BACKGROUND

  1.  The Select Committee is seeking evidence related to the Deputy Prime Minister's 18 July statement. A central thrust of this statement was support for the development of 200,000 homes in four growth areas in Southern England—Ashford—Milton Keynes and South Midlands—Thames Gateway—and Cambridge, Stansted, East London.

  2.  This memorandum is submitted on behalf of Roger Tym & Partners. We have been (or are) involved in all four of the growth areas. We led the consultant's team on the Milton Keynes and South Midlands Study and we are the sub-consultants to Halcrow on the Ashford Study. In 2000 we completed the Thames Gateway Review for DETR and have recently undertaken an assessment of the potential for improved delivery mechanisms in Thames Gateway South Essex for the East of England Development Agency. Finally, in 2001 we undertook the Cambridge Sub-region Implementation Study. We have also recently completed an appraisal of New Islington Millennium Village for English Partnerships.

  3.  The Select Committee's Press Notice entitled Planning for Sustainable Housing and Communities indicates its interest in the following six generic themes:

—  The scale of development envisaged;

—  The location of that development with particular reference to the four growth areas;

—  The quality of development which is to be achieved;

—  Effects on house prices and provision of affordable housing.

—  Proposals for new Millennium Villages;

—  The balance of decision making between central and local government.

  4.  We address these issues in turn below. Before doing so it would be helpful if we spelt out the underlying direction from which this memorandum approaches the questions raised. It is a relatively simple perspective and reflects both current "problems" and the perceived difficulties in achieving a solution.

  5.  In short, development in Southern England is falling below planned outcomes both in terms of quality of built environment and quantity of housing output at a time when both the demand and need for additional housing is at a high level and has been for a prolonged period. The reasons for this are largely to do with the failure of the planning system to bring forward comprehensive development and the necessary associated strategic and local improvements in infrastructure services and community facilities. The planning system has lost sight of the need to implement visions and projects (rather than talk about them). Difficulties will remain in the future and performance will not attain the DPM's 18 July aspirations until effective delivery mechanisms are put in place and the means for funding the full range of infrastructure projects is clearly established.

  6.  Whilst the planning system is not delivering development quickly (few major projects are ever progressed through to development in less than 10 years), it also has to be said that there is often strong local resistance to major development, at least when it involves green field land. In our experience much of this opposition is to do with historical failure to accompany major development with parallel improvements in transport infrastructure, schools, health and community services provision, together with the means to make adequate provision for resource funding.

SCALE OF DEVELOPMENT

  7.  The 18 July statement refers to 200,000 houses being provided in the future as a consequence of opportunities arising in the four growth locations. It is unclear over what period. In fact we now understand that these 200,000 homes are those that are in addition to housing provision established in current regional planning guidance (RPGs 6 and 9) and are envisaged over a long term period of up to 2026-31 or thereabouts.

  8.  It is clearly difficult to separate out what has been assumed to be an existing planning commitment and what could be "new". Based on our knowledge of the four areas we can, however, identify the total potential development outcome. Although there are no consistent data across the four areas, the position is summarised below:

NOTES:
  1  From Final Report of Study

  2  As reported in the Consultation Draft of RPG 14, the higher growth figure is based on the regional scale growth scenario rather than the even greater maximisations of opportunities for economic development.

  3  This is taken from DTLR's Zones of Change document; we are unaware of any comprehensive longer term estimate of development potential, in the Thames Gateway, nor of any estimate of higher growth potential.

  4  This is taken from the Draft Final Report; the higher growth scenario is theoretically possible but is thought unlikely to be achievable because of lack of market interest and strategic infrastructure constraints.

  9.  It can be seen that the total housing potential varies from 429,000-798,000 dwellings over a period ranging from 2015 in Thames Gateway, 2026 in Cambridge/Stansted/East London and 2031 for Ashford and Milton Keynes and South Midlands.

  10.  Looking at the difference between a roll forward of current planning policies and higher growth scenarios it is apparent that in all probability there is potential simply in Milton Keynes and the South Midlands and Cambridge/Stansted/East London to bring forward substantially more new homes than are committed by the planning system at present. A combined increase of 359,000 dwellings over and above rolling forward current planning policies might be possible over the long term in these two areas.

LOCATION OF DEVELOPMENT

  11.  The four principal growth areas in Southern England (the South East and East England Region and parts of London and the South Midlands) have the potential to accommodate significant additional growth. Less extensive growth can also be accommodated elsewhere in Southern England. The question of whether it is "right" to focus growth in the four main growth areas largely depends on the level of investment which government and its various agencies are prepared to invest in the infrastructure which is necessary for development to be realised.

  12.  In Milton Keynes and the South Midlands we have conservatively estimated the 30 year capital investment cost as £8.3 billion to be split reasonably evenly between regional transport projects (but excluding national projects such as main rail upgrades and widening of the M1), strategic utilities, secondary healthcare, education, community facilities, and housing. In addition to these costs substantial investment will be required to achieve the regeneration and growth of Corby, Luton and Bedford.

  13.  No capital investment figure is given for the Cambridge/Stansted/East London study area but it is unlikely to be markedly less than the figure for Milton Keynes and the South Midlands. For the Cambridge sub-region alone we estimate a capital investment requirement on infrastructure and services of £2 billion up to 2031. Significant regeneration investment would be required additionally in the Lea Valley, parts of East London and potentially Harlow.

  14.  In the Thames Gateway the provision of new transport investment is the key to opening up both a faster rate of development and more extensive development opportunities for both housing and employment purposes. Transport schemes such as the Lower Thames Crossing, east-west rail upgrades and the A13 and A127 improvements are the key infrastructure projects, but there are other requirements as well across a full range of services. The cost will be very substantial.

  15.  In Ashford up to £1.4 billion could be required by 2031 with the highest growth option for necessary transport improvements to unlock employment development potential (including Junction 10 of the M20), to provide necessary social infrastructure and to support improved environmental management including augmented water supplies and flood prevention measures.

QUALITY OF DEVELOPMENT

  16.  It is quite possible to achieve good quality modern development on both Brownfield and Greenfield sites although this is not a common perception. There are numerous examples of good development in recent years and it is evident that the housebuilding industry is seeking to improve standards. Once again, however, a principle constraint to a faster rate of progress and a more universal perception of improvement lies in the way development, especially major projects, is implemented.

  17.  Too often, significant urban extensions are built in a somewhat piecemeal fashion rather than as part of a more comprehensive and better integrated scheme with a clear master planned vision. Where it is possible to achieve co-ordinated ownership and development, for example at West Malling Airfield where Kent County Council and Rouse Kent formed a joint venture and acted as a "master developer", it is demonstratably possible to achieve a very high standard of mixed use development. And this is not necessarily because there is a single developer. Under this "master developer" model a number of other developers are brought in to build out discrete components of the wider master planned area. Moreover, it is possible to achieve significant improvements in both on and off-site infrastructure and services provision under this model.

HOUSE PRICES AND AFFORDABILITY

  18.  In the UK the proportion of those who face difficulties in affording market housing has been increasing due to the following factors:

—  Loss of the historic housing stock through the right to buy and the failure to replace the previous council housing stock which has effectively gone over to private housing.

—  A failure nationally, and particularly in Southern England to build sufficient new houses to match the growth in households.

—  A rate of increase in house prices above the growth in incomes.

—  A failure to provide a sufficient proportion of new homes as affordable housing.

  19.  The planning system is quite able to ensure that a proportion of new housing is provided as affordable housing through Section 106 Agreements. However, if insufficient new homes are being permitted and completed in total it is axiomatic that there will be insufficient affordable homes. This problem is compounded by inadequate funding of the social housing component of affordable new homes, which are mainly developed by RSLs with social housing grant funding from the Housing Corporation. The level of funding from the Housing Corporation needs to be increased in order to match the flow of "free land" plots for affordable housing that the planning system is able to deliver through the Section 106 mechanism.

  20.  The relationship between housing supply and house prices has been the subject of academic enquiry in the past. However, the situation is a rapidly changing one. Whilst we have not undertaken any econometric analysis to test these hypotheses, there have been structural changes in the housing market in Southern England which suggest that increases in the supply of housing may have a relatively low impact on price.

—  Mass affluence: property prices are being sustained by the appearance of what is termed the "mass affluent". An estimated 1.2 million enjoy an income of at least £50,000 pa. More than a quarter of estates inherited are worth at least £100,000.[33] This income can be ploughed back into housing.

—  Delay of a first child and return of women to the labour market: evidence suggests that couples spend a longer time earning before having their first child (linked to the ability to pay a deposit) and have an ongoing ability to service higher levels of mortgage debt (as women are returning to the labour market), particularly with historically low rates of interest.

—  Metropolitan areas provide careers for dual career couples: this influences migration at the upper end of the labour market when both partners in marriage/union have high value jobs. The aspirations of both partners are best satisfied in large metropolitan labour markets such as London where the rate of movement of women into managerial jobs is high compared with other regions—bidding up prices relative to the rest of the country[34].

—  Social polarisation: wide gaps in income between the successful and unsuccessful in the labour market can be seen as a result of changes in taxation and welfare systems. Some believe that this results in the growing differences between residential areas[35]. Some areas become price "hotspots", where high earners have congregated in areas with good transport links to labour markets and a pleasant residential environment.

—  In-migration will test supply expansion: academic research suggests that expanding housing supply will attract in-migrants both nationally and internationally. Migrants from within the UK are more likely to be professional and managerial workers than the average, so further fuelling further house price rises.

MILLENNIUM COMMUNITIES

  21.  The Millennium Communities Programme consists of seven developments across England which are intended be exemplars of good practice which:

—  Demonstrate the value of mixed use development as a model for communities in diverse areas across England, to both housebuyers and the housing industry in order to change their perceptions of desirable living environments.

—  Promote sustainable development through demonstrating the feasibility of high density development On brownfield sites, with high energy efficiency, low water usage and maximisation of waste recycling.

—  Promote improvements in construction quality through the adoption of innovative techniques and improved construction standards, including low embodied energy in materials, waste reduction, better site safety, and zero defects.

  22.  There are three Millennium Communities proposed for Southern England: Greenwich, 1377 units (the only one where several phases have been completed); and still in the planning stage, Hastings, 1,100 units; and Milton Keynes, 700 units.

  23.  Given the numbers of units involved, the Millennium Communities will have no direct impact on the supply of housing, location, prices and decision making processes. They do have the potential to influence the quality of development, including its sustainablility in terms of construction and use. Other aspects of housing development which they may influence are the acceptability of high density, mixed uses and the use of Brownfield sites. Their success as exemplars depends on the effectiveness with which the lessons learned from them can be disseminated to the housing market and construction industry. For example, for housebuyers to take into account the energy costs in use of a dwelling—its running costs—they need similar information and standards as car-buyers expect. One way forward may be greater promotion of the Eco-homes standard.

  24.  English Partnerships who are involved in the procurement and funding of all the Millennium Communities—have a dissemination and market research programme which they are developing with each new Community.

DECISION MAKING

  25.  Two issues arise in relation to the roles of central and local government in making decisions. The first relates to the setting of housing targets and ensuring that these are met. The second relates to decisions as to the way development is brought forward.

  26.  On the first point, the decisions about housing targets need to take account of a number of national or regional factors such as economic growth potential, migration rates and propensity to form households, which is clearly beyond the responsibilities of local authority administrations. These decisions should be taken at both national and regional level with monitoring a regional responsibility. If local authorities fail to comply with the regionally adopted targets disaggregated down to the local level then the Secretary of State has the powers to intervene.

  27.  On the second point, the roles are more complex. Local planning authorities (LPAs) are empowered to prepare development plans and approve development through their development control powers. LPAs were not set up to deliver comprehensive major development schemes, although in the past this has been the role of New Towns Development Corporations or Urban Development Corporations. For small scale local level schemes LPA's are well able to take appropriate development plan decisions within the context of regional planning guidance on housing numbers and so on, and also to take timely development control decisions. What LPAs have difficulty with is progressing major developments of about 5,000 houses or more. Difficulty is also faced in implementing strategic infrastructure to support major new developments.

  28.  It is for this reason that the Milton Keynes and South Midlands Study recommended a two tier approach to implementation:

—  An Infrastructure Delivery Board led by central government and involving the main agencies concerned with infrastructure delivery to ensure that all strategic infrastructure is brought forward on time.

—  Project Delivery Companies to plan and implement major expansions at Milton Keynes, Northampton, Bedford, Luton/Dunstable/Houghton Regis and Corby/Kettering/Wellingborough (see the Figure below).

CONCLUSIONS

  29.  It is the difficulties of implementing development that need to be addressed if the many plans and visions for sustainable communities are to be achieved in a way that improves the environment. There are three requirements.

  30.  First, a clear chain of command is needed with strong leadership being provided on the truly national and strategic regional infrastructure components by central government in association with Regional Assemblies/RPBs. This would provide a strong commitment for LPAs to follow.

  31.  Second, adoption of a more comprehensive approach to implementation of major developments in a more co-ordinated and visionary manner. This can be achieved either by adoption of the master developer type model or through the Project Delivery Company route. In both instances there is a need for an effective public/private partnership approach to master planning and delivery.

  32.  Third, adequate funding needs to be established at the outset for a full range of infrastructure provision to accompany comprehensive development, especially where there is a close link between major development and public transport improvements. The scale of funding required is very substantial and will require an inventive use of the PFI and a much more strategic approach to the use of Section 106 payments for infrastructure improvements. There will also be increased calls on mainstream government departmental budgets.

34   P69 Champion, Fotheringham, Ress, Boyle and Stillwell: The Determinants of Migration Flows in England. July 1998 University of Newcastle. For DETR. July 1998. Back

35   P80 ibid. Back