Roundtable Transcription: Infrastructure, Housing & Commercial Development

SBT and NatWest come together for the fourth roundtable instalment, this month bringing together business representatives from Gatwick Diamond Initiative, Vail Williams, Coast to Capital and NatWest to discuss infrastructure, housing and commercial development in and around Crawley

Jonathan Sharrock: I’m Jonathan Sharrok and I’m the Chief Executive at Coast to Capital, which is the local enterprise partnership for theM23 corridor, linking the 3 main areas of our regional economy of Croydon, Gatwick, Crawley and Brighton & Hove. I would say that the opportunity we’ve got for growth is supporting and further developing businesses in our region in a way that’s distinct from London because we’re the 6^th biggest regional economy in England. The challenge is clearly to rise up that lead table and to have a bigger and better regional economy in the SouthEast rather than the South East becoming fully a satellite of London. The challenges in that are really how we develop our land, how we get the infrastructure we need in order to sustain that and how we get the skills that captures our unique economy. What we do is focused on addressing those issues.

Peter Sudworth: I’m Peter Sudworth, Partner of Vail Williams. Our board at the moment at Manor Royal are on the Elect Building Nexus on the Harwood new development, so we’re heavily investing and committing into the Manor Royal occupier base. We also have involvements down in Burgess Hill; the Hub Centre which is 600,000 square feet, which is coming out to the ground soon; and down in Brighton we’re active, so we’re involved with all of the commercial centres down in the South East. I think the biggest challenge for this area is land supply. ManorRoyal is full at the moment. We’re slightly frustrated with the airport decision but there is development coming forward. I think the reasons why the region has been successful is critical mass – it’s now a fully regional centre with Reading and Southampton. If corporate occupiers are looking at occupationin the wider South East, I see no reason why that would continue. But services and infrastructure are challenges for all of us.

Anya Ledwith: I’m Anya Ledwith and I’m the Chairman of Gatwick Diamond Business initiative, which is a voluntary position and my day jobis running my Environmental Management Consultancy, where I work with medium to large companies to put in management systems that reduce their environmental impacts and comply with them. I’m not here to talk from my business’ point of view, I’m here to talk from the GDB point of view. I think what would give us an advantage over, lets say, the London scene is our identity and that we are effectively a business community whereas when you go up into London, it’s very impersonal. The whole spirit of Gatwick Diamond Business is collaboration, network and working together, and building those contacts. Building the ability to work together and share knowledge, share findings, share finances even. That’s what gives us a really good edge compared to certainly the more impersonal, larger areas – not necessarily the other regional areas, they’ve probably got a similar thing – but I think very much the business community has a very strong voice here and that’s what sets us apart.

Daryl Gayler: I’m Daryl Gayler, Regional Director for NatWest. I’m responsible for the SME and mid-corporate lending through the London and South East area, with about five-and-a-half thousand customers. In terms of the opportunity, I think is to work with local businesses. In the last three years we will have grown our loan book by about 8-10% per annum, which suggests there’s a real strong appetite and demand from local businesses to grow; take all of the unemployment and invest in the area despite some of the economic headwinds out, which I think is extremely positive and I think every other bank is kind of doing the same, so it’s not just a NatWest situation;all of the banks are very, very busy. I think some of the challenges always comes back to affordable housing, logistics and transport links, not only North and South but also East and West, plus connectivity. Infrastructure, the logistics, the housing, the skills really need to get working to support those local businesses that really want to grow their franchises, and their business in the local area, which is hugely opportunistic, but we’ve still got some way to go yet.

Jeff Alexander: I’m Jeff Alexander and I’m Executive Director of the Gatwick Diamond initiative. We’re a strategic partnership that bringstogether the public and private sector across the Gatwick Diamond, which includes most of WestSussex. The Gatwick Diamond is a natural economic area that businesses recognise and we lobby hard regionally, and nationally, in terms of positioning the Gatwick Diamond. The challenges I think have already been mentioned; it’s the big 3 for me. It’s the ability in terms of land and premises of the right quality and in the right place. It’s housing; as well as being a social issue, housing is a huge economic pull for people with the skills businesses need. Thirdly is the challenge in terms of skills – meeting the skills requirements of businesses. I think the big opportunity is actually in increasing our productivity as an economy. We don’t compare particularly well on an international basis, so I think there’s an enormous capacity for growth – sometimes called smart growth – through driving up our productivity, or also supporting businesses to drive up our productivities, is a better way of putting it.

Jason Dempsey: On that note then, we will start with the Autumn Statement. It must be encouraging that they announced the national productivity/infrastructure fund. I thought the fact that they came out linking housing, digital communications, research and development and transport all in one showed the cycle to improve productivity. Is there anything that came out of the Chancellor’s Autumn Statement that you’d want to highlight or you wish there was more of?

Jeff: I think we have to welcome it at face value. It’s going in the right direction. There’s also a new pot of money for supporting broadband and 5G, which is very important to this area. So there’s some good stuff in that fund. You have to unpack it and find out what’s new and what’s recycled in terms of the resources, but then I do go back to what I said; the big issue for us is do we get our fair share, or do the businesses get a fair share in the South East and in the Gatwick Diamond in particular? Or will there be a tendency to put it elsewhere? We would argue very strongly that you need to invest in success as well as tackling relative failures. We’re making a very strong case, I hope, for that investment in the Gatwick Diamond and the South East more generally.

Jonathan: And there’s an obvious thing that the Government could announce, which is an upgrade to the Brighton mainline, not just from London to Brighton but all the links going out to Horsham, Chichester, Eastbourne and Crawley. It’s the last major route into London that hasn’t had major investment since the war. It’s still all basically the same as it was 60 years ago and you can see that. So there’s a clear scale in which everyone in the region supports very strongly. I think a decision to back that would be exactly the sort of commitment to the region that Jeff describes.

Daryl: Stewart Wingate from Gatwick has talked openly and in quite a lot of detail around their plans and their hopes for the upgrade and the frequency of trains running from Gatwick to London. I guess one concern – because that’s quite exciting – is to what extent the airport decision put that on hold or delayed it.

Jeff: Obviously the airport decision was disappointing but life does go on and I know it’s very difficult to be positive, particularly about our rail connectivity at this current time, but nevertheless, if we look at what’s happening in terms of the investment, we’re getting the investment in Thameslink, which is going to have a big impact. London Bridge which, for the last year or two, even more, has been part of the problem, eventually it will become part of the solution as the new platforms open there. We’re seeing investment in the Gatwick Express and by about 2018, 15 million people will be within one hour of Gatwick by public transport, primarily by train. I understand that no European airport can actually compete with that, so we do have to celebrate what we’ve got and the getting as well as pushing for the further investment that we clearly need.

Anya: And think about more innovative ways of working as well. At the moment we’re still thinking in the mindset of ‘you travel to work; your suppliers travel’. The more challenging and disruptive ways of running a business these days will hopefully tackle some of these things rather than having to get on a train and getting stuck in the traffic the whole time, sitting on the M25.

Jonathan: It’s all about us growing an economy in the region that residents are part of and you start to build an even more sustainable and prosperous region there. On the productivity point I would say that one angle is making use of the skills we’ve got in the region. So, one of our great assets is that we’re a highly skilled region; I think 50% of people in the Coast to Capital region have got a degree. There’s even more around the Gatwick Diamond than that and we have nearly 10,000 graduates a year come out of our universities. We need to make sure the economy is delivering the sorts of jobs that people with that qualification, higher apprenticeships and the other level 3 vocational qualifications want, because that’s really what drives productivity. I think infrastructure is a means to an end; a means to getting businesses to grow, to getting businesses into the region.

Daryl: I still think there’s a challenge between bridging that gap between students at universities and local schools and actually what the employers need. We’ve taken in 18 apprentices into my region in the last 2 years and it has completely changed. The dynamic in the business – fresh, hungry, diverse, talented – is great to see. You get the skills but you also get the vibrancy, and it just changes the dynamic completely. I think we’ve got a role in terms of being part of that activity between our customers; what they need and what they want to help them run a business, and our connections with the schools and colleges in terms of the way they tailor their programmes, and maybe there is something around work experience because at the moment I’m not sure we’re really joining the dots appropriately.

Jeff: I think we have to accept that London has an enormous pull for skilled graduates, and to some extent you could describe it as a drain on our economy but on the other hand, our economy wouldn’t be what it is if it wasn’t part of the Greater London economy. We do have to shift the balance in terms of the attention and attraction of people with the right skills and I think there’s 2 ways we have to come at it; first is in terms of addressing the education side of things and the aspirations of young people; secondly it’s also related to the infrastructure and housing issues we have been discussing. One of the things that makes it difficult for young people to come and stay or to come to the area is the cost of housing and the general cost of living. In order to afford that and in order to live here, they need to work in London and earn London wages, so we do need to address that balance so that the Gatwick Diamond and West Sussex generally is a place where people can afford to live and work.

Anya: On the other hand, it is more affordable than London and therefore more attractive, so it would be best if we can build the local economy and the good work life balance as well. We need something for them to be attracted to living here, so they’re not living and working elsewhere. We need to understand what’s attractive to people – it’s not just about paychecks, it’s about wider business.

Jonathan: We had a day at the Develop Croydon conference yesterday – it’s unbelievable the level of growth that’s happening there. There’s a big Westfield development going in, we’re going to have 2 million square feet of shopping space in Croydon once Westfield is finished in 2019. We’re going to have a brand new cultural centre, 9,000 flats permitted and under construction at the moment, skyscrapers all over the town – it’s hard to imagine Croydon now compared to the vision for the town but it’s all about vibrancy. It’s affordable and accessible; it’s 20 minutes from Gatwick on the train, so it’s very much part of our economy as much as it’s part of the London economy.

Peter: It’s not just Croydon; you’ve got Sutton doing the same thing. I think the danger with this area is that it can just turn into a “commuter-ville” because you’ve lost so much office space in the past few years. Horsham has no longer got an office stock and East Grinstead ceased to function, so you are in danger if you’re not careful of filling more people into Manor Royal than ever over the next few years, because that’s where the office park is going. So actually, the ability to walk to work if you live in East Grinstead has pretty much gone now.

Jason: Historically, the way I’ve always seen it is that the Gatwick Diamond is the main hub for professional services and financial services outside of London but, as you implied, the grade A offices that firms are looking for simply aren’t there. Like you implied; you can build affordable homes but that’s just affordable homes for London workers and it’s losing that community as a place to live and work.

Jonathan: It’s a huge challenge. If you just take the airports debate as a discussion, if you look at the M4 corridor, there are 3, 4 or 5 major business parks, all which basically serve the Heathrow corridor and on the M23 we have Manor Royal. There are some others but they’re not at the level of investment, development and international attractiveness that they need to be, so as a region, that’s a huge issue. Where’s the next Manor Royal going to come from?

Daryl: I think it comes back to Anya’s point. We almost have a hot desk concept here where you’re trying to make efficiencies and cost savings and less and less office footprint but still trying to provide the right services for the customers, which means people are working a bit smarter, and I guess that comes back a little bit to the whole broadband and connectivity debate which I know is an issue.

Jason: There was a good announcement for the Local Enterprise Partnerships today and London and the South East got a big chunk of it. Is placemaking a part of the infrastructure development?

Jonathan: Yes it is, absolutely. We had a really strong BID with sites identified that were all on the M23 corridor in places where each council has got real plans for development, so Croydon, Horley, Burgess Hill, Worthing and Brighton – specific sites where public money would go in basically to unlock the private sector investment. You talk about placemaking, I think that’s absolutely an area for the future because placemaking isn’t just about infrastructure. The advantage we have over many other regions of the UK and London and lots of other places is what the place is really like. Why would you choose to base your business around Gatwick? Obviously you’ve got the airport but you’ve also got the countryside, you’ve got the coast and you’ve got access to London. There’s a very unique offering in the region and I think, as the South East, we suffer a little but because London tends to dominate everything.

Jonathan: Local authorities face a massive reduction in their Government grant and soon the Government is going to move to 100% rate retention, which sounds great for a prosperous area but, of course, many of the Southern authorities will have to give a lot of that up in order to provide an income for the Northern authorities. Many of them have got property vehicles, many of them are thinking about developing their land and I would agree; I think it’s a very attractive area.

Jeff: The more commercial approach local authorities are taking and some of it is from necessity because of the pressures on them. One of the issues we face is, we’ve all focused on the dual challenge we have in terms of the space for business growth and the space for housing and the balance between the two. We are in a position where we are seeing some businesses contract in the financial services and business services sector for example. Now, we need housing and the pressure is there because it releases the value, but we also need the business space as well and striking the right balance between those two is incredibly important and I do believe that the local authorities have to play with their planning hats on or with a more commercial role – they have to take a leading role in that.

Anya: What are your thoughts in terms of mixed development? We’ve talked about large business parks but actually having a mixture of retail and being able to walk to work as you mentioned, and to not separate the various industries is very important.

Jeff: Well, the trouble with mixed development is that it, like lots of things, it’s in danger of being set up like a panacea; it’s the cure-all for all our problems. In the right place, mixed development is absolutely brilliant. We have had a problem in the part of Sussex we’re in today, and particularly on the Manor Royal in terms of the impact of limited development rights, where you convert from business use to a housing or residential use without the need for planning permission. Now I’m not against permitted development rights used appropriately, but on the Manor Royal we were using very valuable employment sites for inappropriate housing development. Fortunately, Crawley Borough Council stepped in and we have an article 4 direction, which means that you need planning permission to build housing there. So, it’s the right solution for the right place. In Crawley town centre, quite oppositely, the council has strongly promoted mixed development – we want to see more houses and more employment in the town centre and we think they go very well together in a Crawley town context but not Manor Royal.

Daryl: You’ve got some really good mixed-use developments down in places like Gunwharf Quays and Brighton where they seem to have a combination of retail, leisure and residential. I just wonder whether there’s something similar that we can do in Crawley. You’ve got Manor Royal on the doorstep, you have a huge space there but the town centre doesn’t feel as though we have that main traditional square. There’s the high street that feels a little bit tired, there are some exciting development plans for the station, which will really rejuvenate the area, but it still feels like the whole town hall area isn’t quite working. If we can unlock that with some good nightlife and decent leisure opportunities, affordable housing and flats, that would be the way forward.

Jason: Brighton, Worthing and Lewes won the public estate programme with £2 billion worth of investment going in recently. Is there an opportunity for that here?

Jonathan: Yes, there’s also been a BID for that in West Sussex for one public estate, and that’s money to unlock the public buildings. The West Sussex BID, just like the Brighton BID has identified great big stretches of public sector land, which is full of buildings that were fit for purpose 50 years ago, but not anymore. My organization is based in one of them, and you’d never look at it and think that it’s going to be here in 20 years time. The opportunity for the council is to turn all of these buildings that are past their sell-by-date into something different. In many places, that’s quite a challenge, for instance in Horsham. Does Horsham want a road of office buildings, do they want a road of flats, or are they happy with this quite low-density ex-public sector buildings that aren’t that economically productive? That’s the opportunity for this region. You don’t have to take so much green space when you’ve got so much brown space that you can repurpose.

Peter: I think Horsham has got a real challenge though, to keep its identity. It could be a victim of its own success with the amount of development around Horsham; it could change the character completely.

Jeff: I’m not sure about the theory that one area will flourish at the expense of others. I think if we get it right, there’s enough value and growth to be generated, and I don’t mean growth in terms of physically, I mean growth in terms of smart growth or productivity-driven growth. There is enough there to go around. For example, it doesn’t bother me that Croydon has got its act together because I think at some point that will benefit us here. It’s not a zero-sum game but we do need to get all these factors right, and there’s enormous scope for growth in the South East as a whole. If we get the fundamentals right (infrastructure, skills and housing), the business investment should follow, and the scope for it.

Jason: I think it was the Centre for Cities who released a report last week saying that around 25% of all university students end up in London within six months of graduating. What are your thoughts on that?

Jonathan: The place that’s the exception to that is Brighton. There is something that’s unique about Brighton. I don’t know the exact figures but it is a very large proportion of students who do stay there after graduating rather than move to London or anywhere else for that matter. So how can we as an area provide work for this highly talented and motivated workforce straight out of university, so that they don’t have to work in Brighton or commute up to London. Why aren’t they coming into Crawley, Horsham or Burgess Hill? What a difference that could make!

Anya: One tech company we do work with is saying that they’re having to relocate down into Brighton just because they couldn’t draw the talent predominantly from young people in the area.

Daryl: That is the issue – we are trying to compete with Brighton in terms of business, leisure, hotels, diversity, nightlife etc. There are a number of companies we know are wanting to relocate down to Brighton, partly because of the IT skills base but also because of the lifestyle. It’s difficult, realistically for us to challenge that until we have more to offer in terms of leisure and nightlife.

Jeff: Crawley is very interesting from that point of view because Centre for Cities regards Crawley as just that: a city. Not an historical one, but economically, and we think of Crawley and Manor Royal as a bit low down on the pecking order. Yet, if you look at the 39 cities and compare them on patents registered, Crawley is 6^th nationally, up there with Cambridge and Oxford. The interesting thing is of course that that is almost entirely driven by business, as we don’t have the university as other cities do. So, we mustn’t do ourselves down.

Anya: We have good links with the universities as well. I have just started mentoring students at the University of Sussex, which is a low volume project, but the potential is amazing. It’s a fantastic way of molding young minds when they’re thinking of where they want to go or what they want to do in their career. You mentioned skills that we need to run businesses – the softer skills around how to develop as an adult (time management, financial management, phone skills etc.) are things that we need for them to succeed in the business environment.

Jeff: Daryl, your Entrepreneurial Spark project down in Brighton is a brilliant initiative, and in a way I can see us being in danger of having two book-ends: Croydon and Brighton. We end up in the middle. We have your excellent initiative in Brighton, then there’s also the University of Sussex’ longstanding Innovation Centre in Brighton. Then the other bookend is another Sussex University Innovation Centre in Crawley, so we need to bring those two into the great mass in the middle where we are. If we can make the right partnership offer, I think this can be done, and we need it. We need more enterprise, more innovation and more entrepreneurial spirit. We need to draw these two initiatives into Crawley and make the most of what they bring. We also need hands-on support in the innovation process and access to finance.

Anya: Having the hub in Brighton is obviously very useful for the entrepreneurs, so there’s always a contact in terms of support and advice, but is that the problem that we have in the middle of the Gatwick Diamond? That we don’t have the empty space to use? I wonder if there are opportunities for, when we’re building newer spaces, to have some available for these sorts of things.

Jonathan: I think that’s the answer. In our region, levels of startups are immense. Brighton has a huge volume, as does Croydon, but actually growing those small businesses onto £1 – £3 million turnover, we do very poorly when we compare ourselves on a national scale. So, my personal view is that’s because of space and that actually you don’t necessarily have the space for the companies to grow. There’s also something about the level of full employment – a lot of these startups aren’t actually aiming for that scale of business. The transformation into medium businesses is fundamental. Space is a large part of that but it’s probably not the full picture.

Jeff: There is a shortage of high quality and very flexible space. I’d be interested to hear, hypothetically of course, what factors would need to be at play for NatWest to bring an Entrepreneurial Spark hub here, to Crawley…

Daryl: Yes, well it comes back to what incentives can we give people to base themselves here. I have lived here all my life, so I am a massive advocate of Crawley itself. However, when I want to go out somewhere, I do find I struggle with where to go and what to do. There aren’t many places for people to go out and enjoy themselves; you have to go to Brighton or London. It’s a great location that’s fantastically connected to both London and the south coast, with the airport just around the corner, greenery, some countryside close by, but it doesn’t have a great reputation so we have to address that. We need to attract a different type of people into the town, a different atmosphere and alongside that better housing and better nightlife. But you can’t have one without the other.

Jonathan: We need to establish what we want from Crawley too. What do we want to become? What do we want it to look like? You have to know where you’re going and business and the council have a big role to play in that. The universities becoming more present would be significant in that, as will the growth in Croydon. How will that impact us?