HS2 rail project will provide £15bn boost, transport minister claims

Patrick McLoughlin to make speech in Birmingham where there has been a mixed reaction to the high-speed link

Patrick McLoughlin, the transport secretary, will on Wednesday make the economic case for the HS2 rail project by insisting that the high-speed link will give an annual £15bn boost to the economy, with the north and Midlands gaining at least double the benefit gained by the south.

In a speech in Birmingham, McLoughlin is planning to depict HS2 as a "heart bypass" for congested train lines and roads, claiming that speed will be a secondary concern, though the link will reportedly reduce the train journey between London and Birmingham to just 45 minutes.

"Speed is not the main reason for building the new railway. The main reason we need HS2 is as a heart bypass for the clogged arteries of our transport system," McLoughlin will say.

There was mixed reaction in Birmingham, one of the cities most affected, to the government's insistence that it would ease busy train lines.

While the city council, business leaders, big companies and local transport chiefs are campaigning strongly for the multibillion-pound scheme, it is clear that smaller business owners, commuters and many of the general public remain to be convinced about the project.

Steve Brittan, president of the Birmingham chamber of commerce, and managing director of BSA Machine Tools in the city, said it was vital for the region that more effective transport links were created.

"We're at the centre of the country and we're surrounded by transport difficulties," Brittan said. "The roads are full, the trains packed. We don't have the capacity to get people around effectively. On the roads we're stuck between lorries and white vans while our railway system is more than 100 years old and too small to work."

Geoff Inskip, chief executive of the regional transport authority Centro, said that without HS2 the west coast main line, which links London to the Midlands, the north of England and central belt of Scotland, would be full by the early 2020s and services would face closure.

"We need more capacity or the system will become too crowded to function," he said.

The chamber and Centro are part of Go-HS2, a group in the city campaigning for the project.

Also signed up are the Labour-led city council, which believes the line will create up to 50,000 jobs in the West Midlands and boost its economy to the tune of £4bn a year, Birmingham airport, and the NEC exhibition centre.

A passionate HS2 backer is Deborah Smith, who runs a PR firm from Solihull and is behind the Hands up for High Speed 2 website. A relative newcomer to the West Midlands, she believes HS2 will help bolster the region and stop talented young people feeling they had to leave for London. "I feel that HS2 is a once-in-a-generation chance to do something bold to really invest in the regions outside London," she said.

Smith accepts her motive is to help her two sons, now aged three and five, to grow up in a prosperous and forward-thinking area of which they can be proud.

In Birmingham's jewellery quarter, most small-business owners were more cynical.

Eric Goodby, 54, who runs an engraving and jewellery design firm with his father, Ken, 81, claimed Birmingham would be turned into a glorified dormitory town for London commuters.

A few doors along, Carl Longshaw, a metal spinner who produces goods ranging from hubcaps to replica FA Cups, dismissed HS2 as a terrible idea. "It's a white elephant, too expensive and it goes too close to my home in Tamworth," he said.

Colin Ashford, who makes cufflinks, medals and regalia for Freemasons, in a Victorian workshop, doubted the government's figures on jobs and growth. "I'm not sure where they get them from," he said.

But Andy Williams, manager of the Creative Watch Company, was enthusiastic. "It would be good for the city and good for the region. Anything that has the potential to get more people here has to be welcomed."

Commuters on the 7.49am Wolverhampton to Birmingham New Street service on Tuesday morning were also divided. The London Midland train arrived 14 minutes late, partly because it was stuck behind a late-running Virgin train from Manchester to London.

Sally Gray, a shop worker, said she was fed up failing to get a seat on the train. "And you also have to factor in an extra 10 minutes every day because it can be late. I'd be all for the high-speed service if it frees up this line."

Simon Jones, an office worker, said he tended to believe not ministers but the public accounts committee. "All you hear is that it is going to be over-budget and won't really work. I'm deeply sceptical. I'm not sure we're good enough at delivering huge projects like this. I hope I'm proved wrong."

This week, the committee blasted the HS2 project, claiming it was beset by spiralling costs, lack of expertise and unrealistic delivery timetables.

Article Source : http://www.guardian.co.uk

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Plastic banknotes: Bank of England plans to modernise from paper

Public consultations to begin on smaller, tougher notes, due for release starting in 2016

Plastic banknotes with a see-through image of Britannia are likely to replace traditional paper notes from 2016 under plans being drawn up by the Bank of England.

The Bank said the wipe-clean polymer notes will be less tatty, tougher to counterfeit and last up to six times longer than cotton-paper based notes. They will also be 15% smaller, bringing English notes into line with sizes in other countries, but will remain larger than existing euro notes.

The public will have the chance to look at and feel the new notes at shopping centres across the country in a consultation process that starts immediately, with the new governor of the Bank of England, Mark Carney, taking a final decision on the go-ahead in December. The Sir Winston Churchill £5 note will be the first to be made in polymer and launched in 2016, with the Jane Austen £10 note following in 2017. All the notes will continue to feature the Queen and use existing colours.

Plastic notes have been in circulation in Australia for more than two decades and are being rolled out in Canada, Carney's home country, but the Bank said its polymer project began long before the new governor was appointed.

Scotland and Northern Ireland, where seven banks have the right to issue notes, will be free to continue with paper notes, opening up the possibility that cash machines in Carlisle will issue in plastic but across the border in Gretna will continue to supply in paper.

The Bank of England said that in tests, the new plastic notes do not melt until at least 120C and survive washing machines much better than existing paper notes. Despite being made from polymer pellets, the Bank said the notes will be more environmentally friendly as the manufacturing process does not use the same intensity of water as cotton-paper manufacture.

The new notes will cost around 50% more to produce, but the Bank estimates it will save £100m as it will need to replace the notes far less frequently. But the Bank ruled out importing plastic money from China. The notes will continue to be produced at the Bank's ultra-secure plant in Debden, Essex, although subcontracted to a private company, likely to be either De La Rue, the existing maker, or Innovia, which manufactures most of the polymer notes currently in circulation across the world.

The deputy governor of the Bank of England, Charles Bean, said there was no question that the introduction of plastic notes was a "done deal" and promised to listen to feedback from the public before going ahead. "Polymer banknotes are cleaner, more secure and more durable than paper notes. They are also cheaper and more environmentally friendly.

"However, the Bank of England would print notes on polymer only if we were persuaded that the public would continue to have confidence in, and be comfortable with, our notes. The results of the consultation programme on which we are embarking will therefore form a vital part of our assessment of the merits of polymer banknotes."

In recognition of the need for groups such as the blind to handle the change, the Bank will continue to issue notes in size-ascending order, so the new fivers and tenners will continue to be slightly different in size. There is no switchover date yet proposed for when or if £20 notes – the most common note in circulation – will be changed to polymer.

In Canada, where high-value notes are already made of polymer and lower-denomination notes will be introduced later this year, there have been some complaints that the notes tend to stick to each other. But the Bank of England said it did not expect this to be an issue, although it did accept that brand new notes will have a more slippery texture than cotton-paper ones.

The extended time scale for the introduction of the notes has been put in place to allow the cash handling industry, retailers and ATM and vending machine operators time to mange the transition. ATMs will be able to hold, say paper £20 notes and plastic £10 notes, but will not able to issue plastic £10 notes alongside paper £10 notes as they will be different sizes. But because the polymer notes will be thinner, cash machines will be able to stock more, and operators say the machines will be less likely to jam.

But it is security and counterfeiting that the Bank of England places at the heart of the new notes. Evidence from Australia and other countries such as New Zealand, Singapore, Mexico and Nigeria, where polymer notes are common, is that after their introduction counterfeiting reduced substantially. Last year the Bank of England removed 719,000 counterfeit notes from circulation, a relatively high rate compared with other countries.

Shoppers in Northern Ireland will already be familiar with polymer notes, since a limited-edition note was circulated in 2000 by Northern Bank to mark the millennium.

If the new notes go ahead, removal of paper notes is expected to be relatively swift, taking no more than eight months.

Article Source : http://www.guardian.co.uk

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Tesco pays out to rid itself of US chain Fresh & Easy

US billionaire Ron Burkle's Yucaipa investment vehicle agrees to take on 150 stores and 4,000 staff

Tesco has finally negotiated an exit from its failed expansion into the US by lending US billionaire Ron Burkle £80m to take away its loss-making Fresh & Easy chain.

After more than nine months searching for a buyer, Burkle's Yucaipa investment vehicle has agreed to take on 150 Fresh & Easy stores as well as 4,000 staff and a vast distribution centre and production facility east of Los Angeles.

The deal will cost Tesco £150m in total, including the loan, payoffs for about 400 permanent staff and the closure of about 50 stores not included in the deal – taking the total cost of the humiliating episode to nearly £2bn. The future for a further 600 staff is unclear, with some expats likely to return to Tesco in the UK while others are part-time staff and will be let go.

Philip Clarke, the UK supermarket's chief executive, said: "The decision we are announcing today represents the best outcome for Tesco shareholders and Fresh & Easy's stakeholders. It offers us an orderly and efficient exit from the US market, while protecting the jobs of more than 4,000 colleagues."

Tesco said that the deal would mean there was no ongoing financial exposure in the US. However, under the agreement, which is expected to be finalised by the end of the year, Tesco will hold warrants that entitle it to a 32.5% stake in the holding company that will run Fresh & Easy, should certain performance criteria be met. They could be exchanged for a cash sum in the future.

Ron Burkle, managing partner of Yucaipa, who founded the Ralphs and Food4Less supermarket chains in the US, indicated that he planned to continue to run Fresh & Easy as a standalone chain.

He said: "Fresh & Easy is a tremendous foundation. Tesco should be applauded for giving their customers an affordable, healthy, convenient shopping experience. Its dedicated employees and great base of customers give us a solid starting point to complete Tesco's vision with some changes that we think will make it even more relevant to today's consumer."

He said Yucaipa planned to build the chain into a "next-generation convenience retail experience". However, there has been speculation that Burkle wants to use the Fresh & Easy stores to relaunch his Wild Oats brand, which he sold to rival Whole Foods Market in 2007.

The deal is good news for Tesco after weeks of speculation that it would be unable to find a buyer for its US business. The trip over the Atlantic, begun in 2007 with ambitious plans for thousands of stores, has proved very costly for Tesco with trading losses and investment reaching some £1.8bn.

The failure has not only meant problems for Tesco but tarnished the reputation of former chief executive Sir Terry Leahy, who was previously held up as a shining example of British retail success.

It also reflected badly on Tim Mason, the Tesco marketing supremo who was relocated to the US to run Fresh & Easy and build it into a chain the same size as Tesco UK. He was made redundant earlier this year with more than £2m.

It was not clear on Tuesday night if Tesco would have to make further write downs after completing the deal.

Selling off the US business is good news for Clarke, who has been attempting to get rid of poorly performing overseas assets in order to concentrate on Tesco's problems at home.

In April, the supermarket reported its first fall in annual profits for 20 years as its chains both abroad and at home suffered during a global downturn.

The ongoing losses in the US were blamed for a squeeze on expenditure in the UK which meant that stores began to look tired and customer service suffered. Tesco has also suffered from a series of PR disasters including revelations that some of its burgers contained horse meat.

Tesco recently revealed it was in negotiations to put its Chinese business into a new joint venture with the state-owned Chain Resources Enterprise. The deal, which would cost Tesco an estimated £1.5bn, would merge its 131 stores into CRE's Vanguard chain, which has nearly 3,000 outlets.

Article Source : http://www.guardian.co.uk

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