IMF warns about spending but raises growth forecast; the International Monetary Fund (IMF) has increased its growth forecast for the UK for the current year from the 2.75 per cent it predicted in December to 2.9 per cent. This figure, which it deems “impressive”, is in line with the chancellor’s own forecast of 2.75 to 3.25 per cent made in the pre-Budget Report. However the IMF flags up a number of concerns. It says the risks associated with soaring house prices “warrant vigilance” and warns that interest rates may need to rise further if wage settlements are not restrained. However it is public finances that give it the most concern. It notes the rapid rise in public spending from 2001 to 2004, which has led to rising public debt, and a sharp deterioration in the fiscal balance. It urges the government to curb spending growth and make “disciplined choices” in the forthcoming Comprehensive Spending Review. Further information - IMF Independent 06.03.07
Conflicting results from latest economic data; two sets of contradictory data have emerged on the latest state of the economy. The CIPS/Royal Bank of Scotland (RBS) purchasing managers’ index for February shows a dip to 57.4 from 59.2 in January and below the expected figure of 59.0. Andrew McLaughlin (pictured right), the chief economist at RBS, said: “These figures provide evidence that recent rate rises are starting to dampen the growth of the UK services economy, with rates of expansion of both activity and new business weakening further from their heights”. He goes on to argue “the prices data will harden the case for the Monetary Policy Committee to hold off before making the next 25 basis point hike in interest rates that the market is expecting”. However news from the retail sector shows that sales are holding up despite the higher rates. The latest figures from the British Retail Consortium (BRC) show that retail sales were up by 3.3 per cent compared to February 2006, whilst the three-month trend rate of growth for like-for-like sales rose strongly to three per cent from 2.1 per cent in January. Total sales were up by 0.9 per cent as sales space increased. Helen Dickinson, head of retail at KPMG, said: “February’s results reflect a continuation of the trend of late December and January - not a bad set of results…but the like-for-like growth of 3.3 per cent must be seen in the context of a weak set of figures from February 2006”. Kevin Hawkins, the director-general of the BRC, said that growth was mainly driven by food and other sectors were much softer. Further information - Chartered Institute of Purchasing & Supply and BRC Guardian 06.03.07
Brown signals support for private sector role in welfare reform; the chancellor (pictured left) has signalled his support for private sector involvement in welfare reforms. He made a joint appearance with Tony Blair and John Hutton, work and pensions secretary, and a leading Blairite, to launch a far-reaching review of welfare-to-work policy by David Freud, a former investment banker. This follows a series of meetings between Brown and Hutton to finalise their policy approach and is seen as a partial rebuttal to the two former Cabinet ministers - Charles Clarke and Alan Milburn - who are complaining about a lack of a policy discussion. The FT also says that Hutton is clearly being wooed by the Brown camp as someone who could remain in cabinet. It also points to the discussions with John Reid, the home secretary, in the same vein. However, according to the Daily Telegraph, the surprise rapprochement with Mr Reid has produced an interesting consequence with Jack Straw now seen as favourite to be Chancellor of the Exchequer in a Brown cabinet. Hitherto Alistair Darling, a former chief secretary at the Treasury, had been seen as the hot favourite for the job but if Reid stays at the Home Office to see through the reforms that would put three Scots in the top Cabinet jobs. Another candidate is Ed Balls, a former adviser to the chancellor and now a Treasury minister. However the Telegraph says that because Brown will probably elevate Mr Balls’s wife Yvette Cooper, and Ed Miliband, a former special adviser to the Cabinet, a promotion of Mr Balls would look too much like a “crony cabinet”. Financial Times 02.03.07, Daily Telegraph 07.03.07
Howard Davies queries the need for the DTI; Sir Howard Davies (pictured right), director of the London School of Economics, former chair of the Financial Services Authority and director-general of the CBI, queries the need for the Department of Trade and Industry (DTI). He says that he has been spurred into action by the DTI’s sudden announcement that it is cutting £68m from the budgets for the scientific research councils. He goes on that even a day or two later Alistair Darling, the secretary of state, spoke at a Mansion House dinner about the crucial importance of the science base and of research in general without mentioning the decision. It was only after digging by the BBC that the truth came out. The DTI’s budgets elsewhere had overrun - mostly due to the costs of the Rover collapse and the nuclear-related problems at British Energy. So, the research councils’ piggy bank was raided to fill a gaping hole in the department’s overall account. Davies asks what sense does it make to have long-term investment in the science research base subject to the vagaries of the costs of industrial collapse or nuclear clean-up? Or, do we need a DTI with this odd range of functions? Or to put it even more starkly, do we need a DTI at all? Financial Times 12.03.07
Entrepreneurship is the new rock’n’roll; the latest Global Entrepreneurship Monitor (GEM) finds that enthusiasm for entrepreneurship in the UK has helped to buck the trend for falls in the number of start-ups in the world’s richest economies. According to Rebecca Harding of the London Business School, who is the author of the GEM report, there is a buzz about entrepreneurship in the UK that has led some to call it the new rock’n’roll. The proportion of adults starting businesses in the UK is higher than other European countries although it remains less than in North America or emerging economies such as China and India. Although most start-ups are created by people aged between 35 and 44, more than 64 per cent of 18 to 24 year olds think entrepreneurship is a good career choice and 80 per cent think entrepreneurs have a high status in society. The GEM study finds that concerns about fear of failure are unfounded and innovation is on a par with the US. The one bleak spot is that women are half as likely as men to be involved in start-ups in the UK - a wider gender gap than in the US and Germany. Further information - London Business School Financial Times 06.03.07
Brown accused of damaging UK competitiveness; the chancellor has come under fire for raising taxes and putting Britain at a long-term competitive disadvantage. The Confederation of Business Industry (CBI) has appealed to him to rein in public spending to allow for a cut in business taxation. They approve of his plan to limit public sector pay rises to less than two per cent. On public spending they argue that a slight restraint in the pace of spending growth, which need not have any impact on frontline services, would be enough to halt the steady decline in the UK’s tax competitiveness, paving the way for much needed reductions in business taxes in future years. In a separate report Ernst & Young, the accountants, finds that Britain’s competitiveness is at a critical point because of the growing complexity and uncertainty of its tax system. In the top 30 countries in the Organisation for Economic Co-operation and Development (OECD), Britain’s corporate tax rate has slipped from 10th lowest in 2000 to joint 18th in 2006. Paul Davies, head of tax at Ernst and Young, said that unless these issues are addressed “we will hear more stories of major corporates threatening to move their headquarters out of the UK”. Further information - CBI and Ernst & Young Guardian 05.03.07
Business growth funding; the Department of Communities and Local Government have announced that the amount of funding to be distributed to local councils for under the business growth incentive scheme is to double following a change to the qualification criteria. The results for the second round of funding for the Local Authorities Business Growth Incentive scheme (LAGBI) sees 328 councils - 85 per cent of the overall total - receiving £316m. Last year in round one of the scheme 254 councils received £127m. To win LAGBI funds, councils must meet business growth targets. They may choose how to spend the money. One of the big winners of the new round is Manchester whose allocation rose from £3.7m in round one to £17.7m in round two. Amongst London councils Ealing did best winning £7.6m, with Barnet getting £3.4m. Further information - DCLG Regeneration 02.03.07
PM claims progress in tackling social exclusion; the prime minister (pictured right) has fought back at criticism made by Unesco that Britain is bottom of a league that measures child wellbeing amongst developed nations. At his monthly press conference he released an interim report on the Social Exclusion Unit’s policy document issued in September 2006. The new report says that since Labour came to power in 1997, the lowest 20 per cent of households with the lowest income have seen this income rise faster in percentage terms than those in the top 20 per cent. However, families whose income puts them in the bottom two or three percent and which the Tony Blair referred to as “severely dysfunctional”, have been “left behind by the generality of policy and we now need to deal with that”. Further information - Action plan on social exclusion Regeneration 02.03.07
‘Volunteering schemes are toxic’; speaking at the annual conference of the National Council of Voluntary Organisations (NCVO) Camila Batmanghelidjh (pictured left), founder of the Kids Company, warned charities against mentoring schemes. She said that the standard of third sector organisations’ work could become diluted by the corporate social responsibility agenda as some firms coerce unwilling staff into assisting charities. “They come along with paint brushes, fag in mouth, mobile telephone in hand. They are not interested. They are dragged there. [We] don’t want them.” Regeneration 02.03.07
Regional bodies cost £360m a year; regional quangos cost an estimated £360m a year to run, double the level of five years ago, according to research by the New Local Government Network, a think-tank with close ties to the government. Its new report, which was launched by two Treasury ministers in the form of Ed Balls (pictured right) and John Healey, calls for a simplification of the plethora of regional bodies. The typical cost for each region is put at £23m for the regional development agency, £3m for the regional assembly and £14m for the government office, which acts as Whitehall’s representative on issues such as education and transport. Adding in the regional cost of other state bodies such as the Learning and Skills Council and the Environment Agency, takes the annual administration cost to £200m for each region or £1.8bn for England as a whole. The report calls for a redesign of the regional assemblies and warns that abolition is not out of the question. It suggests that elected councillors and national MPs might assume more power in the regions. It is thought that the report will form a potential blueprint for the Treasury and will feed into the comprehensive spending review. Further information - NLGN Financial Times 05.03.07, Evening Standard 05.03.07
Give councils more power says Brown ally; the government should hand over more powers to local institutions, a Treasury minister and Brown ally, has written in a new Hansard Society pamphlet. John Healey (pictured left), the financial secretary, says that people would feel more engaged if more decisions were taken closer to them, rather than at the centre. His remarks come weeks before Sir Michael Lyons makes the long-awaited final report in his three-year review into the functions and funding of local government. His interim analysis argued that greater local choice, and reduced central control, is necessary to build strong communities. John Healey told the Westminster launch of the pamphlet: “Ken Livingstone said he never thought the British Treasury would devolve as much power to him as it did. But there is more to happen and I wouldn’t exempt the Treasury and its general policy instruments when I say the next shift in the UK has to be devolution from the centre”. Lady Shepherd, former Conservative cabinet minister and another contributor to the pamphlet, said that allowing councils to raise a larger share of their budgets would be crucial to devolving powers. Further information - Hansard Society Guardian 23.02.07
Barker is attacked on out-of-town shopping plans; John Gummer (pictured right) highlights the response by the British Council for Shopping Centres to the Barker report on planning and land use. It slams the proposals about out-of-town shopping pointing to the inconsistency between the government’s commitment to the high street and the proposing an end to the need test. Gummer says that following the clear guidance that he gave when he was environment secretary in the early 1990s people have been encouraged to invest in the high street. This policy has been continued more or less by the current government. He says that to cast doubt on the policy now is seriously damaging to confidence as well as raising hopes that will never be fulfilled. There is no real possibility of a return to out-of-town development. Local councils have no appetite for it. They know it is unpopular with the electorate. However Regeneration reports that Barker herself is having second thoughts. She told the Regenex conference that she may have been wrong to recommend the ending of the needs test which forces out-of-town developers to prove that their scheme is necessary before agreement can be given. She said that she and her advisers had not realised the extent to which planners relied on the test. Further information - BCSC Regeneration 02.03.07, Estates Gazette 03.03.07
‘10,000 acres of greenbelt under threat’; the Guardian leads with some research undertaken with the Campaign to Protect Rural England (CPRE) which shows that at least 10,000 acres of greenbelt are likely to be sacrificed over the next 20 years. In particular local authorities in the Midlands, Avon and eastern England say that if regional housing targets set by central government are to be met, the greenbelt is likely to be decimated. According to Shaun Spiers, chief executive of CPRE: “Many villages will be engulfed by housing, several towns could double in size and others effectively join up with each other to create new conurbations. This is a time of unprecedented change in the countryside. Housebuilders, universities, airports and retail parks are all seeking to take advantage of government housing targets and changes in the planning system”. Two of the counties most at risk are Oxfordshire and Hertfordshire. Guardian 12.03.07
Red tape ‘holding back poor areas’; the development of infrastructure in deprived areas is “seriously inhibited” by the government’s funding infrastructure financing framework according to the All Party Urban Development Group. In its inaugural report the Group says that “extremely complex” bureaucracy is leading to “confusion, delay, additional cost and increased risk, each of which seriously inhibits development”. It gives the Crossrail project in London and the redevelopment of Birmingham’s major station as examples. It calls on the government to simplify systems and devolve power to councils to raise revenue of their own for infrastructure. It says that this can be done by either charging supplementary business rates, or by tax increment financing - a system used in the US which allows councils to borrow money against future revenue steams. Further information - All Party Urban Development Regeneration 02.03.07
Freud review could lead to major welfare changes; David Freud (pictured right), a City investment banker asked to review the government’s welfare to work strategies, was backed up by the prime minister, the chancellor and the secretary of state for work and pensions, when he unveiled his report to journalists. The Independent says that this was a clear signal that the chancellor would continue the reforms as and when he succeeds to the job of prime minister. Freud said that the government had set an “extremely challenging” target of 80 per cent employment and that it would help if 1.3m of the 3.1m who have been on benefits for a year or more could be get into work - including 300,000 of the lone parents on income support and one million of the 2.68m people on incapacity benefit. On single mothers he cited the systems in Scandinavia where mothers have to seek work when their youngest child is three. He proposed that the UK should lower the current age of 16 for the youngest child to 12 and then in gradual stages to three. He accepted that in Denmark and Sweden there was a far better childcare system although Labour has pledged that there will be all-day child care from 2010. He said that if lone parents did not try to find at least a part-time job they would face the same sanctions as the unemployed who can lose benefits for refusing to attend job interviews or training. He also proposed that there should be an expansion of the roles of the private and voluntary sectors to help “hard to reach” jobless back into work through one-to-one counselling. There would also be stricter tests for new claimants and their partners. The chancellor promised to “champion” the reforms set out in the Freud report and that they would be taken forward in the 21st March Budget as well as the comprehensive spending review. Further information - DWP Independent 06.03.07
Construction sector faces skills shortage; Britain faces a building bonanza over the next five years that will place an increasing strain on the availability of skilled labour according to ConstructionSkills. Construction output, already on a high, is expected to grow by almost 11 per cent by 2011, led by £4.7bn government programme to renew or rebuild every secondary school as well as increased spending on transport and the Olympics. A lack of trained workers has sucked in migrant workers from eastern Europe and ConstructionSkills say that demand for labour will intensify with numbers rising by 400,000 to 2.8m in 2011. It plans to launch a series of skills academies on large building sites to provide training for would-be construction workers. The first of these started last year on a £600m British Land scheme in Bishopsgate. The biggest growth in output is expected in London, south-east England and East Anglia with London itself needing an extra 12,880 recruits a year. Infrastructure work is expected to be one of strongest national drivers for new work, with significant railway station expansions and refurbishments planned for Birmingham and Nottingham. Other works include improvements to the Manchester Metrolink, the M6 toll road, the M25, the expansion of the Victoria Line, the expansion of the ports at Felixstowe, Harwich and Great Yarmouth as well as the Scottish Executive’s planned £3bn capital investment programme. Further information - ConstructionSkills Financial Times 05.03.07
CBI warns of shortage of engineering graduates; the Confederation of British Industry (CBI) has called for a doubling of the number of graduates with science and engineering degrees over the next six years or skilled jobs will head overseas. It warns that jobs will be lost in industries such as pharmaceuticals, biotechnology, aerospace and defence. Dick Olver (pictured left), chairman of BAE Systems, the biggest employer of engineers in the UK, said: “Unless all of us in industry and business do more to work with our partners in education and government, there is a real risk that UK plc will be left behind when it comes to global competitiveness”. The CBI says that 12 per cent of university students graduate with a science, engineering or technology degree. That needs to increase to 25 per cent, or 97,000 graduates, by 2014 to match the predicted growth in jobs. It also calls for more funds for improving laboratories and specialist teaching facilities in secondary schools. Further information - CBI Independent 12.03.07
Johnson warns that least educated are in ‘spiral of despair’; Alan Johnson (pictured right), the education secretary, has warned that uneducated youngsters are becoming “ideal fodder” for pimps and drug dealers to recruit for a life of crime. The stark assessment from the minister, who left school at 15, comes after a spate of killings of teenagers in south London. He told the Sector Skills Development Agency: “There is a spiral of despair which starts with disinterest at school, turns to disillusionment with society and ends with huge problems for society. The evidence demonstrates that the younger a person leaves school, the more likely he or she will be to use drugs; become engaged in prostitution; commit crime to wind up in prison, unemployed or homeless, and usually all three”. He said that better education is not about acquiring skills just to help the economy but also to make social progress. The minister is drumming up support to argue the case for £2bn cost of raising the school-leaving age from 16 to 18. Further information - DfES Guardian 05.03.07
School lottery may lead to property losses; following the decision by Brighton Council to introduce a lottery to decide which pupils get the best state schools the Guardian says that parents who paid up to £100,000 extra for a house in the right area are now facing serious losses. Three more councils - Norfolk, North Somerset and Dorset, have already announced that they will be using some form of lottery and others are getting ready to follow. Paul Bonnett, owner of Bonnett’s estate agency in Brighton, said that much of the anger about the new scheme is coming from parents who deliberately moved house to improve their chances. “Some had moved across the city solely for this reason - and will have paid an extra £50,000 in increased prices alone - even more once you factor in stamp duty and other costs of moving”. In Muswell Hill, where a few hundred yards can currently mean making the difference between gaining entry to the best schools or not, the price premium on houses that do can easily top £100,000. Prickett & Ellis, a leading local agent, said that owners could expect a price correction if local school entry criteria was changed. However they did not see a big price drop. Another agent, said that he welcomed the scheme. “Personally I feel that this is long overdue. For too long those with the most money have bought their way into the best schools. A lottery would end the price premiums on those houses overnight and leave some people looking at some rather large losses”. Guardian 03.03.07
Private school tax breaks ‘at risk’; Dame Suzi Leather (pictured right), the head of the Charity Commission, has warned that tax breaks worth millions to the country’s wealthiest private schools could be at risk unless big names like Eton act to improve access for poorer children. In an attempt to make leading public schools justify their charitable status, a consultative document published on 6th March says that they will have to provide information about so-called “public benefit” activities in their annual reports from September next year. This will be compared with the benefits they receive from being a charity. According to the guidelines prepared by the Charity Commission schools will have to be accessible to households living on less than 60 per cent of the average income and people living on or below the level of income support. Although schools will be encouraged to subsidise places they will also be able to burnish their charitable status in other ways, such as sharing their facilities with local state schools or seconding teachers. Further information - Public benefit guidance Financial Times 07.03.07
‘Soft’ subjects help schools up the league tables; secondary schools that encourage their pupils to sit non-traditional subjects such as leisure studies and performing arts are bolstering their league table position at the expense of leading schools that focus on core disciplines according to unique analysis of exam results undertaken by the FT. This shows that some of Britain’s best schools were held down while others were given stellar ratings on the back of their pupils’ success in non-vocational and non-core subjects. According to DfES data Manchester Grammar School came in at 120 in England while St Paul’s Girls School, the leading London private school, was ranked at 114. However, once the results were restricted to traditional subjects they shot up to third and fourth place, respectively. Conversely Lancaster High School, a comprehensive rated 478th by the DfES plummets more than a 1,000 places to 1,623 when “softer” subjects and vocational qualifications are excluded. The research also shows that no more than five or six students a year at an average comprehensive have high enough grades to apply to Oxford or Cambridge. Non-selective schools are producing low numbers of students each year who achieve three A-levels with at least AAB grades in academically rigorous subjects – normally the minimum to secure an offer of an Oxbridge place. At the 50 best independent schools, 62 per cent of pupils get top grades - an average of 70 potential Oxbridge applicants per school. This illustrates the problems faced by Oxford and Cambridge in widening their recruitment policy. Financial Times 10.03.07
Foreign languages to be compulsory from age seven; Alan Johnson (pictured left), the education secretary, has accepted the main recommendation of the Dearing report into language teaching: that languages should be compulsory for all children from the age of seven. Dearing’s main aim is to increase the number of teenagers learning languages from the current 50 per cent to 90 per cent. Participation at GCSE has dropped from 80 to 50 per cent after the government’s decision to make the subject voluntary - a policy which Johnson admitted had gone “dramatically wrong”. Other measures include the number of specialist language colleges to be increased to 400; a £50m boost to language teaching to train more teachers; a new languages ladder so pupils can take grade exams at any age, as in music; and the range of languages to be widened to include Mandarin, Urdu and the languages of UK ethnic minorities. Further information - Languages review Independent 13.03.07
Suddenly, it’s all happening on climate change…
1. European agreement on climate change; the role of nuclear power received an unexpected boost as EU leaders pledged to ensure that 20 per cent of Europe’s energy will come from renewable sources by 2020. The commitment of all 27 member nations is legally enforceable by the European Court of Justice. However environmentalists complained that the ambitious goal to cut CO² emissions by 20 per cent had been weakened by concessions to the main nuclear nations and the biggest polluters in eastern Europe. Months of haggling will follow as targets are agreed for different countries - less will be expected of the heaviest-polluting former communist countries such as the Czech Republic and Slovakia. Nuclear power will also be taken into account when calculating national commitments to renewable energy. The EU deal will allow Angela Merkel (pictured above), the German chancellor and, as president of the EU Council, architect of the agreement, to challenge other global players to match the EU’s commitment- with the extra pledge that Europe will go further and cut emissions by up to 30 per cent if others are prepared to follow suit. Merkel will be chairing the G8 meeting in June, which will be joined by China, India and Brazil, when she will lay down the challenge. Further information - Agreement on climate protection Times 10.03.07
2. Government announces legally binding limits on carbon emissions; unexpectedly the government has announced plans to include legally binding limits on carbon emissions in its draft climate change bill published on 13th March. The limits will be fixed every five years, which the government claims is a more intelligent and flexible policy than the yearly targets proposed by the Lib Dems, the Tories and others. The prime minister said that one of the aims of the five-year targets is to provide certainty for business. They will also be a key part of the aim to cut carbon emissions by 60 per cent by 2050. A new independent monitoring body will be established with powers to inform parliament if the targets are not being met and to recommend action. The draft bill also includes proposals to widen the scope of carbon trading. Further information - Climate change Guardian 13.03.07
3. Brown and Cameron go head-to-head on green policies; Peter Riddell assesses the two rival visions on how to save the planet delivered by Gordon Brown and David Cameron (pictured left). He says that Gordon Brown’s carrot may amount to a shrewder reading of public opinion than Cameron’s stick. The chancellor proposed a series of energy-saving measures that he claimed would reduce the typical family bill by more than £200 a year. He proposed that every home would be properly insulated by 2010, that Britain should phase out all the old-fashioned light bulbs by 2011 and that retailers be asked to remove stand-by facilities from televisions and DVD players. Cameron announced plans to raise taxes on frequent flying and that unlike the chancellor, who was using green taxes to raise money for the government, the Conservatives would use the income to cut taxes in other areas. He also promised more action to protect endangered plants and animals as well. Riddell concludes that Cameron has so far taken all the risks; the challenge for the government is to show whether their incentives and the new Climate Change Bill are tough and specific enough to reduce carbon dioxide emissions by 60 per cent by 2050. Further information - 2007-28 and Conservative Party Times 13.03.07 4.
But Ken acts…London plans to cut carbon emissions by four per cent a year; the mayor of London (pictured right) has launched a green action plan with the aim of cutting carbon dioxide emissions to 60 per cent below 1990 levels by 2025. The cuts that are being sought are much faster than current government plans. The strategy, which urges businesses to make more use of green technologies and stop wasting energy on heating and lighting, calls for London’s total carbon emissions to be limited to 600 tonnes between now and 2025 - requiring a cut of 33 tonnes at current levels; a reduction of four per cent a year. Amongst the policies that will be used are charging polluting cars £25 to enter the congestion zone, demanding combined heat and light systems for developments and a green homes programme. This will offer cut-price cavity wall and loft insulation to all appropriate homes and a green concierge service aimed at wealthier Londoners, which will offer full energy audits, recommend contractors and manage the installation of energy efficient improvements such as insulation, renewable energy and water conservation. The service will cost up to £200 plus the cost of improvements. The overall package is budgeted to cost the Greater London Authority £78m over three years. Further information - Climate change action plan Financial Times 28.02.07
Government strategy “little more than a sham”; George Monbiot has made an edition of the Channel 4 Dispatches programme ‘Greenwash’, which he has written up in the Guardian. He claims that, despite bold initiatives and stirring speeches, Tony Blair has blown his chance to tackle Britain’s contribution to global climate change. Monbiot has commissioned a peer-reviewed audit of the government’s planned greenhouse gas reductions undertaken by a team of environmental scientists from University College London led by Professor Mark Maslin. The government currently has two targets for reducing Britain’s climate-changing gases. The first is the one, the Kyoto protocol, commits the UK to a 12.5 per cent reduction by 2012. The second is the long-term goal of 60 per cent in carbon dioxide by 2050, to be made legally binding in the Climate Change Bill. The government’s 2006 energy review found that to show “real progress” towards the 2050 target, by 2020 the UK’s greenhouse gas emissions would need to be reduced by between 143m and 149m tonnes a year (29-31 per cent on 1990 levels). The Maslin audit shows that rather the government is on course to deliver a cut of 12-17 per cent. The government also expects that national transport emissions will rise by 4m tonnes between 1990 and 2020, however the real increase will be 7-13m tonnes. But the biggest greenwash involves flying. Under the Kyoto protocol, pollution from international flight does not count towards a country’s emissions. The government has taken this as a licence to ignore flying; otherwise it could not justify its instruction to double the size of UK airports by 2030. Today the UK is turning out slightly more carbon dioxide than it was in 1997 and we will just scrape in beneath the 2012 Kyoto bar, while on course for dramatically missing our 2020 and 2050 targets. Guardian 05.03.07
English Heritage calls for ‘sky zone’; English Heritage has called for a veto on skyscrapers in what it deems the “Sky Gateway” between the City and Canary Wharf. It wants a protected view from Waterloo Bridge looking east, which could threaten the so-called “Walkie Talkie”, a proposed skyscraper on Fenchurch Street on the eastern edge of the City. The Sky Gateway would consist of a virtual line drawn from the highest towers in Bishopsgate to Canary Wharf. No new buildings would be allowed to be higher than the line. A public inquiry on the “Walkie Talkie”, which is being promoted by Land Securities and has been designed by Rafael Vinoly, started on 6th March. Although the plans had been passed by the City of London the government called them in amid concerns about the impact of the building on the Tower of London. A Unesco report in July criticised the government for failing to protect views of the Tower. Since then the government has been planning new protection for the Tower. Cabe, the architectural watchdog, is supporting the Land Securities’ plans, as are a number of well-known architects including Frank Gehry, Eugene Kohn and Lords Foster and Rogers in a joint letter. The City of Westminster has also waded into the debate warning that skyscrapers could “ruin the skyline” around the Palace of Westminster and Westminster Abbey. The council has also written to Unesco calling for action to block a new cluster of tall buildings around Waterloo Station. Further information - English Heritage and Westminster City Council Financial Times 01.03. 07, 07.03.07
Draft plan issued for the West End; Westminster Council have published a draft action plan for Oxford, Bond and Regent Streets designed to cement their position as the country’s top shopping streets with a £40m makeover. The plans are also intended to give the area a more convivial feel before the 2012 Olympics. The proposals highlight a range of buildings, particularly at the eastern end of Oxford Street, for redevelopment; broader pavements; new street furniture, pedestrianisation for the new Bond Street junction with Oxford Street; al fresco areas or oases set aside from the main shopping streets where shoppers can relax over dinner or coffee and for public performance and art. These are likely to be in Dean Street, Great Titchfield Street and Old Cavendish Street. One of the key proposals are for lighting effects including an Oxford Circus light sculpture, which would be suspended from surrounding buildings, and traditional lighting to reflect Bond Street’s “unique character”. There are plans to further reduce bus traffic and move taxi ranks and bus stops to help ease congestion. Westminster Council has earmarked £3m for the project whilst Transport for London and the New West End Company have committed a further £9m. Further information - www.westminster.gov.uk Independent 02.03.07, Estates Gazette 03.03.07
Mayor lobbies Blair on Crossrail; the mayor and leading City figures have urged the government to make funding available for the most expensive transport project since the West Coast Mainline upgrade. They went to 10 Downing Street to meet the prime minister and ministers from the Treasury and transport to argue the economic case for another multimillion-pound investment in Britain’s railways. In particular they were seeking support either in this month’s Budget or the forthcoming comprehensive spending review. However the chancellor, who was not at the meeting, has already warned that the review will see public spending being tightened over the next three years. Harvey McGrath, chairman of hedge fund manager Man Group and also chairman of London First, said that congestion in London was threatening jobs and the only issue left was how to fund the Crossrail project. One proposal would see the government contributing £3bn in direct funding, followed by a commitment to underwrite £3bn of debt with the remainder coming from London firms through a new business rate. A bill giving consent to Crossrail is currently going through Parliament. Financial Times 07.03.07, 08.03.07
‘London not excluded from Respect Action Areas’; Louise Casey (pictured right), the government’s Respect co-ordinator, has rejected claims that London boroughs have been excluded from the Respect Action Area funding schemes. Following the announcement of the 40 disadvantaged areas, which would gain Respect Action status, which, in turn, would bring extra funding to tackle anti-social behaviour - press reports claimed that London had been ignored because of a local rebellion about the scheme. However, in an interview with Regeneration, Casey says that there is no tension with the London boroughs and that: “We’re working with the Greater London Authority and mayor on a London-wide announcement”. She said that London councils had not been included in the January announcement because “they were working on a slightly slower track and we thought it was better if we had a cross-London announcement”. Penny Thompson, chair of a London-wide board for anti-social behaviour, said that some councils still had some concerns about the Respect scheme. Further information - Respect action plan Regeneration 02.03.07
Living costs rise in London but Oslo still the dearest; the latest edition of the Economist’s annual survey of a basket of goods bought in 132 cities worldwide shows that the cost of living in London has soared to become 25 per cent above that in New York and ahead of Tokyo. However, Oslo remains as the most expensive city followed by Paris, up from fourth to second and Copenhagen, up from sixth to third. London has risen from seventh to fourth followed by Tokyo, Osaka/Tobe, Reykjavik, Zurich, Frankfurt and Helsinki. Outside the EU Moscow was the most expensive city and now has a cost of living higher than New York. Helped by the price of the dollar, New York is 28th in the table and Atlanta, the cheapest city in the US, now has prices below Casablanca. Further information - www.economist.com/cities Guardian 06.03.07
London BID is first to get second term; the Heart of London Business Alliance has become the first Business Improvement District to win a second term, receiving 86 per cent of the votes cast by local businesses. 63 per cent of the 216 eligible businesses voted. This will extend the mandate from two to five years, starting on 1st April. The Heart of London covers Piccadilly Circus and Leicester Square. Sarah Porter, chief executive of the Business Alliance said that in the next five years they would seek to address anti-social behaviour, street crime, rough sleepers, illegal street trading and the condition of the side streets. Further information - Heart of London Planning Resource 01.03.07
New York attacks London market as a ‘casino’; the growing unease in New York about London’s emergence as a rival on the world financial stage has seen one New York stock exchange (NASDAQ) fail in its bid for the London stock exchange, and one new York regulator claim that the London junior AIM market is a casino. Roel Campos, a commissioner of the Securities and Exchange Commission said “I’m concerned that 30 per cent of issuers on the AIM market are gone in a year. That feels like a casino to me”. He said that as the competition between London and New York intensified London would suffer as a result of the lax regulation of AIM. He later sought to play down his comments. However the Times carries a piece forecasting that Wall Street banks will increasingly move global functions to London to take advantage of time zones, immigration laws and the regulatory environment. Quoting leading US bankers it says that more banks will follow the lead of Goldman Sachs and move some of their headquarters functions to London. It also quotes Deutsche Bank, who moved their investment arm to London in the late 1990s, as saying that more European banks will move their global headquarters to London. Times 09.03.07
London strikes deal with China on investment; London has bolstered its position as the most popular destination for Chinese capital flows into Europe by signing the first agreement to promote two-way investment between China and a European capital city. Under the agreement, the Investment Promotion Agency, part of Beijing’s Ministry of Commerce, will steer Chinese companies towards London as a profitable centre for investment in sectors such as financial services, pharmaceuticals and creative industries. It will also draw attention to the favourable business climate and the infrastructure of Chinese schools, restaurants and other facilities created by London’s 80,000 Chinese community. In return, Think London, the capital’s foreign direct investment agency, will help British investors find opportunities in China in manufacturing as well as services and environmental protection industries. Further information - Think London Financial Times 07.03.07
More easyHotels in Central London; following the opening of the first easyHotel in South Kensington in 2005 the group has announced plans to open another 12 in the next 12 months and 60 over the next 2.5 years. The first opened to mixed reviews with complaints about the bright orange décor and the smallest of the rooms at 6sqm but there was approval of the price of £25 a night. However the group say that the first hotel was a prototype and there will be less emphasis on orange and the smallest rooms will be ditched. A second hotel has opened in Basle and two more will launch in central London in the next two months in Belgrave Road, Victoria and West Cromwell Road, Earls Court. Further information - easyHotel.com Independent 12.03.07
‘Ministers set to admit costs will be at least £9bn’; the Sunday Telegraph claims to have seen documents of a joint meeting between KPMG and government officials held in October 2005 - three months after London’s successful bid- that value added tax would hugely increase the cost of staging the Games. It also says that the same meeting was warned about the costs of security and the need for contingency funds. The Sunday Telegraph claims that ministers are set to admit for the first time that the overall costs for staging the Games are likely to be at least £9bn. The FT says that the size of the budget and when it will be announced is still the subject of ongoing discussions between government departments including the Home Office, which is responsible for security. Sunday Telegraph 11.03.07, Financial Times 12.03.07
Olympic costs to be split three ways; Tessa Jowell (pictured right) , the culture secretary, has told the FT that the costs of the 2012 Games will be split into three categories when the revised budget is announced later this month. The move is designed to quell the growing political storm over spiralling costs. Two elements of the forecast totals will be stripped out - a contingency for cost overruns of about £2bn and security costs of up to £1bn - when the final revised costs of about £5bn are presented. The budget will be further sub-divided between the cost of £3.3bn for building the infrastructure and the venues for the Games, and £1.8bn for the regeneration of the area. The new figures are expected to be announced before the Budget on 21st March. Ministers will also reveal how the extra funds will be sourced - with a much larger contribution expected from the Lottery. This in turn is causing a great deal of concern amongst the third sector and the arts. To try and assuage the arts the prime minister hosted a reception for what the Guardian calls “Britain’s cultural great and good” at the Tate Modern. Responding to their concerns about the effects of the Olympics bill and the forthcoming comprehensive spending review on arts funding “the Prime Minister was reassuring in a vague kind of way”. Financial Times 07.03.07, Guardian 07.03.07
Lend Lease finally named as partner for Olympic Village; a consortium headed by Lend Lease have been named as the preferred developer for more than £5bn of work on the 2012 Olympic Village and the adjoining Stratford City scheme. The Olympic Delivery Authority named the consortium after solving a number of finance issues relating to the scheme. Further information - London 2012 Estates Gazette 10.03.07
Major developments in Leicester Square; a special report on London in the Estates Gazette spotlights what it calls an unprecedented amount of development that is due in Leicester Square with the aim of creating a family-friendly environment. Half of the Square is due for new schemes including the Swiss Centre, the Trocadero, the Hippodrome, the Odeon West End and the Equinox night club. Westminster Council’s action plan, which has been in place for five years, has succeeded in cutting crime dramatically - but has not yet created the desired environment. Planning requirements limit the extent of new bars and clubs, which are said to saturate the area, in favour of mixed developments. Although gaming is not viewed as family-friendly, proposals for a number of new casinos do support the council’s aspirations. The council will be releasing details of proposed improvements to the public realm in the next few weeks. These will include plans for performance stage in the Square. Amongst the leading development schemes there are plans for a 520-bed hotel at the Trocadero as well as enhanced retail and leisure. There are plans for another hotel on the site of the Swiss Centre as well as a casino, restaurants, a major retail outlet and ten flats. There are also plans for a casino at the former Equinox night club as well as the Hippodrome, which will also have a cabaret area. The Odeon West End will also be upgraded and the Vue cinema has recently been sold. Estates Gazette 03.03.07
English Heritage produces rival plan for Smithfield; English Heritage (EH) has published a 60-page defence against the expansion of the City into Smithfield. The study of the Smithfield/Farringdon area has been produced by Sir Terry Farrell’s planning firm and rivals the City’s plans for major office schemes in the area, including Thornfield’s 422,000 sq ft proposal for the west wing of Smithfield Market, which is due to go to public inquiry in June. The EH study maintains that the area “is at risk of losing its character and identity if bulky, anonymous, monocultural environments are allowed to spread and dominate”. It outlines 14 principles for developments to adhere to, “to ensure that its fragile identity- defined by its architectural character, streets, places and activity patterns - is respected and reinforced rather than ignored”. It suggests “civilising” areas with improved public realm and slates the design of the massive Little Britain office complex, which was formerly the HQ for Clifford Chance. The Estates Gazette says that EH will also be concerned about the plans for the Little Britain area being drawn up by the St Bartholomew’s Charitable Foundation Further information - English Heritage Estates Gazette 03.03.07
Middle Eastern fund acquires Helter Skelter; amidst all the discussions about tower blocks a Middle Eastern syndicate has been revealed as the purchasers of the City’s 945ft tower on Bishopsgate known as the Helter Skelter. The scheme, which has been bought by Arab Investments, the world’s largest Shari’ah-compliant property fund, is now to be known as the Pinnacle. Khalid Affara of the Arab Investment Fund said that they were committed to a speculative development and that demolition would begin in three months once vacant possession had been secured. The £1bn-plus scheme is scheduled to be completed by 2011. He said that he was not concerned about competition with several rival towers that are also pencilled in for completion at around the same time. Heron has already pledged to build its nearby 665ft tower speculatively, having secured finance from the State of Oman amongst others: while British Land is also considering construction of the 736ft Leadenhall Building without a prelet. Land Securities wants to build the 525ft Walkie-talkie, but is faced with objections from English Heritage as well as a public inquiry. Estates Gazette 03.03.07
The Elephant is delayed..; Southwark Council has delayed its decision on a project leader for the £1.5bn plan to transform Elephant & Castle. The decision had been planned for the last week of February but will now be delayed by one month. It has to choose between St Modwen, which owns the shopping centre at the heart of the scheme, and Lend Lease, the Australian-owned developer, who are also in the final stage talks to win a deal to build the Olympic Village at Stratford. The Times quotes one observer as saying that Southwark may be waiting until the decision about Lend Lease’s bid to build 5,000 homes in Stratford is known. However the Estates Gazette says that it is Transport for London (TfL) that has derailed the plans after objecting to a major overhaul of the area’s gyratory system. In particular it is unhappy about the plans to remove the southern roundabout and northern gyratory system, and replace it with a T-junction with wide pedestrian crossings. It is also understood that TfL is objecting to the cost of the redevelopment of the tube station. Part of the row is about the viability of the overall scheme with Southwark aiming to create a sustainable “non-car parking destination” with 5,200 homes and 800,000 sq ft of retail. Other parties had wanted a major retailing centre. The talks between Southwark, TfL, LDA and Greater London Authority are said to take six weeks. Times 02.03.07, Estates Gazette 03.03.07
Preferred developer chosen for Soho’s former police hostel; First Base has been appointed as the preferred developer for Trenchard House, the former Metropolitan Police Hostel in Broadwick Street in London’s Soho. English Partnerships, which bought the site in 2004, is in talks with First Base and Peabody Trust about a mixed-use, mixed-tenure development including key worker and supported housing, private homes and shops. It could also include space for Westminster Kingsway College who has an old building at the back of the site. Elliot Lipton of First Base said that they would “work closely with the local community to deliver maximum benefits”. The City of Westminster has recently approved a planning brief for the area that places emphasis on keeping the area as a residential area with small businesses. Further information - Soho streets to be nurtured Estates Gazette 10.03.07
Deal clears way for Broadgate redevelopment; British Land has freed up the first building in its 30-acre Broadgate site for redevelopment. It has done a deal with Henderson Global Investors, which will enable its current eight-storey headquarters at 4 Broadgate to be demolished and replaced with a building twice the current size. Hendersons, who will move out in two years’ time, will take about 150,000 sq ft of space in British Land’s speculative scheme at 201 Bishopsgate. The low-rise development lies further up towards Shoreditch High Street. The US law firm Mayer Brown Rowe and Maw have recently taken 200,000 sq ft in the scheme. The Henderson building was one of five within Broadgate that British Land have identified as having the “highest development potential” on the estate. Estates Gazette 10.03.07
grapevine is produced twice monthly (except in August and December when there
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Next issue on 29th March 2007
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