A busy workspace

Trading Spaces: LEP members call on the Government to protect London’s places of work

12 February 2015

Meeting with Dr Vince Cable MP, the Secretary of State for Business, Innovation and Skills on Tuesday (10 February 2015), business representatives from the London Enterprise Panel (LEP) argued for the protection of the city’s vital office space from recent and planned changes to planning law.

Despite its central role in driving economic growth and innovation within the UK economy, recent changes have seen London lose significant amounts of office space suitable for small and medium sized enterprises (SMEs). The introduction of temporary Permitted Development Rights (PDR) in 2013 enabled premises designated for office use to be changed to residential without the need for planning permission. Whilst the Mayor of London successfully lobbied for key areas of London to be excluded, the Government is now considering whether to remove these exemptions; and whether to extend the scheme indefinitely.

Through its partnership with London businesses and boroughs, the LEP’s SME Working Group has been made aware of numerous instances where conversion without planning permission has had a negative effect on the provision of employment and has meant the loss of existing premises for businesses. Impacts on high streets and industrial areas have included the loss of high street shoppers, affordable workspace and potential sites for affordable housing.

Harvey McGrath, Deputy Chair of the LEP and Simon Pitkeathley of the LEP’s SME Working Group, which champions micro businesses and SMEs in London, met with the Secretary of State for Business, Innovation and Skills to strongly urge the Government to retain the exemptions that are currently in place in parts of London and, given the importance of the capital to the UK economy, to consider the calls from small businesses to expand these areas to include Greater London.

The impacts on London so far include:

  • a loss of over 700,000m² of office space in London;
  • 10% of total office stock in Outer London (542,000m²) lost since 2013;
  • two thirds of lost office use was occupied/part occupied (approx. 373,700m² occupied floor space);
  • a total of 33,070 employees may have to be relocated or lose their job because their workspace is being converted into residential;
  • employment growth likely to be reduced due to lack of office space;
  • increasing costs on business through loss of more affordable existing offices; and
  • a disproportionate loss of smaller affordable office floorspace threatening key growing sectors of London’s economy.

Whilst certain central and commercial areas in London (known as the Central Activities Zone, Tech City, Isle of Dogs and Royal Docks Enterprise Zone) were exempted from the PDR changes when introduced, the Government has recently consulted on lifting these exemptions. These areas are central to London’s economic success and it is essential that office supply in these locations is not eroded. The LEP delegation made clear to the Minister the importance of maintaining these exemptions and their serious concerns that there should be no further relaxation in the rules that apply to other categories of premises (such as light industrial use).

The concerns expressed at the meeting echo views expressed by the Mayor of London and key organisations such as the Planning Officers Society London, the British Property Federation and London First who have jointly sent a letter to the Secretary of State for Communities and Local Government expressing their apprehension to lifting the current exemptions.

The LEP argued that there were better ways to deliver London’s housing needs without negatively impacting local economies and provision of employment. Over the past 10 years the planning system in London has been delivering a higher quantity and quality of new housing from surplus office stock than can be achieved through the Permitted Development Right. This planned provision provides additional benefits in the form of affordable housing and contributions to improvements in infrastructure.

Following the meeting, Deputy Chair of the LEP Harvey McGrath said:

“This was a positive and constructive meeting during which the Business Secretary recognised the distinct issues associated with Permitted Development Rights in the high value London land market and the pressures this put on business uses relative to residential. The LEP will continue to press the government on this issue in order to protect London’s vital workspaces and ensure any genuinely surplus office stock is used to deliver housing in a well-planned and strategic manner”.

SME Working Group Member Simon Pitkeathley said:

"Big occupiers will always find new spaces, if they have to, but it's the SMEs I worry about.  London can't afford to lose affordable workspaces, nor potential affordable housing".

Harvey McGrath is Deputy Chair of the London Enterprise Panel, Chairman of Governors, Birkbeck College, University of London and the former Chairman of Prudential Plc.

Simon Pitkeathley is a member of the LEP’s SME Working Group, CEO of Camden Town Business Improvement District and Chair of the London BIDs Working Group.