Not stable now The Thames Gateway is in danger of being slammed shut now that the credit crunch horse has bolted. Graham Norwood reports
Even before the credit crunch bit, the Thames Gateway scheme was in trouble. Now it seems that the entire project risks becoming unachievable for financial reasons, and might even be scrapped if the Conservatives win the next general election.
Until earlier this year, controversies over Europe’s largest regeneration scheme – it stretches 40 miles along the Thames Estuary from London Docklands to Southend in Essex and Sheerness in Kent – centred on targets and politics.
The government’s 2007 delivery plan for the £9bn project pledged 160,000 homes by 2016, plus 225,000 jobs. But delivery supremo Judith Armitt quit amid rancour that targets were too high and bureaucracy too dense. Parliament’s Public Accounts Committee even warned of a possible “public spending calamity” because of a lack of adequate leadership for the project.
Then came the credit crunch, followed by the collapse of house sales, the first signs of mothballing, and now a virtual shutdown of home construction, with the exception of a few publicly funded schemes such as Barking Riverside and the Olympic Village.
Long-term housing targets now look impossible to achieve. But, more crucially, much of the social housing and infrastructure to underpin the Gateway depends on section 106 deals struck between local authorities and developers.
With little building going on, the S106 deals are not happening – and this may be a long-term problem. “Intelligence suggests that some developers are stepping out of the market for anything up to two years,” says a spokesman for the London Thames Gateway Development Corporation, an Urban Development Corporation in the area.
Meanwhile, those developers still willing to build will insist on fewer S106 obligations. “Developments that received permission recently were based on significantly higher market values. S106s will need to be renegotiated,” warns Jim Briscoe, affordable housing chief atCB Richard Ellis. He is already involved in some renegotiations.
Jon Neale, head of development research at Knight Frank, says: “The old deals were predicated on private houses and land values rising. They took years to achieve and now they’re almost worthless.”
Renegotiation is not a simple task given the vast number of bodies – “partners” as the government calls them – that oversee the Thames Gateway (see panel, p89).
“It’s a mess,” says Neale. “There have been successes in the Gateway, notably the [Land Securities-masterplanned] Ebbsfleet area, but there’s not a lot else to boast about.”
The bureaucracy itself makes it hard to quantify the full scale of the problem. Individual bodies say that the Department of Communities and Local Government is the only forum that can monitor Gateway-wide progress. But a DCLG spokesman admits “there are loads of numbers flying around”, and he cannot give a figure for 2007-08 house completions.
Independent analysts suggest that only 6,500-7,000 homes were built in the year to April – scarcely half the 13,000 target set out in last winter’s delivery plan.
The DCLG also says neither it nor any other Gateway body has a system in place for assisting hard-pressed local authorities with renegotiating S106 deals. “It’s about commercial confidentiality. We don’t interfere, it’s down to them,” says a spokesman.
There are a small number of infrastructure commitments already agreed by the London Thames Gateway Development Corporation and British Waterways, mainly covering access to the River Thames. But what can bail out the more substantial infrastructure and social housing projects jeopardised by collapsing S106 arrangements?
“Public-private partnerships on a project-specific basis could help,” suggests Trevor Nicholson, CBRE national development director. He adds: “Public funds might be directed into traditionally private opportunities, such as buying unsold housing stock for private rental, and regional development agencies could become more entrepreneurial.”
Regeneration law firm Berwin Leighton Paisner, which has worked on numerous Gateway S106 projects, says local authorities could “forward-fund” infrastructure work, possibly by being allowed to reinvest their capital receipts. The funding could then be effectively reclaimed from developers once the market improves.
Private developers are less keen, fearing this is council housing by the back door. “We’d very much want to avoid affordable housing being built in monoculture estates which would result in social housing ghettoes, as have been built in the past,” warns Alan Cherry, director of Countryside Properties. His firm has been active in the Gateway region, building the much-praised Greenwich Millennium Village, and the Waterstone Park scheme adjacent to Bluewater.
According to Neale, Cherry need not worry, there will not be funds to allow major public building programmes. The government couldn’t justify it with so many other demands in the financial crisis. How would it find funds for an extension to the Docklands Light Railway or a new roads network?” asks Neale.
He believes that even the locations of residential buildings may be up for grabs as the recession bites. “Developers are going to turn around and say it’s much cheaper to develop on greenfield sites than on brown ones, and they’ll force government and local authorities to choose,” he predicts.
The possibility of greenfield development in Conservative-held council areas, plus additional public funds for an adequate infrastructure, may herald political trouble for the whole Gateway concept if the Tories win the next general election.
Shadow Thames Gateway minister Stewart Jackson has condemned the absence of reliable information on the project to date, and promises that if David Cameron moves to Downing Street in 2010 there will be “an audit and moratorium on spending from Tower Hamlets to the Isle of Sheppey”.
He stresses that this may not herald an end to the Gateway dream, but he will look critically at what progress has been made. “There’s no leadership on the Thames Gateway, and we still don’t know what we have for £7bn invested in regeneration since 2003,” he says.
The government insists that the project will still happen, despite economic problems, but the DCLG acknowledges that plans and timetables will be reassessed “to take account of new financial realities”.
What does that mean in practice? So far, it seems no-one, possibly not even the government, really knows.
New-builds
Figures released in July 2008 show that 26,400 homes have been built in the Gateway but, despite the plethora of monitoring bodies, this total refers only for the period from May 2003 to March 2007. No newer information is available, says the Department of Communities and Local Government.
The DCLG says that the figures below are “estimates”, and that it is “working with the Valuation Office Agency on a methodology to develop a more accurate measure of new dwelling supply, which takes account of new-build, change of use and demolitions”.
It says that the results will be issued at some future date, “but not before further quality assurance”.
Gateway red tape
The government has always advocated a network of “partnerships” to oversee the Thames Gateway development, rather than one all-powerful body.
In addition to the Department of Communities and Local Government, there are seven Local Regeneration Partnerships (Medway, Swale, Southend, Basildon, Kent, Woolwich and Bexley) which exist to co-ordinate building projects.
Then there are two Urban Development Corporations (London and Thurrock) which can enter into legal contracts and receive government funding, and three Sub-Regional Partnerships.
Finally, there is the Thames Gateway Strategic Partnership, which links all of the groups above, plus 25 government departments.
