APPENDIX 1

The South-East Plan

The Western Corridor Sub-Regional Study

Interim Report

Contents

1. Introduction

2. Some characteristics of the study area

2.1 Urban form

2.2 The economy

2.4 The environment and quality of life

2.10 Transport

Linkages with adjoining areas

2.12 Wiltshire and the South-West

2.13 Central Oxfordshire

2.15 Milton Keynes/Aylesbury

2.17 London

2.18 London fringe

2.19 Blackwater Valley

2 Key Issues

3.1 Quality of life

3.2 Demographic change

3.3 The economy

3.12 Transport

3.22 Heathrow

3.24 Housing: the affordable housing debate

3 Some issues for the South-East Plan

4.2 Growth area status?

4.3 Labour supply/demand balance

3.4 Transport problems

3.5 Affordable housing

3.6 Quality of life

4 Further work

South-East Plan

Western Corridor Sub-Regional Study

Draft Interim Report

1. Introduction

1.1 This study is one of a number being undertaken for the South East England Regional Assembly as part of the preparation of the South East Plan. The Western Corridor study area comprises the six local authorities serving the former Berkshire, plus all or part of the following local authority areas: in Buckinghamshire, South Bucks, Chiltern and Wycombe; in Oxfordshire, South Oxfordshire and the Vale of the White Horse; in Hampshire, Hart, Rushmoor and Basingstoke and Deane; and in Surrey, Runnymede, Spelthorne and Surrey Heath. Their respective county councils and the Berkshire Authorities' Joint Strategic Planning Unit have also been closely involved.

1.2 The work has been undertaken by a range of partners, principally from the local authorities concerned, working to a brief agreed by their members. It has been carried out to a very short timescale and has relied upon existing studies and policy documents. It has been constrained by the non-availability of key information (such as parts of the 2001 Census, household and employment projections and information about water supply and flooding) at the time of its preparation. Other work, such as the Treasury-sponsored Kate Barker Housing Supply Study and the CPRE response to it, were published late into the preparation of this report. Consequently there are gaps in the report and it will need to be reviewed and developed as necessary as this information becomes available. The findings in this summary are drawn in part from a series of more detailed pieces of work done for the study, in particular on the economy, transport, affordable housing and the scale and distribution of housing.

1.3 The main purpose of the study is to identify the key characteristics of the area and the issues it faces; to help the Regional Assembly, in consultation with its local authority and other partners, to decide whether the sub-regional issues identified need separate treatment and, if so, whether this requires policies in the South East Plan. This study, like the South-East Plan, looks forward to the year 2026.

2. Some characteristics of the study area

2.1 Urban form: The eastern and central parts of the area consist of a large number of urban areas in relatively close proximity to each other and linked by a dense network of roads and railways. These are some of the most urbanised parts of the south-eastern shire counties. To the north and west, the settlements tend to be more widely spread and, being set largely in a protected landscape, their potential for growth over the years has been far more limited. The central rural areas are highly accessible and subject to considerable development pressures. Some of the largest towns in the area - including Reading, Slough and Basingstoke - have become major regional or sub-regional centres in their own right and these, along with the central part of the study area, contain the largest concentrations of employment. The western parts of the area are generally more rural, influenced to a lesser degree by the pull of London, and with towns like Newbury sitting in considerable rural hinterlands.

2.2 The economy: The area has probably the most buoyant economy in the country, outside London, and parts of it are referred to as the engine room of the South-East. The central part of it was for many years formally designated by the Government as a major regional growth area and, although this designation was formally withdrawn as long ago as 1994, it still tends to be regarded informally as such by those responsible for the region's economic development. Many of the world's leading companies, particularly in the information technology field, have a major presence in the area. Such companies were originally drawn there by the good access to Heathrow and London, an attractive environment and by the presence of a pool of skilled labour (in part a product of the development of defence-related electronics industries in the area after the war). In these days of increasing globalisation, this sub-region is arguably the one part of Britain (outside of London) that can compete with the leading sub-regions in Europe. There is anecdotal evidence that multi-national firms who are unable to locate in this area will prefer to go to mainland Europe, rather than to any other part of the United Kingdom. This special role of the area in a pan-European context may be one that merits closer attention in the South-East Plan.

2.3 In recent years, employment has grown far more rapidly than the labour force available locally to serve it (the latter resulting in part from changes in the age and household structure of the population). This has resulted in labour shortages across a wide range of industries and an increase in commuting into the area. (Although the study area as a whole is still - just - a net exporter of labour, it has moved from being a very substantial supplier of labour to the surrounding areas and is heading towards becoming a net importer).

2.4 The environment and quality of life: The quality of the environment is one of the attractions of the area, and large parts of it are protected from development in one way or another. At the eastern end, there is the Metropolitan Green Belt; to the north and west respectively, the Chilterns and North Wessex Downs Areas of Outstanding Natural Beauty. The River Thames runs through the heart of the area, forming the other main natural feature. Development activity has therefore been concentrated more in the central and southern parts of the area.

2.5 These areas have seen very considerable growth over a long period: Berkshire alone saw 130,000 houses built between 1961 and 1991, almost doubling the housing stock. As mentioned earlier, the central parts of the county and adjoining areas were designated as a major growth area - Area 8 - in the Strategic Plan for the South-East in 1970. Bracknell and Basingstoke were developed as new and expanded towns respectively and Lower Earley, just outside Reading, was at the time of its development the largest private sector development in the country. Over the twenty years 1981 - 2001, Buckinghamshire had the fastest rate of growth of any south-east shire county - largely as a result of Milton Keynes' expansion - and Berkshire was the second fastest. As at 2001, Surrey was the most urbanised county in the south-east and Berkshire - with 19% of its area built-up - was the third most urbanised. This combination, of sustained high levels of growth concentrated in the relatively small, undesignated parts of the study area, has created considerable pressure on a range of infrastructure and services and any proposals for further growth have a major gulf of public and political acceptance to bridge, partly as a result of past failures to match growth with the provision of the necessary infrastructure. Addressing current shortfalls in transport and other infrastructure, and putting in place measures to protect the environment and quality of life the area currently provides, should be pre-requisites, before further growth is contemplated.

2.6 The consequences of this sustained period of growth led the Government, in its 1994 review of regional policy, to conclude in relation to what it called the Western Sector (broadly corresponding to the study area):

...a reducing rate of economic and housing development is appropriate. These areas are now entering a period of adjustment, enabling infrastructure and services to catch up with the rapid growth of the recent past, and should no longer need to absorb continuing net inward migration throughout the 1990s and into the next century...

....This sector has been, and continues to be, the subject of considerable pressure for new development and it is important to ensure that the best of the environment is protected for future generations.

Regional Planning Guidance for the South-East - March 1994 (paragraphs 7.25-7.26)

2.7 Despite this shift in policy, there continued to be considerable pressure for development in the area over the following decade. It is highly debatable whether much of the catching up of infrastructure and services the Government talked about has actually taken place. In some respects, such as the congestion on the area's transport networks, the situation is almost certainly worse now than it was ten years ago and there is increasing concern at the negative effect on business of this shortfall. The need for a period of adjustment remains as pressing as ever.

2.8 The rapid growth in the housing stock over a long period has not depressed house prices. The eastern part of the study area, in particular, now has some of the highest house prices in the region, comparable with many parts of London. Although average household incomes are also high, the proportion of local household incomes being spent on housing costs comfortably exceed national and regional averages. The cost of housing becomes a particular problem for those whose pay-scales are set nationally. The issue of affordability is explored in more detail below.

2.9 Quality of life is a major concern to people living and working in the Western Corridor and there is a widespread view that it is being eroded by growth pressures. The problem is that it is a difficult concept to define or to measure - it can mean different things to different people, and may encompass economic factors, the quality of the environment, the availability of essential services or freedom from the fear of crime - all of which may be given different weighting by different people. If quality of life is to be given the emphasis it deserves, alongside economic or other criteria, consideration needs to be given to developing a more robust and measurable way of reflecting it. Work is proceeding on this by the study area authorities, and further evidence will be submitted to the Assembly. However, this is not a problem unique to the Western Corridor, and it is something the Assembly should address at a regional level through its research programme for the Plan. Their Regional Sustainable Development Framework would be a starting point for its development.

2.10 Transport: Good access was a major selling point for the area, though this is now being undermined by the road and rail congestion referred to in an earlier paragraph. The main features of its current transport networks are the three radial motorways, the M40, M4 and M3, linking the area to London; the M25 orbital route around London and the radial rail routes into London, broadly following the lines of the motorways. To the west, the A34 corridor forms important links to the south coast ports and the West Midlands. Generally, however, north-south rail and road links are far less well developed than the radial east-west routes into London. The area's main routes also double as the conduit through which flow large volumes of traffic from adjoining regions, plus Wales and Ireland, going to the Midlands, London, Heathrow and Europe (via the Channel tunnel and ferries). The area's transport networks are therefore serving both local and strategic needs, which sometimes come into direct conflict.

2.11 Although the area has a dense and relatively high standard network of road and rail links, much of it is now severely overloaded for large parts of the day, and the smallest disruption to the network can lead to disproportionate congestion and delay. The areas subject to congestion are also spreading, to include (for example) the M4 in the western part of the study area. The area has some of the country's highest car ownership levels, and a tendency towards long and complex commuting patterns that cannot easily be replicated by public transport. Latest census results show that nationally 17 local authority areas (outside London) had more than 5% of their workforces travelling more than 37 miles to work each day. Twelve of these were in the South-East and ten of them were in the study area. This pattern of long-distance commuting marks out the area as an extreme case, and is one of the reasons why its transport problems merit being considered separately in the South-East Plan. Considerable investment in the road and rail networks is needed, even to meet current growth forecasts, before further volumes of travel are considered. The form and location of any future development will play a key role in either helping to reduce longer distance commuting or perpetuating the current travel patterns.

Linkages with adjoining areas:

2.12 Wiltshire and the South-West: The South-West region is heavily dependent upon the M5/M4 and A303 corridors. Most of its principal urban areas, the regional focal points for growth, are concentrated along it. Nearby Swindon, in particular, is looking to accommodate substantial growth and there are concerns about M4 capacity in that area. There are several other transport issues in common; Swindon has similar concerns to Reading and other Berkshire towns about the competition for space along the M4 between local and long-distance traffic; access to Heathrow and congestion charging are also issues for them. They also have water supply problems in common with the western part of the study area (subject to the updated information awaited from the Environment Agency). Many of the businesses going to Swindon (mostly small and medium-sized enterprises - SMEs) are locating on campus-type developments. If current policy within the Western Corridor means the supply of campus sites is reduced here, would more businesses be attracted further west? There are also transport proposals within the study area which are of regional, if not national, significance. In particular, the redevelopment of Reading station is also important to rail movement in the south-west and Wales.

2.13 Central Oxfordshire: The southern part of Oxfordshire is largely rural, lying mainly within the North Wessex Downs and Chilterns AONBs. To the north of the AONBs, on the periphery of the sub-region, are the towns of Didcot and Wantage/Grove and this area is designated for both employment and housing growth, based on Oxfordshire's approach of balanced growth. This area also lies within the Central Oxfordshire Study Area. The Regional Transport Strategy identifies both Oxford and Reading as transport hubs and looks for opportunities to strengthen the transport links between them. There are frequent rail services between the two but there are problems of overcrowding, particularly at peak times. Platform capacity and other problems at Reading and Oxford stations, and track capacity at Didcot, limit what can be done in the short term to improve the rail services. However, there are a number of ways in which these problems are being addressed. The Strategic Rail Authority are carrying out a Route Utilisation Strategy for the Great Western main line and are reviewing their strategic plan; a new, combined franchise began serving the route from April 1 2004 and a new timetable comes into effect from the end of the year.

2.14 On the roads, there are indirect strategic links between Reading and Oxford (via the M4/A34 to the west and the M4/A404/M40 to the east). On the more direct A4074 route, congestion in the Reading area, in particular on the river crossings, is a major obstacle. For a number of years the Berkshire authorities have promoted the concept of a third road bridge in the Reading area. However, the Oxfordshire authorities oppose this on concerns that it would encourage further traffic to use unsuitable rural roads in Oxfordshire and increase development pressures in the area. Following the jointly commissioned Cross Thames travel Study, options are being considered to provide additional capacity for public transport journeys across the River Thames.

2.15 Milton Keynes/Aylesbury: This is the nearest of the currently-designated regional growth areas, currently proposed to take major housing and employment expansion. Road and rail links between Milton Keynes and most of the Western Corridor are generally very poor, limiting labour mobility between the two areas. It also tends to mean that affordable housing provided within the Milton Keynes growth area will not do a lot to address the needs of those employed within most parts of the study area. Those seeking affordable housing are likely on average to be less mobile than others. Access from Milton Keynes to Heathrow via the study area is also problematic and may be a possible disadvantage for its growth area prospects. Immediately, there are concerns that growth area status and its new delivery mechanisms may secure Milton Keynes/Aylesbury the lion's share of the area's infrastructure investment. Whilst not denying their need for such investment, it should not be at the cost of gross under-investment in the rest of the area.

2.16 The prospect of Terminal 5 at Heathrow is likely to trigger further employment growth pressure in the Thames Valley. In this event, will there be sufficient demand regionally for inward investment to serve both these areas and the region's other growth areas? The worst possible scenario might be major housing growth in the Milton Keynes area, with employment growth not keeping up; major employment growth in the Western Corridor (fuelled among other things by the expansion of Heathrow), with housing growth not keeping up; and continued poor communications between the two areas.

2.17 London: London is increasingly placing a great emphasis on its role as one of three World Cities, and this vision is articulated in particular through the London Plan, the Mayor's Spatial Development Strategy. As a result, its influence over events in the Western Corridor will remain extremely strong. Transport links, in particular road and rail, into central London are extensive, including the M40, M4 and M3, and the Great Western, Chilterns and Wessex railway lines. It is the issue of capacity on the main transport links into London that is of most concern, and severe problems of congestion exist on many of the roads in particular. However, proposed future improvements in public transport provision would have the effect of increasing public transport capacity, and may also open up previously less accessible areas of London, such as some of the Eastern boroughs. One further issue is that the links to non-central parts of London from the Western Corridor by modes other than the car are, in some cases, inadequate, such as the lack of a rail link from the Western Corridor to Heathrow (although the Air Track Forum has made a strong business case to SRA for a direct rail link into Terminal 5 from the Reading-Waterloo line). Orbital movements around London are also important for the study area, not least as a result of traffic seeking alternative routes to avoid congestion on the M25 and the roads approaching it.

The interrelationship between London and the Western Corridor is particularly significant in terms of commuting. Along with all areas immediately adjoining London, the Western Corridor is the source of a significant part of London's workforce. However, due to the relative importance of the Western Corridor as the location for a large amount of business uses, London's commuting relationship with it is a more reciprocal one than exists with other outlying areas. A further issue is that the western part of London faces a similar problem to the Western Corridor, in that the labour market is constrained, and there is an imbalance in favour of employment over housing. These pressures are likely to increase in both areas, since the London Plan anticipates some 86,000 new jobs in the Western sub-region, and proposes only 59,440 extra homes up to 2016. It is expected that at least part of this new workforce will be provided by in-commuting from areas such as the Western Corridor.

2.18 London fringe: This sub-regional study is proceeding in parallel with the work on the Western Corridor, and detailed outcomes cannot be forecast at this stage. There is, however, a significant overlap of membership between the two study areas and a similar degree of complementary working between them. In particular, the following strands of the work on the London fringe are likely to be relevant to part or all of the Western Corridor:

· the long-term role of the Metropolitan Green Belt;

· the relationship with London, in terms of interaction of labour markets and their implications for patterns of commuting;

· key transport corridors and significant hubs;

· the influence and impact of Heathrow on the local economy;

· the role and interaction of town centres across the study area.

As the findings of the London fringe study emerge, the relevant parts will inform future work on the Western Corridor.

2.19 Blackwater Valley: The Blackwater Valley lies partly within the Western Corridor at its south eastern end. It was identified in RPG 9 (March 2001) as a sub-region within the Western Policy Area where economic growth would be dependant on a co-ordinated approach to land-use and transport planning. The area is characterised by a number of small and medium sized towns separated by narrow but important rural gaps comprising an AONB, SSSIs, an Area of Great Landscape Value and the Thames Basin Heaths potential Special Protection Area. The full impact of future growth scenarios on these designations has still to be assessed.

Average house prices in the area are generally much higher than the regional average. The provision of an adequate supply of affordable housing is seen as fundamental to providing an adequate labour supply but housing need exceeds annual housing requirements. There is local community resistance to higher density housing.

The Blackwater Valley is an area with a highly complex pattern of travel demands. The existing road network offers good links to London, Heathrow and Gatwick outside of peak times when congestion is a major problem. There is a reasonably extensive rail network in the Blackwater Valley which has failed to adapt to changing commuter patterns. The bus network connects to the main towns in the Blackwater Valley but the level of service reflects the high car usage in the area and the polycentric nature of the settlements. A recent investigation into mass transit indicates that the Government's current economic criteria cannot be met. The Secretary of State has recommended that a bus-based public transport strategy should be developed instead.

More pressure will be placed on the highway and rail networks during the period 2001 - 2016 as an overall labour surplus in the area changes to a worker deficit of 10,000. This will result in either labour shortages, a willingness for workers to in-commute further distances or increase businesses to locate elsewhere.

The Blackwater Valley Network has submitted its own sub-regional study report to the Regional Assembly.

3. Key issues

Quality of life:

3.1 As detailed in paragraph 2.9, further work is in progress on this issue and will be submitted to the Assembly in due course.

Demographic change:

3.2 The ageing of the area's population is likely to have several important consequences for the Western Corridor. It is likely to affect the size and structure of the labour force (though whether this will be offset by changes in the law and practice affecting retirement age is as yet an unknown factor); it will affect the demand for a range of services (and the need to fund them) and will also have transport consequences, as a growing number in the population lose their independent mobility.

The economy:

3.3 The following sections have been distilled from a more detailed study of the area's economy, further information from which will be made available to the Assembly. Perhaps the first economic issue to resolve is the area's currently ambiguous treatment as a growth area, discussed earlier. This tends to give the area the worst of all possible worlds, with continuing pressures for growth but none of the investment available to the designated growth areas. If the area has to accommodate additional growth, it must also have the centrally-funded investment required to underpin it.

3.4 Employment in the study area has grown significantly (by just over 50,000 jobs or 5.4% between 1998 and 2002) but recent growth has been rather slower than the regional average (7.5% over the same period). We can suggest various possible reasons for this - that the region was recovering from a deeper recession than the study area over this period, accounting for its more rapid increase; that something has inhibited recent growth in the study area; or that labour shortages have led to study area employers making more efficient use of employees. The reasons for this need to be better understood. There is anecdotal evidence to suggest some drift of businesses out of the region. Work by SEEDA suggests that, insofar as this is happening, it may be more the result of global competition and restructuring than evidence of specific local problems. However, the effects of globalisation on this area could grow in importance during the study period and need to be better understood.

3.5 Economic activity rates in the study area are slightly above those for the region (83.4% of all people of working age were economically active in the study area, compared with 82.2% region-wide in 2003). This suggests that the scope for addressing local labour shortages by increasing the proportion of the local population in work may be limited. Female economic activity rates are similarly slightly above the regional average (77.3%, compared with 76.4%). The 2001 Census shows the composition of those in the Western Corridor not currently working as follows:

3.6 The workforce living in the study area shows a relatively higher incidence of professional and managerial occupations. In some of the local authority areas within the study area, these groups make up around 40% of resident workers (i.e. those economically active people who live in the area, but do not necessarily work there). The study area is correspondingly slightly under-represented in lower order skills and those employed in personal services. A similar picture emerges for the workplace population (those working in the study area, but not necessarily resident there). Given the cost of housing in the study area, it is perhaps surprising that the under-representation of lower-paid occupations among the resident workforce is not more marked and it is a situation that could get significantly worse.

3.7 Commuting and the economy: Comparison of the 1991 and those 2001 Census results currently available shows significant increases in all the gross commuting flows into and out of most of the study area authorities. The length and number of long-distance commuting trips in the area is touched upon elsewhere in the paper. Labour market trends suggest that this pattern could increase significantly in the future, which would be a matter for concern from a sustainability point-of-view.

3.8 Incomes: Large parts of the study area have some of the highest average household incomes in the country. The top six local authority areas in the national rankings are (not in order) Surrey, Buckinghamshire and four of the six Berkshire authorities. The top four of these had average household incomes in excess of £40,000 in 2003. At the same time, seven wards within the study area are within the 20% of most deprived wards in the country. One consideration for the South-east Plan might be whether living in a pocket of deprivation within an otherwise affluent area creates greater problems for those concerned, due to things like higher living costs and less well-developed support services (such as public transport).

3.9 Housing and the economy: Despite the volume of house-building that has taken place in the area over a long period, demand has substantially outstripped supply, with the result that many parts of the study area now have some of the highest house prices in the country, outside London (some areas are as expensive as many parts of London). Affordability has become a major problem for many employees in the public and private sectors alike, and has become an obstacle to the smooth running of the economy. This is discussed in more detail in the housing section below.

3.10 Imbalance between labour demand and supply: However, the most pressing problem for the area's economy is the evidence of a growing mismatch between the number of jobs available locally and the size of the local labour force to fill them. As part of the study, attempts have been made to quantify the problem, but these have been limited by incomplete data. It is hoped that new information, available shortly, will enable us to take this work forward. The initial indications were that even a 50% increase in house-building over the study period would not succeed in bringing the labour market back into balance, given the changes to the age structure of the population. The South-east Plan needs to look at what would be needed to achieve this balance (and what its other consequences would be). If the conclusion were to be that it was either not feasible or not desirable to bring us back into balance, it would then need to consider what the consequences of imbalance would be and how they could best be accommodated. One specific factor which has been identified is the enlargement of the EU and the scope that this will create for increased economic in-migration. However, this is an issue whose impact is likely to be region-wide, rather than specific to the study area, and may be something for the Assembly to consider in more detail.

3.11 The economy and the environment: A good environment has been key to the economic success of the sub-region. It is critically important that, if further growth is to be accommodated, all the good environmental factors are maintained or enhanced. In considering the various growth options, their environmental impacts should be considered in depth at the beginning, rather than being bolted on, in an attempt at mitigation, after the choice has been made.

Transport:

3.12 In thinking about solutions to the area's transport problems, it may be useful to start by asking how the current transport situation in the study area (that is, high levels of long-distance car-borne commuting, following complex patterns) has arisen? A combination of reasons can be identified, some specific to the area, others not. In no particular order:

· the affluence of the area, resulting in high levels of car ownership and an ability to afford the cost of long-distance commuting;

· a relatively dense network of roads, offering a large number of route options;

· a large number of substantial employment centres within commuting distance;

· the relatively low marginal cost of car travel, (including the provision of cheap or free car parking) compared with the cost of public transport;

· the poor image of much public transport, which is not helped by the many £millions spent by motor manufacturers on promoting a positive image for the private car;

· a willingness on the part of commuters to endure considerable amounts of congestion and delay, in return for the other benefits of car use - door-to-door travel; leaving when you wish; privacy; "image";

· increased labour mobility, combined with the high cost and difficulty of moving house, encouraging people to commute rather than move to where they work;

· evidence that housing location decisions are influenced very little by job locations, and much more by things like the quality of the environment and the local schools;

· relatively high economic activity rates. Where there are two or more economically active people in the household, it tends to increase the possibility that one of them will not live close to their place of work

3.13 The above factors have influenced decisions about where people live, work, shop or send their children to school over a period of decades. Many of them are not things that can be influenced through the planning system; some may be largely immune to public policy generally. We should therefore not over-estimate our ability to change people's travel patterns, and certainly not our ability to change them quickly. Further work will be needed on transport within the study area, as a contribution to the development of the South-East Plan.

New transport schemes?

3.14 There are already substantial programmes of proposed investment, arising from the Multi-Modal Studies and the current Regional Transport Strategy, to address many of the transport problems of the study area. Insofar as it is possible to quantify their effects, their combined impact is unlikely to solve the area's transport problems. The proposals in the Thames Valley Multi-Modal Study, for example, would simply result in a slower rate of deterioration in traffic conditions than might otherwise be the case. Although these proposals were framed with an expected end-date of 2016, some of them (in particular, some of those involving heavy rail) now look unachievable within that timescale. It may be therefore be the case that a more realistic implementation date for the programme as a whole would be somewhere between 2016 and the end of the period for the new Regional Spatial Strategy - 2026. Between them, the Regional Transport Strategy and the Multi-Modal Studies identified virtually all of the regionally-significant schemes that have been given serious consideration until now. It would be unrealistic to expect this present study (given its limited resources and short timetable) to come forward with entirely new regional-scale proposals that were not identified in the many £millions of research that went into the area's multi-modal studies. A more appropriate emphasis for this present study might therefore be:

(i) to help ensure that implementation measures are in place to deliver already-identified schemes;

(ii) to look at the role "soft" measures might play in either improving the efficiency of our transport networks, achieving modal shift or reducing the need to travel;

(iii) to consider the particular case of road-user charging, and whether it has any potential role in addressing the area's transport problems.

If the area is to accommodate significantly more growth than is currently proposed, it must be accompanied by a step-change in transport provision that addresses both the needs of the new development and current shortfalls.

3.15 Coordination and implementation: Many £millions of schemes for transport investment have already been identified for the study area. An additional challenge for the area will lie in ensuring the timely and orderly implementation of those proposals which are already on the table from the Multi-Modal Studies and the current Regional Transport Strategy. One of the transport characteristics of the study area is the multiplicity of agencies responsible for the provision of transport within the area (both local transport authorities and transport providers in the public and private sectors). Many of these agencies (including the Regional Assembly) are represented on a group, set up to co-ordinate the implementation of the TVMMS. It may not be a matter on which it is appropriate for the South East Plan to attempt to set spatial policy, but the Assembly and other key players should do all they can to support the efforts of the study area local authorities and transport providers to achieve this coordination. They should also support efforts to secure the funding needed for individual projects.

3.16 "Soft" measures: This term is used to cover such things as making more efficient use of existing capacity on road and rail; promoting modal shift and reducing the need to travel. It includes improved traffic management techniques; methods (in particular, using IT) to improve information about public transport options; improved integration of public transport modes; green travel plans and other new ways of working, ranging from flexible working hours to video conferencing, that reduce workers' need to travel, or at least to travel in the most congested periods. Given our traffic problems and the fact that the area may be regarded as the I.T. capital of Britain, it seems appropriate that the Western Corridor should be at the vanguard of developing these (often technology-based) solutions.

3.17 Individual applications of such measures may not generally be of strategic significance, though there may be occasions when they become so (for example, if the capacity of a strategic route were being increased by a series of such measures, where public transport information were being introduced on a sub-regional scale, or if lobbying were required to secure changes in Government policy (say, to secure additional incentives for businesses to make green travel plans outside of the planning process). These are in many cases new instruments of transport policy, and their likely impact is not always easy to forecast. For this reason, it would be unwise to build proposals for further growth in the area on over-ambitious assumptions as to how far we can influence travel behaviour by these means.

3.18 Road user charging: This is a particular example of a policy designed to reduce the demand for travel, while helping to fund the development of alternative modes of travel. The position of ACTVaR (the Association of Councils in the Thames Valley Region, which represents many of the study area authorities) has to date been to reject any suggestion that the area should become the test-bed for a local pilot road user charging scheme - that it should be considered, if at all, only in a regional or national context and once the compensatory public transport improvements are identified. However, given the Government's renewed interest in it, and in the absence of effective alternative proposals to curb the growth in the region's traffic, this is likely to become a major issue at a regional or national level within the time-horizon of the Regional Spatial Strategy.

3.19 It is not the purpose of this study either to support or to oppose the application of road user charging at a regional or national level. However, its existence as a policy option cannot be ignored, and the region needs to have a better understanding of how it might be applied and what its consequences might be. Without committing one way or the other in relation to it, there may be merit in considering how (or indeed, if) it would work in a complex multi-centred area like the Western Corridor. In some respects, London is a simple case in which to operate a pilot scheme. Their scheme seeks to deter traffic from entering a single city centre; it is administered by a single transport authority, which also has the responsibility for putting in place the compensatory public transport measures. Even so, there are widely differing views on the costs, benefits and detailed implementation of the London pilot scheme. Compare this with an area like the Western Corridor, with a large number of transport authorities and transport providers, and many separate congested town centres, linked by what are often relatively less congested parts of the network. Evidence from around the world suggests that, if the consequences of a road user charging scheme are not carefully thought through, it is likely to have harmful unforeseen consequences. There may therefore be merit in considering the application of a scheme to an area like the study area. This would ask questions like:

· Whose demand is the scheme trying to restrict?

· From what areas and at what times of the day would they restricted?

· What alternative provision would be made for them, when, and by whom?

· How would the scheme be administered;

· How can it be managed to ensure that traffic does not divert to inappropriate routes;

· How would public transport investment priorities be set? and

· Can it be linked to other positive measures, like clean-fuel vehicles and the more active promotion of green travel planning by industry?

3.20 The conclusion may well be that a road user charging scheme is inappropriate or unworkable in an area like the Western Corridor, but such a conclusion would at least be based upon a far better understanding of its application to, and consequences for, the area.

Pressures from planned growth:

3.21 But by far the biggest transport issue for the area concerns the pressures for further development that are likely to emerge from the South-East Plan itself. The Thames Valley MMS only looked forward as far as 2016 and only assumed a rate of housing growth in line with current (RPG9) policy. Even then, none of its provisions (including road user charging) were thought to be capable of preventing journey times lengthening - from what many already see as an unacceptable level - by 2016. Similarly on the rail network, bottlenecks like Reading station face great difficulty in accommodating even the current volumes of traffic and major works are needed to unlock additional capacity across large parts of the network. The new Plan will look forward a further ten years, to 2026. If it also required a significantly increased rate of growth from 2006, the pressures on the study area's transport are likely to get far greater. So far as we can establish, there are no additional bottom-drawer transport schemes that could be brought out to address this new problem. Growth on this scale must not be contemplated without it being accompanied by a new transport strategy and implementation programme for the study area, looking well beyond anything in the Multi-Modal Studies and current regional policy and with firm prospects of implementation within the study period. This must be a priority for the Assembly, working in conjunction with the area's other key transport players, and it should address current deficiencies in the public and private transport networks of the area, as well as the additional pressures new growth would bring.

Heathrow:

3.22 The growth of Heathrow has been a major factor in the post-war economic expansion of the study area. Despite the benefits it has brought, there is growing concern within the study area that the airport has now reached or exceeded its optimum size. Many of the study area authorities opposed the construction of the fifth terminal there (due for completion in 2008) and felt at the time of the inquiry into it that insufficient regard was given to the housing and economic pressures it would create within its hinterland, or to the need for improved surface access from the study area. There is some evidence to suggest that the impact on development pressures may have been under-estimated - employment levels at the airport have already reached those forecast post-Terminal 5. However, its effects on the study area should also not be over-stated. More than half Heathrow's current workforce lives in London and the scope for accommodating extra development pressures within London also needs to be examined (though the earlier forecasts of the growing shortfall in London's labour force raise some doubts about this).

3.23 The Airports White Paper raises the possibility of a third runway after 2015, if certain environmental conditions are met. This could have substantial impacts in addition to those of Terminal 5, although the wording of the White Paper means there is uncertainty over whether the runway development will take place. The potential implications for the South-East and the Western Corridor require further study. They have not been considered in this report but, potentially, they will impact upon the study area more than almost any other part of the region. There is widespread support within the study group for the position being taken by the Regional Assembly, of opposing further expansion beyond Terminal 5 at Heathrow on the grounds of its implications for environmental, transport and development matters.

Housing: the affordable housing debate

3.24 There are two key housing issues for the study area: the scale and location of housing development and its affordability. The cost of housing across most of the study area has become a cause of serious concern, not just as a housing issue but also in terms of its impact on the economy. Housing prices have become a deterrent to the recruitment and retention of staff across a wide range of local industries. Whilst this may not be a problem unique to the Western Corridor, we believe that the level of house prices, relative to income, is higher in this area and adjoining parts of the London fringe than in any almost other part of the country. Also, the geographical extent of the high-priced area is greater than anywhere else, making it more difficult for workers in this area on limited salaries to live within a reasonable commuting distance of their workplace. We therefore believe that this area (and some neighbouring London fringe districts) represent an extreme (if not unique) example of the problem and should be the test-bed for new initiatives to address it. For the purposes of this report, we do not attempt to make distinctions between the different kinds of affordable housing (social housing, low-cost rental, shared ownership, key worker housing, etc.) The balance between these kinds of need is best determined locally, by the authorities that are closest to the problem and have the duty as housing authorities for meeting housing need.

3.25 The case is set out in detail in a separate study, but the main findings are as follows. The Joseph Rowntree Foundation did a national study of housing affordability in 2003, disaggregated to a local authority level. Although the study group had reservations about some technical aspects of the survey, it remains the best available consistent picture of the problem across the region. They found that the average price of a modest dwelling in the study area in 2003 (that is, 4-5 room; note, not 4-5 bedroom) was just over £182,000 - some 58% above the average for England as a whole and 20% above even the south-east average. Although average household incomes in the study area were also above regional and national averages, households in the study area were spending much more of their income on housing than the national or regional average - our typical modest dwelling in the Western Corridor cost 4.14 times the local average household income, compared with a national average cost of just 3.37 times the corresponding national average income.

3.26 Even in the cheapest parts of the study area, a first-time buyer was estimated to need an income of around £35,000 to purchase our modest dwelling. In the most expensive parts, the figure was over £52,000. In consequence, the study estimated that some 68% of households would not have sufficient income to buy our modest dwelling as a first-time buyer. In the more expensive parts of the area, even two key workers, both employed full-time, would struggle to enter the owner-occupied market. Even renting the smallest one-bedroom property was a challenge. A study in Basingstoke (one of the least expensive parts of the study area) showed that - if you assumed a person could afford to devote 33% of their income (a conventional standard) to their housing costs - you would need an income of over £24,000 to rent such a property. Again, this is beyond the means of many key workers.

3.27 We then looked at the economics of providing affordable housing through the planning system, using among other things a study commissioned by the Surrey local authorities. This showed that there are fairly clear limits to the proportion of affordable housing a development could bear, before it became unviable for the developer to build, or the landowner to sell. It showed that the availability of grants from the Government were critical to the amount of affordable housing a scheme could bear (which makes recent Housing Corporation policy on restricting such grants a matter of particular concern). Much above 30% affordable housing, even with grant, and it generally becomes necessary to include an element of shared ownership housing as part of the "affordable" component, to keep the scheme viable. Shared ownership housing, whilst valuable in its own right, is often beyond the financial reach of many of those needing affordable housing.

3.28 Evidence on the scale of need for affordable housing is patchy and inconsistent, and tends to estimate immediate, rather than forecast long-term, need. Even its definition is a matter for debate. However, we were able to draw upon the examples of two studies, carried out by the same research organisation for the neighbouring, but differing, authorities of Reading and Wokingham. These came up with estimates of the annual need for affordable housing in both authorities that were significantly above the total planned annual house-building rate for that authority. We suspect a similar picture would emerge for most, if not all, of the study area authorities, but it should be noted that (fortunately) the planning system and new building is not their only potential source of affordable housing. Another finding of the two case-studies was that the size of affordable accommodation required differed markedly between these two neighbouring authorities. This suggested that the type of affordable housing required should be set at a local level, rather than through a "one size fits all" policy at regional or even sub-regional level.

3.29 We recognised that key worker housing was a special sub-set of general affordable housing need, which raised a number of issues of its own and created certain tensions in relation to wider affordable housing need. A major initiative recently launched on this by the authorities in the western Thames Valley may be valuable in the longer term, in informing policy on key worker housing at a regional as well as sub-regional level.

3. 30 The more detailed study identifies a number of ways in which the supply of affordable housing might be increased in the study area. Without commenting on the merits of them (and a number of them come with problems of their own) they are:

· by seeking affordable housing contributions from smaller sites than current Government thresholds permit;

· by increasing the percentage requirement of affordable housing from sites, where this is currently below what the market will bear;

· by increasing the overall supply of housing (assuming that a fixed percentage of whatever is supplied will be affordable);

· by subsidising the incomes/mortgages of those needing affordable housing;

· by protecting the existing supply of affordable housing (Surrey authorities have been losing social housing through the Right to Buy faster than the planning system could replace it);

· by seeking affordable housing contributions from other forms of development;

· by meeting affordable housing need elsewhere, such as the growth areas where the Government appears to be concentrating much of its funding); and

· by mobilising private sector investment outside the planning system.

3.31 The conclusion of the more detailed study was that the Assembly needs to harness not just its planning powers, but a range of its housing and other responsibilities, to address this problem, in particular within the study area and the adjoining parts of the London fringes where the problem is most acute.

4. Some issues for the South-East Plan

4.1 Work on the sub-regional study so far suggests the following issues that need to be addressed by the South-East Plan:

4.2 Growth area status? No proposal for growth that would involve substantially higher than present rates of development is being proposed by this report. Evaluation of different scales and distributions of growth is being carried out as a separate exercise. but if the study area, or part of it, is to be expected to accept substantial further growth, should it be recognised as a growth area and receive the appropriate investment to support that growth? In those circumstances, it may also be that the area would want to look at improved delivery arrangements for key areas of policy, where there are benefits to be had from closer cooperation. However, all of this presupposes that the area is capable of accommodating higher levels of growth, a proposition which can only be tested once the relevant information is available. The willingness of the study area authorities to support either additional growth or formal designation as a growth area is likely to depend substantially upon:

· how far satisfactory assurances can be given about meeting the cost and delivery implications of a range of infrastructure needs; (These relate both to serving new growth and meeting existing shortfalls) And

· the impact of such proposals on the environment and sustainability, which must be at the core of the evaluation.

Whether or not the area is formally designated, the study area authorities will want to ensure that they have the maximum possible control over the scale, locations, timing and detailed implementation of whatever growth they receive. If the area is to have further growth, it must be "growth on our terms". As a separate exercise, SEERA has asked all the sub-regional study areas to consider their scope for accommodating a strategic development area.

4.3 Labour supply/demand balance: Large parts of the study area are forecasting a substantial surplus of jobs over the locally-available labour supply. Our initial findings suggested that it may not be realistic to move to a situation of balance across the study area in even the medium-term. If this is the case, how large an imbalance can the area comfortably live with and what measures should it take to deal with the consequences of imbalance? This is likely to raise some difficult questions about how much housing growth the area should provide for and how far employment growth should be restricted.

4.4 Transport problems: Whilst not being unique, this area exhibits some of the most complex and intractable traffic problems in the region. The area's transport authorities will not be able to fund the infrastructure improvements required by themselves. There is a relatively large programme of physical infrastructure works in various stages of preparation, but it does not amount to a solution to the area's transport problems. The area's transport authorities need support in developing effective implementation mechanisms, and complementary "soft" measures need to be developed. The area needs to be at the forefront of developing these, in particular those that take advantage of new Information Technology (either to reduce the need to travel or to make travel more efficient). If road user charging were introduced as a national or regional measure, the study area (with its complex urban form and patterns of commuting, and its multiple transport authority structure) represents a particular challenge for its implementation. In addition to the challenges within the study area, we have also identified a number of key linkages with adjoining regions or sub-regions which may benefit from a strategic over-view:

· the M4/Great Western corridor, linking us with Swindon and the South-West at one end and London, the M25 and Heathrow at the other;

· the Oxford-Reading spoke (including the consequences for the rail network if the Dibden Bay proposals go ahead);

· links between Milton Keynes/Aylesbury and the Western Corridor/Heathrow;

· The Hampshire/Surrey fringe and the Blackwater Valley (including the upgrading of the North Downs line and general improvements to the integration between the different rail corridors);

· The Reading station improvements, which will affect long-distance services to adjoining sub-regions and regions, as well as local services.

But, most of all, any proposals for further growth in the area will depend absolutely upon a new sub-regional transport strategy and implementation programme, that looks well beyond the horizons of current regional policy and multi-modal studies, but at the same time has firm prospects of implementation within the required time-scale.

4.5 Affordable housing: Whilst the issue is again not unique to the study area, it exhibits some of the region's most extreme examples of the problem. The more detailed study sets out a comprehensive approach to the problem, which needs to be developed by the Assembly, the local authorities and other key agencies.

4.6 Quality of life: As much a regional as a sub-regional issue. Consideration needs to be given to how we evaluate quality of life, in order that it can be given significant weight against economic and other considerations in evaluating the options for the scale and distribution of growth. As a related issue, the need for a wide range of infrastructure - for health, education, housing and environmental infrastructure, such as sewage treatment and disposal and water supply - also needs to be evaluated.

5. Further work

5.1 This is an interim report, whose contents and scope have been strongly dictated by the time and resources available to produce an initial response. Work on most of the themes covered in the paper will continue and will contribute to the drafting of the South-East Plan and (in particular) to any sub-regional components. In particular, the Assembly should anticipate more detailed work on transport, the quality of life, the scale and distribution of growth, the future of the economy, the role of, and vision for, the area, on the need for various forms of infrastructure to support growth, on any themes from the study brief that have not yet been addressed and on new information relating to the area as it becomes available. In addition, the current report is underpinned by more detailed work on the study area economy and affordable housing, which will be made available to the Assembly to help inform the development of the South East Plan.

Joint Strategic Planning Unit

20 April 2004