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One month into his term, and Sadiq Khan is now grappling with the competing demands on London’s land for employment space and new homes. The new Mayor has called for the Government to give greater powers to the Mayor’s office to prevent office space being converted for residential use and outlined proposals to introduce further exemptions in the London Plan (due to be published in 2018).
The move is an attempt to address concerns (voiced by the Federation of Small Businesses among others) about the potential cost to London’s economy of the Government’s permitted development policy. This allows for offices to be converted into housing without further planning permission, with the aim of getting more housing onto the market – something that is desperately needed, with the number of homes built in London on an annual basis only around half what is required. The policy has undoubtedly made an impact, with an estimated 22 per cent of London’s new homes coming from converted offices last year, but at what expense?
Alongside the need for more homes, it’s also vital that London has sufficient employment space available in the right areas to ensure it continues to be a successful global economic centre in the years to come. As City Hall points out, the capital is losing a significant amount of commercial property space, when much more is needed – with an estimated 1.5m square feet of office space lost in the past three years alone.
This is particularly important because cities, and especially city centres, are home to a high proportion of firms in ‘new work’ sectors like the creative, legal and marketing industries – which our research shows offer the best long-term prospects not only in terms of productivity and average wage growth but in creating jobs in other industries too. London is home to more of these new work firms than anywhere else, but a finite amount of office space limits their growth, and imposes higher costs.
Given the competing pressures for scarce land available in the capital, it is crucial that the Mayor has the power to make tough decisions about how that land is used, balancing the demand for housing with the needs of businesses and other parts of the economy across the city region.
Nationally imposed decisions like permitted development conversion rights contradict these powers. By its nature, a national decision will apply across very different places, ignoring the different priorities in London compared with, for example, Barnsley or Burnley. It also means overlooking the complementary needs of different parts of a city region – in broad terms, city centres are well suited for office and commercial space, and suburban areas for housing. The upshot is a compromise that limits the powers of local decision-makers to make the most of the land in their cities, at the cost of businesses and house building.
Yet simply having greater powers will not be enough – the Mayor must be prepared to use them to make tough decisions about his land and housing priorities. Khan has committed to doubling the number of homes built while ensuring that all new housing developments consist of 50 per cent affordable homes. At the same time, he has also promised to protect the capital’s greenbelt and commercial space.
But the reality is that it won’t be possible to address all these competing pressures at once. To effectively manage competing land and housing pressures, he will have to make tough decisions – even if they are potentially contentious or unpopular.
So while City Hall is right to call for more powers over how land is managed in the capital, with these powers comes the responsibility to take difficult political choices – to build the homes and keep the businesses that London needs, he will need to consider building on the greenbelt.
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