The Budget was timid but not a con: Anatole Kaletsky (pictured right) says that the accusations of a con-trick being made against the chancellor are mostly spurious. The chancellor was unusually straightforward in stating, at the very start of his speech, that this Budget would be broadly neutral, with no room for tax reductions. It was perfectly clear that any tax cuts would be matched by increases elsewhere in the system. Neither could Brown be accused of pointless meddling just because he left the total tax burden unchanged. He was delivering what most experts and commentators had been demanding - a simplification of the tax system combined with an improvement in its efficiency, achieved by reducing marginal tax rates and simultaneously broadening the tax base. The only element of trickery was his failure to spell out his tax increases within the Budget itself. Kaletsky says that the benefit of tax simplification is not to strip pages out of the tax code or push accountants into the dole queues. It is to reduce unintended economic distortions created by taxes. Many taxes are specifically designed to distort economic decisions such as smoking, driving a polluting car, to give to charity, to invest in employee training, or scientific research. However Brown should be judged by the main aspects of economic activity that are most susceptible to tax incentives of which the most important are employment, business investment and personal saving. In each of these cases the distorting effects of taxes now seem weaker than they were before Brown became chancellor. Ironically it is for his failure to create bigger tax distortions that Brown can be more justly criticised: the obvious examples being the reduction of smoking, alcoholism and air pollution. Times 26.03.07
Brown sacrifices small firms to woo the City; David Smith says that the Budget was a clear attempt by Brown to show he is a friend of big business. One of his main aims is to demonstrate he can be trusted by business and the last thing he can afford is for the business vote to be claimed by the resurgent Tories. So, while the primary objective was to wrong foot the Tories an important secondary objective was to woo business. The new strategy started last November when he held a business summit when the men and women running UK businesses told him that more was needed to boost competitiveness, skills, infrastructure investment and, crucially, tax. When the business lobby groups put in their budget submissions, all called for a corporation tax cut but few expected it. Richard Lambert (pictured left) of the Confederation of British Industry said of the Budget; “This was quite symbolic. It’s a recognition of the problem, a signal”. He also noted that the Budget documents also said that the case for further reductions would be kept under review. However the cut in corporation tax had to be paid for. Part was to come from a £2.3bn cut in the value of capital allowances, which will penalise capital-intensive firms. More was to come from lifting most of the rebate from business rates on empty buildings. However, there were howls of outrage from the small business community when the chancellor hit them with an unexpected hike in corporation tax from 19 per cent to 20 per cent in April, rising to 21 per cent in 2008 and 22 per cent in 2009. This will hit around 4m small businesses with annual profits up to £300,000. The small business organisations feel that they are having to pay for the benefits bestowed on big business. Further information - CBI and FSB Sunday Times 25.03.07
Charities worse off after the Budget; charities are one of the main losers from the Budget, with the sector calculating it may be at least £70m out of pocket following the income tax changes. The two pence cut in the basic rate means the Treasury will refund 25p for every pound donated by a basic rate taxpayer under Gift Aid, rather than the current 28p. The Treasury has said that it will try and increase Gift Aid uptake to help compensate charities for the shortfall and would be consulting the charities about appropriate measures. Financial Times 24.03.06
Chancellor ignores emerging markets; reviewing the Budget Stephen King, managing director of economics at HSBC, says that although the subsequent debate has, understandably concentrated on the existence or otherwise of tax cuts, it seems that elsewhere something is missing. For all his blather about Britain’s performance vis-à-vis our G7 competitors, the chancellor (pictured right) said nothing about the competition coming from outside the G7, such as China, India, Russia, or eastern Europe. China and India churn out huge numbers of graduates who are prepared to work for lower wages than their equivalents in the UK. Increasingly multinationals are choosing to invest in China and India not because they offer cheap manufacturing but because they offer well-educated workers who can support research and development. A recent United Nations study showed that India and China, alongside the US, will be the biggest recipients of research and development (R&D) spending. Is the UK guaranteed to still have a seat at the global R&D table, even allowing for Brown’s £1.3bn increase in public investment in science? Equally as owners of capital appear to be winning at the expense of western owners of labour the profitability of most western economies has risen. But as western workers see their incomes squeezed there is an inevitable rise in income inequality across nations. Independent 26.03.07
Bank says UK’s recent immigration record likely to have dampened inflation; an article in the latest Bank of England quarterly bulletin says that economic theory is a poor guide as to whether immigrants will raise or lessen inflationary pressures. The outcome depends on how much they spend relative to how much they earn, which is often related to how long an immigrant stays in an economy. The Bank concludes that the recent patterns, particularly with high flows of immigrants from eastern Europe are likely to dampen pressure on inflation. Recent immigrants are more likely to be in employment and less likely to become permanent residents, reducing their likely effect on pushing up prices with their spending. The Bank concludes that it “may therefore have depressed inflationary pressures in the economy”. Further information - Bank of England Financial Times 19.03.07
FT speculates that the PM will resign on 25th June; the FT says that senior Downing Street officials have drawn up a detailed draft timetable for Tony Blair’s (pictured left) departure from No 10 this summer, which will see him finally quit office in the last week of June. Labour’s National Executive are finalising the details of the leadership contest whilst senior government officials are putting the final touches on the plan which awaits Blair’s approval. Under the terms of the timetable Blair will announce his intention to retire on either 5th or 8th May, which will trigger a seven-week contest for the Labour leadership culminating in a special party conference. This will be held on 23rd June, immediately after Blair’s return from his final EU summit. Assuming that the conference has been held on the 23rd- there is a small chance it could slip to the 30th- Mr Blair would go to the Palace on 25th June to tender his resignation to the Queen. Peter Wilby points out that the FT is not the only paper with a forecast. The People has opted for 24th July, the Guardian for 5th July and the Mail on Sunday for 5th May - but this might just be an announcement of an intention to resign. Financial Times 20.03.07, Guardian 26.03.07
The ultimate poisoned chalice; writing two days before the budget Gary Duncan, economics editor of the Times, said that not long after Gordon Brown takes over a group of senior ministers will be waiting anxiously by the phone. For most of them this nervous moment will be about the anticipation of promotion, or dismissal, from the new prime minister. But for another group, their prayer will instead be that the phone never rings. These are the men (and one woman) in the running to take over from Brown and become his chancellor. The chancellorship may be one of the three great offices of state, but holding that post in the impending Brown administration may be the ultimate poisoned chalice - the job from hell. Duncan argues that Brown plans to bale out of the Treasury having left it more or less on autopilot, having locked up all its main levers in the Budget and the autumn’s Comprehensive Spending Review. With this policy autopilot pre-programmed, the new restless premier peering over his shoulder and Brown’s chief lieutenant, Ed Balls, waiting to take over when the time is ripe, the new chancellor will have scant discretion. Ironically Duncan argues that, even though the plight of the next chancellor should be a joy for George Osborne, his Conservative Shadow, his policies are so similar to Brown’s that he would face an equally miserable time. Times 19.03.05
Brown exhibits “Stalinist ruthlessness”; in an interview with the FT Lord Turnbull, former cabinet secretary and permanent secretary to the Treasury for four years, says that Gordon Brown (pictured right) has exhibited “Stalinist ruthlessness” in government, belittling his cabinet colleagues whom the Treasury treats with “more or less complete contempt”. Claiming that Brown has a “very cynical view of mankind and his colleagues”, Lord Turnbull says, “He cannot allow them any serious discussion about priorities. His view is that it is just not worth it and ‘they will get what I decide’. And that is a very insulting process”. Lord Turnbull praises achievements such as the independence of the Bank of England, the three-year spending round, much of the fiscal framework and targets for departments, which had been “a net strong plus”. However he does question what he calls the “celebrity reviews” into policy issues such as those involving Paul Myners, Derek Wanless and Sandy Leitch. He says, “This has been an unworthy development in the sense that it belittles other ministers”. The chancellor referred to the charges in one aside during his Budget speech while the Conservatives tried to make capital out of it. A number of former Treasury civil servants gave interviews disagreeing with their former permanent secretary. Financial Times 20.03.07
Red Book gives some clues to Brown premiership; Patrick Wintour says that the Red Book, the 320-page publication that accompanies the Budget, gives some clues to the priorities that Brown will follow when he becomes prime minister. The Red Book reveals the unfinished domestic policies he intends to address when he moves to Number 10, most notably a better deal for the working poor. There are hints that he may relinquish his centralising control and that he will cut the number of public sector targets by two thirds in the forthcoming Comprehensive Spending Review. He will shortly announce the government’s response to the Barker Review on improving efficiency in land planning and there will be further welfare reforms with a greater role given to cities. There will be a big boost for the so-called third sector. Guardian 23.03.07
Industry needs two new Whitehall departments; writing in the FT Martin Temple, director-general of the Engineering Employers’ Federation calls for two new government departments to overcome the confusion and unsustainable division of responsibility between the Department of Trade and Industry (DTI) and the Treasury. With the future of the DTI in question he calls for an economics ministry to concentrate on productivity and a separate infrastructure department with responsibility for energy, transport and planning. The Times reveals that the Confedration of British Industry (CBI) has launched a review about the future of the DTI and what business wants from government. Martin Broughton, the CBI president, has already said that scrapping the DTI would be acceptable to business if its responsibilities were given prominence elsewhere in the Cabinet. Financial Times 20.03.07, Times 26.03.07
Tory proposals on business responsibility are ‘unworkable’; two of the main business organisations have warned that the Conservative proposals on corporate responsibility are “under-cooked”, “unworkable”, and “very dangerous”. They were responding to a consultation on the plans from a Conservative policy group seeking to find alternatives to regulation. John Cridland (pictured left), deputy director-general of the CBI, said that although they wanted “to help the Conservatives down this road” the proposals for social emissions trading were flawed as a concept and were unworkable. David Frost of the British Chambers of Commerce commented on the second proposal for “responsibility deals”, under which companies would be offered less regulation in return for meeting higher standards of business behaviour. Frost said: “We cannot see the group’s proposals being workable”, whilst the CBI criticised the deals as a “very dangerous” conflation of regulation and corporate social responsibility. The proposals will be followed by a final report in early summer. Further information - Click here Financial Times 21.03.07
Orange staff vetoes sponsorship of Big Brother; Orange has pulled out of talks to replace Carphone Warehouse as the main sponsor of the reality television show Big Brother after its staff opposed the potential deal. Orange was approached by Channel 4 to sponsor the show after Carphone Warehouse dropped its £3m-a-year sponsorship following the alleged bullying of the Indian actress Shilpa Shetty during the celebrity version of the show in January. Orange decided to gauge the reaction of its 12,000 British employees and found that the majority were against. They therefore turned down the offer, which was subsequently taken up by Virgin Media. Independent 15.03.07, Guardian 22.03.07
Microsoft drops UK supplier over diversity policy; Microsoft has dropped one its suppliers in the UK because it failed to meet the software giant’s standards on employee diversity. The UK arm of Microsoft is one of a small but growing number of British companies to monitor suppliers to ensure that they employ a representative mix of women and ethnic minorities. Microsoft said that it had made the decision following a diversity audit at its 250 leading suppliers. An equalities review, commissioned by the prime minister, last month recommended private-sector companies should be excluded from bidding for public-sector contracts, worth £100bn a year, unless they published progress in tackling inequalities. Employment lawyers at the legal firm DLA Piper said: “Private-sector companies increasingly want to be seen to be acting ethically, whether or not it is over green issues or employment diversity equality”. Firms that put in place “supplier diversity policies” include Morgan Stanley, BAA and Avis Budget. Financial Times 24.03.07
Council levies for infrastructure projects; even though the Lyons Report into the future of local government was published with the Budget it was more or less ignored. Two items did get taken up however. They were the proposals that local councils could impose a supplementary levy on the business rates to pay for key infrastructure projects such as Crossrail, and that there should be restrictions on the rate relief available to owners of empty property. The latter, in fact, became a key part of the chancellor’s calculations on sources of new income. Further information - Click here
Lyons calls for business rate to fund infrastructure; the Lyons Report calls for councils to be given the power to raise a supplementary business rate of up to four pence on the pound to fund local economic expansion. One scheme that is already being discussed for this treatment is the London Crossrail project. Local authorities would have to consult the local business community to spell out what the increase was for and the impact on the local economy. Lyons says that there was a case for business having a vote on the issue but tells the FT: “I have come down in favour of strong consultation as to avoid the unnecessary cost of votes - and we don’t have elections for other elements of taxation”. He said that the recommendation was central to his report whose “most important issue” was “getting local government to take economic prosperity seriously, going back to how it was before the days when the business rate was nationalised, when there was a close working relationship with business”. Business Improvement Districts had been popular and Sir Michael said that this showed that there was potentially some appetite for this from the business community although he added, “there is understandable anxiety about the aggregate level of taxation”. However he had come down against returning to local government the full power to set the business rate, and against altering the business rate base. This was in part because work needs to be done to rebuild the relationship between local business and local government. Further information - Click here Financial Times 21.03.07
UK cities seek to rival Shanghai and Dubai; if plans go through more than 100 high-rise buildings are due to go up in Britain’s provincial cities as they seek to emulate Shanghai and Dubai. For architects and developers they are seen a sign of civic virility but for their detractors they are seen as a feeble echo of the plans by London mayor Ken Livingstone to build tall - even though he is facing increased opposition from the conservation lobby. Liverpool has the most ambitious plans with a £5.5bn scheme by Peel Holdings to build 50 towers rising to 50 storeys on the site of the old docks. Birmingham has a plan for a 50-storey apartment block, the V Building designed by American architect Eric Kuhne. This is one of 10 towers planned for the city. In Leeds the twin tower Lumiere development could rise to 54 storeys. London is also facing competition with the Greater London boundary where Croydon is planning five towers in its centre going up to 46 storeys. Four of these, which will be designed like crystals, will have Ken Shuttleworth as the architect. A study by Drivers Jonas shows that 44 per cent of new homes are now apartments. Further information - Click here Sunday Times 18.03.07
£20m added to the cost of housing plans in the south east; the Environment Agency has estimated that the hidden costs of the government’s plan to build nearly 1.5m new homes in the south east over the next 20 years is £20bn. It argues that many of the sites earmarked for housing development are already near their growth limit and could be tipped into environmental crisis without careful planning. According to the agency it will cost nearly £7.5bn to ensure dirty water from the planned new communities does not pollute rivers and coasts, £10bn to provide new waste plants and £3bn to protect the 100,000 new homes expected to be built on the flood plain. The costs do not include providing water for developments in drought-prone areas. The government has set up four major growth areas and 29 “new growth points”, mostly in the south east. Further information - Click here Guardian 19.03.07
Home ownership goes into reverse; according to figures released by the Department for Communities and Local Government the number of people owning their own homes has gone into reverse for the first time in fifty years. In 2006 about 12 per cent of households, or 2.4 million people were renting privately - a figure that has been rising steadily for six years. At the same time the number of owner-occupied dwellings in England slipped by 25,000 to 14.6 million. The figures break the pattern of steadily rising levels of home ownership. In 1953, the proportion of owner-occupiers in England was 32 per cent. This rose to 43 per cent in 1961, 51 per cent in 1971 and peaked at 75 per cent, or 9.9m households, in 1981. Although the proportion of homeowners fell, the actual numbers continued to rise until 2005. Home ownership remains high, at 70 per cent of households in England but ministers will be hoping that the fall does not mark the start of a trend prompted by high prices, several interest rate rises and costs such as stamp duty. The average price of a house rose to £201,090 earlier this year. Further information - Click here Times 26.03.07
£100m fund for UK innovation; the chancellor announced in the Budget that a further £100m for a collaborative R&D (research and development) competition would be made available to provide funding for the most innovative, marketable projects to research and develop new technologies from environmentally friendly low carbon. So far the scheme has funded research into biofuels, biodegradable plastics made from plant fibres, pacemakers powered by human movement, through to implants for broken bones, which dissolve safely, accelerating healing. The scheme operates under the auspices of the Technology Strategy Board, which will become an executive Non-Departmental Public Body in the summer, responsible for delivering government financial support in a range of ways, including collaborative R&D, knowledge transfer networks, innovation platforms and knowledge transfer partnerships. Further information - Click here Financial Times 21.03.07
Nesta creates green venture fund; the National Endowment for Science Technology and the Arts (Nesta) plans to invest up to £10m a year over the next five years in early stage environmental, information, communication and healthcare firms. It hopes that this will trigger other investors to co-invest and create a fund of around £300m. Nesta chief executive Jonathan Kestenbaum said the fund, which will be overseen by an investment committee of venture capital specialists including Adrian Beecroft, former chief investment officer at Apax Partners, was particularly interested in environmental and energy technologies. He said that Nesta’s research had found that there was only one venture fund, Low Carbon Accelerator Fund, targeting innovative firms. Kestenbaum said; “With the private sector vacating early-stage funding after the dot.com era and the government now shifting its focus to more developed businesses the UK is facing a potential dearth of investment in this area”. However Steve Mahon of Low Carbon Accelerator challenged this view of the market. His £45m fund has invested in eight companies since its flotation last autumn on AIM. He said that there was no shortage of money seeking out environmental technologies. The issue was rather a shortage of commercially viable new ideas. Further information - Click here Daily Telegraph 16.03.07
Conservatives attack business aid schemes; business support schemes are costing taxpayers £12bn a year but achieve no quantifiable economic benefits according to the interim report of the Conservative Party’s independently chaired small business taskforce. The report says that there is a labyrinth of 3,000 business support schemes characterised by complexity, high costs, seemingly irrational regional disparities and few, if any, controls on value for money. Spending on business support has increased more than fivefold since 1982 despite an 80 per cent increase in the number if businesses over the same period. The research will put increased pressure on the government to intensify its drawn-out work to rationalise and improve business support. Further information - Click here Financial Times 15.03.07
Local Employment Partnerships; another initiative announced during the Budget was that long-term unemployed people who successfully pass work trials will be considered for jobs at major retailers such as Tesco, Marks & Spencer and Asda. Under the scheme to be called Local Employment Partnerships the large retailers together with the British Retail Consortium will link with Jobcentre Plus to provide opportunities for free work trials, mentoring and pre-employment training. The chancellor said that he hoped the new scheme would help 100,000 long-term unemployed into jobs over the next five years. Further information - Click here
Tackling worklessness in London; the Treasury published a paper on worklessness in London to coincide with the Budget. The paper looks at the reasons why, at just under 70 per cent, the capital’s employment rate is lower than the national rate and that of every other UK country and region, and child poverty rates are high. Amongst the measures proposed are that there should be an explicit focus on policies that relieve the congestion in London’s low-skilled market that reduces the employment chances of many Londoners; a more London-wide strategic approach is needed on employment programmes; and there should be a clearer focus on the employment needs of parents, including efforts to further improve the functioning of the childcare market. Further information - Click here
Black and Asian women find it hardest to get a job; black and Asian women are facing significantly greater employment barriers than white women and are missing from almost one third of workplaces even in areas with high ethnic minority populations. A study by the Equal Opportunities Commission finds that Pakistani, Bangladeshi and black Caribbean women find it harder than their white counterparts to get a job or win promotion, and are more likely to be segregated in certain types of work despite having good qualifications. The report, Moving On Up: Ethnic Minority Women at Work, argues that a “fundamental shift” is needed. It urges employers and politicians to “catch up” with the diversity of Britain and do more to change the culture of the workplace. Further information - Click here Guardian 15.03.07
Universities split over family background; leading universities are split on their reaction to the proposal from the Universities and Colleges Admissions Service (UCAS) that admissions tutors should use information about family backgrounds when choosing candidates. Oxford and Southampton universities ruled out using such information whilst Sheffield and Birmingham were among those who said that admissions tutors would have access to the additional information. Private schools and the Conservatives reacted with horror to the plan saying that it would discriminate against the middle-class school leavers in order to admit more people from poorer backgrounds. Universities are under pressure to widen access with some funding linked to their ability to increase the number of places given to poorer students. All have agreed to strike access agreements with the Office of Fair Access in which the universities promise to increase the number of students from non-traditional backgrounds in return for the right to levy variable tuition fees of up to £3,070 a year. Research supports the idea that a university would be foolish to use a selection system that relied entirely on a candidate’s performance at A-level as former state school students have been shown to get degrees one class better than former independent school students with similar A-levels. However a limiting factor for some elite universities is that bright students from non-traditional backgrounds tend to be more interested in vocational courses that they do not normally offer. Further information - Click here Financial Times 17.03.07
New schemes to help the gifted and the disadvantaged; three education initiatives have been announced to help both gifted and disadvantaged children as part of the policy review of public services. The proposals will allow regular individual tuition for disadvantaged, dyslexic and gifted children as part of standard state school education. The initiatives, which have already been funded by Gordon Brown, are part of the plan to boost education funding to the level of the private schools. Ten local authorities, including Westminster and Bexley, will be asked to pilot programmes aimed at identifying children from the age of five who have outstanding abilities, whether in sport, mathematics, literacy or music. The schemes will also provide special help through one-to-one help for slow learners and dyslexic children from the moment they enter school. The third initiative, will be more far-ranging, involving a huge expansion in the number of schools open ten hours a day. At present there is a standard ten-hour day from 08.00 – 18.00, in a limited number of schools. The aim is to offer breakfast and evening activities from sport to music in deprived areas. The government now wants to extend the provision to a third of all primary schools and half the secondary schools - covering more than just the deprived areas. Further information - Click here Guardian 17.03.07
CBI worries about raising the school leaving age; the Confederation of British Industry (CBI) has expressed concern that employers should not be compelled to provide unnecessary workplace training as part of the plan to extend the school leaving age to 18. Richard Lambert (pictured left), director-general of the CBI, said that most employers would welcome measures to improve skills provided this did not deter “employers from offering worthwhile work opportunities”. But hard-to-reach teenagers currently not in education or training would gain nothing if they felt they “were being trapped into further learning”. He said that it was unacceptable that nine per cent of 16- and 17-years-old were not in education, employment or training but any new measures must be “properly resourced in the classroom and the workplace”. He was speaking at the launch of a new CBI report, which calls for closer collaboration between schools and employers on work experience. Further information - Click here Financial Times 21.03.07
City academies to educate from three to 19; a new generation of all-through city academies to educate children from the ages of three to 19 will be launched in inner London this autumn when three new academies open in Islington, Lewisham and Westminster. Similar academies will also open in Leicester, Manchester and Swindon. At present there are two three-19 academies operating in outer London. Guardian 24.03.07
Companies combine to tackle carbon emissions; 40 top British companies are to join together to launch a campaign to cut both their own carbon footprint, and also to turn “green consumerism into a mass movement”. Companies involved include Tesco, Marks & Spencer, BSkyB, HSBC, the BBC and B&Q. They are working closely with the prime minister’s Policy Unit, the National Consumer Council and the Church of England. The initiative, which is to be launched next month, will introduce promotions and new products that make it easy for people to save energy and cut carbon emissions with an overall target for the amount of carbon dioxide saved by the campaign. The companies have all promised to clean up their own operations. B&Q has already cut greenhouse-gas emissions from its sites by 47 per cent, Marks & Spencer plans to go carbon neutral within five years, and Tesco plans to work out the carbon footprint of each of its businesses worldwide, publish the totals on its website, and take moves to cut it. It plans to label all its products with their individual carbon footprint. Independent on Sunday 25.03.07
The City spearheads research drive on carbon emissions; the FT says that leading banks, insurers and professional services firms have called on the City Corporation to take a lead in co-ordinating the drive to make the square mile carbon neutral. The call comes as the City unveils the London Accord, a multimillion-pound collaborative research project to attract investment into carbon emission reduction by identifying technologies that will appeal to the growing number of investors seeking a stake in the carbon change industry. The Corporation, which has cut its own emissions by 35 per cent since 1997, is planning a series of measures to reduce the financial district’s carbon footprint, including a ten per cent reduction target by 2010. It plans to create a City-approved carbon-offsetting scheme for City businesses that would use accredited and transparent schemes. The City would offer special help to smaller businesses. The London Accord will draw on the resources of several of the world’s biggest investment banks including Barclays Capital, Société Générale, Credit Suisse, and Morgan Stanley. Their researchers, led by Jan Peter Onstwedder of BP, will team up with academics from Cambridge University, the London School of Economics and the Santa Fe Institute. Price Waterhouse Coopers has become one of the first big City names to announce that it intends to go carbon neutral. It has already cut its carbon emissions by 45 per cent over the past three years. Further information - Click here Financial Times 26.03.07, 27.03.07
BA under fire for increased short-haul flights; a day after the publication of the draft Climate Change Bill, British Airways (BA) announced plans for a massive increase in the number of flights it operates from London City Airport. More than 100 flights will leave the airport each week including new four-times-a-day services to Glasgow and Zurich and increased frequency to Edinburgh with eight flights a day. Other destinations include Frankfurt, Madrid and Milan, with fares available from £39 one way. Campaigners argued that half of the planned destinations were easily accessible from London by direct train links. Friends of the Earth pointed out that a flight to Edinburgh from London resulted in 96.4kg of CO² per passenger compared to 11.9kg when travelling by train. BA pointed out that following the sale of its loss-making subsidiary BA Connect to Flybe it had reduced its regional fleet from 49 to ten. A spokesman said: “At the end of the day it is the customers who will decide. If they want to go by train they will go by train. If they want to fly they will fly”. BA has spent seven years campaigning for airlines to participate in an emissions trading scheme, a proposal that will become law in the EU by 2011. Later in the week BA also found itself under heavy fire from the Green Lobby when it announced plans to start a daily flight from Gatwick to Newquay in Cornwall. Independent 15.03.07, 17.03.07
Airlines fight ‘unfair’ green taxes; low-cost airline easyJet and airports operator BAA are spearheading a new coalition to lobby against what they believe are unfair environmental taxes being levied on the aviation industry. The group, which is expecting 40-50 organisations to join, is to hold its first meeting on 29th March and will be loosely modelled on the “Freedom to Fly” group set up several years ago to lobby for an expansion of UK airports. The industry wants to counter what it sees as exaggerated claims about its impact on climate change. It also recognises that it is losing the PR battle and making it more susceptible to opportunistic taxes from politicians. The industry is still reeling from Gordon Brown’s doubling of air passenger duty (APD) last December and now faces David Cameron’s “Greener Skies” proposals. BA say that it could offset its carbon emissions four times over for the cost of its APD bill- around £400m a year. With the number of flights due to leave the UK set to double of triple by 2030 the airlines are now at the centre of the debate on global warming. Independent on Sunday 18.03.07
NCC calls for energy labels on electronic goods; the National Consumer Council (NCC) says that consumers are confused about the amount of energy used by electrical goods, such as computers and televisions, because of poor labelling and a paucity of information. The Council found that out of 350 electrical products surveyed at ten stores across the UK only one television had an energy label sticker. The NCC is calling on the government and the private sector to introduce a colour-coded energy efficiency labelling scheme for electronic goods. Private households produce just under one-third of the UK’s total carbon dioxide emissions with a growing proportion of that coming from consumer electronics. Further information - Click here Financial Times 19.03.07
Power groups fail to meet demand for ’green energy’; the UK is set to fall far short of meeting the renewable energy demand of its biggest corporate customers in 2007 according to a Datamonitor study. About 3,500 of the country’s biggest energy customers - from chemical producers to retail chains and banks - want to buy 34 terawatt/hours (34 kilowatt/hours) of electricity from renewable sources in 2007. That is three times the 12.2TWh of accredited renewable energy produced in the UK in 2006 and far exceeds estimates for 2007. Further information - Click here Financial Times 26.03.07
London vs New York - the debate goes on (and on); there have been various skirmishes in the battle between London and New York as to which is the world’s leading city. New York magazine declares “if Paris was the capital of the 19th century and New York of the 20th, London is shaping up to be the capital of the 21st century”. The writers go on: “To Londoners now, there’s a sense that the future belongs to them. It can sometimes seem as if there’s nobody under 30 in the streets and that a great experiment in mass immigration and assimilation is under way”. Meanwhile Clara Furze, chief executive of the London Stock Exchange, responds to the attack on the Aim market by a US Securities and Exchange Commissioner by calling for US capital markets to come to terms with the success of London’s Aim market and to “stop navel-gazing based on the premise that the US is the ‘home of capitalism’.” Further information - Click here Evening Standard 20.03.07, Financial Times 20.03.07
London is the new capital of the world - and it should secede from the UK; somewhat tongue-in-cheek James Harding, business editor of the Times, enters the debate by declaring that London is the new capital of the world and that it should secede from the rest of the UK. He argues that it is now the coolest city on earth. New York, like Paris, has become a mini-break destination, a playground for grown-ups who enjoy the same standard tourist menu; a walk round Central Park; a shopping trip to Soho; a show on Broadway; and a very large steak. The world loves a long weekend in New York but these days it prefers to make its home in London. New York has the nostalgia, London the future. New York defines the metropolitan, London, the cosmopolitan. London is passport-blind. It does not have the luxury of being the de facto capital of a continental economy. So, it is international: it treats its visitors as citizens, as players. Further information - Click here Times 13.03.07
Crossrail may be funded by business levy; Crossrail may be the first project to utilise Sir Michael Lyons’ proposal that councils be given the power to raise a supplementary business rate to fund infrastructure projects. Government ministers have already said that they intend to look closely at the proposal and have been aware of secret talks that have been taking place between Ken Livingstone and Sir Michael as the Crossrail Bill moves through parliament with the expectation that it will become law by July. Tony Blair (pictured left) told City figures earlier this month that the government was “absolutely committed” to Crossrail, the most expensive transport project since the £8bn west coast mainline upgrade. One proposal would see the government provide a £3bn direct grant, a further £3bn from anticipated passenger fares and about £3bn from the business rate. A new report, as yet unpublished, produced by Volterra for Crossrail and the Greater London Authority says that delaying Crossrail would cost the London economy more than £1.5bn a year. Guardian 21.03.07, Financial Times 27.03.07
20-mile tunnel beneath London will rescue sewer system; a giant 20-mile tunnel stretching from Hammersmith in the west to Beckton in the east costing £2bn is to be built to bailout London’s overloaded Victorian sewer system. It will be dug up to 80 metres beneath the surface to clear the tangle of existing sewers and transport links under the city. Thames Water said that it would have to put annual bills up by £37 to meet the cost, but one water watchdog warned that the new project could help push up water charges by 50 per cent over the next decade. Further information - Click here Guardian 23.03.07
Olympic costs have tripled to £9bn; Tessa Jowell (pictured right), the secretary of state for culture, media and sport, has announced to Parliament that the budget for the 2012 London Games has trebled to more than £9bn due to rising costs in construction and security, an unforeseen VAT bill and a massive contingency allowance. The shortfall from the original estimate of £3.3bn will be made up by a further £675m from the National Lottery, taking its total contribution to £2.2bn. The Mayor has committed to a further £300m whilst the London Development Agency has agreed to a further sum coming from the increased value of the land it owns on the Games site in Stratford. The government will provide £6bn of which £840m will be the VAT charge, which will mean that the Treasury is in effect billing itself. There was widespread dismay from the Lottery good causes who will suffer an 11 per cent cut in their annual funding for the next five years. Derek Mapp, chairman of Sport England, complained of a “real blow” to community sport. He said that the loss of a further £55.9m “seriously endangers the creation of a sporting legacy from the 2012 Games”. Further information - Click here Evening Standard 15.03.07, Independent 16.03.07
Lloyds TSB pays £80m to be 2012 sponsor - is BT next? Lloyds TSB is paying £80m to become the first domestic sponsor of the London 2012 Olympics. The bank described the cost as “a good price”, saying that part of its motivation was ensuring that the rights package did not fall into the hands of a banking rival. Locog, the London 2012 organising committee, is negotiating similar rights with other sectors - utilities, oil and gas, automotive, telecommunications, airlines and sportswear - as part of its drive to raise £700m in sponsorship, although it is now accepted that this may not be achievable. The Independent says that BT is near to being the second sponsor, with competition from Vodafone, whilst BA, BP, and Ford are also thought to be on the shortlist. Nigel Gilbert, marketing director for Lloyds TSB, said that some of their other sponsorships might disappear in the run up to the Games, as the bank aligned its marketing to youth and community involvement, the two programmes it is developing with London 2012. Further information - Click here Financial Times 15.03.07, Independent 27.03.07
However there are doubts about private-sector funding; the Guardian says that buried in the government’s announcement on Olympic budgets was an admission of defeat over the chances of raising £750m in private-sector funding. The Guardian says that before the announcement, government officials “squirmed” when asked to substantiate the claims made by Tessa Jowell that “discussions are in train”. During the announcement she confessed that “it has been allowed for in the budget on a pessimistic basis. It is possible, but not certain, that may change”. The Guardian says that it is fortunate that Gordon Brown’s £5bn increased subsidy comprises a £2.7bn contingency fund, as it is expected that the private-sector shortfall will have to be covered that way. Guardian 16.03.07
GLA says 2012 jobs may not help poor Londoners; the London Assembly’s economic development, culture, sport and tourism committee has published a report questioning just how many of the jobs stemming from the 2012 Games will go to people living in the surrounding boroughs. It says that around a quarter of the combined population of 720,000 have no qualifications and over 60 per cent are unemployed. Dee Doocey, chair of the committee, said: “We need to get this right from the very start, or we risk losing the truly life-changing potential of the Games for the people. This would be an unforgivable betrayal of people in an area of London that has been characterised by deprivation for generations. The last thing we need is another Docklands where many of the newly-created jobs did not benefit the local people”. The recommendations include more training to target the construction skills gap and a dedicated language academy. Further information - Click here Guardian 23.03.07
2012 already having an effect on property prices; the Times says that while the rest of London could be forgiven for feeling ambivalent about the cost of the 2012 Games there is at least one group who should gain - home owners near the site of the Games. It quotes a report by Halifax Estate Agency that states while London house prices as a whole have gone up by 15 per cent since July 2005 the figure for Hackney and Leytonstone is 20 per cent and Clapton 18 per cent. Although those areas start from a low base, Martin Ellis (pictured left), chief economist at Halifax, says that: “The area is likely to become more attractive as regeneration projects continue and transport links are improved. And our figures do fit in with what as happened in other countries that have hosted the Olympics.” In Barcelona there was a 131 per cent increase in house prices in the five years leading up to 1992 against an 83 per cent Spanish average, whilst in Sydney house prices rose by 50 per cent in the period 1995-2000 against an Australian average of 11 per cent. The Halifax report does acknowledge that the Olympics effect is yet to be seen in Leyton, Manor Park, Bow, East Ham, Bethnal Green and even Stratford. One property developer believes Stratford house prices have already factored in the much improved transport links. Moreover Neil Young, of the Young Group, believes that the health of Canary Wharf and the City are a stronger influence on East End house prices than the 2012 Games. Further information - Click here Times 23.03.07
Second go for Paddington tower; Hammerson and Ballymore have resubmitted plans for a 200,000sq ft office tower on a site next to Paddington Station. Designed by Nicholas Grimshaw and called the Triangle the 15-storey scheme has been caught up in disputes about Section 106 payments and access to Crossrail. In the new submission the developers have improved their offer to upgrade the Hammersmith and City Line tube stations. Estates Gazette 17.03.07
Mayor backs Greenwich housing project in battle with HSE; Meridian Delta, the developers of the £5bn Greenwich Peninsula project, have enlisted the help of London mayor Ken Livingstone (pictured right) and housing minister Yvette Cooper in their battle with the Health and Safety Executive (HSE). Meridian, which is a joint venture between Quintain and Lend Lease, has sought help after being advised by HSE against building 1,300 homes on a section of the site because they would be too close to a gasometer. Speaking at a conference on affordable housing Livingstone argued that the UK’s largest regeneration scheme was being seriously jeopardised by the row - and warned that rules based on a September 2005 review must not be applied across London, where around one-third of people live in a similar proximity to gasometers. The HSE questioned these figures and denied that the Buncefield explosion was leading to an unduly cautious approach. The September 2005 review had been completed two months before the incident. They went on: “We have merely issued a statutory consultation on the area. Until we receive a final plan from Greenwich council we cannot give full advice”. Estates Gazette 17.03.07
Gummer attacks “a little bit of delay is worth having”; former environment secretary John Gummer (pictured left) says that his blood boiled when the King’s Cross Railway Lands Group won the right to challenge in the High Court the massive redevelopment of this London area. “These self-regarding campaigners are determined to foist their views on us all and will use every way open to them to stall this exciting development”. However, Gummer argues, that it is crucial that it goes ahead at full speed. The King’s Cross timetable is driven by the Olympics and the sheer waste of money ought to affront us all. He says that on any measure it is a good scheme and although the campaigners are calling for more housing and less commercial development the scheme is offering 44 per cent “affordable housing” out of the planned 2,000 homes. If anything he says that the scheme has gone over the top to retain the historic environment. The joint leader of the campaign group is Michael Edwards, lecturer in urban planning at UCL, who has been quoted as saying “a little bit of delay is worth having” in order to achieve his group’s ends. Gummer says that this is, of course, the British problem. We seem constantly willing to debate and delay, not to do or dare. Every little bit of delay makes us less able to cope with the modern world, be more expensive than our competitors, and vastly slower in the provision of essential infrastructure. Estates Gazette 17.03.07
Hatton Garden adapts to the new London; the Times carries feature on the renaissance of Hatton Garden - the traditional heart of Britain’s jewellery trade on the Camden border with the City. It says that although its location on the edge of the City and the West End has seen rents increase by more than 20 per cent over the last nine months Camden’s planning policy is ensuring that the traditional occupants are not being squeezed out. Unite, the largest owner of student accommodation in Britain, has concluded a deal to provide 42 basement workshops in return for permission to convert the old De Beers head office into 128 studio flats. The Times says that it has seen a Camden policy document that states that: “The conversion of office premises will only be permitted where it is demonstrated they have been vacant and marketed for two years and are replaced by a mixed-use scheme, including housing and light industrial premises suitable for jewellery workshops”. Many of the occupants moving in are media companies and Derwent London have just let a floor of the Johnson Building in Hatton Garden to a media company for an initial rent of £42.50 a square foot. Whilst the Johnson Building never has jewellers John Burns, chief executive of Derwent, says that he would consider other buildings, as “This is one village that is up and coming”. Another innovation is for gem traders to operate out of shared buildings such as the Heart of Hatton Garden Jewellery Emporium, which enables traders to deal from smaller premises, which keep rents down. Times 22.03.07
grapevine is produced twice monthly (except in August and December when there
is one issue) by Brian Wright on behalf of GLE
Next issue on 12th April 2007
Circulation enquiries to grapevine@gle.co.uk
Content enquiries to Brian Wright on user164898@aol.com
Tel: 01789 263252