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Next's Lord Wolfson: council planners are killing economic development

Poor policymaking is strangling retail growth but we can bring about a change, argued Next chief executive Lord Wolfson at a recent lecture

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I believe that the UK, like many other western countries, has opted for a form of stagnation and, if we do nothing, our economy is going to slowly grind to a halt.

When you look at the economic data, it is pretty bad across most western economies. Output across manufacturing and construction has fallen steadily over the last 18 months, as has real wage inflation. The clearest point in the state of stasis in the world economy are interest rates, which range from 0.5% in the UK, US and Canada, to zero to slightly negative in European Union and Japan, and to negative in Switzerland and Sweden.

There is a danger that people start to think that low interest rates are the cause of low returns, but actually they are a reflection of the fact that the amount we want to save is simply greater than the amount we want to invest.

It is interesting to look at the FTSE 100 over the last four years: profits are collectively down by more than 30% yet dividends have increased by around 30% in the same period. Not only is this an unsustainable situation of declining profits and increasing payouts, it is a clear sign that corporates are finding it difficult to invest the cash that they are generating.

My own company is included in that as we have about 1.5m sq ft net space that we would like to open but we will get barely 300,000sq ft to 400,000 sq ft of that open this year. The biggest restraint is planning, which is my particular bugbear.

I want to give you a sense of government in its widest sense, from Whitehall to town hall, is holding business up.

It has taken us more than six years from the moment we first approached the council and we’re still not open

We are just building a shop on what was a council-owned unused car park just outside Manchester. The council owns it and could make an enormous profit by redeveloping it – more than £50m through granting planning permission for the land – so you would have thought that it would be a slam-dunk quick deal. It has taken us more than six years from the moment we first approached the council and we’re still not open.

To give you a sense of the frustrations involved, after granting planning permission we asked to buy the land, but the council had to advertise for two to three months first. Advertising requires a billboard and the council needed to give itself planning permission for the billboards, which takes another three months.

That one experience is an anecdote but it is symptomatic of the malaise at the heart of policymaking in the UK. There is nothing inevitable about the state of our economy: the stagnation we are experiencing is the result of 25 years of myriad anti-economic policies that have operated together to slow down innovation and growth.

They said the station is moving in five years, so we would be able to build the shop then.

Another example is that we wanted to build a brand new shop on the edge of Maidstone, between the motorway and the edge of town. We approached the planning office, which suggested we looked on the other side of town, round the congested one-way system, where there’s no parking and where the 20-minute catchment potential would fall by around 56%.

When I went to look, I thought we were in the wrong place because there was a railway station there. They said the station is moving in five years, so we would be able to build the shop then.

There is a complete lack of understanding of what the customer wants, because they don’t want to have to go round the one-way system where there’s no parking and they don’t want to wait five years for a new store.

Luckily the council has overturned the planning officer in this case but it was symptomatic of the mistakes that people make when they think they should decide who does what, where and how.

I am a retailer and despite my reputation, I’m a natural optimist. There is so much being done wrong that there is an enormous opportunity, because if we can liberate the housing market, reform top-down zoning and invest in congestion-busting roads, scrap High Speed 2 and have some vaguely sane energy policy, then we can add 3%-5% to GDP and change the trajectory of Britain’s economy.

There will be many that disagree with some of my points, but the point is we have to have these conversations, otherwise we will be part of the eventual failure of this country.

Talk about the barriers to growth and the opportunity for enormous change and we might stand a chance. Say nothing and we will almost definitely fail.

Wolfson’s tips for beating the planning system

  • Don’t try to use the planning system to eliminate or contain your competition. Fighting each other is not the best way to get change to a system.
  • Don’t always ask trade bodies to ask for tax cuts. It ends up like a ‘circle of pickpockets’ where industries are trying to fund cuts by making cuts elsewhere, so no-one wins.
  • Do fight your corner, particularly in relation to regulation and planning. Don’t take no for an answer and apply anyway. “We often take our ideas to the public first before you go to planning so the line of least resistance is to say yes rather than no,” said Wolfson.
  • Do make your argument wherever you can and take a public platform. “We live in a democracy so when we complain about politicians, we’re responsible because we put them there. We have got to make the case for growth and free trade, which are not always intuitive.”

 

 

 

 

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