Business Voice WM Submission

                                    Examination in Public – RSS Phase Two

December 2008

Introduction

The Business Voice WM has decided to specifically comment on the report commissioned by the Government Office for the West Midlands entitled Development of Options for the West Midlands RSS in Response to the NHPAU Report.

While we understand the panel will consider this report alongside other evidence to ascertain the Options as presented by the West Midlands Regional Assembly, we considered that due to the stature and nature of this report that we, as a business community, should express our reservations on any overdue reliance on this report in deciding upon the Options for the Regional Spatial Strategy.

The Business Voice WM undertook its responsibilities to shape the RSS options during the stage when this was being considered by the West Midlands Regional Assembly. It was on this basis that business came to the view that before a significant house building programme should take place three core tests must be passed.  These tests are:

• Infrastructure developments must be in place, at least in the planning stage, before new house building takes place;
• House building must be linked to employment land and buildings;
• Phasing of developments to meet economic and environmental standards.

Infrastructure and phasing of development is mentioned in the Government Office commissioned document to some extent but it is the point relating to employment land and buildings where due cognisance is not taken into any consideration.

Inter-relationship between Employment Land and Housing Land

We are concerned that following the planning policies of recent decades the development of unsustainable housing estates which addressed immediate need but had no long term sustainability strategy built into planning process combined with the development of commuter belts which are supported on the vagaries of the market – and not on the immediate needs of the local area – could be repeated with the approach outlined in the Government Office commissioned document.

The Nathaniel Lichfield and Partners report refers to travel to work areas in respect of the economic aspects of the benefits of the house building programme but it does not refer to the role of employment land and its inter-relationship with housing land. The Business Voice WM is disappointed this is the case as it had sought a written assurance from the Government Office for the West Midlands before consultants were commissioned to undertake this research.

We also held this concern regarding the inter-relationship of housing land with employment land in respect of the development of the Options when the matter was under the aegis of the West Midlands Regional Assembly. We considered that that the work in deciding the ratio of employment land to housing land was not sufficiently robust. However, we were persuaded to support the Options as the policy in the draft RSS specifically states the following:

Sustainable economic growth will also be promoted in the rest of the Region including the Settlements of Significant Development to ensure an appropriate balance between new housing and employment (Policy PA1)

This policy also states the following:

it can help create more sustainable communities by generally providing a better balance  between new housing and new employment and limit the need for commuting

This clear statement linking employment land and housing land is particularly important to ensure balanced regional economic regeneration.

Developments, we believe, need to be planned in recognition that these plans can only be sustainable in the short to long term if economic developments are factored in. This necessity is being recognised in the planning for the North West RSS, for instance, with the need for:

More informed anticipation and modelling of sub regional economic growth scenarios and better assessment of the implications for the level, composition and potential location of future household growth.

(Rethinking the North West Spatial Economy (Strengthening the evidence base of key economic and spatial strategies in the North West) commissioned by North West Regional Development Agency prepared by Centre for Sustainable Urban and Regional Futures, University of Salford, Centre for Policy Studies, University of Manchester, Institute for Political and Economic Governance, University of Manchester, Salford GIS, September 2006)

Regional Economic Strategy

The failure of the Government Office commissioned report is that it does not take a holistic economic perspective to new house building. So, to take one example, the Government Office commissioned report takes no cognisance whatsoever of the implications of the Regional Economic Strategy (RES). We had proposed direct linkages to the delivery mechanisms of the RES in order for new housing building to help drive forward the long term regeneration of the region.

That is why we propose that the RSS should not just be linked to two policies of the Regional Development Agency, Advantage West Midlands (AWM), with Regeneration Zones and High Technology Corridors, but also to its policy of clusters.

The concept of clusters, developed by Porter, identifies the need for firms in particular business sectors to come together to improve their competitive advantage. While the AWM policy of clusters is, rightly, not spatially defined there is no doubt that a successful realisation of a clusters strategy can have spatial implications.

Porter himself states that clusters can lead to competitive regionally based activity. Porter emphasises the links of supply chain dynamics that particularly helps SMEs to develop. Krugman made a similar point emphasising how the development of good regional supply chains in urban areas helps to drive the regional economy in accessing international markets.

Therefore the Business Voice WM would propose that any revision of the RSS must factor in the clusters policy of Advantage West Midlands, as well as with the Agency’s policy of High Technology Corridors and Regeneration Zones, so that Local Development Frameworks (LDFs), as prepared by local authorities and which must legally conform to the RSS, have a clear requirement to develop capacity for the successful development of clusters. Therefore local authorities should not rush to change the use of premises away from business purposes as a consequence of any short term measures.

This would cater for the inevitable impact of the need for land to support the supply chain dynamics for such growth to take place including links with the universities as centres for Research and Development – a critical part of the business cycle.

In turn, it is necessary to consider how small and medium sized enterprises (SMEs) who require use of business premises, especially to sustain the economic vitality of local communities, should not lose out because of short term pressures to accommodate housing by change of use of business premises to housing which would be at the expense of economic sustainability. Therefore we support the proposals in the Options as developed by the West Midlands Regional Assembly for a monitoring regime to exist to ensure that business premises are not lost due to short term housing demand issues.

The growth of creative industries and tourism also inevitably impacts on the use of land. The use of culture to drive forward economic development in the West Midlands region is well known, from the City of Birmingham Symphony Orchestra and Birmingham Royal Ballet to Walsall Art Gallery and Wedgewood Museum in Stoke on Trent. LDFs should be given the freedom for these sectors to be developed, despite the land intensive nature of cultural centres, for there is no doubt that culture is:

an increasingly important tool in regional competition to attract workers and investment. Long term indirect gains may be considerable because culture helps to generate a vibrant economy, greater quality of life and superior experiences giving regions and towns a stronger external profile

(Danish Ministry of Trade and Industry and Danish Ministry of Culture, 2001)

We believe this general approach, if adopted in the revision of the RSS, would free up local authorities, in the development of LDFs, to consider more fully the economic potential of their areas and how this fits in with the general impact of the Regional Development Agency in their areas in encouraging business growth.

Telford

We were open to the concept of additional housing in Telford – which was not deemed appropriate by the West Midlands Regional Assembly. This was on the basis, however, that there is sufficient housing and employment land available in this unitary authority to make such developments sustainable. We proposed to the West Midlands Regional Assembly that Telford should be included as part of the MUAs – which goes beyond the current position of the Options presented by the West Midlands Regional Assembly that there should be limited additional housing in this area as a sub regional foci.

We consider reclassification of Telford as part of the MUAs is more appropriate as it reflects the housing and economic reality of this area within the broader West Midlands region. In addition, it reflects the strategic direction of Telford itself who have decided to join the Birmingham, Coventry and Black Country City Region. With the exception of Telford, the majority of the land mass of the City Region has been designated as part of the MUAs.   

As the Ecotec work implies, this would recognise the economic dynamics in the New Town.

It states, “As a New Town, Telford’s current infrastructure was designed to accommodate almost double its current population level. The area has the land and infrastructure capacity to accelerate and increase its current level of growth”.

The report adds “Proposals to restructure south Telford and link this with the renewal of the town centre and related employment opportunities from the M54 technology corridor will ensure that Telford is uniquely placed to accommodate the accelerated growth targets for the region”.

(Study into the identification and use of local housing market areas for the development of the RSS, Ecotec, commissioned by the West Midlands Regional Assembly, August 2006)

NHPAU and NLP Assumptions

We understand that the rationale of the Government Office commissioned report not to consider these economic development factors relates to the advice received from the NHPAU.

The NHPAU acknowledges that there are a number of factors it does not consider when considering the housing projections for England. It does not consider the infrastructure implications nor the link to employment land. It also does not consider what proportion of new housing should be for rent, though we understand the Unit will shortly be commencing work in this area though we are unclear whether this work will change the figures already presented.

Therefore, as a consequence of not considering these key variables it has taken a mathematical approach rather than an economic development approach as taken by business and public sector economic development bodies.

This therefore provides a rationale as to the reasons why the Government Office commissioned report decided not to consider the employment land variable, for instance.

We are concerned that despite the initial impression of the Nathaniel Lichfield and Partners report being well researched, it presents a number of qualitative statements that are not supported by evidence. For instance, on Page 65 of the report, it states:

The Black Country has major challenges in meeting the requirements of the RSS Preferred Option. Scenarios for future growth should not include additional provision as there is little if any prospect of that increase being delivered.

This statement is based on the current governance and economic structures in the Black Country which are subject to change while such assumptions as to the quality or otherwise of governance structures is not used to address housing capacity in other sub regions.

Infrastructure

The Government Office commissioned report indicates that infrastructure issues are “not showstoppers” but, in respect to transport it acknowledges that the current appraisal for road infrastructure is “not based on detailed modelling” (Page 107).

The report also is unclear why it is confident that water resources can be overcome when it also states “Of the Water Resource Zones (WRZs) the Severn is currently under greatest stress”. No evidence is presented as to how such infrastructure matters can be overcome, especially as the majority of the infrastructure developments that would need to take place is outside the remit of Local Development Frameworks.

Phasing

We are concerned that neither the West Midlands Regional Assembly’s Options nor the Government Office for the West Midlands commissioned report fully took into consideration how phasing of developments would operate.

The business community, particularly developers, have been severely affected by the implications of the credit crunch. Therefore, even if the economic recovery takes place in the first quarter of 2010, as some economists predict, there will be an additional lag time before this would impart to the real economy including with the development industry.

While we understand the stance of both sets of recommendations that the housing strategy is for a 20 year period, we are concerned that as a result of the economic downturn the first set of developments would take place later in the planning cycle. Such an outcome would contain implications for how the overall economy develops and therefore a phasing programme that takes into consideration how the economic cycle impacts on phasing would be of a more practical nature than the phasing options presented in either set of recommendations that have been presented to the panel.

Conclusion

In summary, the business community, while having some reservations regarding the robustness of data as presented in the West Midlands Regional Assembly’s Options, does consider that the policies as stated in  the draft RSS, especially in the context of linking housing and employment land, will ensure the long term sustainability of the region.

However, the Government Office for the West Midlands commissioned report has no reference to this link between housing and employment land and, as a consequence, if the report was accepted as the basis for future growth, would prove to be detrimental and even counter intuitive to economic growth and regeneration.

With the sole exception of Telford, where we agree the town can accommodate more housing that can be linked with employment land than currently envisaged in the West Midlands Regional Assembly Options, we consider that the general approach adopted by the West Midlands Regional Assembly is the most appropriate course for economic development.

We are concerned that not enough research has been undertaken by either the West Midlands Regional Assembly nor Nathaniel Lichfield and Partners into infrastructure constraints. While both organisations state there are “no showstoppers” to stop future housing growth, the Nathaniel Lichfield and Partners report does not support this assessment with sufficient evidence while the West Midlands Regional Assembly will consider most of these infrastructure matters in the Phase Three review – once the RSS Phase Two review is completed.

Therefore, we would urge the panel to consider recommending that any decisions on new house building have to pass robust infrastructure tests before such new housing receives preliminary approval.

Finally, we are concerned that the phasing options contained in both sets of recommendations do not take any cognisance of the current economic problems facing the development industry and how this will impact on phasing of developments. We would propose a more practical phasing policy that takes into consideration the needs of the economic cycle.