Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. Can I welcome everyone to the first session of the Urban Affairs Select Committee, looking into the question of Tall Buildings. It is a continuation of what the Select Committee has been doing in looking at what is relevant to the urban renaissance. And before we start with this session, can I just draw your attention to the fact that the vast majority of evidence that we have received will be published today, in this document, `Tall Buildings', so that anyone who wants to check up on what has been said in evidence actually can read it. Obviously, I am very grateful to all those people who sent the evidence in, and to our Committee staff, who worked so hard to get it ready for today. It will be on the website, I am told, from 3.30 this afternoon, so, instead of having to part with some substantial sum of money, £16.50, you can actually get it just for telephone charges, or whatever it is, on the web. Anyway the evidence is there, if you want to see what people have been saying. Can I welcome the first set of witnesses, and can I ask you to identify yourselves, for the record, please?

  (Ms Mayhew) I am Judith Mayhew, Chairman of Policy and Resources.
  (Mr Rees) I am Peter Rees, Head of Planning and Transportation, City of London.
  (Mr Bennett) I am Peter Bennett, the Deputy City Surveyor to the Corporation.

  2. Thank you very much. Do you want to say anything by way of introduction, or are you happy for us to go to questions?
  (Ms Mayhew) It is very much up to what the Committee would like, Chairman. I could make a short, introductory statement.

  3. If you would like to make a short statement, by all means, do so?
  (Ms Mayhew) Right; well, first of all, can I thank you very much for inviting us to appear in front of you this morning. The Corporation of London, as the planning authority, has been involved with buildings for several years, and I would like to begin by outlining what we regard as `tall buildings', for the City of London, because internationally they are not tall buildings. The sorts of buildings that we look at, as a planning authority, in the City of London, typically are half the height of tall buildings in an American context and about a quarter of the floor plate; so we are talking about, in international terms, mid-size buildings. But we also have a role in relation to economic development, on behalf of City businesses, because, as the City is the world's biggest international financial centre, we are a world-class City and therefore we have to offer first-class buildings, in a variety of contexts, to the finance and business sector. And 70 per cent of our people in the City are now employed in international business and financial services, and over 331,000 people are working in the City, and over 90 per cent of them commute on public transport, and that is a very important and sustainable fact, and, of that number, 271,000 work in the finance and business sector. And we believe this is also very important to our neighbouring boroughs, as well, because the economic activity cascades out into the surrounding areas. And the City contributes £21 billion every year to the UK's GDP, and we collect £470 million in City Business Rates, and 98 per cent of that goes to other local authorities; so we are good corporate citizens as well, important to the economy of London, important to the economy of the UK, but very important to other local authorities, because of our financial contribution. So it is very important that we are able to continue to operate and develop. And one of the unique selling points that we have, as a financial centre, is that we cluster our buildings, we cluster our businesses, so that people can work together, can brainstorm, can learn from one another, and that is very important, because it means that people are not spending a lot of time commuting, in transport, to get from place to place, the concentration is very sustainable. So we need a range of buildings, whether they are groundscrapers, such as the new Merrill Lynch building, which is very interesting, it has included old buildings and some new development, or campus-style buildings, where groups of buildings operate together linked by technology, or, in our case, mid-size buildings, where you have buildings which have either single occupiers or multi-tenanted buildings. And it is important to realise that many of our mid-size buildings, which are big buildings by London standards, are multi-tenanted, because you get lots of small businesses taking space and having services provided by the owners of those buildings, and as they grow and develop they can move out to bigger buildings, or their own buildings. And because we are on an international stage we have to be able to offer a range of buildings, we cannot have all groundscrapers or we would have no green belt left; so, in some cases, where we have confined sites, to make those sites economic, we do need to build buildings of, say, up to 50, 60 storeys high, but that is all we are talking about. Choice is important. Now even though we have had this choice in the past, we hope that we can continue to do so in the future, and although we have had some slowing down, post September 11, basically, it has only put on hold some business expansion schemes, there is still quite a lot of building going on in the City of London. And the long-term trend is for the world-class cities to continue and develop, and we are certainly finding people still continuing to wish to come into the City of London to be located. And we do think there is going to be expansion, both in the City and in the City fringe, in the future.

  Chairman: Thank you very much.

Christine Russell

  4. In 1999, after, I think, two years' work, the London Planning Advisory Committee concluded that, in fact, there was no prima facie case, on economic grounds, for new tall buildings in the City. Did that Advisory Committee get it wrong?
  (Ms Mayhew) I would argue that the Advisory Committee did get it wrong. We are saying, even though the City is subject to cyclical variations, that over the next 15 years we anticipate that City jobs will rise by another 87,000 jobs, and the City fringe jobs will rise by another 39,000. What has happened is that we are pulling in business from other centres, and, because we are the most important international financial centre in Europe, we are carrying out an enormous number of international financial transactions on behalf of the rest of Europe, so we have a very important role, in relation to that. So we do anticipate growth and an enormous amount of growth.
  (Mr Rees) I think it is also worth pointing out that that data was collected now getting on for four years ago, the City moves at quite a pace; at that time there was a considerable number of sites left in the City, that could be developed for groundscrapers, that were still there to be used. But the LPAC report made it clear that if tall buildings were needed at some time in the future they should be clustered, and one of the areas that they drew attention to was the City of London as being a place served by public transport and having a possible future need for high buildings. That time has come, because the sites that were available have been used, the City is, effectively, full, and if you cannot go outwards you have to go up.

  5. So you would argue that the circumstances have changed in four years?
  (Ms Mayhew) Yes.
  (Mr Rees) They have, indeed, yes.

  Christine Russell: And therefore you would dispute, would you, the allegation that is made quite often, that, in fact, companies just want the prestige, as tall buildings, rather than the fact that they are essential for their economic purposes?

Sir Paul Beresford

  6. Before you answer that, can I add a little bit. One of the witnesses following you is Simon Jenkins, and his position if fairly well known. He will have an opportunity to have a go at the evidence that you are giving, and I wondered if we could follow on, because, in fact, he has taken the position that has just been outlined. He claims there is, in fact, no shortage of empty sites within London, he talks, interestingly, about a helicopter flight across London; and, of course, that is one of the difficulties with London, you cannot fly helicopters backwards and forwards, and within, and land, certainly. He claims that most of the tower applications are speculative and there is no tenant for them, and what is happening, effectively, is you are getting a planning permission bank being built up?
  (Ms Mayhew) I think I would disagree with that. I think the clustering is very important. There are certain City activities, particularly if we take, say, the insurance sector, where they cluster around Lloyds and the International Underwriting Association, and they all are close together, because they walk to meetings, and time is money so you do not want to spend a lot of time commuting from one end of London to the other and that is unsustainable. So clustering is very important to us; and you find banks tend to cluster together, lawyers, accountants and others. So you get this whole range of primary businesses and their secondary advisers close together, not only because we have got seven main-line stations and 13 Underground stations, which allows people to get in, but also because you are able to hold meetings and walk between offices. Now, because we have attracted an enormous amount of international business, we do need these buildings, and we are not talking about international icon buildings, of 100-plus storeys, we are talking about sustainable buildings of 50 to 60 storeys, and they are economic at this rate. Developers do not build and lose a lot of money on things that they cannot put tenants in, these people are quite rational when it comes to this sort of activity.


  7. There was some speculation in Canary Wharf, initially, was there not?
  (Ms Mayhew) There was, initially; we are not responsible for Canary Wharf, although we see it as good overspill space for the City. Because, if we take the central business district, which is from Victoria right through to Canary Wharf, the City is at the core of the central business district, and it is a myth to think that we are at war with Canary Wharf; we need them, they need us. But only about 40,000 people are employed down there; 68,000 people are employed in Holborn, mid-town. You have got to get these figures into context. So we believe there is growth and development, there is demand. We have not had any icon speculation planning applications that have gone through our Committee, because it costs a lot of money to work up a planning brief these days, for the City of London, and you are not going to spend that money unless you can actually get a return from it. It costs a lot of money to buy land in the City, or lease land in the City, and although most of the big buildings, you know, these 50-, 60-storey buildings, with single tenants, tend to pre-let before they are built, the ones which are multi-occupied, because of their nature, are not pre-let. But if you look at Tower 42, which is the old NatWest building, it is a highly successful place for small businesses to locate in, and once they grow and develop they move out; and what we do not want to do is lose those firms, particularly the high-tech firms, to other cities in Europe.

Christine Russell

  8. I was going to ask you if actually you have got any evidence that that, in fact, is what would happen, if you were limited to low-rise, mid-rise buildings; have you got any actual evidence of companies saying, "We would pull out of the City of London"?
  (Mr Bennett) Can I just add, part of my role is, in fact, talking to City businesses on a day-to-day basis, and I spend a considerable part of my time talking to businesses. One of the significant changes in the last ten years, in terms of funding of buildings, to begin with, is that the speculative element that was available in the 1980s and early 1990s has disappeared; if you want funding for a major building, you have to demonstrate a major pre-let, at least 60 per cent. And, of course, Canary Wharf was developed in a different age; today, you get very, very little speculative funding, and that is only from certain companies that can fund it internally, banks will not fund on that basis. So buildings will be put up, if you like, funded and actually developed, only if there is a need for it. The second thing is that the term bank of planning permissions needs to be considered, because in the City we have a highly historic environment, small spaces of land, a medieval road pattern. If you want to put up major, modern buildings, to meet the demand, you often have to bring sites together; this means that you need planning permission for the existing sites, to establish the value of those existing sites, and then you need a further planning consent for the combined sites, to show how the marriage value of those sites will work. So there are a number of necessary planning consents in the process which are needed to deliver the larger buildings; and certainly the businesses that I talk to on a daily basis look at the options, they look at the City, they look at Canary Wharf, increasingly at Paddington, they have looked at Euston in the past, and they also look at Frankfurt and they look at other European centres. And the decisions made are not necessarily made in London, they are often made in New York, or they are made in Frankfurt, they are made on an international basis, and they will look at the total cost, not just the building costs but also the transaction costs.


  9. Yes, but the question was, will the people run away to those other sites, if you do not have tall buildings in the City?
  (Mr Bennett) The answer is yes.
  (Ms Mayhew) Yes.

  10. Have you got any evidence of anyone who has run away?
  (Mr Bennett) I can give you one, recently. Bank of America has now declared that it is moving out of the City into Canary Wharf, to go into a large, tall building.
  (Ms Mayhew) Barclays Bank.
  (Mr Bennett) Lehman Brothers, this year.
  (Mr Rees) And what is even more worrying is not so much firms that might move out of the City to one or other of the satellites that have developed around the City, it is the problem of firms that are not coming to London; because we are having firms like Deutsche Bank, in Frankfurt, actively considering at the moment moving their headquarters from Frankfurt to London, because London is the European, if not the world, financial centre. These people have no allegiance to London.

  11. Yes, but is the crucial thing that you would allow tall buildings, or is it merely that they would like office space in London?
  (Mr Rees) We have run out of space; we can only go up.
  (Ms Mayhew) Because we have such a large conservation area, which we cherish, and because we have got St Paul's height restrictions, which we also respect. We have got only one small triangle in the City where we can build mid-size buildings, we are not talking about tall buildings, we are talking about 50, 60 storeys, which are not World Trade Center, they are under half World Trade Center size. But we know that if we want to continue to attract in the international business that clusters and makes us dominant in Europe then we do have to provide upwards; because we also own and cherish the green belt, we cannot spread out too much, but we have got an area in which we can build these mid-size buildings. Swiss Re are bringing in new divisions from Zurich into their European headquarters, which is the new Gherkin building, and we are being successful because we are attracting people in. I would regard it as a failure if we got to a point where Peter had failed to convince someone to stay in the City or stay in London; because we do not want to lose business, because if we lose business the rest of London suffers and the rest of the UK suffers.

Christine Russell

  12. Why do you state in your memorandum that if tall buildings are not permitted in the City then the development will take place along the M25 corridor, rather than in Canary Wharf or Paddington Basin; why do you say that in your memorandum?
  (Mr Rees) Basically, it is to do with transport. In order to create a world centre of excellence in finance, or whatever else, you have to be able to draw on a very large population of potential workers; effectively, we need the whole 20 million of the South East of England to draw on, by radial communications, public transport, not the private car, to get the cream of those people for the top jobs, the `mover and shaker' jobs, if you like, in that industry, to and from their place of work. If you try to move that kind of a centre to a peripheral location, to a satellite location, you are on one radial, your transport is going to be limited to people travelling in two directions by public transport, you cannot trawl a big enough area and you cannot move the numbers of people in a sustainable way. If that cannot take place by public transport, in that way, because of traffic congestion, people then move right out to the suburbs so that they can be entirely car-borne in their travel patterns; you then have a problem of a completely disparate financial centre, or industry, and you end up with the Los Angeles approach. And, interestingly, Los Angeles had to build high-rise downtown because the suburban concept of economic development failed.


  13. But surely the public transport routes in and around Paddington are at least as good as in the City?
  (Mr Rees) No, because there are only two parts of London that were designed in the 19th century on the radial. Transport was designed in the 19th century to bring you to the West End or to the City; you can travel from north, south, east or west, more or less to any of those locations. If you build in the triangle that we have identified in the City, you are surrounded by Underground stations and main-line stations, in any direction in which you walk; that is unique to London, in the City and in the West End. If you try to replicate that elsewhere, it is very expensive.

  14. I thought you wanted Crossrail, in fact?
  (Ms Mayhew) We do.
  (Mr Rees) That is a further access; we do, yes.
  (Ms Mayhew) It is a further access we need. The point is that if you want to cluster people, and top international centres tend to cluster, this is important, having people clustered together, then you do actually need excellent public transport, and you need it not just on one line, you need a lot of radial transport. And, certainly, in the way in which I deal with my constituents in the City, transport is the number one issue, for all international businesses locating in London, and we are in grave danger of moving to a point where our transport is seen to be our Achilles' heel. But at the moment we are lucky, we have seven main-line stations and 13 Underground stations, and it makes economic and sustainable development sense to develop round public transport.

Mr Betts

  15. What evidence have you got for us that tall buildings are actually the most effective way to achieve higher densities, and that there might be an argument, that has been put to us, that developments like Broadgate can achieve very similar densities but on a low scale?
  (Mr Rees) Yes, but the problem is we have run out of sites like Broadgate. Broadgate was a very large area of derelict railway land in the centre of the City, it was a wonderful opportunity for the 1980s, and we are very proud of what was achieved there by the developers and the architects. The difficulty is that we do not have those kinds of sites within our boundaries that can be developed now.

  16. But on that site the same densities were achieved, were they not, that would have been achieved by high buildings?
  (Mr Rees) No; it depends how closely you put the high buildings. If you are going to take an approach of building high buildings with a large amount of green space around them, that is correct; there is a theory, that has been practised in various parts, where you put up small high buildings, as it were, narrow high buildings, and leave a lot of space. The City offers you the opportunity actually to put in high buildings at a relatively high density, because the shadowing of domestic areas and residential areas is not a problem, which it would be if you moved outside the City, and therefore you can pack more in; so it depends how high you go, basically, as to what your density is.

  17. So, in terms of the City then, what sort of percentage overall in increasing floor space are you looking to achieve by moving for more tall buildings?
  (Mr Rees) The City increased by ten million square feet over the last ten-year period; as a very minimum, it has to expand at that rate in the next ten-year period. If you look at the numbers of people, half a million people—

  18. And that is down now solely to building upwards, is it, building higher; that will not be achieved in any other way?
  (Mr Rees) It cannot be achieved now unless we start to go upwards. That was achieved by building the groundscrapers that were possible in the City. Those that have planning permission are being built out, and that will make a contribution, but at the end of that then one has to start looking at going upwards.

  19. So it is ten million more over the next ten years?
  (Mr Rees) As a minimum.

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