Memorandum by Barnsley MBC (GF 20)
ENDING OF THE PIP SCHEME
Following the closure of all the coal mines in Barnsley
in the 1980s and 90s with the loss of 20,000 jobs, the Council
and its local and regional partners are looking to the opportunity
provided by the forthcoming Objective One Programme to regenerate
its economy, but consider that the ending of the PIP threatens
to undermine that opportunity.
Barnsley's unemployment rate is 1.6 times the
national rate and requires up to 19,000 jobs to replace those
lost in the mining industry. Similarly Barnsley has only 60 per
cent of the number of VAT registered businesses per head of population
compared to the national average. 2,500 additional businesses
are required to reach the national average.
Much has been done locally to address these
problems including establishing the multi-agency Barnsley Development
Agency involving the Council, Business Link and the local Chamber
of Commerce with a Board chaired by the private sector thus providing
a single focus for business development.
However our job creation target cannot be met
without the development of suitable sites on which to locate new
businesses.
A range of sites amounting to 209 hectares are
awaiting development within the Strategic Employment Zones designated
in the Objective One Single Programming Document in Barnsley.
However without a replacement for the PIP and/or
a substantive increase in public sector funding for direct development,
it is unlikely that they will be developed.
68 per cent of the sites are owned by the private
sector and will not be brought forward for development without
public subsidy for the very reasons that South Yorkshire has gained
Objective One status ie lack of private sector confidence engendered
by the area's poverty. The private sector will not invest in site
development as the cost of preparation generally exceeds the market
value of serviced land. Consequently the private sector will be
excluded from the Objective One Programme thus confounding their
high expectations, damaging private sector confidence in South
Yorkshire and undermining the impact of Objective One.
Given the rules regarding EC support for land
acquisition it will be difficult for the public sector to finance
the acquisition of privately owned sites to drive them forward.
The loss of PIPs also affects the ability of
the public sector to support private sector speculative premises
development and development by end users. A number of significant
recent end user developments in Barnsley have been supported in
this way and would not otherwise have taken place.
In recent years there has been virtually no
private sector involvement in site preparation or speculative
premises development beyond that subsidised by Enterprise Zone
status. This is indicative of the failure of the sub-regional
property market. Ironically, at a time when the private sector
is showing interest in specific sites this has been undermined
by the closure of PIPs.
The Council is currently working with a private
sector developer to prepare a major employment site opportunity
at Junction 37 of the M1. The development is complex and will
require public sector assistance. However, without the ability
to grant aid the private sector the opportunity may well be lost.
The loss of the PIP is particularly frustrating
when recent experience has shown that the public and private sector
working together can achieve successful development schemes in
the South Yorkshire Coalfield.
The Dearne Valley Enterprise Zone created in
1995 has brought a development boom to an area which was devastated
by the mine closures economically, physically and socially. 6,500
jobs have been created and 2.3 million square metres of business
floorspace created on land reclaimed by the public sector and
developed by the private sector with Enterprise Zone incentives.
In Barnsley Town Centre the PIP was used to
bring forward the development of derelict 18th century warehouse
buildings for a mixed use scheme of café-bar, specialist
restaurant, speciality shops, office and studio space. The scheme,
which is being delivered by Yorkshire Forward, the Council and
a local contractor, received £300,000 funding from the PIP
generating in excess of £0.5 million of private sector investment.
(See attached press release.)
The Council therefore asks the Committee to
support the Alliance for Regional Aid's case for:
— an immediate replacement of the PIP
which does not contravene the EU state aid rules;
— replacement funding to finance direct
development by the public sectors to be included in July's Public
Spending Review.
It is important that priority is given to negotiating
a PIP replacement in Objective One areas given that a degree of
state aid is acceptable in these areas and that it is necessary
to ensure the delivery of jobs and wealth creation.
The Council would also wish to see an extension
of the Enterprise Zone or equivalent to the Objective One Strategic
Employment Zones in South Yorkshire.
John Woodside
Head of Special Programmes
Barnsley MBC
11 July 2000
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