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Among the Developers

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The property industry met at Kensington Olympia last week. MIPIM (Le marché international des professionnels de l’immobilier), held in Cannes for the last 25 years, came to London for the first time, gathering together ‘all professionals looking to close deals in the UK property market’. Tickets cost £500. (I had a press pass.) Day one kicked off with the announcement of a deal ‘to deliver the £400 million Kirkstall Forge development in Leeds’. The large sums of money and vague management speak remained a key feature for the three days of the conference.

The Radical Housing Network organised a protest outside the conference on the first day, accusing the men inside – and they were almost all men – of being responsible for ‘the disappearance of public space and public services, and the displacement and destruction of communities’. They turned up in their hundreds to block Boris Johnson, who was giving the opening speech, from getting in. The mayor got in through a back entrance but the protesters heckled delegates who were queuing to hear him. If you can’t afford to live in London, one of the delegates said, ‘move to the provinces.’ Another punched a protester in the head. The police later confirmed that the man was arrested for common assault.

I went to a talk called ‘What next for housing tax and who is going to pay it?’ It was mostly about the mansion tax. ‘I don’t see why we need yet another tax,’ Marion Cane of the law firm Ernst and Young said. ‘The danger is putting off foreign investors.’ A member of the audience asked: ‘What’s necessary politically to make sure a mansion tax does not happen?… How do you fight it?’ According to Lucian Cook of the estate agent Savills, ‘the great sadness is that the whole taxation of property debate has become hijacked by issues of mansion tax, which is very clearly a politically driven proposal. The majority of the electorate like it because they are not footing the bill.’ Jonathan Rust of Residential Land, one of London’s largest private landlords, said that ‘fairness is often a phrase that’s used by people who don’t pay any tax; it needs to be fair for people who do pay tax.’

On the second day I attended a seminar on ‘Exploring healthcare: opportunities for the property industry’, part of a series of talks on ‘alternative property assets’. One of the speakers was Simon Corben from Capita, ‘the UK’s leading provider of business process management’. NHS executives, he said, ‘are under this scrutiny of savings and unaffordable tariffs and they need to change the model of care that they are delivering within their organisation’. There’s a ‘realisation amongst the health service that they simply cannot do this alone’. The private sector would soon be filling the gap left by central government. ‘There is a great opportunity,’ he told the room. ‘We are right on the crest of a wave… I think things are going to change very quickly for the benefit of people in this audience.’ He suggested they ‘educate the NHS’ about the need to sell off its real estate and rent space back from the developers.

Tim Meggitt of Octopus Healthcare talked about the opportunities provided by the UK’s ageing population: ‘There are about 20,000 care homes across the UK; 45 per cent of them are over 40 years old.’ Overall, he said, ‘it’s a great sector, huge opportunities. You have to learn to speak the NHS language. You will get incredibly frustrated, there’s no doubt. But stick at it and there are things to be done.’

What about the politics of all of this, the convenor, Peter Woodward, asked towards the end of the talk. ‘You know yesterday we had the protesters outside: there’s a conversation going on around, which is a feeling of privatising the social space, the social services, it feels if you analyse it, the only way to go in the future but a lot of people aren’t there and that makes life more complicated.’ The architect David Lewis said that ‘under PFI things are delivered on time and on budget, so bringing the private sector in is actually a better thing.’ Corben said that privatisation should be judged on its results, with the implication that those results were always positive. ‘There’s a bit of lemmings in this and I think now one has landed’ – he was referring to a Capita redevelopment of a hospital in Bristol – ‘I think we’ll see a lot more go through.’

The last event I went to was the MIPIM awards. Michael Heseltine, a key figure in the sale of millions of council houses, was awarded a ‘lifetime achievement award’. ‘My whole career has been about property,’ he said. ‘I love property.’ He got a standing ovation.

The regeneration of Earl’s Court was given the ‘best future project’ award. This 77 acre redevelopment will mean the demolition of two council estates – 760 homes with more than 2000 residents – and the exhibition centre. The new development will have more than 7000 flats and over 80 per cent of these will be sold at market value, a one-bed flat in some of the new schemes costing £600,000; only 11 per cent will be designated ‘affordable’. The Commonwealth Games were given the ‘regeneration project of the year’ award. The project saw entire blocks of flats, streets of houses and rows of shops demolished to make way for stadiums and the athletes’ village, leading to protests and the forcible eviction of residents by police and bailiffs.

Comments

  1. streetsj says:

    The LRB and it’s readers largely approve of state ownership and dislike privatisation. Let me pose a simple question: why is the State so incompetent at managing its suppliers? And since it is so bad why do you have such confidence in its ability to manage anything?

    • Harry Stopes says:

      For starters I think you need to show your working. I don’t share the assumption of your premise.

      • James Alexander says:

        Indeed. But Harry, to which of the four to six (depends on what and how you count) sweeping and unsupported assumptions/premises do you refer particularly?

        The whopper for me, and it is the more egregious for being unspoken, is the assumption that incompetent management is somehow a differentiator, something ‘we all know’ to be characteristic of public ownership and management, and that things are different under private/for-profit/commercial ownership and management. Anyone who confidently assumes and asserts that needs to get out more, or at least listen to the daily news.

        Streetsj, I recognise that you didn’t expressly articulate such a view, but the unspoken implication is writ so large that if it’s not what you think or mean, you’d better clarify.

        My bet would be that if you want to generalise about “the LRB and its readers” (dodgy, surely?) then perhaps they might disapprove of incompetence in general, and disapprove rather more of incompetence driven by greed or machismo, or even just by the profit motive. Read the original post as a story of incompetence on the macro-scale, about private commerce generating public squalor and degeneration.

        • streetsj says:

          Ok, let’s ignore the comment about the LRB readership – it’s my impression from reading the articles and the blog but I accept there might be a large, silent majority of supporters of privatisation.

          I am in favour of apple pie and against incompetence.

          But let’s cut to the meat: is managerial incompetence limited to the public sector? Of course not but is it more prevalent, I would argue that it is. Incompetence in the private sector is not tolerated for long; in the State sector it appears to be tolerated indefinitely. The State run enterprises are nearly always massively inefficient as has been demonstrated on many occasions when they have been privatised and been shown to be capable of running with far fewer employees, generating returns which can be reinvested (and, yes, paid in dividends to the providers of risk capital).

          It is easier to run a contractor than to run the actual business and yet governments continually fail to do so effectively. For example, the numerous times large computer projects are abandoned at huge cost – yes this does happen occasionally in the private sector but it is not the norm..

          I will give one example of which I have had direct experience. A private company I was an investor in could build a long term elderly care ward for less than half the NHS could. The reason? The specification the NHS came up with, after many separate committees had had their say meant that everything had to be built bespoke – it was a classic example of an uncommercial approach.

  2. Simon Wood says:

    That is a simple question, yes.

    State ownership has its place – council housing, schools, hospitals – so does private ownership – housing, schools, hospitals.

    For the absolute azimuth of heroic super-build, however, the apogee, the zenith, the bismuth – how would the marketing suite put it? – look no further than Battersea, where the old power station will soon be dwarfed by an extraordinary compilation of banal plastic, perspex, ticky-tacky and tin, the “WE DON’T DO ORDINARY” as they boast, of the long-awaited terminal phase of redevelopment.

    The excellencing of London will then be replete, complete. Meanwhile, the bewildered, baffled miminum-wagers will be bullet-trained in from the midlands and the north to clean it, then bullet-trained back where they belong.

  3. E L Hirsting says:

    Incompetence is rife in the private sector, too. The privatisation of the rail service saw rising ticket prices and more delays for passengers. But that’s a minor issue when we consider the fact that even after being “privatised” they are still being given tax-payer money in subsidies and then paying profits to private shareholders.
    So we get the incompetence, and we get to pay for it twice. And healthcare is next.

    The LSE wrote a good piece about this in its blog recently:

    http://blogs.lse.ac.uk/politicsandpolicy/the-new-politics-of-rail-privatisation/

  4. lesterhardy says:

    Sounds like the enclosure of the commons all over again to me – state collusion with powerful, private interests to the detriment of common folk.


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