Welsh Government should look again at the case for a national development corporation, says John Griffiths MS.
When I spoke at the Community Housing Cymru conference in November to launch our report on social housing supply, one recommendation that attracted interest from delegates was our call for a national development corporation.
There are examples of successful development corporations operating in Europe and in Wales’s own recent past. These agencies are managing publicly-owned land and assembling large sites – not waiting for social landlords or local authorities to bring forward proposals but taking a proactive lead in designing and delivering major developments.
Often these corporations are managing land in a way that harnesses financial benefits generated whenever land values rise as a result of infrastructure investment or rezoning.
In this article I’d like to highlight the evidence that persuaded members of the committee why this solution is right for Wales.
Wales’s history of strategic land management
Not so long ago, Wales had a development corporation in the form of the Welsh Development Agency (WDA). Before that, between 1976 and 1999 we had the Land Authority for Wales (LAW). LAW, which was an executive agency of the UK Government, acted as a public land bank, acquiring and assembling land for development in the public interest. Part of LAW’s success lay in its legal powers to acquire land at less than full market value – powers which were eventually abolished by the UK Government.
Going back even further, in the postwar period new town development corporations were established across the UK. These corporations achieved unprecedented levels of housebuilding, with an average of 8,000 new social homes built every year in Wales between the mid-1940s and the mid-1970s. Again, one of their success factors was the ability to acquire land at less than hope value, and use any value uplifts to subsidise the cost of development.
Since the WDA’s abolition in the 2006 ‘bonfire of the quangos’, its functions and its remaining land assets have sat with the Welsh Government. Today the in-house Land Division partially fulfils the functions that were formerly carried out by the WDA and LAW.
One of the main ways it does this is through the delivery of ‘exemplar sites’, residential developments on Welsh Government-owned land. The Welsh Government is aiming for around 6,000 homes to be built across 27 exemplar sites over the next five years, of which around 2,600 will be affordable.
Scaling up good practice
While many witnesses told us they welcomed the exemplar sites, there was a strong feeling that the numbers are too low. Witnesses said more could be achieved if the approach were scaled up and made business as usual.
Matt Dicks of the Chartered Institute of Housing Cymru reminded the Committee that the 2019 Independent Review of Affordable Housing Supply had recommended an arms-length body to accelerate development of public land assets.
The Welsh Government had initially accepted that recommendation in principle. What emerged, though, was not an arms-length body but the in-house Land Division.
Some witnesses told us they’d hoped that the national construction company Unnos would fulfil this role. Unnos was established under the now-defunct Cooperation Agreement, receiving £1 million revenue funding in 2024-25. Core objectives include improving supply chains, promoting modern methods of construction, bringing empty homes back into use, and overcoming barriers such as phosphates. Witnesses felt that rather than having a focused purpose, Unnos has instead become what Darren Baxter of the Joseph Rowntree Foundation called a ‘dumping ground’ for too many functions.
‘Actually, focusing its mission really clearly on land assembly and building out a high social and affordable housing target could be a way of really unlocking significant amounts of development in Wales,’ he said.
Matt Dicks told us that increasing social housebuilding means taking a long-term approach that’s ‘beyond the political cycle’. He said that an arms-length body should work to a ‘strategic vision to continue through whatever we’re seeing at a political level’.
This strikes a chord with Audit Wales’s recent report, which found that focusing solely on housebuilding targets within individual Senedd terms was likely to lead to an unsustainable pattern of delivery with dips at the start of each term.
We were also persuaded by international evidence, including examples of development corporations in Denmark, Canada and South Korea. Sorcha Edwards, secretary general of Housing Europe, highlighted the United Nations Economic Commission for Europe’s Housing 2030 report, an invaluable resource for policymakers.
The Housing 2030 report includes a whole chapter devoted to land. This is testament to the importance of a fit-for-purpose land policy for resolving Wales’s housing crisis.
What would it cost?
Another of our witnesses was Dr Nicholas Falk of the URBED Trust. Dr Falk’s achievements include winning the Wolfson Economics Prize for a plan to build a garden city, and conducting research on affordable housing provision across Europe. He was also involved in building Tircoed, a village near Swansea, in the 1980s.
Dr Falk told us that in his experience, an effective development corporation doesn’t need to be large – he estimated 15 to 20 staff – but the important thing is to ensure the right mix of skills. He added that the body must have a long-term mission backed up with the right powers.
Although setting up an arms-length body would require resource, we heard that there is potential to offset costs through strategic land acquisition. The Welsh Government admitted to us that it has missed some opportunities to acquire land and capture the uplift generated by its own infrastructure investment.
We also heard that land assembly would be helped by stronger compulsory purchase powers, which the Welsh Government has said it will consult on. These powers could enable a body to acquire land at less than hope value, as LAW and the postwar development corporations used to do.
There may be potential for Unnos to function as a national development corporation. We have asked the Welsh Government to explore this and, if it disagrees that Unnos is the right vehicle, it should set out how those functions can be delivered by a different body.
Solving Wales’s housing crisis will require a long-term plan to ensure that social housing makes up a bigger proportion of our housing stock. Large-scale development, including new towns and urban extensions, must play a part. The cabinet secretary Jayne Bryant MS told us that she believed local authorities should lead on delivering urban extensions, while any new towns should be part of strategic development plans. But other witnesses told us that local authorities need greater support with large, complex projects.
This is why we believe Wales should revive what has worked well in the past and create a national development corporation, equipping it with the right powers, skills, and vision. This will help to ensure that we miss no more opportunities to increase social housing supply.
Case study: The Copenhagen City and Port Corporation
This corporation has been cited by the Joseph Rowntree Foundation as a successful example of a public sector master developer.
The Copenhagen City and Port Development Corporation acts as a strategic asset manager for the city, sequencing the sale of land and property to maximise value. Funds are used to invest in a broad range of infrastructure – a ‘virtuous cycle’ increasing the value of publicly owned assets, which are then used to leverage low-cost financing. It has overseen around half of all redevelopment in the city since its inception.
The mechanism works as follows:
- National and local government transfers assets to the corporation
- Local government rezones the land for residential or commercial use
- The land increases in value
- The corporation borrows (generally loans on favourable terms from Denmark National Bank) based on the increased value of the land
- Capital is either transferred to the metro construction company for broader transit investments, or used by the corporation to pay for local infrastructure that enables development of the land
- The corporation facilitates development through a variety of mechanisms, including land sales, lease agreements, or in some cases by the corporation itself
- This generates revenue that is used to service loan debt.
John Griffiths MS is chair of the Senedd’s Local Government and Housing Committee