Written evidence submitted by London Thames
Gateway Partnership
WHO WE
ARE
The London Thames Gateway Partnership (TGLP) is a
cross-river, cross-party organisation, made up of the 10 local
authorities and the eight universities in the Thames Gateway London
area, Dartford Borough Council and Thurrock Council. Representing
the whole of the Thames Gateway London area, we campaign on behalf
of our members to ensure the area is able to live up to its enormous
potential and remains a key national and regional priority.
BACKGROUND TO
THE CONSULTATION
The Communities and Local Government Select Committee
are holding an inquiry into regeneration following the publication
of Regeneration to enable growth: What government is doing
to support community-led regeneration. The publication sets
out the government's approach to regeneration which involves a
renewed focus on "Localism; to be led by local government
and local communities." It also identifies the new policies
introduced by government to support regeneration and economic
growth.
TGLP welcomes the government's continued commitment
to the investment in infrastructure and are particularly supportive
of the government's recognition of the Thames Gateway and support
for major infrastructure projects such as Crossrail and High Speed
2. However, we believe that for successful regeneration of the
LTG to continue there needs to be a funded programme to support
the economic, social and environmental regeneration of the Thames
Gateway.
HISTORY OF
THE THAMES
GATEWAY
Historically the area was the main gateway from London
to the world, with the docks and heavy industry employing thousands
of workers. The area was once the most populous part of the capital.
By the 1970s the Docklands and east and south-east London fell
into decline due to a mixture of de-industrialisation and migration
out of the area to Essex and Kent. The creation of the London
Docklands Development Corporation in the 1980s was a catalyst
for the regeneration and the re-development of the Isle of Dogs.
New transport links such as the DLR and the Jubilee extension
acted as a further driver for change.
By the 1990s the focus moved from the Docklands to
the wider Thames Gateway, which became an area earmarked for significant
housing growth and development due to the availability of brownfield
land and the potential to develop the transport system further.
Regeneration was further boosted following the successful bid
for the Olympic and Paralympics Games in 2012 which provided an
impetus for regeneration around Stratford, but the wider Thames
Gateway still has huge untapped potential to deal with the serious
economic difficulties it experiences.
SUMMARY
Since the election of the coalition government in
May 2010, policies to support growth have taken an approach, based
around market based incentives, rather than direct support through
central government grants. The London Thames Gateway is exceptional
as it suffers from severe problems of deprivation and unemployment
but unlike other areas in need, it has strong demand for housing,
and has high growth potential in areas such as Canary Wharf, Stratford
and around the London Gateway as well as opportunities for industry/manufacturing
further east.
The regeneration of east and south-east London is
a long term project. Sir Terry Farrell states that the gateway
is probably around 30 years into a 70 year project. Therefore
whilst significant progress has been made, further investment
is required if east and south-east London is to become a net contributor
to both the London and UK economies. In the context of the Olympic
Games and the government's commitment to securing a successful
legacy for the Games, a commitment has been made to convergence.1
In terms of convergence, it would be a false economy to cut investment
in the region now, particularly since the area has a significant
supply of brownfield land and has improving transport links to
the rest of London and beyond to the rest of the UK.
The government must recognise the need for greater
flexibility and account for the different needs of deprived communities.
To date the approach has been to say government supports private
sector jobs growth in an effort to rebalance the economy away
from the public sector. This strategy implies that investment
should be focussed in the less economically dynamic regions such
as the north of England. This approach, which seeks to mitigate
the impacts of public sector job losses, does not address the
market failure which exists within an otherwise successful super
region (the Greater South East) and is too narrow in its scope.
Government can maximise its return on investment, if it prioritises
areas such as the Thames Gateway which, despite having significant
challenges, also has great potential and has used past investment
to promote growth in dynamic and growing sectors. This could have
a significant impact in helping to rebalance the economy away
from an over reliance on the financial sector towards high value
manufacturing and the emerging digital sector.
TGLP's main concerns are as follows:
1. The Strategic Regeneration Framework has made
a commitment that over a 20 year period, conditions for the people
who live in the Olympic host boroughs will improve to the point
where they can enjoy the same social and economic conditions as
Londoners as a whole. TGLP support this principle but believe
that the convergence commitment should be extended to the whole
of the London Thames Gateway.
— A localism
approach must recognise that despite its overall success there
are deprived areas in London and the South East. The London Thames
Gateway in particular is more similar to areas in the Midlands
and North of England, where the government has focussed more support.
— The
London Thames Gateway has successfully used past investment to
generate sustainable growth but further regeneration is required
because despite investment in infrastructure and physical regeneration,
mainly in inner east London, there remains structural unemployment
and a relatively degraded public realm across much of east and
south east London.
— The
Localism approach has the potential to be an effective approach;
however cuts to the local government settlement have made it harder
for local authorities to prioritise regeneration. It is important
that the localism approach is applied in a consistent manner across
all departments.
— It
would be useful for the government to set clear regeneration objectives
and ensure that all their major policies complement each other,
and are properly coordinated to achieve these aims.
— While
TGLP supports the investment in Crossrail, we have concerns that
the funding cuts will limit the benefits from the scheme particularly
in the London Thames Gateway.
— The
cuts to the affordable housing budget and the reliance on the
affordable rent model will mean that housing in east and south-east
London will not be sufficient to meet the expected demand. In
addition, the housing benefit reforms will exacerbate the problem
of multiple occupancy.
— There
is a continuing need for decent homes funding to ensure existing
communities are valued as highly as new communities moving in
to areas.
— The
government's focus on growth is not being matched with the necessary
investment into skills. Without such investment, growth will not
lead to a long term reduction in unemployment in areas of low
skills and deprived areas.
— TGLP
believes that the success of the government's approach should
be judged against a clear set of objectives including tackling
multiple deprivation, raising skills levels and addressing affordability
of housing.
TGLP'S RESPONSE
TO THE
CONSULTATION
1. TGLP believes that there are five main areas
of regeneration which are specific to east and south-east London:
— The
construction of new transport infrastructure which increases labour
market mobility allowing residents to access jobs elsewhere as
well as bringing workers and consumers to the area.
— The
provision of new housing and decent homes to meet growing demand
and ensure that sustainable communities are developed which can
support a growing population and make the area attractive to new
and existing residents.
— The
upskilling of local residents to ensure that the benefits of growing
sectors of the economy are distributed more evenly and encourage
greater economic participation.
— Supporting
business to create and retain jobs and promote inward investment
in order to support the long term growth of the area.
— Enhancing
the public realm to ensure that the quality of life for residents
of the gateway is enhanced in order to create places where people
want to live, work and relax.
2. To date regeneration in east and south-east
London has focused on developing the former dock areas and industrial
land back into productive use. This has resulted in the physical
transformation of parts of inner east and south-east London; most
notably around Canary Wharf, North Greenwich and Stratford. Strategic
planning and investment have ensured that the regeneration of
the area has produced a sustainable development and jobs growth.
Furthermore, investment in new transport infrastructure such as
the DLR and the Jubilee line extension has helped to integrate
parts of the area with the rest of London and has promoted private
sector jobs growth. However, despite the successes of Canary Wharf
and Greenwich the problems of contaminated land and the lack of
transport infrastructure remain acute in the outer east and south-east
London boroughs. It is important that the government recognises
that whilst there have been successes, vast areas of east and
south-east London are still in need of investment to achieve convergence
with the rest of London in order, to reach their economic potential
and realise the GVA benefits of the sub region.
3. The next stage of development will involve
continued regeneration and intensification around growth areas
such as Canary Wharf and Stratford, as well as the development
of new local centres in outer east London. In addition, to this
traditional form of regeneration, more effort must be put into
improving skills and employability among the local residents to
ensure that regeneration is both beneficial to the local community
and is sustainable . Despite the success of Canary Wharf, Tower
Hamlets continues to suffer from very high unemployment and deprivation
among its residents. Thus the next stage of regeneration must
ensure that residents gain from local developments. In order to
support sustainable jobs growth, there not only needs to be continued
investment in infrastructure but investment in education and skills
to ensure that residents are able to get jobs in fast growing
sectors.
Rebalancing the Economy
4. In Regeneration to enable growth the
government argue that "economic growth can help regenerate
and breathe economic life into areas." Government intend
to use private sector jobs growth as a mechanism for addressing
unemployment and deprivation.
5. In order to support the economy, the government
has set out incentives for growth which will help local authorities,
communities and businesses regenerate their areas. The growth
plans for the government are to support the development of the
SMEs, especially in new sectors such as the creative industries
and advanced manufacturing.
6. TGLP believes that the government should recognise
the potential of the London Thames Gateway to support growth in
new sectors. The development of the Sustainable Industries Park
at Dagenham Dock, together with the Centre for Engineering and
Manufacturing Excellence (CEME) will help provide a focus for
hi-tech engineering and eco-manufacturing in the region. In addition
the area has been recognised as a hub for digital industries by
the Prime Minister under the East London Tech City project. This
will take advantage of the development of Silicon Roundabout at
Shoreditch and utilise the new media facilities at Stratford.
In light of the burgeoning success of new industries, the government
should continue to support the development of these hubs.
7. The plans for enterprise zones could also
help to regenerate deprived areas by providing incentives for
business growth and encouraging new investment. The Mayor of London,
under the authority of the Chancellor, is planning to establish
an enterprise zone in the Royal Docks area. This support will
help to create a business park for convergent technologies by
adding to the past investment in the DLR, City Airport, and the
ExCeL centre, and capitalising on new investment in Crossrail
and the nearby Olympic Park. Moreover, it will support the ambitions
of the broader Thames Gateway with investment targeted to the
main opportunity areas—Canary Wharf, Stratford and the Royal
Docks. These areas lie at the heart of the Golden Triangle identified
in a report by Oxford Economics, which states that the Golden
Triangle will be able to contribute 130,000 jobs and £21
billion to the London's Gross Value Added. By focusing such measures
in areas which lie on the margins of prosperous economic areas
it will ensure that new jobs are not displaced from other areas
but are sustainable over the long term.
8. Whilst the recent announcement of an enterprise
zone for the Royal Docks is very welcome, TGLP believes that it
may also represent a missed opportunity. By not extending the
zone to the Greenwich Peninsula, we believe that it would have
been consistent with the localism agenda for this issue to have
been subject to broader consultation as we would have wanted to
make the case for the zone to cross the river into south east
London to better reflect the functional economic area and stimulate
the economy on both sides of the river Thames.
9. Furthermore the government has not been consistent
with its support, the National Insurance holiday is applies to
all the English regions except London, East England and South
East England. TGLP believe that this approach fails to recognise
that the London Thames Gateway faces similar challenges to other
regions outside of the Greater South East and has characteristics
which are more similar to places like Greater Manchester rather
than other parts of the south east. We have argued that a better
approach would be to apply the holiday to the most deprived local
authorities rather than specific regions. The national insurance
holiday for new businesses would complement the investment directed
towards east and south-east London and provide significant and
sustainable private sector jobs growth. We consider it is important
that the government examine this and other initiatives to ensure
that policies which support growth and regeneration are both effective
and consistent with the localism approach.
10. Investment in the Gateway will support the
convergence of the area with the rest of London. In addition it
will make the area a net contributor to the UK's GDP over the
next 20 years. If the government wishes to continue with its economic
incentive based approach to regeneration, it must focus on areas
which will not only have severe need but will be able to provide
sustainable economic growth over the long term.
Locally Led Regeneration
11. TGLP supports the move to local led regeneration
and welcomes the continued recognition of the Thames Gateway as
a growth corridor with capacity to provide new jobs and homes
for much of London and the South East. A locally led approach
could allow local authorities and other bodies to focus on the
distinctive challenges and opportunities of the area and provide
regeneration that incorporates local needs and aspirations, as
well as benefits to the rest of London and the UK.
12. However TGLP is concerned that the government's
policies do not support this objective. The reduction in local
government settlement will reduce the capacity for local authorities
to support the regeneration of their areas. The most deprived
boroughs such as Newham, Hackney and Tower Hamlets have had their
settlement reduced by 8.8%—the largest in the country. In
seeking to reduce the deficit Government has reduced funding to
local authorities. This has been particularly challenging in the
London Thames Gateway and boroughs will be forced to choose between
the provision of basic services and supporting local regeneration
projects. This reduction in local government funding reduces the
capacity to develop the community infrastructure needed to support
growth and maximise the benefits of new strategic infrastructure
such as Crossrail. This undermines the Principle of Localism by
not allowing local areas a meaningful say in the level of services
and investment in their areas.
13. While the government have set out key themes
such as localism, TGLP believes that there is not a consistent
approach across departments to regeneration. As previously stated
a clear set of regeneration objectives would help all departments
to take account of regeneration impacts when making major policy
decisions. As regeneration aims to tackle several problems simultaneously,
it is important that all the policies complement each or at least
provide enough flexibility in their implementation to ensure that
suitable policies are put in place in different areas.
14. The local government resource review could
provide new opportunities for local authorities to fund regeneration.
Mechanisms such as TIFs could provide a mechanism for long term
regeneration. The retention of business rates could help areas
such as Tower Hamlets and Newham which have fast growing tax bases.
However, some of the outer boroughs will become net losers from
the initiative and may have to draw from a pooled fund. This new
approach will change the thinking of local authorities; authorities
will seek to encourage business growth and will become more aware
of the economic cycle and its impact on their revenues. While
the long term impact is unclear, it is important that local financed
regeneration is supplemented with strategic investment by Government.
15. There are also risks in ensuring that there
remains support following the abolition of Regional Development
Agencies (RDAs) outside London. The creation of LEPs provides
a new opportunity for local growth but they need to address functions
covered by the RDAs such as business start-ups support, inward
investment and business incentives.
16. While the localism approach is laudable in
practice it is not consistently applied. The public sector cuts
have affected the level of support for SMEs and third sector organisations
which could support the localism agenda, while procurement regulations
also make it hard for them to engage. Therefore, while the objective
of local based growth is beneficial, it would be useful for the
government to identify its regeneration priorities and ensure
that there is a consistent approach across all departments.
Transport Investment
17. A central pillar of the government's growth
and regeneration plans is to fund new infrastructure which can
stimulate long term growth and enhance land values which can make
development viable. TGLP supports the government's plans to invest
in new transport infrastructure such as Crossrail.
18. Crossrail will support the continued growth
of Stratford and Canary Wharf, but will also provide an opportunity
for the development of town centres in outer east London such
as Romford. While the potential of this project is significant,
there must be support for complementary measures to ensure that
the full benefits of Crossrail are achieved. Many east London
local authorities have put the development of Crossrail stations
at the heart of their local regeneration projects. However, the
cuts to funding for Crossrail and Transport for London, as well
as local budgets mean that plans to improve the accessibility
of stations and for stations to be catalysts for intensification
and urban renewal are under threat. The failure to improve the
size of stations along the route and to support complementary
measures in the local areas means that for outer London the benefits
of the scheme could be much less than anticipated.
19. TGLP also supports the development of High
Speed 2 which will connect London to the midlands and beyond.
However, we are concerned that the proposed route does not include
a station at Stratford. Extending the route to Stratford would
recognise the past investment in Stratford International Station
and allow for direct routes to and from Europe through the High
Speed 1 link at Stratford and access to the eastern branch of
Crossrail. If the scheme is intended to support local growth,
the government should support extending the route to Stratford
as it will stimulate growth development in the east London growth
corridor.
20. TGLP is pleased that the government recognises
the benefits of new transport investment and are focused on investing
in areas that can support long term growth. We consider, however,
that to maximise the economic benefits and effectiveness of transport
schemes they must be fully funded and that support is needed for
complementary measures which allow local communities to maximise
the benefits of the new transport links.
Housing Reforms
21. TGLP is concerned about the impact of the
government's housing plans on the regeneration of east and south-east
London. The government have introduced new policies which will
simultaneously impact housing supply, but also will increase demand.
East London was identified under the last government and by the
Mayor as an area of housing growth; the area is proposed to accommodate
much of London's population growth until 2031 with up to 600,000
new residents as identified by the Mayor in his London Plan. However
much of this land is brownfield and contaminated, making the construction
costs much higher than that in the rest of England. Nevertheless
demand for housing in east and south-east London continues leading
to higher rents which risk making the area unaffordable to new
and existing residents.
22. The government have cut the funding for new
affordable homes by approximately 50% to £4.5 billion. All
of the new capital funding will be invested into the affordable
rent model. The scheme seeks to provide new funds for housing
by allowing RSLs to borrow against future rents which would be
80% of market rates. This model has the potential to significantly
increase the number of intermediate homes. However, the application
of the scheme is such that it will attempt to address demand for
both intermediate and social housing. The low earnings of residents
eligible for social housing in the London Thames Gateway will
mean few will have the means to live in new affordable rented
homes. In practice the affordable rents homes will not be affordable
to tenants in most parts of London. In addition, the high rents
are likely to increase pressure for the majority of homes that
will be built to be one bedroom flats rather than the much needed
family sized homes. As funds will be raised through borrowing
against rents, it is clear that in areas of relatively low rents,
such as parts of outer east London, the scheme will not lead to
a significant increase in the amount of new homes built.
23. As much of the funding is proposed to go
to affordable rent homes which for the reasons stated previously,
will not be practical in London, there are concerns that there
will not be enough supply to meet the expected demand. There is
a strong risk that this model will not work in east and south-east
London and the lack of money for social rent homes means that
the area will be unable to accommodate the growing demand for
affordable housing. This high level of unmet predicted demand
is likely to lead to an increase in rents in the private sector,
increased multiple occupancy, and an increase in local authorities'
waiting lists.
24. The government have introduced the New Homes
Bonus to support the construction of new homes. However the size
of the bonus is not large enough to encourage local authorities
to support new housing as it will not cover the associated costs
of new housing. The high costs of construction and the need for
physical and social infrastructure mean that the sum offered by
the New Homes Bonus will not be sufficient to address the costs
to local authorities of new housing. The government have agreed
to accept gross figures for the affordable homes supplement to
account for the fact that demolitions are needed in regeneration
schemes. However, as the affordable homes supplement is relatively
small, gross rather than net figures for the number of new homes
built are also required to ensure estate renewal projects are
not disadvantaged.
25. In addition to the funding cuts the challenge
of housing people in east London is made more difficult with the
benefit reforms. The cap on housing benefit and the cut in LHA
will lead to a migration of social tenants from central and inner
London to outer east London. The map below produced by Shelter
highlights which neighbourhoods will remain affordable in London
following the introduction of some of key changes. The evidence
clearly shows that areas such as Barking and Dagenham and Newham
will have be the most affordable areas in London and can expect
a significant increase in demand for social housing. The policies
will further increase the problem of multiple occupancy and could
lead to the creation of ghettos in parts of east and south-east
London as unemployed people move eastwards in search of affordable
social housing. Over the long term, we predict that the benefit
reforms will undermine the goal of creating sustainable mixed
communities in London.
26. TGLP recognises that it may be necessary
to find alternative ways to support the construction of new homes.
However, a reduction in the construction of new homes can have
severe economic impacts and can reduce labour market mobility.
27. TGLP welcomes the funding for Decent Homes,
but is concerned that in parts of the Gateway we have the lowest
levels of decent homes in the UK. Urgent expenditure is needed
in these areas particularly given that they are in many cases
next to major areas of potential housing growth. It is essential
to maintaining social cohesion in these growth areas the existing
properties occupied by local communities are refurbished to the
same standards as new homes.
Skills Deficit
28. A focus on growth, therefore, whilst welcome,
will not on its own deliver the regeneration of the Gateway and
its communities unless there is a sufficient corresponding investment
in the skills of local residents. The success of past investment
as well as the prospect of new investment will ensure that the
area is able to continue to provide new jobs. However, ensuring
that investment produces fundamental change in deprived and low
skilled communities will require the government to address the
skills deficit.
29. Despite impressive growth in key financial
and business services, TGLP is aware that local residents are
unable to get jobs in these high skilled sectors. While unemployment
in the area has fallen over the past decades there remains a serious
problem of structural unemployment. Much of east and south-east
London has a poor labour market score predominantly due to the
lack of skilled workers in the area. The lack of skills in the
London Thames Gateway is below both the national average and that
of the rest of London.
30. New transport investment has supported growth
and has opened the local labour market to the wider London labour
market. Residents in east and south-east London have found it
harder to compete for jobs in fast growing financial and business
services industries without the right skills needed for these
jobs. However, with the high costs of living in London, many residents
find themselves in a "benefit trap" as they are currently
financially better off on benefits than working in low paid sectors.
Greater support for the unemployed to get the appropriate skills
to re-enter the job market would support the policies of the government
to address the potential "benefit trap".
31. The majority of people with no qualifications
or low skills are working in low paid jobs, which are vulnerable
to changes in the national economy. Supporting these people to
maximise their contribution to the local economy will require
a joined up approach to skills programmes targeted at those in
work, combined with support for businesses to allow them to facilitate
workforce development.
32. TGLP is concerned by the constraints on universities
in terms of the cuts to funding and the caps in student numbers
which prevent the institutions from growing and investing in new
facilities. This is particularly important in the Gateway as both
a growth area and an area of deprivation and low skills, and TGLP
seek recognition of the importance of continued investment in
higher education in this area.
33. Addressing the lack of skills could have
a dramatic effect on regeneration in east and south-east London.
It would allow the area to utilise its social advantages in terms
of its young and enterprising population, and maximise the benefits
of new investment. In areas that have a high growth potential
such as east and south-east London, increasing the skills base
is a key effective way of reducing unemployment and maximising
growth.
34. TGLP recognise that the government is undertaking
several ambitious projects which could support the regeneration
of areas such as the London Thames Gateway. But to ensure their
effectiveness there needs to be careful monitoring and assessment
of these policies The government should set clear objectives in
terms of regenerating the most deprived areas of the UK and the
policies should be judged in terms of their ability to achieve
these objectives. In east and south-east London, despite many
successes, the area remains one of the most deprived parts of
the UK. Therefore, it may be useful to use the Index of Multiple
Deprivation to investigate whether packages of policies and different
government approaches have actually provided regeneration and
reduced deprivation. In addition, measuring the levels of employment,
and examining improvements in GVN levels could show how effective
regeneration policies have been.
CONCLUSION
35. TGLP welcomes Government's continued focus
on regeneration and economic growth. It considers however that
there is a need for Government to set out clear objectives for
regeneration and to ensure that these objectives are considered
and applied consistently across Government when setting policy.
36. The proposed locally led approach to regeneration
allows communities to address their specific needs but this approach
requires flexibility in both policies and funding to be effective.
Tackling the fiscal deficit makes the latter difficult, but it
is important that the impact of funding reductions in other areas
such as local government on the ability of key organisations to
support local communities is recognised and addressed particularly
in Thames Gateway. New transport investment such as Crossrail
will help continue important investment in east and south-east
London, but it will not unlock the full potential of the London
Thames Gateway without greater investment in this area.
37. There is an opportunity for a renewed emphasis
helping people and businesses to secure and participate in the
growth of the Thames Gateway. The area uniquely combines a great
potential to provide economic and residential growth with tackling
widespread deprivation and low skills, but to do this requires
specific investment, which recognises these special characteristics.
March 2011
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