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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