The problem with logistics
Logistics is big business. Across the UK, take-up of industrial and logistics space has exceeded the long-term annual average of 14m sq ft every year bar one over the past 13 years. It has more than doubled the long-term average in four of the past six years. The 2020 figure is yet to be confirmed but could reach 40,000,000 sq ft for the first time.
In the sphere of logistics, the key drivers of this rapid increase in take-up are the relentless rise of ecommerce and the shift from Just in Time to Just in Case logistics. The latter has been exacerbated by Brexit and Covid, both of which raise questions over the desirability and fragility of complex international supply chains.
The staggering facts
In 2020, Tritax Symmetry published The Economic Contribution of Logistics to the Northern Powerhouse, with research independently carried out by Turley. This showed that the Northern Powerhouse area is home to a quarter of all logistics businesses in the UK. Between 2014 and 2019, the number of logistics businesses in the area increased by 80% to 10,200 businesses.
The largest contributor to jobs was freight transport which has grown by 66% in the same period. Currently the sector employs 263,000 in the Powerhouse alone. Between 2019 – 2039, logistics is estimated to create an additional 62,000 jobs and to achieve a 36% increase in GVA.
However, the Northern Powerhouse Independent Economic Review under its ambitious but credible “transformational scenario” sees possible job creation of 174,000 jobs between 2015 – 2050. The rise in ecommerce over the last 12 months alone underscores the credibility of these eyewatering figures. The spike over the past 12 months may slip back but there can be no doubt that digital change has been accelerated and its gains are here to stay.
The jobs created are not to be sneezed at. Notions that the jobs are for people driving forklifts all day are wrong. The sector employs a wide range of skills and the average salary of £30,500 exceeds the all-sector average of £27,600 by a significant margin.
Where are we talking?
In the North West, the market can be broadly split into three principal areas:
- The Greater Manchester Market embracing the 10 authorities. In the GMM, most of the largescale logistics units are around the M60, along the M62 corridor, around North Manchester and at Trafford Park
- The Liverpool Market which generally comprises the Liverpool City Region and the six authorities including West Lancashire that make up the recognised functional economic area. Most activity is focused on the M57 corridor including Speke in the south and Knowsley in the North
- The M6 Market which follows the M6 corridor from Crewe to Preston. However, the recognised “sweet spot” (as recently labelled by Mr Aherne in his evidence to the recent M6 Junction 25 logistics call-in lies between Junction 20 and Junction 26. This location has attracted almost 30% of all Grade A transactions in the North West over the last 10 years. The reason for its attraction is not difficult to discern given its central location in relation to all the multi-modal infrastructure in the region and its ready access to Manchester and Liverpool in particular. Take-up in this location has equated to 690,000 sq ft pa over the last decade although current demand is estimated to be in the region of 8,000,000 sq ft. Even at past take-up rates, the current land supply is about six months at best.
Growth in logistics has been on the radar of most practising planners for several years. Similarly, the potentially problematic nature of logistics site requirements have been well recognised: large sites away from residential areas on strategic links with good access to strategic nodes in the form of airports, freight terminals and deep water ports. In the North West, this tends to point to locations that are in the Green Belt. In the absence of up-to-date Development Plans that allocate suitable, available and deliverable sites, developers are faced with promoting sites by way of applications that have to discharge the burden of establishing very special circumstances.
Freight needs overlooked
At a national level, the NPPF at Paragraph 82 notes a need to meet the needs of storage and distribution, but in essence that is all. The Planning Policy Guidance does not take matters much further. In January 2020, the National Infrastructure Commission said the planning system’s “absolute focus” on housing delivery issues had resulted in the needs of freight being overlooked. You can say that again.
The Government’s white paper Planning for the Future is a case in point. It aspires to circa 300,000 new dwellings a year but makes no reference at all to planning for logistics. Think of that for a moment. It is estimated that currently there is circa 70 sq ft of warehouse space for every home in England. On this basis and by simple extrapolation, 300,000 additional dwellings a year creates the need for 21,000,000 sq ft of B8 space every year (please don’t write in – I know it isn’t that simple but it does underscore the lack of joined-up thinking).
In the North West, the problems of a lack of policy direction on the issue have been compounded by the delays in bringing forward the GMSF which, in turn, has held back Local Plan preparation. While the GMSF is, to a degree, cognisant of the need to provide sites for logistics and therefore allocates, for example, land on the M6 at Junction 25 for B2/B8 development, there is no sense that it has grasped the scale of the problem or the urgency of the need. Similarly, Local Plans seem to duck the issue, no doubt because logistics provision inevitably requires cross-boundary strategic thinking.
What is needed?
Firstly, the NPPF needs to recognise the vital role of logistics in supporting the Government’s post-Brexit, post-Covid economic ambitions. The NPPF should require Strategic and Local Plans to specifically assess the legitimate needs of the logistics sector and to make proper provisions. It also needs to bite the bullet and recognise that these needs are capable, if robustly justified, of amounting to exceptional circumstances to change Green Belt boundaries.
At a sub-regional level, I would like to think that the GMSF would properly embrace the issue, but given the political tensions surrounding the Green Belt I do not propose to hold my breath. Will Local Plans take up the mantle? I doubt it, in the absence of any clear requirement to do so from central Government.
Result: brace yourself for applications and appeals seeking to bring forward sites in the Green Belt.
David is one of the country’s leading Planning QCs. He acts for the private and public sector at public inquiries, local plan and CIL examinations and in court. Recent work includes representing Tritax Symmetry at the Call in Public Inquiry in Wigan in relation to Wigan Symmetry Park and successfully representing Bellway at the Bowlands Heys Public Inquiry in Bolton