How do you solve a problem like the high street?

Time for a Troubled Buildings Programme

My first flat was opposite a burnt-out building; an end-of-terrace somehow still standing without pulling down the next in the row, which comprised of two flats above Yilmaz Kebab, which did great fish and chips. I don’t know when the fire happened, but we first knew the area more than twenty years ago, so it was before then. This is the building today:

As you can see, it’s next to vacant plot that could hold, perhaps, 6-10 flats depending on how high you built. The building itself is good for two flats and a retail premises. Two-beds on this street now go for about £350,000 (that’s another depressing story); since I lived there the place has gentrified a lot: there is a restaurant that only serves bao buns, a dog-grooming parlour and a cocktail bar that has Negroni on tap.

So you don’t have to be an economist to see that something is wrong. Millions of pounds of value left unrealised for decades.

I am not Jim Waterson of London Centric, so this is not going to be a deep dive into the history and ownership structure of this site; you are not about to hear about a complex tax avoidance scheme involving snails and american candy. Partly because my investigative journalist skills are pretty limited, but mostly because I’m interested in the policy questions. This site is nothing special. I could name you a dozen more that I walk or cycle past regularly (Why is the old Central School of Art building on Kingsway empty after 15 years? Why has this pub right on the south circular been empty for just as long?) - and I’m sure you have just as many that feature in your daily life.

More importantly still, in many of our smaller towns and suburban high streets, boarded up, graffiti-ed, vandalised buildings and empty lots are the new normal. ‘Broken windows’ theory, which suggests that even tiny infractions of public order foster serious crime, may have turned out to be a bit overblown. But I think we can all agree that broken places ooze a sense of decay onto a community - a sense of decay we urgently need to turn around.

Economics of broken places

There is a lot of raw economics behind the struggles of our high streets, of course. For as long as humans have had urban settlements, in-person retail has subsidised the creation of shared places. Now more and more retail has moved online, there isn’t enough money for as many shops to survive. Add in 15 years of productivity stagnation, a cost of living crisis, a global pandemic and the continuing regional imbalance of our economy, and it’s pretty easy to conclude that there is no turning back.

And yet, if this decline were only about economics, then the kind of sites I opened with would not exist. This is not just market failure. In many cases, it is market manipulation from property owners focused primarily on capital values rather than revenue. Landlords would often rather have a vacant building with a nominal rental value of £10,000 a month than a full building rented out at £5,000 a month. Lower rent may mean cash in the bank but it forces them to realise a loss in the capital value of the building.

Owners may also hold out for a more lucrative planning permission: a vacant pub that could be housing; a vacant warehouse that could be a nightclub. And of course some are overseas investors or UK-registered shell companies who simply don’t care right now.

So we have twin problems: market failure in many places, compounded by pockets of market manipulation everywhere. This means to solve our problems we need to change the market fundamentals and take a much more proactive role in sorting out the toxic sites and boarded up shops.

Updating the tax system

Part of the rot lies in the way we tax physical space. Business rates pay for local services including policing. They’re one of our oldest taxes, based on an old premise that value is created in physical spaces, and policing resources should be concentrated on protecting physical value. Now value is created online, crime happens online, and property owners still pick up most of the tab.

This produces the worst possible combination:

• High rates for the businesses who still show up in person

• Low taxes for firms who extract value but no longer provide place-based benefits

Until we confront this directly - until we accept that the digital economy needs to pay its share for the infrastructure it relies on - we will be fighting decline with one hand tied behind our back.

Changing what we use places for

Whatever happens, there will be fewer shops. There is a bit more hospitality on our high streets (the classic bank → wine bar conversion) and a lot more charity shops. But proactive local authorities should think about how to bring their own services and functions to the high street to drive footfall and enable community.

Sacha Hilhorst has proposed putting a new generation of nursing colleges in our struggling town centres. Council services that need a front of house should also be there. Repair cafes; bike repair stands; water fountains; play spaces and microparks; there are lots of good examples of how to bring life to a place.

But we need to accept this will cost money: retail will no longer be enough to pay for the community benefit of a shared and lively centre for a place.

This is community work
Part of the problem is that small sites are invisible to big systems. We’re (rightly) putting more power and authority into the hands of Mayors and combined authorities, but no Mayor has the time to fret about single buildings.

Regeneration tends to happen through large sites: 2000 homes on a brownfield plot, 500 homes above a station, a shopping centre conversion. Big numbers with big political upsides. By contrast, the things that most visibly blight our places are small - a single derelict pub, a row of garages, a boarded up shop.

These micro-sites irritate residents but barely register in policy pipelines. Planning departments don’t have capacity to chase them. Developers ignore them: the transaction costs are too high, the profits too small, the headaches too many. If a council is trying to hit 5,000 new homes, they’d rather focus on three mega-sites than on 500 tiny ones.

But the long tail of underused assets is where the life of a place actually happens. It’s also the only tier where:

• Communities can meaningfully participate

• SME builders can compete

• Local investors can get involved

• £5,000 grants (not £5 million masterplans) can make a difference

• We can keep carbon emissions down through retrofit instead of demolish and rebuild

So the answer has to be to empower local communities to take action themselves: with only funding and coordination from the centre.

A Troubled Buildings Programme

When I was in government we set up the Troubled Families Programme: a central mission, delivered through local partnerships, with strong data, shared frameworks, and flexible funding.

I think that’s basically what we need for troubled buildings.

Local authorities already have powers to compulsory purchase, to force repairs, to address dangerous structures, to require safety work. They rarely use them. Not because they are weak or stupid but because:

• They are short of money and expertise

• They are worried about the politics of challenging property owners, even the delinquent ones

• They fear being dragged into years of litigation

• They worry that if they acquire a building, they’ll be stuck with a money pit

• They don’t have the capacity or will to fight these battles building by building

That’s where central government can help.

Quite obviously, Whitehall cannot fix derelict corner plots in Truro, broken pubs in Gateshead, or ex-industrial strips in Bolton. (Its core job, of course, is to directly fund chess tables in local parks.)

What central government can and should do is:

• Mandate data transparency - my tiny dream is to see the Land Registry completed and linked to Companies House’s listings on beneficial ownership: that would make it easy for anyone to find out who really owns a burnt out shop.

• Put resources into the housing tribunal and create shared legal and technical capacity to push the boundaries of how the law can be used. Things like standardised templates for CPO, repair orders, meanwhile use and community leases, a dedicated technical team councils can call on, and a pool of the best lawyers to fight the key test cases.

• Provide funding (which they are, through Pride in Place, for which I hold out great hopes). Alongside revenue funding, we need blended, recyclable finance: catalytic loans, recoverable grants, community shares, social investment - the kind of capital that can move fast and fill gaps. There are important precedents: Power to Change support community businesses, the Architectural Heritage Fund can support projects in listed buildings. But the scale is tiny compared to the problem.

Places break slowly and are rebuilt slowly. But they can be broken back into life too. And right now, everywhere we look, we have the raw material: a country full of buildings waiting to be saved.

Footnote: Homes That Don’t Cost The Earth.
This is pretty technical, but also very inspiring. Arup, Dark Matter Labs, UCL and others are collaborating on a project looking at the practical and engineering challenges to what they call “urban densification”: in-fill developments on micro-sites, loft conversions and building extensions, and retro-fit of existing buildings.

Just as individual micro-sites get ignored in favour of the big and shiny… so engineering and policy problems that affect micro-sites tend to get ignored, too. So it’s great to see this happening.