The reporting of the Chancellor’s Autumn Statement (that’s the mini Budget he said he was getting rid of) has been almost ritually gloomy
Growth worse than forecast, borrowing worse than forecast, cuts worse than forecast, unemployment worse than forecast (that’s enough worse than forecast – ed.)
There are a couple of reasons for the headline gloom-fest. For starters, this is not what George Osborne said would happen, and it lands him in a suspiciously similar position to his political opponent, Nottingham High School old boy Ed Balls. So some would say he is properly being held to account, others that it’s political schadenfreude.
The second reason is that we appear to have a fixation with news agendas:
“I think it’s grim, what do you think?”
“Well, yeah – it does sound grim, doesn’t it?”
“Terrible, pretty grim really.”
Now, it would be a brave person to stand up and suggest anaemic UK growth and the euro zone horror story signal that happy days are here again.
But I’ll try to dial in a little bit of perspective.
Besides a potential hiccup in this quarter and the next (that’s the R-word or the Double-D phrase), the economy is likely to grow a little bit over the next year.
As that’s a national average, some regions of the UK are likely to grow more than others.
The East Midlands looks like it’ll be one of them.
I says that because I saw a piece of research towards the end of last week from the Institute for Public Policy Research which analysed when employment in the regions was likely to get back up to its pre-recession peak.
Some of its research does sound, ahem, grim. Northern regions may not see employment peak again until 2018 or beyond. That’s a lost decade.
But other regions will see it return to the high by 2014. And we’re bracketed together with the south, south east and east of England in this group.
One more point of perspective. Whether it was courage, confrontation or carelessness, the Chancellor chose the day before the public sector pensions strike to announce that these workers could also look forward to pegged pay increases and more job losses.
In total, the Office for Budgetary Responsibility is now estimating that more than 710,000 public sector workers will have lost their jobs by 2017.
In isolation, that’s a huge number. But, as I’ve blogged before, it is a proportionally small part of the economy – of the UK workforce of 30 odd million, 6 million are employed in the public sector. So the job losses would amount to less than 2.5% of our total workforce, and over that length of time at least some of those jobs will be replaced by private sector growth (not as many as George Osborne would hope, though).
Besides the raft of measures aimed at encouraging lending to small and medium-sized businesses, the major headline for us was that we finally appear to have dragged the A453 widening project over the line.
After only 30 years of trying...
This single carriageway link between Nottingham, the M1, East Midlands Airport and the East Midlands Parkway railway station has accurately been described as the biggest car park in Nottingham.
Beyond the jokes, it has cost the local economy millions in delays, and Boots dropped some heavy hints in private that it regarded progress on this project as a factor in future investment – especially after the decision to turn part of its sprawling and under-utilised campus into an enterprise zone.
While we don’t have a definite start date, that project will now begin before 2015, which is earlier than expected. Turning it into a four-lane road should reduce congestion and cut journey times.
More significantly, it is also likely to open up swathes of land for residential and commercial development, and I wouldn’t be in the least bit surprised to see land transactions and planning applications start to shift in this area.
We can’t kid ourselves – it’s going to be slow progress for a while now. We could well have a situation where, when the A453 finally speeds up, so does the economy.
Wednesday, 30 November 2011
Thursday, 24 November 2011
Broadmarsh: They think it's all over...it is now
Capital Shopping Centres now owns Nottingham.
Well, in retail terms anyway.
It agreed a deal today to buy the remaining 25% shareholding in Broadmarsh from the Royal Mail Pension Fund. With the 75% it agreed to buy from Westfield for £55m, it means it now has complete ownership of the centre.
For those interested, it paid £18.3m for the pension fund’s 25%. It’s the same quantum as the Westfield price, and probably a premium over the paper value.
The wording of CSC’s announcement, made to the Stock Exchange, is interesting.
CSC had said it wanted to pump £250m into expanding the Victoria Centre, which it already owns. The fear in Nottingham was that this would mean a more ambitious revamp of Broadmarsh – which would also tidy up a massive eyesore on the southern approach to the city – would be sidelined.
Not only that, but the artist’s impressions of what CSC has said it wants to do to the Victoria Centre are, shall we say, quite traditional (and that’s putting it politely
Anyway, this is what David Fischel, CSC’s chief exec, said in today’s announcement:
“CSC is delighted to have acquired this important asset in Nottingham. Common ownership of Victoria Centre and Broadmarsh greatly improves the prospect of transformational retail and leisure led development taking place within the city to the benefit of the local and wider Nottingham community.
“The Victoria Centre has been at the heart of Nottingham for over 40 years and this acquisition further underlines our commitment to the city, which is one of the UK's top ranking retail destinations. We look forward to working with Nottingham City Council on this exciting opportunity.”
That may just be holding back an already familiar deck of cards. Or it could be an olive branch to a City Council which privately has considerable concerns about what CSC may – or may not – do. Or, it could be an indication that, now it’s got two centres, it will revise both plans.
Legal completion of the purchase hasn’t gone through yet, so I doubt we’ll hear a categorical statement of intent until then. CSC will also be discussing its options with the likes of Harvey Nichols, Marks & Spencer, Apple and Hollister, all of whom had agreements of varying status in relation to Westfield’s Broadmarsh redevelopment.
Either way, it’s time for CSC to start talking to Nottingham.
Well, in retail terms anyway.
It agreed a deal today to buy the remaining 25% shareholding in Broadmarsh from the Royal Mail Pension Fund. With the 75% it agreed to buy from Westfield for £55m, it means it now has complete ownership of the centre.
For those interested, it paid £18.3m for the pension fund’s 25%. It’s the same quantum as the Westfield price, and probably a premium over the paper value.
The wording of CSC’s announcement, made to the Stock Exchange, is interesting.
CSC had said it wanted to pump £250m into expanding the Victoria Centre, which it already owns. The fear in Nottingham was that this would mean a more ambitious revamp of Broadmarsh – which would also tidy up a massive eyesore on the southern approach to the city – would be sidelined.
Not only that, but the artist’s impressions of what CSC has said it wants to do to the Victoria Centre are, shall we say, quite traditional (and that’s putting it politely
Anyway, this is what David Fischel, CSC’s chief exec, said in today’s announcement:
“CSC is delighted to have acquired this important asset in Nottingham. Common ownership of Victoria Centre and Broadmarsh greatly improves the prospect of transformational retail and leisure led development taking place within the city to the benefit of the local and wider Nottingham community.
“The Victoria Centre has been at the heart of Nottingham for over 40 years and this acquisition further underlines our commitment to the city, which is one of the UK's top ranking retail destinations. We look forward to working with Nottingham City Council on this exciting opportunity.”
That may just be holding back an already familiar deck of cards. Or it could be an olive branch to a City Council which privately has considerable concerns about what CSC may – or may not – do. Or, it could be an indication that, now it’s got two centres, it will revise both plans.
Legal completion of the purchase hasn’t gone through yet, so I doubt we’ll hear a categorical statement of intent until then. CSC will also be discussing its options with the likes of Harvey Nichols, Marks & Spencer, Apple and Hollister, all of whom had agreements of varying status in relation to Westfield’s Broadmarsh redevelopment.
Either way, it’s time for CSC to start talking to Nottingham.
Wednesday, 23 November 2011
Is High Pay Commission really tuned into business growth?
I blogged a few weeks back about the High Pay Commission, and it was in the news again over the past couple of days.
If you don’t want to track back through the link, here’s the resume: the High Pay Commission isn’t a Commission in the normal sense of a heavyweight, government-sanctioned probe into a matter of major concern. It’s a one-year project funded by a left-leaning think tank which wants to influence government policy. So the name’s a bit of a fib.
And though it is clearly all about what goes on in the upper reaches of stock market businesses, it doesn’t involve any business people. This Commission’s members are academics and a couple of well-connected London journalists.
The Commission’s mission is written all over its name: a belief that senior executives get paid way more than most, and probably don’t deserve it.
It’s in the news again this week because it has published its final report. It finds that executives right at the top of big stock market firms enjoyed pay rises which disappeared into space, compares that to the less-than-stellar performance of their businesses, and wants other people to have a say in executive pay in future. So no surprises really.
I’d be amazed if anything happened, though, for three reasons.
One is that a government grappling with no growth probably has neither the time nor the inclination to launch into an issue which risks being portrayed as dis-incentivising businesses at the cutting edge of the economy (indeed, Business Secretary Vince Cable has already kicked the Commission’s proposals into the long grass by saying government will look at some proposals next year).
Secondly, some of them sound like Utopia-meets-the-boardroom. The idea that any business would want employees sitting on a committee voting on a proposal about how much the boss gets paid is unrealistic. Why not stop there: we could have selected employees also voting on the sales strategy, couldn’t we? No, actually – it would be stupid.
Finally, while reining in top pay might make ordinary people feel good it will do nothing to make them wealthier. The answer to that is enabling economic growth, not disabling executive pay.
And this is the beef with the High Pay Commission. It’s an entirely London-centric concept: backed by a London think tank, run by people based in London and focusing on a small part of the business universe which is centred on London.
It seems to think silly salary packages doled out by global enterprises should be a big issue for the UK government. But is this really where the action's at?
As I said in the earlier blog, many ordinary business people have no more time for the PLC world than the High Pay Commission does. They think it’s too short-term, and have little respect for stock market chief executives or their jackpot pay packets.
But they don’t lose sleep over it. The big issue for them is the continuing inability of government to act like it gets SMEs – the real bedrock of the economy – on any level.
If it did, there would be fewer rules and regulations, cleverly-targeted tax incentives, better access to finance, and a serious effort to solve the continuing problem of school and college leavers who don’t understand what it takes to hack it at work.
The High Pay Commission’s proposals simply do not register on the radar of key business concerns.
But perhaps they weren’t meant to. Protests not so very far away from the Stock Exchange (and mirrored in Nottingham’s own Market Square) have been making a lot of noise about inequality and unfairness. The Occupy movement is anchored in a belief that capitalism, having landed us all in the soup, is just carrying on like it’s someone else’s problem.
Against that background, PLC bosses paying themselves fortunes according to obscure formulae which seem to come up trumps whatever the weather hardly seems like the stuff of civil society.
So the High Pay Commission is not divorced from reality. It makes some powerful points about the relationship between attainment and reward and public companies’ obligation to fairness.
But the anti-big business rhetoric we see so much of these days is in danger of obscuring a greater truth: that the vast majority of businesses simply aren’t like that, and that it is these businesses that our economic recovery hinges on.
I said in another blog that we were in an era where business has to work a whole lot harder to win public respect, and might start by pointing out the huge contribution it makes to the wealth and wider wellbeing of the communities we live in (don’t forget that 80% of jobs are in the private sector).
If it did, then may be London think tanks would think beyond PLC pay packets when they ponder the best way for business to bring wealth to a wider audience.
If you don’t want to track back through the link, here’s the resume: the High Pay Commission isn’t a Commission in the normal sense of a heavyweight, government-sanctioned probe into a matter of major concern. It’s a one-year project funded by a left-leaning think tank which wants to influence government policy. So the name’s a bit of a fib.
And though it is clearly all about what goes on in the upper reaches of stock market businesses, it doesn’t involve any business people. This Commission’s members are academics and a couple of well-connected London journalists.
The Commission’s mission is written all over its name: a belief that senior executives get paid way more than most, and probably don’t deserve it.
It’s in the news again this week because it has published its final report. It finds that executives right at the top of big stock market firms enjoyed pay rises which disappeared into space, compares that to the less-than-stellar performance of their businesses, and wants other people to have a say in executive pay in future. So no surprises really.
I’d be amazed if anything happened, though, for three reasons.
One is that a government grappling with no growth probably has neither the time nor the inclination to launch into an issue which risks being portrayed as dis-incentivising businesses at the cutting edge of the economy (indeed, Business Secretary Vince Cable has already kicked the Commission’s proposals into the long grass by saying government will look at some proposals next year).
Secondly, some of them sound like Utopia-meets-the-boardroom. The idea that any business would want employees sitting on a committee voting on a proposal about how much the boss gets paid is unrealistic. Why not stop there: we could have selected employees also voting on the sales strategy, couldn’t we? No, actually – it would be stupid.
Finally, while reining in top pay might make ordinary people feel good it will do nothing to make them wealthier. The answer to that is enabling economic growth, not disabling executive pay.
And this is the beef with the High Pay Commission. It’s an entirely London-centric concept: backed by a London think tank, run by people based in London and focusing on a small part of the business universe which is centred on London.
It seems to think silly salary packages doled out by global enterprises should be a big issue for the UK government. But is this really where the action's at?
As I said in the earlier blog, many ordinary business people have no more time for the PLC world than the High Pay Commission does. They think it’s too short-term, and have little respect for stock market chief executives or their jackpot pay packets.
But they don’t lose sleep over it. The big issue for them is the continuing inability of government to act like it gets SMEs – the real bedrock of the economy – on any level.
If it did, there would be fewer rules and regulations, cleverly-targeted tax incentives, better access to finance, and a serious effort to solve the continuing problem of school and college leavers who don’t understand what it takes to hack it at work.
The High Pay Commission’s proposals simply do not register on the radar of key business concerns.
But perhaps they weren’t meant to. Protests not so very far away from the Stock Exchange (and mirrored in Nottingham’s own Market Square) have been making a lot of noise about inequality and unfairness. The Occupy movement is anchored in a belief that capitalism, having landed us all in the soup, is just carrying on like it’s someone else’s problem.
Against that background, PLC bosses paying themselves fortunes according to obscure formulae which seem to come up trumps whatever the weather hardly seems like the stuff of civil society.
So the High Pay Commission is not divorced from reality. It makes some powerful points about the relationship between attainment and reward and public companies’ obligation to fairness.
But the anti-big business rhetoric we see so much of these days is in danger of obscuring a greater truth: that the vast majority of businesses simply aren’t like that, and that it is these businesses that our economic recovery hinges on.
I said in another blog that we were in an era where business has to work a whole lot harder to win public respect, and might start by pointing out the huge contribution it makes to the wealth and wider wellbeing of the communities we live in (don’t forget that 80% of jobs are in the private sector).
If it did, then may be London think tanks would think beyond PLC pay packets when they ponder the best way for business to bring wealth to a wider audience.
Friday, 18 November 2011
If only this was Broadmarsh
But I’m afraid it won’t.
What you see above is a design produced by the Newark-based architect Benoy for a one million square foot retail development in Guangzhou, China.
Drawn up by Benoy design director Sarah Lee, it is inspired by some of the world’s major central parks, the flowing lines wrapping round an open space and linking up to a transport interchange.
This is an inspiring global landmark designed by a Nottinghamshire firm.
The tragic irony is that though we clearly have the talent to produce design which wins awards on the global stage, there appears to be no appetite to follow that path here.
The reverse, infact.
Where the Chinese are signing up to ambitious, ground-breaking schemes which win plaudits before they’re even built, Capital Shopping Centres would like to bolt a big brick box on to the end of the Victoria Centre.
The UK’s fifth biggest retail destination outside London has surely got to do better than this:
Thursday, 17 November 2011
Youth unemployment: A shocking truth
A few thoughts on the political hot potato of youth unemployment.
To have more than a million 16-24 years olds not building up experience of work and contributing to the economy is pretty grim, whichever way you look at it.
History shows that the longer young people are out of work the more difficult it becomes to get them into the habit.
Grimmer still is the fact that the UK’s struggle to get school leavers through the workplace door appears to have been around for much longer than politicians would have you believe.
Buried away in the Office for National Statistics data published yesterday was an Excel spreadsheet which shows the path of youth unemployment since the last recession in the early 1990s.
In the early 90s recession, youth unemployment peaked at just over 900,000 in 1992. It then commenced a long, downward path as the economy gathered speed again, bottoming out at just over 500,000.
But that was in 2001. And the ONS’s figures show that while it has risen steeply since 2008, it was already on a marked upward path which had begun in 2003.
Between 2003 and 2007 it rose from under 600,000 to over 700,000. Right in the heart of the economic boom.
There is also a clear divide in these numbers, one which was also glossed over yesterday.
The unemployment rate among 16-17 year-olds (i.e., GCSE school leavers) hovered around the 20 per cent mark from the turn of the century and wasn’t much lower in the decade before that. Among 18-24 year olds (the A-level to college/university period), it fell from around 15 per cent to around 10 per cent before starting to edge up again from 2005 onwards.
I won’t pretend to know why it is that we’ve had an upward trend in youth joblessness that predates the crunch (though it might suggest when the true stresses in the economy first began to emerge), but there was an interesting contribution yesterday to the debate about solutions.
Derbyshire & Nottinghamshire Chamber of Commerce has been reporting for some time that its Quarterly Economic Surveys have been consistently flagging up a problem with the quality of young people turning up for job interviews.
The problem is that these job candidates lack both basic skills – literacy and numeracy – and an understanding of what it takes to hack it in the working world.
To cut to the chase, it’s suggesting that schools’ relentless focus on driving up exam results has missed a crucial element in the bigger picture of what makes a good employee: that attitude counts just as much as attainment.
The Chamber’s got to be careful that it isn’t accused of tarring all kids with the same brush and suggesting school leavers are a generation of feckless Facebook addicts.
That is a tabloid cliché which won’t help identify a solution.
I know that because the same day the unemployment figures came out, I spent the evening at the Nottingham Post’s inaugural Student Awards. It was an inspiring occasion, with young students from city schools and academies proudly receiving awards for a range of stunning achievement which covered everything from academic brilliance to community involvement and immense sporting and creative prowess.
So we should not lose sight of the fact that great things can and do happen in Nottingham’s schools.
But those ONS numbers point to an urgent and serious issue. The jobless rate among 16-17 year-olds has been rising relentlessly since the early part of the last decade, and is heading into territory which points to a fundamental failure underneath apparently improving educational attainment figures.
That points towards wasted lives and economic under-achievement
The Chamber says the Ofsted inspection regime for schools should be changed so that it also measures how good schools are at preparing people for the working world.
It may be a step in the right direction. But schools – and business – may need to make some giant leaps.
To have more than a million 16-24 years olds not building up experience of work and contributing to the economy is pretty grim, whichever way you look at it.
History shows that the longer young people are out of work the more difficult it becomes to get them into the habit.
Grimmer still is the fact that the UK’s struggle to get school leavers through the workplace door appears to have been around for much longer than politicians would have you believe.
Buried away in the Office for National Statistics data published yesterday was an Excel spreadsheet which shows the path of youth unemployment since the last recession in the early 1990s.
In the early 90s recession, youth unemployment peaked at just over 900,000 in 1992. It then commenced a long, downward path as the economy gathered speed again, bottoming out at just over 500,000.
But that was in 2001. And the ONS’s figures show that while it has risen steeply since 2008, it was already on a marked upward path which had begun in 2003.
Between 2003 and 2007 it rose from under 600,000 to over 700,000. Right in the heart of the economic boom.
There is also a clear divide in these numbers, one which was also glossed over yesterday.
The unemployment rate among 16-17 year-olds (i.e., GCSE school leavers) hovered around the 20 per cent mark from the turn of the century and wasn’t much lower in the decade before that. Among 18-24 year olds (the A-level to college/university period), it fell from around 15 per cent to around 10 per cent before starting to edge up again from 2005 onwards.
I won’t pretend to know why it is that we’ve had an upward trend in youth joblessness that predates the crunch (though it might suggest when the true stresses in the economy first began to emerge), but there was an interesting contribution yesterday to the debate about solutions.
Derbyshire & Nottinghamshire Chamber of Commerce has been reporting for some time that its Quarterly Economic Surveys have been consistently flagging up a problem with the quality of young people turning up for job interviews.
The problem is that these job candidates lack both basic skills – literacy and numeracy – and an understanding of what it takes to hack it in the working world.
To cut to the chase, it’s suggesting that schools’ relentless focus on driving up exam results has missed a crucial element in the bigger picture of what makes a good employee: that attitude counts just as much as attainment.
The Chamber’s got to be careful that it isn’t accused of tarring all kids with the same brush and suggesting school leavers are a generation of feckless Facebook addicts.
That is a tabloid cliché which won’t help identify a solution.
I know that because the same day the unemployment figures came out, I spent the evening at the Nottingham Post’s inaugural Student Awards. It was an inspiring occasion, with young students from city schools and academies proudly receiving awards for a range of stunning achievement which covered everything from academic brilliance to community involvement and immense sporting and creative prowess.
So we should not lose sight of the fact that great things can and do happen in Nottingham’s schools.
But those ONS numbers point to an urgent and serious issue. The jobless rate among 16-17 year-olds has been rising relentlessly since the early part of the last decade, and is heading into territory which points to a fundamental failure underneath apparently improving educational attainment figures.
That points towards wasted lives and economic under-achievement
The Chamber says the Ofsted inspection regime for schools should be changed so that it also measures how good schools are at preparing people for the working world.
It may be a step in the right direction. But schools – and business – may need to make some giant leaps.
Wednesday, 16 November 2011
Broadmarsh battle isn't over yet
The Broadmarsh story isn’t over yet. There is one final twist in this tale which relates to the 25% shareholding in the long lease on the centre which Westfield didn’t own.
To recap, Westfield agreed to sell its controlling stake in the operation of the centre to Capital Shopping Centres, the owner of the Victoria Centre.
It was, if you like, a ‘knockout’ deal, one intended to overcome the commercial roadblock caused by both Westfield and CSC wanting to redevelop their centres at the same time.
It is thought – though not confirmed - that the prime movers in this deal were John Whittaker, the Lancashire billionaire whose property business, Peel Holdings, has the controlling stake in CSC, and Stephen Lowy, whose family empire owns Westfield.
You’d have thought that the minority shareholder in Broadmarsh would simply have to accept that the senior partner had done a game-changing deal.
But that’s not necessarily the case.
The 25% shareholder is the Royal Mail Pension Fund. And the terms of its shareholding are that it has pre-emption rights – in other words, it can table a counter offer for the 75% that Westfield has agreed in principle to sell to CSC.
In theory, it has 60 days in which to table a bid.
In practice, it will probably have to make up its mind within the next few days. That’s because CSC has also made an offer to buy its 25%.
We don’t know the terms of that offer, but it will almost certainly contain an ultimatum that unless it is taken up the offer will be withdrawn in less than the 60 days allowed to exercise the pre-emption right.
In other words, it’s an attempt to spike the guns of a counter-bid before anyone has the time to put one together.
This may seem uncompromising stuff, but that’s the way big corporates operate when the value of their business is at risk. No one on the stock exchange would bat an eyelid.
Nevertheless, there is emerging evidence that CSC is going to have to be mindful of the impact this deal has on the reception it gets in Nottingham.
There is considerable political disquiet at the way the sale deal was done – no one in Nottingham knew about it, and the first public confirmation was on the Sydney and London stock exchanges.
Phone calls to all the concerned parties were made last Wednesday evening, but by then the die had been cast.
Standard corporate practice though it was, this did not go down well in the city.
It is against that background that CSC may decide that it wants to go ahead with the expansion of the Victoria Centre and ditch the redevelopment of Broadmarsh.
It needs Nottingham City Council onside to do this. Yet the Victoria Centre was probably not their favoured scheme.
While the Broadmarsh design offered an open environment which cleaned up an eyesore right next to the site of the new transport hub, Victoria Centre’s plan envisages a large-scale – and architecturally dull – extension of an existing sealed mall. It’s making a big box bigger.
Worse in the eyes of city planners, it threatens a potentially significant increase in car-borne visitors in the home of what is arguably one of the best public transport systems in Britain.
Finally, sealed malls are all about keeping trade to yourself. Where would that leave the rest of the city centre around Nottingham’s iconic Market Square?
It is this spectre that is now occupying the minds of the city’s political leadership in a very big way. They see a fundamental part of Nottingham’s future apparently being determined not by elected politicians but by corporate Britain. Whether you think it’s fair or not, corporate Britain doesn’t have a great name right now.
Capital Shopping Centres may well succeed in knocking out potential commercial opposition.
That won’t necessarily translate into support from Nottingham.
One way or another, there will still have to be a plan for Broadmarsh.
To recap, Westfield agreed to sell its controlling stake in the operation of the centre to Capital Shopping Centres, the owner of the Victoria Centre.
It was, if you like, a ‘knockout’ deal, one intended to overcome the commercial roadblock caused by both Westfield and CSC wanting to redevelop their centres at the same time.
It is thought – though not confirmed - that the prime movers in this deal were John Whittaker, the Lancashire billionaire whose property business, Peel Holdings, has the controlling stake in CSC, and Stephen Lowy, whose family empire owns Westfield.
You’d have thought that the minority shareholder in Broadmarsh would simply have to accept that the senior partner had done a game-changing deal.
But that’s not necessarily the case.
The 25% shareholder is the Royal Mail Pension Fund. And the terms of its shareholding are that it has pre-emption rights – in other words, it can table a counter offer for the 75% that Westfield has agreed in principle to sell to CSC.
In theory, it has 60 days in which to table a bid.
In practice, it will probably have to make up its mind within the next few days. That’s because CSC has also made an offer to buy its 25%.
We don’t know the terms of that offer, but it will almost certainly contain an ultimatum that unless it is taken up the offer will be withdrawn in less than the 60 days allowed to exercise the pre-emption right.
In other words, it’s an attempt to spike the guns of a counter-bid before anyone has the time to put one together.
This may seem uncompromising stuff, but that’s the way big corporates operate when the value of their business is at risk. No one on the stock exchange would bat an eyelid.
Nevertheless, there is emerging evidence that CSC is going to have to be mindful of the impact this deal has on the reception it gets in Nottingham.
There is considerable political disquiet at the way the sale deal was done – no one in Nottingham knew about it, and the first public confirmation was on the Sydney and London stock exchanges.
Phone calls to all the concerned parties were made last Wednesday evening, but by then the die had been cast.
Standard corporate practice though it was, this did not go down well in the city.
It is against that background that CSC may decide that it wants to go ahead with the expansion of the Victoria Centre and ditch the redevelopment of Broadmarsh.
It needs Nottingham City Council onside to do this. Yet the Victoria Centre was probably not their favoured scheme.
While the Broadmarsh design offered an open environment which cleaned up an eyesore right next to the site of the new transport hub, Victoria Centre’s plan envisages a large-scale – and architecturally dull – extension of an existing sealed mall. It’s making a big box bigger.
Worse in the eyes of city planners, it threatens a potentially significant increase in car-borne visitors in the home of what is arguably one of the best public transport systems in Britain.
Finally, sealed malls are all about keeping trade to yourself. Where would that leave the rest of the city centre around Nottingham’s iconic Market Square?
It is this spectre that is now occupying the minds of the city’s political leadership in a very big way. They see a fundamental part of Nottingham’s future apparently being determined not by elected politicians but by corporate Britain. Whether you think it’s fair or not, corporate Britain doesn’t have a great name right now.
Capital Shopping Centres may well succeed in knocking out potential commercial opposition.
That won’t necessarily translate into support from Nottingham.
One way or another, there will still have to be a plan for Broadmarsh.
Friday, 11 November 2011
Westfield and CSC: This town wasn't big enough for the both of them
So, what are we to make of Westfield’s decision to walk away from Broadmarsh within sight of a much-vaunted £450m revamp?
I don’t think there’s any question that they’ve decided it would be an awful lot easier to make the numbers add up elsewhere – specifically in the south east, which simply isn’t experiencing anything like the downturn seen in the rest of the country.
In Nottingham, they waded through a complex land assembly and protracted planning, only to see the economic tide head back out.
But the signs are that Westfield may not have made the first move in this decision (though it was certainly wearying of a planning process which went on so long a rival appeared).
No one locally knew about this decision in advance. There is evidence, too, that Westfield’s own UK executives may not have been the first to find out, either. Senior figures here were still proceeding with this plan as recently as last week.
From Capital Shopping Centres, under whose name a statement confirming the intended £55m purchase of Broadmarsh was issued yesterday, we have heard nothing.
So who was the driving force behind this move?
One interpretation is that this has the stamp of a clear-sighted attempt to solve the fundamental dilemma facing both Westfield and Capital Shopping Centres: both were pitching the same set of high-profile retailers.
So only one scheme was going to succeed.
This would have affected the prospects – and therefore the value – of the losing side. The respective shareholders in Westfield and CSC would not have wanted that to happen. So there was a price to be negotiated, one determined by the present and future value of one centre and the impact its development might have on the value of the other.
It’s the kind of deal negotiated by people who know development lives on private profits not public plaudits. Pretty no-nonsense hard-heads, I’d guess.
The no-nonsense hard-heads behind this deal have solved their problem. Infact, they’ve handed the dilemma back to the city’s planners and politicians…whose measure of success is defined by the same criteria in reverse: plaudits not profits.
Nottingham City Council wanted the Broadmarsh revamp to go-ahead because it would rid the city of a series of shockingly decrepit 1960s eyesores which should have been levelled by a smartbomb 20 years ago.
Instead, we would have a new, expanded shopping centre featuring big-name retailers in eye-catching street scenes which spoke of an ambitious regional capital.
So one last deal is still to be done. It will determine whether Capital Shopping Centres expands the Victoria Centre and merely dusts a few cobwebs off Broadmarsh, or is persuaded that there is a way of making the Broadmarsh numbers add up in a way Westfield decided it couldn’t.
This will be a very tough negotiation for Nottingham City Council, a negotiation which will determine the way our city looks for perhaps 30 years ahead.
Whether in person or proxy, the man they will effectively be dealing with may well have been cutting a deal with someone in Sydney recently.
He is clearly a formidably determined character. And he now has Nottingham’s retail future in his hands.
I don’t think there’s any question that they’ve decided it would be an awful lot easier to make the numbers add up elsewhere – specifically in the south east, which simply isn’t experiencing anything like the downturn seen in the rest of the country.
In Nottingham, they waded through a complex land assembly and protracted planning, only to see the economic tide head back out.
But the signs are that Westfield may not have made the first move in this decision (though it was certainly wearying of a planning process which went on so long a rival appeared).
No one locally knew about this decision in advance. There is evidence, too, that Westfield’s own UK executives may not have been the first to find out, either. Senior figures here were still proceeding with this plan as recently as last week.
From Capital Shopping Centres, under whose name a statement confirming the intended £55m purchase of Broadmarsh was issued yesterday, we have heard nothing.
So who was the driving force behind this move?
One interpretation is that this has the stamp of a clear-sighted attempt to solve the fundamental dilemma facing both Westfield and Capital Shopping Centres: both were pitching the same set of high-profile retailers.
So only one scheme was going to succeed.
This would have affected the prospects – and therefore the value – of the losing side. The respective shareholders in Westfield and CSC would not have wanted that to happen. So there was a price to be negotiated, one determined by the present and future value of one centre and the impact its development might have on the value of the other.
It’s the kind of deal negotiated by people who know development lives on private profits not public plaudits. Pretty no-nonsense hard-heads, I’d guess.
The no-nonsense hard-heads behind this deal have solved their problem. Infact, they’ve handed the dilemma back to the city’s planners and politicians…whose measure of success is defined by the same criteria in reverse: plaudits not profits.
Nottingham City Council wanted the Broadmarsh revamp to go-ahead because it would rid the city of a series of shockingly decrepit 1960s eyesores which should have been levelled by a smartbomb 20 years ago.
Instead, we would have a new, expanded shopping centre featuring big-name retailers in eye-catching street scenes which spoke of an ambitious regional capital.
So one last deal is still to be done. It will determine whether Capital Shopping Centres expands the Victoria Centre and merely dusts a few cobwebs off Broadmarsh, or is persuaded that there is a way of making the Broadmarsh numbers add up in a way Westfield decided it couldn’t.
This will be a very tough negotiation for Nottingham City Council, a negotiation which will determine the way our city looks for perhaps 30 years ahead.
Whether in person or proxy, the man they will effectively be dealing with may well have been cutting a deal with someone in Sydney recently.
He is clearly a formidably determined character. And he now has Nottingham’s retail future in his hands.
Thursday, 10 November 2011
Westfield's Broadmarsh bombshell
It’s a bombshell announcement from Australia which will send ripples not just across Nottingham but the whole of the UK retail industry.
Westfield announced overnight that it has sold its controlling stake in the city’s Broadmarsh shopping centre. And it has sold it to the people who own the Victoria Centre.
The £55m deal will see the Australian shopping centre giant’s 75 per cent share in Broadmarsh taken over by Capital Shopping Centres.
The deal has huge implications for the future development of Nottingham city centre, and its status as one of the top retail destinations in the UK
Westfield was about to push the button on the first stages of the £450m redevelopment – one that Nottingham has been waiting for the best part of 20 years.
So why has it backed out when designs have been drawn up and negotiations with a raft of big retail names have reached an advanced stage?
The official line from Australia – and that’s where this announcement has come from, not London – is that it has taken a strategic decision to increase its focus on ‘larger, iconic centres’ like the giant mall it has developed next to the London 2012 Olympics site.
But the fact that it has sold to Capital Shopping Centres raises another question. CSC is also in the advanced stages of a £250m plan to massively increase the size of the Victoria Centre, and the consensus among property experts was that only one of these two schemes could succeed.
So has Westfield decided to cut a deal where it walks away with a premium on the book value and leaves the field in Nottingham open to one developer?
Either way, its decision to abandon Nottingham is hugely controversial. The city has lived with a weary retail relic for years, watching a previous redevelopment plan sink beneath the credit crunch.
After some difficult negotiations with the city council, Westfield then came forward with a new plan which would not only have redeveloped Broadmarsh but also have tidied up the southern gateway to the city centre, dovetailing neatly with plans to turn the railway station into a transport interchange.
So it was not just retail redevelopment, but tangible regeneration.
As I write, there is no statement from Capital Retail to say what their intentions with Broadmarsh are. But the city will be desperate to keep the idea of a southern gateway alive, and it has real concerns about a Victoria Centre extension which appears to tilt the retail centre of gravity away from the city centre and northwards.
There could be some political recrimination from this, too – has the city allowed a major opportunity to slip out of its grasp for a second time?
Let’s hope not. In terms of spend, Nottingham is still the fifth biggest retail destination outside London, and the interest of the likes of Harvey Nichols predates the current Broadmarsh plan.
Capital Shopping Centres hasn’t spent £55m buying out Westfield for nothing: one way or another, a big investment in Nottingham retail is still going to happen.
Westfield announced overnight that it has sold its controlling stake in the city’s Broadmarsh shopping centre. And it has sold it to the people who own the Victoria Centre.
The £55m deal will see the Australian shopping centre giant’s 75 per cent share in Broadmarsh taken over by Capital Shopping Centres.
The deal has huge implications for the future development of Nottingham city centre, and its status as one of the top retail destinations in the UK
Westfield was about to push the button on the first stages of the £450m redevelopment – one that Nottingham has been waiting for the best part of 20 years.
So why has it backed out when designs have been drawn up and negotiations with a raft of big retail names have reached an advanced stage?
The official line from Australia – and that’s where this announcement has come from, not London – is that it has taken a strategic decision to increase its focus on ‘larger, iconic centres’ like the giant mall it has developed next to the London 2012 Olympics site.
But the fact that it has sold to Capital Shopping Centres raises another question. CSC is also in the advanced stages of a £250m plan to massively increase the size of the Victoria Centre, and the consensus among property experts was that only one of these two schemes could succeed.
So has Westfield decided to cut a deal where it walks away with a premium on the book value and leaves the field in Nottingham open to one developer?
Either way, its decision to abandon Nottingham is hugely controversial. The city has lived with a weary retail relic for years, watching a previous redevelopment plan sink beneath the credit crunch.
After some difficult negotiations with the city council, Westfield then came forward with a new plan which would not only have redeveloped Broadmarsh but also have tidied up the southern gateway to the city centre, dovetailing neatly with plans to turn the railway station into a transport interchange.
So it was not just retail redevelopment, but tangible regeneration.
As I write, there is no statement from Capital Retail to say what their intentions with Broadmarsh are. But the city will be desperate to keep the idea of a southern gateway alive, and it has real concerns about a Victoria Centre extension which appears to tilt the retail centre of gravity away from the city centre and northwards.
There could be some political recrimination from this, too – has the city allowed a major opportunity to slip out of its grasp for a second time?
Let’s hope not. In terms of spend, Nottingham is still the fifth biggest retail destination outside London, and the interest of the likes of Harvey Nichols predates the current Broadmarsh plan.
Capital Shopping Centres hasn’t spent £55m buying out Westfield for nothing: one way or another, a big investment in Nottingham retail is still going to happen.
Thursday, 3 November 2011
A Nightmare on Euro Street
You don’t need to be a professor of political economics to get your head round the disaster area that is the Greek economy.
If you run your own business, then a few simple facts and figures should do the trick. So here they are (warning to any EU finance ministers: look away now).
Greece currently owes around £300 billion in debts. Yet its economy is worth only £200 billion a year (for the purposes of comparison, the UK economy is worth around £1.38 trillion). So it isn’t making enough money to pay.
It’s almost certain that the Greek government told creative fibs about the scale of its budget deficit (the shortfall between its tax income and its spending). We now know that, at times, it has been twice the stated level.
Greece ‘qualified’ to join the euro with a budget deficit supposedly amounting to 3.7% of its GDP. Before the credit crunch hit in 2007, the deficit was already 6.5% - well above any other Eurozone country. By 2009, it was just short of 16%. (We’re not short of budget deficit issues in the UK, of course, but our figure for 2009 was 11.5%, and that for an economy six times the size of Greece).
One of the reasons Greece runs up big budget deficits is that there is widespread tax dodging. In 2005, for example, 49 per cent of tax went unpaid in one three-month period. Overall, it’s thought the Greek government loses as much as £18 billion a year in unpaid tax.
The public sector accounts for around 40% of the Greek economy…which will, of course, needs to be fed a huge and steady stream of tax. Tax-and-spend government is fine - but only if you collect the tax.
In theory, then, Greece will routinely need to borrow supertankers full of money to make ends meet. But the bonds it tries to sell to raise that cash don’t even qualify for junk status now – the financial equivalent of scrap metal.
So, it’s bust.
Not a pretty picture for Greece, and now a Nightmare on Euro Street.
You can see from those numbers that Greece never really had the financial discipline to join a one-size-fits-all currency system where 17 different countries had to meet the same financial rules.
Greece has exploded out of the seams of it, and the rest of the Eurozone countries are now desperately trying to stitch those seams back together. It is a painful spectacle.
Italy is facing the same nightmare scenario for three reasons: it, too, engaged in creative accounting about its budget deficit, it has huge debts, and its prime minister, Silvio Berlusconi, is widely derided as a political clown who has lost control of the country’s finances. This in the third biggest economy in the Eurozone…
Financial markets haven’t just written Greece off. They think it exposes a flaw at the heart of the whole Eurozone project: that you can’t have one currency when there are 17 governments unable to agree on a way forward because their economies are operating at different speeds.
The Greek government’s decision to agree a debt restructuring deal one week but put it in doubt through a referendum the next illustrates the point. Markets won't wait; they will take their own decision.
And this is why the Greek dilemma is not some distant wrangle you can read about over your cornflakes and forget when you go to work (though the antics of some Conservative eurosceptics last week suggest some still think this is a playground knockabout).
The clear and present danger posed by the eurozone crisis is that banks, confronted by losses on loans to indebted countries, put the brakes on lending again, tipping the UK’s biggest export market back into recession - and us with it.
Beyond that, the big question beginning to loom over the whole Greek tragedy is this: is an EU with single currency heading towards a single treasury?
If you run your own business, then a few simple facts and figures should do the trick. So here they are (warning to any EU finance ministers: look away now).
Greece currently owes around £300 billion in debts. Yet its economy is worth only £200 billion a year (for the purposes of comparison, the UK economy is worth around £1.38 trillion). So it isn’t making enough money to pay.
It’s almost certain that the Greek government told creative fibs about the scale of its budget deficit (the shortfall between its tax income and its spending). We now know that, at times, it has been twice the stated level.
Greece ‘qualified’ to join the euro with a budget deficit supposedly amounting to 3.7% of its GDP. Before the credit crunch hit in 2007, the deficit was already 6.5% - well above any other Eurozone country. By 2009, it was just short of 16%. (We’re not short of budget deficit issues in the UK, of course, but our figure for 2009 was 11.5%, and that for an economy six times the size of Greece).
One of the reasons Greece runs up big budget deficits is that there is widespread tax dodging. In 2005, for example, 49 per cent of tax went unpaid in one three-month period. Overall, it’s thought the Greek government loses as much as £18 billion a year in unpaid tax.
The public sector accounts for around 40% of the Greek economy…which will, of course, needs to be fed a huge and steady stream of tax. Tax-and-spend government is fine - but only if you collect the tax.
In theory, then, Greece will routinely need to borrow supertankers full of money to make ends meet. But the bonds it tries to sell to raise that cash don’t even qualify for junk status now – the financial equivalent of scrap metal.
So, it’s bust.
Not a pretty picture for Greece, and now a Nightmare on Euro Street.
You can see from those numbers that Greece never really had the financial discipline to join a one-size-fits-all currency system where 17 different countries had to meet the same financial rules.
Greece has exploded out of the seams of it, and the rest of the Eurozone countries are now desperately trying to stitch those seams back together. It is a painful spectacle.
Italy is facing the same nightmare scenario for three reasons: it, too, engaged in creative accounting about its budget deficit, it has huge debts, and its prime minister, Silvio Berlusconi, is widely derided as a political clown who has lost control of the country’s finances. This in the third biggest economy in the Eurozone…
Financial markets haven’t just written Greece off. They think it exposes a flaw at the heart of the whole Eurozone project: that you can’t have one currency when there are 17 governments unable to agree on a way forward because their economies are operating at different speeds.
The Greek government’s decision to agree a debt restructuring deal one week but put it in doubt through a referendum the next illustrates the point. Markets won't wait; they will take their own decision.
And this is why the Greek dilemma is not some distant wrangle you can read about over your cornflakes and forget when you go to work (though the antics of some Conservative eurosceptics last week suggest some still think this is a playground knockabout).
The clear and present danger posed by the eurozone crisis is that banks, confronted by losses on loans to indebted countries, put the brakes on lending again, tipping the UK’s biggest export market back into recession - and us with it.
Beyond that, the big question beginning to loom over the whole Greek tragedy is this: is an EU with single currency heading towards a single treasury?
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