Regeneration hindered by lack of trust between public and private sector

Residential-led regeneration has long been a politically sensitive key-driver for economic growth in the UK. Despite the regularity of central ‘missed’ house-building targets, the construction industry, as a whole, contributes 7% of the UK’s GDP and just under 10% of the UK’s workforce.

Building new homes on the scale required is easier said than done with planning restrictions, funding, volatile raw material prices and space demands creating issues that have long been challenging ones for businesses in the sector.

Insurance giants The Phoenix Group sponsored four regional roundtable discussion forums on residential-led regeneration with the second of those taking place in Leeds, a city with a reputation for playing its housebuilding part, particularly via its large-scale, brownfield city centre developments.

Trust, particularly between the private and public sector, was a theme that came up more than once and Phoenix senior investment manager Anand Kwatra highlighted an issue that investors face when dealing with regional and local authorities.

He said: “We’ve got very stringent requirements, for example, on how a local authority might use the money. As an insurance company we are regulated with a very prudent set of regulations so we have to take a very cautious approach to our investments across all aims so that’s why we ask for a lot of safeguards in how these projects are managed.”

Property development consultant Gerald Jennings, of GR Jennings Properties, also believes the issue of councils and combined authorities spending money ‘wisely’ creates and unwanted tension in the system.

“I was acting for private sector companies I would want to be able to have a proper conversation with my combined authority local authority about how the money is going to be spent,” he said. “I don’t have the trust in the public sector at this point.”

Prew Lumley, who is the office managing partner at legal firm Squire Patton Boggs, has a wealth of experience in the property development field and pointed out that public/private partnerships have long history of mistrust.

“That balance of relationship and trust between the developers and local authorities has always been an interesting and tricky one. That relationship around the local authority trusting the developer to do the right thing and behave the right way. It’s always been that thing of… ‘we the local authority don’t want to take any risk so will put all the risk on the developer cause they make loads of money while we’re just doing this noble thing by enabling the regeneration. It needs to be a much more symbiotic relationship.”

Paul Kelly, the group development director of Leeds-based property developers The Scarborough Group, warned that being over cautious also has its issues.

There is a risk of doing something but what is the risk of not doing something,” he said. “What if we don’t fix the problem and a major consideration should be the economic growth we are going to stimulate through development across all sectors, specifically residential development, which is huge in terms of job creation.”

James Farrar, chief executive of the York and North Yorkshire Combined Authority, thought it was important, across the long term, if all parties had a better understanding of the relative risks.

“It would be good if there was a better understanding of how the balance of risk sits between the institutions, the developer and the public sector because no one of those three can be exposed to it in its entirety. I think that’s the problem because we’re all sat there trying to minimise our risk and there’s not really an understanding of how the three parties come together in a way where that risk is shared in an effective way.”

Leading on from that is the issue of central housing targets, which just never get met. Gerald Jennings claimed that people in the previous Conservative administration came too obsessed with the targets.

The panel from the Residential-led Regeneration roundtable in Leeds

He said: “The last government were fixated on housing and they had to be educated. It’s not just about housing for housing sake it’s about transport, it’s about culture, it’s about a whole range of things. We have to join the dots and they didn’t see the bigger picture so there’s something about educating governments along this journey.”

Prew Lumley agreed. She added: “They (the government) just want to be able to say in our 4-year term we have done X. It doesn’t have that sustainable aspect and they end up just throwing up boxes and they don’t care where the numbers come from.”

Much of the blame for housing targets not being met has been thrown at the planning process and the Squire Patton Boggs director identified a shortfall in planning resource as a major concern.

She added: “I’m actually optimistic there is going to be change but it is a huge problem. I think somebody at some point said there are areas that the private sector can’t deliver but they want to deliver they just can’t get through the planning process quickly enough and it is just a massive problem. I get it but it’s years of not enough money going into it. There just aren’t enough planners to do the work in the councils. It’s not the council wanting to sit on their hands.”

Builders Citu, which has done a lot of work in West and South Yorkshire, was represented by co-owner and managing director Jonathan Wilson, and he gave an example of how differently the planning process was handled by Leeds and Sheffield City Council

“The planning department in Leeds has got a real challenge for all the reasons mentioned but to also add some positivity, in terms of planning, which I know is rare… We’ve just been through a planning process in Sheffield and it’s been one of the best processes we’ve ever had and the reason is because local authority realised that that the project we were discussing (Attercliffe Waterside), which is a regeneration project and a massive social project, will be a catalyst for much wider regeneration and we are dealing with a site that will encompass just over 1,000 homes.

“They appreciate, as a city, their response to the climate emergency and that we were taking a 10-year view around doing something that that will set some new standards for the city.

“And because of the political – and definitely the political leadership in Sheffield – that translated down to the planning process.

“We got planning for 340 new homes, multi use and a new bridge. From final validation we got it through planning in 12 weeks. It took four years for us to get planning for a new school in Leeds and they’re the only two local authorities I’ve worked in.”

Peter Callaghan, land director at the Clarion Housing Group, highlighted the problem of elected officials getting involved with the process.

He said: “It’s politics not planning. The planners should do a planning job rather than the members doing a political job at the interview.”

Gerald Jennings added: “When you get to a planning committee and, the offices of brought the report forward with a recommendation or even refusal, the quality of the conversation around the table from the members of the panel, I always find hugely disappointing.

“There is always that real lack of trust in the private sector and a lack of understanding of really what’s in front of them. A number of us in Leeds have tried to say to the local authority… ‘would you like to sit down with your planning committee members council and have an open conversation about how this really should work. We want to help you understand us and that can help us’. But they don’t want to engage, which I find hugely disappointing.”

There is certainly a big redevelopment opportunity in Calderdale Council when it comes to retrofitting housing stock. The authority’s Assistant Director – Economy, Housing & Investment – Kate McNicholas, explained there are 69,000 homes in need of the service.

She said: “That’s a real scale of challenge and opportunity and a massive part, if we are aiming at regeneration. It’s also a massive part in terms of addressing climate emergency and also making people’s lives better because they are then living in warm homes and the economic opportunities those people have because they can heat their homes”