Sheep, cattle and Schmallenberg virus

It was a little over a year ago that a new disease of sheep and cattle caused by the Schmallenberg virus (SBV) hit the headlines. As its name suggests the disease is caused by a virus which is spread by midges which bite the livestock and pass on the virus. The main impact is that it causes stillbirths and birth defects in calves and lambs which can obviously have a significant economic impact on farmers. The disease first raised its head in the autumn of 2011 when farmers reported stillbirths in sheep in East Anglia. It is thought that the ewes had become infected by midges which must have been blown across from the continent where the disease was already well established.
  
Up until recently however I have heard of few instances in this area but in the last few weeks everything has changed and farmers locally are reporting lambs being born with leg deformities in significant numbers and also some calves being lost.

Paddy Gordon from Shepton Vet Group said, "We have recently had a number of non-viable lambs presented with fused joints and we have now had positive results for Scmallenberg in both lambs and in our dairy herds. Our view is that it is likely there has been infection across the county but the effect on livestock will be variable depending on the stage of pregnancy. We are hearing reports of normal lambing and of flocks with a high proportion of lambs affected." Thus it seems the effect is sporadic rather than widespread, but if you are one of the farmers affected it can be a real problem.

This obviously demonstrates that during this summer infected midges must have been active in this area and one assumes the disease is now here to stay. However on a brighter note I understand that animals that have been infected can develop immunity which should help reduce the impact of the disease in subsequent years. One would also assume that if youngstock can gain immunity before they reach breeding age then this would again help reduce the impact of the disease going forward.

There may also be the possibility of developing a vaccine, as I believe vaccines exist for similar diseases but that still does not help those with livestock which have not yet developed immunity either naturally or via vaccination. In these herds and flocks it looks as though losses of calves and lambs could be a problem at least in the short term and it is certainly a worry to a growing number of farmers in this area. Unfortunately there is little that can be done at this stage, as infection will have been spread by biting midges during the summer. Finally I think it is worth mentioning that there is no known risk to humans.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Common Agricultural Policy (CAP) to be delayed

Following failure to reach agreement last week on the overall EU Budget for 2014 to 2020 it seems almost inevitable that this will result in the reform of the Common Agricultural Policy (CAP) being further delayed. This is because it seems difficult to see how the latter can be agreed in detail until it is known how much money there is to spend.

The current form of the CAP was meant to come to an end at the end of this year but with talks still at an early stage the timetable has already slipped a year and it seems now that 1st January 2015 is the most likely date for the reforms to come in to place.

Indeed Owen Patterson, our DEFRA secretary spoke at the European Ministers meeting in Brussels last week and urged ministers not to rush in to the reforms. He explained that the last CAP reform had seen the UK rush into an agreement only to be hit months later by £550m in EU "disallowance" fines. Whether this was the EU’s fault or that of our own Rural Payment Agency (RPA) who were tasked with administering the system, I am not certain.

Whoever was to blame, the introduction of the “Single Payment Scheme” back in 2005 caused chaos, particularly in England and we do not want this to happen again. The problems experienced were a symptom of the fact we carried out some very major reforms in a very short timescale and certainly the RPA did not have time to set up robust computer systems to cope with the complexity of what the politicians had agreed.

Therefore I think Patterson’s call not to rush the reforms this time around is sensible because I am sorting out one or two problematic cases where clients of mine are still arguing over the claims they made going back to 2005. This level of confusion and incompetence must not be allowed to happen again and so if the reforms are to be delayed to 1st January 2015 I hope this will give the politicians time to agree a workable package going forward.

However, farmers must appreciate that whatever is agreed it is likely that the level of support they will receive from the EU will fall in real terms over the coming years and with many livestock farmers still relying on these payments to make a profit, farmers must look to get their businesses in good shape now while market conditions are generally favourable.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Dairy farming and milk production

Following all the milk price protests earlier in the year, it is interesting to learn that UK milk production continues to fall sharply. I suspect this is a combination of the poor weather conditions, affecting the quality of forage and also the number of dairy farmers exiting the industry. What this means is that in October the UK produced 993m litres which is a 6.5% fall on last year’s production for the same month.

It appears that this phenomenon is not restricted to the UK alone. DairyCo, which is a not-for-profit organisation funded by dairy farmers to work on their behalf commented, "Milk production in the rest of the EU and in the USA is lower than expected, adding support to commodity markets. However, trade remains thin and any small change in market conditions could have a larger effect on prices."

Dairy farmers in the UK will obviously be hoping that the apparent shortage of milk production beyond our shores will have a positive impact on world commodity prices and then on milk prices paid to farmers here. It has to be remembered that one of the factors which was blamed by many milk purchasers for the price cuts which sparked farmers to picket milk factories earlier in the year was the low price of cream on the world markets.

One of the factories which was picketed was in Somerset, being the new Wiseman Dairies facility off junction 24 of the M5 near Bridgewater. Since building the facility Wisemans have now been taken over by Muller and so it will be gratifying to those farmers who supply them with milk that they will get a phased 1.5p/litre milk price increase to 30.5p/litre between 1 December and 1 February.

Ronald Kers, chief executive officer of Müller UK & Ireland Group said, "We want to return a higher milk price to farmers so that we can ensure security of supply for our customers in an environment where on-farm milk production is dropping," He went on to comment, "We are determined to be the leading dairy company in the UK and Ireland and the preferred home for milk produced by Britain's dairy farmers and we will work closely with the farmer board to this end."

These are positive words although they do seem rather hollow in the light of the sudden and dramatic price cuts Muller/Wiseman announced without warning earlier this year. Therefore, from the British Dairy Farmer’s perspective let’s hope this heralds the start of a new and more constructive relationship between dairy farmers and milk processors such as Muller because the problems encountered earlier in the year have done nothing to engender confidence anywhere within the supply chain.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Farming: planning for future generations

Succession planning is one of the most important problems to tackle when any business wants to continue in to the future, but for farmers in particular it can be a very thorny problem because it is not only a business it is also the family home which has often been farmed for generations.

In this context one of the biggest worries is divorce and the effect this may have on the ongoing viability of the family farm. There have been many cases where the cost of a divorce has resulted in part or all the farm having to be sold which not only impacts the husband and wife involved in the dispute but also the rest of the family who may have lived and worked on the farm all their life.

Consequently there has often been reluctance for mum or dad to pass the reigns down to the younger generations until very late in the day which can leave the recipients unprepared to take on the responsibility of running the business or in certain instances result in inheritance tax charges which could have been avoided.

Obviously if the older generation like and trust their daughter or son in law, passing the farming assets to the next generation may not be a problem but where this trust does not exist, concerns still remain. However, increasingly farming families are turning to prenuptial agreements which can be entered in to by the husband and wife prior to marriage which define how assets will be split in the event of a divorce thereby safeguarding the farming business going on in to the future.

It is only relatively recently that the courts have confirmed that such agreements are very likely to be taken in to account if the divorce becomes contentious provided they have been entered in to properly. In general this means the agreement must be in writing, both parties must have taken independent legal advice, both parties must have fully disclosed their assets, the agreement must not have been rushed nor should one or other party have acted under duress.

Ideally a Will for the husband and wife should also be written after the marriage to ensure it does not conflict with the prenuptial agreement in the event of death rather than divorce and also the issue as to how children of any previous marriage or children of the new marriage should be treated needs to be addressed.

In addition postnuptial agreements, which need to comply with the same principles as prenuptial agreements, can be used to unlock inter-generational “log jams” after the younger generation have married, thereby solving the problem of family succession.

Unromantic as such agreements are, they are undoubtedly becoming more important in the world of farming, where divorce has the potential to destroy everything a family may have worked for over several generations but it is clearly important that professional advice must be sought before entering in to such an agreement.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Personal Grooming

Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is getting up close and personal.

“Give me the child until he is seven and I’ll show you the man” is a quote attributed to the Iberian-born 16th Century Jesuit missionary St Francis Xavier and when you take a look round at our current crop of political leaders, it’s difficult to disagree with his maxim.

I suppose it was ever thus. But, at a time when the certainties of the economic and political systems with which we’ve grown up and come to depend upon to reinforce our position in the world are being challenged on all sides, we do seem to be examining the personal credentials of our leaders and our leaders’ lives rather more than when things were less shaky.

Indeed, the Leader of Her Majesty’s Opposition spent over an hour at his Party’s conference in the autumn giving us a glimpse of his 1980s’ teenage education at a North London comprehensive school. Yet, neither the school nor the personal disclosure were quite as comprehensive as they might have been. The state school in question has the exclusive ‘London NW3’ postcode and, even in the 1980s, many houses in its catchment area would have been nudging the million plus mark.

If the speech had been given in the 1980s by the Leader of the Labour Party, you would think he wouldn’t neglect to mention that his father was one of the leading Marxist’s thinkers of the 20th Century.

Yet in 2012, he did.

I bet Ralph Miliband could tell his youngest son a thing or two about the dangers of the cult of the personality.
   
So it was with some relief that a notable tweet from @BBCSport in that same week appeared to indicate, momentarily and in less than 140 characters, that sportsmen were better equipped than our politicians to sort out the ongoing financial crisis. It read: “ECB and Kevin Pietersen reach agreement”.

Sadly, the ECB of the tweet was the England and Wales Cricket Board and not the European Central Bank. So it was more wickets and bails and than bailouts.

Now then, KP’s relationships with England’s cricket establishment and his team mates are classic examples of both the cult of the personality and the over reliance on one person to deliver the goods.

So while in politics and sport, to focus too strongly on one personality can be fatal, in business to have a strong, charismatic leader at the helm of a company is often seen as beneficial. Not only that, but it appears that to get ahead in business as a bloke these days you don’t need to get a hat but a shaven pate.

That’s what a recent study by an academic at the University of Pennsylvania’s Wharton Business School has concluded. An accompanying newspaper article referenced Jeff Bezos of Amazon, Microsoft’s Steve Ballmer and UK-grown entrepreneur Allan Leighton as if to ‘bullet-head’ proof the theory in contrast to the luxurious mane of Nick Buckles of G4S.

The research, called ‘Shorn Scalps and Perceptions of Male Dominance’, concluded that we perceive shaven-headed men who sport the ‘power buzz’ fuzz haircut as more powerful than those with a full head of hair because the hairstyle (or lack of) is associated with über-masculine images such as soldiers and Hollywood blockbuster heroes.

You see why the only observation I make, by way of a conclusion here, is that the leaders of our three main political parties all have fulsome heads of well-coiffured hair. And then there’s the Boris.


Will Mooney MRICS
Partner
Commercial, Cambridge

Milk Quota for Dairy Farmers

Dairy farmers have been feeling the pinch recently but they should still ensure they are keeping up to date with all the latest professional advice because failure to do so could be costly. In this context Milk Quota springs to mind.
  
Milk Quota is an invention of the European Union (EU) which was introduced in 1984 in order to limit production and nearly 30 years quotas are still with us but how the farming landscape has changed in the intervening years. Back then farmers were subsidised to produce food and the markets were underpinned by intervention support which meant the EU (or EEC as it was then) used to purchase produce when the price fell below a certain level thereby underpinning the market.

This not unsurprisingly led to massive over production as supply was not linked to “demand” and as a result huge stocks of milk and milk products were stockpiled in intervention stores across the EU giving rise to the so called “milk lakes” and “butter mountains”. As a consequence the EU introduced Milk Quotas on 2nd April 1984 which prevented farmers producing more than their allocated quota by imposing penal fines for overproduction.

In the early years following their introduction, the volume of Milk Quota held by a farmer was the most significant limiting factor on production because almost overnight the amount of milk UK farmers could produce had been cut by approaching 20%. This was a hard time for dairy farmers and if they wanted to sustain their level of production they needed to acquire Milk Quota.

Thus a market to buy and sell Milk Quota soon developed and by the mid 1990s when milk prices were high in the immediate aftermath of the de-regulation of the milk industry in 1994, the price of Milk Quota rocketed. Farmers facing fines for overproduction were forced to buy Milk Quota at prices as high as 80p per litre.

However, since then the EU has decoupled subsidies from production and farmers are now exposed to world markets and as a consequence the rules of supply and demand are the primary drivers influencing production and therefore the EU intends scrapping Milk Quota in 2015. But herein lies a potential opportunity for dairy farmers because as production has fallen so too has the demand for Milk Quota which is now only worth in the order on 0.2 p per litre – less than a quarter of one percent of its peak value.

This may not seem like an opportunity but it is in that if a farmer can crystallise this capital loss by selling his Milk Quota and then purchase it back, this capital loss can be “banked” now and can be offset against any capital gains in the future. So, dairy farmers who have not already taken advantage of this opportunity should do so without delay although tenants should be aware that consent of their Landlord may well be required to sell Milk Quota.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Let’s go fly a kite…

08 October 2012, With apologies to Mary Poppins, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is not in the party mood this conference season.

The mainstream political parties are in conference mode but these events are not, in modern times, the kind of seaside shindigs of old. Metropolitan locations of Birmingham and Manchester are preferred to Blackpool these days with just the Liberal Democrats sticking to the seaside tradition in Brighton this year.

But that’s not to say there isn’t breeze enough in these cities to encourage as much kite-flying on the policy front in the coming month as in the past one.

There’s been the great hope that the country’s fortunes can be revived by up to 8 metres worth of building extensions. Capitalising on the fervour of our victorious summer of Jub-Olympics, you’d be forgiven for thinking that it’s the patriotic duty of every householder and landlord of a small business unit to build on this success.

This is an offer for a limited period only and to no more than 25 ft or so, and as long as the property’s not in a conservation area or the owner of a listed property and other caveats which include not annoying neighbours.

Unfortunately, this kite is now being firmly tethered by local authorities who, although of the same political hue as central government, just don’t want to play that particular game.
You have to wonder whether this policy won’t go the same way as that plan to sell off the country’s publicly owned woodlands. If you remember that from last year. I had to be prompted myself.

Then we had another dusting down of the proposal for a British Business Bank (BBB). Vince Cable, as Business Secretary, advised that it would be a bank for ‘gazelles’ – those young, agile companies who were fleet of foot (or hoof) and would be looking for ‘patient lending’ over a 20 year period.

News of the BBB was received quite coldly by hardnosed financial commentators, not least because it was announced on the very same day that the Public Accounts Committee aired the failure of the Regional Growth Fund.

Launched by the Deputy Prime Minister in September 2010, with a target of making 36,800 jobs through a fund of £1.4 billion to ‘real’ companies, two years on from its launch, just £60 million of the Fund had been taken up by companies with less than one in fifteen of the jobs target reached so far (2,400 jobs).

Aside from ‘events, dear boy’, it’s all about timing in politics.

For on the same day (11 September), I attended the official launch of the Cambridge & Counties Bank (CCBank) - which is owned by Trinity Hall, one of the oldest of the Cambridge colleges, and Cambridgeshire County Council’s pension fund -and on whose attributes I’ve commented on before.

At the risk of sounding like an A level question, BBB and CCBank: compare and contrast. There wasn’t a national politician in sight at the CCBank launch, thanks to the Cabinet re-shuffle the previous week which saw both the former and the new Financial Secretary to the Treasury unable to fulfil the gig commitment made previously.

What there was, encouragingly, was the reaffirmation by the CCBank that it recognised that business finance is a long game. As a start-up business itself, it’s geared-up to lending for up to that same patience period of 20 years that the BBB would do.

Mingling with the great and the good of Cambridge - and beyond - at the CCBank launch, I sensed that is the very model of a modern business bank and I couldn’t help but feel sorry for the Business Secretary who’d floated his BBB proposal that very morning.


Will Mooney MRICS
Partner
Commercial, Cambridge

Single Farm Payment rate change

Last Friday saw the rate at which farmers are paid the so called “Single Farm Payment” set and it will not make particularly happy reading. This is because the 2012 payment will be approximately 8% less than last year.

Single Payment, as it is more properly described, is the primary source of support farmers receive from the EU via the Common Agricultural Policy and is defined in Euros. The payments are then converted to pounds at the exchange rate prevailing at the end of September, which this year as was last Friday as 30th September was a Sunday.

The 2012 exchange rate was 79.805p per Euro which compared to 86.6665p per Euro last year, hence the unwelcome fall in income. This comes on top of a poor growing year and difficult harvest which has impacted on both arable and livestock farmers alike but it is probably the beef and sheep farmers who will feel the loss in EU support payments the most. This is because such payments still remain a vital source of income for livestock farmers, many of whom would lose money without them.

However, of perhaps more concern to most farmers is the ever increasing stringency of the Rural Payment Agency’s (RPA) farm inspections. The RPA is the body charged in England with running the Single Payment Scheme on behalf of the government and their inspectors seem to be becoming more and more exacting.

In particular their harsh interpretation of the Cross Compliance rules is becoming a matter of great concern. There are a vast number of such rules and ensuring compliance with every single one, however trivial they may seem, would be a challenging task even if one employed a full time member of staff dealing with this alone. However, the reality is that ensuring compliance with such rules is just one of the many tasks that farmers have to deal with on a day to day basis and I would suggest very few of them will ever be able to ensure 100% compliance 100% of the time.

Failures at inspections can lead to significant sums of money being withheld from and individual farmer’s Single Payment and there is little doubt in my mind that as time goes on these “fines” will become more and more significant. So farmers are advised to dust out the Cross Compliance guidance books and refresh themselves on what is required because failure to adhere to the rules may prove expensive.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Game on for Cambridge makers

It’s back to school and back to work this coming month for many and while gearing up for a busy autumn, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, shows how there was no summer slouching in Cambridge.

With the nation still basking in a post-Olympics glow which looks set to be sustained by the achievements of our Paralympians, we’re told we’re returning to our desks in a new, positive frame of mind.

Positive in spirit and mindset at least, as we’re still faced with what’s become the certainty of economic uncertainty.

The regular round of statistics – inflation up, joblessness falling, employment rising yet GDP down in consecutive quarters – continues to baffle our brightest and best economists and policy makers.

Added to this, was a report by a core of MPs which has the British workforce down as ‘among the worst idlers in the world’ and bemoans our lack of productivity in comparison with our Brazilian and Chinese peers.

Taking a look around Cambridge, one could hardly accuse it of idling the summer away. Far from it. The summer months have seen commercial and business interests fired-up by various issues and announcements.

The beginning of August saw the new bank, Cambridge & Counties - which is owned by Trinity Hall, one of the oldest of the Cambridge colleges, and the county council’s pension fund - confirm that it had approved loans to the tune of over £2 million with an eye on a further £6 million commitment in the pipeline.

Fast and efficient work as it only opened officially for business in June which was also when the Government welcomed its establishment.

While, at first, our newest bank is focusing on lending to SMEs – with loans secured against commercial property - it does have retail bank ambitions too in the future.

What a banking contrast to our return from holiday in September 2007, when, like in many UK cities, we witnessed customers queuing in Cambridge to withdraw their deposit and close current accounts at the Northern Rock branch.

The queues were the harbinger of what was to transpire a year later when the term ‘credit crunch’ was coined and which been in use as common currency since then.

Interesting- and most encouraging for those of us in the property business - that the Cambridge & Counties Bank is securing loans against commercial property.

The enduring investment value of bricks and mortar for those in it for the long term received further fillips, locally, during the summer.

Last month saw councillors’ unanimous approval in a process which will bring forward the next stage of the substantial development of North West Cambridge. This is development on a scale which will see 2,000 student bedrooms and 1 million sq ft of academic, research and commercial space.

Also of commercial property note are the plans for a new, four-storey building at St John’s Innovation Park on which Savills is acting for St John’s College and on which public consultation was running over the summer.

In mid-August came the news that private healthcare provider, Nuffield Health is planning to replace its Trumpington Road hospital – built in the 1920s and for those of us who’ve been around almost as long, still known locally as ‘The Evelyn’ - with a brand new £25 million state-of-the-art facility.

So it’s been a busy time for Cambridge businessmakers but it’s also been a busy summer for the city’s policymakers as the City Council and South Cambridgeshire District Council both launched discussion about housing numbers and locations in July which will see pressure on the city’s green belt.

Far from being the silly season, this past summer has seen news of some august property projects taking great leaps forward either in rising apace from the ground – look at the rapid progress of both the Eastern Gateway entrance and cb1 – or in planning for the future.


Will Mooney MRICS
Partner
Commercial, Cambridge

A game of patience anyone?

With both the negotiating and conveyancing stages of residential transactions increasing exponentially, the tendency is for agents and their clients to become frustrated as a potential agreed sale, let alone exchange of contracts, appear to be well beyond the horizon.

With the right approach however, sales are being agreed, exchanging and completing but the entire process requires a greater degree of patience.

For the majority of properties, certainly in the Bath area, the days of quick-fire negotiating and rapid agreements on price are a thing of the past. This is currently due to both buyers and sellers rather than one party or the other.

The best opportunities for sellers to achieve the best price is within the first four weeks of marketing, but even if you inform your client of this from the outset they are usually opposed to agreeing a sale, taking the view that they may get a better offer if they are patient.

Buyers are taking a similar standpoint but naturally for opposing reasons. They are taking the view that there are fewer quality buyers in the market (and they are correct) and that they are more likely to get the property on their terms if they leave an offer on the table for the owners to consider over a longer period of time rather than hastily over-pay. 

In times gone by agents would be forgiven for thinking that a sale wouldn’t materialise out of these circumstances, usually because the buyer loses interest or finds something more suitable. That trend has changed though. Maintaining contact with your client, providing regular market feedback, as well as consistent and frequent updates to your buyer can be rewarding for all parties concerned. Over the course of the last six months properties from terraced town-houses to small country cottages and even larger country houses with land have benefited from this patient if somewhat protracted approach with negotiations ranging from one month to four months but significantly ending with happy sellers and purchasers alike. 

Unfortunately for everyone involved further reserves of patience are required to see us through the seemingly never ending conveyancing process. Between scrupulous solicitors, anxious surveyors and inefficient lenders, the timescale between exchange and completion is becoming cavernous, regardless of how often you are talking to all parties concerned.

Of the last eight properties to be sold by the Bath office this financial year only two have managed to exchange contracts within three months and nine of the properties under offer have already exceeded at least two months.

It is a trend that I believe will last as long as the market remains depressed. Buyers and their solicitors will remain nervous. Most surveys lead to a number of specialist reports with damp, timber, electrics and wiring being the most common. With lending criteria so stringent and the sheer amount of time that it is taking to process applications and book valuations those purchases requiring a loan will no doubt continue to take considerably longer than those that do not. 

It is imperative that sellers remain calm and patient, as we agents must do too and we must manage are clients expectations from the outset and throughout the process as a whole. Neither buyers nor their advisors will be rushed, and trying to force the process will only have a negative impact. Just recently the owners of a building plot became exasperated with their purchaser and the length of time everything was taking. Against our advice they enforced a deadline upon their buyers and the buyers promptly walked away and our clients are now back at square one, in fact it is now far more likely that the plot will sell for a lower figure next time round. The important thing to remember is that it is better for everyone concerned if a sale proceeds to completion and not when.

Patrick Brady
Associate
Residential, Bath

Park Life

It might be the summer festival season but in considering the great outdoors Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, goes urban so no wellies required.

The Queen Elizabeth II Fields Challenge is a Jubilee initiative where, a charitable trust will enshrine 2,012 spaces, in perpetuity, for public recreation. Yet, by June there were still more than 700 spaces being sought and the Fields in Trust chief executive expressed her disappointment with lack of progress.

The week after the Jubilee Pageant saw Granary Square, King’s Cross open as London’s newest public space, built on the former site of the station’s sidings and goods yards. This occasion saw one broadsheet newspaper initiate debate about ownership of public spaces.

It’s a debate worth having.

As a nation, we’re living an increasingly urbanised existence and so, on a daily basis, the bulk of our population’s encounter with the great outdoors is open spaces in cities or towns.

A seam of this debate is consideration of just who owns public space and what is meant by ‘public space’ in our times. In certain quarters, there’s discomfort about these spaces being owned by private interests and the fact that the owners specify what can and can’t be done in these newly created spaces.

However, the counterpoint is that while this model of private ownership might be new, bylaws and protection of public spaces to make them clean, safe and useable is not.

As cities expand, public spaces have to be created as part of wider development. Granary Square is a new space created by the modernisation of the King’s Cross complex which, before its recent development and that of St Pancras next door, was a neglected and dingy part of a main London gateway.

Now it’s a showpiece.

Just west, along Marylebone Road, is Regent’s Park. Developed to a masterplan incorporating open spaces and surrounding houses in the early 19th century, the freehold of the Park is owned by The Crown Estate and it’s managed by a government agency, The Royal Parks. The Park is gated, activities within it are regulated and public access is restricted at night.

But which Londoner or visitor would say it’s not a public space?

Holland Park is a similar case. It was a rural part of London until 19th century development, along a similar model as that of Regent’s Park. The Park itself has byelaws and is gated yet it is a district and public park managed by a local authority – albeit the Royal Borough of Kensington & Chelsea.

While these parks are funded and managed either directly or indirectly through the public purse, to create, develop and maintain new sites for public open space in densely populated areas, we need to see that Granary Square is more the model now in a time when private interests fund what the public purse can’t or won’t afford.

It’s not just in the crowded south east where private investment is being offered in order to ensure the perpetuity of public open space. Aberdeen City Council is considering the need for a £50 million gift from a local businessman for redevelopment of its famous Union Terrace Gardens, as part of a wider £140 million scheme for an arts complex. Although the proposed development will re-shape the gardens, they will still be public.

The Gardens were once the site where Aberdonians laid out washing to dry.

What we want from our public spaces has always evolved.

We are happy to shop or enjoy leisure pursuits in safe, clean, cool, modern shopping malls – owned and managed by private interests – so why does that attitude change when it comes to public open space, just because there’s no roof?


Will Mooney MRICS
Partner
Commercial, Cambridge

Funding for Farmers

During these straitened times, we often hear that one of the main concerns for businesses is the difficulty of borrowing money, but for farmers this is probably less of a problem than for other sectors of the economy. This is because farming has generally prospered in recent years as commodity prices have risen; this has been reflected in higher farming profits, except perhaps in the dairy industry, and soaring agricultural land values.

Consequently banks are more confident to lend to farmers although even then it has to be said they are certainly not lending indiscriminately and are looking at every business case very carefully. In this context I have had a reasonable amount of experience drawing up both business plans for presenting to banks and carrying out valuations to support lending proposals and what is clear is that money is being lent but only on the back of good businesses. Even then the interest rates being offered are much higher than they were four or five years ago despite the historically low Bank of England 0.5% base rate The reason for this is that all banks have had to widen their margins to increase the capital they hold in order to put themselves in a stronger position to withstand another financial crisis without having to be bailed out by central government. Thus it must be of significant interest to hear that one bank which specialises in lending to farmers, the Agricultural Mortgage Corporation (AMC), has negotiated access to a multi million pound European Investment Bank (EIB) investment fund which can effectively subsidise eligible loans with a significant discount of 0.65 % off the AMC’s normal loan margin.

"Our access to this fund allows us to effectively subsidise loans for a wide range of farm improvement and diversification projects including building works and livestock housing, machinery and equipment purchases, farm shops, milking parlours and farm energy schemes. The total fund pot is limited and we have already seen a good level of interest. Farmers with a particular project in mind are urged to contact their local AMC agent," said Jonathan Allright, Head of AMC.

As one such agent I would suggest this scheme provides an opportunity for farmers who are considering expanding or investing in their farm to access favourable loan rates at a time when interest rates are already historically low. I see it as an important tool to help reduce the effects of price fluctuations and input cost volatility.

The minimum amount borrowers can apply for in the scheme is £25,500. The discount is available on loans of up to 10 years for projects that have a definite start and end date and must complete their loan by December 2013.

A wide range of projects within the scope of the scheme and I suggest farmers should consider using this funding to strengthen their farm business for the long term. Indeed with the demands to produce food for a growing world population increasing, this funding offers a real financial boost at an important time for many farm businesses Should anyone have any queries regarding this scheme please contact James Stephen.



James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Testing times for arables farmers

As I pen this article I am looking out of the window at blue sky – a rare commodity this summer and with the forecast looking a little more positive, maybe the worst of the summer weather is behind us which will not come a moment too soon for our arable farmers.

Indeed, I have already seen the first crops of winter barley being harvested and if the weather was to stay fine for the next month or so this could prove to be a profitable year. This is because cereal prices have increased sharply in the last month due to warnings for poor harvests in the United States and Russia, both due to drought conditions.
As a result the spot price for old crop wheat has risen to over £210/tonne and prices for new crop wheat are up to around £180/tonne and on the futures market up to £190/tonne for delivery in November this year.

At these prices our arable farmers should be able to make a healthy profit provided of course the weather does dry up for a reasonable period. This will enable heavy machinery to get in to the currently waterlogged fields and also hopefully dry out the grain sufficiently so that it will not need to go through the time consuming and expensive process of having to be dried before storage.

However, the wet weather has been very testing and some crops have suffered from fungal diseases in particular. It has been difficult to keep such diseases under control because there have been very few opportunities to spray the crops either because it has been too wet or too windy. So even though the cereal prices may be high it remains to be seen how yields will have been affected by other factors such as disease and the generally wet weather.

The prospects for arable farmers are of course in stark contrast those of their dairy farming neighbours who are suffering badly as milk prices fall as sharply as arable prices are rising. This has driven some to direct action and as many will have seen on the news this has manifested itself in this area with farmers blockading the Robert Wiseman Dairy just of the M5 near Bridgwater.

This only goes to demonstrate how complicated the farming industry has become with droughts in the United States benefitting our arable farmers through increased cereal prices while a fall in the price of cream on the world market has stimulated the latest controversial cut in milk prices. Sadly these are all things over which our farmers have little or no influence and so all they can do is manage their own business as efficiently as they can and then just hope for the best with those things they cannot influence – such as the weather. 

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

James Stephen comments on RPA Business Plan

The Rural Payments Agency (RPA) Business Plan 2012/13 was published last week and the chief executive officer Mark Grimshaw said: “Thanks to the hard work of our people and the support of our industry partners and Defra, I believe we have now turned a corner on our way to becoming a trusted, efficient and effective organisation.

“Farmers and food producers rely on RPA support to make their businesses more competitive and, thereby, our rural communities more sustainable. For their sakes, there will be no let-up in our drive to improve performance for our customers and the tax-payer in 2012/13.”

So, at last the RPA seems to have made some substantive progress in its performance, although this is not a moment too soon following the debacle of the introduction of the Single Payment Scheme in 2005, the aftermath of which is still haunting some farmers.
For instance I am aware of applicants who still think they are owed money back to 2006 and so it must be welcomed that the RPA achieved their best performance to date in 2011 and are promising to do better next year.

Indeed their pledge is to pay 91 percent of claimants and 84 percent of value for the 2012 scheme year by the end of December 2012 but there is no doubt their next challenge will be to ensure that when the CAP is next reformed in the next couple of years they do not make the same hash of it that they achieved last time.

This was reiterated by the chief executive of the Tenant Farmer’s Association, George Dunn who said: "The performance of the Rural Payments Agency continues to improve under the leadership of its chief executive, Mark Grimshaw.

“The TFA is pleased to see that the RPA has been set tougher targets for the coming year particularly in relation to payments under the 2012 Single Payment Scheme. The big challenge ahead for the RPA will be implementation of whatever is eventually agreed within the next CAP reform.

“The TFA is in on-going discussion with the RPA and its parent department, DEFRA to ensure that the mistakes made with the implementation of the last CAP reform are not repeated this time round."

To be fair to the RPA the manner in which the scheme was introduced in England by our government was particularly complicated. So, I hope that when the next reforms are agreed at a European level, we do not decide to overcomplicate the regulations at a domestic level so as to give the RPA a fighting chance of making up for their mistakes in the past which cost both farmers and the UK tax payer millions of pounds.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

The Generation Game

Unable to find his name on the latest rich list rankings again this year, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, seeks solace in the wise words of one who knows.

Those of us who are parents acknowledge that we’re blessed with, in equal measure, life’s greatest treasures and the biggest drain on finances. For parents fortunate to have wealth – however meagre and diminishing - to pass on to the next generation, we fret about how to do it responsibly. We don’t want to indulge but we’d quite like to ensure we’ll be remembered fondly by successive generations.

A report published by insurer LV= earlier this year, entitled Cost of a Child:From cradle to college 2012, pegged it at around £218,000 but that is just to the child’s 21st birthday.
While my children are younger than that presently, those parents I know with post-university age children would love to have stopped subsidising their children at 21 or at the £218,000 threshold, whichever came first.

So when consoling myself that Clan Mooney had failed to make it to the Sunday Times’s rich list again this year, I came across some words of wisdom from one of the world’s richest men: Warren Buffett is quoted as saying, on the matter of inheritance, “Leave your children enough to do what they want but not enough to do nothing.”

But what’s enough? And what’s considered doing nothing? Socialite, fashion designer and heiress Petra Ecclestone - one of Formula 1 supremo Bernie Ecclestone’s daughters - has complained in a published article that she feels she isn’t recognised enough for her hard work starting with the feat of getting up in the morning.

She’s been ridiculed but she does have a point. As the owner of a 14-bedroom mansion in Los Angeles and six storey mansion in Chelsea with attendant entourage to see to her every need, why should Petra bother doing anything at all?

None of Ecclestone’s children appear in the frame to take-up the family business of running the Formula 1 circus. This is entirely in keeping with the archetype of first generation entrepreneurship.

First generation entrepreneurs who create substantial business wealth for the first time in their family’s history, tend not to pass on their business unless there is a child who shows not just ability but exceptional ability. They are very protective of the business that has created the family wealth. The same kind of protective instinct means they want to cushion offspring from having to put in the hours of hard graft that were needed to make the business the success it has become.

Apparently by the time you get to the third generation and beyond of any inherited wealth which originated from entrepreneurship, capability has been succeeded by the need for equality when it comes to divvying up the spoils among the family and also the business itself – if it’s still going.

While living among entrepreneurs in Cambridge and being in a business which benefits directly from their wealth creation locally, I make no claim to be one. Also, having never been the heir to a substantial family fortune, I don’t seek recognition for getting up in the morning to earn a living.

Apologies to my children on these two counts.

Still, I’ll never have problem of selecting which one of them, if any, is capable enough of taking over the entrepreneurial reigns from me. They, in turn, will thank me that, unlike Petra Ecclestone, they won’t have to decommission a gift-wrapping room in one of their mansions because they were useless with ribbons.

Will Mooney MRICS
Partner
Commercial Cambridge
T: 01223 558032
E: will.mooney@carterjonas.co.uk

Big news in farming

The big news in the farming world last week was the announcement of a proposed merger between Milk Link - the nation’s leading dairy farmer co-operative - and Arla Foods amba, one of the largest and most successful European dairy co-operatives, based in Denmark. This is one of the first mergers between a UK and foreign co-operative and if completed, the new business will be the biggest player in the UK dairy market.

The merger is the latest and most significant sign of the rationalisation in the dairy sector which has recently seen Robert Wiseman Dairies taken over by Muller, the collapse of Farmright and Rock Farm Dairies, being two small dairy companies based in Devon and Durham respectively and the restructuring of Dairy Crest.

Milk Link chief executive Neil Kennedy said the merger would improve returns for members and, after a three-and-a-half year transitional period, see them get the same return as Arla owners who have been paid on average 10% or 2-3p per litre more over the last five years than Milk Link members.

Information on the merger was due to arrive with Milk Link’s members at the end of last week and then there will be a series of meetings to discuss the merger proposals after which the members will vote on the proposal. If the merger is approved by the two co-operatives, it will also require the approval of the Competition Commission because of the size of the proposed new business.

The details of the merger are only just emerging but what appears to be known to date is that if successful, Milk Link’s standard litre price will rise by 1p per litre for three months from 1st July. From 1st October Milk Link’s price will be linked in a rather complicated manner to Arla’s “On-account” price and from 1st January 2016 Milk Link’s members will be entitled to receive the same price and bonuses due to full Arla amba members.

As far the capital held by existing Milk Link members is concerned, this will be transferred across to Arla Foods amba, up to a maximum level of 5p/litre. No interest payments will be made in respect of this capital during the transition period between 1 July 2012 and 31 December 2015, although each Milk Link member will receive a one-off compensatory cash payment of 57p for every £1 invested in their capital account. Any member that has invested more than 5p/litre will have the excess bought back on a £1 for £1 basis. Founder members of Milk Link with so-called "double rights" will receive a cash payment of around £1.14 per £1 of qualifying loan.

Clearly these are very early days in what looks like being a complicated merger process and as much as anything it indicates that the dairy industry is in the midst of some very significant restructuring which it is hoped will drive efficiencies out of the supply chain to the benefit of the dairy farmers in the long term.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Recession – what recession?

So we are back in recession and can confirm the ‘double-dip’ – well technically we can anyway. But should we really give this apparently depressing news anything more than a passing grimace as we get on with our job. If you look back over the last few months, GDP has been up a bit and down a bit. There is no doubt that we face some major challenges, not least where some of the property debt might come from to replace that which has to be renegotiated over the next 2-3 years, but the majority of business are getting a bit fed up with being in recession. They are keeping their heads down and just getting on with life.

The British Chamber of Commerce summed up the position succinctly in its press release which I quote below.

“The latest ONS data shows a fall in GDP of 0.2% in the first quarter of 2012, pushing the economy into technical recession. The figure is disappointing, and paints an unduly pessimistic picture of the state of the economy. Many commentators will question the accuracy of the data, particularly as it is based on only 40% of the information used for these estimates. As well as large falls in the construction sector, the estimate by the ONS that service sector output rose by only 0.1% on the quarter will be seen as too low by most analysts.

“Business surveys, including the BCC’s Quarterly Economic Survey, have shown a more positive picture, and we believe these give a more accurate indication of the underlying trends in the economy. We think it is likely that the preliminary estimate will be revised upwards when more information is available. For the time being, the main priority is to minimise any possible damage to business confidence. These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism.

“But it is clear that economic growth in the UK remains much too low. We need to see a reallocation of priorities within Plan A that will bolster business growth. That means reducing regulation, encouraging exports and improving infrastructure. While the government must persevere with plans to reduce the deficit despite these figures, it must introduce more measures to empower businesses to drive recovery.”

It would be a tragedy if we allowed the recent news to dent the vital confidence which allows business to invest in the future, because it is that investment which will drive the economy into more sustained growth.

Chris Haworth
Head of Commercial Division
Commercial, Cambridge

T: 0207 016 0729
E: chris.haworth@carterjonas.co.uk

Brazil: a tough nut we need to crack

Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is not the only Britain who’s nuts about the Latin American country’s economic ascendancy.

Brazil puts the ‘B’ in the mnemonic BRIC as one of the darlings of the developing economies alongside Russia, India and China.

It’s a country top of mind of this country’s elite. Not only did the third in line to the British royal throne visit Brazil with a delegation in March but it also got a mention at the dispatch box in the House of Commons when the Chancellor of the Exchequer delivered his Budget statement.

It’s no wonder. March saw this Latin American nation overtake us in becoming the sixth-biggest economy in the world - growing by 2.7 per cent last year whereas UK growth was 0.8 per cent.

In such a vast country of topographical contrast, Brazil’s economic boom is down to high food and oil prices. It’s now the world’s ninth largest oil producer and its government aims for a top five ranking.

The UK is Brazil’s fourth largest foreign investor and the George Osborne was clear in his Budget speech in saying we’re looking to create a climate for export finance which will support our smaller firms in such new markets as Brazil. He also - in contrast to previous default positions of western states of old - was pointed about not wanting ‘protectionist rhetoric’ which, in the past, would have seen a regime of tariffs and heavy protection of currencies in challenging economic times.

Much has been said of the growing gap between rich and poor in our country, with predictions that austerity measures will see this gap increase. With a growing economy, Brazil has seen a decline in absolute and relative poverty in the past ten years, during which time the poorest half of a total population of circa 190 million saw incomes grow by up to 60 per cent.

The source of that statistic tells its own story. It’s Brazil’s Getulio Vargas Foundation which some in the foreign policy field regard as one of the world’s top five policymaking think-tanks. It has links with partner educational institutions such as Harvard Law School, St Petersburg State University, London Business School and, closer to home in our region, Cranfield University.

HRH Prince Harry was in Brazil for the Rio de Janeiro launch of the GREAT campaign which is part of the Government’s drive to capitalise on the international spotlight we’re in this year in not only hosting the Olympic and Paralympic Games but it’s a year which sees the Queen’s Diamond Jubilee.

The GREAT initiative’s Rio launch was anchored around a £25 million campaign to encourage Brazilians to visit the UK. GREAT will see campaign launches in Mumbai and Shanghai too.

British brands on display at the launch included Bentley, Aston Martin, Burberry and Stella McCartney, who is both a brand and the fashion designer responsible for the Olympic wardrobes of Team GB.

Indeed, we pass on the Olympic baton from London in 2012 to Rio de Janeiro in 2016 and, in between, Brazil hosts the 2014 FIFA World Cup.

Even though Horse Guards Parade on Whitehall is the scene for the beach volleyball Olympic event, it’s a world away from Ipanema or Copacabana. But wouldn’t it be inspiring to think that, alongside some of the 2,000 plus tons of sand scattered across the London landmark for the event, some of that Brazilian economic fairydust might be mixed in so we can maximise the chance to shine that this summer will bring Team UK plc? .

Will Mooney MRICS
Partner
Commercial, Cambridge

Is buying a property as complicated as you think?

In recent times it has been difficult to escape from the general negativity surrounding the housing market whether it is a newspaper, television or radio report discussing various factors from economic uncertainty to limited finance options. There aren’t too many stories around that offer buyers and first time buyers much confidence in the current market. Through recounting my recent house-buying experience, i hope that i can offer a more positive insight.    

My family, like many others decided post Christmas that a house move was now essential. We had been putting it off for some time but the need for more space was becoming critical. Having identified the most suitable property, we submitted an offer on the 21st February and signalled our intention to complete by the 23rd March to take advantage of the first time buyer stamp duty relief scheme. We were able to exchange contracts on 13th March and we successfully completed on the 23rd.

Within those three weeks, between the offer being submitted and contracts being exchanged we had to apply for mortgage which was to be 85% of the value. Carter Jonas do have a Financial Services arm or an affiliated company so i received no specialist treatment as some may think, I merely selected a broker who came highly recommended, explained the criteria and let him advise me accordingly. The process couldn’t have been smoother; the valuation was booked in quickly, the report emailed to the lender the same day as the valuation and the mortgage offer followed 48 hours later. Furthermore I received a text update from the lender at every step.

I am not naive enough to believe that every transaction can be as straight forward as this but there is some specific advice that i believe that will benefit all buyers to help iron out any potential problems.

1. Carry out proper research, not just on the properties that you are looking at but the affordability. Research the amount of money that you are able to borrow prior to viewing properties so that once you decide to move on one you can with confidence and you’ll better know your budget and negotiating margins as a result.

2. Select a good broker and solicitor; they will save you time and money in the long run. My broker researched not only the lenders that i could go to but also the backlog of paperwork of each to ascertain who was able to perform within the timescales and the difference in the rates only amounted to a couple of pounds a month. Cheap solicitors commonly found on price comparison sites will cause you more problems and stress and eventually more money than a local, knowledgeable solicitor with experience. Pay a little more upfront and have the security that matters will be dealt with swiftly, professionally and that protect your best interests.

3.Finally, commit to the purchase. I found it strange sat with my solicitor as she told me that a large percentage of clients use the signing of the contract meeting as a way to try and re-negotiate or specifically look for a problem as justification for pulling out of the purchase. If you are unsure at the outset don’t proceed, you will save yourself and others time and money and when the right property comes along you will be certain and once it does, commit to buying, look for reasons to buy not for reasons why not too.

What this whole experience has taught me and what i am keen to share is that many of the perceived problems with buying a property currently seemed to be manufactured. Yes i appreciate not everyone has had or will have the same experience as me, however if you approach the purchase from the right angle, do your research, take time to find the right people to work with and if you are happy then buying a property can be very a very straightforward and stress-free process.

Patrick Brady
Associate
Residential, Bath

MIPIM - glamorous surroundings, serious intent

If you are a reader of a certain popular Sunday paper, you will have learned that MIPIM, the international property conference which takes place in Cannes each March, is a place where local authority councillors go to swill champagne at the ratepayers expense and most men spend the rest of the time, when they are not swilling champagne, in the arms of the many prostitutes that allegedly flock to Cannes for the MIPIM week. I must admit that the article made me feel a bit inadequate. I certainly have had the occasional glass of champagne at MIPIM and, even more occasionally, have had a glass or two with local authority councillors, although it is normally beer, but, in all the 13 times that I have attended MIPIM, I have never once knowingly talked to a prostitute. I think I saw one once – well two actually – when two statuesque and very attractive blondes with a heavily muscled minder appeared to be working the foyer at the Carlton Hotel, but even now I am not sure.

It is true that MIPIM takes place in wonderful surroundings – glamorous villas, luxury yachts and 5 star hotels – with delicious food and drink, but the vast majority of attendees go there to work very hard. The rather pathetic article in the Sunday Express is an easy one for a lazy journalist to write but I remember a few years ago, sitting beside a journalist from the Yorkshire Post at a dinner hosted by Bradford Council. I asked him what he made of MIPIM. “I came here to write an article about local councillors spending the ratepayers money on a champagne junket in the South of France” he said. “But, having seen how hard they have worked, the real contacts they have made, and what they have achieved for their area, that is not the article I am going to write at all”. It is a brave decision for a local authority to attend MIPIM, particularly when times are hard and Government cuts are affecting every authority in the land but it is a hugely worthwhile investment in the future of their area and an unrivalled chance to engage directly with investors, and those who direct investment, to ensure that opportunities for growth – and jobs, and housing – are given the best possible chance of success.

So what was the mood of those of us who were concentrating on the UK property market for 2012 and beyond? The overriding impression is that there is a huge amount of equity available to invest in opportunities, but very few opportunities which match the risk criteria of those investors. It is rare for an agent to be so popular but with the many developers desperately seeking opportunities to invest, anyone who might be able to source those opportunities was feted. The real challenge , and possibly therefore the opportunity, comes on the debt side. In the heady days of 2005 – 2007, a huge amount of debt was written on property transactions normally on a 5 – 7 year term. In the next 2-3 years, some £135bn of this debt is coming up to be refinanced, and many of the traditional debt lenders are out of the market. That, coupled with the more stringent requirements to be imposed on the banks by Basel III, means that banks can no longer ‘pretend and extend’ so we are beginning to see the first signs of new debt providers – the insurance companies, equity funds and the like – coming to the market. So the second most popular people at MIPIM seemed to be those who have access to that debt. The by product of all this of course is that there is a greater likelihood that much of the property which has been locked away under the control of the banks, because low interest rates and outstanding debt exceeding value have made bringing property to the market very unattractive, might actually now start coming to the market – and whilst this potential flood of properties might have a significant downward effect on property values in the short term, it is a real time of opportunity for the well funded developer that has the skill and innovation to bring some of these neglected assets back to life. It is going to be a painful time for some of those banks though, because they are going to have to take some fairly serious further writedowns before they come out the other side.


Chris Haworth
Head of Commercial Division
Commercial, Cambridge

T: 0207 016 0729
E: chris.haworth@carterjonas.co.uk

Don't build on my back yard

So we are back in recession and can confirm the ‘double-dip’ – well technically we can anyway. But should we really give this apparently depressing news anything more than a passing grimace as we get on with our job. If you look back over the last few months, GDP has been up a bit and down a bit. There is no doubt that we face some major challenges, not least where some of the property debt might come from to replace that which has to be renegotiated over the next 2-3 years, but the majority of business are getting a bit fed up with being in recession. They are keeping their heads down and just getting on with life.

The British Chamber of Commerce summed up the position succinctly in its press release which I quote below.

“The latest ONS data shows a fall in GDP of 0.2% in the first quarter of 2012, pushing the economy into technical recession. The figure is disappointing, and paints an unduly pessimistic picture of the state of the economy. Many commentators will question the accuracy of the data, particularly as it is based on only 40% of the information used for these estimates. As well as large falls in the construction sector, the estimate by the ONS that service sector output rose by only 0.1% on the quarter will be seen as too low by most analysts.

“Business surveys, including the BCC’s Quarterly Economic Survey, have shown a more positive picture, and we believe these give a more accurate indication of the underlying trends in the economy. We think it is likely that the preliminary estimate will be revised upwards when more information is available. For the time being, the main priority is to minimise any possible damage to business confidence. These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism.

“But it is clear that economic growth in the UK remains much too low. We need to see a reallocation of priorities within Plan A that will bolster business growth. That means reducing regulation, encouraging exports and improving infrastructure. While the government must persevere with plans to reduce the deficit despite these figures, it must introduce more measures to empower businesses to drive recovery.”

It would be a tragedy if we allowed the recent news to dent the vital confidence which allows business to invest in the future, because it is that investment which will drive the economy into more sustained growth.

Chris Haworth
Head of Commercial Division
Commercial, Cambridge

T: 0207 016 0729
E: chris.haworth@carterjonas.co.uk

Keep Focused on What You’re Good at and That Should Keep you and Your Business Interests Smiling

In the musical Annie, the wee orphan girl sang ‘You’re never full dressed without a smile”. I can’t recall whether this was before being taken under the wing of Daddy Warbucks but, with or without finding my own millionaire patron, I’m determined to be more positive this year.

It doesn’t come easy to those of us on the genetically dour side of the Celtic tracks. But, one month in and my disposition is still sunny. Apparently, being - or at least appearing outwardly happy - is in-vogue now too.

While the Duchess of Cambridge has a lot to be genuinely happy about, she positively beamed forth with teeth-showing and dimpled cheeks on the front cover of January’s Tatler magazine. I’m also advised that models in adverts for luxury brands Mulberry and Chanel have dropped the moody pouts in spring campaigns, whereas Bally’s models are giddy with giggling and goats in the shoe brand’s latest shoot.

While it’s not exactly mirth, my sustained positive outlook is kind-of puzzling given the relentless churn of bad economic news that just keeps on coming.

I still went to bed in a good frame of mind at the end of a day last month which saw £5 billion wiped off the share value of a company which has been the 6th largest property seller since 2007 and which is also a significant tenant and contributor of rent to some of the country’s biggest commercial property companies.

I’m talking Tesco.

It wasn’t that I was positive just because I had sealed a deal with Sainsbury’s on a unit in Cambridge at the end of last year – I’m not naïve. The ‘model’ supermarket not performing indicates it’s not rosy for the others who’ll surely follow in Tesco’s wake come the reporting season.

Yet one person’s bad news gives somebody else a lift.

On that very same January day, when the Royal Bank of Scotland announced the shedding of 3,500 jobs, it saw its stock rise by 5.5 per cent. Mixed blessings for those employees facing redundancy yet who are also UK taxpayers and thus RBS shareholders of 82 per cent’s worth of rising shares.

Boil down the analyses and commentary on the bad fortunes of Tesco and RBS and it seems that, at the core, each company had moved away from the essence of good business and that is knowing and doing what you’re good at.

Tesco CEO Philip Clarke admitted that the supermarket’s focus on expansion beyond UK shores had been a distraction. This and a seasonal price drop in-store which it had adopted as an alternative to its usual, more targeted ‘couponing’ of its loyal customers had contributed significantly to its falling fortunes.

Equally, the expert view of RBS is that its desire to divest itself of its high stakes investment banking activities will bring nothing but good. Its pre-bail out activities had diverted RBS from what it was really good at - being a very fine high street retail bank whom its Scots customers always use to refer to with affection as ‘The Royal’ as opposed to its auld enemy on the high street, the plain old ‘Bank of Scotland’.

So what’s the lesson? Keep focused on what you’re good at and that should keep you and your business interests smiling.

Will Mooney MRICS
Partner
Commercial, Cambridge