Memorandum by the Regional Development
Agencies (CRED 20)
SUMMARY
We summarise below the main points made in this
short submission:
— The economic impacts of the credit
crisis on housing are now part of a wider economic slowdown that
is affecting all economic sectors and employment, as well as housing.
Measures to address housing need to be complemented by interventions
to support the wider economy. The RDAs have reported to the Treasury
on how the regional economies have changed, how existing policies
are working and whether further actions are required. (Section
2 below).
— The current joint review of key regeneration
projects by the RDAs and the HCA will look at regeneration schemes
in the regions, assess the extent to which they may be at risk,
and formulate a position on how the regional and national funding
partners can ensure the viability and momentum of key projects.
(Section 3).
— The short-term responses to the issues
in the housing market must be consistent with long-term strategic
objectives. These are set out nationally in the Housing Green
Paper; the RESs recognise the importance of improving, tenure
choice and type of housing in supporting economic regeneration
and growth. (Section 4).
1. INTRODUCTION
1.1 This paper has been prepared on behalf
of the eight Regional Development Agencies (RDAs) and the London
Development Agency, coordinated by One NorthEast, to provide evidence
for the Communities and Local Government Committee's inquiry into
how the "credit crunch" affects the Government's housing
policies.
1.2 One of the reasons the RDAs were set
up was to help manage major market failure at a regional level.
The RDAs have provided regional leadership to support local economies
during difficult times and help businesses survive and re-orientate.
Coal closures, contraction of car manufacturing, foot-and-mouth
and recent flooding have all required dramatic and timely RDA
intervention.
1.3 The current economic downturn is clearly
having major impacts on regional economies and businesses. The
problems first revealed through housing markets have now resulted
in a much broader economic slowdown, of which the housing market
is one of many sectors impacted. The RDAs are committed to working
with Government to help businesses navigate the economic downturn
and diversify into new products and services and will work to
ensure that the regions emerge with competitive and more robust
economies.
2. THE RDAS'
ROLE IN
SUPPORTING THE
WIDER ECONOMY
2.1 Alongside the impacts on the housing
sector, the wider economic impacts of the credit crisis are now
becoming more pronounced, with negative growth in economic sectors
and a consequent impact on Gross Value Added (GVA) and employment,
as well as housing. They therefore require an equally important
raft of interventions to those being brought forward to address
housing issues.
2.2 The RDAs believe they can work most
effectively by focussing on direct interventions that could assist
in addressing the wider economic impacts. Current interventions
range from the provision and delivery of key development and regeneration
sites and supporting infrastructure, as well as other important
support measures, including funding, training and initiatives
to promote places to new business and tourists. The RDAs have
the potential to address certain barriers presented by the credit
crisis which restrict business investment and growth. One measure
being pursued by a number of RDAs is the Regional Infrastructure
Fund, which support regional infrastructure delivery to facilitate
private investment in businesses as well as housing.
2.3 The RDAs are broadly supportive of the
Government's proposed interventions to help ensure that housing
goals are still met during this time of economic uncertainty (the
establishment of the Homes and Communities Agency (HCA) is a significant
opportunity in this regard). However, this must not be done independently
of the equally important measures necessary to achieve regeneration
and growth objectives, which are also vital components for delivering
the Government's long-term goal of sustainable communities.
2.4 In the RDAs' view, success in promoting
economic growth depends not only on restructuring our economy,
but also creating an environment which offers people attractive
places to live with expanded choice of decent and affordable housing.
Issues affecting regional economic competitiveness not only relate
to housing supply and affordability, but also the quality of the
housing offer and their localities, and accessibility to business
and employment opportunities, key services and amenities.
2.5 Given the aforementioned links between
the economy and housing, the RDAs are committed to working with
the HCA and its predecessors—English Partnerships and the
Housing Corporation—to ensure that the interventions put
in place complement those for housing. Specific involvement in
housing-related interventions currently include working with Regional
Housing Boards (RHBs) and sub-regional housing delivery structures,
including Housing Market Renewal Pathfinders, Growth Point initiatives
and significant mixed-use development and regeneration projects.
2.6 Each RDA has reported to the Treasury
on how the regional economies have changed, how existing policies
are working and whether further actions are required. The reports
set out a framework for discussion in each region. The outcome
of this exercise will feed into a comprehensive programme of work,
and will inform the Government's work in the run up to the Pre
Budget Report which is expected to outline further steps to support
the economy.
2.7 Throughout these processes it is important
that national Government and regional bodies understand the experiences
of businesses and communities. It is also important that businesses
are clear what support is offered by Government and by regional
agencies.
3. KEY REGENERATION
SCHEMES
3.1 As part of its response the Government
has commissioned a joint review of key regeneration projects.
This review was prompted by the departments for Business Enterprise
& Regulatory Reform (BERR) and Communities & Local Government
(CLG), and is being undertaken by the RDAs, HCA and its predecessor
bodies. It will look at regeneration schemes in the regions and
assess the extent to which these schemes may be at risk, or are
already affected by the changing economic circumstances. The review
will also formulate a position on how the regional and national
funding partners can ensure the viability and momentum of key
projects that, at a regional level, offer best value for money
and have the most far reaching impacts.
3.2 The joint review will provide a vital
indication of the regional impact of the credit crunch in terms
of real projects, jobs and communities. The RDAs feel that this
is an important and holistic aspect of the Government's response,
and welcome it as a positive measure to ensuring regionally significant
economic and social regeneration schemes, and the communities
which they aim to benefit, are not put at risk during these challenging
times.
3.3 The RDAs again emphasise the importance
of taking this holistic view to the current economic challenges.
Housing is certainly important, given the number of people currently
excluded from the housing market due to the tightening of the
credit market, and has implications in terms of the wider economy.
For example, a significant number of jobs are supported by the
housing and related construction industries. However, as the recent
global share crisis has demonstrated, the real economy is vulnerable
too, as are local jobs and communities. The RDAs understand the
Government's current emphasis on housing, but an appreciation
of the importance of mixed-use schemes in providing jobs, social
infrastructure and affordable homes to communities is also important.
3.4 A joint report will be produced by HCA/RDAs
and is due to be submitted to the National Economic Council on
2 November 2008.
4. ENSURING SHORT-TERM
INTERVENTIONS ARE
CONSISTENT WITH
LONG-TERM
OBJECTIVES
4.1 Although short-term interventions are
clearly required in the housing market in response to the credit
crunch, the RDAs would underline the importance of any such interventions
being consistent with the long-term objectives for the economy.
Clearly, housing has an important role to play in supporting the
regional economies and the RESs outline a number of long-term
objectives for housing that will help to support prosperity and
the growth of competitive economies.
4.2 It is vital to ensure that plans for
housing provision (in terms of numbers, tenure choice type and
quality) meet the needs of each region's economy and the people
who are likely to live there. Therefore interventions should ensure
that housing has a role in supporting economic growth and regeneration,
with some key principles in mind:
— The short-term responses must remain
consistent with the achievement in the longer term of sustainable
economic growth in regions envisaged in the RESs. Long-term sustainability
must continue to be the underlying guide.
— The potential for new housing to
support economic growth can be maximised if development is focussed
in locations which are well linked, predominantly by public transport,
to existing concentrations of employment and activity, and to
major economic development and regeneration opportunities.
— Existing housing could also play
a significant role if they are in areas which are well linked
to economic development and regeneration opportunities or could
be linked through the improvement of transport infrastructure,
and are improved to help attract and retain people. This could
cover all types of housing area, including Housing Market Renewal
Areas, and other areas which could be improved to appeal to a
wider range of markets.
— Maintaining government investment
in affordable housing is essential for supporting the ability
of employers to attract and retain staff. It is important however
that this is affordable housing in its widest definition and includes
not only social rented products but products that allow routes
into part and full ownership.
— Continued commitment to, and a public-sector
lead on, adequate levels of infrastructure provision will be vital
to sustain growth of housing and employment. Although not all
RDAs will pursue Regional Infrastructure Funds, all RDAs believe
that regional infrastructure should be funded adequately and coherently.
October 2008
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