Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 246 - 259)



  Q246  Chairman: Thank you very much indeed and thank you for your patience. I am sorry that previous session overran a bit so we are starting a little bit later than we wanted to. We are very grateful to you for coming in and for giving evidence to us. Could you just give us a brief sort of thumbnail sketch of your view of the Barker report?

  Mr Oldham: If I may start, Chairman. There is much to commend the report and one of the areas we are particularly keen on are some of the recommendations for trying to speed up the planning system. One of the things we feel at times we are engaged with is the planning process not actually delivering.[6] Barker in her report suggests the idea of an urban design code process through local development orders. If that process could be moved on, I am sure it actually may speed up the reserved matter planning process. Why we are particularly keen on that, for example, recently we promoted a scheme for about 400 homes in Cambridge and it took us two years, on a brown field site on government land, to go through the community engagement process because local people did not like the idea of traffic generation. So Barker is trying to actually introduce quality. I think that is one area. One area I think we are particularly concerned about though is this idea of some form of supplemental planning charge, ie planning-gain supplement. In the report there is an idea of reducing contributions with section 106 and making it up through the supplemental planning charge. It seems to us that on three separate occasions this has been tried since the Second World War in some form of development land tax and therefore this is not a new idea coming in. But our experience in building new sustainable communities is that the section 106 mechanism has worked exceedingly well, albeit today it may be refined, and it may be refined, again drawing on the Cambridge experience, in terms of looking at strategic 106 contributions so you are looking at a wider contribution maybe towards wider transportation elements, and then site-specific 106 contributions which may relate directly to affordable housing by way of example on the site. So there are two examples. As you know, there are many, many recommendations. For example, we are very interested in what will happen with revisions to PPG3, for example, on housing, which Barker puts out in her report as well, but we are going to have to wait some time for that. Those are two areas. There is a Ying and Yang approach to it really.

  Q247  Chairman: Could you comment on her opinion that the use of land banks by developers has a minimal impact on housing supply.

  Mr Oldham: I think it is how you understand land banking. We identify as a company the land that we have under control, which is controlled by option agreements, and I think in her interim review she goes through the house building process and looks at how industry tries to secure control of land. That may be the case, but the way we land bank is to secure planning permission and the land often is without planning permission. We are actually going through the planning process to secure planning permission. So land banking is a process in which in terms of large schemes for sustainable new communities it is an essential process for us because we have to identify land often before the local authorities identify that land. So we go through the process. Previously we went through the structure plan process and then local plans. These days we will be going through regional planning guidance or RSSs and then through the LDF process. So it is long term identification of land.

  Q248  Chairman: You have got, I think I am right in saying, 5,400 homes' worth of land in your land bank. How does that compare with the industry generally?

  Mr Oldham: I think it depends on the size of the organisation. We are not one of the top ten housing firms, but I think we are probably one of the leaders in that, mainly because of the way we as a company have focussed in particular on large mixed use communities, whether on green field or brown field land, and it is having a long term view about development. Sometimes the long term view is maybe ten plus years to secure planning consent and then another ten plus years to build that development. So that is a particular viewpoint, I suppose, of our company in that we have focussed in particular on building sustainable new communities, which means that we have to go through that land banking process.

  Q249  Chairman: Does the fact that you have been given, I think, some recognition for the sustainable approach that you incorporate into your work reflect the nature of the work you are doing to some extent, ie that you are building mainly in growth areas and in higher density situations?

  Ms Gupta: Eight-four per cent of our development last year was on brown field sites, which is far in excess of the guidelines, obviously, and I think in terms of looking at areas of land where we want to be developing the sustainability issues are very much in the forefront.

  Mr Oldham: Just to add to that, I suppose it is a cultural thing within the business in the sense that we are trying to think about where we think development[7] is going in the future at times. So, for example, back in the late 80s, early 90s, we were looking towards trying to create, for example, twenty miles an hour speed limitations within our residential developments. At the time it was seen as quite revolutionary and we had a devil of a debate with the Department for Transport, the local county council, etcetera. Today it is common place. So it is trying to actually bring forward sensible commercial decisions but also, I suppose, trying to sort of enhance the quality of the place that we are making and the quality of the environment we are creating.

  Ms Gupta: That is an important point, because what we are doing is actually adding to the overall quality of the development, looking at the quality of life of the people who will be living there and making attractive places for people to live and work.

  Q250  Chairman: So you are driven partly by altruism, partly presumably by planning controls and partly by the fact that building well is good for your bottom line?

  Ms Gupta: It adds value to everything we are doing.

  Q251  Chairman: Who within this area actually drives it on any given site? Is it the planners, the developers or the architects? You are going to say all three are you?

  Ms Gupta: Within the business, or as a whole? Within our business or—

  Q252  Chairman: Obviously I am talking about the relationship between your business and outside people like planning authorities.

  Ms Gupta: I think it is driven by us because that is our philosophy and that is the way we like to bring forward developments because we know that that is good for our bottom line, to use the words that you used. We also find that because we have such a good track record of bringing developments through the planning process, land owners are far more likely to want to work with us, so we get introduced to far more possibilities for future development than we might be. Also because of our reputation we find that local authorities are quite happy or very happy to work with us because they know that we are willing to work with them in partnership, particularly on large-scale developments, to work to bring the whole thing to fruition. So it is a partnership.

  Mr Oldham: Just to supplement that, an increasing problem though is actually finding anybody out there in local government because of the skills and resources shortage in local government and finding enough people with the skills, because often I think to a certain extent we concern local government when we come in and suggest a proposal and often there are tensions within local government. Ideally, as Trisha said, it is good to try and create partnerships, but sometimes, though, obviously we are in conflict with local government and some of those things may not be for professional or technical reasons, they may be for local political reasons with local communities in terms of their own particular views about development. So we plough through the process and just audit-trail and go all the way through the process to the planning inspectorate if need be, but what we would like to say at the end of the day is to try to be best of friends because I think at the end of the day if communities fight you it is still part of their community and if we are successful we want to go back and try to actually work with them. That is one of the things we always try to do and it is really difficult and it is quite a hard process really to go through that. It is also in our business trying to actually, I suppose, train our own people in this sort of philosophy and this culture basically because we are not necessarily here today and gone tomorrow, it is a long process.

  Q253  Chairman: Am I right in thinking that you were involved in the Greenwich Millennium Village that we heard about earlier?

  Mr Oldham: Yes.

  Ms Gupta: Yes.

  Q254  Chairman: Did I not hear somewhere that there had been some debate between yourselves and an independent architect whose original plans were somewhat more radical than those which were eventually put into construction?

  Mr Oldham: Actually, that was a debate between the overarching master planner, who was Ralph Erskine, a marvellous octogenarian architect whom we employed, and the project architect. There was a debate about who was running the show, basically, and it ended in sort of minor tears in that there was a debate between the project architect, ourselves and the master planner. That was resolved with us actually settling with the existing project architect and actually getting on with the new project architects, while still employing the original master planner. It goes back to what I was saying to you earlier on about design codes. The master planner will set the overall framework for the scheme and the design code—we have got a design code for Greenwich Millennium Village as well, so we use that—to which then individual architects will respond on individual phases of development so it fits in with the design code and the master plan.

  Q255  Chairman: Was the result of all this that some of the environmental measures originally envisaged were watered down?

  Ms Gupta: Not at all.

  Chairman: Okay. Thank you.

  Q256  Mr Francois: I declare an interest in that I am Essex MP and you have built and are building a number of houses in my constituency. If I might say, your evidence is fascinating because you are kind of getting right to the nub of the matter. You talked about strategic section 106 contributions. Can I illustrate with an example. In my constituency all of my secondary schools are effectively full up, it is very difficult to register with an NHS GP, it is practically impossible to register with an NHS dentist, we have got all sorts of traffic problems and they are getting worse. The more and more house building that takes place, the more those problems are likely to be exacerbated unless there is significant compensatory infrastructure in investment, and what I say could apply to a number of other constituencies around the country; I am by no means unique. What contribution can developers like you really make to that situation?

  Ms Gupta: Well, if you take an example in Essex, which is Great Notley Garden Village, we negotiated with the local authority a whole package of community infrastructure items and we were able to plan for a proper sustainable community. It was not just going to be a scheme of 2,000 houses, we were providing community facilities, recreation facilities, a new school, business park, shopping, all the things you really need—the doctor, the dentist, the vet. These were all part of the Section 106 agreement and were embodied in the concept plan and master plan, for which we got outline planning permission. Then we brought this to fruition on the detailed phases. What we actually did, to ensure the whole thing worked, was to provide up front temporary facilities. So when we had built a couple of hundred houses we provided a doctor's surgery in a glamorous version of a portakabin, but it was basically a portakabin and the local doctors did a surgery twice a week. What we did, by doing that, was to create a pattern of living when people first moved to Great Notley. They would start using the local facilities, and would get into the habit of it. So instead of travelling into Braintree, which is the nearest place, by car or bus, they actually had the facilities they required on their doorstep, and we did exactly the same with a church, a cre"che, a vet. Having established these patterns, when all the facilities were provided in permanent buildings people continued to use them and so it was properly established as a self-sustaining community.

  Q257  Mr Francois: I appreciate this matter might be in some senses commercially confidential, so I realise you cannot give a complete answer, but can you give us at least some feel for what proportion of your profit on the deal all of that was? The classic criticism is that the house builders come in, they build the houses, they get away with the smallest possible section 106 commitment they can make and then they are off to the next site. That is the classic criticism of the industry. By the sound of it you went beyond that and you did something more substantial and in a sense I am trying to give you credit for it, but I would just like to get some feel for what it cost you to do that.

  Ms Gupta: I have not got an exact figure, but the section 106 agreement was negotiated before we owned the land. We had an option on it. The land was originally agricultural land and obviously the package of community benefits came off the land value.

  Q258  Mr Francois: If you do not want to say in public, could you possibly write to us and let us know? It would just be helpful to see that. Do you see what I am driving at? It is important to understand where someone is doing it the right way, as it were, what it has cost them to do that because that might be an example for others.

  Ms Gupta: That is an example of a section 106 agreement acting in the way it should, is it not?

  Q259  Mr Francois: Yes, but what I am trying to establish is what it really cost you to do that. If you could write to us on that.

  Mr Oldham: If I could just add to that, though, because I think one of the things to understand is that it is different measures as well in terms of the overall business, in terms of borrowing money from banks, the phasing and lending. We often get asked by the communities for the environmental and social benefits of the scheme without any regard to the economic benefits of the scheme. So often, for example, a community maybe wants a local by-pass at a very early stage and to actually make these things work you have to have money in for money out, so there is a huge debate about phasing and how you make these things happen. Can I also say, I think there is going to be a gradual step change. I think to a certain extent it happened after Bruntland in 1987. I remember writing a note to our company saying, "Watch this space, guys, there's going to be a significant change in terms of our industry and how we to address this." I think local government now with the next round of LDDs is really trying to get on the case, as you discussed earlier with the Ministers, regarding sustainable construction and sustainable communities. So that measure is going to be very interesting.

  Mr Francois: Thank you very much.

6   Note by the witness: By that I mean we should be going beyond the planning process to address and understand the development process. Back

7   Note by the witness: By that we mean good planning and design that creates safe, high quality places that are environmentally, socially responsive and economically viable. Back

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