Will Ofo launch make UK cycling capital ’appy?

Cycling surely has a part to play in the way cities develop and Cambridge – the UK’s “cycling capital”– has even more options for cyclists following the arrival of new app-based services from Cycle.land and Ofo.

Ofo’s new bike sharing scheme, which had its European launch in the city recently, has already proven successful in 81 cities, mainly in China and the US.

The Ofo offering is app-based, so you download the app and if you see an Ofo bike – they can be left anywhere – you register the bike’s individual four-digit number and you are sent a three-digit code which unlocks the bike for your to use. It costs about 50p an hour.

There are currently 20 Ofo bikes in Cambridge, free to use for an initial trial period. The firm has 500 bikes slated for the UK and other UK cities including London and Glasgow have been mooted as possible candidates for the service.

Ofo spokesperson Alex Myers was in Cambridge for the launch.

“If you take the future vision of Ofo we’re a community that judges its success by the positive influence it has on the city and we can have more people cycling on fewer bikes which helps the city to breathe,” Myers told Eastern Echo. “We’ve found students are early adopters but anyone with a smart phone is given that impetus to ride and they’re having more fun and being better off for it.” Recent evidence suggests that cycling lowers the risk of an early death by 40%.

Myers says the firm is committed to working with the council to ensure that any concerns are overcome. “The data we get on usage is something we can help the council with so the city is less polluted, healthier and less cluttered.”

The other app is from Cycle.land, which offers users a wide range of bikes from 50p a day up to £15. The service is proving popular with students and short-term visitors.

While app-based bike sharing makes sense for short trips, the traditional bike hire models remain appealing for those wanting to use a bike for a period of a few days or a week. The average daily rate from retailers is £10 a day and £24 a week – and of course there’s a benefit to the city’s economy by opting in locally. Options here from Outspoken Cycles, Rutland Cycling and Bicycle Ambulance, among others, are all highly popular.

Cambridge’s healthy interest in cycling is likely to ensure that there is room for everyone. Of the Ofo concept, which was started by a student in Peking University, Camcycle’s Cycling Campaign Officer Roxanne de Beaux commented: “In a way it’s a shame that someone in Cambridge didn’t come up with it.” Very true!

Transport first step for new mayor

The new mayor of Cambridgeshire and Peterborough, James Palmer, has confirmed that an underground railway system for Cambridge is the preferred option for resolving the city’s chronic transport issues.

The Conservative candidate, who used to run a diary business in Soham before entering politics in 2007, was leader of East Cambridgeshire District Council until becoming the inaugural mayor of the new combined region on May 4.

The winning candidate polled 56.9% of the vote in the second round, beating the Liberal Democrat’s Rod Cantrill, after no candidate received more than 50% of the vote in the first round. Palmer received 88,826 votes in total against Cantrill’s 67,205 votes.

Palmer told the BBC: “We are a very strong county that pays into national government and we deserve to be properly linked by quality rail, quality light railway and public transport and quality road networks.

“We need to upgrade the A10 and A47, open up the Fens to growth, and we need an underground or light railway option for the south of the county.”

Palmer has said that he envisages a 22km railway link between Cambridge and surrounding towns including Babraham, Hinxton and the Science Park.

Philip Woolner, joint managing partner of Cheffins, said: “Taking away all of the surrounding noise about devolution in general, having a champion for Cambridge is what is needed to really get our economy moving. The idea of Cambridge’s own mayor to go to Whitehall and bang the drum for the city and what it needs is an exciting prospect for many and it also provides accountability for when changes are not put into place quickly and efficiently.

“When it comes to commercial property and business, the most important task for this new mayor will be making moves to facilitate Cambridge’s rise in office take up and R&D as pressure on the city itself intensifies. Central Cambridge does need to progress its revamp if it is going to continue in its role as one of the pillars in driving Britain’s economy and currently lack of space and ease of access could delay this. The sheer levels of development in Cambridge itself has not been offset by an improvement in transport which has fallen far short of expectations, and this will be where our new mayor, James Palmer, will come into play.

“He has said that he wants to include an underground system, an extension to the M11, improvements to the A10  and a light railway to the surrounding villages. This would be hugely welcomed by the city itself however there are significant questions over the viability of this and also funding.

“From a housing perspective, the control over £70m to build new homes in the region will be welcomed as affordability for many in the region continues to be an issue. Palmer has been quoted to have said he is looking to ‘provide the very best opportunities for everybody in this county’ and affordable homes should certainly be on the top of his priority list. The county’s housing market is in flux as the volume of new homes has not matched the growth in population for decades. House prices have spiralled not in line with incomes and as a result we are seeing many young local people unable to get on the housing ladder.

“The funds offered as part of this deal ought to go some way to provide affordable housing through schemes such as Community Land Trusts which have already been a success throughout the county.”

Drones used to inspect bridges

Two recent developments have highlighted the increasing use of technology in the construction business – including drones which can land on water.

The first move came last week when Japan-based SoftBank – best known for its £24bn acquisition of Cambridge-based chip design firm ARM last summer – invested £500m in Cambridge firm Improbable.

Improbable’s cloud-based SpatialIOS software is currently largely deployed in creating games, but it is expected to be developed for use in urban planning and developing an autonomous car network in the near future, in the same way as HoloLens has rejigged its augmented reality software for use by architects and on-site inspectors – more details here.

Meanwhile, in the first trial of its kind, drones are being used to to inspect bridges, enabling workers to record footage on the ground to inspect the condition of the bridge.

The trials are being carried out in by West Sussex County Council in collaboration with Balfour Beatty Living Places, with significant savings already being made through the use of the technology – inspections at two bridges in Shoreham-By-Sea have saved around £8,000 in comparison to more traditional methods.

Bridges are required to undergo inspections every two years to make sure they are safe for public use.

The use of drones dramatically reduces potential health and safety risks and costs, in addition removing the need for traffic management measures. A second camera is also used to film the drone in action to ensure the drone is being operated safely with another worker reviewing the safety parameters around the drone in real-time.

Protective floats are fitted onto the drones to allow them to land safely on water if necessary and onboard GPS systems prevent encroachment into no fly zones such a airport space without prior consent.

Steve Phillips, contract director for Balfour Beatty Living Places, said: “Using drones in our highways inspection work allows us to safely assess the work required while dramatically reducing any potential hazards faced by our workforce who would traditionally carry out work such as bridge inspections at height. It’s a great example of how modern technology can be successfully used by industry.”

West Sussex County Council’s infrastructure manager, Kieran Dodds, said: “The use of drones enables us to obtain the necessary information to determine our highway structures are safe for use, while reducing the risk to our inspectors who conventionally would have to use access equipment when working at height.”

Using more traditional methods to carry out the inspections means traffic management needs to be put in place to allow inspectors to safely carry out works at height and over water, creating disruption for traffic.

Economics of land one-sided, say ‘Rethinking’ authors

An understanding of the role of land in the economy is urgently needed in order to resolve “the paradox at the heart of land ownership”, say the authors of a new book, Rethinking the Economics of Land and Housing (Zed Books, £14.99).

Tracing the history of the sector from the 17th century when enlightenment thinkers developed the notion that land could be turned into property, Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane show how land values have vastly increased since housing replaced farming as its primary economic use.

The result today is that “in the UK housing is by far the largest single source of wealth”, with dwellings (residential and commercial) valued at £4.43 trillion – 58% of the entire net wealth of the nation.

And the values are increasing: “since 1970 housing has accounted for 87% of the increase in the wealth-to-income ratio, and included in the measure of housing is the land that sits beneath the buildings”. Yet this wealth is decoupled from economic activity – rent-seeking involves getting a larger slice of the pie rather than increasing the size of the pie itself – and the result is a nation of housing haves and have-nots.

“There is a paradox at the heart of land ownership,” say the authors, whose fresh look at the topic comes with backing from the New Economics Foundation. “The spread of ownership of land has helped drive economic development, democratised power and spread wealth; yet, we argue, it equally has a tendency towards concentration and monopolisation of resources via excessive rent extraction with increasingly negative economic impacts at the aggregate level, even as the paper wealth of those owning property may increase.”

The issue is this: when the value of land under a house goes up, “the total productive capacity of the economy is unchanged or diminished because nothing new has been produced”. Diminished? Yes, because housing is both an investment good and a production good. We currently have a situation in London where 60% of average wages is spent on rent. This mean less cash is available to spend on goods and services, so the wider economy then suffers – people eat out less, buy smaller cars, take fewer holidays and so on. It’s not just individuals who are the mercy of this equation either – firms have to spend money on rent which could have been used for more productive purposes, such as R&D.

Ignoring the decreased flow of resources to the rest of the economy and only using accounting frameworks which measure the increasing wealth of landowners “has contributed towards the divergence between measures of wealth and the productive capacity of the economy”. And wealth inequality rises further when the previously public housing is switched into private ownership on a large scale because “it narrows the distribution of wealth even if house prices do not change”. That’s why “the average net property of the top 1% of households is £15m”.

The authors present a range of solutions to the issue which include tweaking the banking model towards “relationship banking” which has “stakeholder banks” with regional needs at their core, introducing a land value tax (“the most efficient form of property tax”), plus a shift in planning laws requiring developers “to ensure that part of the planning gain goes towards benefiting local communities”.

Some of these solutions are already being implemented, of course, but the point is that such measures need to be encouraged because if the sector is built solely around making profits for developers, banks and investors, the longer-term outcomes may actually not be in their interests – and there are signs that the current status quo is acting as a brake on an economy facing significant other challenges to its equilibrium.

Inheritance Tax focus as wealth transfers set to boom

With housing a significant issue in the General Election on June 8, a new report from estate administration specialists Kings Court Trust has forecast that total annual amounts passing from one generation to the next are forecast to rise from the current level of £69 billion to around £115 billion by 2027.

The ‘inheritance economy’ is set to boom over the next 10 years, as rising wealth and higher mortality rates combine to raise the total value of inheritances to £1 trillion over the next decade.

This 66% increase in inter-generational wealth transfers outlined in the ‘Passing on the Pounds’ report – developed in association with the CEBR – is expected to be heavily driven by the rise in property prices over the next 10 years.

Already in the last 20 years, the average house price has risen by 273% and this has increased as the percentage of the average value of household net worth from 39% to 51% in 2015, which are the latest available figures.

Christopher Jones, sales and marketing director of Kings Court Trust, said: “The revelation that inheritances will hit £1 trillion in the next decade is quite astonishing, but makes perfect sense given the amount of accumulated wealth being held by the UK’s older generation.

“Between 2012 and 2014 just over 1m people received an inheritance of more than £1,000 in a given year with around 870,000 receiving cash gifts of more than £500. But over the same period, the average inheritance rose from £43,000 to £54,000, so significant amounts of money are already passing into the hands of the younger generation.

“As mortality rates increase and the concentration of wealth in the hands of the older generations rises, the number of adults receiving higher amounts as an inheritance is also set to rise. By 2047, we could see as much as £335 billion a year passing to the younger generation, which is a staggering amount of money.

“This presents a problem for those passing on their wealth, and for those receiving it. Planning ahead to pass as much of this wealth on as possible without paying more Inheritance Tax than necessary is one thing, but the administrative burden can be equally difficult for those left behind, and independent financial advisors (IFAs) play a vital role in helping families deal with this.”

Taxation and housing are both key issues in the upcoming General Election. Labour has indicated that it will reverse Tory cuts to Inheritance Tax to fund its campaign promises, and aims to build a million new homes over five years.

The Conservatives plan to increase the effective Inheritance Tax threshold to £1m for married couples and civil partnerships, paid for by reducing tax relief on pension contributions for those earning more than £150,000.

The Liberal Democrats would introduce a Housing Investment Bank to generate funding for new homes and would reinstate Housing Benefit for 18 to 21 year olds as part of its mission to end the “national scandal” of homelessness.

‘Rent passport’ could eliminate need for cash deposits

New start-up InsureStreet aims to transform the rental market by introducing a “rent passport” which replaces deposits with an insurance policy based on previous rental history.

If it works, the app-based “passport” could pump nearly £4 billion of dead money back into the UK economy by substituting cash deposits with trust-based deposit replacement insurance.

The app, which is backed by insurance provider HISCOX and credit rating firm Experian, presents “generation rent” with an easy and affordable alternative to the often crippling upfront cash deposits required by landlords.

The dynamics of the InsureStreet proposition are:

  • Typically, renters are charged a minimum of six weeks’ rent as a security deposit, plus agency fees and a month’s rent in advance.
  • InsureStreet provides renters with a digital RentPassport™ that validates their profile and then provides renters with an instant insurance quote to cover their deposit.
  • Instead of paying a traditional cash deposit, renters make a one-off payment for an insurance policy that covers them for the duration of the rental contract. In most cases, the one-off payment is less than a tenth of what you would pay for a traditional cash deposit.
  • The platform rewards good behaviour through lower policy premiums at renewal.
  • For landlords, the fear of unknown renters forces them to take cash deposits to cover any losses. InsureStreet replaces that fear with a trusted renter profile and an insurance policy, backed by HISCOX.
  • InsureStreet has also partnered exclusively with Experian to offer renters the option to choose to pay their rent on the app and help improve their credit score.

InsureStreet comes at a time when rent rises across the UK have far outpaced wage increases over the past five years – and at a time when more misery is predicted for renters with further steep rises expected over the next few years, particularly in London. However, with a shortage of affordable housing, more and more people have no choice but to rent.

With nearly two out of five UK households renting their home and home ownership at its lowest level for a quarter of a century, this new data-driven approach also has the potential to channel £4bn of dead capital back into the UK economy, as well as free up often badly needed cash for renters. According to the latest figures around the Tenancy Deposit Scheme, right now more than £4bn is tied up in rental deposits schemes, and £1.25bn of that is in London alone.

Tahir Farooqui, founder and CEO of InsureStreet, says: “Our goal is to make it easier for good tenants to find nice places to live – especially in large cities where rent is inflated beyond their means.

“And for landlords, because they have access to trusted renter profiles, it takes away the fear and mistrust out of rental transactions,” he adds. “What we are offering is not only a convenient app to set up and access our RentPassport™ service, but also a ‘Rental Hub’ to connect tenants, landlords and agents with each other and relevant services to improve their overall rental experience. The hub is both intuitive and transparent, ensuring open communication channels, so together the industry can evolve products and services that make a positive difference in the communities it serves.”

The London-based start-up, which is regulated by the FCA, is selectively piloting with trusted and reputable insurance partners including HISCOX, Experian, Urban Spaces, Get Living, Quintain (Tipi), Essential Living, Atlas Residential, Walten & Allen and Fifty Thousand Homes.

Jonathan Westley, managing director of consumer information services at Experian, says: “We believe the new proposition from InsureStreet doesn’t just make renting more affordable, but that it can give people access to more attractive and affordable credit products in general.

“In the past, building a good credit rating has been easier for homeowners than for tenants, because mortgage payments are factored in, but via Rental Exchange we want to help level the playing field for renting tenants.”