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The Thames Gateway is regularly championed as holding the key to solving the South-east鈥檚 housing crisis. So it is perhaps surprising to discover that hundreds of hectares of employment land are lying vacant in the London stretch of the gateway alone.

The Greater London Authority estimates that 618 ha of the 2500 ha of industrial land in the London Thames Gateway is surplus to requirements 鈥� it represents 72% of the vacant industrial land in the city. Even using more conservative housing density standards than the GLA鈥檚, that works out at enough land for more than 30,000 new homes 鈥� or enough to meet the area鈥檚 housing needs for years.

The GLA proposes in its updated London Plan that 500 ha of the 618 ha should be released. This leaves 2000 ha of employment land across the London Thames Gateway, easily enough to meet the needs of the area鈥檚 businesses.

London mayor Ken Livingstone is keen to see such sites freed up for housing use. After all, just 7% of London鈥檚 population is now employed in industry, according to the GLA鈥檚 own figures. And within 20 years, the GLA estimates that just 154,000 Londoners will be working for manufacturers. But unlocking employment land so that it can be used to build much needed housing is proving far from simple.

Consultant URS has been commissioned to establish how the release of employment sites should be distributed across east London. It is finding that east London boroughs do not quite see eye to eye with the mayor

on the issue. Inner London boroughs such as Newham and Tower Hamlets are happy to play ball. But others such as Greenwich (see below: "Greenwich: all at sea") and councils on the outskirts of the capital, including Barking & Dagenham and Bexley, are more reluctant to sanction the loss of employment land for housing purposes. 鈥淭hey still have a sustainable amount of industrial employment and see it as a core part of their local economy,鈥� says URS.

Chris Donovan, regeneration director at Bexley council, defends his authority鈥檚 stance. 鈥淲e are putting all our eggs into the financial and business services basket in London. In a great city like this you need to have more of a mix,鈥� he says, adding that Bexley ensures that sites are occupied.

Not just a London thing

It is not only in the London boroughs that the tussle over employment land is taking place. Councils across England are being pressured by the government to encourage the redevelopment of industrial land. Revisions to PPG3, published last year, say local authorities should 鈥渃onsider favourably鈥� applications for housing and mixed-use development on land allocated for industry and business that is no longer needed for such uses. Councils can only resist such changes of use if the scheme results in the development of a greenfield site, exacerbates a local over-supply of housing or if the council can demonstrate that there is a 鈥渞ealistic prospect鈥� of the land being taken up for industrial or business use.

A key factor behind the mounting pressure on councils to release industrial sites for housing is the government鈥檚 insistence that at least 60% of new homes should be built on brownfield sites. Derelict or undeveloped employment land is often the best source of such sites. 鈥淭here鈥檚 political pressure to meet the housing targets and a lot of councils find it difficult to find the land,鈥� says Christine Howick, an employment land expert at planning consultant Roger Tym & Partners.

Credit: Julian Anderson

The new economy

The backdrop to all of this is the transformation in the UK economy in recent years. An Ernst & Young survey published last month shows that UK factory production is down 5% since 2001. Over the same period, the manufacturing workforce has dropped even faster 鈥� by 25% 鈥� itself a dramatic acceleration on the 15% fall in industrial employment that took place over the previous decade.

By contrast, output in the service sector, which now accounts for three-quarters of the UK economy and 80% of employment, increased 2.3% per year over the same period. Reflecting this transformation, city-centre office hubs expect to generate hundreds of thousands of new service sector jobs over the next decade.

The brain has replaced the brawn. That must have land use implications

Brian Waters, chairman, London Planning and Development Forum

A recent survey by industrial property expert King Sturge sheds further light on the way the UK economy is mutating. The first quarter of this year saw the biggest take-up of distribution sheds ever recorded, nearly 500,000 m2, as UK consumers continued to buy an increasing share of their goods from overseas.

These shifts are leading to a change both in the volume and the nature of space needed by firms. Richard Woodford, director of the Manchester-based consultancy HOW Planning, says the new breed of advanced manufacturers and service businesses need less land. 鈥淓ffectively you can get a lot more jobs per square metre than you used to,鈥� he says. Architect Brian Waters, chairman of the London Planning and Development Forum, says: 鈥淭he brain has replaced the brawn. That must have land use implications.鈥�

Falling business demand for space has fuelled an increasing mismatch between the value of residential and employment land. Stephen Hollowood, director of planning in GVA Grimley鈥檚 Birmingham office, estimates that the value of land can jump from 拢300,000-400,000 per acre to 拢1.5m per acre when its use changes from employment to residential, giving firms a big incentive to cash in. 鈥淵ou can see potential increases in value of four, five or six times,鈥� he says.

But the planning system takes time to catch up with economic change. PPG4, the guidance on employment land, has not been revised since the early 1990s. And many individual council development plans have not been revised since last year鈥檚 changes to PPG3.

Gareth Capner, planning partner with consultant Barton Willmore Partnership, offers an example of the resistance often encountered by those attempting to re-zone employment land for residential use. His firm has recently helped to secure planning permission for housing on a former hospital site in east Hampshire that had been safeguarded by the local council for employment for the past 15 years. 鈥淪ixty-five per cent of councils are still living in the past, waiting for manufacturing to come back,鈥� says Capner.

To be fair, the verdict is mixed on the extent to which councils are playing ball with the new rules. 鈥淭here鈥檚 been a huge change. Ten, even five years ago, there was a lot of resistance which was not justified,鈥� says Roger Tym鈥檚 Howick. GVA Grimley鈥檚 Hollowood agrees: 鈥淟ocal authorities now recognise that we should not be protecting employment sites for ever and a day.鈥� But Waters is concerned that many councils are still clinging on to what he describes as the 鈥渘aive belief鈥� that they will be able to resuscitate industry in their area. 鈥淯nfortunately, that stuff has not got a hope in the general market,鈥� he says.

Capner鈥檚 colleague Alan Soldat gives an example of a big city authority that has dug its heels in. 鈥淏ristol council takes a very hard line on defending employment land. There are some quite difficult tests that have to be gone through before they will release land for residential or mixed use. You have to demonstrate that the site has been on the market for six years.鈥� In a similar vein, Birmingham council operates a strict policy, grading employment sites.

Tony Kitson, a partner at law firm CMS Cameron McKenna, says: 鈥淭here is a general reluctance among local authorities to release employment land because they hope businesses will come to locate in their areas and they want to be able to offer sites because of the jobs they bring. But this means that they have an aspiration to attract business to their borough in circumstances where in practice there鈥檚 very little demand.鈥�

Kitson says local authorities can be open to persuasion. 鈥淭hey can be persuaded if you produce the evidence that there is no demand either in the short or long term for the type of development that might be possible,鈥� he says.

False distinction

But some argue that the choice between housing or jobs is an artificial and outdated one, given the way the economy is evolving. An increasing proportion of employment is white collar and self-employed and these businesses can co-exist much more happily with residents than the tanneries and metal bashers of old.

Greg Cooper, director of Metropolis Planning, says increased densities can often deliver more employment space and more housing. Many smaller employment sites are occupied by businesses such as scrapyards and car washes. These are not particularly labour intensive, so don鈥檛 bring many jobs to an area. Pointing to north London鈥檚 unlovely Staples Corner Business Park, where he is now working, Cooper argues that creating less of a hard and fast distinction with the residential area on the other side of the road could create a better quality environment for both parties and probably create a more attractive location to work.

Waters goes further, arguing that mixed-use development is often more compatible with the needs of the modern economy, where a 10th of the population now works from home. 鈥淲e need to let it happen and get rid of the use class orders,鈥� says Waters, who points out that on the Continent a multitude of different uses often co-exist on the same block.

鈥淚f you go to Barcelona, you can rent a flat and use it as an office with no questions asked,鈥� he says. This is in stark contrast to the UK, where planning rules stipulate that homes cannot be used for business purposes. Waters rejects the planners鈥� concern that they must keep business and housing apart. 鈥淵ou can always use the 好色先生TV Regulations and the environmental health rules and let people sort it out for themselves.鈥�