In my corner of southwest London, it is impossible to avoid Berkeley Homes. Their boards are everywhere, popping up with new developments of apartments and houses.
For the SW postcodes, read right across London, Birmingham and the South East. Berkeley has got them cornered, and, as today’s company figures show, it is powering ahead, leading an industry that has been struggling with red tape, rising costs, a shortage of suitable sites and an uncertain market.
Berkeley has always been a firm built on disciplined execution and rigid control of costs. Under CEO Rob Perrins, that focus has been even more firmly enforced. It’s a tightness that is reflected in the news that Perrins is to move up to become executive chair of the Berkeley Group, on the retirement of Michael Dobson.
As chief executive since 2009, Perrins has overseen a period of sustained strong performance and growth. The City is not always approving of CEOs switching to chair, but in this case it makes perfect sense: Perrins knows the company, market and industry backwards; he’s also au fait with the complex and often fraught regulatory landscape.
To appoint someone from outside at this moment of great change, with a government committed to driving housebuilding on a huge scale, seems like madness. If anyone knows what requires unlocking to make that key policy even remotely achievable, it is Perrins.
It’s likely that Berkeley shareholders will listen to the reasons for, and approve. There is simply too much risk involved in going down another route, so why take the risk?
Investors, though, are just one audience. The other people who should fall upon Perrins’ experience and knowledge are ministers.
Here we start to come up against the block of old Labour ideology, based on a fixated view that practitioners like Perrins are solely motivated by money; that all they are interested in is securing ever greater profits. It’s not just senior Westminster politicians who think like that, but local councillors. They view much of what the likes of Berkeley do and suggest with suspicion.
Instead of seeking advice from the private sector – the folks who, after all, commit the cash, take the gamble and actually build and sell the properties – and working together with them, there is a tendency to keep a distance, to hear, to nod politely, and to do next to nothing.
That, certainly, has been the pattern previously, which is why so little has been achieved. Government targets for new homes are not a recent phenomenon; they have been set many times in the past and nowhere near met, so much so that they have developed a sort of fantasy, pie-in-the-sky, wouldn’t-it-be-wonderful aspect.
It’s a cycle that must be broken if the country is to have any chance of resolving a deepening crisis – and, from Keir Starmer’s point of view, if he is going to have any prospect of adhering to a central Labour pledge that will impact on the next election.
Which means that Angela Rayner, the minister charged with making it happen, should look closely at what Perrins is saying, and act.
Of course Perrins is pursuing a financial return. It would be negligent of him not to: it’s what is expected of him and his colleagues; they must deliver or else. That’s how business operates, and no one is pretending otherwise.
Equally, though, the one cannot succeed without the other. Rayner and her team need the housebuilders; the housebuilders need Rayner and her team. They should both be pulling in the same direction.
The government’s mission is to build 1.5 million homes. Essential to achieving that are brownfield sites, and occupying a vital position is London. It’s our only world city, the one that enjoys the strongest economy and offers the greatest potential for growth.
Unfortunately, too many politicians look askance when London is mentioned. They are not from London, and they are devoted to levelling up, which in London’s case translates to levelling down.
The London figures suggest a micro-crisis within a larger crisis – private housing starts for the last 12 months amount to just 8,700, and completions are expected to drop to between 7,000 and 8,000 by 2027. They are pitifully low. London is where people want to live, it’s where the jobs are, it’s where foreign capital is heading – yet not enough is being done to help.
Berkeley and its ilk face a double whammy in London: costs have risen by over 40 per cent since 2016, but the price of flats is flat. Make that a triple: as if that were not heady enough, the regulatory burden has increased. Much of it is well intentioned – post-Grenfell, fire safety has become a major concern – but it all adds up. At the same time, public services are placed under ever greater strain, which inevitably puts increased pressure on the private purse. These days, councils desire, and expect, far more for their buck.
From their side, there is too much take and insufficient give. Planning, which is in their gift, is as hidebound as ever, more so with the issuing of unrealistic priorities that take little account of market conditions and operational strictures. So tortuous is the planning process that, shamefully, appeal is now the default.
One change that would yield instant benefits – and one that Perrins keenly advocates – is for councils to use Section 106 agreements rather than the community infrastructure levy (or CIL). The latter is a standardised, non-negotiable charge assessed on development size and style, whereas the 106 is negotiated and site-specific. In others words, the 106 can be made to fit what is being proposed. Hard-up councils, though, prefer the cash, hence the popularity of the CIL. But that tariff, which is what it is, may not sit fairly with the developer. Projects are being lost through the councils’ failure to compromise.
An urgent rethink – or, as this government prefers, a reset – is required, and the housebuilders, with Perrins to the fore, must be a more equal party in those discussions.
#Angela #Rayner #learn #lessons #housebuilders #succeed
