Memorandum by Stoke on Trent City Council
(ERF 10)
INTRODUCTION
This statement is an account of recent difficulties
in attempting to establish the Middleport Waterfront Townscape
Heritage Initiative (THI) in Stoke-on-Trent, due to the DTI's
interpretation that heritage funding is subject to European State
Aid restrictions. The wider implications of this interpretation
are also discussed.
Throughout the development of the Middleport
THI project over the past 18 months, both English Heritage (EH)
and the Heritage Lottery Fund (HLF) have held the view that heritage
funding was exempt from European state aid restrictions. However,
at the final stage of the SRB6 application process, Advantage
West Midlands, the regional development agency, withheld funding
on the ground that the scheme broke state aid rules, the HLF portion
of the budget being subject to them as well as SRB6 money. Both
Government Office for the West Midlands and the State Aid Policy
Unit of the European Policy Directorate of the DTI and have since
stated the view that English Heritage and Heritage Lottery Fund
grants are subject to European State Aid restrictions. The HLF
and English Heritage consider their funding to be permissable
under State Aid Rules.
THE MIDDLEPORT
WATERFRONT THI
The Middleport Waterfront THI is a heritage
based area regeneration initiative based around a mile length
of the Trent and Mersey Canal in Middleport, Stoke-on-Trent. The
Heritage Lottery Fund (HLF) has granted £1,252,000 towards
the scheme. This is proposed to be matched by £520,000 of
SRB6 money to create a common fund of approximately £1.8
million. This common fund would be used to make grants of around
60 per cent towards the cost of works to repair buildings and
make them weatherproof, bring vacant floorspace and buildings
back into use, and deal with the serious problems of dereliction.
In total, the scheme would result in estimated £3-4 million
worth of investment and regeneration.
The Middleport Waterfront THI forms part of
a wider strategy to regenerate the canal corridors in Stoke-on-Trent.
It is envisaged that the THI would act as a catalyst for further
investment and regeneration.
The area covers a number of smaller sites, but
also three large building complexes. One of these (comprising
the Middleport and Port Vale Mills) is owned by Middleport Environment
Centre, a registered charity. Middleport Environment Centre have
recently experienced difficulty in obtaining SRB6 funding on grounds
of being a trading organisation. The other two major sites, Middleport
Pottery and Price and Kensington, are owned by private pottery
manufacturing companies and would therefore be subject to state
aid restrictions.
MIDDLEPORT-SOCIAL
AND ECONOMIC
CONTEXT
The Middleport area has experienced serious
economic and social decline in recent decades. Despite previous
improvement schemes, a significant proportion of the housing is
in poor condition. Problems of crime, drug use and prostitution
have increased. Property prices are well below average against
both the city and national contexts. Some terraced housing has
recently been marketed for less than £10,000. Typical incomes
are well below average, whilst unemployment levels are above average.
The index of Multiple Deprivation data makes clear that Middleport
is in decline, with serious social and economic difficulties.
The Burslem Grange ward, which contains the THI area, ranks as
the third most deprived ward of the twenty that make up the City.
Overall, Stoke-on-Trent is the 34th most deprived of 354 local
authorities measured in England (rank of average of ward scores).
The Trent and Mersey Canal is a focus for the
traditional industrial core of the City, and this is especially
apparent in the Middleport Waterfront THI Area where much 19th
century fabric has survived. In recent decades, traditional industries
have declined, restructured, closed down or relocated to new premises.
The lack of investment and neglect of the traditional industrial
core has resulted in many buildings falling into disuse. This
represents inefficiency in terms of utilising the area's land
resources. It has also resulted in a number of buildings falling
into dereliction and decay through a lack of investment, and neglect
of maintenance and repair. Around 50 per cent of the floorspace
in the THI area is currently vacant and much of it has been for
several years.
Demand for property is suppressed and land values
are very low or even negative. Poor vehicular access to the canal-side
buildings makes it more difficult to identify suitable new uses
and attract investment.
However, it is this very lack of economic activity
in the area that has also allowed much of the nineteenth century
industrial fabric and character to survive, albeit in poor condition.
Paradoxically, the rich concentration of industrial heritage in
Middleport is partly symptomatic of the area's decline, and lack
of economic activity in recent decades. But this lack of economic
activity now threatens the survival of the area's heritage. Investment
is urgently required.
Many companies are struggling for survival in
a contracting pottery industry. Many are sympathetic to the conservation
of their buildings, introducing new uses and economic activity,
and allowing public access. The firms in the Middleport area are
managing to survive, but incapable of undertaking significant
investment in marginal sites. There is clearly little demand for
land and buildings in their current condition. Without substantial
public funding, they are not viable, and by a significant margin.
Cities and towns around Britain have used their
historic environments to help create a distinctive identity and
competitive advantage. The reason some cities are more able to
attract high value investment is linked to the quality and nature
of the built environment. Stoke-on-Trent has a limited built heritage
resource in terms of quantity. However, qualitatively, it has
elements of international importance, especially relating to coal
production and pottery manufacture. Stoke's pottery related industrial
heritage helps to creative a distinctive identity. The three most
important historic pottery sites are Gladstone Pottery (now a
public sector museum), Price and Kensington and Middleport Pottery,
the latter two being in the Middleport THI area. These two potteries
and the other surrounding buildings in the Middleport THI area
form a concentration of pottery based industrial heritage, making
Middleport one of the richest stretches of canal, not only in
Stoke-on-Trent, but also against a national and even international
context. Middleport Pottery and Price and Kensington, both privately
owned, are at risk until the funding problem is resolved.
The proposed Middleport Waterfront THI would
act as a catalyst, complementing and assisting private and voluntary
initiatives, and providing leverage for other funding. The THI
could help to spark the confidence and investment that the area
needs so badly if it is to prosper once again. The state aid problem
currently prevents this.
MIDDLEPORT POTTERY
Middleport Pottery is a model pottery factory
dating from the late nineteenth century, which has survived remarkably
intact. This is reflected by the grade II* listing placing it
among the top 6 per cent of listed buildings nationally. The site
has some 97,000 sq ft of floor space. Around half of this is occupied
by Burgess, Dorling and Leigh, a pottery manufacturing business,
a remainder is vacant, in need of renovation and at risk. The
site was identified as being at risk by the Stoke-on-Trent Buildings
at Risk Survey 1998 and English Heritage's Buildings at Risk Register
2001.
The previous company (Burgess and Leigh) went
into receivership in 1999. At this time the receivers put the
building on the market. A few potential purchasers informally
approached the City Council. However, in each instance the proposal
was for complete clearance, or at best retention of only the front
facade. When informed of the restrictions on demolition, all interest
was extinguished.
Experience elsewhere in the City indicates that
such a building complex if vacant has a life expectancy of only
a few years. They become a target for vandalism, theft, fire damage,
etc. In Hanley, the City Centre, the large Imperial Pottery Factory
complex in the Caldon Canal Conservation Area was recently demolished,
having become unsafe. An adjacent factory complex, Hanley Pottery,
also in the Caldon Canal Conservation Area, is expected to be
demolished in the near future. In the town of Stoke, Colonial
Pottery in the Trent and Mersey Canal Conservation Area was recently
demolished for safety reasons. All had been vacant for only a
few years. Middleport Pottery is comparable to these complexes
in scale and character, though in a much less viable location
due to poor access and the nature of the surrounding area. In
addition, these were all unlisted buildings in conservation areas
and there was scope for higher proportions of demolition than
at Middleport Pottery.
The Middleport Pottery building complex, designed
for 19th century manufacture, is unsuitable for modern pottery
manufacturing techniques or for many alternative uses such as
residential without substantial demolition and redevelopment.
The site only has value to someone intending to carry out manufacturing
using traditional techniques. For anyone else, its value is low
and perhaps negative due to the responsibilities imposed by the
listing. The suggestion that state aid for the built heritage
would distort competition is difficult to understand in such circumstances.
William and Rosemary Dorling purchased the site
with the intention of continuing the traditional manufacturing
activities, producing a specialised product rather than mass production.
The Dorling's personal resources and borrowing capacity have been
fully utilised in this initiative. The company is in profit and
has slightly increased its workforce. However, there is insufficient
income generation to pay for even quite urgent maintenance. There
is no question of the vacant parts of the site being addressed,
or even for the decline of the occupied areas to be fully arrested.
The available resources for the buildings per annum are in the
order of thousands. The estimated cost of fully repairing the
site is probably in the order of £1 million.
The proposal for the site under the THI is to
repair the buildings, introduce visitor facilities and provide
floorspace for rental at realistic market rates to other small
companies. The additional income generated by the new floorspace
would be used to fund the upkeep of the grade II* listed factory
complex. The THI (HLF and SRB6 funding) would pay for around 60
per cent of the works. English Heritage would contribute match
funding. The Dorlings would provide around 5-10 per cent of project
costs. The project would provide substantial benefits to the Middleport
Area and canal corridor in terms of regeneration, bringing in
new jobs, improving the image and dealing with dereliction.
PRICE & KENSINGTON
TEAPOT WORKS
The Price and Kensington site is an extensive
complex of buildings, listed grade II*. Parts of the site were
improved under a previous initiative. However, much of the site
is in very poor condition and one building collapsed a few years
ago, leaving a gap in the site.
The manufacturing part of the business was recently
relocated to new purpose-designed buildings at a nearby site.
This resulted in a saving of hundreds of thousands of pounds per
year to the company. This illustrates the unsuitability of some
of the buildings for modern manufacturing purposes. New uses are
required. Half of the floorspace at the Price and Kensington site
is now vacant, the other half being used for packaging only. The
owner intends to market the site. However, the experience of other
sites in the City suggests that without public funding the site
may be marketable only on the basis of partial or substantial
clearance and redevelopment of the building. The site must be
considered to be at extreme risk.
HERITAGE FUNDING
The understanding of both English Heritage and
the Heritage Lottery Fund is that their funding is exempt from
state aid restrictions. Factors that may support this view include:
— Heritage funding pays for the conservation
deficit. Many projects are economically unviable without substantial
or even complete funding of capital costs. In addition, conservation
projects have to be carried out using appropriate materials and
techniques and this has cost implications. The difference between
any increase in value of the building and the capital cost of
the works is the conservation deficit.
— Article 87(2) of the Treaty of European
Union refers to aid granted by a member state, which distorts
competition by favouring certain undertakings or the production
of certain goods, insofar as it affects trade between member
states. In the case of grants for conservation works, it could
not be considered to distort trade between member states.
— Article 87(3)(d) makes provision
for "aid to provide cultural and heritage conservation where
such aid does not affect trading conditions and competition in
the Community to an extent that it is contrary to the common interest".
The THI would appear to be precisely the kind of initiative envisaged
under this provision.
— The statutory protection of buildings
creates competitive disadvantage to the occupying firms
and heritage funding merely creates a level playing field;
— Statutory protection designates buildings
as a "public good" (in economic terms). It is unreasonable
to expect private firms to fund public policy.
In the case of Middleport Pottery, the site
is economically unviable. The works will have very limited impact
on the value of the site, and such impact would largely be in
cancelling the negative value of some of the buildings. The conservation
deficit therefore accounts for most of the costs of the project.
When the proposed visitor facilities are taken into account (the
company allows visitors access to the site at present) these actually
place a burden on the company, though this can be offset to some
extent by purchases in the shop and proposed café. Some
parts of the site, such as the bottle oven and engine room, are
incapable of being put into productive use and are simply a drain
on the company's resources.
Heritage funding would be made available for
specific and carefully controlled works to repair and consolidate
the grade II* listed building. Public access to the site would
be a condition of the funding. Essentially the listing of the
site gives it the status of a "public good" and the
public would have reasonable access to it. Without providing funding
to cover the conservation deficit, the State is in effect requiring
the company (and other owners of listed buildings) to preserve
the asset as a public good for current and future generations
(ie to fund public policy).
The Dorlings clearly have to concentrate their
resources on servicing their borrowings and keeping the manufacturing
business afloat. Nonetheless, they have a real commitment to preserving
the built heritage as a worthwhile aim in its own right. They
are committed to conservation for it's own value. Such owners
are rare. The will exists, but not the resources. It is simply
unrealistic to leave the cost of preserving such sites to private
companies. Few companies would have the resources and those that
did would be very unlikely to locate in a declining and derelict
industrial area.
It is essential that the problem with funding
be resolved. All of the sites in the THI area are at extreme risk
until this is achieved. A 20-25 per cent grant (the level allowed
to SMEs in Tier 2 areas) could only contribute to very limited
and small-scale repairs such as rainwater goods. Unless substantial
funding can be channelled to this site, the listed buildings will
continue to deteriorate and will be seriously damaged or lost.
The THI forms a significant element in the strategy to regenerate
Stoke-on-Trent's canals. Limitations to the THI projects would
be very damaging to the canal regeneration programme.
INDUSTRIAL HERITAGE
AND INDUSTRIAL
DECLINE
Middleport Pottery provides a very tangible
example of a wider problem for Stoke-on-Trent and other areas
undergoing industrial decline, rationalisation and restructuring.
Much industrial heritage tends to be located in marginal areas
based around the traditional industrial core. Such areas are characterised
by neglect, dereliction and low levels of private investment.
This is certainly the case with the canal corridors through Stoke-on-Trent
including the THI area. A very high proportion of statutorily
protected industrial heritage is occupied by private companies
operating in increasingly competitive and marginal industries.
In the past, industrial heritage in Stoke-on-Trent and other industrial
cities has required substantial public funding in order to make
it viable for repair, refurbishment and continuing or new uses.
Such funding has been necessary to cover the conservation deficit,
which often covers much of the project costs. These projects often
act as a catalyst for wider regeneration.
The current interpretation on state aid restrictions
greatly hampers the potential for public/private partnership to
secure regeneration. It effectively brings heritage-based regeneration,
and indeed urban regeneration in general involving privately owned
land to a halt. The de minimis threshold (100,000 Euros) or 25
per cent (SMEs in Tier 2 areas) limits on funding are in most
instances going to be grossly inadequate. This being the case,
a large proportion of Stoke's and Britain's industrial and commercial
heritage becomes untenable.
A single currency would further exacerbate this
problem. State aid restrictions effectively extinguish the kind
of robust regional policy which is essential to assist under-performing
areas subject to a Europe-wide interest rate. Without such a regional
policy, targeting under-performing areas, cities like Stoke-on-Trent
will decline.
The current interpretation of European State
Aid rules undermines the ability of cities like Stoke-on-Trent
to secure urban and economic regeneration. The scale of this threat
cannot be overestimated. The traditional industrial core will
continue to decline with no prospect of securing regeneration
or creating conditions to attract private investment. I do not
believe it is any exaggeration to describe the current position
on state aid as outlined by the DTI as a disaster for Stoke-on-Trent,
for Britain's built heritage and for regeneration in general.
It is difficult to imagine that the Treaty of
Rome envisaged the suppression or cancellation of heritage funding.
Indeed, the Treaty allows for aid to provide cultural and heritage
conservation, as stated above. Nonetheless, the current interpretation
would appear to have had the somewhat perverse effect of preventing
heritage funding for sites owned by trading companies, except
at very low rates. It is highly unlikely that this was an intended
outcome at the time the Treaty of Rome was formulated.
The current interpretation of state aid rules
is clearly not sustainable. It is incompatible with the Government's
policy on the built heritage and principles contained in Towards
an Urban Renaissance. Indeed, the implications are potentially
the loss of built heritage at an unprecedented scale and urban
stagnation or decline in many areas.
The current position on state aid has dire consequences
for Stoke-on-Trent and similar cities around Britain. In the short
term it is will halt many regeneration initiatives involving privately
owned built heritage. In the medium to long term, it will cause
serious and irreversible damage to the Nation's built heritage,
and inhibit the social and economic benefits associated with a
well-maintained heritage resource. A solution is required urgently.
Whether this is can be found by looking at the interpretation
of the existing state aid rules or the rules themselves need to
be changed is not clear. What is clear, is that the existing rules
and their current interpretation are unsustainable, unworkable
and deeply harmful.
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