Examination of Witnesses (Questions 1-19)|
TUESDAY 22 JANUARY 2002
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.
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
(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.
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
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
(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
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.
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
(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
(Mr Rees) As a minimum.