The broader context is evolving rapidly

  • The COVID-19 crisis is accelerating change in the property market and is also changing economic priorities. There will almost certainly be a permanently higher level of remote working, with employees commuting to their usual place of work on fewer days per week. This will potentially increase the importance of housing versus office space. It will also mean some employees being more willing to trade off living further from their workplace to achieve a better standard of living. This may increase the desire for more personal outdoor space, a home office, and a more ‘rural’ lifestyle. Whilst the city centres of Oxford and Cambridge will remain highly sought after, this trend may well increase the ability of out of town locations to provide housing solutions that are attractive to potential employees.
  • Environmental, social, and governance issues are now core considerations, and becoming increasingly important for a location to create competitive advantage and attract inward investment. Property has a significant effect on the environment, including the climate change impact from carbon emissions. It is also increasingly recognised that the built environment should have a positive impact on urban spaces and those who live and work in and around them.
  • Improving air quality in city centres is an increasing priority, as the significant health risks from vehicle emissions are better understood, and schemes are now coming forward. For example, Oxford City Council have announced plans to introduce a zero emissions zone for the city core and extended area by 2021/22. Cambridge has implemented a Climate Change Strategy 2016-21 to similarly reduce carbon emissions and Milton Keynes is aiming to become carbon neutral by 2030 and carbon negative by 2050.
  • Addressing social and economic inequality is also a key element of the wider growth agenda. Growth needs to rebalance the wealth and opportunities for all, including housing, education, and employment opportunities.
  • Government priorities are shifting towards a ‘levelling up’ between the more and less prosperous parts of the UK – with productivity within the Oxford Cambridge Arc already amongst the highest in the UK, is it now realistic that public funding for the infrastructure elements will be forthcoming?
  • Significant change in the planning system - the White Paper ‘Planning for the Future’ aims to simplify the system and create greater certainty with zones classed for Growth and for Renewal; and the creation of a new Use Class E for Commercial & Business Use.

Use classes forming new use class E

Old Use Class

Description

A1

Shops*

A2

Finance & professional services

A3

Café or restaurant

B1a-c

Offices, R&D, and light industrial (suitable for a residential area)

D1

Non-residential institutions (incl. clinics, health centres, creches, day nurseries)

D2

Assembly and leisure (incl. gyms and indoor recreation)


*shops <280 sq mostly selling essential goods, including food and at least 1km from another similar shop are classed as F2
Note: Former class A4 (Pub or drinking establishment) and A5 (Takeaway) are now classed as Sui Generis.

Given this, what should the Oxford Cambridge Arc be setting out to achieve and how should this influence priorities for delivery? A major objective of the Arc is to facilitate economic and employment growth. However, it is important that the Arc is not simply about boosting growth, but also addresses a range of social and other issues. 

Key issues include:

  • Attracting national and global talent is vital for locations focused on the knowledge sectors. This needs to be achieved through a combination of an agglomeration of high-quality employers in target sectors, with strong ESG credentials, housing that is affordable and high quality environments and amenities.
  • The need to foster the growth of SMEs, and also attract global players, as many of the high value-add companies that have brought prosperity will consider their location on a global rather than national level.
  • Figure 9 highlights the impressive growth rate of businesses across the Arc between 2016-2018 (latest available data). Collectively within the Arc in 2018, 900 high growth enterprises were registered, compared to 2,030 registered across the whole of the South East over the same time period.  The Arc accounted for 7.3% of all high growth enterprises established within England, which clearly reinforces its reputation for developing successful enterprises across a variety of sectors.

Figure 9: High growth enterprises in 2018

  • The high house price to earnings ratio (HPE) in Oxford and Cambridge has increasingly made housing unaffordable for aspiring homeowners and hinders the labour market. This has both economic and social consequences. The UK HPE average shown as the green line in Figure 10, places every Local Authority, with the exception of Fenland and Peterborough, across the Arc above the line, reinforcing the affordability pressures throughout the area. Figure 10 also clearly highlights the exceptional HPE of Cambridge, Oxford and South Buckinghamshire.

Figure 10: 2015-19 Annualised house price growth vs HPE

  • Figure 11 highlights the lack of development and consequent severe shortage of affordable housing throughout the Arc locations.

Figure 11: Number of completed dwellings in 2018/19

  • The huge inequality of living standards within the Oxford to Cambridge Arc is clearly evident in Figure 12, with South Oxfordshire (308) and Cambridgeshire (300) enjoying the highest scores of the 318 UK Local Authorities included in the analysis. However, Luton (52), Peterborough (53) and Corby (70) are ranked at the other end of the scale and clearly illustrate the differing levels of prosperity among the Arc as a whole.

Figure 12: Deprivation index 2019

Many of these issues still link back to one of the Arc’s key objectives – to increase development of commercial and residential space. However, priorities for the Arc should be much broader in order to attract talent and address social issues. The housing element is important, not just to cater for growth, but to make up for the existing underlying shortage and to help address social issues. The Arc needs to create a high-quality built environment and be a beacon for the ESG agenda.

Conclusions

The Arc was a great starting point, focusing on job creation and providing the housing to enable this, with resulting economic growth. Whilst the Arc is ambitious in its scope, it has not delivered tangible benefits to date for businesses or communities, beyond what would probably have happened anyway, and growth has been strong based on the merits of the individual economic centres. 

The Arc is essentially still a concept. Perhaps the biggest gain to date has been from the publicity around the concept, which may (or may not) have assisted in raising the profile of Oxford and Cambridge. Clearly the entire UK and indeed global cities have been affected by COVID-19 in 2020. That said, both Oxford and Cambridge are at the very forefront of research, the development of the vaccinations and the treatment of the disease. 

While market activity within the Oxford to Cambridge Arc is likely to be restrained in 2021 relative to long-term levels, the profile of both cities and indeed the wider Arc will be increased on a global level due to the significant involvement of the expertise within both cities. This is predicted to positively effect both cities and indeed the Arc as a whole moving forward. However, we believe that Oxford and Cambridge are two world leading cities, which simply happen to be located 85 miles apart. While the Arc has numerous strengths and highly skilled workforce it does not collectively work as one entity but rather in isolated silos of exceptionally specialist sectors.

The recent decision by Buckinghamshire Council to leave the Arc further reinforces the concept status of the area. Buckinghamshire Council cited in November 2020 that it “wanted to be in control of its own future development and housing decisions rather than potentially have these imposed upon it by votes from other areas as far away as Corby and the Fenlands”. While the concept of a cohesive area is certainly impressive, current market fundamentals indicate various individual markets working in isolation without an element of an overarching strategy.  

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@ Scott Harkness
Scott Harkness
MRICS
Partner - Head of Commercial Division
02039 938757 email me about Scott
@ Colin Brown
Colin Brown
MRTPI
Partner - Head of Planning and Development Division
01223 326826 email me about Colin
@ Daniel Francis
Daniel Francis
Head of Research
020 7518 3301 email me about Daniel
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Scott specialises in providing advice on agency and development matters to a wide variety of clients from private individuals and trusts through to property funds, institutions, companies and statutory authorities.  He advises both owners and occupiers across public and private sectors.

Working at Board level with clients, Scott’s specialist areas include Business development, development of property strategies, property investment advice, advice in the marketing and disposal of property as well as property acquisitions.

Scott has a particular knowledge and understanding of the property market in the wider Oxfordshire region whilst also operating on a national basis on specific projects.

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Colin is a Partner and was appointed Head of Planning & Development Division in November 2020, he is based out of our Cambridge office.  He has over 25 years’ experience of planning consultancy and has a broad sphere of work.  He acts for a wide range of private, institutional and developer clients and has worked on significant planning applications and appeals.

He regularly instructs Counsel, and has appeared at a number of Local Plan examinations and in Section 78 and other appeals where he has often given evidence.  He carries out much land promotion work and has a strong track record of delivering planning consents taking projects through their entire process from site identification to construction on site.  

Away from work, Colin is Chairman of the Cambridge Forum for the Construction Industry and of the Cambridge branch of networking group, Interact.  He is also Chairman of the Dining Rights Committee at the Hawks’ Club, a sporting club in the City for Cambridge University sportsmen. He is a regular, if poor golfer, a keen cyclist and a committed, but somewhat less dangerous skier than he once was.

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Daniel Francis has been Head of Research at Carter Jonas since 2018. He is responsible for delivering the firm’s programme of market and topic-based research, providing clients with the insight they need. Daniel’s main focus is the commercial market, and he works closely with his rural and residential research colleagues. 

Daniel is a member of the Investment Property Forum and the Society of Property Researchers.
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