Luke Johnson: Permission for growth

Luke Johnson on why planning reforms must stop busybodies getting in the way of business, why publishers still react to change at a funeral pace, and the dead hand of non-profit 'progressives'.

by Luke Johnson
Last Updated: 30 Aug 2012

I'm pleased that the Coalition says it is committed to property planning reform. It will be interesting to see if it has the courage to carry out its proposed legislation. Its National Planning Policy Framework is a highly theoretical document that seems fine in principle, but planning is about the detail of specific situations in individual locations. And building usage is at the heart of our future.

Unfortunately, the Government's ideas conflict with each other. It claims that 'significant weight should be placed on the need to support economic growth through the planning system'. But then it also insists that the Green Belt is preserved, heritage assets are protected and the natural environment is maintained.

In a boom time, when property prices are soaring, such worthy aims might be achievable. But during a slump societies must learn to be expedient - unless they willingly opt for decline, embalming a lost way of life like a backwards-looking gerontocracy.

Many planning officers and councillors are unimaginative bureaucrats who do not understand business. Too often they inhibit investment and job creation by preventing development. At the same time, local authorities claim they want to help tackle unemployment and declining city centres. Quangos such as English Heritage make it harder to reinvent listed commercial buildings so they can actually find an economic use in the 21st century.

I've refurbished many dozens of historic restaurants, pubs and even hotels, and often the busybodies have made the experience a nightmare. I look forward to a more business-friendly attitude from the civil servants if the new planning legislation becomes law.

The rapid rise of ebooks has been difficult to miss. The impact they have had on the economics and viability of book publishing is harder to determine. Currently, ebooks are being sold at prices close to those charged for physical books and this structure cannot hold. The reading public know that the cost of production and delivery of a printed work is vastly greater than the transmission of a computer file. Either ebooks must fall in price or piracy will spread, just as it did with music.

In a way, I always felt music file sharing was the public's just revenge against the record labels for forcing us to replace our vinyl collections with overpriced CDs - which were never as indestructible or as high quality as we were promised.

Ebooks may well disintermediate the publishers. Currently, they offer authors royalties of perhaps 25% of the wholesale price; this percentage needs to rise to nearer 50% if the content creators are to obtain their just share. Otherwise, well-known authors who don't need advances can do it for themselves. The 'added value' from publishers of services like editing and design is negligible. The reading public can always find a famous author's website - they don't care who the publisher is, they're interested in the writer. Publishing is a winner-takes-all game: if the imprints lose their bestsellers, they're bust.

Publishers still react to change at a funereal pace, publish too many books, and fail to follow through with the proper promotional support for their products, while remaining in thrall to fairly irrelevant retailers like Waterstone's.

The industry needs to rapidly reform or it will unravel. Privately, publishers admit that they are utterly terrified of Amazon and haven't a clue how to respond to its increasing dominance of our cultural industries. I worry that this sector may become another case study of weak British management failing to adapt to changing circumstances. Let's hope I'm wrong.

I have spent the past few years working with various self-proclaimed 'progressives' in non-profit organisations. Their chosen label is a fascinating abuse of language. They claim to believe in progress, but in fact reject reform of their cherished institutions such as the NHS, comprehensive schools or the welfare state. At heart, they embrace ossified institutions and systems that represent entrenched interests and out-of-date systems - prime examples being trade unions and defined benefit pension schemes. They cling to ideas espoused by politicians in the 1940s as if they were religion, even though they are wholly irrelevant in the 21st century. The progressives are actually the conservative ones.

Everything has changed, but the progressives want all the old state structures to remain. Yet citizens are much more demanding and live longer. Family structures have fragmented, blue-collar jobs have disappeared, government and households have built up towering levels of debt, and well-educated competitors from places such as China and India are on the march. Current entitlement spending and pension obligations are unsustainable. But the progressives insist that we attempt the impossible and hold back the tide, so burdening younger generations with intolerable levels of debt, taxes and inefficient education and health systems.

Those who believe in free markets and small government should expose the bankrupt thinking and terminology of so-called progressives at every opportunity. Unfortunately, too many influencers in the media, arts and academia identify with this empty and unrealistic philosophy. Few ever experience first hand how globalisation has permanently altered our national competitiveness, and therefore our ability to fund state largesse. We can no longer afford the progressives' thinking - we need a revolution to overthrow their tyranny.

- Luke Johnson is chairman of Risk Capital Partners

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