Examination of Witnesses (Questions 41-76)
Q41 Chair: Thank
you very much for joining us. For the sake of our records could
you indicate who you are and the organisation you represent?
David Orr: David
Orr, Chief Executive of the National Housing Federation.
Julian Dobson, Urban Pollinators, an organisation for sharing
learning about regeneration.
Mike Gahagan, I represent the HMR Chairs; I was Chair of South
Jim Coulter: Jim
Coulter, I was Chair of Bridging NewcastleGateshead until we closed
a month ago.
Q42 Chair: If
you do agree with what has been said before you don't have to
go into great lengths to explain why. How effective did you think
proposal in the Government's document, Regeneration to Enable
Growth, will actually be? Do you see that there are risks
attached to the approach? Certainly some of you have read the
Scottish Government's approach and have a better view of that.
Perhaps you could also say why, while you are summarising the
I am not sure that you could say that the Government's document
is an approach; it does not have any clarity about it. As Neil
said, it lacks a narrative. It is not clear what regeneration
is or why regeneration is needed. It is not clear how regeneration
is to be attained, so it is really difficult to know where to
start with it. I think the Scottish Government document, while
I would say it is far from perfect, does at least make a pretty
good stab at saying what regeneration is, why it is needed and
what we are trying to do with it. If anyone from CLG is going
to be reflecting on this, that would be a very good place for
them to get back and start.
David Orr: I start
slightly earlier. The Comprehensive Spending Review is the Government's
statement of where it intends to invest money over a four-year
period. I think the Report of the Comprehensive Spending Review
runs to 104 pages, and the word "regeneration" does
not appear in it anywhere. I think that is quite a telling indicator
of the starting point for Government consideration of regeneration.
I think the documents that we have seen are a post hoc attempt
to say, "Measures that we are putting in place elsewhere
for different reasons might themselves make some contribution
to regeneration," but I think that is rather a heroic assumption
at present. If regeneration and the whole growth agenda are about
ensuring that places work effectivelynot just about those
places that are economically viable at present, but those that
are not and need to be in the futureI really don't think
that there is a strategic approach to addressing the economic
failure, and some of the related housing market and other failures,
in some of those areas.
I think it is fair to acknowledge there are good some points in
the document that have not come out: some of the issues around
decentralisation; some of the policy elements; the RDAs' assets
going to the HCA; ending some of the ring fences. All of those
are very valuable and contribute. But as our evidence said, that
is more than offset by the absence of resources that there now
is, and the lack of coherence in the document.
I have an additional sadness about the document, which is it does
not make the most of what we have, and I would not have given
the same answer to Mr Morris's question, for example. We have
a pretty good track record. I was President of the International
Urban Development Association, so I have looked at regeneration
around the world. None of them are ideal, all of them have faults.
We are better at it than most. We have got a lot of the structures
and skills in place in the public and the private sector, and
in a lot of communities, and we need to build on that. And that
was not recognised in this document. It is almost as if we are
starting afresh, whereas we are not bad at it actually.
Jim Coulter: I
won't repeat everything everybody else has said on the basis of
your invitation, but I can't resist saying in the context of Mike's
last comment that the year zero approach, which elements of the
language in this document seem to represent, is a very poor account
of what CLG as a department has achieved over the years, and it
ought to have reflected rather more on what past strategies have
been successful and unsuccessful at in order to get a better handle
on a strategic framework that can have objectives set for it and
outcomes established and, underneath that, measures agreed to
be able to judge whether they have been successful or not.
Q43 Chair: That
information is available isn't it
Jim Coulter: Absolutely
Q44 Chair: not
merely in terms of overall analysis programmes, but comparing
one new deal programme against another, and why one works and
one does not?
Jim Coulter: Yes,
there is a tonne and a half of evaluations around including, in
terms of housing market renewal, very substantial pieces of work
have commissioned by CLG itself, done independently by the NAO,
done independently by the Audit Commission.
Q45 Chair: Obviously
there is less public money around; that is a fact. The Government's
view seems to be that we have therefore got to get the private
sector to come in and take the slack up. Is there a worry that
that may happen in some areas which are probably slightly more
affluent, where the possibilities for growth are more obvious,
but in the real deprived communities that simply isn't going to
happen, or do you think some of the measures in the document may
stimulate private money to come in?
They will help, but I don't think they will be enough. You are
absolutely right, you have got to have public money; for example,
in development terms you have got to have money to take the risks
out of a site, because in a time of recession developers go, understandably
and quite rightly from their point of view, to the lowest risk
areas. They will not go to regeneration areas. You have to improve
the quality of the housing stock and the retail offer around the
area where they are going to develop otherwise they will not go
there. So it needs that mix of public and private investment in
these areas, and it will not happen just through the private sector.
Quite the reverse, there is a risk of some of the investment we
have put in, in the past in some areas, where they have not reached
the tipping point, going backwards.
David Orr: I think
almost everyone who has been involved in this conversation has
said something along these lines: in those places where there
is a viable, relatively thriving economy at present, there is
a realistic opportunity for the private sector to be the catalyst
and the driver for greater economic growth. But in those places
that are characterised by economic failure, by market failure,
it is highly unlikely that the market, the private sector, will
go to those areas to seek to generate a new economic benefit for
itself. So if you want to have a nation where every part of the
country is benefitting from growth, it is almost certainly the
case that to attract that kind of private investment, there will
need to be a hook that brings it in.
I would echo that. I refer you back to the Scottish Government's
Regeneration Discussion Paper, which said that the property based
regeneration model of the last 10 to 15 years is no longer viable,
certainly in Scotland. That is a model financed by speculative
development where a private developer will come in and there will
be sufficient profit to finance regeneration activities. That
is not just unique for Scotland. The British Property Federation's
written evidence to this Committee makes the same point.
I was looking at Knight Frank's recent assessment of the commercial
market, and their assessment as of April was "The market
has to get a bit worse in order to get better. However, the pain
this time will be localised to lesser quality stock in certain
parts of the country, and not the general pain seen in 2008."
In other words the markets that are doing well will do well over
the next few years; the markets that are not doing well will continue
to decline. Now if you are looking at a property based model for
regeneration, looking at where people are going to putting their
investments in future, the investments that are doing really well
at the moment are houses over £10 million in Central London
and English farmland, but I do not see any regeneration benefits
accruing from either of those. So if investors work on the principle
that they are going to put their money where they can get the
greatest return, then I think our most deprived communities with
the most difficult economies are likely to be at the bottom of
the pecking order.
Jim Coulter: Could
I slightly qualify that and, as they say, put a gloss on what
my learned friend says? I will give you an illustration of where
the public/private mix in housing market renewal has actually
worked, but over a timescale that took a considerable amount of
investment to get there. In Newcastle a few months ago the local
authority and a consortium of three house builders signed a joint
venture deal worth over £200 million on the back of housing
market renewal, Homes and Communities Agency investment. In Gateshead
the parallel process has almost concludedit has got to
the preferred partner stage of the tendering processagain
on the back of pre-existing public investment to de-risk sites,
to provide infrastructure to get to a market clearing position.
Roughly £600 million of private investment over the next
15 years will be built on the back of about £150 million
of the public investment. So it will vary from place to place.
Those are still deprived areas, but there is a substantial opportunity
that has been created by the amount of public investment. I think
the question going forward is: over what timescale and in what
areas is a comparable level of activity actually needed?
And I think the important thing to say about that is that it is
the public investment that de-risks it for the private sector.
So if you are talking about reducing public investment or taking
it out of the equation, then the capacity to do that kind of thing
Q46 Chair: You
were saying about the private sector following on. Is there any
way in which we might be able to develop modelssuch as
the gap funding of the 1980swhere the public sector puts
money in to stimulate the private investment and help it happen,
then there is an opportunity for the public sector to recoup some
of the eventual gains so we can make better use of public money?
Yes, we are doing that all over the place, or we did until the
recession. Now most of the agreements with developers are open
book agreements with an overage element in them so that the public
sector gets back where they are successful. The problem is that
that has become extraordinarily difficult to negotiate in the
recession. All the Section 106s are being renegotiated.
All those sort of deals are being renegotiated in these areas
because the risks have grown.
Q47 James Morris:
Mike, you made the assertion, "Actually we are not bad at
doing it," and I was struck, again, by the definitional point.
What is the "it" in that particular sentence?
That is a good question; I wish I had an answer. I was thinking
that earlier. I think it is taking lousy neighbourhoods, and people
who have got all sorts of disadvantages within those neighbourhoods,
and bringing them to a state where they can participate fully
in an economy and look after themselves. That is my definition
of it, which is a working definition.
I would agree with Michael that we are not bad at doing it, but
I would also say we are not good enough.
Q48 James Morris:
How do we evaluate "not bad"? I know you said you have
Well there have been, as Josh was saying in the first session,
huge amounts of research that the Joseph Rowntree Foundation has
done. It is well worth looking at. I think that tells you an awful
lot about working in the most difficult neighbourhoods and communities,
and what needs to be done in order to make it work. This conversation
has started around property, but I really want to make the point
that regeneration is not just about property. Sorting out property
is an aspect of regeneration. If I was to put it in terms that
everyone can understand, I would say regeneration is about making
places that are fit for our kids and grandkids to live in, so
that everyone who lives there would be happy to bring their children
up in that area. Now of course there are things that stop that.
Number 1 is crime. A lot of crime tends to accumulate when you
have poor housing problems.
Q49 James Morris:
Sorry to interrupt, I just have one more point. If we are not
bad at that, what does "not bad" mean in terms of concrete
If you take somewhere like the Brackenhall Estate in Huddersfield,
12 years ago, out of 1,000 council homes, 200 were tinned up.
People were moving into those homes, which were being re-let by
Kirklees Council, and they were being robbed on the day that they
moved in. Clearly that is not a sustainable neighbourhood. Now
that particular estate has benefitted from interventions that
went with the grain of the rising housing market; they were lucky
in some ways. The result has been to demolish a number of those
houses, replace them with a number for owner occupation, and generally
create a community where people had more of a stake in their community.
Now owner occupation is not the only way of doing
that. There is a crude assumption that you just knock down council
houses and replace them with private ones and you will get an
okay community. I do not think that is regeneration. Regeneration
is recreating a local economy that works and gives people opportunities.
In the context of interventions like regional growth funds, you
have to ask which of those opportunities that are coming out of
that investment are going to the people living in the most difficult
and disadvantaged areas. That goes back to the point that Neil
McInroy was saying about connectivity: you have to be able to
connect up opportunity with the places that are most disadvantaged,
otherwise people do not have hope. When you do not have hope then
you have a spiral of decline and areas that people just want to
get out of.
Q50 Simon Danczuk: I
want to pick up on a point that Jim alluded to. You said that
public investment over a period of timeand I got the impression
that it was a considerable periodeventually attracted private
sector investment, which is a good thing. Is there a possibility
that we are going to lose a return on the public investment, particularly
in terms of Her Majesty's Revenue (HMR), but it could apply to
selling off RDA assets at a time when we will not get much money
for them. Is there a possibility that turning off the tap, as
the Government have done immediately, creates a problem in terms
of getting a return on public investment that has been going on
for some years?
Yes, that is my worry. 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. The single housing
pot funded loans to private sector and environmental improvement.
Some areas have got beyond the tipping point. There are still
issues there of employability and skills and so forth. Other areas
existI have been to several in my area, Clive might know
themwhere in the worst case scenarios we have left families
with houses boarded up next door to them, there is vandalism,
there is anti-social behaviour, all sorts of problems. We should
not leave families like that. Some of those areas we have had
private investment in, we had private housing going in, and they
were really starting to take off. Now there is a real danger that
those areas will go backwards.
There is also the cost associated with these areas.
Rotherham did an assessment in Canklow; it is going to cost them
an extra £100,000 a year in additional callouts on the fire
brigade and so forth just to try and keep the lid on that area
to make it a half decent place to live. It is a real issue.
Q51 Simon Danczuk:
Jim Coulter: I
agree with that. I do think it is a very serious risk that the
value for money that has been delivered so far will be at risk.
We will end up at some future point redoing things that have already
been done, and that itself has been a historic problem of some
elements of regeneration. If you look at, for example, the most
placed-based regeneration in housing that I can remember in recent
times, which is Estate Action, quite a large number of areas of
Estate Action across the country have had to be reinvested in
simply because the process was not continued, and the holistic
nature of the more successful elements of later regeneration have
not been secured. The other issue, which Mike has just alluded
to, is quite significant: the additional revenue costs to local
government to police local environmental harm, where there is
incomplete demolition, for example, or vacant sites that have
not got a good opportunity for alternative use in the short to
At the worst peak of the West End of Newcastle, in
the 90s, when abandonment was really rife, the local authority
was spending about 40% of its environmental budget in Scotswood
and Benwell, a relatively small area of the population. I am not
saying that is going to be repeated at scale, but that is the
risk. Some of the points that we have been making in the short
term to Ministers and to officials have been about making sure
that this literal abandonment of the programme without an exit
strategy is tackled and we get some resource into dealing with
the problems of dereliction in the worst places now. It surely
is no coincidence, but today the Minister announced an additional
£30 million, when he visited Liverpool, for housing market
renewal for five of the 10 areas. I guess if we came back every
day for another seven days we might come back to the level. But
it is only five, 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.
David Orr: One
of the things that most of us felt was absolutely right about
the housing market renewal idea was that it was going to require
investment over a sustained period of time. We have lots of examples
of where public money has been spent and, because it has not been
sustained to the point at which the communities in question are
economically, socially and environmentally sustainable, the money
has in practice been wasted, and there is a very severe danger
that that is going to happen here. These are large scale complex
things. Julian is absolutely right to say that property based
regeneration is not sufficient. It is not. Property is a necessary,
but not sufficient, condition. There are all kinds of things that
are necessary but not sufficient. One of those is sustained investment,
and I do think that there is a real danger that the value of the
investment that has already been made will be made much less because
of not just the fact of the disappearance, but the manner of it.
The axe coming down and a complete stop is not good use of public
Q52 Mark Pawsey:
I was going to pick up on some points that Mike made, if I may.
My colleague said you spoke about us having the structures and
skills in place, us being good at it and being good about regeneration.
You said there was lots of activity up until the recession. Isn't
it the fact that the recession changed everything, and that operating
in the present climate means that we are not going to be able
to reproduce many of the good things that you saw happening in
the early Noughties?
No, I don't think it is. The scale will be different, but if you
read the report that Michael Parkinson, sparing his blushing,
was responsible for on the regeneration in the recession, what
it basically said was developers will fly to quality, the public
sector has to stick with it because we cannot afford for these
neighbourhoods to become disengaged from the mainstream economy.
I think that is still the case. What I was trying to say was:
whatever the level of resourcesof course there is not going
to be the same level, but there should be more than the zero there
is at the momentwe now have, almost by accident, developed
or evolved over 40 years a set of regeneration policies, governance
structures and skills. We have got some very capable people in
the private sector. We have got some very capable local authorities.
We have got some well informed communities now. We have got the
LEPs who can provide a strategic overview. We have got an agency
in the HCA that understands regeneration. We can build on all
these things. The foundation is there, and, as someone said earlier,
everybody is looking for the silver bullet. There is none. It
is a hard long-term slog of pulling everything together and getting
it on the ground. We do now have the structures, and my worry
is that we are going to try and invent more new things and take
our eye off the ball of making work what we have got and what
we have learned.
Q53 Mark Pawsey:
I am getting conflicting messages then, because I am getting a
message that regeneration cannot possibly take place because the
Government are not putting any money into it and are not too bothered
about it, and you say to us you have got engaged local authorities
and great people at the private sector and that things can happen.
Where does the truth lie?
They are not mutually incompatible, because what I am saying is
all the structures are there, but you do need that stimulus of
a bit of public money. After all, these areas are only as they
are because the private sector has fled. So you have got to have
some public money in to provide that glue that holds everything
together, and that then gets the private sector involved. They
know how to get involved now. We know how to do the deals with
Q54 Mark Pawsey:
How do we capture that information. Urban Pollinators have a proposal
for a national learning body? Doesn't that contradict the whole
principle of localism?
No, learning is about applying what you learn in a broad context
to the local situation. I don't think a sensible view of localism
would be to say you have all got to reinvent the wheel wherever
you are. I think there is an awful lot of learning that has taken
place in regeneration. JRF have a very good cache of regeneration
learning, CLES similarly. What is lacking, which is inexcusable,
is a way of bringing this all together at a national level to
make it available. This is something that the Government did try
to do, setting up the Academy for Sustainable Communities, the
Regional Centres of Excellence, which were recommended in the
Urban Taskforce Report. What we have seen, even prior to the change
of governmentand I certainly blame this Government's predecessors
to some extent for thisis a disintegration of the Regional
Centres of Excellence, a continual chopping and changing about
the Academy for Sustainable Communities, which then went into
the Homes and Communities Agency and has now been decimated within
Generally there has been a failure to understand
the importance of learning. As well as that there has been a failure
to apply learning at ground level. For the last couple of years
I have been doing a piece of work with Bradford Council on what
they call their Regeneration Academy, training up frontline council
officers to understand basically what makes a place work. The
level of understanding among many people who are involved in planning,
in economic development, in infrastructure related jobs about
what regeneration is, why it is needed and what makes it work
is very, very low. 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 JRF
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 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
Q55 Mark Pawsey:
Now I am confused. We have got the people there with those skills
already, and a lot of them are going.
Yes, I would not be quite that dismal. A lot of them are going.
All my staff have been made redundant. The good local authorities
are still struggling to retain their good staff, and they are
managing, I think, to keep a corps of staff. That is what I am
hanging on to. I agree with Julian across the piece that there
is a need for better learning; there always will be. But it has
happened; Pathfinders ran seminars and conferences amongst ourselves
with private developers and with training providers. I do not
know whether Jim's experience is the same. In my area they are
just managing to keep that corps together. We did suffer from
that in the 1960s. At the end of the 60s all the experience in
slum clearance, in compulsory purchase disappeared, and we had
to recreate that, to an extent. I think we might just avoid it
this time. I am a bit Pollyanna-ish, sorry about that.
Q56 Mark Pawsey:
Can you point to bad examples of regeneration that happened because
of the loss of those skills?
I always blank out of my mind the really bad ones. There were
bad cases of Compulsory Purchase Orders (CPOs) that went on that
were not properly prepared and that were not properly carried
through the inspection process, the public inquiry and so forth.
Q57 Mark Pawsey:
Would it be your fear that if we don't keep them, taking your
point about not reinventing the wheel, what limited funds we can
put into regeneration are going to get wasted because there are
not going to be the people who know how to use them most effectively?
There is that risk.
David Orr: I'm
going to tell you a good story. Because this whole question about
localism has only recently become part of the public and political
narrative, there's become an assumption that it didn't already
exist, but of course it did. Successful regeneration: yes, it
needs investment; yes, it needs to invest in housing and economic
regeneration and those things; but it needs fantastic local leadership.
You will not get sustainable long-term regeneration without there
being effective local leadership. There are lots of small and
large scale examples around the country where local leadership
has made that difference. For example, in Wythenshawe in South
Manchester there is a ward called Benchill, which was at one point
assessed as being the most deprived council ward in the country.
There was a stock transfer, and that stock transfer became the
catalyst for a long-term strategic approach to reinvesting and
reimagining what that area looked like. So the promise was about
kitchens, bathrooms and double glazing. The reality was that first
we have to make this safe. There was investment in CCTV, even
mobile CCTV, so that people could begin to feel safe. There was
investment in property, local facilities and the people who lived
in Benchill. It is now a thriving community with a waiting list
for the housing, and private developers building spec housing
for sale, something that would have been unimaginable 10 years
ago. It needed all of those things. You can take that fabulous
local leadership and deprive it of investment and it will still
be able to do things, but it will not be able to do things as
comprehensively as they have been able to do.
Q58 Mark Pawsey:
But to go back to the point about recession, did that happen because
the economy was booming, the house prices were rising pretty fast?
If we were to try to replicate that now would it still happen,
in your view?
David Orr: It wouldn't
happen in precisely the same way now. It would be harder to do
from scratch now, but the fact of transfer created a mechanism
to create investment potential. You could still do that now, although
it would require some big decisions by the Treasury. But you have
to have the mechanism to begin that process of investment. You
need to have the cash up front that allows good things to happen,
and thereby generate the kind of economic growth that makes that
place sustainable and contributing to the economy rather than
being a drain on it.
Q59 George Hollingbery:
Did somewhere replace Benchill at the bottom of the list? Yes,
somewhere did. Did you poke a balloon in one place and it stuck
out somewhere else? It is something that has been intriguing me
throughout all these discussions.
If you improve an area does the one next door become a problem?
Q60 George Hollingbery:
You are withdrawing resources from something somewhere elseyou
have to beor some money that could have gone somewhere
else. Do you poke the balloon on one side and it pokes out somewhere
That is a danger, and that is why the LEPs have got a role in
looking strategically across the piece. But you don't ignore the
other areas; that is a very important element. The question was
asked earlier about whether you invest in the areas that are likely
to get over the tipping point, or do you invest in the worst first.
In a sense you almost have to invest in the worst first, otherwise
you will get them back into the difficulties that we faced 20
years ago. I don't think we are in that situation, but you do
have that issue, and you don't ignore the other places.
Jim Coulter: The
NAO looked at this in relation to the housing market renewal in
2007 and found that, on the whole, there wasn't a displacement
effect because it was an anticipated effect that was more carefully
managed than might otherwise have been the case.
Q61 James Morris:
We have talked a little bit about localism. David, you said localism
already existed. Is there anything distinctive or different about
this Government's approach to localism and regeneration that you
are seeing emerging?
I think it is a difference in degree. The rhetoric is important.
The ending of some ring fencing of budgets is immensely valuable,
because a lot of time can be spent on trying to twist the budget
to fit your local regeneration scheme. The support to some of
the communities is also valuable, but I think the really important
thing is the confidence of the local leadership. It has been talked
about a lot. You mentioned Hulme. I was involved in Hulme, and
there were a whole range of things that contributed to Hulme's
success. But if I had to pick just one, it would be the quality
of the political leadership and the leadership of the officers
at the local authority. I think that is absolutely fundamental.
They were confident enough to do it. I think if the localism can
build up, generally, that confidence that exists in the best authorities,
and the willingness to deal with the local communitiesyou
have got to be confident to do that.
Q62 James Morris:
There are still going to be some issues about cross-boundary regeneration.
For example, the Black Country, part of which I represent, has
lots of integrated economic geography, some deprived areas, some
slightly less deprived areas. I think you said some positive things
about the Local Enterprise Partnership's role. We talked about
the Enterprise Zones earlier; the Black Country is going to have
an Enterprise Zone, but you might have a situation where a lot
of the regeneration just gets sucked into one place. So how do
we deal with those issues? Will the LEP have the power and resources
to deal with and overcome those cross-border issues, do you think?
A LEP can be almost anything it wants to be. There is a huge variation
at the moment between, at the one end, the Greater Manchester
LEP followed by others such as Sheffield. Interestingly enough,
Sheffield has got a subgroup, which is a joint board with the
HCA on regeneration and housing, so they are not ignoring this,
and they can take a strategic view across the piece. Enterprise
Zones are a bit different. I was responsible for Enterprise Zones
in their first incarnation, and I would recommend anybody read
the Roger Tym evaluation of them.
They can stimulate activity in an area by bringing together a
critical mass and focusing attention on that area, but there is
a big dead-weight cost and there is boundary hopping. They are
a mixed message and a mixed baggage, Enterprise Zones, and you
do have to be very careful where they are located.
One of the interesting issues about the new Enterprise
Zones is that the business rate is going to the LEP, and that
will provide some resources.
Q63 Bob Blackman:
Turning to the Regional Growth Fund, which obviously is the Government's
view of saying, "We are going to target private sector investment
in places where the public sector has been predominant,"
so we get the switch from public sector employment to private
sector employment and grow through that. Do you think they have
got it right? Is that the right approach?
I think that is the right approach to tackling the loss of public
sector jobs, but I don't think it is a regeneration approach.
My personal view is the Regional Growth Fund is fine and it is
serving a purpose. But you should not present it as being the
answer to a regeneration problem.
I would echo that. It is about business support, and clearly,
if you have business support that helps produce investment in
regions of the country that are underinvested, that is a good
thing. But there is a big, big question about whether that is
going to produce jobs and opportunities in the most difficult
and most disadvantaged areas.
Q64 Bob Blackman:
If that is your view, what changes would the Government need to
make in order to provide such opportunities, apart from increasing
the amount of money?
The money from the Regional Growth Fund is going to businesses
that have high prospects of growth, and interestingly a lot of
them are subsidiaries of international and multinational companies.
So there needs to be something different that is done at a very
micro level, at the level of estates and neighbourhoods that are
particularly stressed and distressed. That has to be about working
with individuals and families to create skills, boost education,
connect up with jobs where they are available and effectively
to rebuild those economies from the ground up, and that will be
very, very long-term.
Q65 Bob Blackman:
I am sure if the Minister was sitting there he would say, "Well,
yes, that's fine, but that is a local decision, that is local
activity, that is not what the Government is intending to do.
The Government is for the big picture issues, and those sort of
things are absolutely relevant but should be done at local level."
Well if the Government is talking about strategic intervention
and regeneration then it has to look at those very local areas.
That does not mean it has to deliver actions in those areas, but
it does need to take a strategic decision that additional investment
of one sort or another needs to be applied to those areas. There
is another issue, which is about the macro, much bigger picture,
which we have not touched on yet but I think is relevant to this,
and that is about the environmental imbalance in our economy,
and the fact that areas of highest growth at the moment are the
areas of highest environmental stress. There was a very interesting
report that was produced quite recently by the Royal Commission
on Environmental Pollution on demography and environmental change.
We are now seeing a situation where, for example, Thames Water
is spending £250 million on a desalination plant in order
to sustain the water infrastructure for London.
So at a macro level there is a very strong argument
for the Government investing strategically in areas where there
are fewer environmental pressures and in greening the economy
in terms of new areas of business and technology that are going
to provide opportunities in areas that have previously been underinvested.
So, for example, there is no reason why an area like Sunderland
should not be a centre of offshore wind manufacturing. So there
are big strategic issues that could be done by Government that
will have regeneration effects in the long term. But against that
you must also link the very micro interventions that need to be
connected up with the strategic interventions if benefits are
to be felt by people in the most disadvantaged communities. I
think you have to say: why bother with regeneration at all? Why
bother with the most disadvantaged communities? And the answer
to that is because they have been failed time and time again by
both the private market and public sector interventions, so we
have to find a way of reconnecting the interventions that we do
as Government with those communities that have lost out as a result
of poor planning and poor policy.
It may be that in phase 2 the Growth Fund will move a bit more
towards the regeneration dimension, but even if it does not, in
answer to your question, there are things that could be done,
not through the Growth Fund, but that can take off some of the
benefit. I think customised training is a classic case where you
train people particularly for the jobs that the Growth Fund is
creating, and you try and target your training on particular communities.
We have done it in the past; it is that sort of day-to-day thing
that you need to do locally.
Q66 Heidi Alexander:
Can I ask you all about the various new financial mechanisms that
the Government are promoting to fund regeneration such as TIFs,
New Homes Bonus, Community Infrastructure Levy (CIL). You don't
have to say what you think about all of them. We have already
touched on Enterprise Zones and we can probably leave those. What
are your views on how effective these financial mechanisms will
be in promoting regeneration?
David Orr: I do
not think that any of these measures are specifically designed
to stimulate regeneration. They are designed to do other things,
and they may in the right circumstances be able to contribute
to regeneration, but they are not themselves a strategic set of
measures designed to create an environment for effective regeneration.
Consider the construct of some of them. If Community Infrastructure
Levy takes precedence over Section 106 then it might mean that
there is a reduction in the delivery of new affordable housing.
I don't think that would be a good outcome in housing or regeneration
terms. It is almost inevitably the case that the way the New Homes
Bonus is structured will lead to money being moved away from low
value local authorities, mainly in the North, to high value local
authorities, mainly in the South. I do not think that would contribute
fundamentally to regeneration, so I think that they are measures
that do, or may do, the things that they are designed to do. But
I do not think they are really about regeneration.
Q67 Heidi Alexander:
Would you agree with that assessment?
Yes, I would go along with that. I would say TIFs in particular
work well in a rising market. It is significant that, in Scotland,
the place that is piloting TIFs is in Edinburgh, which is the
area with the highest values; again, is it going to address the
issues that we are concerned about with regeneration? I could
imagine the successor to this committee sitting here in 50 years'
time saying, "Well they completely messed up about giving
hope to our kids and our grandchildren, but boy, didn't they do
some exciting stuff with taxing and financing?" I think a
lot of it is tinkering, and there might be quite effective ways
of tinkering, but they are not really addressing the important
Jim Coulter: Can
I just add on the New Homes Bonus, it is a point that has been
made in this session and earlier, the approach of "net new"
is substantially disadvantageous to areas that are going through
the restructuring of their housing market stock. That is a process
that will continue across the North and Midlands for quite some
time to come, actually driven by communities and not simply by
a technical appraisal.
The second point to make essentially is that, as
well as its redistributive effects, the actual net cash coming
out of New Homes Bonus is nothing compared to the interventions
that we have been accustomed to. The figures for Newcastle and
Gateshead for first year's allocation between the two authorities
are just over £500,000. In the last financial year on new
build investment through the Housing Market Renewal Programme
we committed about £17 million to site preparation and infrastructure
investment and so on. There is an absolutely enormous mismatch
between the resource that we produced and what is actually required
in order to get land to be development ready.
We have done slightly better than that in South Yorkshire because
we had more development, and we have lost about £26 million.
This year's settlement is about £3.5 million through New
Homes Bonus. So we are one of the better off, but still nothing
like. I agree with Julian about TIF. It has got a role to play.
All these things might have a role to play, largely in the city
centre, but it is not what the Act is really about. I think CIF
might help in the sense that it gives a developer more certainty
about the tax he is facing. But I suspect that in areas like this,
if you can get anything, and you may not be able to, anything
you gain through CIF you will lose through Section 106. You can
only tax a development once if you can tax it at all. So I think
it will help the development industry a bit, but I do not think
it will add to the sum total of investment or social good that
comes out of the development.
Q68 Heidi Alexander:
In some of your evidence you referred to other options that might
be explored as well. Someone referred to Local Asset Backed Vehicles
Oh, yes, we did.
Q69 Heidi Alexander:
Could you say a little bit more about why you see potential in
They are a scheme where the local authority puts in the land and
a company is formed jointly with the private sector. Even with
the market as it is now, there is still some activity in these.
They are unproven as yet, but they might well be quite a useful
vehicle. I am not absolutely sure how they balance up against
the local authority borrowing. Where I have seen themthere
is a similar sort of operation starting in Doncaster, for example,
though it is not a full LABVI think they could be a weapon
in the armoury. But I keep coming back to this point: don't look
for any single silver bullets, it is the long hard slog over a
prolonged period of time with a prolonged commitment that is necessary.
Q70 Chair: My
understanding is that strictly speaking 106 money has to be applied
to the planning permission given for a particular development.
That is what it is supposed to be, and local authorities do stretch
Well they are allowed to charge money instead, which can go into
social housing, which I think is David's point.
Q71 Chair: But
in terms of other infrastructure it shouldn't be so used, but
CIL can be used, perhaps in different market conditions than today,
to raise money for projects in more upmarket areas, and apply
them to improving the infrastructure in more deprived areas. Isn't
that one of the advantages of it? It probably won't be much use
to them in the current market conditions, but in the future it
might well be.
Yes, I think that is true. I don't share David's concern that
they might not put it in housing. If that is not their priority,
fair enough; they are the elected representatives to decide what
their priorities are. So I think it does give them that discretion,
but they have quite a lot of discretion under Section 106 in many
Q72 Simon Danczuk: How
important is the planning system in terms of regeneration?
It never impinged on me, to be honest, it is not a problem. In
all my time in regeneration, I have only once known it be a problem.
That was in Hulme, where the local authority soon overcame it.
My experience of the planning system is, outside of Areas of Outstanding
Natural Beauty (AONBs) and greenbelt, where there is a will, there
is a way.
David Orr: I think
that is probably true. It is often harder to get consent for half
a dozen new homes. Regeneration schemes tend to be larger scale,
tend to be a bit more strategic, and they tend to have the engagement
of the local authority across the board so there is a greater
understanding of what people are trying to do. No one suggests
that the planning system is presently perfect, but in terms of
regeneration it is not one of the major difficulties.
I will add one thing to that, which is that one aspect of the
planning system has been particularly helpful: the concentration
on town centres first, and the way that the planning system has
militated against out of town developments over the last decade
or so, and that has been hugely helpful in terms of keeping a
lot of town centres alive and helping a lot of city centres to
thrive that otherwise would have lost a lot of trade to out of
Jim Coulter: Can
I just add one further point on this? One of the reasonsand
I agree entirely with what Mike said about planning not having
been a problem, certainly in housing market renewalis that
a substantial commitment to know what you are planning, with significant
community engagement, has been a critical part of making sure
that people understand the process of what is going on, and support
for it gets generated through that means. The decisions at the
end have become more formal as a result of that in their action
plans. Certainly Newcastle and Gateshead have been supported by
significant majorities on local polls and local surveys: well
over 60% in areas where the turnout at a local election would
be at best half of that.
Q73 Bob Blackman:
Given the resources are limited, given that there is a whole range
of different areas to be addressed in terms of areas of the country,
should we be taking the view that some areas are beyond regeneration,
just leave them as they are and concentrate on areas which can
be regenerated with smaller sums of money?
I think the question has to be asked because it concentrates the
mind. We then have to ask why we are doing this. It brings us
back to the fact that regeneration is not about theory, it is
not about property. It is actually about people, and people who
live in particular places that have been distressed and disadvantaged
for all sorts of reasons. Now, places change. So the question
is how to work with natural changes that might occur as a result
of market changes, but also how to complement that with a strategic
overview which says, "At a Government level, we think that
investment in such and such a region is more important for the
good of society than to simply invest where the market is already
strong." If the market is already strong there's a question,
why put extra public investment in it anyway? If you are looking
for areas to reduce public investment, why not reduce it in the
areas that are most likely to succeed?
Q74 Bob Blackman:
My counter argument to that would be that the investment of a
certain amount of public money may then lever in large scale private
investment, which then helps to regenerate the area for the benefit
You have to work out those trades off. But what I would come back
to is saying that in those areas where private market has failed
and where public policy has failed, there are hundreds of thousands
of people whose lives have been messed up for one reason or another,
and it is ethically unacceptable just to say, "Fend for yourselves."
There are some areas that were built up in the industrial revolution
which you cannot sustain at their current level. If I was a North
American, in some areas I would say, "Well, tough, let them
go." I suspect in this country, if only because we all live
within 50 miles of those areas, we can't bear the social and political
cost of that, as well as just the sheer fairness that Julian mentioned.
You do have to put some money into an orderly downsizing of those
areas, you can't just walk away from them. But I agree, in a sense
the more optimistic focus is on those areas where you think you
can get them up to the level where they can look after themselves.
David Orr: I think
Benchill might have been regarded as one of these places that
you would abandon. There is often a theoretical construct that
says, "We have got extra properties that we do not need."
For a long time there was a debate that ran in Glasgow that said,
"There are four major peripheral estates, now we only need
three of them. Should we just decant, close one of them down and
demolish it?" The difficulty is that if you go and speak
to the people who live in those peripheral estates they say, "Me
and my family have been here for 50 years. We like it here, we
don't want to go." If localism and the views of local people
are a driving consideration, you will find it very hard to find
places that you can just abandon because people have connections
to those places. So you can only do it
Q75 Bob Blackman:
Can I just interrupt? Is there not a risk that you are concentrating
money on the areas where you have got money and you invest, and
these places just go by the board? There is no investment, nothing
happens to them, and then they just go nose-diving down into a
terrible state of decline.
David Orr: There
is a real risk of that happening. But this is a country where
the population is growing, and where our focus needs to be on
thinking how do we accommodate this growing population with different
kinds of household formations and different needs. Abandoning
useful housing is quite a difficult thing to do. The issue here
is how you create a strategic environment where those decisions
are part of a strategy rather than a kind of specific, "It
doesn't look like this is going to work very well so let's just
get rid of it." I do think that if localism is to be a driving
concern you do have to pay attention even when people in the local
area say things that you don't want to hear.
I think adding to that, it is really important to assess what
kind of local economy can be created in some of these places.
I think that is a really important job for the LEPs. If you look
at somewhere like the Dearne Valley in South Yorkshire, a former
coalfield area that never really recovered from the de-industrialisation
of the 1980s despite huge amounts of public investment, there
is a real issue about how do you create a working local economy
in that area? However, I am pleased that it is one area that the
Sheffield City regional LEP is looking at, coming up with a vision
for creating a working economy in that area, and I hope that works.
But that is the kind of exercise that the LEPs really need to
be doing in all these sort of places.
Jim Coulter: But
it does not have to be at the population level necessarily in
all the places that it is now.
It is about creating the circumstances in which people and places
change, accept change, work with change, and create the new opportunity
to live, work, invest and learn.
Chair: Finally, just brief
Q76 Simon Danczuk: So
in tabloid language what do you think of the Government's document?
David Orr: The
Emperor's New Clothes.
If I was still in CLG I would be disappointed. A bit strong, but
Jim Coulter: I
wrote down, "Spads rule okay."
Chair: Okay, thank you
all very much indeed for coming to this hearing.
6 Ev 111 Back
Ev 101 Back
Section 106 (S106) of the Town and Country Planning Act 1990.
Demographic change and the environment, Back
Ev 114 Back
Spads = Specialist Advisers to ministerial departments. www.civilservant.org.uk/spads Back