Suggs, cakes and risk

Patisserie

By Alistair McIntosh, CEO, HQN

What was Soho like in the 1980s? You can read all about it in a new book by Christopher Howse. He makes it sound a magical world of poets and painters. And for him it was. But not for me. I was leasing homes for Camden so spent the ’80s cycling through the rain and huddled up in cafes writing my notes.

Where was it best to go? Bar Italia did have great coffee and you could more or less rely on bumping into Suggs. But it did not hold a candle to Patisserie Valerie for what I needed to do. It had proper laid up tables that you could use as a desk so you could crack on with work in the dry. And I could easily burn off the cakes in those days as I pedalled all through London seeking out flats for the homeless. You had to be sharp to get in as there was only one branch. Of course, it was too good to last. Since then it has gone down a well-trodden path.

The money men took one look at Patisserie Valerie and thought they could do a better job. In no time at all they had opened up on every tedious high street and shopping centre. On the face of it they were doing a roaring trade. But this story always has the same ending. They’ve run out of cash.

Why do I mention this? It’s because the new Sector Risk Profile came out at the same time that Patisserie Valerie hit the buffers. And you can take much the same lessons.

Patisserie Valerie grew too quickly and went into places it shouldn’t have gone. We’ve seen a few associations come a cropper for doing that. Who runs the show at Patisserie Valerie? Did the fish rot from the head? Luke Johnson is in charge and he looks super. He has a long track record in business and a column in the Sunday Times telling the rest of us what to do. Yes, we too see boards with all the CV gear but no idea.

In his columns, Luke warned us about entrepreneurs that wanted to grow at all costs and got bored if they weren’t doing that. Do we get antics like this in housing? We sure do and that’s why the RSH warns us about diversifying too far. What works in Soho, or wherever you start from, might not be right in other places. It could be that Luke was also brought down by over optimistic sales projections, fraud and slack audits. I don’t know if this is true but it will all come out in the wash. We see these sorts of things in housing so they are in the Sector Risks report.

The RSH seems to be worried about associations that need to sell homes to keep on track. That comes as no surprise. As they tube it home after a hard days work they will read the Evening Standard. And what do they spot in it?

Loads of big glossy adverts from associations trying to shift homes for sale. Why not just say it’s a buyer’s market? Let’s look on the bright side, shall we? It’s great that these adverts are keeping George Osborne in a job as editor of the Standard. He was the far-sighted genius that gave us the rent cut. So, it’s only right that we help him out.

Actually I do mean that. Osborne taught us to take nothing for granted. The rent cut wasn’t a risk anyone was looking at. Nor was Grenfell. By all means go through the Sector Risk Profile with a magic marker and write a wee report telling the board you are on top of it. It will make you feel good but that’s all it will do. These risks are in the past. It’s the ones you’re not expecting that will take you out.

All we were told to worry about was cash and covenants in the early Sector Risk Profiles. That was the way we went after Cosmopolitan. You couldn’t get anyone to look at anything else. Our reaction to that was a classic case of myopia. It set us back years.

At long last fire safety is being taken seriously after Grenfell. But we need to keep an eye on more than this. Balconies and windows are starting to fall out. Are you sorting that out? How good are your new builds? The press is having a field day about slipshod new homes. When you try to sell homes, are your valuations fair? People are asking if Help to Buy and shared ownership are a good deal. Are they?

So, after seven years of Sector Risk Profiles and four editions of Learning from Problem Cases where are we? I’m sorry to say we’ve shown the perspicacity of Mr Magoo. Risks keep getting added that we didn’t predict. Maybe that’s the way it is in the fast-paced modern world.

It is just hard to see what is coming down the line. So we need people to do the legacy work to box off the old Sector Risks. But by their side we must have folk that scan for problems with super-fast twitches in a crisis. Do you have these types on tap?

One thing that has changed is that the RSH has more money to spend thanks to your fees. I’m pleased to report they are using it wisely. The Sector Risk Profile is improved beyond all measure by putting a picture of a compass on the front cover. Are they telling us where to go? Well I for one want to go back to Soho in the 1980s. And not for a coffee. Jeff bin in…

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