Brownfield regeneration needs greater government support
- Enough post-industrial waste land in England to build 2.5 million homes
- Tax relief on clean-up costs is virtually impossible to obtain
- Shortage of long-term insurance indemnities also discourages investors
The government should meet the cost of clearing up brownfield land to kickstart the redevelopment of tens of thousands of acres of derelict land in our towns and cities, argues a new paper published by the cross-party think tank Civitas.
Peter Haslehurst, chairman of Luxfer Holdings PLC , calls for a new plan to redevelop Britain’s industrial heritage wastelands, breathing life into towns and cities while protecting green belt land threatened by current development projects.
A tax break would harness the energy of private developers and potentially cost the Treasury less than it would to provide new infrastructure for greenfield sites.
Mr Haslehurst describes how post-industrial brownfield sites are scattered throughout the country, particularly in the Midlands, the North West and the North East, yet new factories and houses are being built in the countryside, incurring the cost of new infrastructure while leaving urban centre sites to decay.
England has enough brownfield land for 2.5 million homes, but developers are reluctant to use it because of the prohibitive costs of renovation and decontamination. The tax relief the government currently offers is virtually impossible to obtain and offers little incentive to builders.
Writing in the latest of the Civitas series Ideas for Economic Growth, Mr Haslehurst asks: “With this situation of land availability, why do we even think of building new towns outside existing conurbations?
“The heavy cost of renovating and decontaminating our brownfield industrial sites, in a scenario of ever tightening environmental requirements, falls on the current incumbents of the site.
“Not only is this costly but it discourages new arrivals, making them prefer to build factories and houses on greenfield locations.”
Mr Haslehurst, whose company has spent more than £10 million in the past decade on the environmental clean-up of sites it has taken over from other occupants, says there are no specific grants to help meet such costs.
Corporation tax relief is meant to be available for the remediation of contaminated and derelict land for new facilities. However, there are obstacles to this which means it is of no encouragement to a potential investor:
- The pages of small print covering what is claimable and what is not make the relief not only virtually impossible to obtain and the burden of pursuing it virtually insurmountable;
- The help is only obtainable in the form of tax relief on profits, and as the cost has to be paid at the initial construction stage, when there are often no profits to claim the relief against, the chances of obtaining reimbursement are perceived as minimal.
Another obstacle to developing brownfield land concerns the requirement for indemnities and long-term insurance policies needed to cover future issues that may arise. In recent years, the duration of environmental insurance policies available on the market to cover such environmental liability has decreased and it is now impossible to obtain a policy for longer than ten years.
But Mr Haslehurst argues: “If the costs of clearing up brownfield sites were genuinely met by central government, then developers would be eager to make profits on them.
“Not only would the subsequent corporation tax flow to the Treasury, but many brownfield eyesores in towns and cities would disappear; the pressure for new roads, schools, public transport, shops, hospitals and other infrastructure to support new housing in green field areas would be eased; much of our countryside would be preserved; and, crucially, we would be investing in the future of our town and city centres and their communities.”
‘Restoring brownfield sites in our inner towns and cities’ can be accessed below. It is the tenth in the Civitas series Ideas for Economic Growth, which is part of the Wealth of Nations programme. More details can be found here.
Peter J K Haslehurst is Chairman of Luxfer Holdings PLC and has been a managing director/chief executive and chairman in international manufacturing industry for 45 years, involved in metallurgy, chemicals, fluid technology, aircraft and defence. He was made Eisenhower Fellow from Britain in 1980 and an honorary Doctor of Science at Loughborough University in 2008.
Restoring brownfield sites in our inner towns and cities