Memorandum by Leeds City Council (GF 18)
THE IMPLICATIONS OF THE EUROPEAN COMMISSION
RULING ON GAP FUNDING SCHEMES FOR URBAN REGENERATION IN ENGLAND
1. INTRODUCTION
1.1 The regeneration of local economies
is integral to the City's regeneration strategy and the City's
role as a key driver for economic change in the region. Public-private
GAP funding schemes, such as the Partnership Investment Programme,
have enabled reclamation, refurbishment, redevelopment and infrastructural
improvements to bring forward sites for commercial and industrial
development to create employment opportunities. The following
provides contextual information on the City's economy and details
the role that GAP funding has played in contributing to the achievement
of economic development and regeneration objectives in Leeds.
Information is also provided on current initiatives where it was
anticipated that the Partnership Investment Programme would play
a key role in securing private sector investment.
1.2 Leeds is the second largest authority
in England in terms of area and it is the regional centre of the
Yorkshire and Humberside Region. The district has a total population
of 727,000 and contains a main urban area with a population of
half a million, and an outer ring of small towns and countryside.
Leeds has excellent road and rail links. The principal airport
in the Region is located in the district. There are around 2.2
million people within 30 minutes driving time of Leeds City Centre
and 11 million within 90 minutes.
1.3 Leeds has one of the most diverse economies
of any UK city, which has been the key to its continued strength.
Major sectors include financial services, legal and professional
services, retailing and manufacturing. Leeds has the lowest unemployment
rate of any major city in England and Wales. Leeds has achieved
the best performance of any UK city in terms of employment growth
with a net increase of 29,000 jobs between 1981 and 1996 compared
to job losses in many other cities. This has had major benefits
for the region with figures for net in-commuting rising from 35,000
in 1991 to an estimated 48,000 in 1997 resulting in growing numbers
of jobs for areas such as South Yorkshire, Wakefield and Bradford.
1.4 The City believes it has a distinctive
role to play as an engine of growth within the Yorkshire and Humberside
Region. This is recognised in Yorkshire Forward's (RDA) Regional
Economic Strategy "Advancing Together". It is anticipated
that Leeds will create around 40 per cent of the new jobs (approximately
48,000) in the region over the next 10 years. This assumes that
the City has a readily available supply of land and premises to
meet employment growth needs. However, there is a lack of large
sites allocated for employment use which are ready for immediate
development due to access and ground condition constraints.
1.5 Notwithstanding the City's economic
prosperity, many individuals and communities are experiencing
exclusion and inequality evidenced by high levels of unemployment
(more than twice the City average) and widening income differentials.
In the inner city wards there is an increasing polarisation of
neighbourhoods which are perceived as "good" or "bad".
People who have the option of moving out of declining neighbourhoods
generally do so. The 1998 DETR Index of Local Conditions shows
that under the intensity measure (worst three wards), Leeds is
ranked the third worst of all local authorities in the country.
The scale of the disadvantage and social exclusion and the opportunities
to address these within a strong and growing economy has been
recognised by the City's success in five previous rounds of the
Single Regeneration Budget (SRB) and by the European Commission's
support of the URBAN II Programme and more recently Objective
II Status in six of the inner city wards.
1.4 However the success of such initiatives
will be dependent on how well they are integrated at the local
level. Whilst initiatives funded through Estate Action, SRB and
URBAN have been focused on improving the physical and social environment
of inner city communities, the key to sustainable urban renewal
is employment generation. Unless individuals secure employment,
communities continue to decline and the investment in the physical
and social environment is lost.
2. THE CONTRIBUTION
THAT GAP FUNDING
HAS MADE
IN REGENERATING
DERELICT LAND
2.1 Past success on the Leeds Waterfront
2.1.1 In the late 1980s GAP funding was vital
in securing the redevelopment of key sites on the waterfront.
Working with the Council, developers secured Urban Development
Grant for site acquisition, the removal of contaminants, the refurbishment
of existing buildings and new build in an area which was characterised
by dereliction and underused historic mill buildings. Developer
interest was secured on the basis of the commitment of the Council
to a longer term vision for the area which included the authority
working with other agencies to secure wider environmental improvements
in the waterfront area. These improvements included addressing
the poor water quality of the river (the river flow during dry
summer months was more than two-thirds sewage effluent).
2.1.2 Urban Development Grant of £1.3
million was key to progressing the Victoria Quays scheme. The
scheme to convert existing buildings alongside sympathetic new
build created 121 riverside dwellings was completed in 1989 at
a total cost of £3 million. Such was the interest in this
development that higher than predicted returns resulted in the
grant funding being repaid under the clawback provisions. The
development of two riverside residential schemes providing accommodation
for sale at Victoria Quays and for rent at Chandlers Court were
quickly followed by workshops and offices at the Design Innovation
Centre. Completion of these first developments on the waterfront
generated interest and confidence in the area. They were important
catalysts in stimulating further private sector investment in
the redevelopment of the Riverside Conservation Area which has
grown over time.
2.1.3 Further developments in this area
are 42 The Calls Hotel (1993), Tetley's Brewery Wharf (1994) and
the Royal Armouries (1996), which alone represents investment
exceeding £42.5 million. The Berkely Group is now progressing
a £100 million mixed use development in partnership with
the Royal Armouries and British Waterways on a 5.7 hectare site
at Clarence Dock. Allied Domecq has submitted plans for a £30
million scheme adjacent to the Leeds Brewery.
2.1.3 The Waterfront became a focus for
regeneration and further office development has resulted in an
extension of the City centre. The first major office development
was Asda's office headquarters on the south bank of the River.
This development was key to realising the potential of the corridor
immediately to the south of the city centre and close to the M1
and M621 Motorways. Further office development has included the
Embankment, Addleshaw Booth (1997), Victoria Gate (1998) and Whitehall
(1998). It is estimated that in excess of 15,000 jobs have been
created in the Waterfront area.
2.2 Current initiatives
2.2.1 The Aire Valley Employment Target
Area.
The Aire Valley Employment Target Area (AVETA)
centres on a traditional industrial area which contains the largest
concentrations of derelict land in the district and the largest
new employment land allocations in the Revised Draft Unitary Development
Plan (RDUDP). Its redevelopment for employment generating uses
is fundamental to the Revised Draft Unitary Development Plan,
to the City's Economic Development Strategy and to the Regional
Economic Strategy. The AVETA currently covers approximately 1,000
hectares and provides employment for over 4,000 people in around
1,000 companies in a variety of office, industrial and manufacturing
businesses.
2.2.2 It is recognised that the Aire Valley
has enormous commercial potential to retain and attract a wide
range of high growth industries, with over one third of all land
available for industrial use in the West Yorkshire sub-region.
In addition, its attractiveness as an employment location is enhanced
by several major improvements to the highway network. The motorway
standard M1/A1 link road has been completed and work is underway
on the Inner Ring Road Stage 6. However, funding for the East
Leeds Link which will run directly through the area, linking the
M1/A1 to the Inner Ring Road and releasing land for development,
has yet to be secured.
2.2.3 As outlined in paragraph 1.5 there
are high levels of unemployment in the inner city wards where
current SRB initiatives have been focused on preparing residents
for employment, and the Aire Valley has the potential to provide
the major source of employment. The location of the AVETA adjacent
to some of Leeds' most disadvantaged communities makes its redevelopment
integral to the implementation of the City's regeneration strategy.
2.2.4 It is intended to release 350 hectares
of land in the AVETA for development of which 110 hectares are
derelict or contaminated. The sites include the site of a now
demolished power station including ash pits and sludge lagoons,
a closed landfill site and derelict mills. In bringing forward
this land for development it is estimated that approximately 4,000
high quality employment opportunities will be created. This represents
40 per cent of the projected increase in employment for the region
over the next five years. The strategy and implementation plan
for the AVETA prepared by consultants in 1999 indicated remediation
costs of £30 million.
2.2.5 Delivery of the strategy is dependent
on investment in the highway network to improve access to the
area this includes the construction of the East Leeds Link and
public transport improvements. Investment in development sites
is required to deliver a portfolio of serviced development sites
to meet both indigenous and inward investment requirements. Barriers
to progressing the strategy are the level of investment required
for service infrastructure, the scale and nature of the dereliction
and contamination and fragmented land ownership. Discussions are
taking place with Yorkshire Forward and the landowners and work
is underway to establish more accurate costs for land remediation
and service infrastructure.
2.2.6 Holbeck Urban Village
Holbeck lies immediately to the south of the
City centre next to the Leeds and Liverpool Canal and encompasses
50 acres of underused land and buildings. Most of the area is
designated as a Conservation Area and includes a mixture of old
mills and factory buildings, 17 of which are listed. Immediately
to the south lies the residential area of Holbeck which includes
one of the most deprived inner city communities in the country.
Many of the residents look to this area for employment. The Council
has developed a planning framework to promote the development
of Holbeck Urban Village with the aim of bringing land and buildings
back into use for mixed uses creating around 1,000 housing units
and 1,000 jobs.
2.2.7 The framework aims to guide the regeneration
of the area to:
— produce a vibrant missed use area
with a significant residential population;
— produce a development which is physically
and socially sustainable;
— complement the range of facilities
currently available in the city centre eg provide affordable housing;
— repair the historic fabric and retain
the distinctive character of the area;
— maintain employment opportunities
for the existing local community.
2.2.8 The market has already begun to appreciate
the development potential of the area, but only for speculatively
built offices and up-market residential accommodation. Costs relating
to the refurbishment and redevelopment of the listed buildings
are estimated at £12 million. Inclusion of these less commercially
attractive elements are vital to meet the above aims and ensure
the overall success of the scheme.
2.2.9 Stourton
Stourton is 1.5 miles south of the City centre
sand contains approximately 65 acres of development land. Royal
Mail has recently relocated to the site bringing 950 jobs to the
area. MD Foods, a major employer, is seeking to relocate to a
30 acre site in the area safeguarding 500 jobs. Further market
interest is directed at the remaining 15 acres of the site.
2.2.10 The development of these sites is
constrained by the cost and approach to statutory undertakings.
Additional electricity capacity is required to service the sites
which can be provided by Yorkshire Electricity at a cost of £2
million. Yorkshire Electricity insists that the first purchaser
pays for additional capacity, then reserves the right to sell
on any extra electricity to neighbouring users of the sites. This
pricing policy discourages pump-priming investment from companies
such as MD Foods, which would lead to the development of the wider
area and the creation and safeguarding of job opportunities.
3. CONSIDERATION
OF ALTERNATIVE
SCHEMES TO
REPLACE GAP FUNDING
3.1 Investors placing capital in inner city
regeneration projects face considerable risk. The experience of
progressing such schemes in Leeds suggests that it is difficult
for any one investor to "break ranks" and commit to
the scheme. There is a continued requirement to use public funds
to pump-prime private investment, to finance joint venture to
apportion the risk between the public and private sectors, and
for fiscal incentives for investment as recommended by the Urban
Task Force.
3.2 Adequate funding and a partnership approach
are key elements in facilitating the speedy release of brownfield
sites and the reuse of existing buildings. The tools and resources
to unlock the potential of derelict and underused land need to
address the practical issues, such as, the often fragmented patterns
of land ownership and the need to effectively plan and co-ordinate
the provision of infrastructure to facilitate such reclamation.
The positive encouragement of and resources to use Compulsory
Purchase Order powers by RDAs and local authorities would be welcomed.
3.3 The current restrictions on the use
of the Partnership Investment Programme and the potential implications
for other funding streams will mean that the RDAs will have to
undertake more direct development. This will require additional
funds and or prioritisation of schemes that contribute towards
the achievement of the Regional Economic Strategy objectives.
The current restrictions will mean that strategically important
sites to Leeds and the region, such as the Aire Valley Employment
target Area, will at best be delayed and fail to maximise their
full potential in generating employment opportunities and at worst
not proceed.
3.4 In the longer term, the Government is
recommended to seek amendments to the Treaty of Rome to encourage
public-private partnerships in regenerating derelict and difficult
sites. Such negotiations and any revised policy frameworks should
be informed by an audit of experience across Europe which identifies
best practice and how it might be replicated elsewhere.
4. THE SCALE
OF PUBLIC
FUNDING REQUIRED
TO ENABLE
ALTERNATIVE SCHEMES
TO PRODUCE
EQUIVALENT RESULTS
4.1 An indication has been provided of the
scale of Gap funding required to progress three key schemes in
Leeds in section 2.2. Direct development undertaken by the Regional
Development Agencies (RDAs) to avoid state aid issues arising,
may involve site assembly, remediation and provision of service
infrastructure amounting to substantially more than the estimated
£44 million GAP funding indicated. Direct development undertaken
by the RDAs would be less cost-effective in terms of public funds
and would initially require substantially larger allocations to
RDAs than at present.
5. PROVISIONS
TO BE
CONTAINED IN
A NEW
REGENERATION FRAMEWORK
5.1 Success in securing funding for major
infrastructure and regeneration projects depends upon the extent
to which private investment is channelled into these areas and
the degree to which policy and public capital directs that investment.
The Council would welcome the allocation of funds based on need
and locally agreed partnership strategies drawn up to address
those needs within a timescale which can achieve programmes to
deliver quality and value for money. Whilst strategies will need
to reflect the national and regional policy priorities, the funding
arrangements will need to be flexible enough to allow local authority
led partnerships with other public and private sector players
to support innovation and locally determined solutions.
5.2 The Council would welcome the allocation
of funds driven by an assessment of outcomes on a value for money
basis linked specifically to the RDAs strategic objectives. As
the engine for growth within the region, Leeds provides a unique
opportunity for maximising the potential of public investment
and will provide benefits not just to Leeds but to the wider region.
It follows that Central Government and the Regional Development
Agencies need to work closely with local authorities to identify
in clear and practical terms the role and contribution of each
within the region and sub-region.
5.3 The co-ordination of activity across
Government Departments, a greater degree of flexibility in funding
regimes and joint working with local partners is required to develop
longer term strategies and programmes which address issues in
a coherent way to respond to local needs and circumstances rather
than stifle, distort or fragment efforts to regenerate and safeguard
urban areas from decline.
P R Cook
Executive Director (Development)
Leeds City Council
4 July 2000
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