The conventional view of a city is of a commercial and industrial centre, surrounded by houses, schools and open spaces. The price of land is supposed to be the driver, and the essentially radial transport links reinforce it. But something odd is happening in London, as commercial activities in the inner city are being forced out by the rising price of housing.

Last year the planning rules were relaxed to allow conversion, to encourage residential use of unwanted offices and run-down premises. It hasn’t quite worked that way. Commercial landlords of occupied offices are seeing the chance to serve notice, convert and bank the gains from London’s hot residential property market.

This process is irreversible, as the City Corporation and some inner London boroughs successfully argued when they won exemption. An office block can be redeveloped, while a block of leasehold flats is, effectively, forever.

The cost of commercial space is rising as the amount available falls, and concentrations of innovative or valuable businesses are at risk, threatening the future of the City, according to the property lobbyists. Their industry has become accustomed to commercial space being more valuable than residential.

Yet this is not obviously the terrible disaster they seem to think. The value of housing is high because people want to live where the jobs are, in London. A market force that replaces the daily tide of workers into the centre and out again with a multi-directional scramble will ensure a better use of London’s crowded streets and trains.

Increased local residential space has helped transform the City of London in the evenings and weekends, as well as making it a better place to work. Planners everywhere love drawing neat zones on their maps, but most of the zones they now want to protect have sprung up without their help. Reality is much more organic and more interesting. Rather like London itself.

 

Not Premier league

It’s seven months since the rescue of Premier Foods, the owners of brands old enough to make your eyes, if not your mouth, water. Ambrosia, Mr Kipling, Oxo, Angel Delight and 16 others still turn over £700m-worth a year between them. The rescue was described here as a fine example of the financial confectioner’s art, with a happy ending, of sorts, for the poor shareholders.

Alas, it’s not been that happy. In July CEO Gavin Darby was trying to stay positive despite a 6.1 per cent fall in first half sales. His fellow executives bought shares in the summer. Unfortunately, others have been only too happy to sell them, and at 30p, the price is now just half that paid for the king-size pile of shares issued in the reconstruction.

The analysts mostly disagree with the market, with Jefferies the latest broker to decide the shares really are worth 60p each. Just why Premier is unloved may become apparent later this month with the interim management statement. It’s unlikely to make cheerful reading. The food retailers will be passing the pricing pain to their suppliers, wiping out any gain from lower commodity prices. Shareholders look likely to need that branded comfort food.

Dead ‘ead Ed

Grasping reality has never been Ed Davey’s strong suit, but it’s sheer bad luck that he finds himself cheerleader for Britain’s latest nuclear adventure. Given the glacial progress of Hinkley Point C power station, it could have fallen to almost any of his long line of predecessors as Energy Secretary to force some enthusiasm for this radioactive white elephant.

However, if the European Commission’s rubber-stamp implies agreement “that this is a good deal for consumers”  then Concorde was a great commercial success. When it’s finally generating, Hinkley C is guaranteed twice today’s price for its output, index-linked.

Last year EDF, the French builders who were the only credible contractor, costed it at £16bn. The Commission’s figure is £24.5bn, Ah, yes, but that £16bn was in 2012 pounds, and excluded interest payments, guv. It’s another example of the old adage that a builder’s estimate is a sum equal to half the final cost.

Still, ‘Eadless Ed need not fuss with facts. He’s only in charge of the shambles that passes for Britain’s energy policy until next May.

Advertisements