If you’re the best-known name in housebuilding, you get many benefits.
But as we enter the toughest period of trading in living memory, then the best-known names are judged more harshly than most. And so it is with Barratt and Mark Clare, the former British Gas man who has been criticised for his lack of housebuilding nous. As a result he has been pilloried by the City. But should we be chucking tomatoes, or defending a chief executive who has tried to shake up the sector?
In City terms, so far his approach has backfired: Barratt’s shares have taken the biggest fall of all the quoted firms.
That’s because Clare loaded Barratt, traditionally a highly successful, debt-free firm, with a mountain of borrowing. Hindsight is a wonderful thing and if Clare knew what he knows now, no doubt he wouldn’t have bought Wilson Bowden at that time (not that the City called it that way when the sale went through). Indeed, even when housebuilders expected the market to be tough after Northern Rock, nobody foresaw this brutal liquidity crisis.
While most housebuilders are going into hibernation, Clare says his strategy is to hone the sales operations and, with more strategic land holdings from the Wilson Bowden deal, to be in better shape to exploit an eventual upswing. Obviously, he needs to sell this vision a little harder to the City, which cares deeply about next year’s profit and very little about anything else – such as Clare’s success in talking the government out of the daft policy that only on-site renewables should count towards a development’s zero-carbon rating.
Nonetheless, it is looking unlikely that Clare will be able to hold back from the savage redundancies that other housebuilders have visited on their staff – eventually, the payroll will have to be cut. The good news is that the banks have given Barratt a lifeline and hopefully that means Clare and his attempt to turn Barratt into a recession-proof business will survive, too. But it’s not assured: to survive in the shark-infested stock market, you have to play by its rules – ridiculous as they can be.
Moreover, the most experienced players in the sector develop a sixth sense of where the market is (let’s not forget, Persimmon was shrewd enough to turn its nose up at Wilson Bowden’s £2.2bn price tag). That canniness is something that a newcomer like Clare still has to prove that he’s got.
Clare needs to sell his vision a little harder to the City, which cares deeply about next year’s profit and very little about anything else
Denise Chevin, editor
Four times the fun
Today, one year after the Arts Council dumped Architecture Week, a more vibrant celebration has emerged. Kicking off today, the London Festival of Architecture will stretch not over one week but four and bring together more than 600 events.
This is the vision of one man: Peter Murray, who, aside from running the New London Architecture centre in the Building Centre, has roped in 475 organisations to join the jollification. These range from lectures to bike rides and street parties.
The festival even embraces architecture across the world, through exhibitions staged in 28 London embassies, including Denmark’s.