A nasty but not fatal bout of inflation; the Financial Times argues that this winter, instead of influenza, the British economy has caught a mild case of inflation. In the year to December 2006 the consumer price index (CPI) rose by three per cent - one per cent higher than the Bank of England’s target. As a result, the Bank raised interest rates to 5.25 per cent on 16th January. The Bank has not lost control of inflation and prices are likely to start falling in February, but this bout of inflation is causing discomfort to people like pensioners and parents paying for education. The retail price index (RPI), which includes items such as council tax and mortgage interest payments, is rising faster than the CPI suggests, and inflation is especially concentrated on energy, so groups such as pensioners, who spend a lot on heating, are feeling the pinch. The FT says that it can be argued that the 2003 decision by the chancellor to target the CPI rather than the RPI was a mistake. The switch, which brought the UK into line with the European Central Bank, was not helpful, but nor was it disastrous. From February, last year’s surge in oil prices will start to fall out of the inflation figures and the rate of price rises will slow. The Bank may have to raise interest rates at least one more time to squeeze inflation out of the system. The danger is if inflation does not fall all the way back to the target which would mean interest rates staying higher for longer than some expect. Financial Times 20.01.07
British economy will grow by 2.9 per cent, says Item Club; the Ernst & Young Item Club is forecasting that the British economy will grow by 2.9 per cent in 2007 thanks to a booming financial services industry and strong business sectors. Peter Spencer (pictured right), chief economic adviser to the Item Club, which uses the same model of the economy as the Treasury, says that “Stock Exchange and M&A transactions have been steaming ahead, and business investment has picked up in the last 12 months, helped by the buoyant economy and rising profitability”. He predicts some relief for consumers faced with record levels of tax and high utility prices. He believes this spring, bills will fall as the impact of lower raw material prices feeds through, which will coincide with an increase in overall employment and an improvement in pay packets. The strong growth in labour supply - thanks to immigration and the return of older workers - and falls in oil and commodity prices will help to keep a lid on prices. It expects CPI to fall back to the two per cent target this year without a further increase in interest rates. However Spencer warns that easy credit is feeding through to asset price inflation, with valuations of equities and commercial property rising as a result of the highest corporate profitability for ten years. This, plus City bonuses, means that many people have plenty of disposable income “which might make it harder to bring residential property prices under control too”. Further information - Click here Observer 21.01.07, Independent 22.01.07
Productivity growth has slowed; the latest annual assessment of UK labour productivity by the Conference Board estimates that UK output rose by 1.7 per cent in 2006 compared to the long-run average of 2.1 per cent. Even though the economy grew faster at 2.7 per cent, rapid growth in employment limited the contribution of productivity, which governs the long-term heath of the economy. More worryingly for the chancellor, the assessment of the UK shows that productivity growth between 2000 and 2006 slowed to an annual average of 1.9 per cent compared to 2.1 per cent between 1987 and 2000. Slowing productivity would make the Bank of England’s life more difficult since it could not let the economy grow so fast without taking big risks with inflation. The Conference Board report mirrors the warning given earlier in the month by Andrew Sentance (pictured left), one of the new members of the Monetary Policy Committee. He pointed out that an unusually high proportion of economic growth over the past decade had been generated by falling unemployment and more people working. Given its already low levels it would be difficult for falling unemployment to provide a continued boost in the next decade. “In the absence of an alternative source of labour or an acceleration in productivity growth, there would be a fall in the UK’s average GDP growth rate from 2.8 per cent recorded over the past decade to something closer to two per cent”. Such an outcome would lead to higher inflation at lower levels of growth, prompting the Bank of England to raise interest rates. Further information - Click here and here for the Bank of England Financial Times 23.01.07
Housing market may be cooling; interest rate increases may be cooling the housing market according to the latest data on mortgages from the British Bankers Association (BBA). The BBA says that there were 45,533 mortgage approvals to buy a home in December- a sharp drop from the November figure of 78,726. More significantly, given the seasonal factors between the two months, there was an 11 per cent drop on the numbers for December 2005. The figures follow a report from the Royal Institute of Chartered Surveyors that showed a sharp drop in house prices in December. However reports from both Hometrack and the Centre for Economics and Business Research point to continued price increases in London owing to a shortage of property and the spending of City bonuses. Further information - Click here for BBA and here for RICS UK Financial Times 27.01.07, 29.01.07
Plans to split the Home Office; the proposals put forward by John Reid (pictured below), the home secretary, for the Home Office to be split into two departments could be implemented before Tony Blair leaves office in the summer. The prime minister is treating the proposals as a “serious piece of work” and the plan will go before cabinet within weeks and could be implemented within months. Reid wants to slim down the Home Office significantly to create a national security department focused solely on immigration and counter-terrorism. Responsibility for prisons and sentencing would be transferred to the Department of Constitutional Affairs, which would be reborn as the Justice Department. The plan has emerged from a review of the Home Office initiated by Reid, when he warned that parts of the department were not “fit for purpose” after becoming home secretary last May. Aides to Gordon Brown said that he had not been consulted on the proposals nor had he endorsed it. A few days later insiders close to the chancellor said that it would be “inconceivable” for any decisions on the machinery of government to be taken by an outgoing prime minister. Lord Falconer, the constitutional affairs secretary and a close ally of Blair, said “the time might well have come” for a “very, very serious proposal”. Divisions in response emerged both with the Labour and Conservative parties. Two former home secretaries had diametrically different responses. David Blunkett, who blocked a similar proposal in 2003, warned of the danger of stripping responsibilities from one of the trio of top government jobs. However Jack Straw said that they were a sensible response to the increased workload faced by the Home Office since the US terror attacks of 11th September 2001. Financial Times 22.01.07, 25.01.07
Treasury to take control of efficiency drive; the Treasury is to take direct control of the government’s efficiency drive while giving a slimmed down (but it is claimed, more robust) Office of Government Commerce (OGC) more power to make departments join collaborative deals over purchasing. The announcement reflects the Treasury’s own settlement for the next spending round where it, like a number of other departments, has to make a five per cent per annum spending cut from 2008 in its own running costs and those of its agencies, which includes the OGC. The move reflects the need to improve procurement not just of goods and services but also of big projects from identity cards to other IT schemes. The OGC will be given “strong powers” that go beyond its present role of help, advice and monitoring. The Treasury will direct control of the Gershon efficiency programme after claiming that, halfway through the three-year programme, it is more than halfway towards the target of £21bn in savings. Further information - Click here Financial Times 23.01.07
Loan Guarantee Scheme deals almost halved; following controversial reforms the number of loans backed by the government’s Small Firms Loan Guarantee (SFLG) Scheme has almost halved during 2006. Department of Trade and Industry figures show that the government underwrote SFLG loans worth £225m in 2006, compared to £422m in 2005-6 and £481m in 2004-5. A new rule preventing companies that are more than five years old from qualifying from SFLG support was among a number of changes introduced in December 2005 to make SFLG easier to use. Financial Times 20.01.07
Record spending on online shopping; internet shoppers clocked up online sales of £7.66bn in the ten-week run-up to Christmas - a 54 per cent increase over 2005 and more than double the amount spent two years ago. The strong performance meant that online sales for the year totalled £30.2bn according to the Interactive Media in Retail Group (IMRG), the industry body for online retailers. That figure includes £7.4bn for leisure travel so the online shopping total was £22.6bn or about nine per cent of total retail spend as calculated by the British Retail Consortium. IMRG said that the figures could have been even higher if retailers had had more capacity and stock. “Websites struggled to cope with the soaring traffic levels, stocks sold out early and delivery companies were at full stretch dispatching the 200m parcels ordered. Sales demand outstripped capacity by a considerable margin”. Further information - Click here Financial Times 18.01.07
UK science must work with Asia; a series of reports issued by the Demos think tank say that British science could be sidelined within a decade unless better efforts are made to work with Asian countries. The report says: “Britain must wake up to developments in Asian innovation and promote global, collaborative approaches rather than retreat into competing forms of techo-nationalism”. Demos calls for a ring-fenced £100m government fund to enable collaboration between scientists in Britain and China, India and South Korea to attract 200 scientists each year from the Asian countries to work in Britain. In 2006, the OECD announced that China had moved ahead of Japan for the first time to become the world’s second-largest investor in science after the US, spending £4.7bn. In India spending has risen to an annual £2.3bn. By comparison, the British science budget was around £3bn last year. Further information – Click here Guardian 17.01.07
Late payments getting worse; a study of the accounts of thousands of UK firms by Siemens Financial Services shows that late payments to small companies has got comparatively worse over the past three years. It finds that smaller firms had to wait 80 days to get paid in 2006 compared to 69 days in 2004. Further information - Click here Financial Times 29.01.07
Graduates encouraged to take the plunge; a series of events are being staged around the country by the National Council for Graduate Entrepreneurship to encourage graduates with a business idea to take the plunge. Half day Flying Start conferences are being held in Taunton, Leicester, Brighton, the Eden Project and Bournemouth. Further information - Click here Financial Times 27.01.07
New film tax brings surge in UK films; spending on film production in the UK increased by nearly half to £840.1m last year compared to £568.8m in 2005. The Film Council has linked the boom to an increased confidence in the British market, thanks to a film tax system announced in late 2005 and introduced at the start of this year. John Woodward (pictured left), the chief executive of the Film Council, is confident that 2007 will be another strong year for production spending in the UK. The coming year will see the release of British films including This is England, Notes on a Scandal, Atonement, The Other Boleyn Girl, and 28 Weeks Later. Inward investment rose by 83 per cent to £569.6m with films that include Chris Weitz’s His Dark Materials: The Golden Compass, based on Philip Pullman’s trilogy, Matthew Vaughan’s Stardust, starring Robert De Niro, David Yates’s Harry Potter and the Order of the Phoenix, David Dobkin’s Fred Claus, starring Kevin Spacey and Kathy Bates, and Paul Greengrass’s The Bourne Ultimatum. Further information - Click here Times 15.01.07
Banks target Polish business; Lloyds TSB and the Nat West have joined HSBC and Barclays in targeting Britain’s fast-growing Polish community. All the banks are recruiting Polish speaking staff, producing literature in Polish and simplifying procedures for opening accounts. Lloyds TSB said that its city centre banking “superstore” in Manchester would serve all international customers new to the UK, although it is largely designed to tap into the area’s Polish community. Nat West has launched the Nat West Welcome Account, which will be delivered and supported entirely in the Polish language. It includes telephone and internet banking. Further information - Click here for Lloyds TSB and here for NatWest Financial Times 12.01.07and Money News 15.01.07
Health Service boost for social enterprise; Ivan Lewis (pictured right), the heath minister, has announced a £73m Social Enterprise Fund to support the development of social enterprises in health and social care. Further information - Click here Regeneration 26.01.07
‘Cameron takes crackpot business approach’; the Times examines the report produced by the Conservative Party’s Working Group on Responsible Business. Discussing the idea that obesity might be treated like carbon emissions James Harding says that it is not only intellectually flimsy, it contradicts David Cameron’s (pictured left) core belief in personal responsibility and individual freedom. The Conservatives may well believe that it can score points in the polls by posing as a party that has shed its cosy relationship with business, but surely it can distinguish between areas of personal responsibility and the realms of corporate obligation. To its credit the working party has come out firmly against mandatory reporting on non-financial impacts. It also makes a brief, if equivocal, comment about BAE and the need to be vigilant against corruption. It also seizes on the Higgs Code “comply or explain” principle as a method of enforcing more responsible business without heeding the fact that it is the most ineffectual feature of the code. The appendix to the report reveals that no one on Cameron’s working group has any serious experience in business. Cameron is a politician with a compelling skill for communication, an energy that has enthused his party and the rare gift of natural leadership. Sadly he has not brought these talents to bear when it comes to the future of British business. In fact the report simply reinforces his image as muddled, opportunistic and faddish. Times 19.01.07
Union pickets private equity charity; the GMB union picketed the inaugural dinner to establish the Private Equity Foundation held at the Roundhouse on 24th January. The GMB has been particularly vocal in protests against Permira, whose managing partner, Damon Buffini, has been active in the creation of the new charity, which, in some ways, is seen as the private equity version of Ark, which has been set up by the hedge fund sector. The foundation has so far raised £5.1m and has announced that it will support five charities including the NSPCC. Financial Times 25.01.07
Kelly announces renewal super-agency; as forecast Ruth Kelly (pictured right), the communities secretary, has announced a new super agency to deliver housing and regeneration in England. To be known as Communities England the new quango will bring together the functions of the national regeneration agency English Partnerships and social housing agency the Housing Corporation. It will also be responsible for the delivery of a number of the Department for Communities and Local Government’s own functions including the decent homes and housing PFI programmes, housing market renewal, housing growth and some of the urban regeneration work. It has not yet been determined whether some other services including neighbourhood renewal, the Supporting People programme to provide housing-related services to vulnerable people, and the growth areas will be included in the new agency’s remit. Ruth Kelly said that the new agency would have more than £4bn of public funding available to it, based on the current budgets of English Partnerships and the Housing Corporation. The proposals are going out for consultation but it is planned that the new body will be fully operational by 2009 - subject to parliamentary approval. Further information - Click here Regeneration 19.01.07
Regions urged to diversify innovation policies; a report by the National Endowment for Science, Technology and the Arts (Nesta) says that cities and regions need far greater diversity in their innovation policies if they are to avoid duplication and unnecessary duplication. As an illustration, it points out that out of the nine English regional innovation or economic strategies “eight include biotechnology or health sciences as a priority area. But it is not clear how many biotechnology hubs the UK really needs or can sustain, and this duplicative approach may waste resources”. Nesta points out that, while globalisation and ICT are making the world “flatter”, as knowledge flows freely from place to place, it is paradoxically becoming spikier as innovation coalesces around specialised clusters. In Britain, for instance, Reading has become the main ICT hub and Aberdeen the energy hub. Yet Britain’s regional policies remain remarkably uniform not just in innovation but also in their overall approach to science parks and university-industry collaboration. The report says that the answer is for cities and regions to make more effort to work out what they have to offer. Financial Times 26.01.07
Middlesbrough seeks transformation through art; the FT looks at Middlesbrough’s bid to join the ranks of Barcelona, Bilbao and Valencia by in using art to transform its image. In a town that has had so many regeneration initiatives it was once described as having more visions than Mother Teresa, the eye-catching Middlesbrough Institute of Modern Art (MIMA) sends a message that Middlesbrough is really changing. The £19.2m project was opened by Sir Nicholas Serota, the director of the Tate, on 26th January with an exhibition linking great modern artists such as Picasso, Matisse, Bacon and Warhol with contemporary artists such as Damien Hirst and Gavin Turk. The building has been designed by Erick van Egeraat, the fashionable Dutch practice, who has also designed the Mariinski 11 Theatre in St Petersburg and the Netherlands Embassy in Warsaw. At the same time developers have announced £200m of investment in former dockland at Middlehaven near the town centre, and One North East have approved £7m for a “BoHo Zone” providing workspace for digital and creative companies. It will also complement Teeside University’s new £21m Institute of Digital Innovation and Centre for Creative Technologies. Further information - Click here Financial Times 26.01.07
City hiring spree; two City commentators have forecast further increases in jobs in the City and finance generally. Morgan McKinley, a recruitment firm, said that job openings in the City this month were 12.4 per cent higher than the same month last year. This comes after an exceptionally buoyant year in 2006 on the back of the mergers and acquisition boom. According to the Centre for Economics and Business Research (CEBR) the City now employs 335,000 (including Canary Wharf and Mayfair) and contributes 3.5 per cent of the UK’s GDP. The CEBR said that six months ago it had been forecasting a slowdown in 2007 but had now revised its view. Given the continued strength of the US economy and the soar-away growth in India and China the City’s bonanza “still has a way to go”. Further information - Click here Independent 19.01.07
Alarm at plans for European labour reform; a European Commission initiative to deregulate labour markets in order to cut unemployment has caused alarm amongst British trade unions and some employers’ groups - even though Britain is seen as a model of reform. Amicus, Britain’s biggest private sector trade union, says that the proposed reforms may trigger changes to employment law that would cut workers’ rights and increase the casualisation of labour. Some employers’ groups are anxious that the Green Paper on “modernising labour law to meet the challenges of the 21st century” could open a Pandora’s box of issues they thought had been put aside. Brussels is consulting on the need for changing employment law to promote “flexicurity”- flexible work underpinned by employment protection. The European Central Bank has called already for the reforms to be adopted “rigorously”. The Green Paper, which is being consulted on until the end of March, refers to a report by the European employment task force, which urged member states to “assess, and where necessary alter, the level of flexibility provided in standard contracts in areas such as periods of notice, costs and procedures for individual or collective dismissal, or the definition of unfair dismissal”. Further information - Click here Times 22.01.07
East European arrivals overstated; only 380,000 east European migrants have registered for national insurance purposes since the EU was enlarged in 2004 according to official data produced by the Department of Work and Pensions. This compares with a Home Office estimate of 600,000 and as the Independent states the discrepancy suggests that either the Government has a major problem on its hands with almost a quarter of a million EU migrants working illegally, or the Home Office figure was grossly overstated. The figures also show that the number of foreign workers claiming benefits has fallen from 12 per cent to three per cent - confirming that the great majority are genuinely looking for work. The average age has also fallen; before 2004, 32 per cent were under the age of 25. That proportion has now climbed to 37 per cent. Further information - Click here Independent 20.01.07
France celebrates first baby boom for 25 years; France had 830,000 babies in 2006, the highest annual total since 1981. In 2005 France has a fertility rate of 1.94, which was second to that of Ireland at 1.99 (the Irish figures for 2006 are not yet available). The French figures, which buck the general European trend, are attributed to the introduction of family-friendly policies such as cheap day care and generous parental leave. France is one of the few European countries where the increase in population - up from 62.9m to 63.4m in 2006 - where most of the growth comes from births instead of immigration. The French birth rate is now about 2.0 compared to the UK, which is one of the higher rates, at 1.8 and the EU average of 1.52. The rate usually accepted as that needed for replenishment is 2.07. Independent 17.01.07, Times 17.01.07
Gap year graduates face ‘career crisis’; a survey of 1,100 graduates aged under 30 has found that one in four graduates who have taken a gap year after university are facing a “career crisis”. Many had taken “quick fix” jobs on their return or had lost momentum. The latest statistics from Mintel show that 90,000 people aged 25-35 took a gap year in 2005, with the number growing to 230,000 for those aged 18-24. The survey was conducted by the Training Development Agency for Schools. Further information - Click here Daily Telegraph 24.01.07
Another public school opens in Asia; Haileybury College (pictured left) will become the latest public school to move into international franchising when it opens an offshoot in Kazakhstan next year. At the same time Dulwich College, which pioneered the international franchise model, has announced plans for ten more schools around the world to help fund places for children. Haileybury has struck a deal with Capital Partners, a Kazakh-based property company, to open a 640-place co-educational school for children of wealthy Kazakhs in the booming city of Almaty. Numbers will later increase to 940 with 80 per cent of pupils being Kazakh nationals. Haileybury will receive a fee for the use of its name, ethos and logo and the new school will be run by the Haileybury governors. The move into Asia was pioneered by Dulwich who opened in Thailand in 1996 and Beijing in 2005, with another school due to open in Suzhou, China. Harrow (1997), Shrewsbury (2002) and Bromsgrove (2005) have also opened in Bangkok whilst Brighton College will open in Moscow, and Repton in Dubai. Dulwich said that their new schools would be in the Middle East, India and eastern Europe. Two other schools - St Paul’s and King Edward’s Birmingham have also announced that they are looking into plans to raise money to help pay for poorer pupils to attend their schools. Financial Times 25.01.07, 29.01.07
White students do better in getting top degrees; a new research report from the Department for Education and Skills shows that black and Chinese students are less likely to get university degrees than their white contemporaries. The study suggests that ethnic minority undergraduates face a “considerable cost” as a result, because students who get first-class degrees increasingly command higher salaries. Further information - Click here Independent 27.01.06
Pupils to learn the best of British; Alan Johnson (pictured left), the education secretary, has announced that compulsory lessons in British history are to be added to the citizenship curriculum under the heading Identity and Diversity: Living Together in the UK. The new lessons for pupils aged 11 to 16 will cover ethnicity, religion and race, and will explore Britain’s national identity through a study of immigration, the Commonwealth, the Empire and devolution, along with the extending of the popular vote and women’s rights. Sir Keith Ajegbo, a Home Office adviser and former head of Deptford Green School, who wrote the report on which the reforms are based, said that the new classes aimed to tackle feelings of marginalisation among young people from white and ethnic-minority backgrounds by encouraging them to discuss potentially sensitive issues in the “safe” environment of the classroom. Further information - Click here for DfES and here for Online Publications Times 26.01.07
UN report will end the scientific argument; the release of a report on the science of global warming written by experts on the UN’s Intergovernmental Panel on Climate Change (IPCC) on 2nd February should start negotiations to replace the Kyoto agreement in 2012. A series of key meetings will follow, starting with the EU spring summit in Brussels on 8th-9th March, two more IPCC reports on climate change impact, adaptation and vulnerability on 6th April, and on mitigating climate change on 4th May. There will be a G8 summit in Potsdam and on 3rd-14th December UN climate talks in Indonesia. This report is the result of 2,000 leading scientists trawling through scientific material on climate change for the past six years. The draft copy argues that there is now overwhelming evidence to link man-made emissions of greenhouse gases over the past 250 years to dramatic changes in the Earth’s climate. Although the IPCC has the reputation of being conservative, it is interesting that the panel has recognised one of the great unspoken fears of climate change - that it may be worse than predicted. We are due to see a temperature rise of 3°C this century but the IPCC says it cannot rule out 6°C or more. That would be cataclysmic as the difference between average temperatures now and during the last ice age 12,000 years ago is about the same. Further information - Click here Guardian 27.01.07, Independent 29.01.07
Bush- right problem, wrong solution; Anatole Kaletsky (pictured right) welcomes George Bush’s first-ever acknowledgement of the “serious challenge of global climate change” but notes that it was not the Damascene conversion that some commentators had predicted. However the fact that millions of Americans heard from the President’s mouth that climate change is a “serious challenge” could substantially change the terms of the political battles about carbon emissions, not only in Washington but around the world. It will no longer be politically acceptable for big businesses such as Exxon and General Motors to deny the reality of global warming or to subsidise researchers attempting to prove that climate change has nothing to do with carbon emissions. Given the American “can-do” ethic there will be an upsurge in research and investment in new energy technologies, aided by lobbying in Washington which will see subsidies and political protection switch away from denying the reality of global warming to enhancing energy security and combating climate change. Dealing with climate change will soon become a big and hugely profitable business. However the three new energy policies will distort investment and research spending into some of the least promising solutions to climate change. For example extracting ethanol from corn is less than one-tenth as efficient as distilling it from sugar cane. But because of the power of agribusiness in the Mid West, the US blocks the import of Brazilian sugar-ethanol. The ten per cent cut in vehicle economy standards is so modest that it will divert investment from the much bigger improvements that could be achieved if US consumers could be persuaded to drive lighter and better-designed cars. Times 25.01.07
Bush isolated as US turns green; for years the most powerful voice in the US Senate was James Inhofe from Oklahoma who declared, “global warming is a hoax”. Following the mid-term elections he has been replaced by Senator Barbara Boxer (pictured left) from California who considers global warming “a potential crisis of a magnitude we have never seen”. Bush may have two years of his presidency and remains personally opposed to mandatory caps on carbon gases, but the change in the Senate illustrates how the rest of the US has moved on. Congress, big business, state governments, and mayors have embarked on a course that could bring America into step with the international community on global change. In Congress, Democrats and Republicans have introduced five new bills on climate change, which would seek to reduce emissions by 60-80 per cent below 1990 levels by 2050, as well as setting higher standards for fuel efficiency. It is likely that the bills will go through but they are subject to a presidential veto although supporters are hoping that the groundswell of support will make it difficult to use the veto. Meanwhile 31 states are taking their cue from California where business has set up an alliance of environmental groups and corporations such as GE and Dupont, whilst various mayors have promoted environmentally friendly policies. The Mayor of Carmel (Indiana) has promoted hydrogen cars and tree planting and the Mayor of Austin (Texas) has plans for wind energy and the promotion of plug-in hybrid cars. Guardian 27.01.07
German car makers scupper EU initiative on car emissions; the launch of the EU plan to cap car emissions has had to be delayed after protests that German automakers could be driven out of business. The initiative was due to be launched on 24th January - just two weeks after the EU published its strategy for promoting growth and combating climate change. There has been open warfare between Stavros Dimas, the commissioner for environment policy, who favours putting the burden of change on the car engine makers, and Gûnther Verheugen, the industry commissioner, who wants an integrated approach that looks at all the factors that affect emissions, including fuel, tyres, and transport policy. Although Jose Manual Barroso, the commission president, has come down in favour of the integrated approach he is still insisting on legislation aimed at a target of 120 grams of CO2 per kilometre by 2012. The EU carmakers have already agreed to reduce CO2 emissions for new cars to 140 by 2008, although they are set to miss that target. Further information - Click here Independent 24.01.07
Buildings produce 50 per cent of carbon emissions; the former environment secretary John Gummer (pictured right) warns that the property industry is increasingly in the firing lines over global warming- and it can only get worse. All the various reports and statements, led by the Stern Report, all make it inevitable that governments will look to the built environment for the biggest slice of carbon reduction. Even though the public is convinced that climate change is real, they won’t want to cut their use of cars or cheap flights. Therefore there may be cancellations of new runways, cuts in emissions by airlines through technical advances and some sort of road pricing. But it will not be enough, and therefore the big hits will be concentrated on the way buildings are planned, constructed and operated. Statements in the past fortnight by Tesco and Marks & Spencer and, expected from Asda, indicate that supermarkets will be vying for the most emission-efficient new stores. That response will be adopted by the rest of retailing and business generally. To avoid the heavy hand of regulation the developers will need to keep up with the expectations of government and customers. The trick will be to make the inevitable measures as cost-effective as possible. Estates Gazette 27.01.07
Caution urged on London’s success; London’s civic and business leaders have cautioned against complacency following the publication of a report highlighting New York’s loss of market share in international financial services. The report, which was commissioned by Michael Bloomberg, the mayor of New York, says that the US city now contrasts unfavourably with London because of its litigious environment, punitive regulatory regime and heavy handed immigration policies that deter talented people from other countries. Michael Snyder, chairman of the City of London’s policy and resources committee, said that London needed to redouble its efforts to stay competitive and called for investment in improved public transport. André Villeneuve, chairman of the Euronext-Liffe futures exchange, said that it would be foolish to underestimate New York’s determination to fight back. Richard Lambert, director-general of the CBI, said that global consolidation in financial services which had fostered London’s success would continue. But he warned against downturn in the credit cycle, which could leave London exposed without the support of strong domestic economy. Other dangers included inappropriate regulation from Brussels and clumsy political intervention- for example, on City bonuses or to block a bid. Further information - Click here Financial Times 23.01.07
London-New York battle disguises bigger issue; Hamish McCrae argues that the report by McKinsey into why New York was losing ground to other cities, most notably London, was probably the moment when the US financial establishment realised that the financial power of the US was waning. That power is not just shifting to London or Europe but to Asian cities such as Hong Kong (pictured right), Shanghai and Mumbai. London should not be complacent and there will be leakage to other centres such as Dublin and Zurich, which offer tax advantages, and although the New York example is sobering, the position of London is reasonably secure. But that is the snapshot of the world now. If you look at the dynamics of global growth, the picture is rather different. The twin Asian giants are rapidly overhauling the present developed world, with China growing at more than ten per cent a year and India at eight per cent. Asia now accounts for roughly three-quarters of the additional savings accumulated each year. One of the reasons why the US dollar is so weak is that the owners of these savings are diversifying out of dollar investments and into euro and sterling investments. You can see this in London. Some of the buyers of expensive houses are American but more are from Russia, the Middle East, India, China and so on. It is the same with British companies where bidders are now more likely to come from Europe or Asia. Independent 24.01.07
Extended congestion zone could lead to delays; Transport for London (TfL) has predicted that congestion in the current central London congestion zone will rise by five per cent and average traffic speeds slow when the zone is extended to cover west London. This is because more residents will qualify for discounts and choose to drive in central London and more east-west traffic will decide to pay the charge rather than go round the zone. Ken Livingstone accepts that central zone congestion may get worse but insists that the broader benefits outweigh that disadvantage. “The western extension to the current congestion charging zone will bring significant benefits to an area of London which is one of the most heavily congested in the UK. It is estimated that the number of vehicles in the western extension will be reduced by 10-15 per cent, reducing congestion by at least 15 per cent”. He said that other benefits would be reduced vehicle emissions, fewer road accidents, faster road journeys and an improved environment. From 19th February, four years after the first scheme came into existence; the £8-a-day charge will be extended to drivers in Kensington, Chelsea, Knightsbridge, Notting Hill, Bayswater, Belgravia and Pimlico. Residents qualify for a 90 per cent discount. Further information - Click here Financial Times 18.01.07
Heathrow’s treatment of Asian business leaders is questioned; the issue of how leading executives from India, China and the Far East generally are treated when they pass through Heathrow has been raised as a potential problem for Britain in its relations with the fast growing economies of the east. Although the needs for security are recognised the situation is contrasted with what happens when a senior politician or business leader arrives in Britain from the US. The issue has been raised following a meeting between London business leaders and the High Level Group, established by the chancellor as his bridge to the commercial and financial sectors. London First has confirmed that they are to raise the issue with other government departments. A BAA spokesman said that they did not always know when VIPs arrive and the authorities would assist if asked. Guardian 25.01.07
London Underground close to Alston deal; Tubelines, the private consortium that maintains the track and trains on the Northern Line, is close to finalising contract changes that should transform the reliability of the troubled line’s trains. It has reached an agreement in principle with Alstom, the engineering company that built and maintains the trains. The deal would give Alstom incentives to keep the trains running reliably. Financial Times 22.01.07
Festival Hall to reopen with 48-hour party; a 48-hour party of free musical performances will mark the re- opening of the Royal Festival Hall on 8th June. The “Overture Weekend” will feature music of all styles, to be performed on every site of the hall from the ballroom to the rafters. This will be followed by an opening concert featuring all four of the Southbank Centre’s resident orchestras. The festive mood of the reopening reflects the confidence of the Southbank management team that the hall’s £11m refit, the first phase of a broader refurbishment, will finish on time and on budget. Further information - Click here Financial Times 26.01.07
Is Victoria the new Soho? The FT looks at the chances that Soho is about to lose its status as London’s hub for media and creative people. It says that yes, you have heard it before, but now Soho faces a new and more serious rival: Victoria. It is becoming a mini media village with locals including BskyB, the Telegraph Group, Microsoft, Google and the advertising agency VCCP. However Michelin Guide should stop Soho worrying. Number of Michelin one-star eateries: Soho 4, Victoria 1. Financial Times 26.01.07
Brown told to pay up for the Olympics; the House of Commons Select Committee on Culture, Media and Sport has accused ministers of making a major financial miscalculation in their plans for the 2012 Games and calls for the shortfall to be met by the Treasury rather than the Lottery or London residents. In particular the Committee is critical of the Treasury’s insistence on putting in a £2bn contingency fund which it sees as amounting to “almost an open cheque” for developers. It also attacks the Treasury for not flagging up its concerns about the alleged inadequate provisions for cost overruns before the bid was submitted as well as not sorting out the VAT position, which may cost an extra £250m. The Committee’s Report is seen as being useful ammunition for Tessa Jowell (pictured right) , the culture secretary, in her fraught row with the Treasury about the revised bill for the Games and who should meet the cost. The Committee express dismay that the costs have already risen from £2.4bn to £3.3bn and could easily go higher. Other cost factors included a security bill that has quadrupled. The committee express concerns that unlike other construction projects, building cannot be late and “the builders will have the government over a barrel. There could easily be more cost overruns beyond the ones we have already seen”. The tone of the report has been toned down as Labour members of the committee became concerned that the tone was too critical. Meanwhile discussions between the Olympic Delivery Authority and West Ham United about the premiership club becoming the anchor tenant for the Olympic stadium have entered their final crucial stage. Further information - Click here Observer 21.01.07, Financial Times 24.01.07
Senior business leaders sought for 2012 negotiations; ministers have placed adverts in the press to seek applicants from the private sector to be director-general and finance director of the Department of Culture, Media and Sport’s 40-strong Olympic executive. The decision is seen as an admission that civil servants do not have the skills to handle complex construction, funding and running of the Games. One source said: “We want to find a top-notch business figure with the sort of commercial and financial expertise of complex infrastructure and construction projects not traditionally found in Whitehall. This is exactly the right time to bring in new skills, with the budget discussions at an advanced stage and the Games’ start-up phase concluding”. Tessa Jowell, who is under pressure from the Treasury to bring down costs, wants better management of the negotiations with other Olympic parties, including the mayor of London and his London Development Agency, as well as the two bodies responsible for delivering the Games - Locog and the Olympic Delivery Authority. Financial Times 25.01.07
Powerbrokers jostle for control of 2012 plans; the FT heralds the announcement that the Department of Culture is seeking two business leaders to run its civil servants and negotiate with other “stakeholders” involved in delivering the Games. It says that the words “poisoned chalice” may come to the lips of business people as they read the advertisements. Whatever salaries they may warrant, the idea of jousting not just with their own DCMS staff but with officials from the Treasury, the mayor of London’s office, the mayor’s London Development Agency, the British Olympic Association and the two bodies set up to build and run the Olympics may make a marathon run in the height of summer look positively appealing. Financial Times 26.01.07
London business told how to prepare for 2012; to help London companies understand how to exploit the economic benefits that will stem from the 2012 Games a new London Business Network has been announced by the London Business Board. The Board, which comprises the CBI, London Chamber of Commerce and London First, made the announcement at a conference for 400 executives at Arsenal’s Emirates Stadium. The new “business club” will particularly help small and medium sized companies by providing networking opportunities. It is one of the main recommendations of a report compiled by Arup, the consultants. The London 2012 Opportunity Prospectus suggest that the Olympics could generate business opportunities much earlier than 2012. It also calls for five business-led initiatives aimed at securing long-term benefits from the Games. These are: better promotion of London overseas, a rise in skill levels, enhancing West End facilities to improve tourism, increasing corporate community involvement and accelerating the regeneration of east London. Further information - Click here Financial Times 15.01.07
New Quebec Street gets a makeover; Westminster Council has approved plans for a £500,000 revamp of New Quebec Street, which links the western end of Oxford Street to Seymour Street. The proposals, which are part of the Edgware Road action plan, include repaving and traffic restrictions. Work will start in February with completion expected in August. Further information - Click here Estates Gazette 20.01.07
British Land favourite for Euston; Network Rail is poised to appoint British Land to rebuild Euston, one of the largest regeneration projects in London. It is understood hat Britain’s second-biggest property company is favourite in the final round of a bidding battle for the 15-acre project that has attracted most of the big names to the 4.2m sq ft scheme. The revamp will include new offices and shops as well as increasing the number of platforms from 18 to 20 or 21. The rail infrastructure company announced last October that it was in talks with Hammerson to redevelop Victoria Station and it will be inviting bids for Waterloo next year. Financial Times 19.01.07
More towers for Canary Wharf; Tower Hamlets Council have granted planning permission to Canary Wharf subsidiary Norquil to build two office towers on North Quay. The towers, which will be predominantly office space, are being designed by Cesar Pelli. They will be 725ft and 684ft. Further information - Click here Estates Gazette 20.01.07
Chinese Embassy joins Oriental City dispute; even though Brent Council gave planning permission for the demolition of Oriental City to make way for a new 640,000 sq ft scheme including a new 100,000 sq ft Oriental City the dispute is not going away. The unhappy tenants have enlisted the help of the Chinese Embassy. Jiang Yuansong, the consul-general, has written to Ken Livingstone urging him to block the redevelopment. Although little known compared to Chinatown in Soho, Oriental City in Colindale, is a draw for thousands of mainly Chinese shoppers and diners. Although the existing tenants could return to the new centre, which will feature a B&Q store, 520 flats and a school, they face years of displacement while it is built. Yip Fai Liu, who heads the residents’ association opposing the scheme, says: “The developers told us to go away and come back in three years’ time, I said, we can’t survive that, and if we do come back we don’t know what the rent will be or where we will be”. Development Securities argue that the situation is a test of landlords’ rights. Julian Barwick, the joint managing director, says: “If you want control over your own business then you need to own the freehold. If you rent premises from somebody else you should realise that from time to time….the premises need to be redeveloped”. Financial Times 20.01.07
Murdoch to leave Wapping? the Estates Gazette wonders whether Rupert Murdoch’s News International may be considering a move from its Wapping HQ. It says that agents have linked the owner of The Sun and The Times with a prelet search for a 400,000 HQ in Canary Wharf, Southwark or Paddington. In 1986 to break the Fleet Street printing strikes it left its various offices in central London and decamped to Wapping. However, in October 2004 it moved its printworks to Enfield and since worked on a Terry Farrell-designed development for its 14-acre Wapping site. It expects to get the go-ahead from Tower Hamlets Council in February. Estates Gazette 27.01.07
grapevine is produced twice monthly (except in August and December when there
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Next issue on 15th February 2007
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