Signs of success for Bank policy; the Consumer Price Index (CPI), the measurement that the government uses to track inflation, fell to 1.9 per cent in July - the first time it has been below the 2.0 per cent target rate since March 2006. It had been 2.4 per cent in June. The wider Retail Price Index also fell from 4.4 per cent in June to 3.8 per cent. In another piece of good news for the Bank’s policy of using interest rates to squeeze inflation out of the system a range of housing indicators tracked by the Royal Institution of Chartered Surveyors show that surveyor confidence in the number of house sales numbers in July turned negative for the first time since March 2003. This is despite the number of mortgage approvals made in June showing no change over May at 114,000 with the value of lending rising from an £8.8bn increase in May to £9.6bn in June. Consumer credit also rose in June, which may indicate that households may be trying to ride out the income squeeze by further borrowing. On the other hand there was an increase in house repossessions (see below). Further information - Click here for National Statistics and here for RICS Times 14.08.07, BBC News Online 14.08.07
Business bodies urge caution after upheaval on stock exchanges; a number of leading business bodies have urged the Bank of England Monetary Policy Committee (MPC) to keep interest rates on hold, as the aftershocks of the global economic upheaval continue to be felt. Doug Godden (pictured right), head of economic and fiscal policy at the CBI, said “We feel rates should be kept on hold- this gives MPC members an additional reason for caution”. Peter Patterson, senior economist at the Institute of Directors, said: “It will make the more hawkish members of the committee hold off for another month. They should stay their hand and see what effect these conditions have on the real economy”. Although Patterson and other financial experts consider the UK’s economic fundamentals to be sound, the threat of further instability crossing the Atlantic remains a serious concern. “The US is more vulnerable to what is happening in the housing market and the effect of falling prices on consumers already squeezed by rising energy prices. It is dependent on capital inflows, so if investors take fright, it will put downward pressure on the dollar and consequent upward pressure on the pound”. However, Andrew Milligan, head of global strategy at Standard Life, said: “If there is evidence that the market turmoil is disrupting economic growth and adding inflationary pressure, the bank may say “There’s no reason for interest rates to rise any further”. Independent on Sunday 12.08.07
However, repossessions hit eight-year high; according to the Council of Mortgage Lenders there were 14,000 home repossessions in the UK during the first half of the year- a 30 per cent increase to create an eight-year high. The unexpected jump was blamed on an increase in lending to borrowers with a poor credit history in the so-called “sub-prime” mortgage sector. Interest rates, which have risen five times in under a year and currently stand at 5.75 per cent, were also seen as a driving force in rising debt and missed mortgage payments. Economists warned that the impact of the recent rate increases was yet to be felt and homeowners would not be able to rely on rapid rises in the values of their homes as the market cooled. David Stubbs of the Royal Institute of Chartered Surveyors said that: “With the housing market slowing into 2008 and interest rates expected to hit six per cent, homeowners slipping behind with their payments may be left stranded, unable to sell their way out of trouble”. Nearly 2m homeowners will be coming out of fixed-rate mortgage deals in the next 18 months and will find themselves having to renegotiate with interest rates of 1.25 per cent higher. Further information - Click here Guardian 04.08.07
Record numbers apply for bankruptcy; a record number of people in England and Wales applied to become bankrupt during the twelve months until the end of June according to the latest figures released by the Ministry of Justice. Personal insolvency advisers said that during the past three years the number of people asking to be made bankrupt has soared as levels of domestic debt have risen and people have begun to attach “less stigma” to becoming bankrupt. Bankruptcy petitions have increased five-fold from the late 1990s when the total figure was 10,000 whereas it was 54,000 in the past year. On the other hand the Insolvency Service reports that there was an 8.1 per cent in the number of people declaring themselves insolvent in the second quarter. There was also some good news on the company front where winding-up petitions dropped by five per cent in the second quarter compared to the same period last year. However Mark Sands, director of personal insolvency at KPMG, warns that this is only a temporary respite. He expects family finances to worsen as the “impact of recent interest rate rises” kicks in and as fixed-interest periods for more than 1m mortgage loans runs out. Further information - Click here Financial Times 11.08.07
Floods could push up food prices; the Observer fears that the floods may cause inflationary pressures as crop failures push up food prices and homeowners claim insurance to replace furniture. Ross Walker, UK economist at the Royal Bank of Scotland, says that retail spending could be boosted by as much as two per cent in the second half of the year as flood-hit consumers spend up to £4bn worth of insurance cheques on refurbishing damaged properties. The extra spending could help to keep prices high, creating a fresh headache for the Bank of England’s Monetary Policy Committee, and nudging them into keeping interest rates higher, for longer. Observer 05.08.07
First signs of recruitment slowdown; the latest quarterly survey of employers’ recruitment plans undertaken by the Chartered Institute of Personnel and Development (CIPD) and KPMG shows that employers may be becoming more pessimistic about taking on more staff following several interest rate raises. The survey of 750 employers finds that summer hiring intentions remain strong but the medium-term outlook looks more insecure. The balance of employers saying they expected to take on more workers over those expecting to cut staffing was “the weakest in any summer quarter” since the survey began in 2004. However John Philpot, the CIPD’s chief economist, said “the chances are that most employers will respond to slower demand by cutting back on recruitment rather than increasing redundancies”. Further information - Click here Financial Times 13.08.07
‘Average house price will be £300,000 within five years’; despite Government promises of a massive house building programme and the current credit squeeze the National Housing Federation (NHF) has forecast, house prices will rise by 40 per cent to reach an average of £300,000 within five years. The NHF believes that the pattern of house price rises outpacing increases in wages, which has existed over the last ten years, is set to continue. Since 1997, house prices have risen by 156 per cent, while incomes have gone up by 35 per cent. The figures, which have been compiled for the NHF by Oxford Economics, suggest that the fall-out of interest rate rises will be a slowdown in 2008-09, followed by a new boom. The study, which covers England, suggests that the current average of £213,500 will rise by £88,900 - 41 per cent - to £302,400 by 2012. The biggest rises will be in the south east, where the average price will rise 51 per cent to £392,900 whilst in London there will be a 48 per cent rise to £478,300. Average house prices are currently 11 times earnings. The report, Home Truths, advocates building 70,000 social homes a year. Further information - Click here Evening Standard 06.08.07
Conservatives propose social enterprise zones; David Cameron (pictured left) says that reaching the poor that have been left behind by rising living standards is the most important political problem facing Britain. He says that central government intervention is often too blunt an instrument to aid hard-to-reach families. Instead he endorses the ideas put forward by a Tory task force for “social enterprise zones” in run-down areas, boosted by tax relief and fewer planning constraints. He points to the admission last year by Tony Blair that Sure Start centres have failed to reach the most excluded families, and argues that the best way to reach them is through local, grassroots entrepreneurship. “Social enterprises…are not, as many on the left claim, cut-price welfare organisations, commercial wolves dressed in the sheep’s clothing of charity. They are fired by the same passion for public service which drives the statutory sector, but they deliver it in a way which is often more effective than the large and lumbering agencies of government”. The social enterprise zones task force was headed by Rodney Lord and Hariett Baldwin. It is intended to complement the work unveiled last month by Ian Duncan Smith’s social justice policy group. The zones would be nominated by the local authorities and approved, partly administered and launched by a new community bank. They would be given tax breaks along the lines of those given to the venture capital trusts, plus relief on income and capital gains. Further information - Click here Guardian 07.08.07
Friends of the Earth split on link up with BSkyB; Friends of the Earth (FoE) has suffered a bitter internal row after its directors approached BSkyB to become their favoured charity in a three year deal including a joint campaign on climate change which could be worth more than £1.7m. The Guardian has learnt that 77 FoE staff- including most senior campaigners- signed a highly critical petition to the FoE Board last month calling for the application to be withdrawn. FoE directors say that the tie-up would give the group an unparalleled opportunity to reach Sky’s 8.6m subscribers. Since James Murdoch, chief executive of BSkyB, was converted to the cause the company has won plaudits for branding itself carbon-neutral, cutting emissions by 20 per cent and increasing its programming on environmental issues. Murdoch famously persuaded his father, Rupert, to screen Al Gore’s documentary film on climate change at the News International summit last year. FoE staff claim that such a direct link would be highly divisive, damaging the group’s reputation for not taking money from corporate interests and for campaigning against multinationals. They fear Sky’s links to Rupert Murdoch, who also owns the climate-sceptic broadcaster Fox News, would risk losing core supporters and local groups. Roger Higman, FoE’s campaigns co-ordinator, said that the opportunity to reach nearly 9m homes and influence Sky was too valuable to miss. Around 170 charities have applied to become BSkyB’s new charity partner. The previous partner, Chickenshed Theatre Company, earned £1.7m in donations from Sky during the three-year deal. Guardian 06.08.07
Government has failed to solve North-South divide; a new report from the Institute for Public Policy Research (IPPR) says that the gap in prosperity between the south of England and the rest of the country has worsened under a decade of Labour government. Whilst in terms of output per head London has soared ahead and much of the south has improved, the north east, the north west, Yorkshire & Humberside and the Midlands have moved further behind the national average since 1997. The richest area in the country is west central London with average annual income per head of £22,441 followed by Surrey (£17,785) and Buckinghamshire (£17,415). The poorest area is Blackburn with Darwen (£9,970) followed by Nottingham (£10,071) and Stoke-on-Trent (£10,372). The report says that rather than merely trying to level out the pace of change between the regions the government should aim to bring levels of income per head in different parts of the country closer together. Further information - Click here Times 06.08.07
MPs call for local business levy; the House of Commons Select Committee for Communities and Local Government has issued a report calling on the government to endorse the recommendation that councils be given the power to levy a supplementary business rate (SBR) to fund economic development made in the Lyons Report on local government. It says that such a step would be a “positive step towards financial devolution”. Lyons recommended that councils should be able to introduce a levy of up to 4p in the pound to help local economic projects and infrastructure. The team that conducted the recent Treasury review on sub-national economic regeneration has also pledged to look at SBR and the IPPR Centre for Cities will publish a study of it at the end of this month. Dr Phyllis Starkey (pictured left), the chair of the select committee, said: “If the government gets the framework right, local authorities will be able to take forward these proposals in a manner more closely tailored to the specific needs and individual circumstances of their area”. There was a sharply differing view on the role of business. Further information - Click here Regeneration 10.08.07
Property investment in deprived areas gives best returns; new research by Investment Property Databank challenges the view that Britain’s rundown inner cities and suburbs are historically no-go areas for many big property developers. The research suggests that investors can, over the long-term, get higher returns from real estate in regeneration areas than elsewhere. Not only have the total returns over five years been higher- 16.7 per cent against an average of 15.1 per cent- but they have been less volatile. In particular, there has been much stronger growth in residential values in those areas that were previously overlooked or dismissed. The study, carried out with Morley Fund Management, English Partnerships and Savills, the estate agency, takes data from 581 properties in 20 of England’s urban regeneration companies (URCs) in towns such as Blackpool, Gloucester, Swindon, Salford and Walsall. These URCs were set up by the government in an attempt to encourage investment in down-at-heel neighbourhoods. Over the shorter periods of one year and three years, returns from regeneration areas were slightly lower than the average but according to Yolande Barnes, head of residential research at Savills, “Actually, over five years it shows that regeneration areas held their own against standard investment classes”. However there are concerns that the recent introduction of business rates on empty properties will act as a brake on regeneration. According to the report any willingness to enter the market is still a nascent trend. Further information - Click here Financial Times 10.08.07
Enterprise held back under Labour; ten years of Labour have failed to produce a better environment for entrepreneurs according to research undertaken by the University of Sheffield’s Management School. The paper, written by Robert Huggins and Nicholas Williams, says that business start-up rates have fallen in the UK since 1997, while the proportion of people who are self-employed has remained static. They say that the sharp increase in the level of public sector employment has crowded out the growth of small businesses by offering competing wages for less economically productive jobs. Their research also finds that the dismantling of the Training and Enterprise Councils just as local branches had begun to foster growth, significantly set back the progress of enterprise policy. However they do praise the government’s efforts to encourage entrepreneurship through the schools system, which could have a positive long-term effect on the economy. They call for support for entrepreneurs to be more focused on highly productive, knowledge-based companies. They also call for a long-term commitment to lower taxes and a reduction in the size of government would boost the creation of start-ups. Further information - Click here Times 07.08.07
Big drop in small firms’ loan guarantees; lending through the government’s Small Firms Loan Guarantee Scheme showed a major decline in 2006-07 when 2,700 loans worth £210m were granted. This compares to almost 6,000 loans, worth £422m in 2005-06. David Quysner (pictured right), an adviser to the Department for Business, Enterprise and Regulatory Reform, said the decline reflected a decision to restrict lending to businesses that had traded for less than five years, and confusion at banks concerning new rules. Quysner said: “the volume of lending is not the key criteria of success, but the volume of appropriate lending is”. The DBERR claimed growth in “young businesses” accessing loans was promising, and that default rates were falling. Further information - Click here Financial Times 26.07.07
Firms show little interest in using late payments legislation; a survey of 500 credit managers undertaken by Graydon, the commercial credit agency, shows companies are not exercising their statutory right to charge interest on late payments, because of concerns about the extra administrative work involved. Of the 500, only four per cent said that they always charged interest on outstanding trade invoices, while 52 per cent said that they never charged interest. Among the majority not taking advantage of the late payment legislation, just 16 per cent said that this was out of fear of losing or upsetting customers. One in four said that they never charged interest because it created more administration, while most said it was not “company policy” or was not “customary in their industry”. Further information - Click here Financial Times 04.08.07
Ministers urged to get to grips with late payment culture; the Institute of Directors has accused ministers of failing to get to grips with Britain’s endemic late payment culture despite ten years of Labour’s promises to tackle the issue. The IoD policy paper coincides with two new surveys, which highlight the damage done to small companies by late payments by large companies. Three-quarters of respondents to a Forum of Private Business survey cited late payment as a “considerable threat to my business’s viability”. Two thirds of the 300 companies in the survey wanted to be able to complain in confidence to competition watchdogs. A separate IoD survey into the concerns of small and medium sized employers also finds late payment as the most frequently cited problem. The IoD is putting together a coalition to lobby John Hutton (pictured left), the business secretary, over the government’s perceived failings on the issue. In a policy paper on the “gall ceiling” curbing small companies’ growth, the employers’ body expresses grave concern about the government’s approach. It cites the decision in June to effectively disband a Whitehall group dedicated to tackling late payment, as part of the downgrading of the small business service. The Department for Business, Enterprise and Regulatory Reform said the government was “committed to improving the UK’s payment culture. We need to move to a situation where late payment is no longer viewed as ‘part of the culture’ and instead as an abuse of the client’s position and a breach of contract”. Further information - Click here for IoD and here for Forum of Private Business Financial Times 13.08.07
New Deal ‘failing’ 3m households; mainstream employment programmes such as New Deal are failing to help the most disadvantaged households into jobs, according to a report by the National Audit Office (NAO). Schemes such as New Deal for Lone Parents and New Deal for Partners have helped some participants into work, but are failing to reach almost three million households where no-one works. Eighty per cent of workless households have no-one actively seeking work, and many people in such homes have been on benefits for a long time, making it harder to get them to engage with mainstream work programmes. According to the report the reasons for this include adults in workless households facing “multiple barriers” such as low skills, disability, a lack of affordable and flexible childcare, or caring responsibilities. Better partnership working between agencies such as local strategic partnerships, learning and skills councils and Jobcentre Plus is needed. The government also needs to increase its support to small-scale voluntary and community groups that are often better placed to target the hardest-to-reach workless people. While the employment rate for lone parents has risen, at the current rate of progress, the government is unlikely to achieve its lone parent employment target. A spokeswoman for the Department of Work and Pensions said that it agreed with the report’s conclusions and that “we are continuing our programme of reform”. Further information - Click here Regeneration 27.07.07
Inward migration appears ‘close to peak’; according to the Department of Work and Pensions the number of foreign workers allocated national insurance numbers rose by 7.7 per cent to more than 713,000 in the year to the end of March. This compares with a 51 per cent increase in the previous 12 months. Some economists believe that the figures indicate that the rising tide of migrant workers coming from eastern and central European countries to work in Britain may be approaching its zenith. The figures do not include an estimated 500,000 illegal workers, many working in the black economy, thought to be living in Britain. The biggest rise has come from Poland, which has overtaken India as the biggest supplier of foreign workers. Four years ago, just over 11,000 Poles were allocated NI numbers. Last year this had risen to 223,000- more than four times the number of Indian workers. Slovakia was in third place supplying 28,800 workers followed by Pakistan, Australia, Lithuania, France and South Africa. Out of 562,000 arrivals in the UK in 2005-06 only 16,000 or three per cent, claimed job seeker’s allowance, incapacity benefit or income support within six months of registering. More than 80 per cent were under 35. East Anglia has overtaken London as the most popular destination for eastern European workers; 15 per cent have registered for work in the region since 2004. London and the Midlands accounted for 13 per cent each. Further information - Click here Financial Times 25.07.07
Flagship training scheme under MPs’ fire; strong criticism of the government’s Train to Gain programme, which supports training for workers, has been made by the House of Commons Select Committee on Education and Skills in a report on Post 16 Education. It says that Train to Gain, which is being expanded as part of the vocational training system, says that there is evidence that some of the skills brokers, who work between business and training providers, may be adding an “extra, unwelcome layer of bureaucracy to the process”, with employers required to wade through numerous forms to get the training they need. Many brokers are also simply acting as conduits for training subsidies that would have otherwise been paid by the businesses themselves. Further information - Click here Financial times 02.08.07
Hain casts doubt on role of private sector in welfare-to-work; Peter Hain (pictured right), the new work and pensions secretary, tells the FT that the proposal made in the Freud report that the private sector should take on the prime contractor role in the next stage of the welfare-to-work programme is not his “preferred option”. Whilst he says there was, “a lot of expertise among training providers and I don’t want to squeeze them out. I want to maximise the voluntary sector and local government where it has a role to play in the cities”. Subsequently the FT reveals that proposals to award 20 to 25 major sub-regional contracts to private companies had been signed off by John Hutton, Mr Hain’s predecessor as work and pensions secretary, just before Gordon Brown became prime minister. Financial Times 31.07.07, 06.08.07
State to train claimants for jobs with major corporates; disadvantaged groups such as lone parents and those on incapacity benefit will be trained by the state to work for major employers. The work pledge, which is made in the Department of Work and Pension’s green paper on welfare reform, has been supported by 30 major employers, including Asda, B&Q, Tesco, Sainsbury’s, Marks & Spencer, Transport for London and McDonald’s. Jobcentre Plus, working in England with the Learning and Skills Council, will help potential employees access the jobs by training them for specific posts and presenting employers with “the trained candidates they need”. The proposals received strong support from Richard Lambert, the director-general of the CBI. Further information - Click here Regeneration 27.07.07
Intercontinental plan hotels for contract workers; Intercontinental Hotels is planning a £250m investment programme to bring two of its US brands to the UK. The major push will be for Staybridge, which is designed for contract workers staying in one place for up to six months. Staybridge hotel rooms – called suites in the US - are more like individual apartments, with storage space and communal kitchens. The first will open in Liverpool early next year and six other sites have been identified, including London’s South Bank and Brentford. Further information - Click here Guardian 06.08.07
Workforce only bigger due to migrants, claim Tories; Philip Hammond (pictured right) , the Tory shadow Chief Secretary, has claimed that almost two-thirds of the jobs created over the past decade have been accounted for by migrant workers. He said that this was at odds with the Prime Minister’s claims to be creating jobs for “British workers”. New figures show that the number of migrant workers reached 1.5m this March- 61 per cent of the total increase of those in employment since Labour came to power in 1997. Hammond said; “Migrants make a huge contribution to our economy, but the real jobless total exceeds four million and more young people are not in work, education or training than in 1997”. Times 10.08.07
Teachers’ leader warns about raising school leaving age; Geraldine Everett (pictured left) , chairwoman of the Professional Association of Teachers, has warned her annual conference that there would be “mass truancy” if the government goes ahead with its plans to raise the education leaving age to 18. In her presidential address she said: “Enforcement could lead to mass truancy, further disruption to other learners and staff, maybe even needless criminalisation if ‘enforcement measures’ are imposed”. She went on: “Here is a government that has toyed with the idea of lowering the voting age to 16 in order to promote a greater sense of citizenship among our young people. Yet it proposes to extend compulsory education or training to 18 to compel the already disaffected to, in their perception prolong the agony”. Her comments come hard on the heels of a similar warning by Richard Williams, chief executive of the education charity Rathbone, delivered at the launch of an inquiry into why 200,000 poorly-qualified 16-to-18-year-olds had turned their back on full-time education or training. He said that the plans would lead to thousands of teenagers ending up with criminal records. Independent 31.07.07
Secondary schools ‘failing thousands of pupils’; as the government publishes the latest results in the Key Stage 3 exams for 14-year-olds an official report published by the Department of Children, Schools and Families says that many children are bored in the first three years of secondary school covering the ages of 11-14. It says that pupils- especially boys- shun books and are afraid to ask teachers or parents for help. The result is that they regard punctuation as a bore and struggle to write long passages. Although the latest exam results in England are expected to show a slight improvement, they are also likely to show that about a third of pupils are still failing to master the basics in English, maths and science. Analysis by Nick Gibb, the Conservative shadow schools minister, shows that, in individual subjects, pupils are failing to make progress or getting worse results in their first three years at secondary school. Comparing results at 11 and 14 shows that almost 150,000 pupils made no progress in science, while 85,000 failed to improve their grades in English and 30,000 in maths. Further information - Click here Daily Telegraph 14.08.07, Times 14.08.07
More private schools consider state links; dozens of independent schools are considering a move into the state sector either by becoming part of the academies programme or acting as sponsors of new schools. The Independent Schools Council has suggested that between 10 and 20 private schools could become academies. The Headmasters’ and Headmistresses’ Conference being held in October will run information sessions. Geoff Thomas, the general secretary, said: “We are not against academies. We have been as positive as we can be. For some schools it is a way of securing their long-term future. For some, the old direct grant schools [which used to offer places to state-funded pupils], it is attractive because it is a return to their roots”. William Hulme’s Grammar School in Manchester and Belvedere School in Liverpool become academies in September. Colston’s Girls’ School and Bristol Cathedral School are likely to follow suit next year. Wellington College in Crowthorne, Berkshire, will be the main sponsor of a state academy in Tidworth in Wiltshire, and its head, Anthony Seldon, has suggested that up to 100 other independent schools could raise money to follow suit to help end “educational apartheid”. Guardian 04.08.07
Fewer undergraduates take jobs to fund studies; according to the latest Royal Bank of Scotland student living index undergraduates are cutting down on part-time jobs during term time in a sign that improved state loans and grants may be easing the financial difficulties they face. The survey, which covered 2,700 students at 70 universities across Britain, found that 41 per cent of students are working part-time compared to 45 per cent the previous year. The hours worked also fell from 16 hours a week to 15.6 although a third of the students worked more than 20 hours. Most turned to traditional money-spinners such as bar, restaurant and shop work although some earned extra cash through unusual jobs such as stage managers, photographic assistants and lifeguards. The average weekly income from term time work was just over £146 in London and £70 in Lancaster. The index also ranks university towns by calculating average weekly spending on accommodation and other expenses and the dividing it by the average weekly income for working students. Leeds was the most affordable followed by Brighton, Dundee and London. Further information - Click here Guardian 06.08.07
CBI calls for bursaries for science students; the CBI has called for students to be offered £1,000 a year to study sciences at university. They also want the top 40 per cent of 14-year-olds to be made to study three science subjects at GCSE. The CBI makes its plea in a five-point plan to increase science students at university published ahead of this year’s A-level results, which are expected to show a continuing decline in traditional subjects and a rise in subjects such as media studies and physical education - considered by some academics as a the “softer” subjects. The CBI argues that Britain faces a massive shortfall in the number of trained science graduates it needs to remain competitive. In 1984, 54,722 people took physics compared to 23,657 last year. It is a similar story in chemistry, with 48,068 candidates in 1984 and 34,534 last year. Further information - Click here Independent 13.08.07
Polish university sets up in West London; a Polish university is setting up a satellite branch in west London to allow the booming number of Poles earning a living in Britain to continue their studies. WHSE, a private university in Lodz, is preparing to move more than a dozen academics to teach students at weekends for undergraduate and masters courses from October. It is temporarily based at the Phoenix High School in Shepherd’s Bush although there are plans for online teaching for those outside London and plans to open other bases within months. It is thought that there are 700,000 Poles working in Britain, most of whom are aged 18 to 35. Times 06.08.07
Civil servants advise UK will not meet energy targets; civil servants have briefed ministers that Britain has no hope of getting near the new European renewable energy target that Tony Blair signed up to in the spring- and have suggested that they find ways of wriggling out of it. In contrast to the government’s claims to be leading the world in climate change, officials have admitted that under current policies Britain would miss the EU’s 2020 target of 20 per cent energy from renewables by a long way. A briefing paper for ministers reveal that officials, in the Department for Business, Enterprise and Regulatory Reform, think that the UK can only hope for nine per cent of energy from sources such as wind, solar or hydro by 2020. It also admits that getting to nine per cent from the current two per cent will be “challenging”. Under current policies renewables would account for only five per cent of Britain’s energy mix by 2020. The EU average is seven per cent; Germany is at 13 per cent. The paper admits that Germany has built a “strong and growing renewables industry” and although certain EU members may agree to a more flexible interpretation of the target, Germany will be difficult to persuade because Angela Merkel, the German chancellor, is the champion of 20 per cent and wants to commit Germany to 27 per cent. Officials fear that Britain may end up being told to get to 16 per cent, which they describe as “very challenging”. Guardian 13.08.07
‘We should all be at Heathrow protesting’; Johann Hari writes on the importance of the Heathrow climate change protest. It is not enough for a few people to voluntarily retrain ourselves while everyone else carries on. We need to be restrained, by law, or we will all face spiralling climate chaos. That is why joining the climate camp is even more important than changing your light bulbs or recycling: it is collective pressure on government, not consumer choices, that the world needs now. Hari points to Bangladesh and the Maldives which are doomed to drown by global warming in his lifetime. Almost half of Bangladesh is currently under water. He says that we are living at a time when the most politically important part of any news broadcast is the weather forecast. Even Britain is being battered by floods that should happen every 200 years- except they have happened twice in a six-year-stretch. The protesters at Heathrow are trying to shake us awake. Flying currently accounts for nearly 20 per cent of Britain’s impact on global warming. The two most popular destinations from Heathrow are Manchester and Paris, both of which can be reached easily by train. Independent 13.08.07
National Express quits biofuel experiment; one of Britain’s leading transport groups has cast doubt over the green credentials of biofuels after pulling out of a trial amid fears that it was doing more harm than good to the environment. National Express has suspended a biofuel trial at its UK bus operations after consulting green groups. Biofuel tests have been used by transport companies to highlight their environmental friendliness, with Virgin Trains and Virgin Atlantic among the most high-profile backers of the alternative energy source. Richard Bowker, National Express chief executive, said the coach, bus and rail group would continue to look at such initiatives, but its biofuel study underlined that “what appears to be the green option may not actually be green after all”. National Express said there is “considerable concern” that biofuel production- from crops including sugar cane and rapeseed- will destroy natural habitats and increase the cost of food farming in developing countries. Bowker went on: “Biofuels may well have a role to play in helping us reduce the emissions of greenhouse gases arising from transport operations in the future and we are not dismissing the role they may play in the future, but based on the evidence today I think it is vital that we wait for issues relating to the sustainability of supply are resolved before we press ahead with trials of biodiesel”. Further information - Click here Guardian 06.08.07
Crossrail faces delay over costs concerns; the Financial Times says that the plans to build and open Crossrail by 2015 are in danger of slipping, amid concerns over affordability and growing pressures on businesses in London to make a big contribution to the costs of the multi-billion-pound project. Even assuming a financing package for Crossrail, the biggest and most costly transport infrastructure project being considered by the government, can be agreed in time for the October spending review, services are unlikely to begin for a decade. However, while no agreement has been reached on financing, it is understood that there are still other hurdles to overcome. There had been concerns that work on Crossrail would run parallel with the preparations for the 2012 Olympics with the extra demands on the building industry inflating construction costs but it appears that Cross London Rail Links, the project’s planners, appear to have assuaged those fears. Government officials are stressing that the emphasis in the forthcoming talks would be on ensuring that the scheme, projected to cost at least £10bn, is kept affordable. The Institute for Fiscal Studies said that the case for delay was both about costs and also avoiding an investment squeeze in other public services. Financial Times 03.08.07
Crossrail delay ‘threaten London’s prosperity’; reacting to the FT’s piece on Crossrail being delayed Ken Livingstone (pictured right) uses an article in the Evening Standard to warn of the consequences of delay. He said that while he welcomed the government’s commitment to the infrastructure project, he was concerned that the Treasury would take “too cautious a financial view and put too much strain on the financial contribution that London has to make”. He goes on “the current debacle at Heathrow, which has been building up for many years, is a warning. It vividly reminds everyone if we do not plan for London’s transport infrastructure needs well in advance then we cannot assume that our city’s economic success will go on indefinitely”. Evening Standard 06.08.07
The case for scrapping Heathrow; Adam Raphael says that London’s Heathrow Airport has been described by the Town and Country Planning Association as “one of the country’s truly great planning disasters”. He says that, certainly, today no one would build a major airport in one of the most densely populated areas in Europe. The passenger experience, as a result, is dire, but just as serious is the impact of noise, pollution and sleep deprivation on the millions who live and work under the airport’s flight path. The hell is that Heathrow today is not the fault of its former lackadaisical BAA management, still less BAA’s new Spanish owner, Ferrovial, or even its notoriously militant unions. Its problems are due to the failure of successive governments. A regulatory regime, a monopoly operator, to concentrate on retail profits rather than running an efficient airport has helped turn London’s premier airport into a squalid, delay-ridden hole. It is now rated 56th out of 58 for customer satisfaction amongst international airports. It is simply not fit to be a 21st century airport. For the past 25 years, it has been obvious that it would be unable to cope with accelerating demand for air travel, still less perform as a key European hub, with a third of its incoming passengers transferring to other flights. The government’s solution, a third runway to be squeezed into an already chaotically constrained site sometime after 2015, is another temporary fix. A north-south high-speed rail link could be an attractive option to a third runway but the long-term solution must be its replacement by a new international airport. With modern developments in rapid transit a new 24-hour airport sited along the Thames estuary with 20-minute connections to inner London is practical. Independent 07.08.07
Passengers start to avoid Heathrow; BAA, the much-criticised airports operator, had its busiest ever-month in July handling 15.1m passengers at its seven UK airports. However, even though holiday-makers swelled the monthly figure, the number of passengers using Heathrow fell again, dropping by 1.7 per cent compared with the same month last year. The figures show a trend of passengers switching away from Heathrow to avoid the delays caused by strict security and cramped conditions. BAA said that, in effect Heathrow was running at full capacity and so the passenger figures would not rise until capacity was increased. But restrictions allowing only one piece of hand luggage were having an effect. Jim Fitzpatrick, the aviation minister, said that the one-bag rule could be lifted by November should a trial at Heathrow prove successful. On a wider front Competition Commission has started work on its investigation into whether BAA exercises a monopoly on airports in south east England. This could result in BAA being forced to sell off ether Gatwick or Stansted. Further information - Click here Financial Times 09.08.07
London business confidence drops; the quarterly business confidence monitor produced by the Institute of Chartered Accountants in England and Wales shows that business confidence in London fell to the lowest in the UK. The institute says that this is due to rising interest rates and a widening range of problems in the US sub prime mortgage market. The survey covered 1,006 businesses and was undertaken between 12th June and 16th July. Further information - Click here Financial Times 08.08.07
London house prices accelerate away; the latest FT House Price Index (issued on the day that the Stock Market nose-dived) says that London house prices are accelerating away from the rest of the country. The latest report shows that recent interest rate rises have been offset by London’s buoyant economy, attractiveness to overseas investors and supply shortages. Whilst the national average house price rise was nine per cent in July, it was 15.2 per cent in Greater London and 4.2 per cent in the west Midlands and the north. Equally within London there were differences with the City going up by 38.1 per cent, and Kensington & Chelsea and Islington seeing prices rise by 24.7 per cent. Other big risers were Southwark (20.3) and Richmond-upon-Thames (20.0). On the other side of the coin were Barking and Dagenham which registered 6.2 per cent and Harrow with 6.7 per cent. Further information - Click here Financial Times 11.08.07
Homeowners start to dig downwards; the Observer runs an article about the growing trend for London house owners to extend their property by digging downwards. It quotes the example of a hedge-fund tycoon Chris Rokos, who has bought a former hotel and now plans to spend £20m on improvements including digging down four storeys to create a 16ft swimming pool and high diving board. Maggie Smith of the London Basement Company, who pioneered the practice a decade ago, says “a basement conversion can add the equivalent of a one-bed flat to your property for far less money and trouble than it takes to move”. Demand has risen not only in quantity but also in quality. Three years ago, the average size of a basement extension was 400 sq ft. Now it is 700 sq ft. Experts say the increased interest in creating basements is a reaction to the gridlocked housing market and the apparently inexorable rise in house prices, a lack of good properties and the sheer expense of moving house. Ed Mead of estate agency Douglas and Gordon says that the typical cost of a basement is £150,000 so that if your house is the average price in Greater London of £330,000 it is not worth doing. “But for houses valued at £750,000 or more, a conversion is definitely worth considering as the costs of moving can add up to eight per cent of the sale price”. However, in Kensington and Chelsea, where there are currently 120 applications for basements, the council is taking soundings from residents, many of whom are worried about their neighbour’s basement building works. Observer 12.08.07
London looks at bike hire scheme; Ken Livingstone has confirmed that he wants to emulate Paris’s Velib scheme with a network of hire pushbikes for London. Jenny Jones, his green transport adviser, is visiting Paris to see the scheme in action and officials have been told to devise a similar scheme adapted to London’s needs. Unlike Paris the scheme will need the support of other bodies including the London boroughs, the City of London and the Royal Parks Authority. The Guardian says that it understands that the Royal Parks have particular concerns about advertising- the Velib bicycles are supplied at no charge by JC Decaux, who retain the rights to ad space on the bikes. The Paris scheme involves 10,000 bicycles at 750 dedicated hire points. So far thefts have been minimal largely because of the design of the bikes and the parking stations. Space may be an issue. Some cities have ripped out parking spaces to accommodate the hire stations but London’s narrow streets may make this a problem. In addition to Paris the study will look at other cities such as Barcelona, Lyon, Brussels, Vienna, Berlin, Munich, Oslo and Copenhagen. Further information - Click here Guardian 10.08.07
West London tram plans are shelved; controversial proposals for a tram have been shelved in favour of a new bus system to ease congestion in west London - as long as the government gives the go-ahead for Crossrail. Following a meeting with Jason Stacey, the leader of Ealing Council, Ken Livingstone announced that a combination of the proposed Crossrail east-west rail link and new bus services were the favoured option for reducing the area’s traffic. Some residents had vigorously opposed the proposed west London tram linking Uxbridge, Acton, Ealing and Shepherd’s Bush. Crossrail will run through Ealing Broadway, Acton and Southall. Further information - Click here Regeneration 10.08.07
St Modwen plans to battle on; despite Southwark’s choice of Lend Lease as the preferred developer for the proposed regeneration of the Elephant & Castle, St Modwen, the losing bidder, has said that it had no intention of walking away. Lend Lease, who are teamed with Elliot Lipton’s First Base and Oakmayne Properties, were chosen after a three-year tender process. However St Modwen own the shopping centre at the heart of the project and have hinted that it will fight the proposed compulsory purchase of the centre, which is due to be demolished in 2010. As a first step it may seek a partnership. However Lend Lease said that it was too early to talk about partnerships. They also said that there were no plans to radically alter Ken Shuttleworth’s masterplan for the 170-acre site, which proposes 6,000 homes and 800,000 sq ft of retail. Nigel Hugill, the chief executive of Lend Lease UK, said: “We agree with the Shuttleworth principle of reinstating the original Georgian grid that was obliterated by overweening ambition”. He also said that that they would select a panel of architects to work on detailed plans, as they had done at the Olympic Village, and that the scheme could include as many as six tall buildings. Further information - Click here Estates Gazette 28.07.07
Blackfriars residential tower wins planning permission; the Beetham Organisation, who have built residential towers in a number of cities, have won consent from Southwark Council for a £600m, 52-storey tower at One Blackfriars Road, close to Blackfriars Bridge. The tower, which has been designed by Ian Simpson, will include 64 flats and a 261-room hotel, to be run by Jumeirah International, the operator of the Burj al Arab hotel in Dubai. However the scheme could face a ‘call-in’ following objections from English Heritage, Royal Parks and Lambeth and Westminster councils. Further information - Click here Estates Gazette 28.07.07
Russian bank takes former Lloyds TSB HQ; VTB, Russia’s second-largest bank, has agreed to take four floors of the former Lloyds TSB headquarters at 14 Cornhill in the City. VTB, which raised $8bn in a launch on the London and Moscow stock exchanges in May, will pay around £60 per sq ft for the 60,000 sq ft space. The site was acquired by IVG as part of a property swap with Lloyds whereby Lloyds took the long leasehold of IVG’s development at 25 Gresham Street, while IVG received the freehold of 14 Cornhill. Estates Gazette 29.07.07
Middlesex Hospital to become Noho Square; Candy Brothers have announced that their 1m sq ft redevelopment of the former Middlesex Hospital, north of Oxford Street, will be called Noho Square. The scheme involves 273 flats and 380,000 sq of offices. The Estates Gazette says that both Apple and Google are in discussions about taking office space in the new development and there are also discussions with Soho House about creating a Noho House. The brothers have also won planning consent from Kensington and Chelsea to redevelop two former Thistle hotels next to Kensington Gardens into 97 flats. The 262,000 sq ft scheme is being designed by David Chipperfield. Estates Gazette 04.08.07, 11.08.07
Residential scheme for Albert Embankment; Native Land has been selected as the preferred developer for London Fire Brigade HQ on Albert Embankment. It paid £40m for the 2.5-acre site. The HQ and the drill tower at the back are both listed and will be incorporated into the redevelopment. Lifschutz Davidson Sandilands have been appointed as architects for the proposed residential scheme. Estates Gazette 11.08.07
Landsec and Barratt join for Stratford shopping centre; Land Securities has teamed up with housebuilder Barratt for a £600m mixed-use extension to its rundown Stratford shopping centre in east London. As part of the joint venture Barratt will build 1,300 flats in a £400m residential development including a 40-storey tower and six other complexes to top and round the centre. Landsec will add another 200,000 sq ft of shopping space. The £190m extension will increase the number of shops from 60 to 100 and will include two anchor stores, one of 100,000 sq ft and one of 40,000 sq ft. Landsec said that it would target retailers such as Primark for the new extension. The shopping centre will face stiff competition from a scheme being built by Australian developer Westfield as part of the adjacent Olympic Village. Construction of the £4bn Stratford City scheme, which will provide 1.9m sq ft of shopping, residential, leisure and entertainment space on a 180-acre site has already started. Similar to Westfield’s White City development, its Stratford City shopping centre will be expected to feature a luxury mini-mall. John Lewis has already signed to be one of the scheme’s three anchor tenants. Further information - Click here Estates Gazette 11.08.07
grapevine is produced twice monthly (except in August and December when there
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Next issue on 6th Septmeber 2007
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