Attracting and retaining talented people in our cities

On 24 May 2016 Peter Vernon, Chief Executive of Grosvenor Britain & Ireland, provided the industry address at the ULI UK conference in London. Here is a transcript of the speech.

24th May 2016

A growing global population is gathering in cities.

In the UK, 8 in 10 of us now; 9 in 10 by 2045 will live in cities.

The agglomeration benefits -- the pooling of talent, ideas and higher productivity -- are widely recognised.

But so too are the downward pressures on our cities’ infrastructure and quality of life produced by growing demand.

I believe the most successful cities in the UK will be those that attract and retain national and international talent.

Key to attracting that talent will be the creation and management of great places that are both dense and liveable.

Urban neighbourhoods with a rich cultural life that offer a unique lifestyle

Neighbourhoods that are home to people of mixed incomes, backgrounds, life stages and jobs.

The creation and management of these places is both necessary and profoundly challenging for government and the real estate industry.

So in that context, let me briefly make two points that I hope are relevant to this year’s conference agenda.

First – UK cities are likely to gain new powers to enable them to fulfil their potential for growth.

These powers should create incentives for more aligned partnerships between business and City Government.

Two years ago I sat on the Cities Growth commission chaired by Jim O’Neill.

The commission argued that we have one of the most centralised developed economies in the world, with only around 2.5% of our taxes set locally.

It concluded that greater powers should be devolved to UK cities.

To allow them to plan for growth and then align and integrate a full spectrum of public investment and services.

Since that Growth commission, there have been significant moves to devolve powers -- to Greater Manchester, Sheffield, Liverpool, Leeds amongst others.

Next year a raft of metro Mayors will be elected[1].

The Queen's speech last week put forward proposals to give cities the power to raise new finance through supplementary business rates.

And of course the local retention of business rates, if it comes about, will be another game changer.

Devolution in this way can create much stronger incentives for civic leaders to foster growth locally -- because they would reap the benefits of that growth locally.

With these incentives, the potential for new and better aligned city based partnerships between local government and business should become possible.

Second, a more effective partnership between the public and private sector will be vital if we’re to overturn the housing crisis, which is the most acute in London.

Taking London as an example, we need a doubling of housing supply.

And a response that is judged not only by the number of units, but also by the quality of places and neighbourhoods that are created.

With the right leadership and policy, I think London Government could catalyse long term private capital to work in partnership with it.

Let me briefly give two ways it might do that:

First, through a step change increase in the supply of developable land.

I believe this will require in London a more muscular, interventionist Mayor.

With a Mayoral delivery body that enables land for development, through CPO, planning designation and infrastructure investment amongst other things

And second, I believe we need clear and unambiguous London-wide planning policy and a new approach to build to rent

To my mind, the build to rent sector has enormous potential to deliver a net additional source of vital new supply funded by long-term capital.

But at present, build to rent investors and developers just don’t know where they stand in London

Many in the industry (and I count myself among them) are arguing for a clear, city-wide policy that recognises the economics of building rental homes are different from housing for sale.

And therefore need a different approach that will catalyse new investment.

Through for example, a London-wide tariff: that requires investors to provide a fixed percentage of discounted market rental homes as opposed to unpredictable, expensive and slow viability testing.

So I offer this as an example of how empowered City Government working in partnership with the real estate industry can unlock the private sector expertise, collaboration, commitment and capital needed to create great places that sustain growth.

[1] Greater Manchester, Sheffield, Liverpool, West Midlands, Tees Valley, Greater Lincolnshire, west of England & East Anglia.


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