Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by Urban Splash (ERF 01)

  I am submitting this evidence because I feel that it is absurd that the European Commission has ruled out Government Funding for Urban Regeneration sites.

  The old form of Gap Funding, PIP, was able to support all sorts of commercial mixed uses and purely residential development schemes in all deprived areas of the country. As I understand it, the new scheme is severely limited in many parts of the country and cannot support primarily residential schemes.

  The old Gap Funding was the Government's principal weapon in its urban regeneration armory, and was the catalyst for regenerating most of the significant schemes in the late 80s and 90s.

  Thanks largely to Gap Funding most of our City Centres have seen tremendous improvements over the last ten years, and are now sustainable and regenerating themselves.

  However, many of the outlining areas, the doughnut around the City Centre along with satellite towns, are suffering from tremendous deprivation and we do not have the tools to fix them.

  An example we are attempting is Manningham Mills in Bradford. This Mill was the world's biggest silk mill, at one time employing almost 10,000 people. It is still regarded by many as the finest collection of Mills in the UK. Sadly since the closure of the Mill some ten years ago, the building has become derelict and requires major investment to up-grade it and make it suitable for modern uses. The Mills lie in the heart of Manningham which is plagued by large scale unemployment and severe racial tensions which have recently erupted locally.

  Urban Splash acquired the building almost two years ago. We are willing to commit large scale private resources (c £10 million) to support the process of regeneration in this forlorn community. Our scheme will deliver the conversion of the Mills (some 800,000 sq ft of space), large scale job creation (up to 1,500 jobs, perhaps significantly more), and new residential accommodation. All of this would help transform the local environment and directly create new employment opportunities for people who face severe social exclusion. This is a scheme that would bring back confidence to the area, new private and shared ownership housing, managed workspace and community facilities.

  The costs of converting this derelict mill are enormous and values in Bradford and Manningham, to put it mildly, are rock bottom. As a consequence the viability gap is very large. To deliver the first phase of regeneration would cost almost £20 million, of which there is a funding gap of £9-£11 million. Later phases would become viable once confidence has been restored by judicious pump-priming to tackle the problems of the site.

  The new State Aid rules prohibit an intervention at this level. Apparently due to European Commission legislation, Yorkshire Forward are having difficulty with funding this scheme for fear of falling foul of the state aid rules. The intervention rate for Manningham in Bradford is only at a possible level up to 7.5 per cent of total development costs (because we are SME and the scheme is in a non-assisted area). The residential elements of this mixed-use scheme are not eligible.

  Under the old PIP scheme this scheme could have been supported. The public agencies could have taken a holistic view to encourage a wide range of activities which would breath new life into these Mills and the surrounding community.

  The new EU approved schemes prevent such an intervention and this leaves Urban Splash, the public agencies and the local community facing a very unclear future as regards the prospects for these Mills.

  Any new European Regeneration Framework must recognise the particular local circumstances (eg derelict listed buildings, deprived local communities, ethnic tension). It should be able to support a wide range of activities (housing, commercial, community) and it must be at an intervention rate which allows private sector investment to tackle the problems of brownfield sites (contamination, dereliction, low initial values etc.)

  The Manningham Mills example graphically highlights the shortcomings of the new EU schemes. The Mills are of the highest architectural quality, they have been allowed to deteriorate for many years when the buildings were held in receivership. The local community urgently needs sustained support (see Ouseley et al), the Mills have the potential to create large scale job creation and new residential opportunities, the public sector is extremely supportive and a private sector developer, Urban Splash, is a willing player. The one weakness is the inadequacy of the new regulations to accommodate gap funding at a realistic level.

Tom Bloxham

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Prepared 25 February 2002