UK inflation rate in yet another surprise; following the surprise drop in inflation in July, when it fell to 1.9 per cent, the figure for August was even better at 1.8 per cent- the lowest level for more than a year. The news will be warmly received at the Bank of England where it will create more leeway to focus on the turmoil in the finance sector following Northern Rock. According to the FT the figures will reinforce the view that interest rates have peaked at 5.75 per cent and could even fall if the squeeze in credit markets worsens. There were also surprisingly upbeat figures for retail activity and for the housing market but analysts described them as a hangover from happier times, as they gave warning of a coming slowdown in growth as the fallout from the credit squeeze ripples through the economy over the coming year. Alan Castle, UK economist for Lehman, said: “As a result, we now expect two 25 basic point rate cuts from the Bank of England in the first half of next year and a greater depreciation of sterling on a trade-weighted basis and against the euro”. Further information - Click here Financial Times 18.09.07, Times 21.09.07
Fresh doubts on state of public finances; a combination of falling corporation tax revenues and rising debt interest payments have brought the worst August deficit since records began in 1993, casting fresh doubts on the state of the public finances. The Office for National Statistics said that the preferred public sector net borrowing measure showed a shortfall of £9bn in August- much worse than the City’s forecast of £6bn. Economists said that despite a couple of years of strong economic growth, which should boost tax receipts and cut spending on unemployment benefit, the public sector finances remain stubbornly in the red. Gemma Tetlow of the Institute for Fiscal Studies said: “Today’s figures show that Alistair Darling will have to deliver his first pre-budget report as chancellor next month with government borrowing higher than last year, rather than falling, as Gordon Brown had hoped and predicted in his final budget in March”. Howard Archer, economist at Global Insight, said Brown should consider holding an autumn election because the economy and the public finances could get a lot worse this year and next. Further information - Click here Guardian 25.09.07
Next warns of retailing bloodbath; Simon Wolfson, chief executive of Next, has warned that “despite a tough summer for retailers” he is “acutely aware” that millions of homeowners have yet to feel the real impact of the higher cost of borrowing. He gave a warning that the crunch for retail sales could come over the Christmas period. “We think the higher rates will feed through in three or four months’ time. The economic environment is going to be tougher”. His warning came as the Bank of England released figures that show that mortgage borrowing costs for households jumped in August by an average of 0.25 per cent to 7.69 per cent. It marks the highest price charged by the lending institutions since 1998 and reflects, at least in part, the fallout from America’s sub-prime mortgage crisis. The number of mortgages at 93,700 was down from more than 103,000 a year ago and was five per cent down on July. The average first-time buyer is now borrowing at almost 3.4 times their gross annual salary, compared to 3.23 a year ago. Mortgage payments are taking just under 20 per cent of salaries compared to 16.6 per cent in July 2006. Times 12.09.07
Watchdog defends the statistics office; Sir Michael Scholar, chair of the government’s newly created statistics watchdog, has acknowledged that there were real concerns about the quality of data following the relocation of the Office of National Statistics (ONS) to Newport. He said that following widespread complaints from bodies and individuals including the Bank of England that a hemorrhage of senior staff reluctant to leave London would hamper the ONS’s output had to be taken “seriously”. However he quoted precedents such as the move of the Patent Office out of the capital, which he had overseen in a previous Whitehall role, suggested that such relocations could ultimately be successful. However he did acknowledge that there were worries about the lack of confidence amongst senior staff in the management of the ONS with the percentage of staff believing the office to be well run falling to 11 per cent. He refused to be drawn on the future of Karen Dunnell, the national statistician, whose contract expires next year saying that would be a matter for the new Statistics Board when it was up and running. The members of the new board, which will report direct to parliament rather than to ministers, will be recruited this year. It will formally take over control of data from the Treasury next April. Further information - Click here Financial Times 06.09.07
Northern Rock praised for philanthropy; the directors of many of Britain’s leading charities and foundations wrote to the Financial Times to draw attention to the work of the Northern Rock Foundation (NRF) - an independent trust established by the company which has distributed nearly £200m to good causes across the north of England and further afield. They say: “Within the charitable trusts and foundations world, NRF has become one of the most effective and creative grant-givers in the UK. Its customers and investors should be reassured by the fact that the company has such a strong commitment to good corporate citizenship”. Financial Times 20.09.07
US firms falling behind Europe on ethical standards; despite high-profile scandals and continuing public disquiet about globalisation, a study of corporate responsibility by the think-tank Eiris reveals that large companies now have much higher standards of behaviour than in the past. Responsible practices are being increasingly adopted by companies worldwide. Bob Gordon of Eiris, said: “Twenty five years ago, very few companies were aware of environmental and social governance (ESG) issues, let alone developing policies and systems to address them. Corporate responsibility continues to evolve from what was mainly a philanthropic activity to a more mainstream approach where it is integrated into core business activities.” However there are wide variations. North American companies generally lag behind those in Europe on ESG issues, although “a core of larger companies adopted responsible business practices”. European companies tended to be more socially aware because of “a sophisticated, responsible investment market, NGO pressure and a strong regulatory environment”. Further information - Click here Independent 14.09.07
UK companies ill-prepared for PR crises says survey; UK business owners are ill-prepared for dealing with risks such as the public relations disasters experienced by well-known global companies, according to Grant Thornton International. A survey carried out for the professional services group found that most British businesses were well prepared to deal with threats such as destruction of their property, IT failures and attacks by computer hackers. But when it came to operating risks, they had done less recovery planning than their overseas counterparts. Only 26 per cent had drawn up plans to deal with a media crisis compared to 35 per cent of businesses in the rest of the world. Further information - Click here Financial Times 18.09.07
Tesco may be underestimating its carbon footprint; Christian Aid has claimed that Tesco is severely underestimating its true contribution to climate change. The retailer has set up a £100m fund to create technologies to fight climate change and claims to have Britain’s largest distribution fleet run on biofuels. Christian Aid is claiming that Tesco’s carbon footprint does not include emissions caused by shoppers driving to and from its stores or those incurred by its suppliers. They believe that the true impact that Tesco has on the environment could be 12 times higher than the retailer admits to. Tesco itself estimates its carbon footprint at 4.12m tonnes of CO² equivalent- bigger than Mauritius. Christian Aid, who are meeting Tesco to discuss the situation- said that they were “seeking assurances that the company would stick to its promises, but also that it does not do so by axing overseas suppliers, where what’s needed is help and support from rich world companies to help them go green too”. A Tesco spokeswoman said: “Tesco is acknowledged to have a climate change programme that is second to none. We are transparent about how we tackle carbon emissions and only tackle what we can directly influence. Environmental Resource Management has verified our calculations”. Observer 09.09.07
Tesco gives £25m to fund new research; Sir Terry Leahy, chief executive of Tesco, has said that Tesco is ready to raise prices to deliver “a revolution in green consumption”. He said that business, consumers and government had to make big changes to move to a low-carbon economy and that could mean that prices would have to rise. Sir Terry said that consumers expected the company to take a lead in helping them to follow greener lifestyles and would accept price increases if they could see the value of them. Tesco’s rivals would have to make similar changes. He was speaking as the supermarket chain pledged £25m for a sustainable consumption institute at Manchester University. The institute will investigate issues from the impact of cleaner technologies and recycling to ways of encouraging consumers to adopt more sustainable lifestyles. It will be made up of one professor, five academics, some 20 PhD researchers and up to 30 PhD students. Their research will be freely available. Tesco has launched a community plan, which includes a £100m investment in alternative energy, more local sourcing and a promise to put a “carbon calorie count” on every product. The first carbon count labels will appear next spring. Further information - Click here Guardian 13.09.07
Slow progress on Gateway homes; a report by Savills, the property consultants, says that since 2001 developers have built less than a quarter of the homes that the Government wants to see built in the Thames Gateway by 2016. This means that three-quarters of the 160,000 homes earmarked for the Gateway will have to be built in less than ten years. Although employment and property sales are growing, these successes are being undermined by the sluggish building rate. House prices are rising faster than in the rest of the south-east region with 15 per cent rises in regeneration areas such as Dagenham, Woolwich, Purfleet and Basildon. The employment growth has been 22 per cent compared to 12 per cent in the rest of the country. The government is aiming for 180,000 new jobs by 2016. One of the main reasons for the slow rate of new housing starts is that much of the Gateway housing is on large development sites that are still working their way through complex planning and design stages. Savills estimate that 127,000 homes- 80 per cent of the target- are due to be located on large sites of more than 1,000 units. Further information - Click here Regeneration 07.09.07
Community Trusts see a fall in income; the income of community-owned enterprises has failed to grow for the first time in four years, according to a survey by the Development Trusts Association (DTA). The DTA’s annual member survey of 65 trusts shows that their average total income fell from £1,020,227 in 2006 to £1,000,429 in 2007.The survey shows that the average earned income from activities such as trading and contracts has actually increased but that there is declining grant income as local authorities switch from core grant programmes and moving more to contracts. There have also been cuts caused by the end of the Single Regeneration Budget and EU funding schemes. The survey shows that London-based trusts dominate the top of the table of trusts with high assets with Westway Development Trust (1) having assets worth £28.9m, Coin Street Community Builders (2), £26.1m, and Trust Thamesmead (3), £21.2m. Shoreditch Trust is 11th with £6.4m. The picture changes when earned income is assessed. This table is led by Goodwin Development Trust from Hull (£7m) followed by Coin Street (£3.1m) and Ferguslie Park Housing Association in Scotland (£2.5m). Fourth-placed Trust Thamesmead is the only other London trust in the list (£1.7m). Further information - Click here Regeneration 14.09.07
Warning of 6m more cars by 2031; a warning that Britain will descend into ”traffic hell” with nearly 6m more cars on the roads by 2031 has been given by the Campaign for Better Transport (CBT) (formerly Transport 2000). The campaign is urging the government to cut car use by investing in the rail network, as well as improving bus services and making public transport cheaper. According to government projections, a further 5.7m cars will be on British roads over the next 20 years, increasing the overall traffic load by 30 per cent. Motorists groups have warned that any policy to limit driving or make it more expensive would be politically dangerous. Road pricing, as a policy, suffered a backlash before any introduction in the UK with nearly 2m people signing an online petition calling for it to be dropped. Stephen Joseph of CBT said that the government should press ahead with road pricing and implement a nationwide scheme tackling carbon dioxide emissions as well as congestion. A study by the Department of Transport predicts that car ownership will rise to 33.5m by 2031, up from the present level of 27.8m. Edmund King of the RAC Foundation said that Mr Joseph was ignoring the fact that nearly four-fifths of the total distance travelled was by car. “A realistic campaign for better transport would seek to improve conditions for all transport users but CBT seems to be falling into the trap of assuming car is bad, train is good”. Further information - Click here Guardian 10.09.07
Government to review small business policy; on 20th September Alistair Darling, the chancellor, and John Hutton, the business secretary, launched a six-month “nothing off limits” review of government policy to foster small business growth. The two ministers hosted a small reception at Number 11 Downing Street for 20 leading entrepreneurs, including Lord Bilimoria of Cobra beer and Jonathan Straight of the eponymous water butt company. John Hutton denied that it was a token response to small firms’ complaints of being left out of initiatives such as Gordon Brown’s new business council. Following the consultation the government plans to produce a white paper setting out new policies for small and medium sized companies in the spring. He said: “It’s an opportunity to take stock, to reflect on the last 10 years. We’ve made a lot of progress on this agenda but I don’t think we should be complacent”. The UK’s performance on start-ups and business survival is better than many of its European competitors but the transatlantic gap remains stubbornly wide. “Compare the UK to the US and we’re behind- and that’s the benchmark. We’ve got to be right up there with the most dynamic entrepreneurial economies in the world.” Ministers want in particular to crack the “glass ceiling” that appears to prevent many small companies from expanding. Hutton quotes the “striking” finding from his department’s 2005 small business survey that more than half the businesses with fewer than 50 employees have no ambition to grow bigger. John Hutton and Stephen Timms, the Enterprise Minister, will be holding 14 meetings across the UK over the next two months when they will raise a number of issues including growth within UK businesses; global challenges and opportunities; supporting an environment for business growth; the role of enterprise as a tool for closing the gap between regions and social groups; and encouraging individuals to be more enterprising. Further information - Click here Financial Times 21.09.07
London Business Angels celebrate 25 years; Lord Jones of Birmingham (formerly Digby Jones), the Minister of Trade, was the guest of honour at a gala dinner to celebrate 25 years of London Business Angels. Originally founded as the LEntA Marriage Bureau and then LINC it became London Business Angels in 2000. Since then it has facilitated over 100 investments, totaling £18m. One of the investees was Lord Bilimoria’s Cobra Beer. The activity was encouraged by the creation of London Seed Capital, one of the Government’s early co-investment funds. Six similar funds have now been rolled out across the UK. London Seed Capital has now invested £3m in 21 companies levering in some £10m of angel funding and £8m of external funding. Further information - Click here LBA press release 20.09.07
Chinese companies now rank in world’s top ten; thanks to the record highs on the Shanghai stock market three Chinese companies have entered the list of the world’s top ten companies judged by share capital. Exxon Mobil and General Electric are ranked first and second but the Industrial and Commercial Bank of China is now ranked third and has also overtaken Citibank as the largest bank- although the US group recorded profits three times higher. Petrochina is ranked fourth and China Mobile is sixth behind Microsoft. The other companies in the top ten are AT&T, Shell, Gazprom and Citigroup. China’s stock market is now worth more than its GDP raising fears amongst analysts that the steep rise in Chinese share prices may not be sustainable. On the downside the OECD raises questions about China’s drive to become a global force in science and technology. It blames state dominance of research and development, and the economy in general, combined with a shortage of talented scientists and managers. Further information - Click here Observer 09.09.07
AstraZeneca to outsource manufacturing; AstraZeneca, Britain’s second-largest pharmaceutical company, is planning to outsource its entire drug manufacturing within ten years. David Smith, executive vice-president of operations, said that the aim was to become a pure research, development and marketing organisation. He said: “Manufacturing for AstraZeneca is not a core activity. AstraZeneca is about innovation and brand-building…..There are lots of people and organisations that can manufacture better than we do”. At present AstraZeneca has 27 manufacturing sites in 19 countries. Since February it has announced that it plans to shed a total of 7,600 jobs- or 11 per cent of its 66,000-strong global workforce, but Mr Smith indicated that this would be the start of an even more fundamental transformation of the business. Although the pharmaceutical industry has been one of the most conservative in its attitude towards manufacturing and the supply chain some other major companies have also indicated that they looking at outsourcing. Pfizer, the huge American group, recently announced that it was going to stop manufacturing in Kent with the loss of 420 jobs although it would maintain its research plant. Further information - Click here Times 17.09.07
Prime Minister makes jobs pledge to TUC: addressing his first Trades Union Congress as prime minister Gordon Brown moved to head off growing alarm about the migration of cheap foreign labour by promising to find an “extra 500,000 British jobs for British workers”. In a two-pronged attack he is going to make it more difficult for non-EU migrants to enter the British labour force by tightening English language requirements and he will offer a package of measures to fast-track unemployed Britons into jobs. Nearly half of the 500,000 “extra British jobs” will come through local employment partnerships between major employers and local Jobcentre Plus (JCP) offices, in which employers give commitments to take on, train and offer jobs to people who are either inactive or unemployed under Pathways to Work. So far 64 employers have signed up ranging from Sainsbury’s to the Royal Bank of Scotland. The Treasury is confident that as many as 200 will sign up. JCP offices will also offer specific job interviews for every lone parent, long-term unemployed and incapacity claimants stating that they wish to work. Employers will be offered three measures to encourage them to offer jobs; a £400 training allowance to train new recruits; extending the guarantee of lone parents’ benefits from the current first 15 days of work up to six weeks; and offering those finding work a back-to-work credit of £40 a week rising to £60 a week in London. Subsequently the Department of Work and Pensions has announced the six private and voluntary sector partners for Pathways to Work. Central London, City, east London, Lambeth, Southwark and Wandsworth will be managed by Work Directions, a subsidiary of the Australian firm, Ingeus. The second phase of contracts will be announced in December. Further information - Click here Guardian 10.09.07
Hain denies cooling on private sector involvement; in his speech to the Institute for Public Policy Research (IPPR) Peter Hain, the work and pensions secretary, denied that he had “cooled” on giving the private sector a bigger role in public services. Previously, in an interview with the FT at the end of July, he had said that despite the recommendation in the report by David Freud that the private sector should have a bigger role in welfare-to-work programmes that this was “not his preferred option”. He told the IPPR that he still had reservations about awarding big regional contracts to private companies because he had concerns about replacing a public sector monopoly with a private sector monopoly. However, as evidenced by the announcement above, he had no problem with the private sector as a prime contractor on a sub-regional level. He went on: “No one has ‘gone cool’ on reform [or] the role of the private sector. I’m interested in one thing and one thing only- what works. The reality is that we will work with large providers. They can bring scale and integration. If a sub-regional contract is the answer, we’ll go for it. If it isn’t, we won’t. But there will be a bigger role for private contractors”. John Cridland, CBI deputy director-general, said the acknowledgement of the benefits of private and voluntary sector involvement was “encouraging”. Further information - Click here
Tesco chief warns about basic skills; Sir Terry Leahy, chief executive of Tesco, has warned that Gordon Brown’s vision of Britain as a high-skills powerhouse challenging India and China is being jeopardised by a lack of basic skills that is harming competitiveness, leaving firms hungry for qualified workers and causing deep-seated social problems. In a speech to the CBI summit on skills, the head of Britain’s largest private-sector employer pledged that Tesco to improving the quality of training but warned ministers that they cannot expect firms to make good the failings of schools. He said that companies should see investment in training as a way of improving profits rather than just a way of ticking a social responsibility box but emphasised that the long-term solution had to start in the schools. “Too many children have been leaving school after 11 or 13 years of compulsory education without the basic skills to get on in life and hold down a job. Employers can- and should- add to the basics in the training we offer, but it’s going to be an uphill struggle if the basics aren’t there in the first place”. Sir Terry emphasised the importance of social skills- the ability to work in teams and communicate- and highlighted figures from the Leitch report that showed five million British adults lacked basic numeracy skills, 17 million had problems with numbers and one in six were leaving school unable to read write or add up properly. The figures meant that business had problems with recruitment in a more technological age. “But on a human level they represent a terrible waste of potential, limiting social mobility and reducing opportunity. And they lead to some of the social problems which we read about all too often at the moment”. Further information - Click here Guardian 12.09.07
Poland wants its plumbers back; Lech Kaczynski, President of Poland, has launched an advertising campaign to lure home the two million young people who have emigrated from Poland. Focusing mainly on Britain, where an estimated 600,000 Poles work, he said he wanted to attract as many of his compatriots as possible. Job agencies would be established to tell people about the opportunities. There is now a shortage of doctors, carers, builders and engineers. Earlier this year the President complained that he could not find a decorator. However overall unemployment in Poland is 15 per cent and amongst the under 25s it is 25 per cent. A recent study in Britain showed that 60 per cent were keen to return but were hesitant about doing so. Guardian 22.09.07
Increase in workplace testing for drugs and alcohol; the proportion of employers testing their staff for alcohol and drug abuse is rising but still lags behind that of the USA according to a study published by the Chartered Institute of Personnel and Development (CIPD). A survey of more than 500 employers shows that almost 40 per cent “believe that alcohol and drug misuse is a significant cause of employee absence and lost productivity”. Another third blame drug abuse for “a negative effect in the workplace”. Some 22 per cent of employers currently test and another nine per cent plan to do so. This compares with about 16 per cent who tested in the last CIPD survey four years ago. About 40 per cent of US companies use testing. The health and Safety Executive estimates up to 14m working days are lost each year owing to alcohol problems, costing British industry an estimated £2bn each year. Further information - Click here Financial Times 17.09.07
OECD critical of class sizes and university numbers; the latest education survey of 30 Western countries carried out by the OECD says that class sizes in UK primary schools are still higher than in most developed countries. Figures show that the UK- with an average of 25.8 pupils per class in state schools- comes 23rd out of the 30 countries covered. Only Korea, Chile, Japan, Turkey, Israel, Brazil and Ireland have larger class sizes. The smallest primary school classes are in the Russian Federation, where there is an average of 15.6 pupils per class. UK independent primary schools have a class size of 10.7 children per class. The report also spotlights a dramatic slide down the league table for the number of graduates in the UK. It has dropped from 3rd to 10th despite a government drive to increase wider participation. Student numbers have been rising in the UK- up to 52 per cent in 2005, it is just that they are rising faster in other countries such as Australia and Finland. In Australia, participation has reached 80 per cent. The OECD report also says that teenagers in the UK have fewer expectations of going to university than anywhere else in the Western world. The report does conclude that the UK “remains strong” in overall performance, singling out the expansion of provision for early years and the attempts to improve teaching standards. Further information - Click here Independent 19.09.07
EU growth puts pressure on Cambridge admissions; faced with an analysis produced by the Sutton Trust showing pupils from independent schools have a far better chance of winning places at Oxbridge universities have had to admit that their room for manoeuvre is being hindered by the EU. Cambridge’s head of admissions says that growing competition for places from bright young people from elsewhere in the EU is putting pressure on the 3,300 places available each year. International law dictates that the university cannot discriminate against candidates from elsewhere in the EU, who are also entitled to pay the same admission fees as their British counterparts. The finding is part of Cambridge’s detailed analysis of why applications from state schools fell by 4.3 per cent in the 2006 admissions round. Other factors included growing numbers of people choosing to go to university in their home town and the introduction of admission fees. Private schools enjoy an advantage because of the greater likelihood that their students will achieve top marks in science subjects, maths and foreign languages. About half of courses at Cambridge are science subjects and ten per cent have a foreign language component. It fears that the decline in the number of young people taking languages, triggered by the 2004 decision to make them voluntary at GCSE, will further hit attempts to widen the student intake. Further information - Click here Financial Times 20.09.07
More pressure on public schools; the government is going to risk clashes with backbenchers and teaching unions by calling for more top public schools to set up their own city academies. Lord Adonis, the schools minister, will use a speech to the Headmasters’ Association next month to encourage them to establish and manage state schools in deprived areas as a way of “going back to their roots” as charitable organisations. According to Adonis, more than a dozen independent schools are already at various stages of developing academies in addition to those who are already known about. These include Dulwich, Tonbridge and Wellington College. It has also emerged that a wealthy parent at Brighton College is putting up £2m sponsorship to enable the school to establish a primary school academy nearby. The minister also confirmed that he is in discussion with three schools about plans to leave the private sector altogether to become city academies. Four other schools have already announced that they were switching. Adonis’s call comes just before the charity commission publish guidelines by which they will judge whether independent schools are providing sufficient “public benefit” to retain their public status. Sunday Times 16.09.07
Private schools warned about fees; private schools must bring their soaring fees under control by abandoning small class sizes and lavish school buildings or face a decline in the number of hard-pressed, middle-class families prepared to educate their children privately, a report by Mtm Consulting has warned. The report says that independent schools had become steadily less affordable as fees had risen by 39 per cent between 2001 and 2006, compared with an 18 per cent rise in average earnings. School fees have risen fast in recent years as schools have passed on the increased costs of teachers’ salaries and pensions. Many schools are also spending large amounts on state-of-the-art computing facilities, much of which has quickly become obsolete. Richard Cairns, head of Brighton College, said that the “facilities arms race” had got out of hand and consultants were right to focus on the competition between schools to build ever grander and more lavish facilities. One anonymous head told the report’s authors that fees for top boarding schools could reach £50,000 a year in 10 years. There is the prospect of private equity companies entering the market and the prospect of traditional public schools run as charities forced to huddle together in “federations” in a bid to curb costs and to meet the government’s “public benefit test”. The market is likely to split leaving 30 to 40 academic powerhouses that would remain immune to the cost sensitivity of some parents. Further information - Click here Financial Times 18.09.07
Foreign students dominate key university courses; fewer than one in three postgraduate students studying subjects considered vital to the UK’s economic well being come from the UK according to the latest figures published by Universities UK. Foreign students dominate in engineering, chemistry, computer science and genetics with some courses having 71 per cent of the students from outside the UK. Universities are less reliant on foreign students to fill undergraduate places although there are higher levels of enrolment in engineering and technology, agriculture and some aspects of biological sciences. British students are in an overall minority at two universities- the London School of Economics and the University of Buckingham. In all there are 330,000 foreign students on UK degree courses but whereas in 1998 the UK share of the international higher education market was 16 per cent, this had fallen to 11 per cent in 2004 (the last year for which figures are available). There is growing competition from countries such as Australia and Singapore and, according to a new report by the Higher Education Policy Institute, a growing feeling amongst foreign students that UK degree courses are not worth the money with students at UK universities putting in some of the lowest hours of study in Europe. Further information - Click here HEPI and here for Universities UK Evening Standard 25.09.07
Insurers launch climate initiative; the insurance industry has launched Climate Wise- a climate change initiative aimed at putting pressure on both British business and consumers to take environmental matters seriously. The so-called “ClimateWise” principles were drawn up by a group of global insurers and brokers, as well as the Lloyd’s of London market. As well as rewarding customers who make an effort to reduce their carbon emissions, the industry also hopes to put pressure on businesses, by using its collective might as investors. Further information - Click here Independent 14.09.07
Backlash against plastic bottles; the Independent features what it calls a transatlantic outcry against the soaring use of plastic bottles that has forced the world’s two leading drinks manufacturers to issue a dramatic pledge to improve their recycling rates. Figures released by the Department for Environment, Food and Rural Affairs (Defra) show that sales of mineral water in Britain reached 965m litres last year, an increase of nearly a third since 2001. The value is estimated to be £1.68bn. In the US sales have more than doubled in a decade to reach £5.4bn a year. But there are growing signs that the major beverage companies are being forced to rethink their strategy as a number of public bodies- including Liverpool City Council and Defra itself- ban bottled water and dispensers in their buildings. San Francisco has banned city departments from buying bottled water dispensers and pledged to phase out large dispensers by the end of the year. In New York, the city authorities have run an advertising campaign to encourage the use of tap water. Elsewhere in the US a campaign has been launched to lobby Congress to invest heavily in the public water system to cut down on the use of bottled water. Coca-Cola and Pepsi, which between them account for 55 per cent of the global soft drinks and mineral water market, have vowed to overhaul their operations to recover and recycle the billions of plastic containers used to sell their products worldwide. Coca-Cola will build a £30m recycling plant in South Carolina with similar facilities in Austria, Mexico and the Philippines. A campaign has started for an EU-wide increase in plastic bottle recycling. Further information - Click here Independent 18.09.07
Crossrail gets the green light- or does it? Both the Times and the Sunday Times run the story that subject to final discussions on the funding arrangements a go-ahead for the scheme could be announced at the Labour conference. The following day the Financial Times is more cautious saying that Alistair Darling, the chancellor, is waiting for other partners “to come up with their contribution”. However even the FT seems to think a deal is being done- but it might not be in time for the Labour conference. The original story in the Times (14th September) said that the government’s decision to proceed with funding a third of the £16bn needed for Crossrail may be at the expense of upgrading the London Underground. Transport for London has put up £800m to keep the work going that was due to be undertaken by the failed Metronet consortium. Now, however, there are fears that TfL will not be refunded and the upgrade will delayed. If Crossrail does get the go-ahead the earliest that it could open is 2015. Times 14.09.07, Sunday Times 16.09.07, Financial Times 17.09.07
Businesses remain puzzled about Kelly ‘pitch’; Ruth Kelly, the transport secretary, asked a meeting of business leaders for voluntary contributions for Crossrail held on 20th September. She did not set a target but asked for businesses to make a commitment by 25th September. One of the attendees told the Guardian: “Would you be happy going into a meeting where you are not told how much the funding gap for a project is and how much the government is putting in? On the basis of that how do you go to your board and get the money? It’s impossible”. The Guardian says that it is understood that the funding gap has narrowed significantly in negotiations over the past fortnight, leaving the capital’s banks, investment funds and insurers with a less daunting bill. Ruth Kelly made clear in a newspaper interview that all London businesses will contribute to Crossrail through a supplementary business rate but she wanted the financial institutions to make a further contribution. Guardian 21.09.07
Blow to Mayor’s hopes for Underground; Ken Livingstone’s plans to unravel one of Gordon Brown’s major policies and take over a £17bn London Underground maintenance contract has been dealt a blow by the public-private partnership (PPP) arbiter. Potential bidders for the two contracts made available by the collapse of the PPP contractor Metronet have been advised that the London mayor’s transport body Transport for London is responsible for up to £1.1bn of the overspending. Up to now interested parties have been put off by a financial overshoot of more than £2bn by Metronet. The belief that whoever inherited the contracts would have to pay for the overspending, plus a near-£2bn debt burden had tempered interest from the private sector and put TfL in pole position to effectively renationalise the PPP project by taking over the contracts. Guardian 22.09.07
Mayor publishes draft housing strategy; London mayor Ken Livingstone has called on the government to to encourage institutional investment into the private rented sector. He said that although the private rented market was “enjoying a renaissance in London” much more is needed to be done to improve the sector. He said that the sector could offer a more professional and responsible service. Despite many improvements, too many landlords still provide poor value for money, inadequate maintenance and poor management. He wanted to minimize fragmented ownership in new developments by encouraging institutional investment. The British Property Federation welcomed the mayor’s “tough love” policy, which would boost supply and improve services. The mayor also plans to carry out a London-wide capacity study to see if it is possible to increase the current target of building 30,500 new homes a year. The strategy, to tie in with the new housing and planning powers that the mayor will have once the Greater London Authority bill is passed next month, also calls for 15 per cent more social rented housing. Further information - Click here Estates Gazette 22.09.07
London is worst region for deprivation; a major new study of poverty in the UK undertaken by Sheffield University’s Social and Spatial Inequalities Research Group shows that more than half of the most intractable areas of deprivation in Britain are in London. Data contained within Professor Danny Dorling’s atlas of identity in Britain reveals the number of people in each constituency categorized as “core poor”- those who are materially deprived- and “breadline poor”- those who are better off but still financially excluded from the norms of society. Of the 13 constituencies that saw a rise in the number of breadline poor of ten percentage points or more between 1990 and 2000 and a below average fall in the number of core poor, seven were in London- Barking, Brent North, Brent South, Dagenham, East Ham, Edmonton and Walthamstow. The seven remaining constituencies were Barrow and Furness, Birmingham Hodge Hill, Leeds East, Plymouth Devonport, Walsall North and Walsall South. Further information - Click here Regeneration 14.09.07
London is the most expensive place in the world to eat out; according to Zagat’s 2008 London Restaurant Guide London has overtaken Paris and Tokyo as the most expensive place to eat out with a three-course restaurant meal costing an average £39.09 per head including service and a drink. This is, on average, £4 more than its nearest competitor, Paris, where the price is £35.37. Also in the league tables for quality and service in the world’s leading cities London comes 12th and 10th. However, the Guide says that the London restaurant industry is booming with nearly three-quarters of diners saying they eat out more frequently than they did two years ago. Zagat also say that fine dining in London is also among the most affordable compared to its international rivals. They point to Chez Bruce in Battersea, which they nominate as London’s top restaurant where a meal can £50 less than at Gordon Ramsey. The 2009 Good Food Guide advises its readers to go out of London with only 11 of the top 40 entries being in the capital. The Fat Duck at Bray is named as the best with Gordon Ramsey in Royal Hospital Road the runner up. Further information - Click here Independent 12.09.07, Times 15.09.07
Record visitors to Tate; attendance at the four Tate art galleries- including London’s Tate Britain and Tate Modern- was a record 7.7m- a 20 per cent increase on 2006. Sir Nicholas Serota, Tate Director, said: “Tate has had an incredible year, with its highest attendance figures ever. In six years we have trebled our audiences. A decade ago when the London Tate had two million visitors to a single building in Pimlico no one could have predicted that it could equal the four to five million attendances at the British Museum and the National Gallery”. However he cautioned that the gallery was operating in a difficult climate and was dependent on private funding to a greater extent than any other national museum or gallery. Highlights of the 2007-08 seasons will be retrospectives on Francis Bacon at Tate Britain (1st October 2008- 4th January 2009) and Mark Rothko at the Tate Modern (25th September 2008 - 8th February 2009). Sir Nicholas confirmed that fundraising for the £215m needed for the extension to the Tate Modern, to be designed by Herzog and de Mauron, was on schedule. It was hoped that it would open in 2012. Further information - Click here Times 21.09.07, Financial Times 21.09.07
Half of Olympic Village homes will be put up for rent; Lend Lease, the Australian developer, who is building the Olympic Village, has announced its plans for disposing of the 4,200 houses once the Games are over. It will allay fears that trying to sell 4,000 houses simultaneously would be difficult by putting 2,000 houses up for rent within a £1.5bn single-managed residential fund. Lend Lease will manage the fund and its partners at Stratford-First Base and the East Thames Housing Association- will manage the estate. A further 1,000 houses will go up for sale and the remaining 1,000 will be set aside for affordable housing. Estates Gazette 15.09.07
Tourism told to raise its game for Olympics; a new report from the Department of Culture, Media and Sport says that London’s 2012 Games will boost tourism revenues by £2.1bn over the next ten years but only if the industry improves the quality of accommodation, staff and customer service. Winning: A Tourism Strategy for 2012 and Beyond highlights some of the problems such as shortages of skilled chefs, high staff turnover and more than half the managers lacking minimum professional qualifications. Only 53 per cent of UK accommodation is part of a national star-graded scheme and only one third of London ‘s accommodation has any quality mark. The UK’s welcome to tourists ranks only 14th out of 40 countries. Ministers plan to use the handover of the Olympic mantle to London after the Beijing Games next year to launch a four-year marketing campaign, improve skills and promote business, tourism and conferences. However, the tourism industry is resigned to a cut in the budget of VisitBritain, the national tourism agency, in the forthcoming spending review. Margaret Hodge, the tourism minister, said that the spending review would be “incredibly tight” and that she was focused on creative use of the £300m provided by the government to regional development agencies, VisitBritain and other bodies. Further information - Click here Financial Times 18.09.07
Third major sponsor for 2012 Games; Adidas has become the third major sponsor for the 2012 Games, joining Lloyds TSB and EDF Energy in a commitment to raise £2bn for the London Organising Committee. A fourth major sponsor is due to be announced before Christmas. Adidas have also agreed to sponsor the clothing and equipment for the UK Olympic teams in 2008 and 2012 as well as clothing for the 70,000 volunteers for the London Games. Further information - Click here Various 20.09.07
World’s most expensive office rent in St James’s Square; despite the woes in the financial markets Permal, a hedge fund group and part of Legg Mason, has agreed to take two floors at 12 St James’s Square at rents of £140 and £130 per square foot. The price is the highest paid for office space anywhere in the world as well as in excess of prices paid for top-end West End buildings only two years ago, when £100 per sq ft was seen as the ceiling. The building was redeveloped by D2, a private Irish firm. Financial Times 22.09.07
Excitement grows over New Covent Garden; a powerful group of 250 wholesalers based at New Covent Garden Market has unexpectedly submitted a masterplan for the 56-acre Vauxhall site. The traders, who have the backing of an unnamed major developer and an international bank, are determined to preserve the site for the UK’s largest fresh produce market. The proposal includes a landmark building to house the market’s 2,500 workers, a state-of-the-art food museum, luxury hotels, commercial space and hundreds of homes. The news comes two months after a review of London’s markets, commissioned by Mayor Ken Livingstone, proposed consolidating Smithfield and Billingsgate markets on the Vauxhall site. If the markets were to move to Vauxhall it would scupper plans to pay for a new fruit and vegetable market by selling off the surplus land. The mayor’s plans are also being resisted by the government-run Covent Garden Market Authority, which says attempting to move the meat and fish markets to Vauxhall will hinder plans for the redevelopment of the whole area- including the adjacent Battersea Power Station. The Plan for London is currently being revised and will include a masterplan for what the mayor terms the Vauxhall/Nine Elms/Battersea Opportunity Area. The mayor proposes to remove the strategic industrial location designation of the area to allow more housing. Estates Gazette 08.09.07
Now Canada wants to leave Grosvenor Square; following the news that the US wants to move its embassy from 24-31 Grosvenor Square comes news that Canada now wants to follow suit. The move has been sparked by the recent sale of the US Navy’s 100,000 sq ft offices at 20-21 Grosvenor Square for £250m to a consortium led by Richard Caring. The Canadians occupy 135,000 sq ft at 1-3 Grosvenor Square on a 999-year lease signed in 1947.They plan to move elsewhere in Mayfair. The Estates Gazette forecasts that developers from across the globe are expected to bid for the building, which could be redeveloped as a five-star hotel or as luxury flats. Estates Gazette 22.09.07
Eight are shortlisted for development site behind British Library; the names of the final eight bidders for the Department of Culture, Media and Sports’ 4.4-acre site behind the British Library at St Pancras have been published. It is understood that the bids for the site, which was first put up for sale in January for around £50m, have reached £80m. Most of those shortlisted, who include a joint venture between Capital & Counties and Property Merchant Group, Development Securities, Terrance Hill, Taylor Wimpey and Persimmon are proposing a mixed-use scheme of around 500,000 sq ft. This accords with Camden Council’s 2003 planning brief, which called for “a genuine mixed-use development including a significant contribution to the council’s priority residential and community uses, and to the regeneration of the wider area”. The exception to the majority of the bids is a consortium comprising the Medical Research Council, University College London, Cancer Research UK and the Wellcome Trust who want to develop a £350m medical research facility of up to 860,000 sq ft. Estates Gazette 22.09.07
Bloomberg looks for new hi-tech headquarters; Bloomberg, the financial information services company, is planning to move to a new 300,000 sq ft hi-tech in the City or Docklands. This will mirror their recent move to a state-of-the-art 54-storey tower in New York. If Bloomberg do move it will mean selling its current 135,000 sq ft City gate House office in Finsbury Circus and subletting the interconnecting 120,000 sq ft 50 Finsbury Circus, which has 15 years left on the lease. The move would follow in the footsteps of its media rival, Reuters, which re-located from Fleet Street to a state-of-the-art HQ in Canary Wharf two years ago. Estates Gazette 08.09.07
Noho Square gets planning permission; the Candy Brothers have received planning permission from the City of Westminster for their Ken Shuttleworth-designed 900,000 sq ft Noho Square redevelopment of the old Middlesex Hospital. By increasing their Section 106 payment by £1.3m to £6m they averted prolonged discussion of the scheme. The revised plans include 263 flats and 345,000 sq ft of offices and shops set around a public garden. It will feature a wide range of energy-saving devices including Sedum plants to cover the whole roof and a combination boiler run off biomass. The Candy Brothers are expected to be one of the bidders for the Crown Estate’s Metropole Building at the junction of Northumberland Avenue and Whitehall Place, which is being sold as 400,000 sq ft mixed-use development site. At least 177,000 sq ft must be allocated for hotel use to make up for the loss of hotel space in the West End following the closure of the Regent Palace hotel in December. The Metropole was originally built as a grand hotel and became a Ministry of Defence office building in the 1930s. Times 08.09.07, Estates Gazette 15.09.07
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