Foreign takeovers cause concern on UK tax revenues; the UK has remained unique amongst major industrialised countries in seeing foreign takeovers as being good for British business, particularly in raising the quality of management. This viewpoint has even extended to the prospect of key British assets such as the major airports, the London Stock Exchange and nuclear power stations falling into foreign hands. However, one area of concern has come to light. The FT reports that accountants and academics are warning of the dangers to the UK’s tax revenues especially as the Chancellor is relying on a steep rise in corporation tax revenues to make his public finance sums add up. There seem to be two specific danger points: first, that the takeovers will be structured to shift taxable profits from high-tax countries to low-tax countries and second, that the UK’s generous tax relief on interest costs will encourage foreign companies to increase the debt burden on UK subsidiaries to reduce the level of taxable profits. The FT says that the results of foreign takeovers are usually judged favourably in terms of productivity, innovation, investment and jobs but the narrow perspective of corporate tax may add up to a significant downside. Financial Times 11.04.06
Dispelling
the myths; according to the Independent the OECD Factbook 2006 confirms
some prejudices but shatters some myths. It starts with the facts of doing
business in the UK where employers groups have been claiming that business
taxes have risen by £70bn since 1997 whilst foreign takeovers of UK
firms are at record levels. The OECD says that whilst the UK tax take will
rise from 33 per cent of GDP in 1994 to 38.7 per cent in 2008 it is still
short of the 50 per cent in Sweden and below the average for the OECD. On
immigration the UK has taken in one migrant per 1,000 natives since 1991 whilst
Germany has taken in almost four while Greece has absorbed six. The brain
drain- the loss of high-educated Brits to other countries is true. We have
lost 15 per cent of graduates to other OECD countries. Other contentious claims
that prove to be true are the level of employment where the UK has a higher
level at 80.7 per cent than the US and the Eurozone. The North-South divide
is also confirmed with Britain having the second largest gulf between the
richest and the poorest areas. However the long hours culture turns out to
be a myth (except perhaps in the City). The actual hours worked per person
has fallen since 1994. Independent 07.04.06
London
house prices surge could push up interest rates; the latest FT house
price index shows that between November and February London house prices rose
by 7.2 per cent, an annualized rate of more than 30 per cent and the biggest
rise for almost six years. Annual house price inflation in England and Wales
increased from 3.4 per cent in February to 4 per cent in March. Ben Broadbent
of Goldman Sachs said that the rise in house prices was “another indicator
of consumer confidence and a reason for (the Bank) to leave its optimistic
forecast in place, even though the hard output data is not great”. He
thought that the rising London house prices were an early sign that demand
was picking up across the economy and that there would be higher interest
rates by the end of the year. The latest quarterly trend survey by the British
Chambers of Commerce shows that economic prospects in the second quarter have
improved markedly which is thought to dampen any short-term prospects of interest
rate cuts. Financial Times 08.04.06, Sunday Times 09.04.06
Doubts
cast on Government job cuts claims; official figures have cast doubt
on government claims that it has achieved almost half of the proposed civil
service job cuts, that are such a key part of the planned £21.8bn efficiency
savings due by 2008. The Office for National Statistics (ONS) has released
figures showing that the number of equivalent full-time civil service posts
had fallen by only 9,000 to 529,000 since the first quarter of 2004 when the
Gershon efficiency review was launched. The CBI said that the government’s
claims were beginning to “look like pie in the sky” however the
Treasury insisted that the ONS figures were fully consistent with departments
achieving their efficiency savings by 2008. Financial Times 08.04.06
RDA
role in small business support under attack; just after the Budget
gave more powers to the regional development agencies (RDAs) to pilot five
women’s enterprise units the Daily Telegraph carries a report attacking
the agencies role in small business support. The Telegraph says that it has
seen a draft report produced by the Small Business Service, which is an agency
of the Department of Trade and Industry, saying that it may have been a mistake
to have passed responsibility for business support for deprived groups to
the RDAs. The report is an analysis of the SBS’s £56m Phoenix
Development Fund, which provides financial support for encouraging enterprise
among women, ethnic minorities, the disabled, the mentally ill and ex-offenders.
After five years the Phoenix Fund is being wound up and its responsibilities
passed to the RDAs. However the SBS report raises questions about the handing
over of the Business Links, which transferred last April, and, in particular,
the future of targeted business support for women. It says that the transfer
of the Business Links has led to “a loss of recognition of, and leadership
on, women’s enterprise”. Despite a high-level promotion campaign
the women’s enterprise sector has “failed to impact on the Business
Link transition process and the development of key policy themes and budgets
to the RDAs”. Daily Telegraph 28.03.06
Chambers
blame EU for red tape; according to research published at the annual
conference of the British Chambers of Commerce, European Union regulations
were responsible for most of the increase in the burden of red tape in 2005.
The EU was responsible for a minority of new regulations by number, but the
majority - 86 per cent - by value. The survey also found that government departments,
including those with the biggest impact on business-are failing to assess
the cost of their regulations on companies. The Treasury, trade and industry,
transport and revenue departments were he worst offenders whilst the departments
of health and work and pensions did the best jobs. Financial Times 03.04.06
But ministers say business is not doing enough; faced by a barrage of criticism from government over red tape (including the proposal that the Chambers of Commerce would hold Gordon Brown personally responsible) Alan Johnson, the Trade and Industry Secretary (pictured right), has turned the tables. He told the BCC conference that business was not doing enough to support the deregulatory drive, with companies supplying too few ideas for potential red tape cuts. He went on, “I spend 50 per cent of my time listening to business saying, quite rightly, we should deregulate and the other 50 per cent listening to business saying where we need more regulation because of concerns about unfair competition and other issues. We want business to identify those areas where we can deregulate…we need some help here”. The FT says that there is increasing ministerial frustration at the failure of business to support its longstanding complaints about deregulation with many concrete ideas of regulations that could be simplified or axed. A government website set up last autumn to canvass business suggestions has received only about 100 contributions. Financial Times 04.04.06
Community finance tax relief fails to catch on; two of the largest operators of the Community Investment Tax Credit (CITR) have stopped using the scheme. Originally proposed by the Social Investment Tax Force the scheme was introduced by the Chancellor in 2003 as a means of increasing the funds available for small business in disadvantaged areas. Savers using CITR accounts were offered a tax credit of 5 per cent of their deposit a year for five years, as well as interest on their deposits. Charity Bank, one of the main providers of CITR funding, stopped accepting deposits last August under the scheme, and Triodos Bank took deposits for less than a month last year and is no longer offering CITR accounts. In total, just £38m has been raised under the scheme, a tiny fraction of the £1bn envisaged by Sir Ronald Cohen when his Social Investment Task Force proposed it five years ago. One of the main problems is the issue of when and how fast the money has to be invested in small firms. Under the current rules, 25 per cent has to be invested in the first year, 50 per cent in the second and 75 per cent in year 3. There are calls for the rules to be changed to cover signed loan agreements and to extend the lending period to five years. Observer 02.04.06
Johnson warns about ‘petty nationalism’; Alan Johnson, the Trade and Industry Secretary, has repeated his warning about the dangers of protectionism in the US and Europe. In his speech to the British Chambers of Commerce Annual Conference he said that globalisation was causing ‘increased anxiety’ about its effects across the Channel and the Atlantic. Mr Johnson had previously attacked US politicians for blocking the acquisition of five US ports as part of the takeover of P&O by Dubai World Ports. He said that whilst security was a genuine issue it was being used as a veil. He turned to a slew of interventions by European governments to protect domestic companies starting with the French vowing to protect the independence of Danone against a takeover by PepsiCo of the US. Several European governments opposed to the takeover of Luxembourg-based Arcelor by Mittal Steel whilst the French had rushed through a merger between Gaz de France and Suez to head off a bid for Suez by Italy’s Enel. Mr Johnson said, “I don’t want to be alarmist-world trade is growing- but we are at a crossroads and if we take the wrong turn it could take generations to recover”. Independent 04.04.06
Is
Sir Alan Sugar the right role model? a survey by Begbies Traynor,
the corporate recovery specialists, finds that there is a widespread belief
that programmes like the Apprentice and Dragon’s Den are “encouraging
idiots” to start up businesses. The Times’ City Diary wonders
why Begbies are upset, as it will create “Lots of work for Begbies and
their ilk a few years down the line, then” Times 06.04.06
UK puts more value on SMEs than France; small companies
in the UK are more highly valued than their French counterparts according
to a study conducted by Frenger International and Epsilon Corporate Financial
Services. The study found that British companies benefited from a lower cost
of capital and a more liquid mergers and acquisitions market. As a result
the study found that small British companies were valued at a 15 per cent
premium to their French rivals by takeovers. It also found that the British
economy put a higher value on entrepreneurship than France, which has suffered
from slower growth in its small business sector. Thierry Breton, the French
Finance Minister, has proposed tax reforms and incentives to help small companies
grow faster and catch up with the UK and with Germany’s healthy Mittelstand
sector of mid-sized companies. The controversial and now defunct labour reforms,
which have been the subject of street demonstrations, had been seen as lifting
curbs on small businesses and encourage them to hire more staff. Financial
Times 06.04.06
COMMUNITY AND BUSINESS AFFAIRS
Tony
Blair extols Pledge Bank; during his speech on the plans for the
2012 London Olympics (see page 9) the Prime Minister announced a challenge
that he would become a patron of a London community sports club as long as
100 other people did likewise using Pledge Bank. This prompted the Guardian
to write an editorial extolling the work of Pledge Bank which it describes
as ‘an admirable social website’ and ‘ as one of the most
interesting social websites that are springing up on the internet and has
the potential to take off in a big way once it is better known’. It
gives the example of one member of the public who promised he would plant
ten trees to offset his estimated carbon emissions for 2005 but only if 99
other people did the same. By the time the deadline came on THE 31st December
110 people had signed up. Although Pledge Bank is based in London it has attracted
pledges in 23 countries. Guardian 05.04.06
US
fund says CSR is bad for business; the Independent reports on the
Free Enterprise Action Fund, which is buying stakes in the world’s biggest
multinationals in order to attack chief executives pursuing green policies
and corporate social responsibility programmes. It is quoted that after a
sustained attack on Hank Paulson, the chief executive of Goldman Sachs (pictured
right) that is moving on to BP. Steven Milroy, the fund manager who founded
the business, is quoted as saying: “BP has an advertising programme
asking people what their carbon footprint is. Its chief executive needs to
spend more time worrying about the shareholders and less about green PR”.
The fund argues that advocates of corporate social responsibility are bad
for business and it also disputes the very existence of global warming. Whilst
it only has $6m under management it does have the support of leading right-wind
think-tanks such as the Heritage Foundation and the Cato Institute. As well
as attacking Hank Paulson’s support for environmental causes it has
also been attacking Jeff Immelt, the chief executive of General Electric for
what they claim are his efforts to lower GE’s profits. Independent
10.04.06
Body
Shop suffers after L’Oréal sale; following the sale
of Body Shop to the French cosmetics giant L’Oréal last month,
there has been a marked drop in its reputation according to an index that
tracks public perception of more than 1,000 consumer brands. It says that
“satisfaction“ with Body Shop has dropped by almost half since
the deal by its founder, Dame Anita Roddick, to sell the company for £652m.
Despite pledging to give away the £130m she made from the sale, Dame
Anita has been accused of abandoning her principles by accepting the deal
with L’Oréal, which still tests “a very small amount”
of ingredients on animals to meet safety standards. The Economist had previously
described the deal as the latest example of a deal in which large firms have
bought smaller firms with virtuous reputations. Previous examples have included
Unilever’s purchase of Ben & Jerry’s and MacDonald’s
purchase of 33 per cent of Prêt A Manger. Chris Bones of Henley Management
College says that mergers between the large and the virtuous only work when
the cultures of the two companies are actually rather similar. He says that
the purchase of Green & Black’s, the organic chocolate maker, by
Cadbury Schweppes worked because Cadbury still reflects the moral values of
its Quaker founders. Economist 25.03.06, Independent 10.04.06
Rural
areas will see big rise in the elderly; according to research by
Newcastle University the number of older people living in the countryside
will soar faster than in urban areas. Figures show that of the projected 5.5m
population growth in England until 2028, 5.3m will be due to the increase
in the over-60s. They will be mainly living in rural areas which are expected
to have a 47 per cent increase in residents aged over 50 by 2028 compared
to a 30 per cent projected rise nationally. Already two-fifths of residents
in the countryside are aged over 60 and one in twelve is over 75. The average
age of the rural population is 42 compared to 36 in urban areas. One of the
reasons is that young people are moving out of the countryside for education
or work and affordable housing. Financial Times 04.04.06
Nantucket
votes to outlaw chain stores; the residents of Nantucket, the summer
resort off the coast of Massachusetts, have voted unanimously to ban chain
stores. The decision, which follows the arrival of a Ralph Lauren store, covers
any shop with 14 or more branches boasting homogenised decors or standard
menus, uniforms or trademarks. Nantucket is the latest in a widening war being
waged by communities in the US against so-called cloned retailers. Other towns
to have taken similar action include Carmel (California), Bristol (Rhode Island)
and Ogunquit (Maine). The small towns reflect some of the battles being waged
in the big cities against mega discount stores; most notably Wal-Mart. Voters
in several cities have recently blocked the opening of Wal-Marts, citing fears
that they will harm local businesses. Independent 08.04.06
Casino
bids published; the Casino Advisory Panel has published the list
of bidders for the one pilot regional casino currently allowed by the government.
The 27 bidders are led by Blackpool, the long-time favourite and also include
Wembley and the Dome in Greenwich. There are also 41 bids for the large and
small casinos including the West End in Westminster. Professor Stephen Crow,
the chair of the Casino Advisory Panel, said that the first evaluation is
expected to last six to eight weeks, with further examination of selected
proposals to take place during the summer. Regeneration 07.04.06
Zurich
is the best place to live; the latest survey of the quality of life
in 200 cities places Zurich top followed by Geneva and Vancouver. The top
10 cities were dominated by Western Europe with Germany and Switzerland supplying
three each in the top ten (the other cities being Bern, Frankfurt, Dusseldorf
and Munich). Another notable trend was the rise of the East European cities
with Ljubljana, Vilnius and Tallinn all improving their standing. Dublin was
24th. The three British cities all virtually stood still with London staying
at 39th and Birmingham and Glasgow rising one place to 55th equal. As well
as noting the terrorist attacks, London and New York (46th) received low marks
for crime rates, air quality and traffic congestion as well as poor relationships
with other countries, particularly in the Middle East. Independent 10.04.06
Nursery
places cost an average of £72 a week; parents are paying an
average of £72 per week for a nursery place or £100 per week for
a nanny according to a survey of 8,000 parents in England. High costs meant
that 50 per cent relied on grandparents whilst 40 per cent reported lack of
local childcare places. Many parents were turning to formal childcare but
cost was an issue. The report was compiled for the Department for Education
and Skills by the National Centre for Social Research. Financial Times
03.04.06
New
help for job seekers; Margaret Hodge, the Minister for Employment
and Welfare Reform (pictured left), has announced that people who have been
unemployed for more than six months will have to attend an intensive three-day
course to help them identify and overcome barriers to getting work. The Jobseekers
Mandatory Activity scheme is for people aged over 25. Failure to take part
risks having benefits docked.Times 03.04.06
UK leads on flexible working; a higher proportion of UK
employers operate flexible working hours than most of their European rivals
according to a study produced by the European Foundation for the Improvement
of Living and Working Conditions. It finds that 56 per cent of British employers
with ten or more employees operate flexible working hours, ranking it fourth
behind Latvia and Sweden (65 per cent) and Finland (62 per cent). Germany
has 51 per cent, France 48 per cent, Spain 43 per cent and Italy 40 per cent.
The UK comes first for allowing workers to switch from full-time to part-time
work but is less successful in offering a range of flexible working arrangements
such as working-time accounts. A separate report, commissioned by Action for
Carers and Employment from Sheffield Hallam’s social inclusion centre,
has found that BT has achieved savings of £5m-£6m a year by introducing
flexible working for three-quarters of its 102,000 staff. BT, which has 11,000
staff working from home, said that productivity had risen by 21 per cent and
annual staff turnover was 4 per cent compared to a sector average of 17 per
cent. Financial Times 05.04.06 and 06.04.06
French opt for the Anglo model; whilst the French have successfully demonstrated against the proposed employment laws, which were meant to have made it easier for the young to get jobs in small firms, the Guardian says that hundreds of thousands of their compatriots have voted with their feet and come to work in Britain. It says that- contrary to popular perception- there may be more French people living in Britain than there are Brits living in France. According to the Office for National Statistics since 1999, about 15,000 French people have moved to the UK annually whilst 10,000 British have gone the other way. About two-thirds of the French moving to Britain are under 36 and three-quarters are single. The French Consulate estimates that there are 300,000 to 400,000 French living in Britain, of which 70 per cent live in London, and 300,000 Britons living permanently in France but widely dispersed. About 35 per cent of the French residents in the UK work in the City. Guardian 08.04.06
Non-white women ‘less likely to get jobs’; a
report by the Trades Union Congress says that Black and Asian women are more
likely to be out of work and have more problems finding a suitable job than
white women. The unemployment rate among black women is 5.4 per cent –almost
twice the rate of white women. Black and Asian women often have to settle
for work for which they are over-qualified. The TUC is calling for more training
opportunities for black and Asian women. Independent 07.04.06
Economist gives cautious welcome to FE reform; the Economist looks at the Further Education White Paper and its embrace of vocational skills at the expense of “leisure and pleasure” evening classes in a wide range of subjects such as basket-weaving and pottery. It says, “Gone are the days, it seems, when adult education was seen as a good thing in itself. Now, as globalisation confronts each country’s workers with a wider range of competitors, Labour chants the mantra of employable skills. A return to the technical colleges of the 1960s, from which many further education colleges emerged, is not as good as fixing mainstream schools, but it is not a bad save”. It says that those who follow Tony Blair’s “direction of travel” will spot familiar themes such as colleges being encouraged to federate into clusters and the call for external backers such as charities and business. Failing colleges, and those that inspectors think are “coasting” will be dealt with more toughly. Private providers will compete for the right to run courses. However it quotes one London college head as expressing concern about those who have to be coaxed on to the bottom rung of the education ladder if they are to clamber on at all. Foundation courses in community centres, best suited for their needs, are threatened whilst the Basic Skills Agency was not even consulted during the drafting of the white paper. Economist 01.04.06
Teachers’ unions debate business role in schools;
the role of business in state education is expected to dominate the annual
teacher union conference season to be held over the Easter period. The government’s
‘controversial’ schools bill, with its inclusion of new “trust
schools” backed by private sponsors, has pushed the issue to the top
of the three unions’ agenda. The Association of Teachers and Lecturers
are worried about what they see as an attempt “to create a market in
education” which would tend to prioritise those consumers who do not
take up too much of its resources. The National Union of Teachers is likely
to attack the city academy programme, where privately backed schools enjoy
almost total freedom from local authorities, particularly where religious
groups sponsor them. There is concern about the growing role of Creationist
views. The National Association of Schoolmasters Union of Women Teachers is
likely to adopt a more conciliatory tone and will publish a report outlining
a new approach to working with the private sector. Financial Times 10.04.06
Airport expansion exceeds official forecasts; plans by ten leading UK airports show that the predictions made in the air transport white paper two years ago are being left behind. The white paper included plans to build another runway at Stansted as well as at either Heathrow or Gatwick together with regional schemes including Birmingham and Edinburgh. However master plans submitted by Newcastle, Teesside, Leeds-Bradford, Liverpool, Blackpool, Southampton, Edinburgh and Glasgow all show planned increases in passenger numbers beyond those in the white paper. In addition, Doncaster, which was not included in the White Paper, now forecasts up to 14.5m passengers by 2030, and Coventry (pictured right), which was very small two years ago, is planning for 2m. The white paper forecast that passenger numbers would be in a range of 400m to 600m by 2030 with a generally accepted figure of 480m used as a benchmark. In the meantime the government has announced an offset arrangement to cover the equivalent of 100,000 trips a year to New York by ministers and civil servants whereby they will pay for schemes to reduce emissions from other sources. Observer 02.04.06
MPs reject nuclear power; following a series hearings, the all-party
Environmental Audit Committee has concluded that new nuclear power stations
will be of little or no short-term use in filling an anticipated ‘electricity
generation gap’. In its report, which is due to be published in the
coming week the committee raises a number of issues about the commissioning
of new nuclear power stations. Given the long lead times it queries whether
eight new plants could be ready before 2020 and it also raises questions about
nuclear waste and how the plants would be financed. It also queries whether
they would be ‘carbon-free’ given that as uranium supplies are
on the wane the new stations might have to use lower-grade uranium which requires
processing. However, the report does not rule out the nuclear option all together.
A White Paper on energy is due out later in the year, which is expected to
argue that even with wind power and other renewable energy sources it will
be essential to replace the ageing nuclear stations. Observer 09.04.06
London needs to admit that it has let things drift, slide and crumble; Tyler Brule uses his column in the FT to rail against the claims made by Tony Blair and Ken Livingstone that they intend to make London the best city in the world. He welcomes the government’s plans for better policing and restoring the basic concept of respect but says that these measures, even when bundled with better schools and new housing, are not going to turn London into the world’s greatest city. He says that to get back into the game London has to work hard at restoring a sense of community. Small, innovative, independent businesses are the cornerstone of making any neighbourhood an interesting, sustainable place to live. In this he compares London unfavourably with Paris where, he says, there is no shortage of unattractive chains polluting Paris’s streets but their presence becomes almost invisible when stacked against London. He also calls on London to leverage its diversity and count this as a luxury. Our satellite and cable services should be bursting with programmes in all languages and some newspapers need to accept that all the talent that used to end up in New York, but now resides in London, is a very good thing. Financial Times 08.04.06
City
urges EU to liberalise wholesale financial services; a report commissioned
by the City of London Corporation urges the EU policymakers to “raise
their game” if they are not to avoid slowing growth of the global wholesale
financial services. Research undertaken by the Centre for Economics and Business
Research (CEBR) shows that at present the EU has a 28 per cent share (of which
London accounts for 35 per cent) compared to the US’s 39 per cent. The
two markets were on a par in the early 1990s but a more integrated market
and faster US growth has allowed the US to pull away. China’s whole
financial services sector is currently growing at three times the pace of
Europe’s. Unsurprisingly the report urges further liberalisation in
Europe to allow the sector to cluster further in important centres such as
London, Paris and Frankfurt. The report says: “Through the economies
of scale gained in the London cluster…the EU is a world leader in the
international equity, foreign exchange and derivative markets. London (also
leads) the EU in other fast-growth markets such as mergers and acquisitions,
hedge funds and private equity”. Michael Snyder, policy chairman of
the City of London Corporation, urged that the protectionist stances by some
member states should not be allowed to prevail. Financial Times 10.04.06
Saville Row – the real threat is rent rises; the FT runs a feature examining the emergence of Savile Row Bespoke- the body set up by the leading master tailors to protect their future in Savile Row. It says that there is a battle going on between the master tailors with their ten year training and their workrooms on site and the more media-orientated tailors such as Ozwald Boateng and Richard James and the rookie tailors setting up on the other side of the street. A report by Westminster Council identifies the true cause of the problem: rent rises. Rents have gone up 57 per cent as more and more non-bespoke, non-tailors invade the territory. Westminster has produced a set of proposals, which, they believe, can secure Savile Row’s long-term future. At the same time English Heritage has announced that it will leave its headquarters in Savile Row in June- four years earlier than it needs to. A 100,000 sq ft building designed by Eric Parry will be built on a speculative basis by Legal and General. English Heritage will eventually move to the old Prudential head office in Holborn. Further information-Plans to ensure that Savile Row remains the byword for excellence in men's tailoring have been unveiled Financial Times 01.04.06, Estates Gazette 08.04.06
Diversity will give bidders an edge; contractors bidding
for the £5bn of work awarded annually by the Greater London Authority
will have an advantage if they can show that they promote equal opportunities.
The strategy is being developed by Ken Livingstone, the London mayor, who
has long favoured the use of public sector contracts to promote race and gender
equality. Compliance contracts from public sector bodies were banned by Margaret
Thatcher during the 1980s when Mr Livingstone was leader of the Greater London
Council. The London Development Agency said that under the terms of the 2000
Race Relations Act bodies awarding public sector contracts had a duty to “promote
equality of opportunity”. Mr Livingstone launched Diversity Works for
London last year to work with businesses “to ensure that all levels
of their workforce reflect the diversity of London”. Employers that
have signed up, including Coca-Cola, KPMG and Pearson, will use an online
diagnostic tool, paid for by DWL, to enable them to audit their own ”diversity
performance” and that of their suppliers. Financial Times 30.03.06
Chinese
to launch business invasion; CNOC, the third-biggest oil company
in China, and Mindray, a Chinese medical equipment company, are to set up
their European headquarters in London. They are expected to be the start of
an influx of Chinese companies setting up in the capital. A London delegation
led by the Mayor is currently in China to strengthen ties leading up to the
2008 Beijing Games. Think London, the inward investment agency, which facilitated
the two Chinese companies’ investment is to open an office in Beijing.
Sunday Times 09.04.06
Levene
warns that Lloyds is still in the dark ages; Lord Levene, the chairman
of Lloyds of London (pictured left), has responded to recent criticism of
the Lloyd’s market by saying that he shares the critic’s frustration.
In particular he said that there was agreement that Lloyd’s had to get
its act together electronically saying “I’m fed up with coming
up in the lift and finding people carting around truck loads of paper. Its
ridiculous. This is 2006. Nobody else does it, and we’ve got to address
it”. Last month, Robert Hiscox, the chairman of Hiscox, one of the largest
Lloyd’s underwriters, warned that Lloyd’s would “wither
away” if it did not bring itself into the 21st century. Hiscox has already
switched its focus beyond London by establishing a Bermuda-based operation.
Mr Hiscox claimed that the speed, efficiency and lighter touch regulation
of Bermuda makes it a much more attractive place to do business than London.
Independent 07.04.06
Blair’s
plan for Olympic legacy; the Prime Minister has announced details
of the government’s plan to transform London for the 2012 Olympics.
He said that preparing London for “the greatest show on earth”
would require a collective effort and that he wanted to see the Games as a
catalyst for delivering long-lasting change to London. He said, “We
have six years to regenerate East London”. The government’s blueprint
includes two new agencies to boost employment opportunities, £35m to
raise skills levels, action on affordable housing, at least 60 new academies
and at least 15 new sixth forms or six form centres, more measures to tackle
crime including extending the use of anti-social behaviour orders, and building
on events such as London Fashion Week and the London Film Festival to create
a single season showcasing the capital’s cultural wealth. BBC News
Online 04.04.06
Olympics budget ‘must rise by £2bn’; David Higgins, chief executive of the Olympic Delivery Authority (ODA), tells the Observer that he believes that the cost of the 2012 Games has to rise dramatically and, in particular, the £1bn infrastructure budget. He says that the 2012 Games will be used as a catalyst to build 35,000 new homes in the Lower Lea Valley, which will be “the most intense area of new home growth”. A new budget for the Games is being finalised by the ODA and the accountants KPMG and will be published this summer. Any funding increase would hit budgets in the housing and transport departments and there are fears that the UK taxpayer, the National Lottery or London council taxpayers will foot the bill. However Higgins is adamant that the private sector will contribute to the Games - a view he stressed at the press briefing to mark the setting up of the ODA. Observer 02.04.06, Financial Times 07.04.06
Consortia start to take shape; the FT reports that a number of UK-US consortia are being formed to bid for the management of the design and construction of the London Olympics. Amec and Balfour Beatty have joined forces with Jacobs, the US engineering project manager. Amec has managed the development of terminal 5 at Heathrow, Balfour Beatty was involved in designing the stadium for the Atlanta Games and Jacobs managed Olympic delivery in Atlanta and Athens, and helped redevelop Stratford station, adjacent to the London Games site. Three other consortia are known to include Bechtel and a range of UK partners, Taylor Woodrow with Parsons Brinckerhoff and Bovis Lend Lease with Kellogg Brown Root and Franklin and Andrews. There are thought to have been 80 expressions of interest. After the bid deadline of April 25 there will be a bid shortlist of between 3 and 10 with the winning consortium starting work on August 1st with a contract lasting to 2014. The ODA is likely to grant the contract less on price but rather on the ability to minimise risk. In this regard it will be keeping an eye on the continuing conflict over Stratford City where the Reuben Brothers, who currently own 50 per cent, and Westfield, who own 25 per cent are in dispute. The FT says that one of the conditions for the Reubens to acquire the 25 per cent owned by Multiplex was that the construction company behind Wembley stadium retained the right to “participate in the development and construction opportunities in the Stratford project”. Financial Times 10.04.06
London
bid was a “field of dreams”; the latest independent quarterly
report on the progress of the 2012 Olympics says that last year’s winning
bid was a “field of dreams” and that following some changes “this
is the start of what will be a completely revamped bid”. The report
is written by Andrew Taylor, head of business development at Colliers CRE
and is co-sponsored by Rugby Estates. Taylor cites the delays to budgetary
concerns about a proposed aquatic centre, the decision to relocate the planned
international media centre, wrangling between the mayor and stakeholders in
the landmark development, and slow progress on some road schemes. He also
warns of potential cost slippages. The London Organising Committee said that
there was an ongoing programme of refining the site plans for the Olympic
Park and of scrutinising costs. Lord Coe, the chairman of the 2012 games,
denied the claims that the infrastructure bill was going to increase by £2bn.
Reuters 04.04.06
Olympics
will succeed because ‘foreigners in charge’; Ken Livingstone
has claimed that London will be ready to host the 2012 Olympics because the
large infrastructure projects have been taken out of British hands. In a frank
admission on a BBC TV breakfast show of Britain’s poor record of delivering
construction projects on time and within cost, the Mayor said that the Olympics
would succeed because “almost all the people running it won’t
be British”. Senior roles have gone to David Higgins (pictured above,
right), the Australian chief executive of the Olympic Delivery Authority,
and to Jack Lemley (pictured above,left), a US engineering expert who is the
ODA chairman. The Mayor also said that he would stand for re-election in 2008
because he had given an undertaking to the IOC that he would deliver the Olympics.
However this would probably be the end of his career as London’s top
administrator. Financial Times 03.04.06
Midtown boundaries seem to spread; the Estates Gazette looks at the state of the market in what it calls Midtown. Whereas this seemed previously to relate to those areas linking the City with the West End such as Holborn and Fleet Street the definition now seems to have widened. A number of leading agents are asked to define Midtown and all seem to accept that Covent Garden and Bloomsbury are included whilst Farebrothers define it as “bounded by Euston to the north, the River Thames to the south, Trafalgar Square to the west and St Paul’s Cathedral to the east. The submarkets are Smithfield, Clerkenwell, Covent Garden, the Strand and Aldwych”. One new area is likely to be St Giles High Street to the south of Centrepoint. Legal and General have a planning application due to be seen by Camden Council in June for a £400m mixed-use development, which will include a public space lined with shops and leisure. Other new developments include Fetter Lane, Hatton Garden, the Strand and 685,000sq ft in New Street Square. Estates Gazette 01.04.06
Phase 2 for Paddington gathers pace; the Estates Gazette says that after four years of little progress a second phase or regeneration at Paddington has moved a step closer. In addition to a third building in the Paddington Central scheme Network Rail have announced plans for a 350,000 sq ft office redevelopment for the Red Star parcel site to the north of the station and Hammerson have announced a 15-storey scheme for an area next to the station called ‘The Triangle’. The plans have been facilitated by English Heritage’s decision to withdraw their objection to the demolition of span 4 and are part of Network Rail’s proposals to increase the capacity at the station by 24 per cent. Estates Gazette 01.03.06
Shard gets a companion; the developers of the “Shard of Glass” at London Bridge have received planning permission for an adjacent, smaller 600,000 sq ft building, also designed by Renzo Piano. The scheme will replace a 1960s office block at the front of London Bridge Station. Estates Gazette 08.04.06
Towers setback in Victoria; Land Securities’ plans for a 2.5m sq ft development at Victoria station are in doubt following Westminster city council’s planning guidance that it would only allow one office tower on the site. The Land Securities plans included three towers, which it believes are indispensable in the effort to pay for the millions of pounds of transport and public realm improvements needed at the site. Transport for London, which owns part of the site, had supported the proposals, in order to “generate sufficient funds for the transport works”. The decision may also stimulate further conflict between Westminster and the Mayor of London, who backs the plan. Ken Livingstone said: “Westminster council works on the ridiculous premise that whatever it is, you must reduce its height and density”. Gordon Chard, Westminster’s planning head said that the three towers would harm views of buildings, including Buckingham Palace. “We don’t think towers work aesthetically, but we do see the opportunity for one iconic building to define Victoria”. Estates Gazette 08.04.06
Time
Out chooses the new housing hotspots; Time Out has run a feature
on what it calls ‘tomorrow’s happening neighbourhoods’.
It says that in mid-March the average London house price hit the £300,000
mark and that if you want to ride the property market you have to hit an area
before it gets hip. The eight best up-and-coming districts it recommends to
invest in are Acton, Clapton, Edmonton, Harlesden, Hither Green, Stepney,
Vauxhall and Wood Green/Harringay. Time Out 05.04.06
First
affordable homes to be in Shoreditch; First Base has signed terms
with English Partnerships to build 147 affordable homes in Shoreditch. The
deal is the first under the terms of the government’s London Wide Initiative,
which is managed by English Partnerships, and aims to build 4,500 privately
funded affordable homes in London over the next five years. First Base, which
is backed by Lend Lease and Stanhope, was one of three consortia chosen to
deliver affordable housing using an integrated approach in 2004. The others
were Countryside Properties and Barratt Homes. Estates Gazette 08.04.06
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