount was likely to be down by 10,000 this year. This equates to a quarter of the 40,000 rise in employment in recent years. After the internet crash City jobs fell 4.7 per cent from 2000 to 2002. However Jonathan Said of the CEBR said that this time the cuts would not be as large: “Banks believe the credit crunch is a one-year wonder so they are reluctant to get rid of good staff. Recruitment is an expensive process”. A leader in the FT is more optimistic. It says that although the warnings about City jobs must be causing quaking amongst the restaurateurs and estate agents of Kensington and the Upper West Side the money men are likely to muddle through. It says that business is not all bad and the unprecedented boom in emerging markets continues, commodities traders have never had it so good and mainstream equity, bond and derivative trading benefit from all the volatility. Finance may not be as stable as medicine, undertaking and tax advice but as long as the global economy keeps growing there will be business to do. Financial Times 03.03.08, 04.03.08
Hiring of full-time staff drops; a survey of 400 recruitment companies conducted by the Recruitment & Employment Confederation and KPMG shows that hiring of permanent staff fell in February for the first time in almost five years. It says that the impact of the credit crunch has started to sap confidence across the labour market with salary increases continuing to ease and employers taking on temporary staff, who are easier to dismiss than permanent employees if trading conditions worsen. Further information Financial Times 05.03.08
New Deal not providing enough long-term work; a report by the Public Accounts Committee says that almost half the unemployed people who find work are back on the jobseeker’s allowance within six months. Sustainable Employment: Supporting People to Stay in Work says that two-thirds of the applications for the benefit are repeat claims. They say that the New Deal is not providing enough long-term work. Previously James Purnell, the work and pensions secretary, had announced bigger and longer contracts for New Deal as part of a significant expansion of the private sector’s role in welfare-to-work. The value of this work should expand from around £100m to £360m. The FT says that Dutch and American companies are now looking at joining Australian companies in bidding for contracts. It also expects companies such as Capita and Serco to enter the market alongside current domestic providers such as A4e and Reed-in-Partnership. Further information - Parliament and DWP Financial Times 28.02.08, Times 28.02.08
Truancy hits record levels; truancy in English schools reached record levels in 2007 with 63,000 pupils skipping class every day, despite more than £1bn being spent on schemes to boost attendance. Nearly 273,000 pupils missed at least one day of school every week through truancy, illness and other reasons during 2006-07. On the other hand overall absence, which includes children off sick with permission and children taking family holidays, reached a record low at 6.49 per cent. Further information Independent 26.02.08
City firms urged to provide maths tuition; Ed Balls, the Education Secretary, has urged City firms to consider sending volunteers to mentor school children in maths skills. He was speaking at Joseph Lancaster primary school in Southwark, which is part of a £22m pilot catch-up maths programme for primary schools funded by KPMG and a coalition of finance companies and charities. The programme, Every Child Counts, involves one-to-one tuition for children who at the age of seven are identified as falling behind. It is modelled on the Every Child a Reader literacy programme, which the government is introducing nationally. Further information Guardian 07.03.08
Government plans for 20 new campuses; John Denham, the Universities secretary, has thrown down a challenge to local authorities and regional development agencies to enter a “university challenge” to bid for funding for a campus or college in their area. The facilities would be linked to an existing university or college or be entirely new. They are planned as part of a wider drive to increase the number of young people going into higher education from 43 to 50 per cent. Denham said that the 17 university teaching blocks and campuses opened or planned since 2003 had shown that local universities could play a key role in boosting local economic regeneration. The Higher Education Funding Council for England had set aside £150m from its development programme to fund the expansion. Denham sees university growth as a key driver in economic expansion. He estimates a one per cent increase in the country’s population educated to degree level increases GDP growth by six percentage points. The expansion plans follow the announcement that the Government is planning a blueprint for university reform ahead of the review of tuition fees in 2009. New university campuses or other local higher education centres that have received capital funding since 2003 include Barnsley, Cornwall, and Cumbria. Projects with agreed funding are in Blackpool, Blackburn, Burnley, Everton, Grimsby and north and south Devon. Further information Times 03.03.08
Rush for biofuels threatens food supplies; Professor John Beddington, the Government’s chief scientific adviser, has warned that the rush towards biofuels is threatening world food production and the lives of billions of people. He told the SDUK conference that: “It’s very hard to imagine how we can see the world growing enough crops to produce renewable energy and at the same time meet the enormous demand for food. The supply of food really isn’t keeping up”. He said that by 2030 the world population would have increased to such an extent that a 50 per cent increase in food production would be needed. By 2080 it would need to double. But the rush to biofuels- allegedly environmentally friendly- meant that increasing amounts of arable land had been given over to fuel rather than food. He said that already biofuels had contributed to the rapid rise in international wheat prices and it was only a matter of time before UK shoppers faced big price rises because of the soaring cost of feeding livestock. He said that demand was rising rapidly not least because of the economic growth in India and China. By 2030 energy demand would be up by 50 per cent and the demand for food will also be up by 50 per cent. Critics have been particularly angered by the loss of tropical rainforest, which has been cleared to grow biofuels. Deforestation has been calculated to account for about 18 per cent of world greenhouse gas emissions and Professor Beddington said that “the ideas that you cut down rainforest to actually grow biofuels seems profoundly stupid”. Further information Times 07.03.08
MPs say perks not taxes help business; a report by the House of Commons Environmental Audit Committee says that businesses are more likely to cut carbon emissions if given government incentives than as a result of tax penalties. It says that the availability of government funded experts to help companies be energy efficient has led to much greater cuts in emissions than the simple imposition of energy taxes. Further information Financial Times 10.03.08
Fleet Street starts to come back to central London; Stephen Glover heralds the fact that despite being told they are dying Britain’s two leading newspaper groups are investing heavily in new machinery and also that the migration of the press to east London is now being reversed. He points to the fact that Rupert Murdoch’s News International is investing £650m in new presses to print his UK papers in Liverpool and Glasgow and, from next month, Broxbourne in Hertfordshire. Broxbourne will become the biggest print facility in the world. The Daily Mail is also investing in new facilities. The end of printing in Wapping means that News International is putting up the 14-acre site on the market and the editorial and commercial offices will move to central London. In making this move they are following the Daily Telegraph, which has also relocated from Canary Wharf to Victoria. The Guardian is also moving from Clerkenwelll to King’s Cross. This leaves only the Mirror and the Independent in east London. Independent 10.03.08
Things start happening in Wembley; two separate but conjoined announcements about the regeneration of Wembley have been announced. First the Estates Gazette says that Land Securities have entered into negotiations to become the joint venture partner of Quintain Estates & Development in the £2.5bn regeneration of the areas around Wembley Stadium. Land Securities would become responsible for the retail and leisure element in the 10m sq ft project including a 153,000 sq ft factory outlet, 127,000 sq ft of sports retailing and 300,000 sq ft of leisure facilities, including a 400-bedroom Hilton hotel. It will also be responsible for the development of Wembley Park Boulevard, which will be as wide as Regent Street but pedestrianised apart from taxis, cyclists and buses. At the same time Brent Council have appointed Metaphorm Architects to develop a strategic vision for the adjacent Wembley town centre. This will include a bridge over Wembley Hill Road to create a direct link to the new stadium as well as an urban park running alongside the Chiltern cutting along the High Road. Further information Estates Gazette 08.03.08
London has fewer apprentices than anywhere else in the country; at the end of Apprenticeship Week the latest statistics from the Learning and Skills Council (LSC) show that London has fewer than 7,000 apprentices in the 16-18 age bracket. That is four per cent of the total number in that age group in the capital, and contrasts with seven per cent in work-based learning in the rest of the country. David Hughes, the LSC director for London, says that it’s partly because “industries where apprenticeships have been a traditional feature, for instance engineering and manufacturing, don’t employ many people in London”. However the Government has been stressing apprenticeships are not confined to oily-rag industries and a GLA paper in 2006 pointed to more than 180 apprenticeships in industries such as retail, health and beauty. David Hughes points out that London has a vibrant labour market with a lot of turnover and that even in the construction industry there is a ready supply of skilled labour. Equally young Londoners seem less convinced about work-based learning than provincial youngsters. The capital has the highest proportion of 16-18-year-olds- 80 per cent- staying on at school or college. However Hughes points out that 69 per cent of Londoners of working age are in employment compared to a 74 per cent national average. Closing the five per cent gap would mean bringing 250,000 Londoners into work, but equally it means breaking a vicious circle. Further information Guardian 04.03.08
St Martins moves to King’s Cross; the Independent runs an article on the impending move of Central St Martins to a new £170m development on the King’s Cross redevelopment. The article traces the history of how the Central School of Arts and Crafts was built in Holborn one hundred years ago and morphed into Central St Martins and then part of the University of the Arts London. It became one of Britain’s most revered art institutions with a glittering list of alumni including Lucien Freud, Terence Conran, Gilbert and George and Antony Gormley as well as Stella McCartney, Alexander McQueen and John Galliano. Sir John Tusa, the new chairman of the University of the Arts London says that the move is necessary because “you can’t stay in out-of-date accommodation for ever. The advantages of being able to have a purpose-built art college are extraordinary, never mind one of that size and that is centred round the historic Lewis Cubitt Granary building at King’s Cross”. The new buildings are being designed by Paul Williams of Stanton Williams who is charged with converting the old industrial buildings as well as new buildings. As well as the six-storey Granary, built in 1852 the college will also use the 19th century train sheds that stretch 180 metres north behind the Granary. In front of the building there will be a huge pedestrianised area leading down to the Regent’s Canal. The move will take place in 2011. Independent 06.03.08
Pink Floyd star’s plans for the homeless are thwarted; when Dave Gilmour, the guitarist with Pink Floyd, sold his west London mansion for £3.6m he offered the money to Crisis to provide accommodation for the homeless. He had been inspired by a project called Common Ground in New York where an Art Deco hotel had been turned into a block of 400 flats, half for low-paid key workers and half for homeless people. Five years on from Gilmour’s gift and the idea of bringing the New York scheme to London has crumbled to dust. Successive attempts to find a suitable site and then push it through the planning system have failed. The energy and excitement behind the original idea has been replaced with a bitter scepticism about the way the planning system and nimbyism have ended up blocking the idea. Two potential schemes in Camden were blocked and, most recently, the former Mildmay mission in Shoreditch. Crisis is now looking at much smaller schemes. Further information - Common Ground and CSR Wire Observer 02.03.08
Tracy Emin pays £4m for new Spitalfields studio; Tracy Emin has paid £4m to buy Tenter Ground in Spitalfields to create 8,000 sq ft of artists’ studios. The actual building was on the market at £1.5m with the added costs being spent on buying out the leases of the artists working there. Tenter Ground was constructed in the 17th century by Flemish refugees. Tracy Emin said that she hoped to halt the spread of commercial and corporate development that has transformed Spitalfields. Emin lives nearby and the new property is close to where she had a shop in Brick Lane, where she worked with fellow artist Sarah Lucas in the early 1980s. She said: “The whole area was full or artists then. The rents were comparatively low and there were lots of our friends around us using freezing cold studios. It is a listed building and it is important to me to keep artists working in the area and keep it in artisan use. And also not to have it turned into a hotel or a restaurant.” Evening Standard 03.03.08
New trains to boost London Thameslink service; the planned £3.5bn upgrade of cross-London Thameslink services has taken a significant step forward with the news that Southern, one of the train operators involved, has placed an order for 11 four-car trains from Bombardier in Derby. The new trains, to be delivered next spring, will enable Southern to run to destinations on the line to Bedford, north of London instead of terminating at Blackfriars as happens at present. The new trains will be equipped to use both the third-rail electrification system used south of the Thames and the high-voltage overhead wires used in most of the rest of the UK, including the northern part of the Thameslink route. The second stage of the upgrade, to be completed before the 2012 Games, will see a line on to the Thameslink route from near King’s Cross station opened up. This will enable commuter services from Stevenage and Hertford to enter the tunnel under London. The third and most difficult stage will involve upgrading the track near London Bridge will be tackled after the 2012 Games. Further information Financial Times 07.03.08
Race to agree funding package for Olympic Village; Lend Lease, the Australian developer building 4,200 homes for Olympic athletes in Stratford, are struggling to reach agreement with the government on funding for the £4bn Olympic Village. Work is scheduled to start in July but when its half-year results were published at the end of February Lend Lease said that an agreement with the Olympic Delivery Authority remained “a long way off”. It wants a greater contribution from the government to mitigate its risk in bringing more than 4,200 homes to the market immediately after the Games are over. It also wants a contribution towards the cost of refitting the apartments post-Games and a rental payment for use of the apartments by the athletes. Estates Gazette 01.03.08
Town and cities compete to provide training bases; the London 2012 Organising Committee (LOCOG) has prepared a list of 600 potential training venues for participating teams in the 2012 Games which will be distributed to national Olympic associations this summer. While larger teams are expected to head to established sporting hubs such as Bath and Loughborough universities- the US team is expected to be based in Birmingham- smaller venues are aiming to attract national teams sending a small number of athletes that require sport specific venues. Even the Guardian gets excited about where the beach volleyball teams will train away from the Copacabana or Bondi Beach. They speculate about Margate, Blackpool and Great Yarmouth. Training in local conditions in front of holidaymakers could help the acclimatisation process, while helping familiarise British audiences with the sport before the Olympic competition itself, which will be held on Horseguards Parade. The British team will be based at Aldershot barracks. Further information Guardian 03.03.08
Visiting dignitaries demand chauffeur-driven cars; London’s plans to hold a green Games have been undermined by the International Olympic Committee’s (IOC) demand for more than 3,000 cars to take officials, and corporate sponsors to the site despite them having free access to public transport. The IOC insists that its members need to be able to use cars and the contract signed with London, which is being kept secret, specifies that cars should be provided. Even members of the London Assembly have to sign a legal agreement before seeing the contract not to divulge its details. None of the 10,500 athletes will be able to use the cars- they will be expected to travel on a dedicated fleet of coaches instead. Evening Standard 06.03.08
Igloo wins battle to develop 2012 Media Centre; a joint venture between Morley-managed regeneration fund Igloo and contractor Carillion has been selected as the preferred bidder for the 1.4m sq ft Olympics media centre. The won the battle against rivals Development Securities and Bouygues because of the certainty of the joint venture’s funding commitment. Costs for the venue were originally set at £134m but have now spiralled to £400m. The consortium is expected to contribute about half of these costs in return for a share in the rental income after the Games. After the Games, the London Development Agency (LDA), on whose land the media centre is to be built, and Hackney Council want to transform the centre into a digital media hub. The LDA has already begun negotiations aimed at moving Newham-based 3 Mills Studios to the site as a 300,000 sq ft anchor. Estates Gazette 08.03.08
Apple to anchor regeneration of Covent Garden; Apple is to be one of the anchor stores for the new-style Covent Garden being created by the new landlords, Capital & Counties (part of Liberty International) – who bought Covent Garden for £421m in 2006. Apple, which already has a store in Regent Street, is negotiating to open a 25,000 sq ft store on the site of the Rock Garden at 6-7 The Piazza and 1 The Piazza. It plans to knock the two buildings together. Previously US fashion retailer Hollister was turned away from the site despite being prepared to pay an annual rent of £3m. Capital & Counties wants to transform Covent Garden into a world-renowned shopping centre and has appointed Cushman & Wakefield, CWM and Davis Coffer Lyons to revitalize the shops, bars and restaurants in the area. Estates Gazette 01.03.08
Crown pushes on with Piccadilly revamp; the Crown Estate has appointed architect Eric Parry to work up designs to replace 210-214 Piccadilly, with a 100,000 sq ft office-led scheme. The buildings are on the south side of Piccadilly and currently house the Japan Centre and The Virtual Office Company. The Crown Estate said that a planning application would be submitted later this year but the scheme would be sensitive to the townscape of Jermyn Street at the rear of the buildings. The Crown has already announced plans for a £750m redevelopment of the Quadrant on the north side of Regent Street which will include the redevelopment of the Café Royal as a six-star hotel and the demolition of the Regent Palace to make way for a new retail and office development. Further information Estates Gazette 08.03.08
Chelsea Barracks to be largest Islamic financing scheme; the £1bn scheme to redevelop the Chelsea Barracks into luxury flats will be underwritten by a groundbreaking Islamic financing scheme. A consortium led by the oil-rich Qatari investment fund and the Candy Brothers, which purchased the 12.8-acre site for £300m at the end of January, said that the deal would be the largest Islamic financing on a property scheme in the UK. Islamic law prohibits charging or paying interest, so bankers and lawyers have developed a rapidly growing financial market by restructuring conventional products to make them compliant with religious requirements. The syndicated funding is fully underwritten by a mix of Western and Middle Eastern banks. Proposals for the scheme, which are subject to final planning approval by Westminster city council, will transform the concrete parade ground and army buildings into a mix of luxury apartments and more affordable housing designed by Lord Rogers. At £75m an acre, the transaction is the biggest property deal ever struck in the UK. It dwarfs the Candy Brothers’ previous record, the £150m purchase of One Hyde Park in 2004. The brothers have 5m sq ft under development management across the world, including sites in Beverley Hills and 20 acres in central London. The Chancellor is expected to close a loophole in Sharia finance rules that have allowed commercial property investors to avoid paying stamp duty on more than £1bn of deals. Guardian 03.03.08, Times 05.03.08
Time Out lists the best areas for good value housing; according to Time Out there are two very distinct schools of thought about the prospects for the London housing market. On one hand there is the view of the Chancellor and property experts such as CB Richard Ellis and Hamptons that growth will continue with a six per cent increase in London prices in 2008 ‘as long as the economic fundamentals stay sound’. On the other there is Merryn Somerset Webb, editor of Money Week, who says: “The short-term future for the London housing market is pretty iffy. It’s inconceivable that prices won’t come down”. Her view is backed up by Roger Bottle of Capital Economics who says that 24 out of 27 price indicators are showing a downturn. Time Out says that such words are anathema to most Londoners after more than 10 years of rising prices; it won’t happen here, they say. Which is what people thought 20 years ago, just before a 30 per cent drop in prices; property didn’t regain its 1988 peak until 1998. Other factors include the need to accommodate a further 750,000 people over the next 10 years; the fact that the key commercial and industrial area is still in the centre, leading to strains on the infrastructure; and an increased rate of churn with 20,000 professionals leaving to go to Leeds last year. The areas that Time Out considers are ready for the next wave of regeneration are Kensal Green, Clapton, Tooting and Kentish Town. Time Out 05.03.08
Mayor starts to eye O2 as convention centre; London Mayor Ken Livingstone has suggested that the International Convention Centre could he housed at the O2 centre in North Greenwich. At the time of the redevelopment of the former Millennium Dome Anschutz had hoped to provide the site for the UK’s only super casino, but lost out before the Government scrapped plans to issue the licence and are now left with what the Mayor called: “The great big empty place where there would have been a super casino”. Estates Gazette 08.03.08
grapevine is produced twice monthly (except in August and December when there
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Next issue on 27th March 2008
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