“The Masterplan is a long term plan that should reach far further than the current economic down turn. A wide range of studies have been conducted that provide confidence that the proposals within the document can be delivered.”
Brent Council response to concerns about the Wembley Masterplan, December 2008
Brent Green Party and other objectors to the Wembley Masterplan called for Brent Council to put the Plan on hold until a full analysis of the impact of the recession on the local economy had been carried out and the Council’s Climate Change Strategy was in place.
A report entitled ‘The Local Impact of the Recession’ was tabled at the Council Executive on 16th March 2009. The Climate Strategy is long overdue and there appear to be concerns over the adequacy of the Consultant’s report. It is essential that a long-term project should be based on such a strategy. Despite this vital missing ingredient the Executive is due to make a a decision on the Masterplan at its meeting on Monday April 6th.
The Recession Report resists engaging in detailed economic forecasting but states, “In short we face possible deflation, continuing low interest rates, a continued lull in property and housing markets and unemployment rising and possibly peaking in 2011-12…….At the same time, the government borrowing to defend the economy and provide fiscal stimulus will put huge pressure on public finances.” (4.5)
The Council faced with challenges on the financial viability of the Masterplan had earlier said that funds would be available from the government or the GLA in the event that Section 106 funding was not available.
The Wembley Masterplan envisages 47,000m2 of retail, restaurants and bars and a ribbon of retail running from Wembley High Road to Wembley Park. The Recession Report reveals that employment in wholesale and retail in Brent stands at 22%, a greater proportion than the British average (5.5.2) which ‘therefore may be an area of concern’. Brent has a greater proportion of firms involved in wholesale and retail than the British average: “This may be an area of concern, as the retail-related industry is predicted to be one of the sectors most severely hit by the recession.” (6.1.2)
So retail is already disproportionate, is likely to be hit most severely by the recession, but forms the backbone of the Wembley Masterplan. The Masterplan stated that further retail development was dependent on the successful completion of Quintain’s Phase 1 Wembley Boulevard development. A ‘success’ that looks unlikely in the present economic climate and the competing attractions of Westfield and a refurbished Brent Cross.
The Report suggests that with the fall in house prices and sales at a 30-year low, there may be an increase in demand for temporary and social accommodation. “A consequence of this could be that more people will turn to renting or seeking council housing. Brent already has one of the highest levels of demand for housing in the country, where we are unable to meet even a small proportion of the existing demand.” (8.2.1)
The Wembley Masterplan envisaged the provision of 3,727 new homes of which 1,400 were to be affordable. Much of this would be financed by Section 106 receipts (money paid by developers to the local authority towards infrastructure improvements). However the Recession report notes, “A quarter of the local authorities surveyed by the Audit Commission state that they have seen falls in Section 106 receipts of more than 5%, which is of particular concern because about half of the affordable housing supply in recent years has been provided under Section 106 agreements.” After noting that school building improvement plans will also be affected the Report states, “Opportunities to generate improvements in public sector infrastructure through regeneration projects will also be affected. (10.5.4)
The Report notes that the current forecast is that, “Brent will struggle to achieve the LAA target to deliver 458 affordable homes annually between 2008 and 2011 by 17.4% due to delays or terminations of development schemes. Wembley regeneration schemes were also expected to contribute to the supply targets, but some of these sites will be delayed, as developers such as Quintain concentrate on the non-housing part of their development.” The Report expects new starts to “drastically slow” and “in some cases where construction has commenced developers are delaying internal fit outs that allow new homes to be habitable in the hope that the market will improve”.
So housing, and particularly affordable housing, is essential and a major part of the Masterplan but unlikely to be completed in the short or medium-term, and some, already largely completed, will not be coming on the market. The Report pins its hope on government action to stimulate the housing market despite the constraints imposed by the huge long-term debts incurred by the government’s recent interventions to stabilise the economy.
REGENERATION AND DEVELOPMENT
It is worth quoting the first paragraph of this section in some detail:
“The construction industry has been severely hit by the squeeze on credit, and delays in development schemes have had a negative effect on the pace of Brent’s major projects, for example timetables have been put back for Wembley development….The lack of credit and economic recession may well both stop and delay private development, which may adversely affect our regeneration ambitions in Brent.” (11.1)
This throws the whole rationale of the Masterplan into doubt. The argument that the Plan is a long-term vision beyond the current crisis cuts both ways. If it is long-term there is no need to approve it at present when the Report recognises that the extent, depth and longevity of the economic downturn is unclear. The argument that, “…the council use this as a period of opportunity in terms of the regeneration agenda through undertaking detailed planning work and establishing clarity of vision, so that development projects can be kick started when the upturn occurs” (11.2), seems to be based on an assumption that things will soon be back to normal – an assumption as we have seen that is not well supported by other statements in the Report.
Despite the council’s claim to the contrary when Quintain Estates criticised the Wembley Masterplan for unaffordability, they remain the council’s main developer partner.
Quintain have themselves been badly affected by the economic situation and their strictures need to be taken seriously in the context of their ability to provide Section 106 funding for the Masterplan proposals.
Quintain has recently negotiated a three-year deal with its lenders to manage its debts of £620,000,000. This involved increasing the firm’s maximum gearing ratio (the ratio of debt to net worth) from 110% to 150%, allowing for expected further falls in the value of its UK properties. This stabilised the firm’s stock, which has fallen 58% this year. However the arrangement provides protection only for a 20% fall in property valuation from September 2008 levels and the decline in property values has accelerated since then. Quintain is likely to seek further investment to help stabilise its finances.
The council’s own report, ‘The Local Impact of the Recession’, reinforces objectors’ criticisms of the Wembley Masterplan. The Plan based as it is on expansion of retail, housing, hotel and office space at a time of economic recession and long-term economic uncertainty is irrelevant in its present form. As a long-term Plan it should also take into account the council’s yet to be published Climate Change Strategy.
The Wembley Community Association will be attended the Executive on Monday April 6th to press their case for a realistic and sustainable Masterplan.