Written evidence submitted by Hull City
1.1 We welcome the government's approach to supporting
communities to drive regeneration. Many areas, including Hull,
have developed their approaches in full partnership with their
local communities, as part of a long term strategy for social
and economic regeneration.
1.2.1 Delivering regeneration requires a balance
of people and place based approaches. In some places lasting change
will not be achieved without significant levels of physical restructuring,
which requires a long term public funding commitment.
1.3 Successful regeneration requires an alignment
of public sector effort and funding to create private sector confidence
and a co-ordinated approach to the delivery of people based and
place based interventions.
1.4 The government's approach to regeneration
is set against a background of significant reductions in public
spending. Whilst some of the government's proposed measures are
welcome it is clear that they cannot deliver the level of intervention
required for lasting change in Hull and the advantages are more
than offset by the loss of funding.
1.5 Many of the proposed mechanisms are not well
suited to Hull and other places with failing and dysfunctional
markets. For example:
New Homes Bonus will be calculated based on net additions to housing
stock. Hull needs to demolish substandard housing and replace
it with modern family housing, so the net addition to its housing
stock will be minimal.
new 80% market rent model only works where market rental values
are high enough. In Hull, where market rents are close to social
rents, 80% of market rent would not raise additional finance to
replace the proposed loss in subsidy.
Increment Financing works if the assumed increases in tax revenue
are sufficiently certain, not in places where there is a substantial
risk of them not materialising.
areas such as Hull where development is only marginally viable
imposing additional contributions through the Community Infrastructure
Levy will act as a disincentive to development.
1.6 These new funding mechanisms are much less
certain than previous ones, with some depending on competitive
bidding. The Regional Growth Fund, the only likely source of replacement
funding for significant housing interventions, has to cover a
wide range of interventions across the country. This makes building
community and investor confidence problematic.
1.7 Development of sustainable regeneration programmes
that build vibrant city takes significant time and effort in working
with established communities. Sudden changes, like those resulting
from the impact of financial restraint over the past year, need
to be managed extremely carefully in order to ensure ongoing support
from residents and public/private sector partners. The need to
respond to these changes in funding, have affected the confidence
of residents locally who were fully engaged in developing plans
for their area and has put private sector investment at risk.
Many neighbourhoods have only been partially dealt with, with
many families left in difficult conditions in boarded up and/or
partially demolished streets. There is also a real risk that the
investment to date will be wasted as these neighbourhoods deteriorate.
Staff skilled in regeneration and project delivery will be lost.
1.8 The deployment of locally specific fiscal
measures could assist in capturing the full benefits of economic
regeneration for the city.
2.0 Introduction and Context
2.1 The City of Hull lies on the Humber estuary,
a gateway to global trade. The port has always been a key driver
of Hull's economy. Hull now has a once in a generation opportunity
to capitalise in its economic and manufacturing assetsespecially
renewable energygrowth areas with the opportunity to attract
inward investment and create additional jobs. The city has historically
suffered from significant leakage of its wealth beyond its borders
into the much more prosperous hinterland of the East Riding of
Yorkshire, as middle and higher earning households choose to locate
outside of the city. This has resulted in a deep polarisation
between the housing markets of Hull and the surrounding East Riding,
and a loss of spending power and its multiplier effects within
In January 2011 Siemens announced its intention to
build Britain's first major offshore wind turbine manufacturing
plant in the city. This will place Hull at the forefront of wind
power technology. It will create 800 jobs initially with the potential
for a further 9,000 jobs in the supply chain. The plant would
be the first in the world to make 6MW turbines, double the capacity
of today's biggest.
The Prime Minister has acknowledged the significance
of the Siemens announcement saying:
"Brilliant news for Hull and the region.
I really believe this could be the start of a new era for Hull.
In the years ahead, who's to say your city can't become the world's
leader in offshore manufacturing? You can. And with this potential
investment, you have moved one step closer".
2.2 Without a co-ordinated approach to regeneration
there is a huge risk that past patterns will be reinforced and
that the economic benefits of these new investments will leak
away as workers choose to live elsewhere and commute. There is
a risk that without an attractive housing and neighbourhood offer
within the city higher value activities in the supply chain will
not even locate in the city.
2.3 Hull is the 11th most deprived district in
of the population lives in the 10% most deprived neighbourhoods
has the 5th highest benefit claimant rate in England (20.8%).
the 12 months ending June 2010, it had the highest unemployment
rate in Britain at 14 .1%.
city has an employment rate of less than 63%.
2.4 As a result many people are unable to afford
market rental or sale housing. Low values and low rents
within the city result in new development not being viable in
2.5 Strategic Approach
A co-ordinated, long term, city-wide plan is in place
to promote economic growth, in tandem with substantially restructuring
of the housing and neighbourhood offer to create attractive places
where people will choose to live. Area action plans for key neighbourhoods
have been developed based on extensive community and stakeholder
engagement. They are truly localist.
Visible improvements are being delivered on the ground,
with significant levels of private sector investment being attracted
as a result of the confidence that our vision and delivery plans
2.6 The key constituents of this approach have
mid-2010 Hull was just a few years into delivering a long-term
strategic neighbourhood renewal programme in two areas of the
cityNewington and St Andrew's in west Hull and the Holderness
Road Corridor in east Hull. These aim to deliver 5,000 new homes,
4,000 frontage refurbishments and the clearance of 3,000 of the
worst houses in the city. To date over 700 new high quality homes
are completed or on site, 1,500 homes are refurbished and over
1,000 properties have been acquired to make way for new improved
housing. The next phase of neighbourhood renewal was under development
through the preparation of an outline business case for PFI round
6 funding for the Orchard Park Estate in north Hull.
Building Schools for the FutureHull
is committed to improving education standards in the city and
its £400 million Building Schools for the Future programme
remains intact. The programme includes 10 new and improved schools
including three new academies.
strategy builds upon its key assetsthe port, established
health care industries (including Smith and Nephews) and new opportunities
in renewable technologies, especially in wind turbines.
3.0 How effective is the Government's approach
to regeneration likely to be? What benefits is the new approach
likely to bring?
3.1 There are a number of areas where the government's
approach will support the delivery of regeneration. However, there
are some areas of particular concern where we do not feel that
the tools being offered are appropriate to our market conditions
and will not support the level and pace of delivery required.
We welcome the government's commitment to localism.
Hull has developed Area Action Plans (AAPs) which were community-led
by steering groups of locally elected members, resident and community
representatives. There is now a significant risk that the sudden
and severe withdrawal of funding for these plans will result in
a loss of confidence and cynicism in communities that have been
heavily engaged in planning and decision making but will not witness
The government's intention to increase flexibility
in the use of public sector resources is also supportive. Hull
is a "Total Capital Pathfinder" and as such is leading
the way in the government's drive towards pooling of local budgets
and channelling of public resources more effectively. However
it would be unrealistic to expect this increased flexibility to
fix Hull's fundamental problems. It will help to make us more
efficient but it will not drive a strategic rebalancing of our
3.4 Local partnerships
We agree that local partnerships are essential to
successful regeneration. Hull has a track record in building strong
3.5 RDA Assets
We support the proposal to use RDA assets to deliver
the best possible outcomes for regeneration, rather than simply
being sold to the highest bidder. In many cases assets were bought
in more prosperous times so this will necessitate substantial
write-downs in value. Clear guidance is needed as to how assets
will be incorporated into regeneration schemes, on what basis
they will be transferred and at what value in order to maximise
3.6 Fiscal Incentives
The principle of retaining business rates
locally is attractive, although in the context of the wider review
of local government financing and the possibility of service cuts
there will be considerable debate about where the benefits should
TIFs will allow local
authorities to borrow against future increased tax revenues to
fund infrastructure or regeneration projects. Where these increased
tax revenues are sufficiently certain the model will work, but
where the risk of tax increases not materialising is significant
it will be more difficult. The success of the model will depend
on the attitude of lenders to specific projects or the ability
of the public sector to underwrite risk.
In relation to CIL the issue of economic viability
is critical, due to marginal land values often meaning that contributions
of as little as £2,500 per property render schemes unviable
in Hull. The next stage of CIL requires the Council to produce
a charging schedule and determine the appropriate level to set
CIL. This work is being progressed but it is unlikely CIL will
raise substantial sums of money, and any requirement will further
impact on our ability to require contributions for affordable
We have particular concerns in relation to the financing
of housing led regeneration, where the tools now on offer will
not address the level of need:
self financing brings with it a fundamental
change with significant controls over capital expenditure in the
form of a borrowing limit which will means, in effect, no new
borrowing from 1 April 2011 in Hull. As a result the Council will
have no resources to address the serious structural issues with
much of its system built stock. We will be left with housing that
we cannot to afford to demolish and that we cannot afford to maintain.
This will severely impact on the city's ability to improve its
housing offer to support economic rebalancing and will result
in residents living in very poor housing and neighbourhood conditions.
house building in Hull carries additional costs due to the city's
ground conditions, which require expensive piling and the mitigation
measures needed to address the high flood risk in the area.
New Homes Bonus is a potential gap funding opportunity
for new build homes. However, the bonus is based on net additions
to the housing stock. This disadvantages places such as Hull where
the priority is to improve the quality of its housing stock more
than the quantity. Demolition of obsolete and structurally deficient
stock and replacement with attractive family homes is required
to support economic rebalancing.
Housing Market Assessment identifies a need for more affordable
housing across Hull. Unlike some locations Hull cannot secure
affordable housing through Section 106 agreements, although we
are currently consulting on a possible 10% target for affordable
housing within the core strategy. Viability will be an issue for
most sites. New build affordable homes in Hull therefore currently
require 50% gap funding from the National Affordable Housing
Programme (NAHP). Without this most schemes in the priority
regeneration areas are unviable. It is clear, moving forward,
that there will be less NAHP funding. The proposed "Affordable
Rent Model" will allow social landlords to set rents at 80%
of the market rate in order to create an income flow to finance
the building of new homes. In locations where Registered Providers
(RPs) are currently charging less than 80% of market rent this
will provide them with additional income which will help to finance
new build. However because market rents are very low in Hull most
RPs are already charging around 80% of market rent, so therefore
the new approach will not deliver additional homes unless RPs
are prepared to cross subsidise from elsewhere.
Regional Growth Fund has been proposed as an alternative
source of funding for housing interventions linked to economic
outcomes. However the fund is not targeted at housing interventions
and has to cover the whole country. Keepmoat our Lead Developer
Partner in Newington and St Andrew's has submitted a bid to the
4.0 Will it ensure that the progress made
by past regeneration projects is not lost and can, where appropriate,
be built on
4.1 Sudden changes, like those resulting from
the impact of financial restraint over the past year, need to
be managed extremely carefully in order to ensure ongoing support
from residents and public/private sector partners. The immediate
impact, to Hull, of the national funding changes has been the
sudden halting of the acquisition and relocation programme leaving
part-demolished neighbourhoods and the residents who remain there
in an extremely vulnerable state.
4.2 Community Engagement and Capacity
The loss of community confidence is significant threat
to any future work with communities in Hull. Central to all of
the regeneration work has been the development of trust and support
to help local communities realise joint aspirations. The Area
Action Plans are based on years of community consultation and
engagement, and the halting of the programme is generating cynicism
and mistrust of the regeneration process. The interventions have
not only addressed bricks and mortar issues, but the regeneration
funding has also made a significant contribution to developing
social capital and enhancing community cohesion in the priority
4.3 Key regeneration skills have been developed
in recent years and many of which will now be lost. These are
the very skills needed to work with local communities to achieve
4.4 Private Sector Confidence
Private sector investor and developer confidence
is also at risk if alternative funding cannot be secured to continue
the regeneration. If alternative funding/delivery mechanisms cannot
be identified, an anticipated £400 million in public and
£800 million in private sector investment in Hull's homes
and neighbourhoods may not be realized and there is 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.
4.5 Inevitably plans will be scaled back and
less will be delivered. This is particularly worrying given that
areas that are now part acquired and part demolished and desperately
in need of further investment to take them to a "tipping
point" beyond which they can sustain themselves.
4.6 For area-wide regeneration to work critical
mass is essential. Keepmoat are currently delivering two phases
of development in Newington & St Andrews which total circa
260 housesbut these first phases sit adjacent to dereliction
and degradation. If future phases cannot be delivered then demand
for these first phases is bound to suffer, and in time values
will fall and deprivation will return. The Area Action Plan anticipated
1,800 new houses and 1,800 demolitions. Coupled with refurbishment
and public realm improvements this is enough to fundamentally
change the character of the neighborhood. 260 new houses alone
5.0 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?
5.1 Hull suffers from low property values across
all sectors, and for this reason most major schemes require substantial
gap funding. Whilst some of the new mechanisms are helpful to
a degree it is difficult to see sufficient funding being available
for major city centre regeneration.
6.0 What lessons should be learnt from past
and existing regeneration projects to apply to the Government's
6.1 Area based regeneration is, by necessity,
a long term process. The preparation of plans, full engagement
with the public, setting up reporting structures and forums for
engagement, selection of development partners and approval of
schemes all take time and significant financial investment to
deliver within a democratic framework. Five years is not an unusual
length of time to get an area-wide regeneration programme from
inception to the point where results are starting to be delivered,
and 15 to 20 years is not unusual to get a place to "tipping
point". Continuity of strategy and long term commitment are
crucial. The democratic system will inevitably lead to shifts
in national priorities and in approaches to delivery, but if these
shifts are too sudden and too dramatic they can make area-wide
change very difficult to deliver and can potentially lead to investment
6.2 Successful regeneration requires the alignment
of a number of funding streams and the ability to deliver people
and place based interventions in tandem. In 2000 the Preston Road
New Deal for Communities was awarded £53 million over a 10
year period to regenerate the estate. The NDC delivered environmental
works including play areas for children, garden boundary treatments
and creation of parking. A Village Centre was created which provides
retail, office space, child care and other public sector and community
facilities at the heart of the estate. However funding was not
available to address the major problems of structurally defective
housing stock in the area, or to create a wider range of housing
tenure and type, Therefore despite the NDC investment Preston
Road remains one of the most deprived area of the city.
7.0 What action should the Government be taking
to attract money from (a) public and (b) private sources into
7.1 Building the private sector confidence in
the public sector's commitment to delivery and to a long term
approach is crucial. Before the HMR programme in Hull no new housing
had been built in Newington & St Andrew's for over 20 years.
Private investment was non-existent.
Based on their strategic partnership with Gateway
Keepmoat have now committed circa £50 million of private
investment to Newington & St Andrew's, and subject to their
£8 million RGF bid being approved they intend to commit £118
million over the next 13 years. The HMR programme offered Keepmoat
confidence that an area wide change could be delivered and critical
mass could be achieved. However if the demolition programme cannot
continue then the commercial success of Keepmoat's first phases
will be at risk and this will put their ability to invest in further
phases at risk. If the Government wishes to attract private sector
investment then it should invest in creating viable investment
7.2 A co-ordinated city-wide approach is essential.
If Hull can raise education attainment levels, create jobs and
improve its housing offer then over time the city's economy will
improve, property values will rise and private investment will
be attracted to the city. The alignment of funding streams to
ensure that education, health, job creation and housing strategies
can come together is key. The Government's localism policy should
support this concept provided that interventions do not become
too fragmented. Local strategic leadership is essential.
7.3 Fiscal measures
For policy makers, the issue of the "north-south
divide" is arguably still a major factor in current thinking
about how to address the regeneration challenges which become
more focused when examined at the regional level and ultimately
at local level. As the government seeks to "rebalance the
economy" it is clear that for cities such as Hull, the ability
to further regeneration activity is compromised by both the fiscal
measures put in place to address the national deficit and the
potential low baseline (say tax revenues) and ability to benefit
from the known or emerging financial fiscal interventions that
are being progressed by government. In this context the Budget
is likely to provide a clear direction on the ability of local
authorities, in particular, to pursue such innovative measures.
7.4 The concern is, particularly given that some
may require primary legislation to be enacted, that such interventions,
eg Tax Incremental Finance schemes and Enterprise Zones, "underperforming"
economies will not be in a position to support market opportunities
as they arise, compounded by potential lengthy implementation
timescales. Therefore, areas such as Hull that have seen major
increase in unemployment indicators, will find themselves at a
disadvantage as things stand with a common timescale.
7.5 Hull recognises that the city is in a competitive
market for all types of investment, reflected by the approach
taken by the Regional Growth Fund. However, as exemplified elsewhere
in this submission, it has a number of major market opportunities
that have the potential to be realised. To enable these to be
maximised, there is an evident need for rapid development (deployment)
of local fiscal measures with businesses / market opportunity;
including the Governments proposed "tool-kit"; enterprise
zones, relaxed planning areas, TIFs, potential business rate retention,
etcin essence progress the ideas and quickly reflect our
opportunity to deliver on market potential
7.6 However, the ability to deploy such intervention
in a sustainable manner; thereby avoiding the mistakes of previous
deployment of such initiatives where the benefits were arguably
"short-lived", will be to ensure a combined physical,
social and economic approach to regeneration. In short building
on lessons learned. In that context we would suggest that businesses,
in a leading role, need to demonstrate "good citizenship"
behaviours including mutuality in "activising" community
relationships beyond what is seen as often cosmetic CSR activity.
7.7 To support such behaviour and recognising
the challenges for businesses in raising employment, for localities
such as Hull, the ability to also benefit from Work Programme
flexibilities to address "local" conditions will be
paramount. Changes in the Welfare to Work regimes will present
future challenges and this needs recognition. An example of such
flexibility could be the opportunity to create a local apprenticeship
standard to allow the latent capacity of the local economy over
a three period to be exploitedin essence local flexibility
to meet known employment demands.
7.8 For "low valuelow knowledge"
economies such as Hull the ability to promote and develop local
investment funds (under local governance arrangements) to realise
opportunities arising from academia / high growth potential business
sectors, thereby supporting universities in their engagement /
economic development role, would be one way of supporting "rebalancing".
This would not comprise the competitive environment that the fiscal
measures are enabling.
7.9 To aid this general direction, the opportunity
for local authorities to consider any investors' wider contribution
to the area in terms of planning decisions / policy frameworks
plus potential to "fast-track" planning decisions would
be seen as beneficial to individual localities, accepting that
there may some risk or merely moving the "money" (investment)
7.10 It is clear that Innovative models such
as Tax Increment Financing and Local Asset Backed Vehicles should
continue to be explored, and in some higher value areas these
will help but if a degree of urgency is deployed, other localities
may have the opportunity to benefit more fully. However, it also
needs to recognised and therefore some degree of accommodation
made that the new financial interventions, often predicated on
a risk and reward scenario, will need to be carefully considered
by many local authorities on that basis. This need to duly consider
this change of approach from the "grant aid" of previous
years may deter some local authorities from engaging, placing
relevant local economies at risk.
7.11 We suggest that a piece of work could be
commissioned to investigate whether, with the right structures
in place, tax breaks could be used to attract investment to deliver
specifically defined community-led delivery plans such as those
that exist in our priority areas.
8.0 How should the success of the Government's
approach be assessed in future?
8.1 Evidence-based policy making is important.
However, an assessment of regeneration policy is never straightforward
because of the difficulty of distinguishing the effects of policy
from other influences. One obvious criterion is the gap, according
to a range of neighbourhood renewal indicators, between the most
deprived neighbourhoods and the norm. With a focus on community-led
regeneration, measures of community empowerment and involvement
will also be relevant.
(1) Rebalancing the Economy; prospects for the
north. The Smith Institute. March 2011.
(2) Building a Sustainable FutureRegeneration
Discussion Paper. The Scottish Government (February 2011)