Examination of Witnesses (Questions 80-99)
14 JUNE 2004
MRS MARGARET
FORD AND
MR DAVID
HIGGINS
Q80 Chairman: In the Committee's report
on the coalfield communities we welcomed your commitment to take
on a wider role in promoting economic and social regeneration
in the coalfields. Can you indicate what your programme is for
achieving that, and are there one or two examples you can give
to us which show what you are achieving?
Mr Higgins: The neighbourhood
renewal areas are an example of how that will happen in the Coalfields
Programme there. The example of it is that each of the Coalfields
Programme's 100 individual sites has an appraisal that is set
up at the start, before any money is approved to invest there,
and it has to cover the whole issue of regeneration. Therefore,
social regeneration and employment issues are dealt with at the
very start of the appraisal process, before it goes through to
be finally approved.
Q81 Chairman: Is this new?
Mr Higgins: No, the two-stage
appraisal process has been in place for—
Q82 Chairman: In our report we welcomed
your recent commitment to take on a wider role.
Mr Higgins: Yes.
Q83 Chairman: I was only trying to get
at what you meant by a wider role. If you have done this in the
past, is there a change going on about how you will approach things
in the future?
Mrs Ford: I think the report was
perhaps getting at the change in the role in housing there, rather
than anything else. As with all of our other projects, in the
coalfields projects we would aim to bring basic regeneration impact,
obviously, and we would aim to do that in a sustainable way, working
closely with the whole community. What we were probably referring
to there was the fact that we have the flexibility now to work
in the housing components of that. We have been able to put community
infrastructure back in at Allerton Bywater, for example, which
is a Millennium Community but also former coalfield area. A key
part of turning local opinion around there was to get the miners'
welfare building regenerated and put value back into it and bring
it back as a hub in the area. That is probably what we were getting
at in what you refer to, if I have understood that properly.
Mr Higgins: We have gone back
to the Department on how we would respond to the report from the
select committee, and I think the Department is issuing that in
the next week or so.
Q84 Chairman: If there is something else
you want to add to that, we would be happy to receive it.
Mrs Ford: Absolutely.
Q85 Christine Russell: You mentioned
Allerton Bywater, so can I move on and ask you about the Millennium
Communities? Not wishing to sound too negative, but it is now
seven years into the programme and there is very little to see
on the ground other than perhaps 50% of Greenwich Village being
completed.
Mr Higgins: As you say, construction
at Allerton has started. Construction also started at New Islington.
Planning has been submitted and is close to approval at the project
at Telford. Oakgrove, nearly 2,000 houses at Milton Keynes, is
out to tender now and about to be awarded a key developer on that
project. The first stage of Hastings is starting. A lot of progress
has been made in the last 12 months, and in total 7,000 houses
on those seven sites—and no doubt probably more as they
develop. The most encouraging thing about the whole Millennium
Communities Programme is that when it first started it was seen
as a real experiment, and there was not a lot of support from
the industry. As it has progressed, it is now at the stage where,
on the recent tender for Oakgrove in Milton Keynes, the competition
to get at the last six was intense. There were thirty organisations
vying with each other. These are all major house-builders trying
to get in that last six. I asked a number of the senior executives
from those housing organisations, particularly those that were
very disappointed—major volume house-builders that missed
out—getting to the final shortlist of six; and they said:
"This is the R&D of the industry now." To get on
the Millennium Communities Programme, to understand and learn
from it and then apply elements of it to the mainstream of their
housing industry is a very important process.
Q86 Christine Russell: I am most familiar
with the one in King's Lynn. Last time I was there, nothing much
seemed to be happening on the site. What is happening to that
one?
Mr Higgins: The site is split
between two sites, one owned by a private developer and the other
owned by the local authority, and then there is a swathe at the
end of it that is a drainage containment area. It is going for
planning. There was a major decision on March 30 on a major road
interchange, which is essential to freeing up the whole site.
That commitment to the investment in infrastructure was made by
March 30 this year. The next stage is then the planning approval
for that. At the moment, negotiations are underway between the
Council and the adjacent land-owner NEP, on the whole issue of
value sharing between the sites.
Q87 Christine Russell: Because of all
this progress that you have made in the last 12 months, is it
too soon to evaluate the programme, do you feel; or have you done
any evaluation as to whether or not perhaps some of these sites
should ever have been included in the first place?
Mrs Ford: I began to get concerned
about six months ago about the rate of progress, which is what
I think lies behind your question. I asked our organisation to—I
did not call it an evaluation because I thought it probably would
not be as thorough as that, but I certainly wanted a stock-take
in order to come to our board and on to the Department to say:
"Given we now have seven years and progress on the ground
is pretty well confined—you go to Greenwich and show people
what can be done, but what is keeping us? What is taking us so
long to get on here?" That study is just about to come to
me, and I am very happy to share that with the Committee, if you
would like to see that. The gist of it seems to be that because
it was a very novel thing to do at the time, and it seemed quite
a risky thing to do, people did not think private developers would
be prepared to meet these standards for the costs that we were
describing. I think it did take quite a while, three or four years,
to get the first one up and running and to get the models and
protocols right. There has been much better progress in the last
18 months, and over the next two to three years we will see a
heck of a lot more progress, but I absolutely share your frustration
that after seven years there are lots of things in transit, but
not a lot of tangible outcomes to be able to go out and visit
and celebrate. I hope that will change in the next little while.
Q88 Christine Russell: I am sure we would
appreciate receiving the information.
Mrs Ford: I am happy to supply
that to the Committee.
Q89 Andrew Bennett: If you can give us
some good news there, what about the English Cities Fund?
Mr Higgins: The English Cities
Fund has made its first investment at Liverpool, and that has
now gone on for planning approval.
Q90 Andrew Bennett: How much?
Mr Higgins: The investment?
Q91 Andrew Bennett: Yes.
Mr Higgins: I will give you the
exact amount in a second. The total project itself is about £150
million; the entire site. The site purchase is around £6
million, and they are applying for ERDF funding at the moment.
It has got to stage one at St Paul's Square, so there is planning
approval there. It is also invested in Claytonbrook and NewEast
Manchester, which is done in partnership with the URC in NewEast,
Manchester; and it is close to final negotiations on two other
sites that it is working on.
Q92 Andrew Bennett: How does the Claytonbrook
one count as a city? It is an old river valley, is it not, quite
a long way out of the town centre? The city is going to be defined
as the whole of the urban area, is it not?
Mr Higgins: The Claytonbrook site
is adjacent to the new stadium there. They would think it is relatively
close to town, and it is really when you look at the new metro
that is going on; it is fairly adjacent. The regeneration of Claytonbrook,
particularly housing, is—
Q93 Andrew Bennett: I accept that there
is a good argument for regeneration there; it just seems a little
bit puzzling that it is part of the English Cities Fund rather
than one of the other funds that might be available for regeneration.
Mr Higgins: There are not that
many funds around that invest in regeneration; there are probably
two or three others that I can think of. It requires a lot of
patience and perseverance. The site that English Partnerships
has identified has been done in partnership with NewEast Manchester
and it will take quite a few years to fully consolidate that whole
site.
Q94 Andrew Bennett: So you are pleased
with the English Cities Fund.
Mr Higgins: I think it took a
long time to get established. There were considerable delays as
it went through EU procurement issues, but the fund became live
in mid-2002, when it really started. The area it is working in
it is particularly focused on because of its charter on areas
that are difficult to invest in and very difficult sites; it is
not a fund that has the flexibility of just choosing the best
investment opportunistically across the country. It has a difficult
mandate, but I am pleased.
Q95 Andrew Bennett: The Treasury was
helpful with that one!
Mr Higgins: I am not sure.
Mrs Ford: The Treasury was extremely
helpful with it.
Q96 Chairman: Moving to the European
Union or European Commission, once upon a time you had something
called the Partnership Investment Programme, which was very successful
and generally approved by everyone who had any dealings with it.
That was obviously stopped by a ruling of the European Commission.
Aside from the gap funding for housing, I understand there are
now about five different attempts at replacement schemes or funds
to do the job that PiP was doing. In truth, most of them are not
adding up to much, are they, in terms of delivering schemes?
Mrs Ford: The PiP programme was
before David's and my time, so we can only describe what we understand
it to have done; but all of our colleagues tell us it was an extremely
helpful programme that was very flexible. It enabled our organisation
to do things in areas where it traditionally had been difficult
to do things in. There was a great disappointment when it was
closed, as it were. Certainly since my time in English Partnerships,
the first year we were working on a gap funding regime to replace
PiP, and we spent a year getting that developed with the Department,
but mainly getting through the European hurdles, so the gap funding
regime that we now have in place has been, as it were, approved
by the European Commission. We intend to use it to replace what
we might have done before with PiP. Again, we are in the early
stages of that, and we are seeing different applications coming
forward and different models for gap funding. Again, the Park
Hill example that David referred to earlier is an example where
we have put out, as it were, a negative tender to the private
sector to ask how much gap funding it would take to make this
stack up from their point of view. There are different ways of
using it, but there is no doubt that in my own organisation people
greatly miss the old Partnership Investment Programme because
they felt it was very helpful. We are doing what we can through
the new gap funding regime to try and replace those opportunities.
Q97 Chairman: Aside from the housing
gap funding, how much money have you committed to other schemes
that have been designed to try and replace what it was doing?
Mr Higgins: Importantly, where
our schemes and our partners are going now—and one of the
major participants in the PiP programme was Bellway for example—the
developers are moving a lot more to joint ventures. We are finding
that even where partners—as the other day in Salford—were
looking for traditional gap funding, they have come back and are
much more attracted to joint ventures. We certainly see those
as replacing it. How many of those we are doing? We are doing
a lot. Our largest to date has been Barking Reach, which is 10,000
houses, a significant investment for the public sector.
Q98 Andrew Bennett: Are these joint ventures
identifying a gap, or is there no gap?
Mr Higgins: There is a gap. In
the case of Barking Reach, that sat as a site for 20 years. The
gaps are in decisions on infrastructure. In that case in relation
to contamination we are working with the local authority on their
adjacent site. There is always a reason why these sites have not
developed.
Q99 Andrew Bennett: So you are providing
the money for the gap.
Mr Higgins: It is sometimes negative,
for example Park Hill, which sat there for a decade or more because
there is a gap, and therefore there will be some gap funding required.
In the case of Barking, it is often the risk component and the
need to have a major public sector partner alongside a private
sector developer.
Mrs Ford: From the point of view
of my board, we are not uncomfortable with the move to joint ventures
because in the old days government would have put the money in
as gap funding as straight grant, and that might have been the
last we saw of it. When we are joint venturing with Barking we
will put investment in to unlock that development, but we will
also share in the upside of that and recycle that capital back
into the developments. That has to be good from the value-for-money
point of view, so we are not at all uncomfortable at doing joint
ventures, rather than always grant funding through gap funding
regimes. That is the point we are trying to get across.
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