Regeneration

Regen 19

Written evidence submitted by Cumbria County Council

Regeneration to enable growth: What government is doing in support of community-led regeneration

Summary

· Cumbria County Council welcomes Government recognition that regeneration can be at the heart of driving economic growth and supporting communities. The Council also broadly supports the approach taken by the Government in Regeneration to enable growth.

· The overall ethos of involving communities in their own regeneration is in tune with the way in which the County Council has long tried to work with its local residents and communities. It is an approach that works but for many communities requires long term and committed ongoing support by local authorities and other public bodies.

· However, the County Council has some reservations about the viability of some of the measures outlined in the document, particularly where they will entail significant capacity-building on behalf of local authorities or infrastructure organisations.

· The Council also has some specific concerns about the likely effectiveness of some of the initiatives such as the Community Infrastructure Levy, and whether they will be able to stimulate regeneration in areas of market failure, which exist in parts of Cumbria.

Question-How effective is the Government’s approach to regeneration likely to be? What benefits is the new approach likely to bring?

General Overview

To answer the second part of the question first, it would seem intuitively that if communities and neighbourhoods are more involved in the articulation of their needs and the planning of solutions to those needs, that those solutions would be more effective, and that the community would have a greater stake in its success. However, there are two areas of reservation to this approach, firstly, that of context, and secondly, that of expertise. There are also some specific concerns over some of the initiatives within the document.

Cumbria County Council is pleased that the Eden Valley has been selected to be one of the Big Society vanguard areas, and this will prove illustrative as it is the only vanguard area that is not led by the local authority but by the community itself. Many of the activities being undertaken by groups in Eden have been in development for a number of years, and represent local solutions to identified needs. Eden is fortunate in that it has a demographic profile with the skills and time required to develop plans for initiatives such as a community pub. In other parts of Cumbria, local authority officers are active in working with less engaged communities to identify issues and solutions. This public sector resource and funding support is essential and must be maintained if communities are expected to successfully deliver local solutions.

Context

In terms of context, many of the measures described in the document are to be supported, but may not be useful to citizens when taken out of context. For example, the policy of transparency means that local authorities must publish full data on expenditure, to ‘ensure people can have a clear view of what is being spent and where’. It is questionable whether this information will actually serve any purpose when taken in isolation -e.g. it may be difficult for a citizen to estimate whether a council’s expenditure on, say, social care is inadequate or excessive.

Whilst the proposed reduction in bureaucracy and simplification of the planning system is to be welcomed, there is nonetheless concern that there might be some adverse and unintended consequences. It is recognised by the planning profession generally that the LDF system put in place post 2004 has been extremely time consuming, resource intensive, and over-complex compared to the old style Local Plan process. Yet, it is most important that a statutory plan-led system is retained in order to deliver much needed new development, and that it remains transparent and accountable. The plan-led system has historically given surety to the development industry (including the banking system), to local communities, and to Local Authorities.

Any moves towards planning by appeal, as seen pre-1991, could lead to far greater uncertainty and unsustainable planning outcomes, which may ultimately delay new development coming forward. Reassurances from Ministers still seem to indicate the primacy of the Local Plan, although the ‘presumption in favour of sustainable development’ as referred to in the Localism Bill, would seem to contradict the plan-led system.

Expertise

It would seem that the solution to this question of context lies in the Local Enterprise Partnership, as the body to set local priorities and identify the right spatial level for interventions. The County Council helped to lead the Cumbria LEP submission and is committed to making it a success. However ,given that LEP’s have no statutory authority, no operational funding, or guaranteed access to project finance and are still in an embryonic stage, the future effectiveness of LEPs in driving forward the desired levels of growth must remain uncertain for the time being.

The document conflates the role of the LEP, the local authority and the citizen. The result of this is an assumption that there will be expertise available within the local authority for the LEP and the citizen to make use of. How else will it be possible for people to navigate the planning safeguards of the Localism Bill, set up successful social enterprises, or engage deprived communities, without the advice and intervention of the local authority? The onus is then on the local authority to have officers available for these purposes, which may be challenging in this public sector funding climate.

Localism Agenda

In terms of local buy-in, the localism agenda, including the incentives for growth such as the New Homes Bonus and Community Infrastructure Levy, may assist the delivery of new development that better meets local aspirations, and reduces protracted local objection. However, it is now clear the Local Development Framework, or Local Plan, will still be the principal statutory planning policy document, and any ‘Neighbourhood Plan’ will need to be in conformity with it, have been through an independent inspection, received local referendum support, as well as being in line with the new National Planning Policy Framework, and be mindful of planning caselaw. It may be concluded from this that expectations about what communities can actually do in terms of ‘local’ planning might be unfairly raised, particularly as this will still be subject to external factors beyond the control of the planning system, such as the state of the local market and national economy; financing; legal constraints; and the willingness of developers, investors and landowners.

New Homes Bonus

It is possible that the New Homes Bonus will mostly benefit areas around large metropolitan centres, where growth can be more easily accommodated, and where land prices and development values are higher. Since the NHB is based on an average band D property, it will be of more benefit to the south of the country, rather than weaker northern housing and commercial markets, and is more likely to give incentives to Local Authorities to support larger type housing on greenfield sites, rather than help to address urban regeneration on difficult, and contaminated brownfield sites. This criticism has also been made by the Local Government Association and others in responding to the NHB consultation in late December 2010.

Community Infrastructure Levy

Likewise, the future Community Infrastructure Levy (as in S106 already) is expected to be less effective in areas of weak property markets, and where regeneration of brownfield contaminated sites is a high priority. Other avenues, such as the use of Local Asset Backed Vehicles or Tax Increment Financing might be more appropriate in these locations, although again the development values derived from LA-owned land in failing market areas may limit the potential of these opportunities. The future business rate value derived from TIFs may not provide the solution in risky investment environments.

Inevitably there will be uncertainty over the likely effectiveness of any new initiatives. It is not clear whether the areas most in need of regeneration, particularly those areas of structural and long term decline will benefit from the government’s approach, as defined in this document. It is important that the new measures are carefully monitored to evaluate their effectiveness

Question-In particular:

- Will it ensure that the progress made by past regeneration projects is not lost and can, where appropriate, be built on?

- Will it ensure that sufficient public funds are made available for future major town and city regeneration projects as well as for more localised projects?

Agent

The message of the document is very strongly that it is up to local partners to take charge of their own regeneration. Again, it is unclear whether the agent of this is ultimately the LEP, the local authority or the community or individual. Whether or not these bodies will be able to build on past regeneration projects is not determined by the document in itself, although it is useful to have a summary of the support available.

Sources of funding

Sources of proposed public funds for major infrastructure projects are contained within the ‘nearly £20 billion of central government investment’, of which £8 billion can be identified as being for London only. Of what is left, the only source of discretionary funding is the Regional Growth Fund, which is specifically for increasing private sector jobs, rather than longer term area based regeneration programmes. While a vibrant and expanding business base is necessary for the regeneration of deprived areas, it will be a challenge for local partners to ensure that this is aligned with other regeneration outcomes. There is a real concern that a large number of major regeneration projects in design or currently partially underway will not be completed due to the public sector funding gap created by the demise of the RDAs.

There is also concern for Cumbria around the lack of focus on rural regeneration. The Community Right to Buy and the Community Asset Transfer may be helpful in supporting local communities to save local facilities. However, external factors relating to financial and legal viability and the state of the local market may have a bearing on final outcomes in these cases.

As far as other sources of funding, there is no certainty within the document that particular areas or priorities will secure any support. Many of the resources for local authorities are undetermined. For example, the Local Government Resource Review will report by July, and may "allow authorities to receive direct benefits for increases in their business rates". The exact level of income from this, and other schemes such as the Community Infrastructure Levy, Tax Increment Financing and New Homes Bonus, is as yet unclear. It is accepted that the continuation of the Homes and Communities Agency is likely to aid a more cohesive approach in the delivery of affordable housing and regeneration and this is welcomed.

VCS/Social Enterprises

Coupled with this, funding for VCS organisations is primarily derived from financial products such as Community Shares, Social Impact Bonds and Big Society Bank. These initiatives either imply that the organisation is doing something from which it can derive an income, or that it is delivering a service that will have measurable future benefits to society. This is not a foregone conclusion for many third sector organisations, particularly in the arts and culture. Their contribution to community and individual wellbeing is undeniable, but whether this can be measured in a form equivalent to future savings to public expenditure is open to question.

Despite this, social enterprises in Cumbria are interested and positive about the scope offered by Social Impact Bonds in particular, and it promises some real innovation in delivery. The concern of the social enterprise, and voluntary and community, sectors in Cumbria is over the lack of funding for infrastructure organisations. These organisations offer a much-needed service to enable capacity-building, and help with the process of bidding for contracts and putting together business plans. Support for the continuation of these infrastructure organisations is vital to enable charities and social enterprises to bridge the gap between the end of grant funding, and the new financial funding methods becoming a viable option. It may well be that a number of organisations do not have the resources to survive this transitional period, which will have a negative impact on vulnerable individuals and communities.

Question-What lessons should be learnt from past and existing regeneration projects to apply to the Government’s new approach?

From a planning point of view, it is recommended that the Government retain the plan-led system, but reduce the complexity of it so that plans can be put in place in shorter timescales, whilst recognising the need for strong evidence bases to support the policies.

More generally, some useful principles may include:

- Clarifying the governance structure: as described above, Regeneration to enable growth lacks clarity around the roles of the local authority, LEP and citizen. This situation is not helped by the lack of clear guidance for the legal status and statutory obligations of the LEP. Although Ministers have given assurances about their willingness to transfer power to the LEPs, local political difficulties would be easier to resolve with statutory reinforcement.

- Where regeneration projects have been effective in Cumbria, project managers have worked closely with a local community to develop and refine the specific measures that will have the most impact on that neighbourhood, and their quality of life. This would reinforce the ethos of Regeneration to enable growth, but of course has entailed the time and dedication of a range of agencies, which is not determined by the document. For example, in Maryport in West Cumbria, the County Council has worked with local funding partners to make a number of improvements designed to increase inward investment, and boost business and tourism in the town. These include the development of a Business Centre, the creation of a coastal park from an old coal wash site, and the development of a master plan for the Harbour. The clear lesson here is that to be effective regeneration must be holistic in its approach and coverage. It must also be long term, as there are no short term fixes for disadvantaged areas faced with structural decline.

- Whilst challenge funds can drive up value for money and help maintain quality, competitive bidding can be time consuming and wasteful of resources.

- New funding initiatives should be kept as simple as possible, minimising bureaucracy, red tape and delays. Compliance should be proportionate to levels of funding received and Government must be prepared to accept certain levels of risk if communities are expected to be fully engaged and maintain their long term involvement.

Question-What action should the Government be taking to attract money from (a) public and (b) private sources into regeneration schemes?

(a) The Government’s approach to partnership working is innovative, and it is hoped that it will produce significant gains in terms of maximising the effectiveness of available funding, and ensuring local partners are well-coordinated in their priorities and actions. The Government appears to be committed to encouraging local partners to work more closely together, and the outcome of pilots such as in worklessness co-design and community budgets is keenly anticipated, to see how this operates in practice.

These initiatives represent the use of existing, limited, resources. The impact of the withdrawal of Regional Development Agency funding in an area such as Cumbria is acute, and has a direct impact on schemes that have started delivery on the ground, but which may not be completed. The only other source of additional funding is from Europe. The Government must ensure that its commitment within the document to ‘encourage alignment, where possible, with £1.4bn of European Regional Development Funds that remain to be committed under the current programme’ is followed through. The indication that European Social Funding will be targeted at those not supported by the Work Programme is to be welcomed.

Other possibilities are to identify local initiatives, such as assessing the County Council’s assets, and using them through LABVs to generate development potential.

(b) Private sector involvement is a key thread of much current government policy. The private sector is under pressure to create jobs, invest in skills and play a role in influencing strategic development through the Local Enterprise Partnerships. The reward for business is the opportunity to shape local communities where there will be higher skilled, healthier employees, who will drive future productivity. The Government has a role to play in communicating the importance of this opportunity to business, which may encourage them to make a greater contribution to regeneration schemes.

The example of the Nuclear Decommissioning Authority and Nuclear Management Partners in West Cumbria may be a useful one for Government to use to illustrate the potential of this role to other private sector organisations. The NDA and NMP have played a key role in developing and contributing towards the regeneration of West Cumbria, in partnership with the local authorities, and are committed to tackling issues of worklessness and low skills, among others, in that area.

In contrast, Cumbria has a high proportion of small businesses, who may struggle to contribute financial or other resources to regeneration schemes. 85% of businesses in the county employ 10 or fewer employees, and just 2.6% of workplaces have more than 50 employees (source: Cumbria Economic Assessment 2010). These small organisations are already experiencing a challenging economic climate -in the 2010 Cumbria Business Survey, the percentage of small businesses with a higher profit margin on the previous year was 22%.It is unrealistic to expect any significant levels of SME funding into regeneration when margins are tight and many businesses are struggling to recover from the recession.

Regeneration to enable growth mentions several financial products, which should serve to unlock private sources of finance for public gain, such as Community Shares and Social Impact Bonds. As above, the implication of these products is that the organisation can produce a return on that investment, which may be in terms of future savings to society. In the case of some third sector organisations or social enterprises, this return is often difficult to measure, particularly in the arts and cultural sector.

One solution may also be for the Government to encourage financial institutions to make greater investments in local communities, and expand their Corporate Social Responsibility programmes so that they are more co-ordinated with local priorities established through the Local Enterprise Partnerships. For example, the Northern Rock Foundation has historically provided a high level of funding for organisations working in deprived communities in Cumbria.

Question-How should the success of the Government’s approach be assessed in future?

The County Council has welcomed the Government’s commitment to dismantling over-bureaucratic systems of measuring performance, in particular the system of Comprehensive Area Assessment and Local Area Agreement, as well as the National Indicator set. Assessments of future success can be partially determined locally determined, making use of locally identified measures. Of course, the danger with all measures becoming locally determined is that it becomes impossible to define progress in a sub-national or national context.

However, there are some measurements that could be used as comparators, for example, the number of developments, the number of Neighbourhood Plans, and the length of time taken to approve Neighbourhood Plans and resulting development. This would give a useful indication about the effectiveness of measures designed to reduce bureaucracy.

The recent research report Who is ready for the Big Society (Sutcliffe, R & Holt, R, Consulting Inplace, February 2011) provides a useful basis for measuring change, taking its source from NI6 -proportion of the adult population participating in regular, formal volunteering; NI3 -proportion of the adult population who say they have been involved in decisions that affect their local area in the past 12 months; NI4 -proportion of the adult population who agree they are able to influence decisions in their local area; and from the Place Survey, proportion of respondents who say they would like to be more involved in the decisions that affect their local area. Clearly, the National Indicators won’t be available, but if local partners are able to find a suitable proxy, or a measure from the Single Data List, this would provide a means of tracking the effectiveness of Regeneration to enable growth. Some of the National Indicators for housing (NI154 and NI155) have been particularly useful.

Other ways of evaluating the success of the Government’s new approach is to measure progress against the Coalition’s key objectives of private sector growth and rebalancing the economy e.g. private sector jobs created, private sector investment, export led manufacturing.

The proposal announced elsewhere to measure success through including additional softer, social criteria, as well as the traditional economic criteria like GVA is welcomed. The proposal to construct a "well being " or "happiness" measure which will be included in the Treasury’s Green Book appraisal should give greater weight to social outputs which in the past have been given less emphasis in cost /benefit analyses.

March 2011