Examination of Witnesses (Questions 129-157)
Q129 Chair: Good
afternoon and welcome, both of you, to the third evidence session
of our inquiry into regeneration. Just to start off, could you
introduce yourselves, and say who you are and the organisations
you represent?
Tom Flanagan: My
name is Tom Flanagan. I am the Corporate Director for Environment,
Planning and Economy in Cornwall Council.
Allan Haile: Alan
Haile. I am the Assistant Director of Economic Development in
Cumbria County Council.
Q130 Chair: Right.
Thank you both, and thank you for the evidence you have submitted
to us so far. Looking at your evidence, it appears that you are
perhaps not 100% comfortable with the Regeneration to Enable
Growth paper that the Government has produced.[1]
Perhaps you could just identify your concerns about it, and say
what you think is missing and should be added to it?
Tom Flanagan: From
Cornwall's perspective, we are fully in line with and fully support
some of the main principles behind the paper, in terms of localism,
rebalancing the economy, investment in low-carbon futures and
incentives around affordable housing and eco homes. Our issue
is that we would like it to be even more ambitious, in terms of
devolution of powers and responsibilities. Since we became a unitary
authority two years ago, we have had the mantra, "not a big
district but a small country", so it is nice to come to England
to talk about regeneration today. That is the ambition.
Ambition is the byword, and we look with envy at
some of the city region responsibilities that have been devolved
to London, Manchester and Leeds, and, as we have said in the submission,
we would like Cornwall to be a non-metropolitan exemplar of what
can be done in terms of devolution, in particular to support economic
regeneration. We have a few years left of the convergence programme;
we are looking ahead towards transition post-2013, and we would
like to build a sustainable future. Further powers would help
us do that, so we are very keen to see what the implications of
the Localism Bill mean for Cornwall.
Allan Haile: Some
similar issues, really. In principle, the intention to have regeneration
at the heart of economic growth is a principle that we have been
signed up to for many years. I suppose we are a little bit concerned
about some of the proposals and initiatives, firstly because they
are untried and untested in England, but we also feel that they
are likely to be more successful in areas where there is greater
potential for economic growth and job creation, and not so successful
perhaps in areas like Cumbria, where there is some market failure.
Q131 Chair: My
colleagues will come on to the specific details of what you might
want to see, so without going into the details, when we have had
Government Ministers in front of us before, a point they have
sometimes made to us is that they do not very often get Local
Authorities knocking on their door and saying, "This is a
list of things we would like to do if you gave us the power to
do it." Have either of you so far done that with Government
and, irrespective of what we might do with our inquiry, would
you be intent on doing that, if you have not already done it?
Tom Flanagan: Yes,
we certainly have. We did it as part of the LEP submission; there
were a series of asks of Government as well in the LEP submission.
We made certain proposals in terms of Tax Increment Financing,
in terms of using the whole process of rebalancing the economy,
and savings in public expenditure and revenue terms, to reinvest
in the economy. So we are very interested in some of the innovative
funding mechanisms that might be coming through to create an investment
fund for Cornwall. We made a number of those submissions. We would
like to de-trunk the roads in Cornwall, take the responsibility
back from the Highways Agency and develop an integrated transport
authority, as exists in metropolitan areas, because connectivity
in a peripheral area like Cornwall is key to the economy going
forward. We have made a number of proposals and we are very keen
to follow those through.
Allan Haile: We
obviously set out our intentions in the submission to form the
Local Enterprise Partnership, but as such I do not think we have
made any suggestions similar to those that have been made by my
colleague here.
Q132 Mark Pawsey:
Gentlemen, the term "regeneration" is more often identified
with urban areas, where you have an area where land is being re-used
or put to an additional use. How does regeneration relate to a
rural environment?
Tom Flanagan: In
Cornwall's case, Cornwall is hovering around 75% of GVA—gross
value added—which is why it has convergence support from
the European Union. That means that it is lagging behind, and
there are a number of reasons for that. In the past, it has been
through a transitional journey from Objective 5b through to Objective
1, and now through convergence, to lift it up into the mainstream
of economic activity.[2]
The key issue around regeneration is to make a contribution to
the economic prosperity of the country and the opportunities that
exist in areas like Cornwall. We have had the fastest growth rate
of any area outside the City of London over the last decade, but
we are still hovering at around 75% of GVA. The opportunities
to grow the economy by focusing regeneration on urban areas, but
also certainly rural economies like Cornwall, are very important.
Q133 Mark Pawsey:
You have used the term "economic growth". In what respect
does regeneration, as far as you are concerned, differ from economic
growth?
Tom Flanagan: I
think regeneration supports economic growth; investment in higher
education is an example. We were losing a lot of talent from Cornwall
that was going to universities outside the area, so, for example,
we have invested in Combined Universities in Cornwall, a partnership
of higher education and further education institutions. That has
allowed us to keep talent within Cornwall, to build a skills base
and to support local businesses. The biggest growth in jobs in
Cornwall over the last decade has been in advanced manufacturing,
which may be a bit surprising, given our rural and tourist economy.
Q134 Mark Pawsey:
Can I go back to why that is regeneration, rather than just looking
at the economic growth of an area? What is the difference, as
far as you're concerned?
Tom Flanagan: Regeneration
supports areas that have had structural failure in the economy.
In Cornwall, in terms of its mining industry, its fishing industry
and its rural economy, there have been structural failures in
the economy. Regeneration has to overcome those structural failures
in order to then achieve economic growth. That is a journey that
Cornwall has been on.
Q135 Mark Pawsey:
Are there some areas of Cornwall that do not need regenerating
and are happy, and patches where regeneration is necessary?
Tom Flanagan: There
are certainly patches where regeneration is necessary; we have
an urban regeneration company, for example, in Camborne, Pool
and Redruth. There are more affluent areas, though, where there
are a lot of second homes, but that in itself creates a problem
around affordable housing.
Q136 Mark Pawsey:
And the issue in Cumbria?
Allan Haile: We
are in a similar position to Cornwall, as far as GVA is concerned.
We have a slightly better position. We are not a convergence area.
We are regarded as part of the competitiveness programme, as far
as European funding is concerned. A lot of people forget the reliance
that there is in Cumbria on the manufacturing sector. A lot of
employment, and a lot of our GVA/GDP, is based around manufacturing.
To some extent, it is difficult to separate out the rural regeneration
issues from some of the more urban-style regeneration issues,
because the two things are so interlinked. The people from the
rural areas travel into to the towns for work, etc.
However, there are some further significant issues
in the rural areas that are not always as transparent as they
are in the towns and the more urban parts of the county, simply
because they are very much dispersed. The loss of access to services,
transport issues, the loss of shops and libraries, etc, have a
very major impact on the economy and on life in rural areas. Regeneration
to try to address those things through community/voluntary social
enterprise sector is a key part of regeneration in Cumbria.
Q137 Mark Pawsey:
Tom made a very early bid for additional powers; he mentioned
de-trunking roads and perhaps more autonomy. What would you like
to see in Cumbria that would enable you to tackle this issue of
regeneration effectively?
Allan Haile: One
of the things that are perhaps missing from the package at the
moment is recognition that in areas of Cumbria where there is
market failure, you still need to provide support to create the
infrastructure to enable businesses to grow. The difference between
cost and value of property, for example, is very significant.
There also needs to be a long-term approach, and we feel the Regional
Growth Fund is a very short-term, quick-win approach to dealing
with growth. We think, in an area like Cumbria, there needs to
be a more holistic and longer-term approach.
Q138 Mark Pawsey:
But isn't the Regional Growth Fund targeted more at economic growth,
rather than specifically at regeneration? Would you like to see
it focus purely on regeneration?
Allan Haile: I
would not like to see it focus purely on regeneration, but it
would be useful if it did. The other thing about job creation
without some other activity is that you can create 100 jobs tomorrow
in an area, but it is not necessarily people who are unemployed
in the area who will benefit from that. There needs to be work
done to help and assist those people in being ready for work.
Indeed, social enterprise and the voluntary sector are very good
ways of helping that happen.
Q139 Heidi Alexander:
Mr Haile, I think you have mentioned a couple of times the community/social
enterprise/voluntary sector and, of course, the Government's document
is referred to as being about community-led regeneration. I just
wonder what your assessment of that document is, in relation to
its community-led credentials, and whether you see something in
that document that is going to fulfil the aspirations of people
in Cumbria.
Allan Haile: I
have a mixed response to that. In terms of community involvement
in certain rural areas, that is very significant. I think the
demographics of some of the rural areas help form social enterprise
and community involvement in helping the locality grow and improve.
In other areas, though, that is not the case. There are some parts
of the planning system that we have concerns about; the community
plan system is fine, but without a strategic approach to planning
within an area, we think there may be weaknesses, and there could
be significant concerns about nimbyism built into that.
Q140 Simon Danczuk:
You were talking about patches that needed regeneration, and about
structural failure; you were making a distinction between regeneration
and economic development, and I understand all that. The private
sector is not going to step in and sort these particular areas
out, is it? The second question then is: is the Government's funding
financial proposal set out in the paper adequate to sort out the
need for regeneration in these particular areas, do you think?
Tom Flanagan: The
issue is that regeneration can support private investment, and
that is the experience we have had in the urban regeneration company
area—Camborne, Pool, and Redruth. It has taken a lot of
public investment from the Homes and Communities Agency, the Regional
Development Agency and the council actually to get things off
the ground, but now we are ready to encourage private investment
in the area. For example, the Innovation Centre in Pool has exceeded
its targets, in terms of private businesses going into the managed
workspace there. The public sector has to create the climate and
the opportunities for private sector investment to come along,
and that is the whole purpose of involving the public sector:
to de-risk a lot of the issues where the private sector will not
take the risk in the early stages.
Q141 Simon Danczuk:
Yes, that is a good point. In the Government's proposals for financing
and funding regeneration, is there the ability to do what you
have just described?
Tom Flanagan: One
of the key worries for us is the loss of the RDA single pot, because
that created a lot of investment opportunities and also match-funded
the European funding, particularly ERDF, which created a lot of
the infrastructure to allow private sector investment. It is that
gap, in terms of infrastructure provision, that we are quite concerned
about. We are interested to see whether the Community Infrastructure
Levy, the New Homes Bonus or Tax Increment Finance can actually
fill the gap. We are not certain about that at the moment and,
obviously, capital programmes across all Departments are being
reduced. The Department for Transport fared probably better than
most in the Comprehensive Spending Review, but nevertheless there
is a reduction in the availability of funding, and connectivity
is a key issue for us around infrastructure.
Q142 Simon Danczuk:
Allan, on that, your Cumbria submission, in terms of finance and
funding in the proposals, was quite sceptical about the Regional
Growth Fund meeting the requirements, or the New Homes Bonus being
helpful or applicable in Cumbria.[3]
What is your view?
Allan Haile: We
have exactly the same issues as mentioned previously. As I mentioned
at the very beginning, things like the New Homes Bonus, Tax Increment
Financing, etc, are all new and untried. In our view, we have
concerns that they might be effective in areas where there are
greater prospects for growth than there are in Cumbria, where
we do suffer from market failure. As in Cornwall, any development
that has taken place has had to be kick-started by the public
sector in the past. I think everyone recognises that funding has
to be reduced, but the loss of funding in the way that we have
lost it will mean that it is very difficult to undertake those
activities in the future because the Regional Growth Fund is not
there to do that. It is there to give money directly to the private
sector. I do not have a problem with that, but in terms of addressing
the market failure issues, there is a gap.
Q143 Chair: Can
I just make a point about ERDF funding that I think probably just
applies to Cornwall? You talked about the need for match-funding;
do you actually have ERDF funding that is sitting there now and
that you cannot use because you do not have the match-funding
to go with it?
Tom Flanagan: Not
so far. One of the initiatives that the council has taken is to
put in place a £40-million capital programme for economic
development, but we are conscious that with the RDA single pot
going, as we come towards the end of the convergence programme,
there may be gaps in the programme. The last thing we want to
do is to hand funding back to Europe.
Q144 Chair: Because
there is a national problem, isn't there, of under-spending ERDF?
Tom Flanagan: Yes.
Chair: But you do not
have that at this stage?
Tom Flanagan: No,
we are over our targets, in terms of "N Plus 2" on ERDF,
so the programme is proceeding well at the moment, but obviously
there is that risk, as we head towards the end of the programme,
that some things may fall off the edge, and that we will have
to give some money back unless we can marshal the match-funding.
Q145 Bob Blackman:
Clearly there are going to be limited resources; I think you both
recognise that issue. Equally, in my view, the key to successful
regeneration is levering in the private sector. Are there any
particular tools that are not in your armoury at the moment that
you would like to see? Anything from you, Tom?
Tom Flanagan: Yes,
one of the things that we are looking to do is examine the opportunities
through the Localism Bill, in terms of new sources of funding.
For example, at the moment, we have a 10% discount on second homes
in terms of council tax. One of the other things we are considering
doing is holding a referendum to remove that discount or even
add a surcharge on second homes, so that we can develop a funding
stream there for investment. The other thing is that Cornwall
obviously has a population of 500,000, but in the summer that
expands to 5 million, which places a great pressure on infrastructure.
It is unfair to ask the Cornwall council tax payer to fund the
burden completely of providing for that infrastructure. Cornwall
at the moment has 26 million visitor nights per year. If you put
£1 per head per bed in terms of visitor nights, that could
raise £26 million per year, which again could go into investment,
so we feel there are funding opportunities if we are given the
freedom to do that; it is really exploring what the general power
of competence means as part of the new Localism Bill.
Allan Haile: I
mentioned earlier that one of the missing things is the ability
to provide the gap funding that is required to assist the private
sector to develop, and that addresses the cost versus the value
of property. That is a serious omission at the moment and it is
one that will be difficult actually to address. The other thing
that is missing is the long-term approach; we cannot really see
within the current proposals that there is a long-term approach
to regeneration. We fully believe that there is a need for a long-term
and holistic approach.
Q146 Bob Blackman:
Are there any lessons from the past? Given that we are in a time
of very restricted resources, are there any lessons from past
experience that you think you can bring to the fore that we could
learn from and roll out to other parts of the country?
Tom Flanagan: I
think it is this issue of risk transfers from the public to the
private sector. We have a real opportunity to invest in renewable
technologies—solar, wind, wave and also geothermal—but
those investments take a lot of capital up front. How can you
de-risk the capital investment for the private sector, so that
they are allowed to bring along their own investment and create
jobs and wealth in the area? One opportunity might be municipal
bonds of some description to de-risk the process of that initial
capital outlay and provide opportunities for the private sector
to prove their case—proof of concept—and develop a
business case around, in particular, renewable technologies, which
is why we think Department of Energy and Climate Change (DECC)
should have been involved in the regeneration policy programme,
as should Department for Business, Innovation and Skills (BIS)
in terms of the skills agenda; they have not been, so far.
Q147 Bob Blackman: Would
you see Cornwall or the Government putting that money up? Who
is taking risk and responsibility?
Tom Flanagan: We
recognise that it should be a shared responsibility. There are
things that we can do and would want to do locally to support
continued investment in the economy, but we need that co-ordinated
approach from Government that at the moment is not really coming
through, in terms of the policy.
Q148 Bob Blackman:
Will that be presented to the council tax payers of Cornwall as,
"If this all goes horribly wrong, your bill is going to go
up quite dramatically to pay for this risk"?
Tom Flanagan: We
would make sure that there was security in place, that the risk
was manageable. We are quite confident. There is a debate going
on at the moment about the feed-in tariff for solar power, but
clearly if things like that were put in place—if the Renewables
Obligation Certificate (ROCs) review comes out with five ROCs
for Cornwall, as we have in Scotland—then those opportunities
might create the base for further investment. I think it is a
shared responsibility and something we are keen to explore.
Allan Haile: The
Government has announced the proposals for enterprise zones. We
had an enterprise zone for Cumbria in the past that was very effective.
One of the things that appears uncertain at this point, as opposed
to definitely missing from that, is the capital allowances that
really made a difference in enterprise zones last time. In terms
of lessons learned, that is one thing that I think needs to be
considered as part of the enterprise zone debate. I have already
mentioned the long-termist approach, which is certainly a lesson
that we have learned.
Q149 David Heyes:
This is a question to both of you, really: I guess this paper,
Regeneration to Enable Growth, means that you are already
operating in a very different environment to the context that
is dictating what you have done for the past 13 or 14 years. One
of the key things that are going to change is the lack of measurement
and assessment. It is a clearly stated objective to remove some
of the top down measurement there has been in the past: Local
Area Agreements (LAAs), Comprehensive Area Agreements (CAAs) and
so on. That does beg the question, though, of how we are going
to measure progress against regeneration to enable growth in this
new environment with no measures.
Tom Flanagan: That
is a fair point, but I think, in the past, a lot of targets were
perverse and resulted in behaviour that was not effective, in
terms of producing the right outcomes.
David Heyes: For example?
Tom Flanagan: With
some of the targets around reducing drug dependency, for example,
the way that the funding worked was there was absolutely no funding
around alcohol, which causes most of the social unrest on the
streets. You have to be careful about getting the right target
to achieve the right outcome. We are quite comfortable setting
benchmarks against out own ambitions and on where we need to be,
and we are benchmarking against the European regions, which gives
us quite a good idea of where the economy is going. I am not worried
about the measurement issue per se, but I do think it is
important that the framework is put in place to allow a coherent
approach, so we can plug into a clear national framework that
the policy does not provide at the moment.
Q150 David Heyes:
Before Allan comes in, that is okay as far as it goes, I think,
but the stated intent is that local partners and communities will
determine the success or otherwise of the plans. It seems very
much a grass-roots measure of what we do in the future. It would
be very sensible to benchmark yourself against European figures,
but what about local?
Tom Flanagan: I
think locally as well. Obviously, we need to be transparent, and
part of the issue around the Local Enterprise Partnerships at
the moment is that they, like the Health and Wellbeing Boards,
have no statutory basis. They are informal partnerships at the
moment. We should be giving it a statutory basis; we should be
providing a duty of co-operation around local enterprise regeneration
and, through that, making it more transparent in terms of accountability
through our own council scrutiny committees, through the community
and voluntary sector and through the local community.
Allan Haile: I
think the last point about Local Enterprise Partnerships is an
extremely valid one. If Local Enterprise Partnerships are to achieve
what Government expects for them, I think they have to be given
the legitimacy actually to drive some of the things that are required.
We also welcome the move away from the set of measures that were
in place before. Firstly, I would say that there does need to
be a common approach across the country in terms of measurement
of progress. Otherwise, how can you assess one area's performance
against another's? To supplement that with local measures that
actually look at what it is you are trying to achieve, and to
recognise that those are meaningful, would be helpful. The intent
is for a move away from a reliance on public sector funding and
public sector jobs to private sector jobs. Clearly, a means of
measuring what progress is being made towards that and whether
initiatives that are in place are actually helping with that needs
to be in there.
We also think that the housing targets or housing
indicators that were in the previous set were actually quite useful.
They were a good indication of economic conditions. It also helps
in forming a housing policy, etc. There were some good parts and
bad parts to the last set. We think there needs to be a common
approach to enable us actually to measure progress against other
areas.
Q151 David Heyes:
Just one last point, Chairman. A common approach is about having
some comparative measures; that is what you are saying?
Allan Haile: Yes.
David Heyes: Is there
any work going on to achieve that? It would have to be a voluntary
arrangement; it is not going to be top-down, where people are
dictated to. What is going on to ensure a common approach? I am
already detecting differences in your approach to Tom's at the
opposite end of the country. Tell me how you will forge your common
approach.
Allan Haile: One
of the ways to do that would be through the Local Enterprise Partnership,
and there are moves afoot to create Local Enterprise Partnership
networks; that is one way we could actually do it.
David Heyes: Okay. It
is a bit tenuous though, isn't it?
Q152 George Hollingbery:
Just briefly, I started off wondering what rural regeneration
was, and I am not sure I am actually any the wiser. I want to
return to Mark Pawsey's question: is regeneration in a place such
as Cumbria or Cornwall basically economic growth? Is that what
you are looking for—stability, and backing up or bringing
forward the economy in your areas? Is that what we are talking
about, essentially, for rural regeneration?
Tom Flanagan: Yes.
I just think you have to be careful about semantics. Matthew Taylor
did a very good rural report about regeneration, and he actually
said that the economic sectors in rural areas are not that different
from economic sectors in urban areas if you look at the proportions.[4]
Q153 George Hollingbery:
But much more diffuse, and more difficult to manipulate within
communities themselves, rather than with overall governmental
intervention.
Tom Flanagan: Yes,
but the issues are very similar. Cornwall has been very fortunate
over the last decade; the agri-food sector has increased its value
by 50% from £1 billion to £1.5 billion, and it has done
that through a focus on quality and a focus on local sourcing.
Support in terms of regeneration: do you call it regeneration
or do you call it economic growth? Some of the restaurants, such
as Rick Stein's restaurant, actually source food from local farmers,
so I think you just have to be careful about saying there is a
hard and fast boundary between what is regeneration and what is
economic growth.
Q154 George Hollingbery:
I see the complication. It is coming down to the diffuse nature
of what you are trying to grapple with. You can see a community
in Salford and you can say, "That needs regenerating; now
we begin to start to think about how to do it."
Tom Flanagan: Yes.
I think the difficult issue in rural areas is that you have other
factors or forces at work, such as the common agricultural policy
and what is happening in terms of some of the DEFRA regulation.
All those other things play into rural regeneration; they do not
necessarily do so in urban areas.
George Hollingbery: That
is very useful, thank you. Alan?
Allan Haile: It
is very difficult to distinguish between economic development
and regeneration. I think the two things need to work hand in
hand; to be effective, the two things do work hand in hand. So
far as a rural area is concerned, as I did mention earlier, the
rural area is as reliant on the urban area for work, employment
etc as the urban areas are themselves. Another thing to bear in
mind, addressing the agricultural sector, which is still a major
part of the Cumbrian economy, is how we actually enable farmers
to extract the value from the produce that they provide. At the
moment, all the other sectors—the retail and food preparation
sectors, for example—are extracting the value. It is how
you help that. Definitely, it is a very grey area, what you call
regeneration and what you call economic development.
Q155 Chair: I
will deal with two issues—very briefly, I promise. You could
conceive of a position, though, where you were successful in increasing
economic growth but still left problems of regeneration?
Tom Flanagan: Yes,
particularly if you are importing things—skills or products—and
you are exporting profit out the area. There is a real issue in
particular for peripheral areas. At the moment, we export 97%
of the profit from energy from Cornwall. If we can create a renewables
sector, we can keep more of the profit in the area and support
continued investment.
Allan Haile: I
absolutely agree; you can create jobs, but you have to assist
local people to be ready for those jobs. You have to provide them
with the skills; you have to provide them with the will to work,
in some of the worst cases. We have huge opportunities within
the energy sector, both in terms of nuclear and renewable, in
Cumbria. The thing that we are keen to do is ensure that it is
local people who benefit from those opportunities. Clearly, there
will need to be people who come into the area to help exploit
those. That is accepted, but unless you enable local people to
take advantage of it things will not improve.
Q156 Mark Pawsey:
You both cover big areas geographically. Could you both see a
situation where you get pretty substantial economic growth in
part of your area but still have a need for regeneration in the
remaining part, or would you look at the area as a whole and say,
"We can live with that"?
Tom Flanagan: It
is already the case. Work was done around resilience, particularly
to public sector funding cuts, and obviously parts of Cornwall
are more resilient, particularly the areas that have the opportunity
to commute to Plymouth. The east of the county is more resilient
than the west of the county, and clearly Cornwall is a bit of
a special case because it is surrounded on four sides by water.
Nevertheless, the peripherality to the market means that you are
more vulnerable.
Q157 Mark Pawsey:
So even if we have very substantial economic growth in Cornwall,
across the county as a whole there could still be pockets that
need regenerating.
Tom Flanagan: Yes.
Mark Pawsey: Does the
same apply to Cumbria?
Allan Haile: Absolutely
the same, and I think that is the same throughout the country.
Chair: Thank you both
very much indeed for coming to give evidence.
1 Evs 129, 150 Back
2
www.europarl.eu/parliament/expert/displayFtu.do?tfuld=FTU_4.5.2.html&language=en Back
3
Ev 130 Back
4
Living Working Countryside: the Taylor review of rural economy
and affordable housing, www.communities.gov.uk/documents/planningandbuilding/pdf/livingworkingcountryside.pdf Back
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