At a loss over discounts

Compare and contrast:

£600,000 loss in public land sell-off (South London Press)

Home proposals to go ahead (News Shopper)

The two headlines are from articles about the same story in our local papers. You wouldn’t know it, would you? The News Shopper piece is essentially factual reporting garnished with a picture of Lewisham Mayor and politician most in need of a TV make-over, Steve Bullock.

The South London Press piece is one of the most startling pieces of economic illiteracy I’ve seen in a while. Let me explain. The gist of the story in both reports, is that Lewisham council has selected AMEC to develop the Lewisham Gateway site, with the hope of turning a traffic-and-roundabout dominated entrance to Lewisham into something considerably more attractive and useful. However, one fact about this has got SLP journalist Peter Harrison’s back up:

The land, which includes Rennel Street car park and Quaggy Gardens, has been independently valued at £4,268,900 but AMEC is offering ?3.6m – that’s a loss of more than £600,000.

I would suggest that Lewisham Council isn’t selling it at a loss at all. In fact, I would suggest that “loss” is entirely the wrong word. The one the writer should be using is “discount”. For example, if Boots sells me some deodorant (so important in hot weather) for £2.10 instead of the normal £2.50, it’s not selling the product to me at a loss, merely at a 50p discount. Now, if I sold the same deodorant to a chum with a malodorous crisis on his hands for £1.60, then I’d have made a loss of 50p. Clear?

Now, Lewisham Council hasn’t spent £4.3m acquiring the land. It’s owned most of it for decade, if not longer. It’s merely selling it at a discount to help achieve the regeneration it wants – pretty standard practice in regeneration circles. The paper then gets all het up about the requirement that

“seeks approval for the disposal of council assets at less than best value in order to secure the regeneration of the Lewisham Gateway”

Of course, it says “best value” not “best price”, a distinction that seems to have eluded our fevered little hack.

Never mind. I’m sure the council will fail to have a crisis of confidence brought on by one journalist’s incompetent economics and get something done with that horrible area of Lewisham. It’s a pity we won’t see the results until 2011.