For almost 40 years F3GROUP has worked with our clients, delivering built environment projects across the private and public sectors. As we emerge from unprecedented times with the mantra “Build, Build, Build” ringing out from central government, we have engaged our teams to take a look at the key pain points which commonly frustrate the public sector development cycle and set them against the backdrop of a period of significant change and green shoots opportunity.
New funding and a generational shift in planning policy have been promised and exciting times await our sector. Nonetheless systemic bottlenecks endure and a renewed agility is required to move at pace and emerge stronger than before.
Challenges facing the public sector
Compliance with (PCR2015) adds layers of uncertainty, cost and time:
- National skills shortage around the built environment The public sector struggles to recruit and retain suitably skilled in-house staff. This results in extensive reliance on costly consultants and third-party consultancies, all of which still need to be directed and managed through internal governance procedures
- Time Drag caused by short contract consultants which create continuity issues and a lack of buy-in to projects
- Inexperienced or under resourced delivery teams can lead to programme slippage, contract variations and budget overrun
- Management of third parties and risks is still required by internal teams through the governance processes
- Programme Slippage which impacts housing targets and departmental KPIs
- Lack of Funding means that viable and ambitious schemes often fail to gain traction
- Poor Value Returns and Capital Receipts resulting from traditional approaches to the release of excess land
- Loss of Long-Term Revenue Streams resulting from overly opportunistic private sector deal structuring
Planning Reform 2020
Couple this irony with a complex, slow and often ill-fitting Homes England funding regime and there is little wonder that it takes so long to put a brick on a brick without offloading the family silverware via JVs which present a minefield of questionably opportunistic partnership weightings.
In addition to the notable changes to Permitted Development rights in June 2020, on the 6th August 2020 the UK Government also laid out its proposals for sweeping planning reforms in a White Paper titled “Planning for the Future”.
A 12 week Public Consultation focused on new build developments now ensues with plans for legislation into the back end of 2020 subject to consultation responses and available legislative time.
The reforms include:
- scrapping section 106 agreements and replacing them with a new ‘levy’
- designating land according to three categories – growth, renewal and protection
- a greater emphasis on brownfield development – and designated Green Belt will be protected
- stricter rules to ensure every council has a local plan in place
- creating a fast-track system for “beautiful buildings”
- establishing local design guidance for developers
- ensuring that all new homes are developed to net-zero standards
- creating a First Homes scheme, which would offer newly-built homes for sale at a 30% discount for local people, key workers and first-time buyers
Seen widely as a shift to a zonal planning system, certain types of development in these “zones” would be allowed to proceed in line with more specific predetermined criteria, including height and massing, without the need for a formal planning application / permission.
The Government states that the reforms would cut red tape while maintaining building standards and added that local democracy would be at the heart of the process be allowed to proceed in line with more specific predetermined criteria, including height and massing, without the need for a formal planning application / permission.
The Government states that the reforms would cut red tape while maintaining building standards and added that local democracy would be at the heart of the process.
As most in the industry will be fully aware, central government has not been shy in committing large sums of money to tackle housing shortages, most notably over the past 5 years. Recent initiatives such as the heavily criticised c£7.7bn* “200,000 Starter Homes initiative” have been superseded, it would seem by the new “Build Build Build Initiative” which promises a new £12bn “Affordable Homes Programme” designed to deliver up to 180,000 new affordable homes.
The fact that over 50% of the “new funds” appear to have been recycled out of the 2015 commitment should not detract from the fact that this government appears to be betting the bank on the UK building itself out of the Covid-19 doldrums. One can only hope that access and drawdown issues associated with earlier incarnations of this initiative have been carefully considered and will be properly remedied.
Into battle with a spoon…
Notwithstanding the known statutory and sector pain points, it is important also to acknowledge that so much is expected of public sector bodies against comparatively small teams and budgets. The successive erosion of central government funding for Local Authorities in particular, has served to trim down the agility with which the public sector has been able to assess and approach potential schemes, despite increasingly demanding Central Government housing targets.
So what comes next and how can public sector bodies take full advantage?
With the announcement of a considerable house building funding initiative accompanied by a planning regulation red tape bonfire, an exciting period of opportunity lies ahead for the sector.
Nonetheless the practicalities, the “pain points” faced by the public sector will persist, especially as large building firms recover from recent balance sheet impacts and the industry recovers its feet.
We believe that the smart pathway is to choose an agile and adaptable delivery partner who will work closely with you to deliver a truly end-to-end solution. F3 has the in-house skills and sector wide experience to help public sector clients at every stage of the development cycle, from feasibility to funding and through to project delivery. Where opportunities exist to JV we also have significant investment capital of our own to deploy via F3 Capital.