Who to trust on inflation? Wolfgang Munchau, writing in the FT, looks at the track record of the leading three central banks on delivering price stability. He claims that of the three the European Central Bank is the most inflation-adverse. It has a tough inflation target- one that includes the price of energy and food-and it has some of the world’s most inflation adverse central bankers. It has already left little doubt that it will increase rates next month. The Bank of England (right) also has an excellent track record in meeting its inflation target, though it remains to be seen how it will perform in an environment of rising global inflation (the last meeting of the Monetary Policy Committee was the first when the members voted in three different ways). However Munchau says he is less certain about the US. Ben Bernanke, the new chairman of the Fed, complains that the markets regard him as dovish but it is difficult to interpret him in any other way. If the Fed lets inflation slip a little and the ECB does not, the most likely consequence is another fall in the dollar. Predictions to that effect have often proved mistaken but the dollar is still fundamentally and substantially overvalued. Until now, the reason why it has not further fallen against the Euro has been the gap in short-term interest rates with the US at 5 per cent and the eurozone at 2.5 per cent. the trend could start to reverse as early as June if the Fed keeps rates unchanged and the ECB increases by 0.5 per cent. It is more likely that the ECB will opt for 0.25 per cent but the fact is that the interest rate differentials will decline over the next 12 months unless the Fed agrees to further tightening. Financial Times 22.05.06
China will push global growth- at least until the 2008 Games; writing in the Independent on Sunday, Hamish McRae examines the current economic cycle and that this time it is not being driven by events in the developed world. Roughly half the growth this time has come from what Goldman Sachs have deemed the Brics- India, Russia, Brazil and particularly, China. That explains the different characteristics of this cycle with no inflationary pressure in traded goods and very little pressure from wages in the developed world. Cheap imports from China are holding down prices and fear of jobs being “offshored” is holding down pay demands. On the other hand there is more pressure on commodity prices and there are also larger current account deficits that would normally be expected with the US deficit standing at 7 per cent of GDP and the UK at 2.5 per cent. France, Italy and Spain have also seen a sharp deterioration in their current account position. By contrast the trade surpluses of Brazil, Russia and China- but not India- have soared along with the oil producing countries. The trade surplus of China, plus that of Japan, is being recycled to the US, and more recently Europe so that the developed world can go on buying the products of the new one. We are now in an undiscovered land, but at some stage in the next few years the growth phase of the developed countries will peter out. We cannot know the answers but what we can see is that in so far as it is within China’s ability to do so, it will not allow any economic collapse before the Beijing Olympics in 2008. Independent on Sunday 21.05.06
Cabinet Office to oversee third sector and social enterprise; one of the consequences of the Government re-shuffle is that as well as social exclusion the Cabinet Office is now to be responsible for social enterprise and the voluntary and community sector (VCS). Hilary Armstrong, the former chief whip (pictured left), will now become the Cabinet-level Social exclusion minister as well as Chancellor of the Duchy of Lancaster. She will also be responsible for the new Office of the Third Sector, which will be led by the new voluntary sector minister Ed Miliband (brother of David who is the new secretary of state for environment, food and rural affairs). The Active Communities Directorate from the Home Office will now report to him. At the same time the Social Exclusion Unit has moved from the former Office of the Deputy Prime Minister to the Cabinet Office.Regeneration 12.05.06
Margaret Hodge is minister for regions and enterprise; former employment and welfare reform minister Margaret Hodge (pictured right) has succeeded Alun Michael at the DTI to become minister for industry and the regions. This will give her responsibility for regional development agencies, the Small Business Service, enterprise, growth and business investment. Before entering parliament she was leader of Islington Council. Regeneration 12.05.06
Social enterprise is being taken seriously; Jonathan Bland, the chief executive of the Social Enterprise Coalition (pictured right), writing in the Times says that the Cabinet changes show that social enterprise is making its way into the centre of government policy-making. He says that Ed Miliband and his team face two crucial challenges. The first is that it is important not to lose the focus on business. Social enterprises are businesses and if they can’t employ the same tools and techniques of business, they will lose their social and environmental aims. The second is that much greater effort needs to go into providing the right kind of support, access to investment and embedding of social enterprise as a mainstream way of doing business. He says that last week’s launch of the Treasury review of the third sector, linked to the comprehensive spending review, adds weight to Ed Miliband’s new role and is a golden opportunity for government and the social enterprise sector to explore the long-term future of social enterprise. Times 23.05.06
Street markets ‘more powerful than supermarkets’; yet more fuel for the anti-supermarket backlash is provided by the New Economics Foundation (NEF) in a report that claims that local street markets generate twice as many jobs as big supermarkets and sell goods at half the price. The report claims that planning decisions that favour the building of huge outlets at the expense of established smaller markets could result in fewer jobs and less choice. The Competition Commission has announced a full inquiry into the £95bn grocery sector after accusations that the large supermarkets are abusing their power. The “big four”- Asda, Sainsburys, Tesco and Morrisons- control 75 per cent of the sector. The NEF report focuses on Queen’s Market in East London, which is also the subject of the film, Wal-Mart: The High Cost of Low Price, which highlights the struggle of Queen’s Market against plans to demolish it to allow Asda to build a giant store on the site. The report found that prices at Queen’s Market were 53 per cent cheaper than at a nearby Asda. They also found that the street market gave better access to specialist foods for ethnic minorities, provided twice as many jobs per square foot of retail space and generated £13m for the local economy. The growing popularity of local markets is thought to be swaying public opinion with a survey by ICM finding that 80 per cent of the 1,000 people interviewed want powers to curb the power of the supermarket chains. Independent 22.05.06
Manufacturing decline partly due to services shift; a feature article in the FT looks at the reasons for the fact that whilst there is a general decline in manufacturing’s share ofthe economy some manufacturing companies are doing better than the sector’s generallygloomy macroeconomic data.It says that government statisticians believe that up to a fifth of the decline could be explained to a shift by production companies towards service activities in place of turning out goods. Since 1995 manufacturing’s share of the economy has declined from 20 per cent to less that 15 per cent. This is generally attributed to the growth of services, productivity improvements and the growing share of global manufacturing accounted for by companies with lower labour costs. This has led to the creation in the UK of “hybrid businesses” where companies are asked to classify their output between the two activities. Thus Pace Micro Technology, a West Yorkshire business which is a world leader in set-top boxes for television, employed 1,500 at its main site in Shipley in the late 1990s- most of them in manufacturing. Today its UK manufacturing is non-existent- all of its production takes place in low-cost countries- but it continues to employ 450 people in Shipley, mainly in design engineering and software. Indesit, an Italian white goods company, which owns Hotpoint, has 5,500 workers in the UK- but only 2,000 of them in conventional factory jobs. The rest are involved in servicing appliances, distribution and logistics, sales and running a call centre in Peterborough. Financial Times 22.05.06
UK share of global manufacturing falls as China surges; according to The United Nations Industrial Development Organisation (Unido) Britain’s share of the world’s manufacturing has fallen from 3.8 per cent to 3 per cent during the past decade. At the same time world manufacturing output has increased by 34 per cent from $5,772bn to $7,747bn while UK manufacturing output has only increased by 6 per cent. The UK performance has been much worse than the USA, which maintained a 20 per cent share although Japan’s share dropped from 21.1 per cent in 1995 to 17.7 per cent. Not unexpectedly China was the big winner with output rising by 156 per cent from $242.4bn to $619.7bn and its overall share going up from 4.2 per cent to 8 per cent. It is now third in the league table. The UK has fallen from seventh to eighth. Financial Times 22.05.06
Less than half of firms have continuity plans for birdflu; following on the report claiming that small firms were not ready for another terrorist attack the Chartered Management Institute has now issued a report saying that less than 50 per cent of companies have a continuity plan to deal with a flu pandemic. The research, which was conducted with Cabinet Office, covered 1,150 companies of all types as well as charities and local government. Financial Times 16.05.06
COMMUNITY AND BUSINESS AFFAIRS
FT warns Cameron about ‘pandering to anti-corporate prejudice’; a leader in the Financial Times examines David Cameron’s speech to the annual meeting of Business in the Community. It says that whilst it supports his efforts to bring the Conservatives back to the middle ground he should know better than to pander to popular prejudice with loose talk about companies acting “irresponsibly” and the need “to stand up to big business”. They instance his attack on BHS for a product they withdrew three years ago but did not mention Philip Green (picture right) as an entrepreneurial role model. Mr Cameron talked at length about the need for companies to treat local communities, suppliers, customers and employees as “neighbours” but the FT asks what it means. They say it sounds a lot like the discredited notion of ‘stakeholders’ used by New Labour in 1997. The woolly thinking was best captured by the statement “I’m not prepared to turn a blind eye if the [market] system sometimes leaves casualties in its wake”. If he means competitors- including small shops driven out of business by more efficient supermarkets-then he misunderstands the basis of the market system and its process of creative destruction. Hopefully the shortcomings of the speech will deter him from relying too much on the nebulous idea of corporate social responsibility. It would be better to say that the Conservatives are in favour of competitive markets and urge companies to take an enlightened view of their long-term self-interest. Financial Times 11.05.06
Ecology replaces price as selling point for big chains; the Guardian runs a feature on the new battle between the supermarkets- the environment. It says that although suspicions that Tesco announced a 10-point plan to become a “good neighbour” on the day after the supermarkets were referred to the Competition Commission for a third time it says that City analysts believe that Tesco is anxious to avoid the image problems facing Wal-Mart in the US (see below). A week later a pained Sainsburys also announced their plans, pointing out that they have been cutting their energy use by 5 per cent for the past five years and had built its first ecologically friendly store in Greenwich in 1999. Asda and Wal-Mart its UK parent announced a $500m commitment to environmental goals last year and this year Lee Scott, the Wal-Mart president met Prince Charles to discuss green issues. The Guardian says that in addition to the image issue Sir Terry Leahy, the chief executive of Tesco (pictured right), said that consumers are becoming increasingly concerned about the environment and that “To retain their trust, we must innovate to meet changing needs, we have a wider responsibility to society”. Consumers are changing the way they shop, from increases in demand for organic produce to the proliferation of Farmers’ Markets. Guardian 18.05.06
Giving thanks to Wal-Mart; Dominic Lawson, writing in the Independent, reviews- or at least writes about as he admits that he hasn’t seen it- the new film Wal-Mart- the High Cost of Low Pay. In some ways Wal-Mart has reached the heights on community backlash that Tesco must have nightmares about with big US cities preventing them getting planning permission and the unions constantly targeting their alleged low pay and health benefits. Lawson tackles some of the allegations. First of all he points out that the hardware shop that is supposed to have closed down because of Wal-Mart’s brutal price cuts had, in fact, closed months before Wal-Mart opened. He says that he is sure that many grocery stores have gone out of business as a result of Wal-Mart but a 2002 survey showed that the arrival of anew Wal-Mart in an urban area led to an average increase in local sales of $57m and the opening of 13 new stores. On the issue of low pay Wal-Mart’s wages are in line with the rest of the retail sector but the career prospects offered by accompany with such an extraordinary growth record acts as a magnet – a new store in Oakland received 11,000 applicants for 450 jobs. Wal-Mart has 18 separate healthcare plans, which 48 per cent of its employees have bought in to, compared to a national average of 36 per cent. Finally Global Insight, a market research company, has estimated that the average American family saves over $2,300 a year because of the Wal-Mart effect on prices. Independent 16.05.06
Independent joins RED companies; the Independent newspaper has become the first media company to join the RED campaign being fronted by Bono and Bobby Shriver. It says that the genesis of the campaign was the poor business response to Kofi Annan’s launch of the UN Global Fund to fight Aids. After a meeting with Robert Rubin, Bill Clinton’s former Treasury Secretary, Bono and Shriver were advised to market a giving campaign as though it was something like Nike. The idea of a new brand with significant corporate supporters giving a percentage of profits was conceived. However instead of the US it was decided to launch in the UK where ethical shopping had already established the greatest grip and where there was a history of buying products such as Fairtrade coffee and Green & Black chocolate. The Co-Operative Bank, which refuses to invest in tobacco, fur or countries with repressive regimes, has seen its deposits grow from £1bn to £6bn in just ten years. The companies currently supporting RED include American Express, Gap, Converse and Giorgio Armani. Independent 15.05.06
Aiming at middle-class realists; research undertaken by American Express for the RED campaign indicates that the ethical shopping market in the UK will grow from around 1.5m now to 3.9m by 2009. It has conducted surveys, which show that 33 per cent of British shoppers now consider themselves “conscience consumers”. At the other end there is another group- 35 per cent of the market-who it calls “value shoppers” or “apolitical shoppers” whose prime concern is price. In between, however there are 31 per cent whom the survey calls “middle-path realists”- who want to effect change without spending much money or time. These are the initial target for RED. Critics have already attacked the concept both for allowing big business to make money from Aids, and at the other end for marketing that has so far been “as flat as a pancake”. However Bobby Shriver (pictured right) says that the flat as a pancake comment came just six weeks after launch when there were only four RED branded products available. The full product range will not be available until Christmas and Shriver thinks that it will take 18 months to judge the success. On the political front Bono says that the point of RED is that it is ‘win,win,win’ - consumers, corporate business and the world’s poorest people all benefit. Independent 15.05.06
Sainsburys encourage local suppliers; in the race for which supermarket can be the nicest to its neighbours Sainsburys have announced that they are going to give small regional suppliers the chance to pitch for shelf space in stores. The Sainsbury scheme, called Supply Something New, will be piloted later this month and involve board members spending a day in different regions meeting new suppliers. In a format loosely based on that of Dragon’s Den, suppliers will have 40 minutes to convince the panel to take their goods and will get an immediate answer. Products that are accepted could be on the shelves within 6 weeks. Sunday Times Business News 14.05.06
Youth volunteering charity is launched; Gordon Brown presided at the launch of the charity, which has been tasked with persuading 1m young people to become volunteers by 2010. The charity, to be called V, was the key recommendation of the Russell Commission set up in 2004 to look at the Government’s approach to increasing youth volunteering and civic service. Even though it was technically a Home Office initiative (now Cabinet Office) the chancellor has taken a close interest in the project and announced the details in his budget speech. The charity is chaired by Rod Aldridge, formerly of Capita, and Terry Ryall, formerly of the Prince’s Trust, is the chief executive. Regeneration 12.05.06
Gummer welcomes Ruth Kelly speech on housing; writing his weekly column in the Estates Gazette John Gummer praises Ruth Kelly’s first speech as Secretary of State for Communities and Local Government. The speech was on housing and it is worth noting that Gummer is chairman of David Cameron’s Taskforce on the Quality of Life. He acknowledges that Ruth Kelly concentrated on the real housing issue - the fact that we are not building enough homes. She pledges to build 200,000 a year by 2016, which he says, is a start, but it can’t end there. Gummer says that we will need to build 100,000 more than that if we are to start making up the backlog left by Kelly’s predecessors, and she’ll need to push the numbers much faster. But, the simple acknowledgement of the issue is encouraging. Estates Gazette 13.05.06
Water-rich north tempts southern companies; Tees Valley Regeneration, in conjunction with Northumbria Water, is to mount what is believed to be the first inward investment campaign based on secure water availability. They have targeted 2,000 companies, 90 per cent of them in London and the South East, including food processing and chemical companies as well as some service sector employers with large workplaces. The growing pressure on water companies in the South East to issue drought orders has encouraged northern arguments that the government should revise its regional growth policies. John Adams, the Newcastle-based research director of IPPR North says, “It highlights the environmental and political limits of the UK’s growth being so heavily concentrated on the South East”. Financial Times 18.05.06
Super casino shortlist unveiled; the Casino Advisory Panel will be announcing a shortlist of 12 regions that have made it on to the shortlist for the one super casino licence on Wednesday, May 24. They will also be announcing shortlists for the other casino licences. The panel received 27 applications for the super casino licence and the Independent on Sunday says that the frontrunners will include Blackpool, the Millennium Dome, Glasgow, Birmingham, Coventry and Manchester. The list is being described as provisional and appeals are possible before the final list is published in the summer. Blackpool is still seen as the favourite. Independent on Sunday 21.05.06
Reading is the most polluting town; the first full survey of household emissions of carbon dioxide provides some surprising results with Reading heading the table of major towns and cities and Uttlesford (which comprises the picture postcard market towns of Thaxted, Great Dunmow and Saffron Walden in Essex) as the place with the greatest volume of emissions. The survey, which was commissioned by British Gas from the Cambridge consultancy Best Foot Forward, examined all 386 British local authorities, looking at energy consumed in terms of electricity, gas and solid fuel. Uttlesford’s 70,000 inhabitants produce an annual average of 8.092 kilos of CO² per dwelling far ahead of the second worst local authority, which is Teesdale in County Durham, which is also an area of market towns such as Barnard Castle. On the other hand the London Borough of Camden was the best performing local authority producing an average of 3,255 kilos of CO² per household. Another surprise is that Greater London was at the bottom of the regional scale. Independent 23.05.06Joblessness at highest rate for three years; an increase of 0.1 per cent has taken the level of unemployment to 5.2 per cent for the three months to March-the highest rate since November 2002. This is the equivalent of 1.59m unemployed. The claimant count, a different measurement, shows an increase of 7,700 to 945,500 in April. However the numbers in work also rose to 28.9m largely due to young women and women over 50 entering the job market. Figures for wage growth show that annual average earnings rose by 4.2 per cent in the quarter up to March, a small increase but still below the Bank of England’s 4.5 per cent threshold. John Butler of HSBC commented “The fear of second-round effects from higher energy costs to wages is simply not materialising”. Times 18.05.06
Muslims face bleak employment prospects; a government-backed study of various faith communities in the UK undertaken by a group of universities shows that many Muslims face bleak employment prospects and endure poor standards of housing. The university researchers from Birmingham, Derby, Oxford and Warwick found that half of Muslims over 25 are unemployed, and one in three live in deprived areas. They are also more vulnerable to long-term illness. The report, which covers the Hindu, Sikh and Muslim communities, finds that because families want to stay close together and to live near to their places of worship they were likely to remain concentrated in the same areas. BBC News Online14.05.06, Evening Standard 15.05.06
Job schemes could be devolved to cities; the Department of Work and Pensions has raised the prospect of local consortia of local authorities, business and voluntary groups taking control of schemes to tackle unemployment. The Cities Strategy, which was launched by John Hutton, the Work and Pensions Secretary (pictured right), calls for towns and cities to submit an action plan for running their own schemes with a series of pathfinders to be selected at the end of July. If successful the scheme will then be rolled out on a national basis. Although it is not clear what money is on offer Hutton said that the cities will be able to bid to a £90m Deprived Areas Fund, that will replace Action Teams, Ethnic Minority Outreach, and Working Neighbourhood Pilots. Hutton said, “We want to focus the initial pathfinders on areas that are furthest from the national 80 per cent employment rate aspiration”. Regeneration 19.05.06
Controversy about Polish workers hots up; following the almost universal approval of the unprecedented Polish migration into the UK with even the Governor of the Bank of England saying that they have contributed to the UK growth rate an attack on their role has begun. Celebrity chef Anthony Worrall Thompson criticised them for their lack of English and their waiting skills although he did recant later by saying “Polish people work incredibly hard”. Professor David Coleman, professor of demographics at Oxford University, estimates that the influx at “hundreds of thousands” and that “From one country in a very short space of time, it must be the largest influx we have ever seen”. Whilst the official figures from the Home Office put the number of Poles that have arrived in the UK at 204,895 these are only for those that have had to register and the general estimate is 350,000 and they have settled in towns throughout the UK including Inverness, Luton, Southampton, Crewe and Northern Ireland. Barclays in Ealing are recruiting Polish banking staff to serve the growing number of Poles who have become bank customers. A Sunday Times editorial says, “Poles come to Britain to work, not to claim benefits. They tend to be young, conscientious and in many cases highly skilled. They often speak English as well as the natives, if not better. Employers testify to the fact that Poles have filled jobs that local workers are unable or unwilling to do, and are industrious and reliable. The Poles have contributed to economic growth and held down inflation and interest rates. When their economy is stronger, many of the Poles will return home. In the meantime, we should celebrate the fact that they are here”. Sunday Times 14.05.06
Poles say “whiteness” helps them in job market; a small survey of Polish workers in London undertaken by the Centre for Research on Nationalism, Ethnicity and Multiculturalism (CRONEM) at the University of Surrey says that Polish migrants believe that their “whiteness” is helping them find work. Ironically, although a third of young Poles thought the multiculturalism of London was an asset “where everyone can make it” another third held more or less covert racist views. The survey says, “Judged through their own experience of a relatively homogeneous country, our respondents express surprise and often hostility to this [multicultural] state of affairs”. Many of the Polish migrants do not intend staying permanently and almost a quarter are buying or planning to buy property in Poland with the money they are earning in the UK. The Poles are described as individualistic and driven by the desire for success and believe strongly in an idealized market economy. Almost two-thirds say that they have advanced socially. Times 18.05.06
IBM staff may become teachers in return for tax breaks; the Sunday Times says that IBM is in talks with the government about sending its experienced staff into classrooms to ease the shortages of maths and science teachers. The scheme would see IBM staff who are reaching the ends of their careers volunteering to become teachers in return for more favourable treatment of their pensions. In the US IBM has launched a scheme with 100 staff called Transition to Teaching, aimed at addressing the critical shortage of maths and science teachers. IBM provides up to £8,000 to meet employee tuition costs during training. In the UK a quarter of all maths lessons in secondary schools are taken by teachers of other subjects. More than a quarter of all secondary schools have no physics specialists with an eighth of all physics teaching done by people with only a GCSE or an A level in the subject. Sunday Times 14.05.06
Blair backs nuclear option; speaking to the CBI’s annual dinner the Prime Minister gave an unequivocal signal that he wants Britain to build a new generation of nuclear power plants, warning that failure to do so would amount to “a serious dereliction of our duty to the future of this country”. He referred to an early draft of the review and said that the implications were stark both for Britain’s climate change targets and energy security. He said that if there were no change in policy by 2025 we would have moved from being 80-90 per cent self-reliant in gas to 80-90 per cent dependent on foreign imports. “These facts put the replacement of nuclear power stations, a big push on renewables and a step change on energy efficiency- engaging both business and consumers- back on the agenda with a vengeance”. At present nuclear power provides 19 per cent of the UK’s electricity compared to 88.5 per cent in France, 28.7 per cent in Germany, 27.8 per cent in Japan and 19.3 per cent in the US. Financial Times 17.05.06, Guardian 17.05.06
New ‘clean-coal’ plants to be built in Lincolnshire and Essex; two major German utility companies have announced that they are to build clean-coal power stations which by ‘capturing and storing the CO²’ can generate carbon-free electricity. E.ON and its Powergen subsidiary are to build a £1bn plant in Lincolnshire close to the Killinghome gas-fired station on Humberside, which it hopes to inaugurate in 2011. RWE will build a plant at Tilbury, costing £800m, which should start generation in 2016. Capturing, liquefying and storing the CO² produced the generating process, however, is both demanding and costly. Drax, the UK’s biggest coal-fired station has so far shied away from this because of the expense. However, Vattenfall, the Swedish power company, aims to launch a 300MW clean-coal plant near Berlin in 2008 and BP together with Scottish and Southern Electricity is engaged in a £330m generation project, separating CO² from hydrogen at Peterhead in Scotland. Vatenfall and RWE are both looking at inland underground storage in disused mines or gas fields while E.ON in considering storage in offshore gas or oil reservoirs. BP plans to use the Miller Field reservoir under the North Sea. The 1980s dash for gas cut the role of the coal-fired stations but they still account for one-third of power generation. British coal mines still account for half of the coal used. Independent on Sunday 14.05.06
Skills shortages are biggest barrier to business; the CBI’s latest survey shows that for the first time 61 per cent of employers in London are putting skills shortages as the biggest barrier to doing business in London. In last year’s survey 49 per cent of employers named skills shortages as their greatest problem but transport problems were the leading barrier. Companies in property, professional services and transport were the hardest hit. As well as specialist skills employers also said that general skills such as communication and team-working were also a problem. Transport was named as the second biggest barrier to business, followed by regulation and lack of office space. However, businesses are increasingly positive about London as a place to do business with half saying it is “very good” and 45 per cent saying “good”. Independent 12.05.06
Mayor says congestion charge will go up; speaking in a ITV debate on London Ken Livingstone said that he would “most probably” increase the level of the congestion charge to £10 if he was re-elected in 2008. The London Chamber of Commerce said that it was “utterly dismayed” by the news. Guardian 12.05.06
Questioning the value of Crossrail; Christian Wolmar, a well-known commentator on rail matters, has questioned the thinking behind the Crossrail project to build an east-west rail link through London. He says that every time he sets out to understand the rationale behind this huge project, the logic gets more and more convoluted and the case gets weaker and weaker. The routes that have been proposed look as though they are an attempt to rationalise the difficulties of merging in with existing railways, keeping costs down and making the best of a bad job. Why else have a scheme that runs from Shenfield and Abbey Wood to Maidenhead rather than Canary Wharf to Heathrow? Of the planned 24 trains an hour in the peak only ten would go beyond Paddington. Also while Crossrail will go to Heathrow (but not to Terminal 5) the journey time will be longer than the Heathrow Express due to the trains being stopping trains. Wolmar says that he notes that Sir Peter Hall has come out in favour of the alternative Superlink scheme which argues for a regional approach which links up with other lines including the West Coast Main Line as well as running to Stansted. Sir Peter Hall says, “The one evident fact, which increasingly stares any dispassionate observer in the face, is that the official Crossrail scheme makes absolutely no operational or economic sense at all”. Hall goes on to argue that without a basic rethink of the number and length and location of the outer branches “Crossrail is doomed to hit the buffers”. Rail 10.05.06
Constantly expanding City Airport put up for sale; Dermot Desmond, “the secretive Dublin financier”, has announced that he is putting London City Airport up for sale. He is expected to make a handsome profit on his investment. He bought the then-struggling airport in 1995 paying Mowlems a price of £23.5m. Now following a boom generated by Canary Wharf and the rest of Docklands, private jets, the light railway connection and short check-in times, it is now thought to be worth up to £400m. Passenger numbers, which have been boosted by the construction of a dedicated terminal for private aircraft, have gone up to 2m and are projected to go up to 8m by 2030, creating 4,000 jobs in the process. Sunday Times Business News 14.05.06
Local elections may defeat west London tram; the Mayor’s plans to build a £648m tramline through West London may be endangered by all three of the councils along the route-Hammersmith and Fulham, Ealing and Hillingdon switched to the Conservatives in the local elections. In each borough the Conservatives fought on an anti-tram platform. Jason Stacey, the new Leader of Ealing Council, said, “People have made their choice. On 18 May there will be a special council meeting to discuss its future. Transport for London (TfL) needs our co-operation, but we are going to become aggressive opposers to the scheme”. TfL will apply for an order under the Transport & Works Act this summer that would allow the tramline to be built. The Mayor is still adamant that he will go ahead with the scheme citing an opinion poll showing 48 per cent for the tram and 37 per cent against and a recent speech by David Cameron saying that the Conservatives are going to re-consider their attitude towards rapid transit systems. However he still needs to convince Douglas Alexander, the new Transport Secretary, to come up with at least half the money when his predecessor, Alistair Darling, killed off tram schemes in Hampshire, Leeds and Merseyside. The Independent on Sunday 14.05.06
Chinese companies enrol on AIM; there are now 29 Chinese companies listed on the Alternative Investment Market- London’s junior stock exchange- 22 of whom have listed since the start of 2005. The trend shows no sign of abating with City advisers saying that there is fresh wave of Chinese companies weighing up London listings over the next few months. Graham Shore of Shore Capital says that the growth is in part due to the booming Chinese economy and the fact that the demand can’t be entirely financed in China so they’re looking at the capital markets. “London has a greater international credibility [than Asian markets] and there’s no doubt that there’s a mechanism and an appetite for good quality Chinese companies”. Philip Wong, chief executive of IGM, which delivers ringtones and messaging services and will list in June, says “The London market is attractive because it is prestigious. London is a lot friendlier than NASDAQ because of the [lighter] compliance and regulation”. Times 15.05.06
Newham leads house price surge; an analysis of London house prices over the last ten years shows that whereas home-owners in Hammersmith & Fulham, Islington and Richmond-on-Thames have been among London’s losers, in relative terms house prices in Newham have risen by 348 per cent. Newham includes the once-neglected areas of West Ham, Silvertown, the Royal Docks and Stratford, where the Olympics will be held in 2012. In Hammersmith & Fulham, by contrast, prices rose by 189 per cent over ten years. Liam Bailey, head of residential research, said that investors would have made the biggest profit by buying in Newham, Hackney and Westminster. However whilst these could all be deemed as areas ‘on the up’ regeneration did not necessarily lift values. The development of the South Bank should have lifted prices in Southwark and Lambeth but over the last five years they have sat at 31st and 27th out of 32 boroughs. Financial Times 20.05.06
Political skirmishing starts; Guardian Unlimited says that the uneasy Olympic truce between the major parties is on the verge of breaking down with both Labour and Conservatives seeking to make capital from the 2012 Games. Hugo Swire, the shadow culture secretary, has written to Tessa Jowell, who, in addition to her culture secretary job led Labour’s local election campaign, complaining about emails, a speech and an eve-of-poll election broadcast all citing the Olympics. There was further skirmishing in a debate about the financial management of the project when Conservative and Liberal Democrat MPs accused the government of not paying sufficient attention to detail over the £2.375bn public spending package that will fund the infrastructure for the Games. Guardian Online 16.05.06
L&G plans for redevelopment of Bucklersbury House; Legal & General have announced plans to redevelop the 1950s Bucklersbury House on Queen Victoria Street. The replacement scheme, to be known as Walbrook Square will consist of four individual buildings, with the remains of the Roman temple of Mithras acting as a focal point for the square. The highest of the four buildings will be a 22-storey tower, which will have a futuristic rounded top. The other three will lean into the tower to create a cloud effect. In total there will be 875,000 sq ft of office space and 95,000 sq ft of retail. There will also be cafes, restaurants and bars. The scheme has been designed by Atelier Foster Nouvel- a partnership between French architect Jean Nouvel and Foster & Partners. Writing in the Times Marcus Binney says that the loss of Buckersbury House is “Good riddance to a city eyesore”. He also welcomes the use of Jean Nouvel who he describes as a “perpetual enfant terrible” and that the commissioning of high-flying and adventurous architects is welcome in the City. Times 19.05.06, Estates Gazette 20.05.06
City to get first purpose-built shopping centre; according to the Estates Gazette Land Securities could start building the first purpose-built shopping centre in the City in October. It has appointed Strutt & Parker’s retail investment team to find a partner for the 560,000 sq ft One New Change- the former Bank of England office building facing the St Paul’s Cathedral Choir School. The complex will house 220,000 sq ft of shops over three storeys and will be anchored by four 25,000 sq ft stores. Estates Gazette 20.05.06
City gives go-ahead to Smithfield scheme; ten City of London Corporation has given Thornfield planning permission for a controversial development of the General Market building in Smithfield, which fronts the Farringdon Road. It will become a 350,000 sq ft office building. The original scheme, which was also designed by Kohn Pedersen Fox, the US architects, was to have been for 600,000 sq ft but English heritage managed to get the Red House at the back of the site listed. Financial Times 17.05.06
Canal City proposed for Lower Lea Valley; a detailed vision for a new water city “to rival Amsterdam” as part of the biggest development scheme since Canary Wharf has been published by the Mayor, the London Thames Gateway Development Corporation and the London Development Agency. The £3bn plus regeneration of the Lower Lea Valley is a major part of the proposed Olympic legacy and has the aim of creating up to 40,000 homes and 50,000 jobs. The planning framework proposes that the transformation of 1,450 hectares of run-down, polluted and cut off land in the East End will continue the movement of the capital’s business base eastwards. The focus of the regeneration will be to clean up the four miles of canals and rivers that wind through the site. Financial Times 17.05.06
Grapevine is produced twice monthly (except August and December when there is one issue) by Brian Wright on behalf of oneLondon.
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