Written evidence submitted by Nottingham
City Council
1. Summary
1.1
— There
is a need to distinguish between economic development and regeneration
and define how they relate to one another.
— Proposed
financial tools will not provide the necessary gap funding required
in areas which experience market failure or abnormal development
costs. Most are also untested.
— Changes
to the planning system should ensure it continues to provide a
supportive environment to promote regeneration.
— Changes
in the funding framework will not necessarily enable community
led regeneration in the future and therefore reduce the VFM derived
from this neighbourhood involvement.
— The
dismantling of the sub-national economic development environment
may leave a knowledge and experience gap.
— The
removal of Working Neighbourhoods Funding will significant impact
on the ability to tackle unemployment in deprived areas as high
growth jobs will not necessarily directly benefit the long-term
unemployed.
— LEPs
should not automatically assumed to be the best vehicle for driving
regeneration.
2. How effective is the Government's approach
to regeneration likely to be? What benefits is the new approach
likely to bring?
2.1 The Government's approach is based upon the
belief that regeneration can either be solved by community led
approaches or by market forces. Lessons learned over the past
20-30 years suggest otherwise.
2.2 Community led regeneration tends to be reliant
on those communities having the necessary capacity and leadership,
which is lacking in many cases hence the introduction of Neighbourhood
Renewal Funding (NRF) which could be used to improve neighbourhood
capacity and give them the resources to drive community led programmes.
2.3 The Government's approach to regeneration
appears confused with their approach to economic development.
Economic growth will not necessarily create the conditions for
regeneration in areas with existing market failure. These are
often deprived communities which are the most in need of regeneration
be it either social, economic or physical. However, Government
policy is focussed towards growth which is likely to continue
to benefit already economically strong areas of the country and
miss out areas of continued and long standing deprivation and
unemployment. This is because economic growth is not the same
as job growth. Economic growth tends to derive from the creation
and expansion of businesses within higher value sectors. This
tends to create high value jobs but not in significant numbers
and not of the type which could potentially benefit those living
in deprived areas.
2.4 In the past, both the public and private
sector have been able to access regeneration funds to help kick
start schemes through the provision of gap funding. This is because
some schemes due to their location ie in an area of market failure,
or associated abnormal infrastructure costs will never come forward
without this gap funding. The financial tools which are now available
to assist in funding regeneration schemes cannot fill this gap.
The increase in the interest rates from the PWLB has effectively
meant that local authorities can no longer gain an advantage from
borrowing using this method and in some cases it will be cheaper
to source market funds. The issue thus being that the application
of market rates may make many more schemes unviable thus stalling
regeneration in less buoyant markets and there will be a knock
on effect on local economies.
2.5. The format and structure of the planning
system i.e. Local Development Framework (LDF), Core Strategy,
site specific Development Plan Documents (DPDs), and Area Action
plans, allow planning for regeneration to be targeted at the most
appropriate spatial scale. Any changes to the planning system
should ensure that it continues to provide a framework which can
positively support and promote regeneration. In regards to Neighbourhood
Plans, based on our understanding and experience of typical patterns
of engagement and capacity in our communities, this suggests that
it is much more likely we will see these in suburban and village
locations rather than in areas where regeneration is a priority.
There is also concern about how communities can be funded to produce
Neighbourhood Plans particularly as the Planning Aid budget has
been withdrawn.
2.6. The proposed "Duty to Cooperate"
might be useful in the continued promotion and joint or partnership
approaches to the delivery of key regeneration projects or sites.
This may especially be the case where regeneration areas or sites
are located close to, or across local authority boundaries, therefore
continuing to take a joined up and coherent approach between authorities
will be vital.
3. 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?
3.1. Over the last 15 years, designated regeneration
funding (such as Single Regeneration Budget (SRB), Neighbourhood
Renewal Funding (NRF) and Urban and City Challenge has enabled
programmes to take place which have been community driven and
needs focussed. The funding has also provided infrastructure support
for Local Area Partnerships, Voluntary and Community Sector infrastructure
projects, and a small grants fund; providing a backbone for the
voluntary and community sector in the city. Nottingham CVS has
estimated that funding for voluntary groups in the city will fall
by 38 per cent from April, from £47.5 million to just £29.5
million. NCVS has also estimated that 19 voluntary services will
close at the end of March 2011, with a further 30 at risk of closure
or being reduced.
3.2 Because of the dismantling of the funding
framework and the subsequence loss of confidence from the investment
market current ongoing regeneration schemes may not now derive
the level of Value for Money (VFM) and invest to save community
benefits that were originally sought. New initiatives such as
New Homes Bonus are not ring fenced which is a risk and the criteria
for its use requires clarity if regeneration in core cities such
as Nottingham is to be stimulated.
3.3 The flexibilities of initiatives such as
the Working Neighbourhoods Fund have also meant that the most
deprived neighbourhoods and groups were targeted and that special
initiatives could be developed such Early Intervention in Nottingham.
The end of this fund means that projects will be decommissioned
and skill sets lost.
3.4 There is also a danger that the dismantling
of existing sub-national economic development and regeneration
structures has been too fast, and that much of the experience
and knowledge built up over the past ten years within Regional
Development Agencies (RDAs) will be lost. Public funding will
still be required in the future to drive forward regeneration
in areas which are experiencing market failure, and with innovative
mechanisms such as Tax Increment Financing (TIFs) still untested,
using private sector funding is not a realistic alternative in
many cases. The Regional Growth Fund (RGF) is also unlikely to
provide the necessary public funding due to its focus on economic
and jobs growth rather than regeneration. Combined with public
sector spending cuts, this leaves a significant and potentially
dangerous gap in funding to drive forward regeneration in major
towns and cities.
4. What lessons should be learnt from past
and existing regeneration projects to apply to the Government's
new approach?
4.1 Increasing employment and skills levels in
communities is essential for future growth and regeneration. The
removal of WNF and programmes such as the Future Jobs Fund (FJF),
which have proven to have a direct impact on the unemployment
rate at a local level will greatly reduce the potential for reducing
unemployment.
4.2 The creation of jobs within the private sector
will need to counter the job losses experienced within the public
sector, but also to meet the current demands of the labour market.
Focus on high growth business will provide some of this but as
noted in 2.3 this will not generate significant numbers of new
jobs. Instead the start up and survival of new business needs
more focus and support.
4.3 To have a total place approach to funding
that takes account of drivers for change such as deprivation.
A robust evidence base is therefore crucial to the decision making
process.
4.4 Local authorities should be given the statutory
duty to lead on complex schemes as part of generating confidence
in the private sector. This is because although the private sector
has much to offer, especially in regards to economic growth and
job creation, they are possibly not the best placed to lead regeneration.
As such Local Enterprise Partnerships (LEPs) should not be automatically
considered as the best vehicle for regeneration. Instead, with
many RDA assets potentially being transferred to quasi-public
or public sector bodies rather than LEPs (as many are not in a
position to take on the risk), it will inevitably fall to local
authorities to maintain the regeneration momentum. To aid this
local authorities should be compiling an evidence and options
appraisal so that there is understanding and sharing of risk and
reward between private and public partners.
5. What action should the Government be taking
to attract money from (a) public and (b) private sources into
regeneration schemes?
5.1 There are concerns that the range and quality
of the financial tools introduced to invest in capital will not
have the outcomes that the Government seeks primarily because
of the stringent and prescriptive criteria for their use. Key
examples:
— Tightening
of prudential borrowing.
— New
Homes bonus not being ring fenced.
— Working
neighbourhoods fund withdrawn.
TIF and JESSICA funding are not designed to assist
non viable development and therefore cannot be used to bridge
the funding gap. The Government should instead seek to support
the use of Enterprise Zones as a way of channelling funds into
areas most in need to generate additional business activity and
growth.
5.2 Large corporate businesses should be encouraged
to pursue corporate social responsibility by expanding their presence
to deprived areas in order to deliver jobs and confidence. This
could be achieved by offering time-limited tax breaks to corporations,
to encourage their presence, and offering tailored training to
ensure that the potential workforce in deprived areas is ready
to take up employment opportunities created by inward investment.
6. How should the success of the Government's
approach be assessed in future?
6.1 The Government primary objectives are to—reduce
the deficit, empower people, stimulate housing supply, health
outcomes and carbon reduction. There is no investment in regeneration.
Were the Government to establish a regeneration policy and an
investment framework then measures for success could include:
— Increased
housing supply in all tenures.
— Increase
in employment and skills in a locality.
— Decrease
in deprivation at SOA level.
— Increased
business rates in deprived areas.
6.2 Again however, there is a need to distinguish
between regeneration and economic development. Economic development
creates an increase in employment and skills, which has a knock
on effect in decreasing deprivation. Regeneration is a catch all
term which often encompasses economic development but is more
often associated with physical regeneration of a locality. As
such the Government should draw a clear distinction between the
two and understand the contribution each makes before deciding
on measures of success. LEPs are the vehicles for driving economic
growth but the Government should be clear on what is considers
to be the vehicles for regeneration.
March 2011
| 
