A fundamental role of planning is to provide land of the right type in the right location to balance the need for new development with the interests of local communities and the wider public. The key challenge though is to recognise current and emerging growth opportunities and ensure that local plans are sufficiently flexible to be able to accommodate the full spectrum of opportunities, from small scale extensions and change of use through to identifying strategic sites capable of accommodating inward investment from external sources.The recent chain of events triggered by the UK’s decision to leave the EU has placed a renewed focus on how localities position themselves for economic growth and ensuring that the various planning systems across the UK are ‘fit-for-purpose’ to secure future prosperity.Inward investment represents just one source of growth and development, yet it remains one of the more challenging to quantify and plan for, given its ‘footloose’ nature. The extent to which local areas can actively plan for – and successfully capture – inward investment can also vary considerably across the country.To explore how planning for inward investment works in local areas and how local partners can be more pro-active in securing these opportunities, NLP recently carried out a survey of local planning authorities (LPAs) and local enterprise partnerships (LEPs) across England. The key messages are presented in our new research report Invest to Grow and are summarised below:
Growth begins at home: 88% of LPA and 100% of LEP respondents thought working with existing businesses and investors was a particularly effective way of supporting and encouraging inward investment in a local area, underlining the valuable role that domestic investors play in expanding their existing presence within the UK.
‘Oven-ready’ sites are crucial: The most significant barrier to attracting and securing inward investment comes from the various factors that hold up development, such as infrastructure costs required to make sites ‘oven ready’ for development - this was cited as a significant barrier by 83% of LPAs and 100% of LEPs. Planning can have a role to play in shaping the strategy and funding mechanisms required to help overcome these barriers and unlock development opportunities ready for investment.
Clarity on inward investment strategies: Global competition for inward investment can be fierce and within the UK a handful of sectors are repeatedly being targeted by local areas, for example through the designation of Enterprise Zones and through allocated City Deal funding (see Figure below). This makes it increasingly important for local areas to develop their strategies around their indigenous sector strengths, clusters and ‘USPs’.
Work together: A 4.good level of awareness exists amongst LPAs and LEPs of the strategy for inward investment in their area and supporting local growth, but a third of LEPs and 60% of LPAs thought there was room for more collaboration between their respective organisations on planning for inward investment. This suggests there is significant scope for more effective, joined-up working between partners.
Drawing on best practice examples, we have identified a series of critical success factors that local partners could use to shape appropriate planning policy responses to inward investment opportunities in their area. This distils the opportunity into three broad typologies (described below) and provides a useful way of thinking about how the planning system can more pro-actively target and help capture inward investment within the overall ambit of planning for growth.‘Grow your own’ – the first typology - refers to companies that already have a UK base and have scope to expand their operations either in the same location and/or elsewhere across the country. Responding to this opportunity is all about taking the time to understand and nurture an existing business base, ensuring they have the support they need to become more embedded within a local economy and being responsive to expansion and development plans to ensure that their growth can be accommodated.
Source: NLP Analysis
‘Catch and steer’ – the second typology - describes firms that have already decided to bring their investment to the UK or a particular region and are exploring their location, site and premises options. Planning has a role to play here in establishing a clear and competitive sector offer, by providing planning certainty that key sites are available and deliverable, and contributing to making the economic case for public funding to unlock development opportunities.
Source: NLP Analysis
‘Footloose and free’ - the final typology - relates to firms that are not tied to any particular location or country but operate within a global marketplace. This arguably represents the most difficult opportunity to plan for, so maintaining a flexible and responsive planning system that anticipates (rather than accurately predicts) where opportunities might derive from is key, alongside promoting a positive message to the global marketplace that a local area is ‘open for business’. This will help an area to respond effectively if, or as and when the time comes.
Source: NLP Analysis
Our research shows that planning for inward investment inevitably looks different in different places, but with the EU Referendum result already impacting on business decisions to invest and trade with the UK, it also indicates that the ability of local areas to make themselves attractive to inward investment - and the opportunities that this can bring - is now more important than ever.Download a copy of Invest to Grow here.
The principle of Functional Economic Market Areas (FEMAs) is of longstanding relevance for spatial and economic planning. However, until recently, it was not always being clearly applied in practice, even under the Regional Strategy regime: most local authorities produced economic evidence based on their local authority boundaries, and made general reference to their neighbouring authorities. However, the Government’s Planning Practice Guidance (PPG) published in 2014 gave FEMAs far more prominence: it states that economic development needs should be assessed in relation to relevant FEMAs - that is, the spatial level at which local economies and markets actually operate (in most cases extending beyond administrative boundaries). In that sense, it is analogous to the role of Housing Market Areas (HMAs) in assessing housing need.To support our clients to meet this requirement, NLP has developed FEMAplan: a framework for assessing the scope and nature of FEMAs. Having applied this framework for some of the first post-PPG FEMA mapping exercises across the country, it seemed like a good time to reflect on what we have learned, how this has shaped our thinking about the geography of local economies, and what this might mean for local authorities and their partners when it comes to planning for, and delivering, economic growth. Some key observations and reflections are set out below.Across the guidance (PPG and previous Government notes), a number of key themes and factors are identified as useful approaches or ways of thinking about the economic geography of a local area. These themes shape FEMAplan and are summarised in the Figure below.
When undertaking FEMA analysis, explore the opportunity to collaborate with neighbouring authorities and partners, shaping the scope of analysis together and sharing resources if possible. This approach has been taken in Thames Valley Berkshire where NLP recently supported the Thames Valley Berkshire Local Enterprise Partnership (LEP) and six Berkshire authorities to examine the economic linkages and relationships that exist across the area. This sub-regional partnership approach also worked well in Sheffield and Rotherham, Hertfordshire and Bedfordshire, using the latest data to revisit and re-examine established economic relationships and networks.
Example Commercial Property Market Area Analysis
Be clear from the outset what the purpose of the FEMA analysis is. Is it needed to define the geographical area of analysis for an economic strategy or employment land study, to inform Local Plan policies or Infrastructure Plans? FEMAplan has been used to explore a range of policy issues, from an assessment of the potential scope for new strategic employment sites within the ‘Gatwick Diamond’ to appraising current economic performance and potential across the Greater Brighton and Coastal West Sussex area.Draw on existing data and analysis as far as possible, with published studies often containing a wealth of intelligence and analysis. When it comes to synthesising this information with new intelligence and data, try and remain open to different ways of thinking about economic geographies and flows of people, goods and capital, particularly where this might deviate somewhat from the ‘status quo’. Our recent work in Berkshire looked beyond the well-recognised concept of an M4 Western Corridor to identify three distinct sub-market areas operating within the Thames Valley (see Figure below), each with their own unique characteristics and profile of occupier demand.
Sub Market Areas in Thames Valley Berkshire
Once a range of factors for mapping FEMAs has been chosen, collating the evidence into a single FEMA boundary can prove challenging; ultimately an element of judgement will be required. One approach could be to consider the ‘degree’ of relationship or overlap with adjoining and nearby authorities across different indicators. In Bracknell Forest, this exercise found that functional linkages with adjoining Windsor & Maidenhead were stronger in commercial property and labour market terms than they were for housing and consumer markets. This evidence will help to determine where cross boundary cooperation will be required on particular strategic planning issues.Analysing the spatial extent and nature of FEMAs also provides a great opportunity to use powerful GIS, mapping and graphics tools to convey sometimes complex and unfamiliar geographies in a user friendly and digestible format. FEMAplan uses NLP’s market-leading Spatial Analytics skills to capture a broad array of economic information and analysis in a visually appealing and creative way. For example, business sector mapping was used to identify the spatial distribution of business activity and clustering of sector specialisms across the Nottingham Core and Outer Housing Market Area (HMA), as illustrated below. This intelligence was used to help shape a spatial strategy for accommodating business needs across the HMA.
As part of the process of streamlining local plans, recent recommendations made by the Government-appointed Local Plans Expert Group pointed to the potential for government to update national evidence on the definition of HMAs, as well as aiming for coordination between economic and housing planning boundaries to facilitate more effective strategic planning. A sound understanding of economic geography will be key to the outcome of this recommendation being taken up, and we will be watching with interest to see how local planning authorities and their partners apply this evidence and use it to shape their development strategies, and their cross- boundary ‘duty to cooperate’ discussions in the months ahead.Find out more about FEMAplan and how it can be used to examine functional economic geographies by getting in touch.