Supplementary memorandum by the Minister
for Housing, Planning and Regeneration (AP 03)
At the hearing on 20 November you requested
further information about a number of subjects which were raised
by the Committee. I now attach notes covering the following points:
The Cabinet Committee for Urban Affairs
I hope that the information provided in these
notes will answer the Committee's questions, however I stand ready
to provide further information should this be required.
Meetings of the Cabinet Sub-Committee for Urban
Affairs (Question 80)
The Cabinet Sub-Committee dealing with urban
regeneration issues, the Domestic Affairs (Social Exclusion and
the Regions) DA(SER), was established after the general election
and is chaired by the Deputy Prime Minister, its members are:
Deputy Prime Minister (Chair)
SofS, Department for Environment, Food and Rural
SofS, Department of Work and Pensions
SofS, Department for Transport, Local Government
and the Regions
SofS, Department of Health
SofS, Ministry of Defence
SofS, Department of Trade and Industry
SofS, Department of Education and Skills
SofS, Department of Culture, Media and Sport
MofS, Department for Transport, Local Government
and the Regions
Its terms of reference are:
"To oversee the development and implementation
of the Government's policies on social exclusion, neighbourhood
renewal, and area-based initiatives; to oversee the follow-up
to the Urban White Paper, and to report as necessary to Domestic
Affairs (DA) Committee."
At the time of the Committee meeting, DA(SER)
had met once since the general election and not twice as the Committee
were informed in error. The Committee has met once more since
Papers or information relating to the proceedings
of Cabinet Committees are classified and are exempted from the
commitment to disclose information under the code of practice
on access to government information. It is, therefore, not possible
to disclose further information on the Committee's business.
Evaluation of City Challenge (Question 141)
Outputs: The evaluation estimated that almost
25 per cent of the activity supported by City Challenge would
have gone ahead anyway. In future programmes, greater emphasis
should be given to their verification.
Programme aims: Each of the Programme's six
aims was at least reasonably well achieved but there were concerns
over the creation of employment opportunities for local people,
the degree to which an enterprise culture had been created and
the level of integration between projects. KPMG felt that the
programme's aims lacked precision and could have been more specific.
Performance of partnerships: Partnerships varied
significantly in terms of the characteristics of their areas,
partnership arrangements, programmes, delivery and succession
strategies. Performance also varied significantly and KPMG identified
a number of related factors to inform future regeneration policy:
Getting a clear, robust and realistic
strategy is important. Precise objectives at partnership level
are needed for assessing progress. Most partnerships did not do
this and in some cases problems were encountered with projects
or aspects of their strategy.
Successful regeneration partnerships
need good practitioners and strong leadership. Some partnerships
experienced a high turnover of staff and lack of strong leadership
that hampered performance.
There was a link between low levels
of community involvement and poor partnership performance.
Generating an early success and a
flagship project is important. Some partnerships had problems
getting the local programme underway. There was need for better
contingency planning to reduce the risks of losing flagship projects.
Linking projects together increases
the benefits. Some partnerships had weak links and missed the
There is a need to spend time in
the earliest days of the partnership developing effective management
systems. Often initially weak systems were strengthened during
Developing a (post-funding) forward
strategy at the outset is important. Overall this was thought
to be unsatisfactory.
City Challenge succeeded in tackling many of
the local causes of social exclusion but the extent of the problems
meant that a full reversal of the downward spiral could not be
achieved, although many partnerships created the foundations for
City Challenge was the first main partnership-based
regeneration programme. There were 31 City Challenge Partnerships
that operated in deprived urban areas between 1992 and 1998. Each
was eligible to bid for £37.5 million over five years and,
including levered-in funds, the Partnerships on average spent
over £240 million in each of their targeted areas. The Programme
was the forerunner to the Single Regeneration Budget.
KPMG Consulting evaluated the programme on the
Department's behalf. The final evaluation was published in February
2000. Key findings were:
Leverage: The £1.14 billion of City Challenge
funding resulted in a total investment of about £7.58 billion.
Every £1 of expenditure by City Challenge levered in a further
£3.78 of private sector funding and £1.45 from other
public sector partners.
over 110,000 dwellings built or improved;
nearly 170,000 gross new permanent
jobs created or safeguarded;
almost 4,000 hectares of land reclaimed
over 3.6 million square metres of
business space created or improved; and
8,700 businesses started;
130,000 qualifications secured by
Overall, the original forecast outputs were
all exceeded by the end of the programme, although some over-estimation
of outputs was identified (see key lessons). Almost two thirds
of jobs created in the City Challenge areas went to residents
in the same area.
Outcomes: The programme had very significant
and positive effects on the well being of local people and firms,
as well as improving the performance of a number of local markets
by addressing market failures. Amongst the key outcomes were:
increased economic activity and investment;
substantial improvements to the physical
infrastructure and environment;
improvements in the quality of housing;
and empowerment within communities;
an improvement in the ability of
local residents to secure a job;
reductions in recorded crime;
increased confidence of those involved
in City Challenge; and
creating the potential for sustainability.
Efficiency: KPMG's cost effectiveness analysis
focused on the relationship between the inputs (costs) and outputs
and outcomes. It showed that City Challenge performed well against
benchmark figures. Furthermore, on average a collection of individual
programmes would have been less cost effective in delivering a
similar basket of outputs and outcomes.
Economy: The programme was delivered to within
2 per cent of its overall budget. KPMG considered that for such
a large programme covering six years of expenditure and disbursed
over 31 partnerships, this was an impressive performance.
Overall value for money: This was considered
in terms of a composite assessment of the effectiveness, efficiency
and economy of the programme. On this basis, KPMG concluded that
it provided very good value for money and, compared with previous
value for money assessments, achieved above average results.
Positive features of the programme (many adopted
by the successor Single Regeneration Budget programme):
Competition for fundingon
balance the advantages outweigh the disadvantages provided it
is set within a supportive, narrowly-defined and needs-based framework.
In the majority of schemes the partnership
approach added significant value, although in a few cases it did
not work effectively and was a lost opportunity.
The benefits of a comprehensive and
strategic approach to regeneration were maximised and complex
integrated problems were addressed in a comprehensive and co-ordinated
£37.5 million per partnership
provided a "critical mass" of resources to help reverse
extended periods of decline, although local conditions should
determine the local requirements.
Time-limited life of the programme
retained interest and concentrated effort. The timescale should
be determined by local circumstances.
Output drivenprovides a useful
indication of activity but more emphasis should be on longer term
long-lasting benefits where improvements can be sustained beyond
the life of the programme is a key aim.
Lessons for learning
City Challenge was a ground-breaking and very
successful programme. It provided the basis for a step change
in regeneration policy and many of its features have been incorporated
into subsequent regeneration and area-based programmes.
Gap funding (Questions 155 and 160)
Take-up of replacement land and property regeneration
All of the five replacement schemes are now
in place and available for use by RDAs and EP. The schemes cover
direct development, speculative gap funding, community regeneration,
environmental regeneration and non-speculative gap funding. There
has been expenditure in the current financial year on projects
which fall within the parameters of the new schemes. However,
none of these projects involve gap funding. This is because the
RDAs and EP had already finalised their spending plans for 2001-02
by the time the schemes were approved earlier this year. We expect
a higher take-up of the schemes in 2002-03. For example, SW RDA
expect to spend £2 million on gap funding projects in the
next financial year.
Continued operation of the Partnership Investment
Programme (PIP) until such time as the European Court of Justice
had reviewed the Commission's decision.
It was not open to the UK Government to continue
operating PIP until the Commission's decision that it was an unlawful
State aid could be challenged in the European Court of Justice.
The decision that PIP breached the State aid rules took immediate
effect. Even if we had challenged it, the decision would still
have been in force and PIP would have been closed to all new projects.
We are working closely with the Commission and
other Member States on proposals for a new regeneration framework
under the State aid rules. The framework would permit the payment
of State aid for the regeneration of land suffering from market
failure anywhere in the EU. We are making good progress on this
issue. At the 9 October 2001 Council of European Regeneration
Ministers in Brussels, the UK stressed the urgent need for a regeneration
framework and was strongly supported by several other Member States.
The UK will host a conference on this issue in March next year,
to which the Commission and all Member States will be invited.
20 December 2001