Regeneration

CLG Select Committee Regeneration Inquiry 2011

Written Evidence from Urban Forum

Who we are

Urban Forum is a national charity with over 850 members, predominately small local community groups concentrated in deprived areas. We are member led and committed to supporting local people to improve their communities. We sit on DCLG’s Voluntary and Community Sector Partnership Board.

Summary

· The government’s approach to regeneration lacks clarity and coherence and fails to articulate how regeneration will be funded.

· Equality and inclusion must be at the heart of regeneration of place and people. At present this is missing.

· Neighbourhood planning and local incentives could support community led regeneration, but need to be designed to work for deprived communities.

· Commitments to Open Government need to be matched with transparency and accountability among private sector and not for profit regeneration companies and service providers.

· Local areas must be given greater control over local economies in order to reconnect capital with place.

· The key lessons to be learnt from both physical regeneration and neighbourhood renewal regeneration initiatives are:

o people need to be at the centre of regeneration and top down intervention doesn’t work

o residents are empowered to be active in their communities if they meaningfully involved in decision making and treated as equal partners

o regeneration agencies need to be more transparent and open to public scrutiny and influence

o directly funding grass roots activity leads to improvements in deprived neighbourhoods

o different regeneration initiatives need to be joined up

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

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?

1.1 It is unclear in ‘Regeneration to enable growth’ what is meant by regeneration, and a commitment to regeneration as a means of tackling inequality is missing. With the current economic crisis and budgetary constraints, which impact disproportionately on the poorest areas, it is essential that regeneration strategy focuses activity on supporting community resilience and strengthening local economies.

1.2 Moves to introduce a Right to Data and commitments to Open Government to improve the transparency and accountability of public bodies must be applied to regeneration companies, and outsourced providers of public services from the private and not for profit sectors.

1.3 Proposals around neighbourhood planning and the introduction of mechanisms to strengthen community benefit from development are welcome. The planning system needs both greater transparency and democratisation. Evidence shows [1] that one of the main drivers of low feelings of influence is consultation that citizens do not believe in, where they feel that the outcome is already decided behind closed doors. Planning is an area of decision making that particularly provokes this response. It is essential therefore that neighbourhood planning is open and transparent, integrated with accountable structures of neighbourhood governance and local democratic processes.

1.4 Neighbourhood planning, in conjunction with initiatives such as community asset transfer, Participatory Budgeting and the proposed new Community Rights, could be used to involve citizens in a genuine discussion about meeting neighbourhood needs. The Community Infrastructure Levy (CIL) and the New Homes Bonus can be used to positively engage the public at a neighbourhood level, provided local communities are given meaningful control over their allocation.

1.5 The CIL and the New Housing Bonus have the potential to be far more open to public influence and scrutiny than the current system for planning decisions and funding via Section 106. Serious consideration should be given to broadening the remit of CIL to include community infrastructure and affordable housing. However, if these are to be mechanisms for regeneration, and tackling deprivation, their implementation in areas with weak local economies and housing markets, high levels of deprivation and low levels of civic engagement, must be properly considered.

1.6 Community-led planning, parish and neighbourhood councils are well established in rural areas, where communities tend to be smaller and less diverse, and in more affluent areas that are more likely to have the benefit of community members with professional knowledge and other resources. Neighbourhood planning in urban areas must be properly resourced and supported, with support targeted at areas and groups of high deprivation and social exclusion. Without targeted support the opportunities created through planning reform and Community Rights will not be taken up equitably and inequality will be exacerbated as a result.

1.7 Whilst the New Homes Bonus has potential as a mechanism to incentivise local authorities and communities to support house building, it is not ‘new money’, and must be assessed within the context of a 60% cut in housing capital [2] . This calls into question the financial viability of affordable housing, even with community support. Cuts in front line services also offset the potential local benefits to agreeing to new housing and a growing population. The New Housing Bonus currently rewards areas with more homes in higher council tax brackets, penalising poorer areas where homes are in the lowest council tax band. If regeneration is to turn areas around, prevent further decline, and reducing inequality, the distribution of funding for development needs to be targeted at areas most in need.

1.8 Developing community-led regeneration requires conscious public policy and leadership. Without redesigning the fundamentals we will continue to undermine the efforts of civil society, local authorities, the private sector and communities to deliver local benefit and improved outcomes. Simply leaving regeneration to market forces, particularly in areas where the market has manifestly not delivered, even through boom years, or has delivered the wrong things (such as the widely acknowledged oversupply of high end flats in northern city centres, like Manchester and Leeds), is not an answer problems of decline and deprivation. It is essential that new ideas are brought forward that move us towards a genuinely new community-led approach to regeneration.

1.9 As with public service reform, there is a tension in planning reform between centralising and devolving tendencies. There are welcome new opportunities for communities to be proactive in plan making - developing neighbourhood plans and influencing Local Development Frameworks. However, the presumption in favour of sustainable development removes some of the checks and balances, and opportunities for communities to influence decisions beyond the planning making stage.

1.10 There is also a wealth of evidence that communities value the services and community identity provided by small retailers, and the disappearance of independent retailers from our high streets [3] is a concern for many sections of the community [4] , as well as a loss to local economies, essential to sustainable regeneration [5] . Giving more power to communities to shape plans, along with new powers for local authorities to support local business, could allow them to create a more level playing field for local businesses to compete in. Enabling this needs to be a feature of the Government’s approach to regeneration.

1.11 The Government paper ‘Regeneration to enable growth: What Government is doing to support community-led regeneration’ fails to provide a clear strategy for achieving this. Nonetheless, it rightly stresses the importance of accountability and community action as central components of renewal. If regeneration is to be sustainable in the long-term, it must be more about existing communities, how they feel about where they live, their confidence and unlocking latent capacity, than simply bricks and mortar.

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

2.1 The UK, through successive Governments, has invested billions of pounds in regeneration from Priority Estates Programme and City Challenge in the 1980’s and early 1990s, through to New Deal for Communities and Community Empowerment Networks as part of the Neighbourhood Renewal Programme from the late 1990’s and early 2000’s, the Housing Market Renewal Programme (HMRP) from 2002 and major urban development projects such as the Thames Gateway and the Olympic Legacy in the 2000’s. While these have resulted in some improvements in some areas, overall they have not been successful in providing enough affordable homes, stimulating significant growth of enterprise and employment, reducing inequality between communities and geographical areas, or in working in partnership with residents to improve areas and increase social capital. There are important lessons to be learnt about why such substantial investment has delivered only modest outcomes. It is essential to join up the different strands of regeneration and neighbourhood activity and breaking down the silos that undermine holistic community regeneration efforts. All aspects of regeneration need to be clear about their objectives and have community resilience and reducing inequality at their core. Organisations leading physical regeneration, including Local Enterprise Partnerships, Development Agencies and regeneration vehicles must have clear lines of accountability, and be genuinely capable of listening and responding to communities.

2.1 Previous regeneration initiatives have suffered from a lack of clear objectives from the outset, focussing on the wrong objective or having the goalposts moved midway through the programme. In particular the Housing Market Renewal Programme (HMRP) focused almost exclusively on the objective of increasing house prices. Local authorities sought to improve the local ‘housing offer’ to attract middle class professionals into inner city areas, which often resulted in the poorest and most disadvantaged sections of the community being pushed out of areas as they became unaffordable. Large swathes of terraced housing were earmarked for demolition, uprooting and permanently dispersing whole communities, and resulting in a net loss of affordable housing in those areas. The lines of public accountability and responsiveness to community influence were not apparent with the HMRP boards, further fuelling community opposition and anger. Furthermore, as house prices rose (as part of the UK trend) it became clear that whilst housing market collapse was a feature of decline in many areas, reversing this did not on its own address the deep-rooted causes of weak economies, worklessness or poverty [6] .

2.2 The current (and previous) Government’s strategy clearly locates community action as part and parcel of area regeneration, which is positive. The Community Empowerment Programme was a major component of the previous government’s neighbourhood renewal strategy and provides some important lessons for the future. One overarching lesson is that all activity to regenerate neighbourhoods must be properly integrated so that citizens benefit from it, and have a genuine say over how the area where they live is regenerated. The ambitious intention of the programme to narrow the gap between the poorest neighbourhoods and the rest of the country was welcomed, as was the acknowledgement this would take a generation to achieve. The Community Empowerment Programme achieved some successes in improving neighbourhoods and involving citizens, and there has been significant progression in ambition and thinking from involvement, to participation, to empowerment and now in ideas around ownership and control. It also resulted in developing and mainstreaming some innovative methods of building community power – such as Participatory Budgeting. However in most instances the progression in ideas towards more meaningful involvement has rarely lived up to stated ambitions in relation to empowering communities, leaving people disillusioned by this ‘implementation gap’.

2.3 During this period, physical regeneration schemes had consistently poor performance on public engagement overall. In the HMRP programme the speed at which intervention was planned provided little opportunity for residents to actually have a say before decisions were made. Existing communities were often presented as obstacles to be cleared away, rather than as equal partners in regeneration. The National Audit Office report on the HMRP in 2007 [7] raised serious doubts about the levels of engagement with local communities, and concerns about the top down nature of the housing market approach to regeneration (in contrast to other regeneration initiatives) which is viewed as both hampering meaningful engagement and created community stress. It made a number of recommendations for changing how the programme operated to improve community involvement, which included basing decisions on intervention on the views of residents, and making decision making more transparent.

2.4 While taking place in roughly the same time period, in the same areas, and should have had the same goals, physical regeneration schemes and the Community Empowerment Programme appear as almost entirely unconnected. The limited impact of the Neighbourhood Renewal Strategy, despite substantial public funding can, in part, be attributed to the lack of co-ordination and connection between different initiatives.

2.5 Two distinct features of the Community Empowerment Programme are that it provided direct funding of social action by small community groups through Community Chest funds, and that it resourced and supported community voice through the involvement of Community Empowerment Networks in Local Strategic Partnerships and through resident directors in the New Deal for Communities partnerships. Independent reviews of the Community Empowerment Programme highlighted both of these as significant success factors [8] . The NAO evaluation report found that in the first three years, the programme had funded 25,000 small-scale projects, the vast majority of which could be shown to have contributed to improving neighbourhoods (for example reducing crime or improving school results) in ways that, while not always measurable, were clearly felt by local people [9] . It highlighted the contribution to this achievement of delegating administration of the programme directly to the community sector, rather than via local authorities.

2.6 The NAO report, and other reviews [10] , also highlighted the tensions between the role of elected councillors and community representatives from Community Empowerment Partnerships. Too often both groups jostled to establish the legitimacy of their position to speak for the community, rather than focussing on reflecting community interest. This tension between representative and participative democracy was never resolved and was further compounded by reference in statutory guidance to the LSP as a ‘partnership of equals’ [11] .

2.7 With local government becoming increasingly frustrated with bureaucratic burden of over a thousand mandatory national targets, the Government adopted a new focus on local authorities as local leaders and ‘place shapers’. The welcome result of this was a reduction of centralised targets and the adoption of locally determined Local Area Agreements. However an unwelcome result of this was the abandonment of the broader neighbourhood renewal strategy and the absorption of the community empowerment programme into local authority-controlled area based grant-funding. As a result the Community Empowerment Programme was gradually dismantled, small grants activity ceased to exist and the Community Empowerment Networks either ceased to operate or were sharply curtailed in their grass roots activity [12] .

2.8 The experience of the Community Empowerment Programme demonstrates the value of linking grass roots activity with strategic decision making to support community-led regeneration. The programme’s success was based on channelling resources directly to grass roots activity, and a focus on building the capacity of the most disadvantaged communities to play an active role in regenerating their communities.

2.9 From the mid 1990’s until 2008 physical regeneration activity has principally been developer-led, predicated on a buoyant housing market and rising land value, capable of yielding sufficient profits out of which community and capital infrastructure and affordable homes can be funded – either through the private sector, or through borrowing by Housing Associations based on a return from rising values. Major questions remain over how successful this market and developer-led model was in meeting community needs. In any case, this is no longer the situation that we face, and this funding model is no longer feasible in the current context or foreseeable future. The plans to devolve aspects of planning and development control to a neighbourhood level are welcome, but current government policies reveal a striking absence of a specific approach or a coherent narrative for regeneration in this new context.

2.10 One of the features of recent regeneration schemes has been a reliance on strengthened powers for compulsory purchasing of land and property. The Planning and Compulsory Purchase Act 2004 was introduced to make it quicker and easier for authorities to assemble land for regeneration [13] , providing powers for planning authorities that were subsequently extended to the HCA in the Housing and Regeneration Act 2008. The Localism Bill currently proposes to extend these powers further to directly elected mayors. This is an area where power has been centralised and rather than extending these powers, consideration ought to be given to how the Localism Bill can provide stronger checks and balances are put in place for local communities and individual residents.

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

3.1 There are tensions inherent between current localist ambitions on the one hand and the continuation and extension of policies to allow free reign to market forces. By its nature, the market brings with it winners and losers, resulting in poverty and deprivation for some areas as well as wealth and prosperity to others. It is precisely because of this that we need regeneration activity to supplement or shape market activity.

3.2 As it is presently configured, relying on the market also has centralist consequences, with increasing concentrations of power, influence and activity in ever larger global institutions. The implications of this oligarchic trend is at odds with the principles of localism, which value locally determined decisions and control. Whilst the market has an important role to play in delivering choice and price pressures, it also has limits and adverse consequences for deprived communities.

3.3 One area where we see this tension in the regeneration strategy is around public services. In spite of an apparently strong economy in the decade up to 2008 the private sector provided little in the way of job creation. This was particularly marked in the 100 weakest local economies (outside of London) where the public sector accounted for 90% of employment growth1999–2008 [14] . The government’s economic policy (from which presumably regeneration flows, though this is ambiguous) relies on stimulating growth in the private sector through public service reform.

3.4 The government’s belief that the private sector will fill the gap left by the withdrawal of the state and provide an improved quality of public services is, at best, unproven. Recent evaluation of Private Finance Initiatives by the National Audit Office [15] concluded that "There has not been a systematic value for money evaluation of operational PFI projects… to demonstrate whether the use of private finance has led to better or worse value for money than other forms of procurement". Independent evaluation of PFIs, with a combined capital value of £52.9bn, is essential in order to inform the government’s approach to regeneration.

3.5 For public service reform to support economic regeneration we need mechanisms to keep profit and the supply chain local – supporting local voluntary and community groups, and local SMEs, with a long term interest and commitment to their local area. The introduction of The Public Services (Social Enterprise And Social Value) Private Members Bill [16] , sponsored by Chris White MP, requires greater consideration of economic, social or environmental wellbeing in commissioning, and would be a step forward.

3.6 The contraction in access to capital and the rising cost of credit since the credit crisis (which the NAO estimate between 20%-33% for PFIs) pose impediments to community regeneration. The consolidation within the financial services sector over recent years, with banks becoming ever larger global institutions, has resulted in a disconnection between capital and place that inhibits regeneration. Urgent action needs to be taken to stimulate new entrants and greater competition to the financial services sector, with a particular emphasis on local provision.

3.7 Wealth retention and creation, poverty and income inequality, asset building and resilience are central to the challenges that local areas face and intrinsically linked to the ambitions of localism. In many instances, particularly in deprived communities, these are stubborn, complex and deep-rooted issues that have not been successfully addressed despite waves of regeneration programmes. A more localised banking system could provide a way to connect surplus capital with productive purpose within the community (for the mutual benefit of investors and borrowers).

3.8 Regional stock exchanges, is another way to develop the economy that would support regeneration, and were a feature of the UK economy until relatively recently [17] .

3.9 There is potential to grow the currently small and immature community banking sector, which successfully link capital and place, despite the current centralised economic architecture. Credit Unions and CDFIs account for a tiny proportion of the financial services sector as a whole. In 2007 the value of the entire CDFI sector was less than 10% of Royal Bank of Scotland’s profits in the same year [18] . One of the most effective ways to stimulate the growth of local community-based finance provision –would be to introduce legislation along the lines of the US Community Reinvestment Act (CRA). The US experience suggests banks, wanting to benefit from the incentives provided to improve their performance in serving deprived communities found it more efficient to support community based finance organisations than to serve these communities directly. So, rather than have the expense of setting up a branch in a community, they put their money into local provision. This approach could easily be adapted to the UK - taking account of the very different context, but retaining the underlying principles.

3.10 Both local financial institutions and local businesses offer considerable benefit to local economies – as the well evidenced LM³ methodology [19] has shown. They recycle a significantly higher proportion of capital and retain more wealth within an area than national or multi-national institutions. Banks, with their very specific role as brokers of capital, have an even greater significance on local economies and it is crucial that we create the necessary regulatory framework and infrastructure for this to flourish.

3.11 Allowing councils to retain locally raised business rates is a good idea. And more Council’s and other public bodies need to use their existing powers to raise revenue, and use intelligent commissioning and procurement practices to stimulate local economies. However until local areas are given greater powers over general taxation, in particular Income Tax, it will be difficult for differing local needs and capacity to be adequately reflected in practice. By giving local areas greater control over revenue raising and taxation, they will be far better equipped to reflect differing local needs. With this power local areas would be able to use tax incentives more effectively to stimulate enterprise and regenerate deprived areas and reward local economic value.

3.12 Other ideas to support economic regeneration that might be woven into our economic architecture include; Local Enterprise Funds and Bonds and competition laws that favour local economies. The introduction of a locally determined (and collected) Land Value Tax, linked to greater devolution of decisions on land use, to replace Council Tax and Business Rates, like that proposed by the Green Party [20] , would also benefit local economies and better reflect their differences. This would have the added advantage of creating a deterrent against speculative development and land-banking, which stifles sustainable regeneration.

3.13 If we are to respond to global financial crises, and regenerate areas that were declining even before the economic crisis then we need a system that encourages, rather than hinders, this type of provision. This means not simply introducing programmes or policies for local, but some radical changes to the way our economy is organised.

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

4.1 More than ever, we need a locally based approach to regeneration, which builds community resilience to withstand the challenges posed by the economy, social change and environmental demands. This approach needs to respect existing residents, valuing what is there, building on existing assets of both people and place.

4.2 There can be no regeneration of place that doesn’t involve and focus on the communities who live there. Regeneration is about economies, jobs and housing. It is also about people – building confidence and capacity as well as improving opportunities and quality of life. Fundamentally it is about reducing inequality by turning around areas in decline to improve the life chances of those who live there.

4.3 The success of the Government’s approach to regeneration needs to be based on a joined-up assessment of all these areas.

Toby Blume and Rachel Newton

Urban Forum

5th May 2011