The next subject is market economy. I have persuaded an active member of the RTPI's Membership and Ethics Committee, Kieron Hyams of Arup to be interviewed. He specialises in research, evaluation and assessment and has considerable experience of positioning the practice of planning in an economic context.
Interview by Martin Willey FRTPI (RTPI Past President 2009-10).
Kieron, planning is inevitably an "intervention" into any market economy and with the current government, there is a clearly stated preference for as free a market as possible regardless of sometimes unintended (or perhaps intended in some cases) consequences. Your experience is from evaluation through policy, leading to delivery. How do you view the market economy as regards planning practice?
The first thing I would say is that the issue covers both public and private sectors; it's a partnership trying to deliver favourable outcomes. More obviously the private sector is looking for opportunities and then navigates them through the planning process, but the public sector needs to be resourced, capable and able to respond to (and at times, initiate) that.
Do you mean test proposals?
The public sector needs to have the foresight to generate good, positive policies. The problem for planning is that it has to strike a balance between flexibility and certainty! The private sector with professional planning advice is charged with generating good proposals to deliver that policy.
I led some research for the Welsh Government looking a new ways of managing development as part of the evidence base for their new planning legislation. A key feature of this was looking not at how we do things now, but a more 'first principles' take on what characteristics' a system should have. The idea was to come up with something fresh. With help from Cardiff University we explored how other planning systems attempt the same things. To incentivise prompt uptake, how might people feel about plans that over allocated land to provide choice but which has a quota or phasing on the release of that land? Similarly, why do we revisit the principle of a use where proposals are in line with policy; isn't identifying parameters for suitable future uses and locations what policy is for?
The private sector can also have different objectives. If you are a long term investor in town centres with good public transport and parking, you are not happy with the competition from out of town, but inevitably there is investment in both and planning as the "steward" has to strike the balance you suggest.
In this respect may I turn to your career and both the development of a revised Planning Performance Indicator for Department of Communities and Local Government (DCLG) and producing a Strategic Monitoring Framework for Planning for the Welsh Government? How can, and does, planning influence and deliver sustainable development outcomes?
The problem for planning is that it only becomes engaged in the sustainable development process sporadically, when something is knocked down or regenerated, but the process involves addressing the long term potential for beneficial change beyond when 'structural' or 'use' changes are made. That's only a small proportion of the built form. The Welsh Government was interested in how planning impacts upon delivering sustainable development objectives so we were involved in addressing the "logic chain" of planning, what the objectives were, what action occurred and then how the outputs, outcomes and impacts were delivered. The policy objective might be to deliver a proportion of affordable housing, the output might be consent, or the outcome might be a house and the impact is a family happily housed and sheltered. Politicians want the impact, but sometimes the outcome doesn't deliver the target impact and the market can help or hinder the process. The DCLG planning indictor work showed that an end-to-end perspective was needed in addition to the more traditional 8 and 13 week measures.
How did the Welsh Government's Framework address the market economy Kieron?
If you just measured the number of houses or the number of affordable houses as an outcome this would not take account of the broader sensitivities and interaction planners seek to address. In the hard times in 2007-10, maybe just "any new houses" was a good outcome? Now, where perhaps the impact of "viability" testing means planners have to choose between six affordable houses or a classroom for a school, "balance" takes on a new meaning. Planners have to be able to present a reasoned case for one or the other.
The situation in Wales is very diverse. If you are in the centre of Cardiff then enough value is created to secure a sustainable solution. If you are up in the Valleys, the market is tighter so is it the case that standards and planning gain will inevitably drop?
Wales is a microcosm of the rest of the UK with both good and challenging areas, but the problem for planning is how to overcome the perception that the process is a "blockage" to development. In any local authority area planning is pivotal in delivering corporate objectives of housing, jobs, recreation, healthy places, and the local economy – whatever the Councillors identify. The question remains, is the private sector knocking down your door for development; if not how can planning create the environment for private sector interest, not just development, but sustainable and well designed development? The primary conclusions of this Framework was the development of a set of indicators that would test and measure the outputs, outcomes and impact of the logic chain for planning. The indicators were based on existing data to ensure minimum burden. The aim was to create a public dataset, not as a league table, but to help all parties 'triangulate' and understand how the system is functioning. For both the market and the authority, there is a clear interest in being able to identify areas which have growth plans, but which are not currently attracting the required interest to bring them forward.
Having worked in a partnership between public and private development and investment sectors, I was amazed how risk averse the private sector is?
It's back to that 'flexibility with certainty' conundrum again! Conceptually, planning is very helpful to the private sector in delivering certainty – almost to the point where they don't wish to act contrary to policy. Land allocations are good for market certainty; but an allocated site isn't always a deliverable site. Also, many challenges to the private sector – such as land assembly, finance, construction and managing risk – are at least partially outside the planning sector.
Arup carried out the London Brownfield Land Review. How did the market impact on this study?
As always you need data to help reach a decision. This was before 'big data' was a thing, but that's pretty much what we were doing. This exercise started with partial and slightly out of date data from the National Land Use Database (NLUD). In London NLUD only really captured sites over 0.25ha whilst elsewhere it went down to 0.1ha. This excluded numerous brownfield sites where planning could quickly generate a positive market response. Our study created a free to access web led database of all sites and added additional contextual information around ownership, site constraints, site designations, planning history and other data that might encourage private sector and local authority interest. It was packaged up with a good search and export tool. We produced a good practice guide and together they were supported by an action plan and the exercise was effectively targeting areas of market failure, where sites weren't coming forward.
The project won an RTPI Award for Planning Excellence and I can see many parallels with the current progress towards requiring authorities to maintain a brownfield register.
You carried out an Assessment of the Costs and Benefits of Environmental Impact Assessments (EIAs) for DCLG, widely perceived as a barrier to development. How did the market feature in this process?
This was part of the evidence for the UK's response to the European Union's review of EIAs, identifying the costs across a number of consents, refusals and appeals for a range of development categories. We investigated the questions that LPAs were seeking to answer with EIA, and how costly or beneficial the process was. It allowed DCLG to come to the EU table with real evidence. We spoke to applicants and LPAs about their experiences. LPAs can also be risk averse to things like judicial reviews and are wary of other processes resulting in delay! The conclusions unsurprisingly demonstrated the value of partnership in delivering permissible solutions. Interestingly, the successful schemes had few proposals for adaption and mitigation because they have been addressed in the submission and by going through the process itself. The costs of "the regulatory burden" varied from £20,000 to seven figures, but our work suggested that a simpler (but not necessarily cheaper, back to certainty again…) regime would help a constructive market response.
Moving to international experience Kieron, Arup was invited by the OECD as part of an international group of experts, to assist Latvia in the creation of a regional tier of economic and spatial planning. The market must be very different to the UK, so how did your work influence the market there?
This was timely for me as a UK planner; just as the UK Government sought to dismantle regional spatial planning, the Latvian Government as trying to create it!
This was a fascinating piece of work in a location where there is a very capable civil ,but few planners. We delivered a comprehensive set of proposals that particularly addressed cross boundary local issues regarding land release for development beyond tightly constrained city boundaries, such as for the capital Riga. I was involved with helping to creating a solid evidence base, but also in persuading policy makers that evidence doesn't in itself lead immediately to policy. There is an interim stage of choices where decisions have to be made. There was a (then) less mature private sector. We tried to help develop a creative way of approaching policy in partnership, and which might promote entrepreneurship. For example, the timber industry was well established and, as part of a push towards creative industries, policymakers wondered if the materials and skills would be attractive to the film industry around scenery and props. Our work helped frame a means of establishing if there was a "spatial ask" that might be addressed to promote sectoral development. Our recommendations created the opportunities for much wider private sector involvement. Planning was not seen as a barrier but as a facilitator and promoter, able to introduce sustainable parameters in anticipation of a market response.
I'm pleased to say that our work helped make the case for the establishment of planning regions.
An exercise some years back seems to resonate with the objective of this interview where you evaluated the Fiscal Incentives in the Urban White Paper for the then ODPM and HMRC!
We carried out this exercise jointly with The University of Ulster Planning School and it was a good experience for both of us. The incentives we examined included Disadvantaged Area Relief, Contaminated Land Tax Credits (Land Remediation Relief), Flat Conversion Allowances and Stamp Duty Relief for first time buyers. These were a government response to market failure. Interestingly whereas tax reliefs helped schemes balance the books, they did not at the outset incentivise the release and development of land and property, because the benefit was only recovered later on in the process, which itself was perceived to be risky and far from certain in terms of the values that might qualify. Pricing for risk was not offset by the potential downstream benefits. There were a few exceptions, often smaller players, but few real examples of consistent success of reclaimable tax relief measures.
These issues remain relevant today. Arup is currently working with the LSE and Centre for Cities on the What Works Centre for Local Economic Growth. The Centre looks at existing evaluation evidence en masse to try and unpick 'what works' for a range of policy levers. I find Local Development Orders (LDOs) an interesting case, and the Centre has looked at a range of Area Based Initiatives. The jury is still out for the larger longitudinal evaluations, but they on the one hand appear to give some certainty, reducing private sector risk. But at the same time licensing issues or building control requirements remain, and can be just as significant influences on risk. LDOs are not as comprehensive as say, Enterprise Zones and it would be good to have an overview on the extent to which they have been either displacing or creating investment.
I am very interested in your project for both the HCA and Halton Borough Council looking at a "Greenfield Brownfield Exchange Concept" as I trialled this in Nottingham without success, but Bee Bees successfully delivered this in Corby. Their business logic was that poorer markets in the centre of Corby needed to grow if the greenfield development market on the outskirts was to also grow successfully.
In Halton the challenge was how to stimulate development in the de-industrialised areas of Halton and whether greenfield development uplift could be captured and be re-invested in these "black field" sites. In effect, you'd allow the development of a greenfield site in order to enable the 'greening' of a brownfield site. There was not an overall lack of market demand, but getting the right sites, in the right place and at the right time was something we tested as part of the policy making process and through a number of modelled economic scenarios. The result was projected on the basis of delivering a consistent net return – perhaps a large greenfield site cross subsidising a small, but heavily contaminated brownfield site - and a revolving fund was recommended to allow a number of sites in both locations to be developed in parallel, perhaps 'pooling' between schemes, developers and/or contributions. Here planning was aimed at creating a market. This is something that I think still has legs and could well be dusted down in the future.
Kieron, you and Arup are experts on ports and you carried out an Economic Value Assessment of the Port of Tilbury to consider its northern expansion?
I'm very fortunate to have been asked to help a number of ports estimate their contribution and make an economic case for improving their facilities. Tilbury Port has huge regional economic significance being the nearest port to London with a deep sea handling ability and in terms of distribution has around 18 million people within 75 miles of it. From a planning perspective, the port is next to a listed building, close to a settlement and bounds the green belt. The Port was the terminal for many building materials for the 2012 London Olympics, which were carried to Stratford by barges. A huge amount of food and perishables for London passes through the Port. We carried out an assessment of direct employment as well as speaking to suppliers and tenants to estimate the effect of the supply chain and the induced effects of the operation of the Port and made a strong case for northern expansion. There is significant local, national and international competition – as well as factors around vessel sizes, berthing capabilities, market changes in the sector and the national policy and regulatory regime - and the market consequences of not optimising the Port's performance would have a huge economic impact. Fortunately ports engage planners and economists!
In the past, Arup was the leading producer of Area Investment Frameworks (AIFs), a policy tool intended to channel funding to the most beneficial spatial/sectoral areas. Tell us of your experience in the South East.
AIFs were created by the South East Economic Development Agency as a way of engaging the private sector in policy making, and to encourage cross boundary and cross sector collaboration. Sounds a bit like LEPs, do you think? We prepared AIFs for five strategic areas in an era that preceded 'joined up planning' and the duty to co-operate. Each AIF contained a socio economic baseline analysis to identify overarching areas of need, priority and opportunity. An audit of public, private and voluntary investment was then carried out to from which a gap analysis led to a framework agreement comparing objectives to existing services and budgets. The aim was to identify gaps and synergies to enhance and "bend" funding streams. This co-ordinated approach helped enormously in giving the private sector confidence to invest in partnership and establish a forum for engagement and shared interest.
Kieron, you clearly have a wide experience of understanding the "total market context" of planning. Do you have some lessons learned to offer practitioners?
My work has meant that I have assessed a wider range of plans and a big variety of complex applications. But a lot of the work I do, for example with the Planning Advisory Service or in supporting LPAs through service reviews, is as a planner first but also as a management consultant second.
My work is grounded in practice and experience of the system. As an example, many authorities are reviewing their use of pre-commencement conditions. Many are added at the request of an applicant who wishes to deal with the issue later or by a consultee seeking to minimise risk. To improve efficiency, applicants are increasingly asked to cover typical pre-commencement issues up front in their application or to resolve it along the application's journey by planners looking at ways of reducing delays and reducing costs down stream of the decision, and to also create fewer subsequent requirements for applicants before they can start on site. We've helped several authorities try to reduce the loss making work they do post decision.
The work that our team does requires a detailed understanding of where the responsibilities lie for economic development including all stages of dealing with an application. Lessons learned include:
- Establishing (up front) the whole planning delivery chain from policy through "discretionary" pre-app, consultation, to application and decision including pre-commencement condition release, legal agreements and planning contributions and then monitoring impact and outcomes;
- Understand the positions of the private development and investment sectors and address the timescale of the planning process within the total development delivery chain;
- Planners are effectively "management consultants" of the community, consultees, councillors and applicants and of course the outcomes of the process;
- Build robust information systems embracing GIS (ideally GPS) and interactive information rich websites. Having more information online stops agents and the public having to chase and shows that authorities are upholding their performance targets.
Many thanks Kieron for an insight into market economics and the planning process. Certainly you have demonstrated that planning is not a barrier to development, but a necessary and valuable intervention.
Kieron studied for a BA in Geography at Queen Mary University of London before being awarded a full ESRC studentship place at University College, London for an MPhil in Town Planning. He joined Arup as a graduate economic planner and has been a chartered planner since 2002. An Associate within the Planning, Policy and Economics team, Kieron has undertaken over thirty research and evaluation commissions for UK Government Departments and Devolved Administrations. He has also acted as an international expert for the OECD and worked on a range of policy and development projects covering Australia, Latvia, Montenegro, Oman, Slovakia, South Africa and the UAE. He is currently leading the evaluation of the Planning Advisory Service and supporting the Channel Island of Alderney in producing its Land Use Plan.
Interview by Martin Willey FRTPI (RTPI Past President 2009-10).
To find out more about understanding and practising in a market economy at the RTPI.