the times | Monday May 23 2022 41
Business
Five thousand signallers are holding
the levers to what could be the first
national rail strike since 1994 and the
dawn of the privatised railways. A
summer of disruption could be called as
early as Wednesday, with walkouts
beginning next month after the Plati-
num Jubilee celebrations.
Network Rail is drawing up con-
tingency plans in the event that the sig-
nallers walk out, with proposals to shut
down the vast majority of the system
and to run only a 12-hour service on
weekdays, from 7am to 7pm, on the
busiest lines.
In an unprecedented ballot of its
members by the RMT union, 40,000
railway workers in 16 companies have
been asked to vote for industrial action.
Their pay was frozen during the pan-
demic and now they are being offered a
rise of about 3 per cent.
The union is demanding a cost-of-
living pay increase, with the retail
prices index measure of consumer
inflation running at 11.5 per cent, but
they also want negotiations over the
planned redundancy of 2,500 track
maintenance workers and the linked
issue of network safety. The businesses
Building work on new offices in
London has slowed sharply in recent
months as developers hold off in the
hope that construction costs will drop.
In the six months to March, work
started on five new-build office devel-
opments in the capital, according to
Deloitte’s latest London Office Crane
Survey — a third below the previous
half-year period.
The prices of fuel, steel and concrete
have risen dramatically over the past
year, while labour costs also have risen.
“That meant contractors were strug-
Office developers sit back hoping construction costs will dip
Tom Howard gling to give developers a fixed price
and developers and investors had to
take a view [of] whether to share some
of that risk,” Mike Cracknell, a director
in real estate at Deloitte, said. “They
have all hesitated a little bit to try to let
the froth die down.”
The pandemic had triggered a “flight
to quality”, he said, with most compa-
nies, and their staff, wanting modern
and eco-friendly offices. That demand,
coupled with a slowdown in new starts,
is expected to lead to a supply squeeze.
Last week, GPE, the London office
landlord, predicted that there would be
an “acute shortage” of prime central
London [office space] in the not-too-
distant future. The imbalance between
supply and demand is likely to push up
rents for the best space, although
Cracknell pointed out that office costs
as a percentage of staff costs had come
down over time, which meant that
boards should still be happy to sign off
on pricier leases.
Of the landlords polled in the survey,
two thirds said that demand from
prospective tenants was “a little better”,
while 14 per cent said it was “much
better” than this time last year.
While developers are hesitant about
new-builds, the refurbishment marketremains strong. Deloitte found 31 “com-
prehensive refurbishment” schemes
had begun between October and
March as landlords tried to upgrade
their offices to meet the demand for
“sustainable and quality space”.
It is anticipated that the government
will force commercial landlords to get
their offices up to a minimum B Energy
Performance Certification rating by- Deloitte thinks that 80 per cent of
London office stock will need upgrad-
ing to meet that EPC target, although
some in the industry are sceptical over
whether there are enough builders to
carry out the required work. The
Deloitte survey estimated that despite
the slowdown in new-build starts, the
total volume of office construction had
increased by 4 per cent to 13.5 mil-
lion sq ft, which is above the ten-year
average.
It is partly because of delays to
projects that are in progress, with only
1.7 million sq ft completed between
October and March. Typically, that
would be closer to 2.5 million sq ft.
However, many of the delayed projects
are likely to be finished in the coming
months, with Deloitte expecting seven
million sq ft of office completions this
year, the most in a year since 2003.Grosvenor’s
properties
are hot again
Tom HowardThe Duke of Westminster’s property
company swung back to a profit last
year as the value of its 300-acre estate
in the heart of central London re-
bounded.
Grosvenor Group, which runs a
multibillion-pound portfolio of assets
including in the West End of London,
Vancouver and Tokyo, made a pre-tax
profit of £437.5 million, having fallen to
a loss of £322.8 million in 2020.
Revenue profit, which strips out
movements in the valuations of its
buildings and is Grosvenor’s preferred
profit metric, more than doubled to
£99.7 million from £39.7 million.
Mark Preston, chief executive, hailed
a “significantly improved financial
performance”, despite the business
having to deal with continuing restric-
tions and lockdowns. As a result, the
group raised its dividend back to where
it had been before the pandemic after
the Duke and his family took a cut the
year before. In 2021, the board paid a
dividend of £47.8 million, slightly more
than in 2019, before Covid. In 2020, the
dividend totalled £32.2 million.
Grosvenor Group owns about
300 acres of land in Mayfair and
Belgravia that have been under the
control of the family since the late
1600s. It also owns the Liverpool ONE
shopping centre, as well as billions of
pounds of property overseas. The
group is almost entirely owned by
trusts, one of the ultimate beneficiaries
of which is Hugh Grosvenor, 7th Duke
of Westminster. Now 31, he inherited
the title when his father died in 2016.
Grosvenor’s swing back to profitabil-
ity was driven by a turnaround in the
value of its properties, which, having
been written down as Covid hit the
property market in 2020, were marked
back up by £320 million last year. Its
portfolio is worth £8.9 billion.
Income from its properties, which
include retail, office and hospitality,
climbed to £310.2 million in 2021, up
22 per cent from £254.6 million a year
earlier. That reflected a pick-up in rent
collection, with 93 per cent of rents due
from tenants in 2021 paid by January
this year, compared with 89 per cent of
2020 rents.
Grosvenor has been buying up
offices in regional cities such as Leeds,
Manchester and Bristol, investing
about £170 million over the past year. “A
lot of this is about diversification,”
Preston, 54, said. “With or without a
levelling-up agenda, we think there is
opportunity in these markets.”
Grosvenor is also investing in its food
and agricultural technology business,
which includes dairy farms, woodlands
and stakes in alternative meat prod-
ucers and vertical farming companies.Signallers are centre of attention
in vote over national rail strike
Robert Lea Industrial Editor — Network Rail and 15 contractor-
operated regional train companies —
are now public servants after Grant
Shapps, the transport secretary, rena-
tionalised the railways during the pan-
demic. This means they must take di-
rection from the Treasury and must
stay in line with public sector settle-
ments.
Crucial to the dispute will be the
votes of 5,000 signallers employed by
Network Rail, which is in charge of the
country’s rail infrastructure.
If the RMT gets majority support on
a turnout of at least 50 per cent of its
20,000 members in Network
Rail, it will have a mandate
to call a national strike.
The union’s members
in the train compa-
nies will be allowed
to join any action
only if they, too, vote
in the majority on a
turnout of more
than 50 per cent
within their business.
A spokesman for
Network Rail said: “We
view this potential dispute
as all about the future of the
railway. The stakes are high
because unless we can cut an affordable
deal on pay and reduce the overheads
and costs, we’ll be unable to put the rail-
way on a sound financial footing.”
The railways received £16 billion of
taxpayer support during the pandemic
and remain in financial crisis because of
lost fares, with passenger numbers
having returned to only 72 per cent of
pre-Covid levels because so many
people are now working from home.
Industry experts believe that if the
signallers strike, Network Rail would be
able to keep only 20 per cent of the
railway system open.
The last time that signallers
went out on a national
strike was in 1994, weeks
after Railtrack had
been created from
the state-run Brit-
ish Rail. Ministers
were accused of
interfering in pay
bargaining in the
newly privatised
firms. There were
ten weeks of stoppa-
ges, the longest dispute
since nationalisation in
1947, disrupting holidays
and causing havoc with thedelivery of perishable goods. The dis-
pute is being seen as not only a chal-
lenge to a weakened prime minister but
also as posing a question about whether
the Labour leadership would support it.
It is also seen as a test of the leadership
skills of Andrew Haines, 58, chief exec-
utive of Network Rail and the leading
candidate to head Boris Johnson’s
Great British Railways, the state-
backed integrated British Rail MkII
that the prime minister plans for 2024.
Mick Lynch, secretary-general of the
RMT, has said that feeling is running
high among his members because of
“pay freezes, the prospect of losing their
jobs and repeated attacks on their
terms and conditions. Train operating
companies have praised our members
for being key workers during the pan-
demic, but have refused to keep staff
pay in line with inflation and soaring
living costs. Thousands of railway
workers have seen their living
standards plummet and have run out of
patience. A national rail strike will bring
the country to a standstill, but our
members’ livelihoods and passenger
safety are our priorities.”
Transport for London recently
agreed a pay deal with its 15,000 Under-
ground train workers of 8.4 per cent.St Pancras station in London in 1994 during the last national strike by signallers. Mick Lynch of the RMT, below, says the living standards of staff have plummeted
ALAMYNetwork
andate
ike.
rsr
We
pute
e of the
are highThe last tim
went ou
strike w
after
bee
th
is
w
in
b
ne
firm
ten
ges, t
since n
1111947 , disr
and causing