The recent change in prime minister has brought with it a much greater emphasis on the need for economic growth and a desire to show the delivery of policies to achieve this. The regeneration of our city centres provides just this opportunity.
There is considerable headroom for UK city centres to grow. Successful city centres are the most productive parts of the UK economy and have seen an increasing number of high-skilled jobs locating in them in recent decades. But most are either underperforming or are just not as large as they need to be to bring prosperity to their wider areas.
This research sets out what the national government should do to lever in many billions of private sector investment into city centres to kickstart growth. It builds off one of the most eye-catching policies in February’s Levelling Up White Paper, the announcement of 20 regeneration areas to do “King’s Cross style” redevelopment projects elsewhere in the country. This policy should be applauded for being selective in its approach and concentrating resources to fix specific problems in specific urban areas, rather than trying to “jam-spread” resources across the entire country. In its attempts to ‘go for growth’ the new Government should persist with it.
King’s Cross itself is a commercially-led, mixed use scheme that has brought formerly underutilised land back into highly productive use. As with all good regeneration projects, it has been able to change the mix of economic activity on the site, offering something different to businesses than was previously the case. It is because of this that it has been referred to by government as a model it would like to replicate elsewhere. This research looks at what lessons can be learnt from King’s Cross and how applicable they are in other parts of the country.
A key lesson is that in many places that need growth, the leveraging in of private sector investment will not happen without considerable public sector investment to spur it. Even in King’s Cross, a site that sits on the fringe of one of the most successful central business districts in the world, public sector investment was required to unlock large private sector investment.
The balance of public and private sector investment will vary across city centres depending on levels of demand for commercial and residential space within them. In places like Bristol city centre where demand from business to locate there is high, the risk attached to any redevelopment is likely to be relatively low (as was the case in King’s Cross). But in places with weaker demand for space, like the centre of Nottingham, there will need to be a much greater amount of upfront investment from the public sector, and the balance of public sector investment to private sector investment will need to be higher.
Despite the differences in demand there is much to learn from the King’s Cross redevelopment for other parts of the country. Lessons include:
- The pulling together of land under the ownership of one main body, which helps to deal with a number of barriers to investment.
- The long-term approach to investment, to provide enough time for investments to earn a return.
- The master planning and associated focus on placemaking (which received a great deal of thought and attention in King’s Cross) to curate and coordinate activity.
- The relocation of public sector activities to act as a catalyst for private sector occupancy.
Any regeneration project that has the intention to change the mix of businesses in its area will need to be guided by these lessons. Given this, in order to deliver on its commitment to deliver ‘King’s Cross style’ regeneration projects across the country, national government should do the following in conjunction with local policymakers:
- Set making city centres more attractive places to do business as the central goal of the policy. This will require a particular focus on new office and commercial space – schemes should not be dominated by housing development.
- Invest public funds to leverage in private investment. Centre for Cities estimates that in order to leverage in up to £50 billion of private funding, up to £12 billion of public funds will be needed. As part of this it should consider creating a co-investment fund, which would offer the schemes up as a portfolio for investment in order to leverage institutional developers and help further spread risk across the projects.
- Complement this public sector investment with a mix of other tools that can remove risk from an investment, such as using public sector tenants as first movers onto a site and providing guarantees on occupancy. Within this it should coordinate other policies such as government relocations with this policy.
- Support places to introduce existing planning tools such as Local Development Orders, Mayoral Development Corporations, and Simplified Planning Zones to increase certainty and flexibility, as well as the forthcoming National Development Management Policies contained within the Levelling Up Bill to encourage take-up of these tools among local planning authorities. Locally-led development corporations and improving the compulsory purchase order process could help even further.
- Get moving on implementing this policy, and commit to a long-term approach which will survive economic downturns, as regeneration schemes can take many years to come to fruition.