Examination of Witness (Questions 140
- 156)
WEDNESDAY 8 MARCH 2000
MR A W PIDGLEY
Christine Butler
140. I have been following closely your comments.
It concerns me that there does not seem to be, from your comment,
a strategic direction. I was going to ask you if that is your
experience with local authorities. You mentioned a lot of the
planning which has been going on in the more derelict areas of
east London. We have the Thames Gateway Regeneration Project.
We have a commitment to holistic thinking. Are you saying that
this is entirely lacking?
(Mr Pidgley) Yes.
141. Right. I am going north now, looking at
some of the areas in the north and the Midlands, particularly
in the north east, where there is a lot of greenfield development
going on and yet many, many, many brownfield sites are not being
developed and could be. Now Lord Rogers in the Urban Task Force
Report actually suggested withdrawing the allocated land in greenfield
sites in areas such as these, to provide a better incentive for
local authorities and developers such as yourselves to get cracking
on regeneration of brownfield land. Do you think that is a good
idea?
(Mr Pidgley) Yes, I do, provided we are strictly talking
about what I purely call green belt.
142. Not green belt, sorry, greenfield. Green
belt, I am not sure where all that lies.
(Mr Pidgley) I do not know where greenfield is either.
143. Greenfield is land which has not been previously
developed and is outside the urban footprint.
(Mr Pidgley) As a result of reading Lord Rogers' Report,
in Newcastle we find many sites there which fit the criteria that
you are standing and we are developing there now. The point I
would make again is that there is one authority. They want to
see us there. We are part of a team. We can talk to them. They
treat us as partners and team work. We find that in all the big
cities, almost without exception, across the country. We are redeveloping
in Leeds at the moment: 1.2 million square feet. It was a pleasure
to work with the local authority. It has taken us 18 months from
start to finish. We have one of the biggest chemical plants on
the site, Yorkshire Chemicals, and we had to deal with all the
environmental issues, but it has been a team effort. We do not
see that in some of the sites in the London boroughs.
144. So you think: maybe clip back a bit on
the already allocated land in greenfield that has not got planning
permission, that could go, and have a better focus on brown field
regeneration in the north. Now, in the south, it is not quite
the same case. There will be occasions where greenfield extensions
should be undertaken, or will be undertaken, to an existing urban
footprint. I could mention the case of Poundbury. You will be
aware of that development. Do you think it is a good model to
follow?
(Mr Pidgley) Yes. The Berkeley Group has always had
a high regard for Poundbury. We have a number of schemes across
the country that are modelled on Poundbury.
Chairman: Can you tell us one.
Mrs Dunwoody
145. What aspect of Poundbury are you talking
about? The type of architecture or are you talking about the general
design?
(Mr Pidgley) Architecture again, I would say, is settled
by the local vernacular. The site in question, where we follow
the principles of Poundbury, is in Canterbury. Canterbury is one
of our historic towns and we do not believe we could go in there
with modern or contemporary architecture. We have followed Poundbury
where there are one-bedroom units, there are old people's units,
and we have a mix of accommodation. We pushed the densities with
the local authority.
Christine Butler
146. You have approved that level of density
and you think it works well. What would be the thought when it
comes to designing a greenfield extension in a urban location
which is fairly new maybe? It has previously been under a development
corporation, certainly mid-20th century.
(Mr Pidgley) I go simply to where I started. I think
that every scheme should be architect designed, taking account
of the local characteristics. I do not think that standard house
types across the country should be encouraged. If we had that
as a principle I think you would find the merits of development
improving dramatically.
Mr Blunt
147. You touched on the issue of taxation. I
have two issues. I noticed you said earlier that you favoured
a tax, effectively a windfall tax, on planning gain. Do you have
any views on how that should operate? And should there be, at
the same time, a sense of relief on perhaps planning gain on brownfield
sites, so that there is a sense of relief on capital gains tax?
(Mr Pidgley) Yes, there should be. I have not thought
through the detail in that sense. What we always say as developers
is this: we just like to have a level playing field when we enter
the arena. We would like that playing field to stay in place.
That we do not have this 25 per cent, 40 or 50 per cent. That
is not a good way to work. Most developers think that tax on land
to go back into regeneration would be something they would welcome.
The details I would have to think about.
148. Turning to VAT, there is speculation that
the level of VAT on refurbishment works may be reduced but, at
the same time, there may be an equalisation of rate by increasing
VAT on new build. Would you support such a measure?
(Mr Pidgley) No. I would not support it for very simple
reasons. First of all, how can you have VAT on new housing and
none on second-hand housing? Secondly, people's perception is
that the value of their house is the value. So if you have stamp
duty already, which is just about enough for a temperature change,
and then add VAT to it, I believe this Government would put the
housing market into slump like it has never seen. It would then
take the feelgood factor out of the market, which drives the market,
and you have all sorts of problems from it.
149. But is not the price of the house—in
a sense, the market will dictate that. Will not the effect of
VAT on new housing be, in effect, an indirect tax on the landowner?
It will be the receipt of the landowner which is reduced.
(Mr Pidgley) Providing it is the receipt of the landowner.
At the moment we are talking about putting it on the house. We
obviously run all sorts of market research on this. The public
have just about accepted stamp duty as a tax but they do not like
it because they do not perceive it as value. It is a strange thing.
If you buy a house off us for £100,000 that is what you pay.
If it goes to 120 the difference is yours. But if you pay 100
plus stamp duty, (for argument's sake), you do not perceive you
have anything for it. All these sorts of situations miss the mood
of the people.
150. But when you build a new house you are
selling it, so you are selling it in a market where 85 per cent
of the market are second-hand houses, which would not be attracting
taxation and stamp duties. So surely then, in a sense, that VAT
charge is pushed back down the line to the people you are buying
the land off in the end, or would you see it as seriously affecting
your margins?
(Mr Pidgley) I do not think our margins come into
it because our margins have a habit of balancing themselves out.
I would put this to the Member. If you look at our industry it
never survives. The house builders who are here today, 15 years
later, you tell me who was here 15 years ago? If I gave you a
list of them they are all in the various graveyards. So I think
it is important that we encourage companies like us. The Committee
has one other problem. There are very few urban regenerators in
the country, who have the expertise and the balance sheet and
the size to do so. Going back to taxes, if we tax our new housing
it will be take out the feelgood factor overnight.
Mr Brake
151. You commented on the negative impact, but
what about the positive impact that might occur if VAT was reduced
on renovation?
(Mr Pidgley) I see the arguments as two completely
different things. Looking at a site at the moment as a set of
historic buildings, it is £100 million worth of construction
work. VAT adds, at the current rate, ten million quid to it, plus.
It just stops the figures from working because these are regeneration
sites. That is a classic site which has come back into use but
it just stops us. That has to be negative from any point of view
or way of looking at it, because we are struggling enough to make
the figures work anyway without another tax.
Miss McIntosh
152. In the north of England, particularly north
Yorkshire, there is a lack of affordable housing. I just wondered
whether what, in your view, the Urban White Paper could usefully
say on mixed housing, affordable housing; and, perhaps contradictory
tothat, could you give us examples of developments that you have
dropped where there was an element of social housing included.
(Mr Pidgley) We have always been supporters of affordable
housing. We believe that society cannot have executive homes and
not deal with the affordable. Where we have criticised the current
system it is like all the things we are saying, it is one end
or the other. We, as a developer, would like to see—and
we are starting to do—what do we do with the nurses and
the fire engine drivers and all the other people who are in middle
bracket, if that is the right expression? We are seriously looking—and
this is where we would like to see some help and do not know the
detail—but if we, as the developer, could have some sort
of charitable trust set up, where we would encourage the manager
of owned sites to bring forward those types of accommodations
in it. I cannot answer on Yorkshire because we do not have any
real presence. We are in York. We are just moving in.
Chairman
153. Can you tell us what you think the rent
level for affordable housing should be, say, in London?
(Mr Pidgley) I cannot because my answer is simple.
It will be the yield across the cost of the money. So, at the
end of the day, we would look at it simply as a yield.
154. Do you think you can build affordable housing
or does it have to have a substantial subsidy going with it?
(Mr Pidgley) No, is the answer, in short terms. That
is created by the TCI's now being forced out of the system. You
are forcing out all that you do by doing it that way. I am not
saying it is right you force the developer to force down specification.
If we are going to cure this problem of affordable housing, you
have to make the people who live in them—and I am not talking
about the 1 per cent minority, I am talking about a lot of ordinary
people—you have to make them proud of that home and want
to have it looking nice because it is their home. If you drive
down the specifications, as we are seeing in the market at the
moment, again you are just going backwards, I am afraid.
Miss McIntosh
155. On the second part of my question, can
you name developments which you have dropped because of the element
of social housing.
(Mr Pidgley) We have not dropped any. The only way
I can answer that is this. What we know it has done, it is the
smaller schemes being killed off, the infill that you want, that
does not drop into the statistics. Because the affordable housing
cuts in, and people do not understand the economy, the people
who own these smaller sites and rent it out for this and rent
it out for that, earning a perfectly good living, they have suddenly
got to give away whatever it is to the land value, a large portion
of affordable housing, so you stop all those smaller sites. It
isvery important to our industry, if you want tomaintain the standard,
that the smaller owner/driver/developer is encouraged to come
forward. I talk to the industry and it is only the driver that
is suffering; the small local man who does a quick job that sets
the standards, because be cannot buy the big sites like we do;
and equally he cannot buy the small sites because the value is
falling so far, so we are stopping him coming forward there.
Chairman
156. On that note, may I thank you very much.
You have certainly stirred a few issues.
(Mr Pidgley) Thank you.
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