2009 will be the problem year, not 2008; Hamish McRae argues that the tough year for the UK economy will be 2009. Even allowing for the work of scare stories such as the one about HBOS, he believes that the banking crisis may be reaching its peak- mainly because the central banks are now clearly on the case. There may be some big bumps ahead but there should be a gradual return throughout the summer to less frenetic conditions but with bank credit much more restricted than it has been for the past three or four years. His argument about the economic side is based on the fact that at the current moment the UK economy is still growing well with consumers seemingly happy to keep on spending. The OECD, which has a good forecasting record, says that, surprising as it may seem, the UK growth rate will be 0.6 per cent a quarter to the middle of this year, which would be equivalent to 2.4 per cent for the whole year- consistent with the chancellor’s forecasts. However if our housing market remains flat for two or three years, and if mortgages remain tight, this will squeeze consumers. Equally if unemployment starts rising then consumption could tail right off. This all takes a while to happen so 2009 will be the problem year, not 2008. Independent on Sunday 23.03.08
CBI says slowdown will stretch into 2009; the CBI has warned that the economic slowdown is set to be more prolonged than anticipated and will prompt recession-like conditions. Continued tightening of credit will put the brakes on the economy well into next year or as Ian McCafferty, the CBI’s economic adviser says: “It’s as much a 2009 story as 2008”. One of the reasons for their gloom is their forecast for growth in GDP which they have dropped from 2.0 to 1.8 per cent this year and a drop from 2.1 to 1.7 per cent for 2009. They are also gloomy about inflation, which they predict will reach a peak of 3.2 per cent between July and September this year. Further information Times 25.03.08
Data adjustment sees inflation jump to 2.5 per cent; consumer price inflation jumped to a nine-month high in February as statisticians have started to record price rises in oil and gas in full at the time they are introduced rather than phasing in them over four months as they did previously. The Office for National Statistics said the consumer price index rose 2.5 per cent in the year to February, in line with expectations but above January’s 2.2 per cent reading and further above the Bank of England’s two per cent target. The reading underlines the challenge facing policymakers, who must reconcile continuing market turmoil and the risk of a sharp economic downturn with rising inflationary pressures. Although the markets have been betting that the Monetary Policy Committee will cut interest rates at its April meeting, most economists think the Bank will wait until May, wanting more evidence that demand is slowing enough to bring inflation back to target. Analysts are worrying that higher fuel and food prices combined with a weaker pound may force inflation over three per cent during the summer and that it will prove harder to return inflation to target over time. Further information Financial Times 19.03.08
Rising prices cause rise in serious debt; rising food prices, gas bills and mortgage rates have been blamed for a jump in the numbers facing serious debt problems according to the Citizens Advice Bureau. They say that there has been 215,000 more requests for help in dealing with debts in January and February than in the same period last year. Whilst most problems are related to credit card bills, the reports of mortgage arrears has grown by a third as thousands of borrowers come to the end of fixed-rate deals taken out two years ago. The Royal Institution of Chartered Surveyors estimates that there will be 43,000 repossessions in 2008. Following a slight fall in 2007 personal insolvencies are expected to reach new heights in 2008. Further information Financial Times 19.03.08
Stiglitz blames ‘flawed’ City bonuses; the Nobel Prize-winning economist Joseph Stiglitz has blamed the “unconscionable” system of generous bonuses paid to investment bankers for exacerbating the global credit crisis. He says: “The system was designed to encourage risk taking- but it encouraged excessive risk taking. In effect it paid them to gamble. When things turned out well they walked away with huge bonuses. When things turn out badly- as now- they do not share in the losses”. He rejects the idea of limiting bonuses, but is keen to link performance to longer-term success, for instance by holding bonuses in escrow for ten years and if there are losses in the following years the bonuses would be reduced appropriately. Independent 24.03.08
The importance of Jeremy Hayward’s return to No 10; the Guardian reviews the return of Jeremy Heywood to Downing Street as the head of domestic policy. It says that the appointment of Stephen Carter as Head of Strategy overshadowed Heywood’s return, but having emphasised the need for change when he became Prime Minister last June, under Heywood’s influence Gordon Brown has stopped the mixed signals as well as stopping being anti-Blair but post-Blair. One minister describes Heywood as “a walking encyclopaedia on public service reform, having been through many of the gruelling battles between 1999 and 2003 when he was Blair’s personal private secretary”. In the weeks before Christmas Heywood and Dan Corry, another returnee as head of the policy unit, canvassed cabinet opinion on how the reform agenda was faring, with the response that whilst Brown had been right to emphasise change he simply could not afford to simply jettison Blair’s public sector reforms. As a result Brown gave an unambiguous pro-reform speech, which, according to one health minister, was like an electric shock. The arrival of James Purnell as welfare secretary has seen an acceleration of the reforms advocated by David Freud to make greater use of the private and voluntary sectors in helping the unemployed find jobs. Similarly in education, it seemed initially that Ed Balls, the supposedly anti-reform education secretary, might neuter city academies, institutions so poisonous that Brown would not visit one. But Balls went to the Labour spring conference to praise them and promise more. Equally Ben Bradshaw, the health minister, held a briefing to launch a drive to get patients to exercise their right to choose any accredited hospital, public or private, for their routine treatment. Finally in the week ahead of the budget, Brown himself drew all the threads together in a piece for the FT when he wrote: “There can be no backtracking on reform, no go-slow, no reversals and no easy compromises”. Guardian 22.03.08
Communities resist change; many regeneration projects may struggle to meet their aims because of historical perceptions of social class and status that can persist regardless of subsequent change according to a new report on neighbourhoods by the Joseph Rowntree Foundation. Douglas Robertson and a team from the University of Stirling studied three neighbourhoods in the city, each built in the 1920s and 1930s as a planned community. They found that a neighbourhood’s current status often remained associated with historic male employment patterns. They found one estate was labelled as “rough” and the area, prior to the estate being built, had carried this label for over 500 years. As a result Right-to-Buy was less popular there than in the other areas examined and it constantly maintained its poorer, ‘working-class’ status. Further information -www.jrf.org.uk/pressroom/releases/120308.asp Times 18.03.08 Housing minister expands on links between housing and work; despite concern from some Labour MPs and from bodies such as Shelter, the housing minister Caroline Flint has taken forward her ideas about making access to social housing dependant on seeking training or work. She announced two groups headed by independent experts that will examine “potential incentives, obligations and support” for those entering social housing. She said that the more she discussed the issues in housing, the more impressed she had been with the work being undertaken in areas such as social landlords getting involved in a range of activities to overcome economic inequality. She pointed to Notting Hill Housing Trust, which is to test commitment contracts through its Moving Forward project. She also announced the £70m Places of Change Programme, which will support 69 homeless projects across England to ensure that those getting hostel accommodation are also supported and encouraged to find employment. The projects will include a new Employment Academy to be run by Thames Reach and based in either Lambeth or Southwark, which will help hundreds of rough sleepers and homeless people into education, training and employment. It will be funded by a £4m grant and will give employment advice, skills training and social enterprise support. It will also provide business start-up advice and fund training in painting, decorating and maintenance for teams of handymen employed by Lambeth Council. Another project that will receive support is a social enterprise, the Beef Kitchen, set by ex-servicemen, who are tenants of the Sir Oswald Stoll Foundation, to provide food to football fans attending Chelsea matches. Further information - Department of Communities and Local Government and Thames Reach and Beef Kitchen Guardian 21.03.08
Tories say link bonuses to corporate responsibility; company bosses should have their bonuses cut if their firms do not act responsibly to help communities to tackle issues such as teenage binge-drinking and recycling under plans put forward by David Cameron. The Tories want to compel companies to link directors’ bonuses with their corporate responsibility work rather than profits. Launching his ideas, which he said would be voluntary with legislation only used as a last resort, Cameron unveiled the first of what he deemed “responsibility deals”- a voluntary agreement with the supermarkets and other companies to limit packaging and other waste- to be overseen by former shadow cabinet minister and Asda chief executive, Archie Norman. He also called on the Financial Services Authority to issue an annual social responsibility index so that companies could be judged against each other. David Frost, the director-general of the British Chambers of Commerce, said: “Most companies already take on a vast amount of social responsibility and we get very worried when businesses are lambasted for not doing more”. The Financial Times writes about Cameron’s proposals saying that they “do not suggest any genuine appreciation of the employers’ main role in the community. This is to create jobs, make profits and pay taxes”. It says that, overall, the proposals “look ineffective and confused”. Further information Daily Telegraph 17.03.08, Financial Times 19.03.08
Buy-out firm threatens to leave UK; Guy Hands has become the first buy-out boss to warn that he may move overseas at least part of Terra Firma in protest against the recent tax increases on capital gains and non-domiciled residents. He said; “Recent developments in UK policy may well drive global firms and highly-skilled individuals away from London at significant cost to the UK economy in terms of lost revenues and lost taxes”. Terra Firma owns some of the UK’s best-known companies including EMI, the music group, and Odeon/UCI, the cinema chain. It employs 100 people from 20 different nationalities and has invested more than £6bn of equity in UK companies since 1994. Financial Times 19.03.08
BAA plans to double the size of Stansted by 2015; BAA has submitted a planning application to Essex County Council to double the size of Stansted airport by 2015. If approved the £2.5bn second runway and terminal would serve at least 68m passengers a year by about 2030. BAA state that the carbon emissions from the expanded airport in 2030 will not exceed those in 2006, and they also offer 9,000 new jobs by 2030 and contribute £9bn to the national and local economy. Carol Barbone, co-ordinator of “Stop Stansted Expansion” said: “BAA’s planning application for a second runway goes beyond environmental vandalism and is tantamount to a declaration of war on the local community and global environment”. She said that the application had been submitted as a means of boosting the airport’s value in case they had to sell, due to it’s halt in rapid growth in 2007. Teresa Vickers, the Shadow Transport Secretary, said there was no credible economic case for a second runway. Further information Times 12.03.08
Local authorities say new runway ‘would put unbearable strain on services’; six local authorities, representing 3.2m people, are to oppose the plans for a second runway at Stansted. According to the county councils authorities in Essex, Suffolk and Hertfordshire and the District Councils in Braintree, East Hertfordshire and Uttlesford the second runway would put “an unbearable strain” on local services and was “unwanted and unnecessary”. They have formed a cross-party group called Councils Opposing a Second Runway (CO2) and have called on the government to “totally rethink” its aviation strategy. Further information Independent 17.03.08
Stronger city government is key to urban renewal; in the first of three reports on urban regeneration the Policy Exchange think tank calls for changes in the way urban renewal policies are run. It says that many towns and cities that have received central government funding are declining on a range of indices and that policies would be more effective if drawn up at a city level. It also examines urban renewal in six cities in three continents. Further information Guardian 21.03.08
Major developer’s fears about Blears’ plans; Roger Madelin, chief executive of Argent, the developer of King’s Cross Central, has cast doubt on communities secretary Hazel Blears’ plans on community empowerment. He said that community empowerment must not come at the expense of delaying schemes. He went on that there were already too many opportunities for “mischievous” people to delay schemes even when the developments had the support of the community. King’s Cross was delayed when protesters forced a judicial review. As a prelude to the White Paper Hazel Blears has published a discussion document - Unlocking the Talent of our Communities - which covers some of the contentious issues facing her department including citizenship and links between social housing and employment. Further information Regeneration 14.03.08
Call to boost northern transport links; small northern towns and cities need better communication links with their regional capitals if they are not to fall further behind their southern counterparts according to a new report from Centre for Cities. It says that people in thriving smaller towns and cities in the south east have much better connections with London, which helped them keep pace with the growth of the capital’s economy. The report found that more than 10 per cent of the population of Reading’s working population commutes 40 miles into London every day, compared to less than three per cent of Burnley’s residents who travel half that distance into Manchester. Reading has fast road and rail links into the capital, with high-speed trains taking 30 minutes to reach Paddington, while the train journey from Burnley to Manchester takes 80 minutes and usually requires a change. Burnley’s population earns 10 per cent less than Manchester while the differential between Reading and London is far smaller- despite high salaries in the City. There is a similar pattern in other northern towns such as Hull, Bradford and Barnsley lagging behind the growth rate of Leeds, the regional capital. Further information Financial Times 17.03.08
Rockefeller backs ‘social stock market’; plans for a ethical investment bank, funded by an estimated £250m held in dormant bank accounts and a “social stock exchange” will be announced by Phil Hope, the Cabinet Office minister responsible for the third sector, at the 2008 Skoll World Forum on Social Entrepreneurship taking place at the University of Oxford’s Said Business School. The Rockefeller Foundation is putting up $500,000 (£252,000) to pay for a feasibility study for a “social stock exchange”, where ethical investors can trade shares in worthy enterprises. The exchange would enable social enterprises and environmental ventures to raise cash. Anthony Bugg-Levine, managing director of the Rockefeller Foundation, said that it had chosen the UK partly because of firm government support for social enterprise. He hoped the exchange could provide a handy investment forum for wealthy philanthropists. Pradeep Jethi, formerly new product development manager at the London Stock Exchange, devised the idea of a UK social stock exchange and will lead the research. He said: “I know of 150 social enterprises listed on the LSE, Plus Markets or on AIM but they are in the microcap category and are difficult for investors to find”. The social stock exchange would resemble a junior market, accepting businesses with as little as £500,000 annual turnover and two years trading history. The problem would be to develop an ethical screening process that meets the bulk of the investors’ approval. Well known social enterprises include the Eden Project, the Fifteen restaurant chain and the Big Issue. In all there are more than 55,000 social enterprises in the UK generating about £27bn a year. Further information Financial Times 22.03.08, Times 23.03.08
Tax relief yield for deprived areas is ‘stalling’; the Community Development Finance Association reports that investment raised through the Community Investment Tax Relief scheme stalled in 2007. The Association, which is the umbrella body for community development finance initiatives (CDFIs), says that the investment raised in 2007 was £40m- only £2m higher than in 2005. The report says that enthusiasm for the tax break is dwindling as the CDFIs- third sector lenders in deprived areas- find it harder and harder to use. They call for a review of the original policy intentions of the tax break. There was a Treasury review of the tax break last year but that concentrated on its operation. The report also reveals that total CDFI investments and loans at the end of March 2007 were worth £287m, up from £181m the previous year. Regeneration 14.03.08
Shared knowledge base could be applied to any sector; the FT writes up the work of a body called The Key, an innovative service set up by two government-sponsored agencies to enable school leaders to share knowledge. The scheme is being run by Ten UK, a lifestyle services company, which also runs a “green concierge” which deals with questions about green lifestyles. The core principle behind The Key- a tightly- focused community facing similar questions and letting individuals’ answers define the content of the information provided- could be applied to countless other situations in the public and private sectors, says James Crabtree of the Institute for Public Policy and Research. In the first phase, school leaders phone or e-mail researchers who find the best possible answers and then compile a full reply with references, sources and suggestions for further reading, and tag it for further reference. Because many of the users are facing similar questions the more times a question comes up the lower the cost per answer. In the first four weeks half the questions required new research. At three months, nearly 90 per cent could be answered using existing content. In the second phase previously answered questions are being transferred to the internet. Further information Financial Times 24.03.08
Learning and Skills Council to be axed; England’s biggest quango is to be killed off “by 2010” with local authorities taking the lion’s share of its £11bn funding. The demise of the Learning and Skills Council (LSC), responsible for all vocational training, is another victory for local government made since Gordon Brown became prime minister. Local authorities have already been given a greater role over city academies. The LSC had many critics both in business and in the public sector, who accused it of excessive bureaucracy. Soon after taking over as prime minister Brown announced a shake-up in the machinery of government. At that time the Cabinet Office announced that funding for a range of education and training for 14-to-19-year-olds- including much vocational training- would be taken over by local authorities. Of the LSC’s £11bn budget, about £7bn will go to local authorities for education and training for teenagers. The remaining £4bn, for adults, will go to a new quango called the Skills Funding Agency. Further information Financial Times 18.03.08
Incapacity benefit review targets 2m people; James Purnell, the work and pensions secretary, has told the House of Commons that well over 2m people on incapacity benefit are to have their ability to work tested in just three years starting in April 2010. How far those judged capable of work will then receive help from the private and voluntary sector to re-enter employment seems to depend on Purnell’s ability to agree a plan with the Treasury that private providers can be paid from the money saved from benefits. Despite challenges from the Conservatives, the Department of Work and Pensions (DWP) insisted that it had identified the funds to launch the undertaking- the number of incapacity claimants currently stands at 2.6m, implying that 900,000 people will have to be assessed annually on average. The DWP estimates that it will have saved £20m by 2010 from soon-to-be-introduced obligations on lone parents to look for work, and from changes to the incapacity benefit that will put new claimants on to an employment support allowance to ease them back into the workplace. The Treasury added £10m to that in the Budget to which the Department can add some money that has been put aside for work tests. It is hoped that a new system of funding providers from the savings made- a process known as an “AME/DEL switch”- will kick in from 2010. Financial Times 14.03.08
Sickness absence and worklessness costs UK £100bn a year; a call for the government to explore replacing the sick note with an electronic “fit note”- defining what people can do rather what they cannot- is one of the recommendations in a review of the health of UK workers undertaken by Dame Carol Black, former president of the Royal College of Physicians and now the government’s national director of health and work. She also advocates early moves to stem the flow of people from short-term to long-term sickness absence and on to capacity benefit through improved wellness services at work as well as a well-being consultancy service that would provide tailored advice for SMEs at a market rate. The report urges a new “fit for work” service aimed at early intervention when people go of sick. A detailed study by PwC undertaken for the report said that there was evidence that “workplace wellness programmes make commercial sense”. The report says that if such a programme reduced the flow on to incapacity benefit by just one per cent it would save £10.5m. The government is already experimenting with employment advisers in GP’s surgeries. Alan Johnson, the health secretary, endorsed the report but added “we will need to consider carefully how best to pilot this”. Further information Financial Times 18.03.08
Colleges to snub business friendly two year degrees; a Financial Times survey suggests that England’s leading universities are set to snub government plans for intensive business-friendly degrees lasting 48 weeks a year. A draft Whitehall paper, due to be published in the spring, says that universities should offer reforms “that an employer and employee will want, such as degrees taught over 48 weeks a year, with the bulk of learning delivered online or in the workplace”. However, most of the universities surveyed, especially members of the so-called Russell Group, were sceptical or hostile, with Oxford, Cambridge and Bristol all resistant to changes in their 35-week pattern. These universities traditionally reap the biggest share of public money due to their records on research. But they could lose out to the former polytechnics, which are more willing to embrace the new breed of intensive degrees that could be completed in two rather than three years. The paper, by the Department for Innovation, Universities and Skills, says that universities that agree to increase co-operation with business would earn “extra resources”. Both Oxford and Cambridge said that the 48-week model would go against their traditional structure. Other problems would include the attitude of the academics and their trade bodies as well as commitment of employers. The FT quotes one senior academic as saying that the only business people effectively involved are consultants or semi-retired people with time on their hands. Financial Times 24.03.08
Different visions for the future of Britain’s energy; the Independent on Sunday says that two events will set out very different visions of Britain’s future energy supply. Gordon Brown and Nicolas Sarkozy will meet in the unlikely environs of Arsenal’s Emirates Stadium, where they are expected to sign an agreement to build a new generation of nuclear power stations and to export the technology around the world. Two days later a barge will slip out of Belfast to install the world’s first-ever commercial tidal power turbine in Strangford Lough. The IoS says that there are no prizes for guessing which event will get the most attention, but in 20 years’ time the story may be different, for the low-key event in Northern Ireland may then be seen as the beginning of something radically new, or as a tragically missed opportunity. This is not merely an issue of nuclear versus renewables. True Britain’s record in this area is appalling. Blessed with by far the best renewable resources in Europe- tide, wave and wind- we remain near the bottom of the European league when it comes to exploiting them. This is partly because there is plenty of evidence that the proper development of renewables in Britain has been stifled lest it pose the slightest threat to the nuclear dream. However there ministers seem to have caught on to the scope of tidal power and have become enthusiastic converts to the Severn Barrage, which it is estimated, could supply five per cent of Britain’s electricity from a reliable source. However the time needed to build the barrage points to the concept of drawing energy from the currents as they flow past, rather than impounding them behind a dam, being cheaper, more flexible and faster to construct and get into operation. It would require a decentralized policy but this can be more efficient, it is cheaper and in the age of terrorism, it is more secure. Independent on Sunday 23.03.08
Revenue from green taxes near record low; research by the Institute for Fiscal Studies reveals that revenue from green taxes will remain close to record lows despite a Budget that claimed to be environmentally friendly. The Treasury will raise the equivalent of 2.8 per cent of GDP next year from environmental taxes, such as fuel, vehicle excise and air passenger duties. This is fractionally up on last year’s 2.7 per cent but is one of the lowest figures since 1987, when green taxes made up 3.1 per cent of GDP. Fuel duty makes up the bulk of environmental taxes, but it has risen by less than inflation in recent years. Even the 2p per litre addition that Alistair Darling delayed by six months is an inflationary rise. The halfpenny above inflation rise does not kick in until 2010. The Treasury Select Committee recently described the Government’s use of green taxes as too “timid”. Nick McChesney of PwC said: “In terms of overall yield there is more talk and not enough action. It is surprising that the chancellor has not gone farther. He has the chance to shift more taxes on to bad environmental behaviour. Further information - IFS and Parliament Times 14.03.08
Cabinet split on green cars; the Cabinet has clashed on a proposal to switch British-built ministerial cars with Japanese Toyota Prius hybrid vehicles. John Hutton, the business secretary, led the criticism of the plan to import cars from Japan rather than use traditional Jaguars made in the UK. He was backed by Jack Straw and Ed Balls. The call for the use of the Prius was led by Ruth Kelly, the Transport Secretary, who wanted to make the plan to revamp the government car fleet with low-emission vehicles more ambitious. By the summer all cars used by ministers and senior civil servants will have carbon emissions below 130g/km, ruling out Jaguars and Range Rovers. The only exception would be for ministers requiring specially adapted vehicles for security reasons. Kelly is pushing for a more ambitious target of 120g/km, an idea backed by David Miliband and Hilary Benn. With the Cabinet divided, Gordon Brown asked Kelly to do more work on the idea. Financial Times 19.03.08
Cabinet split on new coal-fired power station; plans for E.ON to build Britain’s first coal-fired power station since 1984 have led to a cabinet split amid concerns that the project would undermine efforts to cut carbon emissions. The power station would replace an outdated plant at Kingsnorth in Kent and its supporters hope that it would become a pioneering “clean coal” project with emissions much lower than from existing coal-fired stations. However officials at the Department of Environment, Food and Rural Affairs are urging Hilary Benn, the Environment Secretary to oppose the scheme unless there are guarantees it would be able to exploit new “carbon capture and storage”. A possible compromise is to commission an independent study of the scheme before ministers make a decision. This could delay the final decision from the summer to the autumn. Independent 24.03.08
BMW looks at battery-powered cars; BMW is considering an all-electric car as part of its strategy to cut greenhouse gas emissions and combat growing restrictions on traffic within big cities. Norbert Reithofer, chief executive, said they would decide later in the year but tests had shown that it was technically feasible. It has already launched prototype hydrogen-powered versions of its series 7 series and is working with General Motors and Mercedes to develop hybrid models to rival those sold by the market leader, Toyota. The first BMW hybrid will be launched next year, consuming 20 per cent less fuel than a conventional engine. It is braving traditional American resistance by introducing diesel cars throughout the US this year, claiming that a Mini Cooper diesel can equal the same emissions- 104 grams per kilometre- as a Toyota Prius. Guardian 19.03.08
Mayoral candidates clash on transport; launching their manifestos for the London Mayoral contest due to take place on 1st May the two leading candidates clashed on transport policy. Ken Livingstone announced plans for all new London buses entering service after 2012 to be equipped with carbon cutting technology. He also announced plans to have 500 hybrid buses, with 40 per cent lower carbon emissions, on the city’s roads by 2010 as well as programmes to encourage cycling and walking. Boris Johnson, his Conservative rival, proposes to scrap bendy buses and replacing them with Routemaster double-decker buses with conductors. However this has led to a dispute over cost with Johnson claims that it would cost £8m contested by Livingstone who claimed the costs would be £108m. Professor Tony Travers, director of the Greater London Group at the London School of Economics, said that he was “surprised by the utter lack of radicalism” in either of the manifestos. Further information - Ken Livingstone and Boris Johnson Regeneration 14.03.08
Making the West End pedestrian-friendly; Westminster Council has launched a £40m action plan to make the three most famous streets in the Wet End more pedestrian-friendly in time for the 2012 Games. Westminster has been working with Transport for London and the New West End Company since 2006 to produce the plans for Oxford Street, Regent Street and Bond Street. Pavements will be widened and streets redesigned to reduce traffic. The overhaul will also see 14 side streets pedestrianised to create alfresco space for dining, art and performance. Further information Estates Gazette 15.03.08
West End bucks retail slowdown; according to the New West End Company the West End appears to be bucking the trend of the high street with affluent Middle Eastern and Russian tourists driving sales of luxury brands. A survey reports a 5.1 per cent increase in footfall on a year-on-year basis in Oxford Street, Regent Street and Bond Street, which compares to a year-on-year drop of 4.9 per cent across the UK. It also bears out recent figures from John Lewis, which said that sales were falling in all its stores except Oxford Circus and Aberdeen. Further information Independent 17.03.08
CEBR forecasts 10,000 job losses in the City; the Centre for Economic Business Research has revised its forecast of job losses in the City from 6,500 made in December to 10,000 for 2008. The forecast was made before the news about Bear Stearns. Doug McWilliams of CEBR warns that the total could rise again. The research group publishes data on the City twice a year, and is due to report again in early April. “Obviously the world moves on. Previously we thought it would be a slightly more limited number of job cuts that would be lost but confidence is rather weaker than we assumed. On what we can see now, the number of job losses will be higher”. Several thousand jobs have already been cut at banks including Citigroup, Morgan Stanley, Goldman Sachs, Deutsche Bank and Merrill Lynch. Previous City job losses included 40,000 during the recession of 1991-92 and 20,000 in the dot-com crash of 2001-02. Further information Guardian 17.03.08
Heathrow ranked 103rd in world’s airports; a list of the world’s best and worst airports decided by 7.8m passengers has ranked Heathrow at 103 out of 162 airports, with passengers blaming its snaking security queues, surly immigration officers and infuriating baggage system. The ranking is a drop of 58 places on last year and reflects the luggage crisis last August, when British Airways was so overwhelmed that it had to transport unclaimed bags to a sorting depot in Milan. Travellers, who were responding to the survey distributed by airport consultancy Skytrax, said Heathrow’s worst attribute was its transit facilities and the best was the duty-free shops. The best airport was named as Hong Kong International. The Guardian also reveals that privacy watchdogs are investigating plans to fingerprint thousands of passengers at Heathrow, following complaints that the measures are unnecessary and intrusive. The opening of the £4.3bn Terminal 5 will see fingerprinting measures, already in use for domestic passengers using Terminal 1 extended to the new hub. Further information Guardian 24.03.08, Times 24.03.08
Yahoo moves European HQ from London to Geneva; Yahoo, the internet company, is to move its European headquarters from London to Geneva, with 70 of the top managers in the UK told to relocate or lose their jobs. One person close to the move said it was for corporate taxation reasons. It will come as a blow to the UK’s efforts to keep innovative technology companies in the country. Google, which has large commercial operations in London, recently chose to base its European engineering headquarters in Zurich and in 2006 Electronic Arts, the games publisher, moved its European head office from outside London to Geneva. Financial Times 14.03.08
£98m deal for Croydon tramlink; Transport for London has announced that it is to take over the owner of the Croydon Tramlink system. TfL said Tramtrack Croydon, the company that built the 28km-long system and had the right to run it for a further 88 years, has agreed to accept £98m from TfL for the company. The deal is expected to be completed this summer. Further information Financial Times 18.03.08
London boroughs call for more devolution; London’s mayoral candidates should use local solutions to tackle some of the biggest problems facing the capital, according to a new prospectus produced by London Councils. Trusting Devolution: the Challenge for London argues that the government in the UK is too centralised and too removed from local people to understand what they need. It argues that challenges in areas such as health and social care, poverty, housing and transport should be locally driven. Further information Guardian 19.03.08
Olympics will leave open space to rival Hyde Park; once the 2012 Games have moved on, the biggest public park in more than a century will emerge from the site. Its designers hope the 270-acre park, which will open in 2014, will capture the spirit of the great Victorian parks and will rival Hyde Park as the capital’s greatest open space. The £200m park, which is being designed by George Hargreaves, the American landscape designer, will be built around the valley of the River Lea and will stretch for almost two and a half miles from the Eurostar station at Stratford to the Thames. The park will follow the form of the river and will be fringed by intensive developments of offices and thousands of homes. There will be a concert field capable of accommodating 50,000 spectators. The Games stadium will be scaled down to 25,000 seats and is likely to remain in use for sport with Leyton Orient, the frontrunners to use it as a home ground. Other facilities including the swimming pool and the Velodrome will remain for public use. Guardian 17.03.08
‘Police shortage threatens security of 2012 Games’; Lord Dear, who was chief constable of the West Midlands and an Inspector of HM Constabulary, has warned that the police are too stretched and short of manpower to be able to cope with the additional pressures of the Games. He says that his views are shared by many senior police officers who do not believe that they are positioned well enough today to be able to deal with the Games if they happened tomorrow. The police were becoming increasingly stretched between requirements for national and international responses and local demands. The government has pointed out that there are a record 140,000 police officers now in the service. But Dear says the police were already struggling before the additional pressure of the Olympics. In New York there are 467 police officers for every 100,000 people. There are 380 officers for every 100,000 citizens in France. But in the UK there are 260 officers per 100,000. The government has already increased the budget for policing and security at the Games by £238m to £1.2bn but even Sir Ian Blair, the head of the Met, has expressed concern about the impact that the Games will have on his budget. Observer 23.03.08
Media hubs start to resemble the No 11 bus; the BBC is planning to go head-to-head with the London Development Agency over the creation of a 1m sq ft media hub in London. The LDA is keen to turn the 2012 Games media centre in east London into a media hub and is pursuing some of its relevant clients to move there in 2012. Now, partly as a consequence of moving staff to the media village being built in Salford, the BBC is planning a masterplan for the Television Centre on Wood Lane to become a 1m sq ft media hub in 2012. The BBC proposals, which are partly driven by the lack of bidders for the site, are to promote the redevelopment of the 1m sq ft studios and adjoining land owned by Westfield as a creative industries complex, together with a large residential scheme. The LDA said that they believed that Soho was becoming overheated and there was room for one new media hub in the capital. The LDA has the support of the London Thames Gateway Development Corporation who insist, “media will be the legacy for Stratford”. They foresee the trendy media set of Hoxton moving east into Hackney and Stratford. However, the Estates Gazette quotes Tom Russell, the LDA’s Olympic Legacy director, as saying: “If another location comes forward more successfully, we will consider alternative high-value uses”. Estates Gazette 15.03.08
Business missing 2012 bonanza; a report from Lloyds TSB says that business has yet to wake up to the £21bn worth of commercial opportunities offered by the 2012 Games. The bank, which is an official sponsor of the Games, has produced an official business guide to help companies capitalize on the event. The bank’s economists estimate that entire commercial benefits at £21bn with £8.6bn going to companies in the south east. One misconception identified by the guide is that it is too early to start looking at the opportunities when the Olympic Delivery Authority has already let contracts worth £1bn. Further information Financial Times 17.03.08
Commercial property prices could drop a further 15 per cent; commercial property prices could drop by up to 15 per cent in the coming months after dropping as much in the past six months according to a briefing by Legal & General Investment Management. Rob Martin, head of property research, says that the speed of the plunge in property values is “unprecedented” in modern times and far from over. “After 14 years of positive returns, the UK commercial property market went into sharp reverse in the second half of 2007”. He said that the credit crunch had increased the cost of borrowing and reduced the availability of funds to buyers, suddenly making investors far more averse to risk. Commercial property had given total investment returns of 18.5 per cent in the three years from 2004 to 2006, but the returns had now gone negative because of the sharp fall in capital values. His best guess was that capital values of commercial buildings had another 5-10 per cent fall before they bottomed out, perhaps later this year, as signs were emerging that the market was beginning to stabilise. Yields had already begun to turn up and were now back above government bond yields at 5.5 per cent. There were already signs that some overseas buyers, in particular German property funds, were back in the market. Further information Guardian 19.03.08
JP Morgan faces wrath of Barbican residents; public consultation on JP Morgan’s proposals for a 950,000 sq redevelopment of St Alphage House on London Wall has commenced but leaves the City of London Corporation with a quandary. The City has worked hard to keep JP Morgan in the Square Mile and persuaded them to resist the blandishments of Canary Wharf but now faces strong criticism from tenants of its Barbican Estate. David Graves, the chairman of the Barbican Association, said that the redevelopment of St Alphage House was “pushing the envelope of what is acceptable”. He said that the City could have gone for something more modest, but had opted for a groundscaper with a tower, which he said, “is an enormous amount of space to cheek by jowl with 4,000 residents”. The City together with Hammersons and JP Morgan have spent a year working on the proposals which will be the largest single building in central London. A planning application is due to be submitted in May with a decision in September. Estates Gazette 22.03.08
Newham revises Canning Town regeneration plans; Newham Council has published a revised masterplan for the regeneration of Canning Town to increase the amount of commercial development. This follows the decision by two of the six developers on the shortlist to drop out. The new scheme, which is still designed by Erick van Egeraat, includes 10,000 new homes and 650,000 sq ft of shops, leisure and offices. The four remaining on the shortlist- Modus, Kier, Bouygues and the Key London Alliance have been joined by the East Central Alliance, which includes Sir Stuart Lipton’s Chelsfield Partners and Sir Stuart’s son Elliott’s affordable housing company First Base. Further information Estates Gazette 15.03.08
New office block proposed as a neighbour for St Paul’s; proposals for a new six-storey office block which will ‘wrap round’ one side of St Paul’s cathedral have been submitted to the City planners by developers St Martins. The block will replace an existing eight-storey office block, which runs along Newgate Street from St Paul’s tube station, will comply with the new height limit for buildings around the cathedral. In addition to providing space for new offices and shops the scheme, which is designed by John McAslan, will also create a covered area – the size of a tennis court- for people entering and leaving the tube station with the entrance facing the cathedral rather than Newgate Street. The plans, which have the support of English Heritage, will be decided by the City Corporation in May. It is believed that they welcome the reduction in height, as well as the better offices, shops and facilities. It is also a first step in linking St Paul’s to the Bank of England by redeveloping Cheapside as a thriving new working and shopping hub. However there have been attacks by critics, including supporters of Prince Charles, who have labelled the architect “that steel and glass man” and for being out of harmony with the cathedral. Evening Standard 17.03.08
Forecasts for City building downgraded- again; forecasts for City development have been further downgraded in the wake of the collapse of Bear Stearns. Indeed the takeover by JP Morgan of Bear Stearns has a direct bearing in that Bear Stearns are developing a new London head office at Canary Wharf whereas JP Morgan is planning a 1m sq ft head office at London Wall. Peter Damesick, head of research at CB Richard Ellis, says that the amount of space to be built between 2009 and 2011 is likely to be 6.2m sq ft- half the amount he was predicting in 2007. Jones Lang LaSalle have also reduced their forecast for City development to a maximum of 11m sq ft in speculative development between 2008 and 2011- an eight per cent fall. Mike Hussey of Land Securities warns that if the credit crunch continues for another year, the developer would be unlikely to press ahead with its 509ft Walkie-Talkie tower at 20 Fenchurch Street. Exemplar Properties has stopped work on its 93,000 sq ft scheme at 67 Lombard Street while it looks for a new funding partner. However, Arab Investments insist that the 1m sq ft Pinnacle on Bishopsgate will be built speculatively and British Land maintain that the development of the 601,000 sq ft Leadenhall Building is pushing forward for completion in 2011. Further information - Jones Lang Lasalle and CBRE Estates Gazette 22.03.08
Radical new arts centre proposed for the South Bank; the Observer reveals revolutionary proposals for a radical £150m arts centre on the South Bank between Tower Bridge and City Hall. The building will be covered with a landscaped hill or garden and will go up to Potter’s Fields. Simon Elliott, artistic director of the project, said that the plot is the last of free space in the South Bank’s so-called ‘string of pearls’ and is already visited by 12 million people a year. The scheme has been in preparation for four years and an outline planning application has now been submitted to Southwark Council. Award-winning architect Kathryn Findlay has worked alongside many other volunteer consultants including Tim Smit, creator of the Eden Project in Cornwall. There is a dispute between the Mayor and Southwark Council about another proposal for the area from Berkeley Homes who want to build a series of circular residential towers. Observer 16.03.08
New claim to be world’s most expensive home; a flat in St James’s Square has become the most expensive home in the world, with a price said to exceed £115m. The flat, which only received planning permission this month, is one of six that are being created out of a 1930s seven-storey office block at the junction of the Square and Duke of York Street. The figure exceeds the £100m price for a flat in the Candy Brothers’ One Hyde Park development. It is also far in excess of the £80m paid for a house in Upper Phillimore Gardens in Kensington and the £70m paid by Lakshmi Mittal for a 12-bedroom mansion in Kensington Palace Gardens. Three of the other flats at 8 St James’s Square have also been reserved although only the most basic building proposals are available. There will be large solar panels on the roof, a car lift to take vehicles to basement parking- and cycle racks to comply with regulations. From the outside the building does not look remarkable but Peter Wetherill, a specialist in St James’s property, says that the main selling point could be sheer exclusivity as these will be the only flats available in the area for some time. Westminster Council granted planning permission having gained agreement from the developers that because of the exceptional size of the flats they would contribute £3.978m towards the costs of affordable housing in the borough. Sunday Times 16.03.08
Astoria to shut to make way for Crossrail; Ken Livingstone, Mayor of London, has confirmed that the 2,000-capacity Astoria Theatre will be knocked down to make way for the Crossrail and will shut at the end of the year. The Astoria in Charing Cross Road was originally built as a cinema in 1927. It converted to a theatre and concert venue in 1976 and developed a reputation as a star-maker for breakthrough acts. A petition to save the venue attracted 35,000 signatures as well as the support of acts such as Franz Ferdinand, Kaiser Chiefs, Maximo Park and Jamie T. In a sign of the times four other central London nightclubs are closing to make way for development- Turnmills in Clerkenwell, and The Cross, Canvas and the Key in King’s Cross. Replacements are emerging but further out in areas such as Vauxhall and Brixton. Times 14.03.08, Financial Times 22.03.08
Rem Koolhaas to give Commonwealth Institute a makeover; Dutch architect Rem Koolhaas has been selected to revamp the former Commonwealth Institute at the end of Kensington High Street. The £150m redevelopment of the building is being led by Chelsfield Partners and the Ilchester Estate. The redevelopment will include a number of luxury flats. The 60,000 sq ft exhibition galleries at the 2.25-acre site will be preserved. The building has been closed since 2004. Further information Evening Standard 20.03.08
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Next issue on 10th April 2008
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