Estate regeneration: trust and money

Originally published on January 11 on Inside Edge 2, my blog for Inside Housing

It will take huge amounts of commitment, trust and money to deliver David Cameron’s vision of estate regeneration.

There is commitment but sadly only to the most simplistic of world views: lots of poor people live on council estates; therefore council estates must cause poverty. Never mind that much better funded area-based initiatives under Tony Blair largely failed. Never mind that poverty and even worse deprivation were concentrated in many of the same areas before the estates were built (just check the Booth poverty maps of London). The ‘so-called sink estates’ will be radically transformed or knocked down.

Trust is in such short supply after a series of controversial regenerations of estates in London (and we are mainly talking about London) that promises need to come from the very top to restore good faith. That applies both to the prime minister and to the Conservative candidate for London mayor Zac Goldsmith.

Sadly, given the opportunity on the Marr Show on Sunday to confirm there will be as much social housing for rent as there was before his scheme, Cameron flunked it completely. ‘Well there’s going to be a…It depends how you define,’ he began evasively before stressing that ‘affordable’ should mean to buy as well as to rent. Goldsmith has promised a ‘guarantee’ to residents to go with his promise on right to buy replacements but he also said this week that London has an unusually high amount of social housing and support needs to be rejigged to help people in the middle.

There is some public money but only £140m that is meant to ‘pump prime’ planning, temporary rehousing and early construction costs and bring in private investment. Two figures put this into perspective. First, the Packington Estate in Islington is cited in Cameron’s Sunday Times article is generally seen as an example of what can be achieved in delivering genuine mixed tenure while preserving social housing but the cost was £168m for one scheme. Second, demolition costs alone on the much more controversial regeneration of the Heygate Estate in Southwark came in at £15.2m. Cameron is talking about regenerating 100 estates for his £140m so even Lord Heseltine, chair of the new Estate Regeneration Advisory Agency, is going to have his work cut out.

None of this shows that there is not an opportunity, potentially a huge opportunity, to regenerate London’s housing estates to deliver more homes. Cameron’s bold plans draw on research published today by Savills that concludes that a ‘Complete Streets’ approach to regeneration could be applied to 1,750 ha of land on London estates and deliver 54,000 to 360,000 additional homes as well as replacing those there already. This is very close to the ideas put forward by Create Streets.

Most interesting to me is the report’s argument that this approach is fundamentally different to what it calls Contemporary Regeneration. This is the current model of replacing blocks of flats with blocks of apartments that relies on the new-build premium to make it viable and is subject to huge market risks. The alternative will require long-term ‘patient’ investors content with long-term gains rather than short-term profits from sales, genuine partnership with local authority landlords, potentially as equity investors, and a deal offering residents the chance to gain from regeneration.

Given the scale of the opportunities, the report deserves careful reading but I can’t help wondering if any of these are on offer in the current political climate. Institutional investment has at last begun to shake off its ‘Waiting for Godot’ image but the funding required is massive (at £19.9m build cost per ha, those 1,750ha will require £34.8bn).

The localism of City Deals and the Northern Powerhouse is matched in housing by the asset grab of forced council sales. That alone could make it pointless for local authorities to build any new homes.

As for residents, Savills is careful to stress that ‘all our calculations of regeneration numbers and values, in all cases, presumes that there would be a strong community role at the outset in Complete Street regeneration plans and that 100% of residents would have the right to be re-housed on site in an equivalent or better home’. However, despite brave talk about ‘stakeholder buy-in’, residents of estates like West Kensington and Gibbs Green know what can happen to ‘binding guarantees’ and promises in the real world if like their homes and don’t want them to be knocked down.

And then there’s the bigger question of whether market-led regeneration is appropriate for some of the last remaining pockets of genuinely affordable housing in London. Savills calculates that a Complete Streets approach to regeneration could mean a four-fold increase in real estate values that will deliver cross-subsidy for affordable housing. Perhaps current residents and local authorities can share in these gains but what happens in the longer term?

All of these issues would be difficult enough to tackle under a government committed to genuine partnership, resident involvement and affordability. Under one that blames poverty on poor people and deprivation on deprived areas, they look close to insurmountable.

And Cameron seems to have a different approach in mind in his Sunday Times article. He argues that:

‘As we tackle this problem, we should learn the lessons from the failed attempts to regenerate estates in the past. A raft of pointless planning rules, local politics and tenants’ concerns about whether regeneration would be done fairly all prevented progress. And if we’re honest, there often just wasn’t the political will and momentum in government to cut through all of this to get things done.’

Did he really mean to say that it’s not just ‘planning rules’ that are ‘pointless’ but also ‘local politics’ and ‘tenants’ concerns’? Maybe that was just bad writing but the impression is reinforced a few paragraphs later in a passage that really leapt out at me:

‘We’ll publish an Estates Regeneration Strategy that will sweep away the planning blockages and take new steps to reduce political and reputational risk for projects’ key decision-makers and investors.’

What does he mean by these ‘new steps’? Whether it’s clamping down on housing protestors or bypassing local democracy or paying lip service to resident consent, there seems precious little trust or money but plenty of commitment to protecting investors. Cameron may succeed in getting things done. Whether they are the right things is another question altogether.

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