New London Sounding Board - Autumn Statement Response

Wednesday 30 November 2016

Robert Evans leading the discussion hosted at LCA © Agnese Sanvito

Deirdra Armsby, LB Newham; Robert Gordon Clarke, London Communications Agency

Lyn Garner, Director of Regeneration, Planning and Development, LB Haringey

Lyn Garner, LB Haringey; Sarah Cary, British Land; Yolande Barnes, Savills

Pat Hayes, Executive Director of Regeneration and Housing, LB Ealing

‘A modest first step’, but icebergs loom for London from Hammond’s Autumn Statement

  • Cautious welcome for Autumn Statement, but Sounding Board warns on ‘icebergs’ including costs of social care, homelessness, and Brexit uncertainty
  • Government should take urgent action to solve the UK’s growing skills crisis across the built environment sector. New housing fund should invest for the long-term in tackling people and skills shortage
  • £3.15bn for housing welcomed by GLA to provide flexibility and opportunities on housing starts
  • Off-site manufacturing will play a part in meeting demand, along with greater use of public sector land, and CPOs used around it
  • London should be viewed as having more ‘responsibility’ for Northern Powerhouse
  • Sounding Board welcomes link between infrastructure and productivity 

NLA’s Sounding Board gave the Autumn Statement a cautious welcome as a ‘modest first step’ but warned of a series of ‘icebergs’ London must steer clear of if it is to prosper and grow.

That was the overall consensus of the meeting of senior experts across the built environment industry, called to chew the fat over chancellor Philip Hammond’s headline offering of £3.15bn to the GLA to help start the building of over 90,000 affordable homes by financial year 2020-21.

The statement was not as positive as some had hoped, said London Communications Agency executive chairman Robert Gordon Clark, despite welcoming Hammond’s broad point about bringing up other cities economically, rather than taking London down. There was a modest start to devolution, but no real mention of the ‘massive issue’ of social adult care so represented something of a ‘curate’s egg for London’. ‘Overall I thought it was so-so’, he said.

There had been a ‘huge sigh of relief in City Hall that the figure of 3.15bn had been confirmed at all, however, said Pocket CEO Marc Vlessing, and, dealt with such a poor hand, the chancellor had juggled reasonably well. But why was the national investment fund not 60bn or indeed £500bn at a time when money is cheap, and he felt that there was definitely an element of recycling going on with some of the figures. An important move, however, was that here was a government that is now reasonably tenure neutral. ‘Gone was all the talk about Starter Homes’, said Vlessing. ‘Gone is the fastidious obsession with particular tenures. I think they are very much in the business of trying to encourage supply, which is a very good thing.’ What was missing, however, was any reference to skills and how government would or could fund a skills network.

Nothing was said about devolution for suburban rail franchises, said one member of the Sounding Board, and Mayor Sadiq Khan will continue to press for this along with discussions about Vehicle Excise Duty. But the link between infrastructure and productivity was noteworthy, even if Hammond’s line about looking forward to receiving the business case for Crossrail 2 was difficult to translate. More encouraging was the signalled move for more money for innovation in transport, with sums for digital and smart ticketing, along with a ‘slug’ of money for low emission and autonomous vehicles. Government clearly wanted to stay ahead of the game in these areas, given our permissive regulatory regimes.

This was a much more sensible policy direction on housing, said director of regeneration, planning and development at LB Haringey Lyn Garner, with a welcome move on mix of tenure. While there was a bit of ‘landlord bashing’ going on, the measures here were welcome, but Garner was not convinced that Starter Homes were yet completely off the agenda. 

For Jamie Ratcliff, assistant director of policy, programme and services at the Greater London Authority, the pushing back of the Housing and Planning Act could be seen not as a U-turn but a pragmatic approach showing ‘a government which was prepared to pause, listen and not just follow ideology.’

What was interesting and welcome for Savills’ director of world research Yolande Barnes was the explicit link in the statement between productivity and housing. But while we have all been in a world where we’ve been talking about urbanization and the concentration of both capital and people, now it is more about urban dispersal with people pulled and pushed into alternative urban centres like Cambridge and Canterbury. ‘What we’ve now got to start accepting is that London’s economic power extends up to and beyond Manchester and Bristol, and to smaller coastal towns like Margate’, said Barnes. ‘The way we think about London now therefore has to be with a far greater sense of responsibility for the Northern Powerhouse. The two are not unrelated and the whole London, Bristol, Manchester cluster and certain small towns and cities in between is increasingly being treated as one economic entity on the global stage.’

The Autumn Statement is a ‘total disaster area’ for executive director of regeneration and housing at LB Ealing Pat Hayes, given its underlying assumptions about growth and borrowing, from a government that doesn’t know what to do about major issues facing it. Why, for example, when we have a massive deficit, massive air pollution problems and congestion issues, are we ‘promoting people to drive more’ with ‘pointless’ road building? A sensible measure would have been giving the Mayor more Vehicle Excise Duty to spend on more sustainable transport, which has been an opportunity passed up. Greater regulation on planning fees and something on CIL might also have helped, while the landlord letting charges did not solve reputation or regulation issues in the private rented sector. ‘The long-term mood music for London is really poor, and we have to acknowledge that.’

Another iceberg was the impact on local authorities around homelessness, said Sue Foster, strategic director of neighbourhoods and growth at LB Lambeth, while director of regeneration and planning at LB Newham Deirdra Armsby questioned whether there was anything for the average Londoner struggling to get housing and stable work.

Daniel Moylan, councillor at RB Kensington and Chelsea, would have acted on borrowing, and done ‘something radical’ about homelessness; that is, give or sell every council house in the country to its tenant, providing certain criteria were met. This would introduce huge mobility, he said, while the current lettings agents scenario was morally wrong in terms of a lack of accountability, and Hammond’s Crossrail 2 line was, in Moylan’s view, simply government awaiting a revised business case with reductions in overall capital cost, irrespective of benefits of certain elements. This could mean an end to a station on King’s Road, and possibly the new Southgate branch.

So, what would people do with a blank sheet of paper and that £3.1bn to get moving on housing? Jamie Ratcliff applauded the new level of flexibility it will bring the GLA, even if £1.07bn was allocated from a previous mayor. The main focus will be on affordable housing construction, with new guidance on grant funding out next week which will aim to cut bureaucracy.’ We’ve designed a grants system which will be very transparent, very certain, very predictable’, he said. Ratcliff said three main tenures will be looked at – shared ownership, a London Living Rent product with rents set in relation to local incomes, and then a proportion of homes at social rented levels. But the flexibility in funding will also allow GLA to support acquiring surplus central government land and supporting people through compulsory purchase powers, acquiring sites around public land to widen the opportunity. The mayor wants to go further than his predecessor on suburban intensification and town centre densification. It will also seek to use funding more innovatively in the mould of the 0% finance terms it used with Pocket, and then there is the GLA’s interest in driving up London’s ability to manufacture more homes in factories. 

Vlessing said that 25% of its output is factory-based manufacture, but having visited all the modular factories in the UK, the more automated they are the less his firm is interested in them. ‘The more they are basic sheds with just in time management teams that have a contracting background and know about development the more interested we are in them’, he said. Government should not be investing on this but hypothecating public funding to organisations that are given an obligation to spend some of it on modern methods of construction.

While, as investment director at Mount Anvil, Darragh Hurley said, ideas are easy and their execution is everything, the question was on investing more on creating infrastructure for the future delivery of homes. ‘Invest in infrastructure, and by that I don’t mean roads, bridges and railways; I mean people, primarily people and then the skills.’

And skills are the crucial point, agreed Central director Pat Brown and Vlessing. Those factories Vlessing visited had 70% EU workers, many of them from Poland, and the number one problem across the industry is a lack of qualified personnel. Eddie Lister should, he added, try to turn the HCA into a bank that could do something ‘meaningful’ with the £3bn, and some of the cash should be ploughed into helping people into various layers within the sector in both the public and private sectors to motor London and the south east. Moylan reminded the group that the Mayor’s Design Advisory Group had a plan for a new structure to help in skills but, as chair Robert Evans pointed out: ‘we all know there’s only so many good people.’ 

Perhaps the general population of London might decline, postulated Robert Gordon Clark. Certainly Brexit could make a major dent in numbers, said Fred Pilbrow, founding partner of Pilbrow & Partners, with immigration such a ‘huge engine’ of productivity. ‘I think perhaps we take London’s ascendancy for granted and perhaps place a huge risk in front of its future prosperity’, he added. We may have to get used to plateau in all sorts of areas, such as house prices, population, productivity’, but at least (most of) the rest of Europe in the main will be in decline, so London will look different.

Ultimately, the Board saw the autumn statement as a modest first step, said chair Robert Evans. But it was a good analogy that there were also a number of prospective ‘icebergs’ in the way. The state of our borrowing figures is one, the social care position another, with the issue of temporary accommodation and the homeless another looming large. All of this, against the general Brexit uncertainty acting as a filter on everything including London’s competitiveness and prospects for growth likely in years three to five, rather than immediately. 

Write up by David Taylor, Editor, New London Quarterly

Sounding Board members in attendance Toggle

Deirdra Armsby, Director of Regeneration and Planning, LB Newham Yolande Barnes, Director, World Research, Savills
Pat Brown
, Director, Central
Sarah Cary, Head of Sustainable Places, British Land
Robert Evans, Partner, Argent (Chair, New London Sounding Board) Peter Eversden, Chair, London Forum of Civic and Amenity Societies
Sue Foster, Strategic Director Neighbourhoods and Growth, LB Lambeth
Lyn Garner, Director of Regeneration, Planning and Development, LB Haringey
Robert Gordon Clark, Executive Chairman, London Communications Agency
Pat Hayes, Executive Director of Regeneration and Housing, LB Ealing Darragh Hurley, Investment Director, Mount Anvil
Michael Lowndes, Executive Director, Turley Daniel Moylan, Councillor, RB Kensington and Chelsea
Peter Murray, Chairman, New London Architecture
Lucy Musgrave, Director, Publica
Fred Pilbrow, Founding Partner, Pilbrow & Partners
Ben Plowden, Director, Strategy and Planning, Surface Transport, Transport for London
Jamie Ratcliff, Assistant Director of Policy, Programme and Services, Greater London Authority
Ed Sneddon, Development manager, Derwent London
Marc Vlessing, CEO, Pocket

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