The latest in an ongoing series about the day-to-day travails of an embattled practitioner. This week: It’s the economy, Stupid……
‘So I went to the bank to see what they could do, They said son – looks like bad luck gotta hold on you…..’ Simply Red (J & W Valentine)
Are we living a kind of biblical time shift? A plague of locusts seems to have been at work over recent years. Grey day, grey mood, decide to have a lie-in and a think.
I like clients. Almost all are fascinating and watching them react to recent crises has been an education. One big developer client is now a small developer client. The company is living daily with the bank manager who suggested they acquire a run-down mill he had on his books. Permission for two hundred flats in the bag, now they can’t give it away. The bank manager wants to know why. He aslo wants to know when the developer will be paying off the debt. Proposal after proposal is put forward but rejected. So instead the company is burrowing down from multi-million developments to max multi-thousand projects – just doing more of them.
The client is exploring raising finance from cash-rich individuals fed-up with puny returns from the banks
The client is exploring raising finance from cash-rich individuals fed-up with puny returns from the banks. Funds are secured and in escrow, interest rates are generous and the costs built into their appraisals. Minimum 6 month investment – the turnaround of a typical mini-project - and then repayable within 4 weeks on demand.
I hadn’t come across this before. In some areas they’ve discovered a market for their projects. Local communities apparently form clubs of about 100 and pay in about £100 a week. Every month there’s a draw and a lucky winner gets £40,000 or so. You can’t win twice and you have to stay in for the long haul – about 8 years - and pay back what you won. But it’s enough in some areas for a terraced house in need of TLC or a deposit on something larger. All based on trust - not a bank or building society in sight; no made up SVRs, no arrangement fees, no bonuses. I hope there are such things and I didn’t misunderstand.
When I hear graduates in our office bemoaning their outcast state it occurs to me that something like this could work for them – based on trust, and the longest possible wait of eight years for your chance, but equally it could be next month…… We’ve found the present economic doldrums have had one of two effects on staff. Some feel sorry for themselves as the lifestyle they were sold all those years ago evaporated. They arrive 10 minutes or so late and start packing up 10 minutes early. But some refuse to be victims and get in half an hour early and get a good start to the day – or maybe stay later to avoid the queues – all hands to the pumps.
The government could have given control of some of their recent bank top-ups to architects
This makes me wonder about degrees of self-help. Government guarantees billions to self-proclaimed cash-strapped banks so they can reduce punitive interest rates by 1 per cent. No-one we know has seen any of it – maybe just the lucky banker whose job it is to go into the counting house every day to make sure it’s still in safe hands. Then we hear that doctors are to be given control of bloated and some say ineffectual healthcare budgets – not sure if that’s because the government doesn’t trust the managers or they want doctors to pick up the blame when it goes wrong.
But it occurs to me that the government could have given control of some of their recent bank top-ups to architects. Say there are 20,000 chartered architects practicing in the UK, there could have been about £1million each.
And it would produce proper Qualitative Easing. Securing jobs and investing in the future of communities, funding suppliers, builders, plasterers, decorators, cleaners – newspapers, the pub, the cafe, families, cinemas, holiday resorts.
Last week two local practices went bust another went on a three day week
And say everyone in the chain agrees to work for 10 per cent less. At least they’re working and giving those funds at least 10 per cent greater reach. Instead, last week two local practices went bust – one having already been through the mill – and a very good contractor we’ve worked with went too. Another practice went on a three day week. The worst of it is that it’s the worst kind of well-kept secret. Struggling practices, struggling contractors don’t want to talk about it – that could have a disastrous effect on future prospects, on staff, on families. It isn’t so much denial as is often quoted it’s more like smiling as the ship goes down – because the alternative brings it on quicker and another week may be all that’s need to land the next big job.
If banks are worried about their overvalued property portfolios someone should be worried about the businesses hiding behind hope that things will improve. There’s a tsunami you wouldn’t want to witness. So easing via the banks doesn’t seem to be working – but that isn’t news either and more worryingly the worst is yet to come. The message from the chap on Newsnight seems to be that when the banks work out how to gain government support for their next offensive to rebalance their books the rest of us should head for the hills – there’ll be no rescue……
Easing via the banks doesn’t seem to be working
And trickle down has to be built in. £20 billion of cheap money goes to five banks. PFI’s go to one of a handful of companies set up to harvest government big-budget spending –transport, schools, hospitals and the like. Some architects go into say healthcare for the social good attached. Now we hear that massive returns on PFI funded healthcare schemes are being distributed to shareholders instead of the patients they sought to help.
Practices in all the famed top 100 surveys would be excluded. If they made it they can clearly look after themselves. But architects could be put in a position to fund community works, self-build or any schemes. Communities everywhere except the banking community have lost access to pump-priming funds across the board. Maybe a limit of £250,000 per project, maybe some would fail but the balance of probability is that most would succeed. Some on-line companies providing unsecured loans say the failure rate is small and somewhat predictable….. So we could have a proper trickle down, proper easing. There would be some risk but architecture is a noble profession with an underlying mantra at odds with Gordon Gecko.
We don’t privatise the profits and socialise the losses, rather we ensure the there is private profit and social profit too. All those projects – at least 100,000 or more – would go through a public participation process, the planning process. Open to public support and objection unlike the private deals the banks make. So the government could be happy in the knowledge that this easing is trickling down and is based on public involvement and support. Big society?
With suitable controls we could have 200 new houses on site within three months
We have clients with approved schemes looking for JV partners to spread the risk. With suitable controls we could have 200 new houses on site within three months or so.
Unlikely the RIBA would have a role, too busy with other things. My recollection is that the mission statements of recent presidents have been something about gaining access to the corridors of power. Sipping single malts in the lobby and waiting to discuss getting design at the heart of the agenda again while bankers thrash out the exact quantity of easing over dinner.
Maybe CABE? There is something difficult about CABE – the design reviews are not all about altruism, though there is lots of that. By far the most powerful CABE document I remember was ‘The Value of Design’ where there was a valiant attempt to properly value design to replace the limp-wristed, foppish claim that like medicine, design is good for you, end of. But then CABE was somewhat sidelined – perhaps they were really onto something. I hope the report wasn’t all made up, it had the makings of something powerful and compelling.
What about the real cost of flaky design?
Look at what happens when strong links are made between cause and effect. Particularly if the cause is transfats, nicotine or alcohol and their impacts on GDP or health budgets for obesity, intensive care and worse are measurable. What about the real cost of flaky design? That would make the back of an envelope submissions we see at some of our planning departments a bit harder to sustain.
Good design would not just be a good intention. It could be given the same weight as a SAP calculation or a bat survey. Good design is somewhat rarer than bats and could do with rather more protection.
Easy to dismiss when it’s regarded conveniently as a matter of opinion - harder to avoid when poor design attaches to real identifiable costs on the downside while good design provides measurable benefits. We’re allowed to choose bad design in just the same way we could not to use seatbelts in a car – until someone worked out the true cost to society of that dubious freedom.
Then I’m disturbed by the repetitive chiming of a distant gong - it must be breakfast - one please, poached, no vinegar or cling-film tricks mind…… just wet enough to make the toast comfortingly soggy, thanks.