City Assets Summary 2018

The key to unlocking city-region potential

By Lord Kerslake

It has been a privilege for me to chair a series of City Assets Round Tables in which we have brought together political, civic and business leaders to debate ways in which we can step outside our organisational silos and develop a shared understanding of the best ways to drive economic regeneration at city-region level.

This is partly because these debates have brought my career full circle. As the CEO of Sheffield City Council from 1997 to 2008, I worked with council, business and community leaders to drive the economic regeneration of the city.

More latterly, in my time as Head of the UK Civil Service, I saw Government at all levels coming to terms with the implications of financial constraints that have begun to change the way public institutions fulfill their responsibilities.

This has not been an easy transition, because the fundamental responsibility to deliver on behalf of the people they serve has not gone away. Indeed, the enormous difference in the performance of different parts of the UK economy suggests to me that this responsibility is now more urgent than ever.

Whilst we can be proud of the prominence that London and the South East has in the global economy, the gap between their performance and that of the rest of the UK is not healthy. At regional level, our economies lag not only London but their European peers.

So we need to drive economic progress at scale, and to address that imbalance in our economic geography. It is without doubt an urgent debate, and for three reasons.

  • I firmly believe that unlocking the potential of our great city regions will generate significant opportunities for all and greater economic and social resilience. 
  • It is an eminently sensible response to a regional productivity puzzle that has been evident for too long.
  • Its urgency is underlined by the significant uncertainties facing our economy related to both Brexit and the unfolding technology revolution.

Whilst civic historians may look back fondly on the days when our great provincial municipalities were considerable forces for economic and social progress, this is not about turning back the clock. It is about decisive action to confront the challenges of the future by exploiting the regeneration opportunities in front of us now.

The burning question is how. What this summary, and the round table discussions which informed it, have brought into sharp relief is the key to actually unlocking that potential.

I would characterise that key as the Three Cs: Convening, Capacity and Collaboration.

Whilst Local Government no longer enjoys the resources it once did, it retains a significant power in the context of driving progress: democratic legitimacy and the convening power to bring stakeholders together and drive coherent visions for economic regeneration under a common banner.

Exploiting that convening power requires powerful managerial and political leadership and a willingness to overcome cross-organisational barriers. As you will see in this summary, there is encouraging evidence in several city-regions of a willingness to do just that.

Capacity is an equally challenging issue, when the reality is that local authority departments like planning and economic development have suffered substantial cutbacks: meaningful progress cannot be achieved without technical skill, intelligence and practical resources. That they are no longer in one place does not mean that they do not exist – as we are seeing in city regions and some enterprising London boroughs, new models are emerging which access the right capacity in different forms, but retain democratic control which gives them legitimacy.

Those models are examples of the collaborative approach I believe is fundamental to progress in the modern world. If there is consensus on what needs to be achieved then collaboration between different stakeholders – be they public, private or other stakeholders – is critical to progress. The solutions to our urgent challenges do not lie in dogmatic silos.

Progress is not always easy in a mature, complicated democracy. But the City Assets Round Tables should be seen as a cause for optimism. I have witnessed talented and committed people from civic institutions, commercial businesses and stakeholder organisations identify shared approaches to coherent visions.

This shared ambition is what marked out our great city regions in the past. For the next generation to thrive, it must do so again.

Introduction

By Bill McElroy

Turner & Townsend has a substantial presence in most of the UK’s major city regions. Our decision to hold a series of City Assets Round Tables, in conjunction with the Centre for Cities and our partners Bevan Brittan, was born out of a commitment to foster a dialogue about how these locations can exploit their significant economic potential.

Our City Assets Round Tables have taken us on a journey around the country, highlighting differences in the performance of the UK’s economic geography. The Local Authorities responsible for leading economic development and regeneration unquestionably face challenges related to the resource constraints that have impacted on the public sector.

Despite these challenges, our round tables told an encouraging story – one of a willingness to explore innovative new models for unlocking development potential which brings together the expertise of public and private stakeholders in pursuit of shared objectives. Strong leadership driving clear visions through powerful partnerships – partnerships which are willing to break down barriers and innovate – have been a reoccurring theme at our round tables.

At a time when central government is naturally focusing on a Brexit road map, we have seen a number of city regions come to the fore through their elected mayors and combined authorities. They, in particular, are displaying great clarity of vision and a willingness to seize the moment and drive progress.

Nor should we forget that government has already recognised the need to bring a sharp focus to the way the UK’s economy develops nationally and regionally. Its Industrial Strategy is a common-sense assessment of priorities which identifies paths to progress through innovation, infrastructure, places, people and the business environment. Its focus on organisations like the Northern Powerhouse and Midlands Engine has given regional economies flags to rally round.

Government is also clear that it regards long-term investment in the fabric of the UK economy as essential, with better infrastructure and new housing at the heart of efforts to drive improvement in growth, productivity and prosperity. In this respect, the creation of both the National Infrastructure Commission and Infrastructure and Projects Authority are positive signs.

So amid the challenges, there are reasons to be optimistic. It is now up to our city regions, their stakeholders and private sector partners to make the most of new thinking and new models in the pursuit of their economic visions. Those visions must be shared and powered by collaboration.

Our own business is built on a vision of enhancing performance and improving productivity so that our clients continue to thrive amid global challenges. This is, in short, the pursuit of sustainable investability and that is a prize that our city regions must continue to prioritise at a time of transformational change.

City Assets: How new partnerships can deliver change

The UK’s political and economic landscape is going through a period of unprecedented change.

Our relationship with the world around us is being redefined by the Brexit process, while society as a whole is coming to terms with the implications of an unfolding digital revolution which may alter fundamentally the way we live our lives.

At the same time, there is an urgent need to address imbalances in the UK’s economic geography. London and the South East continue to perform to a global standard, but their dominant share of national GDP contrasts with below-par productivity in the UK’s regions.

These changes coincide with two other challenges: the transition to a more sustainable, low carbon economy and an era of public sector fiscal constraint which traces its origins back to the global financial crisis.

Yet an appetite to unlock growth remains in both public and private sector, and it has been thrown into sharp focus by the visible ambitions of the UK’s city regions. The significant contribution they can make to rebalancing the economy and helping it meets its challenges has been explored at length during a series of round table discussions around the country that have been facilitated by Turner & Townsend and Bevan Brittan and informed by research carried out by the Centre for Cities.

Bringing together elected mayors, political leaders, local authority CEOs, local stakeholders and professionals from across the property and development industry, our City Assets Round Tables have been held in devolved regions and key provincial cities – Bristol, Greater Manchester, Newcastle, Nottingham, Sheffield, Stoke, Tees Valley, the West Midlands – and in London.

They have adopted a pragmatic, solutions-driven approach to a critical question: what role can publicly-owned assets play in shaping, enabling and driving comprehensive regeneration schemes that have the potential to deliver long-term economic benefit?

The City Assets Round Tables saw some candid assessments of the challenges faced by economic and social stakeholders locally and nationally. While they all have a part to play in driving progress, their internal priorities can sometimes give rise to conflicting responsibilities and incentives.

Nevertheless, all discussions identified shared, unequivocal desires for improvement and a willingness to look beyond organisational silos.

In particular, the wave of devolution deals agreed by government has given real momentum to a belief that new challenges require new thinking at regional level – and partnerships which transcend administrative, political and sectoral boundaries.

The research carried out by the Centre for Cities suggests city region economic development initiatives on this scale will work effectively only if they are founded on five key principles.

At their heart is a realisation that publicly-owned assets must be seen not as potential one-off receipts, but as opportunities to create coherent economic visions which can deliver long-term returns to city regions and long-term benefits to their citizens.

Centre for Cities: The Five Key Principles for exploiting City Assets

  • Know your assets – collate a clear and comprehensive picture of public property assets, understand their potential, share that knowledge with stakeholders.
  • Have a clear sense of how those assets can help deliver an economic vision – grassroots growth requires clarity about available land for employment, housing and infrastructure. This enables partners to understand and support your vision.
  • Develop a commercial mindset when you consider the potential of public assets – City regions must understand what gaps in the market their assets can fill, what the competition is and where the risks lie. 
  • Identify and invest in the resources necessary for asset-backed collaborations to succeed – without dedicated funding and dedicated teams, project-specific partnerships may falter as existing calls on time and money dilute momentum. 
  • Build strong institutional partnerships – partnerships involving separate organisations with differing goals, cultures, incentives and timelines require a clear structure underpinned by shared civic goals and strong personal relationships. But they must also be flexible enough to respond to changing circumstances.

Recognising the challenges

A commercial mindset is imperative because the public sector cannot do this on its own. You have got to bring the private sector with you. We have had a strong LEP and the business community are buying into what we are trying to achieve

-Ben Houchen, Mayor of the Tees Valley

Our City Assets Round Tables validated the five key principles put forward by Centre for Cities, but also identified a number of reoccurring challenges which large-scale regional projects must overcome.

  • The relationship between central government policy and local vision and ambition can be dysfunctional – policies developed centrally tend to be disconnected from local need/delivery challenges. Similarly, locally-developed policies and initiatives may struggle to navigate their way through Whitehall departments which operate separately and may not see property as a frontline priority.
  • Is devolution really locally-driven: Is devolution likely to achieve its aims when “the reality is dealing with the consequences of central Government decisions” and “the leaders of key local assets are not under local power – they are mostly based in London” according to one senior observer.
  • Political short-termism: Local and regional economic visions are by definition long-term plans for the future which may take decades to complete, but they are at risk from the short-term political cycles of national and local government. While such plans do need to build in flexibility to respond to changing circumstances, is there a way they can be insulated from these disconnected political imperatives? The answer to that is yes: it lies in achieving consensus around the broad vision – at the most basic level, all sections of the community want a better place and growth is the best way to achieve that. Community-level communication : in London, Bristol and Sheffield, concerns were raised about the impact critical local media reporting can have on public perceptions of specific development projects. This stems from a failure to properly communicate the bigger picture which these individual initiatives are part of – hence they are seen in isolation, perhaps from an unsophisticated perspective. Community engagement should be a key part of any sustainable vision and that should involve local media, influencers and stakeholders. This was identified as a critical issue because of its potential to undermine political buy-in: an unhappy public often means unhappy elected representatives – and development dogged by controversy.

Regional talking points

There is no doubt in my mind that this is the right conversation for Greater Manchester to have. In terms of our future, we need to think the way we are being encouraged to think by these City Assets round tables - creatively and imaginatively”

-Andy Burnham, Mayor of Greater Manchester

The City Assets Round Tables have been a journey through city regions which have shared ambitions but sometimes differing challenges and differing perspectives.

Whilst Nottingham has yet to secure a devolution deal, its long-term political stability was felt to be an asset in terms of shared goals and city partnerships which might support them. The city’s decision to bring in a workplace parking levy was not universally popular among businesses, but there was a broad acceptance that the award-winning tram system it has helped finance would improve the city’s long-term economic functionality.

In Manchester, there is visible pride in the way its city centre has been revitalised by a clear vision of progress over the last 25 years. But property developer Tom Bloxham, of Urban Splash, is among those who believes that its next challenge is to form public-private partnerships which could tackle the housing-related deprivation which exists only a short walk away from that internationally-renowned centre.

Tees Valley Mayor Ben Houchen acknowledges the need for shared visions and detailed reports which form the evidence base for investment in some significant large-scale opportunities which would help the area overcome economic challenges such as the collapse of steel manufacturer SSI.

But while some consider reports to be a significant milestone, Mayor Houchen says they

do no more than get you to the start line – politically, this is all about deliverables and making sure those deliverables happen quickly.

Businesses present at the City Assets Round Table in Sheffield voiced concerns about the impact changing politics could have on long-term investment plans. Roundtable comment:

Industry does get nervous about changing politics so it is incumbent on institutions to build consensus around long-term visions. Nothing is future-proof, but we should take comfort from the fact that while politics has sometimes changed in Sheffield, the strategy over a long period has not.

For Marvin Rees, the Mayor of Bristol, collective buy-in was critical not only to the success of an economic vision, but to making that vision viable at “another level of place” and to making sure support did not drain away when new structures took new risks in pursuit of improvement.

Alongside political leaders, the City Assets Round Tables enabled candid discussions between different stakeholders, bringing forth a number of key observations:

Entrepreneurialism:

  • Local Authority balance sheets/prudential borrowing are probably an under-used asset in the context of city-regional development. But local authorities have to be careful – using prudential borrowing to buy a shopping centre out of area may be seen by the Treasury as commercial competition, abuse of the system and a cause to clamp down. 
  • If a city or region wants to be seen as investable, that investability must be visible. If plans don’t translate into progress, investors will lose interest. n
  • Agencies or organisations which don’t have an entrepreneurial culture will struggle to secure investment. If we look at the deal which saw McLaren Cars commit to a £50m chassis building facility in Sheffield, that deal was based on a short chain of command and a series of handshakes.
  • Large-scale developers are concerned most about the calibre and authority of the people they are dealing with and an aligned vision. The time it might take for development to come to fruition is important, but less of a consideration.
  • The three Is – Innovation helps you stand out in a crowded market place, intervention by Local Authorities in the right place can unlock market progress, initiatives with partners have got to show that they can change places for the better.

Digitalisation, decarbonisation and devolution: 

  • Digitalisation and decarbonisation are the two driving forces of the 21st century – city regions should be at the forefront of this wave of disruption and innovation.
  • The inclusion of health in devolution deals could be a game-changer – housing and health are inextricably linked. Alongside planning, transport and the broad application of new technologies, they should be part of a coherent vision founded on decarbonisation.
  • Devolution represents an opportunity to do politics with people, rather than to them – new partnerships should transcend boundaries, and engage from community up, especially when a new era of levies, tariffs and charges have to be justified.

Citizens and partnerships:

  • Leveraging assets must be grounded in delivering improvement for citizens and customers – this is about translating economic development into jobs and opportunities for your people and your businesses. In the words of one roundtable attendee, “…if you lose sight of that then you have lost the plot.”
  • Collaboration and partnerships are critical – partnerships with the authorities which reflect the economic shape of your area rather than just its politics, partnerships with universities and other centres of expertise because you won’t have the answers to everything and you certainly won’t be able to deliver on your own;
  • Shared vision – If you have got an aligned vision with your public and private partners you should prod and poke government to get what you want. Shared visions articulated by coherent voices are powerful weapons.

Tackling the challenges, realising the opportunities

The urgency of delivering economic development at scale is now much greater because of the huge disparity in performance between London and the South East and the rest of the country

-Lord Kerslake, former Head of the UK Home Civil Service

A powerful corner of the UK now accounts for fully 40 per cent of the UK’s GDP. The performance of our regional economies lags not only that of London and the South East, but of competitor regions elsewhere in Northern Europe.

Yet our City Assets Round Tables highlighted significant opportunities for investing in economic potential – in promising industries, new housing, better infrastructure – in every single region. How do we unlock those opportunities and make up that lost productive ground?

The responses to that question were informed by real wisdom – leadership-level experience of Whitehall departments, Local Authorities, agencies and professional services businesses used to working with the public sector to achieve viable, valuable outcomes.

Taking the Centre for Cities principles as a starting point, these leadership-level discussions homed in on the key enablers of progress.

How do city regions access the capacity and institutions to deliver? Ambitious programmes implying long-term commitment depend on significant technical skill, intellectual capacity and practical resource. In the current climate, some of that capacity may no longer exist in Local Authorities. This is why partnerships with seasoned professionals who can add value to visions offer such fertile ground for delivery.

But these visions must always be powerfully led, both politically and managerially. Powerful leadership is felt to be the key to overcoming the barriers between organisations. It entails a willingness to ‘knock down doors’ if some parts of the system don’t properly comprehend what a partnership is trying to achieve.

Achieving an alignment of interests is also critical when the publicly-owned assets which might make up a development jigsaw are under the stewardship of organisations and departments for whom property might not be a policy priority. This entails demonstrating that their property holdings can be solutions to problems.

Accessing the granular detail of who owns what is not easy in authorities, agencies and departments which may themselves lack comprehensive property records or knowledge of adjoining ownerships. Again, our Round Tables demonstrated that private sector professional expertise – which has a strong focus on data-drive, digitally-enabled solutions - can help.

While those mechanisms have inherent challenges, the City Assets Round Tables have also shed light on some innovative solutions.

Notably, they have looked at Be First, a decision by the London Borough of Barking & Dagenham to put planning and economic development into a wholly-owned subsidiary, give it the financial latitude to build capacity, and set it clear targets to achieve regeneration and housing growth whilst delivering a £10m return to the council by 2022.

Whilst London’s above average property values might suggest this is an achievable goal, Barking & Dagenham is not a wealthy borough and its land values reflect that. On that basis, it remains an ambitious strategy.

Working with quasi-public bodies also holds potential. Also in London, the housing association Peabody is the lead partner on a regeneration site south of the Thames which is nearly the size of central London.

They key in both cases is to maintain political control – all decisions still rest with the Local Authorities involved, they too will reap significant long-term financial benefits, investors are likely to be reassured by long-term commitment, citizens should come to see a better place.

Conclusions

The UK economy is at a turning point. As it redefines its relationship with the world and adapts to a wave of developing digital technologies, it also has to find ways of unlocking the potential of its regional economies in a way which drives opportunity and improves productivity.

Our City Assets Round Tables have demonstrated that there is a shared appetite for progress in the UK’s city regions, and a belief that some of the traditional financial and organisational hurdles which tend to hold back that progress can be overcome with new visions, new models of collaboration and devolved powers.

At a time of fiscal restraint, local authorities have been under pressure to identify new sources of revenue. Research carried out by Centre for Cities, and the conversations at our Round Tables, have shown that the best way to do this is to use public assets as the building blocks of long-term economic visions rather than the route to short-term receipts.

There is no question that the devolved city regions are blazing a trail here. Elected Mayors have challenged conventional wisdom in the pursuit of ambitious regeneration goals, using their convening power and leadership skills to bring partners from public and private sector together in pursuit of common goals.

Nor should we forget the significant progress Government has already made in driving a holistic approach to property assets through its One Public Estate initiative – itself a partnership between the Local Government Association and the Office of Government Property.

Our Round Tables have shown that even those authorities without devolution deals are considering new structures and new models to drive economic and social benefit. They see planning and economic development as opportunities rather than costs and acknowledge that private sector expertise and relationships are critical components of progress.

Observers in both public and private sector were also clear that public assets must take in more than local authority-owned properties. The NHS and government departments also have a role to play in unlocking regional growth.

Nevertheless, local and devolved authorities must take the lead in these partnership developments because their historic status and democratic legitimacy mean they retain that convening power to create and drive visions which deliver for citizens.

It is also beholden on them to ensure citizens and stakeholders are fully informed and engaged. Our round tables heard concerns voiced on several occasions that poor engagement left projects vulnerable to opposition grounded in misunderstandings resulting from poor communication.

Yet the public sector cannot deliver on its own. The round tables also saw widespread acknowledgement that complicated, large-scale, long-term, projects require a level of data-driven technical and project management skills for which UK professional services are globally renowned.

While challenges remain in aligning local interests with central policy, West Midlands Mayor Andy Street was unequivocal in his assessment of the best way to overcome them:

Government wants to make devolution deliver and it will work with places where the momentum is greatest and the opportunity most visible. This is our time.

This stems from a failure to properly communicate the bigger picture which these individual initiatives are part of – hence they are seen in isolation, perhaps from an unsophisticated perspective. Community engagement should be a key part of any sustainable vision and that should involve local media, influencers and stakeholders. This was identified as a critical issue because of its potential to undermine political buy-in: an unhappy public often means unhappy elected representatives – and development dogged by controversy.

If you would like to discuss this report or any of the topics covered, please contact Michael Henson, or your usual Turner & Townsend key contact.

For further information contact:

Michael Henson
Associate Director Local Government