Written evidence submitted by the Chairs
of the Housing Market Renewal Pathfinders
INTRODUCTION AND
SUMMARY
This evidence is submitted by the Chairs of the 10
Housing Market Renewal Pathfinders. The Housing Market Renewal
Programme (HMRP) ends on 31 March. The purpose of this evidence
is not, however, to lobby for the programme, those decisions have
already been taken, but to draw out some of the lessons relevant
to the questions set by the Committee.
As Chairs we have a wide range of experience in regeneration,
both through the HMRP and other programmes. We also come from
a range of backgrounds, including local and central government,
the private sector and academia.
Our main conclusions are:
— This
country has built up considerable expertise in regeneration that
stands comparison with anywhere in the world, especially in integrating
the various sectors to be improved and involving fully the private
sector and the local community. Regeneration policy has continued
to evolve. Local authorities have a central and increasing role
to play in setting the strategy, aligning expenditure and providing
leadership.
— The
Pathfinders, which close on 31 March as the Housing Market Renewal
Programme finishes, have been successful both in meeting their
targets and in bringing about the comprehensive renewal of their
priority neighbourhoods as emphasised by the Audit Commission.
We have not found the planning regime or the availability of powers
to be a hindrance.
— The
problem now faced in the Pathfinder areas is the absence of funding.
This has been exacerbated by the fact that funding has been terminated
suddenly rather than through a phased withdrawal which would have
allowed a planned exit. The cuts have, of course, coincided with
a significant reduction in local authority budgets. The HMR programme
was £260 million in 2010-11 and will be zero in 2011-12.
— This
funding withdrawal has left many schemes half completed, neighbourhood's
only partially dealt with and families in distressed circumstances,
including living in streets which have been partly demolished.
There is also a grave danger in many areas that the investment
in part completed projects will be wasted as the neighbourhood
deteriorates, giving poor value for both the public and private
funds spent to date. Staff skilled in implementing projects, often
paid for by the Housing Market Renewal Programme, are also being
lost.
— The
Coalfields have similar and, sometimes, overlapping regeneration
issues. Ministers have recently announced £30 million over
two years for the Coalfields Trust and £150 million to complete
remaining projects. We have no problems with money devoted to
such schemes but do not see how projects in our communities can
be any less deserving.
— Other
funding streams now in existence or announced, including the New
Homes Bonus and the Regional Growth Fund, will probably finance
only a very limited level of regeneration. In the latter case,
however, decisions have yet to be announced.
— We
welcome many of the proposals in the Government's report "Regeneration
to Enable Growth" particularly the reduction in ring fencing,
the possible use of RDA assets for regeneration and the support
for communities. These advances are, however, likely to be more
than offset by the lack of funding.
— One
value of the Pathfinders has been that they straddle local authority
boundaries, ensuring that priorities are agreed across the wider
housing and jobs market. The Local Enterprise Partnerships (LEPs)
have an important role to play in ensuring the continuation of
such an approach and we welcome the £5 million made available
by the Government over two years to provide support for such work
in the LEPs.
— Private
finance has always been difficult to attract to such areas, especially
in an economic slowdown. Gap funding, as operated by the Homes
and Communities Agency, is a cost effective way of achieving such
finance for capital schemes. Other proposed schemes such as Local
Asset Backed Vehicles (LABVs) and Accelerated Development Zones
(ADZs) may have a part to play but would need to be developed
as part of an overall regeneration strategy for the city and would
be unlikely to be sufficient on their own.
CONTEXT
Before dealing with the Committee's question we should
make a number of points:
— This
country has built up considerable expertise in urban regeneration
over the forty three years since the launch of the first Urban
Programme. Our regeneration policies have evolved in the light
of experience and our skills, particularly in local authorities
and the private sector but also in some communities, match those
anywhere in the world, especially in integrating different activities
and programmes to bring about comprehensive renewal.1
— This
is just as well because, as we were the first to enter the industrial
revolution, so much of our infrastructure is outdated, particularly
in the inner city. 21% of our housing stock was built before 1919
and much of this is located in city cores. The clearance programmes
of the 1960's and early 1970s tended to concentrate families in
social housing which was often poorly built and managed. The poorest
families inevitably gravitated to the poorest quality housing,
creating deprived communities. 43% of the 1% most deprived communities
lie within the Pathfinder areas. These neighbourhoods have to
be tackled comprehensively if we are not to condemn families to
long term disadvantage and are to reintegrate the neighbourhoods
back fully into the economy.
— In
all cases, local authorities have to deal with other elements
besides housing, such as education, training, health and policing.
One of the most sterile debates in regeneration is whether we
are dealing with people or places. The answer has to be both:
enhance the skills, employability and income of families and they
will sensibly leave the neighbourhood to better themselves, improve
the physical fabric alone and the neighbourhood will soon deteriorate
again as incomes are inadequate to sustain the area.
— There
has been talk of excessive top down regeneration. We do not see
it that way. The Pathfinders were created and managed by local
authorities with central government funding. They defined their
own strategies and priorities. The proposals for dealing with
priority neighbourhoods were always negotiated with full local
community involvement. This was also the case with New Deal for
Community projects. It is worth bearing in mind, however, that
in some of the communities with which we have had to deal the
population is not stable. Up to 50% of the houses were vacant
in certain places in the early days and much of the remaining
population was transient.
— In
these circumstances the role of the local authority is key. In
most cases it alone can provide the leadership and the ability
to draw together different activities and funding streams. Many
authorities, especially unitary councils, are adept at such delivery.
Moreover, the neighbourhoods to be regenerated may be central
to the wellbeing of the city and it is legitimate for the city
fathers, as well as the local community, to be heavily involved
in decisions about renewal.
— It
is also important to avoid tilting at windmills. Planning policy
or the available powers have been quoted as restricting the success
of regeneration. That is not our experience. Planning is not usually
a difficulty in such areas where the local authority is determined
to achieve renewal: similarly we know of no major cases where
the powers have significantly limited action. Some requirements,
particularly around compulsory purchase procedures, can be demanding
and time consuming but that is justified by the importance of
the decisions being taken.
— Our
premise, therefore, is that regeneration in this country has evolved
into a successful policy area. It is not perfect by any means
but it is capable of real achievements thought skilled and experienced
politicians, staff and communities. The Pathfinders, for example,
have met almost all their targets. Their success has been generally
endorsed by the Audit Commission who have reviewed them in detail.
We can do no better than quote the Commission's final annual review.2
"The HMR programme is making a difference to
the communities it serves, with fewer empty houses, reduced crime,
and more jobs and training opportunities, especially in those
neighbourhoods that are more advanced in their programmes. By
March 2011, HMR investment will have averaged about £115
per resident per year—surprisingly less than the comparative
spend by the New Deal for Communities (NDC) programme per head
on housing. By March 2011, pathfinders will have:
— refurbished
more than 108,000 existing homes;
— attracted
private investment to complete over 15,000 new homes;
— readied
substantial sites for future development through selective acquisition
and clearance of up to 30,000 properties;
— generated
some £5.8 billion of economic activity across the economy;
— created
some 19,000 jobs in construction and related industries; and
— helped
maintain over 2,600 jobs in the construction industry each year."
The problem therefore is not mainly one of skills
or commitment or community involvement. The problem is that resources
both for the Pathfinders and regeneration generally have dried
up. In the case of the Pathfinders, cuts implemented over time
could have been managed but the programme has gone from £260
million in 2010-11 to zero in 2011-12.
THE SELECT
COMMITTEE'S
QUESTIONS
"How effective is the Government's approach
to regeneration likely to be? What benefits will the new approach
bring?"
As we have argued above, the country has built up
considerable expertise in regeneration, especially within local
authorities, the private sector and some communities. There is
not a lot wrong with the way in which the process was evolving.
This is not to argue for the status quo. The development
of a single regeneration block within the Homes and Communities
Agency's (HCA) budget linked to the Local Investment Plans drawn
up by the local authorities, for instance, would mark an advance
on the Housing Market Renewal Programme. Moreover, we welcome
many of the proposals in the Government document "Regeneration
to Enable Growth." It is valuable, for example, that the
HCA is working with the Regional Development Agencies to ensure
that the land and property assets of the latter are managed in
a way which delivers the best possible outcome for regeneration.
Similarly, the strengthening of the community voice should prove
valuable as will the proposals to enhance the skills and employability
of the workforce. The ending of ring fencing of budgets will remove
one of the most frustrating elements in attempting to put together
a regeneration package. Other benefits are mentioned elsewhere
in this evidence.
These advances, however, are likely to be more than
offset by the extreme cut backs in regeneration funding, not only
through the Housing Market Renewal Programme but also through
local authority budgets. Alternatives such as the Regional Growth
Fund and the New Homes Bonus may provide some resources. These
however, must be put in context.
The amounts through the New Homes Bonus will be relatively
small. The Newcastle Gateshead Pathfinder, for example, has calculated
that, on the basis of construction rates over the past ten years,
the two authorities will gain about £6.03 million over six
years. This compares with an HMR budget for the Pathfinder of
£28.9 million in 2010-11 alone.
Similarly there will no doubt be many pressures on
the Regional Growth Fund. The Fund overall is £1.4 billion
over three years (ie about £470 million a year). This is
in excess of the HMR programme which peaked in 2007-08 at £405
million. However, the fund is available across the country, though
focused on the areas that have suffered public sector job losses.
Moreover, the priorities of the Fund, according to the consultation
paper, lie firmly in the creation of jobs, business support and
the revival of the economy.4 This is understandable
but it should not be assumed that there will be much available
for the capital improvements of the infrastructure in the poorest
areas Matters will become clearer only when the results of the
first round of bidding are announced.
The coalfields have similar issues of neighbourhoods
experiencing a long period of decline, some recovery and successful
schemes but being susceptible to the economic slowdown. These
were highlighted in the Review of Coalfields Regeneration published
last September.5 In response Ministers have recently
announced £30 million over two years for the Coalfields Trust
and £150 million to complete remaining investment projects.
We welcome the money for such regeneration but do not regard our
communities as any less deserving, our unfinished projects as
any less pressing or the danger of failing to gain full value
from past expenditure any less real.
Will it ensure that 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 town centre and city regeneration projects as well
as for more localised projects?
As is implied above, it seems unlikely that sizeable
regeneration projects will be fundable in the near future.
There is also a danger that funding will be inadequate
to retain within local authorities sufficient staff with the necessary
core skills. Besides anything else many of the staff working on
implementing projects on the ground are paid for by the Housing
Market Renewal Programme. Such retention is essential to ensure
that, when resources become available, we do not as a nation have
to re-learn techniques such as integrating the various activities
and working with communities and the private sector. This was
to some extent the case in the 1970's.
What lessons should be learnt from the past and
existing regeneration projects to the Government's new approach?
One lesson that we have learned to our cost recently
is that Government and regeneration timescales do not coincide.
As we pointed out to the ODPM Select Committee Inquiry into low
demand Pathfinders in 2005 and to the All Party Urban Development
Group in 2009 "Regeneration and renewal schemes typically
have a lead time of four to six years from inception to delivery,
and in complex neighbourhoods the period can be far longer. During
this time considerable negotiations take place with local communities
and with the private sector."6
Recognising this issue, a commitment to a ten year
horizon was given to the New Deal for Communities programme, but
this was the exception rather than the rule. The original implementation
agreements between the Pathfinders and Government in 2004 stated
that the agreement would run until 2018, though with the usual
termination clauses. In reality funding has never been provided
for longer than two years and, on more than one occasion, the
budgets were not approved by Government until several months into
the year in question.
These problems have been severely exacerbated recently
with the sudden ending of the programme. Some cuts were no doubt
inevitable though it would have been desirable for a significant
renewal programme to continue. The problems have been magnified,
however, by the abrupt ending, rather than the phased withdrawal,
of the programme. Neighbourhoods which were promised action in
later years will be disappointed. More importantly, many schemes
have been left partially completed. As a result there are streets
where some houses have been refurbished, some demolished, others
boarded up and some still occupied by families living in dismal
conditions. Moreover, some neighbourhoods where renewal has been
only partially completed may well regress because of the unsatisfactory
state of the half completed environment. This is likely to provide
very poor value for money from the investment to date.
Annex A provides two examples of such schemes.
An interesting characteristic of the Pathfinders
has been that they straddle local authorities because housing
markets are no respecters of local authority boundaries. This
has ensured that priorities have been defined across the wider
market. To do otherwise runs the risk that improving one neighbourhood
could well be at the expense of another just across the boundary.
Another, less obvious, benefit has been that the less adept authorities
have significantly improved their performance as a result of working
closely alongside the more able. We therefore welcome the £5
million made available by the Government to the Local Enterprise
Partnerships over two years to fund the continuation of cross
authority working.
What action should the Government be taking to
attract money from (a) public and (b) private sources into regeneration
schemes?
As far as public money is concerned the greater the
freedom given to local authorities and other funders to align
their priorities locally the better. As already mentioned, the
move of the Homes and Communities Agency towards a single housing
pot linked to local investment plans is also welcome. It is unfortunate
that it coincides with that pot being almost empty!
The ability of central government to align its funding
streams to ensure, for example, that schools or health centres
can be built in regeneration areas or skills training provided
to the inhabitants, has improved over recent years. The Government's
localism policy and the measures listed in the CLG statement "Regeneration
to Enable Growth" should continue that improvement.
Private finance has always been difficult to attract
to regeneration areas, even before the recession. One reason that
such neighbourhoods are rundown is that private money has fled.
Again, over the past twenty years, considerable expertise has
now been built up by both the public and private sectors in negotiating
and implementing projects, especially capital schemes. The use
of gap funding as developed by the HCA has been particularly important
in gaining the best value for money from the public pound.
A large number of other proposals for attracting
private money have been suggested in the past. These almost always
involve public expenditure, either as subsidy or as income forgone.
We have commented on two in the recent past, namely Local Asset
Backed Vehicles (LABVs) and Accelerated Development Zones (ADZs),
as follows.
"Local Asset Backed Vehicles (LABVs).
In the classic situation the local authority puts land into a
specially created company and seeks equity funding from the private
sector. The company, which is jointly owned, is then able to borrow
against its assets to invest in its area and the returns are distributed
between a dividend and a re-investment into the area.
Such a scheme, or a variation of it, would certainly
seem to have its place. It is, however, a long term solution and
is as yet untried. There is much to be said for encouraging those
Authorities who have such schemes in mind and monitoring closely
their performance. One feature which might greatly help their
attractiveness would be if Government were to make it clear that
any borrowing by such a body would be outside the local authority's
prudential borrowing limits.
ADZs ("Tax Increment Finance" in the USA)
were proposed by the Core Cities Group and Price Waterhouse Cooper
in 2008. In essence councils would be able to borrow funds for
development against future business rate revenue. ADZs would assist
the provision of infrastructure and would, as the Core Cities
report points out, "enable local authorities to participate
in the growth dividend." From our point of view, however,
any ADZs which are established should coincide with the priority
regeneration areas. If this is not the case they would add to
the competition for scarce private resources.
An ADZ would assist in financing the provision of
infrastructure in an area. It would be relevant, however, only
where the Authority could be confident of a resulting uplift in
property values. In many of our areas, as has been mentioned,
action is needed on a number of fronts over a prolonged period
to achieve comprehensive and lasting regeneration, especially
in times of slow economic growth. Thus an ADZ could be a useful
addition to the bag of possible actions but, as the Core Cities
Group report recognises, may well not be sufficient on its own."
How should the success of the Governments approach
be assessed in future?
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 indicators, between the most deprived neighbourhoods
and the norm. This was one of the recommendations of the National
Audit Office in its inquiry into the Pathfinders for the Public
Accounts Committee in June 2008.7
Again, various academic institutions have built up
considerable expertise through evaluating such programmes as City
Challenge, the Single Regeneration Budget, New Deal for Communities
and the Housing Market Renewal Fund.
REFERENCES
1 See, for example,
"Messages for Competitive European Cities" Liverpool
John Moores University 2007
2 "Housing Market
Renewal: Programme Review," Audit Commission February 2011.
3 "National Evaluation
of Housing Market Renewal Pathfinders 2005-07." Nevin Leather
Associates, Sheffield University, Sheffield Hallam University.
CLG 2009.
4 "Consultation
on the Regional Growth Fund," Department for Business, Innovation
and Skills, Department for Communities and Local Government, July
2010.
5 "A Review of
Coalfields Regeneration" Coalfield Regeneration Review Board,
September 2010.
6 Evidence to the
Parliamentary All Party Urban Development Group Inquiry "Regeneration
and the Recession" 2009.
7 "Housing Market
Renewal Pathfinders," House of Commons Committee of Public
Accounts, June 2008.
Use has also been made throughout this evidence to
documents published by the Chairs.
Annex A
EXAMPLES OF NEIGHBOURHOODS AFFECTED BY WITHDRAWAL
OF FUNDING
BENSHAM, GATESHEAD
In Gateshead, the focus of demolition and renewal
activity is Bensham. Three phases of demolition were planned for
about 450 houses (all Tyneside flats). The final 90 are now in
limbo thank to the loss of funding. Some £9 million would
secure the acquisition, displacement and demolition costs. The
streets in question are surrounded by completed housing improvements
so lack of demolition will be an eyesore for those owners and
tenants and would also leave many people trapped in homes from
which they cannot be decanted.
As well as community blight, there will be a significant
economic impact. The land in the three clearance phases is included
in the proposed disposal of 19 publicly owned sites to a consortium
for development, including affordable housing. The final stages
of the OJEU tendering process are in place but the basic assumption
of cleared land cannot be delivered if resources are not available.
The area action plan has strong resident approval and the new
homes would add to the choice of tenure and house type available
in the area.
GRANBY ESTATE,
EDLINGTON, DONCASTER
As part of the HMR Pathfinder programme in Doncaster,
the clearance of selected properties on the Granby Estate, Edlington
was approved on 19 September 2007. To date, 183 properties have
been demolished. As at 2 March 2011, there are 23 empty properties
awaiting clearance (pepper potted between tenanted homes), with
a further 12 fully disconnected properties currently with our
demolition contractors.
The announcement that there will be no dedicated
HMR funding beyond March 2011 has meant that Doncaster is unable
to release the last four phases of the clearance scheme. As a
result residents are left in the middle of a clearance site, with
no timescales regarding when, or indeed if, they will now be given
the opportunity to move. They find themselves adjacent to large
areas of undeveloped brownfield land, which they feel is detrimental
to the neighbourhood. Crime, arson and ASB have recently escalated.
Resident aspirations and the Council's relationship with the community,
which has been developed over the last five or six years, have
been handicapped.
In addition, maintaining the cleared sites and securing
any empty homes to ensure the safety and security of those who
remain is costly to the Council. Obtaining maximum value for the
land is also dependent on a fully cleared site.
In short, the local community on the Granby estate
have been left in limbo regarding the future of their homes and
aspirations of a sustainable, thriving community. The Council
is unable to progress re-development of the site to stimulate
housing and economic growth, with a real threat that the area
will suffer further decline.
March 2011
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