黑洞社区

Dan Labbad this week breaks his silence to set us straight on the relationship between Bovis and Lend Lease, its parent company. As old timers in construction will know, uncertainty about the intentions of Bovis鈥� owner is about as novel as civil unrest in France - in the nineties it was the P&O conglomerate that was always about to sell it, float it, integrate it or allow a management buyout. In the noughties the same rumours swirled around Lend Lease, given extra impetus in the past year or so by continual changes in the contractor鈥檚 senior management and the company鈥檚 structure and strategy, all of which created the impression that, for Lend Lease, Bovis was a problem it was struggling to solve.

One issue was the degree to which Bovis should be integrated within Lend Lease鈥檚 operations. At one extreme is the Canary Wharf Contractors model, at the other a purely formal relationship. In his conversation with 黑洞社区 on page 30, Labbad clears this up for us: Bovis is to take on 20-30% of Lend Lease鈥檚 work, and scratch for the rest of its meals in the market. But which markets? The review conducted by Nick Pollard, the firm鈥檚 former chief executive, proposed a move into civils. This was prescient, given that Bovis was best known for high-end commercial and education schemes, neither of which are exactly booming these days. But Labbad is less convinced. Although he鈥檚 clear about his interest in energy from waste, his general position is that he is 鈥渞eviewing the review鈥�. Or, to put it another way, he appears to believe that sensible plans can鈥檛 be drawn up until we have a sensible economy to apply them to. Yes, infrastructure looks a good bet (pages 12-13), but such is the degree of political and economic risk around that the best course of action is to try to decipher 鈥渕arket signals鈥� - that is, to emulate companies such as Berkeley that seem able to change their strategy on a sixpence and leave threepence change (page 17). Underlying that is, of course, the Bovis brand. Whatever decisions Labbad arrives at will depend on leveraging its strength; the danger is that if he leaves it too long, it may become a diminishing asset.

What change will we have from 拢6nb?
So George Osborne鈥檚 spending review has put an end to New Labour鈥檚 dreams of an urban renaissance and a narrowing of the North-South divide (see pages 22-23). Instead, the coalition is to introduce an untested funding model whereby 150,000 鈥渁ffordable鈥� homes are to be funded by unaffordable rent rises for social tenants - at least in London and other big cities. The headline figure is that the communities department鈥檚 budget is to be cut 75%, which means in practice that a myriad pots of regeneration money are about to vanish, as is support for private housebuilding through HomeBuy Direct, Kickstart and the Homes and Communities Agency. All in all, about 拢6bn of regeneration funding has been chopped.

Is there an upside? Well, local authorities will have greater control of their own destiny as the new localism agenda gets translated into planning statements and council policy, which should be good for developers that master the new system. But, again, we are facing another abrupt policy shift. The hope is that the Treasury鈥檚 general principle of incentivising local authorities is achievable on the ground. Some comfort may be gained from the fact although most expect 鈥渢ax increment financing鈥� (that is, borrowing against a development鈥檚 future tax take) will be capped and 鈥渙n balance sheet鈥�, as has been shown to work in America. But if you didn鈥檛 realise it already, the days of public support for private development will soon be a distant memory. It鈥檚 as bad as you probably thought it would be.