Building better places Contents

Appendix 5: Note of Committee visit to Southwark Council and Elephant & Castle: Wednesday 16 September

As part of its inquiry, the Committee met with members and officials of Southwark Council, before travelling to Elephant and Castle to meet with staff from Lendlease and to view part of the new Elephant Park development.

The following Members took part in the visit:

Baroness Andrews, Lord Clement-Jones, Baroness Finlay of Llandaff, Lord Inglewood, Earl of Lytton, Baroness O’Cathain, Baroness Whitaker and Baroness Young of Old Scone.

The Committee heard from:

Simon Bevan, Director of Planning, Stephen Platts, Director of Regeneration, Councillor Nick Dolezal, Chair, Planning Committee and Councillor Mark Williams, Cabinet Member for Regeneration and New Homes.

The Committee were told that the delivery of new housing in London is concentrated in the high-density, inner London Boroughs such as Southwark, rather than the outer Boroughs and suburbs.

The Council officials noted that Southwark is in a relatively fortunate position to meet the demand for new housing, as it has a relatively large amount of land to exploit compared to most other urban councils.

Housing targets

The Committee were told that the Mayor of London sets targets for housebuilding in all the London boroughs. Southwark’s target of 2,736 new homes per year—the equivalent of 1 every 3 hours—is the 2nd highest in London.

Southwark Council have, at times, raised concerns regarding housebuilding targets set out by the Mayor (both the former Mayor Ken Livingstone and current incumbent Boris Johnson MP). Their target was set at 1,600 new homes per year initially, then raised to 2,005 and then again to 2,736 per year. It was suggested that success in delivering against targets in the past may have contributed to a subsequent increase in targets, which could prove difficult to deliver.

Old Kent Road development

The Committee were told about the initial planning for a large new housing development around the Old Kent Road in Southwark.

The area surrounding the Old Kent Road is largely made up of old industrial sites, based around the former Surrey canal, gas works and railways. It has a high number of single-storey factories and yards. It has been protected for many decades for industrial usage, in order to safeguard local employment opportunities and to supply the rest of London with the products of those industries. As a result of this designation, little or no new housing has been allowed in the area.

In the last couple of years, however, this position has been re-evaluated and housing is now being considered for the area. This change was initiated by Southwark Council, who had asked the Mayor of London to consider the Old Kent Road as an ‘opportunity area’.

The council are planning for 20,000 new homes in the Old Kent Road area, accommodating 50–60,000 people (approximately the size of a town such as Woking). It is a 15–20 year programme that is in its early stages at present. The homes are not being built to meet particular demographic or population projections—other than to contribute towards the Mayor’s target—but the Committee were told that the pressure for housing in the capital was such that there was no risk that there would not be the demand for new housing.

At this stage the Council have not undertaken the detailed planning for education and health infrastructure, but have identified that new infrastructure will be essential, particularly transport connections. The proposed Bakerloo Line extension is deemed vital to the overall viability of the proposals.

Southwark Council are actively working with local residents to engage them in the process of developing the plan for the area. They have set up an Old Kent Road community group that has regular meetings about the project and which is discussing ideas with the architects for the project, Allies and Morrison.

The Committee asked about risks the project might face. The Council does not own much land in the Old Kent Road area, and ownership is fragmented, meaning that acquisition for development could be a lengthy and complex process, with a risk of land value speculation. It will require Compulsory Purchase Orders (CPOs) and likely result in incremental construction and on-site assembly (which is more costly). In addition, there is the possibility that the Bakerloo Line extension does not happen (or an alternative route for the extension through Camberwell and Peckham is chosen). Site contamination could present a further complicating factor.

There are also the risks and potential costs of planning appeals and judicial reviews, which can cause significant delays in delivery. Experience in the Borough relating to the ‘Quill project’ was highlighted. This had been intended as student accommodation for King’s College London; delays caused by planning appeals, however, had led to this accommodation need being met elsewhere, with the development being changed to become private accommodation instead.

In terms of infrastructure investment, the Southwark Council officials told the Committee that the Old Kent Road project is too early in its formulation to get financial support from the Greater London Assembly, though it may be possible to access cheaper borrowing for the project through the Assembly in due course.

They noted that the London Mayor introduced a CIL (Community Infrastructure Levy) for funding Crossrail that London boroughs had to contribute towards. Southwark was a significant contributor to the CIL, despite receiving no direct benefit from Crossrail (the East-West route of the line does not go through Southwark, and will do very little to alleviate congestion on travel routes in or through the borough). Southwark Council asked for the Bakerloo Line extension project to receive contributions from this fund—the request, however, had been turned down

Affordable housing, viability and Elephant Park

Southwark Council told the Committee that that they have a robust planning policy for affordable homes—35% need to be affordable (broken down into 70% to buy and 30% to rent).

The Committee were told, however, that the viability definitions in the National Planning Policy Framework (NPPF) are making it difficult to get 35% on all the developments happening in the borough. The NPPF requires that local policy (such as setting the proportion of affordable housing, or levels of infrastructure contributions etc.) does not impede developments from being deliverable. The Committee were told that, in practice, some developers would tell the Council that the requirement to provide 35% affordable housing made their proposals no longer viable, thus requiring the negotiation of a lower percentage of affordable housing. The Committee were told that the financial calculations underlying such viability assessments were problematic, as they considered only the current land values of a site, rather than projected land values at the completion of a project (which may be 10-20 years into the future). Some contention also existed regarding the inclusion of projected infrastructure costs in viability assessments.

Southwark Council said that for the Elephant Park site (which the Committee later visited), the developer Lend Lease had initially calculated that only 11% of the housing on the site could be affordable. Southwark Council negotiated this up to 25%, although they acknowledged that this was still short of their 35% target. However across the Elephant & Castle area the Council expect to reach 35% overall over the next 30 years, as some sites will be 80%–100% affordable.

The Committee were told that while mixed-tenure housing blocks were desirable, they are difficult to deliver in practice. One of the major reasons is that service charges in private blocks are higher and it is hard to resolve service charge issues in a mixed-tenure block. It was also noted that service charges are not covered by housing benefit, so high service charges would effectively price people out of the blocks, making them no longer affordable. Southwark have sought to ensure that the affordable housing in the Elephant Park development is superficially no different to the private housing in order to create mixed-tenure developments, if not mixed-tenure blocks.

Southwark planning & skills

Southwark have a Local Plan, called the Southwark Plan. This plan is complete and a revised version is due to be finished in 2017. Southwark’s plans have to conform with the Mayor’s London Plan.

The Committee were told that councils’ planning budgets had been cut by 40% in the last few years and that further cuts of around a third are expected in the next 3 years.

Southwark has a comparatively large planning team and is reasonably well-resourced compared to other councils, but were still feeling the effects of funding reductions. Recent changes to the way in which developers are charged for applications had proven helpful. It was noted, however, that Southwark is in a fortunate position due to the value of building in inner London, and extracting significant sums from developers would not be possible for councils operating in lower-demand areas.

In terms of skills, the Southwark team are relatively well-equipped, though consultants are sometimes engaged for particularly technical pieces of work. In recruitment terms, it was sometimes difficult to compete with a private sector that was typically able to offer higher salaries. Appealing factors such as a good work-life balance are required to attempt to entice people to work in public sector planning.

What would Southwark Council recommend?

The Chairman asked the Southwark Councillors and officials what they would like to see the Committee recommend.

The Councillors said they would like to see an end to the Right to Buy policy and that if the proposal for a Right to Buy for Housing Association properties went ahead it would be disastrous for the borough.

The Council officials said that skills shortages were a significant problem, particularly construction skills. They also suggested that the contracting model was ‘broken’, that there was too much sub-contracting and that the construction supply chain was not robust.

The Committee were also told that there is not enough housebuilding by local government and that national government needs to trust local government to build and give them the borrowing capacity to do so.

The Chair of the Planning Committee suggested that a less adversarial planning process would help to deliver more housing and better planning outcomes.

Lendlease

The Committee received a presentation from Rob Heasman (Project Director) about the Elephant Park development followed by a tour of the Trafalgar Place site by Elizabeth Randall (Senior Project Manager) and Iain Smith (Communications Manager).

About Lendlease

Lendlease are a subsidiary of an Australian property developer that operates across the world. They are an integrated company, working at all parts of the property ‘food chain’, including planning, construction and management. The Committee were told that Lendlease will see a development through to completion and then afterwards will consider selling it on as an investment (e.g. to pension funds). They developed the Bluewater out-of-town shopping centre, which they recently handed over to new owners 15–20 years after starting the project.

The Elephant Park development is the biggest UK resident site for Lend Lease, although they currently have bigger residential developments in the USA and Australia. They also currently have ongoing developments in Deptford and Stratford and have acquired the Crosby Homes portfolio.

Elephant Park

The Elephant Park project involves the regeneration of a 1970s mono-tenure housing estate (the Heygate Estate), attracting investment further south into the borough of Southwark.

Elephant Park is a key opportunity area in the London Plan. More buses go through Elephant & Castle every hour than anywhere else in Europe; it also has two tube lines and the Thameslink rail connection, and is less than one mile from 11 river crossings.

Lendlease noted that one of the benefits of the Elephant & Castle project is that there is not fragmented land ownership. This has made the large scale demolition, planning and redevelopment more straightforward.

The new Elephant Park will have ~3,000 homes and 50 shops by 2025 and create a new ‘linear park’ with 1,200 trees. This includes retaining many of the mature trees currently present and designing the site around them. Lend Lease are seeking to create a new ‘town centre’ with diverse usage in the area. The former Heygate estate had 1,212 homes on it—the new Elephant Park will have 2,800.

Lendlease said that 25% of the development will be affordable housing, with half for rent and half for shared ownership. It was emphasised that, from the outside, it would not be possible to tell which blocks were private and which were affordable. Of the rented properties, the 3 and 4 bed homes will be social rent and the 1 and 2 bed homes will have a capped rent.





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