Memorandum submitted by Northamptonshire County Council (H&R 5 - iii)

 

 

MKSM Principal Authorities

Joint Response to 'Delivering Housing and Regeneration, Communities England and the Future of Social Housing Regulation'

 

The MKSM county councils have a keen interest in the proposals for the new Homes and Communities Agency as this agency will become a key partner in the delivery of sustainable growth across MKSM, working with the local authorities, LDVs and other agencies.

Whilst we appreciate that the closing date for consultation has passed (and we have already contributed, through various individual agency and common partner responses from the MKSM agencies and Local Delivery Vehicles), we hope that this political contribution and input will still be helpful towards preparation of the Bill, which I understand is due to be introduced in November, and thereafter as more detailed work is undertaken.

Indeed, we would very much welcome an opportunity to meet with you and the Minister to discuss key issues during this critical transitional stage. MKSM strategic authorities have a wealth of experience both in terms of close working with English Partnerships on the delivery of growth area regeneration projects, and with the Housing Corporation on affordable housing policy and the development of a robust evidence base. We are also, and very importantly, delivering on the step change represented by the MKSM RSS, as your senior officials will confirm.

Milton Keynes South Midlands (MKSM) is providing for the highest level of growth of all the growth areas, including Thames Gateway, and is playing a critical role nationally towards achieving Government housing targets. Between 2001 and 2021 MKSM will accommodate around 210,000 new homes and over 170,000 additional jobs.

MKSM has demonstrated its ability to deliver. Its track record shows that housing completions have increased by 40% since the publication of the Sustainable Communities Plan in 2003. The reviews of the respective Regional Spatial Strategies (RSS) for the South East, East of England and East Midlands, which will be taken forward in discussion with partners /stakeholders, will extend the growth horizon to 2026 and are expected to reinforce the growth capacity and delivery offer of MKSM.

The local delivery vehicles (LDVs) and local authorities are working with other regional and local delivery partners, including English Partnerships, the Highways Agency and the three RDAs, to secure the necessary infrastructure investment to facilitate planned and sustainable growth in MKSM. Securing timely investment and the provision of appropriate affordable housing are key issues, as are the regeneration of our town centres and the functionality and sustainability of our growing communities.

MKSM, through the Ministerially led Inter-Regional Board, continues to strengthen its 'architecture' to ensure it has a clear path to support the delivery of growth, can agree shared strategic priorities, has common purpose and effective partnership structures. This includes recent activity to appoint a high level MKSM Director, the establishment of a Strategic Transport Board and testing proposals for an Economy and Skills Board. The MKSM Inter-Regional Board (IRB) adds strategic capacity and sub-regional leadership in support of the critical delivery work of the LDVs at the local growth area level.

The MKSM principal authorities are key players on the IRB, representing local authority interests, including as highways and education authorities, as well as strengthening democratic accountability at the sub-regional level.

An MKSM 'Vision and Plan for Growth' or business plan is being developed to set out the MKSM vision, its economic 'offer', and to identify strategic infrastructure investment priorities at the sub-regional level to facilitate growth. The principal authorities are helping to shape this work, with the full collaboration of partner delivery agencies, to inform its outcomes through the IRB 'architecture'. More detailed 'Programmes of Development' are being prepared by the LDVs to set out the infrastructure investment challenge and necessary delivery and regeneration programmes at the local growth area level. Strategic authorities are critical to bringing these forward and providing a strong evidence base. Transport (including modal shift measures), schools and waste management infrastructure necessary to support growth are substantial elements of these programmes in investment terms.

English Partnerships and the Housing Corporation are key partners on the IRB and proposals for the new Homes and Communities Agency (HCA) need to ensure that this relationship remains a positive one, including its relationship with the LDVs as delivery partners and ringmasters. We have a number of key messages we see as essential elements of getting the new agency orientated to the scale of the task and opportunity we look forward to delivering on together as it arrives on stage.

KEY MESSAGES

§ The HCA needs to focus its resources and activities on areas delivering high levels of housing growth and where investment leverage can be maximised.

§ Given the scale of growth being delivered and the pan-regional geography of the sub-region, a dedicated HCA office and investment programme should be established for MKSM, just as is proposed for Thames Gateway.

§ The HCA needs to work closely with regional and local authorities and the LDVs to ensure joined up delivery through coordinated and longer term investment programmes.

§ The HCA needs to work with MKSM local authorities to find innovative solutions and share risks that must be managed to secure the front funding of infrastructure to release growth in a sustainable and timely way.

§ The HCA needs to be tied into Government performance frameworks including the national PSA on housing growth and as key partners in LAAs and MAAs.

§ Government and the HCA need to recognise the significant revenue implications for local authorities of delivering services to existing and new communities and businesses in the Growth Areas in such a step change context.

§ The need for Government to continue to support established LDVs in the Growth Areas and to ensure that they are properly resourced to continue to perform strong and effective delivery roles, working with local authorities and other partners.

 

Need to focus resources and activities on areas delivering high levels of housing growth

The Government's proposals to streamline agencies are welcome. Bringing together core regeneration and housing functions should help to ensure a more coordinated approach to investment and delivery. However, it is critical that the HCA concentrates its resources and activities in areas that are accommodating higher levels of housing growth, such as the MKSM Growth Area where its impact and leverage can be maximised for the benefit of, not least, UK plc. One of the principal advantages and strengths of English Partnerships is its ability to focus on key areas and regeneration priorities. It is important that this focus is not lost with the transition to the new agency.

Delivery partners in the Growth Areas are investing significant expertise, energy and resources in meeting the challenges of the growth agenda and ensuring the sustainability of rapidly growing communities. English Partnerships' role (including expertise, investment resources and capacity) working in partnership with local authorities and LDVs to bring forward key sites, has been crucial to unlocking growth across MKSM. Examples of this include the Brownfield Initiative in Northampton, town centre regeneration in Corby including the current proposal for a new rail station, and the Bedford Western Bypass. It has also been crucial in terms of raising standards and innovative sustainable design solutions such as the West End Central Milton Keynes development and Upton in Northampton.

The sub-region continues to make a substantial commitment to the growth agenda and productivity offer to the UK plc. The experience and expertise of MKSM strategic authorities and other partners helped to inform a robust solution-focused and evidence-based submission to CSR07 and the Government's cross cutting review of infrastructure to support housing growth. We are now seeing some of our ideas taking shape in recent key policy papers published by Government, through CLG and the Treasury in particular, this summer. This is very encouraging and positive.

It is vital that proposals for the HCA do not undermine the ability of MKSM to deliver or that they under-estimate the scale of the delivery challenge and how important the additional capacity, skills and targeted investment of the HCA will be to making this happen. Whilst the new growth points and eco-towns will contribute towards meeting Governments challenging housing targets, it will continue to be the principal four Growth Areas which will make the greatest impact (more than all the first and second round growth points together). Focusing resources in the Growth Areas will continue to demonstrate value for money.

It is essential at this key implementation phase to ensure continuity of the investment programme and retain and enhance experience and capacity available. This continuity creates the right conditions, through increasing certainty and hence confidence, for higher levels of private sector investment.

 

A Dedicated HCA Office for the MKSM Growth Area

The proposals suggest that the HCA will be structured on a regional basis and will have a national presence. It also suggests that Thames Gateway should have its own office. The delivery challenges in Thames Gateway are significant and a business case for a dedicated office can clearly be made. However, MKSM is delivering at least as much growth as Thames Gateway and its geography, delivery and investment challenges - and the delivery opportunity we represent in terms of housing supply - equally justify the need and make the business case for a dedicated HCA office for MKSM. Indeed, English Partnerships already has an office to support MKSM and Eastern England based in Milton Keynes.

The MKSM sub-region includes parts of 3 English regions (the East Midlands, South East, and East of England). Working with Government, MKSM partners, including the principal authorities, have established robust structures through the MKSM Inter-Regional Board (IRB) and its sub-groups to manage the growth agenda for MKSM. This is in recognition that a co-ordinated partnership approach with shared objectives is critical to the success of MKSM, lying as it does at the geographical periphery of 3 regions and therefore dealing with 3 RDAs, 3 RAs, and 3 GOs. Under current proposals this would also mean working with 3 HCA Offices along with their respective Regional Investment Plans.

Clearly, given the scale of growth being accommodated in MKSM and the potential of its economic offer, a dedicated HCA office for MKSM is crucial to support delivery, including an MKSM Investment Programme. This would also complement proposals in the Sub-National Economic Review (SNR) which emphasise the potential for sub-regional delivery and management of funds to support economic development and regeneration, including where the economic geography falls across regional boundaries or groups of local authorities as is the case for MKSM. We have some significant MAA opportunities in terms of strategic transport and economic development that further underline this direction of travel and logic.

 

Joined up and longer term Delivery Programmes

The IRB is preparing a MKSM Vision and Plan for Growth (or business plan) setting out core strategic investment priorities and a programme to support the delivery of growth across the sub-region. The MKSM strategic authorities will help to shape this Prospectus. The HCA needs to work with the local authorities, the IRB, the LDVs and other delivery partners to ensure that respective investment programmes are coordinated, support common delivery priorities and objectives and help to deliver the MKSM vision. The development of a single HCA Investment Programme for MKSM (rather than being part of three) would help to ensure this happens.

HCA Investment Programmes must support Growth Area delivery priorities in a coordinated way, including the proposed new single Regional Strategies and MKSM Sub-Regional Strategy, as well as through Local Area Agreements (LAA) and proposed Multi Area Agreements (MAAs) where these emerge. The HCA must work closely with the RDAs to ensure consistency and support at regional/sub-regional level for MKSM as a whole, especially to secure joined up policy to underpin effective investment strategies that work to the best advantage of MKSM.

The time horizon for the Investment Programmes needs to be sufficient to give confidence and certainty to public and private sector delivery partners that investment and capacity will be delivered. They should look in strategic terms towards longer term horizons, in keeping with spatial plans and LDV programmes, as well as committing more short - to medium term investment. This should be a minimum of 3 years but longer term indicative programming (5-10 yrs+) would be preferable, particularly when dealing with large scale delivery and capital investment programmes in the Growth Areas.

 

Front-funding of infrastructure / Banker Role

Given its unique and specialist role, the HCA should play a key role in the Growth Areas to support mechanisms to fund at a timely stage the necessary infrastructure to release growth, including working with local authorities and other delivery partners to share risk through appropriate 'banker' mechanisms where necessary.

English Partnerships has already demonstrated its ability to deliver mechanisms to front fund infrastructure such as the Bedford Western Bypass where risk was shared with Bedfordshire County Council, and banker arrangements have also been established to support growth in Milton Keynes. Northamptonshire is also working on innovative approaches to this matter, relating to prudential borrowing and planning gain revenue streams, which your officials, and colleagues at HMT, are aware of. The HCA should continue to work with the local authorities and LDVs to secure innovative and solution based approaches to the front funding of infrastructure where this is critical to the delivery programme.

 

A key partner in meeting Performance Framework Targets

We welcome the introduction of a new cross Departmental PSA on housing growth which will be led by Communities and Local Government, as set out in the SNR and Housing Green Paper. It is vital that there is cross government buy-in to the growth agenda from key Departments including HMT, DfT, DCSF, Defra and DBERR, if Government housing delivery aspirations are to be realised and local authority and LDV activities in the Growth Areas are to secure regeneration and growth in a sustainable way to the benefit of new and existing communities.

It will be important to ensure that the HCA is tied into this national PSA and to secure buy-in to delivery priorities at the sub-regional and local growth area level as key partners to MAAs and LAAs. The geography of MKSM as a cohesive and polycentric economic sub-region, its track record on delivery and the scale of growth being accommodated, and the strength of its partnership and governance structures lends itself as a test bed for a pan-regional MAA performance and delivery framework, particularly on transport and other economic policy delivery objectives. This concept was promoted to Government in the MKSM IRB submission to the CSR07 consultation with local authority, regional and other delivery agency support and has, we are assured, influenced thinking across the cross cutting reviews that are now informing the future patterns of delivery that HCA will be an important part of.

 

Recognising the Revenue Implications of Growth and Regeneration

MKSM principal authorities lent their support to the conclusions and recommendations to Government set out in the Price Waterhouse Cooper (PWC) report on the revenue implications of population growth commissioned by Northamptonshire County Council in 2006 in response to CSR07. This report demonstrated the massive scale of the revenue challenge as a result of growth, not least because Formula Grant methodologies are not sensitive enough to population change and base data on population and forecasting is flawed as it is mainly based on historical trends. The 2006 PWC Report predicted a cumulative revenue funding gap of up to £715m for NCC between 2006 and 2021 due to population increase if current Revenue Funding Formula methodologies were not sensitised to growth or an additional allowance made.

This quantum is clearly providing a similar, and similarly growth restraining pressure on the other MKSM local authorities and, due to the commonality of overall formula assumptions and outcomes, other parts of the public service delivery machine, such as health and policing, also.

ONS have just released revised 2004-based population projections and, while these show an increase on previous projection figures, they still significantly underplay the scale of population growth anticipated when building in policy adjustments. As an example, the revised ONS projections suggest a 13.5% population increase for Northamptonshire between 2006 and 2021 while the County Council's own projections, which take account of growth policy, suggest around a 20% increase. Similarly, for Milton Keynes, the respective projections suggest a 15% population increase (ONS) compared to 36% (MKC) during the same period.

The special circumstances in terms of the revenue challenge being experienced by the main Growth Areas (those delivering a real step change) needs to be recognised and addressed by Government if MKSM local authorities (and particularly the principal authorities carrying the high revenue responsibility and financial challenge for education, social services, transport and waste) are to be able to maximise their ability to respond to delivery opportunities in partnership with the HCA, LDVs and other delivery agencies in a way which not only secures physical growth and regeneration but which also provides for public service delivery critical to the functionality and sustainability of those communities.

 

Continued support for established LDVs

It is vital that the support for existing LDVs is maintained and enhanced through the transition to the HCA. As the pace of delivery continues to step up across MKSM, the role of the LDVs will be fundamental to delivery performance, including their key role as 'ringmasters', driving, coordinating and programming delivery and working with partners to secure investment. The HCA and the LDVs will need to work closely together to facilitate growth, regeneration and delivery and their respective roles need to be clear.

It is also important that the likely designation of further new growth points does not lead to a plethora of new LDVs and in particular UDCs and URCs and resulting dilution of focus and resources. In most cases, the scale of additional growth is relatively small and can be effectively managed through existing local authorities and more informal partnerships. Aylesbury, Ashford, Bedford and Cambridge all illustrate how effective these can be.

In this matter, the threat of dilution of both policy capacity at the centre and our attention to implementation, and the high potential of resource and financial diffusion, when the step change needs concentration, represents a significant risk to the delivery of the Government's massive growth aspiration for the (nationally significant) major Growth Areas including MKSM.

On behalf of the MKSM principal authorities, I trust that you and the transition team will find these comments constructive and helpful in preparation for the forthcoming Bill and the more detailed deliberations on how the new agency will operate.

We would welcome the opportunity to meet with you and the Minister to discuss these issues further and share our expertise as well as to keep abreast of developments and implications for MKSM during the transitional period over the coming months.

 

December 2007