www.cause4livingessex.com

“Garden Cities”: what cost?

Time for a planning Plimsoll line

Collection of CAUSE papers, June 2019

Rosie Pearson & William Sunnucks

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Contents

Page

Introduction

4 Time for a Plimsoll rebellion in planning?

Part 1. Setting the scene

7 What are the North Essex Garden Communities?

8 Learning from the past

11 West Tey risks

Part 2. The need for a planning plimsoll line

16 What costs: economic

17 The wrong Plimsoll line

19 You want land value capture? Small is beautiful

28 Small is Beautiful 2: The wider context

35 What costs: the environment

Part 3. So, where should the houses go?

39 Economic efficiency – the size of the cake

41 Transit-oriented development case study: Metro Plan

Conclusion

44 Be like Plimsoll, not Captain Calamity

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Introduction

Time for a Plimsoll rebellion in planning? This booklet1 brings together some of our campaign group’s papers, to address the problems of

modern day “garden cities” and present alternatives. We look at the economic and environmental

cost of the “North Essex Garden Communities” proposals for 43,000 homes in three new

settlements, which have a bearing on new settlements proposed elsewhere. It is the most ambitious

green-field house-building project since Milton Keynes2, and is part of government’s Garden Towns

& Villages programme3, which currently supports 28 proposals with funding for feasibility studies.

Tax-payers’ money, around £6m to date, is being poured into the project, but it is fraught with

problems. Decisions are being made based on unsound assumptions, particularly about viability. It

is essential that government and local authorities learn from the mistakes made here, before more

money is wasted elsewhere. Living under the cloud of poorly planned new towns should not become

the norm.

We set modern garden cities in the context of two influential Victorian gentlemen, Ebenezer Howard

and Samuel Plimsoll.

Ebenezer Howard The first, Ebenezer Howard, is very familiar in planning circles for his garden city vision, published in

his 1898 book, “Garden Cities of Tomorrow”. Howard aimed to solve the housing problem of the

time: overcrowding in the inner cities. He offered a vision that blended the best of town and

country, with an idyllic life free of smoke, free of slums, with ‘bright homes and gardens’. His vision

promised high wages, low rents, low rates. There would be plenty to do and, quirkily, “no

sweating”... Two English towns were built as garden cities, Letchworth and Welwyn.

It was a paternalistic, top-down approach, fashionable at the time. Jane Jacobs4, in her book, “The

Life & Death of Great American Cities”, was not terribly impressed with Howard, saying, “Howard set

1 This booklet was prepared for the Letchworth Connected Cities Conference, 19 June

2019https://www.eventbrite.com/e/letchworth-four-how-garden-cities-can-become-connectedcities-tickets-60411296815 CAUSE’s Metro Plan is a good example of a Connected City approach and we were invited to speak and host a round table 2 The Oxford-Cambridge ‘Arc’ is more ambitious, with talk of the need for one million new homes, but not

advanced to the stage of new towns at Local Plan examination stage 3 https://www.gov.uk/government/news/james-brokenshire-plans-increase-in-garden-towns

4 For a fascinating insight into Jane Jacobs, read “Who the hell is Jane Jacobs?” by Deborah Talbot

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spinning powerful and city-destroying ideas”, adding, “virtually all modern city planning has been

adapted from, and embroidered on, this silly substance.”

She may be right. The new towns project in England delivered 22 new towns but this is what town

designer Sir Frederick Gibberd said in an interview5 in 1982, 35 years after he created the new town

of Harlow, “Well, I get a lot of misery out of it, in fact. I go around and think, ‘My god, that’s

unbelievably bad, and it could have been so good.’”

However, the Town & Country Planning Association has been an enthusiastic supporter of Howard

and his garden cities. It has created a more a modern set of principles6 (sweating not mentioned).

The aim is to deliver a “holistically planned new settlement which enhances the natural environment

and offers high-quality affordable housing and locally accessible work in beautiful, healthy and

sociable communities.”

Is land value capture the answer? No-one could criticise the aims. Unfortunately, however, modern thinking stops with the ideals and

does not address the realities of creating a garden community. In theory, the principles are to be

funded by land value capture – yet our analysis shows that a stand-alone new town cannot be

funded by land value capture. The costs are too great. No-one has addressed the issue of where

best to locate a new town, the impact on infrastructure and communities beyond the new town’s

perimeter or whether they are even fit for purpose in the modern era.

We have seen ‘on the ground’ in north Essex how difficult it is to plan, let alone build, a modern-day

garden city. There have been problems with all elements, from a major mistake with viability

appraisals, to site selection, infrastructure, employment, affordable housing and community

engagement. Here the three proposed North Essex Garden Communities will have 43,000-homes in

total, and 24,000-homes in the biggest, known as West Tey. West Tey is the case study referred to

throughout this book.

Samuel Plimsoll This brings us to the second influential Victorian gentleman, Samuel Plimsoll7. He was an MP who

campaigned vigorously, and took on vested interests, to put a stop to “coffin ships”. The result was

the Merchant Shipping Act of 1876 which imposed the now famous “plimsoll line” on ship owners.

5 https://www.theguardian.com/cities/2019/may/15/sterile-or-stirring-britains-love-hate-relationship-with-

new-towns 6 https://www.tcpa.org.uk/garden-city-principles

7 https://www.rmg.co.uk/discover/explore/samuel-plimsoll-and-ship-safety

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It is a load line based on a complex array of calculations depending on water density, to ensure that

ships are not overloaded and dangerously unstable.

The link with planning is that complex calculations are used to determine the stability of a ship. The

same should be done when it comes to deciding whether to build a ‘garden city’, where and how big

it should be. Government’s garden towns project needs just such rigorous analysis and a form of

plimsoll line. We need to understand the financial cost and environmental cost of garden cities.

Otherwise we will simply see the same mistakes repeated time and time again.

CAUSE has discovered that numbers are curiously absent in planning. The result is that unstable

garden cities are trying to set off from port. No-one really understands why they are floundering,

because the powers-that-be have not done the right analysis. Thinking in terms of a planning

plimsoll line would ensure that environmental costs and financial costs are properly analysed.

Proper analysis will lead to better planning. We are repeatedly told “housing has to go somewhere”

(But surely not just anywhere, any type?) So, CAUSE has come up with proposals which make much

more sense. One of these is the ‘Metro Plan’, known as transit-oriented development.

In north Essex we have an under-used transport asset, the Colchester-Clacton electrified rail line.

Instead of chasing after costly and complex new mass rapid transit, as our authorities are doing, this

offers low-cost, in-built rapid transit potential and even solves the problem of the final mile. It

would be relatively simple8 to increase the train service from 2 to 4 trains per hour (maybe 6).

It passes a plimsoll test with flying colours: the boat floats. It is environmentally friendly and, unlike

the ‘garden towns’ it really does capture land value and even combines the best of town and

country. It works because ‘small is beautiful’. We would not want to see this proposal foisted on

unwilling communities. We know what that feels like. But, unlike the garden towns, it offers

benefits to nearby communities.

We conclude that there are implications for decisions about new settlements elsewhere in England

and that it is essential to learn from the North Essex Garden Communities. The modern garden

towns are sinking before they even leave harbour because no-one has measured their capacity to

bear the garden city promises load. Government needs to do some analysis and implement a garden

cities Plimsoll line system. There is a less risky, more economically efficient and more

environmentally friendly alternative which will coincidentally also meet Government’s need for

‘more, better, faster’.

8 http://www.cause4livingessex.com/wp-content/uploads/2015/09/Jonathan-Tyler-CAUSE-Report-FINAL.pdf

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PART 1: SETTING THE SCENE

What is a North Essex Garden Community?

Three new settlements are proposed by a grouping of local authorities including Colchester,

Braintree, Tendring plus Essex County Council, with backing from Government for feasibility studies.

They wish to borrow from the Public Works Loan Board to acquire the land and put the ‘site

enabling’ infrastructure in place. A ‘delivery vehicle’ called North Essex Garden Communities

Limited9, which wishes to become the first Locally Led New Town Development Corporation, is

calling itself a master developer. It aims to sell serviced plots to developers.

43,000-homes would be delivered in total, with 24,000-homes in the largest, known as ‘West Tey’,

10,000 at ‘West of Braintree’ (13,000 if an Uttlesford section gets the go-ahead) and 9,000 at East

Colchester, near the University of Essex.

The aim is to build these to garden community principles set out in a charter10. Interestingly, the use

of garden community principles is deemed to make otherwise unsuitable locations acceptable11.

This is from the Plan:

We, and other groups, have many concerns about the proposals. Our own ‘evidence base’12 of

consultation responses and hearing statements sets out these concerns in great detail. The planning

9 http://www.ne-gc.co.uk/about/

10 http://www.ne-gc.co.uk/wp-content/uploads/2018/05/Garden_Communities_Charter.pdf

11 This accords with Colchester’s decision, in 2008, to reject large scale development at Marks Tey, on the basis

that development at the location would be both undesirable and unsustainable.

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inspector, who examined the proposals in 2018, also had concerns. He delivered a devastating

letter13 to the north Essex authorities, finding them unsound. He highlighted shortcomings

including:

Major flaws in the viability appraisal of the proposals, including failure to deal adequately with

transport infrastructure costs, land purchase and interest or contingency allowance;

Failure to include details of employment land or floor-space;

Conclusions over deliverability of affordable housing which cannot be relied upon;

Uncertainties about trunk road improvements;

Over-ambitious targets for modal-shift and no feasibility study or costing of mass rapid transit

options;

Failings in the sustainability appraisal which may breach legal requirements.

New Towns: Learning from the past

A body of literature points out the risks associated with delivering new communities. However,

these lessons have not been learned, or even acknowledged, in the North Essex Garden

Communities project.

The Wolfson Economics Prize in 2014 posed the question, ‘How would you deliver a new garden city

which is visionary, economically viable, and popular?’ A team from URBED, including Dr Nicholas

Falk, who CAUSE has worked with, won the prize from a field of 270 competitors. The conclusion

was this, “Through this debate we have come to the fundamental conclusion that it is probably

impossible to create a Garden City of any scale from scratch in the current economic climate. …we

have concluded that it is better to graft a Garden City onto the strong root-stock of an existing city.”

CAUSE’s assessment of the viability of West Tey confirms that a stand-alone settlement sinks itself

under the weight of its own infrastructure and land costs. There is much to be said for URBED’s

vision of well-connected, compact, urban extensions in place of expensive stand-alone garden

communities.

12

http://www.cause4livingessex.com/about-cause/cause-papers-and-evidence/ 13

https://www.braintree.gov.uk/downloads/file/7906/ied011_-_inspectors_section_1_post-hearing_letter_to_neas_-_8_june_2018

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A paper14, “Is It Possible to Build Financially Successful New Towns? The Milton Keynes Experience”

by Richard B Peiser & Alain Chang, found that:

Milton Keynes lost more than one-half a billion pounds, despite being one of the more

successful new towns, and although it is possible to develop financially successful new towns,

it is extremely difficult.

One of the major reasons why American new towns failed included poor site selection

(landowners proposed the sites rather than government selecting the best locations).

Inadequate funding was also a problem.

A DCLG report15, “Transferable Lessons from the New Towns (2006)” also sounds a warning to

planners and policy-makers. The report highlights the huge debt write offs of new towns, the

crucial role of Government to fund infrastructure to get new towns off the ground, even with

land acquired at existing value, and the impact on local government of running services in the

early days:

o Debt write-off: “…governmental scepticism about the New Towns grew in the later 1970s

and 1980s. This reflected the very unfavourable financial position of many of the later

New Towns at the time consequent on very high interest rates and inflexibility over

borrowing rules. In the 1980s a huge write-off of debt was necessary (largely in

connection with the accumulated Housing Revenue Accounts) at net cost to government

estimated by Sorensen (1993) at £3bn. This was the real basis of the shift to a more

‘disposal-for-private-development’ regime, a major shift in the delivery culture of the

corporations.”

o Government backing: Like any large-scale areas of growth, the New Towns faced major

problems of infrastructure provision. The key difference then was that these were

resolved by public finance at a time when there was a stronger belief in public sector

investment. Central government funding was absolutely fundamental to delivery of the

New Towns. Those responsible for delivering today’s new towns will clearly need to

champion the infrastructure needs of their own areas at a time when public spending is

not de rigeur.

o Existing land use values: New Town development corporations enjoyed exceptionally

favourable arrangements for land purchase at existing (or close to existing) use values

and were effectively able to acquire all the land needed to build the New Town. The

NTDCs were landlords of large amounts of housing. This had major advantages in 14

https://journals.sagepub.com/doi/abs/10.1080/0042098992773 15

https://planningnewtowns.files.wordpress.com/2014/02/transferable_lessons_from_new_towns.pdf

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ensuring housing affordability and obviously played a role in getting major development

underway relatively quickly.

o Running services: Providing and running schools, libraries, facilities for emergency

services etc in the early years, in advance of full demand and before local tax income

increased, imposed heavy financial burdens and often generated political tensions. It is

worth noting that in 2016 an All Party Parliamentary Group16 for new towns was created.

One of its three goals is to, “Make the case for investment in the regeneration and

renewal of New Town infrastructure and other issues that specifically apply to New

Towns.”

Not only do new towns struggle to achieve viability. A report by the Future Foundation17, “Vital

Cities not Garden Cities” argues that garden cities are not sustainable, being low density, car-

dependent settlements. Nor will they solve the housing crisis: “Twenty Garden Cities with 30,000

inhabitants, each at an average household size of 2.4 persons, would only provide 250,000 units –

the equivalent of just one year’s worth of house building needed each year in England.” The report

instead makes persuasive arguments for revitalising our towns and cities. Smart Growth UK makes

similar points in a report18 on the recent wave of garden communities, “Garden Towns & Villages;

Unwanted, unnecessary and unsustainable”

The new garden villages have attracted criticism from various other quarters. British Architect

Richard Rogers has criticised the garden city proposals as a “return to the mistakes of the past”. He

argued that there is no need to build on greenfield sites when there is still capacity to build more

than one million homes on brownfield land. His remarks were made after a report by the Campaign

to Protect Rural England (CPRE) and the University of West of England (UWE), which proposed more

homes be built on brownfield land, was published In November 2014.

Conclusion

It’s not just academic papers about the past we should look to. Ebbsfleet is a smaller new town with

many locational advantages over West Tey, not least that has excellent public transport and is being

built on brownfield land. Nevertheless, it has taken many years, and required around £300m of

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https://www.tcpa.org.uk/new-towns-appg 17

http://www.futurespacesfoundation.org/wp-content/uploads/2016/04/Vital-Cities-not-Garden-Cities-FSF-dps.pdf 18

http://www.smartgrowthuk.org/resources/downloads/Garden_Communities_Report.pdf

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Government funding before it finally got off the ground. The planning of Ebbsfleet has been

described by one architect as of a type “where you link one type of arm to another type of leg and

hope it can walk.”

Perhaps this is why Lord Best, crossbench chairman of the all-party parliamentary group on housing

and care for older people, has called for fifty ‘Poundbury’s’ – small urban extensions of around 5,000

inhabitants. And Freiberg is a much cited example of a university town in Germany of a similar size

to Colchester which grew successfully through high density urban extensions, lots of green space

and a meticulously planned transport strategy. A CAUSE visit to Freiburg last year found that it lived

up to the hype. There is much to learn. Planned urban extensions are not the same as suburban

sprawl in the form of soulless housing estates.

Many of the mistakes of the past are already being repeated. Large scale, long-term borrowing, no

assessment of risks in the viability appraisal, contingencies inadequate at only 5%, infrastructure

budgets inadequate and little prospect of sufficient government investment this time round.

Let’s look at some of those risks...

West Tey risks

From the perspective of assessing risks, we believe that West Tey should be considered as a

more as a public-sector infrastructure project with houses, rather than a housing project with

infrastructure. Public money is required to underpin the proposal and it should therefore be

tested against the full rigour of HM Treasury rules. Best practice in assessing risks and budgets

should be followed. Our analysis shows that this is not being done by our local planning

authorities.

We have investigated the project costs19 proposed for the 24,000-home ‘West Tey’ garden

community by Braintree and Colchester councils. We draw three conclusions:

1. The contingency is far too low for this kind of project.

The contingency, at 5%, is far below what would be expected for a complex project of this

size. The norm would be at least a 40% contingency. One expert we spoke to referred to this

as a ‘rounding error’ not a contingency.

19

As set out in the Aecom reports (June 2016), the Local Delivery Vehicle budget (December 2016) and Hyas Viability Appraisal (May 2017) https://www.braintree.gov.uk/downloads/download/635/new_local_plan_evidence_base .

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2. Risks have not been assessed or tested alongside the costs

It would be expected with a significant infrastructure project that risks are assessed alongside

costs. There does not appear to be the case for West Tey. CAUSE has run a number of

scenarios, and these show a huge range in outcomes given different, and more realistic, input

assumptions.

3. The infrastructure budget is too low to deliver garden city promises.

The budget, £1,182.3m for a town of 23,660 homes (Hyas 2017), is too low (by £658m20) to

deliver garden city promises. This is a project which will plague our councils with overruns for

its fifty-year life.

We have done analysis which concludes that instead of the residual value methodology used, a

conventional Discounted Cash Flow technique would be more appropriate for this type of proposal.

Using this method, the base case is unviable. Under realistic infrastructure costings and

contingencies, West Tey is not viable even at zero land value. This should ring alarm bells about the

impact on council finances, delivery of infrastructure and so on...

At this stage of scoping, it is essential to ensure that cost risk is effectively managed and we believe

that this should be done by following the recommendations set out by the Infrastructure Risk Group

(2013) in their report for the Treasury:

Risk exposure should be presented as a range, to promote more informed decisions and

communications. This is because cost risk and uncertainty are highest during the early stages

of projects.

West Tey’s early-stage risk allowances should be underpinned with both reference-class

forecasting and risk analysis, and cost and risk estimates should be considered side-by-side.

Risks and use of contingencies

CAUSE considers the contingencies (set at 5%) at this early stage of West Tey’s definition to be too

low. No major project in any economic area, be it industry, public infrastructure, would use such a

low % rate. Budgeting appears to neglect best practice21 in large infrastructure projects, of assessing

risk alongside costs.

20

CAUSE estimate based on analysis of Aecom & Hyas infrastructure budgets 21

https://www.theirm.org/media/654694/IRM-REPORTLRV2.pdf

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Overruns

Cost and deadline overruns on large projects are a frequent occurrence. Two obvious current

examples are Crossrail and HS2. Nobel Economics prize-winner, Bent Flyvbjerg, a leading expert in

infrastructure project costing, refers to this as the “Megaprojects Paradox22”: “At the same time as

many more and much larger infrastructure projects are being proposed and built around the world, it

is becoming clear that many such projects have strikingly poor performance records in terms of

economy, environment and public support. Cost overruns and lower-than-predicted revenues

frequently place project viability at risk and redefine projects that were initially promoted as effective

vehicles to economic growth as possible obstacles to such growth.” Referencing data from previous

projects is one approach recommended by Flyvbjerg, and by The Infrastructure Risk Group (IRG), of

Infrastructure UK, a unit within the UK Treasury.

Contingencies If Treasury guidance23 (2013) on optimum bias is followed, adjustments of 66% or more should be

applied to the various components of the West Tey project. This study was based on a Mott

McDonald report which analysed the actual outcome costs and time-tables on a very large range of

public procurements in order to quantify the risk.

Evidence that the 5% contingency (£56.7m on an infrastructure budget of £1,182.3m)24 is far too low

is supported by benchmarking against other significant infrastructure projects:

Network Rail – a 60% ‘uplift for risk’ is applied to the first set of costs;

Oil Industry – In oil industry large project terminology, West Tey is at the ‘Conceptual Stage’

at which point a 40% contingency of scheme cost would be considered normal.

HS2 Project - In 2012, the Phase 1 contingency was £6.38bn out of a total £16.28bn

representing a 39% contingency in relation to the total cost, or 64% of scheme cost. The

Phase 2 contingency was £6.45bn out of £17.12bn, representing a 38% contingency in

relation to the total cost, or 61% of scheme cost. By 2018 it was forecast to cost more than

£56bn with some forecasts of nearer £90bn.

22

http://flyvbjerg.plan.aau.dk/excerpt.php 23

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/191507/Optimism_bias.pdf 24

Although the Hyas report contains references to a 10% contingency, the appraisal contains only a 5% contingency, not 10%. It has been suggested by Colchester Borough Council that the main contingency is within each line item of the infrastructure budget. However, CAUSE has tracked the Hyas viability figures back to the AECOM report, volume 3, where it states unambiguously that no allowance for contingency has been made.

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Crossrail – The National Audit Office reported25 in February 2019 that a 19% increase in

funding had been made available to Crossrail. It was originally forecast to cost £14.8bn and

could now reach £17.6bn, with the opening of the rail line set to be further delayed until at

least 2020.”

Local

A120 dualling options. (2006) The Coggeshall bypass option contingency was £99.8m out of

a total £356m, representing 28% contingency, in relation to total cost, or 44% of scheme

cost. Similar contingencies applied to other options. (2017). Contingency is 44% of scheme

cost.

Lower Thames Crossing - In 2013, a new Dartford bridge was the cheapest option but by

2016, the cost had increased by 170% suggesting a contingency of 170% of scheme cost was

required.

Risks

Project unknowns Project length & complexity Land deals

West Tey is an ‘immature’

project, at outline stage, with a

large number of project

unknowns:

Exact location of new

town, currently 23,660

homes in broad area of

search;

funding and timing of

A120 dualling;

route and timing of A12

widening; Housing

Infrastructure Fund bid

outcome

upgrades to GEML (if

these happen at all);

West Tey should be considered as

a programme which includes

several project types, and it has

the characteristics (as defined by

the Treasury26) of a non-standard

project, being innovative, with a

high degree of complexity and

difficulty, and many unique

characteristics.

West Tey will be delivered over

fifty years, which exposes it to

risk in the form of:

political cycles, Brexit risk,

management change,

contractor changes;

Another area of the proposal with

significant and important unknowns:

how is inflation factored in to the

land deals? Will it be indexed?;

fixed price options or contractual

commitments? The risk profile is

fundamentally different;

when will land be paid for and

how will be financed? The

AECOM report says it will be

bought just two years before it is

sold. Even if acceptable to the

landowners this implies

significant risk.

how will all the land be tied-up

before committing to the

25

https://www.nao.org.uk/wp-content/uploads/2019/02/A-memorandum-on-the-Crossrail-programme.pdf 26

https://www.gov.uk/government/publications/green-book-supplementary-guidance-valuing-infrastructure-spend/early-financial-cost-estimates-of-infrastructure-programmes-and-projects-and-the-treatment-of-uncertainty-and-risk

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location of a new station

on GEML & relocation of

Sudbury branch line (if

possible);

variety of mass rapid

transit options under

consideration with an

early cost range of

between £25m and £2bn!

and economic cycles and

housing market cycles;

interest rate fluctuations;

currency fluctuations;

inflation risk – something

which has not been costed

into the current budget,

and which we consider to

be a significant oversight.

scheme? This will drive up

values.

what “overage" deals are being

done?

how will the inherent conflicts

between landowner and

community over such a long

period be dealt with27?

Financing, Council Revenue & State Aid risks. There are also implications around risk of

financing and State Aid. A commercial review of the garden communities was carried out by PWC28.

It was heavily redacted by the authorities so that only around one third of it is readable. But that is

worrying enough...

Conclusion

CAUSE has run a number of scenarios, and these show a huge range in outcomes given different, and

more realistic, input assumptions. There is much to be done by the North Essex Garden

Communities authorities to understand risk. A Government report29 in 2006 on lessons to be

learned from the new towns, noted that local authorities are not designed to deliver very big

projects: “…recognition that local planning agencies are in most cases inadequate on their own to

deliver major growth” This is clear in the way that the project costs are being underestimated and

risks ignored.

“Mega projects” – i.e. projects which are very large and span long timescales, seem

disproportionately hard to deliver. The reasons include the difficulty in estimating risk

consequences over long timeframes, complex stakeholder environments, and changing

scope requirements, stakeholder environments, and changing scope requirements”

Concerto Crossrail Review Report30

27

CAUSE’s support base has strong concerns about the influence of land-owners over the process. 28

http://www.cause4livingessex.com/wp-content/uploads/2017/07/1.-PWC-report-16-Dec-2016.pdf 29

http://www.futurecommunities.net/files/images/Transferable_lessons_from_new_towns_0.pdf 30

https://www.london.gov.uk/sites/default/files/gla_migrate_files_destination/Concerto-Crossrail-Review-Report.pdf

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PART 2: THE NEED FOR A PLANNING

PLIMSOLL LINE

In our experience, planning is crying out for better analysis of both the economic and environmental

costs of large schemes. It matters because you cannot deliver sensible decisions using professional

judgement alone. With the north Essex garden communities, and any other new settlements, it is

paramount to analyse the costs and risks properly. Yet we feel that no-one is trying to understand

them.

What cost: economic

The economic thinking around the garden communities is the myth that big new settlements deliver

infrastructure. We are told they do this by ‘land value capture’ and attracting the attention of

government in order to secure large amounts of funding.

In fact that is not the case and we demonstrate in this next section why. The bigger a development

and the longer it takes to build, the higher its costs and greater its risks (which increases the

contingencies required). We show how it is not possible to simply scale up a standard one hectare

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residual value model, and how planners proposing long-term projects need to deploy net present

value residual values instead.

Will government cough up? The short answer is no. The national Housing Infrastructure Fund pot is

only £5.5bn, contested by 48 counties. North Essex alone has submitted three bids (Chelmsford

Bypass & Beaulieu Station £218m; A12 re-route £229m; A120/A133 link road & rapid transit system

£99m). What realistic chance do we stand of receiving such a disproportionate share of the fund?

Any growth deals offered will merely scratch the surface and are a shaky foundation to build on.

Cambridge was allocated £70m for affordable housing; Oxfordshire has been offered £215m for

100,000 homes (£60m affordable; £150m infrastructure) but local politics have put this at risk now

that the Local Plan may be withdrawn; Manchester was promised £68m for affordable housing but

this was cancelled when said it would only build 201k homes, not 227k.

Ebbsfleet Garden City received around £300 million pounds for on-site infrastructure, but that too

would only scratch the surface for three new communities, which between them are three times

bigger than Ebbsfleet. Homes England is helping to fund some sites to ‘unlock’ housing however

these are significantly smaller than the North Essex Garden Communities.

Therefore, on the assumption that developments will have to plan for self-sufficiency, there is an

increased case for more science in planning. The lessons from the north Essex garden communities

must be learned and applied elsewhere. In England we have no means of ranking projects and no

early eject button. Projects gain political momentum and trundle onwards until sunk costs and red

face costs become too high for an easy way out.

The wrong Plimsoll Line

In April 2017 The North Essex Authorities published an appraisal for the 23,660 dwelling settlement

at West Tey which showed that it generated a residual land value of £177,000 per acre. This was

taken as evidence of financial viability because it exceeded the benchmark land value for large

settlements which was judged to be £100,000 per acre.

However the £177,000 per acre is not available to pay for the land until 2065. This is important

because with time the value of money changes hugely - comparing 2065 money to 2019 money is

meaningless. The difference is small for short term projects but for long term ones it is huge – 14.5x

over 46 years at 6%.

18

How could this happen? How could the Plimsoll line be set at the wrong level for such major

decisions? Is David Lock, in an article for the TCPA31, right to argue that financial appraisal for long

term projects is unnecessary?

The problem arises because the finance charges on land fall between two stools. The Harman

guidance specifically makes it clear that it should be taken into, but the mechanics are tricky and it is

too easily ignored. It can’t easily be deducted from the residual value calculation because you need

the land value to calculate it – a circular reference.

Using future values creates another problem. Small changes in the assumptions produce huge

differences in future values. The models appear highly volatile, and users lose confidence in the

results.

Our paper on this32 argues that net present values should be used. Instead of calculating a notional

bank balance at the end of the project, the cash flows available to purchase land should be

discounted back to the present day. That way the figures are much more stable and users can have

more confidence in the modelling. The change is quite easy to make, and existing models could

easily be adapted.

This is of vital importance because the wrong conclusions are being reached. Big settlements are

systematically and incorrectly favoured. The Plimsoll line must be drawn in the right place otherwise

the big ships will sink before they have left harbour.

31

“Establishing a local new town development corporation” 32

As set out in the Aecom reports (June 2016), the Local Delivery Vehicle budget (December 2016) and Hyas Viability Appraisal (May 2017) https://www.braintree.gov.uk/downloads/download/635/new_local_plan_evidence_base .

19

You want land value capture? “Small is beautiful”

This paper addresses one simple but over-looked point: There are significant scale diseconomies in

building big new towns. The bigger the town, the longer it takes to build, and the higher the cost per

dwelling. It is vital to “do the numbers” and identify these problems early.

We illustrate this with the numbers from the Hyas appraisal for West Tey, a 23,660 dwelling garden

community proposed on 13sq kms of countryside in North Essex. But the same conclusions will apply

to big settlements elsewhere.

Figure 1

The Hyas study

Hyas appraised the three North Essex Garden Communities which together comprise 28% of the

Government’s national garden communities programme. The Hyas study was originally presented as

evidence to support the Local Plan’s viability and deliverability, but it ignores the funding cost of

20

buying the land – a massive error akin to buying a house without budgeting the mortgage payments.

When just this error is corrected West Tey, the biggest of the three, becomes unviable.

CAUSE uses the Hyas numbers not because we agree with them – the cost assumptions are

optimistic and there isn’t enough contingency. We use them because we want to illustrate our point

with third party numbers.

Why is West Tey not viable?

One would expect large scale housing at West Tey to be viable. It is in a commuter area where

houses sell well. There is sufficient farm land to accommodate a large-scale settlement and some

scale economies on infrastructure might be expected. Three Dragons show that a “one hectare

development” will produce a residual value of c£1.5m per hectare even with 30% social housing.33

Clearly viable.

But the corrected Hyas numbers34 show that 23,660 dwellings built on 1300 hectares is unviable35.

Why? The table below compares the cost per dwelling for a large settlement to a small one.

Figure 2

The dramatic cost increase arises because of the finance costs on land. The increase in total land

costs as the holding period increases is astounding. Land bought now for £100,000 per acre

escalates to £179,000 after 10 years and £1.8m after 50years36.

33

See Colchester Economic Viability Study by Three Dragons and Troy Planning June 2017 CBC0001 page 27. It shows residual values of over £1.5m per hectare in the “Tiptree and Rural” area which includes West Tey. 34

After inclusion of land funding costs at 6% 35

Explained in more detail in CAUSE’s West Tey viability note updated Feb 2018, available on the CAUSE website. 36

£100,000 x 1.06^50 = £1.8million

21

What is the optimal scale for new settlements?

Economic modelling can help us think clearly about the optimum size. The key is to maximise the

capture of land value uplift. Extra acres should be bought until the marginal cost equals the

marginal revenue. The marginal cost is the cost of the land, plus the funding costs which increase

with time. The marginal revenue is the extra housing value realised by extra acre.

We illustrate this with the Hyas numbers for West Tey, which show a crossover at 10 years: if land is

bought at £100,000 per acre and generates £177,600 per acre on average as in the Hyas appendix,

then funding cost at 6% will make it pointless buying more land which can’t be used within 10 years.

Indeed extra land will weigh down the appraisal and reduce the surplus available for infrastructure

and social housing.

Once the crossover is established we can calculate the optimal settlement size. Again using Hyas

numbers this is about 2000 dwellings. This assumes that the land is bought 2 years before the first

houses are delivered – remember that it is vital to buy the land early if any uplift is to be harvested.

22

Houses are then delivered at 240 dwellings per annum, the maximum rate advised by Cushman and

Wakefield37 and equivalent to the average for the first 6 years in the Hyas appraisal.

These figures (about 2000 houses over 10 years) are not inconsistent with the actual housing

market: housebuilders rarely buy land which will take more than 10 years to build out.

Scale economies?

In theory big settlements might benefit from scale economies. It might be possible to build a sewage

works or power supply at a lower cost per dwelling for a 24,000 dwelling settlement than for a 2,000

one. But we have seen no evidence that this is the case.

The only claim to scale economies made during the recent Examination of the North Essex Garden

Communities plan related to education. The NEAs variously38 suggested that settlement sizes of

5000 and 15,000 are needed to support an optimum number of secondary schools. No detail was

provided, and CAUSE would argue that secondary schools can be provided every bit as efficiently in

smaller well connected urban extensions as in large standalone new towns. Our thinking derives

from Nicholas Falk’s Wolfson prize-winning essay where he argues that standalone settlements are

unlikely to be viable, and that well connected urban extensions provide a better solution.

The West Tey education budget (for building both primary and secondary schools) is about £9000

per dwelling. Even if a scale economy of 10% or £900 per dwelling could be achieved the saving

would be dwarfed by the extra finance cost associated with a 20 year project which we estimate at

£6000 per dwelling.

Small settlements can be efficient if they are properly located and connected to existing centres.

CAUSE’s Metro Plan, which the NEAs rejected on grounds of insufficient scale, is an example of how

this might work.

Assumptions

Figures 1 and 2 use the weighted average cost per dwelling, including 30% social housing. These are

CAUSE calculations derived from Hyas assumptions.

Other key assumptions, all drawn from either the Hyas and Aecom reports, are:

37

See AECOM feasibility study. There is a limit on the number of houses that builders are willing to build and sell each year due to the financial risks. C&W assume 3 outlets selling 60dpa each + another 60 social houses. 38

The North Essex Authorities were represented by David Lock Associates at the Examination in Public Jan 2018 where they used schools as the justification for the 15,000 minimum size for West Tey. Significantly more than the Essex County Council guidelines indicate that 3000-5000 homes are needed to support a secondary school.

23

NEGC buys the land, adds infrastructure and master-planning and sells to housebuilders at

£91,800 per plot

Land purchase price £100,000 per acre + 5% SDLT and 2.5% for fees and other

Housebuild cost taken from Hyas and reconciled back

Infrastructure cost taken from Hyas and reconciled back. Includes 15% contractor profit

Finance charges in the left hand column include cost incurred by both the housebuilder and

the infrastructure provider

Finance charges in the right hand column come from CAUSE’s model, cumulated at 6% per

annum over the period until 2065. They would increase further if the 5810 plot sales in 2063

were spread over the period to 2073 as they realistically should.39

Housebuilder profit is assumed to be “payable” as the dwellings are completed.

The delivery model

The model adopted by the NEAs assumes that NEGC and its subsidiary LDVs buy the land, do the

master planning work and sell it on to housebuilders two years later at £91,801 per plot. The

Housebuilder model is workable as has been confirmed through consultation with some developers.

It is the NEGC infrastructure provider model which is clearly unviable.

Is it right to assume that all the land must be acquired up front?

A new town needs to capture land value uplift in order to fund its infrastructure – this is a

fundamental principle behind garden communities40. But it is easier said than done. In practice the

land needs to be owned from the earliest possible date, preferably before consideration for

39

We have ignored this 10 year extension not because we think it is possible to sell 5810 plots in one year – that clearly isn’t realistic. But because it would be difficult to explain the numbers objectively without using DCF techniques. We would too easily fall into the same trap as Hyas by comparing future values with present values. 40

See TCPA “Garden City Principles” first bullet point “Land Value capture for the benefit of the community”.

24

inclusion in the local plan41. If it isn’t then much of the benefit from infrastructure investment will

find its way into land values – a transfer from the public purse to landowners.

Land could be controlled through an option or conditional contract rather than purchase. Such an

arrangement is common for projects of up to 5-10 years, but would be unprecedented for a 50 year

project such as West Tey. The longer the option the bigger the premium needed and buying a 50

year call option would be very expensive indeed. See CAUSE’s paper on the “deal for landowners”42.

Compulsory purchase?

The authorities are considering compulsory purchase, but this will be difficult to achieve in practice.

CAUSE has Counsel’s opinion on this, and it seems that there are three major obstacles:

Human rights: If the land is to be bought at existing use value (about £10,000 per acre for

agricultural land) it is necessary to show that the public interest outweighs the landowner

rights. The West Tey landowners have been promoting their own housebuilding schemes for

many years, and the public interest will be hard to prove43.

Market Value: CPO must be at market value, which for land earmarked for development in

North Essex is significantly in excess of agricultural value, even assuming a “no scheme” world.

Uncertainty: large scale CPO will be very difficult to fund due to the time taken by the land

tribunals and uncertainty as to market values in a no scheme world. This type of legal

uncertainty is unattractive to both debt and equity investors

Some politicians are now advocating a change to the 1961 Land Compensation Act to allow land to

be purchased at Existing Use Value rather than Market Value. CAUSE is advised that changes will

also be needed to the 1996 Human Rights Act and the European Convention on Human rights and

that it will be highly controversial and damaging to force through. It is likely that the search for a fair way of

sharing land value uplift will continue for many years.

41

This point was identified as a key risk by the NEAs when the setup of NEGC was approved. The NEAs have weakened their commercial position vis a vis the landowners by including the land in the local plan before they control it. 42

CAUSE consultation response 6th

August 2017 page 83 43

Some politicians are advocating a change to the 1961 Land Compensation Act to allow land to be purchased at EUV rather than Market Value. CAUSE’s barrister advises that changes will also be needed to the 1996 Human Rights Act and the European Convention on Human rights if this is to be achieved.

25

Is 6% pa the right finance charge?

It has been suggested that 6% is too high, and that cheaper borrowing would be available from the

Public Works Loan Board at 2.5%. On the other hand 6% is below the rates conventionally used in

house-builder appraisals – we know of one that uses 7.5%.

Both 2.5% and 7.5% are shortcuts. For major projects like this we need to calculate a weighted

average cost of capital (WACC) for raising market funding for the project and use that. This approach

is well understood by utility regulators and might well result in a pre-tax real WACC of 5-10% based

on 50% debt at c. 3% and 50% equity at 15%.

It is important to note that acquiring land without a committed buyer is a risky venture that will only

attract market capital at a high cost. CAUSE is able to do more research on this on request.

6% is the figure chosen by Hyas, and we keep to that for simplicity and clarity.

Are these figures realistic?

The figures are future values, just like the ones used by Hyas and by s106 advisers. They look big

compared to today’s values. Drawing conclusions from them over 50 years is risky - the temptation

to compare future values with current values is hard to resist.

CAUSE believes that such long projects should be appraised using the DCF/NPV44 techniques which

are using for big (and small) projects in industry. The chart below shows how an NPV produces

exactly the same conclusion, but with more understandable figures:

44

DCF = Discounted Cash Flow. NPV = Net Present Value

26

Why has no-one noticed this before?

It is well known that big settlements are difficult to deliver, but very few interested parties appear to

have looked properly at the numbers. Although the error we have identified is huge the underlying

model is clear and usable, and Hyas are to be congratulated for putting it into the public domain.

It is remarkable that such a spectacular error has been acknowledged since July 2017 but remains

uncorrected by the North Essex Authorities. Taxpayers can have no confidence in the public sector’s

decision-making processes on this basis. They risk having to fund massive errors in

Choice of settlement size

Location of settlements

Negotiation of land purchase arrangements with landowners and promoters

It is even more disappointing to hear decision makers saying that financial analysis is too difficult

because the future is uncertain. This is an astonishingly lazy approach to stewardship of taxpayer

money: used properly the financial models bear important messages about both size and location –

27

“Small is beautiful” is just one. They also confirm the lessons from the past45 to which we should

listen.

Conclusion

Small settlements that can be delivered within shorter periods will capture more land value uplift

per dwelling. The figures for West Tey indicate that the cut-off is about 2000 dwellings. Small is

indeed beautiful.

This conclusion is vital for the government’s garden communities programme. If they want to

deliver housing fast they need to concentrate on garden villages in the right locations and linked to

existing centres. They should abandon large standalone new towns before further money is wasted

on projects that will never happen without disproportionate subsidy.

CAUSE does not expect decision makers to accept such an important conclusion without checking.

We therefore ask that they instruct a financially qualified third party to examine the issue and take

heed of the results.

45

See http://www.cause4livingessex.com/new-towns-learning-from-the-past. which refers to DCLG report “Transferable Lessons from the New Towns (2006)” and “Is it possible to Build Financially Successful New Towns? The Milton Keynes Exoperience “ by Richard B Peiser and Alain Chang.

28

Small is Beautiful 2: The wider context This follow-on paper addresses some of the comments CAUSE received about “Small is Beautiful”

and considers some wider political issues.

Financial viability falls for new developments of more than a certain size, which we estimate at

around 2000 dwellings in North Essex. This is the number which can be realistically delivered within

10 years of land purchase. It is at this point that the cost of holding the extra land – the cost of

equity and debt – exceeds the extra residual value from an extra acre.

Land acquisition strategy

Our critics point out that “Small is Beautiful” relies on very specific assumptions about how land is

acquired. They argue that there are lots of ways of acquiring land, and it is not necessary to assume

it is all bought on day 1.

In a narrow sense they are right. Our model is a simple arithmetic one which does indeed assume

that land is purchased on day 1 and is financed at 6%46, at the low end of the finance charges used in

development appraisals. It is deliberately kept simple; for example it assumes the same

infrastructure cost per dwelling for large settlements as for small. But the underlying point holds

true – it is very difficult to capture land value uplift on big sites.

We agree that land does not have to be bought on day 1. But its price must be controlled, otherwise

the land value uplift will go to the landowner. Land value capture is at the centre of the garden

46

6% is higher than the borrowing cost of many developers, especially the larger ones. It is better regarded as a low “weighted average cost of capital”. Ie a weighted average between interest cost of say 3% and the cost of equity of say 15%. Note that quoted housebuilders have very expensive equity due to the cyclical nature of the business, and are currently trading at p/e ratios of below 10.

29

community movement and without it the infrastructure cannot be delivered unless Government

writes a big cheque. If the land is not purchased then an option or fixed price contract is needed,

both of which involve a “cost of capital”. A smart acquisition strategy is needed, and that will be

easier when there is a big choice of “option virgin” land to choose from.

In North Essex the authorities have identified land which they do not own for three big new towns.

The land already had hope value which has increased now that large sums of public money have

been spent claiming that the chosen locations are sustainable. The public sector has put itself in a

weak negotiating position: landowner expectations have risen, the land has mostly been optioned

to experienced promoters or developers, and in one area they face a consortium of landowners

which reduces competition.

More recently the authorities have started to talk about relying on compulsory purchase powers and

a dubious interpretation of Pointe Gourde47. The land under consideration already has considerable

hope value, and it will be very difficult to determine a “no scheme” value with any certainty.

The NEGC model

North Essex Garden Communities Ltd hopes to become a development corporation which will buy

land, masterplan it and sell fully infrastructured plots to developers. But it does not have planning

powers, and it does not own the land. One of the three new settlements, West Tey, at 24,000

dwellings, will take nearly 100 years to build48.

So how is land value uplift to be captured?

It will be not easy. The Councils have promised upfront infrastructure investment which will further

inflate market values . The table below shows the various twists and turns of the debate – but it all

comes back to the same point: It is very difficult to capture land value uplift for big new towns.

47

Pointe Gourde Quarrying & Transport v Subintendent of Crown lands (Trinidad) establishes that compensation for compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying that acquisition 48

Assuming delivery at 250 dwellings per annum, a figure that is supported by the Planning Inspector. It is higher than the average of 161 dpa experienced at present but lower than the 500dpa in the Hyas viability study.

30

The landowner model

The Gateway 120 Consortium49 claims that:

its members already own enough land for a large garden community (17,000 dwellings) and

can deliver it for development as and when needed.

The landowners will bear the landholding costs themselves and the scale diseconomies

argument therefore does not apply.

The “small is beautiful” argument works rather differently for landowners developing their own

land. They will have a cost of capital even if they do not always see it. Their land will be tied into

30-100 year commitments during which other opportunities will be restricted. We have analysed

“the deal for landowners” in a paper which formed part of our August 2017 consultation response.

49

A consortium of landowners in the Marks Tey area who are promoting their land for a large scale garden community as an alternative to NEGC

31

The landowner development model has to work for local communities too. Assurance is needed

that the infrastructure will be delivered in a timely manner and funded from land value uplift rather

than the public purse. This is difficult for normal 10-15 year schemes and becomes unworkable for

30-100 year ones. There is deep distrust of developer promises, and legal structures strong enough

to overcome this will be expensive to document. The long-promised Beaulieu Park railway station

provides a vivid local example of the public sector bearing the infrastructure cost while the private

sector benefits from the land value uplift.

If a landowner model for large scale garden communities is to succeed much more transparency will

be needed - both on the nature of the consortium and the structure of the funding arrangements.

The land owners will still want to receive fair value for their land under this model, and therefore

land value capture remains a problem. The scale diseconomies will still be there, but will emerge in

a different way.

Justifying the big settlements

We are alarmed by the lack of economic analysis to support the decisions on the size and location of

the new garden communities. Central government is promoting garden towns of >10,000 homes

and garden villages of 1,500 to 10,000 homes.

The entire strategy is underpinned by the assumption that land value uplift will fund infrastructure

(a core garden community principle), but it seems that no-one has done the figures. There is too

much reliance on scaling up 1 hectare blocks, a useful technique for smaller projects but wildly

misleading for larger ones.

In North Essex the sustainability appraisal fails to justify the key decision to build three big garden

communities, and the financial viability evidence submitted ignores the cost of funding the land – a

key error. The Planning Inspector has asked for credible evidence of viability and the Councils are

“doing more work”, as yet unaware that “more work” will not do the trick. The large communities

they are planning will not capture land value uplift, and thus will not be able to deliver the

infrastructure that is needed.

At the Examination in Public50 it became clear that the authorities have no theoretical framework for

making decisions on size. It was suggested that critical mass was needed for a secondary school but

this was variously used to justify scales from 3000 homes to 15,000 with little supporting analysis or

evidence.

50

Examination in public of the North Essex Authorities combined Part 1 Local Plan January 2018

32

Size needs addressing. Are there really scale economies in secondary schools which might outweigh

the huge landholding costs? Are people really happier in large towns than in smaller communities?

Are Garden Community principles best delivered by large communities or small?

Are smaller settlements sustainable?

The Garden Towns strategy is underpinned by an assumption that it is better to build brand new

settlements rather than supporting the facilities of existing villages. In November 2018 the Country

Land and Business Association (CLA) published a paper on “sustainable villages” which highlights the

need for some villages to grow if they are to keep their churches, pubs, schools and surgeries. In

some cases growth is stifled by over-restrictive planning policies, and there has been a failure to

recognise the role of broadband and social capital in making village living more sustainable.

The CLA also demonstrates the ability of landowners to deliver significant numbers of houses in

smaller settlements: only 2% of landowners have ever built more than 50 properties. We argue that

it is the smaller landowners who will be more in touch with their communities and more likely to

generate sustainable development. The big developments will be tied up with promoters and

extracting community benefit will be more difficult.

33

Evidence from the real world

Our hypothesis is strongly supported in the real world. Despite many attempts51 no large new towns

have been delivered at the scale of West Tey since Milton Keynes and policy makers should be

asking themselves why. Could it be that it is difficult to capture land value uplift on mega sites?

Sir Oliver Letwin reports that large sites (>1500) are currently delivering only 25,000 dwellings per

annum, less than 10% of the 300,000dpa target. Even within this group more than half the schemes

are below 3000 dwellings.

Government has encouraged Councils to be bold, and the result is a crop of Garden Towns that are

much bigger than our 2000 dwelling threshold. Even the smallest (at 8000) is substantially bigger

than the 3700 average of the large sites addressed by Sir Oliver.

A more realistic scale is illustrated by developments such as:

51

For example Labour’s Eco Towns.

34

Poundbury, which was started in 1993 and has grown to a population of 2500 (1100

dwellings52). It is projected to grow to 4500 (2000 dwellings) by 2025.

Great Notley, population 5500, roughly 2400 dwellings over 20 years

Beaulieu Park, [3600] homes over 20 years on land already owned by Countryside properties

Milton Keynes (100,000 dwellings) is regarded by some as a success story for large scale

development. But it is worth remembering that its development corporation benefitted from lower

land values and it still suffered debt write-offs and restructuring. Fuller & Peiser estimate the total

tax payer funded loss at £0.5billion.53

Why 2000 dwellings?

2000 is not of course a precise figure – each settlement will vary and the choice of location is vital.

But it is a size that should be deliverable in 10 years, a period over which land funding cost will be

manageable. The cost of land bought for £100,000 per acre at the beginning of the project will have

risen to £179,000 in year 10 and £1.8m per acre by year 50. See diagram below.

Conclusion

We can find no economic analysis to support the scale of the proposed Garden Communities, nor is

there any realistic chance that government will provide subsidy on the scale required. Instead of

generating funding through land value, they create an economic burden. Smaller and more realistic

initiatives are required with thorough assessment of the economic efficiency of proposals and their

ability to deliver land value capture for the benefit of all.

52

When converting population numbers to dwellings we assume the national average of 2.3 people dwelling 53

See “The Milton Keynes Experience” by Richard B Peiser & Alain Chang. Also “Transferable Lessons from the New Towns” DCLG 2006.

35

What cost? The environment

At a time when climate change is rightly high up the agenda, it is essential that there is some kind of

“plimsoll line” to measure the environmental cost of ‘garden cities’. Designing a new town from

scratch does not happen in a vacuum, nor is the starting point a ‘blank canvas’. What costs do the

very large garden communities impose on the environment? Are they sustainable?

In north Essex, it is hard to tell from the authorities’ evidence base. There is far too much reliance on

subjective ‘professional judgement’, back-filling of justifications and optimistic talk of ‘mitigation’. In

one paper, the consultant claimed with unabashed, twisted logic that because of the sheer size of

the settlements proposed, “constraints are considered benefits”.

Across north Essex, the traffic trend is upwards and new road capacity is planned. It is known that

road capacity induces traffic. In addition, isolated developments far from services & jobs and/or

poorly connected by public transport or cycling/walking options to services & jobs will generate car

journeys. We already know about the north Essex garden communities that they:

have not been demonstrated to provide one job per working age adult

are too far from urban centres for walking or cycling to be a realistic option54

That there is no realistic mass rapid transit solution

The % trips by made by car, all available in Census data, and number of trips per day

It is therefore possible to make predictions about journeys OVERALL and for different scenarios of

growth but it was not done when the proposals were submitted for examination. It will be worth

making comparison with similar schemes55.

In the many consultation responses CAUSE has submitted, we have highlighted our concerns about

the lack of justification for garden cities versus other alternatives; the size of the garden

communities and choice of location56.

54

I once tested this. I walked across the area of search for West Tey. This took over an hour. Then I walked on from Marks Tey into Colchester town centre. This took me over an hour and a half. I walked at a brisk pace, in trainers...not in work shoes or carrying shopping. 55

Great Notley, a garden village in Essex, has higher car ownership rates than elsewhere in Braintree District, where it is located 56 Reg 19 in 2017 , when we said, “The [SA] analysis is subjective and ignores both cost and viability” and that it

“failed to justify the decision to concentrate development in garden communities or the decision to locate

those garden communities in three specific areas of search”; Reg 18 in 2016 , when we said that “the

Sustainability Appraisal contains a number of serious inconsistencies and omissions”; Colchester’s Garden

settlements criteria consultation (Colchester, Sep 2015) in which we set out concerns about the scoping

method proposed saying that it appeared to set the cart before the horse and apply site specific criteria

36

More recently, we have argued that quantitative measurements are required in lieu of ‘professional

judgement’. What do we mean by that? Here are a number of examples, all of which will apply

equally to schemes elsewhere in England.

Example 1. Traffic modelling.

Amazing though it may seem, traffic has not been measured and predicted for the North Essex

Garden Communities. The impact of the NEGCs has not been added to the forecasts. Therefore a

thorough traffic modelling exercise is needed57 to understand the:

a. Existing situation across all three districts

b. Future situation without garden communities

c. Future situation with each permutation of alternatives being assessed, including impact on

all the villages and rural roads surrounding the garden communities.

d. Future situation based on realistic rapid transit system, including Colchester-Clacton line

e. Future situation based on dualled A120, widened A12, new connecting road around Marks

Tey, A133-A120 link.

Example 2. Air quality

Transport emissions form 20% of the UK’s CO2 emissions, and over half of that comes from private

cars58. Therefore it is essential that we integrate transport planning with planning for housing if we

want to reduce emissions and improve air quality. That is why CAUSE has huge concern about large,

stand-alone communities such as West Tey, which are serviced by trunk roads.

Government’s Clean Air Strategy places a stronger imperative for a more detailed and fine grained

analysis of air quality impacts. Clearly while road improvements etc may improve existing air quality

on the A12 and A120, more houses and traffic increase pollution overall, as do additional roads and

road space . The north Essex area is currently shown as higher than the 10 μg/m3 level and is

predicted to stay above this in 203059.

Required action:

• To assess whether the proposed plan is at least compliant with the Air Quality Strategy,

some attempt should be made to assess particulate impact as well as NO2.

without a strategy. We said that, “We are very concerned that the criteria set out for consultation are too

detailed and that we risk analysing individual parts without considering the body as a whole. “

57 CAUSE raised this in our 2016 ‘Preferred Options’ response, in a report by Tim Pharoah of Living Transport

(‘Infrastructure & Connectivity analysis’) that “All developments that generate significant amounts of movement should be supported by a Transport Statement or Transport Assessment”. 58

https://www.theguardian.com/news/datablog/2012/feb/07/uk-carbon-emissions-come-from 59

see maps on page 30 of the Clean Air Strategy

37

• more demanding assessment targets should be enforced on future large scale development

in order to anticipate future reductions in upper limits.

Some of the issues that must be taken into account:

o overall housing number (cumulative impact)

o existing situation

o assessment of impact of different options

o assessment of impact of road-building/road-widening

o assessment of impact of sustainable transport and any rapid transit system

o what is the risk of new Air Quality Action Plan zones being created?

Example 3: Modal shift

The promised goal in the garden communities’ project is to achieve more sustainable travel

behaviour, reduce the need to travel and reduce congestion. Car usage reduction from 70% to 30%

is also the target. That is easy to say but much harder to deliver. CAUSE believes that it cannot be

achieved without providing a decent integrated public transport system and the introduction of

significant congestion charging across North Essex...

Therefore, to prove it is achievable, analysis is required. There are lots of consultants’ reports, but

no-one has ever looked at the whole of north Essex and the current capacity of transport network

and impact of proposals on travel patterns and modal shift.

Really, though, a north Essex transport strategy is essential before any sites are selected, and that is

still lacking. Decisions are being made about sites in isolation.

Instead, the methodology being used for the current sustainability appraisal is depressingly one-

dimensional and will not help decision-making. It maps sites against their nearest facility, for

example station or school. What it does not do is factor in the capacity of the facility or network.

This will result in some flawed results. For example, and ‘West Tey’ land within 1km of the station

would score highly in the sustainability appraisal and receive a green traffic light. What the overly-

simplistic mapping would not show is that the Great Eastern Mainline is already full60. Nor would it

show that the station is difficult to access, with narrow roads for cars and dangerous access for

pedestrians and cyclists given the need to cross busy roads and junctions, several without crossings.

It is terrifying as a driver to watch the commuters having to cross the A12 slip-roads on foot to reach

the station. The point here is that the mapping exercise needs to build in some quantitative factors

around capacity and accessibility.

60

See Anglia Route Study 2015

38

Example 4. Impact on wildlife and habitat

Here again, without thorough assessment of the impact of the proposals, the cost to wildlife and

habitats is uncertain. The sites under consideration for the garden communities are huge, totalling

over 2,200 hectares of green field land. Unfortunately, except where there is a habitat designation,

green field land has no specific protection. Even high grade agricultural land seems to count for

little to our planners. This loss of countryside to low density urban sprawl on the scale proposed in

the North Essex Garden Communities is extraordinary.

We are wary that the biodiversity net gain proposals put forward by DEFRA may make it too easy for

planners to allow developers being able to pay tariffs to ‘mitigate’ any loss of habitat.

Alternatives have not been presented for debate or fully assessed. A different approach would be

the one taken by the National Infrastructure Commission, which briefed 5th Studio61 to look at

options for growth along the ‘Arc’ corridor based around existing communities, transport and

landscapes. Our authorities have not done that. Nor have they focused sufficiently on brownfield,

(there is much work to be done on the brownfield land registers62), or asked if we might prefer

higher density, compact settlements around public transport (transit-oriented development63)

instead.

The impact on wildlife will be felt beyond the perimeter of the new towns, but we have no evidence

that off-site impacts, aside from the RAMSAR work, has been considered.

A good example is the potential impact on the EU protected bat, butterfly and bird species on the

Marks Hall Estate. The Estate is adjacent to a proposed 8,000-home proposal which abuts onto a

number of ancient woodlands, some belonging to the Estate. Extensive surveys will be required of

damage that will be caused to species by:

• increased access by domestic pets will cause on the wildlife of the ancient woodlands;

• light pollution

• air pollution from increased traffic

• the protective effect of buffers

• for the bats, a five year study will be required, with radio tracking. It will be necessary to

prove where the bats go to feed and demonstrate how/if it is possible to mitigate.

Conclusion

We therefore need to ensure rigorous analysis and testing of all elements of a proposal to ensure

that we understand its impact and can compare it properly with other proposals. 61

https://www.nic.org.uk/wp-content/uploads/171122-NIC-Final-Report-5th-Studio-optimised.pdf 62

http://www.cause4livingessex.com/brownfield-land-registers-could-do-better/ 63

http://www.tod.org/

39

PART 3: SO WHERE SHOULD THE HOUSING GO, THEN?

It is essential that the debate is re-framed. Discussion about how an area should grow must not be

limited to a tit-for-tat about where to dump very large numbers of houses. Too often it is.

Economic efficiency – the size of the cake We believe that economic analysis needs to come early in the process. The focus should be on

creating a deliverable plan. It is enough to link it to the three dimensions of sustainability

(economic, environmental and social) identified in the NPPF.

This approach has four main benefits:

1. “Biggest Cake”: It will identify the “biggest cake” options i.e. those that generate the most

money for good things. It will then check that environmental damage is minimised and where

possible mitigated. And it will give politicians a sound foundation for “cake dividing” activities. How

much should be spent on social housing? How much on infrastructure? How much left with

landowners and developers without whom nothing will be built at all?

2. Justifiable decisions: The economic analysis will also produce a justifiable basis for choosing

locations and provide a sound starting point for the Sustainability Appraisal. The Councils must be

able to justify including some locations and excluding others, and they need a more resilient defence

against speculative development than “professional judgement”.

3. Raising money: an economic approach should focus attention on land value uplift, the main

source of funding for both infrastructure and social housing. The Councils’ focus on bureaucratic

processes rather than raising cash leaves too big a gap between the residual value of development

land and its current agricultural uses. A financially smart approach is needed.

4. A sound plan: an economic approach will widen the planning process to include a financial

plan – policies for s106 and CIL which will raise money for small ticket infrastructure and more social

housing. It will also give credibility to the “narrative for government” which will help raise money for

essential big ticket items.

CAUSE has created an alternative strategy for land value capture, a 10-point Plan. The North Essex

Authorities could implement it immediately if they so chose:

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10-point Plan for north Essex Local Plans

Inspector’s Option 1 Activate Option 1 to allow time to do the Section 1 plan properly. The

Section 2 district Local Plans should proceed to give speculative developer

cover.

Community

Infrastructure Levy

Implement CIL as soon as possible. CIL pays for infrastructure identified by

councils and held on a public list. All three north Essex Councils have failed

to implement it.

Section 106 Increase s106 policy burden for affordable housing & infrastructure. The big

uplifts on development land in North Essex are evidence that the Councils

desperately need to strengthen their position. Use Housing Revenue

Account for social housing.

Viability reviews Require viability reviews for all non-compliant projects (as per NPPF2). If

developers claim unaffordable S106 requirements they should present an

appraisal to justify their position

Brownfield land The Councils’ Brownfield Registers need much more work. Landowners

need support and encouragement to address the problems in developing

these sites.

Neighbourhood

Plans

Support Neighbourhood Plan groups. Many villages need to grow to retain

their school, shop, pub or church. With a Neighbourhood Plan in place,

increased CIL money transfers to a parish.

Smaller strategic

sites

Reduce the target size for strategic settlements to 2000 dwellings. Until there

is evidence that the larger towns (8,000-24,000) are economically efficient

and financially viable they should be dropped.

Land value capture The land-owners of the garden community sites have high price expectations.

Look instead for “option virgin” sites and existing underused infrastructure.

“Think smart” about capturing land value uplift.

Transit-oriented

development

Make use of existing infrastructure before attempting to build a new mass

rapid transit system. Many of the branch lines in North Essex (particularly the

Colchester-Clacton line) are underused. CAUSE’s Metro Plan is a great

example of transit-oriented growth.

Government

funding

Strengthen delivery narrative for Westminster infrastructure funding – it is a

competitive funding environment. Present a realistic financial plan and

demonstrate that they have used existing infrastructure properly.

41

CAUSE’s 10-point strategy lays out a coherent policy framework. Instead of the inefficient extra

layers of the public sector that we see in the North Essex Garden Communities, the private sector

can work with planners and local communities, to deliver. Strong financial incentives are already in

place for landowners and developers, so the public sector should restrict its involvement to raising

the money for infrastructure and spending it wisely.

Our strategy will deliver housing earlier than big new towns because there is no need to wait for a

development corporation. And once started it can deliver faster by offering a diversity of location

and product that will be more difficult to achieve in large settlements.

This builds on the theme of the Letwin report on delivery rates. Each small settlement will be in a

better position to develop a community and character than large scale standalone settlements, and

“market absorption” problems will be mitigated.

We are not the only people with an alternative to the very large ‘garden’ towns. An Essex planner,

Ted Gittins, puts transit corridors and the existing settlement hierarchy at the heart of his strategy64.

Transit-oriented development case study: Metro Plan

What is transit-oriented development? This is from the Transit Oriented Development institute, and explains the goals of the Metro Plan:

64

http://www.cause4livingessex.com/wp-content/uploads/2015/12/GittinsReport.pdf

42

“...it's the creation of compact, walkable, pedestrian-oriented, mixed-use communities centered

around high quality train systems. This makes it possible to live a lower-stress life without complete

dependence on a car for mobility and survival.” And, “Transit oriented development is also a major

solution to the serious and growing problems of climate change and global energy security by

creating dense, walkable communities that greatly reduce the need for driving and energy

consumption. This type of living arrangement can reduce driving by up to 85%.”

What is the Metro Plan It is a transit-oriented development proposal for north Essex. It is more sustainable than garden

communities, being based around green transport, and our analysis65 of the viability demonstrates

that a generic rail-connected settlement of 1000 houses is simply more economically efficient than a

large new town. This means that more money is available for community priorities, whether they be

social housing or infrastructure. There are transport benefits to the villages if they wish to accept

development in return for a ‘metro’ service but that is something for those who live there to decide.

Each village along the line should be asked for opinions and those opinions listened to. It is not a

plan to be foisted on unwilling communities. Each village along the line should be asked for opinions

and those opinions listened to.

Infrastructure First

The Colchester-Clacton line is an under-used asset, with spare capacity. The North Essex authorities

have talked of needing up to £2bn to provide a mass rapid transit system from scratch. This one is

sitting, waiting...

With minimal investment, the electrified Colchester-Clacton line has the potential to offer a service

every 15 minutes, the ‘holy grail’ service level to encourage use of public transport instead of car

use.

The Metro concept requires any development to be within walking distance of a station (within

800m). Developments around the stations would become communities in their own right, offering

lower order services. Higher order services would be accessed via the metro line, as often the case

on the continent.

Bus rapid transit can also form the backbone of a transit-oriented development system, but only in a

situation where the buses are not running in traffic. They must be segregated onto bus-ways or

their own bus lane.

65

Paper available on request. Email stopurbansprawlnow@gmail.com

43

Delivery The Metro plan is more deliverable than the garden communities because it offers choice and

competition in the market for land – there is no need to face down a landowner consortium such as

Gateway 120 which claims to control the bulk of the land needed for West Tey. There is no need for

the complexity of a development corporation or the use of CPO powers. In addition, smaller sites

are less complex and faster to build-out than an entirely new town will be.

The Metro Villages are one part of CAUSE’s 10-point alternative strategy for North Essex which could

deliver at least 7500 dwellings prior to 2033. There was never an intention for the Metro Plan to be

the one and only ‘solution’ for north Essex’s strategic growth. It forms a ‘modular’ strategy which

can flex according to need/demand, as one part of a wider regional strategy.

Assuming proper two-way engagement with adjacent communities, there is the possibility that the

Metro Plan brings so many benefits to existing residents (in terms of land value captured for local

spending plus the improvement to the rail service) that there may be less opposition to the proposal

than to the (rightly) opposed new towns which bring no benefit to existing residents. In addition,

there are school places already available and capacity in the water & sewerage systems, which will

ensure that the new homes do not immediately place undue pressure on local services while the

project is being completed.

Rail practicalities: 4(-6) trains per hour The basic timetable is an hourly regional train between Clacton and London, calling on the branch at

Thorpe-le-Soken and Wivenhoe (and not running into the Town station), and an hourly all-stations

local train between Walton and Colchester that runs into and reverses at Town. The local arrives at

Thorpe before the regional and then follows it in order to offer faster journeys for Walton line

passengers and connections between Clacton and the smaller intermediate stations. Extra services

operate in the peak, partly because a large rolling-stock depot is located at Clacton.

This is a thin service for an electrified, double-track railway, but it reflects the modest population

around the intermediate stations and the demographics of an area with an unusually high

proportion of elderly people. It is undesirable for this to continue because it does not make optimal

use of an expensive asset.

Usage of the intermediate stations is currently rather poor, but they are quite well located for the

villages they serve and/or have sizeable sites suitable for housing within their walking catchments.

They therefore offer the potential for generating additional travel on the line while averting

development at sites that would add to road congestion.

44

The promising starting point for four trains per hour is an under-used asset ripe for enhancement

rather than a project requiring extensive and expensive new build. Two trains/hour could be

doubled to four using rolling stock that otherwise stands idle between the peaks. It is envisaged that

the second local would run from and to Clacton, leaving the Walton spur with an hourly service.

The only constraint is the need for careful planning at the two junctions on the direct line where a

train running into Colchester Town and reversing to run eastwards may conflict with a westbound

regional train and where frequent or lengthy closures of East Gate Level Crossing must be avoided

for the sake of traffic circulation within Colchester. Analysis of timetabling options (see Appendix 1)

indicates that evolution of the service could go further to offer two regional trains and four local

trains/hour, although it must be stressed that this is intimately dependent on decisions about the

overall structure of the GEML timetable.

The pattern would be two locals between each pair of regionals with one serving Clacton and

thereby giving that section four trains/hour and the other serving Walton half-hourly. With the

existing type of trains and none of the extra stations this could provide an attractive offer. There

would be one requirement for an infrastructure upgrade and one potential operational problem.

In order to secure connections at Thorpe-le-Soken from Clacton into a local and from Walton into a

regional (as now) and to do so in the two directions simultaneously (which is a necessary function of

an integrated timetable) the disused platform and the third line would have to be restored, but this

would hardly be a major project. The operational problem is that even it currently closes about six

to eight times in each morning peak hour, sometimes for some minutes. Replacement with a bridge

is impossible in a dense urban environment. It is envisaged that the restored northern line would

have an independent connection to the Walton branch and a crossover at its centre to enable the

two Walton trains to occupy the northern side of the island together. The third platform would offer

flexibility in the event of out-of-course running. There would also need to be provision for bi-

directional ('wrong-line') running for about 2 km west of Thorpe.

New stations? New stations could be considered along the line, at the University, Clacton North and Thorrington.

This would require new rolling stock that, through faster acceleration and sharper braking, could

absorb the loss of time and the extra dwell time. In the longer term, the 'tram-train' concept could

be considered. Tram-trains are vehicles built to run both as traditional trams and on mainline

railways amongst conventional 'heavy-rail' trains. This allows them to offer highly flexible services,

typically connecting relatively low-density areas with large town centres and their principal stations.

45

Conclusion

Be like Plimsoll, not “Captain Calamity” A planning Plimsoll line is a definite necessity given the headlong rush towards modern garden cities.

Perhaps it is more exciting to be like Ebenezer Howard than Samuel Plimsoll. It is much more

appealing to dream of visions, utopias, designs and master-plans for the new towns of the future

than numbers. However, that is like setting off into the sunset with a poorly loaded boat and no

navigational equipment. You will soon become lost then capsize. What is playing out in north Essex

will keep being repeated in garden town proposals across England if we do not get to grips with the

mistakes being made.

We can find no economic analysis to support the scale of the proposed Garden Communities, nor is

there any realistic chance that government will provide subsidy on the scale required. Instead of

generating funding through land value, they create an economic burden. Smaller and more realistic

initiatives are required with thorough assessment of the economic efficiency of proposals and their

ability to deliver land value capture for the benefit of all.

So in reality, rather than be like ‘Captain Calamity66’, the yachtsman who only sold his yacht after

being rescued nine times in one year, it is better to be like Samuel Plimsoll. We do need to measure,

quantify and do the numbers in planning if we are to get things right for future generations.

Numbers help planners to make decisions. Economically, they allow us to decide which strategy is

most efficient and delivers the greatest benefit in terms of land value capture. Environmentally,

numbers allow us to decide if the cost is worth it and if there is a better alternative. We need a

planning Plimsoll line for garden cities.

66

https://www.independent.co.uk/news/uk/home-news/sailor-dubbed-captain-calamity-finally-sells-yacht-after-ninth-rescue-in-seven-months-a6985816.html

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“Without mathematics, there's nothing you can do. Everything around you is

mathematics. Everything around you is numbers.”

Shakuntala Devi

47

With thanks to the CAUSE Committee, in particular Julian Bowden for reading and ideas, and to our

advisers who assisted us with the Metro Plan: Dr Nicholas Falk, Tim Pharoah, Jonathan Tyler, Joanna

Chambers. Thanks also to Michael Robson and Martin Edwards for all their patient advice.

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www.cause4livingessex.com

©2019. Rosie Pearson & William Sunnucks