08 August 2012

J'Accuse (I accuse you) was an open letter published on January 14, 1898 in the newspaper, L'Aurore, by the influential writer, Emile Zola.  The letter was a damning indictment of French government policy and caused huge controversy.  The term "J'accuse" has become a generic expression of outrage and accusation against someone powerful and has been used many times to highlight the injustice surrounding major issues.

It is within the above context that I chose "J'accuse" as the title for this article.  I believe firmly that our political leaders are ignoring the deteriorating financial position within the property industry and that their ineptitude will adversely affect the ability of the Northern Irish economy to recover and compete with the rest of the UK.  Most of our property sectors are on their knees with the banks now the major controlling parties as they attempt to recover debt.  However, our politicians are ignoring key areas where intervention could assist recovery.

In particular, consider the carnage in the high street where rates payments far exceed rentals and we are heading rapidly towards a 20% vacancy rate.  Surely someone within government can connect increasing vacancy levels with the inflexibility/inequities of our current rating system? Factor in the burden of vacant rates liability and it doesn't take long to work out that rates collection is becoming a huge issue.  We need to revalue now in order to alleviate the disproportionate liability that rates have assumed within the retail market.

I have written repeatedly about the government's apparent destruction of our office market through its insistence on lease provisions which effectively decimate capital values by rendering assets un-saleable within the wider UK institutional market.  I have been challenging this policy for some time and am stunned by the Land and Property Service's seemingly cavalier disregard for the damage its policy has inflicted on development for inward investment. 

Simply speaking, Belfast has no new office buildings coming out of the ground; rentals have been driven down to the point where development is simply not viable. LPS' defence has always been that it is protecting the public purse. As tax revenues dry up, stamp duty receipts all but disappear and inward investors discover that there are no buildings to meet their requirements, I am left asking, "What is the plan?" My biggest concern is that there is no plan. 

The private sector has had to adapt, amend and introduce numerous strategies to survive the economic downturn.  Nearly five years into the recession, the public sector remains basically unchanged.  The requirement for our politicians to be re-elected weakens their resolve to take tough decisions, take risks to effect growth or to scrap failed initiatives.  Maximising our cost effectiveness and proven educational superiority in order to attract inward job investment should be a key driver of growth. 

I see no evidence of a strategy to capitalise on our advantages.  Inward investment should be easier to achieve within our more stable political framework than during our troubled past yet construction is non-existent.  Modern property infrastructure to satisfy back office opportunities is all but gone and there appears to be no political will to pursue any policy to encourage development.

Since our politicians do not appear to have the ability to tackle the issues surrounding construction and development, the least they can do is to provide an efficient approvals system.  Planning within the province still takes an age to achieve and recent permissions granted are laughably years too late.  As I write, there is basically no new office development underway within Belfast (or elsewhere in Northern Ireland) and even if the private sector could take the risk, it would probably have to wait at least 18 months to get planning approval plus a further three to four years to develop a new city centre office block.  Timescales like this make us uncompetitive against our regional rivals and limit our ability to attract the new investment and jobs needed.

It is easy to hide behind red tape, process, consultation, equal opportunities, regional variance and other excuses: we need our politicians to act.  I challenge our leaders to show the business community that they actually understand the issues and that their new-found ability to work together can actually make a difference to the construction and development sector.  In a recent reply from the Finance Minister's office, I was advised that it regarded my representations as ill-founded and highly contentious.  Having determined that I was intent on pursuing my challenge to its office policy, the Minister concluded that "a direct meeting with you regarding these matters would be inappropriate at this time" and referred me to officials within the LPS.   I am right back to where I started in July 2010, to the government agency responsible for creating and imposing the "modern government lease" and its destructive effect on our market!  Still, pressure is mounting on the LPS to undo the damage its lease has had on investment values and to examine the unbelievably disproportionate burden of rates on the retail market.

I am reliably informed that there is some good news from Stormont where a Non-Executive Bill regarding the "reclassification of the horse as an agricultural animal" is out for consultation.  Hopefully, when that is sorted, our leaders can take another look at the construction and development economy.  Here's hoping they don't say, "nay"!

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