Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Memorandum by Bellway Homes (GF 10)

GAP FUNDING

You may know that the Bellway Group was one of the principal users of UK GAP funds, which enabled us to deliver considerable investment in "difficult" urban areas. However, we now only have a residual activity in this field, new funding having ended last year!

  Some years ago, you will be aware that there was a considerable range of resources to enable our industry to tackle land which is either contaminated, suffering from market failure, or both. These resources have been steadily eroded in recent years, astonishingly, in parallel with an increasing desire on the part of Government to increase brownfield development.

  This ludicrous and, immensely damaging scenario will shortly be very harmful to our industry, and undermine the objective of providing more homes in urban areas.

  If we roughly divided the industries future output of 150,000 homes pa into 50,000 on Greenfield, 50,000 on "upper" market brownfield and 50,000 on "middle to lower" market brownfield sites, we can begin to assess the scale of the problem.

  The middle to lower market output has great difficulty in satisfying the value aspiration of landowners, the planning taxation of Local Government and the physical cost of removing existing structures, contaminates, ransoms etc. Coupled with the essential cash intensive nature of urban redevelopment, and the long time scales, you can begin to envisage the size of the situation.

  If some 40,000 of the homes required an average of £10,000 per unit support, then the industry will need circa £400 million pa of GAP support. This may sound unduly pessimistic, but it needs to be borne in mind that we are rapidly using up the better brown land which is forcing us into the less viable locations. The GAP fund requirement, can of course, be greatly reduced by reducing or removing LA planning tax and preventing land owners from gaining benefit from their "ransom" situation. However, such means will reduce, not remove the need for GAP funds.

  Given that we can return in large measure to the efficiency of the City Grant gap fund mechanism there is no better and no more efficient way of bringing forward difficult brown land redevelopment.

  Development corporation variants will simply not deliver the annual plots required by the industry within a cost structure which is even remotely acceptable.

  It needs to be stressed that the absence of support is likely to severely affect the industries ability to meet Government targets on brown land, thus fuelling demand for release of more greenfield.

  Alternative schemes could involve variations on derelict land grant (which would need to recognise market failure) or a new build version of the "Improve for Sale" mechanism which through JV with local government, enabled the industry to tackle failed housing stock.

W A Stevenson

26 June 2000


 
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