Y Pwyllgor Cyfrifon Cyhoeddus a Gweinyddiaeth Gyhoeddus

Public Accounts and Public Administration Committee

16/06/2022

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Mark Isherwood MS Cadeirydd y Pwyllgor
Committee Chair
Mike Hedges MS
Natasha Asghar MS
Rhianon Passmore MS
Rhun ap Iorwerth MS Yn dirprwyo ar ran Rhys ab Owen
Substitute for Rhys ab Owen

Y rhai eraill a oedd yn bresennol

Others in Attendance

Matthew Mortlock Archwilio Cymru
Audit Wales
Professor Karel Williams Athro Cyfrifeg a’r Economi Wleidyddol, Ysgol Fusnes Alliance Manchester
Professor of Accounting and Political Economy, Alliance Manchester Business School

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Elizabeth Foster Dirprwy Glerc
Deputy Clerk
Fay Bowen Clerc
Clerk
Owain Davies Ail Glerc
Second Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:59.

The committee met in the Senedd and by video-conference.

The meeting began at 09:59.

1. Cyflwyniad, ymddiheuriadau a dirprwyon
1. Introductions, apologies and substitutions

Bore da. Croeso. Good morning and welcome to this meeting of the Public Accounts and Public Administration Committee in the Senedd. For those who may be tuning in, apologies for keeping you; we had a bit of extra work to consider in our pre-session. Apologies have been received from Rhys ab Owen, but we welcome Rhun ap Iorwerth, who's deputising for him. Before I go further, do Members have any declarations of registrable interests they wish to share? No. Obviously, any interests Members have will be declared on the public record should people wish to check those. Headsets are available in the room for translation and sound amplification—translation on channel 1, amplification on channel 0. Please ensure, Members and others, that any electronic devices you have are set on silent, which includes myself. 

10:00

I can't get silent to work. I was, at the beginning of this meeting, trying to get silent to work, and, as you probably noticed, it didn't.

In the event of an emergency, an alarm will sound in the building, and the ushers will direct everyone physically present to the nearest safe exit and assembly point.

2. Papurau i'w nodi
2. Papers to note

We have a paper to note, a letter from the Minister for Social Justice, an update on implementing the recommendations from the Public Accounts Committee report, 'Delivering for future generations: the story so far'. In late 2020 and early 2021, the fifth Senedd's Public Accounts Committee undertook an inquiry into barriers to the implementation of the Well-being of Future Generations (Wales) Act 2015, and reported its findings in March 2021. The Minister for Social Justice responded to the report in October 2021, accepting, in principle, seven of the eight recommendations made to the Welsh Government, and accepting in full the remaining recommendation. This committee considered a response at its meeting on 17 November last year, and agreed to keep an active watching brief on progress, inviting six-monthly updates from the Welsh Government.

The Minister's letter in your pack is the first of these updates. This sets out further detail on the Welsh Government's aspirations to provide longer term budgets for its partners and stakeholders. The letter highlights that the recent UK spending review has provided a multi-year settlement that has enabled the Welsh Government to allocate spending and provide certainty for its partners. Our predecessor committee had recommended that there was more the Welsh Government could do to support the resourcing of public services boards—recommendation 2. In its initial response to the committee, the Welsh Government stated it would

'consider, on an annual basis, the package of funding and support we make available directly to PSBs and will be looking at how we can raise awareness of the range of funding sources available to them.'

The Welsh Government also committed to working with PSBs to better understand

'where they have pooled—or attempted to pool—resources and identify and share good practice'

and provide guidance on existing flexibilities regarding funding from other sources.

We were concerned previously that this guidance would not be provided by the time PSBs completed their local well-being plans and planned to resource their delivery. However, the Minister's letter sets out that this work and guidance is on track to complete before the well-being plans are published. The Minister's letter details the latest position on the development and publication of national milestones and indicators, which are designed to represent the desired outcomes for Wales and measure the progress being made towards the seven well-being goals. The update highlights that the first set of national milestones was laid before the Senedd on 14 December 2021. The letter explains how remit letters will be framed around the Act, and this has been in place since May 2021.

Finally, in terms of the next steps for the partnership landscape, the letter reiterates that the outcome of the review of strategic partnerships contains clear recommendations on practical actions to simplify the partnership landscape. The letter asks us to note

'that there is a commitment in the Co-operation Agreement to keep regional partnership arrangements under review, which overlaps with the recommendations'

of our predecessor committee.

The letter provides a generally satisfactory response to our predecessor committee's recommendations, and we're due to receive a further update in December this year. The work undertaken by our predecessor committee, ourselves and the Equality and Social Justice Committee appears to be helping to drive progress in this area. The Equality and Social Justice Committee has responsibility, within its remit, for scrutinising the implementation of the Act, and we've agreed to work together on this going forward, given our interests. And, obviously, this was also reiterated in the debate in the Chamber yesterday afternoon.

It's important that we maintain a watching brief over the implementation of the Act, given our concerns about the slow pace of implementation and the culture change that is essential to successful implementation.

Members will recall that we were recently sent a copy of the Equality and Social Justice Committee's report on scrutiny of the commissioner and the Welsh Government's response to this. The report was debated, as I said, in Plenary yesterday, and, of course, the recommendation that we've accepted from the ESJ committee report related to not just looking at the future generations commissioner but resourcing for Welsh commissioners generally, and that work is being scheduled for the autumn term, as I stated in the Siambr yesterday.

So, Members, do you have any comments on the letter, beyond the summary I've provided? Could I therefore suggest that the committee writes to the Minister, if we have any observations—we appear not to—just noting that we will continue to monitor this area and look forward to receiving the next update in December? Thank you. Well, clerks, the letter can be shorter than it might have been, so there we are.

10:05
3. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod
3. Motion under Standing Order 17.42 to resolve to exclude the public from the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o eitem 4 y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from item 4 of the meeting in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Well, now, can I move to a motion to exclude the public? So, I propose, in accordance with Standing Order 17.42(ix), that the committee resolves to meet in private for item 4 of today's meeting. Are Members content? Members, I can see, are content, so, if no Member objects, as they haven't, we can move into private session. Thank you.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:06.

Motion agreed.

The public part of the meeting ended at 10:06.

11:10

Ailymgynullodd y pwyllgor yn gyhoeddus am 11:13.

The committee reconvened in public at 11:13.

5. Adfywio Canol Trefi: Sesiwn dystiolaeth
5. Regenerating Town Centres: Evidence session

Bore da. Croeso. Good morning. Welcome back to the Public Accounts and Public Administration Committee in the Senedd. Now, we're going into our public evidence session on regenerating town centres, and I welcome our witness, Karel Williams. Could Karel please formally state his name and role for the record?

My name is Karel Williams. I've been a professor at Alliance Manchester Business School for 30 years, and I am the consultant and director of the Foundational Economy Research Ltd consultancy that produced the 'Small Towns, Big Issues: aligning business models, organisation, imagination' report on Welsh towns. 

Thank you very much indeed and, again, thank you for being with us today. We have a series of questions for you involving all Members, but I'll begin those questions first. So, in your view, to what extent overall has the Welsh Government created a coherent policy and planning framework to support local authorities and their partners in regenerating and creating sustainable towns?

I think the charitable thing to say is that it's beginning, in the climate change ministry, to move towards a constructive policy, because I think that involves quite a large shift from thinking about the town-centre problem to locating town centres versus edge-of-town competition in a car-dependent society, and you can see that previous policy has failed because it's focused simply on the town centre.

If you look at 'town centre first', for example, in Bangor, at present, the FE college wants to move to Parc Menai, a business park on the edge of town, because there is no suitable site available in central Bangor and because there's a cheap building available in Parc Menai. That's absolutely classic. And you can carry on, if you read our report, and look at all the statistics, which illustrate the amount of retail spend and the amount of movement that is out of town, edge of town, et cetera.

A lovely example that came my way last week was Morriston in 2019. The high street in Morriston is Woodfield Street. In 2019, before the pandemic, it had 2.8 million visitors; the one Asda superstore on the enterprise park a mile away had 16.2 million visits. All of this needs to be factored in to a comprehensive towns policy, not a town-centre policy.

11:15

I was interested by your reference to Bangor University. As a parent, three of my children went to Bangor University. One of them, although she lived near the centre of town where the main university building is located, her department was located on the periphery of town, so she had a mile walk each day, which was probably very good for her and she never complained about it. To what extent can that sort of model work, where they were sustaining an existing complex on the periphery of town but living in the town, and therefore utilising its services, its shops, its recreation facilities and so on?

Most of the stuff on active travel suggests a 10-minute walk is the limit of what the middle aged and unfit are prepared to do. If you look at the towns we looked at in our report, 30 per cent of their footfall comes from within a 10-minute walking distance. This is a crucial group in our town centres. And of course the problem in almost all Welsh town centres is that, around the retail core, you have a doughnut of low-income housing, which sustains basically down-market shops on the high street.

Okay, thank you. Again, to what extent do you consider that the 'town centre first' policy approach is deliverable and what else might you suggest that the Welsh Government needs to do to deliver on its ambitions, including those around transport access?

As I've already said, 'town centre first' can be evaded, as it can be evaded by the FE college in Bangor, by simply pleading the case that there is no suitable large site in town and there is a cheap and available site on edge of town. To deal with this, I think you need a 10-year plan of possible moves by all the anchors in a place like Bangor. You need to understand where the new health centre would go, where the medical school would go, which vacated buildings would become available. And if you think of it then as being a kind of board game with who goes where, then you can actually say to the FE college, 'Look, you can stay in town, because in three years' time this building site becomes available.' That would also be much more ecologically responsible, because we now understand that, in buildings, you have large amounts of embodied carbon, and if you simply knock down the existing Bangor FE college on Ffriddoedd Road, it's not very environmentally sensible. How can we reuse buildings is an absolutely crucial task.

11:20

Thank you, Chair. Very briefly. It's very interesting what you said in terms of—and I might be paraphrasing, so please tell me if I'm incorrect—that you feel that 'town centre' is wrongheaded, and it should be 'towns'. And I'm interested in that, but I still don't understand—and I know it needs to be brief—but I don't quite understand your 10-year plan, apart from you want it to be ecological. You understand fully, I'm sure, the amount of difficulty there is in the public purse at this moment in time, and also, the right pressure for town centres to keep pushing forward. So, could you just give me a little bit more meat on the bones about your 10-year plan? What's the answer?

I think the point I'm making is really quite simple. One of the major issues in town centres—it's not the only issue; we need to talk about housing as well—but one of the major issues is the relocation of public sector and not-for-profit actors. This covers things like health centres, libraries, FE colleges, universities; all of these people have facilities, and some of them can have more facilities in the centre of town. For example, in Bangor, you have lots of poor-quality accommodation in the hospital at the edge of town; some of that could be rebuilt in town.

Now, if you then look at how do you actually move these guys around, the big problem is that if you look at a single move, there usually isn't a site that is large enough and available in town. Now, you can't have a 10-year plan that actually says exactly who does what, but you can certainly have a 10-year plan that deals with the possibilities and the plans. We know in Bangor that, for example, the university is building a new medical school. We know it's vacating certain buildings. Exactly when those things will happen is subject to the public purse and funding, and all the rest of that, but you need to have some overview and oversight of multiple moves because it's not going to work, 'town centre first', if you do it one move at a time.

Thank you. Developing on that, you mentioned, for example, the need to engage with FE colleges and others years ahead to retain that potential future development in the town centre. But to what extent do you believe the Welsh Government itself has a role to play in influencing the behaviour of developers and property owners to support 'town centre first' rather than sustain the development of out-of-town developments?

Well, private developers are basically in it for profit, which is entirely legitimate. And if you look at private developers, they would normally expect a 20 per cent return on capital. This isn't as extravagant as it sounds, because they're probably paying around 7 per cent to borrow money, and what they want is a return of 7 to 10 per cent to compensate them for risk. 

Now, that's the return that people like Barratt, Redrow and Persimmon have been getting on edge-of-town housing developments through the 2010s. They're not really interested in brownfield sites in town, because it's more complicated, more costly, and doesn't involve selling a standard product to a middle-class customer. You've really got to bring in not-for-profits for housing like housing associations.

You might say, 'What about smaller developers and smaller owners?' The problem there is usually one of fragmentation and multiple players. A good example would be Woodfield Street, Morriston, where, at last count, there were 105 property owners and 95 owned just one premises.

So, I don't think the large corporate developers, or small private people are going to solve the problems, particularly the crucial problem of trying to get more mixed income housing within walking distances of our town centres. 

11:25

That's very useful. I think the question was: what, if anything, you believe the Welsh Government, in the role it can play, can do to influence the behaviour of developers, whether they're for profit or not for profit?

I think that Welsh Government needs to enable and empower. It needs to have a philosophy, that there are clear objectives, and the question is: how do you get there? One way of getting there, obviously, is to engage the anchor institutions and have a plan of their multiple moves on sites. Another way is to involve the housing associations, who can accept lower returns on residential and mixed-use property. And I think, to some extent, the role of Welsh Government then has to be to look at the engagement of the anchor institutions, the involvement of the housing associations, the commitment of civil society groups and traders in different places, and almost certainly be much more selective in backing places where this kind of local alliance between anchors, housing associations, civic groups and traders looks to be a runner. I would think, for example, if you look at the three towns we looked at, Haverfordwest is already part of the way there, Bangor could get there, with a bit of enabling, empowering, shouting at et cetera; Bridgend is very difficult indeed from that point of view. So, I think Welsh Government needs to have a clear sense of the anchors, the housing associations, the civic society groups and the traders, and it needs to be hard-headed about allocating funding, not to everybody, but to places where there are signs that local alliances can get it together.

Thank you. I'm conscious that, obviously, the clock is ticking, so I'll just comment, because I'm sure my colleagues will pick up on this later. One thing you didn't mention was local development plans and the roles they might play, where we know the absence of a local development plan, or an up-to-date local development plan, can encourage speculative development, whereas an effective, current LDP can discourage that and require development in accordance with the local authority's goals. But I'm going to leave that to my colleagues. You'll be aware that the three speculative task and finish groups have been created to feed into the town-centre action group. Do you believe that the remit of the ministerial town-centre action group is focusing on the right and most significant issues affecting town centres, and if not, what do you propose?

Engagement of the anchors, involvement of housing associations and involvement of civil society groups I would say are the three things that need to be headlined in all of this, if we want to do it. There's also the whole question of what you do on edge of towns, where, for 30, 40 years, we have, one way or another, been saying 'yes' to more off-roundabout development. Really, that has to stop. That's part of the whole shift from thinking about town centres to thinking about towns. Because if you look at it, under local development plans at present, what the planners do is choose between proposed housing sites to meet need, which are sites that were put forward by the developers. The developers will always propose off-roundabout, edge-of-own sites. And I think, at one level, on planning, if you look at the high-level vision in 'Future Wales: the national plan 2040', it's a great vision of the 15-minute city transposed to smaller towns, but at another level, at a local level, planners need to learn to say 'no' to edge-of-town development and to edge-of-town reuse. Because with the rise of internet retailing, there are going to be lots of surplus retail sheds and business park offices, and the owners will want to repurpose them as gyms, health centres or whatever, and if they're allowed to do so, that makes it much more difficult to sort the town centres.

Thank you. And perhaps one of the lessons to be learned from experiences in other towns and cities, across the UK and beyond, is the risk that that can lead to the sort of gentrification that prices out local people, rather than the sort of development that brings housing affordably into the reach of local people. Therefore, what overall lessons do you believe that the Welsh Government could learn from approaches in other parts of the UK or beyond? 

11:30

Three separate situations: small places, large places, mid-sized towns. In small places, self-management works, provided they have an affluent surrounding hinterland. That's the story of Hay-on-Wye, Abergavenny or Narberth. It helps to have a bit of historic architecture as well. So, small places can largely look after themselves. Large places with high property prices deliver new build, which is what you get in central Manchester and London, but, of course, you don't necessarily get new build of affordable housing, you don't get community facilities or whatever. But in large places you get private developers, who, as in central Manchester, would put up blocks of flats, and make their 20 per cent and say, 'Thank you very much.' Small places—self-management; large places—the property developers do it, but not probably what you want from a social equity point of view. In mid-sized towns in north and west Britain—in the north-west of England, the north-east, and in Wales—it's very difficult, because of low property prices.

The basic problem, on somewhere like Woodfield Street, is that there's a going rate for a lock-up shop with a flat on top and there's a going rate for a terraced house adjacent to Woodfield Street. And that basically means that it's not worth spending a lot of money to refurb or renew property, because you never get more than the going rate. It's like the car repair man tells you, of your elderly car, when the automatic gearbox has failed in it, or something of that sort—he says, 'That's going to cost you £2,500 and the car's only worth £800.' That's the fundamental reason—the going rate, the market rate, for a property on Woodfield Street—why for-profit developers aren't interested: you can't turn a profit easily. It's also the case, and this is quite fundamental, that property developers, like everybody else in life, don't like complication. Greenfield sites are really easy to deal with; brownfield sites are much trickier, in terms of trying to predict the difficulty of the job and what you need to deal with, and what it will cost you. So, there is very little opportunity for for-profit, private development in mid-sized towns, where property prices are low and the going rate on any refurbished or renewed property is, therefore, very low. 

Thank you. I'll pass over to colleagues. Just one comment: Tai Clwyd in Denbigh, which is now part of the Grŵp Cynefin housing association group, many years ago pioneered small, town-centre infill developments—mixed tenure, so open market, intermediate and social housing with cross-subsidy—which was a model, I think, Grŵp Cynefin have taken forward, where they can. So, perhaps you could incorporate commenting on that, in further responses to my colleagues. That sort of approach can help the mixed market needs in town centres. 

Absolutely. There's a scope for all kinds of imaginative mixed-income housing in our town centres, and unless we tackle that one, which private developers will not sort for us, then I think the whole business of a post-retail town centre is not going to work. 

Thank you, Chair. Hello, Karel. Just a quick one: do you feel that the local authorities have the necessary skills and capacity to deliver the changes needed to actually create thriving town centres? 

I think their skills and capacity are very variable—that's one of the problems. We've got 22 local authorities in Wales, and I think, if you look at the absolute top end, the best, which, in the case of our report, was Haverfordwest, then it really is a pretty smart operation at operating within the constraints. They've got the concept of a corridor of development across the riverside. They engaged with civil society et cetera, et cetera. Many other local authorities are nowhere near that level of vision and capacity to execute. I think there's also a sense in which—. So, that's one problem: the capacity is variable.

And then, coming back to my main theme, you can't expect local authorities to do it on their own. You need them to engage the anchors, involve the housing associations, get civil society and the traders to actually buy in so that we have the activity. The problem, in a sense, is that it's a complex equation where you've got to solve several different items. And I think it's fair to say that, although the most competent local authorities, like Haverfordwest, make a good fist of it, nobody in northern Britain or western Britain, where property prices are low, has completely got together this business of the engagement of the anchors, the involvement of the housing associations and the commitment of civil society. It's all work in progress. But Welsh Government, if it stopped talking about town centres and realised the problem was towns, and started to say 'no' to edge-of-town development, could play a catalyst role and back the guys who are prepared to run for it and with it.

11:35

Okay. Thank you so much for that. And what do you think local authorities could be doing specifically to develop their leisure, social and night-time offer that they can have for people who live in the area?

Well, leisure, social, night-time is quite large. I think the old, unimaginative things, like public libraries, are very important, it seems to me. And also I think the whole idea is that social and cultural activity needs to be brought into the centre, and the question of where your scout groups and your mother and toddler groups are meeting is important, and the whole question of local arts and cultural groups and how they need to be sponsored.

One of the problems in a place like Morriston is there are a whole load of church and community halls on the edge of the centre, across which a lot of activity is dispersed. It would make much more sense to put activity into the basement of Tabernacle chapel, but that needs a bit of vision, do you understand, to see how we get from here to there?

I do. I'm going to go a little bit rogue, actually, and ask you a bit of a sub-question, if that's okay. Apologies, Chair, and everyone else. What's your view on retail parks? Because the region that I represent has got a wide spectrum of people from different socioeconomic backgrounds. We had a thriving high street for many, many years in south-east Wales. The predominant area that I cover, there's one part of it called Newport, which, as I say, had a thriving high street. It's pretty much diminished over the years, and the focus has been particularly to focus on retail parks. And I know that a lot of different areas across Wales are tending to move people from high streets to retail parks. What's your view on that?

Well, the retail park is inevitable in a car-dependent society. Remember, 80 per cent of Welsh households have a car. I think the problem with Wales is, simply, we have too many retail parks, which is the result of competitive localism. And that’s partly the result of the way in which business and retail rates, non-domestic rates, were a cash cow for local authorities in the post-Thatcher years, and how, when people proposed retail parks, they always said, ‘It brings x hundred jobs, it brings the retail spend. Now, you need to have one, because if you don’t have one, they’ll give permission 20 miles down the road.’ So, we've ended up with too many retail and business parks based in Wales. It's part of the mix, but it's an overly large part of the mix. Indeed, on both the retail parks and the business parks, I would say we've got to look at them a bit like factory sites in the 1980s. You're too young to remember, but in that period people knocked down a lot of factories, and I think one of things we need to do with retail, edge of town, is knock down surplus capacity.

11:40

And what would you suggest we do in the surplus capacity, once it's knocked down?

Well, the key thing is to make sure—. I suppose dog walking is the obvious thing to promote. It's actually an important thing. What the owners will want to do is to build housing on it. The retail parks are where the housing demand is, and one of the key issues going forward is whether private developers will be allowed to build housing on surplus retail parks. That's what they'll want to do. Probably the single most constructive thing that Welsh Government could do would be to stiffen the resolve of local planners against edge-of-town housing.

Okay. Thank you so much for that. Do you think that some Welsh town centres are simply just too big and that local authorities actually need to acknowledge this and develop plans for alternative uses? I know you touched upon that in your answer now, but are there any areas you feel that are relevant and important to us?

'Yes, of course', is the short answer. If you like at the High Street in Bangor or Woodfield Street in Morriston, they're nearly a mile long. These places are not actually—. It's called the high street, but it's not actually functioning like a retail centre at all. When we looked at the usage of Woodfield Street, about a year ago, in Morriston, the pattern of movement and the scale of movement at the top end of Woodfield Street, near St John's church, the church in the middle of the road, is what you'd expect in a residential district—a flurry of activity in the morning, and then in the afternoon from schools closing, to the evening rush hour. This, of course, is why we need housing, because if you look at somewhere like Bangor High Street, there's no conceivable demand for retail in a strip a mile long, without car parking, and I think we've got to think about how we get the housing in, how we get the arts group engaged.

I agree with you completely there. How can local authorities, in the words of the auditor general's report, be 'more interventionist' in the context of powers they have currently, and any powers that you feel may be additionally added that may be useful and beneficial to not just them but also the people who will be using the services and areas around them?

I don't think it's simply a matter of powers, it's also a matter of culture. I think the single most important thing is that local planners need a bit of spine and they need to learn to say 'no' to edge-of-town developments, within a proper framework. If you think of Swansea enterprise park in relation to Woodfield Street, or Parc Trostre in relation to Llanelli, or the designer centre in Bridgend, which is within a 30-minute drive-to time of everywhere from Swansea to Newport, if you consider the M4—if you look at all of that, these are historic mistakes. It wasn't a mistake to have retail parks, but there are too many of them in a way that creates a giant sucking sound, and we need to say 'no' to edge-of-town housing and say 'no' to the reuse of retail parks for housing.

Thank you very much. My final question is: how do you feel that local authorities and the Welsh Government could use relevant data perhaps better to understand the issues affecting town centres and perhaps create an informed response going forward?

This is a case where the public sector lags massively behind the private sector. It's interesting. The private sector has good data on rents. You know, the public sector discusses concessions on non-domestic rates, without realising that rents were down by about a third in the 2010s in our town centres, even before the pandemic. Essentially, the private sector is using rents data, it's using drive-to time data, and it's using mobile phone footfall data, which we used bits of in our report, but the public sector is only slowly catching up with this.

11:45

Thank you for answering my questions. Chair, back to you. Thank you so much.

Thank you very much indeed. I'm conscious the clock is ticking. I'd be grateful if questioners and our witness could be as concise as possible in your questions and answers. Mike Hedges, if you could take up the questions, please.

COVID turbocharged the direction of travel we were already going along: more people working from home, more people buying things online; that's had a huge effect on town and city centres. What we've ended up with is surplus office accommodation, we've ended up with surplus churches and chapels, which is a different problem, and we've ended up with surplus pubs. These are quite often large buildings. Is the planning system suitable to allow the changes necessary to those buildings to bring them back into use?

Two aspects to that. The planning system will only work on reusing large buildings if there is a developer who can usually work on smaller margins than a standard private sector developer would expect. So, it's not simply the planning system, but it's the planning system and a developer who is prepared to accept modest margins. And, secondly, the surplus capacity is kind of something that has several different dimensions. We haven't so far this morning discussed surplus office capacity, which outside Cardiff is mainly in edge-of-town business parks; the key thing there is the emerging energy efficiency requirements. By 2030 all offices will have to reach grade B efficiency and Savills calculates that 87 per cent of offices will need upgrading. So, we will have lots of surplus edge-of-town offices where people are unwilling or unable to upgrade, and, again, I think the answer in edge-of-town is at least partly demolition. The answer in town centres, with pubs, churches and things of that sort, is usually reuse, and this involves not just planning but a developer, and probably also things like community groups to occupy the church or whatever.

Thank you for that. If we could talk about Woodfield Street, because you've mentioned it quite regularly this morning, and I live a mile away from it. My office is about 50 yd from it, and I visit it at least two or three times a week, and quite often daily. Woodfield Street has changed. There are a lot more flats above shops there. Looking just at the electoral register, which those in this room do fairly regularly, the number of people living there now who are registered to vote is up to 60 or 70, where it used to be often in single figures. The former pubs on the street have been turned into, either partly or wholly, or are in the process of being turned into, partly or wholly, accommodation. The same sorts of things are happening with the church in the middle of the road. I'm just seeing that what Morriston has lost is those key anchors that it used to have. Wilko is now the only big, national store that is there, and that's changed it. You used to be able to buy everything in Woodfield Street. We've just lost our last shoe shop. I think people are concerned about what's going to happen, and, yes, these are going to be—. I don't think the place will be empty, very few buildings are empty there, but flats are coming in, or ground-floor something or other, a ground-floor cafe and shops above. Huge growth—I'll stop here, Mark—huge growth in cafes in town centres. Have you noticed that?

Yes, of course. I mean, one of the things is that in seriously declining high streets—like Stepney Street, Llanelli, or Woodfield Street, Morriston—what you get is not vacant premises, but cheap cafes and hairdressers. I think at last count, there were more than 15 hairdressers for men and women on Woodfield Street. So, you get a kind of race to the bottom, which is reflected in the retail offer: lots of cheap cafes and hairdressers, and then the only chains you've got are bottom-of-the-market chains. You've mentioned Wilko; I would add Heron Foods, which is B&M's food operator, and Iceland foods, both of which typically operate smaller supermarket-type stores in areas where a large amount of the traffic is neighbourhood, low-income, on-foot shoppers. 

11:50

What I would say is, a lot of the things we're talking about there are where they're not in competition with online retailers. I think that those who are in competition with online retailers have been losing out. You can't get your hair cut online, the cheaper end of the food market doesn't exist online, so what you've got—. And tattooists are also a big group, because you can't get them done online, and beauticians.

Undoubtedly so. 

Thank you. In that case, could I invite Rhun ap Iorwerth to take up a question?

Bore da. Dwi wastad yn mwynhau gwrando arnoch chi, a diolch am siarad efo ni y bore yma. Os cawn ni edrych ar ardrethi annomestig. Faint o broblem ydy'r system ardrethi annomestig o ran creu cyfleon i ddatblygu y stryd fawr?

Good morning. It's always good to listen to you. Thanks for talking to us this morning. Just to look at non-domestic rates. How much of a problem is the issue of non-domestic rates in terms of creating opportunities to develop the high street?

Thank you, Rhun. I think the key thing with non-domestic rates is you need to separate the equity issue and the regen issue. In equity terms, non-domestic rates are basically unfair, and they're unfair because retail rates were a cash cow for local authorities from 1945 to the great financial crisis of 2008. People opened—. This connects again with the over-provision of retail parks. If you've got a retail park, you've got a great amount of rates income. From the town centre, you wanted a retail high street because that brought rates income. And the result is, when circumstances change, an unfair burden is placed upon the retailers. But there's a separate—. If that's the equity issue, there's a separate regen issue, which is: do we reduce rates to make it cheaper for retailers to operate in town centres so that we solve the urban renewal problem? And I think there the answer is: cheaper non-domestic rates won't solve the problem. Rents have been falling. We have also the problem of housing and the doughnut of cheap housing around the town centre. So, I think, on equity grounds, something needs to be done, but if you want regeneration, you're going to have to do other things as well, with engaging the anchors, involving the housing associations and connecting with civil society groups.

What kind of review of the system might help? What are the key questions that could be asked—the key outcomes that we should be looking for, if we can change things for the better?

For urban regeneration or for non-domestic rates? For urban regeneration, maybe.

Yes. The current system is unfair. We need a new system, or we need to bring zero rates, or whatever, in. What are the key questions that we need to ask?

Well, I think, first of all, the fundamental problem with all kinds of tax reform is that it's the third rail of British politics and nobody would want to go there. It's not the only inequity in the tax system. There's value added tax, which bears heavily on low-income groups in society; there's the taxation of income rather than wealth, when wealth is seven times the gross domestic product income in the UK. And then you talk to somebody like Rachel Reeves and you raise all these issues and say, 'This is unjust, this is unfair', and she smiles in a watery way. Because, if you start changing things, Rhun, there are lots of losers, and people worry about the losers mobilised by the Daily Mail and the Express—that's the political reality. There are severe constraints in the UK on changing the many inequities in the tax system.

11:55

What would be, though, the one most effective financial incentive for businesses to get engaged with regenerating town centres?

The single most effective incentive would be to crack the problem of mixed-income housing in or near our town centres, which would produce the spend that would actually sustain the businesses.

Well, I think that we have to see housing as a key part of the mix. And the question then is that Welsh Government needs to have a discussion with the housing associations about their many obligations existing, for example, on housing retrofit and energy efficiency, and how, in a sense, you balance the financial incentives for different kinds of social benefits that you want from these key not-for-profit actors.

You don't think that there is an incentive that you can offer the big house builders—they won't be interested; there's nothing that can be done, it's got to be a social venture.

Barratt, Persimmon and Redrow have a formula that delivers 20 per cent return on capital. If I had a formula that delivered 20 per cent return on capital and people started to ask me to potch around on Stepney Street, Llanelli, I would smile and say, 'no'. 

Finally, I read with interest the proposal in England for these rent auctions to try to bring premises back into use on the high street. What do you make of the idea and is that something that could be, should be done in Wales?

I think that it's pretty classic Conservative government by gimmick. I think that they've completely forgotten the lessons of the 1989-92 crash in the housing market, when, essentially, there was a 30 per cent—thereabouts—fall in retail house prices. The banks and the building societies foreclosed pretty brutally, and there were distress auctions in places like Manchester, whose effect was that it knocked down the going rate for houses in the street or flats in the block. The building society was prepared to auction for whatever price it would fetch; people knew that and, as soon as the price was lower on the distress auction, that pushed all the other prices down. Now, in the 2008 financial crisis, the banks and the building societies were leant on by the Bank of England not to foreclose but to tolerate people who were in arrears. Now, I think the lesson of 1989-92 is that if we start to have reverse auctions on rents on the high street, where rents were falling, and falling rents bring down property values, where rents were falling in secular terms before COVID, they've almost certainly fallen heavily since COVID, then I think you get a disorderly decline in property prices. And the problem already on Stepney Street, Llanelli, or High Street, Bangor, is that property prices are very low and don't really justify investment in refurb and renewal.

Thank you very much indeed. In that case, Rhianon Passmore.

Thank you. That's been really interesting, so thank you for the contribution to date. I was quite amused by your comments about the Daily Mail and Express; I'm not sure that they would agree with your demolition of retail parks, but I think it's a very interesting thought.

And in regard to the balance—

I think there's a very interesting theme there, which is people want the upside on capitalism, but they don't want to take the downside. If you look at retail parks, they've been selling at prices that reflect a stable 7 per cent yield for the last 25, 30 years. The prices have been gently marked down since about 2012, but it's been a standard blue chip investment for pension funds.

Now, I would argue that that's just fine; I've got no problem with that. But, when the market turns, please don't ask the state to bail you out, or the state to allow you to build houses on your surplus retail parks, because capitalism means that you're in it for the profit and you need to take the hit when things change. 

12:00

And I think, in terms of your comments—and I will quickly come to my questions, Chair—it is about the balance of state intervention in regard to marketisation and the whole mix, holistically, within that, and that is complex and complicated.

So, I'm going to move to my questions, if I may. How do you feel in regard to the sufficiency of funding that's been available? I take your point in terms of 'town centre', you feel, is wrongheaded, but how do you feel about that sufficiency of funding from Welsh Government—I think I know what you're going to say—and also the UK Government? And I'd like you to particularly point, if you can, to your consideration as to the importance of the community renewal and shared prosperity funds and the transparency of that process. I don't know if you've got any comment that you want to add around that.

Right. Historically, I think hundreds of millions have been spent—and Nick Selwyn and the audit people added it up—hundreds of millions have been spent on what I would call pepper-pot rebuilding and restoration of buildings without thinking through the social activities in the building and the need for corridors of redevelopment and pipelines of schemes. It's been one grant at a time, typically, for something physical, and I think you've got to think more broadly in local terms about the anchor institutions, the housing associations, the civil society groups; you can't solve it one deal at a time.

If you then look at, I think, the shared prosperity fund, I think my misgiving there is that we have so many funders and so many funds with different criteria. The shared prosperity fund criteria are actually quite good. Three of the four are social criteria, i.e. contribution to public services, sense of community and local agency—bravo, that's what I would agree with; those things, really, are very much what I'm talking about in terms of my three essentials. But I do worry that, with all these different funds, all these different funders and the alphabet soup of committees—the PSBs, the CJCs, the RPBs and all the rest—that we're really organising a competition for grant writers, not urban regenerators. I think there's a real danger that the core expertise becomes grant writing, not doing regeneration. The obvious example would be outsourcing, where, the large corporates like Serco and Capita, I consider their core competence isn't actually doing outsourcing, it's actually being able to write bids.

Thank you. I take it that you would then, therefore, state that that is non-strategic in terms of where we need to be.

Over the recent years, Welsh Government's funding for town-centre regeneration has been, do you feel, streamlined and focused on the right issues? I think you may have answered that, so a 'yes' or 'no' answer would be great.

'No', is the short answer. It needs to be focused on towns and connected actions over a period of time.

Thank you. What do you see, further to the comments that you've made about civil society and co-ordination between registered social landlords and community groups—what do you see as the key priorities now for investment in terms of social infrastructure, which was sort of where I was trying to go to in my first interjection to you?

If you think about what we need, it's kind of co-ordinated and multifactoral, and I think what we should be trying to do is back the players who can get out of silo working and people who can get into alliances that are pushing meaningful change. Housing associations, yes, are key players, but housing associations lined up with civil society groups on Swansea High Street, for example, are a powerful ingredient. I think Swansea High Street's actually quite an interesting example of regen, because the Coastal Housing Group, under Debbie Green, has played a key role with the Volcano Theatre development, where you take a surplus department store and turn it into a theatre and art studios, and also with her idea—which works on Swansea High Street, but wouldn't work on Stepney Street, Llanelli, or Woodfield Street, Morriston—of building up to six storeys, so you don't need an anchor retail tenant who pays a fancy rent on the ground floor and you can therefore open the ground floor to vintage clothing shops, social enterprises and a variety of other other people that really fit the vibe that you want to create in Swansea.

12:05

Thank you. Where would you point to—I can think of potentially one or two—as examples of how the state has managed to strategically steer town-centre regeneration and renewal organically? What would come to your mind in that regard?

I think you can't point—. This is really very interesting. You can't point to any place, I think, in the UK where the state has—

External to the UK—. Well, I mean, in many places, of course, they've started from a different position. If you look at the Netherlands, for example—hugely tougher regulations on out-of-town retail parks, much more emphasis on bicycle and active travel. If you get a problem that—. One of the big problems in the UK is that—. You know, it's like that Irish story, where the tourist asks the Irishman for directions, and the Irishman says, 'Well, I wouldn't start from here.' We are starting from a place where we've been, in a way, pedalling in the wrong direction for 40 years. The idea that the state could somehow or other simply intervene to solve this problem is nuts. It's a complicated problem of local co-ordination between the anchors, the housing associations, the civil society and the traders, and very difficult to get your act together. And what the state can basically do, I think, is back the people who are either getting their act together or on the edge of doing so, at a local level, town by town.

I wish we had more time, and I would pursue that line of questioning, but I am going to be disciplined and move to my final questions and not do that.

You've talked briefly to the scattergun approach of UK levelling-up funds and the challenges that poses to strategic regeneration, urban renewal et cetera, et cetera. So, do you feel that the funding for town-centre regeneration, through the levelling-up fund and shared prosperity fund, gives opportunities as well as risks? And could you briefly outline them?

I think the central problem is that, when you have schemes of this sort by Welsh Government or by Westminster, I think the two problems are that there is a tendency to spread the money around on grounds of equity—

Yes. There is a tendency to reward the facile grant writers, and I think what we're looking for is people who can put together local, what I'd call alliances for change, and that's a really difficult thing to do. And I think we should be trying to focus on those places where there is some possibility of an alliance for change, so that people aren't making one-off decisions, that they have a broader vision, that it's not simply one bite at a time. I think that's the way forward, with a clear sense that anchor institution locations, mixed-income housing and civil society are part of the remix. You can't simply mandate that or get it in the response to one grant scheme or to a multiplicity—

12:10

Okay, thank you. That's clear, and I would also comment that I think, in terms of Government's mandate of setting that strategic objective, it is very much able to do that. And in terms of wider strategy, it would only be Government that would do that. It certainly wouldn't be Walmart or Tesco, and it certainly wouldn't be any of the supermarket retailers that you speak so eloquently of. So, lastly, finally, Chair, and briefly, what do you feel about the areas that are most in need? We can all point to them, you've talked about your case study in town centre regeneration. How do you feel that Wales is placed in order to develop investment proposals and bids to ensure that they benefit from the UK's cascaded funding to those that fit the brief?

I think one of the difficult things about selectivity of funding is that the funding will partly go to places that are not the most deprived. If they get their act together, fine. If they don't get their act together, no. I think that's quite a difficult one to swallow, but if you want constructive regen with the anchors, the housing associations and civil society, some places are going to end up further ahead in the race to get co-ordination than others.

What I would say is that depressed, deprived places, sometimes they have an infrastructure that is well adapted to succeeding in the kind of world that I would like to see. The classic example that I know is Blaenau Ffestiniog, which, on most social deprivation indices, would score highly—wages are low, property prices are low, education is not so great et cetera, et cetera, local services have been withdrawn—but we ran a questionnaire in Blaenau, and it showed that people really like living in Blaenau and that there's a group of, certainly, Welsh-speaking graduates who are there by choice, even though there are larger opportunities elsewhere. So, these people are a creative resource in a place like Blaenau, and I do think we give the money to people who can get their act together, but some places that score pretty badly on social deprivation indices will be able to get their act together, and lead the way.

I always think the middle classes live in splendid suburban isolation and wouldn't be completely capable of this kind of engagement, involvement, community activation kind of programme, which is what I'm recommending for urban renewal.

Thank you. In fact, I should declare I used to work in a building society and sat on the board of a housing association, and I recall the Moseley village approach in the 1990s, which seems to have followed the model you're now advocating. But I'm conscious, professor, that we're well over the time you allocated for us. What is your timescale, do you have to go, or how much longer can you stay?

No, it's—. The business of shifting people from town centres to towns, getting them to think about edge-of-town development and reuse, getting them to think about car dependence, it's a long-term crusade. If you want another 45 minutes—

—we can carry on, pressing towards a progressive line.

You're okay until half past. Do you want ask to continue with the questioning or—? Perhaps we'll go on for five more minutes, and we'll be as condensed as we can in our final points. Mike.

12:15

With national non-domestic rates having come in, there's no benefit to any local authority to have new shops, et cetera, or shopping centres, because the money all goes into the centre. So, without any financial benefit, should we be having a regional plan, perhaps in Swansea and the Swansea city region, where they look at the city centre of Swansea and they then look at the out-of-town developments at places like Morfa and Trostre park, and then look at the small town development? Because what happens in Clydach has a huge effect on Woodfield Street, and vice versa.

I mean, I think that's a very shrewd point because, you see, when 80 per cent of households have cars, we've constructed a 30-minute drive-to society. If you look at Wales as it was, if you look at Clydach or Morriston or Llanelli, a large number of people lived within—. These were work-live communities. People lived within walking or bicycling or short bus journeys from their place of work, whereas now, if you look at Welsh towns, typically, those who live and work in a place like Clydach or Llanelli will be one third or less of those who commute in or out to work. So, there's a large movement from Morriston to Llanelli and from Llanelli to Morriston, commuting in and out, and the live-work thing has been broken with a series of disconnects.

Now, if you wanted to put it together, then some kind of regional plan—like the thing you're suggesting—would be a really good idea. The problem I worry about is who is going to be the regional supremo. We've got city deals, regional partnerships, corporate joint committees, et cetera, et cetera, and a lot of these operate on spreading things around rather than taking tough decisions. If you look at the city deal thing, for example, that basically starts on the basis of, 'Well, every local authority should get a bit of something.' Now, a tough-minded regional plan would need to go one step further, which is why I think my instinct is to press for action by local alliances at town level, not because regional plans wouldn't make a lot of sense, but because, at present, tough regional plans that say 'no' to some things or 'smaller' some things rather than what they have been for the last 20 years are not really within the Welsh political culture.

Thank you. Well, if I may conclude then by just asking if there's any points that you'd like to raise with us that you haven't already covered, either in the context of the 'Small Towns, Big Issues' report or actions that you believe the Welsh Government could or should be taking beyond those already covered.

I think the one issue that we haven't raised is how, in a sense, the urban responsibilities of Welsh Government are divided between many departments, and just like you have silo thinking by the anchors in an individual town, i.e what suits the health board, what suits the FE college or whatever, what's complicated, what's costly, you've got that kind of silo problem at a local level. You've also got the problem, I think, that the whole responsibility for urbanism is divided between different divisions—between housing, transport, climate change, et cetera—and I think there's a problem about silo working in Welsh Government, as there is with silo working with anchor institutions at a local and a regional level. So, I think, working together needs to start with Welsh Government. 

Thank you. Well, on that note, then—. We've all got more questions that we'd love to ask you, but none of us, unfortunately, has the time for that. So, can I thank you again very much for attending today and for the extra time you've given us answering your questions? A Record of today's meeting will be published in draft form and sent to you for you to check for accuracy before publication of the final version.

So, at that point, we'll say farewell to you and thank you again for your contribution. If there are any further thoughts you have that you feel we've missed, please let our clerks know and we can incorporate that into our further work. We may have one or two more questions we want to write to you to perhaps answer in writing, and we'll discuss this privately in a moment. But again, thank you again and may the rest of your day be creative and rewarding. Thank you.

12:20

Thank you for your questions and I hope the committee shifts from talking about town centres to talking about towns and car dependence. Thank you very much.

6. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod
6. Motion under Standing Order 17.42 to resolve to exclude the public from the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Well, on that point, therefore, I propose, in accordance with Standing Order 17.42(ix), that the committee resolves to meet in private for our final item. Are Members content?

Thank you. In which case, I'd be grateful if we could be moved into private session.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 12:21.

Motion agreed.

The public part of the meeting ended at 12:21.