Dear Chancellor……; for the first time since the Bank of England was given its independence ten years ago the Governor has had to write the necessary letter demanded if inflation goes one per cent over the two per cent target (for the consumer price index (CPI)). Both Mervyn King (pictured right), the Governor, and the chancellor in his reply, went out of their way to be reassuring and were fulsome in praise of their strategy. An FT leader says that reassurance was essential because Britain’s system of monetary policy is about to be tested. The letter of explanation is one way that the central bank is made accountable to the politicians, which leaves an unresolved question. Mr King’s missive is meant to reassure the public that inflation is under control and will soon fall back to two per cent. However the FT argues there is a risk that it may have the opposite effect and convince businesses and workers that they live in inflationary times and that they should seek higher prices and wages. The CPI data is bad. Last year’s surge was led by energy, as high wholesale prices for oil and gas fed into domestic electricity and heating bills. Due to a resurgent oil price this influence has not died away as expected. But inflation is now worryingly broad-based with food, furniture, leisure and services such as education all contributing to CPI’s rise above three per cent. The FT says that the Bank’s response must be tough. Past interest rate rises should lower inflation, but if prices are slow to respond or if there are any signs that public expectations of inflation are drifting upward, then the Bank must act. If that means interest rates of six per cent plus, then so it must be. Financial Times 18.04.07
Kaletsky wonders if it is too late; Anatole Kaletsky (pictured left) is less optimistic about the chances for inflation, which he says might be spiralling out of control. This week’s 16-year inflation record coincided with the pound rising above two dollars for the first time since 1992. This would normally subdue inflation, yet prices in Britain have gone up faster than the rest of the world. Inflation in Europe, America and Japan has recently subsided as oil prices have stabilised. Why then are British prices going the other way? The only reasonable conclusion is that underlying inflationary pressures in Britain – not just from oil and food, but also consumer goods and services - are now considerably stronger than in other countries. These pressures are likely to intensify because the divergence between “official” inflation, as measured by the recently introduced CPI, and the “headline” inflation as presented by the 4.8 per cent increase in the traditional retail price index (RPI). The RPI has been the main measure of inflation in Britain for 50 years and is still used as a benchmark for settling wages, pensions and financial payments. With the gap between the two measures as wide as it is and with the chancellor insisting on using his official CPI target of two per cent as the base for public pay settlements, large swaths of the population will start to feel cheated. This could lead to a return of the acceptance of a naturally accelerating inflation rate and jeopardise Britain’s recent economic achievements. The whole new British economy, which is built on foundations of cheap long-term credit, would collapse. To prevent such a thing the Bank must act to restore credibility to the two per cent inflation target. By late 2008 the entire world economy should be in a co-ordinated boom and if the Bank of England does not get prices back under control this year, it could be too late to tame inflation. Times 19.04.07
Monetarists go even further; a group of Britain’s leading monetarists led by Professor Tim Congdon (pictured right) have issued an attack on the Bank of England’s Monetary Policy Committee, warning that inflation risks surging out of control in a repeat of earlier boom-bust cycles. They express concern that the recent double-digit rise in the monetary base is storing up trouble. Congdon says, “You can’t get away with money supply growth of 12 or 13 per cent like this. It’s not as bad as earlier cycles, but is nevertheless bad and it’s going to end in the usual way. Rates will have to go to 6 –6.5 per cent, and may even reach 7.5 per cent.” Daily Telegraph 24.04.07
‘UK economy is living on thin ice’; the latest issue of the Ernst & Young ITEM club warns that the economy is “skating on thin ice” because of excessive household debt. Although it is optimistic about the immediate inflation risks- forecasting that one more interest rate hike should be sufficient to bring inflation back to the two per cent target- it says that the current benign macroeconomic environment has made both individuals and firms overly relaxed about risk, inflating asset values and transactions and boosting borrowing and spending. “Many people are following the chancellor’s lead and are borrowing to finance consumption,” said Peter Spencer (pictured left), the ITEM club’s chief economic adviser. “The UK’s current deficit is 3.5 per cent of GDP which suggests that as a country we are close to the edge”. Britain’s consumer debt mountain has topped £1.3 trillion raising fears that thousands of households will be left with debts they cannot afford to repay if interest rates are jacked up. The report also highlights the huge black hole that has opened up in the public finances which has resulted in the fact that “the bottom line is that we are all living beyond our means”. Despite the grim warnings, the ITEM club predicts, that thanks to the booming business services sector, the UK economy will expand by a healthy 2.9 per cent this year. Further information - Click here Independent 23.04.07
IMF repeats warning about public spending; the International Monetary Fund (IMF) has warned the chancellor (pictured right) to tighten his grip on government spending to prevent public finances plunging further into the red. However it does his upbeat assessment of the economy and predicts that the economy will grow by 2.9 per cent this year, up from the 2.7 per cent it was predicting six months ago and in line with Mr Brown’s budget forecast of 2.75-3.25 per cent. It says that risks seem reasonably well balanced but still warns that higher interest rates may be needed. “The combination of higher-than-targeted inflation and diminishing economic slack has prompted rate rises by the Bank of England, and that inflation is expected to come down to the target by year-end. However some further tightening may be needed, particularly if wages pressures emerge”. The IMF has already accused Brown of engineering the “most aggressive fiscal expansion of any G7 country, an implicit criticism of the chancellor’s huge borrowings to fund the government’s massive injection of cash into the public services. Despite the spending squeeze set out in the Budget the IMF still expresses anxiety about the state of public finances. “Tight spending control will be needed to halt the rise in public debt”. Further information - Click here Independent 12.04.07
Housing market has biggest rise for five years; according to the property commentators, Rightmove, Britain’s house prices rose by 3.7 per cent in the four weeks up to 7th April - the biggest one-month increase since April 2002. The year-on-year rate of increase rose to 15 per cent and the average asking price was £236,490. The data is based on sellers’ asking prices which Miles Shipside, commercial director of Rightmove, said was one of the earliest indicators of which way the market was going. However he did say that there were some unique factors boosting the market including the Easter bounce, a shortage of supply, and easy availability of mortgage finance. He went on: “homeowners should not regard the rise as the start of another boom”. London house prices went up by 3.7 per cent or 25 per cent on a yearly basis. The average asking price was £379,846. Further information - Click here Independent 16.04.07
Brown plans shake-up of the DTI; answering questions at the British Chambers of Commerce Annual Conference Alistair Darling (pictured right), trade and industry secretary, implied that some sort of shake up of the DTI was inevitable if Gordon Brown is elected as the new Labour leader and prime minister. Darling hinted at a shake up and hiving off some responsibilities but the FT quotes Whitehall insiders saying that a number of options are under consideration. Brown is expected to make a decision soon after assuming the position of prime minister and there is a prospect that he could float some of his ideas during the planned Labour hustings. Among the options are transferring the responsibility for energy, the department’s second biggest spending commitment, either to a new department or an enlarged Department for Environment and Rural Affairs headed by David Miliband. Science and technology, which accounts for the biggest slice of DTI spending, could be the basis for a revamped department or be merged with education and skills. Brown is also considering greater private sector involvement in business support, possibly by moving this area of responsibility to a government agency. Financial Times 17.04.07
NHS takes first steps to greater independence; David Nicholson (pictured left), the chief executive of the National Health Service (NHS), is developing proposals to create “an NHS headquarters” or a separate “management executive” within the department of health. The move would be the first step towards the creation of a more independent board to run the £90bn business the health service is to become, reducing the day-to-day involvement of politicians. Gordon Brown, the chancellor, is reported to be considering the idea as one of his early acts in office, assuming he becomes prime minister. The FT says that the idea of a relatively independent NHS management executive was tried during Mrs Thatcher’s time in office. Although the Bank of England is cited as the model, the FT quotes Brian Edwards, professor of health care development at Sheffield University, as saying that the Bank example is too limited. Better cases would be the BBC or the Higher Education Funding Council. Birmingham University’s Health Services Management Centre has produced proposals for an independent NHS. Further information - Click here Financial Times 11.04.07, 17.04.07
Brown holds back on identity card scheme; Gordon Brown has left open the idea of scrapping the identity card scheme if he becomes prime minister. In a written parliamentary answer to a Tory backbencher he said that he had refused to approve the budget for the scheme and has only given the Home Office permission to spend a limited amount towards developing it. The total cost of £5.4bn will exceed the spending limit and means that the home secretary will have to seek further permission from the Treasury before he can press ahead with issuing cards. Times 19.04.07
Young Muslims show trust in the government and the system; Gallup has released the results of an opinion survey which shows that Muslims living in London are, if anything, more patriotic than the average Briton, identify strongly with their country as well as their religion, and place great trust in the institutions of British democracy - elections, the courts and the police. Almost nine out of ten Muslims in London believe attacks that target civilians are unjustified and morally wrong whilst 81 per cent condemn violence even if used in a noble cause - a figure that is nine per cent higher than the view of the general public. More than half identify very strongly with Britain and about four in every five believe it is important for integration to master the English language, get a better education and find a job. The poll, which is part of a world-wide survey of Muslim attitudes undertaken by Gallup’s Centre for Muslim Studies, was carried out only in Greater London, where attitudes are more relaxed than elsewhere in the UK. Further information - Click here Times 17.04.07
Migration is damaging communities warns minister; Liam Byrne, the immigration minister, has warned that “laissez-faire migration” runs the risk of damaging communities and undermining the government’s attempts to tackle inequality and child poverty. In a pamphlet for the Policy Network think tank he goes on to warn that mass migration has left Britain richer but so deeply unsettled that the issue risks losing Labour the next election. He cites the case of Canning Town in east London, where the proportion of foreign-born nationals doubled between 1991 and 2001 and now makes up a quarter of the population. The pamphlet also appears just before the local elections when the BNP is putting up 655 candidates (twice the number in 2005) and mounting strong challenges in traditional Labour areas. Wearing his Home Office hat Mr Byrne was also responsible for announcing Britain’s new “managed migration” points system. Under the new system non-EU workers will be placed into five categories, ranging from highly-skilled scientists and entrepreneurs to the unskilled. The top tier will be allowed in from January 2008 but there is no starting date for admission of non-EU workers judged to be low-skilled. Further information - Click here and here Guardian 18.04.07, Independent 19.04.07
Children stay living with parents; the latest issue of the Social Trends Report says that because of the cost of housing 58 per cent of young men aged 20-24 and 39 per cent of young women in the same age bracket still live with their parents. The average price of a house paid by first-time buyers rose by 204 per cent to £141,229 in the decade up to 2005 compared to a 92 per cent average rise in incomes. One of the reasons for the rise in house prices is the increased demand caused by people living longer and more people living on their own which rose from 3m to 7m between 1971 and 2006. Correspondingly the proportion of all people living as couples with dependent children has fallen from 52 per cent in 1971 to 37 per cent in 2006. Equally the number of children living in single-parent families has risen from eight per cent in 1972 to 24 per cent today. Homes are being built at a greater density with 40 per hectare in England in 2005 compared to 24 per hectare in 1995 - the London figure is 110 per hectare. Times 11.04.07
Youth exclusion “is costing billions”; in a report published in conjunction with the Royal Bank of Scotland the Prince’s Trust says that despite low unemployment and growing prosperity, the UK has a significant number of socially excluded young people. It says youth unemployment costs the economy £10m a day in lost productivity, while the costs associated with criminal activity by young offenders costs over £1bn each year. The research analysed data on youth unemployment, crime and educational under-achievement collated by the London School of Economics. Almost one in five young people aged 16-24 in England were not in education, employment or training (Neets) - a percentage that is almost unchanged since the mid-1990s and which compares very unfavourably with other European countries such as France. Much of the blame is placed on under-achievement at school and the report calls on the government for combat social exclusion among young people. Further information - Click here Regeneration 13.04.07
500 Britons leave the UK every day; according to the latest Office for National Statistics figures a record 380,000 left the UK in 2005. Of these more than half were British citizens leaving for more than a year with the favourite destinations being Australia, Spain, France and New Zealand. Meanwhile 565,000 arrived, slightly down on 2004, so the population rose by 185,000. Most came to work or study. Whereas many of the migrants coming to the UK said that they would only be staying one or two years, a large proportion of those leaving the UK said that they were leaving for good. Of the nationalities coming to the UK people from India, Pakistan, Bangladesh and Sri Lanka accounted for more than two-thirds. India had the largest numbers with 92,000 followed by Australia (78,000), Poland (69,000) and South Africa (63,000). Further information - Click here Times 20.04.07
Beckitt unveils CSR drive; speaking at the Lord Mayor’s Easter Banquet, Margaret Beckitt, the foreign secretary, launched a drive to ensure that British business is “socially responsible” in its international dealings, arguing that the pursuit of “narrow commercial interest to the exclusion of everything else makes little sense”. She said, “business, as much as government, will have to take a responsibility for building the kind of world in which we can prosper and thrive”. She set out the broad outlines of the Foreign and Commonwealth Office (FCO) initiative which aims to encourage corporate social responsibility by large UK companies, especially those operating in sectors such as oil and gas mining, engineering and defence. A senior FCO official said: “What both business and the government need to do is to ensure that, when there is international investment by big British companies, it is done in a sustainable way and not in a way that aggravates local populations”. One of the good practice models that the FCO is looking at is how BP has developed a liquefied gas project in Indonesia, where they avoided the problems they ran into in the 1970s. This time, BP involved the local community in what they were doing, involving them in the siting of the project and consulting with them”. Further information - Click here Financial Times 19.04.07
Budget reveals early Treasury thinking on regeneration strategies; Regeneration examines the Budget for tell tale clues to the Treasury’s review of sub-national regeneration and economic development initiatives. It says that although Treasury officials have been consulting widely little has emerged about their findings, which will take the form of a report to guide the Comprehensive Spending Review in the autumn. However some clues did emerge from the Budget including measures to strengthen local authority incentives and decision-making powers, developing mechanisms to drive sub-regional collaboration across functional economic areas including city-regions and improved economic planning and decision-making processes at regional level. Dermot Finch (pictured right) of the IPPR’s Centre for Cities says: “The emerging evidence from the review highlights the economic importance of sub-regions, but they are not reflected in current governance arrangements. Ministers are very wedded to the regional tier, especially RDAs, but now accept that RDAs are not sufficiently accountable. They also accept that RDAs must do more to engage with the sub-regional level, on both planning and delivery”. Some observers believe that the Treasury favours solving this conundrum by merging the RDAs and the regional government offices into regional executive agencies, which would be more accountable than currently to locally-elected politicians. Regeneration 13.04.07
‘We need enterprise zones for areas left behind by the south-east’; David Frost, the director-general of the British Chambers of Commerce, has called for a new generation of enterprise zones offering tax breaks and less onerous employment legislation for new businesses to be set up in areas left behind by Britain’s growing economic success. He said that the UK was becoming dangerously divided between south-east England and the rest of the country. Twice as many businesses were formed per head of population in the Thames Valley as in the Tees Valley, and the country was perpetuating dependency culture in the regions. It needed more than “endless tinkering” with business support policies that were subjected to three-year upheavals. He called for a revival of the enterprise zones that had been seen in the 1980s for those areas worst hit by the decline of large-scale industry. “We need to reinvent a spirit of enterprise in areas outside London and the south-east”. He also hit out at the Conservatives for attacking business interests rather than explaining their importance to the economy. “Apart from the odd photo opportunity with a young entrepreneur I do not hear anything coherent from the leadership about the importance of wealth creation”. Further information - Click here Financial Times 17.04.07
Nurses ‘can’t afford housing in 99 per cent of UK towns’; more than two-thirds of towns are unaffordable for key public sector workers according to new research published by the Halifax. A typical property in 70 per cent of towns was now beyond the reach of nurses, teachers, police officers, fire-fighters and paramedics. The figure is up by five per cent from last year and almost double the 36 per cent deemed to be unaffordable in March 2002. Nurses and fire-fighters face the greatest difficulty with 99 per cent of towns unaffordable in March 2007 for nurses and 97 per cent beyond the finances of the fire-fighters. London and the south-west were the least affordable. In London, the house price to earnings ratio is 10-1, meaning the average property costs more than ten times their yearly earnings. Independent 13.04.07
UK urged to seek investors for higher-speed broadband; ministers and regulators have just two years to find ways of encouraging investment in the next generation of high-speed broadband or the UK’s competitiveness will suffer according to the Broadband Stakeholder Group. It warns that existing internet access networks, and those being rolled out, will be too slow to meet the demands of the most bandwidth-hungry companies and households by 2012. Pressure on broadband pricing means that commercial incentives for building the necessary infrastructure are “particularly weak”. BT will be offering broadband speeds of up to 24 megabits per second from next year whilst Virgin Media plans to offer up to 20 mbps from June and is testing a 50 mbps service. However France Telecom is already trialling up to 100 mbps in Paris, and Deutsche Telecom has plans to offer speeds of up to 50 mbps in 50 German cities next year. Further information - Click here Financial Times 16.04.07
Big Invest to launch social venture buyout fund; Big Invest, a specialist finance company for social enterprise, is to launch its own social venture buyout fund next month. It plans to raise £10m to buy five private companies, but instead of stripping the companies’ assets, laying off staff and selling the new acquisitions at breakneck speed for a 20 per cent return on investment, Big Invest will transform the companies into social enterprises. Big Invest, which was originally conceived as a funding scheme for social enterprises by the team that set up Big Issue, aims to expand the social business sector. It stems from the fact that Anita Roddick (pictured right), John Bird, the first editor of Big Issue and Nigel Kershaw, the first managing director of Big Issue, asking themselves why there are not more businesses like the Big Issue and Café Direct. An initial £3.5m came from sources such as the Phoenix Fund. So far it has made 15 loans, including £250,000 to St Margaret’s Bay Trust to create a zero-carbon conference and training centre in Kent, and £250,000 to fund the expansion of Belu, the first bottled water company in the UK to use compostable bottles. Further information - Click here Guardian 18.04.07
One in six restaurants and bars go bust each year; a report by accountants UHY Hacker Young says that restaurants and bars are three times more likely to go bust than other UK businesses. One in six hospitality and catering firms fail each year. The sector is the second toughest in terms of business closes after the courier and haulage industry. Further information - Click here Times 23.04.07
BCC clashes with Darling over small businesses; two differing views of how the UK nurtures small business arose on the first day of the British Chambers of Commerce (BCC) annual conference. Alistair Darling, the secretary of state for trade and industry, heralded a DTI report that showed that the UK is winning “the Champions league of Europe” which shows that the profits of UK firms is almost equal to France and Germany’s top firms combined. He also stressed the importance of the last Budget in its support for research and development (R&D), raising skills and help for exports. However David Frost (pictured right), director general of the BCC, said that the decision in the very same Budget to raise the corporation tax for small firms from 19 to 22 per cent was a huge blow for small companies. The BCC disillusion was compounded by the results of a survey it had commissioned of 145 businesses. Asked about the problems of starting a business today compared to ten years ago, 49 per cent said it was “much harder” and 20 per cent said it was a “little harder”. A third of the respondents mentioned cutting red tape as the biggest priority, 25 per cent wanted improvements in education and 17 per cent wanted better skills training. David Frost said that: “businesses are succeeding in the UK through the desire and ambition of the hundreds of thousands of entrepreneurs who are battling to succeed in the competitive globalised economy. Politicians of all parties must not take this for granted and see business merely as revenue stream to fund their spending”. Further information - Click here Independent 16.04.07
However, CBI chief disagrees…; Richard Lambert, director-general of the CBI, told a group of leading entrepreneurs that entrepreneurial culture is as dynamic as it has been since the Second World War. He conceded that the assertion might seem counterintuitive. “We’ve all read surveys saying how business is strangled by ever-growing mountains of red tape”. But he said that there was a process of creative destruction going on in British industry. “Disruptive technologies and processes are changing the face of long-established industries and bringing whole new sectors of activity to life. Supply chains are being re-examined and market access is being transformed by the internet”. Further information - Click here Financial Times 17.04.07
USA continues to dominate biotech industry; the American biotechnology industry continues to dwarf the rest of the world in terms of both products and revenues although the UK remains the leading player in Europe according to Ernst & Young’s Global Biotechnology Report for 2007. American public biotechnology company revenues stood at $55.8bn (£28.1bn) in 2006 representing 76 per cent of the global total of $73.4bn. Pending on R&D in the US was $23bn, or more than 82 per cent of the $27.95bn spent by publicly held biotechnology companies worldwide. William Powlett-Smith of Ernst & Young said that American industry is supported by the fact that the USA is a single market without price regulation. “As long as that remains the case, it will be very tough for Europe and Asia to catch up in terms of product revenues”. Within Europe, the UK is the strongest player in terms of products. Publicly held British biotech companies had 246 products in development, or 35 per cent of the total of 692 across Europe. Six of the ten largest European biotech mergers and acquisitions in 2006 also involve British companies. Further information - Click here Times 16.04.07
UK leads in adding value; Alistair Darling, the trade and industry secretary, says that UK companies came out well from the 2007 Value Added Scoreboard published by the Department of Trade and Industry this week. Of the 750 biggest value adding, or wealth creating, firms in Europe 210 are from the UK. Over the past four years, large UK-based companies have had higher profitability, faster value-added growth and higher wealth creation efficiency than their French or German equivalents. The DTI says that one reason for the UK’s success is its strength in high-value sectors such as oil and gas and financial services. The three largest European companies by value added were Royal Dutch Shell, BP and Total. The next two UK entrants were HSBC at seventh and Royal Bank of Scotland at 11th. Siemens, DamilerChrysler and Deutsche Telecom were fourth, fifth and sixth. Further information - Click here Financial Times 23.04.07
CBI says that there 21m “suspect sickies” last year; a poll conducted by the CBI and insurers Axa has revealed that employees took an average of seven days off sick in 2006 and lost 175m working days. This compares to 6.6 working days in 2005 and a total of 164m days lost. Long-term absence of 20 days or more accounted for 43 per cent of all time lost, costing £5.8bn. The total cost of workplace absence last year was £13bn. Employers said that they attributed 12 per cent of short-term absences to staff “pulling a sickie”, which meant 21m working days were lost at a cost of £1.6bn. Further information - Click here Guardian 10.04.07
Teenagers should be paid for passing A-level maths and science; teenagers could be paid for passing A- levels in maths and science or get bursaries to pursue their studies at university under proposals put forward by the Council for Industry and Higher Education. In a review of the supply of young people following careers in science, technology, engineering and maths (the “Stem” subjects) the Council says that there has been a significant decline in students taking these subjects at A-level since 2002. It also raises concerns that students are being forced into subject choices too early in schools, that qualified teachers are still in short supply, and that school laboratories are still not up-to-date. However their main recommendation is that the government should consider incentives of about £300-£500 to help remedy the shortfalls in the number of graduates. Richard Brown, chief executive of CIHE, said that offering £300 to teenagers successfully completing A-levels in maths or computing would cost about £17m a year or, if extended to all Stem subjects, £53m a year. Further information - Click here Guardian 13.04.07
London Challenge to run for another three years; the £40m-a-year London Challenge scheme, which was due to finish in 2008, has been extended by another three years. Alan Johnson (pictured left), the education secretary, said that the scheme, which is aimed at raising education standards in deprived parts of London, was being extended because of its “success and popularity”. It is also to be extended to another two cities. The London Challenge started in 2003 and provides pan-London resources and programmes for all schools, individualised support for around 70 disadvantaged schools and carries out intensive work with five London boroughs -Islington, Haringey, Hackney, Southwark and Lambeth. GCSE results improved faster in London than England as a whole between 2001-06. It also received a very favourable report from Ofsted at the end of 2006. Further information - Click here and here Regeneration 13.04.07
Racism and assaults rise sharply in English schools; a parliamentary answer reveals that the number of pupils suspended for racist abuse has risen sharply. Suspensions at UK schools for racist abuse went up by 29 per cent to 3,300 in 2005 according to Department of Education figures. There was also an increase in the number of pupils suspended for attacks on adults and other students, while suspensions for verbal abuse, bullying and sexual misconduct also shot up. The total number of suspensions rose by 45,000 (some 13 per cent) in 2005. Independent 14.04.07
Retailers told less waste means more business; the Institute of Grocery Distribution (IGD), the research body for the food industry, has suggested that manufacturers and retailers who reduce wrappers are likely to improve “brand loyalty” from customers. The Independent says that its Campaign Against Waste has shown that excessive packaging is disliked by shoppers and harms the environment. In Britain, 3.3m tonnnes of food is thrown away every year. Most goes to landfill sites, where it causes methane emissions that add to global warming. The IGD says that of the 1,000 shoppers it interviewed, 43 per cent thought they should reduce impulse purchases that led to food being discarded. But 29 per cent wanted food companies to introduce more re-sealable packaging, 23 per cent wanted the shelf life of food to be extended and 19 per cent were interested in temperature sensitive labels to ensure food was chilled correctly. The IGD report, Beyond Packaging: Food Waste in the Home, highlights the business case for reducing waste. “The research finds packaging and labelling innovations that reduce food waste are well received by shoppers, helping to provide a competitive advantage and brand loyalty for retailers and suppliers”. Further information - Click here Independent 13.04.07
Planting trees may not be the answer; a paper produced by two US scientists has cast doubt on the climate change mantra that planting trees is the answer to offsetting carbon emissions. The scientists from the Lawrence Livermore Laboratory that only tropical rainforests are beneficial in helping slow global warming. They argue that outside a thin band around the equator, forests end up trapping more heat than they help to get rid of through a cut in carbon dioxide. Planting trees above 50 degrees latitude- the equivalent of Scandinavia or Siberia in the northern hemisphere- can also cover up tundra normally blanketed in heat-reflecting snow. Further information - Click here Guardian 10.04.07
Ministers aim to turn schools ‘green’; the education secretary, Alan Johnson, has won £100m from the chancellor’s Comprehensive Spending Review to ensure that all new secondary schools are designed to be carbon neutral or at the very least reduce carbon emissions. Although ministers plan to refurbish or rebuild every secondary school in the country by the end of the next decade the programme will start with the 200 new schools that are to be built over the next three years. Design features will include wind turbines, solar panels, insulated windows and low-emission light bulbs. It is estimated that the new measures will reduce carbon emissions by 140,000 tonnes. However, if successful, the programme will be extended to the schools to be refurbished or rebuilt which should result, according to Alan Johnson, in at least 2,000 out of a total of 2,950 schools becoming “environmentally friendly”. The initiative will build on the achievements of the St Francis of Assisi Academy in Liverpool, which became the first specialist “green” school when it opened last year. Independent 16.04.07
Citibank to cut 700 jobs at Canary Wharf; Citibank is to start on a restructuring plan that will axe or relocate 26,500 jobs, about one in 12 of the workforce. The company’s 11,500 employees, including 9,000 at its European headquarters in Canary Wharf were being warned that high cost centres such as the UK would be disproportionately affected. As well as 17,000 lay-offs from a global workforce of 327,000, Citigroup is to move 9,500 jobs away from major cities such as London and New York to lower cost regions in the same country, or even overseas. The company did not set out country-by-country figures for the 17,000 job cuts but is believed that 1,600 will go in New York and up to 700 jobs in the UK. Further information - Click here Independent 12.04.07
Crossrail is back on track; the £10bn east-west London Crossrail link is finally to be given the go ahead. The Estates Gazette quotes Whitehall sources as claiming that a deal would be approved in the next few months “barring a disaster”. Construction could begin in mid-2008 with some sections opening in 2015. It is still unclear how much of the funding will come from the private sector. Estates Gazette 21.04.07
Mayor calls for West End co-operation; speaking at his weekly press conference Ken Livingstone (pictured left) called for developers in the West End to drop their individual plans for the area and join together in one single “breathtaking” development. He specifically singled out the St Giles area, to the east of and including Centre Point, which is currently owned by three different groups of landowners including Legal and General, which owns the former Ministry of Defence building facing onto St Giles High Street, the Co-Operative Insurance Society, which owns a major building on New Oxford Street, and Targetfollow, which owns CentrePoint. Legal & General won approval for a Renzo Piano-designed redevelopment of St Giles Court in July 2006. The Mayor said that the L&G scheme would waste an opportunity to create “a genuinely accessible location” with “perhaps an iconic public space at its centre”. He said that would be “more than happy” to use his compulsory purchase order powers to buy the land at the east of the site including the Bloomsbury Central Baptist Church. However he has no power to force L&G to resubmit their plans and sources close to the insurer said that they had no intention of abandoning its £300m scheme. Livingstone previously hoped to bring a 5,000-seat international convention centre to the St Giles area but told the press conference that it was no longer financially viable. Regeneration 20.04.07, Estates Gazette 21.04.07
New York to adopt the congestion charge; the mayor of New York, Michael Bloomberg, has announced plans to introduce a congestion charge for cars entering the busiest parts of Manhattan. However the charge will be $8 - approximately half of that in London. The announcement was made in a speech made by the Mayor to mark Earth Day and is one of a number of measures designed to lower carbon emissions in the city. Further information - Click here Guardian 23.0.07
US firm to take over London school; Edison Schools, an American-owned education company, is to take over the senior management of Salisbury School in Enfield - the first time this has happened in a local education authority school. Two unusual aspects of the deal are that the school is not failing and that part of the three-year £1m package will depend on pupils achieving better GCSE grades and scores, as well as ensuring there are fewer expulsions and making the school more popular with parents. Further information - Click here Guardian 23.04.07
Hackney provides the new housing ‘hot spots’; the Times’s property supplement indulges itself by naming Dalston and Stoke Newington as two new housing hot spots. It says that both are being stimulated by City cash, the proximity to the Olympics and the sort of middle class invasion that has hit nearby areas in the past such as Islington. It says that location is Dalston’s main asset although the news that it will get a tube station on the extended East London Line in 2010 is a factor. It describes present day Dalston as the edgier part of the London borough of Hackney, home to artists, students and newly arrived immigrants. However, according to Hometrack, house prices rose by 23 per cent in 2006 and whereas a year ago buyers could have taken their pick nowadays you can walk into an estate agent with £500,000 to spend and they will not even bother registering you. Stoke Newington is nestled deep in Hackney but is off the Tube map and most Londoners’ radar. First-time buyers began to migrate here in the 1980s but like Dalston it has seen property prices go up by 31 per cent over the last four years. The housing stock is mostly Victorian and its conservation area status coupled with Stoke Newington Church Street and Clissold Park are encouraging the new gentry. However the lack of quality secondary education means that young residents move on. Elsewhere in Hackney the Financial Times’ House and Home supplement is even more adventurous in naming Hackney Wick as a coming area. It accepts that a somewhat desolate atmosphere remains from the area’s industrial past but position facing the Olympic Park and the growing influx of artists and creative types establishing live-work in the old warehouses. There are the usual worries that the current situation will be disrupted by newcomers and the fact that it is lacking the social infrastructure of areas like Shoreditch or Hoxton with one grocery, one bar and two cafés. Times 13.04.07, Financial Times 14.04.07
Islington Green to be a 3-19 school; speaking at his monthly press conference Tony Blair said that city academies are poised to take over state primary schools with Islington Green being one of the first to do so. The prime minister sees a likeness with leading fee-paying schools and their junior “prep” schools. It is also part of the idea of a joined-up schooling from three to 19. The announcement will be made when details of the first schools to become trust schools are announced. Independent 18.04.07
The City goes wireless; the rollout of Europe’s most advanced wi-fi network that will offer wireless broadband to 350,000 workers and visitors across the City of London has been completed. The network, which started operations on 23rd April, will offer free access for the first month. The Cloud is managing it. Further information - Click here Independent 23.04.07
Six London restaurants in world’s top 50; the latest San Pellegrino awards for the world’s best restaurants show that London has six in the top 50. The judges, who compiled the list after surveying 70 countries, gave France the most entries, followed by the USA, the UK and Spain. The London restaurants in the table were Le Gavroche (28th), St John (34th), Nobu London (17th), Hakkasan (19th), Restaurant Gordon Ramsey (24th) and the River Café (44th). The only other UK restaurant in the list is the Fat Duck at Bray (2nd). Further information - Click here Independent 23.04.07
McNulty says Olympic budget was rushed; speaking on a Radio 4 programme Sir Roy McNulty (pictured right) , the acting chairman of the Olympic Delivery Authority, says that the budget for the London games had not been sufficiently worked out when the bid was made. He says that “homework” was not done “deeply enough at the beginning” resulting in several funding crises and the review which saw the cost more than triple to an overall £9.3bn. A spokesman for the Department of Culture, Media and Sport acknowledged that the budget had not been fully worked out but said that this was inevitable. “Some elements… could have not have been foreseen, and the £2.7bn contingency may not even be touched. The core costs are now £3.1bn, not a huge increase on £2.3bn. Clearly there will always be a difference between a bid and a living, breathing games”. Guardian 17.04.07
LDA launches £11m development fund for Olympic opportunities; employment, training and skills projects across London are set to benefit from the £11m Opportunities Fund (“Engaging in London 2012”) that has been set up by the London Development Agency. The grants will fund a range of skills training, work placements and employment advice. They will be particularly aimed at helping the capital’s most disadvantaged and excluded communities. The projects will include sports and leisure training for young people, a London Metropolitan University project to create 40 new women-led businesses, support for Bengali women to start up and develop businesses and training in Islington and work placements for 200 black, Asian, and ethnic minority construction graduates. Over 14,000 Londoners and 1500 businesses in every London borough will benefit from the funding which will run from 2007 to 2010. Ken Livingstone, the Mayor of London, said at the launch of the fund, “The Opportunities Fund will provide over 14,000 Londoners with the training and support they need to make the most of the huge opportunities brought by the 2012 Games. The projects will train new sports coaches, cooks and builders who are needed to make London 2012 successful”. Further information - Click here Regeneration 13.04.07
Olympic clearance work advances; more than a fifth of the land required for the 2012 Games has been cleared and 95 per cent of demolished material is being recycled according to the Olympic Delivery Authority (ODA). So far demolition has accumulated 10,000 tonnes of material, all but five per cent being recycled into the construction of the Olympic Park. The ODA aims to clear most of the land by the time of the Beijing Olympics next year. The authority gains full possession of the Olympic Park site in July when it will begin a nine-month demolition programme levelling 256 buildings. Financial Times 17.04.07
Olympic land could raise £2bn; speaking at his weekly press conference London mayor Ken Livingstone said that the sale of LDA’s land in the Olympic Park could bring in up to £2bn when it is sold off after the Games. The money would be divided between the LDA and the Lottery. Around half of the Park will be sold off and the mayor said that he will work with culture secretary Tessa Jowell (pictured left) to formalise before the end of the summer how exactly the proceeds will be shared out. He said that at the moment the “cautious” estimate for the sale of the land was £650-800m. However this was based on an assumption of the value of the site rising by six per cent each year, when such a rise was the lowest annual rise seen in London in the last ten years. If the value of the land went up by 20 per cent a year then the Olympic suites could be valued at £1-2bn. Regeneration 20.04.07
RBS looks at Southwark Street; the Estates Gazette reports that the Royal Bank of Scotland, Europe’s second largest bank, is in discussions with Land Securities about taking 370,000 sq ft in the Bankside 2 and 3 schemes in Southwark Street. Bankside 1 is already let to IPC Media. The Gazette says that the news has surprised some commentators as RBS has recently signed up to take 270,000 sq ft at the Aldgate Union scheme on the edge of the City. It also has two City HQs in Bishopsgate and Premier Place. The letting would be a further boost to the South Bank following the recent lettings to Transport for London and the London Development Agency. Southwark Council is also looking for a 300,000 sq ft headquarters building in the area. Andrew Barnes, a partner at King Sturge, said: “The South Bank is fast becoming home to a substantial number of major corporates. It’s now clearly major competition for Paddington and Canary Wharf”. Estates Gazette 14.04.07
Somerset House luxury hotel plan; the government has decided to sell one wing of Somerset House as a potential hotel with an asking price of around £100m. The location is the Pennethorne wing situated on Lancaster Place running between the Strand and the Embankment. It was earmarked three years ago as a potential home for the UK Supreme Court, which will now be based in Parliament Square. More than 760 HM Revenue & Customs (HMRC) currently occupy the 500,000 sq ft. HMRC are expected to leave Somerset House and their two other Central London buildings in the summer. The Estates Gazette ponders whether bidders will see this as an opening gambit to get control of more of Somerset House. The Somerset House Trust holds a 128-year headlease on the estate from the Department of Culture, Media and Sport. Estates Gazette 21.04.07, Times 21.04.07
Guardian building gets major offers; the Guardian’s 77,0000 sq ft offices in Farringdon Road have attracted offers from a number of major developers including Heron, Helical Bar, Frogmore, Tiger Developments and student housing specialist UNITE. The freehold building, which will become available when the Guardian moves to the King’s Cross development, has consent for a 93,000 sq ft residential-led, mixed-use scheme. Estates Gazette 14.04.07
Art colleges prepare for move to King’s Cross; London’s University of the Arts has enlisted two leading firms of architects to help it with plans to sell two of its central London campuses, which will become free when it moves to King’s Cross Central in 2011. The largest is the 230,000 sq ft former Central building in Holborn at the junction with Theobalds Road which includes the Grade-11 Lethaby Building, the Cochrane Theatre and a tower block. The value is thought to be £60m. The Lethaby building could be redeveloped as a hotel, with an office and residential mix across the remainder with ground-floor shops. The second site is the old St Martin’s building in Charing Cross Road next to Foyles bookshop. It could fetch £30m and has the potential for three floors of shops, with commercial or residential above. The architects are Ken Shuttleworth’s MAKE and Woods Bagot. Estates Gazette 21.04.07
City approves 40-storey tower for Bishopsgate; Great Portland Estates’ proposals for a 40-storey office tower at 100 Bishopsgate has been recommended for approval by the City Planning Officer. The tower is part of a 815,000 sq ft three-building complex designed by Allies & Morrison. Both English Heritage and CABE have backed the scheme. Estates Gazette 14.04.07
King’s Cross battle continues; King’s Cross Central developer Argent and London & Continental Railways are considering taking legal action against the King’s Cross Think Again lobby group for loss of earnings after they were forced to down tools until a judicial review takes place on 24th-15th May. King’s Cross Think Again asked for the review because it wants the amount of affordable housing at the site increased from 40 to 50 per cent. Argent and LCR said that they would go ahead with a claim for damages if they could not get a high court injunction –stopping all work on the site- lifted. Estates Gazette 21.04.07
Candy strikes again; Project Blue, a consortium of the state-owned property company Qatari Diar and Christian Candy’s property group, CPC, have beaten 13 other bidders for the 13-acre Chelsea Barracks site in a deal worth around £900m to the Ministry of Defence. Project Blue is believed to have offered £800m upfront, followed by a top-up when consent is granted and further overage from the sale of homes on the site. The site was originally put on the market in October with a £250m guide. Westminster Council planning brief for the triangular site between the River Thames and Sloane Street allows for a 1.5m sq ft scheme with 1,500 homes. CPC, which has achieved fame for its top of the market apartment schemes including the redevelopment of Bowater House in Knightsbridge where prices have reached £84m and £100m for individual flats. It is also redeveloping Middlesex Hospital. CPC have close links with Qatar’s new prime minister, Sheikh Hamad Bin Jassim Bin Jabr Al-Thani (pictured right) who chairs Qatari Diar, for whom this will be their first European investment. The Sheikh personally funded the Bowater House scheme. One of the original favourites for the site was the US government who are looking for a site for a new London embassy. A source close to Project Blue did not rule out a swap deal for part of the Chelsea site in return for the Grosvenor Square embassy building. However he said that there would be concerns that this might compromise the prime residential value of the Chelsea site. Estates Gazette 14.04.07
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Next issue on 17th May 2007
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