Memorandum from BCSC
BCSC
BCSC represents businesses operating in the retail
property sector, our mission being to promote industry best practice
and advance the professional aims of the retail property industry.
Our membership is a broad church of around 2,600 property professionals
including owners, developers, retailers, surveyors, architects
and public sector managers.
The retail and retail property industries together
play a strategic role in sustaining communities, with 7.6 million
people currently employed in the UK. In 2008 alone around £6
billion was invested in the UK by the retail property industry,
creating tens of thousands of new jobs.
Given our unique position at the heart of the retail
property industry—an industry which has played a crucial
part in revitalising many of our towns and cities, including in
recent years Liverpool, Manchester and Bristol—we would
welcome the opportunity to explore with you the issues raised
in this submission at a future oral evidence session.
SUMMARY OF
BCSC POSITION ON
LOCALISM AGENDA
During the last two years, we have seen a radical
change in the fortunes of retail led development. The stark consequences
of the UK banking crisis, combined with falling capital values
and consumer demand has had a profound effect. Add to this the
reluctance of banks to provide loan facilities to commercial property,
and in particular, development, and we have the recipe for stagnation.
Our research shows that virtually all development that is not
under construction at present is unlikely to be delivered for
several years. This will have a dramatic impact on the regeneration
prospects for many towns and cities in the UK, and will undermine
hopes of imminent job creation in our part of the private sector.
Against this backdrop, we welcome your Committee's
Inquiry into localism and are pleased to offer our industry's
initial thoughts on the likely consequences of moving towards
a decentralised model for the delivery of public services and
a localised framework for sub-national growth.
Our submission focuses primarily on the possible
consequences of a localised framework for sub-national growth
as it is within this policy area that our industry has the most
experience and expertise to offer.
To summarise:
- We welcome the Government's decision to look
at ways to enable communities to better take a lead in the direction
of the development of their local area.
- We urge Government to make the transition to
the new governance structures as straight forward as possible—whilst
recognising that the full transition may take some time.
- Our industry needs further clarity from Government
to be able to adapt internal processes to engage with new points
in the governance structures.
- We welcome the Government's commitment to seeing
businesses lead Local Enterprise Partnerships (LEPs), however
we urge Government to ensure that the new system does not suffer
from a perceived democratic deficit as this could undermine the
new setup and lead to public calls for a rethink at a future date.
- We believe that the planning system works best
when clarity exists for both applicant and developer.
- Planning departments need to be adequately funded
and resourced in order to prevent both delays and unnecessary
application refusals.
- Looking to delivering a sustainable built environment,
we continue to believe that the national building regulations,
rather than localised interpretations of the Merton rule, are
the best mechanism for meeting our climate change obligations.
- We fully support proposals to extend to the discretionary
measures for providing business rate relief.
- We welcome the recent announcements on Tax Increment
Finance (TIF) proposals, and look forward to working with Government
to identify the best model for the UK market.
3. THE EXTENT
TO WHICH
DECENTRALISATION LEADS
TO MORE
EFFECTIVE PUBLIC
SERVICE DELIVERY;
AND WHAT
THE LIMITS
ARE, OR
SHOULD BE,
OF LOCALISM
As stated in our opening remarks, we are keen to
comment only on the areas of public service delivery that impact
directly on our industry's ability to thrive and bring about regeneration
benefits for the country's many towns and cities. With this in
mind, we have restricted our comments to the planning system,
the sustainability agenda and the possible adjustment of business
rates arrangements.
Planning
Irrespective of the tier of government that is designated
the decision maker/arbitrator for planning decisions, we urge
Government to ensure that all parties—developer and potential
critic—are fully aware of the channels of engagement open
to them.
With this in mind, we would welcome clarity from
Government as to how far the functions of the LEPs will in fact
extend. In the 29 June letter to Local Authority Leaders and Chief
Executives, the Government noted that some of the functions of
Regional Development Agencies are "best led nationally, such
as inward investment, sector leadership, business support and
access to finance". We believe that it would be of huge benefit
to those establishing LEPs and those seeking to engage and work
with them in the future if Government could be more explicit in
this division of responsibility.
To give some context to this, it is crucial to understand
that our industry, like many, centralised its operations as Government
centralised its own. This enabled our companies to engage with
the relevant decision makers and build effective relationships
which have helped to create some hugely beneficial regeneration
projects.
With the dismantling of the RDAs set to be completed
by 2012 (24 months), our members are keen to ensure that our own
internal operations are realigned to match the new central/local
governance arrangements. To minimise disruption, and delays to
regeneration projects and the positive consequences thereof, we
are keen to begin the transition now.
One factor that has contributed to the cumbersome
character of the current planning system is the lack of officers
available to process applications on the ground. Further Government
cutbacks to local authorities' budgets will further put pressure
on the resourcing of planning departments. This could lead to
an even slower process due to fewer officers being able to process
applications, resulting in increased delays in bringing forward
schemes at a time when delivery of investments needs to be accelerated
to safeguard and create jobs.
Notwithstanding some of the concerns about the current
planning regime, our industry has welcomed the recent shift in
attitude towards development at a national level. The planning
system has become more open to a positive view of development,
recognising the regenerative benefits that come about from significant
private sector investment in local areas. We would be keen to
ensure that this pro-development attitude is not lost in the transition
as responsibilities are devolved.
Sustainability
We recognise that there are many ways in which shopping
centres can reduce carbon emissions, via both behavioural and
technological changes, and we are committed to the Government's
target that all non-domestic property should be zero carbon by
2019.
We continue to support the use of Building Regulations
as the mechanism to deliver sustainability advances, and urge
Government to resist handing more powers in this area to the planning
system.
The introduction of policies designed similar to
that of the Merton Rule do not deliver the required flexibility
to work towards meeting the 2019 target. It is crucial that each
development is assessed on its own merit, and local authority-wide
(often arbitrary) sustainability targets have not been shown to
deliver the best results.
The Merton Rule is clearly popular with local authorities
and is seen to be quick win to deliver energy reductions and improve
a council's reputation in this area. However, the rule is restrictive
in its application, and in certain circumstances introduces an
element of risk in enabling developments to move forward.
A move towards such policies could serve to complicate
matters and create further regional inconsistencies between different
local authorities. This, we feel, could undermine the power of
larger landlords and developers to make strategic decisions relating
to the sustainability of more than one shopping centre at any
one time, thus reducing economies of scale.
Business Rates
Retailers contributed around 25% of Government's
annual £25 billion in business rate receipts in 2009-10,
and with a revaluation in 2010 along with powers given to local
authorities to raise addition rates revenue through a Business
Rate Supplement (BRS), the cost of business rates to retailers
is likely to increase. Escalating business rates at a time of
falling sales driven by weak consumer confidence continues to
have a detrimental impact on retailers' ability to remain profitable.
This has resulted in large numbers of retailers going into administration
and an increase in the amount of empty property on our high streets.
Against this backdrop, we fully welcomed the Government's
proposal, as published earlier this year, to establish a broad
new power allowing a local authority to grant relief to any ratepayer,
subject to local eligibility criteria. We believe that this would
help support town centres during the current difficult economic
climate. We strongly believe that any relief should also be made
available on empty property. This is an area where the localism
agenda can enable communities to seize the initiative and act
to protect local retailers and landlords and thus preserve their
own high streets.
Turning to the recent announcement by the Deputy
Prime Minister on Tax Increment Financing (TIF), we firmly believe
that a specific TIF variant—known as Local Tax Re-investment
Programme (LTRIP)—should be introduced urgently. Unlike
other tax increment proposals, including ADZs, we believe that
the introduction of LTRIP transfers risk to the private sector
for upfront infrastructure investment without relying on public
sector money and in our view does not require primary legislation
given, as you will be aware, that the Local Government Act 2003
s70(4a) gave powers to Ministers to allow additional business
rates, over and above those assumed in annual financial settlements
and which would normally be retained by Government, to be returned
to local government and allocated to principal authorities.
As indicated above the key point to note about LTRIP
is that it does not require any initial borrowing by the local
authority. Instead, the expenditure can be financed by the developer's
own resources, and the developer is then repaid out of a tax increment,
from increased business rates, as and when it arises. Thus the
local authority can entirely transfer to the developer the construction
risk and the risk that the tax increment will fall short of expectations.
4. The lessons for decentralisation from Total
Place, and the potential to build on the work done under that
initiative, particularly through place-based budgeting
We welcome the LGA's June 2010 report Placed based
budgets the future governance of local public services. Whilst
we recognise aspects of the description of a "public service
architecture created on a flawed and over-centralised model, with
a public budget for every issue, and an inspection and control
regime for each one", we do not believe that the role for
centralised streams of funding is completely defunct.
There will continue to be a role for a central department
to share best practice and guidance with local authorities around
the country. This in itself should not be seen as an unnecessary
additional cost. This should be seen as a means of saving money,
albeit the local authorities' money rather than central government's.
To expect each local authority to undertake the same learning
curve for each and every new planning application (for example)
that comes into its realm would be an inefficient use of public
funds. It would be more sensible for the central department to
be able to share the experience and expertise of the whole country
with all the respective authorities.
We fully accept that there is also a role for trade
bodies in the dissemination of best practice and education, and
this is a core function of our own organisation. We would be particularly
keen to explore ways in which we, and other industry bodies, can
help to provide local authorities and other local decision makers
with the necessary education and experience that they require
to make informed choices for their communities.
5. The role of local government in a decentralised
model of local public service delivery, and the extent to which
localism can and should extend to other local agents
Local authorities will clearly have a crucial role
to play in the decentralised model of local public service delivery.
We also welcome the proposed LEP structure which is set to include
local business representation.
That said, we do acknowledge the perceived accountability
deficit in the RDA model. With this in mind, we are keen to ensure
that the replacement LEPs are not left vulnerable to similar perceptions.
We would therefore urge Government to issue robust guidance in
relation to the balance of the LEP Boards.
We fully support the suggestion that "business
and civic leaders work together", however, we believe that
it is essential that there is no space whatsoever for a public
perception that the new LEPs are anything other than democratic
organisations.
We believe that there do need to be in place some
guidelines to ensure that all LEPs are able to demonstrate democratic
accountability to their local areas. To give each LEP the ability
to construct its own Board without such guidance could undermine
effective delivery in the future, with opponents of decisions
exploiting the perception of a democratic deficit to challenge
plans.
6. The action which will be necessary on the
part of Whitehall departments to achieve effective decentralised
public service delivery
The transition to decentralised public service delivery
cannot and will not take place over night. It is fundamental that
the Whitehall structures remain in place, and properly resourced,
until such time as the new arrangements are fully operational.
We cannot allow a situation to arise where there is a shortfall
of service provision, be it a shortfall that causes delay to the
planning system, or indeed one that undermines social care provision.
To allow such a hole in service provision to occur will undermine
the public's support for localism and thereby could cause the
very same resentment that came to be levied at the soon to be
extinct RDAs.
Our industry is particularly keen to ensure that
we do not have to undergo a further remodelling of the governance
arrangements in the future as this would only serve to create
further delays to development processes and thereby exacerbate
delays to realising the full benefits of some retail-led regeneration
projects that are currently in the pipeline.
7. The impact of decentralisation on the achievement
of savings in the cost of local public services and the effective
targeting of cuts to those services
We recognise the constraint on public finances at
the present time, and we do understand that delivery of public
services at a local level may reduce some costs. However, we cannot
begin to estimate these cost savings for Government or indeed
those for our own industry until such time as further clarity
is available on the Government's localism proposals.
8. What, if any, arrangements for the oversight
of local authority performance will be necessary to ensure effective
local public service delivery
The LGA's place based budgets report recommended
that each place should be accountable to Parliament for its budget.
Whilst in principle this sounds relatively straightforward and
removes layers of bureaucracy, we are sceptical as to whether
this could become a realistic proposition.
Given the planned reduction in the number of MPs,
and therefore the increase in each MP's workload, we would welcome
further explanation of how this proposal would be taken forward.
We would question whether there would be sufficient Parliamentary
time for MPs to scrutinise each local authority's budget. Equally,
we would welcome further clarity on where accountability would
lie should a budget be misspent—would it be with the place,
or with the scrutiny committee of MPs.
9. How effective and appropriate accountability
can be achieved for expenditure on the delivery of local services,
especially for that voted by Parliament rather than raised locally
As noted above, we would welcome further exploration
of this issue. We are concerned that Parliament will not alone
have the capacity to regulate the funding streams. This is an
area where there may well continue to be a role for some arms
length bodies with limited regulatory functions.
October 2010
| 
