Planning for growth clusters in the UK

Copyright: David Lawson - First published Property Week 1999

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Cluster fudge is a strange delicacy. The sticky, unpalatable mess, with its distinctly fishy odour, is blamed for a plague of problems ranging from inflamed tempers to deadening torpor.

 Clusters have been a favourite drug among among planners and developers for decades but this variation - a by-product of world-shaking research by the pharmaceuticals giant Glaxo Wellcome - is slowly poisoning their system.

  It all started when the mixture became tainted by politics. Wellcome asked to double the size of its research centre near Cambridge. This appeared to conform to a strident  statement by Peter Mandelson when in his his pomp as Industry Secretary, calling for encouragement of 'clusters of growth industries'.

 But Deputy prime minister John Prescott put on his conservationist  hat and supported the local planners' objections. Wellcome threatened to flee overseas rather than be diverted into the job-hungry provinces and tempers have boiled ever since.

 On the surface, the issue seems to have been blown out of proportion. Clusters are rarely as problem, springing up where groups of like-minded companies gather. Media companies in London's West End or banks in the City are classic examples, says Mike Haddock, research associate at GVA Grimley, which investigated the issue with ECOTEC Research for the government last year.

 Conflict arises only where they come up against space restrictions. Even then, the impact may be exaggerated.  'In the Thames Valley, for instance, high-tech clusters make up only 5% of jobs,' says Haddock.

  But they have turned into a flashpoint in the simmering  conflict between  growth and conservation which has been a constant problem in the development of business parks. That is where the fishy smell has emerged.

 'Clusters are a red herring,' says Adrian Hill of Healey & Baker. 'The urgent issue is whether growth companies will be allowed to grow. It is part of a wider aspect of restrictions such as parking controls which cannot be sustained if we want to encourage the growth engines of our economy such as pharmaceuticals and IT.'

  Soothing noises came late last year from the Chancellor, Gordon Brown, with tax incentives for innovation promised in the Budget. The Sainsbury Report into bio-technology also called for changes in planning to enable a a network of clusters around university towns. Even Prescott appeared mollified, suggesting the new PPG11 and 12 planning guidance notes will encourage high-tech clusters.

 But this has merely created uncertainty, says John Bowles of Fuller Peiser, who  advised Wellcome during its expansion bid. The company was offered 60% of its desired expansion space, which turned the issue from clear-cut principle to one of scale. This was a 'fudge', he says. The proposed  guidelines on clusters adds more layers of to the confection.

 'There is nothing that encourages clusters. The guidance will be a general comfort statement. It should be unequivocal and remove the ambiguity that devalues development plans and the credibility of planners,' he says.

   At the sharp end of the market developers are in limbo, says Tim Heatley, business park director at GVA Grimley. 'Clusters are another example of a system which cannot manage to produce joined-up thinking.'

 That covers not just feuding ministers but a host of local authorities that beg for jobs and expansion while  rejecting development.

 Bowles blames a fundamental inability  to cope with sea-changes in economic activity. 'The planning system  has been shown time and again it is unable to handle new concepts, whether they are  retail parks, conversion of commercial space to housing or clusters. This is another example and it could fatally harm the economy.'

  There is an ever-present fear that growth will be driven abroad. Again, this is not new: 'But we are living in a different world where firms think on a global scale,' says Stuart Robinson, head of planning at Hillier Parker. 'A company may not leave but it can easily divert investment elsewhere.'

 One of his clients refused permission to expand a computer facility merely transferred extra work to the US. 'There are many similar examples bubbling below the surface. International companies are bemused why they face such a struggle when other countries are desperate to take their investment.'

  One faction in government - the DTI cabal - appears to understand this. The DETR, however, seems to feel that companies can be steered away from clusters to benefit other parts of the UK. That ignores the fact that clusters exist because of shared labour skills. It may be easier for a company to find similar skills or in another country - or attract staff to California rather than Cleethorpes.

  The argument is not iron-clad, however. Clusters have a downside that goes beyond trespass on green land. Concentration of fast-growing industries can  ramp up labour and housing costs, causing local  economies to overheat. Cambridge is a classic example.

 At the other extreme, they can kill whole communities because of over-reliance on a single industry. It is easy to forget that coal, steel, shipbuilding, textiles and oil were all  clusters. When they declined - sometimes overnight - there was nothing to replace them and local economies collapsed.

  Flight abroad is also not an automatic reflex. When Oracle outgrew the Thames Valley, it found new space not in  San Francisco or Stuttgart but Solihull. But developers argue that is because the labour skills nothing like those demanded from research scientists. There were also suitable buildings available.

  The property industry is not always so accommodating, however.  While attacking a system which discriminates against growth sectors, it is riven with its own flaws. Investors are notoriously shy of backing the kind of start-up companies that tend to make up today's clusters. Many developers  have also  refused to provide buildings for call centres, forcing them into offices and warehouses.

 Fudge seems to be a favourite on both sides of the fence.

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