Don’t fudge it – budget

On June 22, Chancellor George Osborne raised his tattered red budget box for the final time for it is to be pensioned off to a permanent display in the Cabinet War Rooms, its condition perhaps analogous to that of the British economy it serves.

Few would begrudge this box its leisured retirement. War, depression, boom and bust, this container has seen it all over a 150 year spell at the heart of government. Now, in its last hurrah, the box has divulged a broad template for what the future holds in store for us all from deep within its wooden confines as the coming five years of fiscal austerity make their mark on our commercial property sector. Now its time to shift through its highlights before the lid snaps shut for good.

If the past three years has witnessed private sector famine while an engorged public sector continued to feast then the coming five will witness a form of role reversal as the coalition government come to terms with its own empty larder. The great unknown however is will the private sector rise to the challenge and fill the gap? Should it fail to do so the consequences would be dire so what is the prognosis?

Commercial property in particular has always been a cyclical beast with developers pursuing each other like the pied piper of Hamlyn in the good times – only to follow each other off the cliff lemming-like in the bad. Now though a new breed of international investor, predominantly from the Gulf, is beginning to oil the rusty mechanics of the property sector thanks to the type of balls that only unlimited petro-dollars can provide. This has seen a suite of grandiose towering schemes which looked to have been toppled by recession sprout like weeds as a dearth of new supply pushes up rents and confidence.

But if the economy is a tale of public and private then it is also a tale of London and the rest. As City of London planning officer Peter Rees told the British Council for Offices recent annual conference: “London is a city chained to a third world country. Let’s junk nation states. They don’t get us anywhere.” This has seen commercial property development all but extinguished in cities out with the capital as banks continue to recoil from new lending – and with no oil rich sheikhs around it is harder to see where stimulus will arise. It is therefore welcome that a regional growth fund is to be established to bankroll capital projects over the coming  two years.

Already a slew of capital projects have been scrapped by the coalition government, ranging from Stonehenge Visitor Centre and Birmingham Magistrates Court to a New Wear Bridge in Sunderland, but the budget itself brought a reprieve to further cuts in capital spending with Osborne stating: “I think an error was made in the early 1990s when the then government cut capital spending too much.” It shows a welcome change in emphasis from the government toward protecting projects which offer “significant economic return,” even if that entails stringent cutbacks in welfare, pay and pensions.

At a time of retrenchment, stock taking and reappraisal of the old ways is the ideal moment to reappraise our whole approach to construction. That is why the Rubble Club welcomes Michael Gove’s decision to allow derelict hospitals, shops and offices to be transformed into free schools. Why bother to build anew after all when we have so much pre-existing real estate? Many redundant buildings offer scope to be intelligently remodelled into places conducive to 21st century education, with the proper imagination.

Schemes such as New Heartlands, responsible for the demolition of swathes of housing in Merseyside, are illustrative of the kind of short term thinking has already been criticised by Liverpool City Council leader Warren Bradley for leaving tracts of his city derelict. In local press reports Bradley admitted that the housing policy pursued by the council was wrong and had “ripped the heart” out of local communities following large scale demolitions, including some listed buildings, whilst scores more properties lie empty and boarded up.

The clearance programme is of a scale not seen in the UK since the seventies and many architects are unhappy that the scorched earth policy is taking the good down with the bad. The coalition has already slashed its budget by 17.5 percent in the year 2010-11 but we believe the initiative should be wound up for good together with proposals for so called “eco towns,” in their planned format they were anything but.

Instead, the Rubble Club advocates refurbishment of an estimated 870,000 empty homes languishing across the country, together with enough vacant commercial property to create a further 420,000. This could be readily achieved by adopting the Liberal Democrats plans, to bring a quarter of a million empty homes back into use by offering grants to owners willing to convert their properties into social accommodation and loans to owners wishing to convert for private use.

One policy which has been reversed is the practice of ‘garden grabbing’ after the government found that there’s something nasty lurking at the bottom of many peoples lawns. As a quick scan of Google maps attests there are acres of suspiciously large sheds springing up in suburban areas of London and the South East. These dormitory accommodation blocks house some of the migrants who have flocked to the capital in recent years but the issue has also precipitated the demolition of suburban homes for private flats, an effort to tackle the housing shortage. Indeed, in 2008 one in four of all new homes were built on previously residential land.

Now with gardens reclassified from brownfield to greenfield land, that avenue of growth has been curtailed. This may be shortsighted. While there have been undoubted abuses there remains a need to up densities, a requirement which has itself been dropped by the new government as they empower local councils to decide what density is appropriate to their area, in order to boost provision of family homes. With greater restrictions on greenbelt and a finite supply of land however, the council may find itself scrabbling to meet these commitments with both hands tied behind their backs.

If this is what we know, there is much more that we do not, with many policies remaining to be fleshed out. Notably this includes the fate of the Homes and Communities Agency, Kickstart, local authority housing and the Building Schools for the Future programme. As these policies are settled, the industry will be closely examining their ramifications.

If there is a theme to this budget behind the headline grabbing spending axes and higher taxes however, it is a commitment to localism. So in the UK at least, local is the new global.

John Glenday is a journalist and member of the Rubble Club. Visit: therubbleclub.com