‘The Bank’s been asleep on the job’; Simon Ward of New Star Asset Management was only one of 50 economists surveyed by Reuters to predict an increase in interest rates to 5.25 per cent. The Independent argues that the biggest mystery is how everyone else got it wrong. It has been apparent that for some months the Bank’s approach to policy was far too lax. The economy was bounding ahead, consumer and retail spending had remained robust, the housing market was once more inflating, wage demands were rising, and it appeared that general price inflation was out of control. The Bank had allowed itself to become sidetracked by a somewhat arcane debate about globalisation and whether migrant labour had expended the capacity of the UK economy, and therefore its ability to sustain low-inflation growth. Warner says that we now know the margin of spare capacity in the economy “appears limited” adding to domestic pricing pressures. He says that the surprise generated by the sudden announcement was not because people had missed the inflationary story but because the Bank had tutored the markets to expect changes in policy to be reserved for the month immediately prior to the publication of the Quarterly Inflation Report, which, in this case, would have been February. If the Bank has strayed from this routine, that can only mean that things must have become serious. Independent 12.01.07
Brown’s economic prospects; the Times looks at Gordon Brown’s (pictured right) prospects on the economic front. Gary Duncan argues that the prospects for the economy look “pretty optimistic” with growth in 2006 set to end at about 2.6 to 2.7 per cent and the first signs that it entered 2007 at full steam. Equally prospects for global trade look fairly well-founded. However even though the economy outperformed expectations, the national mood was scarcely euphoric due to the intense squeeze on households through rising income and council taxes, increasing interest rates and a higher cost of living. The percentage of after-tax incomes left after paying for essentials is now at it’s lowest since the 1960s. People are having to cope with rising food prices although falling oil prices will save £100 a year during 2007. If interest rates have to go up again, this will take another one per cent from household incomes. The other problem is that heavy Treasury borrowing means that there is no scope for tax cuts so everything will depend on income growth picking up fast enough and far enough to leave the country more cheerful. Times 08.01.07
Education expected to gain at health’s expense; giving evidence to the Treasury Select Committee the chancellor said that he would favour education in negotiations with all other departments in next year’s Comprehensive Spending Review. He said that no other large department was likely to do as well as education in settlements for capital equipment between April 2008 and April 2011. Pressed by the Conservatives to say if the increased capital for education announced in the Pre Budget Report was new money he responded that education capital spending for the review period would be “probably the highest of any major department”. The comments imply a plunge in the rate of spending in the NHS from 18.8 per cent above inflation in the current spending review to below 5.3 per cent in the new review starting in 2008. Financial Times 14.12.06
Brown plans for the first six weeks; Andrew Grice says that in Gordon Brown’s first six weeks as prime minister he will want to display a new style of government as well as new policies. He will be keen to dispel his “control freak” image, by giving away power from the centre, as he did in 1997 by handing control of interest rates to the Bank of England. He has floated the idea of an independent NHS Board; similar moves may follow in local government. Another file in Mr Brown’s drawer is marked “restoring trust in politics”. Parliament will get more powers, such as the right to veto military action. The rights and responsibilities of both state and citizens could be codified, perhaps in a written constitution. He might inherit unfinished business on House of Lords reform and party funding. Writing in the Observer Andrew Rawnsley says that Mr Brown talks of his premiership being a moment for “moving the country into its ‘new generation’”. However he cannot personify generational change himself since he is actually older than the man he will replace. The way to compensate for that will be to surround himself with younger and fresher faces. Independent 13.01.07, Observer 14.01.07
CBI says business would not miss the DTI; Martin Broughton (pictured right), the president of the Confederation of British Industry (CBI), has told the Times that the Department of Trade and Industry (DTI) could be scrapped without any impact on business. His remarks come at a time when there is speculation that Gordon Brown may scrap or radically cut back the department if he becomes prime minister. Mr Brougton, who is chairman of British Airways, said that the DTI had “not been dealt with as a serious department” by government because of the amount of ministerial change thrust upon it. Since 1997 there have been six secretaries of state and several dozen ministers. He said the CBI would back its abolition if its responsibilities were farmed out to other departments. He called for energy to be transferred to the Department of Environment, Food and Rural Affairs, as that would eliminate rivalry. Times 08.01.07
Women make up 25 per cent of top 100 entrepreneurs; for the first time, one in four people who appear in Management Today’s list of the top 100 entrepreneurs are women. There were 25 per cent less women in the first list, which was published in 2004. According to the Office for National Statistics more than one million women in Britain are now running their own businesses - a rise of 355,000 since statistics were first drawn up in 1984. The top-ranked woman is Elena Ambrosiadou (pictured left), who set up one of the first hedge funds at the age of 33. She is now one of the best-paid businesswomen with an estimated fortune of £140m. Other entrepreneurs in the list include Sarah Tremellen of Bravismo, Luisa Scacchettis of Mamas and Papas and Christian Rucker of the White Company. Further information - Click here Evening Standard 28.12.06
Creative industries to get green paper in the spring; Shaun Woodward (pictured right), the creative industries minister, has revealed that the thirteen sectors that comprise the creative industries will be spotlighted by a green paper in the spring that will try to establish the sector as a “very serious part of the wealth creation of the UK economy for the foreseeable future”. He cited the industry’s rapid growth - twice as fast as the rate of the rest of the economy for the last seven or eight years and the fact that it employs an estimated 1.8 million people. The minister said that they needed to address issues such as skills, access to finance and the regulation of the sector. He said that skills had been highlighted by the working groups set up to harvest business views ahead of the green paper. This in turn could lead to problems about access to finance and Woodward said, “What we need to do is to encourage a stronger private-sector venture capital angels market”. He also said that the video games industry should sponsor an academy to teach geeks the skills they need to operate successfully in the sector. He said that the video-games sector was moving beyond an early “rebel period” of looking enviously at the tax breaks and other incentives offered to film companies, to an acceptance that it was now a multibillion pound industry in its own right. Financial Times 04.01.07
Half of research tax credits ‘are wasted’; the Treasury has revealed that half of the £580m cost of research and development tax credits are wasted because firms are claiming the cash for research they were already planning to carry out. The information was given in answer to parliamentary questions tabled by George Osborne, the shadow chancellor. Observer 14.01.07
Half of urban businesses would like to relocate to the country; a YouGov survey, commissioned by Cornwall Pure Business, shows that half of the businesses polled would cheerfully relocate to the country. Happily for the paymasters, Cornwall and Devon were the most favoured locations, followed by the Highlands of Scotland. Norfolk was the least alluring. London was the urban area business people were keenest to forsake. A spokesman for Ken Livingstone said: “It is one thing to say you will move to the country but another to actually do it”. The main barriers cited by the correspondents were fears that profits would fall, high costs, possible lack of access to technology and employee discontent- so no problems there. Further information - Click here Financial Times 13.01.07
Kraft join exodus to Switzerland; Kraft Foods, the US multinational, is joining the flight of US corporations to establish their European headquarters in Switzerland in search of efficient transport, easier taxes and a more relaxed lifestyle. Kraft has taken a lease on a building in Zurich and will transfer jobs from Vienna and Kew in south west London. The US firm, which owns a range of famous brands including Philadelphia Cheese, Kenco Coffee and Terry’s Chocolate Orange, are following in the footsteps of Proctor and Gamble and Colgate-Palmolive, which have also shifted their European head offices to Switzerland. Some 200 jobs in Kew will be affected by the move. Kraft specifically singled out UK tax rates as one of the reasons for their decision. A number of tax advisers told the Times that the Kraft decision meant that the Treasury would have to consider fundamental changes to rules on taxation of foreign profits repatriated to holding companies in the UK as Britain’s 30 per cent rate of tax on companies was beginning to look uncompetitive. According to Philip Gillettt, head of tax at ICI (Investment Company Institute), Britain has lost ground slipping from the third-lowest European rate a decade ago, to tenth in 2006. Times 05.01.07, Times 08.01.07
Whilst Plastic Logic are steered to Dresden; when Plastic Logic, a Cambridge-based technology business, decided to build a factory to make a potentially revolutionary form of plastic semiconductor device, they commissioned KPMG to consider more than 200 locations around the world. However, instead of recommending eastern Europe or China, KPMG offered a shortlist of three - Dresden in eastern Germany, Singapore and the state of New York. Dresden gained its place with low labour costs and its strong traditions as the leading centre in micro-electronics research for the old Soviet empire. All three locations already have clusters of electronics firms as well as lucrative government grants to defray building and equipment costs. Dresden won because the state of Saxony was able to build a high-technology building in a relatively short time. The result is that a third of the costs of $100m for the new building will come from German and EU grants. Financial Times 03.01.07
CORPORATE AND SOCIAL RESPONSIBILITY
Battle is joined on social responsibility; Jackie Ashley writes on the political differences between Gordon Brown and David Cameron (pictured left). She says that they seem to have laid down three themes for the 2007 battleground - Britishness and the future of the union, our role in the wider world, and social responsibility. Of these she says that social responsibility looks if it will be the most interesting as well as being the buzz phrase for the year. Brown talked about the importance of everyone contributing to the country at the Fabian Society conference on 13th January and David Cameron held a one-day conference on the subject on 15th January. Ashley asks what do they mean by this - and is there a real difference? She says there certainly is. Cameron means shrinking the state, sacking civil servants and using a revival of business philanthropy and charity-sector work to fill the gap. Brown intends that a humbler, more listening state remains deeply engaged. There is a classic left-right divide hidden below similar seeming language. The initiative will be with Brown because he will be able to put flesh on his ideas in office. So we will see more support for volunteering, perhaps local referendums and the like. If he is to make a mark, Brown will have to go further. What about more paid time off for people contributing to their local communities as councillors or school governors? What about generous tax breaks for people who spend time volunteering; and making university UCAS points and even degrees dependent on proving that you have given something back? The problem is time - a commodity that everyone seems short of. The accompanying document, which has been put out for consultation, proposes what Cameron calls a carrots and sticks approach for companies aimed at starting a “revolution in corporate responsibility”. Further information - Click here for the Fabian Society and here for the Conservative Party Guardian 15.01.07, Financial Times 16.01.07
Big retailers join forces to fight labour abuse; the world’s largest retailers have for the first time agreed on a unified set of workplace standards aimed at eliminating problems such as child labour and unpaid wages in their vast global supply chains. Wal-Mart, Tesco, Carrefour and Metro - the world’s four largest supermarket chains - have been working with Migros, the largest Swiss retailer, to develop a draft code of standards called the Global Social Compliance Programme. The programme includes standards drawn from the companies’ existing code of ethics and will also set out goals aimed at standardising a range of competing monitoring initiatives to combat “audit fatigue” amongst suppliers. According to Alan McClay, chief executive of CIES, an international association of food retailers and suppliers, which is co-ordinating the initiative, “The ultimate objective is to improve conditions in the supply chain”. CIES approved the draft code in December and will publish the details in the next few weeks. There has been a cautious response from labour rights advocates who are concerned that they had not been consulted and are excluded from a direct role on the governing board. Further information - Click here Financial Times 11.01.07
IBM leads index of most ‘gay-friendly’ employers; IBM has been declared the most gay-friendly employer in the annual workplace survey run by Stonewall. It succeeds Staffordshire Police who are in second spot this year. Other companies in the top ten are Lloyds TSB (6th), Goldman Sachs (7th) and KPMG (8th). Ten City companies are in the top 25 and regional police occupy four of the top 15 positions. The Greater London Authority was joint third. Further information - Click here Financial Times 11.01.07
Private equity groups set up their own foundation; some of the world’s biggest private equity firms are joining forces to create a pan-European charitable foundation as part of a drive to counter criticisms of excessive pay. KKR, Blackstone, Texas Pacific Group, Bain Capital and Permira are among the eight founding trustees of the Private Equity Foundation, which is expected to be formally launched at a gala dinner in London in the next few weeks. Other members of the steering committee include Candover, Summit and Tower Brook. About 30 private equity groups across Europe, including CVC and Apax, are thought to have backed the foundation. Sunday Times 14.01.07
M&S to spend £200m to become carbon neutral; Stuart Rose, chief executive of Marks and Spencer, has announced that the company is to spend up to £200m over the next five years to become carbon neutral - a commitment equal to taking 100,000 cars off the road - and to send no waste to landfill by 2012. It will also double the amount of food sourced locally over the next 12 months, minimise the amount of food imported by plane, use biofuels in half its lorry fleet, start selling polyester clothing made from recycled plastic bottles, and increase sales of garments made from Fairtrade cotton to 20m this year. It also intends to open a model “green” factory in partnership with one of its 2,000 suppliers, and three model green shops in Glasgow, Bournemouth and Liverpool. The M&S announcement is welcomed in the editorial columns of a number of papers. The Guardian says that the company is to be applauded and hopes it will galvanise its rivals. However it does wonder whether the company means what it says, or is riding with the mood of the times, wrapping itself in synthetic greenery to keep middle-class customers on side. There has been an element of this in much of the talk about corporate social responsibility. However it does recognise that M&S is leading by example and that the significance of the plan is that if everyone does something similar (and the company goes on to deliver) the problem might be in sight of a solution. Further information - Click here Independent 15.01.07, Guardian 16.01.07
Newcastle is arts capital of the UK; a study of 14 UK cities has found that, per capita, people in Newcastle are more likely to visit art galleries, museums and concerts, have better libraries and bookshops, and have more arts students and the second highest number of theatres. The study, which was specially commissioned by Artsworld TV channel, also commends its architecture including the Millennium Bridge and the Baltic Centre for Contemporary Art in Gateshead. In the table Nottingham came second, Edinburgh third, and Cardiff fourth. London was ninth. Further information - Click here Guardian 30.12.06
Regeneration quangos to merge; Regeneration magazine reports that the government has finally given the go-ahead for the merger of the Housing Corporation and English Partnerships. It reports that the new quango will probably be called Communities England and will take on a number of functions currently carried out by the Department for Communities and Local Government. A formal announcement is imminent although there may be a slight hold up caused by the problems faced by Ruth Kelly, the communities’ secretary, over the decision to educate her son privately. Regeneration 12.01.07
Civil Service dispersal plans are in ‘disarray’; two leading relocation advisers are claiming that the plans to relocate 20,000 civil servants from London to the regions are in disarray. They also claim that the regions have been failed by a drive that has delivered piecemeal moves and consolidation rather than new requirements; prioritised London and other thriving cities rather than the intended “neglected” areas; and dressed up non-related moves as genuine relocations. A DTZ report reveals that an average of 16 jobs were moved out of the capital in each of the 629 relocation projects carried out since the government committed itself to Sir Michael Lyons’ recommendations in 2003. The largest relocations - to Catterick and St Athan, outside Cardiff - involved 1,871 military personnel and DTZ say that there is a strong suspicion that that a large percentage of the civil servants moved to Catterick are soldiers rather than office workers. The biggest moves have been within London. Within a year of the publication of the review the Home Office, the Ministry of Defence and HM Revenue & Customs went ahead with major relocations within London. The few large-scale relocations that have gone ahead have gone to thriving centres rather than areas in need of regeneration such as the Big Lottery Fund’s move to Edgbaston in Birmingham. Further information - Click here Estates Gazette 13.01.07
EU culture earns twice the cash of EU carmakers; the Independent features a new EU report on the importance of the European arts and culture industries. It says that 5.8 million people are employed in the creative sector and unlike manufacturing the number of jobs is increasing by 1.85 per cent annually. The sector earns more than double the cash produced by European carmakers and contributes more than the chemical, property or the food and drink industry. The report finds that creative workers tend to be better educated with almost half having a university degree - compared to about one quarter in the general working population. It also has twice the standard rate of self-employed. It interprets the creative sector to go beyond traditional cultural sectors such as cinema, music and publishing to include the written press, radio and television, and creative sectors such as design, fashion, cultural tourism, the performing arts, visual arts and heritage. Further information - Click here Independent 26.12.06
Businesses face penalties for employing illegal immigrants; the Home Office has started a £700,000 advertising campaign to draw attention to new laws enforcing civil penalties for employers with fines of up to £2,000 for every illegal immigrant they employ. Under the laws those who knowingly use or exploit illegal workers could also face prosecution, with a maximum two-year jail term and an unlimited fine. John Cridland (pictured right), deputy director-general of the CBI, warned that the current rules on illegal working were so complex it remained hard to know for sure whether a migrant was allowed to work in the UK or not. “The Home Office must follow up their campaign and provide clear and timely advice to employers”. Further information - Click here Financial Times 06.01.07
Financial jobs to grow to record levels; the latest survey undertaken by the CBI and PricewaterhouseCoopers shows that employment growth in the financial services sector has reached record levels. In the three months to December 2006 the number of firms reporting rising employment levels exceeded those reporting falling numbers by 55 per cent - the highest gap since the surveys started in 1989 and an eight per cent increase on the previous quarter. Further information - Click here Financial Times 08.01.07
Flexible workforce will swing advantage towards women; Hamish McCrae looks at the report by the Equal Opportunities Commission (EOC) on the lack of progress made by women in the workforce over the 30 years since the Sex Discrimination Act came into force. The EOC point out that women make up only ten per cent of directors of FTSE-100 companies and only 20 per cent of MPs. McCrae says that it seems absurd that any society should waste talent in this way. He quotes Professor Andrew Oswald’s point that Sweden has a much higher proportion of women in parliament than in almost any developed economy. Nethertheless, it is harder there than in the US for women to get top jobs in business. However, McCrae believes that economic forces now at work may be much more effective in rebalancing the opportunities between the genders. There are five big changes taking place that either play to what seem women’s natural advantages in the workplace, or at least are gender neutral. The first is the increased need for multi-tasking, which as women seem better able to do this, should play their way. The second is the growth of the creative industries. The third is the rise of the entrepreneur. One of our few competitive advantages is our sense of enterprise and it seems to be pretty evenly distributed between the genders. The fourth is technology, which makes it easier for people to work part-time or from home, which, at the minimum removes one of women’s disadvantages. And, finally, there is the little matter of inheritance and the accumulation of wealth. There are now supposed to be more female millionaires than male, which is a sign that power is shifting. Further information - Click here Independent 10.01.07
Diverse workforce better for business; a survey undertaken by ICM on behalf of Jobcentre Plus shows that a diverse workforce is better for business and could help to increase sales and attract recruits. One in two customers would be more likely to use a business that included people from different backgrounds, in particular disabled, female, ethnic minority and older workers and 79 per cent of the 2,000 respondents said that it was important for businesses to have a good diversity employment policy in place. Further information - Click here Financial Times 04.01.07
Plans to raise school leaving age to 18; plans to raise the school leaving age to 18 have received a guarded welcome from business leaders who said that it would only work if young people gained the literacy, numeracy and vocational skills wanted by employers. Under the plans, to be unveiled in a green paper published by Alan Johnson (pictured right) , the education secretary, young people would have the choice of staying at school or taking work-based vocational training, such as an apprenticeship. The proposals, due to be introduced in 2013, are expected to affect 330,000 teenagers. Employers and teaching organisations have questioned whether there would be sufficient investment to cope with the extra teaching and training costs. The measures are designed to tackle rising skill shortages and increased youth unemployment because of the fall in unskilled jobs. The unemployment rate among 16 and 17 year olds has risen from 19.9 per cent when Labour came into power to 25.3 per cent, according to official figures. Financial Times 13.01.07
Bush to fund alternative fuel research; it is likely that President Bush (pictured right) will use his State of the Union address, due on 23rd January, to announce additional funds for fuel research in next year’s federal budget. The news was made available for the start of the Detroit Motor Show where a number of car-makers were promoting prototypes of greener vehicles. These included GM and Ford who both showed concept cars that run on electricity, BMW who unveiled hydrogen-fuelled vehicles, and Saab who showed their BioPower car, a bioethanol hybrid concept. Chrysler said that carmakers were working with the US government on a network of projects using alternative fuels and electricity. Chrysler has pumped $1bn into hydrogen fuel cell technology over the past decade. At present the annual budget of the US Department of Energy’s vehicle technologies office is $180m. Independent 09.01.07
CBI forms climate-change taskforce; business leaders from 17 of Britain’s largest companies have formed a taskforce to develop radical ideas on tackling climate change. It will take the report on the economic impact of climate change produced for the government by Sir Nicholas Stern as its starting point. Further information - Click here Financial Times 12.01.07
Mr Blair gets in a tangle about carbon offsets; in an interview on his return from holidaying in the Florida mansion of Bee Gee Robin Gibb the prime minister, (pictured right), told Sky TV that he wasn’t going to set a lead by example on holiday flights. One subsequent report said “Carry on flying, says Blair - science will save the planet”. The prime minister went on: “I personally think these things are a bit impractical, actually to expect people to do that. It’s like telling people you shouldn’t drive anywhere”. However after something of a battering at the two lobby meetings held on his first day back, the prime minister’s office announced that he would offset the holiday and personal travel of his family. According to the Climate Care website, that would amount to offsetting 11.98 tonnes of CO² for a return flight from Heathrow to Miami. He told a press conference “There’s a massive amount individuals can do. In this building we have energy efficient lightbulbs now, we get all our sources of energy from renewable sources, we have been putting down the temperatures, we do recycling on a very large scale”. However he added, “I’m not going to be in a position of saying that I’m not going to take holidays abroad or use air travel, it’s just not practical”. In another Sky interview David Cameron, the Tory leader, reports how he is installing solar panels and a wind turbine in his Notting Hill home. Both there and in his Oxfordshire home, he describes how he is collecting rainwater, improving insulation, and recycling more. “What you need is cultural change. What you need is people to change their view about the environment and to change their behaviour, and I think that starts at the top”. Further information - Click here Guardian 10.01.07
Tree planting is not the answer; in the wake of the prime minister’s wavering, a number of newspapers ran articles querying the effectiveness of carbon offsetting. The Independent predicts that the offsetting industry is expected to grow from £60m in 2006 to £480m in 2009. However even the most ardent supporters of offsetting admit that it would be impossible to plant our way out of climate change. In Britain alone, it would be necessary to plant a forest a size of Dorset each year to offset the UK’s annual CO² emissions. Increasingly campaigners are calling for offsets to meet the Gold Standard, run by an independent body that certifies high-quality projects and rejects all forestry schemes. Leading offset companies, such as Oxford-based Climate Care, say they are reducing their reliance on forestry projects to less than five per cent of its portfolio. The City-owned Carbon Neutral Company has cut its forestry portfolio from 80 per cent to 20 per cent. Instead, offsetting companies offer investment in renewable energy and development projects in developing countries such as bio-gas digesters in India, energy-efficient light bulbs for Kazakhstan or efficient stoves for villagers in Honduras. Further information - Click here Independent 11.01.07
Blair was right first time; writing in the Times Anatole Kaletsky (pictured left), says that Tony Blair should have stuck to his first remarks that were summed up as “Carry on flying, says Blair, science will save the planet”. Kaletsky says that even though the headline was meant to be ironic it is an excellent summary of what should be done about climate change. We should carry on flying as much as we want, but we should also create economic conditions to ensure that science does “save the planet”. Aircraft emissions, according to the Stern report, currently generate just 1.6 per cent of global emissions and assuming current growth rates this only increases to 2.5 per cent by 2050. Air transport emissions, therefore, are a tiny contributor to global warming, far smaller than road transport, which creates ten per cent and industry and agriculture, which generate 14 per cent each. Electricity generation accounts for 24 per cent and deforestation for 18 per cent. Half of the deforestation is due to the annual destruction of the rainforest in two countries - Brazil and Indonesia. If they could be persuaded to stop their environmental vandalism for one year, the consequent preservation of the rainforests would be sufficient to neutralise the climate impact of all the aircraft in the world until 2050. If governments replaced the present passenger levies on air travel with fuel taxes or, better still, a system of carbon trading this could be used to increase incentives for emission-reducing activities, whether nuclear generation in Britain or rainforest preservation in Brazil. Times 11.01.07
Britain is landfill ‘capital’ of Europe; figures compiled by the Local Government Association (LGA) shows that Britain is officially the most wasteful nation in Europe dumping more rubbish in landfill than any other member of the EU. UK households send 26.8m tons of waste to landfill every year - three times as much as Germany, which has a 25 per cent greater population. Italy, the second worst offender, dumps a relatively modest 19.5m tons. The LGA is mounting a campaign for local authorities to be given the power to cut council tax for homes which throw away less and to impose a separate charge for waste collection. Further information - Click here Independent 08.01.07
Tory wants domestic flights taxed out of existence; Tim Yeo (pictured right), a Tory MP who chairs the Commons Environmental Audit Committee, has called for flights within the UK to be taxed almost out of existence. He said that he wanted to see “virtually no” domestic flights taking off within a decade. Amid the row about politicians taking long-haul holiday flights, Yeo said action was needed closer to home first and there was “no reason at all why people should fly around the UK”. Commenting on Yeo’s statement the Tory-leaning political blog Guido Fawkes headed their story “Yeo flies back from another golf trip to call for en end to unnecessary internal flights”. Independent 13.01.07, Guido Fawkes 12.01.07
Central London boroughs set to suffer major health problems; London’s inner-city boroughs are set to replace former mining towns as Britain’s sickest areas according to research undertaken by CACI, a market intelligence company, and TNS, a market information company. They forecast that whereas the current list of the top ten areas with health problems have no London entries the future problems table places six London boroughs - Tower Hamlets (1), Hackney (2), Southwark (3), Lambeth (4), Newham (6) and Islington (7) - in the top ten. The report comes to its conclusions by analysing factors such as smoking, single-parent families, fast-food consumption, low consumption of fruit and vegetables, income and demographic characteristics. Further information - Click here Times 02.01.07
Central London to be rejuvenated in time for 2012; James Bidwell, chief executive of VisitLondon, calls attention to the Mayor’s plans to rejuvenate central London in time for the Games in 2012. The London Development Agency is to build a £300m conference centre in the West End - possibly at the eastern end of Oxford Street - whilst Westminster City Council is planning a £70m facelift for Leicester Square and a spruce-up of Covent Garden, Chinatown and the eastern end of Oxford Street. As a first move the Estates Gazette highlights twelve acres of prime retail sites that have been pinpointed by the City of Westminster for redevelopment - by compulsory purchase if necessary. The eleven sites - which controversially include the Marks and Spencer Pantheon store and the giant BHS flagship store at Oxford Circus - are virtually all at the eastern end of Oxford Street. They include three of the major sites close to Tottenham Court Road, which the Mayor’s Commission on the West End have identified for urgent action. They do not include the six major sites to be effected by Crossrail. Estates Gazette 16.12.06, Times 27.12.06
Ken joins the jet set at Davos; the Guardian examines why Ken Livingstone (pictured left) has accepted an invitation to attend this year’s World Economic Forum in Davos, which is due to start on 24th January. He will be joining the high priests of global business, politics and academia to speak at a session on cities in a global world, although the invite means that he will be feted at a series of subsidiary events. The Guardian says that Davos is a key event for business titans but it is also a landmark for anti-globalisation protesters and the far-left, who would have once have regarded Livingstone as an anti-establishment figure to be relied on. Livingstone’s stock is high internationally after the introduction of the congestion charge and the capture of the 2012 Olympics. However he has also been criticised for his links with Hugo Chavez and his recent trip to Cuba. Tony Travers, of the London School of Economics (LSE), says: “His ability to marry apparently irreconcilable political approaches has been honed to a degree that makes New Labour look like innocents. Going to Davos and almost at the same breath defending Cuban dissidents and indulging his nostalgia for Castro is the sort of thing that makes him different”. Further information - Click here Guardian 15.01.07
King’s Cross community group folds; the King’s Cross Community Development Trust, which represented 75 community groups in the King’s Cross area went into receivership just before Christmas with debts of £130,000. Regeneration 12.01.07
Buy-to-let accounts for two-thirds of new homes; research undertaken by the Greater London Authority shows that 67 per cent of 20,000 new homes built in London have been snapped up by buy-to-let investors. The Bank of England’s decision to put an additional quarter of a per cent on the interest rates is an attempt to take the heat out of the housing market, which last year grew by 10.5 per cent - the third rise in six months. There are fears that another rate rise could prompt investors to sell off their properties, sparking a price dip. However six out of ten investors said that they expected to continue purchasing more property. The mayor has encouraged a healthy private rental sector to cater for a mobile workforce. He is also encouraging shared-ownership as a way of allowing those on low incomes to get on the housing ladder. The number of new homes is due to increase by 20 per cent this year to 30,000. The mayor will soon have control of affordable housing provision and will launch his new strategy in May. Independent on Sunday 14.01.07
LDA will always be in constant change; Manny Lewis (pictured right), the chief executive of the London Development Agency (LDA), discusses the many changes that have taken place in the LDA during its short life. Lewis says that flux is inevitable - “the truth is that we are going to be in constant change, and we need to face up to that reality”. He says that the LDA’s past management problems were “growing pains” of a young organisation although he accepts that the agency suffered from a lack of joined-up working and credibility, and a structure that led to work being duplicated. The solution was to change the working methods at the top of the organisation. Lewis seems to be making headway and the LDA is in charge of assembling and preparing the land for the Olympic Park involving a spend of £1.44m. Although there was noisy criticism by the firms that had to move the current signs are promising. Some 93 per cent of the site is now in the agency’s hands and many previously hostile local landowners have agreed terms with the result that the process is now ahead of schedule. The LDA has also been tasked by the mayor with drawing up the skills strategy for the new Skills and Employment Board. In fact the LDA’s long game is more likely to focus on developing skills and jobs in building and construction. It will not abandon large physical regeneration projects, but will instead “bend” those projects to maximise job growth. Regeneration 12.01.07
Paris mayor worries that Champs Elysées ‘declining into Oxford Street’; it is one of the most famous streets in the world but in the course of a century the Champs Elysées has gone from a wooded promenade to one of the most expensive pieces of real estate in the world attracting 500,000 visitors a day. However a recent study conducted for the mayor of Paris warned that it was in danger of turning into Oxford Street, a faceless parade of chain stores dominated by burger bars and sports shops. In terms of rental costs, only Fifth Avenue and Hong Kong’s Causeway Bay are more expensive. Just 26 families live there and large chain stores are increasingly the only tenants who can afford to pay up to £6,700 per square metre each month. The street is lined with car showrooms, airline offices and flagship stores for Virgin, Nike and Adidas. Analysts are warning that it risks turning into a “banal open-air shopping centre”. The mayor of Paris is drawing up plans to preserve the street. The first step is to start turning down planning applications from high street clothing jobs starting with H&M. He wants to preserve the 40 cinemas but as rents rise the cinemas are closing and making way for the chain stores. The Champs Elysées has recently been given special permission to open on Sundays. Further information - Click here Guardian 30.12.06
Westfield unveils plans for Olympic Village; Westfield has unveiled their plans for the first phase of Stratford City, the centrepiece of the £4bn Olympic Village. The Australian shopping giant has lodged its masterplan and environmental strategy for the whole 180-acre Stratford site with the Olympic Delivery Authority. The plans include 13.5m sq ft of retail, leisure and entertainment facilities, offices and hotels. There will also be 5,312 homes - 3,000 of which will be used for athletes taking part in the 2012 Games. Westfield will only develop the first phase, which will feature a 1.5m sq ft retail centre anchored by a 240,000 sq ft John Lewis store and a 32,000 sq ft Waitrose. There will also be 1,224 houses, two hotels, offices, and leisure and community facilities. In all there will be 17 buildings, including a cluster of headquarter offices as well as the retail buildings. Further information - Click here Estates Gazette 13.01.07
Lottery warns of ‘dark forces in Whitehall’; Sir Clive Booth (pictured right), chairman of the Big Lottery Fund, has said that he fears “dark forces in Whitehall” are planning to plunder the cash pot to help fund the £900m Olympic funding shortfall. He says that this would have a “chronic and damaging effect” on the fund’s mission to help the neediest groups in Britain. Tessa Jowell, the secretary of state for culture, media and sport, announced in November that the estimated cost of building the Olympic Park had gone up by £900m to £3.3bn. Asked at the time whether the lottery, which overall is contributing £1.5bn towards the Games, would be protected from further cuts to make up the shortfall, she said that she had “never ruled out” the option. The Big Lottery Fund is responsible for distributing half of all Lottery money, exposing it to potential £450m cuts. This would, in turn, bring cuts of around £315m in support for voluntary and community groups. Stephen Jebb, chief executive of the Association of Chief Executives of Voluntary Organisations, said that the treat to the lottery pot came as charities were being squeezed by cuts elsewhere, including European funding and public sector belt tightening affecting the health service and local authorities. Guardian 10.01.07
Cultural festival to augment Olympics; James Bidwell (pictured left), chief executive of Visit London, has revealed plans to create a cultural and entertainment festival to augment the 2012 Games. In the Times he reveals his strategy for combating the dip in conventional tourism that has befallen previous Olympic host cities. He believes that there will be 120,000 hotel rooms available by 2012 and that this should be sufficient to cater for both sets of visitors. Giant screens would be positioned throughout the capital, which would draw people to watch the Olympics by day and other forms of live entertainment in the evening. “Something needs to happen in Hyde Park every night, with the use of the big screens. A bit like Henman Hill, but with 50,000 people”. The events will be co-ordinated by a committee to be chaired by David Lammy, the culture minister. Mr Bidwell is also confident that London’s transport infrastructure will be able to cope with the influx of people in the summer of 2012. Times 26.12.06
Three key sponsors sign up; following the indication that Lloyds TSB have become the first of the “tier-one” sponsors paying up to £80m to be a major sponsor for the 2012 Games the Sunday Times tips two more names. It claims that BP and BT are to follow suit so that the London Organising Committee will have selected three of the six main sponsors ahead of schedule in what is on course to become the biggest sponsorship income in Olympic history. However the Guardian quotes an official spokesman as saying that there will be no formal announcements until March. The 2012 budget requires £750m to be raised through domestic sponsorship with the remaining sponsorship to come from tier-two and tier-three deals, which will start to be sold later in the year. The Guardian also discusses what the benefits of sponsorship would be as there is no exposure for direct media advertising and there is also the factor of the International Olympic Committee’s own sponsors. Up to 12 companies, including Samsung, Coca-Cola and General Electric, have paid to use the Olympic logo. Another is Visa, who will be seeking re-assurance that Lloyds TSB does not cut across their interests. Sunday Times 07.01.07, Guardian 08.01.07
Green issues will create two-tier market; a leading agent has predicted that increasing corporate social responsibility (CSR) pressures will put increasing pressure on firms to take space in green buildings. Peter Richards of King Sturge says that a two-tier market will emerge between energy-efficient and non-efficient buildings as occupiers become more willing to pay premiums for space in environmentally friendly buildings. He instanced one public sector client had recently shortlisted two buildings for its requirements but opted for the more expensive as it was a greener building. He said that the property industry needed to realise the impact climate change and environmental regulations, alongside CSR influences, would have on the industry. Estates Gazette 06.01.07
Development threat to Ally Pally; the Independent claims that the future of the first television studios in Alexandra Palace in north London is under threat from development. The studios in the tower are seen as a vital part of broadcasting history and despite the fact that they have been empty since 1883 they are still intact. Alexandra Palace was opened in1873 as ‘the People’s Palace’, a recreation centre surrounded by parkland. There was a racecourse on the site until 1970. Haringey Council, which owns the building through a charitable trust, intends to lease it to Firoz Kassam’s Firoka Group. He is a former owner of Oxford United football club and owner of hotels and conference centres. He plans a multimillion redevelopment as a hotel, leisure and exhibition complex. He has promised a broadcasting museum on the site but protesters are up in arms as the lease does not cover the preservation of the original studios. The Independent also claims that another historic venue, the Hammersmith Palais, is under threat from an office development. Hammersmith and Fulham Council will be considering a planning proposal for demolition during this month. Independent 30.12.06
Sloane Square plans are praised by CABE; the Commission for Architecture and the Built Environment (CABE) has given its backing to the royal borough of Kensington and Chelsea’s plans to regenerate Sloane Square. The proposals are to transform the square into a large public space by introducing staggered crossroads. This would include removing the existing roundabout and introducing two paved areas to the east and the west of the Square. They have received the support of English Heritage as well as CABE, who praised the “rigourous and high quality approach”. The proposals are opposed by the Save Sloane Square campaign group, who include Bryan Ferry amongst an illustrious group of supporters. Further information - Click here for the Sloane Square Improvement Scheme and here for the Save Sloane Square Regeneration 12.01.07
UN threatens to put Tower of London on danger list; Unesco is threatening to put the Tower of London on its list of endangered World Heritage Sites because of the number of skyscrapers being planned for the surrounding area. The Department of Culture, Media and Sport has been given until the end of the month to demonstrate to the UN agency’s World Heritage Committee why the Tower should not be included on the list. It is expected to say that the correct planning procedures have been followed for the proposed developments. These include the 306-metre-high “Shard of Glass” tower planned for London Bridge, which will be Britain’s tallest building. Although plans for a second tower - the 200-metre Minerva tower have been scaled down, two other proposals, a 324-metre Bishopsgate tower and a 209-metre tower at 20 Fenchurch Street, have also raised alarm at Unesco. A culture department spokesman admitted that it was too late to “row back” on permission for the Shard of Glass. He stressed that permission had been given after a public inquiry, which considered the environmental impact, adding: “Our response to these criticisms will be that our planning controls are among the most sophisticated in the world. As a result we are pretty confident we will not be placed on the danger list”. Unesco will make a final decision in June. Independent 08.01.07
Another hotel for the City; the Edinburgh-based Apex has paid almost twice the asking price for Piercy House at 7-9 Coptall Avenue in the City with the plan to convert the office block into a 75-room hotel. The 13 tenancies in the building, which is held on long lease from the Clothworkers’ Company, expire in December and Apex hope to open the hotel in early 2009. The high price paid for a potential hotel mirrors a number of previous City transactions including the purchase of the former head office of Willis and before that the PLA in Trinity Square, which was bought by a US hotelier for around £110m and the sale of the old Midland Bank HQ in Poultry for £72m to Vladimir Chernukhin, a former deputy finance minister for Russia. Estates Gazette 06.01.07
BBC considers selling White City TV centre; the BBC is considering selling the television centre to create a 19-acre mixed-use development opportunity with the White City regeneration zone. The BBC will make a decision on the 1960s-built studios on Wood Lane, W12 later this year. There are a number of options and one insider said that the most likely outcome was the refurbishment of the main studios and the disposal of six acres or more of modern surrounding buildings; however, a sale of the entire complex is not ruled out. The site lies at the northern end of the 43-acre White City regeneration zone, which is being masterplanned by Rem Koolhaus for a consortium of land owners including the BBC, Helical Bar, Land Securities and Marks and Spencer. The BBC is pursuing site disposals across its estate to cut costs and provide buildings suitable for digital broadcasting. It plans to move 1,800 people to a media centre in Salford. Several hundred people working on BBC News will move to a refurbished Broadcasting House by 2012. Estates Gazette 13.01.07
grapevine is produced twice monthly (except in August and December when there
is one issue) by Brian Wright on behalf of GLE
Next issue on 31st January 2007
Circulation enquiries to grapevine@gle.co.uk
Content enquiries to Brian Wright on user164898@aol.com
Tel: 01789 263252