Talk of New Towns suggests finally long-term thinking about infrastructure in the UK. The political cycle is not kind to long term planning but can the Labour Government’s super majority ride the waves and bring forward a slew of new towns across the country.
If we are simply looking at the metric of housing delivery then Labour’s identification of new towns as a solution may be quite clever. A recent (ish) study from the Centre for Cities found that between 2008 and 2017, three of the top five towns for housing delivery (based on percentage increase in existing stock) were 1960s “New Towns”.
However, getting to the solution will require patience and learning the lessons from previous experiments to build new settlements from scratch. Here are a few insights and challenges:
The Treasury holds the keys
New towns are cash hungry and unfortunately the ‘market’ won’t be able to do it alone. There are few master developers out there and the ones that are left will emphatically say that cheap and plentiful capital is an essential early ingredient.
The delivery of the original new towns was often down to the ability to secure long-term Treasury loans at what by historical standards were low rates of interest and subsidies on advantageous terms. Friction between the Treasury and MHCLG will be unavoidable. With the Treasury eyeing the projects as bottomless pits whilst MHCLG identifying them as a strategic priority for housing delivery.
The Treasury recovered just 57 percent of the costs of the previous New Towns programme. Interesting to see how this will work with Reeve’s mantra “if we can’t afford it, we can’t do it” approach.
Interest rates matter
With the UK increasingly vulnerable to global economic shocks, the days of low interest rates seem behind us. The new normal may be a return to the fluctuating rates reminiscent of the 1970s and 1980s. This poses a significant challenge for new town development. Milton Keynes which started in the late 60s initially struggled during high-interest periods compared to the more favourable rates enjoyed by those projects initiated in the 1950s. Perhaps Labour will come to regret Blair’s decision to hand control of interest rates to the Bank of England after all! There is of course Tax Incremental Financing to consider which was used effectively in the delivery of the Nine Elms – a new town from the last decade one might suggest.
Softer roles for Local Authorities
New Towns performed most effectively when the specific Development Corporation took up the roles and responsibilities often associated with local government. For example, Milton Keynes was successful in encouraging private sector delivery offering relatively cheap land to delivery partners. This far harder to achieve when led by local authorities much bedevilled by regular election cycles. Also, given this wave of new towns maybe more akin to urban extensions and less new settlements, local authorities could be resistant to giving up their own placemaking powers.
Strong CPO powers for New Town Development Corporations
History tells us that unified land control was absolutely central to the delivery of new towns and indeed urban regeneration more generally. The question is how to get the land in play.
The most effective period for New Towns was prior to 1961 when specific Development Corporations could CPO land at agricultural land value. This also benefited the Treasury since greater profits swelled central coffers. The 1961 Land Compensation Act changed that adding ‘hope value’. This is now being changed back with new legislation removing hope value from the equation. This won’t be a game changer everywhere, for instance industrial values are higher these days and development value has been much hindered over the last five years by new statutory regulations. However, the hand of the public sector is much strengthened with the return to existing use value and this is and essential building block.
Conclusion
New Towns greatest enemy is time. These projects could take at least 15 years and by then Mr Starmer and much of his cohort will have moved on. Consensus will be important between the major parties, with the local communities these new projects will ultimately affect and future generations who will call these places home.
