Build it and they will come...
The business news that matters
Hello everyone. It’s Friday, it’s nearly the weekend and this is your latest Off to Lunch…
I want to start today by pointing you to an excellent piece of new research that shows investing in transport infrastructure outside London is key to improving productivity in the UK.
The Financial Times has pulled data together which shows that Birmingham, Manchester and other UK cities cannot effectively access large labour markets - in other words, they can’t get enough highly-skilled workers - which means they are not as productive or as big as they could be. A fascinating stat is that in Manchester the average person can reach 12.5 times as many jobs by car as they can by public transport within half-an-hour. Bristol is not far behind Manchester. But for London it’s just 2 times, better than all other big cities.
You can find the FT analysis by data journalist Amy Borrett here
Those who followed my recommendation earlier this week and watched Channel 4’s documentary on rail services in the UK will be familiar with the problems with public transport in northern England - unreliable services and ageing infrastructure.
That documentary and this FT analysis help to debunk a counter-argument in this debate - that the obsession with trains and public transport is London-centric because most people outside the capital use a car to get to work. Even Mark Harper, the transport secretary, has made this argument. But as the documentary and FT research point out, the reason that cars are so prevalent outside London is that the public transport infrastructure is unreliable and slow…
Other stories that matter…
1. Zac Goldsmith, the Conservative MP, has resigned as a foreign and energy minister. Normally this wouldn’t warrant a mention in Off to Lunch and his departure comes after he was criticised by the parliamentary Committee of Privileges for trying to interfere with their investigation of Boris Johnson. But his resignation letter is interesting because it explicitly criticises Rishi Sunak’s lack of interest in climate change and hitting net zero targets…
2. On a not-unrelated note, Gillian Tett has written in the Financial Times about how Bidenomics represent a historic shift in how governments interact with the economy. Biden has introduced the $369 billion Inflation Reduction Act, which offers incentives to companies investing in clean energy projects, healthcare and other infrastructure. This has encouraged swatches of US and international companies to announce new investments and factories. President Biden said in a speech earlier this week that he wanted “smart investments in America”. This is how he explained his vision of the economy:
“The economy that grows from the middle out and the bottom up instead of just the top down. When that happens, everybody does well. The wealthy still do, everybody does well. The poor have a ladder up, and the wealthy still do well. We all do well…
“This vision is a fundamental break from the economic theory that has failed America’s middle class for decades now. It’s called trickle-down economics. It’s the belief that we should cut taxes for the wealthy and big corporations... I want them to do well, but I’m tired of waiting for the trickle-down. It doesn’t come very quickly. Not much trickled down on my dad’s kitchen table growing up.”
You can read Tett’s column here and President Biden’s speech here
3. Venture capital firm Fuel Ventures is to invest £100 million in early-stage UK start-ups, the latest example of how the ecosystem for start-ups is flourishing. Story from Sifted here and more detail on Fuel Ventures here
4. The latest news on Thames Water is that executives from the company and Ofwat, the industry regulator, have been called to appear in front of the parliamentary environment committee. Meanwhile Alistair Osborne, my former colleague at The Times, has written what looks to be a well-briefed column on the appointment of Sir Adrian Montague as chairman and how avoiding the nationalisation of Thames Water is ultimately best for all sides. The column looks at how the underlying finances of Thames Water are actually ok and that the government wants to avoid taking the financial hit of nationalising the company and damaging the attractiveness of the UK as a place to invest, especially given the pension funds and overseas investors who own shares in Thames Water are those who can help to fund infrastructure improvements. Piece here
5. Centrica, the owner of British Gas, has increased the capacity of its gas storage facility at Rough, which is off the coast of East Yorkshire, to 54 billion cubic feet. Rough was closed in 2017 but reopened last year as gas prices surged following Russia’s invasion of Ukraine. Last year it had a capacity of 30 billion cubic feet. The facility accounts for half of the UK’s gas storage and could now meet demand for 3.5 days of peak winter gas usage. Reuters story here
6. The verdict is in: working from home is not as productive as working in the office but it does make employees happier. That is the view of academic research on the issue according to The Economist. Companies will have to balance these competing forces when deciding how their staff should work. Piece here
7. A growing trend in the retail industry is cheaper prices for members or loyalty card holders. Tesco has done it with Clubcard and now Marks & Spencer will too. Retail Week story here
And finally…
It’s the summer and it’s the weekend, so how about a list of the top 25 beer gardens in the UK according to National World? You can find it here. My vote goes to the Wateredge Inn in Ambleside, although it doesn’t make that list. You can find that pub here
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Best
Graham