House of Commons - Regeneration - Communities and Local Government Committee

Regeneration - Communities and Local Government Committee Contents

3 The current picture

Stalled schemes

47. Our evidence suggested that the economic downturn, lack of available credit and reductions in public funding had all taken their toll upon regeneration, resulting in a reduction in the number of schemes currently underway. East Riding of Yorkshire Council said:

In the current economic climate, characterised by a failure of commercial property markets, very limited commercial lending by banks, and severe constraints on public sector funding, there is clearly a substantial lack of significant private development taking place. This is particularly marked in deprived areas, where development is often much needed, but not particularly commercially attractive, unless there are incentives available to the developers.[89]

The National Housing Federation agreed, saying that "declining property values and the withdrawal of funding from banks has undermined the viability of many developments". It added, "Many residential and commercial sites have been mothballed and others are in jeopardy as private developers nearing the limits of their financial capacity have withdrawn as partners".[90] Leeds City Region spoke of "uncertainties over budgets and priorities" making regeneration difficult and "hampering efforts to secure complementary funding, including from the private sector".[91]

48. During our visit to Greater Manchester, we saw examples of regeneration schemes that had slowed down or stalled—in New Islington, New East Manchester and Rochdale. The British Property Federation suggested that "very little development of any kind is now taking place outside prime areas in Central London", and said: "As regeneration is by its nature on the margins of viability then it is affected even more severely than more standard types of development".[92] Chris Brown, Chief Executive of Igloo, claimed that "something like 90% of major regeneration projects are stalled at the moment".[93] When we put this to Mr Shapps, the Minister, he said, "I do want to challenge the 90% figure, not that it may not be the case that 90% of regeneration is delayed—my own town centre is delayed—but that it always has been." He added that "an awful lot of projects have been delayed for an awful long time."[94]

49. The Minister did not deny that very little physical regeneration is currently taking place. However, by suggesting that this has always been the case, he gave the impression that he did not see it as a particular problem. We think he should be rather more concerned. Our evidence attributed the stalling of schemes to issues such as lack of lending, low property values and public spending reductions, all features of the current economic and financial climate. It may be the case that a number of schemes have been stalled for a long time, but the evidence we have received suggests that in recent years the problem has become more acute, with the emergence of specific barriers that need to be overcome. If the Government is to prescribe appropriate solutions, it would be helpful for it to have a clear understanding of the scale of the challenge. We recommend that the Government make and publish an assessment of how many regeneration schemes are currently underway and how many are stalled, compared to previous years. It should also identify what it considers to be the main obstacles to physical regeneration at the present time.

HOUSING MARKET RENEWAL

50. A particular issue raised by a number of witnesses relates to the Housing Market Renewal Pathfinder Programme. In the October 2010 Spending Review, the Government announced that funding of Housing Market Renewal as a separate programme would end in March 2011.[95]

51. We have heard mixed views about the Housing Market Renewal Programme. Some of our evidence has been very critical. Urban Forum observed that "reversing [housing market collapse] did not on its own address the deep-rooted causes of weak economies, worklessness or poverty".[96] It said that a 2007 National Audit Office report had "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".[97] The Building and Social Housing Federation argued that the scheme placed "little emphasis on sustainable development, community participation or employment beyond acknowledging that housing market failure may not derive from houses but may derive from 'non-housing factors'".[98]

52. Others, however, have spoken more positively about Housing Market Renewal. During our visit to Rochdale, we learned that the local authority considered it to be one of the best government-promoted regeneration schemes as it was based on a strong understanding of the key issues; residents spoke positively about its impact in the Langley area. The National Housing Federation referred to the benefits it had brought to the construction industry, stating, "To date the HMR programme has generated £5.8 billion of economic activity, created 19,000 jobs in construction and related industries and helped maintain over 2,600 jobs in the construction industry each year".[99]

53. Our evidence raised particular concerns about the suddenness with which the funding had been taken away. Michael Gahagan, representing the Housing Market Renewal Pathfinder Chairs, said:

Everybody expected cuts; we know we had to have cuts. It was the fact that last year it was £260 million, this year it is nothing. It is not just HMR, remember. Other associated budgets have also disappeared. One that springs to mind in the housing field is the single housing pot. In my area it was £26 million HMR, £13 million single housing pot; that is £39 million disappeared.[100]

54. We also heard about the human cost of the funding withdrawal. In Rochdale, we spoke to a family whose promised new home had not been delivered. We also heard from Ros Groves, Chair of a Liverpool residents' association, who spoke of the effects on her community:

To be honest, it is just getting people to notice what we are being left to live in. I have 88 owner-occupiers in phases 6 and 7 who are now totally and utterly stranded. I know there are 50 people in the Klondyke; there are people in Tranmere; there are people in Birkenhead. They are all in the same position. We cannot waste £60 million of public sector investment. We cannot—it just seems criminal. We have had £207 million-worth of private investment. That kind of money to us is a lot, and it seems like we are just going to go, "Okay, bye bye. It does not matter. We can just waste that; we can write it off. It is irrelevant," but it is not.

We need to think what my people are living in and the conditions they are living in. It is a famous line: we have kids in schools; you ask them to draw a house and they will draw you a house with boarded-up windows, not fancy little curtains or anything else. To me, that is not a future that we can build on, which is criminal. We have a right to have a decent life and place where we live, and that is the one thing that we ask Government. Can we have it? Can we let any Pathfinder area be left with what some people are being left to live in?[101]

55. It was suggested that action was needed to prevent the money already invested going to waste. Hull City Council warned that without a new solution, there was "a significant risk that a proportion of the over £130 million of HMR funding invested to date and the £125 million of private sector investment already made will be wasted."[102] This view was reinforced by the representatives of Manchester-Salford Pathfinder we met during our visit. The Riverside Group, a charitable housing association called for "an ordered continuation strategy to ensure a managed wind-down of the programme, even if this has to be delivered with lower resources".[103]

56. The Government, in its memorandum, spoke about "a new £5 million transition fund [...] to help safeguard and develop expertise and capacity in the five worst affected [Housing Market Renewal] areas".[104] On 9 May, DCLG announced it was "allocating up to £30 million to develop a transition scheme intended to help people trapped in the worst conditions where Housing Market Renewal schemes have been stalled".[105] This would be a match funded scheme, with local authorities expected to provide the remaining funding. The fund was made available to "the five most challenged Housing Market Renewal areas" but excluded five other areas, including those covering Manchester and Salford and Oldham and Rochdale.[106] Jim Coulter of the Housing Market Renewal Pathfinder Chairs felt it was "no coincidence" that this announcement was made on the same day he and Michael Gahagan gave evidence. He questioned how much impact the additional funding would have: "I guess if we came back [to the Committee] every day for another seven days we might come back to the level. But it is only five [areas], and we have got problems at a different scale across the whole of those areas, so that is the literal, physical cost of the suddenness of change".[107]

57. We asked Mr Shapps what hope he could offer to Ros Groves and the family we met in Rochdale:

To say that this is an inevitable consequence of an unsustainable approach, which I appreciate is not much help to somebody who is stuck in the middle of all of this, and that we will not just turn our backs and walk away. That is why, when I went to Liverpool, I announced that £30 million /£60 million fund. What really strikes me about so many of the communities that I visit—if we are back to housing market renewal, this is not true in all cases—is that quite often geographically the regeneration areas can be incredibly well placed.[108]

Later in the discussion, he said that he would "not be satisfied sleeping at night until we know that people are not living in streets that are half abandoned in communities that are not functioning".[109]

58. Whatever the merits of the Housing Market Renewal Pathfinder programme, the decision to end funding so suddenly has had a profound impact on the lives of people in town and cities throughout the North and Midlands. Many of those left in the mainly cleared areas are owner occupiers, often elderly and vulnerable people, who have no alternatives; as Ros Groves told us, they are "totally and utterly stranded".[110] We welcome the Minister's assurance that the Government will not "walk away".[111] However, the £30 million transition fund is not available to all former pathfinder areas and, even in the places able to access it, will not be enough to mitigate the effects of the programme's abrupt cessation. While the Regional Growth Fund may provide some help to affected parts of Hull and Wakefield, it is clearly not intended as a replacement for Housing Market Renewal funding. We consider that further action is urgently needed to help those affected and to ensure that the significant sums of money invested do not go to waste. We recommend that the Government set out a plan for a "managed wind-down" of the Housing Market Renewal programme in all pathfinder areas. In doing so, it should ensure that sufficient funds are available to eradicate the blight that has been left in many neighbourhoods.

Knowledge and skills

59. Our evidence raised concerns about important knowledge and skills being lost, to the detriment of regeneration projects. The development company Kier Group pointed to the abolition of Regional Development Agencies, stating that "much of the expertise built up over many years risks being lost"; it added, "Continual reorganisation of the public bodies charged with helping to spark regeneration across the regions is likely to limit the ability of the retained and new organisations to keep that stored knowledge and experience over time".[112] Igloo did not think that the new Local Enterprise Partnerships would provide "a focus for regeneration skills"; it was concerned about "the reduction in staff complement at the [Homes and Communities Agency]" which it believed would affect "the capacity of the public sector to provide support for neighbourhood regeneration". It added that "in most cases the pressures on local government funding" meant it would be "very unlikely" that this could be managed.[113]

60. Other witnesses spoke of the need for skills to be passed on. Ken Dytor, Chair of the British Property Federation's Regeneration Committee, pointed to the closure of Urban Regeneration Companies and the loss of "some really dedicated people". He believed that there was a need "to harness those sort of people" and to ensure "that there is a crossover with the new younger breed of people coming through into regeneration when [...] we get recovery".[114] Julian Dobson of Urban Pollinators felt there was need for an organisation that would ensure that those on the frontline could access learning:

If we are going to move into an environment with much reduced resources, which clearly we are, then we need to up-skill the people who are out there at the moment, and we need to find ways of doing that. It doesn't really matter how that is done, whether it is through an exterior body like [the Joseph Rowntree Foundation] or an independent body, but it does need to be done, and it needs to be a priority. There needs to be a way in which frontline council officers, developers, people who are actually involved in making things happen on the ground have access to learning. What we are finding at the moment with the reduction in public sector funding is [that] the first thing local authorities and others cut back on is staff training and learning. We can see why they do it, but it is short-sighted and it will result in problems further down the line.[115]

61. We are concerned about the loss of knowledge and skills and the serious risks this poses both in the short term and for future regeneration projects. It is important that those new to the sector have the opportunity to learn from the experience of those who have been involved in regeneration for many years. Our predecessors' 2008 inquiry Planning Matters—labour shortages and skills gaps concluded that there was "a drastic shortage of planning officers [...] and a significant and growing skills gap among those planners who remain within the system" and that "the shortage of planners was identified as long ago as the late 1990s but has been allowed to continue to worsen to its present condition".[116] There is a risk that similar issues could arise in regeneration if urgent action is not taken. We recommend that the Government review how regeneration knowledge and skills can be preserved and bolstered. It should consider options for sharing good practice and ensuring that there are mechanisms in place to pass on the knowledge of experienced practitioners. Actions from the review must then be implemented at the earliest opportunity.

89 Ev w95 Back

90 Ev 123, para 1.2 Back

91 Ev 192, para 24 Back

92 Ev 206, para 5 Back

93 Q 204 Back

94 Q 392 Back

95 Housing Market Renewal Pathfinders, Standard Note SN/SP/5953, House of Commons Library, May 2011, p 5 Back

96 Ev 219, para 2.2 Back

97 Ev 219, para 2.4, citing National Audit Office, Department for Communities and Local Government: Housing Market Renewal, HC (2007-08) 20 Back

98 Ev w14, para 3.13 Back

99 Ev 125, para 2.2 Back

100 Q 50 Back