A RATHER ‘MEH’ BUDGET
This year’s Autumn Budget Statement was a somewhat muted affair – not least because, as the Chancellor himself admitted, the vast majority of big tax and spending decisions had been announced or leaked in recent months.
Furthermore, Philip Hammond admitted that the entire exercise may turn out to be academic, as a ‘no deal’ Brexit scenario could require an entirely new Budget. This edition offers a roundup of reactions from key London institutions and the broader development industry, as well as an initial assessment of our own.
We also look at a number of other prominent stories from the past week, covering estate regeneration, people moves and council by-elections, as well as new research on property sector investment and the housing crisis.
It is worth noting a couple of recent, big-ticket news items from the sphere of planning, which the edition at hand does not cover in detail: The City of London Corporation’s Planning and Transportation Committee has approved its new Local Plan, while Westminster’s Cabinet has endorsed a number of reforms proposed by its planning review. More on these in our next edition!
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LONDON IN THE 2018 BUDGET
No mix of policies could have satisfied everyone in the capital, but the 2018 Autumn Budget did elicit at least some praise in London:
Even Sadiq’s announcement welcomed the lifting of restrictions on the ability of local authorities to borrow for investing in new council homes – though the Mayor’s overall verdict was that the Budget ‘confirms that the Government is pressing ahead with the huge cuts that have caused so much damage to London’. Sadiq was especially disappointed with the lack of any additional funds for policing in the capital.
Meanwhile, Conservative Assembly Member Gareth Bacon, in his capacity as Chairman of the Assembly’s Budget and Performance Committee, suggested that had Sadiq’s representations to the Chancellor been more ‘realistic’ the result ‘could have been more robust for Londoners’.
In its response, London Councils was positive about the government’s boost to adult social care funding, but characterised the Budget’s support to local authorities as little more than ‘cash injections and other short term measures’.
Business association London First hailed ‘some worthy measures’ such as money for road maintenance, a boost to investment allowances, and an apprenticeship levy cut for smaller firms, but saw ‘no real game changers for London’.
The London Chamber of Commerce and Industry’s (LCCI) running Twitter commentary was similarly pleased with the increase to investment allowance, but also £1bn from the British Business Bank to support SME builders and plans to open the use of e-passport gates at international airports to visitors from the US, Canada, New Zealand, Australia and Japan.
Think tank Centre for London welcomed the Chancellor’s promise of £675m for a new national Future High Streets Fund, as well as other announced initiatives to help future-proof town centres.
LCA’S TAKE ON THE BUDGET
As for our initial assessment of the Budget’s offer for London, having tuned in to the Chancellor’s statement – and pored over relevant documents since his speech on Monday:
On the plus side, we noted the renewal of a more targeted version of Help to Buy until 2023 and extension of stamp duty relief for first time buyers to include shared ownership; the confirmation of the HRA borrowing cap’s removal; new funding and tax benefits for struggling high streets; and finally, the confirmation of funding for public realm improvements in Westminster; and an extension of the Docklands Light Railway (DLR) through the Housing Infrastructure Fund (HIF). These should help to substantially boost London’s housebuilding rates, support high street regeneration and prop up key infrastructure development.
On the downside, the DLR decision was the only concrete announcement relating to HIF allocations – with decisions still pending on other applications from London; similarly, all the Budget had to say about Crossrail 2 is that the government is ‘considering the recommendations of the Independent Affordability Review’ and will ‘consider the case for the project’ at next year’s Spending Review, kicking that particular transport can further down the road; and while the Met has welcomed a boost to counter-terrorism budgets, the Chancellor deferred a wider review of policing funding to December, at a time when crime is a pressing issue for London, much to the Mayor’s frustration.
A COUNTRYSIDE ESTATE IN KINGSTON?
Countryside Properties has been chosen as the preferred development partner for Kingston’s Cambridge Road Estate regeneration plans. Countryside beat Pinnacle Group and Places for People to secure the deal, which will see 865 homes demolished and 2,000 built in their place over the course of 10 years. The details of the plans and exact housing mix are yet to be revealed – though the masterplan is sure to include a combination of social, shared ownership and open market rate homes. As previously reported by LDN, the Liberal Democrat-led council will offer residents a ballot on the plans, following a 2018 local election manifesto pledge, but also as a pre-requisite to receiving £67m in funding from the Mayor’s Building Council Homes for Londoners programme (officially allocated last week). The official announcement of Countryside’s selection and relevant reports also lay out some additional details about the process going forward – though it remains unclear when the council foresees the scheme will be submitted for planning approval:
The contract between Countryside and the borough is expected to be officially signed in March 2019.
Masterplanning for the scheme will begin in Spring 2019.
Proposals will be subject to a resident ballot in Autumn 2019.
Works should start in 2020.
Despite its elusiveness in this Monday’s Budget, it has by no means been a quiet week for Crossrail (i.e. the Elizabeth Line), as it was announced last week that the government has allocated the project a £350m short-term repayable bailout. The funding is intended to ensure that it does not fall even further behind schedule, after it was announced at the end of August this year that it would fail to meet its original December 2018 launch date and that its opening would instead be pushed back to Autumn 2019. It was estimated in July that the project was already running almost £600m over budget and there are concerns that the government’s loan will place further pressure on Transport for London’s (TfL) already strained finances. While the funding was welcomed by the London Assembly, Liberal Democrat AM Caroline Pidgeon, who chairs the transport committee, dubbed the additional funds ‘only a sticking plaster to keep the project going’. The announcement comes just days after transport secretary Chris Grayling blamed Sadiq Khan’s fare freeze for TfL’s financial difficulties and Department for Transport’s (DfT) permanent secretary Bernadette Kelly said that London would have to ‘bear the cost’ of Crossrail’s delay.
BY-ELECTIONS AND OTHER LONDON BOROUGH NEWS
In a by-election held on 25 October in Sutton’s Belmont ward – triggered by the resignation of Councillor Patrick McManus – Neil Garratt held the seat for the Conservatives, with a clear majority of 259 votes over the Liberal Democrat runner-up. The vote nevertheless swung in favour of the borough’s ruling Liberal Democrats by an estimated 10.7% compared with the local elections in May, which saw the Tory opposition exceed expectations and double its seats (from nine to 18).
Meanwhile, another by-election is in the works all the way across town in Haringey, where Councillor Ishmael Osamor resigned at a meeting of the Labour group yesterday evening. The West Green ward councillor pleaded guilty to a charge of possession of illegal drugs with intent to supply at a music festival in Dorset last year, but was sentenced only last Friday to a two-year community service order and 200 hours of unpaid work. Osamor, first elected to Haringey Council in May 2018, is the son of Edmonton Labour MP Kate Osamor and grandson of former Haringey Councillor Martha Osamor.
THE OTHER HOUSING CRISES
Recent research by mainstream media outlets offers useful insight into the state of the UK’s – and particularly London’s – housing crisis, but also illustrates the ever-increasing level of scrutiny local authorities are being subjected to.
An investigation by The Guardian and ITV News has highlighted the extent to which rogue landlords are continuing to operate, despite the rollout of licensing and enforcement schemes. According to a series of articles published last week by the Guardian, Freedom of Information (FOI) responses from more than three-quarters of councils in England and Wales suggest one in seven councils have failed to prosecute a single landlord since 2015. These reportedly include the London boroughs of Merton, Enfield and Kingston.
Meanwhile, popular online news portal HuffPost UK has published the results of an extensive investigation into ‘out of borough’ placements of homeless households. It was reported that at least 50,000 households from 21 councils across England have accepted offers of relocation outside their council in the last five years. HuffPost received FOI replies from several London boroughs, including Brent, which recorded 2,247 ‘out of borough placements’, a number of which resulted in families moving as far away as Liverpool and Manchester. In Westminster, the figure was over 5,300.
HOUSING AND PLANNING IN THE 2018 BUDGET
Aside from boosts for Help to Buy, shared ownership, council housebuilding, and the HIF, the Budget painted a very mixed picture for housing and planning – as borne out by sector bodies’ reactions:
The British Property Federation’s (BPF) response was upbeat, welcoming tax relief for building and refurbishing commercial property, but also suggesting that private landowners and developers remain hungry for more certainty as regards a host of tax and planning reforms mooted over the past few months and barely hinted at in the Budget.
The National Housing Federation (NHF) has bullishly demanded more decisive action to ‘overhaul how land is sold’ to lower real estate prices and redistribute a greater share of private landowners’ profits for the construction of social housing. But London’s g15 group of housing associations was more positive, warmly receiving the announcement of £653m in 2021-2022 for ‘strategic partnerships’ with nine housing associations to deliver over 13,000 homes.
The Federation of Master Builders (FMB), which represents SME constructors, was broadly positive, focusing its response on the potential for the government’s high streets initiatives to help deliver more homes above shops, while of course welcoming a new £1bn to guarantee lending to the SME housebuilding sector.
THE LETWIN REVIEW
Meanwhile, the Chancellor’s speech and Budget referred briefly to the final report of Sir Oliver Letwin’s review into build out, which was released in tandem with the Budget. The review has exonerated housebuilders, finding no evidence that speculative land banking is part of their business model – nor, for that matter, that it is a driver of slow build out rates. The report instead concluded that the homogeneity of homes (and tenures) often developed on large sites is the key factor limiting the rate at which the market absorbs such products. This, in turn, is ‘the fundamental driver’ of slow build out rates. Letwin goes on to recommend measures to require (and incentivise) the differentiation of housing types and tenures delivered on large sites. Letwin also recommends giving planning authorities more powers to designate areas for development ‘only as single large sites’, use compulsory purchasing to assemble such sites and control their development. In both his statement and the Budget’s documentation, Hammond was reticent as regards whether the report’s recommendations will be adopted – deferring the government’s official response to February 2019. But the obscure phrasing of the relevant passage on p62 of the Budget could suggest that reforms are indeed afoot. In the interest of ‘minimis[ing] uncertainty’, the government commits to not making Help to Buy and other funding commitments for sites with existing outline permission contingent on ‘any new planning policy on differentiation’.
CAMDEN CLADDING BOOST
Mainstream, local and trade publications have reported that Camden Council was the sole recipient of £80m in government funding to assist the removal aluminium composite material (ACM) cladding from tower blocks. Remarkably, this seems to represent a full third of £248m in government funding allocated so far (out of a total £400m fund) for 12 local authorities and 31 housing associations nationally, as announced earlier this month. The proportion of funding seems even more striking when considering the government’s Building Safety Programme: Monthly Data Release for October, which suggests that buildings in 78 local authorities in England have failed large-scale fire safety tests. The money allocated to Camden will reportedly be used to address the fire safety issues found on the Chalcots Estate in Swiss Cottage, identified in the scramble by social housing and tall building landlords to reassess their buildings’ fire safety following the Grenfell disaster. The estate’s five towers were evacuated while safety measures were put in place.
EURO INVESTMENT SPIKE?
The purchase of central London office buildings by overseas buyers has seen a record amount of foreign investment in the capital. According to figures from property advisers CBRE, in the three months to September foreign firms spent £3.8bn in this sector. European investors surprisingly bucked the trend by spending £1.7bn, above Asian investors who spent £1.5bn, despite the latter customarily dominating in this particular market. UK investors spent a comparatively paltry £421m, while North American buyers invested £171m. Total investment into central London property came to £4.3bn, a drop from £5.1bn in the second quarter of the year and from £4.8bn the year before. Despite this slight drop, the sustained high level of investment into London – by European investors no less – will serve as a reassurance that the negative impact of Brexit may not be as severe as is often predicted. However, CBRE warned that there may ‘some hesitancy’ from investors as the date that the UK is set to leave the EU approaches.
Sir Jeremy Heywood has announced his resignation from his roles of cabinet secretary and head of the civil service due to ill health. He is set to be replaced by Sir Mark Sedwill, who is currently the PM’s National Security Adviser (and will also stay on in this role).
Ian Thomas, Lewisham’s CEO, has ‘agreed to step aside from his role at the end of this year’. Thomas has only served in the role, to which he was appointed by former Mayor Sir Steve Bullock, since March 2018.
Deborah Collins, Strategic Director for Environment and Leisure, and Ian Smith, Director of Environment, will be leaving Southwark Council this winter in order to pursue different opportunities.
There have also been a number of changes at London’s flagship newspaper, the Evening Standard. Jack Lefley has been promoted to Executive Editor, Ross Lydall has been re-appointed City Hall Editor in addition to continuing his role as Health Editor, while Sophia Sleigh has been promoted to City Hall reporter, working alongside Lydall.
Stuart Gibbons, former Galliford Try partnerships and regeneration managing director, has joined Lovell, where he will oversee the firm’s London division.
Centre for London's flagship event The London Conference returns for its eighth year running, on Wednesday 7 November, at the Congress Centre (WC1B 3LS). This year the diverse programme is rethinking the way London operates. Covering a range of issues crucial to London’s prosperity, from political devolution to technological change, the conference will explore how the capital can respond to disruptive times and become an inclusive, working capital. The day-long conference will feature an A-list of leading Londoners from across the public, private and third sectors, from the Mayor of London and Leaders of Westminster, Lambeth and Camden Councils, to the Chair of ITV and Chief Executive of the Trust for London. Register your interest in attending or nominate someone here.
WHEN THE COAL DROPS
Unless you’ve been living under a rock and haven’t read anything about what’s going on in London over the past week, you probably know that Coal Drops Yard, the new retail district in the heart of King’s Cross is now open. To celebrate the launch, Coal Drops Yard Firsts, a four day public events programme, will run from tomorrow until Sunday. Expect food, fun and fashion. This is the latest in a long line of major openings for the wider Kings Cross regeneration project, which LCA has proudly worked on for almost two decades.
LCA OUT AND ABOUT
This past week has seen the LCA, attending a number of events. Yesterday, we were at the Capital West London Growth Summit held in The Drum, Wembley. A packed agenda included discussion about new homes, unlocking employment and culture among many other topics and we heard from a wide range of key figures including, Deputy Mayor Jules Pipe, several London borough leaders and a host of senior industry figures. We were able to see, quite literally, the regeneration taking place around us, including that undertaken by Quintain, with which we have been involved for a number of years. Yesterday, we also attended the NLA's Waltham Forest: Hotspot or Creative-led Growth event in Leyton. London’s first Borough of Culture is rather unsurprisingly looking to put culture at the heart of its urban regeneration work. The event hosted a strong speaker line up, with Cllr Simon Miller, Cabinet Member for Economic Growth and High Streets and Stewart Murray, Strategic Director of Economic Growth, in particular speaking passionately about creating an economy that works for London’s up and coming artists, makers and creators. And this evening, we will be at the APPG for London's Autumn reception.
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