Bank should follow its governor; the FT examines the news that the Bank of England’s Monetary Policy Committee (MPC) outvoted the governor (and chairman of the MPC) at the June meeting when it decided by 5-4 not to raise interest rates. The FT concedes that there are real divisions over what will happen to UK inflation but in its opinion the wrong side won and higher interest rates are needed, and sooner would be better than later. Global demand growth is strong and the UK labour market is tight. House price rises may be slower but they are still going up. Oil has moved back to about $70 a barrel, which will create renewed inflationary pressures next year. And monetary policy is still not all that restrictive. Wage growth remains under control, but the price of 2009 UK government bonds suggests that the market expects inflation of more than three per cent over the next couple of years. Surveys also suggest that the public expects inflation of more than two per cent, the Bank’s target, over the coming year. The doves may be right, but all of the factors listed above create risks that inflation will not fall back to its target, or will not stay at its target in 2008 and 2009. Further information - Bank of England Financial Times 21.06.07
Modest wages increases may not stop rate rise; government data shows that average earnings growth slowed unexpectedly sharply in April. The Office for National Statistics said that earnings growth fell to four per cent in March - well below City forecasts of 4.5 per cent. The drop was mainly due to hefty City bonuses in the new year falling out of the three-month figures. But even excluding bonuses, pay growth in the three months to April held at 3.6 per cent. In April, earnings were just 3.3 per cent higher than a year ago- the weakest increase since January 2006. The data surprised economists, who had thought the 10-year high in retail price inflation would have pushed pay growth higher. Another encouraging factor was the news that the numbers claiming jobless benefits fell for the eighth successive month and by a larger-than-expected 9,300 in May. However, Mervyn King (pictured right), the Governor of the Bank of England, has warned against reading too much into recent falls in inflation. From the decade high of 3.1 per cent in March it currently stands at 2.5 per cent. King said that more action might be needed to rein in inflation back to the Bank’s target of two per cent. Further information - National Statistics and Bank of England Guardian 14.06.07
London house prices start to cool down; according to Rightmove there are tentative signs that London’s long-running housing boom is coming off the boil. In the four weeks to 9th June when there was something of a stampede as buyers tried to get ahead of the now-delayed Home Information Packs, the average asking price of a UK home rose by 0.8 per cent to £237,361, double the gain of the previous month. The year-on-year rate of increase went up from 13.1 per cent to 13.2 per cent. However, for the first time in six months, prices in the capital rose by less than the national average, up by 0.7 per cent. Moreover London was outstripped by more than half the regions in the rest of the country. The worst performing regions were Yorkshire and Humberside, East Anglia and the North-West. Bucking the London trend were houses at the top end of the market where prices continue to roar ahead largely due to overseas buyers. The average price of a million-plus house in the smartest areas, such as Belgravia and Mayfair, increased by 2.5 per cent in May, making an annual increase of 33.3 per cent. Further information - Rightmove Independent 18.06.07Tesco results could indicate retail slowdown; giving details of its trading in the three months up to 26th May Tesco said that underlying sales in UK stores had gone up by 4.7 per cent against analysts’ hopes of 5.5 per cent. Andrew Higginson, Finance Director of Tesco, said: “We have suggested that consumers are being a bit more cautious around non-food and more generally given the interest-rate hits”. He said that the market had slowed and Tesco were preparing for a tougher year due to consumers concerns following four successive interest rate hikes - “A lot on interest rate hikes have yet to work their way through”. However, he insisted: “We are pleased with the numbers, which are ahead of our budget at this stage”. Analysts said that the supermarket’s sales performance in the UK was disappointing. The outlook for the big supermarkets is expected to be quite tough in the next few months. One factor is that they are trying to improve on exceptional trading figures a year ago, when the World Cup and good weather boosted food and drink sales. A day later J Sainsbury also reported slower sales growth in the first quarter with a sales increase of like-for-like excluding fuel of 5.1 per cent against a market expectation of 5.5 per cent Times 20.06.07, Independent 20.06.07, Guardian 21.06.07
Brown wants to strengthen the role of business; in an interview less than a week before taking over as Prime Minister Gordon Brown (pictured left) said that he wanted business to take a stronger role in running the state in future. “We should welcome the involvement and engagement of people from the business community in our schools, in a whole range of different public services and you will see more of that in the months to come”. He refused to be drawn on details of how this would work in politically contentious areas, such as expanding private sector involvement in the NHS. Instead, he called for a “consensus, businesses working with the government” to respond to the pressures of globalisation and issues such as climate change. He rejected that his control-freak tag was out-of-date, saying: “I have learned a lot in the last 10 years. I have learned that top-down, ‘pulling the lever solutions’ are not always the ones that are going to work best”. In a later interview he defended the decision to offer the former Lib Dem leader Paddy Ashdown a seat in the Cabinet and a ministerial post to Lord Stevens, a cross-bencher and former head of the Metropolitan Police. He said that it was right to draw on all the talents: “I think you will see that we are in a position- whether it’s in one capacity or another- to draw on some of the talents of our society who are not normally associated with party political events and forces”. Financial Times 23.06.07, BBC News Online 24.06.07
Government wants more skilled immigrants; the Home Office has announced that Britain is to be actively marketed by the government as a destination for migrants who can fill skills shortages in the economy. A policy paper on managing global migration implies that in the future promoting Britain would be necessary in a world in which there will be increasing competition for migrants and tourists. The government is introducing a points system for people wishing to work and study, which the paper says will be promoted worldwide. Liam Byrne (pictured left), the immigration minister, says that Britain’s Indian and Chinese communities could also be important to help to expand Britain’s investments in the two countries. Ministers also plan to share more information with overseas police and security agencies to prevent foreign criminals and immigration offenders from entering the country. In the meantime ministers are to consider lifting the limits on Romanians and Bulgarians coming to the UK. This is on the basis of evidence presented to the new migration impacts forum at its first meeting on June 21st. Further information - Home Office and Border & Immigration Agency Times 19.06.07, Guardian 21.06.07Trying to reach the chronic socially excluded; the government has announced new plans to help the 66,000 adults who face chronic social exclusion by proposing that private and voluntary agencies should take responsibility for their future, rather than the a bewildering array of state agencies. The move is aimed at the one per cent of people thought most hard to reach, who rarely receive help when they hit a crisis. In London alone, there are thought to be 6,400 severely excluded adults. Ministers believe that such vulnerable people are costing the state millions each as they bounce up against the wide range of state agencies. It is estimated that the cost of arresting, charging and sentencing those with mental illness, for instance costs up to £5bn a year. Research from the Cabinet Office suggests that 65 per cent of these adults need help from six different groups, including benefits offices and housing services. Twelve schemes, combining voluntary, state and public agencies, will look at root causes of problems rather than see them as a snapshot. The London schemes include Counselling in Prisons, Thames Reach, and St Mungos. Outside London they include Calderdale Domestic Violence Forum, Tyneside Cyrenians, and, After Adoption. Further information - Cabinet Office Guardian 18.06.07
Half of Britons cannot exist without email; half of all Britons cannot exist without email and 30- and 40-somethings are more reliant on it than teenagers a survey conducted by ICM has found. Among 25-34 year-olds, 50 per cent felt that they could not carry on without access to email. However contrary to expectations, the latest technologies are not being monopolised by the younger generation. Forty-one per cent of teenagers admitted to relying on email, whereas 44 per cent of 35-44- year-olds said email was vital. The region where email was most important was the south-east where 43 per cent said they would struggle without it whereas only 34 per cent relied on it in Wales and the south-west. Further information - Nasstar Guardian 18.06.07
Tomorrow’s Company challenges the role of big business; a new report from Tomorrow’s Company challenges the role of big business in the global economy and looks at areas where the market and the political system have not resolved major issues such as climate change, areas of persistent poverty and abuses of human rights. The report, Tomorrow’s Company: challenges and choices, has taken 18 months to prepare by a group comprising business leaders from Europe, North America and Asia as well as leading NGOs such as Amnesty and Sustainability. Further information - Tomorrow's Company Observer 17.06.07
North-south divide yawns as south-east prospers; the north-south divide is set to widen in the next few years as booming industries locate in the already dynamic regions of London and the south-east of England according to Experian, the business services group. Some large regional cities - those that have most successfully diversified into financial and business services, such as Edinburgh, Cardiff, Leeds and Manchester, are also poised to do well. But these pockets of success will not prevent the wider regional economies from falling further behind. Experian forecasts that the continued dynamism of business and financial services, which are heavily concentrated in the south-east, will push the regional economy further away from the rest of the UK, making it ever harder for the government to meet its pledge to “reduce the persistent gap in growth rates”. Further information - Experian Financial Times 19.06.07
Heseltine urges Tories to back elected mayors; not unexpectedly Lord Heseltine (pictured right), who is leading a policy taskforce for David Cameron on local government, has come out in favour of elected mayors to lead the major cities. He was probably the first major national politician to espouse the policy in the 1990s and it was subsequently taken up by the current government. Lord Heseltine proposes elected mayors for all top-tier authorities, serving four-year terms, with executive mayors for Birmingham, Newcastle, Manchester and Liverpool with powers over regeneration, transport, skills, fire, waste and police services. The proposals go further in the direction of devolving power than anything offered so far by Labour. Further information - Conservatives Guardian 16.06.07
Debate on role of new super agency intensifies; the future of non-housing led regeneration has been left unclear following a government consultation paper on the proposed housing and regeneration super-quango Communities England. The consultation confirms that as well as merging the Housing Corporation and English Partnerships, key government functions will be devolved to the new body. However a senior source is quoted as saying that the Department for Communities and Local Government is still debating with the regional development agencies and the Treasury over whether the new agency will have a role in non-housing functions, such as city centre regeneration. The issue will be resolved through the Treasury-instigated Sub-National Review of economic development and regeneration, which is due in July. Further information - DCLG Regeneration 22.06.07
Entrepreneurs speak out on CGT reform; prominent entrepreneurs have expressed strong opposition to reform of the capital gains tax system, fearing that changes intended to penalise private equity investors could backfire and damage enterprise. The entrepreneurs’ reaction has, in part, been stimulated by the qualified support given for reform by Sir Ronald Cohen (pictured left), former chief executive of Apax Partners and an adviser to the chancellor. Luke Johnson, who built up Pizza Express and is now chairman of Channel Four as well as an investor, said that Sir Ronald was “a champagne socialist, who would say that, having made his pile and retired”. The Treasury is likely to reform taper relief on capital gains, exploited by private equity executives to reduce tax on “carried interest” to 10 per cent or less. The tax break was introduced to encourage company founders to sell up and start again, instead of keeping the business for the dividends. Simon Woodroffe, founder of the restaurant chain Yo Sushi, said private equity’s ability to keep its tax liabilities low “can rankle with people, but in the long-term it is better to leave the system as it is”. He said that private equity had been crucial in helping him expand. “If the UK wants to be an enterprising nation it needs to encourage private equity investors as well as entrepreneurs”. Financial Times 18.06.07
Task force to aid growth of BME businesses; Margaret Hodge, minister for industry and the regions, has announced a new ethnic minority task force to support the growth of firms run by black and Asian entrepreneurs in the UK. One of its first tasks will be to investigate why ethnic minority businesses face additional barriers raising finance. A recent DTI survey found that ethnic minority owned businesses typically pay higher loan charges than white-owned businesses. The new task force will be chaired by Adeeba Malik, deputy CEO of QED, which represents and promotes the interests of ethnic minorities in the UK. Further information - GNN Independent 20.06.07
Enterprise enters social mainstream; enterprise has lost the associations of the 1980s hard-nosed greed and entered the social mainstream according to a survey conducted of more than 800 young entrepreneurs who have taken part in Shell Livewire. The survey, which was undertaken by Don Slater, a sociologist from the London School of Economics, finds that today’s young entrepreneurs are more likely to identify with the founders of the Innocent smoothies business (pictured left), than with Sir Alan Sugar. It also finds that more than half of the survey believes that they are seen as “respectable business people” rather than the wealth creators of the Thatcher years driven by the desire to get rich. Young entrepreneurs have broader, more disparate goals than their predecessors. While money-making had remained an important motivator during the Blair years there were other things that were equally important such as the chance to create new products and services and to set up socially responsible businesses where people enjoyed working. Further information - Shell Livewire Financial Times 22.06.07
Next goals for cull of business support schemes; Margaret Hodge (pictured right) has published a consultation document on the next stages of the cull of business support schemes whilst admitting that only the “easy” part has so far been completed. When the process was announced a year ago the aim was to reduce the number of schemes from 3,000 costing £2.5bn-a-year to fewer than 100 by 2010. According to the consultation paper this would save business between £20 and £40m a year and taxpayers £240m over three years. Hodge says that implementing these cuts is proving a complex bureaucratic exercise and achieving the targets will depend on successfully negotiating a deal with the regional development agencies. The consultation paper sets out a blueprint for how business support should look, with Business Link acting as a “first port of call” for anyone seeking advice. However although there is commitment to a design a theoretical framework, which will meet everybody’s needs; “The difficult exercise now is to apply the framework in practice”. Amongst the problems are pinning down what schemes exist, particularly as about 40 per cent of the schemes are run by local authorities. Hodge says that she is looking for “levers and incentives” to get local authorities and regional development agencies to co-operate with the comprehensive spending review in the autumn acting as the driver for simplification. Further information - DTI Financial Times 22.06.07
London to be promoted as social enterprise capital; a number of leading London bodies have signed up to a strategy for social enterprise in the capital produced by Social Enterprise London. They include the London Development Agency, the Government Office for London, the Learning and Skills Council and London Councils. Further information - Social Enterprise Strategy for London launched Regeneration 22.06.07
Creative industries ‘as important as financial services’; a new report from the Work Foundation says that Britain’s creative industries are as important to the economy as the financial services sector. The report, Staying Ahead: the economic performance of the UK’s creative industries, was commissioned by the Department of Culture Media and Sport, says that Britain creates more ‘cultural good’ for export than any other nation in the world, totalling $8.5bn in 2002, the latest year for which comprehensive figures are available. The 13 creative industry sectors are advertising, architecture, publishing, radio and TV, design, film, music, software and computer services, designer fashion, crafts, performing arts and the arts and antique market. They employ 1.8m people but the report warns that growth could slow without ‘targeted public investment’. It identifies eight drivers of success including the need for grants to be better targeted and ways of offering additional help to encourage smaller enterprises to expand. Further information - Work Foundation Observer 24.06.07OECD warns about ‘acute rise’ in jobless young men; the OECD Employment Outlook for 2007 has warned about the “worrying trend” of youth unemployment Britain. It says that the overall rise in unemployment last year from 4.8 per cent in 2005 to 5.3 per cent in 2006 was the “first increase of such magnitude in more than 10 years”, though the figures have since fallen. However, the report goes on: “of more immediate concern- indeed a worrying trend- is the continuing increase in youth unemployment, which rose three percentage points to 13.9 per cent between 2004 and 2006. The rise was particularly acute for young men. The unemployment rate for young men (aged15-24) increased from 11.8 per cent in 2004 to 15.8 per cent in 2006”. Opposition parties seized on the report to condemn the New Deal, introduced after Labour’s election victory in 1997, which critics argue had little impact on youth unemployment which was already falling as the economy expanded. The report comes as a Joseph Rowntree Foundation study says that nearly half of those leaving school with no, or limited qualifications, were white males. Further information - OECD Evening Standard 22.06.07
HSBC say technology can enable half of HQ staff to work from home; Michael Geoghegan, the chief executive of HSBC, has said that technology should enable the bank to halve its 8,000-string workforce in its headquarters at Canary Wharf over the next seven years. Thousands of people, he said, would be able to work from home or using mobile devices on the road. The Equal Opportunities Commission in the final part of their study into the transformation of work pointed out that in the UK only one in five companies allow people to work from outside the office, which is half as many as Germany, Denmark and Sweden. McKinsey issued a forecast that one of the first casualties of the 21st century will be the eight-hour working day. They also forecast that early in the next decade there will be more than 25 million people working from home in western Europe. Further information - EOC and McKinsey Quarterly Times 16.06.07
Skills shortages reach record levels in London; the latest London Business survey by the CBI and KPMG shows that skills shortages have reached record levels in the capital and are now the biggest inhibitor to growth. Three-quarters of the firms that responded reported problems finding skilled staff compared to 61 per cent in 2006 and 49 per cent in 2005. The vast majority of employers- 81 per cent of those interviewed- expect the problem to get worse over the next six months. To tackle the problem the CBI wants a “step-change” in the Government’s education and training policy. KPMG said that the Government’s skills system “needs to become demand-led by employers, and not supply-led by Government and the London Skills Commission”. However, 95 per cent of the respondents rated London as “a good place to do business” and 78 per cent were optimistic about their prospects over the next six months. Further information - CBI Regeneration 15.06.07
Childcare nurseries urged to open at weekends; childcare nurseries must open at weekends and in the evenings to cater for the demands of modern working life, according to a survey Listening to Families, funded by the Department for Education and Skills on behalf of the Daycare Trust. It found growing dissatisfaction with the restricted care on offer despite billions of pounds of investment in nurseries. Almost all nurseries open from 8am until 5.30 pm, with parents being fined if they turn up late to collect their children. The government immediately backed the survey’s findings and said that they expected government-funded nurseries to cater for parents who needed to work outside traditional office hours. They also urged privately run nurseries to follow suit. Further information - Daycare Trust Times 14.06.07
TUC says migrants helping the economy to grow; migrants are not a drain on the welfare state and pay more in taxes than the value of the public services they receive according to a new report from the Trades Union Congress. They also say that, “contrary to far-right accusations…the arrival of migrant workers has not depressed jobs or wages”. An estimated 1.5m migrants were working in the UK in 2005, representing about 5.4 per cent of employees. In the past decade alone the number has increased about 600,000. Brendan Barber, general secretary of the TUC, said: “Migrant workers are making a substantial contribution to Britain’s economy and some sectors would collapse if they were removed overnight. They haven’t caused mass unemployment or held wages down, as some would have us believe”. Figures show that migrant workers were responsible for about 10 per cent of economic growth. Further information - TUC Financial Times 19.06.07
City Strategy Pathfinders share £65m for next step; John Hutton, the work and pensions secretary, has announced that the 15 City Strategy Pathfinders, which aim to cut the number of residents on benefits, will share £65m to start their operations. They will be able to access further money once they have had proven success. In addition to east London and west London the 13 other areas to be tackled are Birmingham, Blackburn, Dundee, Edinburgh, Glasgow, Heads of the Valleys, Leicester, Liverpool, Manchester, Nottingham, Rhyl, Sheffield and Tyne and Wear. Further information - DWP Regeneration 22.06.07
Brown plan for universities to aid city academies; Gordon Brown (pictured left) used his final Mansion House speech as chancellor to unveil plans for improved partnerships between schools and higher education institutions including allowing universities to sponsor city academies at a discount rate. He also announced a new National Council for Educational Excellence to tie industry, higher education and the voluntary sector more closely to heads, teachers and parents. He said the Sir Michael Barber, formerly head of the No 10 delivery unit had agreed to join the Council together with Tesco chief Sir Terry Leahy, CBI chief Richard Lambert, Rolls Royce boss Sir John Rose, private equity partner Damon Buffini and Merrill Lynch vice president Bob Wrigley. The chancellor said that the Council would be part of the debate on how “over time” the government would increase spending per pupil in state schools to reach the £8,000 level in private schools. Squashing hopes on the left that he would reverse some of the reforms of the Blair era he signalled that he wanted to go further. “We will now consider reduced cash contributions for universities and colleges to make it easier for them to play a full part in the expansion of academies”. Further information - HM Treasury Guardian 21.06.07
Tower Hamlets rejects Goldman Sachs; almost simultaneously with the chancellor’s Mansion House speech extolling city academies the news emerged that Tower Hamlets Council had rejected a 2005 proposal from Goldman Sachs to sponsor a sixth-form academy. It also rejected another academy proposal from an East End charity to take over a secondary school that had failed its inspection by Ofsted. Tower Hamlets said that it had succeeded in raising standards in its schools without resorting to Blair’s flagship education scheme. The percentage of pupils in the area getting at least five A* to C grade passes at GCSE has more than doubled from 26 per cent in 1997 to 56 per cent last year. It has also established a good reputation for success in its primary schools, achieving better than average results in the national curriculum tests for 11-year-olds in maths and English- even though English is a second language for most pupils. Last year it beat authorities including Kent and Bournemouth. Council officials in Tower Hamlets insisted that the council was not anti academy. Independent 21.06.07
Poor children lag behind by age three; many children from disadvantaged backgrounds are up to a year behind more privileged youngsters educationally by the age of three according to research conducted for the Economic & Social Research Council’s Centre for Longitudinal Studies. Vocabulary scores achieved by 12,000 children indicated that “sons and daughters of graduates” were ten months ahead of those with the least-educated parents. In response to the findings, child poverty campaigners called for primary schoolteachers to be given the resources to help children from impoverished backgrounds catch up academically with children from more privileged families. Further information - Centre for Longitudinal Studies Regeneration 15.06.07
Immigrants outperform native speakers at GCSE; children who speak English as a second language are more likely to be among the top performers at GCSE level than native English speakers according to data released by the Office for National Statistics. They confound widely held misconceptions about immigrant children pulling down school results. At age 11 only 7.5 per cent of children with English as a second language are in the top 10 per cent of all children compared to 10.5 per cent of English-speaking children. By age 15, however, the English as a second language pupils have pulled ahead with 10.8 per cent of them in the top group compared to 10 per cent of native English-speakers. Further information - DfES Times 21.06.07
“Cowboy” operators risk reputation of carbon offset’; the fast-growing but increasingly criticised carbon offset industry is at risk of being discredited by “cowboy” operators unless it draws up a recognizable set of standards that customers can trust according to Jonathan Shopley, chief executive of CarbonNeutral. His comments highlight growing unease that blue-chip companies could turn away from carbon credits amid growing unease that some schemes are of dubious value. One adviser to HSBC told the FT “The police, the fraud squad and trading standards need to be looking at this”. Shopley said: “There are credibility issues and there are cowboys around. It is probably to be expected for an industry at this stage but we need a set of standards and outside verification so that self-regulation can engender trust and integrity in the market”. CarbonNeutral, which had doubled its revenues in the past year, is supporting the Climate Group, a non-profit organisation, in its attempts to draw up rules for a “voluntary carbon standard”. The Climate Group has been working with the World Economic Forum and other groups and hopes to have details of a scheme by the end of July, to be launched in September. The Climate Group has the support of both public and local governments and business in the USA, Canada, Australia and the UK. It was recently awarded sponsorship of $17m by HSBC. Further information - Climate Group Guardian 18.06.07
UN report says renewable revolution is here; a gold rush of new investment into renewable power over the last 18 months has led the United Nations to conclude that clean energy could supply almost a quarter of the world’s electricity by 2030. More than £35bn was injected into wind and solar power and biofuels in 2006- a 43 per cent rise on the year before. Sustainable energy accounts for only two per cent of the world’s total but the UN says 18 per cent of all power plants under construction are in this sector. The findings, outlined in the Global Trends in Sustainable Development annual review, represent a challenge to received wisdom among energy experts that green power is only likely to play a marginal part in the energy mix until the second half of the century. The International Energy Agency, which recently argued that renewables could account for barely nine per cent of power production by 2030, said the figures needed further examination. Greenpeace described them as “great news- if true”. Further information - UN Guardian 21.06.07Food giants sign up to agreement on packaging; nine major food and drink producers have agreed to sign the Courtauld Commitment, the government’s voluntary agreement on packaging. The original commitment was signed by 13 major retailers including Tesco, Sainsbury, Asda and Boots after a ministerial summit at the Courtauld Gallery, London in March 2005. A year later Heinz, Northern Foods and Unilever signed and now nine more, including some of the world’s major food companies such as Nestle and Coca-Cola have joined the Commitment. The other seven are Mars, Cadbury-Schweppes, Premier Foods, Britvic, Dairy Crest, McBride and Duchy Originals. Each year an estimated 6.3m tons of packaging reaches British homes, costing the average family more than £400. By 2008 the Commitment aims to “design out” the rise in packaging and by 2010 to cut packaging by 340,000 tonnes. Companies will use a range of methods from “lightweighting”- slimming down materials such as bottles and cans- to “delayering”, removing unnecessary wrapping. Cadbury Schweppes has committed to using wholly recoverable or biodegradable packaging by 2010. Further information - Defra Independent 15.06.07
Government signs up for green energy; EDF Energy has signed a four-year contract worth £1bn with the Office of Government Commerce to supply renewable energy to 300 government departments and civil service bodies. The deal, which also covers Downing Street, is part of a government plan to convert public sector offices to green power. EDF Energy won the contract on the condition that a third of the power distributed to civil service and government offices would come from renewable sources. All leading suppliers were invited to tender for the “green energy” contract, commencing on 1st October. Further information - OGC Times 18.06.07
London leaps in list of expats’ costly cities; London has become the second most expensive city in the world for expatriate business-people to live in, as steep housing costs combine with a strengthening pound to send its living costs soaring. In the influential annual ranking of costs in 143 of the world’s top cities compiled by Mercer Human Resource Consulting, London goes up three places to be a close second behind Moscow. Moscow, which is top for the second year running, is more than a third pricier for expatriates than New York, which Mercers use as a basis for comparing its extensive tally of the costs of housing, transport, food, clothing, household goods and entertainment worldwide. London is 26 per cent costlier than New York- a big rise from last year when it was only 10 per cent dearer. The main factor was accommodation, with monthly rental of a two-bedroom flat estimated at £2,000- double or more of the cost of a similar flat in most European cities. Other UK cities also shoot up the league table with Glasgow rising from 60 to 36 and Birmingham from 69 to 41. Further information - Mercer Times 18.06.07
Hong Kong operator to run new overground system; Hong Kong-based MTR, which has a near unbeatable record in train punctuality is to operate the capital’s so-called London Overground system in a partnership with John Laing, whom operate Chiltern Railways. The new London Overground comprises the north London Line, at present run by Silverlink, which takes in services from Richmond To Stratford and a number of other services in north and east London. From 2010 it will also include the modernised and extended east London tube line that will run from Dalston in the north to Crystal Palace in the south. It will be the first time that MTR, who boast a 99 per cent punctuality record in Hong King, have operated outside China. Further information - TfL Independent 20.06.07Foreign buyers dominate top end of housing market; an international elite is pricing British citizens out of the London housing market with the help of tax breaks for foreigners living in the UK. More than half of London’s multimillion-pound houses are bought by non-domiciles who, unlike UK citizens, are able to use offshore trusts to pay less stamp duty. However many British-born people can also declare themselves non-dom, on the ground that their family origins and “cultural ties” lie overseas. A study published by the International Monetary Fund in April ranked Britain alongside Switzerland, Bermuda and the Cayman Islands as an “offshore financial centre”, provoking accusations that the City of London has effectively become a tax haven. Liam Bailey at Knight Frank said that 50-60 per cent of properties sold for £3m or more went to foreign residents. The Times did a survey of the west side of Cadogan Square which showed that of the 13 properties looked at, five were held by offshore companies and a further three were owned by companies not listed at Companies House. Government figures show that there were 112,000 non-doms in 2005, an increase of 74 per cent on three years before. However supporters of the rules say that they have encouraged talented people to move to London. Patrick Stevens, tax partner at Ernst & Young, said: “If you are trying to boost the City then changing the non-dom rules would be insane”. Times 19.06.07
The prospects for Crossrail 1; ‘near unstoppable’; the momentum behind Crossrail is now almost unstoppable according to Douglas Oakervee, the man in charge of designing and building the trans-London rail link. In an interview with the FT he says that there is “every indication” that the Treasury will have agreed a package to pay for the long-delayed scheme by the time that the Crossrail enabling bill clears parliament early next year. He also reveals that the final costs are projected to be less than £15bn, including a contingency of up to 35 per cent, about £1bn less than government forecasts. Financial Times 18.06.07
The prospects for Crossrail 2: Whitehall lights are at red; the day after the highly optimistic interview with the FT a very different tale appears. This time the message is the old one- Gordon Brown (or his successor) will only give the green light unless there is a “substantial contribution” from business and the project’s cost can be met within tight public spending limits. Although ministers are hopeful that a deal can be ironed out before October’s comprehensive spending review- which will set departmental expenditure for the next three years- it is understood that talks over the scheme’s cost and the crucial issue of where the money comes from still have some way to go. Officials are anxious that approval for the scheme does not lead to spending limits being breached and that it will keep the department’s expenditure within an overall public spending envelope of 1.9 per cent real-terms annual growth. The incoming chancellor is going to have little room for manoeuvre and will be juggling competing bids on health, education and law and order. At the very least, this could have implications for the timing of any announcement. The Crossrail decision is probably still some way off. No date has been set. Financial Times 19.06.07
Row grows over Mayor’s green office targets; a row has erupted between Britain’s £700bn commercial property industry and Ken Livingstone, the Mayor of London, over how the capital’s office buildings can be made more environmentally friendly. Livingstone wants the industry to ensure that 20 per cent of the energy used to run new buildings in the capital comes from renewable sources from 2008- double the current 10 per cent guideline. However the British Council of Offices, the property industry’s trade body, claims the proposals are doomed to failure as the 10 per cent target is being regularly missed. The debate has become public because a review of the energy proposals has begun, giving all parties their final chance to lobby for changes to the Mayor’s plans. The debate centres on his wish for buildings to generate their own power through solar, wind and other renewables, and the developers’ preferred plans to reduce energy usage. Developers claim that energy savings on new offices will be better achieved by efficient design, haring excess heat with residential developments and increased use of automated systems to turn off lights and computers when not in use. They claim that wind turbines and solar panels are highly inefficient in the capital. Peter Rogers, chairman of Stanhope and of the UK Green Building Council, said: “Renewables tend to work outside London. At the moment the GLA is spending too much time dumping on the developer and not enabling energy saving to happen. Getting the infrastructure right for future fuels is important. We need local power generation. Offices do not need heat. Local authorities need to put the pipes in to take that for hot water in nearby residential”. Times 19.06.07
Battle for London foodies hots up; London foodstores are starting to fight back as the US chain Whole Foods opens Britain’s biggest dedicated foodstore in Kensington High Street. Waitrose, which proportionally sells more fresh food than any other UK supermarket is redesigning its Marylebone High Street store with a counter serving smoothies in the morning, salad for lunch and three-course meals for dinner. Shoppers will also be able to choose between “clear conscience farmed caviar” and “cut-to-order” organic cheeses. The supermarket chain plans to roll out the design round London before introducing it elsewhere in the country. For the next two weeks whilst the shop is being refurbished, customers living close to the Marylebone store can request to be driven to the nearest operational Waitrose in the refurbished Brunswick Centre at Russell Square. Shoppers spent £1.6bn on organic products in 2006 and it is expected to grow by a third to £2.4bn by 2011. Financial Times 14.06.07London logo is ‘fantastic’ says IOC; speaking at the end of an official evaluation visit Dennis Oswald, chairman of the International Olympic Committee’s Evaluation Panel, said; “I love it. We had a presentation about two months ago before it became public and when I phoned the IOC President to report, the first thing I told him is ‘they have a fantastic logo, very young, very dynamic with flexibility about how it can best be used’. It reflects what London wants to do with the Games in 2012”. His remarks came after Tony Blair described the logo as “brilliant or awful” whilst an opinion poll said that two out of three Britons who had seen the logo disliked it and just under half “strongly disapprove”. As the Olympic Delivery Authority announced the completion of the first Olympic construction project- two tunnels under the Olympic park to house power cables- Oswald said that London was the best prepared Games five years away from the opening ceremony. Further information - London 2012 Financial Times 15.06.07
Hammerson get the go-ahead for the City fringe; Hammerson has unveiled the first phase of its 10-year project to regenerate 13 acres of the City fringes on and around Shoreditch High Street. To be known as Bishops Quarter the scheme will produce 4.5m sq ft of mixed-use development on three sites. The first part- the £700m Bishops Place scheme- will include 645,000 sq ft of offices, 310 flats and a hotel on the old Nichols & Clarke site on Shoreditch High Street and Norton Folgate. A planning application for the 1.08m sq ft Foster & Partners designed project on the other side of Shoreditch High Street, will be submitted in the next few months, with construction due to start in 2008. The third part of the scheme is the old Bishopsgate Goodsyard- which Hammerson owns with Ballymore- which could provide 2.69m sq ft of mixed-use development. Estates Gazette 16.06.07
GLA calls for overhaul of affordable homes grants; a GLA report to be published later this month calls for the system for allocating government grants to build affordable homes to be overhauled because some councils are choosing not to build enough. The report says that in 2005/6 developers across the capital built 7,653 affordable houses- just 27 per cent of the 28,309 total- and well below the mayor’s 50 per cent target. Assembly members found that the number of affordable homes varied from borough to borough- from more than 80 per cent of new homes in Haringey to just 5.4 per cent in Kingston-upon-Thames. Further information - GLA Estates Gazette 16.06.07
Ken refuses to give up on St Giles; Ken Livingstone has asked his new architecture and design unit- Design for London-to draw up plans for a vast regeneration scheme at the eastern end of Oxford Street. It will cover five landholdings around Targetflow’s iconic Centrepoint tower. It will cover the land owned by Targetflow, Consolidated Development’s adjoining site bordering Denmark Street and the Charing Cross Road; the CIS’s holdings in New Oxford Street east of Centrepoint, Derwent London’s sites on the western side of Charing Cross Road including the Astoria, and Land Securities’ holdings north of Centrepoint in and off Oxford Street and New Oxford Street. The scheme would be fed into planning briefs at Westminster and Camden Councils. Although he has talked about compulsory purchase the Mayor cannot force his plans through. One site that is missing is the Legal & General site on St Giles High Street, where a consortium has gone on site with a Renzo Piano- designed scheme for 400,000 sq ft mixed-use project. Estates Gazette 16.06.07
Victoria Embankment; Design for London is also working on a scheme for a redevelopment of Victoria Embankment Gardens along the north bank of the Thames stretching from Waterloo to Westminster Bridge. Richard MacCormac of MJP architects, who is designing the scheme, said that plans including doubling the pavement width and turning the gardens into “a great and noble venue”. Discussions have begun with the landowners and Transport for London. Estates Gazette 16.06.07
Southwark decision damages chances of Elephant renewal; Southwark Council’s decision to take 200,000 sq ft in Tooley Street rather than at the Elephant & Castle has raised doubts about the chances for the £1.5m regeneration project for the Elephant. Even though Southwark will be taking 100,000 sq ft at the Elephant the two shortlisted consortia were relying on the Council to be the anchor tenant by taking 300,000 sq ft in a new civic centre at the heart of the 170-acre site. Even though Southwark councillors still believe that they will be announcing a preferred developer on 24th July their decision has cast doubt on the commitment of retailers to the 750,000 sq ft leisure development designed to replace the current shopping centre. Marks & Spencer, John Lewis and Debenhams are all keen to take space but indicated that a major office pre-let was vital because of the lack of parking. The two consortia are led by Lend Lease and St Modwen. Estates Gazette 16.06.07
Developments at Paddington; Development Securities is close to securing its first prelet for its Paddington Central scheme. Banking software provider Misys is set to take 70,000 sq ft at 1 Kingdom Street having considered alternative space at King’s Cross and Fitzrovia. The news will be a relief for the developer, which had recently cutback on its plans for 2 Kingdom Street for lack of prelets. Elsewhere in the Paddington scene European Land & Holdings has got consent for three of the final four buildings at the 1.8m sq ft Merchant Square development. European Land is a joint venture between the Reuben brothers and Bruce Jarvis’s Pearcroft. The focal point of the development-43-storey residential tower designed by Perkins & Will- will only get final approval after “clarification of detailed matters”. Estates Gazette 16.06.07
Dramatic building proposed for square around the Monument; a dramatic new 10-storey building has been proposed by architects Make for the square in which the Monument sits. The 90,000 sq ft building would have a crystalline structure and aim to create more coherent plan of the square. There would be a roof garden on top, which would provide both a form of urban sundial and act as a green foreground for views from the top of the 202ft Monument- the largest freestanding stone column in the world commemorating the Great Fire of London. The Monument would be reflected off the building, which will also feature a ground floor café to give life to the square and a place to appreciate the column. Financial Times 22.06.07
Real Chinatown gets the go-ahead; Development Securities has won approval for the redevelopment of the Oriental City shopping Centre- known as the “real Chinatown” in Colindale, NW9. Work will begin in May 2008 after a compensation package was agreed with traders. There had been strong protests against the scheme led by the Mayor and the Chinese Embassy. The new scheme comprises 300,000 sq ft of shops, 520 homes and a school. Estates Gazette 16.06.07
grapevine is produced twice monthly (except in August and December when there
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Next issue on 12th July 2007
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