05 May 2020

The role of local authorities in the COVID-19 response has been unprecedented (as has been the financial support from central government) with almost every function affected in some way. Equally local authorities have been at the forefront of help for small businesses including retailers with financial assistance. As we look ahead and prepare for the recovery phase (and ultimately transformation) their role will only strengthen. This article looks at one element where a significant difference can be made in a local authority's economic development role harnessing their powers to drive forward the growth agenda.

It revolves around the proposition of the Town Centre Investment Model first developed in 2016 as a solution to fragmented ownership. The link between addressing fragmented ownership and the role local authorities can play using the crisis as a catalyst through government empowering them to use compulsory purchase powers was raised only last weekend in comments made by Bill Hughes Head of Real Assets at Legal & General Investment Management in a Sunday Times article (paywall).

The high street post COVID-19

The high street – once the central focus for retail and leisure in any town has seen its influence affected for many years by changes in consumer behaviour. The problems are complex with a matrices of issues. This includes a number of hidden elements which have hampered the ability for high streets to adapt such as disparate or fragmented ownership.

Those issues will only be exacerbated by the impact from COVID-19 as we see some businesses either close or move away from the high street and consumer behaviours change. As the High Streets Task Force have put it last week:

"It is not clear what towns and cities will look like after the end of the COVID-19 outbreak, or even how the country will come out of lockdown. Many town centres and high streets may not manage to recover from the effects of the crisis, unless they start acting immediately to develop the necessary capacity for recovery and then longer-term transformation."

The role of local authorities

The ability to transform town centres will require strong political leadership from local authorities taking a long term-view. It will also require partnerships with the private sector using their capital to invest and the willingness to share the risk. That resource and willingness is there – it needs unlocking and any barriers addressing. Local authorities are already actively working with businesses on the recovery phase. Bristol Mayor Marvin Rees covered in his blog on 3 May 2020 how the Bristol One City Economy Board is discussing "how we proactively build the future economy into one we want and need – one that is more sustainable and inclusive". 

Town Centre Investment Management as part of the solution

In 2016 we contributed to a British Property Federation Report Town Centre Investment Zones: Getting investment back into the high street alongside Peter Brett (now Stantec) and Citicentric. The report looked at supporting investment in town centres to help them transform from purely retail focused to becoming social centres, engines of economic growth and new, exciting residential locations. 

The central barrier affecting transformation was fragmented ownership and that issue has not gone away. Whilst localism, Business Improvement Districts and Business Neighbourhood Plans can be utilised to build consensus around the need for significant structural change, the ability to do so may require focused intervention.

The BPF report concluded that one solution to fragmented ownership was to have single or collective ownership and management of properties – Town Centre Investment Management (TCIM) with a well-managed core area under single control making it more attractive to investors, particularly institutions. An area would define where the TCIM would operate. The creation of this Town Centre Investment Zone would be backed by a clear strategy with local leadership. It would need to be backed by incentives agreed with central government especially where fiscal or business rate incentives would be used. 

One significant element of the TCIM creation is the need for pooling of assets. The clear preference would be voluntary pooling by owners. That may not necessarily work and so the TCIM vehicle could be used to purchase assets by agreement. Finally as a last resort compulsory purchase (CPO) may be required. Whilst that was the direction of travel, planning for the need for CPO to be used as part of the COVID-19 recovery and transformation phase now is greater. That is not to detract against the need for always seek to acquire interests by agreement. 

Central Government support

The launch of the Future High Street Fund in 2018 was a significant step in supporting the transformation of high streets – available for local authorities to bid for funding for capital projects as well as being a resource through the High Streets Taskforce for expertise. Further detail about the Fund can be found in a useful House of Commons Library Briefing Paper.

Whilst the Fund is welcomed and the application for the fund criteria included the need for details of public and private sector partnerships, the structural ownership issues may not necessarily be resolved through the Fund. Equally issues could be exacerbated through the impact of COVID-19. We have already seen a number of retailers go into administration this year not necessarily linked to Covid-19. What we don't yet know is how many more retailers including independents will be forced to close their doors. This has also impacts on property owners with vacant space and reduced rental income and it is too early to tell what the longer term impact will be on capital values.

Land Assembly using CPO

In order to overcome these challenges the recovery and transformation phase needs to consider how local authorities can play a greater part in the town centre economy through refreshed visions. A greater mix of uses as town centres are repurposed including more residential use will be essential. We already have a significant amount of unused upper floors which could be repurposed for residential use aside from any wider-scale regeneration being proposed. This vision needs to be clearly set out both in terms of a strategy as through the development plan if development is proposed. It may be that initially no development is proposed as plans are formulated over a longer period. Whilst it could be seen as "chicken and egg" the single ownership requirement could shape the development vision. Where the use of compulsory purchase is needed as a last resort some reform to the principles will inevitably be required. This may not all need legislative reform as some of it could be achieved through amendments to the CPO guidance. 

A Planning White paper is due this spring. However in last week's BPF webinar "Planning for Recovery" MHCLG's Director of Planning Simon Gallagher would not be drawn on when this would be published but indicated that Ministers may be wanting to reflect longer on the impact of COVID-19 before publishing. The contents of the white paper were trailed in March 2020's Planning for the Future and in connection with CPO suggests that its measures will "Improve the effectiveness, take-up and role of Compulsory Purchase Orders to help facilitate land assembly and infrastructure delivery" to give LA greater confidence to use the powers. An area of concern within the guidance at present is the planning impediments test if CPO is to be used for TCIM.

The CPO Guidance sets out that a programme of land assembly needs to be set within a clear strategic framework, with the framework demonstrating that there are no planning or other impediments to the implementation of the scheme. It also acknowledges that it may not always be feasible or sensible to wait until details of the scheme have been worked up and planning permission obtained, before proceeding with the order. It would be helpful for the Guidance to support TCIM and could also be updated to give greater acknowledgment as to the weight an adopted supplementary planning document and masterplan has in the planning case so that future plans for a scheme do not need to be as clearly defined at the point of the CPO being made. Looking ahead further, longer term broader land assembly powers for local authorities adopting the mayoral development corporation model could be beneficial and this would require legislative reform. 

Conclusions

The Planning White Paper will hopefully set out a clear framework for transforming the planning system including our town centres. Local Authorities have a critical role to play and in the words of Mark Bradbury Director of property and economy, Enfield Council in a recent Voice of Authority webinar their role is both "facilitator and actor"; let's hope the local authorities are given the white knight role in the script and that the TCIM model is one scene in the play.