New Town Development Corporations could prevent ‘political merry-go-round’

For some, New Town Development Corporations will allow town development to be overseen by a single body combining the best of local government and private enterprise, but for others the lack of any accompanying guidance is a concern.

“I strongly welcome the new regulations because they will give a boost to the powers and responsibilities of local authorities,” says Lord Shipley, housing spokesman for the Liberal Democrats. “The Liberal Democrats have long been supporters of the transfer of power to local communities.”

Roger Tustain, managing director of Nexus Planning, also welcomes the move. “It puts in place a more professionally informed and experienced body,” he says. “New settlements may have cross-boundary implications and they may require a far more experienced team to implement them.”

David Churchill, a partner at Carter Jonas, also supports the regulations, claiming they “provide a central source for what are potentially quite difficult projects to push through”.

He believes long-term planning is made onerous under the current system because of local politics.While one local administration may agree to a development project, another administration could just as easily oppose it, he says.

Churchill states that this “political merry-go-round” is the “root-and-branch cause” of concern and lack of confidence in the planning system. He believes the new regulations could change this by “providing a framework for major projects that sits outside local politics”.

According to the document that accompanied the release of the new regulations, the corporations will be overseen by local rather than central government but will also be autonomous to a degree.

However, there isn’t much detail on what this will mean in practice and how it will be achieved because guidance has yet to be issued.

Churchill worries whether the public and private sectors will be able to work together in the way the government suggests in its regulations. “If it’s not properly arranged, it could add another layer of bureaucracy,” he says.

Staff shortages

Shipley is dubious of the regulations for a different reason. He wonders how likely it is that the corporations will be able to function properly given local councils’ scarce resources. “There is an issue with the capacity of local authorities given staffing cuts over the last decade or so,” he argues.

Shipley believes austerity has had a severely negative impact on the number of council-employed professional planners, adding that English councils are “increasingly seeing professional planners replaced with private housebuilders whose concern is to build and sell houses, not to build a community”.

He adds: “I’m a strong supporter of a civic housebuilding model as opposed to one that is effectively led by private housebuilders that are building for profit.”

“English councils are increasingly seeing professional planners replaced with private housebuilders whose concern is to sell houses, not to build a community”

Tustain has further concerns, arguing that “the thing stopping development is the lack of a mechanism for identifying where growth is going to happen in the first place”.

In his view, the new regulations do not solve this issue. “These organisations won’t have the power to identify where growth is going to go. They’re there to help deliver once the location has been identified,” he says.

Housing-first approach

Shipley also sees the location of new town developments as a potential problem. “When you build a new town, it has to be holistic. It has to have the jobs, it has to have the community facilities – like shops and schools – and it has to have the housing. The tendency is for housing to lead development rather than being part of development,” he explains.

Shipley is concerned that this housing-first approach is part of the housing secretary’s rhetoric. “Dominic Raab talks of these regulations being a great way of building more homes. That is partly true, but it isn’t just about building houses. It’s about building places,” he says.

According to Shipley, the “great danger” with the housing-first attitude towards town development is that “you end up building large housing estates on the periphery of existing towns without the infrastructure needed by the people who are living there”.

At just 12 pages, the document accompanying the New Town Development Corporation regulations is thin. Throughout the regulations, there is reference to guidance that will be released at an unspecified date and clarify what the new regulations mean. There is concern that the government, preoccupied with Brexit, is unlikely to see releasing guidance any time soon as a priority.

However, when asked how soon he thought the guidance would be launched and the regulations would reach parliament for a vote, Shipley said: “From what I understand, the House of Lords will have it in the autumn.” This could mean that the regulations will come into force by the end of 2018, but it is impossible to say for sure.

Shipley thinks this creates a “huge issue around finance”. Another issue is that it is not made clear how the development corporations will be able to generate funding. “You can’t do anything with new powers or responsibilities unless you’ve got the money to do it,” he says.

However, he is cautiously optimistic about New Town Development Corporations’ ability to raise money, but argues that government will still have a role to play.

“There is a hope that there will be lots of private sector investment, and inevitably there will be, although depending on where you are there will be a different level of state intervention required. The secretary of state can’t step back entirely from this because the oversight authorities may, in some places,need help,” he says.

Tustain also maintains that the New Town Development Corporations will need state funding. While the private sector might be willing to fund a housing development of a few thousand homes, Tustain says it will be much more reluctant when it comes to investing in the development of an entire town.

Churchill is more positive. He says that in the past similar development corporations – such as the London Thames Gateway Development Corporation– were hampered by financial restrictions placed on them.

Draft cap

This was an issue raised in the consultation. Under the draft regulations, New Town Development Corporations would have needed central government consent to borrow in excess of £100m. There would also have been a £4.6bn cap on overall borrowing. Respondents in the consultation called the cap arbitrary. The new regulations remove this cap as well as any requirement for corporations to obtain central government consent on borrowing.

For Churchill, the updated funding mechanism will give corporations more power to raise finance, which means things will be different this time. He foresees a better relationship between the public and private sectors as a result. “A development corporation done right will be able to bring in the private sector to help with the delivery of development and bring in funding to assist with any funding gap,” he says.

As a result of the open-ended way in which the government has announced its final New Town Development Corporation regulations, it’s unclear where power has shifted from and to. Shipley calls the regulations a victory for localism, as it is local authorities that will oversee the corporations. Yet Churchill believes the regulations actually signal a U-turn on localism because they give power to corporations that will stand outside local politics.

When guidance detailing how the regulations will be implemented has been released, councils and private investors will have a clearer idea of how the corporations will work. Then the true test will be to see whether they deliver in practice.