Infrastructure investment should mean more than just new roads and railways. What if funding could also be channelled into town centre regeneration to help improve a place and stimulate demand?
The Government’s principal response to the recession from the perspective of local economic development seems to be stubbornly stuck on traditional infrastructure.
While undoubtedly there is a need to invest in the nation’s infrastructure, isn’t it a little one-dimensional to exclusively fund the development of new or improved roads or rail if there is no demand for development at the end of them? What if we expand our definitions and start thinking about town centres as the infrastructure of places as much as we do road and rail?
We are still in recession. Despite the recent softening of original GDP figures for Q2, the economy still contracted by 0.5%, in Q1 by 0.3% and by 0.4% in Q4 2011/12. While Q1 looked a bit better, you don’t need to be an economist to see that over the last few months, according to GDP figures, the economy has weakened.
From the perspective of the built environment, there continues to be lots of ideas and policy consultations buzzing around that are interesting and quite innovative. In this category I would include tax increment finance, the possible relaxation of change of use permissions in town centres, Custom Build residential schemes, the Portas Review and even the need for authorities to take a more pragmatic view on Section 106 agreements.
However, despite all of this, it is impossible to avoid the fact that one of the government’s principal responses to the recession alongside re/de-regulating planning is limited to investing in enabling infrastructure.
If we leave aside the hot topics of fast railways and runways, there remains an emphasis on creating economic dynamism by investing in enabling infrastructure such as roads and existing rail.
The Growing Places Fund administered by Local Enterprise Partnerships is a good example of this. The premise is simple – if a large development is unviable because of the need to invest up-front in new road infrastructure, fund the infrastructure and it will unlock the development. But isn’t this overlooking the issue of whether or not there is demand for the uses at the end of the new road?
If prospective residents find it as hard accessing mortgage finance as house-builders do institutional investment (perhaps recent announcements will help), the residential scheme is still unviable. If prospective industrial or commercial investors don’t have the confidence in the economy to relocate or expand, the employment scheme will still be stymied.
Investment in infrastructure delivers a short sharp shot in the arm for the local civil engineering sector, but not a great deal else other than increasing development profit margins years down the line when the economy has recovered and the schemes are eventually delivered.
Wouldn’t it be interesting if we thought about town centres as the infrastructure of places as much as we do roads and rail? What if infrastructure funding could also be channelled into town centre regeneration to help improve a place, grow base values and stimulate demand from the bottom up?
Questions about the viability of developments become less important because in so many instances space is already there (vacant) and those small-scale mixed use infill schemes, cheaper than their huge greenfield cousins, might just get funded.
Some local authorities have thought along these lines and invested in their town centres in advance or even regardless of whether there are plans for growth. However, examples are few and far between and are generally supported by a legacy of Development Corporation funding.
New major funding programmes such as Growing Places or Regional Growth don’t appear to be designed to invest in town centres, and what funds there are (Portas, High Street Innovation X, Town Team Partners etc) even combined are only a fraction of the size.
It isn’t easy to provide an appraisal that demonstrates investing in a town centre will deliver x new jobs and y square metres of new development but we all know it has a positive impact.
We know that investment in the public realm, creating more attractive places, draws more visitors and shoppers. It lifts an area and makes it more attractive for prospective residents and inward investors. Albeit at the higher-value end of the scale, Grosvenor has recently bought into this concept and is delivering public realm works across its estate recognising it can reduce voids and sustain commercial activities and increase base values.
We know that investment in unlocking brownfield sites can provide a catalyst for change over an entire neighbourhood fundamentally improving its performance and contribution to a sub-regional economy.
A classic example is the public-private joint venture at Bermondsey Square which has helped drive a change in character of the entire area which is now full of interesting retail and business activities in dozens of converted warehouses and terraces. It has created jobs where previously there were very few, it has created a new retail and leisure destination and an attractive and sought-after residential neighbourhood in the centre of London.
To conclude, the development industry is looking to invest only in places that are perceived as safe and attractive bets with strong and resilient residential and employment markets. This is driven by much more than roads and developable plots. It is driven by the vibrancy, energy and popularity of a place, which in turn is driven by its town or city centre.
A simple test is to have a look around at the pockets or hot-spots of development that continue to be delivered throughout the recession and see what the common factor is.
Ross Ingham is economic development and regeneration consultant at Ingham Pinnock Associates