Chancellor hints at a further rate rise; giving a briefing at the annual meetings of the International Monetary Fund and World Bank in Singapore, the Chancellor put homeowners and businesses on alert for fresh rises in interest rates as he hailed the government’s success in fuelling growth and boosting employment. He said that business investment was growing by more than 4 per cent a year and export growth had doubled this year, while employment was at a record high. However he warned, “We know that if we are to sustain growth in the future we must never be complacent and always be vigilant to risks. So that is why I supported the pro-active, forward looking action taken by the Bank of England in August and why we will continue to base public sector pay settlements on our 2 per cent inflation target”. Gerard Lyons, chief economist at Standard Chartered, told the Guardian, “It looks as if it was inserted by Mervyn King [Bank Governor] and is a clear indication that rates are going up again, probably in November”. Independent 18.09.06, Guardian 18.09.06
IMF warns about budget deficit and house prices; in its twice-yearly World Economic Outlook the International Monetary Fund warns that the growth of UK public spending must be curbed more rigourously than the Chancellor has been planning or else he is in danger of breaking his golden rule on the size of the national debt. It also repeats its warning about UK house prices being too high - although its criticism is less severe than before. It praises the robustness of the UK economy and raises its forecast for economic growth for 2006 and 2007 and accepts that the budget deficit will narrow. The Chancellor is planning public expenditure growth of 1.9 per cent above inflation, which is below the expected growth rate, but the IMF still believes that Mr Brown is on course for net public debt to exceed the target of 40 per cent of gross domestic product by 2011. If Mr Brown becomes prime minister next year, his government would either have to cut the rate of growth in public spending or introduce higher taxes- or both. Financial Times 14.09.06
Tax ruling may help companies switch to low-tax states; what the FT describes as a partial victory for Cadbury Schweppes in the European Court of Justice (ECJ) may make it easier for multinationals to exploit the lower tax rates offered by other EU states such as Ireland and Estonia. The ECJ said that putting subsidiaries in low-tax countries should not be treated as tax avoidance if they carry out genuine economic activities. The judgment is likely to force governments in 10 member states, including the UK, Sweden, Germany and Italy, to change their anti-avoidance legislation. Tax experts also said that the ruling could increase the impact of tax competition in Europe. Financial Times 13.09.06
The Internet and climate change are the most important issues; Jeremy Warner, the Independent’s City Editor, writes a column saying that the economic cycle is becoming less important as an issue and that in the new economic stability other different challenges for business are coming to the fore. He believes that the two biggest are modern communications and the other is climate change. The first is a market driven, and, if properly handled, a hugely positive force for business and economic development. The effect on employment and buying habits promises to be as seismic as the industrial revolution. Yet we are only at the beginning of the process. Mass rollout of broadband means that the critical mass is now being achieved and Chinese and Indian development will further accelerate the transformational process. Climate change is likely to prove more challenging than the Internet. Most of our economic progress has been based on oil and the shift to a carbon free economy, or near carbon free, is therefore likely to prove a costly, difficult and traumatic one. Climate change is perhaps the best example of market failure. If the market produces an undesirable outcome, it will normally self-correct the problem. Yet, because consumers are selfish, and are generally not prepared to pay the extra for protecting the environment, the system breaks down. There is now every chance that the world will be forced to become carbon free well before the reserves of oil and gas run out. This is a huge change that businesses are going to have to come terms with over the next ten to twenty years. Independent 16.09.06
City success powers UK boom; the financial sector now accounts for 8.5 per cent of the UK economy compared to 5.5 per cent five years ago according to the annual report of International Financial Services, London (IFSL). The increasing importance of financial services to the UK economy comes after a steady decline during the 1990s. It also compares with manufacturing which has seen its contribution to GDP drop by a third in the past decade to 13.6 per cent. IFSL say that the government has benefited greatly from the City’s success, receiving £8bn annually in corporation tax receipts. Income tax from the financial services workforce totals 12 per cent of the total whilst the number of jobs has stabilized at 1.09m at the end of 2005, or 4.1 per cent of Britain’s 26.8m workforce. Guardian 26.09.06
Small Business Service faces shake-up; a radical downsizing of the Small Business Service is to be introduced as part of a streamlining programme of business support by the state. Alastair Darling, trade and industry secretary, said that the SBS would be restructured to make it “smaller and more focused on what it can do. It will have a much smaller policy focus and a much closer tie-up with the Treasury, so that the Treasury is more tied into business concerns”. A “lot of” the £150m in business support will be transferred to the regional development agencies. The FT says that the SBS is perceived as lacking influence in Whitehall and giving it the explicit support of the Treasury as well as the Department of Trade and Industry should give it greater clout with other departments. It also speculates that Mr Darling is seen as the frontrunner to succeed Gordon Brown as chancellor and the close working relationship between the DTI and the Treasury may be an early manifestation of the transition to a new era. The latest review is part of an attempt to simplify the labyrinthine system of business support provided by Whitehall and regional bodies that includes 265 programmes administered by 15 departments. The chancellor in his March budget promised to cull the number of business support schemes from 3,000 to fewer than 100. In recent months the SBS has faced a range of sharp criticism from bodies such as the National Audit Office and the British Chambers of Commerce, although the BCC wanted the DTI to survive “to act as a voice for business within government”. Financial Times 18.09.06
Gold-plating of EU rules hits small businesses; European Union legislation is implemented more stringently than necessary in the UK, imposing higher costs on small businesses and deterring them from taking on new staff, according to the Foreign Policy Centre. The Centre, which was set up in 1998 under the patronage of Tony Blair, has examined the eight EU directives most heavily criticised by business and found “gold-plating” in five of them. The gold-plating takes several forms including extending the scope of the legislation, adding unnecessary requirements and introducing targets and deadlines not specified in the EU directives. The report has been published jointly with the Federation of Small Business, who polled a sample of their members on the effects of EU legislation. It will be submitted to the second stage of the Treasury-commissioned review into the implementation of EU legislation, chaired by Lord Davidson, advocate-general for Scotland. The review is due for completion later this year. Financial Times 07.09.06
UK slips to sixth as place to do business; the UK has fallen one place to sixth in the World Bank’s annual survey of business-friendly economies Doing Business 2007. The survey was originally designed as a study of market-based reforms and it is ironic that the UK has been overhauled by Hong Kong, which since reverting to communist rule has introduced new rules to protect investors and encourage trade across borders. Singapore has also risen one place to become the leading economy, followed by New Zealand, formally no 1, and the USA and Canada who stay third and fourth. . The remaining countries comprising the top 10 are Denmark, Australia, Norway and the Irish Republic. Times 06.09.06
The retail revolution has arrived; the Observer examines the implications of Tesco’s move into selling a much-expanded range of goods through a catalogue operation and the announcement by Marks and Spencer that it is moving into electrical goods and setting up an online operation with Amazon. John Lewis has announced a 70 per cent increase in online sales while Next’s figures have been rescued by its Internet and catalogue operations. But as retailers, and, in particular, Tesco expand their ranges, the repercussions will be felt in other businesses. With retail costs growing at 4 per cent and sales growth at 2 per cent, casualties are inevitable Richard Hyman of Verdict says, “Over the next ten years there’s going to be a significant shake out”. Other online consequences, according to the Sunday Times, were the cutting of 4,000 jobs by Aviva, the financial services group, in part because customers were no longer shy about doing big financial transactions online, and MyTravel as well as a number of old-style holiday companies. Observer 17.09.06, Sunday Times 19.09.06
Ben & Jerry’s to open social enterprise; Ben & Jerry’s, the ice-cream firm owned by Unilever, is to launch a shop in Aberdeen which is to run as a social enterprise managed by the Aberdeen Foyer. Ben & Jerry’s already have two “partner-shops” in Derry and Belfast and there are 16 in the US. The scoop shops offer disadvantaged people from all sectors of society a chance to return to employment. The new shop will open in October. Regeneration 22.09.06
Philips to lead new equality body; Trevor Philips, the current chairman of the Commission for Racial Equality (CRE) has been appointed chair of the government’s new equality and human rights body. The Commission for Equality and Human Rights (CEHR) will come into being in the autumn of 2007, when it will take on the responsibilities of the Commission for Racial Equality, the Disability Rights Commission and the Equal Opportunities Commission. Trevor Philips will stand down as chair of CRE as soon as a replacement has been found. Regeneration 15.09.06
Most poor people do not live in deprived areas; a study commissioned by the Joseph Rowntree Foundation says that more than half of deprived people don’t live in deprived areas and that government policy needs to be tailored to their needs. The study, which is part of a wide-ranging audit of housing and communities, also finds that the location of places that suffer concentrated deprivation has not changed during the lifetime of the Labour government. Guy Palmer, the co-author, says, “It’s easier in some ways for government to invest in deprived areas because it can get more bang for its buck, but this isn’t the whole issue. A poor person in a prosperous area can be very badly off”. Regeneration 22.09.06
Hodge reopens OFR debate; speaking at a fringe meeting at the Labour Party conference in Manchester Margaret Hodge, minister for industry, said that the fundamental review of company law currently going through parliament is only the “first step” in tightening statutory controls on directors with respect to environmental and social issues. She said that the government was “listening” to lobbying from environmental pressure groups to impose tougher standards for business than specified in the legislation. She went on “the way to move forward is by having this first step, which enables those who are fearful [of the bill’s impact] to be convinced”. She suggested that new measures could be considered once the bill was “in force and people start understanding it does not impact on profitability in the way that they think it will”. The CBI immediately dubbed the speech “a mistake” and Alistair Darling, the trade and industry secretary, said that the government would not intend to introduce any amendments at the bill’s third reading in the Commons on October 19th. Financial Times 26.09.06
Potential CSR backlash from US investors; the Independent on Sunday carries a story about a potential move by the Securities and Exchange Commission (SEC) to unleash US-style investor activism at the shareholder meetings of companies whose shares also trade in New York. It foresees a clash between European shareholders lobbying for companies to take their social and environmental impact more seriously, and some American funds who think that the corporate social responsibility movement has already gone too far. The Free Enterprise Action Fund has petitioned the SEC to drop exemptions which prevent US investors from voting or putting down motions in London-based companies, such as BP, that trade shares in New York through American Depository Receipts (ADRs). These do not have the same rights as the underlying shares. Steve Milroy, the manager of the Free Enterprise Action Fund, is demanding that BP spends less money on green campaigning. The Fund has also been attacking Goldman Sachs, where Lord Browne is a director as was Hank Paulson, the new US Treasury Secretary, for a gift of land to green charities in Chile. Independent on Sunday 10.09.06
Tesco launches organic clothing; Tesco is to launch a range of organic clothing designed by Katherine Hamnett (pictured right) in 40 stores in the spring. The move follows Marks & Spencer and will feature men’s, women’s and children’s clothing. The material, which is pesticide-free, is grown without chemical fertilisers and is dyed in an eco-friendly way. Independent 09.09.06
Companies wake up to the power of the blog; the Guardian looks at the growing power of the blog in attacking the perceived shortcomings of well-known companies. It cites Dell, who recalled 4.1m laptop batteries after a video showing one of its computers bursting into flames was posted on the Internet. Others that face what the Guardian calls vitriolic, often obsessive blogs include United Airlines (Untied Airlines), Wal-Mart (WakeUpWalMart, Wal-Mart Watch) and McDonalds (McChronicles). One of the most famous was Kryptonite Bicycle Locks where a blogger in 2004 illustrated that one of their locks could not withstand an attack by a biro pen. Kryptonite’s shares took a sharp downward turn. With over 35m blogs on the net keeping abreast of all of them is impossible. However Nielsen BuzzMetrics, a New York firm has developed an expertise in monitoring blogs and currently works for 150 of Fortune’s 1,000 firms. Guardian 19.09.06
Companies back Oxfam fund; Aviva and Vodafone have become the first two major companies to commit money to Oxfam’s 365 Alliance, which aims to put Oxfam’s ability to respond to major disasters such as the Asian tsunami on a stable, long-term basis. The supporting companies will provide between £500,000 and £1m over three years. Financial Times 20.09.06
Eurostar delivers blow to Ashford; Eurostar has announced that it is to close most of its train services from Ashford in Kent, as well as delaying the opening of its new station in Stratford, East London for at least two years as part of a sweeping cost-cutting plan. The plans were announced as it unveiled its new station at Ebbsfleet in North Kent on the route of the £5bn high-speed Channel Tunnel Rail Link. The two announcements are seen as major blows to the regeneration of Ashford and also of East London. The Eurostar stop played a big part in the planned development of 30,000 new homes in the area. It is also feared that the remaining three stopping trains to Paris will eventually be cut as it will be uneconomic to keep the station open for just eight trains a day. The delay in launching services from Stratford will be a major blow to East London. The station will be completed next year ready for the opening of the 68-mile Channel Tunnel Link but Eurostar says that it prefers to wait until a new fleet of high-speed commuter trains enter service in 2009 or 2010. It is quoted as saying that it is in competition with the airlines and does not want to lose money by sending customers to a station with a high volume of construction and poor transport links. It is also likely that large-scale building works for the Olympic will block off connections. However Eurostar did announce that high-speed rail services to Kent, to be operated by a joint venture between Britain’s Go Ahead Group and France’s Keolis, might start earlier than 2009. The service, which will use new trains being built by Hitachi in Japan, will operate at 140mph from St Pancras to Ebbsfleet before switching to normal speeds on conventional lines. Nonetheless they will sharply reduce journey times to towns such as Rochester and Ashford. Independent 12.09.06, Financial Times 13.09.06, Regeneration 15.09.06
City Development Companies to get green light; Regeneration says that organisations with the remit of delivering economic development and physical regeneration across entire conurbations are to get the green light in the forthcoming white paper on local government. It is thought that they will be modelled on Creative Sheffield, a city-wide body set up earlier this year, which Ruth Kelly, the communities secretary, said last week would become the first CDC. The new bodies will concentrate on economic development and may not be asset-owning bodies. On the wider issue of city-regions the government is still thought to be split between those who want formal structures with a directly elected figurehead on the lines of the London Mayor and those who favour the partnership model with boards drawn from existing local authorities. Regeneration 22.09.06
Most BIDs receive support from property owners; government research shows that more than half of the Business Improvement Districts (BIDs) are receiving financial support from property owners. To get approval Business Improvement Districts have to have the support of local traders with landlords not obliged to contribute. Nonetheless the report, which will be completed in 2008, says that the emphasis on traders is effecting landlords’ involvement. Regeneration 15.09.06
Leading employers join job equality scheme; over 80 major companies including BP, Centrica, BT, National Grid, Tesco, BAE Systems and Accenture have signed up to be “Exemplar Employers” under a new government scheme to improve employment opportunities for women at work. The companies have agreed to help women returning to work again to gain access to “good quality jobs” including part-time and flexible working. They have also agreed to help develop job share registers to make it easier for mothers and other women seeking part-time or flexible working to fit in with caring responsibilities. The scheme is amongst a number of measures announced by Ruth Kelly, communities secretary, in response to a report by the Women at Work commission, chaired by Baroness Prosser (pictured right). Other measures that have been announced include a £500,000 fund to help companies specialising in flexible working increase the number of senior part-time jobs for women and a £10m two-year programme to help at least 10,000 women in under-represented sectors with skills shortages. There will be a £20m London pilot scheme aimed at “low-skilled” women which will provide level three training, equivalent to two A-levels. Financial Times 12.09.06
McDonald’s to provide work-based education; McDonald’s. the country’s largest employer of under 21s, is to set up a web-based education system for its employees to gain qualifications in numeracy and literacy. It is aiming at 1,000 staff gaining the nationally-recognised qualifications by taking exams at one of its restaurants which will be accredited as an exam centre. Financial Times 19.09.06
Train to Gain goes national; a service to help businesses source appropriate and affordable training is being rolled out across England by the Learning and Skills Council. Train to Gain offers employers access to skills brokers, who will provide free advice on where to source training. Subsidised training up to NVQ level two, and in some regions level three, is also offered through the scheme as well as free advice to employees. Up to £1,000 worth of training for directors in small and medium sized businesses is also on offer and employers with less than 50 employees will be compensated for the time employees spend in training. Regeneration 22.09.06
Romania rejects mass migration fears; Calin Tariceanu, the Romanian Prime Minister (pictured left), has told the Financial Times that there will be no massive wave of emigration when Romania joins the EU on January 1, 2007. He also appealed to the British media and public to calm down saying, “People with higher education levels might go to the UK but I don’t see too many”. He felt that most poorer Romanians would head to Italy and Spain, where they would have less trouble with the language, and only those with better schooling would go to Britain. Meanwhile a group of Romanians and Bulgarians already working in the UK have urged the government to give their compatriots the same rights that were granted to new members of the EU two years ago. John Reid, the Home Secretary, is preparing to announce tight controls on citizens of the two new member states by only giving work permits to the highly-qualified or where they will fill skills shortages. But in an open letter to the Independent, some 45 senior executives in organisations such as Goldman Sachs and KPMG, warn that protectionist measures can only harm the UK. Independent 25.09.06, Financial Times 25.09.06
Basic skills exam at age 12 to placate business; Peter Walker, national director of the government’s schools improvement strategy, has revealed that a new test in functional skills is to be piloted for 12-year-olds which will be aimed at proving the pupils worth to employers. The new test, which will be piloted from September 2007, will testify that pupils have achieved the basic standard in literacy, numeracy and information technology in their first year at secondary school. There will be a full national roll-out of the English and ICT tests from September 2009 and maths in 2010. Independent 11.09.06
OECD shows UK slipping back in graduate table; a report by the Organisation for Economic Co-Operation and Development says that the UK is likely to slip even further back in the number of university graduates due to a “serious bottleneck” of 16-year-olds leaving school without good GCSEs. In recent years the UK has slipped back in the league table of adults taking degrees amongst the OECD’s 30 member states from second in 2000 to ninth in 2004. Furthermore the OECD predicts that the UK government will struggle to increase the pool of graduates in the economy claiming that, based on current entry rates to higher education, the UK may actually fall below the OECD average. The government has recently dropped its target of 50 per cent of under 30-year-olds going to university by 2010. The OECD says that there has been a sharp drop relative to other countries in the proportion of UK students with “level 2” qualifications, which is measured as 5 GCSEs at grades A*-C. It is unlikely that this has been caused by economic factors as the earnings and employment benefits of UK graduates are well above the OECD average and the financial penalties for leaving school without five good GCSEs more severe than in other countries. In spite of a 1 per cent decline in the UK’s share of the international education market the UK is still the destination of 11 per cent of the foreign students enrolled worldwide. The US takes 22 per cent, France 9 per cent, Australia 6 per cent and Canada 3 per cent. Financial Times 13.09.06
Manchester named University of the Year; the latest edition of the Sunday Times University Guide names Manchester as the University of the Year, although Cambridge still tops the Top 20 Universities league table. Manchester wins the accolade because it has risen three places to 15th in the league table and it attracts more applications than anywhere else in Britain. The Sunday Times says that much of the credit must go to Alan Gilbert, the vice-chancellor, who was recruited from Australia to mastermind the merger between the Victoria University of Manchester and the University of Manchester Institute of Science and Technology in 1994. Exeter, which rose seven places to 18th, is named as the runner up. The league table is still dominated by the usual suspects with Oxford still in second place, LSE and Imperial swapping third and fourth places, followed by UCL in fifth. They are followed by Warwick, York, Durham, Bristol and St Andrews. Sunday Times 10.09.06
Indian e-tutors provide homework help; hundreds of Indian teachers are being recruited to provide online tutoring services to students in the UK and the US. With maths and science teaching in crisis, new Indian companies are rushing to fill the gaps. Krishnan Ganesh sold his call centre business to set up Tutorvista which offers students unlimited help for £50 a month. “if they want to get into Oxford, get a place at a private school, catch up when they’re behind, or just improve their marks, what they need is individual help”. Classes are conducted by whiteboard that allows tutor and pupil to watch each other draw symbols and go through equations together on the net, using a mouse rather than chalk. Observer 19.09.06
Gummer claims that Bush will recant on global warming; writing his weekly column in the Estates Gazette, John Gummer, the former environment secretary and now chairman of David Cameron’s Quality of Life taskforce, says that following California’s acceptance of carbon trading and caps on emissions, Washington is filled with rumours that George Bush is about to make his equivalent of Nixon’s visit to China. He says that Republican spin-doctors are assiduously spreading the notion that the demands of energy security, driven by terrorism, together with the competitive needs of American business mean that Bush wants to lay down a Republican basis for reducing emissions to counter the Democrats’ strength on the issue. There is even a suggestion that he will admit that the science is changing. However feeble all this may become when the president has listened to the sceptics and the industry apologists, it is likely that his new policy will be a turning point in the world’s response to climate change. We shall probably have to wait at least until the State of the Union speech in January before we see the Bush recantation, but it will come. Gummer’s claim comes at the same time that Arnold Schwarzenegger has introduced a battery of green proposals in California and Al Gore’s film An Inconvenient Truth is playing to packed houses round the world.Estates Gazette 16.09.06
Branson pledges $3bn to tackle climate change; Sir Richard Branson has pledged all the profits from his Virgin air and rail interests over the next 10 years to tackle climate change. However announcing his plans at a conference of the Clinton Global Initiative, Branson said that the money would not be going to charity but will be invested in a new branch of his ever-expanding Virgin conglomerate, Virgin Fuels. Much of the investment will focus on biofuels, an alternative to oil-based fuels made from plants. The UK government has already ordered petrol stations to source 5 percent of their fuel from renewable energy by 2010. Virgin made its first investment in so-called green fuels by injecting $60m into Cilion, a California-based venture that plans to make bioethanol from corn and to construct seven refineries by 2009. Virgin Trains is switching its diesel –powered trains to biodiesel and also plans to develop biofuel for planes. One note of doubt came from the New Scientist magazine, which said in an editorial, “We cannot grow our way out of the twin crises of climate change and energy security. There is a real danger of creating a biofuels bubble that will burst, leaving behind a pungent whiff of chip-fat oil, burning rainforests and rotting fields”. Guardian 22.09.06
Royal Society challenges Exxon to stop funding climate change denial; in an unprecedented move Britain’s leading scientists have challenged the US oil giant Exxon to stop funding groups that attempt to undermine the scientific consensus on climate change. The Royal Society has written to the oil giant to demand that it withdraws support for dozens of groups that have “misrepresented the science of climate change by outright denial of the evidence”. They go on to describe Exxon’s own public statements as “inaccurate and misleading” whilst claiming that it distributed $2.9m to 39 grops that misrepresent the science of climate change. The letter goes on to refer to a July meeting between Exxon and the Royal Society when Exxon Mobil indicated that they would not be providing any more funding to these bodies and asks when this pledge will be carried out. One of the main groups funded by Exxon is the US Competitive Enterprise Institute, which has described global warming as a myth. It took out adverts attacking Al Gore’s climate change film, An Inconvenient Truth, and is believed to be getting ready to attack the latest report from the UN Intergovernmental Panel on Climate Change. This report, which is due out in February, is expected to say that climate change could drive the Earth’s temperatures higher than previously predicted.
Guardian 20.09.06
Awareness of carbon risk not matched by action; business is beginning to understand climate change but is still not dealing with the problem properly according to the Carbon Disclosure Project (CDP). CDP, which is an alliance of investors responsible for over £16bn of assets under management, asked the world’s largest companies for information on their greenhouse gas emissions. From the FT500 72 per cent responded and 47 per cent in CDP1. Some major US companies responded for the first time including American Express, Boeing, Home Depot and Wal-Mart. Despite the report’s findings that GHG reduction is cheaper than expected only 48 per cent of the companies consider that climate change to present commercial risks and/or opportunities. Financial Times 18.09.06
Green levy on household goods; household electrical firms have started a lobby for the introduction of a green recycling levy at the tills which could add more than £10 to the cost of a TV or £1 to a toaster. The call, which comes from all the major names such as Bosch, Sony and Philips, is in response to the new EU regulations that require recycling of all electrical products from next summer. A green levy, which already exists in Ireland and the Netherlands, would be an alternative to the government’s insistence that big business should pay for the recycling as a normal part of business. The companies estimate that this would put an increase in prices of up to £600m a year. The idea is opposed by some of the major retailers such as Currys and Comet, who say that it will mean incurring huge expense in changing their tills. Evening Standard 20.09.06
Action in the household; the Institute for Public Policy and Research (IPPR) argues that millions of households, particularly in the south east, should be forced to install water meters as part of a drive to reduce water consumption. The IPPR says that metered houses use more than a tenth less water. They also call for the water companies to bear the cost of installing water butts, efficient flushing toilets and spray taps in homes. Also going in the same direction is John Gummer, the former environment secretary and currently chairman of David Cameron’s quality of life policy review. He wants homeowners to be forced to pay to improve the energy efficiency of their homes when they are sold. The review group also intends to mandate tougher green standards for building and refurbishing residential and commercial properties. Independent on Sunday 17.09.06, Financial Times 20.09.06
Livingstone plans new West End shopping zone; the Sunday Times reveals plans drawn up by the Mayor to give a £1bn facelift to Oxford Street. Details include an electric tramway connecting Tottenham Court Road to Marble Arch, which will replace buses and taxis on the 1½-mile route; new pedestrian piazzas at either end and futuristic glass structures and sculptures to transform landmarks such as Marble Arch, Piccadilly Circus and St Giles Circus. Other ideas include 30ft fountains to mark the entrance into the shopping zone and a glass structure inspired by the Louvre pyramid to cover Tottenham Court Road underground. The reasons for the facelift include the increased pressure felt from out-of-town centres such as Bluewater and the perception that the West End is unwelcoming and outdated in comparison to other cities such as Birmingham and Barcelona. Stuart Rose, chief executive of Marks & Spencer, welcomed the proposals saying the area “couldn’t get any worse” while Terry Farrell, the architect and member of the mayor’s West End commission, said “At the moment Oxford Street is an embarrassment to the city”. Sunday Times 17.09.06
West End is under threat from new London retail centres; one leading property expert is predicting that with the advent of major new shopping centres, such as Westfield London (White City, pictured right) and Stratford City, the West End faces “having the single-largest loss of spending power in the UK over the next 10 years”. However CACI does not anticipate the West End losing its number one slot with areas such as Carnaby Street, Bond Street and Covent Garden continuing to flourish but “the parts of the West End that have average, functional retailing and are no different to what these new places offer, will suffer”. Elsewhere in the Estates Gazette survey of the West End Churston Heard warns, “The worry is that Oxford Street will be focussed totally on tourists, held together by Selfridges and John Lewis, because everything else can be seen elsewhere”. On the plus side Experian, the credit ratings agency, is sticking to its forecast made two years ago that demand for retail space in London was such that it needed the equivalent of 10 more Bluewaters by 2016 and that immigration into London will be higher than expected. Westfield London is due to open in 2008 but will not proceed with Stratford City until the White City scheme is completed. There are also a number of other retail schemes including the Elephant & Castle, Croydon and an expansion of Brent Cross. The EG says that the advent of Westfield London is causing nervousness in Hammersmith and, to a lesser extent, Kensington High Street. It quotes one agent as predicting that “Ealing retail is going to die”. Estates Gazette 23.09.06
Plans announced for London Overground; plans have been announced for a £1bn investment in new trains and restored tracks to create what is to be known as London Overground. A gap between the North London Line and the East London Line at Dalston Junction will be plugged by 2010 which will permit trains to run every 8 minutes and will give far greater access to the Stratford Olympic Park. The 100-metre section of track was promised in the Olympic bid and will connect the North London Line trains that presently go from Richmond in the west to Stratford with the East London Line, which is being extended from Shoreditch to Dalston Junction in the north and from New Cross Gate to Croydon West in the south. Announcing the plans the Mayor reiterated his plans for an orbital railway round London. He announced plans to extend the East London Line to Clapham Junction via Surrey Keys and for the East London Line to extend from Dalston Junction to Highbury Corner although these projects are, as yet, unfounded. Times 06.09.06
Support for increased housing targets; planning inspectors have given their support for the proposed new housing targets in the revised London Plan due for approval next spring. The mayor has proposed that the annual housing provision target should be raised from 23,000 to 30,650 – a 33 percent increase. The independent Examination in Public panel appointed by the Planning Inspectorate also gave their support to the mayor’s “radical and forward-thinking strategy” on waste management that would see London manage 85 per cent of its own waste by 2020, instead of transferring it for treatment outside the city. The proposals now have to go to the government for final approval. Regeneration 22.09.06
City firms on ‘recruitment spree’; according to Manpower’s latest Employment Outlook survey City firms are hiring at their strongest levels for nine years with 30 per cent of City firms in the financial sector planning to hire staff compared to 17 per cent in the last quarter. Manpower attributes the increased optimism to increased confidence “alongside increased merger and acquisition activity”. They also note that there are signs of wage inflation. Guardian 11.09.06
London Fashion Week revels as ‘nursery’ to the stars; there was a time when London Fashion Week sulked as its stars decamped to other places such as Milan or Paris but according to the Independent it has now learnt to love it’s status as a centre for ethical and fair trade in fashion as well as being a unique testing ground for young talent. This has been aided by a number of scholarship schemes which have now been added to by a gift of £170,000 by Giorgio Armani to Central St Martins for bursaries for five students for five years. Armani’s presence, to present his Emporio Armani collection, caused some ructions with many welcoming the support but with some complaining that it distracted from the main purpose of the week. Armani explained why he was launching his new RED range in London, “London has in many ways overtaken New York as the world’s most cosmopolitan and culturally diverse city, which makes it the perfect place to present a fashion and music event that can help to create further awareness and momentum for this [ethical] initiative”. Another diversion, which achieved a great deal of publicity, was a show put on by Topshop, who are now opening in Moscow and St Petersburg and is sold in high-fashion boutiques in New York, Paris and Tokyo. Top Shop also featured Kate Moss who is being touted as a future designer for the label. Financial Times 16.09.06, Guardian 18.09.06
Tate Britain prospers despite London bombings; Tate Britain has had its most successful year since the opening of the Tate Modern and despite the fall in visitor numbers following the London bombings last July. A record 1.7m people visited the original Tate gallery on Millbank, partly because of BP’s sponsorship of its free collection- a sponsorship that is now due to continue until 2012. The Tate’s biennial report also cites the success of all its operations with three of the top five most successful shows in its history taking place in the last two years. The Tate Modern exhibition on Edward Hopper attracted nearly 430,000, making it the second most popular show after Matisse-Picasso in 2002. Another 382,000 saw the Turner-Whistler-Monet at the Tate Britain, while Frida Kahlo at the Tate Modern had more than 369,000 visitors. Forthcoming shows include Hogarth at Tate Britain and Dali at the Tate Modern. Independent 19.09.06
London is ‘hot money’ capital of the world; Jeremy Warner, the Independent’s City Editor, examines the claims made by Clara Furst, chief executive of the London Stock Exchange, that London’s success in attracting international listings is not due to the iniquity of Sarbanes-Oxley in New York. She says it is due to lower costs, better international liquidity, faster transaction speeds and so on. Yet Warner thinks she has overlooked some key advantages. He agrees that London’s regulation regime allows for speed of action and innovation in financial services but remains tough enough to command international respect. But the main reason is to do with American foreign policy and its support for Israel while it is thought that Britain only half means it. Hence London, rather than New York, has been chosen as the conduit for Russia’s new-found oil wealth, and even for the hot money spilling out of the Middle East. All this hot money flowing in is a much under-estimated feature of London’s success as a financial centre. It also helps explain sterling’s strength as an international currency. The dollar is falling in response to the growing current account deficit in the US. Yet the pound is actually strengthening in the same circumstances. There is even evidence of its growing use as a reserve currency by central banks. Independent 19.09.06
Stratford City race down to two; the shortlist of three consortia to build more than three-quarters if the £4bn Stratford City Olympics Village has been reduced to two with the elimination of the RBS-led consortia which also comprised Bellway Homes and housebuilder Gladedale. The two remaining bidders for the work, which comprises 4,500 homes in the athletes’ village, up to 5m sq ft of offices and 398,000 sq ft of leisure are consortia led respectively by the Australian developer Lend Lease and a joint venture between French construction group Bourgoyes and Barratt Homes. Lend Lease is seen as the favourite, not least because choosing a French constructor might not be popular. The only sticking point may turn out to be Lend Lease’s relationship with rival Australian shopping centre giant Westfield, who own the overall development rights to the 13.5m sq ft scheme alongside London & Continental Railways. Westfield is building a 1.5m sq ft shopping centre and 1,040 homes in the first phase. The Olympic Delivery Authority will make a decision in the next two months. Estates Gazette 23.09.06
Newham wins power for first phase of Stratford City; despite the Olympic Delivery Authority assuming full planning powers for major applications in the Olympic Park area Newham Council will keep control of the first phase of Stratford City covering a retail centre and housing. However Regeneration says that the two sides will continue to discuss who has control over the later phases although Newham are keen to stress that they should deal with applications that are not directly relevant to the Games. One piece of good news is that John Lewis have announced that they are to build a full-range John Lewis store of 240,000 sq ft as well as a Waitrose supermarket at Stratford City. The Guardian heralds the announcement as John Lewis does not normally do “new” and has no plans for any more new stores before 2008. The Stratford store will open in 2010. Regeneration 15.09.06, Guardian 15.09.06
Foster goes it alone on Olympic stadium; Lord Norman Foster has made the unusual move of bidding for the design-and-build of the London Olympic stadium for 2012 without a building contractor. Many other well known architects who had been expected to bid, such as Richard Rogers Partnership, Make and Herzog and de Meuron have not done so because they could not find contractors. Two of the obvious contractors are Taylor Woodrow, who have decided not to bid, and Laing O’Rourke, who are part of the consortia that have won the Delivery Partner role. Others may have been put off by the problems at Wembley Stadium. Foreign Office Architects, who helped draw up the designs for the official bid, are understood to have considered a design-led bid but have pulled out. Another factor is that there is a strong bid from the team that built Arsenal’s Emirates Stadium comprising contractor Sir Robert McAlpine, architect HOK Sport and the engineer Buro Happold. Guardian 26.09.06
Funding package for City shopping centre; the first purpose-built shopping centre in the City of London is to go ahead after Land Securities, the developer, secured financial backing from Beacon Capital, a US-based private company. One New Change (computer generated impression right) will be built on the site of the former headquarters of Allen & Overy and will comprise of 560,000 sq ft of space, of which 220,000 sq ft will be shops spread over three floors. There will also be 340,000 sq ft of office space and a rooftop public space. The architect is Jean Nouvel and the design will feature an array of colours and textures of glass. Financial Times 18.09.06
City landmark to become hotel; the former Port of London Authority headquarters at 10 Trinity Square, facing the Tower of London, has been bought by an American entrepreneur who plans to spend £250m converting it into a luxury hotel. Built for the PLA in 1922, the building was opened by Lloyd George and in 1946 acted as the temporary home of the first general Assembly of the United Nations. The PLA sold it to Willis in 1976 who, after deciding to move to a new City headquarters in Lime Street, put the building up for sale. They will move in 2008. Thomas Enterprises has paid £110m for the building and plans to convert it into 100 hotel rooms and 30 apartments. Woods Bagot have been appointed as architects with the brief to turn it into a “superluxury” hotel. One hotel expert said that this valued the 100 rooms at £2.5m- more than Claridge’s or the Lanesborough. It has also emerged that to take advantage of the increased appetite for hotels in the City the former Head Office of the Midland Bank at Poultry is being marketed as a potential hotel site. Times 20.09.06, Estates Gazette 23.09.06
Is Battersea changing hands? A number of newspapers and magazines carry the news that the Irish group Treasury Holdings is in advanced negotiations to take a controlling stake in the £1.5bn development of Battersea Power Station. It has signed a conditional agreement with Parkview, the Victor Hwang-owned company that has been struggling to develop the south London site for 15 years. The Treasury is also thought to be talking to Lord Norman Foster about drawing up new plans for the 38-acre site. It is thought that the decision to go ahead will depend on the prospects for gaining consent for a revised masterplan that will scale back the leisure and office space and increasing the housing content. Estates Gazette 23.09.06
Yet another tower proposed for the City; Great Portland Estates have announced that they are submitting a planning application for a 40-storey office tower at 100 Bishopsgate, providing 815,000 sq ft of offices and shops. The three-building complex, designed by Allies and Morrison, will form part of the City’s cluster of tall buildings. The two smaller seven-storey buildings will contain a new public library in one and a new hall for the Leathersellers’ Company in the other. In the meantime another proposed City tower- the so-called “Walkie-Talkie” (pictured left) at 20 Fenchurch Street has received planning permission from the City Planning Committee. Designed by Rafael Vinoly for Land Securities it will have 37 storeys with 600,000 sq ft of office space. It will have a public “sky garden” on the roof, which will include a restaurant and a cafe. The Planning Committee voted 12-8 to approve the proposal with some members worrying that it could lead to a second cluster of towers in City. It has also emerged that the Shard of Glass- an office tower at London Bridge, that will be the tallest building in Western Europe, has completed a £190m funding package. On the other side of the coin Minerva has abandoned its plans for a 50-storey tower at Aldgate and plans to go ahead with a 14-storey building with half the space. They said that the original scheme was too big for a company of their size. Estates Gazette 09.09.06 and 23.09.06, Financial Times 20.09.06, Independent 26.09.06
Mayor pushes market plans; URS Corporation has been appointed by Ken Livingstone, the London Mayor, to look at plans to release Smithfield and Billingsgate markets for redevelopment. The review, which forms part of a wider investigation into surplus industrial sites, will aid consultations on amendments to the London Plan next spring. URS will look into the possibility of consolidating Smithfield, Billingsgate, New Covent Garden, New Spitalfields and Western International in Hounslow. Estates Gazette 09.09.06 Kier wins Supreme Court victory; Kier has won the battle to develop the first Supreme Court at the former Middlesex Guildhall in Parliament Square. Kier Property will carry out the £35.3m conversion to produce 70,000 sq ft of space. Under the terms of the deal Kier will own the building for the next 30 years, leasing it back to the Department of Constitutional Affairs. Estates Gazette 16.09.06 Dubai luxury hotel for Blackfriars Bridge; Jumeirah, the Dubai-based luxury hotel operator, has agreed to manage a 261-room hotel in the 51-storey Beetham Tower being built at the junction of Upper Ground and Blackfriars Road. The hotel will be on the lower floors but there will be restaurants and a luxury spa on the 26th and 27th floors. There will also be a ballroom capable of accommodating 800 people for conferences and banqueting events. Evening Standard 22.09.06
Blackstone opens student accommodation; the private-equity group, Blackstone has unveiled a student accommodation scheme In Pentonville Road, King’s Cross as the first step in its drive to overhaul university living across Britain. The 16-storey building it bought from Nat West last year is being converted into 846 en-suite bedrooms with kitchenettes, 50 private apartments, 14 affordable apartments, parking space for 250 bicycles and retail and commercial space. It will open next September and will cost £180 a week for a single room or £140 each for two people to share. Using the name ‘Nido’ Blackstone aim to replicate it in other university towns and a second London site has been acquired in Spitalfields. It is estimated that, including this years freshers, there are 120,000 students looking for accommodation in London and there are only 33,000 institutionally owned and operated student beds. Sunday Times 24.09.06
Westminster told to allow higher buildings to create more flats; the independent commission set up by the City of Westminster to tackle its acute housing problems has advised the council to relax its restrictions on tall buildings and look for places for higher-density schemes. This could be done either by squeezing the sites into existing estates or by replacing buildings. Westminster has a target of providing 6,800 homes by 2016. The independent commission which was set up by the council to advise on how to tackle the acute housing problems, was chaired by Lord Best, director of the Rowntree Foundation and includes Kate Barker, the Treasury adviser on housing, and Sarah-Jane Curtis, retail director of the Grosvenor Estate. Estates Gazette 16.09.06
grapevine is produced twice monthly (except in August and December when there
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Next issue on October 12, 2006
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