Budget 2011 – Not much for the Commercial Property Sector – by William Hinckley

Once again, George Osborne’s budget contained little to excite the commercial property sector, despite promises to ignite the enterprise and business worlds. Small businesses will be relieved to have had their rates relief extended for a further year, but this will only assist businesses who occupy properties with the combined rateable value of less than £18,000. The well intentioned Chancellor also proposed 10 ‘improvements’ to the planning system including a “presumption in favour of sustainable development” and a ”streamlining of the planning process”, the latter having the somewhat ambitious (and rather unlikely) objective that all applications, including any appeals, will be dealt with within 12 months. These proposals fly in the face of the coalition government’s “localism” agenda which seeks to give the electorate the veto about whether a development proceeds or not, and which had the immediate effect of sharply reducing the number of planning applications as both councils and house builders got to grips with the new system. The 10 changes announced by George Osborne are not all without merit, but all require serious further thought to ensure that they don’t cause more damage than good. One proposal which will have caught the eye of commercial property owners was the proposal to consult on plans to make it easier to convert commercial premises (by which we assume offices) to residential. It is admirable that the Chancellor is looking to find ways to invigorate both the residential and commercial markets by providing the opportunity to create more cosmopolitan 24 hour ‘living’ towns where there is a mix of business, retail, restaurant and living accommodation. There are undoubtedly some towns which still have an over-supply of outdated, empty, or partially empty office buildings where the local council is resisting conversion. In many towns, however, office-to-residential conversions have been taking place for the last 10 to 15 years. The problem is that in areas where office rents are below £20 per sq ft it is unlikely to be viable to replace the old stock with new offices and, as a result, there is a diminished supply of offices. In such towns this proposal, which has absolutely no regard for the requirements of the business community, could drive the office occupiers from the town or city centre.

Kent Economic Roundup by Michael Bax

Some interesting insights from various business representatives at the Kent Economic Board
on 22 March.

• Avionics - business buoyant but UK a waste of time. Many orders from developing countries.
• Packaging - improved export orders but UK market soft. Japanese disaster likely to cause increase in price of world’s steel.
• Motor industry – tough and February figures worst for many years.
• Construction - current order book strong but 50% down projected 12 months from now.
• Media - signs of improvement at last.
• Legal Services - highly competitive and serious concerns over East Kent unemployment. Including contract workers, Pfizer job losses will amount to approx. 10,000, and equivalent losses are expected in the public sector in East Kent.
• Marketing - many new ideas coming through but general lack of confidence in terms of ability to promote and market response.
• Residential Development – demand is strong but the problem is supply and lack of mortgage availability. Prices are static and the main activity is from downsizing, divorcees and first time buyers. This developer had launched three sites since Christmas and has six more in the pipeline. Different funding models are required to enable viability for developer and landowner.
• Kent Ports - worth noting that Sheerness is considered to be 17th in the UK Poverty Stakes. Nevertheless the ports industry is busy in the Medway and various plans are in hand for Sheerness and Chatham/Rochester. All schemes dogged by planning uncertainty. Various opportunities on renewables, but no confidence on FIT policy which also needs certainty.
• South Eastern Rail - relatively upbeat and generating profitability, which has immediately led to reduced Government support.
• SEEDA - approaching closure and nothing finalised on allocation of Kent assets.
• Television - significant potential new work, but need for expansion including new buildings/infrastructure. Once again being suffocated by the planning system.

This theme on the painfully slow planning process cropped up again and again in discussions. Some people are simply not contemplating projects, because they need to be able to bring ideas to fruition within 12/18 months and see any serious planning proposal as taking between three and five years. A business cannot be run against that background. One individual expressed the view that the Government had “created a legislative theme park for small minds”. Localism is considered to be a disaster in the making and will be the final obstruction to initiative and innovation. Nobody understands what is meant by the “Big Society”.

Broadband in Kent by Michael Bax

This follows my note from 2009/10.

UK is as low as 25th in the world league table in terms of Broadband coverage.

33% of rural businesses and households have less than 2Mb capacity and nearly double that have less than 4Mb.

So far as Superfast Broadband is concerned, it will cost between £500M and £1.1Bn to get fibre to all property in the County and at this stage 40% of Kent’s businesses are in areas of market failure so far as this is concerned.

It is not only a question of what it will cost to get Kent properly enabled, it is also a question of the cost to the Kentish economy of NOT providing rural broadband.

In Cornwall, virtually the whole county is broadband enabled and this has been achieved using European money and County Council grant.

There have been some local initiatives in Kent, e.g. Womenswold where a satellite router has been installed, powered by small wind turbine and pv cells. This is pinging 8Mb round the village.

Please go to broadband@kent.gov.uk and return the questionnaire to support the County Councils efforts on this vital subject.