Time to shine the light
27 November 2023
If the logistics industry wants the right warehousing space in the right locations - there’s no more hiding in the shadows.
RIGHT NOW, the bean counters and mandarins in government are going through what are hopefully hundreds of representations from property developers, planning consultants, investors, businesses, trade bodies and logistics freight and warehouse associations following a call for evidence on Freight and Logistics and the Planning System, which closed in October.
“No one can doubt, especially after the pandemic, that the sector should be considered anything less than critical national infrastructure,” says Tritax Symmetry’s Jonathan Dawes, “within six weeks as the world was put into lockdown, the logistics sector was sorted out, it may have been a limited operation, but it kept going.”
Transport and warehouse operatives were given key worker status, right up there with the nurses and doctors in the NHS – we just didn’t clap for them.
For GLP senior planning director Gwyn Stubbings, it is simple: “The sector should really be as national infrastructure in the same way as education and healthcare; it has a fundamental impact on economic growth.”
His thoughts are echoed by St Modwen and property consultant Savills in their response to the call for evidence: “Without it, goods cannot be transferred from the various freight modes to end customers, whether they be businesses, homes, or essential social infrastructure such as hospitals.
“In our view, freight and logistics uses should be considered ‘critical national infrastructure’. Anything that adds to the cost of freight and logistics operations, or hinders its performance, adds cost and delays to the wider economy. Similarly, anything that helps to make freight and logistics work better has a direct and positive impact on supporting growth, reducing the cost of living, and enhancing the UK’s competitiveness.”
The Government agrees. In its call for evidence, it reiterates the sentiment adding that the freight and logistics sector contributes £127 billion gross value added to the UK economy through more than 200,000 enterprises. It has already acknowledged through its 2022 Future of Freight plan that providing the legal infrastructure and governmental support is critical and that the planning system in England needs to be updated to facilitate that ambition. Hence the call for evidence which will lay bare the issues and reasons why the planning system is failing to provide for the needs of the freight and logistics sector and what can be done to ensure that that changes.
“There is a sort of snobbishness about warehousing jobs. Councillors, councils and those in charge seem to only want a certain type of job.”
Be that as it may, for something so critical the over arching question must be how did the situation get so dire? Especially when it comes to providing the warehouse function of the logistics industry with the right amount of land, in the right places, for an efficient fully functional modern supply chain.
For UKWA CEO Clare Bottle the answer is simple: “Warehousing remains one of the fastest growing yet least understood sector in the UK. This is partly because people rarely see what happens inside these often vast buildings, where millions of products are processed every day. Accordingly, the essential work warehouses do has always been ‘behind the scenes’ and therefore to a large extent under-appreciated.”
It’s not just Joe Public that under-appreciates its value, this goes to the highest authority in the land. Bottle notes: “It does not feel that warehousing has had the bandwidth that is deserves especially compared to transport which has had its own Department, Secretary of State, and committee [for over a century], until recently warehousing had nothing – now it is part of the Department for Levelling Up, Housing and Communities and falls in the remit of the Secretary of State for Faith and Communities.”
Developer Jaynic’s planning director Paul Sutton; “Warehousing is not held in high esteem, everyone talks about housing but the process for employment land is not seen as important.”
Bottle agrees: “When people talk about planning they talk housing without even thinking about it. Too often there has been high level focus on residential development without due regard to the job requirements and delivery needs of residents.”
It is well known that such was the focus on residential in London that over 3,000 acres of industrial land was lost to other uses – mainly residential – between 2001 and 2015 alone.
Property consultancy Gerald Eve planning and development team partner Leonie Oliva says: “As a sector industrial and logistics has been somewhat overlooked and misunderstood in the past and this has generally resulted in limited policy protection for industrial land and a well-documented drain on this, particularly in London, but also in other parts of the country, including the loss of the sites that are particularly well suited to logistics uses.”
Savills director of economics Mark Powney says: “The Government is obsessed with housing and housing affordability and there are pages and pages of guidance [for it] but for the rest [employment] there is a couple of bullet points on how it might be done.”
No one is saying residential development is not important, just that it should not be the be all and end all of planning policy. Dawes says: “Everyone understands residential therefore politically that is what [governmental bodies] are going to focus on.” Montagu Evans partner specialising in commercial and retail planning Kirill Malkin agrees: “Some topics are politically more charged than others.”
Powney adds: “It is time to focus on the economy to the same level as housing.”
The British Property Federation in its evidence notes that the South Cambridgeshire Local Plan was positively hostile in its approach to logistics where it actually states that large scale warehousing and distribution centres will not be permitted.
That is where the real nub of the difficulty lies Dawes explains: “Despite the pandemic raising the positive message regarding the importance of freight and logistics to keep the economy moving it has not translated into that wider recognition of the complexity of the sector.”
Developer Potter Space’s managing director Jason Rockett agrees: “Historically, the sector has been thought of as dirty, low skilled and continues to be viewed through that lens rather than what it actually is.”
Savills planning director Tim Partridge notes: “There is still an old fashioned belief that [warehouse] jobs are not proper ones.”
Colleague Powney agrees: “The problem is the sector is impacted by a number of misconceptions surrounding the quality and quantity of jobs on offer, the pay and work conditions.”
Some may go as far as to say that there is job snobbery. Bottle says: “There is a sort of snobbishness about warehousing jobs. Councillors, councils and those in charge seem to only want a certain type of job.”
The British Property Federation in its evidence notes that the South Cambridgeshire Local Plan was positively hostile in its approach to logistics where it actually states that large scale warehousing and distribution centres will not be permitted. The subtext of the policy informing that decision states that these developments require large swathes of land but generate low numbers of jobs. The UKWA also signalled the council’s attitude saying its Local Plan celebrates the priority given to technology developments over warehousing. “During the last 30 years, the Cambridge Sub- Region has developed into one of the premier locations for high technology research and development in Europe. Planning policies favouring research and development and discouraging large scale office and warehouse development have helped foster one of the highest rates of job growth outside any of the UK’s major cities.”
This is an embedded attitude harking back to days ,before the internet, ecommerce, and technological revolution within the supply chain industry. Nearly 25 years ago research by Fuller Peiser into local authority attitudes to logistics noted at the time that of the 111 adjacent to or in secondary locations near strategic transport corridors 76% indicated a more restrictive regime towards B8 (storage and distribution) development: “This shows an ingrained planning officer attitude towards B8 development. The industry is not seen as one to be encouraged or provided for.”
Clearly those producing the South Cambridge Local Plan 2018 have clung to those attitudes from the last century and are proud of it. They are not alone. Councillors in other regions have similar attitudes. In Basingstoke warehousing has been described as “not the vision for the town” and a ‘money making exercise for with little benefit to the Borough of Basingstoke & Deane and its residents’ by a local councillor and supported by the local MP.
In Yorkshire Batley & Spen MP, Kim Leadbeater, has challenged the ability of Amazon to provide the number of jobs it said it would on the ill-fated Cleckheaton development in her constituency in parliament. Other MPs have also brought up the veracity of job numbers and quality of jobs in parliament and their constituencies further embedding the belief that warehousing is something not to be desired.
This of course is not helped by headlines in the media such as ‘The Job is not Human’ quoting research that carried out in-depth interviews with just 30 workers, and others equating warehouse jobs to slavery. Bottle agrees that there is an issue regarding job security and tenure and that needs to be addressed. However, these issues are not solely the domain of warehousing employment.
And it is these attitudes and reports says Knight Frank’s partner and head of logistics and industrial agency Charles Binks that informs local opinion. “Add in the fact that the buildings are large with lots of traffic movement and locals immediately opt for the not in my back yard – people have votes and that is what the local politicians bow to.”
“Ultimately it is a local political decision, if the local populace is not in favour and is particularly vocal about it, even if the planning officer says that it [the warehouse application] meets policy invariably it gets turned down [by council members]. In my experience some [councillors] are wanting to get re-elected and that will be their foremost concern rather than whether or not this is within policy.”
Planning consultant SEC Newgate’s most recent National Planning Barometer annual research noted that 9 out of 10 councillors have also voted against their officers’ advice at least once in the past 12 months, with almost one in five doing so six or more times.
The reality about the quality and quantity of jobs in the sector is a different story. Powney says: “The logistics sector has been the fastest growing commercial sector in the UK for over a decade. Jobs in the sector pay better than the national average across an increasingly diverse range of occupations.”
St Modwen and Savills evidence to government has shown that between 2011-2021 the share of higher skilled roles in the warehousing sector increased 17% with the biggest increase being in professional occupations such as engineering and technology where roles have grown by a third, in addition traditional office based roles have grown 11% as more businesses choose to bring their operations under one roof and utilise the Grade A office space being provided by developers within warehouse buildings.
Bottle says: “Yes there are entry level jobs, but warehouses generate a diverse employment opportunities and provide a clear career route whatever level of entry is taken. Not everyone has the best start on life and entry level jobs are essential. Even at a philosophical level it is important, to do so otherwise is consigning some members of society to the scrap heap - the exact opposite of social mobility.”
St Modwen’s senior planning director Richard Hickman says: “Many communities and local authorities have a poor perception of logistics and what it means for their area because they aren’t aware of the types of businesses that now occupy these modern, sustainable spaces or of the benefits that come with their development. These include employment opportunities across a diverse range of roles, as well as the wider positive economic impact at both a regional and local level. It’s important that we lift the lid on these warehouses and show people what really goes on inside. If we could find a way to change perceptions and reform the planning system, we would help to unlock the opportunities that the logistics sector presents.”
This is just what the UKWA is hoping to achieve with its 80th Anniversary year long ‘2024 The Year of Warehousing’ campaign. Bottle says: “As our role becomes increasingly central to everyday lives, it’s time to turn the spotlight onto all the great work we do and for the warehousing sector to be more widely recognised by government, media and the general public for its achievements.”
However, without full engagement by all in the logistics sector then it will be far too easy for the ingrained the status quo to remain. Nearly 25 years ago I wrote up a report on attitudes to distribution, it’s scary to hear that those same attitudes abound today because nothing was done to change perceptions.
What is to be done?
The government’s call for evidence has thrown up a series of issues and innovative solutions.
Tritax development director Jonathan Dawes says: “On the most basic level local authorities do not allocate or identify enough land for employment.”
In fact developer Jaynic’s planning director Paul Sutton notes: “Local authorities are providing less than half of the employment land required because they use outmoded backward looking formulae to calculate employment need.”
Many developers and consultants interviewed say the same. St Modwen’s senior planning director Richard Hickman explains: “None of the criteria that local authorities use to assess the need for employment land in a given location are truly demand-focused or what the sector requires. This means local authorities use their own method for assessing the need for logistics development which is often an amalgamation of different approaches, criteria, or lookback periods – and more often than not they come up with outcomes that fail to recognise the growth and importance of the sector in recent years.
Savills director of economics Mark Powney adds: “The statistical models they use for calculating future demand are inadequate. Local authorities are gatekeepers to land allocation and have been roadblocking supply which is proven when it can be shown that demand has been outstripping supply for decades.
According to analysis undertaken by St Modwen Logistics and Savills historic land constraints have suppressed industrial demand by 29% over the last decade. Over that period national availability (vacancy) has consistently been below 8% the rate at which supply, and demand are considered to be in balance.
Savills calculates that annual demand for new logistics space exceed delivery of new units by 58%.
The BPF notes that the suppression in demand for employment floorspace risks results in speculative applications and the unplanned release of sites via appeals and call-ins, as developers are able to pull together strong needs cases where the evidence has been ignored in the local plan process.
“This is far from ideal and is not only leading to a delay in the delivery of floorspace but is resulting in increased cost and risk to the market. This places a strain on planning resources versus what would have been more straightforward via a plan-led approach.”
The BPF says that between 2019 and 2022 more than 1,630 acres of employment land was allowed at appeal again proving that the current methods of calculating need are in adequate.
A number of those interviewed suggested that requiring local authorities to set a five year employment land supply targets mirroring the approach already in place to determine residential supply would be a first step and combined with the use of standardised formulae such as a suppressed demand model as used by Savills and St Modwen would clarify need transparently across the country.
But all this will come to nothing if there are not enough resources in the planning system in the first place. Trammel Crow Company’s UK planning director Sophie Watkin says: “One of the biggest issues is resources, local planning authorities are so poorly staffed. They lose people all the time resulting in there being not enough planners with the right experience working on the applications.
Al King head of development at developer Chancerygate agrees: “The system is set up so there can be awkward and inappropriate challenges with planning officer too inexperienced to differentiate between those that are genuine and those that are not.”
He adds: “Planning is an art form that takes effort and time it is the ultimate negotiation and you need to know what you are doing.”
His premise is that if one side does not, then it all leads to a lengthening in the time it takes to see an application through the planning process and an increase in costs.
Colewaterhouse planning placemaker George Smith says: “Across the board on every single application the response time of all descriptions is probably the worst it has ever been.”
Watkin notes: “Even if the land is allocated and should in theory only take months to push through, it often lands up being a couple of years.”
Wilton Developments managing director Jason Stowe notes: “Just getting form outline panning to reserved matters – something that should take 12 weeks will take 12 months.”
In addition says GLP senior planning director Gwyn Stubbings: “There are variations across different planning authorities, discrepancies which leads to challenges and delays.”
None of this is made any easier with the increasing amounts of red tape, be that through changes to planning policy from government, or the multitude of planning conditions applied to an application all of which need to be sorted prior to the commencement of development.
It has been noted that one consent had 45 conditions set on it prior to development these were split between several different planning officers. “It is not surprising,” says consultancy SECNewgates’s director in local planning David Scane, “that after a decade or two not a spade has been put in the ground on some of these applications.”
It is a bad state of affairs when Knight Frank’s head of industrial investment Johnny Hawkins says: “Almost every developer says that planning is the bane of their lives and all have a bad story to tell.”
That is not to say that every local planning authority is bad, just that there is severe strain on the system. “The system needs strategic guidance,” says Potter Space managing director Jason Rockett: “and this has to come from the top.”
Savills planning director Tim Partridge agrees and adds: “Planning should be evidence based but it is political members are members planners and are planners and without guidance everything is open to interpretation.”
Probably more importantly than that, according to GLP planning manager Lauren Whiteley, is: “the need for meaningful enagment at the policy making stage between all parties, planners, developers and occupiers.”
Stubbings agrees: “As a developer when we do manage to get local authorities to vists sites and see what is happening there is much more clarity. They begin to understands the issues and opportunities and the visits are very well received.”