04How policy can better manage competition for space
A number of policy recommendations stem from the analysis above. Implementing these at a city and national level will relieve some of the pressure on city land and improve their ability to manage competition for space.
Recommendations for national government
1. More actively prioritise commercial space in city centres
National planning policy guidance is clear that the planning system must support economic growth, but the emphasis on delivering housing is also strong. The proposed new draft National Planning Policy Framework (NPPF) appears to tip the balance of these objectives towards housing.23 Cities are under pressure to focus on enabling house building. The use of explicit assessed targets for housing, but not commercial space, furthers this tendency to prioritise residential property.
Guidance should place more emphasis on protecting commercial space in the most economically important locations. The proposed planning guidance emphasises how planning must prioritise “making provision for clusters or networks of knowledge driven, creative or high technology industries”.24 Cities, and more specifically city centres, are where this clustering and networking is most successful, as the analysis above shows. Policy must explicitly prioritise commercial space in city centres in order to support these knowledge-intensive industries and prevent their premises being squeezed out by residential development.
2. Offer exemption from commercial to residential PDR to all city centres
PDR removes control from local planning authorities to strike a balance between commercial and residential space in city centres. Given the vital role these areas play within both city and national economies, it is crucial they provide the space businesses need to succeed, in particular high-skilled, knowledge-intensive firms.
For this reason, the number of exemptions from PDR should be increased to include each city centre of England’s 55 largest cities from the policy. The exact definition of each city centre, or equivalent commercial district, should be determined by the cities themselves. The current system offers much needed protection to a small number of city centres, but most must go through the difficult process of requesting an Article 4 direction if they require exemption. Instead, all city centres should have the option to be protected from the use of PDR to change use from commercial to residential. Doing so would mean that city planners will again have control over how land is allocated to each property use and the ability to prioritise commercial space.
These exclusions must be subject to periodic review. This is to ensure that the geography of the city centres remains relevant as city economies develop and change over time, and that the most commercially important area continues to be protected.
In addition, the policy should be adjusted so that housing delivered through PDR meets minimum space and quality standards. This is in response to cities’ concerns about very poor quality housing being developed through the policy. Minimum standards will ensure PDR makes a sustainable contribution to residential development.
Outside city centres, the policy has facilitated useful conversions of older, vacant commercial buildings into much needed housing by removing some of the red tape around planning processes. By keeping the policy in place these quick conversions can continue to benefit cities, while also recognising and protecting the exceptional economic role played by city centres.
3. Show leadership in relaxing planning restrictions
Many cities face a crucial housing shortage threatening their role as places to live. National government must support these cities as they consider how planning restrictions can be adapted and updated to ensure sufficient homes are built, showing leadership where local authorities face resistance to change.
To significantly increase the number of residential properties available there needs to be a relaxation of planning restrictions. In recent years national policy has been strongly against development on green belt land, making exception only for limited infilling or provision of affordable housing. There has been little change to this approach in the proposed new NPPF, reiterating the importance of protecting this land. But densification and brownfield development alone will not be enough. Given the knock-on impact these restrictions have on the availability and affordability of commercial space in more central city locations, and areas beyond the belt, these guidelines must be reviewed. Consideration of green belt development must be permitted where pressure to deliver housing within the belt boundary threatens economic growth, in addition to the current exceptional circumstances specified. Doing so would then give implicit support to local authorities to permit development.
4. Devolve missing planning powers to big cities
Each part of a city region has a distinct economic role to play, so the type of property supplied within each should vary. While some authorities are better placed to provide offices, others are more ideal locations for housing.
Planning for these varying roles is straightforward when a city is contained within one local authority. For larger cities in particular this isn’t the case, with the physical footprint of the city spanning many local authorities. This means that coordination is required between authorities.
Several UK cities have the power to plan across a wider region:
- In London, individual boroughs develop detailed local plans, but they must all adhere to the London Plan’s guidelines. In addition, the Mayor of London has the power to intervene in sizeable developments, and to veto planning decisions that oppose the city’s planning objectives.
- Four of the new metro mayors – West of England, Cambridgeshire and Peterborough, Liverpool City Region, and Greater Manchester – have strategic planning powers. In each of these areas, the combined authorities’ constituent authorities will develop the region’s plan together with oversight from the mayor.
But other large city regions are missing from this list, such as the mayoralties of the West Midlands and Tees Valley, and those that have no devolution deal, such as Leeds and Nottingham.
To address this the Government should do two things. The first is to extend planning powers to the two mayors who currently don’t have them. The second is to strike devolution deals with other large cities which include spatial planning powers.
5. Use fiscal incentives to encourage cities to prioritise commercial space
Business rates should be reformed to incentivise cities to protect and expand high-quality commercial space. The current design rewards cities who expand the amount of commercial space on offer, rather than improvements in quality, leading many to prioritise large industrial developments in the suburbs and hinterlands suitable for low-value activities. The focus should instead be on providing the premises for more productive businesses. Reforming business rates to incentivise cities to do this would encourage them to prevent residential development squeezing out vital commercial space in the city centres, because providing higher quality office space would generate a greater financial reward.25
Recommendations for cities
1. Have a local plan which places businesses in their preferred location
It is important that all local areas have a plan in place. Local plans are vital tools used to set out what commercial and residential space is needed, and where each type should go. Every local authority is required to design and adopt a plan but currently only 82 per cent have done so, and not all are up-to-date. 26
The local plan should be based on an understanding of the geography of the economy. Starting with knowledge of where each type of business is best located within a city will enable sites to be allocated according to their most suitable use.
In line with the national recommendations above, cities should prioritise commercial property in their city centres and business districts. While there is an increasing preference to live in the urban core, this must be balanced against continuing to provide commercial space.
In cities with competition for space, a local plan is an especially important guide to use when making development decisions that will affect the balance of residential and commercial property. It is also a source of information for businesses, helping them fit their ambitions around the built environment of the city, giving them the confidence to make long-term decisions.27
2. Relax planning restrictions
Since competition for space is a result of high demand but not enough space, making more land and property available will relieve some of this pressure. As discussed above, each planning restriction presents a trade-off between development and preservation, the costs and benefits of which change over time.
Each periodic review of a city’s planning restrictions should consider how the trade-offs have changed over time. Rather than a focus on whether or not assets are sufficiently protected, periodic reviews should re-consider the balance between the benefits to the city of protecting heritage and the costs of reduced development.
For several cities this means being open to strategically releasing green belt land. As discussed above, by preventing residential development on the outskirts of the city competition is worsened in the centre. Strategic release around transport nodes in particular will ensure the most accessible land is used. Previous research by Centre for Cities has shown that releasing just 5 per cent of green belt land close to train stations for low-density development could provide 1.4 million new homes where they are needed most.28
Cites have a choice to make between preserving the green belt and losing important commercial space needed for economic growth, or releasing small amounts of land to protect these properties. The situation in Slough is a current example of this trade-off (see case study 3).
Each planning authority should evaluate the quality of its green belt land. Not all green belt is of equal environmental significance. By evaluating each piece of land, cities can make an informed judgement about which sites should be protected and which should be considered for development.
Planning should also accommodate densification wherever possible. This is an essential tool for urban areas to accommodate the demand for both home and business space. Dense developments will take a different form in each location and is in no way restricted to towering glass buildings, with mid-density suburban development also being a key way to accommodate more housing.29