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June 2008 Archives

Last Thursday, I was a guest at Drivers Jonas's annual crane survey for Birmingham. As its name suggests, this is a review of development in Brum's city core (measured by the number of cranes in the skyline) over the past 12 months. The survey results themselves were upbeat. This isn't a surprise (or shouldn't be) - there have been (and continue to be) lots of cranes in the sky.

And the survey wasn't all doom and gloom for the next 12 months. Although the residential market is going to slow significantly (just how many more studio apartments does the city centre need?), there is plenty of Grade A office space coming on stream.

However, the people I talked to over breakfast were uniformly downbeat about prospects for the next 12 to 24 months. Predictions ranged from the jokey - "I will be spending a lot of the next 12 months reducing my golf handicap" - to the downright suicidal - "It's 1929 all over again".

It's not just Brum's property and construction industries that are worried. A quick scan of the headlines suggests that people are concerned about at least some or all of the following: house prices are falling; interest rates are on the up; the price of fuel and food is increasing radically; you can't get a mortgage for love nor money; America's economy seems to be in an even worse state than ours; and the great and the good all seem to be predicting doom and gloom.

If you believe the pessimists, we are either in recession already or headed that way at a rate of knots. But, with all the authority I can muster from having got an A in an economics exam 21 years ago, I'm not so sure.

Hopefully more persuasively. I've also come across this very interesting article by Anotole Kaletsky in which he (with a lot more authority, knowledge and ability than I can) challenges the assumption that America is in recession. His basic argument is that a downturn in the housing and banking industries is just that: a downturn (albeit a painful one) but not a recession.

I can't help but wonder if the same argument doesn't apply to the UK. That's not to decry the difficulties people are facing, or that we live in challenging times, but are we really in recession? To pinch the definition used in Kaletsky's article - "A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and wholesale-retail trade. A recession influences the economy broadly and is not confined to one sector." - the argument goes that we have not actually seen evidence of that.

Which brings me onto the question posed at the start. If we are not actually in recession, isn't there a danger that we will convince ourselves that things are worse than they really are? What do people think?

A whip cracks in the darkness of an ancient tomb. Flickering torchlight casts the shadow of our fedora-clad hero as he stoops in the gloom, his hand sweeping away ten thousand years of grime from a forgotten relic. As the dust falls away an ancient clue is gradually revealed and the secrets of a long-dead civilisation come slowly into focus.

Like practically every 20-something bloke I know, I've been swept up in Indiana Jones fever, eagerly anticipating last month's release of Indy 4 by reliving all of those backyard fantasies of fighting Nazis, dodging fiendish booby traps and snatching priceless relics from highly improbable places.

Whether watching an ageing Dr. Jones creak his way through two hours of sci-fi mumbo-jumbo was actually worth the 19 year wait is a matter for debate, but the recent tidal wave of Indy mania got me pondering our own place in the annals of recorded history.

And I came to the conclusion that we're a future anthropologist's dream come true.

To help us save the planet, what we need is lots of really heavy rubbish.

Go on. Start throwing it in the recycling bin. The more it weighs, the better.

That's nonsense of course - so why do we give our local councils recycling targets measured by the tonnes of waste collected?

As part of it's recent Climate Change Festival, Birmingham City Council challenged all residents "to increase the amount of waste they recycle over the coming months by at least 20 kg per person."

I was discussing the issue with someone who knows the waste management industry pretty thoroughly (someone who journalists writing about fortnightly bin collections would call 'an industry insider').

So, i'm a bit behind on this story (and on my blog) but when the new OGC logo was unveiled a few months back something happened to me which has born a new obsession for amusing designs. By now most people will have seen, read about or laughed at the new OGC logo commissioned by the HM Treasury. Aside from costing £14,000 to create and being pretty underwhelming in appearance the main focus of attention has been the completely unintentional appearance of the logo when rotated 90 degrees. Suffice to say, a few red faces must've ensued given that the error wasn't spotted until the logo had not only been unveiled but also printed on a load or collateral including mousemats and pens! The point of this blog however, isn't to talk any further about that logo in particular by instead about the joyous OCD I now have for hunting down these 'design classics'. Perhaps it's the morbid fear that as a designer myself one day I could be responsible for one of these amusing slip-ups, but either way this month has been a month of coffee break 'googles' for more of the same.

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I'll begin with a confession - this is really a plug for my favourite telly programme masquerading as a business blog. So, first up, let's hear it for the best thing on TV by a country mile - Location, Location, Location hosted by Phil Spencer and Kirstie Allsopp. Brilliant presenters who are witty, authoritative and very good at what they do. They also combine a great personal chemistry with a passion for their work. And Mrs P gets to shout at the telly when the couples Phil and Kirstie are helping ignore their advice. What more can you want out of an hour of light entertainment?

But the latest series has adopted a more serious tone as Kirstie and Phil consider how to stop the bottom falling out of the housing market. Their solution - asking the government to take a serious look at stamp duty.

If you've bought a house, then there's a strong chance that you've come across stamp duty (or stamp duty land tax to give it its full name) and you may well think it's rather unfair. I certainly do.

In fact, I'd go further - in the 21st century, it's a real anachronism. That's because most taxes are based on something tangible - income, capital gain or value to think of three of the most obvious ones. Stamp duty isn't. No: it's the cost of getting a bit of paper that the government insists on before you can register your purchase at the Land Registry. The cost to you depends on the value of the house. Up to £125k, there's no charge. Then it's 1% of the purchase price up to £250k, 3% up to £500k and 4% for houses worth more than that. The average house price in England and Wales is £183,626. So, if you have bought an average house recently, there was nearly 2 grand extra on the bottom line in return for a bit of paper. It's perhaps no surprise that the total value to Alistair Darling is north of £7 billion.

Kirstie and Phil aren't advocating the abolition of the tax altogether, and it would be naïve to expect the government to find an extra £7 billion by magic from another source. Rather, their concern is to keep the property market buoyant - the volume of sales has fallen by roughly 30% between February 2007 and February 2008.

Their suggestion:

(i) First time buyers should not have to pay stamp duty when the value of the purchase property is under £250,000.

(ii) It should then be graduated for everyone else so that buyers generally pay 1% on the first £125,000 to £250,000. Above this threshold, the 3% would only be charged on the amount over £250,000 (rather than the full amount) and similarly the 4% only on the amount over £500,000.

Am I the only one who thinks that there's a lot of sense in this?

Two things trouble me about social media. The first is that everyone I read or connect to via Twitter or Facebook or whatever, seems to be having a much more exciting life than me. It's a world of gallery openings, launches, great nights out or simply wonderful sunny, lazy days untroubled by personal dramas or upheavals.

Not that I'm jealous of course. Well actually of course it's because I'm jealous. I even get invited to some of the same events that my friends and colleagues go to I just never seem to get round to going to them - either through a lack of willing babysitters or, more likely, a general acceptance that I'm a long way from being renaissance man. A beer and night in front of the telly are usually all the cultural activity I can muster after a day at work.

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Last night, my wife assured me that, at the age of 37 and ÂŞ, I have officially become a grumpy old man. The cause of my ire: the blinking ugly electricity pylon which has been plonked in Victoria Square as the "centrepiece" of Brum's Climate Change Festival.

According to the organisers:

"The pylon brings home the reality of climate change - it makes the issue of climate change visible and local. It isn't just happening far from home and in the future: it's happening here and now...The climate change festival has been designed to make the invisible (carbon emissions) visible, and the idea lies at the heart of our problem with energy: we are rarely conscious of how much we use."

Am I the only person who thinks this is utter gobbledygook?

Don't get me wrong, I am very concerned about climate change (who isn't?) and try my best to be a responsible citizen. I also work with clients who are passionate about building a new generation of carbon-neutral buildings (although the jury is still out on what carbon-neutral actually means).

I know it's not fashionable in some quarters to admit it, but I found Al Gore's An Inconvenient Truth a very disturbing film and I worry like crazy about the future of the planet (especially the fact that no-one appears to be agreed on what the solution - or indeed the cause of the problem - actually is).

But, I also drive a car, heat my home with gas, watch the telly and fly places on holiday - and so do lots of other people. Those are facts of modern life and will continue to be so for the foreseeable future. If, as I suspect is the case, the pylon is supposed to make us feel guilty about living (and consuming electricity), then I can't help but feel a wee bit patronised. It is also hideously ugly and ruins the best bit of our city centre.

I also agree with this comment I saw on the web-page of Building magazine, the key journal for the construction industry in the UK: "If the organisers feel people need to see a giant pylon to get the point, why there are plenty within five minutes of my house - it would have cost nothing to show people those".

The only saving grace: the wretched thing gets dismantled on the 8th.

We've heard suggestions before that the London Olympics is going to suck money out of the regions.

Our own market square project for Kings Heath could be the sort of minor victim if, as one voice suggested at a recent meeting, all the Lottery money is going to pay for the spiralling Olympic costs. Without this it would have come our way for local regeneration projects of course (?)

There's also the suggestion I've heard that the massive construction projects in East London, as well as CrossRail etc, will increase the demand for labour and building materials so that the price for other UK projects (such as New Street Station?) are forced upwards.

If anyone has got any ideas whether either of these will actually materialise, please let me know.

But here's a new one on me. The global cost of steel is, I'm told, being forced up by the Beijing Olympics, now only a few months away.

Business authors

David Bailey

David Bailey - Prof David Bailey, Coventry University Business School
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Stuart Pemble

Stuart Pemble - Construction Lawyer, Mills & Reeve
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John Clancy

John Clancy - Birmingham City Councillor and director of mediafuturesalert.com and justliteracy.com
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John Samuels

John Samuels - Professor of Business Finance, Birmingham Business School
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Chris Tomlinson

Chris Tomlinson - Chris Tomlinson is the founder of social media and online PR agency Friend (frienddigital.com)
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Andrew Whitehead

Andrew Whitehead - Senior partner at law firm SGH Martineau, leading the firm's Energy & Climate Change practice.
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Keith Gabriel

Keith Gabriel - A Birmingham-based PR Account Manager
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Beverley Nielsen

Beverley Nielsen - Lecturer, Design Management, at the Birmingham Institute of Art & Design, BCU
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Mike Loftus

Mike Loftus - Director of News from the Future Ltd. Writing on the trials of setting up your own business
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Richard Halstead

Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
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Karl Edge

Karl Edge - partner at KPMG in Birmingham, specialising in automotive, manufacturing and house building sectors.
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Peter Owen

Peter Owen - Managing director for construction firm Willmott Dixon Midlands.
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Doug Mahoney

Doug Mahoney - International Trade Director at UK Trade & Investment in the West Midlands.
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Dr Steven McCabe

Dr Steven McCabe - director of research degrees for Birmingham City Business School.
My postings | Dr Steven McCabe's RSS feed My feed

Francis Greene

Francis Greene - Professor of Small Business and Entrepreneurship, at the University of Birmingham.
My postings

Alan Gilmour

Alan Gilmour - Director at Cogent Elliott, experienced in marketing, brand development and customer relationship management.
My postings

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