The Subplot | Levelling up loadsamoney, rural bliss, Liverpool horrors

THIS WEEK

• Loadsamoney: the shift in attitude to urban regeneration in the North West risks disappointing everyone
• Elevator pitch: your weekly rundown of who and what is going up, and who is heading the other way

SPLASH THE CASH

Would you like some money?

The £4.8bn Levelling Up Fund risks going nowhere fast, a select committee concluded last week. That could be disappointing for a long list of North West destinations.

Governments of all colours love to splash the cash. It looks decisive, it pleases people, it gives politicians some big numbers to shout at opponents and because it’s for “regeneration” the glow of good works hovers around ministers’ heads like a halo. What’s not to like?

Same old same old

Unfortunately, once the cash is splashed governments tend to lose interest. The £12bn Local Growth Fund won headlines back in 2019, but the government “did not understand what impacts it…had had on local economic growth and yet had also decided not to evaluate it,” a monitoring report said. A series of devastating National Audit Office reports since the 1980s has shown, again and again, that what “regeneration” achieves is usually at disproportionate cost. A handful of schemes deliver lasting benefits, most are dead ends.

Press repeat

And now it is happening all over again. “Despite billions spent on local growth policies over many years, the government still does not have a strong understanding of what works.” That was the conclusion of a Public Accounts Committee report published last week after analysis of the first 105 awards (worth £1.7bn) from the £4.8bn Levelling Up Fund.

Who are we talking about?

Local winners of Towns Fund dosh were “shovel-ready” projects in Birkenhead (£25m), Blackpool (£39.5m), Bolton (£22.9m) Cheadle (£13.9m), Crewe (£22.9m), Leyland (£25m), Millom in Cumbria (£20.6m), Nelson (£25m), Preston (£19.9m), Rochdale (£23.6m), Southport (£37.5m), St Helens (£25m), Warrington (£22.1m),and Workington (£23.1m). The full national list is here.

Baby steps

How “shovel-ready” these schemes actually were remains doubtful. According to the committee, spending was expected to be about £600m in the first year (2021/22). It turned out to be “around £100m.” That’s less than £1m in each of the 100-plus locations. Hardly electric.

Wallace & Gromit

Subplot approached a selection of North West Towns Fund winners for an update on progress, and Preston City Council replied. The council has ambitions plans for the Harris Quarter but so far outputs are not overwhelming: “The Wallace & Gromit bench was installed and unveiled September 2021; the mobile events tent is in situ on the site of the old Market Hall with a range of events scheduled; and the Murals project is ongoing with two complete to date.” Funds have been allocated to projects and pop-ups, but there’s no word on it being spent.

And in Birkenhead?

Birkenhead’s win attracted attention because cynics thought it looked like a retirement gift for Labour MP Frank Field’s support for the Vote Leave campaign. The Birkenhead Towns Fund has some great aims – a new Transport museum; creating a small business hub in Egerton House; a business development space StartYard at Cammell Laird; and a creative space at Argyle Street, among much else.

More approvals needed

However, “funding for projects is subject to business case approval and further approval from [the ministry] before the allocations can be confirmed,” Wirral Council said last year. “Assuming we get drawn down on funds, this is the essence of what regeneration should be,” says Andy Delaney, director at AspinallVerdi, who has been watching the Birkenhead plans. Wirral Council says about 5% of funding has been released to help get projects off the drawing board. ”Once final signoff is achieved, we can expect the funding to be available later this summer and we anticipate many of the project leads to commence delivery as soon as the funds have been received,” a statement said.

Pointing fingers

A bit of a let-down? Yes, probably. So who should we blame? You don’t have to be very skilled at subtextual reading to work it out. “It has been a common criticism that government funding for regeneration has been pepper-potted and there is lack of joined-up thinking. This problem is particularly acute with the current funding regimes,” says John Keyes, chair of UK public sector at Cushman & Wakefield. “The lack of an overall government strategy and inconsistency of funding approaches, makes delivery more complex and means government funding is less likely to secure value for money.” In other words, the government is screwing this up.

More pointing

Walter Boettcher, chief economist at Colliers, takes a similar view. Splashing a few million here and there, like the Towns Fund does, creates complexities. “It’s hard to manage smaller scale projects pursued for a variety of reasons, some of them political,” says Boettcher. The larger levelling up schemes are a different, far more significant, prospect he says.

Patience running low

Cllr John Merry is deputy mayor of Salford and chairs the UK Key Cities group. Merry also detects weariness in the public and property business. “The concern is we’ve seen a lot of regeneration projects that look relatively minor, and it encourages the public to be more cynical. It’s ‘they’ve planted a few trees, is that all we get’ and I can understand private sector partners being a bit concerned about how this is developing,” he says.

The regeneration game

Regeneration has become one of the stand-by income streams for the property business, and a very valuable one when the mainstream economy faces headwinds (as it does today). Regeneration is going to be their big preoccupation for the next few years, so property people’s enthusiasm for levelling up is therefore high. But if £4bn of “regeneration” spending doesn’t achieve much on the ground, or does it too slowly for anyone to notice, public patience will eventually wear thin, as Cllr Merry suggests. That lovely risk-free income stream will shrink or become problematic. The wiser heads in property realise this, and are thinking hard.

ELEVATOR PITCH

Going up, or going down? This week’s movers

Can elevators go at warp-speed? They can if potential farmland buyers are climbing aboard. Meanwhile, Liverpool’s horror-struck office agents are hoping for the arrival of a lift going down.

Green green fields

If you’re spending a few days in the countryside this summer it would be easy to kid yourself you’d left the cares of the property market behind. Wrong! This week Transport for the North launches a new joined-up approach to spatial planning designed to improve rural economic outcomes. It’s all sound stuff – lots of best practice and case studies – but the hard truth is that they are trying to push water uphill. Car dependency is and always will be a fact of life in large chunks of truly rural (as opposed to small town) Lancashire, Cheshire and Cumbria because nothing else is even slightly viable. But full marks for remembering the rural North exists.

Meanwhile, rural land prices are locked in a price spiral which makes the giddy central Manchester land market look anaemic, according to Knight Frank data. English lowland farmland outperforms all other property asset classes over the short-, medium- and long-term, easily double its nearest rival (central London residential). And it’s a great recession-buster: during the 1970s nominal price growth compounded to about 500%, yet farmland still showed growth in real terms of around 75%. Well-funded buyers are piling into a market with historically low-levels of supply (perhaps one-sixth of pre-pandemic levels, though a lot happens round the back of barns, so nobody is quite sure). Definitely a market to watch.

Horror stories

A cracking no-holds-barred Playstation horror game is apparently the latest big project at Liverpool video game developer Firesprite. Thanks to the game developer Liverpool’s office market might be spared a horror story of its own.

Firesprite has signed up for the entirely of 50,000 sq ft at Cert Property’s Ropewalks scheme, Duke & Parr. The 10-year lease replaces space at Urban Splash’s 64,000 sq ft net Vanilla Factory, where units don’t get bigger than 8,000 sq ft, which just so happens to be the same number as the total amount of floorspace transacted in central Liverpool in Q1 2022 (in fact, 8,005 sq ft, according to Avison Young). That the standard rent-free incentive is 24 months, and top rents are effectively £19/sq ft, shows how truly dire things have become.

Could more tech deals come to the rescue? Perhaps. Market wisdom is that the lack of good new floorspace holds the market back. If that’s not right – and it’s a theory that’s hard to test – the gore-fest isn’t yet over.

Get in touch with David Thame: david.thame@placenorthwest.co.uk | 01544 262127

The Subplot is brought to you in association with Oppidan Life.