28 Nov 2019
Last month’s London Plan Panel Report confirms what was widely suspected – that London’s future industrial land needs are probably higher than first thought, mainly because of growth in demand for storage and warehousing within and close to urban locations. Whilst the evidence indicates a modest reduction in the amount of land needed for manufacturing uses (c.170 ha), this is more than counterbalanced by predicted growth of land needed for distribution uses (c.280-400 ha), driven by a combination of London’s population growth and the shift to online retailing and e-fulfilment centres.
The draft Plan assumes achieving a 65% plot ratio average to accommodate the future balance of industrial needs. But evidence submitted to the Examination pointed to this being challenging (indeed, our research last year across a sample of sites in Outer London found the current average ratio closer to 33%), and not necessarily applicable in all cases. This led the Panel to conclude, “whilst this does not mean that the average of 65% could not be achieved in the future, it does suggest it may be challenging in some locations and for some types of development.” In other words, intensification of industrial land is not in itself likely to absorb the full level of industrial land needs identified, and in any event there is uncertainty about how deliverable this would be in practice.
To complicate matters, the pipeline of industrial land release is also now much greater than was originally assumed. In 2015 about 12% of existing industrial land, equating to 838ha, either had planning permission for non-industrial development or had been identified by boroughs has having potential for redevelopment, with no certainty that any industrial capacity would be retained. The 2017 SHLAA indicated that this figure had increased by 106ha to 944ha, implying that future losses of industrial land will probably be higher than was first thought – much to help meet the Plan’s housing requirements.
Furthermore, the Panel noted that the vacancy rate of existing industrial land and premises in most boroughs is less than 5% – referred to as “a reasonable benchmark to assume in an efficiently operating market” – so there’s not even much slack within the current land supply to provide more capacity (apart from a small number of east London boroughs where vacant supply is potentially higher).
Taken together, these factors led the Panel to report, “there is likely to be a need, in quantitative terms, for more industrial land to meet future demand over the plan period to 2041 than assumed in the Plan.” However, it’s not just a quantitative issue. Whilst existing industrial land supply may be distributed across property markets and in locations that are generally suitable for the types of industrial use that are expected, the Panel also identified that there will almost certainly be a need to meet new locational and site specific requirements of some businesses including in and around the CAZ and other accessible locations. So not only does London need more industrial land, but it needs to broaden the portfolio of sites and locations it has to offer.
In this context, the Panel concluded:
“We consider that the approach to meeting [industrial land] needs set out in E4 to E7 is aspirational but may not be realistic. This is for a number of reasons relating to the practicalities and viability of significant intensification of SIL and LSIS, the continuing pressure to redevelop non-designated sites for other uses, and the likely need for new sites in certain locations, including in and around the CAZ.”
There was significant debate about the policy detail at the hearing sessions in March, as we reported in an earlier blog. Modifications are suggested to help the effectiveness of these policies E4 to E7 in the short to medium term, but the Panel is unequivocal that planning for medium to longer term industrial land needs should fall within the remit of the future strategic, London-wide Green Belt review that is recommended.
The context for this is that in the 15 years since the first London Plan was adopted, there has been a general presumption in favour of industrial land release across London within specified benchmarks. However those benchmarks were significantly exceeded, with the end result being far greater release of industrial land than was ever anticipated (Figure 1). The effect of this has been not only to reduce London’s industrial capacity beyond what structural trends allowed for, but also to narrow the range of industrial locations (particularly within inner London) available to accommodate the wide range of business uses that can exist on industrial sites.
Figure 1: Change in London’s industrial floorspace supply (2000-2016)
In response, the draft Plan proposes a far more stringent approach to better guide the management of remaining industrial capacity, but relies heavily on intensification and co-location of industrial uses (plus introduces – but doesn’t really articulate in any detail – the concept of ‘substitution’ whereby industrial needs could be met outside of London). However, the Panel was evidently not convinced that the capital’s current and likely future demand-supply balance for industrial land could be met solely in this way, and indicates a bolder approach is called for in the longer-term. The risk is that the issue simply ends up in the long grass, whilst in the meantime a buoyant industrial market adds more pressure. It will be interesting to see how the Mayor responds.
See our other blogs in this series:
New London Plan Panel Report: Homes for all?
Lichfields will publish further analysis on the London Plan Panel Report and its implications in due course.
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Lucie Bailey & Ciaran Gunne-Jones
27 Nov 2019
Today marks exactly two years since the government published the UK’s Industrial Strategy. Since then, Local Enterprise Partnerships (LEPs) and Combined Authorities across the country have been busy preparing their local response through the form of Local Industrial Strategies (LIS), intended to showcase how local areas can support the nationwide challenge to boost productivity and economic prosperity.
The journey so far
So far, 6 “trailblazer” LIS have been completed and published, forming part of a first ‘wave’ that focused on the major city regions of Manchester and Greater Birmingham and the Oxford-Cambridge Arc growth area (see Figure 1).
Wave 2 includes a further 6 strategies. One of these has now been published (West of England) with the remainder due to be agreed with government by March 2020.
The third and final wave of LIS captures all remaining areas of England outside of waves 1 and 2. Progress within this group varies quite significantly, and some wave 3 strategies appear to be further ahead than their wave 2 counterparts (such as the draft New Anglia LIS which has been submitted to government for review).
Figure 1: Local Industrial Strategy ‘Waves’
Source: Cities and Local Growth Unit
Note: Numbered areas refer to ‘wave 3’
With government originally aiming to have all LIS in place by early next year, the race is on to get the remaining 30 or so agreed with the various government departments and Whitehall teams. And whilst recent political events are likely to have impacted this programme to some degree, the March 2020 target remains the official position.
At Lichfields, we’ve been supporting a number of LEPs and Combined Authorities to get their evidence base in place and to help draft policy propositions and interventions that maximise local strengths, assets and strategic growth opportunities, whilst also working with a range of other local partners across the country to feed into the LIS process to ensure their specific priorities are reflected.
What have we learnt?
A number of overarching observations and learning points stand out, based on what has come forward from LIS development so far:
A number of common and recurring themes emerge from the published strategies (waves 1 and 2) in terms of levers and catalysts for local productivity growth. These include health innovation (data-driven health and life sciences, med-tech etc), connectivity and infrastructure (including the future of mobility ‘Grand Challenge’), digital and creative technology, and advanced manufacturing and materials. Many of these sound familiar, but there’s a notable shift towards innovative, technology driven solutions to global Grand Challenges (see below).
All of the strategies published so far explicitly respond to the majority, if not all, of the four Grand Challenges posed in the national Industrial Strategy. Opportunities for alignment with the Grand Challenges are clearly stronger in some areas than others, but government will need to ensure that at a macro level, these responses are complementary rather than competing.
The final LIS documents are somewhat lengthy, with some extending to more than 100 pages; a far cry from the 20-30 page guideline initially suggested. This makes them challenging to fully digest, and difficult to compare without a consistent ‘template’ in use. Some such as the Oxfordshire LIS are accompanied by a concise summary, and user-friendly diagrams such as maps of innovation clusters included in the SEMLEP LIS help to place the strategy narrative into local context.
Related to this, the structure of the published strategies can make it difficult to identify the essence of their proposition. Some are framed around the Grand Challenges (e.g. Greater Manchester), while others use the five foundations of productivity (Oxfordshire), key sectors (Cambridgeshire & Peterborough) or nationally-significant economic assets (Buckinghamshire Thames Valley). That’s fine in so far as it reflects the distinctive economic opportunities identified in each area, but when considered collectively, it could prove tricky to identify the synergies between them.
There is clearly a balance to be struck within the strategies between showcasing a genuinely distinctive local offer (and contribution towards addressing the UK’s productivity problem) and taking a holistic approach to ensure that everyone can benefit from economic growth and productivity improvements (i.e. genuinely ‘inclusive’ growth). This compromise inevitably means that place-based strengths and opportunities don’t shine through in the early stage LIS as strong as they could, and that overarching ambition statements are at risk of being rather ‘bland’. For some areas, dispersed geographies also make the task of articulating a distinctive narrative that bit harder.
For the trailblazers, and those other LIS due to be completed soon, attention will be turning to translating ambitions and policy interventions into a coherent programme of delivery, and monitoring progress of objectives against key performance indicators.
The LIS development process has provided a timely opportunity for a wide range of stakeholder groups to engage and input to setting the productivity agenda for their local area, so there will be a great deal of interest in LIS implementation and how local partners can get involved in this. Those that mobilise early on will undoubtedly be best placed to capitalise on and benefit from resourcing and funding opportunities that flow from their LIS, albeit these have not yet been clearly defined.
Some LEPs have already started to progress this final step; OxLEP for instance is currently preparing an Investment Prospectus to detail the LIS investment opportunities, a Delivery Plan for each policy intervention and project set out under the LIS, and a Monitoring & Evaluation Plan to demonstrate the impact and value for money associated with commitments under the LIS and track Oxfordshire’s performance as a global innovation ecosystem against rival competitor locations.
The Lichfields team will be exploring some of these issues and challenges at the Institute of Economic Development (IED) Annual Conference 2019 taking place in London on Wednesday 4th December, where we will be chairing a roundtable discussion on Local Industrial Strategy. We hope to see you there for what promises to be a thought-provoking discussion.
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