would you live here?

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WOULD YOU LIVE HERE?

MAKING THE GROWTH AREAS COMMUNITIES OF CHOICE

JIM BENNETTWITH DAVID HETHERINGTON, MAX NATHAN AND CHRIS URWIN

ippr

The Institute for Public Policy Research (ippr) is the UK’s leading progressive thinktank and was established in 1988. Its role is to bridge the political divide betweenthe social democratic and liberal traditions, the intellectual divide betweenacademia and the policy making establishment and the cultural divide betweengovernment and civil society. It is first and foremost a research institute, aiming toprovide innovative and credible policy solutions. Its work, the questions itsresearch poses and the methods it uses are driven by the belief that the journey toa good society is one that places social justice, democratic participation andeconomic and environmental sustainability at its core.

For further information you can contact ippr’s external affairs department [email protected], you can view our website at www.ippr.org and you can buy ourbooks from Central Books on 0845 458 9910 or email [email protected].

Our trustees

Chris Powell (Chairman)Chai Patel (Secretary)Jeremy Hardie (Treasurer)

Professor Kumar BhattacharyyaLord BrookeLord EatwellLord GavronProfessor Anthony GiddensLord HollickJane HumphriesRoger Jowell Neil Kinnock Frances O’Grady

Carey OppenheimSir Michael PerryDavid Pitt-Watson Dave PrentisLord PuttnamSir Martin ReesEd SweeneyBaroness WilliamsBaroness Young of Old Scone

© IPPR 2006

About the authors iv

Acknowledgements iv

List of abbreviations v

Executive summary vi

1 Introduction 1

2 The policy context for housing growth 3

3 The Growth Areas and housing supply 6

4 The Growth Area communities 20

5 The Growth Area economies 29

6 Delivering growth: infrastructure and structures 45

7 Conclusions and recommendations 50

Appendix: Estimating the infrastructure costs of higher 56

housing growth targets

References 59

CONTENTS

Jim Bennett is a Senior Research Fellow at ippr.

David Hetherington worked as an intern in ippr'ssocial policy team in 2005/06.

Max Nathan is a Senior Researcher at the Centrefor Cities at ippr.

Chris Urwin was an Economist at the Centre forCities at ippr until August 2006. He is now aSenior Analyst at CB Richard Ellis.

iv WOULD YOU LIVE HERE? | IPPR

About the authors

Acknowledgements

This project would not have been possible withoutthe generous support of the British PropertyFederation, the Building and Social HousingFoundation, English Partnerships, Land Securities,Multiplex Developments (UK) Ltd, Shelter andTilfen Land.

Pinnacle PSG also supported the project andorganised the roundtable discussion with housingand regeneration practitioners, whose invaluableinput informed the chapter on communities. Wealso thank all the stakeholders who took part ininterviews and discussions throughout the projectand who participated in the seminar.

We thank James Murray who provided research support during key stages of the project and madea significant contribution to the analysis containedin this report. Our thanks are also due to JamesMorris, Miranda Lewis and Lula Durante for theirwork on the qualitative research.

Kate Stanley provided input and guidance through-out the project, and Kayte Lawton and GeorginaKyriacou have assisted with the preparation of thisfinal report.

Helpful comments on this report were receivedfrom Steve Carr, Ian Kearns, Nick Pearce, SueRegan, Mark Thomas and Anthony Vigor.

Tracy Kornblatt produced the maps in chapter 4.

CPO Compulsory Purchase OrderCTRL Channel Tunnel Rail LinkCSR Comprehensive Spending ReviewDCLG Department for Communities and Local GovernmentDfT Department for TransportDTI Department of Trade and IndustryGLA Greater London Authority GVA Gross Value AddedLSC Learning and Skills CouncilLSCP London-Stansted-Cambridge-Peterborough LSP Local Strategic PartnershipMKSM Milton Keynes and South MidlandsNHPAU National Housing and Planning Advice UnitNTDC New Town Development CorporationODPM Office of the Deputy Prime MinisterPGS Planning Gain SupplementPPP public private partnershipPPS Planning Policy StatementPSA Public Service AgreementRDA Regional Development AgencyRPG Regional Planning GuidanceRSS Regional Spatial StrategySCP Sustainable Communities PlanTGSE Thames Gateway South EssexUDC Urban Development CorporationURC Urban Regeneration Company

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List of abbreviations

vi WOULD YOU LIVE HERE? | IPPR

Executive summary

The Growth Areas1 are a crucial element of theGovernment's response to the very pressing prob-lem of housing shortage in England. They repre-sent a spatially strategic approach to the particular-ly acute housing pressures in the Greater SouthEast, which undermine the achievement of socialjustice and the stability of growth in the economy.

The previous model of planning for the coun-try’s housing needs, which delivered dispersedhousing growth through the 1980s and 1990s, wasneither popular nor effective. It has not deliveredenough housing of the right type in the rightplaces. At the same time, housing growth plansinflame vocal local opposition. The dispersed pat-tern of growth has tended to be land hungry andhas failed to meet the needs of the communities.The old model also failed because it provided noincentives at the local level for communities toaccept growth.

As housing supply has failed to match house-hold formation rates and house prices have grownrelative to incomes, the number of households inneed of housing has increased. The supply ofsocial housing has been unable to meet newlyarising housing need and rising prices haveincreased the numbers of households unable toaccess decent housing in the market. The result is abacklog of unmet housing need at record high lev-els. There are nearly 100,000 homeless householdsliving in temporary accommodation and 1.5 mil-lion people on council housing waiting lists inEngland.

The Growth Areas have the potential to be amuch better model for delivering growth, insocial, economic and environmental terms. Theycan deliver more homes while taking less undevel-oped land. They allow for a strategic approach tomeeting transport and community needs alongsidethose for new homes, and for housing growth andeconomic development strategy to be aligned.

This report focuses on the social and economicchallenges that the Growth Areas face in becomingcommunities of choice. For the Growth Areas tobe successful in delivering places where peoplewant to live and work there needs to be a greatercommitment from across government to thisapproach.

Our research: background and scope

In 2005, ippr’s Commission on SustainableDevelopment in the South East reported on therange of social and environmental pressures thatthe South East region faced (ippr 2005). TheCommission identified some tough challenges tobalancing the delivery of enough housing withmaintaining quality of life and protection of theenvironment. In relation to housing need, it con-cluded that there was a case for higher rates ofaffordable housing provision in the region thancurrent plans allowed for, but it rejected the argu-ment that the rate of market housing provisionshould be increased to improve affordability.

The analysis in this report is based on new pro-jections of household growth, which show thatthere is a strong demographic case for increasinghousing output in the South East, London and theEast of England. Current plans for house buildingin these regions will fall short of the projectednumber of new households by more than 200,000homes as at 2016.

The public debate about how we respond to thehousing pressures faced by the Greater South Easthas increasingly focused on the environmentalimpacts of growth. Addressing the challenges ofwater supply, flood risk and energy efficiency areabsolutely critical issues, but there is a risk thatthey are obscuring wider social and economicchallenges to delivering sustainable growth. Thisreport does not address environmental questions;it focuses instead on the social and economic chal-lenges and looks at how growth can achieve inclu-sive and cohesive communities with viable localeconomies to create places where people want tolive and work, and that meet the needs of differenthouseholds in different circumstances.

Our analysis highlights a number of social andeconomic risks that the Growth Areas and govern-ment policy for managing growth face. We havealso set out the policies and actions necessary toaddress those risks.

Housing supply

The Growth Areas will make a significant contribu-tion to housing supply in the Greater South East.However, even if the Growth Area’s housing targets

1. The four Growth Areas are: the Thames Gateway; Milton Keynes-South Midlands; Ashford; London-Stansted-Cambridge-Peterboroughcorridor

are met, in London, the South East and the East ofEngland there will still be a significant discrepancybetween rates of new housing supply and newhousehold formation. Over the period 2001-16 theshortfall amounts to more than 200,000 homes.This is the same amount of additional housing thatthe original Growth Area plans set out to deliver, inaddition to the housing in previous plans. Whilesome of this demand could be met in theGovernment’s ‘new’ Growth Points, in order toaddress this shortfall in a way that is socially, eco-nomically and, arguably, more environmentallysustainable, the housing targets for the GrowthAreas need to increase.

Established trends in migration indicate that,although household growth is primarily driven bythe growth of single-person households, the profileof households migrating to the Growth Areas willinclude a higher proportion of families. The hous-ing, community facilities and neighbourhooddesign of the Growth Areas therefore need to befamily friendly.

Planning for housing needs in the Growth Areasneeds to reflect the fact that the Growth Areas arean inter-regional response to the problems of hous-ing shortage across the Greater South East. Thismeans that local plans cannot solely be informedby local housing need assessments. Local andregional planning policies and decisions need to beinformed by the new National Housing andPlanning Advice Unit. The unit’s advice should bebased on an analysis of demographic change andmigration at the inter-regional level, including thetypes of households as well as overall growth. Itshould strike a balance between achieving a social-ly and economically viable mix of housing types,while at the same time maximising the opportunityto increase social housing provision across theGrowth Areas.

Inclusive and cohesive communities

Our qualitative research with prospective and exist-ing residents of the Thames Gateway has highlight-ed the potential for tensions in the Growth Areasbetween new and existing communities. To date,the need for community development in theGrowth Areas has not been given sufficient priority.Community infrastructure and development willbe essential to supporting the development ofsocial networks within the new communities in theGrowth Areas and for ensuring good communityrelations between new and existing residents.

The Growth Areas communities will need to besupported by community development to engageexisting residents in the delivery of growth, and

enable the development of positive social relationsbetween communities. The Growth Area strategiesneed to identify the resources to do this and whowill be responsible for delivering it. The planningof developments needs to ensure that market andaffordable housing are fully integrated and thatneighbourhoods have appropriate communityfacilities, open spaces and play and sports facilities,as these are essential for supporting networks. Ifthe Planning Gain Supplement (PGS) is imple-mented, it is essential that some of the resourcesfrom this are set aside for community facilities.

Strong local economies

To create economically sustainable new communi-ties, the Growth Areas’ strategies need to be moreexplicitly about economic development, and howto spread economic growth across a wider area ofthe Greater South East. Economic developmentand skills objectives need to be aligned with hous-ing objectives in the Growth Areas.

Some parts of the Growth Areas will need todiversify their economies to achieve a balancebetween economic and housing growth. They willneed to raise their income and skills profile andimprove their connectivity. This will require a hous-ing offer that can attract higher earners as well asco-ordinated and timely delivery of infrastructure.

Policies for supporting economic and housinggrowth in the Growth Areas need to be reconciledwith national policy for reducing economic dispari-ties between regions. Government needs tostrengthen its commitment to reducing regionaleconomic disparities through measures to empowercity-regions to improve their economic performanceand through extending its regional economic per-formance Public Service Agreement (PSA) target.

Delivering sustainable growth

If achieving sustainable communities is aboutmore than just housing, then the strategies for theGrowth Areas need to reflect this. Government iscommitted to delivering a strategic framework forthe Thames Gateway that will combine economic,social and environmental objectives. Strategicframeworks, as opposed to just spatial plans,should be developed for the other Growth Areas.Delivery arrangements should also be strengthenedat the local level through increasing the number ofareas that have Urban Development Corporations(UDCs).

Commitment across government for achievingits objectives for the Growth Areas should be sup-ported by a revised version of the PSA target for

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housing supply. The new PSA target should set theobjective of achieving housing growth and regener-ation through the delivery of sustainable commu-nities across all regions. The PSA target should besupported by a clear, ambitious government-widevision for what a sustainable community shouldlook like on the ground, and for the public sector’srole in delivering it.

Housing growth cannot be delivered on thecheap. Without adequate funding for infrastructurefrom the public sector and private finance, thecommunities in the Growth Areas will not be sus-tainable. The local economies will be weak and thecommunities will be deprived and socially divided.There is a real risk that they will become the regen-eration needs of the future.

The Government is aware of this risk and hasacknowledged the crucial role that public invest-ment in infrastructure plays in supporting sustain-able housing growth. In the ComprehensiveSpending Review 2007, the Government needs toreview the funding formulae of the mainstreamdepartments, particularly health, transport andeducation, to ensure that they are more responsiveto increases in demand associated with housinggrowth. It will also need to add an estimated £300

million per year to the Community InfrastructureFund to support higher housing targets in theGreater South East, which will be necessary if it isto meet its long-term objective of providing200,000 homes a year in England. Some of this canbe partially funded though the proposed PGS. Itmay also be possible to allocate further funding fortransport infrastructure from the TransportInnovation Fund.

Conclusion

Government has rightly committed itself to increas-ing housing supply in England to 200,000 homes ayear by 2016. The Growth Areas provide an oppor-tunity to meet that objective, but more than that,to change people’s expectations of housing andcommunities. The new communities in the GrowthAreas should provide homes to new standards ofdesign and environmental sustainability, and high-quality local community facilities, and deliverinclusive and cohesive communities where peoplefrom different backgrounds get to share in the ben-efits of living in 21st century communities ofchoice.

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The need to increase housing supply is currentlyone of the foremost priorities for public policy. Thesocial impact of the shortage of housing can beseen in the fact that we have 100,000 homelesshouseholds living in temporary accommodation,and in the increasing difficulty faced by peoplewith moderate incomes to access market housing.Recently, there has also been a focus on the macro-economic impact of housing shortage, as set out inthe Barker Review (Barker 2004) and theGovernment’s response to it (HM Treasury andODPM 2005).

As a result of concern about the social and eco-nomic impacts of housing shortages, a strong,cross-party consensus about the need for additionalhousing is emerging (for example, see Cameron2006). The damaging consequences of failing toaddress the current challenges facing housing poli-cy have not escaped any of the main political par-ties. While, politically, there has been much focuson the impact that current policy failures are hav-ing on the plight of first-time buyers, there is agrowing recognition of the much wider social andeconomic costs of housing shortages: the 1.5 mil-lion households on council housing waiting lists;the yawning wealth inequalities between ownersand renters; and the stifling effect on labour marketmobility and economic performance. The issuedemands that any political party committed tosocial justice must have a policy response.However, while there may be a consensus on thecase for greater housing supply, the policy prescrip-tion necessary to deliver that supply in a way thatis socially, economically and environmentally sus-tainable is highly contested.

The Growth Areas, along with reforms to theland use planning framework and additionalresources for social housing, underpin the currentgovernment’s approach to addressing the problemof housing supply. The success or failure of theGrowth Areas to deliver significant additionalhousing will be a key test of this approach. (Adescription of the Growth Areas programme andthe location of the areas is set out in Chapter 2.)

However, the scale of growth proposed is suchthat the Growth Areas policy is about much morethan delivering significantly more housing, which

would be a big enough challenge in itself: it isabout building whole new communities, often inareas where the existing communities are excludedand deprived. This means putting in place a frame-work that supports the provision of not just hous-ing, but also physical infrastructure, public services,retail and private sector services and communityfacilities.

The Government continually emphasises theimportance it places on building sustainable com-munities, not just houses. However, the strategy fordelivery of the Growth Areas initially focused onhousing and transport infrastructure only. Theimportance of the social and economic aspects ofthe growth agenda are only now being fully recog-nised.

The key focus for ippr’s research has been onthose aspects of delivering growth that go beyondthe physical and environmental considerations.Since the Growth Areas policy was launched in2003, the public debate about housing growth hasincreasingly focused on the significant environ-mental challenge of delivering sustainable growth.Addressing the challenges of water supply, floodrisk, waste, transport, air quality and energy useremain absolutely critical issues. But for some ofthese issues, most notably those relating to water,the impact of new housing growth is disputed. TheGovernment urgently needs to assess what thoseimpacts will be and develop suitable, sustainableresponses to them, such as incentivising water effi-ciency (Every, forthcoming) and enabling thedevelopment of new supplies, where appropriate.

The scale of these challenges is such that theyare in danger of obscuring other critical issues thatwill also affect the sustainability of the GrowthAreas. This report does not set out to address theenvironmental challenges, but focuses instead onthe social and economic challenges of theGovernment’s housing growth policies.

Through our analysis we have sought to answerthe following questions:

1. What are the challenges to the creation of mixedand sustainable communities in the GrowthAreas?

2. To what extent will the Growth Areas alleviate thehousing pressures in the Greater South East2?

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1. Introduction

2. Throughout this report, where we make reference to the Greater South East, we include the Government Office regions of the East ofEngland, London and the South East.

3. Are the current proposals for housing in theGrowth Areas likely to meet the aspirations ofthose people that are expected to live there?

4. How can the significant community sustainabil-ity and cohesion challenges that the GrowthArea proposals face, be overcome?

5. In addition to housing, what other developmentis necessary to ensure the social and economicviability of the Growth Areas?

The project seeks to provide a better understandingof who will live in the Growth Areas, what theiraspirations and needs will be, and how we canmeet them. To do this we have undertaken fourmain analyses:

1. A review of the New Towns Programme, identi-fying relevant lessons for the Growth Areas.

2. A review of demographic evidence on housingdemand and need in the South East of England.

3. Qualitative research with groups of prospectiveand existing residents of the Thames Gateway.

4. An assessment of the prospects for economic aswell as housing growth in two case study dis-tricts in the Growth Areas.

Alongside this work we have had extensive discus-sions with government, its agencies, local deliverybodies and the private sector. We have combinedthis analysis to set out what we see as the mainsocial and economic challenges for the successful

delivery of the Growth Areas and how this shouldinform the future direction of policy on growthand housing supply.

Structure of report

Chapter 2 sets out the policy context for the hous-ing growth agenda. Chapter 3 goes on to providean overview of evidence about demographicchange in the Greater South East and looks specifi-cally at what this tells us about the nature of hous-ing demand and need that the Growth Areas needto respond to. It also assesses the extent to whichthe Growth Areas will alleviate the housing pres-sures in the Greater South East.

Chapter 4 looks at the community needs of newand existing residents in the Growth Areas, andhow housing growth can support the creation ofinclusive and cohesive communities. Chapter 5assesses the prospects for economic growth in theGrowth Areas and how different levels of growthare likely to impact on the outcomes for theGrowth Areas in the medium term.

Chapter 6 looks at some of the delivery chal-lenges for the Growth Areas that arise from ourdemographic, social and economic analysis.Finally, Chapter 7 brings together the analysis fromthe preceding chapters and sets out recommenda-tions for the Growth Areas and the future of hous-ing growth policy.

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The problem of housing shortage in some parts ofEngland has been a long time in the making. But itis only in the last few years, when the conse-quences of this problem have started to bite onmiddle England, that the issue has gained sufficientpolitical priority to stimulate a concerted policyresponse. This chapter sets out the key policy devel-opments.

What, and where, are the Growth Areas?

In 2003, the Government published the SustainableCommunities Plan (ODPM 2003), which set out aprogramme to deliver a ‘step change’ in housingsupply in those regions where housing was becom-ing increasingly unaffordable. A key feature of thenew regional approach to housing policy that theplan proposed was that the delivery of additionalnew housing would be concentrated in four GrowthAreas. The main objective of the Growth Areas is toaccommodate the economic success of London andthe Greater South East.

The location of the four Growth Areas hadalready been identified in regional planning guid-ance for London and the South East in 2001(Government Office for the South East 2001). They are:● The Thames Gateway● Milton Keynes-South Midlands● Ashford● London-Stansted-Cambridge-Peterborough

corridor

The potential of the Thames Gateway was origi-nally identified much earlier, in 1967, as part ofregional spatial planning for the South East. Theidea was revived during the 1990s as the EastThames Corridor and became the Thames Gatewayin 1995 when a specific planning framework forregeneration and development of the sub-regionwas published. The identification of the otherGrowth Areas in Regional Planning Guidance(RPG) 9 led to studies being carried out on thescale of development potential in each area. Theresults of these studies then informed theSustainable Communities Plan.

Given the level of opposition (mostly on envi-ronmental grounds) to the previous administration’sproposals for meeting the demand for housing, fol-lowing the publication of the Green Paper HouseholdGrowth: Where Shall We Live? (Department of theEnvironment 1996), subsequent regional planningguidance has placed a strong emphasis on concen-trating development around already built up areas.The initial rationale for the Growth Areas put for-ward by this government is that they would providea more concentrated approach to development thanthe more dispersed approach that had been in evi-dence since the end of the New Towns Programmein the 1980s.

A more concentrated approach to developmentis assumed to be more environmentally sustain-able, at least in terms of land use. It also allows forhomes, workplaces, green spaces, leisure and cul-tural facilities, and community services to be pro-

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2. The policy context for housing growth

Box 2.1 The Sustainable Communities Plan

The Sustainable Communities Plan was published in February 2003 and set out the then Office for the DeputyPrime Minister’s (ODPM’s) programme of policies and investment for housing and regeneration using itssettlement for these policy areas from the Spending Review 2002. The plan focused on four main issues:● Improving the quality of existing housing, primarily following the commitment made in 2000 to make all social

housing of a decent standard by 2010.● Achieving a step change in housing supply in the fastest growing regions.● Addressing problems of low housing demand and housing abandonment in specific areas of the Midlands and

North.● Minimising the impact of growth on the countryside, in terms of land take.

The plan focused on the four Growth Areas as places where the growth in the Greater South East could beaccommodated sustainably. The plan included resources for site assembly and land remediation, deliveryvehicles, affordable housing and essential local infrastructure. £446 million was allocated to the Thames Gatewayand a further £146 million for the three other Growth Areas.

vided in closer proximity to each other, which canprovide social, environmental and economic benefits.

The development of the Growth Areas approachshould be seen alongside other initiatives such asgovernment targets for 60 per cent of new housingto be delivered on brownfield (that is, previouslydeveloped) land; for minimum housing densities;and a general policy of encouraging urban renais-sance, as opposed to land-hungry suburban sprawland large-scale development in rural areas.

The Barker Review of housing supply

In the 2003 Budget the Chancellor and the Deputy

Prime Minister announced that they were askingKate Barker, of the Bank of England’s MonetaryPolicy Committee, to conduct an independentreview of housing supply to report at the followingBudget. The review had partly been prompted bythe conclusion of the Treasury’s consideration ofthe ‘five economic tests’ on whether the time wasright for the UK to join the Euro. The relativevolatility of the UK housing market was cited asone reason our economy was not sufficiently con-vergent with the Eurozone economies to enable asmooth transition to the Euro. Analysis underpin-ning the Euro decision had suggested that the weaksupply responsiveness of the UK housing marketwas a factor in the volatility of house prices. Barker


Box 2.2 Overview of the four Growth Areas

Thames Gateway

The Thames Gateway encompasses both sides of the Thames Estuary, running from the London Docklands toSouthend on Sea in Essex and Sheerness in Kent. In 2001, the area was home to 1.5 million people and 0.5 millionjobs. The growth potential of the Gateway arises from its proximity to both London and continental Europe,enhanced by new transport infrastructure, principally the Channel Tunnel Rail Link, and from its 3,000 hectaresof under-utilised brownfield land. The Thames Gateway Strategic Partnership has had responsibility for theoverall co-ordination of the development. The Government has announced its intention to publish a new strategicframework and appoint a Chief Executive for the Thames Gateway in 2006.

Milton Keynes-South Midlands (MKSM)

The MKSM Growth Area covers 4,850 sq km and is located in southern central England between London andBirmingham. Its population is 1.5 million. The region lacks a single, dominant urban centre but major townsinclude Milton Keynes, Northampton, Luton and Bedford. It is home to Luton Airport and is traversed from northto south by the M1 motorway, although east–west transport links are poor. Economic growth has been broadlystrong, although this masks some sub-regional variation, with Milton Keynes and Northampton growing muchfaster than Bedford, Corby or Luton. The MKSM Inter-regional Board was established in 2004 to manage strategicand implementation issues in the Growth Area.

London-Stansted-Cambridge-Peterborough (LSCP) corridor

The LSCP corridor comprises five London boroughs around the Lea Valley, Harlow, the Stansted/M11 corridor,Cambridgeshire and Peterborough. It is the most heavily populated of the Growth Areas, with 1.9 millioninhabitants, and sustains 0.8 million jobs. The region enjoys good road and rail links between London andCambridge, although these do not extend to Peterborough, while Stansted Airport offers connections to UK andEuropean destinations. Cambridgeshire is the economic centre of the corridor with strong education, research,technology and service sectors. There is no overarching body responsible for the delivery of the LSCP corridor –instead, responsibility for individual sub-regions is shared between the Greater London Authority and the East ofEngland Regional Assembly.

Ashford

The town of Ashford is situated in central Kent, houses 44,000 people and sustains a similar number of jobs. Itwas first identified as a potential hub in the Kent Structure Plan, and then recognised by the Government as aGrowth Area in RPG9, along with MKSM and the LSCP corridor. Employment and economic growth in Ashford hasbeen relatively slow due to competition from other areas of Kent, capacity problems associated with the M20motorway, and a perception that it is too far from London. However, growth has increased recently withcompletion of the M20 and the opening of Ashford station on the Channel Tunnel Rail Link. Responsibility fordelivery of the Ashford Growth Area lies with Ashford Borough Council and its strategic partners, including theSouth East of England Regional Assembly.

was charged with exploring why, when houseprices are high, such as they have been in recentyears, private house building does not respond byincreasing its output.

The results of the Barker Review highlighted thatthe long-term UK real trend in house prices wasroughly twice the European average. Barker con-cluded that the lack of supply responsiveness wasthe main driver of that trend and made a numberof recommendations that would improve housingsupply. The main conclusion was that the biggestbrake on new housing supply was the scarce avail-ability of land. Most of the recommendationstherefore revolved around making the planningsystem more responsive to market signals.

Other recommendations focused on the needfor investment in more social housing, the scopefor increasing rented housing supply throughencouraging institutional investment in the resi-dential sector and modernisation of the housebuilding sector.

Importantly for the Growth Areas, the reviewalso touched on the way in which public financescan act as a disincentive for local authorities toallow growth to happen in their areas. Essentially,public funding regimes do not always compensatelocal authorities for the additional local costs anddemands for services that arise from growth. Undersuch circumstances it is not surprising that nationalgovernment’s growth plans can be frustrated bylocal opposition.

The review also looked at how the lack of strate-gic funding for infrastructure can limit the possibil-ity of large-scale growth. This led directly to theannouncement of the Community InfrastructureFund in 2004, which is providing £200 million fortransport infrastructure in the Growth Areas.

Barker also recommended that more could bedone to capture the uplift in land values that ariseswhen land is given planning permission for devel-opment. Specifically, her report recommended thatthe current approach to achieving public gainsfrom development to pay for local infrastructureand affordable housing should be reigned back toallow for a new Planning Gain Supplement (PGS)to be introduced.

Beyond Barker and the Sustainable

Communities Plan

In its response to the Barker Review theGovernment has set out a long-term ambition todeliver 200,000 homes a year in England by 2016(HM Treasury and ODPM 2005). This figure waswithin a range of possible housing targets set outin the Barker Review’s final report.

The Government also accepted that the land useplanning regime for housing needs to be moreresponsive to market signals if housing affordabili-ty is to improve. It is in the process of implement-ing reforms to the planning system that will givegreater weight to the achievement of housing mar-ket affordability in regional and local plan making.A new draft planning policy statement for housinghas been consulted on and regional housing andplanning bodies will be merged later this year.However, before any of these new policies haveeven been implemented, the Government hasasked Kate Barker to conduct a further review ofthe planning system, again focusing on responsive-ness to growth, but this time it is not restricted tohousing. The interim report of the review has high-lighted the need for the planning system to bemaking faster, more transparent decisions, do moreto promote economic growth and be more respon-sive to price signals (Barker 2006).

It has also consulted on a proposed PGS, alongthe lines recommended by the first Barker Review.The outcome of the consultation has not yet beenannounced. Stakeholders’ views on whether thePGS will help raise the resources necessary forinfrastructure provision, or in fact have the effect offurther stifling development, are evenly divided(Walker 2006).

The Government has also announced a tentativeextension of the Growth Areas approach by invit-ing bids from other locations for £40 million ofinfrastructure funding to become Growth Points.The potential Growth Points will be much smaller,both in terms of geographical area and the num-bers of additional homes over and above existingplans that they will provide.

In setting its long-term housing supply target,the Government has acknowledged that the level ofpublic resources available to support the provisionof infrastructure will have a significant impact onprogress towards meeting it. It has also set up across-cutting review of infrastructure provision toinform the 2007 Comprehensive Spending Review(CSR), which will set out public investment plansfor the period 2008 to 2010. This period will be keyto the delivery of the Growth Areas. The cross-cut-ting review itself will look at the infrastructureimplications of housing growth in different spatialforms and locations, cost-effective patterns ofgrowth and the use of targeted investment, andwhether departmental resources across governmentare targeted appropriately to support future hous-ing and population growth. The importance of theCSR for the Growth Areas and the Government’shousing supply objectives cannot be understated.

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As set out in the previous chapter, the main objec-tive of the Growth Areas is to accommodate theeconomic success of London and the Greater SouthEast, over and above the development capacity ofexisting urban areas and in such a way that deliverssustainable, well designed, high quality and attrac-tive places where people will choose to live andwork (ODPM 2003). Delivering this objectiverequires an assessment of the additional housingsupply needed, over and above existing develop-ment capacities to accommodate growth.

The Sustainable Communities Plan set out thecase for a step change in housing supply of200,000 additional homes over and above existingplans by 2016. However, this target was not basedon an assessment of future housing demand orneed, but rather the assessment of the developmentcapacity of the Growth Areas identified in RPG9.Meeting the Government’s objective of accommo-dating economic success requires future housingdemands and need to be met. Therefore, we needto assess whether the Growth Areas will enable thisin the Greater South East.

In this chapter we use the very latest official pro-jections for household growth, allied to evidence

on inter-regional migration and our own qualita-tive research, to answer two key questions:

● To what extent will the Growth Areas alleviatethe housing pressures, in terms of both demandand need, in the Greater South East?

● What do demographic trends tell us about thetypes of new households that will form andmake up additional demand and need in thefuture?

This chapter is broken into three parts. The firstlooks at current levels of housing supply, need anddemand. The second provides new analysis of thelatest available evidence about the nature of futurehousing demand and need. The third sets out howfar the Growth Areas will take us to meeting hous-ing demand and need in the South East.

Current supply and unmet needs

Before we can assess the contribution that thehousing targets for the Growth Areas will make tohousing supply, it is important to review the rate ofprovision in the Greater South East over the lastdecade. This is for two reasons. First, if existing tar-


3. The Growth Areas and housing supply

Box 3.1 Definitions

Housing demand – demand for housing of adequate standard to rent or buy (that is, households with sufficientresources to rent or buy a home that meets their requirements at the going market price).

Housing need – a normative concept that derives from housing policy aims, such as the opportunity for a decenthome for everyone. The implication of such a policy aim is that those households that cannot afford the marketprice of adequate housing from their own funds should be given access to it by assistance from public funds.

Unmet housing need – at any given time there are households and would-be households with unmet housingneeds. This includes homeless households living in temporary accommodation, or people living as a ‘concealed’family in someone else’s household (for example, a couple living with the parents of one of the partners). In orderto prevent growth in the backlog of unmet need, growing the increase in the number of dwellings occupied asmain residences must be enough to match the increase in the number of households.

Newly arising housing need – among newly forming households there will be a proportion of households that arenot able to access adequate housing in the market sector. These new households are additional to the backlog ofunmet need.

Social housing – rented housing provided by local authorities and housing associations.

Affordable housing – includes social rented housing, housing under low-cost homeownership schemes,intermediate rented housing (housing where rent is above that charged by social landlords but below that chargedon the open market) and discounted housing for sale.

gets have proven challenging, then we might besceptical about the achievability of higher ones infuture. Second, if recent supply has been unable toreduce housing need, we should consider whetherthe new targets will be sufficient to address bothnewly arising need and the significant backlog ofunmet need.

Previous rates of housing provision

The best available data for new housing provisionis at the regional level. This indicates that over theperiod 1992 to 2003 across the Greater South East,the South East experienced the highest average rateof new dwelling construction with 24,600 newunits per annum (ODPM 2005c). London’s averagerate of construction in the same period was 15,600new units per annum, while the equivalent figurefor the East of England was 18,6003 (ODPM2005c). Rates of provision have increased in allthree regions since 2002, although prior to thisthey had fallen steadily since the peak of the early1990s. The year-on-year levels of new dwellingcompletions are shown in Figure 3.1.

The rates of provision described above arebelow the level of new household formations inthe latest household projections data and RegionalPlanning Guidance (RPG) targets in all threeregions (even when non-self contained dwellingsand re-lets of vacant units are included). In 2002

and 2003, the average shortfall in London betweensupply (new dwelling provisions) and demand(new household formations) was 7,800 dwellings.In the South East, it was 4,700 dwellings, while inthe East of England household formation out-stripped new supply by 5,900 units. These out-comes are summarised in Figure 3.2 (next page).

The impact of housing undersupply

There are various reasons why supply has beenunable to meet demand in the housing market.The Barker Review (Barker 2004) identifies severalcapacity constraints that inhibit much neededgrowth in new supply. Although the recommenda-tions from the review are contested, its analysisthat the primary constraints on housing supply arethe difficulty in accessing land for the constructionof new housing, a shortage of skilled labour andinadequate levels of subsidy for the provision ofsocial housing and infrastructure, are generallyaccepted.

In aggregate, these factors combine such thatnew housing supply has been below the level ofhousing demand and need. In this context, hous-ing need is distinguished from market demand andrefers to the need of households who are unable tofind an acceptable housing solution without assis-tance. This group includes households that are intemporary accommodation or overcrowded

7

3. These supply rates include the construction of new self-contained dwellings, but exclude new units that are not self-contained, and thereturn to use of vacant dwellings. Figures produced by the ODPM are for new self-contained dwellings only. Total supply includes newself-contained dwellings, and non-self contained dwellings and vacant units returned to use.

0

5

10

15

20

25

30

1992 93 94 95 96 97 98 99 00 01 02 03 04 05

South East of EnglandLondon

East of England

Figure 3.1 New dwelling completions by region (1992-2005)*

Note: *All years are financial years (so 1992 represents 1991/92, and so on)

Source: ODPM 2005c

dwellings, are sharing facilities or whose tenancy ormortgage is under notice.

As supply has failed to match household forma-tion rates and house prices have grown relative toincomes, the number of households in housingneed has increased. The supply of social housinghas been unable to meet newly arising housingneed and rising prices have increased the numbersof households unable to access decent housing inthe market. The result is a backlog of unmet hous-

ing need at record high levels. Across the widerSouth East, there are over 720,000 householdswhose housing needs have not been met. Some ofthese needs can be met by upgrading existingdwellings, but a large minority of these house-holds’ needs can only be met through the provi-sion of new housing supply. In the three SouthEastern regions, this group is estimated to consti-tute around 210,000 households (see Figure 3.3).

Unless the supply of new housing includes


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25

30

35

London South East of England East of England

Thousands of new

households/ dwellings

Average new household formations*

RPG targets**

Average new dwelling supply

Figure 3.2 Household formation versus planned and actual new dwelling supply (2002-03)

Notes: *Household formation figures are averages for 2001-06; **RPG6 for East of England, RPG9 for South East of EnglandSources: Government Office for the East of England 2000; Government Office for the South East 2001; ODPM 2006

0

100

200

300

400

500

600


Thousands of households

Total unmet

Unmet need requiring new housing supply

need

Figure 3.3 Unmet housing need in the Greater South East (2001)

Note: London figure is for 2002Sources: Cambridge Centre for Housing and Planning Research 2003, 2004; Lee 2004

enough social housing to meet the newly arisinghousing need, then the backlog will continue togrow. The principal policy response to meetinghousing need has been to set regional targets forthe share of affordable housing within new supply,supported by public subsidy and planning gainsnegotiated from private developers. In two of thethree South East regions these targets have been setbelow the levels required to meet newly arisingneed and reduce the estimated backlog of housingneed. Also, in recent years, these regional targetshave not been met because of insufficient levels ofpublic subsidy for new social housing further com-pounding the problem. This situation is illustratedin Figure 3.4.

In an attempt to redress this situation, the draftRegional Spatial Strategies (RSSs) have set stillmore ambitious targets for the share of affordablehousing in new supply. London intends to provide50 per cent of new housing at affordable levels,while the figures for the South East and East ofEngland are 35 and 30-40 per cent respectively.However, it will not be enough to simply meetthese percentage targets. To significantly reduce thebacklog of unmet housing need, the regions musteither ensure that total provision is increased con-siderably above historical rates of supply orincrease the percentage of affordable housing with-in the total targets. ippr’s Commission onSustainable Development in the South East con-cluded that any increase in the rate of housebuild-ing in the region should be of affordable homesrather than market housing (ippr 2005).

Key points about housing undersupply:

● The rate of new housing provision in theGreater South East has already increased signifi-cantly since 2002 but is still below the level atwhich new households are forming and belowthe level of targets set in regional plans.

● Supply shortfalls have contributed to record levelsof unmet housing need in the Greater South East.

● To address unmet need in the Greater SouthEast, the Regional Spatial Strategies mustachieve both higher levels of overall housingprovision and a higher proportion of affordablehousing within the new supply.

Future housing demand and need

The above section looking at housing supply,demand and need focused on the numbers ofdwellings required in the Greater South East. In thissection we consider what demographic projectionsand recent evidence about patterns of migration cantell us about the types of housing that will be indemand in the new Growth Area communities.

The characteristics of the future residents are acritical determinant of housing and infrastructureplanning. The age and composition of householdsaffects their housing needs and aspirations.Infrastructure requirements also change withdemographics. Families with children requireschools and sports grounds. Older people needmore care facilities.

9

0

5

10

15

20

25

London**** South East of England East of England***

Thousands of dwellings

Affordable housing needs*

Affordable housing completions***

Affordable housing targets**

Figure 3.4 Affordable housing needs, targets and completions by region (2002)

Notes: *Includes requirements for backlog of need; **RPG6 and 9 for East of England, London Plan for London, RPG9 for SouthEast of England; ***Completions for the East of England are the average of 1996/97-2000/0; ****15,000 affordable housing tar-get for London is 30,000 total upper target at 50%Sources: Government Office for the East of England 2000; Government Office for the South East 2001; Cambridge Centre for Housingand Planning Research 2003; Lee 2004; Mayor of London 2004; London Housing Board 2005; South East Regional Housing Board 2005

Patterns of household formation

To understand these competing requirements, weneed to assess demographic projections for theregions, in terms of both household size and com-position. Across England, the principal trend is oneof household fission. Households are gettingsmaller and more people are living alone forlonger periods of their lifetime. This trend is fore-cast to continue in all three regions of the Greater

South East over the period 2001-16, as outlined inFigure 3.5.

However, this broad movement towards smallerhouseholds masks several underlying trends. First,the share of couples in households is decreasing inall regions. In London, the combined share of mar-ried and co-habiting couples is projected to fallfrom 46 to 40 per cent. In the South East ofEngland, their share is expected to contract from 59


2.38 2.38 2.372.22 2.22 2.20

0.00.20.40.60.81.01.21.41.61.82.02.22.42.6


Average persons per household

2001

2016

Figure 3.5 Evolution of household size by region (2001-16)

Source: ODPM 2006b

3727

5041

5142

35

39

2934

2834

1111

66

65

910

66

66

9 13 9 13 9 13

0

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70

80

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2001 2016 2001 2016 2001 2016

London

Co-habiting couples

Lone parents

Other multi-person

Single person

Married couple

East of EnglandSouth East of England

Per cent

Figure 3.6 Evolution of household composition by region (2001-16)

Source: ODPM 2006b

to 54 per cent and in the East of England from 60to 55 per cent. Second, the share of single-personhouseholds is forecast to grow in all regions, from35 to 39 per cent in London, 29 to 34 per cent inthe South East and from 28 to 34 per cent in theEast. Both these trends are consistent with decreas-ing household size. The proportion of lone parentsand other multi-person households is expected toremain broadly constant. These trends are illustrat-ed in Figure 3.6.

London has a markedly different householdtype profile relative to the South East and the East,with a much lower share of married couples and ahigher share of single person households and co-habiting couples. This is explained by London’sattractiveness as a destination for single youngworkers, as well as the relatively greater appeal tofamilies of the lower density South East and Eastregions.

In absolute volume terms, the greatest increaseis in the single-person household group, which hasbeen forecast to grow by 990,000 households over2001-16. 360,000 of these will be in London,360,000 in the South East and 270,000 in the East.Married and co-habiting couple households growmore slowly than the total household population,with 230,000 additional households over all threeregions. Multi-person households grow by 120,000units, although from a much smaller base, and

lone parent households grow by 130,000 units.These figures are summarised in Figure 3.7.

These trends have important implications forthe size of new dwellings in the Growth Areas. Thegrowing share of single person households suggestsa need for significant numbers of smaller one- andtwo-bedroom dwellings. While there is a strongrelationship between dwelling size and householdsize, there are other factors that affect the size ofdwellings that households demand. The long-termtrend of increased living standards among owneroccupiers has been linked to increased housingconsumption. Also, households of older people donot necessarily reduce their housing consumptionas their household size reduces. When childrenleave to form their own households, many parentswill continue to occupy family-sized dwellings(King and Hayden 2005). In spite of new house-hold formations being dominated by single-personhouseholds, trends in housing consumption arelikely to mean that demand for larger dwellingswithin new housing supply will be greater than thedemographic trends alone would suggest.

In London, although average household size isfalling, there is significant unmet and growing needfor larger family-sized dwellings, which is reflectedin earlier projections of the housing required in thecapital.

Projections of housing requirements based on

11

1.12 0.95

1.66 1.571.15 1.12

1.05 1.41

0.94 1.30

0.63 0.90

0.330.40

0.21

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0.120.14

0.28

0.34 0.19

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0.130.16

0.26

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0.49

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1.0

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2.0

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3.0

3.5

4.0

2001 2016 2001 2016 2001 2016

Millions of

households


Co-habiting couple

Lone parent

Other multi-person

Single person

Married couple

Figure 3.7 Number of household types by region (2001-16)

Source: ODPM 2006b

the London households survey for the GreaterLondon Authority (GLA) indicates that 69 per centof new homes required will be either one- or two-bedroom dwellings over the period 2002-12 (Lee2004). The remaining 31 per cent will be largerhomes, of four bedrooms or more. This need forlarger homes results both from earlier projectionsshowing an increasing number of multi-personhouseholds and existing household units who areliving in overcrowded, smaller dwellings. Finally,the GLA study also suggests that there is a surplusof mid-sized, three-bedroom houses in Londonwhich could be sub-divided into smaller dwellingsor demolished to make way for larger houses.

While demographic trends of new householdformations are dominated by the continuing rise ofsingle person households, the future demand forhousing in the Growth Areas will depend on theprofile of households that migrate to these areas.Assessing future demand for housing there requiresan understanding of patterns and drivers of migra-tion across administrative and regional boundariesas well as regional demographic trends.

Patterns of migration

The Greater South East accounts for 47 per cent ofthe household growth projected by the new 2003-based household projections (ODPM 2006). Thisis slightly lower than historic trends. Between 1991and 2003, London, the South East and East regionsaccounted for two thirds of national populationgrowth. Following a period of net population lossfrom the capital prior to the 1980s, these trendshighlight the fact that the importance of London’s

role as a source of population growth has increasedthrough a combination of natural (indigenous)growth and international migration (Bramley2005). The reduction in the Greater South East’soverall share of households reflects more positivegrowth forecasts for the other regions, which issupported by the recent reversal of the long-termtrend for net migration within England to flowfrom north to south (Champion 2005).

In terms of migration within the UK, London isa net source of migration to other regions. This hasaccelerated in recent years from a net loss of43,400 a year in 1994-97, to 110,000 in 2002-03.Most of the migration has been to the South Eastand East regions, but in recent years the flow fromLondon to these regions has slowed, while increas-ing to the East Midlands and South West(Champion 2005).

These trends are interpreted as being driven byeconomic growth and the housing market. AsLondon’s population growth has accelerated withits economic prosperity, the housing market hasincreased in value. This has led some Londoners touse their housing wealth to move out to otherregions. Increasingly, these trends are consistentacross different ethnic groups, which indicates thatthe description of urban exodus as a ‘white flight’is wide of the mark. This suggests that the regionalescalator model (Fielding 1993), where young peo-ple move to London, become more affluent, formrelationships, start a family and then move out ofLondon to the surrounding region, has been modi-fied slightly to cover a broader area of southernEngland and to be more ethnically diverse.


-5

0

5

10

15

20

1 bedroom

2 bedrooms

3 bedrooms

4 bedrooms

5+ bedrooms

Thousands of dwellings

32%

47%

9%

16% 15%

Figure 3.8 Annual net dwelling requirement in London by dwelling size* (2002-12)

Note: *Includes allowance for backlog of unmet needSource: Lee 2004

More broadly, latest evidence shows that thelong-standing national trend of ‘counter-urbanisa-tion’ (net movement from urban areas to ruralareas) continues, although some northern citieshave followed London’s trend of more positivegrowth (Champion forthcoming). This has beenlinked to changes in the other long standing trendof net movement of population from north tosouth. Between 2000 and 2003 the flow reversed,and in 2003 the North gained a net 35,000 peoplefrom the South, which is unprecedented(Champion 2005).

Outside of London, in the Greater South Eastthere was strong household growth between the1991 and 2001 censuses in small towns and ruralareas, reflecting the positive pull that these areashave. Milton Keynes shows the strongest positivetrend, reflecting its young population profile aswell as being an attractive location for counter-urbanites (Champion forthcoming).

Drivers of migration

In order to understand how these broad trends indemography and patterns of migration might maponto the future patterns of migration to the GrowthAreas, ippr conducted qualitative research withgroups of prospective residents of the ThamesGateway (Bennett and Morris 2006). The key ques-tion that cannot be resolved by analysing the demo-graphic evidence is the extent to which the GrowthAreas will be shaped by established patterns ofmigration, or whether the Growth Areas significant-ly change these established flows. Answering thisquestion requires some evidence about how poten-tial residents are likely to respond to the housingopportunities that the Growth Areas provide.

There is a limited amount of evidence availablespecifically about Londoners’ attitudes to migrationout of the capital. Evidence from the LondonHousehold Survey (LHS) indicates that householdsliving in social housing wanting to move out oftheir current borough are dominated by single peo-ple or lone parents, younger people and people inemployment (Power et al 2004). Analysis of theLHS in the London Housing Requirements Studyfound a total of over 130,000 established house-holds and over 40,000 newly forming householdsconsidering moving to the South East and Eastregions over the next five years (Lee 2004). Amongthese households, securing access to better schoolsor a larger home were major reasons for movingout of London. Although the LHS shows that ofthose households considering moving out, a signif-icant proportion were non-white (14.5 per cent),this was lower than the proportion of non-whitehouseholds considering a move within London, at

31 per cent. In addition to families looking tomove, a significant proportion were retired house-holds.

An implicit assumption underpinning theGrowth Areas approach is that people will be pre-pared to move relatively large distances within theGreater South East in order to secure a decenthome. In the UK people with choice in the housingmarket tend to move only short distances unlessthey have a specific reason for relocating (Boheimand Taylor 1999). For the Growth Areas model tosucceed, people will need to choose to migrate tothese areas primarily to improve their housingoptions. The aim of our qualitative research was totest this proposition with a range of differenthousehold types whose housing choices would beconstrained to varying degrees.

In our qualitative study we focused on prospec-tive residents in three categories:

● A low income group of people in severe hous-ing need, living in overcrowded social housingor temporary accommodation

● A mid income group whose household incomesranged from £20,000-£40,000 per year, broadlyreflecting the criteria for the Government’s keyworker housing schemes

● A higher income group with householdsincomes of £40,000-£80,000 per year, many ofwhom already owned their current homes.

All of the households we spoke to were looking tomove home within the next year. Participants’views were gathered through a combination of in-depth interviews and focus groups. The researchalso covered existing residents of the ThamesGateway living in deprived areas, which we discussin chapter 4.

The key issues emerging from our qualitativeresearch with prospective residents were:

● The prospect of more affordable housing in theThames Gateway was attractive to low- to mid-income groups. Higher income groups were lesswilling to consider moving to this area, and wereonly likely to be attracted to locations with verygood transport links or a strong cultural heritage.

● In considering different locations, peoplefocused on trade-offs between proximity to fam-ily and social networks (particularly for peoplegiving or receiving care), wages, housing costsand travel costs.

● Higher income groups were resistant to the ideaof mixed tenure developments, and althoughlower income groups were more enthusiastic,some expressed concerns about being lookeddown on by homeowners.

13

● All groups were concerned about the quality ofhousing and neighbourhood design of newhousing developments and feared that the newhomes in the Thames Gateway could be of poorquality, and that neighbourhoods would lack asense of place.

● There was strong consensus about the need fornew neighbourhoods to have access to a rangeof local private and public amenities, transportlinks and green space.

● Moving to an area with a sense of communityand security was also considered to be important.

● People from black and minority ethnic groupswere frequently concerned about the availabilityof culturally specific goods and services.

The findings of this research raise important ques-tions about the physical, community and socialinfrastructure needs and community development,which are addressed in chapters 4 and 6. The find-ings also provide some pointers as to how weshould interpret the implications of demographicand migration trends for the Growth Areas.

Conclusions – the nature of housing demand in the

Growth Areas

Inevitably there will be significant demand forhousing in the Growth Areas arising from withinthose areas. However, an inter-regional response toplanning to meet housing demand in the GrowthAreas will require an understanding of who is like-ly to move to these areas.

In spite of future household growth being dom-inated by rising numbers of single-person house-holds, potential migrants to the Growth Areas willinclude a significant proportion of couples andfamilies with children. The results of our qualita-tive research indicate that, particularly for thoseparts of the Growth Areas that are not very close toeconomic centres like London, the Growth Areasare more likely to attract families seeking to escapeinner-urban living (Bennett and Morris 2006). Thisis consistent with current patterns of migration inthe Greater South East. Higher income householdsare only likely to consider moving to parts of theGrowth Areas with high quality transport links towork and strong cultural heritage.

People without children, particularly those onlower incomes, will also be attracted to the GrowthAreas, but only where the housing offer is moreaffordable than in urban areas and neighbourhoodscan offer some of the convenience and benefits thatare typical of amenities in urban residential areas.

The fact that migration in the Greater SouthEast is largely driven by London’s role as a netsource of migrants means that migrants to the

Growth Areas will be more ethnically diverse thanexisting residents. Any suggestion that the GrowthAreas will facilitate ‘white flight’ from urban areasis wrong.

It will be important that the housing offer inthe Growth Areas can respond to the needs anddemands of the full range of different householdtypes, including smaller units for single people andchildless couples, family-sized homes as well assome housing for older residents.

The Growth Areas’ contribution to future

housing supply

This section provides an overview of the GrowthAreas housing targets, places them in the context ofcurrent and developing regional spatial plans andthen sets them against the latest projections forhousehold growth in order to assess their impacton future housing supply.

Current and draft regional plans

In 2001, the four Growth Areas were home toaround five million people, a figure expected togrow by 10 per cent over the next 15 years. Thethree larger areas have populations of 1.5 to twomillion people, while Ashford is much smaller ataround 50,000 people.

One of the key issues for the sustainability ofthese areas is the balance between job creation andpopulation growth, and current forecasts indicatetotal growth in new jobs of 430,000 by 2016.Chapter 5 considers the challenges of meeting thejobs targets in more detail. An overview of popula-tion and job growth is presented in Table 3.1.

Prior to the Sustainable Communities Plan(SCP), regional planning guidance (RPG) made pro-vision for 310,000 new houses in the Growth Areasfrom 2001-16. The SCP and subsequent amend-ments now provide plans for more than 545,000households to be delivered during this period, anincrease of 235,000 dwellings. Under these targets,the majority of the additional dwellings above theexisting RPGs are planned for the Thames Gatewayat 135,000 extra units, with Milton Keynes-SouthMidlands and the LSCP corridor absorbing around47,000 additional units each. Ashford will onlyhouse around 6,000 more dwellings, but this is sig-nificant growth off a small base. A comparison ofthe new annual targets with previous RPG bench-marks is illustrated in Figure 3.9.

Given that the principal objective of the GrowthAreas is to accommodate household growth in theGreater South East, it is important to consider whatimpact these additional dwellings will have on thetotal housing supply in the three South East regions.


The original RPGs are being replaced withRegional Spatial Strategies (RSSs). London hasalready agreed its new RSS and the South East andEast regions are currently in the process of consul-tation and scrutiny on their draft RSSs.

In the East and London, the ‘step change’ insupply intended by the SCP is reflected in theirhaving higher rates of housing provision than pre-

vious plans. The draft East of England Plan, incor-porating the SCP targets for parts of the LSCP corri-dor and Thames Gateway, proposes 23,900 newdwellings annually, an increase of 3,100 above theRPG targets (East of England Regional Assembly2004). The draft alterations to the London Plan(which incorporates tranches of the same GrowthAreas) set a target of 31,505 units per year, 7,600

15

Table 3.1 Overview of South East Growth Areas

Population Population Population Jobs Jobs Jobs

(2001) growth (2016) (2001) growth (2016)

(2001-16) (2001-16)

0.8% pa 53,000 Ashford 44,000 3.3% pa 71,000 47,000 (low case) (low case)

2.0% pa 63,000 (high case) (high case)

London-Stansted-

C’bridge-P’borough 1.87m 0.8% pa 2.10m 0.82m 0.7% pa 0.91mCorridor

Milton Keynes- 1.50m* 0.8% pa** 1.68m 8,550 jobs paSouth Midlands

1.1% pa 1.78m Thames Gateway 1.50m (low case) (low case) 0.50m 2.1% pa 0.68m

1.4% pa 1.85m (high case) (high case)

Notes: * Figure is 2002 population ** Growth rate is for 2000-10Source: ODPM 2003

0

2

4

6

8

10

12

14

16

Thames Gateway LSCP MK and SM Ashford

Thousands of new

dwellings per year

Previous plans

Updated plans including SC Plan

Figure 3.9 Comparison of previous and current planned dwelling production by Growth Area(2001-16)

Notes: *Thames Gateway and LSCP include increased provision proposed in draft alterations to the London Plan (July 2005);**Previous plans include RPG6, RPG9 and RPG9aSource: Mayor of London 2005

**

* *

more than was indicated in the 2000 LondonHousing Capacity Study (McMullen and Fender2000; Mayor of London 2005).

However, in the South East, planned housingsupply is lower in the draft RSS than in the previ-ous RPG. Under RPG9, which is due to be replacedby the draft RSS, output was planned to increasefrom 28,100 to 32,100 dwellings per year from2006, while the Draft South East of England Planhas a constant target of 28,900 per year until 2016.In effect, the South East is proposing an increase inhousing provision in its Growth Areas (Ashford,Milton Keynes-South Midlands and the Kent sideof the Thames Estuary), so reducing planned con-struction rates in other areas. The net result is anoverall rate of housing supply below previous planlevels. The total rates of planned housing provisionfrom 2002-16 prior to and after the launch of theSCP are shown in Figure 3.10.

Housing supply and demand in the Greater South East

The revisions to the regional targets in light of theSCP, as currently reflected in the RSSs, add around230,000 dwellings to housing supply over the peri-od 2001-16 (15,300 per year). This is a considerableadvance on earlier plans. However, the addition to

the regional plans that the Growth Areas providehas to be considered against levels of householdgrowth to assess whether it will enable the GreaterSouth East to meet future demand. In making thisassessment we have used the latest official projec-tions of household growth, which are the 2003-based household projections (ODPM 2006).

As Figure 3.10 illustrates, the ODPM’s 2003-based projections suggest that, while the additionalsupply from the Growth Areas will result in a clos-ing of the supply-and-demand gap, the GreaterSouth East still faces a significant shortfall in sup-ply across all three regions.

Over the period 2001-16 demand is forecast tooutstrip supply by 3,800 households per year inthe East of England, and by 6,300 householdsannually in the South East. In London new house-holds are expected to exceed new dwellings by4,300 units per year over the same period. Thescale of the shortfall is set out in Table 3.2.

The Growth Areas and the housing supply-and-

demand balance

The overall scale of the shortfall shows that whilethe housing targets for Growth Areas have thepotential to make a significant difference to the


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LHC study

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s

Thou

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s of

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Impact of Growth Areas

New householdformations


Affo

rdab

le(5

0%)

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rdab

le(4

5%)

Affo

rdab

le(2

5%)

Figure 3.10 Comparison of dwelling production and household growth by region (2001-16)

Note: Draft SE Plan figure is 28,900 dwellings per year as per current proposalsSources: McMullen and Fender 2000; East of England Regional Assembly 2004a; Mayor of London 2005; South East Regional Assembly2006

amount of housing delivered in the Greater SouthEast, they will not be sufficient to meet futuredemand. If the household projections are reliable,then the scale of the shortfall, more than 200,000homes, is as great as the additional provision thatthe Growth Areas are expected to deliver.

The Growth Area housing targets and regionalspatial strategies in the Greater South East need tobe reviewed to reflect the latest evidence on futuredemand. The review will also need to consider howto respond to demand within environmental limits.

The Government has a choice between threeoptions for increasing housing output in theGreater South East:

● Demand higher housing targets from the threeregional spatial strategies, without directingwhere growth within those regions should befocused; or

● Identify new locations where concentratedgrowth can be achieved; or

● Increase the housing targets of the Growth Areas.

To an extent, the Government is already pursuingthe first two options. It has already signalled that itbelieves that the proposed housing targets in thedraft regional plans in the South East and East aretoo low. It will also shortly announce the outcomeof the 20 bids it has received for funding from the£40 million Growth Points initiative. However,pursuing these options alone will not be enough. Ifa commitment to a concentrated approach todevelopment is to be retained, to ensure efficientland use and get maximum value from investmentin new infrastructure, then a significant densifica-tion of the Growth Areas would be an appropriateresponse.

Independent evaluations of both the South Eastand East of England’s draft plans have concludedthat their draft housing targets are too low (East ofEngland Plan Panel 2004; Roger Tym and Partners2006). The Government and the regional planning

bodies will need to consider, whether these futurelevels of housing demand can be met, and if so,what balance to strike between seeking to absorbthat growth within the existing Growth Areas or thewider regional plans.

Table 3.3 sets out the benefits and disadvantagesof these three different spatial options for increas-ing housing supply. One of the key issues in decid-ing which is most appropriate, is the differing costsof increasing infrastructure capacity for a givennumber of additional dwellings. In the short term,a dispersed approach can be more cost effective, asthis has the potential to make maximum use ofexisting infrastructure capacity (for example, emptyschool places, available water and sewerage capaci-ty, adequate flood defences, underutilised road andpublic transport capacity). However, in the GreaterSouth East, the short-term dispersed approach hasalready been pursued, it could be argued, almost tobreaking point. Over the long term, it is not possi-ble to simply continue to pile demand on the exist-ing infrastructure; in this context, more concentrat-ed growth may be favourable, to achieve efficien-cies and economies of scale in delivering new infra-structure to particular areas.

The South East and East regional planningboards have rejected higher housing growth targetsfor their regions, partly on the basis of concernsabout infrastructure capacity in these regions.Long-term trends in public spending on housingand transport as a proportion of GDP show that inspite of recent rapid increases, spending in theseareas is only just returning to the same level as inthe early- to mid-1990s, with much lower levels inthe intervening years (ippr 2005). Analysis for theSouth East region and Eastern counties(Bedfordshire, Essex and Hertfordshire) shows acombined infrastructure shortfall of around £8 bil-lion just to meet existing growth plans (Roger Tymand Partners 2005). In the absence of more robustanalysis, one can conclude that the extent to whichadditional infrastructure costs can be avoided

17

Table 3.2 Draft regional plans, household projections and shortfalls (2001-16)

Region Projected annual Projected rate of Annual housing Total shortfall

output under household growth output shortfall over 2001-2016

current/draft plans (2001-2016)

London 31,090 35,400 -4,310 -64,650

South East 28,900 35,200 -6,300 -94,500

East 23,900 27,800 -3,900 -58,500

Total 83,890 98,400 -14,510 -217,650

Source: ODPM 2006

though a dispersed approach is at best minimal.There are no robust models for making this

kind of judgment, and the position will vary,according to the extent of existing capacity in anyparticular location. But it is possible to review thebroad arguments behind the different approaches,as provided in Table 3.3.

The issue of infrastructure capacity and fundingis examined further in chapter 6.

Increasing the housing targets in the existingGrowth Areas can be achieved without radicallychanging the proposed density of housing on indi-vidual development sites. Additional housing out-put could be achieved through designating moreland within the Growth Areas to residential devel-opment and expanding plans for infrastructureprovision in these areas, where possible.Concentrating more people within the GrowthAreas as a whole should increase the long-term rev-enues (for example, through local taxes and higher

use of public transport) that can meet the ongoingcosts of new infrastructure. However, this does notmean building more blocks of flats. As our analysisin this chapter shows, while policy should seek toencourage housing densities that can sustain agood level of local service provision, we also needto ensure that we are delivering housing and neigh-bourhoods that are attractive to families. The pre-sumption that high density means building onlyflats, while understandable, is misplaced. There arenew developments that demonstrate how low-risehouses can be delivered at relatively high densitiesin a similar way to Victorian terraced housing, butusing modern architectural design (for example,Tanner Street in Barking).

Increasing the housing targets for the GrowthAreas will have implications for water supply andtreatment capacity and other environmental con-straints. The Government will need to assess theimpact and develop suitable, sustainable respons-


Table 3.3 Spatial options for increasing housing output in the Greater South East

Criteria Dispersed growth New growth points Densification of

across SE regions existing Growth Areas

Maximises existing physical infrastructure ✔✔ ✔ ✘

capacity

Large sites provide opportunities for ✘ ✔ ✔✔

masterplanning and mixed use development

Economies of scale in new physical ✘ ✔ ✔✔

infrastructure

Scope for raising density and sustaining ✘ ✔ ✔✔

diverse local service base

Efficient use of ✘ ✔ ✔✔

brownfield land

Minimises land take ✘ ✔ ✔✔

Links mixed communities and ✘ ✘ ✔✔

economic development objectives

Builds on existing delivery arrangements ✘ ✘ ✔✔

and capacity

Key: ✔✔ = meets criteria fully ✔ = meets criteria partially ✘ = does not meet criteria

es to them. This should include incentivisingwater efficiency (Every, forthcoming) andenabling the development of new supplies whereappropriate.

Housing supply: conclusions

The Greater South East’s current housing supply isunder significant pressure, as evidenced by recordlevels of unmet housing need. This is partly due toprevious output being below planned levels,although output has increased in recent years.

To address unmet housing needs, increased sup-ply of new housing is needed, and within this, amuch greater proportion of affordable housing.Our analysis of demographic trends, combinedwith our qualitative research on housing aspira-tions, indicates that households moving into theGrowth Areas will include a higher proportion offamilies than newly arising households in general.They will also be more ethnically diverse than the

existing communities in the Growth Areas. There isa risk that some of the Growth Areas will onlyattract households with limited choice in the housing market. This has significant implicationsfor the skills and income mix of the Growth Areas,and therefore their social and economic sustain-ability. These issues are explored further in chapters4 and 5.

The Growth Areas targets have the potential tomake a significant positive impact on the balanceof housing supply and demand in the GreaterSouth East.

However, this will not be sufficient to meet thelevels of household growth projected. The scale ofthe shortfall is almost as great as the additionalsupply that the Growth Areas are projected to pro-vide. If the Government is to meet its objective ofaccommodating the Greater South East’s economicsuccess, then it needs to push for higher regionalhousing targets and review the scope for a densifi-cation of the Growth Areas.

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This chapter focuses on some of the issues that arecritical to building new communities. It exploresthe potential barriers that the Growth Areas face inachieving good social relations in the new commu-nities that will be created. Prospective residents ofthe Thames Gateway in our focus groups talkedabout aspiring to live in places with a ‘sense ofcommunity’, but at the same time existing resi-dents were highly sceptical of the potential benefitsof growth and hostile to the prospect of incomers.The scale of growth in these areas will create aunique set of challenges for community develop-ment.

The need for sustainable communities

The Government has been at pains to set out howits housing policies are about creating sustainablecommunities. By this, it means not just providinghomes, but about ensuring that homes are provid-ed with access to the necessary services, facilities,goods and opportunities to make them places ofchoice that are ‘successful, thriving and inclusive’(ODPM 2003).

This goal is hard to disagree with. It partly reflectsa recognition that much of housing and urban poli-cy of the 1950s, ‘60s and ‘70s left a lot to be desired.The drastic action of the slum clearance programmesand decentralisation policies was meant to improvefamilies’ housing conditions, but in fact the ‘quality’of much of the new housing provided was low, andstrong social networks were dismantled (Young andWilmot 1957), with long-lasting negative socialrepercussions (Holmes 2006b).

While few would criticise the objective of creat-ing sustainable communities, it is far from clearwhat this means in practice. Whether or not thecurrent policy framework is capable of achieving it,either in new communities or in communities thatare considered as currently not being sustainable, isperhaps even less clear.

The components in Box 4.1 focus on the physi-cal aspect of a community (design and the environ-ment), the goods that should be locally available(public and community services, transport, jobsand training) and its values (inclusive, fair andwith accountable governance). What is missing,perhaps partly from wanting to avoid accusationsof ‘social engineering’, is any consideration of thepeople that would make a sustainable community.

The need for mixed communities

Would a community that met all the above criteriabe sustainable, regardless of who lived there? Thereis a growing consensus that the answer is probably‘no’. It is becoming increasingly clear that the pro-file of the population within a community is a keydeterminant of its sustainability, and one charac-terised by a mix of households of different typesand different circumstances is more sustainablethan one that is not.

The case for creating mixed communities is notbased on idealised or utopian groupings, but ratheron evidence that shows that where polarisation hasconcentrated lower income and vulnerable peoplein an area, the resulting multiple deprivationbecomes reinforcing and difficult to address(Wilson 1987, 1997; Social Exclusion Unit 2000;2004 Katz 2004; Berube 2006). It is argued thatpoor neighbourhoods are not just a symptom ofdisadvantage, but also one of its causes.

Concentrations of poor people tend to sufferfrom poor-quality housing, environments and publicservices. This can go on to create stigma, which limitssocial networks and is linked to crime and anti-socialbehaviour (Fitzpatrick 2004). However, Gibbons et al(2005) argue that while neighbourhood affects riskof crime strongly and educational outcomes modest-ly, it has no impact on employment.

A wide range of government programmes sincethe 1980s have sought to correct the problems ofconcentrated multiple deprivation (Imrie and Raco2003). Some of the causes of these problems arenow recognised to have been exacerbated by the


4. The Growth Area communities

Box 4.1 Components of a sustainablecommunity

● Active, inclusive and safe ● Well run ● Environmentally sensitive ● Well designed and built ● Well connected ● Thriving ● Well served ● Fair for everyone

Source: website of the Department forCommunities and Local Government,www.dclg.gov.uk

failure of earlier public policy programmes toavoid concentrating lower income households incertain areas (Page 1993).

Recently there has been much focus on the prob-lems that can arise in areas with high concentra-tions of social housing, which, due to the limitedsupply of affordable housing and needs-based allo-cations policies, include high proportions of vulner-able households and low-income families with chil-dren (Prime Minister’s Strategy Unit 2005). In the2005 Budget the Chancellor announced that theGovernment would be introducing nine pilotschemes to test the effectiveness of radical interven-tions to rebuild previously mono-tenure socialhousing estates with a new tenure profile, focusingon estates that had not benefited from previousattempts to regenerate them (HM Treasury 2005).The return to large-scale, concentrated housingdevelopment in the Growth Areas, where large newcommunities are being created alongside existingones, raises different and much broader questionsabout how to achieve the right balance. These chal-lenges go beyond just ensuring that developmentsinclude a mix of tenures; they also need to considerincome, household types, and occupants’ ages andethnicities.

The experience of mixed communities

to date

Some aspects of housing policy already work toachieve a varied socio-economic mix. Planning pol-icy enables local authorities to require that largernew housing developments include a significantproportion of affordable housing through what areknown as section 106 agreements. This is becomingan increasingly important route through whichnew affordable housing is being delivered (Monket al 2005). In addition to components of planningpolicy and the new mixed communities pilotsthere are indications that meeting mixed commu-nities objectives will become a dominant feature ofgovernment housing and regeneration policy ingeneral (Gardiner 2006).

This shift in policy direction is in spite of thefact that the evidence base to show the positiveeffects of mixed communities is quite limited.Recent reviews of relevant research literature pointto some modest but significant benefits of develop-ing housing and communities in a way thatencourages ‘mix’. The evidence base points tomixed tenure developments having the following

characteristics:

● They have avoided the problems that have besetsome mono-tenure social housing estates (stig-ma, weak local economies), and are able to sup-port more varied commercial services.

● There are no significant problems in terms ofsocial relations between social renters and pri-vate owners, but at the same time there is noevidence of increased social capital or rolemodel effects4.

● They are able to attract families, but in the pri-vate sector, the ability to retain families dependson an appropriate mix of housing types forchildless households to move into when theystart a family (Allen et al 2005; Silverman et al2005).

Mixed tenure developments are clearly better thansegregation, but the limited evidence does not fullysupport all the potential benefits that had beenascribed to them. Also, while there is some evi-dence of positive outcomes in mixed communities,it is not always clear why exactly this is the case(Tunstall and Fenton 2006). This may change asthe evidence base grows. It is important to bear inmind that while policy can work to achieve a mixof housing types and tenures, it is a mix of house-holds with different social characteristics that isthought to deliver benefits. Achieving mixed com-munities is often cited as reason to justify govern-ment subsidy for homeownership; however, home-ownership itself does not deliver the communitybenefits sought from mixed communities (Maxwelland Sodha 2006).

Tenure is just a proxy for a potentially beneficialmix of household circumstances, and while therehas been a strong focus on income as a positivecharacteristic, other factors such as household typeare important (Holmes 2006a), although it is notalways realistic to expect to achieve a strong mix inall residential areas. For example, the recent rise incity centre living is dominated by young singlepeople, with a mix of tenures and incomes, but nomixing of ages and household types, and therewould appear to be limited utility in policy seekingto change that (Nathan and Urwin 2006). That isnot to say, though, that inner urban areas, as dis-tinct from city centres, should be seen as ‘no-goareas’ for families with children (Silverman et al2005; Nathan and Urwin 2006).

While the evidence base on the advantages ofmixed communities is limited, it would be fool-

21

4. One of the arguments in favour of mixed tenure development is that it may be more likely to support the development of social net-works that bridge between socio-economic groups, thereby increasing the aspirations and opportunities of people on low incomes (seefor example, Wilson 1987)

hardy not to consider its implications for theGrowth Areas. Clearly there are benefits to beachieved from seeking to achieve mixed communi-ties in the Growth Areas. It is significant thatMinisters now refer to the objective of policy tocreate mixed and sustainable communities.

In the previous chapter we highlighted the avail-able evidence for who the new residents of theGrowth Areas might be. In considering the ques-tion of how to achieve a balanced mix in theGrowth Area communities we also need to consid-er how the profile of the new residents will mixwith that of existing communities. Here we set outthe challenges that the Growth Areas face in meet-ing the objective of creating mixed communitieswhile at the same time alleviating some of theexisting housing pressures in the Greater SouthEast. We also look at some of the specific measuresthat will be needed in order to foster social net-works and community cohesion within the GrowthAreas.

First, it is useful to look at the New Towns pro-gramme, because it faced similar challenges in rela-tion to both the social and economic mix, and alsothe development of social networks, in large newcommunities.

Lessons from the New Towns programme

The New Towns programme, which began follow-ing the New Towns Act of 1949, was underpinnedby a strong vision of the new communities thatwould live in the New Towns. This highly paternal-istic vision, championed by Lord Reith, had itsplace in the brave new post-war Britain, but it wasnever really achieved, due to the prevailing eco-nomic conditions at the time, limits on publicspending and the bureaucracy surrounding accessto New Town housing (Bennett 2005). However,having a vision, although key aspects of it werenever fully realised, did mean that the overall pro-gramme had clear and comprehensive social objec-tives beyond that of simply increasing housing sup-ply (Bennett 2005).

A similarly paternalistic vision for the GrowthAreas is unlikely in today’s social and political cli-mate. While we have a description of the key com-ponents of a sustainable community, it does notamount to a vision. The closest we have come is theintegrated social, economic, environmental and civicvision for the Thames Gateway set out by formerCommunities Minister David Miliband in a speechto the Thames Gateway Forum (Miliband 2005a).

The vision for the New Towns was that the newcommunities should be balanced, although theconception was limited to social class, and failed to

consider other potential aspects of what might con-stitute a balanced community. The goal of classbalance in the New Towns was never achieved,because of affordability barriers to the develop-ment of an owner-occupied market, and theemployment conditions placed on access to rentedhousing. In the early days the social class profile ofthe New Towns was predominantly made up ofskilled manual workers.

There is no overarching vision covering all theGrowth Areas. Clearly, the needs of, and futures forcommunities vary significantly within and betweenthe Growth Areas. Nonetheless, a stronger visioncould help to address the lack of certainty amongstakeholders in the Growth Areas about what theGovernment actually means by ‘creating sustain-able communities’. It would also provide the basisfor clearer social and economic objectives for theGrowth Areas.

New Growth Area communities

In considering the make-up of communities, thedevelopment process for the Growth Areas differsfrom that of the New Towns in two key regards.First, the development of the Growth Areas will bepredominantly led by the private sector. Most of thenew housing will be for private sale and thereforeaccess to the majority of the new housing will bethrough the open market. Second, the Growth Areasinclude existing cities and towns and much of thenew development will occur where it is contiguous,or at least very close to existing urban centres.

It seems important, therefore, that considerationof the appropriate mix in the Growth Areas needsto take into account the make-up of the existingcommunity. Furthermore, policymakers and plan-ners can best exert influence on the mix of new res-idents through the housing and lifestyle on offer inparticular areas.

The analysis of demographic and migratorytrends, coupled with our own qualitative research,highlights the fact that those parts of the GrowthAreas that are not in London, or immediatelycontiguous with it, are likely to attract more fami-lies with children than single-person householdsor childless couples, in spite of the growing pro-portions of single-persons households withinhousehold growth. The housing and neighbour-hood offer in the Growth Areas therefore needs toreflect this profile: housing types will need tocater for families with children, and neighbour-hood layouts need to be conducive to familiesand include appropriate open spaces and playfacilities. In order to be able to attract families, itwill be essential that appropriate public services


are available from the outset, including education,health care and childcare. Families will not moveto areas without adequate schooling capacity. (See chapter 6 for more about services and infra-structure.)

Two areas in which our qualitative researchthrew up class differences in people’s attitudes tomoving to new communities were transport con-nectivity and cultural heritage (Bennett and Morris2006). All prospective residents of the ThamesGateway that we spoke to highlighted transportissues as being an important consideration, andhigher-income groups had expectations aboutready access to high quality transport links toLondon. When discussing a range of possible loca-tions that they would consider moving to, thosewith higher incomes placed greater emphasis onplaces with some cultural heritage.

Clearly it will be easier in those parts of theGrowth Areas with very good transport connectivityand a sense of heritage to attract new residentswith higher incomes and skills – something thatwill be important for the economic viability ofsome parts of the Growth Areas, as highlighted inChapter 5.

The prospect of living in mixed tenure develop-ments also revealed differing attitudes. People cur-rently living in owner-occupied accommodationtended to report a strong aversion to living inmixed tenure developments (Bennett and Morris2006). Many participants in our research expressednegative views of social housing and were againstthe idea of moving somewhere where they mightlive in close proximity to it. This stemmed from aconcern that they would be exposed to the prob-lems of large single-tenure social housing estates ifthey lived in such a development. Meanwhile,lower-income households who would be likely tolive in social housing in mixed tenure develop-ments expressed concerns that other residentsmight look down on them. Both these views are insharp contrast with the attitudes of people alreadyliving mixed tenure developments (Allen et al2005; Silverman et al 2005).

Inherent opposition to the prospect of living inmixed tenure developments raises two importantissues. First, it suggests that planners and develop-ers need to think carefully about how to marketmixed developments. Second, investment in thesocial housing and public realm in mixed tenuredevelopments needs to be sufficient to achieve‘tenure blind’ integration and avoid the potentialstigmatisation of social rented units (Silverman etal 2005).

Mixing with existing communities

Our focus groups with existing residents ofdeprived areas of the Thames Gateway highlightedconsiderable concern as to the potential impact ofhousing growth on their communities. The viewsexpressed focused on two key issues: the capacityof public services; and community cohesion.

Existing residents felt that the quality and capac-ity of local public services and infrastructure wereinsufficient to meet existing demand, and that anyinvestment to improve services alongside growthwould only benefit new residents.

The other concern was that the new residentswould be from different ethnic or social back-grounds from existing residents, that they wouldnot integrate with the existing community, and thatwealthier new incomers would lead very separateexistences.

Some of these views were expressed using racistlanguage, a fact that should sound a strong warn-ing about the prospect for community cohesion insome parts of the Growth Areas. Indeed, the farright has already made considerable politicalground in parts of the Thames Gateway. Deliverybodies will have to work hard to avoid creatingconditions where far right political parties canexploit emerging tensions between new and exist-ing residents. In the most recent local elections, theBritish National Party (BNP) gained 13 seats inBarking and Dagenham, which covers part of theThames Gateway. However, the main issue under-pinning the BNP’s support was the perception ofunfairness between existing and newer residents inthe allocation of social housing in the area, ratherthan specific concerns about plans for growth.

Some of the communities in the ThamesGateway, for example in Basildon, Ockenden,Purfleet and Tilbury, were populated by overspillfrom London, mainly white working class familieswho moved out of the East End of London afterthe second world war. Some of the views expressedin our research mirror those in Michael Young’sfollow up to his influential 1957 study of East Endcommunities: Young concludes that racial hostilityand community divisions are partly due to percep-tions of fairness in the allocation of scarceresources within the welfare state (Dench et al2006). The concerns we identified in our studyindicated that residents of deprived areas of theThames Gateway anticipated that resources linkedto growth would be allocated in a way that disad-vantaged them.

To avoid divisions opening up between new andexisting residents in the Growth Areas, it will beessential that existing residents are consulted and

23

involved in decisions about the delivery of invest-ment in public services linked to growth.Otherwise, a perception of unfairness, and thatnew community and public facilities are only fornew residents, is likely to create a sense of resent-ment towards new residents, undermining commu-nity relations. The experience of the New Townssuggests that these issues need to be addressedfrom the outset, as once new places have developeda reputation it can be very hard to change that per-ception (Bennett 2005).

Achieving the right mix?

While the development of policy for mixed com-munities has identified that a mix of incomes andhousehold types should be the objective of hous-ing and planning policy, as mentioned above, thisis not based on the notion of an idealised balanced

community, but on the premise that we shouldavoid ‘non-mix’ (Berube 2006). In the case of theGrowth Areas, large-scale concentrated develop-ment necessitates careful consideration of the ques-tion of mix. This is because the Growth Areas areheterogeneous, in terms of their socio-economicprofile and the existing mix of tenures (see Figures4.1 and 4.2). The Growth Areas vary significantlyboth in terms of the existing proportion of socialhousing, and the levels of deprivation (as meas-ured by the latest Indices of Deprivation).

In terms of avoiding the problems associatedwith concentrated deprivation in the Growth Areas,it is important to consider not just the tenure mixof new developments, but also the existing tenuremix and how new development will affect the over-all tenure profile. Mix needs to be determined inrelation to the whole market area, because site-spe-cific targets, ultimately determined by whatever


Figure 4.1 Indices ofdeprivationscores for localauthorities thatfall within the Growth Areas

level of provision the developer can bear, maymake little sense in the wider context (Turkington2006).

Also, places within the Growth Areas will varyin terms of their social and economic capacity toaccommodate new social housing residents in asustainable way. The next chapter highlights theextent to which some places see growth as anopportunity to improve their economic perform-ance by increasing the top end of their skills andincome profile. Our qualitative research with resi-dents of deprived areas of the Thames Gatewayhighlighted the extent to which limited localemployment opportunities and existing pressureson social infrastructure and public services in theseareas where a concern for local residents prior toany growth taking place. On both these countssome parts of the Growth Areas are unlikely to beable to sustain significant increases in the numbers

of social housing units in their area.The Regional Spatial Strategies for the Greater

South East will specify targets for the provision ofaffordable, including social rented and intermedi-ate, housing ranging from 25 per cent social rentedand 10 per cent intermediate housing in the SouthEast to 35 per cent social rented and 15 per centintermediate housing in London (Mayor ofLondon 2004; South East Regional Assembly2006). These are regional targets, based on judg-ments of what is appropriate in response to hous-ing need within each region and what the combi-nation of public subsidy and developer contribu-tions to affordable housing provision might beable to deliver.

It is imperative that the opportunity that theGrowth Areas provide to increase housing supplydelivers affordable, as well as market, housing,given the unprecedented levels of need in the

25

Figure 4.2Proportions ofsocial housing inthe localauthorities thatfall within theGrowth Areas

Proportions of social housing

South East. As we have seen in Chapter 3, acrossthe three regions there is a desperate need to signif-icantly increase the amount of social housing thatis available. The scale of unmet need across thethree regions should be considered in all theGrowth Areas, even if locally arising need is limit-ed; the assessment of affordable and social housingneeds should not be based solely on locally arisingneed. For example, Milton Keynes’ plans providefor at least 30 per cent of all new dwellings beingaffordable, which is consistent with the emergingregional plan (Milton Keynes Partnership 2006).However, within this overall figure, only five percent will be socially rented on the basis that this isall that is needed to meet locally arising need.Given that the Growth Areas represent an inter-regional response to the housing needs of theGreater South East, and that there is a very pressingneed for more socially rented housing across thethree regions, this should be reflected in the plansfor specific locations in the Growth Areas. Where ahigher proportion of socially rented homes can beaccommodated sustainably, the housing needsacross the regions should be considered, not justindigenous need.

It is important that a balance is struck betweenachieving a sustainable mix of household typesand incomes and maximising the opportunity toincrease the supply of affordable homes. The ques-tion of specific areas’ social and economic capacityto sustainably accommodate a given proportion ofaffordable housing is not considered in the settingof regional targets. In the Growth Areas, it will benecessary to depart from the regional targets at thelevel of individual sites. Looking at the criteria ofsocial and economic sustainability, in some loca-tions the target should be lower, and in others itcould be higher. What is essential is that there issome mechanism to provide oversight of plans forlarge developments, to ensure that the right bal-ance between social and economic sustainabilityand maximising affordable housing supply is beingstruck across the Growth Areas as a whole.

The practitioners’ perspective

The findings from our qualitative research indicatethat delivery in the Growth Areas needs to takecareful account of relations between new and exist-ing communities. A response to this challenge cutsacross three key areas:

● Planning for public services and communityfacilities that takes into account the needs ofexisting residents and delivers high quality servic-es to new and existing residents simultaneously

● Involving residents in the delivery of new

services and facilities● Supporting the development of positive social

relations and networks within new develop-ments and between new and existing residents.

Through discussion with stakeholders and review-ing growth strategy documents, our overall assess-ment of the extent to which current delivery in theGrowth Areas is fit for purpose in terms of commu-nity relations, is that policy and practice are moredeveloped on the first two of these points than thethird. There are many examples in the GrowthAreas where the investment supporting growth isalso delivering benefits to existing communities,and in some instances this is being informed byconsultation and community involvement process-es. However, there is much less evidence that strate-gies and the resources necessary to support thedevelopment of good community relations inGrowth Areas are being identified.

In the New Towns, community developmentwas a key function of the New Town DevelopmentCorporations (NTDCs) and a significant number oftheir staff were employed to undertake communitydevelopment activity. While much of the commu-nity development practice that was current at thetime of the New Towns programme would lookout of date today (for example, all new arrivalswould be visited by an officer from the NTDC andwere given a house plant), the wider point is thatcommunity development was a well resourced pri-ority in the New Towns. The much leaner deliveryvehicles in the Growth Areas are much more aboutland use planning and co-ordinating investmentthan direct delivery, but in terms of communitydevelopment it is not clear who they could ‘co-ordinate’ to deliver this function. The capacity ofthe Community Development sector is limited,partly as a function of unstable funding. Forty percent of community development work is deliveredon short-term contracts, leading to insecure andfragmented delivery (CDF 2006), which, given thelong-term nature of the community developmentprocess, is likely to undermine the effectiveness ofcurrent provision. There is a lack of strategic think-ing at both the national and local level about theneed for community development to support hous-ing growth.

We tested our assessment that communitydevelopment was a potentially neglected but verynecessary aspect of delivery in the Growth Areas ina roundtable discussion with 12 regeneration andhousing managers who worked for housing associ-ations and local authorities in Milton Keynes andthe Thames Gateway. The discussion focused onthe practitioners’ perceptions of the extent to which


community development would be a key challengein the Growth Areas. Most of the practitioners hadexperience of working in relatively new develop-ments or regeneration schemes.

There was a strong consensus that the scale ofnew housing provision in the Growth Areas meantthat avoiding tensions in community relations anddeveloping a sense of community within newdevelopments would be a significant challenge.Some of the practitioners had direct experience ofworking in communities where there were poorcommunity relations. There were a number of keyissues that were common across the different exam-ples they cited, including:

● Community facilities – there is a lack of sharedcommunity facilities to act as a focal point forcommunity development activities

● Facilities for young people – tensions betweenresidents often arise due to the behaviour ofyoung people, which can be seen as problematicwhere they do not have access to sporting orcultural facilities

● Mix and layout – in mixed tenure develop-ments, a lack of proper integration of marketand social housing creates conditions wheredivisions between residents from differenttenures could open up.

Other participants in our roundtable discussionworked in regeneration schemes where a multi-agency approach to the provision of sporting andcultural activities for younger people had been suc-cessful in addressing behavioural problems andimproving the sense of community. They also high-lighted that the provision of social infrastructure,such as community centres, quality public spacesand sporting facilities, was essential to achievingcommunity development objectives.

‘Wired’ Growth Area communities

Recently there has been increasing attention givento the potential role that information and commu-nication technology (ICT) can play in supportingsocial networks. This has even led some people toquestion the relevance of a place-based approachto community relations (see Bridge and Guilari2004 for a review). However, there are good rea-sons to retain a significant focus on the local whenthinking about social relations. Face-to-face contact

between people gives relationships meaning andtrust, and is the type of social contact that mostpeople generally prefer. Also, people will alwayshave certain shared interests that are specific totheir locality, even in the absence of a culturalidentification with their local neighbours (Davies2003). But while we may not accept that the inter-net has superseded the relevance of neighbour-hoods, it is an important factor that can no longerbe ignored in contexts where it is in the publicinterest to foster social networks.

Evidence suggests that ICT has a positive role toplay in supporting communities. For example,there is evidence from a study in Canada that inone new community, those with access to the webfrom their homes knew more of their neighboursthan those households without home web access(Hampton 2003). The main objective for wiring-upcommunities has been to enable people to accessinformation and opportunities that would other-wise not be possible. The fact that it can alsoimprove local social relations was something of anadded bonus to early wired neighbourhood experi-ments (Davies 2004). It is important to note, how-ever, that providing local Broadband networks orintranets should not be seen as a replacement forother, more traditional, approaches to supportingcommunities. ICT can have the biggest impacteither where it can augment existing social capitalor in predominantly middle-class communities(Gaved and Anderson 2006). In the Growth Areas,technology needs to be seen as part of a widerapproach to supporting new communities.

Steps are already being taken to deliver wired-up communities in the growth areas. For example,the Government has recently announced the out-come of its Digital Challenge competition5 andone of the winning bids is for Milton Keynes toprovide Digital Service Centres6 to broaden outaccess to ICT (DCLG 2006a). Also in MiltonKeynes, one of English Partnership’s MillenniumCommunities – Oakgrove – is being developed todeliver 2,000 homes in a mixed use developmentthat aims to be one of the most IT-enabled com-munities in the country. Another MillenniumCommunity, the Greenwich Millennium Village,already has a local intranet.

In the Growth Areas, the need to provide newtelecommunications infrastructure is an opportuni-ty to ensure that neighbourhoods have access to

27

5. The Digital Challenge Competition was a challenge to regions, cities or similar sized areas to use technology to transform services to bet-ter meet community needs (www.digitalchallenge.gov.uk).

6. Digital Service Centres aim to overcome barriers to the use of digital services in excluded and deprived communities by providing train-ing and loans of equipment, and by installing wireless Broadband networks and Internet TV in homes that would otherwise not haveaccess to such facilities.

Broadband from the outset. The use of that infra-structure to develop local social networks withincommunities should be maximised. This should belinked to measures such as Digital Service Centresto ensure that deprived residents can access ICT.

Communities: conclusions

The Growth Areas should conform to theGovernment’s objective that new housing shouldbe provided in such a way as to support the cre-ation of inclusive and cohesive communities. It isright that policy and delivery in the Growth Areasshould seek to achieve mixed communities,through new developments including a diversity oftenures and housing types. The evidence base forthe advantages of mixed communities isfavourable, though limited, and we know enoughabout the consequences of providing ‘non-mixed’communities to prioritise a mixed communitiesapproach in the Growth Areas.

However, in determining the appropriate pro-portion of affordable housing a balance needs tobe struck between two imperatives:

● the need to significantly increase the supply ofsocially rented and affordable housing acrossthe Greater South East; and

● the need to support the Growth Areas’ economicstrategy and reflect its socio-economic baseline.

A strategic approach to determining mix needs tobalance these two factors and consider mix at thelevel of local housing markets, not just specificsites, and take into account the levels of housingneed across the regions.

The scale of change in the Growth Areas’ com-munities, coupled with the different ethnic andsocial backgrounds of new and existing residents,means that there is a significant risk that withoutappropriate support, community relations in theGrowth Areas will be weak. The results of our focusgroups have uncovered the potential for significanttensions in some areas. A breakdown of communi-ty cohesion is particularly likely where there are bigdifferences in the backgrounds of new and existingresidents, there are already pressures on local serv-ices, limited local economic opportunities andinsufficient community infrastructure put in place.In the provision of social infrastructure to supportgrowth, there will need to be a strong emphasis oncommunity involvement in the process of deliver-ing those services, so that as far as possible existingcommunities benefit and the perception that they

are only for new residents is avoided. If the issue ofcommunity development in the Growth Areas isnot given priority then the objective of creatingcohesive and inclusive communities will not beachieved.

In order for the Growth Areas to overcomepotential problems with community relations,there are two key areas that require attention. Thefirst is that new developments need to be deliveredin such a way as to foster social relations, andavoid segregation. Developments need to:

● be ‘tenure blind’, so that social rented andaffordable housing units are properly integratedwith market housing and built to the same stan-dards

● include a high quality public realm, supportedby a single management organisation

● include public spaces and community facilities,which are essential to providing places for socialinteraction and as a focal point for communitydevelopment action

● include access to play and sports facilities forchildren and young people

● maximise the potential role for ICT to supportthe development of local social networks

● have public services delivered alongside residen-tial development and be accessible to, andreflect the needs of, existing residents as well asnew residents.

The second key area that requires attention is theprovision of resources to support communitydevelopment work in the Growth Areas. In theNew Towns, development corporations had wholecommunity development departments. There is areal risk that in the Growth Areas responsibility forcommunity development could fall between thegaps in the looser, partnership-based approach todevelopment unless specific resources are madeavailable to provide delivery vehicles and localauthorities for this purpose.

A failure to invest in community facilities anddevelopment risks the Growth Areas’ communitiesdeveloping a similar reputation to those of some ofthe New Towns, which were considered to be life-less places to live where residents suffered from the‘New Town blues’ (Bennett 2005). This kind of rep-utation can significantly damage places’ ability tobecome places of choice for residents or to attractbusiness investment. There is also a risk that with-out action to prevent it, parts of the Growth Areascould have significant problems with communityrelations.


A key question for the sustainability of the com-munities in the Growth Areas is their economicviability. The long-term future of these areasdepends on the relationship between the rates ofprovision of housing and economic growth. TheGovernment has set out ambitious goals for hous-ing growth and job creation across all four GrowthAreas. The Sustainable Communities Plan identi-fied a flourishing local economy to provide jobsand wealth as a key requirement for a sustainablecommunity, although the plan said little abouthow it expected local economies to grow alongsidenew housing.

Some of the Growth Areas already have flour-ishing economies: the main challenge is to providehousing and infrastructure to help support growth.However, other Growth Areas are performing lesswell. If the Growth Areas are to develop in accor-dance with the Government’s definition of a sus-tainable community, housing growth needs to bematched by employment growth, through a combi-nation of commuting and indigenous economicregeneration.

These challenges raise some important ques-tions. What are the likely future sources of econom-ic growth in low-performing Growth Areas, andwhat are the future risks for higher-performingareas? What are the social and economic impacts ofa growing commuter economy? How can weimprove skills to help local people compete ingrowing labour markets? How do we deliver andpay for the infrastructure that will underpin growth?

The Growth Area economies also raise some sig-nificant challenges in relation to national econom-ic policy. Currently much investment in the UK isconcentrated in the Greater South East, but mostlyin locations away from the areas that have been tar-geted for housing growth (for example, the M4/M40 corridor). The Government also has a PublicService Agreement (PSA) commitment to improvethe economic performance of all English regions,and over the long term reduce the gap in growthrates between regions. Is it possible to deliver hous-ing and employment growth across the GreaterSouth East, while doing the same elsewhere in thecountry?

This chapter looks at the economic landscape ofthe Growth Areas, focusing on two communities atdifferent ends of the growth spectrum: MiltonKeynes, and Thurrock in the Thames Gateway. Itasks three key questions:

● What are the prospects for employment growthand what measures are relevant agencies usingto attract inward investment to the GrowthAreas? Could they be doing more?

● What is the likely balance of commuting versusself containment in the Growth Areas, andtherefore what are the implications for the bal-ance of residential and commercial develop-ment?

● How do the objectives of achieving jobs growthin the Growth Areas sit with wider governmentpriorities for economic growth and reducing thegap in growth rates between regions?

The analysis in this chapter is based on three mainsources:

● A survey of the academic and policy literature,including strategy documents, baselines andexisting studies

● Quantitative analysis of economic and socialdata across the Growth Areas

● Interviews with local, regional and nationalstakeholders.

The chapter is structured as follows. The first sec-tion sets out the economic rationale for the GrowthAreas, and introduces the case study areas. The sec-ond sets out the regional policy context. The thirdprofiles Thurrock and Milton Keynes. The final sec-tion presents conclusions about future opportuni-ties and risks for both areas, and lessons for deci-sion-makers.

Economic and policy background

This section sets out the economic rationale for theGrowth Areas. It then looks at the economic land-scape of the Growth Areas, focusing on MiltonKeynes-South Midlands and the Thames Gateway.It also looks at the specific policy frameworks forthese areas.

The economic case for the Growth Areas

The overriding objective of the Growth Areas is toaccommodate the economic success of the GreaterSouth East (ODPM 2003). The three regions thatmake up the Greater South East are the most pros-perous in the country. Compared to the rest of theUK, London, the South East and the East ofEngland have the highest gross value added (GVA)per capita. And over time, growth in the Greater

29

5. The Growth Area economies

South East has outstripped that of the rest of thecountry (Figure 5.1).

The analysis in chapter 3 of this report high-lighted the extent to which housing output in theGreater South East has failed to keep pace with therate of household growth, underpinned by thestrong economic performance across these regions.

The Government has argued that there is a needto accommodate the population growth of Londonand the Greater South East, to support economicperformance. It also has an objective that everyoneshould have the opportunity of having a decenthome.

There are important national economic conse-quences that stem from the Greater South East’sability to grow its population and economy.London, the South East and the East regionsaccount for a greater share of the national economythan other regions across a range of measures ofeconomic output and performance (Robinson2004). London itself imports £110 billion of goodsand services from the rest of the UK (OxfordEconomic Forecasting 2005) and accounted for 20per cent of the UK’s GDP growth between 1994and 2004 (ONS Regional Data). The strong eco-nomic performance of these regions, and London


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Figure 5.1 Regional GVA per head, 1995-2003

Notes: The headline GVA series for this publication have been calculated using a five-period moving average. Estimatesof workplace-based GVA allocate income to the region in which commuters work.Source: ONS 2005a

in particular, means that they have a role in sup-porting the UK economy as a whole and the per-formance of other regions’ economies.

To prevent bottlenecks in the labour marketdeveloping, people across the income range needto be able to afford to live within travelling dis-tance of their workplace. In London and theGreater South East, on a much larger scale than inother parts of the country, housing affordability isan employment issue. A large commuter economyhas developed around the capital, on the back ofaffordable housing shortages. Commuting placesconsiderable stresses and strains on workers andtheir families – particularly lower paid workers andlow paid part-time workers. Also, high housingprice differentials between London and other areasare likely to act as a barrier to inter-regional labourmobility, contributing to wage inflation in theGreater South East.

The economic landscape of the Growth Areas

While the Greater South East includes the threemost prosperous regions, economic growth in theseregions is far from uniform (Robinson 2004). Theeconomy of the Greater South East has becomeincreasingly polycentric over the past 15 years (Halland Pain 2006). Towns and cities to the west andnorth of London – like Reading, Slough and MiltonKeynes – have seen strong growth in population,economic output and employment. Some haveevolved into economic centres in their own right,with significant commuter flows between them, aswell as into London. Urban areas to the east ofLondon have seen less economic growth and haveevolved as primarily commuter centres, althoughsome parts of the Thames Gateway have strengthsin particular sectors, for example, logistics.

Some of the Growth Areas have been identifiedfor growth because they simultaneously represent aneed and an opportunity:

● A need because they currently lag behind otherareas of the South East across a number of indi-cators and are in need of regeneration.

● An opportunity because they have relativelylarge amounts of previously developed landavailable, enabling commercial and residentialgrowth to be achieved with the minimumgreenfield land take.

The economic trajectories of the two Growth Areasstudied here differ significantly. In Milton Keynes,and the wider MKSM sub-region, the primary chal-lenge is to provide sufficient housing to support agrowing economy. In the Thames Gateway –including areas like Thurrock – support for parallel

housing and economic growth is required.

Milton Keynes-South Midlands

MKSM has a strong and balanced economy. At theheart of the region’s economy, Milton Keynes itselfhas experienced above-average GVA growth and itspopulation growth has been higher than thatnationally. Future economic growth would be like-ly to create additional housing demand, with orwithout the Growth Areas programme. As well asinward migration as a result of economic growth,its young population profile means that MiltonKeynes will experience strong indigenous growth.As a New Town, Milton Keynes’ development strat-egy was to achieve self-containment, with the pop-ulation both living and working within the town.But over time, commuting out of and into the cityhas increased.

MKSM’s economy has been characterised bystrong employment growth and significant job cre-ation (Figure 5.2). Unemployment levels are inkeeping with those of the South East.

However, skills shortages are a potential futurerisk for the sub-regional economy. With a lowerthan average proportion of the population quali-fied to graduate level, raising the skill level of theworkforce is becoming a priority.

Generally, the economy is well positioned. Ithas a relative low proportion of its employment inmanufacturing. The size of the service sector is inline with the national average. The region’s eco-nomic activity includes high-value financial servic-es, high-tech manufacturing and research anddevelopment, plus a lot of retail.

This picture varies across this large sub-region,however. Some areas of Northamptonshire stillhave a big manufacturing base. Similarly, there arepockets of low skills. The proportion of peoplewith no skills is above the English average (29 per

31

Case study: Milton Keynes

Milton Keynes is at the heart of the MKSM GrowthArea. A New Town, it has evolved into one of thehighest-performing cities in the UK. Milton Keyneshas strong population, output and employmentgrowth, and a well-balanced economy. Well-connected to London, it has been a location ofchoice for investors and has received good flows offoreign investment. More people commute intoMilton Keynes than travel out to work elsewhere(mainly to London). The city is now developing aseries of broader commuter and economic linkswith the rest of the sub-region, and nearby cities likeOxford and Cambridge.

cent) in Luton, Wellingborough (both 30 per cent)and Corby (39 per cent).

A key advantage of the MKSM sub-region is itsgeo-strategic location within the wider network ofsatellite economic centres surrounding London.Although east–west links are not good, thenorth–south axis of road and rail links means it iswell situated in relation to London. Indeed, veryquick commute times mean that Milton Keynes is‘closer to London than some parts of London’, as astakeholder told our research. But Milton Keynes isnot economically dependent on its relationshipwith London alone. It sits in the Oxford-Cambridge Arc and has deep economic ties toother cities in the Greater South East.

Infrastructure requirements needed for bothhousing and economic growth include transportand public services. On the transport side, roadtransport cannot keep pace with the level ofgrowth. A modal shift towards rail and buses isrequired generally. And more specifically, east–westconnectivity needs to increase and business devel-opment would benefit from a high-speed rail linkwith Birmingham International Airport. Somestakeholders also suggested to our research that therail links to London, although relatively good,could be improved further.

In terms of public services, there is a risk thatthe provision of key services and social infrastruc-

ture will not be able to match the rate of growth inhousing. There is some concern in Milton Keynesthat funding formulae for mainstream public serv-ices, especially for education and health, are notresponsive enough to rapid growth. This problemin Milton Keynes dates back to the days of the NewTowns Programme (Bennett 2005). Given the needto increase the skill level of the Milton Keynes pop-ulation, there is a need for high quality furthereducation facilities.

The big challenge for the MKSM Growth Area isfinding the means to finance and deliver theseinfrastructure improvements. Money will comefrom the Department for Communities and LocalGovernment (DCLG) (formerly ODPM) GrowthAreas funds, and the tariff (see chapter 6). The tar-iff has gained a lot of attention. But it only has thepotential to raise £310 million of the £1 billionneeded7. It is not the solution in itself, but perhapsan example of the type of innovative revenue-rais-ing measures required to plug gaps in mainstreamfunding.

The policy framework for MKSM

The MKSM Growth Area sits on the edge of threegovernment regions, with Milton Keynes in its cen-tre. As the city and surrounding urban centres havebeen identified as a Growth Area, it has beenimportant to set out a clear growth strategy for the


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7. Stakeholder interview, Government, November 2005

future, in particular to deal with the fact that thesub-region crosses a number of institutionalboundaries. The strategy has been drawn up by theGovernment Offices for the South East, EastMidlands and East of England. As the strategyamends the Regional Spatial Strategies for theseregions, it has to have the support of the RegionalAssemblies.

The strategy provides new housing and jobs tar-gets for each of the growth centres within theMKSM sub-region, as well as longer-term guidancefor sub-regional housing growth (to 2031) and aspecific estimate of inter-regional infrastructurespending requirements over the next 30 years (£8.3billion). The sub-region targets are for 170,000new homes by 2021 and the same number of newjobs in the main towns by the same year (ODPM2005d).

Alongside the strategy an MKSM Inter-RegionalBoard (IRB) has been established, which is current-ly chaired by Yvette Cooper, Minister of State forHousing, and brings together local authorities,local delivery vehicles, other public agencies, andsub-regional stakeholders. This body sets infrastruc-ture priorities and monitors their implementation,with a specific focus on cross-regional investmentthat cannot be secured by local delivery vehicles.

In addition to housing growth, the strategy hasthe following priorities:

● Delivering economic growth and improvingworkforce skills, especially in high-value sectors

● Regenerating deprived areas● Meeting both existing and newly arising infra-

structure needs, including through a modal shiftto public transport.

The strategy suggests projected numbers of newhomes and jobs for each area within the sub-regions. Milton Keynes, for example, has a target of44,900 new homes by 2021, and 70,000 new jobsby 2031. City planners want to concentrate newjobs in high-value industries including informationtechnology, office jobs, research and development.They also want new jobs to be filled mainly by‘new locals’, that is, people moving to the arearather than in-commuters8. New housing will helpstabilise the number of in-commuters and reducepressure on infrastructure.

Thames Gateway

The economic prospects of the Thames Gatewayare much more difficult to describe than those ofMKSM. The story of MKSM is driven by the experi-

ence of Milton Keynes itself, and, allowing for adegree of generalisation, the sub-region shares acommon economic trajectory. This is not the casein the Thames Gateway. There is not a single urbancentre within the Gateway that dominates theeconomy. Rather, there are a number of relativelysmall centres (Hall and Pain 2006). In many cases,their most important relationship is with London,not other towns within the Gateway.

There is not a Thames Gateway economy assuch, but rather there are a number of economieswithin the region. As this lack of economic interde-pendency within the region would suggest, thestate of the various towns’ economies differs signif-icantly. For example, population growth across theGateway has been in keeping with South Easttrends but this has been very unevenly distributed.So some towns have experienced negative growth(for example, Havering and Gravesham) while oth-ers have experienced very rapid increases (forexample, Newham and Swale).

These patterns mirror trends in the labour mar-ket. While some Gateway areas have experiencedrapid job growth, employment rates across theGateway tend to be lower than the South East aver-age (Figure 5.3). Similarly, unemployment levels ina majority of Gateway districts tend to be signifi-cantly higher than in the rest of the South East.

In part, these labour market trends areexplained by the economic structure of the area.Generally, the Thames Gateway is over-dependenton a shrinking manufacturing base. The proportionof the workforce in manufacturing has historicallybeen above the South East average. Although someof the losses in manufacturing have been offset bynew jobs in retail and leisure, the Thames Gatewayhas done less well than neighbouring regions ingenerating replacement work opportunities for

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8. Stakeholder interviews, Milton Keynes, February 2006

Case study: Thurrock

Thurrock is in the middle of the Thames Gateway,around 25 minutes from London. It is less a city thana cluster of small towns, concentrated around thewest of the local authority boundary. Thurrock’seconomy is strong, but narrow – key sectors aredistribution, logistics and retail (in particular, theLakeside shopping centre). Like much of theThames Gateway, Thurrock has a poor local skillsmix and low levels of school attainment. There is agreat deal of commuting into London, and this islikely to grow under the Growth Area programme.

those who used to (or would have) worked inmanufacturing. High tech industries are notable fortheir absence, for example. In the Thames Gateway,economic restructuring is an ongoing process.

Plant and machine operative occupationsremain overrepresented (8.3 per cent of employees,compared to 5.3 per cent in the South East) whilemanagerial, professional and associate professionaloccupations are under-represented (37.4 per cent,compared with 45.6 per cent for the South East).Relative to the South East generally, there is agreater proportion of resident workers with noqualifications (nearly 17 per cent, compared with11 per cent across the region) and the proportionof skilled residents at all levels is lower than in

neighbouring areas. The regeneration of theThames Gateway will depend on both basic andhigher skill levels being improved.

With low skills and fewer inherent advantagesthan MKSM, it is even more important in theThames Gateway that there is a comprehensiveapproach to growth that takes in housing, educa-tion, skills, employment and transport. At the heartwill be an ability to make the Thames Gateway anextension of the London economy, taking advan-tage of its geo-strategic position. In the short term,the economic strategy needs to be based on grow-ing the commuter economy through providing ahousing offer that will attract people who work inLondon to live in the Thames Gateway. The hous-


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ing will have to compete on both price and qualitywith housing in London and other parts of theGreater South East that are close to London.Through increasing the commuter economy,Thames Gateway agencies hope to draw out extrajobs in the service economy, for example, in retailand entertainment. In the longer term, the regionwill need to further diversify its economy and buildits skill base.

The results of our study on prospective resi-dents’ attitudes to the Thames Gateway revealedthat people on low to mid incomes would bepotentially attracted to the prospect of more afford-able housing in the Gateway. In contrast, peoplewith higher incomes were less likely to consider itas an option, with people in this group expressinghigher expectations of transport connectivity andcultural heritage in their location decisions(Bennett and Morris 2006). This raises significantissues for those parts of the Growth Areas that areseeking to attract commuters and change the skillsprofile of their area by attracting new residentswith high skills.

Both the long-term goal of improving skills andthe short-term goal of growing the commuter econ-omy are dependent on very significant improve-ments in the region’s infrastructure and ability toconnect and integrate itself with Greater London.As in MKSM, this requires a modal shift away fromthe road. For some towns within the region, theChannel Tunnel Rail Link (CTRL) will help themachieve this goal. Connectivity within the ThamesGateway, especially with the CTRL, will be funda-mental. Other important projects include theThames Gateway Bridge, CrossRail, and a furtherextension of the Docklands Light Railway. Withouthuge investment in infrastructure, job targets willnot be met. So a massive challenge for the ThamesGateway will be funding infrastructure projects. Aversion of the Milton Keynes Roof Tax (see chapter6) may be an option, but the region will not beable to raise sufficient revenue locally. Furtherdirect funding from central government will benecessary.

The policy framework for Thames Gateway

The Government’s plan for the Thames Gateway isto deliver 120,000 new homes and 180,000 jobsby 2021 (ODPM 2004). A Cabinet Committee,chaired by the Prime Minister, has been set up toprovide strategic oversight of the programme. TheODPM has committed to provide a StrategicFramework for the whole Gateway during 2006

and is in the process of recruiting a Chief Executivefor Gateway, whose role will be to co-ordinatedelivery.

Outside of Whitehall, there is a complex hierar-chy of strategies and delivery bodies currentlyresponsible for delivery. The Thames GatewayStrategic Partnership comprises the three RegionalDevelopment Agencies (RDAs), local delivery vehi-cles and other delivery agencies. Below this, threesub-regional partnerships provide detailed frame-works for each part of the Gateway.

The Thames Gateway South Essex Partnership(TGSE) is one of the three. It has set out its visionfor the area: a differentiated economy with growthpoints across the sub-region, for example, logisticsat Thurrock and business at Basildon (ThamesGateway South Essex Partnership 2005). Deliverypriorities are regenerating key sites, attractinginward investment, supporting businesses, improv-ing transport infrastructure and promoting skills.

Like the other sub-regional partnerships, TGSEworks upwards with the RDAs and DCLG, anddownwards with local authorities, local deliveryvehicles, Learning and Skills Councils (LSCs),transport authorities and health and educationproviders.

At ground level, local authorities, Local StrategicPartnerships (LSPs) and local delivery vehicles takethe lead. In Thurrock, for example, the UDC(Thurrock Development Corporation) is fundeddirectly by DCLG. It can gap-fund projects, hasCompulsory Purchase Order (CPO) powers andnegotiates Section 106 agreements. Thurrock’sLocal Development Framework is still being drawnup, so the UDC is leading the regeneration andplanning process. It lacks statutory plan-makingpowers but is designing ‘quasi-statutory’ policiesthat can be formally adopted later.

Thurrock’s Regeneration Framework sets outnine goals, covering economic development, skills,housing, infrastructure, green space, leisure, cultureand environmental sustainability (ThurrockDevelopment Corporation 2005). Thurrock’s head-line targets are to create 26,000 new jobs and18,500 new homes by 2021. Under this, the eco-nomic priorities are to:

● Bring in higher-value economic activity ● Build the existing SME base and bring in more

inward investment ● Create employment opportunities that local

people can fill.9

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9. Stakeholder interview, Thames Gateway, January 2006

In the short term, the commuter economy willgrow. Better transport infrastructure and a strongerlocal skills base are central to achieving all threelong-term goals.

The Growth Areas and regional economic

policy

The Sustainable Communities Plan sets the overallframework for planning, housing and developmentpolicy across the whole of England. As such, it isone of several strategic frameworks that affect eco-nomic growth. Some of these cut across theGrowth Areas agenda, raising strategic tensions andcontradictions.

The Government is committed to build morehouses and raise employment across the GreaterSouth East. But it is also committed to reducingeconomic disparities across the country. Since the2000 Spending Review, the ODPM (now DCLG),the Treasury and the Department of Trade andIndustry (DTI) have shared a PSA commitment to:

Make sustainable improvements in the eco-nomic performance of all English regions andover the long term reduce the persistent gap ingrowth rates between the regions, definingmeasures to improve performance and report-ing progress against these measures by 2006.10

This target is at the heart of the Government’s eco-nomic development strategy. Despite the pockets ofdeprivation in some parts of the Growth Areas,they remain relatively well-off compared withdeprived areas of the North and Midlands.

While it can be argued that people can move toareas of prosperity to access opportunities, for rea-sons of social and territorial justice Government isconcerned with place as well as people (Adams et al2003). Some groups are more mobile than others –not everyone is able to move to opportunity.Structural economic change hits the worst-off hard-est. Weak local economies, poor housing and envi-ronments, and poor public services create a cycle ofdecline, concentrating disadvantage in poor areas(Prime Minister’s Strategy Unit 2005).

The need to improve lagging regions’ perform-ance also helps explain the resurgence of interest inBritish cities. A growing body of work suggests thatconurbations like Leeds, Manchester andBirmingham are the economic building blocks oftheir regions (SURF 2004; HM Treasury et al 2006;

Marshall and Finch 2006). Better-performing citiescould help reduce regional disparities, and con-tribute to key national policy goals: full employ-ment, more even growth and reductions in childpoverty (Healey 2005).

The Government is already moving to translatethese ideas into policy. First, the Northern Way setsa strategy for narrowing economic disparities acrossthe three Northern English regions (The NorthernWay 2004). The delivery plan is based around theNorth’s eight city-regions. A £100 million GrowthFund has been allocated, with the aim of leverag-ing the North’s £60bn of public sector spending(The Northern Way 2005).

Second, the Government is considering greaterpowers and freedoms for big cities, to enable themto raise their economic performance. DCLG recent-ly devolved significant powers over housing, skillsand planning to the Mayor of London (DCLG2006b) and this may become the blueprint fordevolution to other cities. The Lyons Inquiry nowcovers the role and functions of local government,and will report at the end of 2006. Prior to that, aLocal Government White Paper will float ideas inthe autumn, which will include policies to empow-er cities to improve their economic performance(HM Treasury et al 2006).

Thurrock and Milton Keynes area profiles

This section provides an outline of the nature andrecent development of the economies of Thurrockand Milton Keynes. It draws on economic andsocial baseline information, as well as a range ofstakeholder interviews.

Thurrock

A poly-centric cluster of small towns concentratedaround the west of the local authority boundary,Thurrock is a mid-to-good performing part of theThames Gateway. Nevertheless, GVA levels11 arewell below national and South East levels (Figure5.4). Employment levels are below South East aver-ages but in line with national averages.

Geo-strategic location

In terms of connectivity, it is Thurrock’s relation-ship with London that dominates. There is a highamount of commuting into London, and this islikely to grow under the Growth Area programme.In 2001, 43 per cent of the resident workforce com-


10. www.hm-treasury.gov.uk/performance/targets/perf_target_105.cfm 11. GVA figures need careful handling below regional level. Local data may not capture the shape of the local economy or labour market.

Figures for Thurrock and Milton Keynes are provided at NUTS3 (sub-regional level), and give some approximation of the performance ofthe local economy

muted elsewhere to work, marking an increase inthe level of out-commuting over the previousdecade. There is in-commuting at about 60 per centof the level of out-commuting. Thurrock is a com-muter-dependent economy, and is likely to becomemore so.

In the middle of the Thames Gateway and just25 minutes from both the Thames crossing atDartford and Canary Wharf, Thurrock has thepotential to become a hub of economic activity butso far it has struggled to fully benefit fromLondon’s growth. Poor intra-regional connectivityis presently a barrier. The fact that Thurrock is not astop on the Channel Tunnel Rail Link gives it a sig-nificant weakness compared to other areas.

Demographic characteristics

In 2004, Thurrock’s population reached 146,400,having grown at a significantly faster rate than thepopulation of England or the South East between1991 and 2004 (Figure 5.5). The working age pop-ulation has grown faster than that of the overallpopulation.

Industrial structure

Thurrock has a strong but narrow economy. Keysectors are distribution, logistics and retail (in par-ticular, the Lakeside shopping centre).

The increase in local population (both inThurrock itself and neighbouring areas of theThames Gateway) has the potential to boost theretail sector. The construction sector will also bene-

37

0

5,000

10,000

15,000

20,000

25,000

30,000

Thurrock Milton Keynes South East England

Figure 5.4 GVA per head in Thurrock and Milton Keynes, 2002

Note: Thurrock and Milton Keynes figures refer to NUTS3 areas Source: ONS 2005a

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

19911992

19931994

19951996

19971998

19992000

20012002

20032004

Milton Keynes Thurrock

Figure 5.5 Population in Milton Keynes and Thurrock, 1991-2004

Source: ONS 2005b

fit from growth. For other major employment sec-tors, expansion will be dependent on infrastructureimprovements. There is no reason to assume thatdistribution and logistics sectors can provide theemployment opportunities to generate jobs for agrowing population. First, both industries arepotentially mobile. Second, both react quickly totechnological change (for example, container portsare increasingly computerised). So if Thurrock’sincreasing population is to be employed locally,the economy needs to diversify.

Skills

Despite evidence of gradual improvement,Thurrock has a relatively low skill level profilecompared to the rest of the South East.Significantly more of Thurrock’s population has noskills relative to both the South East and England.The proportion of the population with NVQ +4(degree level and above) is less than half the SouthEast average.

There is also a clear skew towards lower gradesin the occupational profile. Managerial, profession-al and associate professional occupations are allunder-represented, while personal services and ele-mentary occupations are over-represented.

Milton Keynes

Milton Keynes is a high performing urban area. Ithas strong growth in output, population andemployment. High average standards of living andstrong and sustained GVA growth are key featuresof the Milton Keynes economy (Figure 5.4). Theemployment level is slightly higher than thenational average (although lower than that of theSouth East).

Geo-strategic location

Milton Keynes benefits from its location and con-nectivity. Connectivity is important, not just withLondon but across the Greater South East. Thereare complex networks of economic interdependen-cies forming in Milton Keynes. The city is attempt-ing to market itself as part of the ‘Oxford-Cambridge Arc’. So far, this is more marketing ini-tiative than concrete strategy, but the Arc haspotential to leverage spill-over growth from bothcities into Milton Keynes. Delivery will, however,depend on improvements in east–west transportinfrastructure.

Between 1991 and 2001 there was a significantincrease in the proportion of workers living inMilton Keynes that worked elsewhere: numbers rosefrom 34 per cent to 43 per cent. More people com-mute to London than anywhere else. The number ofin-commuters travelling to Milton Keynes to work

grew over the same period but at a slower rate.

Demographic characteristics

In 2004, Milton Keynes’s population was 218,400.Over the previous ten years, the town’s populationgrew by over 16 per cent, far faster than populationgrowth in either the South East or England (Figure5.5). The main driver of this has been indigenouspopulation growth, reflecting the relatively youngdemographic profile.

Industrial structure

The manufacturing sector remains prominent inMilton Keynes, although the service sector is alsowell developed. Overall, the city economy appearswell balanced with high-value financial services,high-tech manufacturing and research and develop-ment all prominent. The retail sector is also a sig-nificant employer.

A significant proportion of the Milton Keynespopulation works in elementary occupations. Thereare relatively few people working at administrativeor skilled trades but significant representationamong higher skilled professions giving the town’soccupation structure an hourglass-shaped profile.

Current concerns about future employmentgrowth surround the footloose nature of manybusinesses and the perceived threat of off-shoring.

Skills

The Milton Keynes population contains a relativelysmall amount of people qualified to graduate levelor above relative to England and even more so therest of the South East. This is compensated for byan over-representation of people with NVQ 2- and3-level qualifications. The number of people with-out qualifications is above the South East averagebut below the national average.

Analysis and findings

This section first sets out the future opportunitiesand risks for Thurrock and Milton Keynes, and sug-gests how their economies could evolve to 2021. Itthen draws out lessons for policymakers across theGrowth Areas, and in national government.

Growth Area economies: opportunities and risks

The Growth Areas have both housing and employ-ment objectives. In practice there has been morefocus on housing to date. There are risks facingboth objectives. If the economic objectives are notgiven enough priority, they will not be met. Thiswill have a significant impact on the social andeconomic sustainability of the Growth Areas, espe-cially those areas where economic performance is


generally lower. The greatest risk for the housingobjectives is the inadequacy of infrastructure tosupport growth. These issues are being played outin the two case study areas we have looked at, theimplications for which we consider in more detailbelow.

These tensions could be reconciled through amore explicit acceptance that the Growth Areas willspread economic activity, from London over awider area of the Greater South East. Governmentneeds to be more up-front about the importance ofeconomic development to successful delivery of theGrowth Areas. There are some indications that thishas started to happen. For example, DavidMilliband referred to the need for the RDAs, LSCsand sub-regional partnerships to produce an eco-nomic strategy as part of a new strategic frameworkfor the Thames Gateway (Miliband 2005).

Milton Keynes

In Milton Keynes, the main risk is on the housingside. The challenge is to provide housing to enablethe economy to continue along its upward trajecto-ry. There are also future risks to this economic tra-jectory, but compared with Thames Gateway, theyare relatively low.

The Growth Areas offer opportunities boththrough the provision of housing and through theinfrastructure improvements that accompany them.More houses will reduce bottlenecks in the labourmarket and commuting, while better infrastructureshould improve Milton Keynes’ location advan-tages, and cement comparative advantage overother towns and cities around the North and Westof London.

However, if housing is not delivered, problemswith labour supply could slow economic growth.Commuter routes will become increasingly over-loaded, and house price inflation will become aserious problem. Similarly, failure to deliver infra-structure improvements will further overload roads,rail, education and healthcare across the sub-region. Some of the more footloose employers mayrelocate to other areas with lower costs, especiallythose associated with labour costs.

Thurrock

In some senses, the opportunities presented by theGrowth Areas are greater for Thurrock than forMilton Keynes. But the need to achieve housingand regeneration goals requires careful balance,and the potential for things going wrong is higher.

One strategic risk for Thurrock is its dependencyon commuters. In the short term, employmentopportunities within Thurrock will not attract peo-ple to the area. People will choose Thurrock for

other reasons (for example, the availability andaffordability of housing). The Growth Area strategyhas to ensure that Thurrock becomes a place ofchoice, particularly for middle- and high-incomehouseholds who can bear the costs of commutingand can, to an extent, work around poor infrastruc-ture. ‘Connectedness’ and the quality of physicalinfrastructure are also an important part of theoffer, however.

While evidence suggests the bulk of commuters’income is spent where they live, not where theywork, relatively high earners will be needed to gen-erate additional employment in Thurrock’s localservice economy. This is a significant risk given thecurrent lack of leisure and entertainment facilitiesin Thurrock. If they do not emerge quickly, com-muters will spend their money elsewhere and thereis a risk that patterns of spending will be comeengrained. Commuter-led growth would then be amuch more gradual process.

A failure to diversify would mean that certaingroups would struggle to find employment. Lowearners and part-time workers may find it harder tobear commuting costs. An effective regenerationstrategy cannot depend upon the demand generat-ed by a commuter economy alone. Thurrock mustbecome a better place to both live and do business-es and compete with other locations close toLondon. Achieving these goals will have to be driv-en by infrastructure improvements rather than pop-ulation growth.

The two case study areas that we have chosenbroadly reflect each end of the economic spectrum.Other locations within the Thames Gateway willhave a slightly different set of challenges than thosethat face Thurrock. For example, Kent Thameside inthe Thames Gateway already has a more diverseeconomic base to build from, is closer to Londonand will benefit from being a stop on the CTRL.However, like Thurrock, its potential is limited bypoor road infrastructure and a low skills profile.

2021 growth scenarios

Given all of this, how might Thurrock and MiltonKeynes develop over the next 15 years? We haveconstructed high, medium and low growth scenar-ios for both areas. Scenarios cover change in theeconomy, commuting relationships, housing mar-ket, infrastructure projects and delivery partner-ships.

Scenarios also cover future political risks – achange of priorities in the current government, or achange of government altogether. It is unclear if afuture Conservative administration would changeor reverse the Sustainable Communities Plan. At

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local level there is a great deal of support for thePlan, especially in the Thames Gateway. And aConservative government would face the samestrategic challenges as the current administration.But it is likely that a new Government will makesome cosmetic changes at least.

Milton Keynes: high growth scenario

● There is continued high growth. Jobs and housingtargets are met.

● The economy remains strong. Milton Keynes’ baseremains diverse, and high-value sectors stay inthe city. Central MK develops a better urbanenvironment, and attracts more small firms –including creative industries.

● Milton Keynes remains the premier location outsideLondon. It continues to benefit from its widerstrategic location, and maintains strategic posi-tion in the Greater South East. The Oxford-Cambridge Arc brings in overspill from bothcities. There is little impact from off-shoring.

● There is little change in containment. There is morecommuting in and out of the city, and more ‘newlocals’ moving into new housing stock.

● New housing is delivered. There is a clear strategyfor delivering housing and social infrastructure.Milton Keynes Partnership’s land holdings bringdevelopers on board.

● Infrastructure improvements are delivered. Majorroad, rail, office space projects take place.Funding is delivered through the Roof Tax, andthrough central government budgets – bent tolocal needs.

● Partnerships work. There is a strong partnershipbetween economic development, skills, housingand public service agencies. Agencies have goodcapacity and continue to agree on key goals.

● Political risks are low. There is long-termWhitehall commitment to the Growth Areas.

Milton Keynes: medium growth scenario

● There is uneven growth. The jobs target is met,but the housing target is not met.

● The economy remains strong. Milton Keynes’ baseremains diverse, and high-value sectors stay inthe city. Central MK develops a better urbanenvironment, and attracts a few smaller firms.

● Milton Keynes remains the premier location outsideLondon. It continues to benefit from its widerstrategic location, and maintains strategic posi-tion in the Greater South East. The Oxford-Cambridge Arc brings in overspill from bothcities. There is little impact from off-shoring.

● The economy becomes less self-contained. There ismore in-commuting, as residents are priced outof Milton Keynes housing market.

● New housing is built, but social infrastructure is notdelivered. The Roof Tax provides some funding.Whitehall budgets are not leveraged to fill fund-ing gaps.

● Transport infrastructure is not delivered. Road net-works are overloaded, and rail improvementsare not delivered on time – or at all.

● Developers scale down commitment. Not enoughnew housing is built.

● Infrastructure is overloaded. House price inflationprices people out of the city. There is excessdemand for schools, healthcare and transport.

● Partnerships work. There is a strong partnershipbetween economic development, skills, housingand public service agencies. But it fails to securelong-term commitment from the property andconstruction sectors.

● Political risks are medium. There is no change ofGovernment, but attention moves away fromthe Sustainable Communities Plan.

Milton Keynes: low growth scenario

● There is low growth. Neither jobs nor housingtargets are met.

● The economy weakens. Low-end elementary/serv-ice sectors continue to grow, but high-value sec-tors shrink or move away from the city.

● Milton Keynes loses its ‘premier location’ status. Thecity centre becomes obsolete, no longer provid-ing a suitable location to many firms. Theymove to other cities in the Greater South East.The Oxford-Cambridge Arc fails to deliver realgains. Offshoring has a significant impact.

● The economy becomes less self-contained. There ismore in-commuting, as residents are priced outof the Milton Keynes housing market. As theeconomy slows, there is more out-commuting toLondon and the rest of the Greater South East.

● New housing is built, but social infrastructure is notdelivered. The Roof Tax provides some funding.Whitehall budgets are not leveraged to fill fund-ing gaps.

● Transport infrastructure is not delivered. Road net-works are overloaded, and rail improvementsare not delivered on time – or at all.

● Developers scale down commitment. Over time, notenough new housing is built.

● Infrastructure is overloaded. House price inflationprices people out of the city. There is excessdemand for schools, healthcare and transport.

● Partnerships fracture. As the economy slows andhousing strategies fail, public and private sectoractors diverge.

● Political risks are high. A different Government iselected, and changes the direction of theSustainable Communities Plan.


Scenarios for Milton Keynes all involve degrees ofsuccess. In the low growth scenario, the city under-shoots housing and jobs targets, but remains oneof the better-performing areas of the UK.

By contrast, the risks are much greater forThurrock – and the rest of the Thames Gateway.Here, the low-growth scenario leaves Thurrockmuch as it is. The economy remains strong but nar-row, and the area continues to perform poorly onskills, income and levels of deprivation.

Thurrock: high growth scenario

● There is continued growth. Jobs and housing tar-gets are met.

● The economy remains strong. Shellhaven (a con-tainer port in Thurrock) and other major proj-ects are delivered, and new, high-income resi-dents help the local service economy.

● The economy becomes more diverse. The Londoncommuter economy grows, as Thurrock’s strate-gic location in the Gateway starts to pay off.Thurrock also attracts new back office jobs, forexample, a local authority and utilities call cen-tre at Grays.

● The labour market improves. Skilled ‘new locals’move in. LSCs and other providers also improvelocal workforce skills base. The new undergrad-uate campus helps raise aspirations in the area.

● The economy becomes less contained. There is morecommuting to London, and more local in-com-muting from surrounding areas. This is partlybalanced by more local jobs.

● New housing is delivered, and occupied. There is amix of social housing, and intermediate hous-ing for first-time buyers/middle-class families.

● Social infrastructure improvements are delivered –in particular, new schools, healthcare and utilities.Changes to mainstream funding formulae pro-vide the bulk of the money. Additional fundingis delivered through a Roof Tax/Planning GainSupplement, helped by UDC gap funding.

● Transport infrastructure improvements are delivered.Thurrock gains from further Thames Crossingsand dedicated links to the CTRL.

● Partnerships work. The UDC’s frameworks areadopted by Thurrock Council. Both build stronglinks with local service providers, ThamesGateway South Essex Partnership, and RDAs.

● Political risks are low. There is long-termWhitehall commitment to the Growth Areas.

Thurrock: medium growth scenario

● There is uneven growth. The homes target is met,but not the jobs target.

● The economy remains strong, but narrow. There isgrowth in distribution, logistics, port, retail, but

no diversification. The commuter economy getsbigger.

● The labour market remains weak. There is littlechange to the local skills base, but higher-skilled‘new locals’ help the skills profile improve a lit-tle.

● The economy becomes much less self-contained. Thecommuter economy into London gets bigger,and there is some in-commuting from sur-rounding areas.

● New housing is delivered, and occupied. There is amix of social housing, and intermediate hous-ing for first-time buyers/middle-class families.

● Social infrastructure improvements are delivered –in particular, new schools, healthcare and utilities.Changes to mainstream funding formulae pro-vide the bulk of the money. Additional fundingis delivered through a Roof Tax/Planning GainSupplement, helped by UDC gap funding.

● Transport infrastructure improvements are delivered.Thurrock gains from further Thames crossingsand dedicated links to CTRL.

● Partnerships work. The UDC’s frameworks areadopted by Thurrock Council. Both build stronglinks built with local service providers, ThamesGateway South Essex Partnership and RDAs.

● Political risks are medium. There is no change ofGovernment, but attention moves away fromthe Sustainable Communities Plan.

Thurrock: low growth scenario

● There is low growth. Neither homes nor jobs tar-gets are met.

● The economy remains strong, but narrow. There isgrowth in distribution, logistics, port, retail, butno diversification. The commuter economy getsa lot bigger.

● The labour market remains weak. There is littlechange to the local skills base. Existing indus-tries upskill, and local people find it harder toget jobs. Higher-skilled ‘new locals’ help theskills profile improve a little.

● The economy becomes much less self-contained. Thecommuter economy into London gets bigger,and there is some in-commuting from sur-rounding areas.

● Poor infrastructure and a low skills base makesThurrock less appealing to potential ‘new locals’ andinward investors. CTRL links remain poor. Someindigenous firms move elsewhere (for example,logistics), and there is little migration into thearea.

● New housing is not all delivered, or occupied. Thereis a failure to make a good ‘offer’ to first-timebuyers/middle-class families. There is an unsus-tainable housing mix, with much of the market

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housing bought by individual investors and letout.

● Social and transport infrastructure improvements arenot delivered. Central government funding isinsufficient, and funding formulae prevent itfrom being delivered effectively. Additionalfunding mechanisms do not provide enough.

● Partnerships do not work well. Political uncertain-ty creates patchy relationships between the UDCand Thurrock Council. Longer term, agencyoverload continues. The Thames Gateway strate-gic framework and Chief Executive fail toimprove strategic leadership. In the short term,the Olympics divert resources.

● Political risk is high. A different government iselected, and changes the direction of theSustainable Communities Plan.

Lessons for decision-makers: strategy

The Growth Areas agenda is moving from policy topractice. What does our evidence tell us about thechances of success, and what are the emerging les-sons for decision-makers? This section sets outsome lessons for strategy, and the broad pattern ofdevelopment in the Growth Areas.

Strategic priorities

Currently, the Growth Areas are more concernedwith providing housing than jobs. On the ground,homes targets are harder than jobs targets, whichto some observers feel ‘aspirational’.12 In part, thisreflects the needs of the different Growth Areas. Inbroad terms, outside the Thames Gateway, the pri-ority is providing the housing to support andaccommodate economic growth. In the ThamesGateway, it is delivering growth in both housingand employment. It is easier to plan for housingthan economic development, and so far, the focusof delivery has been on property, rather than jobsor surrounding infrastructure.

This needs to change. First, concentrating onhousing – and therefore, a commuter economy –will have some local multiplier effects. But on itsown, commuter economy growth is unlikely tomeet employment targets (see below). Second,both housing and employment targets are at risk ifsocial and transport infrastructure is not delivered.This is particularly the case in Thurrock and otherparts of the Thames Gateway, where infrastructureis key to attracting new residents and businesses.

Patterns of growth

The Growth Areas will not have entirely self-con-tained economies. While the New Towns set out tobe self-contained, they are becoming progressivelyless so, as transport links improve, and as theyevolve polycentric relationships with other citiesacross the Greater South East. The Thames Gatewayhas strong radial links into the capital, and theseare unlikely to change in the near future (Hall2005). It is much less self-contained than the otherGrowth Areas, and we should expect a significantamount of commuting into London.

This means that it is impossible for policymak-ers to try for a perfect balance of new homes andnew local jobs. Some growth of the commutereconomy is inevitable, even in high-performinglocations like Milton Keynes.

A commuter economy could help generate localemployment. Some stakeholders are worried thatcommuter spending would leak out of the area.Other analysis contradicts this view. London com-muters are assumed to spend 85 per cent of theirincome where they live. In 2002, this amounted to£11.1 billion of spending in the rest of the UK,mainly in the rest of the South East (OxfordEconomic Forecasting 2004). This money will helpsupport and grow local services, particularly leisureand retail sectors like food stores, convenienceshopping, restaurants and bars. But at the sametime, a commuter-based economy may put consid-erable strain on family relationships and commu-nity structures – especially if infrastructure systemsare poor.13 Also, if there is a lack of retail andentertainment offer from the outset of growth,there is a risk that a pattern of spending elsewherecan become entrenched even once facilities becomeavailable.

There is also a risk of ‘lockout’, where new localjobs are created, but local people fail to get thembecause of competition from commuters and ‘newlocals’. A similar scenario will arise if existingindustries modernise and upskill – for example,logistics in Thurrock – again locking locals out ofthe labour market.

From a social justice perspective, it is criticalthat local people do not lose out from the GrowthAreas programme. So it is important to improvelocal people’s skills and employability, so that theycan compete in the labour market. Those at thelower end of the labour market typically travelshorter distances to work and face greater barriersto finding and keeping jobs. They tend to find


12. Stakeholder interview, commentator, January 200613. Stakeholder interview, commentator, January 2006

work in local labour markets, with employers whohire from the area, such as retailers. Commutinginto London will often not be possible or worth-while. So for these groups, access to local employ-ment is particularly important (Green and Owen2006).

Better skills for locals must be the key strategicpriority – especially in the Thames Gateway, whereskills deficits are greatest. Increasing employmentopportunities is also important. But creating ‘localjobs for local people’ will not have much impact ifcommuters or ‘new locals’ continue to get them(Adams 2005).

‘North’ vs ‘South’

Finally, what does the Growth Areas programmeimply for other strategic goals? Is it possible toincrease housing and employment across theGreater South East, at the same time as reducingeconomic disparities across the country?Specifically, can you expand London and theGreater South East, and raise economic perform-ance in bigger cities in the North West and NorthEast?

It is very hard to provide definitive answers. Inan open market economy, there are limits to anygovernment’s ability to direct growth across theUK. Similarly, economic development is not neces-sarily zero-sum. There is no ‘lump of growth’ to beapportioned across the UK. Urban economies arealso highly interdependent, and while they com-pete for mobile investment, they do not ‘compete’like individual businesses (Urwin 2006). For exam-ple, around 29 per cent of jobs in London dependon demand from the rest of the UK (Gordon et al2002). The Greater South East needs the rest of thecountry, and vice versa.

So we need to approach the issue from a differ-ent perspective. If development in the GrowthAreas detracts from growth elsewhere, this could befor two reasons:

● Sectoral growth in the Growth Areas shifts pat-terns of industrial location across the country.Key sectors concentrate in the South East.

● Employment growth in the Growth Areas shiftspopulation patterns across the country. Peoplemove south to find work.

This has been the basic pattern of British industrialchange for the past 50 years (Moore and Begg2004). But in the past decade, this has started tochange as northern conurbations have recovered.At the same time, London has entered a period ofexplosive growth. This suggests it is possible forNorth and South to grow together in the future,

particularly in sectors like retail, communicationsand elements of business and financial services(Simmie et al 2004).

However, it is much less easy to overcome theentrenched advantages of the Greater South East,particularly the presence of London. In key sectorslike ports and logistics, growth in the South Eastcould hurt prospects elsewhere (Loney 2006).

Latest estimates of regional growth rates suggestsome improvement in the growth rate of northernregions. Looking forward, in the short term, thereare good prospects for a continued economicrecovery of the northern regions. Economic inter-dependencies between regions mean that thenorthern regions’ recovery is partly driven by theeconomic growth that is occurring in the southernregions. Accommodating the economic success ofthe South may be important to sustaining the ‘rip-pling out’ of economic growth to other regions.

However, while it is not inevitable that theGrowth Areas programme widens disparitiesbetween northern and southern regions in theshort term, in the longer term there is a risk ofreinforcing established patterns of economicgrowth. While economic performance hasimproved, the North East’s growth rate remainsbelow average, and absolute disparities betweenregions persist (Experian Business Strategies 2006).Similarly, ODPM’s State of the English Cities reportillustrates the clear divide between urban areas inthe South and East, versus urban areas in the Northand West (Parkinson 2006). With a few importantexceptions (growing cities like Manchester andLeeds) on key social and economic measures, citiesin the South and East tend to perform 20 to 30 percent better than places in the North and West.Other research for ODPM asserts that patterns ofpublic spending – particularly on transport, scienceand innovation – effectively concentrate long-termeconomic development in London and the GreaterSouth East (Harding et al 2006).

So how can the Government meet its commit-ment to narrow the output gap between North andSouth? In the longer term, an approach that moreexplicitly seeks to balance the rates of economicgrowth across the regions is needed, with a corre-sponding approach to investment in infrastructureto support economic development. This couldensure that regions with lower economic perform-ance are supported to achieve greater economicgrowth, while at the same time, investment ininfrastructure in the faster growing regions is notsimply pouring fuel on the fire and further acceler-ating infrastructure demand unsustainably(Harding et al 2006). Over the 30-year horizonsthat some of the Growth Areas plans cover, in the

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interests of territorial justice, there need to becounterbalancing policies to promote sustainedgrowth outside of the Greater South East, which gobeyond the existing regional economic policyframework.

To achieve this, first, all mainstream governmentdepartments will need to take a spatial view, andthis should be reflected in PSA targets (see chapter7). Delivering sustainable communities – andimproving economic performance across the coun-try – requires transport, skills and science spendingto be joined up with economic development andhousing.

Second, focusing economic policies on city-regions provides the best chance of boostingregional performance, and meeting national goals.Research by SURF finds that in the North, it will befour times easier to achieve the Government’sregional economic performance targets if growth isconcentrated in city-regions (SURF 2004).14 Otherevidence suggests that devolving economic powersto city-regions has the potential to improve theireconomic performance (Marshall 2005).

Growth Area economies: conclusions

At the beginning of this chapter we asked questionsin three key areas: about the prospects for jobsgrowth in the Growth Areas, the nature of thefuture Growth Areas’ economies, and the relation-ship between a Growth Areas economic develop-ment policy and wider regional economic policy.So what are the answers? In brief:

1. The prospects for meeting the jobs growth tar-gets are mixed (see scenarios above). Specificareas’ trajectories will be shaped by their currenteconomic base, existing infrastructure capacityand skills profiles. In areas where these areweak, such as many parts of the ThamesGateway, meeting jobs targets will depend onthe ability of these areas to diversify the localeconomy, which in turn will require improve-ments in infrastructure and the skills base.

2. The patterns of commuting versus self-contain-ment will vary across the Growth Areas. Areasstarting from a position of relative economicstrength like Milton Keynes have the potentialto grow their economy in parallel to their popu-lation. Economic development should be a pri-ority in all Growth Areas. However, in areas likethe Thames Gateway, growth of the commutereconomy may be a necessary precursor to signif-icant growth of the local economic base.

3. The economic development objectives for theGrowth Areas need to be made more explicit. Inthe short term, the Growth Areas should notthreaten the recent signs of recovery in thenorthern regions, and the northern core cities inparticular. However, in the longer term astronger emphasis on achieving more balancedeconomic growth is necessary, supported byprogrammes that counterbalance the GrowthAreas support of economic growth in theGreater South East, through investment in infra-structure in other regions.


14. This is based on the assumption that growth rates in the South East to 2014 continue at 80 per cent of their growth rate between 1995and 2001. In practice, the Growth Areas programme may help accelerate growth rates above this level, particularly if major infrastructureimprovements are delivered.

The focus of this report has been on the social andeconomic challenges facing the Growth Areas. Thepreceding chapters on their demography, communi-ties and economies all raise implications for the pro-vision of physical and social infrastructure in theGrowth Areas. These issues are subject to muchstudy elsewhere, but our analysis provides furtherarguments on the nature of the infrastructure chal-lenge, the previous chapter providing insights intosome of the possible responses to that challenge.

While the Growth Areas approach has a numberof assumed benefits, delivering concentrated growthon the scale proposed by the SustainableCommunities Plan throws up two key delivery chal-lenges:

● Physical and community infrastructure need tobe delivered alongside new housing.

● The Growth Areas span the boundaries of localand regional institutions responsible for spatialplanning, transport and economic development.

The more dispersed approach to development, typi-cal of the 1980s and 1990s, allows new develop-ment to rely, to a certain extent, on the capacity ofexisting infrastructure. The gradual changes in popu-lation associated with dispersed growth can be morereadily catered for by standardised mainstream fund-ing frameworks and local development plans.However, the Barker Review identified a number ofaspects of current local funding regimes that pro-duce a lag between population growth and subse-quent increases in central government funding sup-port (see below) (Barker 2004).

It could be argued that in the highest growingregions, such as the South East, the dispersedapproach has been pursued to the point wheremuch of the physical infrastructure, particularlytransport, is now creaking under the strain of grad-ual housing growth, unmatched by an appropriatelevel of infrastructure investment (Roger Tym andPartners 2005). In spite of the very significantincreases in public spending under this government,spending on housing and transport as a proportionof GDP has only recently approached the levels ofthe early 1990s (ippr 2005).

Infrastructure

The need for government to invest in adequate infra-structure to support planned housing growth is cen-

tral to the current debates on the draft regional spa-tial strategies for the South East and East of England.While the Growth Areas approach has brought theissue of infrastructure investment needs into sharprelief, it is not exclusively a Growth Area issue.

The Government is committed to delivering sup-porting infrastructure alongside new housing.Specific Growth Areas funds were made availablethrough the Sustainable Communities Plan butthese budgets were not based on an assessment ofthe level and cost of infrastructure required to matchthe Government’s growth targets. The Growth Areafunds have been supplemented by the CommunityInfrastructure Fund (£400 million), which will sup-port the additional transport investment needed atstrategic sites to unlock further development. Thewhole question of public finance to support growthis a key aspect of the Government’s response to theBarker Review.

In February 2006, the Government completed aperiod of consultation on proposals for a newPlanning Gain Supplement (PGS) (HM Treasury etal 2005). This would seek to capture the uplift inland value that arises when land is granted planningpermission, with the specific objective of making theresulting revenue available to finance infrastructure.It needs to be recognised that the amount of valueuplift that may occur will vary considerably acrossdifferent sites (English Partnerships 2006). Onbrownfield sites with considerable land remediationcosts there will be minimal value uplift to capture.In areas like the Thames Gateway, where the majori-ty of development is on brownfield land, PGS willonly make a limited contribution to infrastructurefunding. The Supplement will need to be flexibleenough to accommodate a range of land develop-ment economics across sites. Also, it will be essentialthat it is levied at an appropriate level, which is notso high that it stifles development, but also not solow that the funding for the infrastructure of eco-nomically viable sites is not forthcoming.

The Government has also announced that it willbe conducting a cross-cutting review of infrastruc-ture, which will inform the ComprehensiveSpending Review (CSR) 2007. The extent of furtherfunding in the CSR will have a significant impact onthe trajectory and rate of growth in the GrowthAreas. PGS should improve the funding of infra-structure to support growth, but it will not be ableto meet all the infrastructure needs of the GrowthAreas. More public money will be needed.

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6. Delivering growth: infrastructure and structures

The New Towns Programme faced similar deliv-ery challenges to those of the Growth Areas (Bennett2005). The New Towns originated in a very differentsocial and political climate, in a period where devel-opment was led by the public sector, arguably undera more favourable set of conditions in which todeliver large-scale growth. The New Towns cut acrossexisting jurisdictional boundaries, so powerful NewTown Development Corporations were created,which were both public landowners and planningauthorities. The New Towns were advanced signifi-cant capital resources from the public loans boards,which enabled them to build much of the infrastruc-ture they required, although they still faced signifi-cant problems for types of provision that were out-side of their control, such as health services(Aldridge 1979). In spite of the different context, thesignificant disparity, in terms of delivery capacity,between the New Towns programme and GrowthAreas (Gardiner 2004) should make the GrowthAreas policy makers pause for thought.

Structures

Delivery in the Growth Areas occurs through a rangeof different structures. At the local level they includeUrban Development Corporations (UDCs), UrbanRegeneration Companies (URCs) and partnershipsof local authorities and the private sector, which areoverseen by sub-regional partnership bodies. Thisapproach enables delivery to take account of thevery different local circumstances across and withinthe Growth Areas, and provides a degree of localaccountability that was significantly lacking from theNew Town Development Corporations.

However, the delivery structures, particularly forthe Thames Gateway, have been criticised as beingboth too weak and too complex (Gardiner 2004;Urban Task Force 2005). The delivery vehicles donot always have the powers or resources necessary todeliver growth, and can be vulnerable to changes inthe local political landscape. Certainly the NewTown experience would point to the potential bene-fits of having a greater number of UDCs for theGrowth Areas (Bennett 2005).

Before the Sustainable Communities Plan waspublished, local authorities were allowed to select anappropriate growth vehicle from a range of options.Some local authorities may have been fearful of theUDC option, given past experiences where the devel-opment corporations tended to ride roughshod overthe local authorities, for example in the case of theNew Towns and London Docklands DevelopmentCorporation. However, the new breed of UDCs ismuch more locally accountable and takes less poweraway from local authorities.

Learning from Milton Keynes

The Milton Keynes-South Midlands Growth Area hasthe most advanced and best developed deliveryplans. Partly this is a function of the sub-region hav-ing some specific unique features, which place it atsome advantage over the other Growth Areas.However, there are some aspects of its deliveryarrangements that could be replicated elsewhere.

Learning from Milton Keynes: institutions

One reason for Milton Keynes’ strong position todeliver growth is its history – specifically, a legacy ofstrong institutions. The New Town DevelopmentCorporation had around 1,000 employees. MiltonKeynes Partnership and associated agencies have farfewer people to call on. However, many of the keyplayers have remained in place from the New Towndays, in new agencies that have spun out of theDevelopment Corporation. Important relationshipswith the private sector were forged many years agoand have stayed strong. The business community isengaged and shares the values of public sector play-ers. Most significantly, there is broad agreementacross sectors on some of the key strategic goals forthe area.

Milton Keynes has effectively evolved a ‘deliverycluster’, much like the industrial clusters elsewherein the Greater South East. This network of agencies,personnel and shared understanding gives MiltonKeynes huge advantages over the other GrowthAreas, where institutional relationships are onlybeginning to form. In Thurrock, for instance, theUDC was only established in 2003. Organic rela-tionships could evolve across the Growth Areas, butwill take time to form. Milton Keynes is a goodmodel of what other Growth Areas should aim forin 10 to 15 years’ time.

Learning from Milton Keynes: powers

Milton Keynes Partnership and the Growth Areas’UDCs have a broadly similar set of economic devel-opment powers, but with two key differences. First,the UDCs only have limited planning powers: theycan initiate strategic planning, but the local authori-ty is under no obligation to adopt their ideas. WhileUDCs can make decisions about certain strategicapplications, the MK Partnership also has statutorypowers over key strategic sites in the town.

Second, outside its official powers, thePartnership has far greater effective powers to callon. It can leverage considerable social capital (seeabove). Most of all, it has huge land assets. By own-ing most of the developable land in the area, it is ina far stronger position to assemble land packages,negotiate with developers and so achieve strategicgoals.


UDCs could use compulsory purchase powers toachieve similar ends. But the process is often costly,time-consuming and can be challenged in thecourts. Compulsory Purchase Orders (CPOs) are apower of last resort, and a voluntary approach isusually preferable (Marshall and Finch 2006).Moreover, CPOs do not have the capital resources tomatch the land assets that the Milton KeynesPartnership has inherited from its New TownDevelopment Corporation predecessor.

UDCs are some of the strongest delivery vehiclesin the Growth Areas, but are only being used in afew locations. URCs, on the other hand, have no for-mal powers, small budgets and few staff (Clark andHackett forthcoming) and across the majority of theGrowth Areas there are no single purpose deliveryvehicles. In most places delivery falls to non-statuto-ry partnerships of local authorities, which in somecases are hampered by a lack of consensus amongthe partner agencies.

Learning from Milton Keynes: funding tools

One of the biggest differences in Milton Keynes isthe development of its tariff model (sometimesreferred to as a ‘Roof Tax’), a form of extendedSection 106 agreement, which will raise up to £310million over ten years.

The tariff works as follows. English Partnerships(EP) provides advance funding for infrastructure.Developers pay a flat fee of £18,500 for every homethey build. Developers also provide land for schoolsand hospitals, and undertake to build a given shareof social housing. Over time, developers’ paymentsare used to recoup EP’s upfront funding. For thepublic sector, the cash and land deal means the tariffis effectively worth £37,000 per house. While thebulk of the money is split between strategic, trans-

port and social infrastructure, significantly, a smallproportion will be used as revenue funding for thevoluntary sector to undertake community develop-ment. This was the only example we found of plan-ning gains or public resources being set aside forcommunity development.

The tariff provides an important, secure source offunding for social and economic development andhas two key advantages. First, Section 106 agree-ments can take a long time to negotiate, and canhold up the whole development progress (Marshalland Finch 2006). The tariff provides certainty forboth developers and planners. Second, the tariffmodel can be used immediately. The Growth Areasneed to fund infrastructure, and tariff agreementscan be implemented now because they are part ofthe current Section 106 system.

However, there are limitations to its wider appli-cation, in terms of some of the unique features ofthe Milton Keynes Partnership and the favourablelocal land development economics. Milton Keynes’ability to negotiate this kind of arrangement stemsfrom the fact that English Partnerships, through theMilton Keynes Partnership, is the planning authorityin this area and so there is a direct relationshipbetween the agency providing public money and thesection 106 agreement to recoup it. This alsodepends on the developments plans being over asufficiently long term for the financing to work.Also, the Milton Keynes Partnership has been veryproactive and assertive in using its planning powersand this has shaped the nature of the relationshipwith developers such that they have to work with thePartnership. Furthermore, much of the developableland in Milton Keynes can be brought forward fordevelopment relatively cheaply. In contrast, in someparts of the Thames Gateway the costs of land

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Box 6.1 Kent Thameside case study – delivery hampered by weak delivery vehicle andinfrastructure funding shortfall

The Kent Thameside development crosses the boundary between Dartford and Gravesham District Councils,includes the areas surrounding the new Ebbsfleet Station on the Channel Tunnel Rail Link (CTRL) and is plannedto provide 28,000 new homes and considerable office and retail space.

The Ebbsfleet CTRL station will give the area excellent rail connections to London, Ashford and continentalEurope. However, the capacity of the local road network is limited and can only support growth of around 18,000homes. Kent Thameside Partnership is looking at options for increasing road network capacity. Currently muchof the road improvements are being paid through section 106 agreements. One option could be to apply theMilton Keynes tariff model. Even so, it is likely that limited road capacity will force a reduction in the number ofhomes built.

Resolving the challenges in Kent Thameside is made harder by the fact that the delivery vehicle, a localpartnership, is weak. It has no formal powers and there is a lack of consensus between the three local authorities(the two districts and the county councils), who are the main statutory bodies on the partnership board.

decontamination and remediation, along with flooddefence infrastructure, mean that the land develop-ment economics are less favourable, and the scopefor extracting tariffs, or any form of planning gain,on the same scale as Milton Keynes is limited.

The tariff in Milton Keynes will make a signifi-cant contribution (£310 million) to the overall infra-structure costs, but even this will not be enough byitself. In the area of the city covered by the tariff,infrastructure, including works to the M1 motorway,will cost just under £1 billion15. So overall, the tariffwill pay for around one third of this, certainly muchmore than a traditional section 106 agreementwould, but it still requires significant public funding.The major long-term issue that remains is howmainstream government budgets respond to growth,in the Growth Areas and elsewhere.

A further innovative funding model is also beingemployed in Bedford in the MKSM Growth Area.Bedford has been identified as having the potentialto deliver 19,500 homes by 2021. However, progressto this target is dependent on infrastructure deficitsin the current plans being overcome. In WestBedford, where 2,250 homes and associated com-munity infrastructure are planned, the developmentis dependent on a new road bypass, which neitherthe local authority nor the Highways Agency canfund. The cost of the bypass will exceed the levelthat the land developer could bear to pay in advanceof selling the land on for housing.

To get round this, English Partnerships will fundthe local authority to contract the road building,which will enable the landowners to get planningpermission with a condition that the housing isdelivered within a specified timescale. Another con-dition is that English Partnerships and the localauthority will share in the uplift in the land valuewhen the land is sold for housing over a ten-yearperiod, which has been secured through a legalcharge over the land.

This model as used in Bedford overcomes cashflow problems that block many large developmentsites, where landowners and developers cannot bearthe full costs of gaps in infrastructure upfrontthrough a section 106 agreement and mainstreampublic funds are insufficient. Net public infrastruc-ture costs are minimised and the approach evenallows for the possibility of the public sector accru-ing a net gain from its upfront investment, whichcan be recycled in another location.

The potential of public private partnerships

(PPPs) for growth

Public private partnerships have become a veryimportant mechanism for enabling private sectorinvestment to accelerate the delivery of capital proj-ects in the public sector. However, while PPPs arewidespread in the education and health sectors, theyare less developed in the delivery of housing andcommunities. Most of the examples of existinghousing and related PPPs are in regeneration areas.Data on commercial property investment perform-ance shows that investments in regeneration areasmatch the UK average for property investment andin some sectors perform better than average (IPD2006). There is a willingness within the private sec-tor to make long-term investment in regenerationareas which could in future extend to areas that aregrowing rapidly.

Regeneration PPPs can fill gaps in investmentthat cannot be met through planning gains or publicsector budgets. Where less and more profitableinvestment locations can be bundled together withina PPP, investor confidence can be increased in areasthat would not otherwise attract investment (Millsand Atherton 2005). In a regeneration PPP model,the public sector provides cash investment andassets (most often land), the private sector providesfurther cash investment as an equity stake in thepartnership, and the assets can be used to raise debtfinance. In the field of regeneration, governancearrangements vary and are evolving, but are likely tobecome more standardised in the future (ibid).Partnerships generate a commercial return throughthe enhancement of the land value that occurs as aresult of the improvements in local infrastructure. Ina Growth Area this return could be realised throughdevelopment projects with a third party developer.

For PPPs to play a greater role in this sector theyneed certainty and to avoid delays in decision mak-ing processes by public sector bodies (ibid). In theGrowth Areas delivery vehicles that can accrue con-trol public land assets and align public sector inter-ests and funding streams would increase the viabilityof a PPP model to deliver up-front investment.

Delivering growth: conclusions

Across the Growth Areas, the biggest single policyissue is how to fund and deliver infrastructure. Atbase, it is about how to deliver the nuts and bolts ofsustainable communities, not just in the South East,but also in the Housing Market Renewal programme


15. Stakeholder interview, July 2006

in the rest of the country (Nathan and Urwin 2006).From an economic perspective, infrastructure is criti-cal to growing existing industries, attracting newinvestors and drawing in skilled people.Connectivity – access to markets and suppliers – is acritical factor in business location decisions(Cushman & Wakefield Healey & Baker 2004;Kornblatt and Troni 2005).

The key point is that for agencies on the ground,it is far harder to deliver sustainable communitiesthan it should be. There are three key challenges:

● Cultural and capacity barriers: many public sectorhealth and education bodies lack experience oflarge-scale investment.

● Funding formulae: funding formulae for healthand education do not allow investment ahead ofnewcomers arriving. This can limit investmenttime horizons.

● Levels of funding: there are shortfalls for key proj-ects, particularly transport infrastructure andhealthcare.

By slowing down investment and project delivery,these funding issues create additional strategic risksfor the private sector. So there are knock-on effects,and over time, these may put whole programmes atrisk. The scale of the problem differs across theGrowth Areas. One calculation puts the fundingshortfall at £2 billion in the South East – but at £6billion in just the southern half of the East ofEngland region (Roger Tym and Partners 2005).

Where might new sources of funding come from?

First, it is becoming clear that the 2007Comprehensive Spending Review (CSR) will betight. Government has signalled that infrastructureinvestment will be a priority in the CSR, but theoverall fiscal position is likely to mean there is limit-ed scope for significant increases above current levelsof investment (HM Treasury et al 2006). Second,besides the Roof Tax, there are a number of innova-tive finance mechanisms available or under develop-ment, including evolving public-private partnershipsfor regeneration, which have the potential to attractlong-term institutional investment (Hackett 2005).But these are all essentially niche funding tools,which will only be viable in particular circumstances(for example, where there are publicly-owned assetsinvolved) and will not fully plug shortfalls in main-stream funding.

This means that central government needs to pro-vide better strategic leadership, and better use ofexisting budgets, which dwarf regeneration funding.To do this, the Office for the Deputy Prime Ministersuggested that it is sufficient to ‘maintain dialogue’with other key spending departments (ODPM2005b). However, when Minister for Communities,David Miliband also argued that ‘all Departmentsshould be regeneration departments’, not justODPM (Miliband 2005b). This suggests that ODPMhad failed to gain enough political traction to getother departments meaningfully involved. Its SelectCommittee, for example, was yet ‘to be convincedthat the Department will be able to ensure the co-ordinated Government action needed to meet itsgoals’ (ODPM Select Committee 2006b).

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Creating communities of choice in the Growth Areasis a huge challenge. It is not just about buildingmany homes, rather whole new communities, oftenin areas where the existing communities are exclud-ed and deprived. This means putting in place aframework that supports the provision of not justhousing, but also physical infrastructure, public serv-ices, retail and private sector services and communi-ty facilities.

The analysis in this report highlights gaps in thecurrent policy framework. In this final chapter werecommend how they can be addressed.

1. The Growth Areas will help, but will not

solve, the Greater South East’s housing

shortage

The Growth Areas represent a strategic response tothe need for increasing housing supply within theGreater South East in a way that reflects concern inthe region about preserving undeveloped land. Astrategic spatial planning approach, supported bytargeted infrastructure investment, will deliver morehomes than would otherwise be built. But ouranalysis of the most recent demographic evidencesuggests that in London, the South East and the Eastof England, even if the Growth Areas housing targetsare met, there will still be a significant shortfallbetween rates of new housing supply and newhousehold formation. Over the period 2001-16 thisamounts to the additional housing supply from theGrowth Areas needing to be doubled to keep upwith demand.

The Growth Areas are meant to deliver a step-change in housing supply, but under current plansthe step is too low. In the long run, the Governmenthas an ambition to deliver housing at a rate muchcloser to the rate of household growth in England(HM Treasury and ODPM 2005). Its objective is toincrease housing supply across the whole of Englandby around a third to 200,000 homes a year by 2016.To achieve this objective in the Greater South Eastthe Government has three choices. It could:

1. Demand higher housing targets from the threeregional spatial strategies, without directingwhere growth within those regions should befocused; or

2. Identify new locations where concentratedgrowth can be achieved; or

3. Increase the housing targets of the Growth Areas.

To an extent, the Government is already pursuingthe first two options. It has already signalled that itbelieves that the proposed housing targets in thedraft regional plans in the South East and East aretoo low. It will also shortly announce the outcomeof the 20 bids it has received for funding from the£40 million New Growth Points initiative. However,pursuing these options alone will not be enough.

In the three largest Growth Areas there is enoughland capacity to deliver more homes than the cur-rent plans provide for. There are delivery vehiclesand partnerships already in place and new infra-structure is being delivered. While the deliveryarrangements and infrastructure investment are notadequate, it will be better to build on existingarrangements and investment than open up majornew fronts in the growth strategy.

Government should:● Review the Sustainable Communities Plan with a

view to identifying the scope for a densificationof the existing Growth Areas

● Use the CSR 2007 to identify how the GrowthAreas can further support the Government’sobjective of increasing housing output to200,000 per year by 2016.

We estimate that the infrastructure investment impli-cations of providing a further 200,000 homes in theGrowth Areas in the period up to 2016 will costaround £300 million a year (see point 5 below).

2. The Growth Areas need to be family

friendly

The results of our qualitative research combinedwith analysis of patterns and drivers of migrationpoint to a high proportion of the future demand forhousing in the Growth Areas coming from families,even though new household growth is dominatedby rising numbers of single-person households. Thehousing and quality of life offer in the Growth Areaswill therefore need to be attractive to families withchildren. This means that the mix of housing typesin the Growth Areas, the social infrastructure andlocal facilities will need to be appropriate to theneeds of families with children.

There is a growing concern that although house-hold size is declining, a significant proportion ofnew housing developments are almost entirely dom-inated by two-bedroom flats (ODPM Select


7. Conclusions and recommendations

Committee 2006a). Over-provision of a particularhousing type in a location will undermine the cre-ation of mixed and sustainable communities. In2000/01, when new planning guidance was intro-duced, around a third of all the new homes builthad two or fewer bedrooms; by 2004/05 this hadrisen to almost half (ODPM 2005c). Developmentsthat only consist of one- and two-bedroom flatsmight be suitable for city centre locations (Nathanand Urwin 2006), but they will not reflect thedemand for new housing in the Growth Areas.

The quality and phasing of social infrastructurewill be extremely important if the Growth Areas areto attract families. Capital planning for social infra-structure requires financial commitments to bemade in advance of demand for those services.However, many public funding streams invest inresponse to growth in demand, rather than in antici-pation of it.

The importance of access to local, good qualityeducation provision in making decisions aboutwhere to live can be seen in the £60,000 premiumthat families are willing to pay to secure a homewithin the catchment area of a high performing pri-mary school (Gibbons et al 2005). This is a majorconcern in the Growth Areas because the fundingmechanism for schools depends on the number ofchildren living in particular locality. This is perfectlylogical, except for areas experiencing significant,rapid growth. In areas with high levels of new devel-opment, families with children will have to moveinto an area before funding will be made availableto increase school provision (Walker 2005). It is veryhard to attract families with children to an areawhere there are not yet schools in place.

Our roundtable discussion with housing regener-ation practitioners highlighted the provision ofappropriate play and sports facilities for childrenand young people as being critical to good commu-nity relations. Where young people are unable toaccess facilities, their behaviour becomes a source ofconflict between residents, which undermines thecommunity. In a context where there is significantpressure on the public funds to deliver the mostbasic aspects of the necessary physical infrastructure,there is a real danger that sufficient resources forcommunity facilities, including play and sports facil-ities, will not be available. This will underminecohesion in the new communities.

Government should:● Strengthen the guidance on local development

frameworks in Planning Policy Statement (PPS) 3to ensure that new developments include anappropriate balance of housing for differenthousing types in individual developments, rather

than across the plan area● Review the way in which mainstream funding

mechanisms respond to growth, with a view toimproving their responsiveness in rapidly grow-ing areas

● Ensure that the new PPS3 recommends thatlarge-scale new residential developments includeadequate provision of community facilities intheir master plans.

3. Taking a strategic approach to mixed

communities

The Growth Areas are a response to the housingpressures of the whole of the Greater South East. Asa concentrated approach to meeting the needs ofthese three regions, some people will have tomigrate to these areas to access a decent home.However, planning for housing at the regional andlocal level is still based on the presumption thathousing needs and demand are generated andaccommodated within the same sub-regional hous-ing market area (for example, see page 10 of thedraft PPS3 (ODPM 2005a).

For the Growth Areas, where there is anticipatedto be greater migration into these areas, a broaderstrategic approach to planning for housing is neededto reflect the fact they will be accommodating morehousing need and demand from across the GreaterSouth East. This will be important for addressing theappropriate mix of housing types (see above) andtenures.

In determining the appropriate proportion ofaffordable housing a balance needs to be struckbetween two imperatives:

● the need to significantly increase the supply ofsocially rented and affordable housing across theGreater South East; and

● the need to support the Growth Areas’ economicstrategy and reflect its socio-economic baseline.

A strategic approach to determining mix needs tobalance these two factors and consider mix at thelevel of local housing markets, not just specific sites,including their existing level of affordable housingprovision, and take into account the levels of hous-ing need across the regions.

Government should provide strategic oversightand monitor the net impact that the plans for hous-ing provision in the Growth Areas will have on thehousing needs and demands across the growingregions. This should then inform planning guidancegiven to the Growth Area delivery vehicles from theDepartment for Communities and LocalGovernment (DCLG) and advice given to the

51

merged Regional Planning and Housing Boardsthrough the new National Housing and PlanningAdvice Unit.

The monitoring and advice should be informedby:

● An understanding of demographic change andmigration at the inter-regional level, includingthe types of households as well as overall growth

● Balancing the objectives of achieving a sociallyand economically viable mix of housing types,while at the same time maximising the opportu-nity to increase social housing provision.

4. Providing for community development

Our qualitative research has highlighted the poten-tial for tensions in the Growth Areas between newand existing communities. To date, the need forcommunity development in the Growth Areas hasnot been given sufficient priority.

Community development will be important forensuring that the plans for development and invest-ment in new physical and social infrastructure in theGrowth Areas reflect the needs of existing communi-ties as well as new residents. Engaging existing com-munities will be necessary to avoid them viewingnew infrastructure and public services as only beingfor the benefit of newcomers.

Community development will also be essentialfor fostering social networks within large-scale newdevelopments and good relations between new andexisting residents. Community development was acore function of the delivery vehicles in the NewTowns, but responsibility for community develop-ment in the Growth Areas has not been allocated toany organisation or sector and there are no specificpublic funds available to support it. The MiltonKeynes ‘roof tax’ was the only example of a fundingmechanism that included specific provision for com-munity development that we identified in this study.More generally, the only capital funding source forlocal community infrastructure is planning gain.Under the Planning Gain Supplement (PGS) pro-posals, section 106 agreements would no longermake provision for community infrastructure andtherefore it will be essential that some resourcesfrom PGS are identified for this.

Government should:

● Include the challenges of integration and cohe-sion that housing growth presents within theterms of reference of the Commission onIntegration and Cohesion

● Provide revenue resources for the provision ofcommunity development in the Growth Areas

● Encourage delivery vehicles to make provision forcommunity development with their partners,including through setting aside a small propor-tion of developer contributions to fund it

● Ensure that, if and when it is implemented, someof the resources from PGS are set aside for localcommunity infrastructure.

In order to support the creation of inclusive andcohesive communities planned and delivered insuch a way that can foster social relations, and toavoid segregation, developments need to:

● be ‘tenure blind’, so that social rented and afford-able housing units are properly integrated withmarket housing and built to the same standards

● include a high quality public realm, supported bya single management organisation

● include public spaces and community facilities,which are essential to provide places for socialinteraction and act as a focal point for communi-ty development action

● include access to play and sports facilities forchildren and young people

● have public services delivered alongside residen-tial development and be accessible to, and reflectthe needs of, existing residents as well as new res-idents.

To achieve this outcome, planning guidance needsto be robust on issues such as on-site provision ofaffordable housing, and planning authorities needto be bold in their expectations of new develop-ments.

5. Housing growth cannot be delivered on

the cheap

If housing targets are not supported by adequatefunding from the public sector and private finance,the communities in the Growth Areas will not besustainable. The Growth Areas must become com-munities of choice.

Inadequate funding of the physical infrastructurein the Growth Areas risks leaving communities spa-tially isolated, and will undermine their attractive-ness to high value commuters and as a businesslocation for potential investors. Developers will seethe Growth Areas as a higher risk development andwill be reluctant to invest in delivering high qualitydevelopment. A shortfall, or lag, in the provision ofsocial infrastructure will also undermine the abilityof Growth Areas to attract higher income house-holds and exacerbate the potential for communitytensions between new and existing residents.Developments without high quality public space,fully integrated social and market housing and


access to community facilities will not achieve inclu-sive and cohesive communities.

Without enough funding to deliver the full rangeof physical and social needs of the new communi-ties in the Growth Areas, they will not become com-munities of choice. The local economies will beweak and the communities will be deprived andsocially divided. There is real risk that they will become the regeneration needs of the future.

Government is aware of this risk and hasacknowledged the crucial role that public investmentin infrastructure plays in supporting sustainablehousing growth. The cross-cutting review of infra-structure that will feed into the CSR 2007 must putthe Government in a better position to identify thelevel of infrastructure investment needed in theGrowth Areas and to support its long-term objectiveof delivering 200,000 new homes a year in England.The review should also explore the full range offunding mechanisms for capturing land values andattracting long term institutional investment ingrowth.

While we need to have a better understanding ofthe scale of the infrastructure spending necessary tosupport growth, it is already clear that current levelsof public investment, even when combined withplanning gains, whether through section 106 orPGS, are not sufficient to achieve socially and eco-nomically sustainable communities. In order to sup-port the Government’s long-term ambition of pro-viding 200,000 homes a year in England, the CSR2007 needs to:

● ensure that the development of the proposedPGS does not undermine the development ofother finance options, such as the Milton Keynestariff model or Bedford cash flow mechanism

● explore the scope for regeneration PPP models tobe applied in Growth Areas

● review the funding formulae of the mainstreamdepartments, in particular the Department forEducation and Skills (DfES), the Department ofHealth (DOH) and the Department for Transport(DfT), to ensure that they are more responsive toincreases in demand associated with growth

● provide a comprehensive assessment of the infra-structure spending implications of theGovernment’s long-term housing targets

● identify a further £300 million16 a year for theCommunity Infrastructure Fund to support thehigher rates of growth in the Greater South East

necessary to meet housing demand. Some of thisspending can be funded through planning gains,via the PGS or another land value capture model.The Transport Innovation Fund could provide afurther source of funding for strategic transportinfrastructure in the Growth Areas under theProductivity Schemes criteria.17

More generally, where resources for infrastructureinvestment are tight, spending should be prioritisedon areas that will add greatest value – those withgrowth potential (that is, developable land), but sig-nificant current infrastructure deficits. They shouldbe delivered in a way which maximises the potentialto leverage private finance through PPPs, or for pub-lic investment to be recouped from developers whenthe profits from infrastructure investment can berealised through a cash flow mechanism.

In the long run, building on the PGS consulta-tion and the Lyons Review, government shouldreview the current system of property taxation with aview to replacing it with a system of land value taxa-tion. As well as more effectively capturing the privateprofit that occurs when land values increase as aresult of public spending on infrastructure, it wouldalso support macroeconomic stability (Maxwell andVigor 2005).

6. Economic growth and housing growth

To create economically sustainable new communi-ties that do not become more deprived locationswithin the most prosperous regions in the country,the Growth Areas strategy needs to be more explicit-ly about economic development and the spreadingof economic growth across a wider area of theGreater South East. Economic development andskills objectives need to be aligned with housingobjectives in the Growth Areas. This is already hap-pening at the local level in some of the GrowthAreas, but national policy needs to catch up andsupport delivery vehicles in joining up economicand housing growth.

Co-ordinated delivery of infrastructure will beessential to achieving economic growth, as well assupporting housing growth. Improving places’potential as business locations will be important forthose areas that need to attract investment to diversi-fy their local economy. The co-ordination ofresources and delivery at the appropriate spatialscale will require stronger delivery vehicles that can

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16. Details of how we calculated this estimate are set out in the appendix.17. The Transport Innovation Fund will run from 2008/09 when £290m will be available, increasing to £2,550m by 2014/15. Funding is

allocated to projects that meet either ‘congestion scheme’ (i.e. demand management) or ‘productivity scheme’ (for example, strategictransport that supports labour market mobility or the agglomeration of business activity) criteria.

proactively intervene in site preparation and driveforward masterplans that create space for local eco-nomic activity as part of a joined-up approach tohousing and economic development. This will needto include a focus on human capital. For example,across the Growth Areas, government should allo-cate control of adult skills and employment budgetsto sub-regional partnerships.

Policies for supporting growth and theeconomies of the Growth Areas and the GreaterSouth East need to be reconciled with national poli-cy for reducing economic disparities betweenregions. The long-term strategic tension is that if theGrowth Areas meet their economic objectives, thismay be at the expense of other regions. In the shortrun, current trends would suggest that investment tosupport growth in the South need not occur at theexpense of growth in the North. However, in thelong run there is a risk that without counterbalanc-ing policies to support the infrastructure of otherregions, spatial inequities in public investment willcement regional economic disparities. Governmentneeds to strengthen its commitment to reducingregional economic disparities through:

● measures to empower city-regions to improvetheir economic performance

● extending its regional economic performancePSA target. This could involve a clear commit-ment to narrow absolute regional disparities inGVA per head, across the whole of the UK. Thetarget should cover DfES, DfT and DWP, as wellas the existing lead departments, DCLG, HMTand DTI, which should maintain lead responsi-bility.

7. Delivering communities of choice

If achieving sustainable communities is about morethan just housing, then the strategies for the GrowthAreas need to reflect this. Government is committedto delivering a strategic framework for the ThamesGateway, which will combine economic, social andenvironmental objectives. At the very least, the newframework needs to make the implicit assumptionsabout spreading economic growth into an explicitobjective supported by economic development andskills strategies for the Gateway.

The strategic framework for the Thames Gatewayshould go beyond spatial strategy, and encompassand align housing, economic development, skills,transport and social infrastructure and community

development. The framework needs to allocateresponsibility and public resources to meet specificobjectives and targets in all these areas. The strategicframework for the Thames Gateway should then beused as a model for strategic frameworks for theother inter-regional Growth Areas (Milton Keynes-South Midlands and London-Stansted-Cambridge-Peterborough).

Delivery arrangements should also be strength-ened at the local level. The experience of both ourcase studies suggests that the Growth Areas shouldreview their delivery vehicles by 2008. Where appro-priate they should be given the option to evolve intoUDCs, with funding made available for start upcosts. DCLG should closely monitor all deliveryvehicles, and prepare examples of best practice thancan be adopted across the Greater South East.

In order for the strategic frameworks to achievetheir objectives, the Growth Areas need strongerleadership and a vision that is shared across govern-ment and with delivery agents and local authorities.The Government is in the process of appointing aChief Executive for the Thames Gateway. This roleneeds to be given the powers and resources neces-sary to co-ordinate and drive forward delivery of thestrategic framework as well as providing greaterfocus to strategic decision making and accountabili-ty across the gateway as a whole. The other inter-regional Growth Areas also need stronger and morefocused leadership.

Commitment across government for achieving itsobjectives for the Growth Areas should be supportedby a revised version of the Government’s PSA targetfor housing supply. This target will need to berevised to reflect the Government’s long-term hous-ing growth objectives. The new PSA target should setthe objective of achieving housing growth andregeneration through the delivery of sustainablecommunities across all regions. HMT and DCLGshould be the lead departments, but the DfES, DOHand DfT should also have responsibility for meetingthe target. This PSA should sit alongside a strength-ened Regional Economic Performance PSA target.

The concept of sustainable communities hasstrong support, but has been criticised for beingvague. The Growth Areas, and indeed wider housingpolicy, need a shared vision for what a sustainablecommunity should look like on the ground. All ofgovernment, not just DCLG, and its partners need tocommit to achieving a common vision. Withoutthat commitment the Growth Areas are at risk ofbecoming stigmatised as the ‘new New Towns’.


55

ippr’s vision for communities of choice in the Growth Areas in 2016

By 2016 the Growth Areas will have exceeded their original targets for housing output as the rate of housebuilding and infrastructure provision has increased to better match new household growth, while respectingenvironmental limits. The new homes are provided in well designed neighbourhoods with high quality sharedpublic spaces. The housing is built at sufficient density to support local public and private sector services withinwalking distance, but includes housing and green spaces suitable for families. Residents are able to walk to localshops, a primary school and primary health care services. The Growth Areas have been used as an opportunityfor innovation and have become exemplars in the provision of better public services.

A local bus service connects communities to the nearest town or city centre with regular rail services, retail andleisure services. The homes are of different types and designs and social rented and low-cost homeownershiphomes are mixed in with market housing and built to the same high design and material standards. The newhomes have been built to very high environmental standards and neighbourhoods have modernised energygeneration and waste management systems.

Some of the residents commute to jobs in major economic centres using high-speed rail links, some commutemore locally and others work locally in new local retail and leisure services, business-to-business services andback office functions, creative, environmental and high technology industries. An increasing proportion ofresidents work from their home either on a self-employed basis or because teleworking has becomeincreasingly common.

The neighbourhoods have a strong sense of community, where people know each other through using localservices and some residents are involved in a local community group. The new public services have been locatedand designed to be accessible to new and more established communities and the shared benefits of growth haveovercome initial misgivings between new and existing residents. All the neighbourhoods have been wired-upfrom the outset, and online networks have played an important role in developing social capital and engagingcommunities in local services and democracy.

Overall, the quality of life in the Growth Areas has meant that they have become as popular places to live asestablished locations within the Greater South East. Lessons from the delivery of growth in the Growth Areashave enabled other regions to respond to housing demand more effectively. Other locations are able to integratepublic and private investment in new areas so that different elements of a sustainable community are deliveredalongside each other. Public attitudes to new housing improve, and support grows for environmentally andsocially sustainable development to meet demand. The problems of runaway house price growth, overcrowdingand homelessness have become less acute.

In 2005, Roger Tym and Partners (RTP) was commis-sioned by the South East Counties to assess the levelof infrastructure necessary to support the draft spatialplans for the South East region, and the ‘Easterncounties’ (Essex, Bedfordshire and Hertfordshire, plusThurrock and Luton Unitary Authorities), and theextent to which these infrastructure needs would bemet by existing funding sources. The results of itsanalysis were published in 2005 in the report The costand funding of growth in South East England. This iscurrently the most robust and comprehensive pub-licly available analysis of infrastructure needs in theSouth East. We have used their analysis to estimatethe public infrastructure costs of increasing the hous-ing targets in the Greater South East by 200,000 overthe period to 2016.

In the South East region the draft regional planmade provision for 572,500 homes to be deliveredover the period 2006 to 2026 and the draft East ofEngland plan made provision for 205,500 homes inthe Eastern counties over the period 2006 to 2021.The overall conclusion of RTP’s analysis is that theSouth East faces a £1.9 billion shortfall and theEastern counties a £6.1 billion shortfall in publicfunding for new infrastructure. The large differencebetween the two figures is because the EasternCounties need a much higher provision for trans-port infrastructure. This partly reflects a greaterdeficit in transport infrastructure, but may also be afunction of the East of England plans being moreadvanced at the time the analysis was conducted andtherefore having more developed transport infra-structure plans than the South East.

In its analysis RTP found that:

● There is no gap in funding for health and socialservices, although provision may lag behindgrowth and the impact of current health servicereforms could change this position.

● There is no gap in funding for schools and educa-tion, although there may be specific problemsaround the timing of provision in some locations.

● There are no funding gaps in the provision forutilities per se. However, there are concerns aboutcash flow and the risk that suppliers face ininvesting in advance of demand. There are specif-ic concerns about water provision, and whetherthe water companies will invest in increasing sup-ply sufficiently in advance of growth.

● There are no funding gaps for social housing,local open spaces and play areas if the majorityof planning gains are spent on these (which cur-

rently is not the pattern for use of planninggains). If planning gains are needed for otherinfrastructure (like transport) then there is likelyto be a shortfall in the funding for social rentedhousing.

● There is not enough funding for other local gov-ernment services (community centres, libraries,cemeteries) and for some of these the only sourceof potential funding is planning gain.

● There is not enough funding for non-nationaltransport infrastructure by a significant margin.

In calculating the overall size of the net public sectorshortfall in funding for infrastructure, RTP first cal-culated the funding shortfall for transport and non-housing local government services. This is sum-marised in table A.2.

These figures do not include any contribution tothe funding of infrastructure from planning gain. Inits analysis, RTP goes on to calculate the extent towhich planning gain could reduce these fundinggaps. In doing so it first assumes that social rentedhousing has first call on planning gain contribu-tions. In combination with funding from theHousing Corporation and other sources, planninggains can meet the costs of social rented housingwith some funding left over for the purposes. Theimpact of the residual planning gains is set out inTable A.3.

However, in practice, social rented housing is notthe first call on planning gain. If more planning gaincontributions are used to meet other costs, as is thecase in the majority of schemes, then it is likely thatthere will be a significant shortfall in the funding forsocial housing.

For this report we provide an estimate of theinfrastructure costs of increasing the housing targetsup to 2016 in the Greater South East by 200,000homes. Given that the Government is planning tochange the way in which planning gains are cap-tured, through the proposed PGS with a proportionof revenues being paid into the CommunityInfrastructure Fund, this creates a significant degreeof uncertainty about the net public funding require-ment to increase housing output to this level.Therefore, in using the RTP analysis to estimate theinfrastructure cost of the additional housing identi-fied by this report, we have based our calculationson the figures for gross infrastructure costs beforeplanning gain contributions from Table A.2.

From these figures, a per-dwelling unit cost of


Appendix: Estimating the infrastructure costs of higherhousing growth targets

57

Table A.1 Infrastructure costs in the South East region and Eastern counties

South East region Eastern counties Total

Number of homes 572,500 205,500 778,000

Total public infrastructure costs £29,660m £15,630m £45,290m

Total funding gaps, not including social rented £5,550m £7,212m £12,762mhousing or planning gain contributions

Total funding gaps, including social rented £1,900m £6,100m £8,000mhousing provision, net of planning gain contributions

Source: Roger Tym and Partners 2005: 10, 104-05

Table A.2 Pubic sector funding gaps in transport and local government services

Item Gap in South East (£m) Gap in Eastern Counties (£m)

Transport 4,267 6,703

Social and community facilities 687 261

Sports centres 200 90

Open space/play space 286 118

Libraries 58 25

Cemeteries 52 15

Total 5,550 7,212

Source: Roger Tym and Partners 2005: 100

Table A.3 Public sector funding gaps with planning gains, net of social rented housing costs

South East Region (£bn) Eastern counties (£bn)

Public funding gap 5.5 7.2

Planning gain contribution -3.6 -1.2(net of social rented housing)

Net funding gap 1.9 6.0

Source: Roger Tym and Partners 2005: 101

Table A.4 Estimating the cost of increasing housing output in the Greater South East by 200,000 homes

RTP estimate of public sector funding gap (excluding housing and planning gain) £12.7bn

Number of additional homes this will support 778,000

Estimate of per-dwelling cost £16,300

Estimate of total costs of 200,000 additional homes to 2016 £3.2bn

Over ten years approximately £300m pa

£16,300 for transport and local government servicescan be calculated. Applying this to the 200,000home shortfall figure gives an overall cost of £3.2billion. Given that this shortfall covers the period to2016 this gives an annualised infrastructure cost ofapproximately £300 million.

This figure for annualised infrastructure cost doesnot include funding for health and education servic-es as this should increase with population throughstandard funding formulae. It does not includefunding for social rented housing as these will besignificantly affected by the proposed planning gainreforms.

This provides an approximate estimate of thescale of resources that need to be added to theCommunity Infrastructure Fund if the Governmentwants to achieve its objective of increasing housingoutput to meet household growth by 2016 in theGreater South East. The proposed PGS, if imple-mented, would deliver revenues to provide a signifi-cant proportion, but not all, of these resources.

It may also be possible to provide some fundingfor strategic transport infrastructure under theTransport Innovation Fund’s productivity schemescriteria. The Transport Innovation Fund will runfrom 2008/09 when £290 million will be available,increasing to £2,550 million by 2014/15. Funding isallocated to projects which meet either ‘congestionscheme’ (i.e. demand management) or ‘productivityscheme’ criteria. The productivity criteria includeschemes that: increase the mobility of people orgoods in a way that reduces business costs; supportagglomeration of business activity; support themobility and flexibility of the labour market;increase international competitiveness and tradethrough improving ease of movement of goods andservices; increase network resilience and choice forbusiness users. Arguably, some of the strategic trans-port infrastructure needs in the Growth Areas willmeet these criteria. However, there will be significantdemand for resources from the fund from otherlocations.


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