Four reasons ambitious three left British Land in the lurch

Peter Bill
9 Oct 2009

Chris Grigg is in deep trouble. The 49-year-old former banker, who joined British Land as chief executive in January, has lost three members of the eight-strong team which runs the UK's second-biggest property company day-to-day. It gets worse. The three defectors run the entire retail side of business, which accounts for 56% of the £8.6 billion portfolio.

The news, revealed in these pages yesterday, that Andrew Jones was thinking of leaving broke in an oddly worded announcement from British Land, saying the 40-year-old main board director was “considering” leaving. What Jones was also clearly considering was the possibility of setting up a property fund and taking with him Valentine Beresford, who manages British Land's funds, and Mark Stirling, who looks after the physical assets.

Imagine if the entire top team that runs the food side of M&S walked out, and you have some idea of the impact this will have on morale at British Land.

Why have they gone? Four main reasons probably — history, thwarted ambition, Grigg, and an eye to making a fortune. All three joined British Land from successful retail property company Pillar when previous chief executive Stephen Hester bought the business for £881 million in July 2005. The trio worked for the serial entrepreneurs who ran Pillar, Raymond Mould, 68, and Patrick Vaughan, 62, who are now on their way to a third fortune with London & Stamford. So the DIY ethos was already in the blood.

The world knew Hester, who joined in 2004, was destined for greater things. So it proved. Last year he joined RBS. Jones harboured ambitions to take over. But, no, Grigg got the job and settled down to run British Land in the way a former chief executive of Barclays' commercial banking operation would, by reducing its debts.

That he has done. But at what price? The City may have praised him for selling half of Broadgate for £75 million plus £1 billion in debt. But British Land insiders could see that the estate could easily rise in value by that £1 billion over the next few years. But, no, reducing the overdraft counts for more.

The third factor is Grigg's style. Of that there are few clues, none of them actually adverse. Those few in the property world who have met Grigg speak of him well enough. Bit quiet, highly intelligent, rather nice.

But the brutal fact is that whatever Grigg has done in his short 10 months at the top has created conditions that have resulted in these defections.

He and his chairman Chris Gibson-Smith will have to work much more effectively to restore the reputation of British Land, which may find itself the subject of bid attentions.

But the chance for the trio to make millions like their mentors Mould and Vaughan was no doubt a very strong pull factor. The price of retail property is on the floor. There are numberless half-bust shopping centres, with owners and banks who are anxious to offload. Jones, Beresford and Stirling know where the bodies lie and have no doubt spent many off-duty hours planning the hunt.

Smart ideas that drown in a sea of stupidity

Remember the day Margaret Thatcher stood outside 10 Downing Street in her Labour-red coat beside a beaming Gordon Brown? It was Thursday, 13 September 2007: exactly the same day a key Conservative policy document on the environment was published.

Lady Thatcher's appearance ensured that little space was given the next day to the 549-page Quality of Life report produced by Zac Goldsmith and John Gummer after 18 months of hard work and input from more than 500 experts. Not much has been heard since: which is odd, as the whole thing was commissioned by David Cameron, admittedly then in his “greener-than-Labour” phase.

Presumably some of the planet-saving recommendations will filter through into the Conservative manifesto. But what fate awaits the chapter entitled “delivering smart growth”: pages maybe worth scanning by those looking for clues on what a Tory administration's attitude will be towards new development.

A further clue came from shadow housing minister Grant Shapps on Tuesday in his speech to the party conference. The member for Welwyn Hatfield heartened developers (and perhaps disturbed his audience), by harking back to the early Fifties when Harold MacMillan promised — and delivered — 300,000 new homes a year.

Shapps promises to encourage a surge in house-building by use of a “radical” plan: give local authorities 100% of the council tax and business rates created by said development for six years — as long as they spend it on developing projects that improve life for community. This is a smart idea (in theory) and does chime with the “smart growth” ideas in the Goldsmith/Gummer report.

There are three core principles of smart growth.

First, ensure development occurs in sensible spots, near transport links for instance — so-called “locational efficiency”. Second, make sure families can walk to the shops, cafés and schools — the principle of “walkable neighbourhoods”. Third, ensure services such as doctors, dentists and day centres are kept small and scattered, to allow everyone to reach one on foot — so-called “diffuse provision”.

Sadly, these smart ideas come up against a dumb planning system. Ask residents of W10 in the borough of Kensington and Chelsea. They were keen to have a redundant NHS hospital site retained for community use. But no, thanks to the idiocies of the system, a planning inspector gave the go-ahead two weeks ago for 33 houses.

The planning system is not just blind; it is deaf and dumb to radical change. Over the past 10 years Labour has ushered in reform after reform. Most of the numbingly complex rules are targeted at achieving goals not that dissimilar to these espoused by the Conservatives.

The one difference is the Conservatives are going to attempt bottom-up localism rather than top-down imperialism to effect change. That may prove even tougher: for they will come up against a granite-hard version of localism; the parochialism of both red and blue councils and the nimby-ism of voters of either stripe. The hopes of every new government tend to be dashed on that rock.

Royal Borough of Knaves and Charlatans

Both Kensington & Chelsea council and locals wanted the redundant Princess Louise hospital in W10 to be re-developed for community use. Planning rules guard against houses being built.

Why then was permission granted on 30 September to build 33 homes? It starts with a rule that forces the NHS to sell to the highest bidder. In high-price suburbs housebuilders are always the highest bidders.

But why do they even bid? Because they gamble that if no other viable scheme is put forward, homes will be allowed. But surely if housing were banned totally the bids for the land would be far lower? Yes indeed.

That would surely make the development of small school, nursery or old people's day centre viable? Correct.

Welcome to one small example of how communities can be sterilised by rules which undermine attempts to introduce the “walkable neighbourhoods” called for in the “smart growth” section of the Conservative's Quality of Life Commission report.