Written evidence submitted by the Chief
Economic Development Officers Society (CEDOS) and the Association
of Directors of Environment, Economy, Planning & Transport
(ADEPT)
SUMMARY OF
EVIDENCE
— We
support the Government's ambition to achieve locally driven growth.
We welcome the emphasis on the important role effective regeneration
can have in driving economic growth, strengthening communities
and supporting people back into work.
— We
strongly support the need identified in the CLG report for "every
part of Britain to fulfil its potential so we can prosper and
grow as a nation".
— Whilst
the new approach can bring benefits, we have serious concerns
about the likelihood of it being as effective as it could be as
a result of:
— the
lack of a clear national strategy for regeneration;
— a failure
to recognise the need for a strategic approach at the local/sub-regional
level; and
— the
scale of the reduction in resources for regeneration.
— With
the scale of the organisational changes being made and the very
significant reductions in funding being made, there must be a
serious risk that the progress made by previous regeneration schemes
and the ability to build on their successes will be compromised.
— With
the scale and pace of the public sector funding cuts, there is
little likelihood that sufficient funds will be available, certainly
in the short/medium term, to realise the aim of every part of
Britain fulfilling its potential.
— We
welcome the growth incentives and measures that the Government
is introducing but as they are currently being defined/planned,
some have significant limitations.
— It
is essential that relevant lessons from past and existing schemes
are learned. With its intention to take a strategic role, Government
should, as a matter of urgency, take a lead in reviewing projects
and identifying and disseminating best practice from across the
country that can inform its new approach and support local regeneration
action.
— To
attract money from public sources into regeneration schemes, Government
needs to:
— quicken
its pace in introducing incentives eg to set out definitively
how it sees TIF operating and complete its consideration of Business
Increase Bonus/business rate retention options and ensure that
the incentives are designed in a way that supports regeneration
projects and does not undermine them;
— extend
the principle of place-based community budgets to economic development
and regeneration, with all levels of funding and intervention—national
as well as local—being covered; and
— ensure
that match funding is available to enable resources from European
programmes to be drawn down to maximum effect.
— Restoring
the necessary level of confidence to attract private investment
into regeneration should be a key plank of policy for Central
Government and local authorities. There is a need to provide certainty
on the delivery of necessary public funded infrastructure, on
developer contributions and on development timescales. Whilst
risk cannot be removed, incentives and safeguards need to be considered
to help lessen risk and make regeneration schemes attractive to
private investors.
— Consideration
of how to assess the success of the Government's new approach
is a conspicuous by its absence in the CLG report. In its strategic
and supportive role, Government needs to address this gap and
provide guidance to identify measures of success related to the
objectives of its new approach.
INTRODUCTION
1. This Memorandum of evidence is submitted jointly
by the Chief Economic Development Officers Society (CEDOS) and
the Association of Directors of Environment, Economy, Planning
and Transportation (ADEPT).
2. The Association of Directors of Environment, Economy,
Planning & Transport (ADEPT) represents local authority Strategic
Directors who manage some of the most pressing issues facing the
UK today. ADEPT membership is drawn from all four corners of the
United Kingdom. The expertise of ADEPT members and their vision
and drive is fundamental in the handling of issues that affect
all our lives. Operating at the strategic tier of local government
they are responsible for delivering public services that relate
to the physical environment and the economy.
3. The Chief Economic Development Officers Society
(CEDOS) provides a forum for Heads of Economic Development in
upper tier local authorities throughout England. Membership includes
county, city and unitary Councils in non-metropolitan areas, which
together represent over 47% of the population of England and provide
services across over 84% of its land area. The Society carries
out research, develops and disseminates best practice, and publishes
reports on key issues for economic development policy and practice.
Through its collective expertise, it seeks to play its full part
in helping to inform and shape national and regional policies
and initiatives.
4. CEDOS and ADEPT welcome the opportunity to submit
evidence to the Communities and Local Government Committee's inquiry
into regeneration, following the publication by the Government
of the report "Regeneration to enable growth: What Government
is doing in support of community-led regeneration". Our joint
evidence, which has been framed in the light of consulting with
our members across the country, focuses on the specific questions
being considered by the Committee's Inquiry.
THE GOVERNMENT'S
NEW APPROACH
5. The report sets out a new localist approach to
regeneration, "putting residents, local businesses, civil
society organisations and civic leaders in the driving seat and
providing them with local rewards and incentives to drive growth
and improve the social and physical quality of their area".
The report argues that with the country facing a
record budget deficit and less money available for investment
in regeneration, a new approach is needed.
6. The Government believes that regeneration activity
should be led by local communities not by Whitehall. It sees its
role as being strategic and supportive by:
— reforming
and decentralising public services;
— providing
powerful incentives that drive growth;
— removing
barriers that hinder local ambitions; and
— providing
targeted investment and reform to strengthen the infrastructure
for growth and regeneration and to support the most vulnerable.
How effective is the Government's approach to
regeneration likely to be? What benefits is the new approach likely
to bring?
7. We support the Government's ambition to achieve
locally driven growth. We welcome the emphasis on the important
role effective regeneration can have in driving economic growth,
strengthening communities and supporting people back into work.
We agree that it is important, not only for individuals and communities
but also for the country as a whole and we strongly support the
need identified in the CLG report for "every part of Britain
to fulfil its potential so we can prosper and grow as a nation".
8. Whilst the new approach can bring benefits, we
have serious concerns about the likelihood of it being as effective
as it could be as a result of:
— the
lack of a clear national strategy for regeneration;
— insufficient
consideration of the need for a strategic approach at the local/sub-regional
level; and
— the
scale of the reduction in resources for regeneration.
LACK OF
AN OVERALL
NATIONAL STRATEGY
9. The Government believes that regeneration activity
should be led by local communities not by Whitehall. Nevertheless,
it sees its role as being strategic as well as supportive. Despite
this, there is an absence of any real strategic guidance in the
CLG report. There is no real attempt to define what is meant by
regeneration. Although the report refers to strengthening communities
and improving the social and physical qualities of local areas,
the over-riding focus is on the physical aspects of regeneration,
with other economic, social and community development aspects
largely ignored. Whilst we support the focus on local leadership,
if the Government is to support community based regeneration,
some overall assessment/strategic guidance on regeneration needs,
approaches and resources would be helpful.
NEED FOR
A STRATEGIC
APPROACH AT
LOCAL/SUB-REGIONAL
LEVEL
10. The CLG report focuses on "lifting the burden
of bureaucracy and empowering local areas to do things their own
way" but apparently fails to recognise a need for a strategic
approach at the local/sub-regional level. There is an emphasis
on a simplified and streamlined National Planning Policy Framework
that will allow local communities to set their own policies by
abolishing regional strategies in favour of local and neighbourhood
plans. Whilst we strongly support the Government's emphasis on
localism and the important role of local communities, we are concerned
about the potential risk of a new right for communities to draw
up neighbourhood development plans to undermine effective regeneration
through giving rise to a new wave of "nimbyism".
11. In our view, it will be essential for the detailed
proposals for neighbourhood development plans to be drawn up in
a way that minimises this risk. It should be recognised that neighbourhood
interventions and larger spatial responses to regeneration are
not mutually exclusive and we consider that the introduction of
neighbourhood plans must take place alongside provision for effective
sub-regional strategic planning and coordination. In fact, the
need for a strategic approach is provided in the conclusions of
the CLG report itself, which recognises that regeneration action
will vary from area to area and needs to take place at the right
spatial level from local neighbourhoods to whole towns, city regions
to rural areas.
AVAILABILITY OF
RESOURCES
12. Effective regeneration needs resources. We recognise
the constraints on regeneration funding as on other areas of activity
as a result of the overall economic situation and the need to
reduce the Budget deficit. We appreciate that there will be fewer
public sector resources available and what is available needs
to be used to maximum effect. Nevertheless, to be effective in
many areas, particularly in deprived areas, regeneration will
continue to require public sector investment not least to unlock
and maximise private sector funding.
13. We agree with the Government that regeneration
activity should be locally led. With the cuts to regional funding
and the ending of national funding streams that have supported
regeneration such as the Working Neighbourhoods Fund and the Local
Enterprise Growth Initiative, public funding will depend crucially
on local authorities. We have real concerns that the scale and
pace of the cuts facing local government could undermine the effectiveness
of locally led regeneration at the same time as the economic uncertainty
is inhibiting the private sector having the confidence and ability
to invest. Already there are reports from local areas across the
country of a significant adverse impact on local regeneration
funding and activity including a loss of professional skills and
expertise.
14. We acknowledge the steps that the Government
is taking/proposing to take/considering with regard to, for example,
tax increment financing, incentives, community infrastructure
levy and the re-localisation of business rates. These are considered
in more detail later in this memorandum.
BENEFITS OF
THE NEW
APPROACH
15. A localist approach to regeneration can bring
real benefits, providing sufficient resources are available, a
rounded approach to regeneration involving physical, economic,
social and community development is taken, and community and neighbourhood
focused action is balanced by a strategic approach locally and
sub-regionally. The essence of a localist approach is that regeneration
will be based on local understanding of needs, problems and opportunities
rather than being dictated centrally. A focus on greater community
involvement offers the prospect of bringing new ideas and approaches
to the regeneration process. It needs to be recognised, however,
that there will be no quick fix. Achieving real involvement of
all parts of communities requires time and effort—and resources.
16. We welcome the decision to replace regional development
agencies (RDAs) with local enterprise partnerships (LEPs). However,
unless the devolution of power is accompanied by real devolution
of resources to LEPs and their local authority partners, it will
be a significant barrier to their ability to drive and support
regeneration locally. As regards the removal of barriers, we welcome
the steps the Government is already taking to reduce the burden
of too much reporting and inspection on local authorities and
the reduction in the overlong chain of decision-making with the
abolition of the RDAs. However, there needs to be continued vigilance
and action needs to be taken to tackle the burdens that remain
and in some cases that could be intensified, for example as a
result of too many local resources being taken up by time consuming
and uncertain competitive and other bidding processes for centrally
controlled funds.
Will it ensure that the progress made by past
regeneration projects is not lost and can, where appropriate,
be built on?
17. With the organisational changes being made and
the very significant reductions in funding being made, including
the cuts to RDA funding that have already taken place, funding
allocated to some projects has now been withdrawn. In other cases
projects advanced to a late stage of final approval have fallen
into a state of limbo awaiting alternative funding opportunities.
Whilst the introduction of the Regional Growth Fund is, of course,
welcomed, the reality is that there is less funding available
for regeneration schemes and greater competition for what is available.
With over 450 applications for the £350 million first round
of Regional Growth Fund bidding totalling £2.78 billion,
there is little hope that the majority of projects will be realised
in the short to medium term. Having regard to this and the loss
of professional skills and expertise referred to earlier, there
must be a serious risk that the progress made by previous regeneration
schemes and the ability to build on their successes will be compromised.
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?
18. To realise the Government's aim that every part
of Britain is able to "fulfil its potential so we can prosper
and grow as a nation", there must be sufficient public funds
available to achieve the necessary regeneration projects in both
urban and rural areas across the country. With the scale and pace
of the public sector funding cuts, there is little likelihood
that sufficient funds will be made available, certainly in the
short/medium term. The cuts to local authority funding, the reduction
in RDA funds and the ending of the Working Neighbourhoods Fund,
the Local Enterprise Growth Initiative and the Local Authority
Business Growth Initiative, are already taking their toll.
19. At the same time, we welcome the growth incentives
and measures that the Government is introducing/planning such
as the Regional Growth Fund, the Community Infrastructure Levy,
the New Homes Bonus, the intention to introduce powers to allow
local authorities to implement tax increment financing, and the
consideration of options for councils to retain locally-raised
business rates. However, some of these measures as they are currently
being defined/planned have significant limitations, for example:
— Regional
Growth Fund—This falls well short of previous RDA funding
and for which on the evidence of the first bidding round is likely
to be heavily over subscribed.
— New
Homes Bonus—described in the CLG report as a powerful incentive,
it will in fact be funded primarily by top slicing the local authority
formula grant. The Government acknowledges that the redistributive
mechanism of the bonus means that the scheme will create financial
winners and losers. Moreover areas needing regeneration could
be adversely affected by the reduction or cancellation of other
housing investment streams and by the Government's decision to
pay the bonus on the net increase in dwellings rather than for
all new homes that are built when the reality is that in areas
requiring regeneration, new house building often needs to be preceded
by demolition of existing dwellings.
— Re-localisation
of business rates—Whilst in principle we support councils
retaining business rates, the option selected should have the
flexibility to unlock the economic potential of all areas and
should not disadvantage areas that benefit under the existing
system. There needs to be a mechanism either within or alongside
the business rate retention model to encourage business growth
in areas where there is a limited business rate yield. In 2 tier
areas there needs to be a realistic basis for the distribution
of retained business rates between the District Councils, who
collect the rates and the County Councils, who often undertake
the greater amount of activity to support economic development
and regeneration. It is our strong view that the distribution
of retained business rates, or indeed any other form of business
growth incentive, should be in proportion to the spend on relevant
services that support economic development, including capital
investment.
— Tax
increment financing (TIF)—We welcome the intention to introduce
TIF. However, the Local Growth White Paper anticipated that, at
least initially, it would be introduced through a bid-based process
with lessons from a set of initial projects informing future use
of the proposed new borrowing power. Whilst a pilot phase designed
to provide a better understanding of the risks and practicalities
of TIF and to develop best practice has merit, we believe strongly
that TIF must be open to all authorities and should not be based
on a bidding process. Quite apart from the fact that such a process
would run counter to the principle of fair treatment for all areas,
it would introduce an unwanted bureaucracy, which would impose
an additional cost on local authorities and be an unnecessary
barrier to local regeneration action.
— Targeted
investment—A significant proportion of the investments referred
to in the CLG report focuses on High Speed Rail 2, Crossrail and
the Olympic Park, which raises the question of what happens to
areas that will not benefit from these investments?
— RDA
Asset disposal—The CLG Report refers to refers to them being
"managed in a way that delivers the best possible outcome
for regeneration in local areas, while delivering value for the
public purse". Clearly a balance has to be struck but it
will be extremely important to maximise support for local economic
development and regeneration.
What lessons should be learnt from past and existing
regeneration projects to apply to the Government's new approach?
20. There are many examples of area-based regeneration
projects led by local authorities, urban development corporations
and others using a range of funding streams such as the Single
Regeneration Budget, the Neighbourhood Renewal Fund, the Working
Neighbourhoods Fund and the Local Enterprise Growth Initiative.
It is essential that relevant lessons from past and existing schemes
are learned. With its intention to take a strategic role, Government
should, as a matter of urgency, take a lead in reviewing projects
and identifying and disseminating best practice from across the
country that can inform its new approach and support local regeneration
action.
What action should the Government be taking to
attract money from (a) public and (b) private sources into regeneration
schemes?
21. Given the severity of spending cuts and the removal
of grants that have been used to support regeneration, there is
at present little scope to continue to source money from the public
sector. In this context, Government needs to quicken its pace
in introducing the incentives referred to in the CLG report, for
example to set out definitively how it sees TIF operating and
complete its consideration of Business Increase Bonus/business
rate retention options and ensure that the incentives are designed
in a way that supports regeneration projects and does not undermine
them (see paragraph 19 above). As one of our members from the
South West has said "it is difficult to underestimate how
pressing this is as for much of the last 12-18 months there has
been a hiatus with no clarity on how ambitious schemes should
proceed".
22. We recognise the need for fiscal consolidation
and public sector debt reduction. At the same time, we believe
there is scope for resources for local economic development and
regeneration to be released by taking a cross-agency place-based
approach to reduce administrative costs and central constraints
that lead to inefficiency. In the Spending Review it was announced
that community budgets will be established in 16 local areas to
pool departmental budgets for families with complex needs, and
rolled out to all local areas over the Spending Review period.
We agree with the Local Government Association that the Government
should not limit the policy objectives that community budgets
can be linked to and that a genuinely localist approach would
allow organisations in the local area to pool budgets for whatever
purpose they choose so as to provide the best services for local
people. We believe there is considerable potential for this in
economic development and regeneration, where it is important to
focus not just on local public services working together to deliver
savings, important though this is. It is essential that all levels
of funding and intervention are covered.
23. It is important that the flow of funds through
current European programmes that benefit regeneration projects
is not disrupted and it will be important that Government ensures
that match funding is available to ensure that structural funds
can be drawn down to maximum effect.
24. The context of public sector cuts emphasises
the importance of attracting funding from the private sector,
which has been hit by weakening market conditions and a fall in
investment returns. Restoring the necessary level of confidence
to attract private investment into regeneration should be a key
a key plank of policy for Central Government and local authorities.
It will be important to provide certainty on: the delivery of
necessary public sector infrastructure provision; on developer
contributions eg via Section 106, Community Infrastructure Levy;
and on development timescales. Whilst risk cannot be removed,
incentives and safeguards need to be considered to help lessen
risk and make regeneration schemes attractive to private investors.
How should the success of the Government's approach
be assessed in future?
25. Consideration of how to assess the success of
the Government's new approach is a conspicuous by its absence
in the CLG report. In its strategic and supportive role, Government
needs to address this gap and provide guidance to identify measures
of success related to the objectives of its new approach. Whilst
these are not explicitly stated, references to the following in
the CLG report can provide a starting point:
— ensure
that local economies prosper;
— supporting
people back into work;
— strengthening
communities;
— improve
the social and physical quality of local areas;
— ensuring
areas over-reliant on public funding see a resurgence in private
sector enterprise and employment; and
— enabling
every part of Britain to fulfil its potential.
March 2011
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