November 2007

NEWS

Darling strikes cautious note in first Budget Report
The new Chancellor of the Exchequer, Alistair Darling, made his first Pre-Budget Report (PBR) to the House of Commons in October, following Gordon Brown’s elevation to the post of Prime Minister over the summer. Among measures announced were changes to capital gains tax and inheritance tax, a flat-rate fee levied on non-domiciled residents and an increase in air passenger duty.

The change most likely to affect businesses was the abolition of taper tax relief on capital gains to create a single rate of 18 per cent. The change was designed to close a tax loophole that benefited private equity firms, but business organisations criticised it, pointing out that it would also hit small businesses and entrepreneurs. Business leaders met Mr Darling in late October to raise their concerns, and talks are ongoing.

In another move, the chancellor announced plans to levy a $60,000 flat rate charge for non-domiciled residents in the UK. Wealthy foreigners will pay the charge if they have lived in Britain for seven of the past 10 years, from next April. Individuals can claim non-domiciled status if the country with which they have the deepest connections – usually their place of birth – is outside the UK. This allows them to avoid paying tax on their overseas income and on capital gains.

The Chancellor also announced constraints on Britons living abroad that make frequent return visits to the UK. At present, individuals are allowed to spend 90 days in the UK without being taxed as a resident, but in future days of arrival and departure will also count as days spent in the UK. The new rules on residence and domicile are expected to raise an extra $1.6 billion for the Treasury in 2009-10 and $1 billion in 2010-11. They are likely to affect sports people, the super-rich, entrepreneurs and employees in financial services, the oil industry, high-technology companies and the health service.

The air passenger duty paid by customers on business class-only airlines will double to $160 from November 2008, closing a loophole whereby they paid the economy class rate. Duty for all passengers will be fundamentally reformed from November 2009, with the system switching from a tax on passengers to one on aircraft, based on the length of journey and total emissions. Mr Darling said that these changes would raise $1.04 billion by 2010.

Also in the PBR, the Chancellor raised the inheritance tax threshold for married couples and people in civil partnerships, with the rise backdated for widows and widowers. (Like the move on non-domiciles, this was seen as a popular reform – and one that had also been proposed by the opposition Conservative Party the week before.) Changes to the state second pension, however, saw a reduction in entitlements.

On the macroeconomic level, Mr Darling reduced his growth forecast for the UK economy in 2008 from 2.5-3 per cent to 2-2.25 per cent. At the same time, he announced an increase in public borrowing for 2008-09, up by $14 billion to $72 billion. Expenditure on health services would rise by 4 per cent in real terms in 2008-09 and in 2010-11, he said, while there would also be an extra $4 billion in public spending starting from 2010-11. A new single budget, rising to $7 billion in three years’ time, will cover police, security services and other anti-terrorism operations.


Local authorities gain power on business and property taxes
In other recent changes to legislation, the Government has given local authorities the right to raise extra revenue from businesses through a supplementary business rate, to finance projects such as improvements in transport infrastructure. The measure has proved unpopular with business groups, but the Government claims that the vast majority of businesses will be exempt. Only properties with a rateable value of more than $100,000 will be liable to pay, it says, which will exclude more than 90 per cent of business properties.

The Government proposes continuing to set business rates centrally and restricting any supplementary rate to 2p in the pound, less than 5 per cent of the current business rate. Also, proposals for a supplement will require consultation: if businesses are to contribute more than a third of the cost of a project, they must be balloted on it.

In another move, a controversial policy to tax development land has been abandoned, with the Government giving in to pressure from the property industry for an alternative ‘roof tax’ system. Instead of the proposed planning gain supplement (PGS) – a tax on the uplift in value of land after planning consent has been granted – it will introduce a ‘planning charge’ proportionate to the size and scale of the development. Tariff-based schemes are already operated at a local level by some 25 local authorities, including Milton Keynes and the City of London.

The charge will apply to both residential and commercial developments, and is expected to be calculated as a set amount per dwelling or per square metre of space. Developers will make payments to the local authority, with the charge including a contribution towards regional infrastructure. The Government is currently consulting on the tax, and will present it to Parliament in November as part of the planning reform bill.

 

Record returns for UK companies as economy continues to grow
The profitability of UK corporates, excluding the financial sector, accelerated to a record high in the second quarter of 2007, according to the Office for National Statistics (ONS). Companies outside the financial sector hit a new peak in profits, with a net rate of return of 15.7 per cent. The figures related to the period before the autumn’s market volatility and ‘credit crunch’ but, said economists, they suggested that British companies were better placed than most to withstand such pressures.

The net rate of return for non-financial companies jumped to 15.7 per cent in the three months to June, up from 15.1 per cent in the three months to March, while the rate of return on capital employed for manufacturing firms rose to 8.4 per cent from 5.6 per cent, according to the ONS. For service companies, the net rate of return reached an all-time high of 21.4 per cent, up from 21.2 per cent, while that for North Sea oil companies rose to 30.7 per cent from 25.3 per cent.

All trends in profitability have been rising strongly since the beginning of the decade, said the ONS. According to analysts, the main reason for this is the UK’s sustained rate of economic growth, which was running at around 3.1 per cent a year before the recent market difficulties. This has been aided by a strong pound and a weak labour market, which have helped to keep down costs.

“Record profitability in the second quarter of 2007 indicates that most UK companies are currently in a healthy financial state and are well-equipped to withstand the credit crunch,” commented Howard Archer, chief UK economist at analyst Global Insight.

Further data from the ONS show that, between July and September, the UK economy grew at its fastest annual rate for more than three years. Gross domestic product (GDP) grew by 0.8 per cent from the previous quarter, and the annual rate of growth stood at 3.3 per cent during the period, above expectations of 3.1 per cent and the strongest rate since the second quarter of 2004. Growth was driven by expansion in the service sector, particularly in hotel, restaurant and retail businesses. The ONS data came on the back of upbeat figures for both retail sales and the labour market.

As expected, the Bank of England left interest rates on hold at 5.75 per cent in October, opting to wait and see how the turmoil in financial markets might affect the wider economy. Many analysts believe that interest rates have now peaked, although there is disagreement as to when a cut might be made. Some observers suggest that it may be as early as November, following the example of the US Federal Reserve and in the hope of avoiding a slowdown in the economy. Others, however, do not expect the Bank to move before 2008.

UK FDI hits $1 trillion as global investment grows
The UK received foreign direct investment of over $1 trillion for the first time in 2006, according to the annual World Investment Report from UNCTAD (the United Nations Conference on Trade and Development). The UK attracted $1,135 billion in foreign direct investment (FDI) stocks, once again more than any other European nation and, globally, second only to the USA. Compared with other leading European economies, the UK was $353 billion ahead of second-placed France. Belgium was third, with $603 billion, and Germany fourth with $502 billion.

“This landmark figure highlights that the UK environment, which offers commercial stability, fair and efficient regulation and support for innovation, is working,” said Minister for Trade and Investment, Digby, Lord Jones of Birmingham. FDI flows into the UK were the second highest in the past ten years, although the total showed a marked a decrease on 2005, when figures were skewed by the reclassification of Royal Dutch Shell as a Dutch-owned company.

Globally, FDI flows in 2006 amounted to $1,306 billion, an increase of 38 per cent compared with 2005. This was the highest total since 2000, when inflows hit a record $1,411 billion. Growth was due to strong global economic growth, high corporate profits and a boom in mergers and acquisitions (M&A) activity, said UNCTAD, with 172 mega-deals each worth more than $1 billion accounting for about two-thirds of the total value of cross-border M&As.

Another notable trend was the growing significance of private equity funds and other collective investment funds. In 2006, such funds were involved in cross-border M&As valued at $158 billion, an 18 per cent increase over 2005. The stock of FDI worldwide reached $12 trillion, driven by investment by some 78,000 transnational corporations (TNCs) and their 780,000 foreign affiliates.

Growth was recorded in all three types of economy: developed countries, developing countries and the transition economies of South East Europe and the Commonwealth of Independent States (CIS). Inflows to the US rebounded to $175 billion, restoring it to its position as the largest recipient of FDI, after it was displaced in 2005 by the UK. France attracted the third highest total worldwide. Among high-growth economies, China attracted $292 billion, followed by Brazil with $221 billion and Russia with $197 billion. Singapore also performed well.

According to UNCTAD, FDI inflows this year are on track to surpass even 2000 levels, despite the problems in financial markets. Preliminary estimates by the Geneva-based agency suggest FDI this year of $1,500 billion, partly due to strong M&A activity before the credit squeeze made itself felt. Cross-border M&A activity rose by 58 per cent to $581 billion in the first half of the year, compared with the same six months of 2006. However, financial instability and high energy prices made forecasts uncertain, and UNCTAD expected FDI this year to grow at “a somewhat slower rate than in 2006”.
 

London retains pre-eminence as European business location
London has once again increased its lead over Paris as Europe’s top city in which to locate a business, according to European Cities Monitor (ECM), the annual location survey of Europe’s leading companies carried out by real estate consultant Cushman & Wakefield.

The UK capital was the top-rated city for six of the 12 factors rated by the survey. It came first on easy access to markets, qualified staff, external transport links, internal transport, telecommunications and languages spoken. It improved its score in areas such as the climate created by government (up three places to number two), though it fell nine places to 25th for cost of staff.

The ECM survey is based on interviews with senior managers and board directors in charge of location at 500 top European companies. It considers factors regarded as important by companies when deciding where to locate, and compares the performance of 33 leading European business cities on each factor. This year, the availability of qualified staff, considered an ‘absolutely essential’ factor by 62 per cent of respondents, overtook access to markets as the most important factor to consider when locating a business. In third place was quality of telecommunications, overtaking external transport links.

In last year’s ECM poll, London achieved a weighted score of 0.91, which this year increased to 0.92, while Paris’s went from 0.59 to 0.57. Behind London and Paris came Frankfurt and then, closely grouped together, Barcelona, Amsterdam and Brussels. The three biggest risers in the rankings were Geneva (up eight places to 12th), Lyon and Manchester, which rose three places to 18th.

London and Paris remain the best-known business locations, although the gap between the two has narrowed. Barcelona, Madrid and Prague are seen as the cities doing the most to improve themselves as business locations, followed by Warsaw, which has overtaken Berlin and Budapest. Dublin this year came top for the business climate created by government, and Stockholm scored best on freedom from pollution. In a new category, London was top for business hotels, followed by Paris and Barcelona, while Barcelona scored best for residential accommodation for expatriates.

Moscow was top for future expansion over the next five years, with 63 of the 500 sampled companies expecting to locate there. Moscow was thought to provide the biggest business opportunities among Europe’s ‘emerging’ eastern cities, followed by Bucharest and Istanbul. Paris was number one among Western European cities, while for new global locations Shanghai was top, followed by Beijing and Mumbai.

Among other findings, companies said that the growth of China as a market for products and services would have the greatest impact on business over the next ten years, followed by the enlargement of the EU. More than a fifth (22 per cent) of companies had relocated or outsourced to another country in the past 12 months, with 51 per cent choosing one of the new EU member states in Central and Eastern Europe and 35 per cent another Western European country. The same proportion planned to relocate/outsource to another country in the next two years.

James Young, head of the City of London office of Cushman & Wakefield, said: “From year to year London is consolidating its position as part of an elite group of global cities, together with New York and Tokyo. With the Olympic Games on the horizon in 2012, providing there is no major global economic downturn, London’s future seems to be only in one direction – up.”

Regional cities score highly on quality of life indicators
Closer to home, London retains its pre-eminence within the UK, but Manchester has overtaken Birmingham as the second most popular business location, according to another Cushman & Wakefield survey. The company’s UK Cities Monitor survey, now in its second year, polled more than 200 companies, ranking UK cities on similar criteria to its Europe-wide survey though with additional ‘quality of life’ indicators.

The top fifteen UK business cities were London, Manchester, Birmingham, Bristol, Leeds, Glasgow, Newcastle, Edinburgh, Liverpool, Cardiff, Nottingham, Sheffield, Southampton, Reading and Belfast. Bristol overtook Leeds to claim fourth position, while Edinburgh was a new entrant to the top 10.

Ease of recruiting qualified staff was considered by companies to be the single most important factor, followed by easy access to customers and clients. Cost factors, in terms of both property and labour, were the next most important. Staff recruitment and retention were seen as having the greatest impact on business over the next ten years, followed by government regulation. Conflict and terrorism, on the other hand, were not seen to have a major impact on business. Nearly 23 per cent of companies surveyed had relocated to another lower-cost location in the past 12 months, with the UK the favoured destination, followed by China.

Although ranking behind London overall, regional cities ranked higher on a number of individual factors. Manchester was rated the best city for a new headquarters or back office function and top for availability of office space. It was also rated the city doing the most to improve itself. Glasgow was judged to be the best location for a new call centre. Nottingham was thought to offer the best value for money in terms of office space, while Newcastle scored best on staff costs. Birmingham topped the category for external transport links, while Edinburgh won out on quality of life and freedom from pollution. London still topped several categories, among them the best city for a lively environment.

In terms of company expansion, Manchester can expect the biggest influx of companies over the next five years, followed by Birmingham and Bristol. Outside the major centres, Aberdeen and Milton Keynes were considered the most important for business, closely followed by Leicester and Oxford.

Adrian Hill, head of business space, Cushman & Wakefield said: “It’s clear that senior directors of UK companies overwhelmingly favour the country’s three largest cities principally because of their population, access to markets and transport infrastructure. However results also show that softer factors such as quality of life are deemed increasingly important for a firm’s employees.”

In another survey, by holiday review site TripAdvisor, world travellers have voted London the best city for public transport for the second year running. The UK capital also topped the poll for having the safest public transport, the best subway or metro system and the best taxis. However, travellers considered London to have the most costly transport system, and it was only the fourth cleanest, after Washington DC, Tokyo and Paris. New York was runner-up to London as having the best public transport system, but it was also the second most expensive. Los Angeles emerged as the city with the worst public transport system.

London cements position as world leader in finance

Regulation and tax continue to be seen as the most important determinant of a financial centre’s overall competitiveness. Michael Snyder, Chairman of Policy and Resources at the City of London Corporation, responsible for the city’s financial services sector, said; “The UK’s recent 2 per cent cut in corporation tax shows that central government is committed to improving conditions for doing business. This enhances London’s position against New York.”

Among other key findings, London now attracts a greater proportion of foreign IPOs than New York and is contesting New York’s dominance in private equity and hedge funds, claiming management of 21 per cent of global hedge funds. Its Alternative Investment Market (AIM) attracted more listings than all its global rivals combined last year, raising $29 billion in primary and secondary listings. Despite higher property costs, London’s occupancy rates also remain strong and it has a higher volume of real estate transactions than any other city. In New York, meanwhile, negative perceptions of the Sarbanes-Oxley regulations are compounded by a propensity to litigation and high brokerage charges, according to the report.

London scored 806 points out of a theoretical maximum rating of 1,000 in the GFCI survey, up from 785 in March. New York scored 787, Hong Kong 697, Singapore 673, Zurich 666 and Frankfurt 649. Shanghai (in 30th position), Beijing (39th) and Mumbai (41st) all lost ground but, along with Dubai and Moscow, they were named as the top candidates for growth in the next two to three years.

Further evidence of London’s financial lead position comes from the triennial survey by the Bank for International Settlements (BIS). This shows that London’s dominance of the global foreign exchange market is continuing to grow sharply, while the shares of New York and Japan are declining.

The UK’s share of forex trading volumes jumped from 31.3 per cent in April 2004 to 34.1 per cent in April 2007, more than double the share of the US, its nearest rival, which saw its market share fall from 19.2 per cent three years ago to 16.6 per cent now. Japan’s share of the market has fallen to its lowest level in at least 12 years, with trading volumes declining from 8.3 per cent of the global total in April 2004 to 6 per cent in April 2007 – its lowest level since the survey began in 1995.

Most of the world’s large currency investors are now based in London and, according to analysts, the city’s pre-eminence allows them to benefit from economies of scale. “The biggest investors like to trade where there is liquidity. Once you obtain critical mass, it has a tendency to feed off itself,” commented David Woo of Barclays Capital. London has also become the preferred trading centre for Asian central banks, which have built up huge foreign exchange reserves in recent years. In addition, London’s time zone makes it a much more convenient place for them to trade than the US.

The survey showed that global average daily volumes on the forex markets grew by 71 per cent from $1,880 billion in April 2004 to $3,210 billion in April 2007. According to the BIS, this huge increase has been fuelled by increasing activity by hedge funds, growing interest from retail investors, and greater use of forex as an asset class by institutions such as pension funds.

In another development, the London-based PLUS Markets Group (PMG) has achieved a major landmark in its quest to become a serious competitor to AIM by becoming a ‘recognised’ exchange. The Financial Service Authority (FSA) has granted PLUS the same status, rights and privileges as the London Stock Exchange (LSE), significantly improving its relationship with investors. Recognised Investment Exchange (RIE) status is an internationally sanctioned benchmark and is a prerequisite for many investors before they release funds.

Existing member companies should also benefit as they will now be able to access a far greater range of services via the market, according to PLUS. PMG will soon be opening a ‘PLUS-listed’ market alongside its ‘PLUS-quoted’ market. This will be positioned as an EU Regulated Market and will serve the needs of all types and domiciles, including investment trusts, REITs and structured products.
 

Professor Evans is considered by many to have discovered embryonic stem cells. The cell types initially studied by Capecchi and Smithies could not be used to create gene-targeted animals, but Evans showed how embryonic cells could be removed from a mouse and grown separately in the lab. This discovery enabled the scientists to replicate human diseases in mice by introducing genetic changes into the animal’s stem cells.

Gene targeting is now applied across the field of biomedicine, leading to many new insights into conditions such as cancer and heart disease and use in the development of novel therapies. The technique has also helped to shed new light on the ageing process, and on how the embryo develops in the womb. “Gene targeting in mice has pervaded all fields of biomedicine,” said the Nobel Committee in its citation. “Its impact on the understanding of gene function and its benefits to mankind will continue to increase over many years to come.” The $1.54m prize is awarded annually by the Karolinska Institute in Sweden.

Scottish initiatives push development in biomedicine

Fluorescent human embryonic stem cells differentiating into neurons. Picture: Stem Cell Sciences.

A Scottish-based biomedicine business has won almost $600,000 of European Union funding to take part in a multinational drug screening collaboration. International research and development company Stem Cell Sciences (SCS) is to lead the EU’s $3.4 million NEUROscreen project, which aims to use stem cell research to discover new medicines for the treatment of cancer, Alzheimer’s disease, strokes and epilepsy. SCS, which has one of its two UK bases in Edinburgh, specialises in developing technologies to grow and purify embryonic and neural stem cells. NEUROscreen is a three-year project that will bring together leading European academic research institutes and biotech companies from several nations, including Germany and Italy.

Wyeth Pharmaceuticals, a division of US-based Wyeth, has acquired Haptogen Ltd, a Scottish company based in Aberdeen that focuses on biopharmaceutical therapies. Through the acquisition, Haptogen becomes part of Wyeth Discovery Research. Wyeth is a lead partner in the Translational Medicine Research Collaboration, an initiative launched last year that includes the Universities of Aberdeen, Edinburgh, Dundee and Glasgow, as well as regional National Health Service boards and Scottish Enterprise.

Haptogen has developed a number of technologies that allow for the discovery of new protein therapeutics, which can be used to fight diseases that are not treatable with the first generation of protein therapeutics. Founded in 2002 as a spin-out of the University of Aberdeen, its facilities are located on the university’s campus.

AAI (Great Britain) has announced plans to expand its operations in Edinburgh as part of the AAI Group’s European growth plans, creating up to 47 new jobs over the next three years. Based in North Carolina, AAIPharma, Inc. is a global contract research organisation that provides product development and support services to the pharmaceutical, biotechnology and medical device industries.

The company’s strategy is to develop clusters of expertise and excellence, and Edinburgh will host its pharmacokinetic and pharmacodynamic consulting arm, which will establish the therapeutic profile of drugs being tested. Currently AAI is based at the Technopole in Edinburgh, but the company plans to move to the Riccarton area of the city. The new project is being supported by a Regional Selective Assistance (RSA) grant of $800,000.

The Scottish Bioinformatics Forum (SBF) has launched a new website to provide a comprehensive resource of bioinformatics-related activities, research and expertise in Scotland. The site provides a gateway to bioinformatics resources, and will be of value to anyone involved in bioinformatics or who wants to learn more about how bioinformatics can help in life sciences research. Visit: www.sbforum.org.

Government science review aims to boost innovation
Prime Minister Gordon Brown has announced a $2 billion government programme to boost business innovation and applied research over the next three years, along with a campaign to improve science teaching in schools. The programme, based on a comprehensive review of the UK science and innovation system carried out by former science minister Lord Sainsbury, will be led by the Technology Strategy Board. The TSB, which was set up in 2004, will double its expenditure to help boost research to $800 million a year by 2010.

Among opportunities to improve conditions for business innovation identified by the review is better-targeted support for early-stage high-tech companies. To help such businesses attract equity finance, a scheme will be established to channel initial ‘proof of concept’ funding through regional development agencies (RDAs). Another move will be to reform the Small Business Research Initiative to make better use of public procurement to drive innovation.

The Higher Education Innovation Fund will be revised to increase funding to ‘business-facing universities’ – teaching-oriented institutions with links to small and medium-sized companies. In addition, schools secretary Ed Balls announced further spending to implement the review’s science teaching recommendations, including the introduction of accredited physics, chemistry and maths courses to retrain teachers.

In another initiative, the Government has appointed a Senior Innovation Advisor to offer advice on all aspects of business innovation. Peter Davidson will primarily advise the Department for Business, Enterprise and Regulatory Reform (BERR) and the Department for Innovation, Universities and Skills (DIUS), but will also work more widely across Government as needed.

His task will be to strengthen links between the two Government departments and with business sectors. He will work with teams in both departments to review areas of innovation opportunity, and to identify gaps in current innovation policy programmes and strategy. Previously, Mr Davidson worked in various roles at ICI from 1977 to 2004, after which he helped to start up of number of high-tech businesses. The most notable of these was D1 Oils, a sustainable biofuels company which floated on the AIM market in 2004. He was also elected the (then) youngest Fellow of the Royal Academy of Engineering in 1992.


North Staffs takes national title for enterprise
The North Staffordshire Regeneration Zone (NSRZ), a project dedicated to promoting enterprise in a deprived area of the West Midlands, has been named the winner of the title Enterprising Britain 2007. The NSRZ, which covers the urban core of Stoke-on-Trent and Newcastle-Under-Lyme, beat eleven other regional finalists to take the national title.

James Capper of North Staffordshire Regeneration Zone with the Enterprising Britain 2007 national award
 

North Staffordshire – known as ‘The Potteries’ – was once an economic powerhouse, but over the past 30 years has suffered a massive decline in its traditional industries. In 2003, Barclays Bank branded it “the worst place in the country to start a business”. Various NSRZ projects set up over the past six years have helped to reverse this decline by supporting over 500 new start-up businesses in the area, as well as instituting innovative projects in local schools. It has helped to create more than 1,000 new jobs and 21 sustainable social enterprises, and has given more than 7,500 young people the opportunity to run a business.

The Enterprising Britain competition, which is run on behalf of BERR, is a key part of the Government’s drive to increase entrepreneurship. The Paper Trail, a Hertfordshire-based charity that has turned disused industrial buildings into an education, business and heritage centre, was runner up in the competition. Both projects will go on to represent the UK in the European Enterprise Awards later this year.

In the East Midlands, a contract has been signed for the first in a series of first innovation networks (iNets) in the region. East Midlands Development Agency (emda) has appointed Medilink East Midlands to deliver iNet activity through a consortium of partners, including local companies and universities, for the healthcare sector over the next three years.

iNets are an initiative being set up by emda and East Midlands Innovation (its regional Science, Innovation and Industry Council) to exploit new ideas. Each iNet will bring together partnerships of regional businesses, universities, the public sector and individuals around a shared interest in a market sector. Other iNets covering food and drink, sustainable construction and transport equipment are set to follow towards the end of the year and early in 2008.
 

New regulations aim to simplify company law
The Companies Act 2006, which came into force on 1 October and is set to receive Royal Assent in November, has introduced a number of changes aimed at simplifying and improving company law, making it more flexible and easier to understand, especially for small businesses. The Act, which followed extensive consultation with the business community, is expected to save business up to $500 million a year and will create greater shareholder engagement and transparency, according to BERR.

Provisions in the Act include a statutory statement of directors’ duties (other than those on conflicts of interest); an enhanced business review, which for quoted companies must now include information on environmental, employee, social and community issues; and increased rights for indirect investors. In addition, it will establish a new approach to company decision-making, allowing firms to take corporate decisions by written resolution rather than by calling shareholder meetings. Clearer procedures for bringing derivative claims will also be introduced.

Also on 1 October, increases in the national minimum wage came into effect, along with additional annual leave entitlements. The minimum wage has increased from £5.35 ($10.70) to £5.52 ($11.04) an hour for workers aged 22 and over, while for 18-21-year-olds it has increased from £4.45 ($8.90) to £4.60 ($9.20) and for 16-17-year-olds from £3.30 ($6.60) to £3.40 ($6.80). In addition, the minimum annual leave entitlement will increase from 20 days to 24 days for full-time workers, with a further increase to 28 days due on 1 April 2009.

According to BERR, up to six million workers, including 3.5 million women, will benefit from the extra annual leave, while businesses will benefit from a more motivated and productive workforce. Enforcement rules on the minimum wage have also been tightened, with bigger fines for employers who fail to pay and an obligation to repay arrears to their workers at a higher rate.


Green light at last for London’s Crossrail scheme
The Government has given the go-ahead for the long-awaited London Crossrail scheme, with a $32 billion funding deal to secure its construction. Crossrail will stretch across the UK capital, linking Maidenhead and Heathrow in the west with Shenfield and Abbey Wood in the East. It will include new stations at key city locations including Bond Street, Farringdon and Canary Wharf. According to the Department for Transport, it is expected to carry 200 million passenger a year, and will bring an additional 1.5 million people to within 60 minutes of London’s key business areas.

The total length of Crossrail will be 118.5km, including 41.5km in tunnels. The line will serve 38 stations, and 24 trains an hour will run through its central section in each direction at peak times. Work on the project will begin in earnest in 2010 and the first trains are expected to run in 2017. It will be Europe’s largest civil engineering project and will provide London with a world-class railway, helping to support its growth as a world-leading finance centre. It will help add at least $40 billion to the UK’s economy, according to the Government, and will also boost regeneration schemes in areas such as the Thames Gateway.

In a unique deal, the link will be funded both by the Government and by the businesses that are set to benefit from it. The Parliamentary Bill to secure the powers needed to begin construction is expected to get Royal Assent in summer 2008. Prime Minister Gordon Brown said: “I believe this is a project of enormous importance not just for London but for the whole country. By generating an additional 30,000 jobs and helping London retain its position as the world’s pre-eminent financial centre, it will support Britain’s economic growth and maintain Britain’s position as a leading world economy." North East tops list of places to visit North East England has been named as one of the must-see destinations for the coming year in the new edition of Lonely Planet Bluelist 2008. The region is one of only 30 places around the world to make it into the influential travel guide’s section on up-and-coming destinations, and is described as “the most exciting, beautiful and friendly region in the whole of England”. Last year’s edition tipped Belfast in Northern Ireland as an up-and-coming city, and in the same year the city saw a record number of visitors. The Lonely Planet guide highlights events such as the Tynedale Beer Festival, the Stockton International Riverside Festival and The Great North Run. Places it recommends visiting include the border town of Berwick-Upon-Tweed and Kielder Water, both in Northumberland, along with Durham Castle and Durham Cathedral. Durham was also recently named Best City in the UK by Conde Nast Traveller Magazine, while Northumberland was named as the most tranquil place in the country by the Campaign to Protect Rural England.

Regional news
The South East England Development Agency (SEEDA) has awarded $1.9m Selective Finance for Investment in England (SFIE) grant to Brighton-based NCsoft Europe, one of the world’s leading online game publishers, to expand its business and create over 100 new skilled jobs. The NCsoft office in Brighton is the European HQ for NCsoft Corporation, the Korean digital gaming developer and publisher. The company first set up in Brighton in 2004 with three people, and now employs 112. The SFIE grant will facilitate the expansion of its current base and will support its move to new premises in the CityPoint development in two years’ time. The investment is expected to help create 116 new jobs by 2010.

Business class economy carrier MAXjet has launched a new non-stop service between Los Angeles LAX and London Stansted, in the East of England. The service offers business class for the price of premium economy, and includes fast-track check-in, comfortable departure lounges, leather reclining seats, gourmet four-course meals and on-demand entertainment. It also offers an ‘Arrive and Refresh’ facility at London Stansted with complimentary hot showers, spa and a buffet breakfast.

Icape, an international company that specialises in the manufacture of printed circuit boards for a range of industries, has established a UK sales arm in Nottingham in the East Midlands. The French-owned firm received extensive support from East Midlands Development Agency (emda) in deciding to invest in the region. Paul Pinder, its UK managing director, commented: “Icape has an annual growth rate of 30 per cent with a turnover of €20m. There is real scope to nurture our commercial potential, and Nottingham is proving a great place to do business.”

PepsiCo has announced a $30 million investment in a new snack food R&D facility in Leicester in the East Midlands. The lease on the company’s previous UK site was set to expire, and it carried out a pan-European search for a new base before settling on Leicester. The company already owns two Walkers crisps factories in the East Midlands region. The new Technical Centre at the Leycroft Road site will accommodate 175 employees and will serve as the hub of development for Walkers and PepsiCo Foods Europe, which covers an area including the Netherlands, Spain and Russia. PepsiCo plan to move into the new centre by 31 July 2008. “The centre will provide state-of-the-art offices, pilot plants and laboratories to enhance and support our aggressive new product development programme,” said Rob Hargrove, VP R&D Europe PepsiCo.

Susino (UK) Ltd, an umbrella and outdoor equipment maker from the southern Chinese province of Fujian, has opened a UK outdoor product centre in Liverpool, North West England. The company, listed on the Chinese stock exchange, was assisted in setting up its operation by ChinaLink, a Liverpool-based business advisory service that has helped to establish several UK-China trade projects and joint ventures in China for British companies. “We have invested heavily in the last few years in gearing new services toward Chinese investors coming to the UK market and have developed a range of support services, together with our professional and public sector service partners. We are working with Susino on a long-term business plan to help them integrate into the UK market,” said Dr. Kegang Wu, director of ChinaLink.

Brake pad manufacturer TMD Friction UK Ltd is creating 68 new jobs at its Tees Valley site in Hartlepool, North East England. The $4 million investment, supported by a $489,000 SFIE grant from RDA One NorthEast, will help to expand the firm’s production capability, increasing its output from 20 million to 25 million brake pads a year. The company is part of TMD Friction Cayman Ltd, one of the world’s leading manufacturers of brake friction materials, with a head office in Germany. As well as disc brake pads for passenger cars, it produces discs used in motor racing. TMD is one of Hartlepool’s largest employers, and the new development will boost its workforce from 296 to 364 over the next 12 months.

Global healthcare company ConvaTec, part of the US-headquartered Bristol-Myers Squibb Group, is investing $40 million to expand its 30,000 sq ft manufacturing facility on the Heads of the Valleys Industrial Estate in Rhymney, South Wales by a further 15,000 sq ft. The company, which specialises in wound care products, has a significant presence in Wales, with another R&D and manufacturing facility on Deeside, where it employs 950 people. Some 50 per cent of all its products globally are manufactured in Wales, and exported to 120 countries worldwide. The Rhymney site produces material for its Aquacel absorbent dressings, making 100 million dressings a year, or 275,000 a day. This is the latest in a number of expansions since ConvaTec took over the facility from Merck in 1995. Its workforce has grown from 24 people in 2003 to 115 today, and will grow further when the expansion is completed by the end of next year.

A multimillion-dollar investment by US telecommunications company Mformation Technologies promises to create up to 162 new hi-tech jobs in Belfast, Northern Ireland. The company, which specialises in mobile telecoms, is setting up a centre of technical excellence in the city, after receiving funding worth $4.2 million from Invest Northern Ireland. “Northern Ireland offers us an outstanding location option for our growing company, particularly because of the region’s high-quality skills, recognised excellence for academic and industry-focused research, and a compatible business and legal environment supporting the protection of intellectual property,” said Mark Edwards, CEO for Mformation. Northern Ireland Economy Minister Nigel Dodds hailed the announcement as a sign of the country’s strength in the international mobile telecommunications sector.

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