In addition to understanding individual roles and responsibilities in setting out the vision and framework for the revitalisation of our town centres ad high streets, it is also crucially important to establish the means of delivery. Cuts in local authority budgets are a significant challenge, as is the overly-bureaucratic planning system. The Government has already made some headway into addressing these challenges through various regulatory and fiscal policy initiatives however we believe that in order to implement transformational change at pace, greater focus needs to be placed on the following areas:

In the third and final instalment in our Roadmap to Recovery Guide, a series of expert opinion pieces setting out our approach for revitalising our town centres and high streets over the short, medium and long-term, we ask the question “How do we deliver success?”.

PLANNING FOR THE FUTURE

“The time has come to speed up and simplify this country’s overly bureaucratic planning process” - Rt Hon Robert Jenrick MP - Secretary of State for Housing, Communities and Local Government (18: 56).

Planning has a critical role to manage and deliver high street and town centre transformation and regeneration.  But the planning system has come under attack for being outdated, overly bureaucratic, too complex and lacking the flexibility needed to deliver new development and respond to the dynamic trends impacting on our towns and high streets. 

In response the Government has issued a series of reforms of the planning system and policy the like of which have not been seen since the 1947 T&CPA came into effect.  Alongside the recent publication of the Government’s White Paper – ‘Planning for the Future’ - and amendments to Permitted Development Rights (PDR), the reform of the Use Classes Order came into effect from 1 September 2020.  

LSH’s recent viewpoints describe the UCO reforms and Planning White Paper in more detail.  In brief, retail uses (previously defined as Class A1) are now incorporated in a new Class E, along with: financial and professional services (A2); restaurants and cafés (A3); offices, R&D and light industry (B1); gyms (D2); and medical/health services, nurseries and day centres (E).  From the beginning of September planning permission will not be required for change of use within the new broader Use Classes unless explicitly stated.  

Robert Jenrick (Secretary of State for Housing, Communities and Local Government) has confirmed that the intention of the UCO reform is to “support the recovery and reimagination of our high streets and towns”.  The reforms should certainly help landlords and investors who are seeking alternative uses for their failing retail portfolios.  For example, plans have recently been approved to convert two-thirds of Westfield’s House of Fraser store in London into co-working office space.  Elsewhere shopping centre owners are actively reviewing and promoting the redevelopment and repurposing of failing assets.  

The reforms have to be welcome where they help to stimulate the economy, fast-track good high quality development and allow for alternative viable uses to replace vacant units and buildings.  But any reform needs to be mindful of the “unintended consequences” that can arise from liberating the planning system too much.  We have already seen the impact of PDR office to residential conversions, for example, that have resulted in sub-standard, poor quality accommodation in some cases, and the loss of viable employment uses.  A careful balance will be needed to protect the integrity, role and function of our high streets.   

The reform of Local Plans is also welcomed.  The current system is broken.  Local plans are currently trying to do too many things in too much detail, and are often out-of-date by the time they are finally adopted.  As a result they are failing to keep up with the dynamic economic and property market trends. Local Plans must be living documents, regularly updated to capture and reflect changing trends, and reflecting the needs of all key stakeholders.  They must be forward looking, and they need to balance visioning with commercial reality. We recommend that they should also be supplemented with dynamic strategies – linked to masterplans and Area Action Plans – covering town centres, high streets and neighbourhoods.  

FUNDING TRANSFORMATIONAL CHANGE

The Local Government Association (LGA) said at the Select Committee in February 2019 (SOURCE…20: 23: 47):
 “Local authority services face a funding gap in excess of £5 billion by 2019–20. Between 2010 and 2020, local authorities will have seen reductions of £16 billion to core Government funding. In the face of such financial pressures, the ability of councils to proactively support their town centres is constrained as they prioritise their resources on vital and statutory services”

Roll forward 18 months and the COVID-19 pandemic has had a devastating impact on government budgets and council resources.  The overall financial outlook for local government continues to be extremely challenging.  Since 2010 there have been very significant real term reductions in funding.  For example, between October 2010 and 2014/15, funding for local government reduced by £9.6 billion, or 35%.  Pre COVID-19 the Government indicated that reductions will continue through to 2022/23.  Although boroughs have a number of funding tools that, on paper, allow them to provide support for their town centres (for example grants, business support, ability to make public realm improvements or using rate relief to support businesses in financial hardship) these interventions come at a cost which boroughs will find increasingly hard to meet. With less funding available for town centres new approaches that ‘nudge’ business behaviour and strengthen local powers are needed to overcome some of these funding challenges.  Councils need to be creative and commercial in enabling change, working with partners, using assets and borrowing powers judiciously to make returns in financial and socio-economic terms.

The Government’s Future High Streets Fund and Town Deal will provide funding sources to help kick-start major regeneration projects and interventions in many centres across the UK.  But many centres will miss out on this funding – which begs the question how are they going to raise money for their town centre recovery and regeneration strategies.  It is those towns that may be most in need of funding that may well have the fewest resources and are least equipped to deliver effective recovery strategies.  Furthermore, although centres can bid for up to circa £25m-£50m under the Town Deal - and this is a substantial amount of money – more long term sustainable funding is needed.  But where is this going to be sourced from?
In this context there is an urgent need to consider new mechanisms to bridge the funding / viability gaps.  
Since 2016 local authorities have been one of the main investors in town centres and the main purchaser of shopping centres assets, at a time when the traditional investors and landlords have been withdrawing from the sector.  

The recent travails of Hammerson and Intu Properties have shone a fierce light on the failing retail sector, and specifically shopping centres.  Research by LSH and Revo shows that Local Authorities had invested some £6.6bn in shopping centres in the four-year period from 2016-2019.  But why invest in a failing market? There are a number of reasons. First, councils have been able to draw on cheap money through the Public Works Loan Board (PWLB), which allows them to take a longer-term view on investments.  Second, councils are mainly investing in shopping centres for regeneration purposes, to help take back control of town centres and drive forward regeneration strategies.  Examples include ….  

Although councils have come under fire in the press and a review of the appropriate use of the PWLB has taken please, the fact remains that if a local authority has a robust plan to repurpose and/or redevelop failing second or third generation shopping centres for a mix of more viable uses – such as residential, education, health, etc. then that may represent a very good use of public money.  As ever, investment needs to be underpinned by a robust and commercially viable strategic plan.   But in the here-and-now and looking ahead, for many local authorities such spending on property assets will not be a priority given the financial pressures under which they are operating and the necessity of prioritising statutory services.

Steve to review and add something about LSH advising on new funding models beyond the PWLB, and signpost where LSH is advising … but this needs input from Damian and Neil, as well as from other LSH individuals outside of PDR – e.g. Simon Eddy, Chris Hornung.

UNLOCKING VALUE

As one of the country's biggest land and property owners, the public sector has a critical role to play in driving forward the regeneration of our town centres and high streets. There is no recent figure for the value of the entire public estate, but in 2008 the Office for National Statistics estimated it to be around £380 billion, a significant proportion of which is likely to be retail-led.

According to the BRC-LDC Vacancy Monitor, the high street vacancy rate edged up to 12.3% per cent in the quarter ended March, from 12.1 per cent at the end of December.

This, combined with the erosion of retail capital values which fell by 11.9% in the five months to July, compared with 6.2% for All Property, as highlighted in LSHs recent research article, is creating an increasingly viable business case for the conversion of vacant or under-performing premises for alternative use, with residential the obvious frontrunner.

Indeed, a recent report by non-partisan think tank, Social Market Foundation (SMF) suggested that through a nationwide program of repurposing vacant retail space across our city and town centres into residential property could, under conservative assumptions, create 800,000 additional homes.

However, unlocking hidden value through alternative use is not just about the opportunistic realisation of savings by selling off vacant property to the highest bidder. It requires a thorough understanding of the fundamentals of the underlying property markets alongside a careful assessment of the current use, location and quality of the assets in question in order to determine the most viable prospects for alternative use.

LSH’s Planning, Development and Regeneration experts are advising many private and public sector organisations on their estates and accommodation strategies to establish whether opportunities exist for changes of use and re-development and the actions required to achieve this. [Examples include …Rebekah to add]

CONCLUSION

Our town centres and high streets are in dire need of support. If they are to survive and thrive through the short, medium and long-term then radical intervention is required.

Traditional regeneration and investment models are no longer fit for purpose; we need creativity, collaboration and leadership, underpinned by commercially-robust advice as set out within this guide.

NEXT STEPS

View the first instalment in our Roadmap to Recovery Guide series ‘Qualifying Success’.

View the second instalment in our Roadmap to Recovery Guide series ‘Achieving Success’.

For more information or advice about how we can help with planning, funding and delivering successful and resilient town centres and high streets of the future please get in touch or visit our Planning, Development and Regeneration web page.