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Tiers and Tears

Stephen White
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In 1982 my wife and I almost bought a house.

My job required me to move to the South Coast.  We found a property we liked, not least because it was called The White House, very appropriate given my name. The asking price was £75,000. It was in need of considerable modernisation, and we offered £68,000. The seller indignantly turned us down, and made no counter-proposal, so we looked elsewhere. It was a buyer’s market, and there were lots of suitable properties, but none had quite the appeal of the White House.

Soon we found another house which had great potential, and we bought it. The day before completion we got a call from the owner of the White House. He was now prepared to accept our offer of £68,000.  Sorry, we said, our offer is no longer available. He was exasperated. Why were we trying to screw an even better deal out of him? We explained that we were committed to another property. He metaphorically skulked away.

I was reminded of this incident yesterday as the stand-off between the Government and the leaders of the Greater Manchester councils unfolded. During the day negotiations about a business support scheme for the Manchester area if it went into Tier Three restrictions became increasingly shambolic. I have no idea where the parties opened the bidding, nor how much each party conceded, but eventually Manchester was demanding £65 million and Whitehall were offering £60 million, the £5 million gap so insignificant in absolute terms that it should have been a no brainer deal. However instead of saving face and agreeing the two sides went into deadlock, and since the Government had the power to impose its will the negotiation ended with a mandated decision to put Greater Manchester into Tier Three. The Manchester leaders were spitting feathers and crying tears of anger.

But at least they had got £60 million.

Oh no, said the Government. The £60 million offer assumed an agreement, but we have no agreement, so the £60 million is no longer available. Collapse of stout party (Google it!).

We all know that within a couple of hours the Government had been shamed into re-instating their offer. That’s politics. In a commercial negotiation you can’t predict that an offer, once made, will be sustained. Withdrawal of a proposal might be inflammatory, but it makes a great negotiating tactic with counterparties who are messing about. And if you are on the receiving end of a proposal which you reject remember it may never see the light of day again. Nothing lost if the proposal was unacceptable under all circumstances, but unsatisfactory if you said No as a tactic to force a better offer and not only does the better offer never come but the original offer disappears too.

 

Stephen White
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