According to one of the engineers at Abbey Road studios, Kate was recently "working there"- she only seems to record there for strings or overdubs!

As for official news, Del Palmer (Kate's own engineer, Bass player, programmer and ex boyfriend!) recently turned up at a fan gathering as Kate's "emissary" and had the following titbits to impart:
Kate is still in talks with EMI about releasing a second single from Aerial and remixes have been discussed -
on a related note when some fans called EMI to find out whether a second single would be released, the official line was that there would be and that Kate's middle name is "long gap"!
Kate is dancing again.
No plan for a Greatest Hits collection in the near future.
There is unreleased footage from her one and only tour in 1979 that wasn't on the official video release which Del has copies of and would like to release in some form.
Everyone is getting together in September to start work on a new project.
There's material that didn't make it onto Aerial which we will hear "at some point".
And we wont have to wait as long for the next album!

Sounds like something will happen sooner rather than later!

Please, please, please
Let it be this decade