BPF and LGA announce new best practice for public-private sector partnerships

25 Jan 2017

Policy area: Planning

The British Property Federation, which represents the UK commercial real estate sector, and the Local Government Association, which represents more than 370 councils in England and Wales, today launch a report highlighting best practice for public-private sector collaboration.

The report – an update to the publication of ‘Unlocking growth through partnership’ in 2012 – has been produced in light of significant policy change over the past four years and provides guidance which will enable pro-growth councils, the real estate sector and central government to jointly develop more innovative means of driving forward much needed local growth.

This report encourages local authorities to take the following steps to foster stronger public-private sector partnerships:

  • Create ongoing political dialogue
  • Ensure a convincing and realistic vision
  • Use land assembly tools at their disposal
  • Develop commercial mindsets
  • Be committed to improving infrastructure

Simultaneously, the report recommends the real estate sector to:

  • Take a long-term view
  • Get to know an area, its priorities and history before development
  • Remain open and accessible to Local authorities
  • Communicate
  • Develop a compelling housing and public realm offer

In order to support, central government is urged to:

  • Allow the pooling of funds
  • Commit to local growth
  • Review state aid rules
  • Demystify local plans
  • Simplify the Community Infrastructure Levy (CIL)

The paper includes examples of innovation, such as Southampton and Milton Keynes, where local authorities are working with the real estate sector at a time when public funding is not guaranteed, particularly as central government drives its devolution agenda. It also highlights remaining challenges for these case studies including upfront costs of land assembly, limited internal resources, barriers to attaining finance and ongoing infrastructure requirements to complete developments.

Cllr Martin Tett, the LGA’s economy spokesman, says: “While certain local authorities have already demonstrated success through public-private sector partnerships, challenges still lie ahead. We hope this paper will further the debate on how local authorities, the real estate sector and central government can do their upmost to create thriving partnerships and packages of support which are able to fund the infrastructure and development critical to the country’s growth.”

Melanie Leech, Chief Executive of the British Property Federation, adds: “In a period of uncertainty, the need to forge effective public/private partnerships to maintain economic activity and investor confidence has never been more important. A local authority’s ability to engage with the real estate sector and make meaningful improvements to its town or city will shape the quality of people’s lives for years to come. Against this backdrop, we have updated our best practice guidance for how the public and private sectors can work together. Their success in developing these relationships could drive a seismic shift in the way development is brought forward across every region in the UK.”

“This report comes at a time when the growing impetus on local authorities to drive local agendas shows no sign of abating, particularly as the business rates system is reformed, allowing local authorities to retain 100 per cent of their business rates income. Local authorities must capitalise on this as they are in a unique position to offer investors a clear vision for growth, which will safeguard our town and city’s commercial future.”

ENDS

Note to editors:

Case studies include:

Southampton

Southampton is an ambitious city with strong local authority leadership, seeking to achieve economic growth that will benefit residents, visitors and the business community.

Pivotal to achieving this vision is the implementation of the city centre master plan, which recognises that incremental, small-scale, and piecemeal development will not bring about the desired objectives of increasing prosperity and providing significant amounts of good-quality housing. The master plan has already driven significant transformation of the city centre, following its launch in 2012.

Southampton’s master plan is off to a great start, with residential, public realm and research and development sites underway if not completed. However, the city has also been left with more challenging sites in need of development. To achieve the master plan’s ambitions for the remaining sites, a number of challenges must be addressed concerning the upfront costs of land assembly, and there must be adequate internal resources to focus on these tasks. Some of the sites left to market also require off-site highway infrastructure, flood defences, and decontamination, at a time when their values may not support the level of expenditure needed.

Further funding opportunities lie in attracting more occupiers to the city leading to an increase in business rates income; however Southampton presently lacks investment into the office market. In addition, the city faces competition for commercial development from large-scale peripheral developments away from the city centre.

Milton Keynes  

Like Southampton, strong leadership from Milton Keynes’ local authority drives the city forward. It is the fastest growing city in the UK, one of the most productive, and makes a significant contribution to the national output year on year. With a relatively young population and one of the widest offers of homes for sale at an affordable rate for the South East, the city has much going for it.

Maintaining momentum, Milton Keynes continues to set out its future through the new local plan, Plan:MK, and the MK Futures 2050 report. Milton Keynes has also set up its own organisation for managing many of its property transactions, the Milton Keynes Development Partnership, which helps the city manage its load between economic growth and providing statutory services.

Still, Milton Keynes struggles to get the finances and internal resources it needs to make its forward thinking a reality. The Urban Development Area Tariff that the city adopted in 2007 offers better financing opportunities presently than the later introduced CIL does. Given this, the local authority has been hesitant to introduce CIL until the levy can better fulfil the city’s goals, and the city awaits the outcome of the recent CIL review.

While Milton Keynes will have access to relatively healthy business rates income following business rates devolution, the city would like to go further with TIF than it can at the moment. The current five year leverage cut-off does not allow Milton Keynes to invest in some of the riskier projects the city needs but that private sector financing would shy away from, even though the local authority has the appetite for risk. Finally, while Milton Keynes was one of the first cities to introduce a Neighbourhood Plan, it has struggled with identifying and then balancing the mandate the Plan provides for communities, sometimes leading to delayed development opportunities as a result.