Bank of England scheme is ‘cleverly designed and welcome’; the Financial Times welcomes the Bank of England’s new Special Liquidity Scheme saying that it is a cleverly designed and welcome move to ease liquidity troubles. The FT says that a moment of truth is arriving in the credit squeeze: a clear empirical test of whether it is a problem of bank liquidity or bank solvency is about to begin. The new scheme should lower the three-month interbank lending rate. But if the real fear is solvency- that too many bad loans were made at too low an interest rate- it will not make mortgages cheaper, or release wholesale funding for the banks. Click here for further information Financial Times 22.04.08
Why the banks can’t meet the demand for mortgages; Hamish McRae explains why the banks do not have enough funds of their own to meet the demand for mortgages. In very round terms, the country needs about £100bn a year to meet mortgage demand-last year it was £108bn. But the banks can only meet half of that from their own funds; last year they lent less than £40bn directly. They used to be able to cover the gap by selling on mortgages to other lenders, some of which were abroad, some of which were specialist lenders set up for the purpose. But, for six months, it has been impossible to sell on those mortgages, the result of the crisis in global financial markets. That was because a lot of the debt that was traded turned out to be dud and, as a result, there are no buyers even for good-quality debt. The Bank of England’s announcement allows the banks to swap up to £50bn of their mortgage debt, which cannot be traded, for government debt, which can. That does not solve the problem in the medium term because all it does is clear the backlog of existing debt: new mortgages are excluded from the scheme. The assumption is that, within a year or two, the money market will have recovered. McRae says that it should be seen as a bandage over a wound. The mortgage market has a chance to heal and gradually it will. There may well have to be a fall in house prices and mortgages will remain tight. We will all have to save more. But this should stop the housing market becoming really ugly and for that the scheme deserves a welcome. Independent 22.04.08
Item Club predicts that growth will halve; the latest report from the Ernst & Young Item Club predicts a “sea change” that could see economic growth nearly halve this year. The Item Club, which uses the Treasury model, believes that the economy will grow by 1.8 per cent this year; down from 3.1 per cent last year. Next year will be even worse at 1.5 per cent unless the government takes decisive action. Peter Spencer, chief economic adviser to the group, said: “Our reliance upon international banking markets means that it is only a matter of time before [the economy] slows. This is going to be a rapid, painful adjustment and it will be a rough ride. We are facing a massive sea change in the balance of the economy.” The group expresses support for the unprecedented bonds-for-mortgages stimulus package unveiled by the Chancellor, Alistair Darling. Click here for further information Independent 21.04.08
House prices falling at fastest rate since 1978; the Royal Institute of Chartered Surveyors has reported that the number of estate agents reporting an increase in house prices has dropped to its lowest level since its housing market survey began in 1978. The latest snapshot of the housing market shows that 78.5 per cent more surveyors reported a fall rather than a rise in prices. The gulf has widened since February and eclipses the previous low of 64.5 per cent in June 1990, when the economy was heading into recession. Click here for further information Guardian 15.04.08
Inflation stays steady at 2.5 per cent; the Office for National Statistics (ONS) has announced that the headline rate of inflation stayed steady at 2.5 per cent in March, which will provide the Bank of England with room to manoeuvre as it considers further interest rate cuts. The ONS said small rises in furniture, household equipment and recreation services compared with last March had countered larger increases in the cost of transport and housing. As a result the consumer price index inflation, which the Bank uses as its targets, was unchanged with February. Economists were surprised by the stability of inflation, particularly following the latest data on factory gate prices, which the ONS had said a few days earlier were rising at the fastest rate for seven years. The figures suggest that retailers have felt unable to pass on rising costs to consumers, whose household budgets are under pressure. Click here for further information Independent 16.04.08
Bank economist rejects interest rate cuts as the way forward; the Bank of England’s chief economist has rejected the idea of more aggressive interest rate cuts telling a City audience that the Bank was walking a tightrope between rising inflation and a deepening credit crunch. He said that the climate in the high street was “chilly” and that house prices would continue to become more affordable in a tougher economic climate. He thought it unlikely that falling house prices would in themselves lead to a sharp drop in consumer spending, but higher inflation and the reduced availability of credit would have an impact. The dislocation in the credit markets was proving “more pervasive and longer-lasting” than expected, and the root of the problem was a “lack of trust in a context of incomplete information about the scale and distribution of the likely losses associate with mortgages”. Click here for further information Guardian 18.04.08
CBI warns of tough conditions; Richard Lambert, the director-general of the CBI, has warned companies to batten down the hatches ahead of a downturn in the economy when it would be much harder for them to raise finance. He went on: “Entrepreneurs are going to have to work hard to develop robust business plans, and to secure necessary lines of credit in a world when finance will be harder to come by.” However he said that there would be opportunities for some. “If you look at the best entrepreneurs you will find their first opportunity came in a time of change when established firms slipped. The fact is that economic cycles come and go”. He acknowledged that the climate for entrepreneurs had become “distinctly chillier” in a reference to both the credit crunch and to unpopular tax changes. “Partly as a result of global conditions, partly as a result of ill-considered political decisions, readings on the UK’s entrepreneurial barometer have dipped sharply over the past twelve months”. Click here for further information Financial Times 16.04.08
IFS says that targeting the rich on taxes will not work; a study of Britain’s tax and credit system by the Institute for Fiscal Studies (IFS) says that increasing the rate of tax on the rich is unlikely to raise extra revenue. The IFS wants to raise incomes for the poorest 40 per cent of the population to raise work incentives, increase employment and reduce poverty without harming the economy. It would fund this by increasing taxation on the richest 40 per cent. They calculate that the biggest losers would be the fourth richest tenth- those with net incomes of between £500 and £594 per week- who would lose 2.4 per cent of their income. The richest tenth would lose a smaller percentage- 1.2 per cent. The IFS says that it had “new, albeit tentative” evidence that ratcheting up income tax rates for those earning more than £100,000 was likely to be counter-productive, based on the evidence of the past 40 years. Click here for further information Financial Times 21.04.08
Cash makes a comeback; a British Retail Consortium (BRC) survey shows that shoppers spent £5bn more in notes and coins last year and that the value of cash as a proportion of total spending went up by two per cent to 34 per cent, the first reversal of a two-decade trend. The BRC (whose findings are disputed by payment body Apacs) suggests that people wanted to put less money on plastic because of the credit crunch. The survey was based on results from 17,000 shops. It also reveals that cash transactions have increased from 54 to 60 per cent totalling £264bn. Click here for further information Independent 21.04.08
The Internet keeps rolling on; internet sales have hit an all-time high in the UK as shoppers shun the high street in lieu of bargain-hunting online. In the first three months of the year web sales passed £13bn, an increase of 50 per cent on the same period last year and equal to £213 for every person in the UK. The figures, which were compiled in the IMRG e-Retail Sales Index, underline the growing importance of the web to retailers as the wider economy slows. Click here for further information Independent 21.04.08
Enoch Powell ‘still haunts immigration debate’; Trevor Phillips, chairman of the Equality and Human Rights Commission, has claimed that Enoch Powell’s “Rivers of Blood” speech has cast a “40-year shadow” over the immigration debate in Britain, with governments failing to provide articulate leadership on the issue. He said that one consequence was that the UK was falling behind competitors in recruiting immigrant talent because of the lack of a coherent immigration policy. He went on: “Immigration is part of our future. The real question will be whether we can seize the restless tide of talent sweeping across the globe. So far we are lagging behind our competitors”. Stressing the need for a renewed debate he said: “Many think this is not the time for this debate. If we cannot talk about it now, then when? We cannot allow discussion of race and immigration forever to be seen as playing into the hands of extremists. The40-year old shockwave has gagged us”. Click here for further information Independent 21.04.08
Chief Police Officers deny immigration has led to crime wave; a report from the Association of Chief Police Officers says that although the new wave of immigration has placed new demands on forces, immigrants are no more likely to offend than other members of the community. Peter Fahy, chief constable of Cheshire and one of the report’s co-authors, says: “Migration has had a significant effect on UK communities in past years, but while this has led to new demands made on the police service, the evidence does not support theories of a large-scale crime wave generated through migration. In fact, crime has been falling across the country over the past year. Many migrants are young professionals looking to earn money and return to their home countries. Cultural differences such as attitudes to offences like drink-driving may exist, but can be exaggerated”. The report, which was not due to be made public, was being presented to the Home Secretary. It does, however, stress the increased costs of factors such as interpreters to deal with what Julie Spence, the chief constable of Cambridgeshire, says are people from 93 different cultures speaking more than 100 different languages. Click here for further information Guardian 17.04.08
Society has lost its moral compass, warns Rowntree Trust; in 1904 the Joseph Rowntree Foundation identified poverty, war, the opium trade, impurity and gambling as “the great scourges of humanity” and that one day they would be overcome. However, a new report from the Trust, based on interviews with 3,500 people, identifies 10 current social evils – including the decline of community, individualism, consumerism, and young people being both victims and perpetrators. Government, the media, big business and a lack of religion- or too much- are blamed for today’s evils. Beth Watts, a foundation researcher, says that a century ago there was more optimism-“there was a feeling these things could be overcome. I think people are now less clear about how to move forward”. Click here for f urther information Independent on Sunday 20.04.08
Westminster to target problem families; families that commit crimes, have chronic drug abuse problems and fail at school and in the job market are to be targeted by Westminster City Council in a drive to cut the costs to the state. Westminster has identified 600 families who it says, “have a long-term negative effect on society as a whole”. Sir Simon Milton, the leader of the council, says that some of the families are dealt with by up to 20 different bodies. “These are the families at highest risk of social exclusion, whose problems bring them into contact with a range of voluntary and statutory bodies, on whom a disproportionate amount of public funding is spent, and for whom the outcomes in terms of overall quality of life, and life chances for their children, are often the worst”. By intervening early the council hopes the families will become less dependant on such high-cost services. It hopes to have multi-agency teams in place by the start of the new year. Click here for further information Guardian 21.04.08
Pharmaceutical company moves to Ireland to ‘optimise’ tax; Shire Pharmaceutical has announced that it intends to move its tax base from the UK to the Republic of Ireland, arguing that Dublin offered the group an “optimum” tax location. However, beyond a vague explanation that being domiciled in Ireland gave greater “opportunities”, Shire declined to comment further on why the group was making the move. As well as being tax domiciled in Ireland, the company will become incorporated in Jersey, saying that with just seven per cent of total sales coming from the UK, Britain was becoming less relevant although it had no plans to cut jobs or move its main operating base at Basingstoke. Commenting on Shire’s move, Richard Lambert, director-general of the CBI, said: “We are particularly worried that an uncompetitive corporate tax system is spoiling the UK’s attractiveness as a place to do business, and that other internationally mobile firms will follow Shire’s path”. Shire joins other companies such as the insurer Hiscox and the computer games group Electronic Arts, which have moved away from the UK for tax reasons. Click here for further Information Independent 16.04.08
London election shows the value of elected mayors; Simon Jenkins writes in the Sunday Times on the 1st May election for the London mayor. He says that for three months the people of London have been treated to a Clnton versus Obama backchat with policies hurled back and forth and personalities stripped bare. He has counted 16 encounters between Livingstone, Johnson and Paddick together on a platform or in a television studio. Halls have been packed, a far cry from the handful of party faithful at most local government meetings. If nothing else, the London mayoralty has raised the hustings from the dead. Media coverage has been nationwide- and indeed international, in last week’s New Yorker magazine. The gains to London from an elected mayoralty are hard to disentangle from the performance of the eight years of Livingstone’s incumbency, but they are undeniable. An astronomical £1bn subsidy for the London buses, and probably three times that amount for the giant Olympics and Crossrail projects. Like him or loathe him, Livingstone has established the concept of city government as an entity in the American style. Elected mayors may terrify politicians, which is why they oppose them tooth and nail, but Londoners have tasted the long-forbidden fruit of participation and seen the fruits flow. Sunday Times 20.04.08
Rail journeys hit a peacetime record; Britain’s railways saw record peacetime traffic last year- the 13th year of consecutive growth. There were 1.21bn passenger rail journeys during 2007 and traffic of 30.1bn miles, journeys multiplied by the length of each. The previous record was set in 1946, when soldiers were travelling long distances during demobilisation and when there was 40 per cent more track. The seven per cent in passenger growth in 2007 was also matched by a growth in freight. Since 1994 passenger traffic has grown by 67.6 per cent. Click here for further information Financial Times 10.04.08
Eurostar reports 21 per cent increase in passengers; the opening of St Pancras International and the high-speed link through southern England have helped Eurostar lure two million passengers to the cross-Channel service. In the first three months of 2008 2.17m passengers have travelled between London, Paris and Brussels- an increase of 21.3 per cent. Click here for further information Guardian 15.04.08
Super-councils reviewed; Regeneration looks at the surprise proposal in the consultation document on Sub-National Review of Economic Development and Regeneration that if councils within a city-region want to take on powers over and above the economic development powers being offered to city-regions, they should consider merging into super-sized authorities. Sir Peter Hall says that super-councils covering entire urban areas are an old idea. An entire network of unitary bodies was proposed by the Royal Commission on Local Government in 1969- an idea that was accepted by the Labour government, only to lose the general election the following year. The incoming Tories introduced a system of two-tier councils in big metropolitan areas. Planners, economists and geographers often argue that boundaries in urban areas should represent functional cities, yet in many areas they don’t. While Leeds, Bradford and London have boundaries that cover 90 per cent of the total urban population in Nottingham, Middlesbrough and Manchester only half the population is covered. Professor Tony Travers of the London School of Economics, says that there’s clearly some kind of shift in government thinking, going on to say: “They are already encouraging joint working across city-regions for transport and for economic regeneration. How much further could they go without merging authorities?”. Regeneration 11.04.08
Call for city-regions to have tax-raising powers; groups of town halls should be given greater rights to raise cash to invest in transport schemes according to a report produced by Grant Thornton. Connecting for Competitiveness says that the UK’s investment in transport has averaged 40 per cent less as a proportion of GDP over the last 40 years than that of its key competitors. This investment gap was directly affecting the economies of regional centres. Click here for further information Regeneration 11.04.08
Councils fret about fast-track planning system; the number of national infrastructure projects that will be fast-tracked through the planning system is starting to be a cause for concern to Sir Simon Milton, chairman of the Local Government Association (LGA). The planning bill, which will pass through the House of Lords this year, allows big projects to be waved through if they have been approved by a new infrastructure planning commission. But, Sir Simon tells the FT that more than 40 projects ranging from trunk roads to wind farms have been put forward by the government- more than the “single figure” number that would have been appropriate. The LGA is urging the government to tighten up the wording in the bill. Sir Simon said that they appreciated that projects such as Terminal 5 and the new nuclear power stations needed such treatment. They had protested about the 10 proposed eco-towns, which would have been given to the new Homes and Communities Agency, and would have bypassed the councils. “We kicked up such a fuss about it that they withdrew”. Councils are also worried about the seeming downgrading of their position in the abolition of regional assemblies, on which they were represented, which had responsibility for special strategies. Now, under the Sub-National Review (SNR), this is to be handed to the regional development agencies, which already have control over economic strategies, albeit with council input. Sir Simon went on: “When you look at all these issues together you find the government is slowly building up alternative approval mechanisms”. Click here for further information Financial Times 15.04.08
Why the UK lacks ‘global gorillas’; weaknesses in the business environment are preventing the UK from producing “global gorillas”- big technology companies like Google and Microsoft- according to a report produced by the National Endowment for Science, Technology and the Arts (Nesta). Flaws range from a “culture of amateurism” in management to an unwieldy legal system. The lack of global gorillas is a long-standing worry for politicians of all parties and an unflattering comparison is made with the US where some companies have progressed from formation at top universities to market capitalisations of billions in a few years. The danger is that foreign rivals may supersede world-leading British businesses in areas such as pharmaceuticals and finance and increase the need for home-grown technology gorillas. The report says that starting a business in the UK is comparatively easy but founders find expansion much tougher. One problem may be an ambition deficit. Shareholders, including academics and venture capitalists, often sell small UK technology businesses to big acquirers rather than building them up as independents. One problem may be poor management skills, which reflects a very British disinclination to shell out on management training. Click here for further information Financial Times 18.04.08
New EU small business law is being ‘rushed’; the Institute of Chartered Accountants in England and Wales (ICAEW) has claimed that the European Commission’s Small Business Act for Europe due to be implemented by the end of the year is rushed and ill-publicised. Consultation for the new Act, which aims to increase SMEs’ access to innovation and growth across Europe as well as reducing their administrative burden, ended on 31st March and concrete proposals are expected by June. Political pressure by France, reflecting President Sarkozy’s support for the measure, means that the Act needs to be implemented before France gives up the Presidency in December. Both the chartered accountants and the British Chambers of Commerce are worried about the tightness of the timetable. The Department for Business, Enterprise and Regulatory Reform said that the new Act could help simplify legislation and reduce the regulatory burden on small companies in the EU. Click here for further information Financial Times 12.04.08
New code to reduce red tape; the Department for Business, Enterprise and Regulatory Reform (Berr) has introduced a new code of practice designed to help businesses save time and money by improving the way that regulators work with them. The Regulators’ Compliance Code is described as an important step in the programme to cut red tape. It requires regulators to take a risk-based approach to inspection and enforcement. This means fewer inspections and less regulatory burden for the majority of compliant businesses, but more rigorous inspection when there is a high risk of a business not complying with regulation. Businesses can expect a cut in unnecessary inspections, form filling and information requests, as well as better advice on how to comply with the law. Click here for further information Financial Times 12.04.08
City tycoon to fund Centre for Entrepreneurship; Peter Cullum, a billionaire alumnus of the City’s Cass Business School, is putting up a £10m fund to help younger alumni to follow in his footsteps. The fund will be the centrepiece of a new Centre for Entrepreneurship, reflecting the trend amongst business schools to train would-be entrepreneurs rather than corporate executives. Cullum, who took an MBA at the business school, is the founder of Towergate Partnership, Europe’s largest privately owned insurance intermediary. He said that the Peter Cullum Centre would be one of the biggest entrepreneurship training facilities in the world. It will focus on finance and other service sector start-ups. It will host incubator space for fledgling businesses and offer research and consultancy. Cullum intends to coach some of the fund’s protégés himself. Click here for further information Financial Times 14.04.08
City set to lose 40,000 jobs; a report prepared for investment bank JP Morgan predicts that up to 40,000 workers in the City could lose their jobs. The prediction, which is double its previous estimates, would mean that five per cent of City jobs would go in the worst set-back since the dot-com bubble burst in 2000, when seven per cent lost their jobs. They are also predicting that City rents could fall by 16 per cent. Banks such as Citibank, HSBC, and Morgan Stanley have been cutting staff as demand for complex debt and mortgage products has dried up. JP Morgan started to backtrack as the news crept out. The previous highest figure had come from the Centre for Economic and Business Research (CEBR) who raised their 12,000 job loss forecast to 19,200 earlier in the month. Times 16.04.08
Back-to-work drive needed better funding; a Department of Work and Pensions report says that a pilot scheme to provide support to incapacity benefit claimants returning to work did not work because of insufficient funding. Pathways to Work was piloted in 21 areas and aimed to provide an incentive and reassurance to incapacity claimants entering employment, with referrals from Jobcentre Plus to specialist providers. But the DWP report finds that there was insufficient funding largely because of the intensive nature of support needed by many recipients. But Pathways to Work did provide “a helpful part of the jigsaw for most customers” and the scheme will form a key part of the government’s new drive to get claimants into work. Click here for further information Regeneration 11.04.08
Whitehall fails to take on apprentices; an audit by Government Skills, the body responsible for improving training in central government departments, can find fewer than 300 apprentices out of a civil service of 600,000. Gordon Brown recently acted to increase apprenticeship numbers by announcing a nationwide matching service between would-be learners and employers. Government officials have boasted of their success in the past 10 years in doubling the annual number of apprenticeships across the economy. However the audit shows that in the 6,000-strong Foreign and Commonwealth Office or the 3,000-strong Home Office there are no apprentices. Equally there are zero in the ranks of the Revenue and Customs although the Valuation Service has 53. The Department for Innovation, Universities and Skills, which is responsible for apprenticeship policy, has none. The Army trained more than 7,000 apprentices in 2006-07. Apprenticeship remains most deeply rooted in industries such as construction and engineering although there has been recent growth in the services sector. For example 15,516 people became apprentices in business administration in 2006-07. However, Gus O’Donnell, head of the civil service, has announced that there are plans for 500 new apprenticeships from September. Financial Times 14.04.08
OECD urges more local action on jobs; a study by the Organisation for Economic Co-operation and Development (OECD) says that Britain is lagging behind international rivals in devolving power to local agencies to resolve skills shortages and returning the long-term unemployed to work. The study says that Britain has been good at using non-government bodies to meet nationally set targets, such as reducing the number of people aged over 50 out of work. But it has been reluctant to give local agencies the authority to set targets and adjust budgets to meet differing local needs. The study says that the UK is consistently towards the bottom of league tables measuring the ability of local agencies to influence the design of labour programmes and setting of budgets. This compares with countries such as Denmark where local job centres are given “considerable freedom” to choose specific target groups. Stephen Timms, the employment minister, responded by pointing to the latest employment figures and also the growing number of initiatives where power is being devolved to local authorities. He pointed to £1.5bn that had been made available to 65 local authorities to tackle unemployment through the Working Neighbourhoods Fund. Click here for further information Financial Times 21.04.08
Manufacturers recruiting older workers; a survey of manufacturers undertaken by the EEF shows that they have become more willing to take on and retain older workers as a means of overcoming skills shortages. More than a third of the companies surveyed said that they believed that older workers were more productive while 54 per cent said that there was no difference in productivity between older and younger workers. The more physical nature of manufacturing was not seen as an impediment. Almost 40 per cent of the companies were offering flexible working arrangements to facilitate the employment of older workers. Click here for further information Financial Times 21.04.08
Call for urgent action on flagship diplomas; Jeff Jarvis, managing director of Edexcel, has warned that the government’s new diploma system “risks failure” when it is introduced to schools in September. He has stated that a series of flaws have emerged which need to be addressed - including teachers not having adequate training, schools not knowing how the new features should be taught and fears that the qualification will be too demanding for pupils, leading to more pupils leaving school with no qualification. The FE colleges are separately seeking assurances that the IT system to manage the project will be in place in time. Jarvis’s concerns were echoed by teaching unions who, like him, support the diploma but now fear it will fail to win round students and their parents. There are only 14 weeks of school before the pilot diploma starts in September. Jarvis said that the issue was about schools being able to cope. The diplomas, which require the establishment of consortiums of schools and colleges to deliver them, were also happening as new GCSEs and A-levels are being introduced and as the Qualifications and Curriculum Authority, the government agency responsible, is being split into two separate organisations and relocating to Coventry. Guardian 17.04.08
One million pupils have left school without any qualifications; a new report by the Bow Group says that an “entire generation” of school children have left school having failed to achieve even the lowest grade, G, in five GCSEs since Labour came to power in 1997. The report says that while ministers have boasted of the rise in pupils achieving five C grades at GCSE, they have failed to highlight the growing numbers at the bottom of the pile. Despite billions of pounds of investment, almost 900,000 pupils left school last year with no qualifications. The report, The Failed Generation: the real cost of education under Labour, says that employers have warned that young people without five good GCSEs, grade C or above, risk not getting jobs. A survey by the Learning and Skills Council found that more than 20 per cent of employers would not recruit teenagers without the grades or a vocational equivalent while 15 per cent said they would ignore the CVs completely. Click here for further information Observer 20.04.08
Business to fund 30,000 university places; John Denham, secretary of state for innovations, universities and skills has launched a consultation paper on higher education which includes plans to reshape universities by making them more business-friendly and targeting new course places at adults in work. About 30,000 new places will be co-funded by employers as part of the plan, which aims to refocus the culture and purpose of higher education. The government is aiming to equip 40 per cent of the workforce with graduate-level skills by 2020, a target that can only be met by helping tens of thousands of the existing workforce to study at university. The reform will require a cultural change for universities as timetables involving 36 weeks of term time a year are altered, and the student intake becomes older, in work, studying part-time and living away from campus. Critics are expected to claim that the government is undermining the academic nature of university in pursuit of national productivity but Denham insists that the reforms will not mean an erosion of the independence of universities, nor of the pursuit of research. Instead there would be a more diverse range of universities. Universities may be judged on league tables on a wider range of criteria, including the contribution a university makes to the local economy. One of the main reasons for the changes is that there is expected to be a sharp decline of around 70,000 18 to 24-year-olds going to university by the end of the next decade, putting pressure on the government to concentrate on upgrading the skills of the existing workforce. Click here for further information Guardian 14.04.08
Employers struggle to find staff with science skills; almost half of all companies are having difficulty recruiting staff skilled in science subjects, says the first ever survey of Britain’s skills by the CBI. The finding underlines the desperate shortage of graduates in Stem (science, technology, engineering and maths) subjects. The survey found nine out of ten employers were seeking Stem graduates. It also noted the 15 per cent drop in engineering and technology graduates over the past 10 years. Susan Anderson, director of human resources at the CBI, said: “employers are acting rationally by looking abroad to hire Stem graduates,” with more than one in three larger companies recruiting from India and a quarter from China. More than seven out of ten employers expressed concern about the quality of employees’ written English and a similar amount worried about staff ability to spot numerical errors. Click here for further information Financial Times 18.04.08
Stern gets even gloomier; speaking at a World Bank conference in London, Lord Stern, whose report on climate change 18 months ago caused such a stir, admitted that the assumptions that had been used for that report were wrong and the current situation is far worse. “We badly underestimated the degree of damages and the risks of climate change. All of the links in the chain are on average worse than we thought a couple of years ago”. Lord Stern dismissed the critics of his original report, “People who said that this was scare mongering are profoundly wrong. If anything, I was too reticent.” Greenhouse gases are growing much faster that previously thought due to factors not fully appreciated before, including the release of methane from the thawing permafrost, the acidification of oceans and the decay of carbon sinks. Consequently Lord Stern argues that the worsening situation increases the need for a global pollution-cutting agreement to be reached by next year’s climate conference in Copenhagen. He also emphasised the need to invest in new technologies and efficiency measures as well as creating a global carbon trading system. Calling for zero carbon electricity by 2050 he said that it meant carbon capture and sequestration (CCS) as well as nuclear and renewables. Because there are still plentiful stocks of coal and it is relatively cheap Lord Stern said that CCS would be absolutely crucial. Independent 17.04.08
Tesco labels to show carbon footprint; Tesco is to test putting carbon labels on its own-brand products in a move to enable consumers to choose products which are less damaging to the environment. The retailer announced its intention to put carbon counts on up to 70,000 products some 15 months ago. It has since been working with the Carbon Trust to find an accurate method of labelling. Sir Terry Leahy, the Tesco chief executive, speaking at the company’s AGM, said: “It has not been simple, but we are there”. The details of the scheme will be announced shortly. Click here for further information Guardian 16.04.08
Mayoral candidates vie for business support; in the final two weeks before the 1st May election the two main candidates for Mayor of London have been putting their case to win support from London’s business community. Ken Livingstone emphasises his role in delivering major infrastructure projects such as Crossrail and tube modernisation. He stresses the need to promote London’s position in key markets such as India and China and points out that his Conservative opponent seems to be backing his pledge to shut London’s overseas offices after hearing the views of business. Boris Johnson has been giving more emphasis to issues such as crime, the need for less regulation and help for small businesses. He also wants to create a Mayor’s Fund to be financed by big business, which will fund community projects with a particular emphasis on youth. He has also announced a team of advisers headed by Bob Diamond, head of Barclays Capital and the highest paid boss on the FTSE 100. Further information- www.londonforken.co.uk and www.backboris.com/policy/business Guardian 22.04.08, Financial Times 22.04.08
Jowell blames BAA for Terminal 5 disaster; Tessa Jowell has argued that the fiasco at Heathrow’s Terminal 5 has “damaged London” and that airport operator BAA must take responsibility for the economic cost. The warning came as British Airways delayed by a further five weeks the transfer of most of its long-haul flights to the £4.3bn showpiece terminal. This was to allow time “to iron out any remaining problems”. BAA and BA are under intense pressure from the government to resolve the problems. Ministers fear that the poor performance of Europe’s busiest airport is damaging the economy, as executives shun the UK rather than risk lost luggage, delays and cancelled flights. The minister rejected accusations made by some business people that London’s sclerotic transport system meant the city could no longer function effectively. “Provided the problems are resolved and don’t recur, then I think that over time people will forget this pretty disastrous first month”, Jowell said. At a briefing with foreign correspondents, Willie Walsh, chief executive of BA, said that the transfer of long-haul flights to Terminal 5 would not be complete until the autumn. Financial Times 12.04.08, 15.04.08
University and major hospitals create largest science research centre; three leading London hospitals- Guys and St Thomas’, Kings College Hospital and the Maudsley have joined forces with King’s College to become the country’s leading science research centre. It is the second instance of a university forming a partnership to create an academic health sciences centre since Imperial College merged with Hammersmith and St Mary’s hospitals last year. The King’s College joint research venture comes as London faces health reforms drawn up by Lord Darzi, the health minister. He has encouraged scientists to work more closely with doctors to make clinical trails easier. The King’s College partnership is believed to be the first one in the world to include a mental health trust. However the union is different in that all the partners will remain independent although clinical trails will be funded by a joint fund. Click here for further information Evening Standard 10.04.08
City elects new policy chairman; Michael Snyder has stood down as chairman of the City of London’s Policy and Resources Committee after serving a maximum five-year stint. He is succeeded by Stuart Fraser, the deputy chairman and a divisional director of stockbroker Brewin Dolphin. Fraser acknowledged that it was a particularly testing time to take on the role with the City facing “one of the biggest changes we have seen since the war”. He said that they needed to keep a close eye on the current turmoil in the financial markets and to ensure that any new regulations that came in “do not put us at a serious competitive disadvantage to other areas”. He also pledged to continue to call for a solution to the Heathrow situation as well as keeping the government on track with projects such as Crossrail. Click here for further information Financial Times 18.04.08
More than 2m sq ft of office space to be released in the City; more than 2m sq ft of office space is due to come on to the City market in the next few months, just as experts are predicting large job cuts. British Land’s 400,000 sq ft scheme at 201 Bishopsgate and Allied London’s 360,000 sq ft Aldersgate scheme are just two of the developments in a total of 2.5m sq ft in the City core, of which 2.06m sq ft has yet to be let. The figures were revealed by EGI’s London Office Database. Estates Gazette 19.04.08
Humphries steps in at New West End Company; former John Lewis Partnership retail development director Ann Humphries has been appointed as interim chair of the New West End Company, succeeding Ian Henderson. A permanent chair- expected to be John Lewis chairman Charlie Mayfield- will be appointed this summer. Click here for further information Estates Gazette 19.04.08
London house sellers start cutting prices; house sellers in Greater London have cut their asking prices sharply in a bid to attract buyers with prices falling in 27 of the capital’s 32 boroughs according to the property website Rightmove. Prices fell by 0.9 per cent between March and April to an average of £403,545 with the most expensive boroughs being the hardest hit. Richmond was the top faller with prices down 2.7 per cent. Kensington and Chelsea dropped 2.2 per cent but still had an average asking price of nearly £1.5m. Click here for further information Guardian 19.04.08
However…London increases its lead in luxury homes; the 2008 Wealth Report from Citi Private Bank and Knight Frank says that London is now the most expensive city in the world to buy luxury property. Price growth in 2007 easily outpaced that of rivals such as Monaco, St Jean Cap Ferrat, Courcheval and Manhattan. Despite more luxury property becoming available in London through specialist developers such as the Candy Brothers, prices in London barely slowed. The average price of a luxury flat in London rose 29 per cent to £36,500 per square metre. The number of £10m-plus sales in Chelsea, Kensington and Belgravia in the six months to January 2008 was 190 per cent higher than in the same period a year earlier. However, Liam Bailey of Knight Frank warns that the good times could be coming to an end for the high-end property markets- in the short-term at least. Click here for further information Financial Times 21.04.08
MPs condemn soaring costs of Games; the government underestimated the true cost of hosting the 2012 Games, misleading parliament and the public, in order to win support for the Games according to the chairman of the House of Commons Public Accounts Committee (PAC). Speaking at the launch of the PAC’s report into the funding of the 2012 Games, Edward Leigh said the original budget was “entirely unrealistic” and ignored foreseeable costs such as policing, contingency provisions and tax obligations, while overestimating contributions from the private sector. The original budget was set at £4bn, but the bill has jumped to £9.3bn since then. The extra costs are largely due to the addition of costs for security (£600m), VAT (£837m) and a contingency fund of £2.7bn, factors which the PAC claim were foreseeable and should have been included in the original budget. There was also a 35-fold increase in the budget of the Olympic Delivery Authority, which rose from an original estimate of £16m to £570m.The amount of private sector support was originally put at £738m but has been revised down to £165m. Click here for further information Guardian 22.04.08
Westfield wants total control of Olympic shopping mall; Westfield is preparing to buy out London & Continental Railways, its joint venture partner in the £1.5bn shopping centre planned as zone one of the Stratford Olympic Village site. The 40-acre site, which is thought to be worth an estimated £170m and is scheduled to accommodate 1.5m sq ft of shopping, 1,224 flats, 1m sq ft of offices, two hotels and two major rail interchanges, is the first phase of the 170-acre Olympic Village. Westfield is keen to retain control of zone one, which needs to be completed ahead of the 2012 Games, but has no interest in buying the remainder of the site. The company is close to finalizing an agreement with rival Australian developer Lend Lease, which will build 4,000 homes for athletes outside zone one. To further complicate matters the EG’s diary quotes John Armitt, chairman of the Olympic Delivery Authority, as saying that “from a security point of view, it won’t be that helpful to have all those shoppers around”. Estates Gazette 14.04.08
Think-tank claims 2012 Games won’t benefit locals; the New Economics Foundation has published a report that claims that the 2012 Games will not fulfil the promise to improve the lives of east London’s poorest residents. It says that the Games are in danger of following previous Games, which boosted tourism, leisure and infrastructure but failed to improve the lives of the poorest residents. Vast amounts of money injected into the area could leak out to consultants, developers and large companies, the report says, leaving local businesses unable to compete and local people priced out of the housing market because of gentrification. In the original bid the government and delivery bodies promised residents that they would regenerate the Lower Lea Valley, one of the UK’s most disadvantaged areas. Click here for further information Guardian 21.04.08
Social enterprises win 2012 bus deal; two of the UK’s largest social enterprises have won a contract to operate bus services on the Games site leading up to 2012. The Ealing and Hackney Community Transport groups have formed a partnership to transport workers between key points in construction areas, venues and compounds within the Olympic Park. Click here for further information Regeneration 18.04.08
Minerva place building contract for St Botolphs; property group Minerva has announced that it has placed a £150m building contract with Skanska for the 560,000 sq ft St Botolph’s development. The Nicholas Grimshaw-designed scheme is due to be completed in 2010 and has one pre-let of 84,000 sq ft to Locktons, the Insurance broker. The building has been shortlisted by News International as their new London headquarters. Financial Times 10.04.08
City companies start to dispose of surplus space; Man Group, the world’s largest hedge fund, has put one-third of the space at its proposed new global head quarters up for disposal. The group, which currently occupies 140,000 sq ft in Sugar Quay on Lower Thames Street, had taken a 292,000 sq ft pre-let at Riverbank House in Swan Lane, into which it plans to move in 2011. Meanwhile Barclays Capital is expected to dispose of 80,000 sq ft in Canary Wharf and Citi bank wants to let 150,000 sq ft at Canada House in Canary Wharf. Close attention is also being paid to the Royal Bank of Scotland, which has announced 200 redundancies. Estates Gazette 12.04.08
Candy Brothers adapt Chelsea Barracks to woo Westminster; following concerns expressed by Westminster Council, the Candy Brothers have made some changes to their scheme to replace Chelsea Barracks. Documents lodged with the Council reveal that the height of several buildings has been scaled back to meet Westminster’s concern that the luxury flats would spoil the views from the Royal Hospital. The nine buildings along Chelsea Bridge Road will now be mainly seven storeys rather than 12. The tallest building in the new scheme will be a 13-storey affordable block on Ebury Road. CPC Group and joint venture partner Qatari Diar Real Estate Investment Company’s 2.5m sq ft scheme includes 1.8m sq ft of flats, an 108-bedroom hotel and 23,000 sq ft of shops. Estates Gazette 14.04.08
New life for Café Royal; the Café Royal, once the haunt of writers and artists such as Oscar Wilde and James McNeill Whistler, is to be turned into a luxury hotel as part of a £750m makeover. Israeli hotel company Alrov Group has announced that it has acquired a 125-year lease of the site for £90m from the Crown Estate. It will be transformed into a 160-bedroom luxury hotel, with retail established at ground and basement levels. The scheme will involve the retention of the Grade 1 listed rooms including the Grill Room. The development forms part of the Crown Estate’s one million square foot Quadrant scheme around the junction of Regent Street and Piccadilly Circus. Click here for further information Financial Times 14.04.08
Bermondsey Square announcements; Igloo, the Morley-managed regeneration fund, has signed three occupiers for its £60m mixed-use Bermondsey Square development. Bespoke Hotels will operate the 79-bedroom hotel, restaurant and delicatessen. Shortwave Films will run a 55-seat cinema and Sainsbury’s will build a 4,000 sq ft store to anchor the scheme. It is expected to open in the autumn. Estates Gazette 19.04.08
grapevine is produced twice monthly (except in August and December when there
is one issue) by Brian Wright on behalf of GLE
Next issue on 15th May 2008
Circulation enquiries to grapevine@gle.co.uk
Content enquiries to Brian Wright on user164898@aol.com
Tel: 01789 263252