14 September 2021

Lending Focus - September 2021 – 2 of 6 Insights

Steve Norris on bricks and mortar, carriages and parliamentarians

  • In-depth analysis

I was very pleased to meet Steve Norris, Chairman of Soho Estates and London Resort Company Holdings. Steve is a former government minister, ran for Mayor of London twice, is an expert on property, infrastructure and transport issues – and of course, London. His office is a stone's throw from lofty Westminster Abbey and within touching distance of the movers and shakers at Parliament. 

He talked about his rich and varied career that has covered a multitude of interests, underpinned by real estate, infrastructure and politics.

You studied jurisprudence at Oxford. Why didn’t you end up going into the law?

I won an exhibition at the Middle Temple but couldn’t afford to pay for Bar finals or pupillage. Serendipitously, the UK was making the transition from imperial to metric and therefore to decimal coinage. So, I got a job in the City through my brother-in-law selling electro-mechanical accounting machines for Burroughs Corporation – prototype computers, if you like – to replace paper ledgers. Business was good. I was earning double the amount of my Oxford contemporaries. I never looked back or returned to the law.

How did you get into the engineering and automotive worlds?

After a couple of lucrative years in the City, I saw an advert for a job at Ford, working with modern accounting methodology, and they took me on. My job involved getting to know all the Ford dealers in the South, persuading them to disclose their sales figures and feeding these into a central database. They could tell if they were doing better or worse than their peer group, and why. It was no easy task to get the dealers comfortable, and there was a great deal of suspicion over the potential use of the figures – echoes from the past of today's GDPR-type arguments.

Memorably, I completed my first ever turnaround when I was in Ford, of the F. English dealership in Bournemouth owned by a wonderful man called Colonel Ronnie Hoare, from the banking family. He'd complained to the Chairman of Ford that his business wasn't doing well enough and I was sent to tell him why it was his fault, and not Ford's. In the event, I had to tell the Colonel that he was wrong and Ford were right. But to my surprise he offered me the job of Finance Director for his group at double my Ford salary. Unsurprisingly, I took the job. We turned the business around and I spent the next decade doing a similar job in Lancashire and Berkshire as well as owning two VAG dealerships of my own.

I'm still interested in the automotive sector but now mostly at the heavy end – trucks and buses. In simple terms, cars may well be able to run on electricity, but for a 38 tonne truck, the battery would weigh 7.5 tonnes. I'm chairman of Evtek Automotive and our main customer is Jaguar Landrover. They're seriously looking at green hydrogen as an alternative fuel source.

Why the love of politics?

I wasn't a political hack at Oxford. I wasn't an Oxford Union groupie. 

Looking back, I suppose I was politicised by those mainly Labour years from 1964-1979. The unions had a stranglehold over the country. Tax rates were unbelievably high. And listening to Labour, I remember being made to feel that I was part of the problem when as a single man from a working class background I was paying a lot of tax and taking nothing at all from the State.

Taking the first step to enter the world of politics was a snap decision. I lived in Berkshire, and I told my ex-wife I thought the two Tory candidates put forward for the county council elections were hopeless. She said, "I don't know why you don't stand. You can talk the hind leg off a donkey". Kennedy was my hero, and "Ask not what your country can do for you..." resonated with me. I stood, won, and got involved in local government. 

One thing led to another and before I knew it, I'd been elected as the first MP for Oxford East in 1983 and then after losing that marginal in 1987, for the 'dead safe' seat of Epping Forest in 1988.

Why did you step down in 1997?

By 1996, I could see that a Labour government led by Tony Blair was going to be in power for a long time. Being on the opposition bench earning next to nothing was not for me.

Looking back on your time as Minister of Transport, what do you think were your biggest achievements?

The Jubilee Line extension is perhaps the most memorable project that’s impacted most people. I also kept Crossrail alive. On an issue which has now become topical again with smart motorways, I refused to authorise the removal of hard shoulders and my opinion hasn't changed.

Do we need another runway at Heathrow?

Absolutely not. It would involve a lot of hassle and disruption to people's lives…knocking down a thousand houses and destroying a community, for one. It will cost north of £20 billion and how would this be paid for? The cost could never be recouped from landing fees.  

It makes much more sense to add a brand-new runway at Stansted for say £5 billion or to modify the 'back-up' landing strip at Gatwick for only £1.5 billion.

Has COVID made Crossrail irrelevant? Will there ever be political will for infrastructure in London again?

It's depressing that Crossrail has taken so long to complete, but I still believe it is going to be absolutely transformational. 

Infrastructure will continue to be key to servicing London and the national economy, particularly networks feeding into London. But COVID has certainly hastened a move to what we now call WFH since we've all had a taste of it during lockdown. Half the country is looking at the arbitrage of living cost and getting to work cost. And there's no doubt this will impact on the London housing and office markets and on public transport. Quite how, none of us yet really knows. 

How do you think perceptions of office spaces have changed, post-lockdown?

I do think some changes to our working pattern are now permanent. But here again we know that for older workers, particularly those who already work solo, the absence of the daily commute is terrific, while we also know that younger people are much keener to get back to the office where they meet their friends, partners even, and can enjoy a drink after work. Again, it's too early to be definitive because for many people the journey to the office is genuinely hazardous as long as the virus is a big issue. It will be some time before we really know how the property market as a whole will change, but it surely will.  

You obviously have a heart for London. What would you do if you were Mayor of London now, in a post-COVID world?

Unlike the current mayor, I'd try to work closely with central government, because they have the cheque book.

Trying to tackle social inequality would be a key priority for me, which I believe would reduce divisiveness and violence such as knife crime. I would put a lot of money into youth work, to tackle gang culture. I chair the New Bermondsey Sports Foundation, which is going great guns at over 4,000 visitors a month offering basketball and table tennis – both sports that participants don't have to buy expensive kit for. Sport promotes teamwork and self-belief. It gives young people something positive to focus on. It creates friendships and connections.

As with everywhere else, secondary high streets in London have suffered. We need to rethink them, with more residential housing, more congregating and relaxing spaces. Personally, I believe that the use classes order should be reviewed and updated to impose less restrictions on the shape of high streets.

What's the vision of Soho Estates?

'Edgy not sleazy". We definitely don't want drugs, minor theft or protection-racketeering on our patch. 

However, neither do we want to over-sanitise the place and to drain away its individuality. The Soho Summer Festival and Madame Jojos will give you a flavour for the type of vibe that Soho Estates thinks is right for the area, that preserves its quirkiness, heritage and individuality.  

The fact that Soho Estates is a family business means we can think long-term. It's very different to managing property which is ultimately owned by private equity or sovereign wealth funds. Because we have very low gearing, Soho Estates can cultivate stable and long-term relations with tenants. We've been working with all our tenants to get through COVID. We know them and their businesses well and that's been a great advantage during the lockdowns.

Do you think there has been a permanent shift in the relationship between landlords and tenants, in the wake of the recent tenant-friendly COVID legislation?

Many have said that it’s the end of upward-only rent reviews. In my view, that isn't necessarily so. It will just depend on the property, the landlord and tenant concerned.

Lockdowns have been painful for all of us. I'm not sure that it will have changed the landlord-tenant balance of power. It's like previous financial crises. Yes, there has been a lot of opportunistic profiteering but I don't believe it will translate into a permanent shift.

What key changes spring to mind, when you think about the impact of COVID?

Obviously, COVID will impact on the amount of space a company needs and how that space is valued.

Flexible workspace will prompt a shift to short-term leases. A good manager of flexible workspace, with a great order book, may still only take leases that last a year. It'll take adjustments on the part of potential investors to get their heads around this.

There will be more hybrid spaces. For example, in retail, a sportswear store may provide a café, peloton machines and exercise space alongside clothing for its customers, to enhance the retail experience and encourage customers back into the store.

What are you working on at the moment?

I'm in the process of setting up a think-tank on urbanisation, where my interests in infrastructure, real estate and politics dovetail: a non-political organisation to look at what works in cities around the world, from Mumbai to Paris, and what doesn't. How do we integrate communities? How can we improve getting private finance involved? How do we improve social mobility? In London, we fail to grasp those challenges at our peril.

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