Focus on East London
Monday, 08 November 2010
There are fears that the Government's welfare reforms could trigger an influx of housing benefit claimants to the city's eastern boroughs. Stuart Watson examines this and other key east London regeneration issues.
For the past decade and more, east London has been the main focus of regeneration efforts not just in the capital, but also across the nation. Huge projects such as the Greenwich Peninsula, the Thames Gateway and the Olympics have grabbed headlines and gobbled up vast sums of government money. But now fears are growing that government cuts will spark a crisis in the affordable housing supply that will hit east London.
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As part of the coalition's welfare reforms, local housing allowance - the type of housing benefit paid to cover private rents - will be subject to a weekly cash cap from April 2011. Then, from October 2011, the way the allowance is calculated will be changed so that, rather than being sufficient to meet the cost of staying in homes in the cheapest half of the private rental market, the benefit will only cover the cost of renting the cheapest 30 per cent of homes.
In September, a survey by umbrella body London Councils showed that 82,000 households in the city could be at risk of losing their homes due to the changes. The following month, the National Housing Federation, which represents social landlords, estimated that the reforms would mean that as few as 46,000 of the 160,000 private homes being rented by housing benefit recipients in London would qualify as being among the cheapest 30 per cent, leaving 114,000 households seeking cheaper accommodation elsewhere.
Nigel Minto, head of sustainable communities for London Councils, says that the boroughs are concerned that the changes could lead to east London bearing a disproportionate load as households move in seeking cheaper housing and private landlords raise rents in hitherto low-cost areas as demand rises. London Councils and the Greater London Authority are jointly lobbying the Government for a number of special measures, including exempting existing housing benefit claimants from the cap, with the aim of reducing the policy's impact in central London and its spillover effect in outer boroughs.
Sir Robin Wales, elected mayor of the London Borough of Newham, says: "We support putting the country on a strong fiscal footing. But ministers have promised us that their deficit reduction plan won't be 'on the backs of the poor'. These policies will squeeze poorer people out of their homes in expensive central London boroughs to more affordable places like Newham and mean that we face even greater pressures on public services and housing in east London."
Jeremy Grint, director of regeneration and economic development at the London Borough of Barking & Dagenham, says he is concerned about the impact of the cap on the already huge demand for socially rented properties in the area. "There is already crying need for more affordable housing and this will be compounded by the housing benefit changes. But funding for affordable housing will massively fall during the next three to four years."
With the national social housing budget cut by 60 per cent in last month's Comprehensive Spending Review (CSR), David Lunts, London director at regeneration quango the Homes & Communities Agency (HCA), says it is unlikely that it will have anything to spend in the capital in the next financial year beyond its existing commitments of £650 million. But he says that the agency will be able to offer grants to developers and housing associations in the capital in the following three years, and will start allocating them as soon as possible to encourage them to keep building.
According to Grint, the new measures will also mean local public resources having to be diverted to support high-need families who move in from inner London. "It could also impact on community cohesion, which is a sensitive issue for the borough," he says.
Grint also warns that all this is taking place in the context of a struggling private housing market and low land values that deter housing development in parts of east London by reducing potential profit margins.
Housing is one of the community sector's chief concerns too. Neil Jameson, executive director of community alliance London Citizens, says that the body's main goal is to create permanent affordable housing. He says it hopes to do this by setting up community land trusts: not-for-profit bodies that develop housing on sites that they are legally bound not to sell, thereby excluding the price of land from the cost of the homes they build. London Citizens aims to set up a trust to develop the site of a former hospital on Bow Road and is in talks with mayoral/central government joint venture body the Olympic Park Legacy Company about creating another on the Olympic site after 2012, Jameson says.
Geraldine Blake, chief executive of east London charity Community Links, says another major concern for the third sector is potential cuts to small community projects. "With councils facing 40 per cent budget cuts, the temptation will be to take money out of community work because its effect is hard to measure and often seems like small stuff compared with multi-billion pound regeneration projects," she says.
However, she stresses the importance of one such project to east London's regeneration: the Olympic Park. Plans for the post-Games legacy were revealed by the Olympic Park Legacy Company last month. After 2012, the site will be named the Queen Elizabeth Olympic Park and is planned to create five neighbourhoods containing a total of 8,000 homes, with a greater emphasis on family homes than in previous plans.
Andrew Boff, a Conservative London Assembly member and a vocal critic of past proposals for the site, says: "The masterplan lacks detail and doesn't (set out the cost of development), but it is a massive improvement because there is more focus on families."
The legacy firm says an outline planning application for the scheme will be lodged in the second half of 2011. Meanwhile, it has begun to seek users for the facilities that will remain after the Games. In September, it called for expressions of interest in the broadcast and press centres, and bidding closed at the end of that month for the chance to take on the Olympic stadium. West Ham United Football Club with the London Borough of Newham and Tottenham Hotspur Football Club with entertainment firm AEG entered bids.
Meanwhile, the coalition's localism agenda and quango cull have prompted big changes in the institutional landscape governing regeneration in east London. The Olympic Park Legacy Company is set to be subsumed into a new Mayoral Development Corporation (MDC), which is also likely to be responsible for the part of the Lower Lea Valley regeneration area near to the Olympic site.
The Lower Lea Valley is currently overseen by the London Thames Gateway Development Corporation, one of the quangos the coalition is to abolish. A statutory framework for the MDC is due to be established in the Decentralisation and Localism Bill scheduled to be published this month.
LTGDC chief executive Peter Andrews says the corporation's responsibilities for the parts of the Lower Lea Valley that are to be covered by the MDC will be handed over in April 2012. Meanwhile, the LTGDC's planning powers over major planning applications in riverside areas in Barking and Dagenham - known as London Riverside - and the rest of the Lower Lea Valley will be repatriated to individual boroughs.
But Andrews says the body will continue to work on projects, including the 10,800-home Barking Riverside scheme and the mixed-use Canning Town and Custom House project, before being wound up in 2013 or 2014. "We are pretty confident we will be left alone for long enough to get things done," says Andrews.
However, it was announced in the CSR that the Government would no longer fund the Thames Gateway from next March. Furthermore, the London Development Agency (LDA) will also be reconstituted. Its land and development functions will be rolled into a new Greater London Authority-controlled entity along with the HCA's London operations and the GLA's strategic planning and development control roles. Lunts says the new body will take on statutory status in April 2012.
The LDA's remaining business support and economic development functions will be taken on by a separate unit within the Greater London Authority. These include the LDA's key job creation scheme: the promotion of a green enterprise district in the Lower Lea Valley and London Riverside. Construction of the district's flagship project, the Siemens Pavilion at the Royal Docks, which is intended to showcase green technologies, is due to begin this month. Meanwhile, waste-to-energy company Cyclamax is due to start work at the Sustainable Industries Park in Dagenham next year, joining recycling firm Closed Loop.
Economic development efforts in east London could receive a further boost if the coalition approves the creation of a council and business-led local enterprise partnership (LEP) that would be able to bid for cash from the new £1.4 billion Regional Growth Fund designed to help create private jobs. The Government initially suggested that, unlike in the rest of England, LEP status would be unavailable to groups of London boroughs. But last month, Olympics minister Bob Neill revealed that there would be London LEPs.
The Thames Gateway LEP, which is set to include ten east London boroughs along with Dartford and possibly Thurrock councils, is being promoted by sub-regional alliance the Thames Gateway London Partnership. Chief executive Ros Dunn says there is a strong case for funding an LEP that includes an area that is slated to house much of London's growth, but is also struggling with poverty and worklessness.However, London mayor Boris Johnson last month announced his support for a single London-wide LEP to be created as an alternative to the six LEPs currently proposed for the capital.
The spending bonanza that has fostered regeneration in east London over the past decade is over.
But the problems of long-standing deprivation and the demands on services caused by growth and possible migrants from central London are still present. Overcoming those hurdles will be a tough task for the area's regeneration sector in the new financial climate.
David Lunts speaks at this week's Future of London conference at Wembley Stadium on 10 November. Visit www.folconference2010.com for details
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