Worst (political) jargon of the week: Supermajority
At City A.M., we’ve long been fighting the evil misuses of language. But to mark election season, we’ve decided to venture out of the comfort of corporatopia and into the political wilderness. After all, if there’s anything we know about politicians, it’s that they’d rather say anything than what they actually mean. This week: the supermajority.
What does it mean?
The eclipse of a waning organism by a massive new entity. A supermajority normally looms during the last evolutionary stages of a massive Tory reign, or when a white dwarf is triggered into runaway nuclear fusion. Indeed, scientists have identified several types of supermajority – with the most recent discovery being of a particularly noxious kind.
Who uses it?
Scientists, hacks, Mancunian rockstars and the Conservative Party are the most frequent users of the term, united in their awe and fear of the colossal explosion of a star and the dawn of a new era.
Could be confused with:
- The superloop
- The super sewer
- A word with a meaning beyond ‘a really great majority’
Should we be worried?
Undoubtedly. A supermajority is a phenomenal event of space-altering significance. They are extremely powerful, sending energetic radiation and blast waves of ejected gas far into space. If a supermajority were to occur within about 25 light-years of Westminster, the entire planet would probably lose its atmosphere, and all life would perish.
How do we get rid of it?
Happily, a tenacious field of journalism experts have pointed out that whilst the supermajority is a meaningful term in the USA, India, Canada and Australia, it is in fact meaningless and an impossibility in the UK. These hack-perts have pointed out that over here in Blighty, nothing is super (even if the label is whacked onto the beginning of a bus service or a sewer).
So, give the next Brit you encounter who has used the term ‘supermajority’ a load of that factual accuracy – it should bring them straight back down to earth.
Political ick rating: 7/10
Will it work? Tax and benefit cuts
It’s an election year. Politicians are giving us a barrage of policies. But we often forget to ask the most important question: will they actually work? In this column Sam Fowles take policies on their own terms and asks whether they solve the problem they’re supposed to solve.
Rishi Sunak has made tax cuts the centrepiece of his election campaign. So it’s only fair to ask: will it work?
What’s the Plan?
Tax cuts, paid for by welfare cuts. National insurance will be cut by 2p for employees (costing approximately £10bn over five years) and eliminated entirely for the self-employed (costing £2bn). The money will come from £12bn of cuts to (mainly) disability benefits.
Reasons to Get Excited
We’re all getting more money! But perhaps not quite as much as Sunak and co make out. The Conservatives claim the average worker will benefit to the tune of £450 per year for employees and £1350 for the self-employed. This relies on some tricksy accounting. The Conservative’s hid the impacts of already planned freezes to income tax and NIC thresholds. The real benefit is likely to be £260 for the average employee and £1230 for the average self-employed worker. Much less than promised but better than nothing.
Cause for Concern
The plan to pay for these tax cuts seems to rely on some magical thinking. New disability benefit claims doubled between 2021 and 2022. The total bill is around £15bn per year. Research by the Health Foundation shows Britain is getting sicker for three key reasons: First, the availability of healthcare is decreasing. NHS waiting lists more than doubled between 2008 and 2024, currently standing at 7.5m, with many people waiting more than a year (particularly for chronic conditions like hip and knee surgery – which have a major impact on the ability to work). Second, debilitating mental health conditions have increased, particularly among young people, largely driven by disrupted education and repeated crises. Third, social deprivation and disease. People are getting unhealthier because it’s more difficult to access healthy food, good housing, and opportunity to exercise.
Does it add up?
Sunak and Co seem to believe they can cut the benefit bill just by wishing away the causes of the public health crisis. But economies don’t work in siloes. In reality, the Conservative plan will just transfer the costs of the crisis to places where they will be more economically disruptive.
People who need help with their health will be forced to work while ill or give up on work altogether. This will drive down productivity at a time when historically low productivity is already one of the main causes of the UK’s economic stagnation (those in Labour, who see the NHS purely as a “cost” item, should also take note). Many more will be plunged further into poverty. The costs of this will be picked up by parts of society which are already overstretched. Local government and the courts will be forced to deal with more people who can’t pay their rent. Charities and food banks will be put under greater strain. More people will have to drop out of the workforce to take on unpaid caring responsibilities. And that’s just the start. The ultimate result will be a further suction of demand out of the economy, lowering the potential tax take and making it more difficult for businesses and the high street to thrive. In other words: all the same problems we’ve been dealing since the last time government tried to combat an economic slowdown by cutting benefits.
What’s the verdict?
It’s an attractive headline but the emperor has no clothes. The Conservative plan is a recipe for more of the same stagnation we’ve endured for the last decade.
Scores on the Doors
Electoral appeal: 3/5
Value for money: 1/5
Effectiveness: 1/5
Originality: 0/5
Overall: 5/20
Don’t listen to the Tories, Britain needs a supermajority
Labour are set for a baptism of misery, with a host of tough decisions on everything from taxes to the NHS. Just as Boris broke the Brexit deadlock, Starmer will need all his strength to push through the changes this country needs, says Zoe Grunewald
Conservative MPs have moved from maintaining that their party can still win the general election to issuing grave warnings about a Tory wipeout.
Defence secretary Grant Shapps cautioned that Labour could get a “supermajority”; a sweeping victory that would give Labour leader Keir Starmer unchecked power, pushing dangerous legislation through the Commons, authorised by a mass of subservient MPs.
This argument would have been far more powerful had it come from a government with a track record of good governance. Consider Rishi Sunak’s legacy. You’d be forgiven for drawing a blank. In his first few weeks as prime minister he was forced to water down vital planning reforms after his compulsory house building targets were rebuffed by unruly MPs. His flagship Rwanda legislation saw months of delays while his government was forced to negotiate with rebels. Now it looks unlikely we will ever see the plan put into action.
Large majorities are useful. Though you might disagree with the principle of Boris Johnson’s hard Brexit (I certainly do), his substantial 80-seat majority in 2019 allowed him to break through months of parliamentary gridlock. The constitutional crisis that leaving the EU provoked required a leader with a large mandate and compliant MPs to resolve.
Labour’s honeymoon will be a baptism of misery. Councils across the country face bankruptcy, universities and hospitals are failing, utilities companies are on the brink of collapse and overcrowded prisons are bursting at the seams. Like the Brexit deadlock, these problems require a powerful force to resolve them. This is where Sunak failed – he could not command the confidence of his MPs who were more preoccupied with their political survival. So the country stagnated and services worsened. The new government will have to act fast to stem the bleeding.
The only way through is a party prepared to make a series of difficult decisions – possibly in the form of tax rises and reforms. This would be no good for a leader who is beholden to MPs or hampered by a hung parliament – it requires a party united by political will and emboldened by a large mandate. Starmer has ensured that he has loyalty. His interference in candidate selection – though making him unpopular with the left – has secured him the confidence of his MPs and minimised the threat of large, insurmountable rebellions.
That is not to say large majorities are risk-free. As Britain faces its most precarious set of circumstances in generations, it is essential that legislation gets adequate scrutiny. With the main opposition likely to be reduced to a small, divided group of MPs, their capacity for line-by-line scrutiny of complex bills will be minimal.
But there are reasons to be optimistic. Scrutiny is not solely a function of opposition MPs. Select committees, parliamentary questions, the media and civil servants all have a vital role to play in holding the government to account and keeping them on course. As Hannah White, Director for the Institute for Government pointed out, the important thing is that Labour is open to engaging with parliament.
Importantly, Labour dedicated an entire chapter of its manifesto to winning back the trust of the electorate and strengthening democracy. This includes the introduction of a dedicated Ethics and Integrity Commission to “ensure probity in government”, a ban on MPs taking up consultancy jobs to focus on serving their constituents and devolving power to communities. These are not the promises of a government intent on operating beneath the shadowy cloak of power.
The Tories, engulfed by yet another political scandal, are in no place to question Labour’s motives. The governing party has been more preoccupied with themselves than governance – allowing the country to fall into a state of disrepair. Fixing Britain requires not only a change of guard, but political will, unity and a leader who is backed by their party and prepared to make tough decisions. In this sense, a supermajority is nothing to fear. In many ways, it may be our only hope.
Zoe Grunewald is Westminster Editor of the Lead UK and a freelance political journalist and broadcaster
The next government must unashamedly champion London
London’s productivity has flatlined since the financial crisis and the entire economy is suffering as a result. Changes to planning and tax raising powers could help change this, says Paul Swinney
To get the UK out of its economic coma, the next government will need to shake the capital awake. As is well known, London’s economy is better performing than the rest of the UK. A London worker produces as much in 3.5 days as workers in the rest of the country do in a week. And it accounts for a quarter of the UK’s economic output. Driven from a position of fairness, this leads to calls from some quarters to divert policy support away from London – transport spending has long been a good example of this.
But this comparison isn’t always that helpful. Economic policy at the cutting edge shouldn’t be governed by ‘fairness’. Big cities are supposed to be more productive than other parts of the country. We should expect London’s economy to perform better than smaller places.
So, if the Capital should have a higher benchmark, where should we set it? It should be how London measures up to other global cities.
Centre for Cities’ recent report on the performance of cities across the G7 showed that, compared to New York and Paris, London isn’t an outlier. If anything, it lags slightly behind.
What’s more alarming for both the capital and the national economy is how the city has stumbled since the Global Financial Crisis. The national flatlining of productivity – and living standards – over the last decade and a half is well known. What is less well known is London’s role in it. The capital led national productivity growth before 2008. But it has barely moved since. The result is that national growth has struggled.
And this has created an additional problem for UK PLC. The UK has long had an issue with the underperformance of large cities outside of London, such as Manchester and Glasgow. It now has a London problem too.
What should the next government do to address this? Not only are all of the UK’s large cities outliers in the G7 for their economic performance, they are also outliers in terms of the tools they have to address their challenges. Just five per cent of taxes raised in the UK are done at the local level (and even that is constrained by central government oversight). In Italy, the next lowest country, it is 12 per cent. And we’re bottom of the G7 league for local control of investment too.
To change this, the government should give London and other large UK cities the ability to raise and keep a larger share of their taxes, rather than sending it all to the exchequer. We propose doing this through changes to council tax, business rates and income tax. This change would give them greater freedom over how to spend money and how to compensate for the political pain that growth can bring with it.
And it should reform the planning system. The discretionary, case-by-case system we’ve had in place since the end of World War II has left us with a shortfall of 4.3m homes. The causes of the decline in housebuilding rates date back to planning legislation in the 1940s, much earlier than Right to Buy or even the decline in council housebuilding after a peak in the 1960s. This housing shortfall has bitten hardest in London and the Home Counties, evidenced by how much higher house prices are relative to incomes in this part of the country.
Switching to a rules-based system – which would allow any development to go ahead if it passes a set of agreed upon, pre-defined rules – would change this. It would inject certainty into the system, which would help London and its surrounding area build the homes that people are looking for.
All parts of the country will have a role to play in reviving the UK economy. But the next government should be unashamed in focusing on London, alongside the UK’s other large cities, if it is serious about reviving the UK economy.
Paul Swinney is director of policy and research at Centre for Cities.
The Notebook: A key test for Labour? Dealing with the water industry
Where the City’s movers and shakers have their say. Today, it’s Lucia Hodgson, Charlesbye Strategy partner and former Downing Street special adviser, with the pen to talk manifestos, Trafalgar Square, and Labour’s first big test: the water industry
Full of crap? The next government has a tough task ahead
As the election campaign enters its last fortnight (I can hear us all breathing a collective sigh of relief), there will be much crystal-ball gazing over what exactly the likely Labour government will do in its early days – surprise taxes, King’s Speech bills, ministerial appointments. But there is one test we know is coming down the track, and that is how Labour will deal with the water industry.
The ‘draft determinations’ are the regulator Ofwat’s verdict on pricing and investment for water companies, and are due to be one of the first things on the new PM’s desk. It will almost certainly feature challenging new regulations for a sector facing intense scrutiny.
Charlesbye Strategy recently polled one of the rumoured policies: cutting water company fines to support proper infrastructure investment and stop leakage. Perhaps unsurprisingly it was the second least favoured option, coming after nationalisation. Just 11 per cent supported reduced fines, compared with 45 per cent who believed CEO and senior executive pay should be cut. Add reducing shareholder dividends into the mix and that number is 63 per cent.
Labour will need to prepare a robust and credible set of policies to deal with this issue. It may well be the companies under pressure, but 47 per cent of the public believe that responsibility to improve the water industry sits with the government and the regulator. With trust in politicians at an alarmingly low rate, this test of resolve will be important to get right.
Despite the issue reportedly ranking first on Starmer chief of staff Sue Gray’s “S**t List”, it’s been notably absent from the Labour and Conservative campaigns. Both parties know the sector is notoriously difficult to reform, but that’s a hard sell to voters thirsty for change. If the new government doesn’t want a bailout on their hands, it will have to agree to some potentially unpalatable fixes.
Trafalgar Square could be a haven!
Finally some sunshine, and sitting on the steps of St Martin in the Fields should be one of the most pleasant places to be in London. Instead, niche campaign groups compete over their megaphones with buskers and sound systems, making Trafalgar Square one of the least ambient places in London. Some al-fresco cafes, outdoor exhibitions, or even just some more seating would transform the area around the National Gallery into one of London’s best spots to watch the world go by.
With the addition of a few extra seats and cafes, Trafalgar Square has the potential to be a summer al-fresco dining hotspot – why is it only home to campaign rallies and feral pigeons?
Manifestos: TLDR
Charlesbye has spent the last fortnight reading election manifestos cover to cover to decipher potential implications for our clients. Despite hundreds of pages, many businesses are still telling us they just are not sure what Labour will actually do – from energy policy through to early years. Our polling found that although only nine per cent of the public read them, 70 per cent recognise their importance in deciding how to vote.
Parties must get their messages out beyond that nine per cent. Labour seems to have made excellent in-roads with Generation Tiktok – confirmed when I spotted they’d jumped on the very odd Little John home design trend…IYKYK
Quote of the week:
I am not your punch bag! I am a member of parliament.
From the new play, The Constituent, on at the Old Vic
A recommendation
I’ve always loved whatever Miranda July turns her hand to, whether film, art or writing, and her new book does not disappoint. I tore through All Fours in a single weekend, a page-turner about a middle aged woman who abandons her cross-country road trip to instead spend three weeks in a motel thirty minutes from home. She keeps up the pretence of the trip with her family as she embarks on a weird and wonderful journey of discovery and soul searching, with lots of July’s trademark quirkiness and subtle probing into sexuality, femininity and contentment along the way.
Late to the party, I also recently saw People, Places and Things at Trafalgar Theatre and thought it was brilliant and enthralling.
I’m the only openly gay CEO in UK banking. LGBT people still face so many barriers
The City can put on a good show for Pride, but its C-suite record shows LGBT representation still has a long way to go, writes The Bank of London chief executive Anthony Watson
A pivotal moment in my journey occurred at Microsoft in the early 2000s when a colleague made a vile and shocking gay slur to someone else in the room, not realising that I was gay myself. This incident shocked me so much, it empowered me to embrace my true identity and come out, despite open hostility to LGBT people at the time.
Yet openly LGBT executives like me are still a very rare sight in business. Whilst diversity is often championed, visibility and representation of LGBT people in particular remains disproportionately low, pointing to a glaring gap in corporate inclusivity.
There certainly isn’t much diversity on display in FTSE 100 board rooms, with only two openly gay CEOs: Antonio Simoes of Legal & General, who only assumed the role this year, and Stuart Machin of Marks & Spencer, who only recently rejoined the ranks of the FTSE 100. It is a sobering statistic emphasising how much work still needs to be done.
Today, I am proud to be the first and only openly gay person to found and run a bank in the UK or Europe. Being gay has been one of the greatest blessings in my life, driving me to be transparent and vocal about issues that matter and are now an essential part of my identity.
However, it is disheartening to see the continuous oversight of LGBT diversity. Whilst other strands of diversity are crucial, they should not overshadow or replace LGBT inclusion, especially with LGBT hate crime on the rise for the first time in a generation.
The challenges within and beyond the City are significant. Bias has been a persistent force throughout history, and its impact is being embedded into new technologies. Anthropologist and gender studies expert Mary Gray noted in a 2021 Forbes interview that AI would “always fail” LGBT people due to its inherent static nature, which struggles with evolving identities within the LGBT community. We must strive for AI that fosters inclusivity, not marginalisation. It is imperative AI development includes LGBT perspectives to ensure fair and equitable outcomes for all.
The fight for LGBT rights remains critical, as these rights are being eroded in subtle and significant ways digitally and legislatively. Sadly being openly LGBT in business, especially in banking and finance, is still perceived as ‘something odd’ by both regulators and industry. Authentic inclusion means being true to oneself and having workplaces, and opportunities in those workplaces, that embrace our differences. As Pride in London’s campaign this year beautifully states, it’s about “shining a light on the presence of London’s LGBTQ+ community, and the power they have to be drivers of change by living authentically and without apology”.
Boards, hiring managers and recruiters must prioritise potential over past limitations, embedding diversity at every organisational level. When employees can bring their authentic selves to work, they can fully focus on their work performance free from fear. Surely every employer wants 100 per cent of their employee to be present and not just a token percentage of what that employee is comfortable bringing to their place of work? Although some companies are making strides to improve AI and support LGBT rights and inclusive workplaces, real change will happen when these principles are woven into the daily operations of all businesses, not just highlighted during Pride Month. The emphasis on diversity should include all facets equally, recognising that each brings unique strengths and perspectives.
It is time for corporations to recognise that true diversity includes sexual orientation and gender identity. Authentic inclusion is not a zero-sum game; it enriches the entire organisational fabric and drives innovation and growth.
Let’s move beyond tokenism and towards genuine, comprehensive inclusion where every individual feels seen, valued and empowered.
Anthony Watson CBE is the founder and group chief executive of The Bank of London
Build, Baby, Build: We’ll never fix the housing crisis without private capital
It is only by close collaboration between the public sector, private companies and institutional investors that we’ll be able to deliver housing of all tenures at scale, stabilising the market and ensuring more people are able to live better, says Rick de Blaby
As someone who runs a business where a third of our workforce is under 30, I know how important it is to be providing homes across London that people can not only afford, but also where they want to be. Homes that are high quality and energy efficient, within neighbourhoods that enable connection and community.
It is in no one’s interest for this city’s next generation of talent to be forced out of the capital because a lack of housing has forced up the cost of rent and mortgage repayments.
Yet the shortage of fit-for-purpose, affordable housing continues to be a long-standing systemic issue.
The December 2023 Housing Delivery Test figures found that 22 London authorities failed to meet their individual housing delivery targets between 2019 and 2022, and, of these, 13 fell at least 25 per cent below their mandated housing delivery requirements. And this comes as the buy-to-let market is increasingly shrinking, putting further pressures on housing.
It is clear that if we’re going to have any chance at making a meaningful dent in the housing crisis, the significant levels of private capital are going to be required. For an idea of the scale, an estimated £250bn worth of global capital is needed over the next seven years for rental housing alone.
The build-to-rent (BtR) industry, which is backed by sophisticated, long-term investors – many of whom are pension fund custodians – has an important role in making this happen, bringing forward not only the market rental homes that are in such high demand, but also significant levels of affordable homes.
For us to do that at the scale that is required, we must break down the obstacles to growth.
In the lead up to the general election it is encouraging that all parties are considering ways in which we can boost housing delivery and we were pleased to see Labour’s pledges to build more high-quality, well-designed and sustainable homes, while also supporting councils and housing associations to make a greater contribution to affordable housing supply.
Whichever party is in government in the next few weeks has to start by being able to ‘sell’ what that grand vision is for housing in the UK. People need to see how development can be a force for good and the country must be positioned as a compelling investment case so that we have the capital to deliver it.
Given the levels of demand, it should not be a difficult feat to attract the global capital that is required, however the risk of further red tape and any calls for rental controls serve as an immediate deterrent for that capital, stifling growth in a sector that badly needs it.
Indeed, we were the closest we have ever been to passing the Renters (Reform) Bill, which had struck a good balance between protecting renters and maintaining an appealing market for investment. It is therefore a shame, for the benefit of the 11m tenants and 2.3m landlords across England, that the Conservatives weren’t able to see this through before the Election was called.
On top of that is the well-documented problem of our planning process, which is under-resourced, complex and lengthy.
As we approach a new political period come 5 July, I am optimistic that we can set the UK up for growth. It is only by close collaboration between the public sector, private companies and institutional investors that we’ll be able to deliver housing of all tenures at scale, stabilising the market and ensuring more people are able to live better.
At Get Living, we’re delivering one of the capital’s major regeneration projects at Elephant and Castle, which will bring a new mixed-use town centre to the area, comprising shops, restaurants, work space and homes, of which a significant number are affordable. This project should serve as the blueprint across the country.
The BtR industry is one of the few that has the investment and appetite to deliver more private and affordable homes. That is why it is crucial that our future government works with the sector to achieve that growth for the benefit of all.
By Rick de Blaby, Chief Executive at Get Living
Forget Rightmove, we need an Amazon for home buyers
Rightmove has been the dominant force in property portals for almost two decades. Currently the 5th most shorted stock in FTSE by investors, it is the indisputable leader in its field. But the question on everyone’s lips is how much longer this will be the case? asks Babek Ismayli
Disruptors have been seeking to dethrone Rightmove for several years now with suggestions ranging from class actions or boycotts by estate agents to outspending Rightmove in marketing and offering exclusive listings for a limited time. More recently, however, there has been a significant focus from both the investor community and the industry on Homes.com’s acquisition of OnTheMarket, and it looks like their ambitious marketing plan to displace Rightmove from its top position.
Can you really challenge the dominant player?
Displacing a dominant classifieds player like Rightmove with a similar business model is extremely challenging. While competitors can take actions that might have an impact, ultimately, they’re unlikely to be anything more than an annoyance and when it comes to Rightmove, much more will be needed to unseat it from its top position. Why? Because there is simply no compelling reason for home buyers to switch. And it’s this, the opinion of the consumer, that allows Rightmove to continue with its ‘Keep calm and increase fees’ approach.
Identifying the elephant in the room
The surprising thing in all of these machinations is that the home buyer and their experience is at the heart of Rightmove’s success, and yet not a single would-be usurper has factored them into the discussion. Rightmove’s strength has always been its focus on property search. It revolutionised the housing market in 2000 by consolidating listings from newspapers into a single online platform, making it easier for buyers to find available properties. It made finding homes easy, accessible, even if you were looking at a long-distance move, even if you were looking overseas and that’s what the consumer wanted.
Disrupting the disruptor
The singular focus of Rightmove has also become its weakness. The brand’s success, with over 70 per cent profit margins and strong influence over estate agents, has led to complacency. With no pressing need to innovate, Rightmove has stuck to its original model, stopping at the search stage and leaving buyers to navigate the rest of the home-buying process on their own and that doesn’t gel with the seamless, integrated experiences that contemporary consumers expect.
Rightmove is a platform which forces users to juggle multiple service providers with little guidance. It frustrates buyers who are accustomed to the ease and efficiency of digital firms like Amazon and Uber Eats and it’s that frustration that creates openings for other potential players.
To understand the potential for disruption, consider the evolution of e-commerce from old internet classifieds like Gumtree to comprehensive online marketplaces like Amazon. Gumtree provided a centralised platform for classified ads but offered a fragmented experience. Users had to contact sellers, negotiate deals, and handle payments independently. Amazon, on the other hand, integrated product listings, payment processing, and logistics into one seamless platform, making it incredibly easy for consumers to find, purchase, and receive products. This holistic approach set a new standard for convenience and efficiency, making Amazon one of the most loved consumer brands in the world. The future of real estate lies in adapting to the evolving needs of consumers. Just as e-commerce evolved from fragmented classifieds like Gumtree to comprehensive platforms like Amazon, the real estate industry must transition from outdated, disjointed services to integrated, end-to-end solutions. Imagine a world where buying a home is seamless and stress-free. Picture discovering a dream property, viewing it with an agent, securing a mortgage online, and handling all legalities on one platform. This isn’t a distant dream; it’s the future and also the biggest risk for incumbent businesses like Rightmove. They are forced to reinvent themselves, think differently, and take risks – or face becoming the next Blockbuster.
Babek Ismayil is founder and CEO of property transaction platform, OneDome
Build, Baby, Build: A manifesto for London’s fourth housing boom
There is a vast amount of capital waiting to be invested in London housing, here’s how the British Property Federation’s Melanie Leech would unlock it…
London needs another housing boom. The late 19th century created the Victorian terraces of Zones two and three, the 1930’s ‘Metroland’ developments built much of today’s outer suburbs and the post-war council house boom filled in bomb sites and replaced older homes across the city. Today’s housing crisis demands a burst of building on a similar scale.
As this paper has rightly pointed out, since the 1980’s London’s population has grown by almost half, yet the number of homes has only risen by a third. This supply gap has contributed to historically high rents and made home ownership in London a minority tenure – 48 per cent (and falling) compared to 65 per cent nationally.
As we set out in our manifesto ‘Building our Future’, whoever wins power will need to make changes to the planning system to make sure it provides the clarity and consistency to deliver new homes and the critical infrastructure such as logistics that supports them across the country, including London, where need is arguably greatest.
To unlock development at pace we also need more planners – the major parties are committing to providing more resources and the British Property Federation’s (BPF) members have also consistently said that they would happily pay higher planning fees to get a system that delivers faster and more effectively.
We need to provide homes for people of all ages; families of all sizes and to cater for a wide range of budgets. The positive news is that there is a vast amount of capital available for investment in new London homes if we are smart about accessing it. This could unlock more build-to-rent (BtR) properties, housing for older people, student housing and affordable and social housing, addressing Londoners’ diverse needs.
BtR properties have emerged as a vital component of London’s housing supply with almost 50,000 new homes completed. Unlike the traditional buy-to-let market, BtR developments are built at scale – specifically designed for renting and typically managed as a block by professional companies. Rents in BtR are broadly similar to the wider private rented sector but with long-term leases and predictable rental increases, tenants can enjoy greater security and easier financial planning. BtR offers numerous other advantages, including well-maintained facilities and communal spaces and on-site services such as 24-hour security and concierge services. Professional management ensures consistent quality and maintenance.
With the right policy and planning framework, the BPF predicts that we can double annual BtR output to 30,000 homes across the UK, boosting choice and quality for Londoners.
Investing in purpose-built student accommodation (PBSA) is also essential in a city with so many globally renowned higher education institutions. High-quality accommodation is an increasingly important part of the offer to students and post-graduates – it enhances the overall student experience, offering safe, comfortable and conducive environments for studying and living. PBSA can help alleviate the pressure on the wider rental market, freeing up homes for others to live in.
One of the most significant developments in recent years has been the growth of private sector capital invested in our pensions and savings, seeking to invest in social housing, boosting supply either directly through development activity, or indirectly through acquisition of existing assets. Partnerships between the not-for-profit and the for-profit sectors are emerging, with a shared ambition to deliver quality, sustainable investment in this sector. With the right framework, billions of pounds more of new money could be unlocked for social housing.
The BPF’s manifesto sets out the property industry’s offer to the next Government to unlock investment into our built environment – to build the homes, critical logistics infrastructure, workspaces and leisure destinations London and the country needs. The BPF’s members want to play their part in the city’s fourth great housing boom of the last 150 years. Further, we are offering the new government an opportunity to work with us to unlock new investment, power London’s economy, build new homes, and maintain London’s pre-eminent status on the world stage.
Melanie Leech is chief executive of the British Property Federation
Mark Kleinman: Melrose 2.0 may shine more than Shein
Mark Kleinman is Sky News’ City Editor and is the man who gets the City talking in his weekly City A.M. column. This week, Kleinman tackles Rosebank Industries aka Melrose 2.0, Heathrow Airport drama, and the ownership saga around Everton
Melrose 2.0 may shine more than Shein
0.1 per cent: that’s the likely valuation of Rosebank Industries – aka Melrose 2.0 – relative to the Chinese-founded online fashion retailer Shein if and when both make their London stock market debuts in the coming months.
With an initial seed capitalisation of about £50m, Rosebank is the new vehicle of Simon Peckham, one of Melrose’s co-founders. He has assembled a team from his former company with over a century of experience between them, and now intends to reprise the ‘Buy, Improve, Sell’ playbook which made its investors handsome returns over two decades.
Yet while political and media attention focuses on when Shein will push the button on a UK listing, Rosebank’s listing may be disproportionately significant in what it says about the recovery story for London’s flagging stock market.
According to insiders, Peckham and co have for months been discussing a privately owned version of the vehicle which would secure substantial capital commitments from one or two deep-pocketed private equity firms.
Sources tell me that the decision to pursue a public capital raise instead reflects a judgement about institutional investors’ willingness to finance another listed company from the team which made Melrose so successful.
An investor presentation I’ve seen unsurprisingly makes hay with that track record: Elster, which generated a 33 per cent internal rate of return, and Dynacast, for which the comparable figure was 30 per cent.
Overall, Melrose made an average 2.5x return on equity across all of the businesses it sold since its 2003 flotation, and generated a total shareholder return of nearly 3,400 per cent.
Past performance, of course, offers few assurances about the future, but Peckham has sounded bullish during recent interviews about the opportunity to work alongside management teams of target companies, rather than simply replacing them, as was the pattern at Melrose.
That should present an easier door-opening tactic for Rosebank’s pipeline of prospective acquisitions.
The presentation also makes clear that Peckham will deploy the same approach to remuneration that made his previous venture such a perennial talking point in the City.
Low salaries and below-average bonuses tied to a long-term incentive structure which has the potential for bumper rewards, with ‘real’ industrial assets listed in London – it’s a familiar, and welcome, story.
Heathrow drama taxing towards the runway
Talk about a terminal situation. After months of negotiations, Saudi Arabia’s sovereign wealth fund and Ardian, the private equity firm, have struck a £3.3bn deal to buy a stake of nearly 40 per cent in London’s Heathrow Airport.
Announced late last week, it addresses the tag-along demands of investors excluded from the original deal unveiled late last year.
While the delay will have been frustrating for the Saudi Public Investment Fund and Ardian, it eventually landed at an appetisingly reduced valuation of £8.7bn. Based on rising passenger numbers and earnings, the price looks cheap.
Challenges remain, however. Recent remarks by the bosses of British Airways and Emirates highlight the rough deal many of Heathrow’s most prominent airline customers believe they are getting.
I suspect the advent of a new government will herald a fresh effort by those carriers, along with Virgin Atlantic, to call for a further overhaul of the airport’s ownership structure
Previous attempts, and international comparisons, imply their focus will be on breaking up Heathrow’s monopoly ownership of its five terminals. Expect this to be the biggest aviation battleground – and lobbying blitz – under a new government.
Watchdog won’t solve sticky Toffee drama
It looks like a case study ready-made for a new football regulator. As the ownership saga surrounding Everton, the Premier League side which has made a habit of late escapes from relegation in the last few years, enters its next chapter, the prospect of a famous club starting another top-flight season in limbo escalates.
The Toffees’ nickname is apt, given that resolving the financial mess enveloping the club has been akin to wading through treacle.
Farhad Moshiri, the long-standing owner, has pumped hundreds of millions of pounds into Everton since buying it in, but will see little in return.
Creditors including Rights and Media Funding, MSP Capital and local businessmen and lifelong Evertonians including Andy Bell, the AJ Bell founder, are owed nine-figure sums, some of which are secured against the club’s new stadium at Bramley Dock.
A solution may be in sight after myriad false starts: step forward, Dan Friedkin, the owner of AS Roma, who has now been granted a period of exclusivity.
Much of the responsibility for the mess lies with 777 Partners, which signed a deal with Moshiri to buy Everton last year and has since turned obfuscation into an art form.
The Premier League appears to have had no definitive reason to block the transaction despite a complete absence of visibility over 777’s funding and deep misgivings about financing troubles elsewhere in its sporting and insurance affiliates.
Ultimately, the conditions imposed on 777 by the Premier League – which included a deadline to repay outstanding loans and to deposit funds into an escrow account for use by the club – put paid to the deal.
If a new regulator is to have real teeth (and thereby justify its existence), it will require greater powers to intervene in takeover situations like the Everton one.