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Guest blog: Brexit uncertainties for planning

29 July 2016 Author: Janice Morphet

Brexit And Planning

Following the results of the EU Referendum, RTPI will be posting a series of blogs on Brexit and planning.

A month on from the referendum on the UK’s membership of the EU, there has been much political upheaval with more to come, but has daily life changed? The economy appears to be operating at the same level, unemployment is down again and retail sales are at expected levels, with a bounce back after the stay at home period during the campaign. Yet as The Economist reminds us, the underlying picture is not the same as before 23rd June. Although too early yet for the Brexit effect to be seen in quarterly economic data, job vacancies have reduced by 25%, business confidence is at its lowest since 2008, housing company values have fallen,  property  funds have been hit with runs to remove investment, many projects have been placed on hold and the £  devalued by 10%.

So is this gloomy picture influenced by the shock of an unexpected result or is there more to be concerned about particularly in the development sector that relies on long term confidence and stability? It is too early to come to a view but some new local authority development investment deals have been struck in the last month including Sheffield, Warrington and Enfield.

However, there are some other Brexit uncertainties for planning to contend with. The first is the extent to which the regulatory environment will be changed in the future. Like many other areas, the UK has pooled its environment powers and policies within the EU. Some of these will remain given the UK’s obligations to UN treaties but what will be the future of EIA and other areas that rely fully on EU legislation including waste, maritime areas and habitats? Brexit also brings uncertainty to many national and local projects including HS2, the Northern Railhub and local growth deals that focus on rural, regeneration, transport, energy, ports and R and D projects all over the country. The government will need to consider not only the funding gaps for these programmes but also their legal basis as, at present, all devolutionary and differentiated funding regimes within the UK rely on the basic principles of the founding EU Treaty and subsequent additions for economic, social and territorial cohesion. Next, the agricultural funding system including rural development is set under World Trade Organization rules but the EU has a special deal with the WTO and states outside the EU are unlikely to be able to offer terms similar to those currently available. Finally, in areas where there are major pan-EU programmes such as Erasmus for students and Horizon 2020 for research, there are already signs that the UK is not being invited to participate or asked to step back from leadership roles in case their presence jeopardises the project as a whole.

In addition to these regulatory requirements and territorial investment programmes within the EU, there are also future initiatives foregone. These include the use of English as one of the core languages and access for public sector capital funding through the European Investment Bank. There are also emerging programmes being prepared for the period 2020-2030. These include an extension of the Infrastructure Investment programme launched in 2013 that has already funded as many projects in the UK as other member states. The revival of the European Spatial Development Perspective will have a legal underpinning this time rather than being an informal Ministerial agreement. The newly adopted Urban Pact, agreed in Amsterdam on 30th May, includes policies about promoting urban areas and their peripheries through a focus on the operation of legislation and programmes within them. This is accompanied by a new programme to consider the role of spatial planning as a common core activity for delivery in the future. In transport, the Trans European Networks are to have a Comprehensive Network, a second layer of designated nodes, hubs and corridors inside the Core network (agreed in 2013) that will receive infrastructure investment when finalized by 2030.

All this uncertainty is an anathema to the development sector but is there anything that planners can do to make a positive contribution during this coming period? The first is to remember that we remain in the EU until we formally leave. This will not be when Article 50 is triggered but minimally two years after. So there is some certainty about EU schemes in the short term such as the A14 improvement. Secondly, as we are uncertain about the longer term relationship between the UK (or any of its parts) and the EU, it would be as well to engage in designating the UK’s comprehensive transport network.  This is a reasonable activity anyway and would support the work being undertaken by the UK nations. Although some of the devo deal growth funding for infrastructure projects may eventually disappear, the shift to combined authorities and their new role in strategic planning and delivery is likely to remain as it is international in its origin. This may also help to reduce development uncertainty.

Finally what about housing? As development companies draw back from investment commitments, is it time to look at new ways of filling the housing gap? Both the House of Lords Built Environment and Economic Affairs Committees have recently argued that public sector building needs to restart to fill the enduring gap created by Mrs Thatcher, when she ended local authority house building in the 1980s. This time, house building can be for all tenures and there is no reason why local authorities cannot purchase consented schemes from developers and rent them or sell them to households. This does not need to rely on the Housing Revenue Account but can use bonds, loans or hedge funds through the powers in the Localism Act 2011 using new  cross-sectoral International Financial Reporting Standards across the UK. These mean that local authorities can capitalise investment across the whole of their asset portfolios. It has been suggested that Mrs May wants to launch a new social programme through local authorities, emulating Joseph Chamberlain’s municipalism. If so, Brexit is finally the opportunity to tackle the housing problem through directly addressing its causes.

Janice Morphet is a Visiting Professor at the Bartlett School of Planning, UCL and the views expressed here are her own.

Janice Morphet

Janice Morphet

Janice Morphet is a Visiting Professor at the Bartlett School of Planning. Twitter: @janicemorphet