To be published as HC 1014-ii

House of COMMONS



Communities and Local Government Committee


Monday 23 May 2011

Keith Burge and Keiran McNamara

Dr Hugh Ellis, Paul Evans and Richard Summers

Evidence heard in Public Questions 77 - 128



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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 23 May 2011

Members present:

Mr Clive Betts (Chair)

Heidi Alexander

Bob Blackman

Mr David Heyes

George Hollingbery

Mark Pawsey

Steve Rotheram


Examination of Witnesses

Witnesses: Keith Burge, Chair, Institute of Economic Development, and Kieran McNamara, Chair of CEDOS, CEDOS/ADEPT, gave evidence.

Q77 Chair: Good afternoon, thank you very much for joining us and welcome to the second evidence session of our inquiry into regeneration. For the sake of our records, could you say who you are and the organisation you represent?

Keith Burge: I am Keith Burge; I am Chair of the Institute of Economic Development.

Kieran McNamara: I am Kieran McNamara, Chair of the Chief Economic Development Officers’ Society.

Q78 Chair: You are both welcome. Thank you for the evidence you have given us so far. The Government has issued a document, Regeneration to Enable Growth. Do you think that provides a clear strategy for future regeneration? If not, why not and what do you think should be done instead?

Keith Burge: The easy questions to start with. If you would like a one-word answer: no.

Chair: That did not last very long.

Keith Burge: Shall we go now? When I read the document I wondered if it was not sinking in or whether a number of pages were stuck together, because by the time I got to the end of it I could not believe just how limited it was in its appreciation. No consideration has been taken of the nature and scale of regeneration that is required, where it is needed and where the opportunities lie. There was no review of communityled regeneration, of what has worked, what has not worked and why. None of those things were included; it is just really a hotchpotch of spending commitments and little more than that.

Kieran McNamara: Could I follow on from that? It struck me as being a context statement of where things were at this moment and what the priorities of the current Administration were. We said in our evidence that we supported the thrust of greater focus on localism and the localism agenda. One of the things that does commend the document is its brevity-it is very short. As we set out in our submission, though, it does lack a very clear strategy, and I would tend to echo the comments of Keith and the IED in that respect.

The focus in some of the areas on specific major capital investments seems to imply that growth can be generated purely from such investments and that will regenerate the country. There is an emphasis in the document on wishing to see "every part of Britain to fulfil its potential", yet the focus seems to be on very specific large capital schemes, with a particular focus on major areas of population. Those areas may well benefit from some of those major capital schemes but that will not be the case across the rest of the country.

Q79 Chair: Do you not think it is going to work or you are not sure what is actually trying to be achieved?

Keith Burge: I keep going back to the front cover, "What Government is doing in support of communityled regeneration." I do not think any of the things in there have anything to do with communityled regeneration. So that is a misnomer to start with. Are the regenerative benefits of High Speed 2 any better or worse than spending that money on other regeneration activities? We do not know. I think it is just a very narrow view, a very brief view and one that really lacks any evidence to suggest why the Government is proposing to do what it is proposing to do.

Q80 George Hollingbery: Is the Government actually planning to do anything?

Keith Burge: Again, if you return to the title and the idea of communityled regeneration, I do not believe any of this really is what we have come to regard as communityled regeneration over decades of successive Governments. There is enough past practice to look at; we can go back to Urban Development Corporations, City Challenge, Single Regeneration Budget, Neighbourhood Renewal Fund, New Deal for Communities and so on. Plenty has happened but nobody has taken the trouble to sit down and look at what has worked and why, or what has not worked and why. Instead it is about affordable housing, High Speed 2, Crossrail and the Olympic legacy.

Q81 George Hollingbery: The Government are not daft. I agree with you that this is a very thin document, and I am not going to pretend otherwise. What is behind the Government’s thinking? They are clearly thinking something. Perhaps they are deliberately saying that they are not going to have anything to do with it and think that it does not work and the Government should not be part of this process. Perhaps they are saying there is not enough cash and we simply cannot afford to do this, or they are saying that economic development is going to drive this and that is going to make it work. In your view, what is underlying this very thin document?

Kieran McNamara: From my perspective, it is a couple of things: the drive to what they see as a more locally based decision-making process and the identification of particular funding mechanisms that might be available locally for local populations and determining how that is best utilised. So the ideas around TIF and the New Homes Bonus and so on are welcome. I think there are issues on the details, but I think it is driving the agenda, particularly from a local government perspective, more towards local areas determining what the priorities are rather than the Government setting the priorities for those local areas. So from that perspective, the drive towards the localism agenda is quite welcome.

Keith Burge: If there was more argument in there saying that we do not believe that area-based regeneration works for the following reasons, then that would be something for us to get our teeth into and have a debate about. That is not even in there; it is very selective, very partial and really does not make the case for the things it is suggesting should be funded in future.

Q82 Bob Blackman: Could I just ask you something? One of the problems in this whole debate is a lack of clarity about what regeneration actually is. However many people you have in the room, you will come up with one more opinion than you have people. Do you have a clear view of what regeneration is and in particular what areabased regeneration is?

Keith Burge: Regeneration as we see it as the IED is a much more holistic process than that which has been identified here. For regeneration read development to a large extent in this document. It does not talk about people; it does not talk about communities other than on the front page. It does not have a full appreciation of all the very complex factors that come into play in regenerating a local area.

Q83 Bob Blackman: Could you point me to one example over the last 20 years of a real regeneration scheme that you would regard as being a success? I am not challenging you; I just want to get a clear picture of what that would be.

Kieran McNamara: Can I give you one example that I have personally been involved in?

Bob Blackman: Yes.

Kieran McNamara: That is in area in East Sussex called Hailsham and a particular ward, Hailsham East. It was a very holistic approach and it embraced a whole range of activities. It was focused on an estate called Town Farm, a very traditional Radburn estate with lots of warrens and passageways, so it had issues with crime and so on. The thing that really transformed that estate from my perspective was that, instead of wanting to get off it, people started to want to get on it. For me that is a real transformation and real evidence that something is working and is successful: when people actually want to live in places.

Q84 Heidi Alexander: In the last few months of last year we saw a lot of different Government funding streams coming to an end, whether it is Local Authority Business Growth Initiatives, LEGI or Working Neighbourhoods Fund. There have been big cuts to the Homes and Communities Agency budget as well. I just wondered whether you think the Government is doing enough to ease the impact of these big cuts in direct regeneration funding?

Keith Burge: I do not see that it is doing anything to mitigate the effects of those cuts. We all understand the situation with the public purse, we do not need to labour those points again, but I think that there is a lack of appreciation of the fact that some of the spending is investment and not just cost. A failure to make that investment is going to have some knockon effects elsewhere. Failing to continue to work with local communities has impacts on people’s ability to access employment and training, their health, crime, on the environment and so on. So it may save money today, but it is storing up problems for tomorrow.

Kieran McNamara: It is quite clear that there have been no replacement funding schemes in the way that they were available before. The focus has been more on the Regional Growth Fund and trying to drive private-sector investment. It is quite clear that there is no replacement and we are in the fiscal position that we are in. There is an element of us having to stand back and reflect on that and see which of the mechanisms that have been put forward can work in our best interests.

Some of the ones that the Government have put forward may well work, but I do have concerns as a society about how the mechanisms are going to be introduced. For example, the New Homes Bonus is based on net additional homes. In those areas that have major housing issues and need to clear housing and then rebuild, the net additional housing is going to be pretty limited, and yet the investment and the number of new homes is going to be quite significant. So I have some reservations about the way some of these mechanisms work from a society perspective. Keith is quite right that there are no direct replacements, and our members are reporting significant budget reductions: 50% reduction in capital, 30% reduction in revenue budgets and about 33% from staffing. So these are having significant impacts at the moment. I think that we have to stand back a little bit and just accept the reality of the financial position of the country.

Q85 Heidi Alexander: I mentioned quite a raft of different initiatives in the economic development sphere. Previously Keith mentioned a whole range of historic urban regeneration vehicles. What, in your view, have you seen actually work? Was it the New Deal for Communities? Was it Neighbourhood Renewal Fund? People talk about these examples and the desire to see a lessons-learnt exercise being done, but from your professional experience, what do you see as having worked?

Kieran McNamara: There are two things from my perspective. In a previous life I worked in Scotland, and we had a programme called New Life for Urban Scotland focusing on peripheral estates. I worked in a particular programme in Wester Hailes in Edinburgh. For me that worked very, very well. It was the holistic approach that Keith alluded to earlier.

Similarly I have seen SRB work very well. I was involved in a submission that was a very holistic and started from things like speech and language therapy for young kids before they went to school. That was taken over because we managed to get Sure Start Pathfinder into that particular area, so it was combined with an SRB programme. That worked really, really well but it was a holistic approach that took in the economic needs, the social needs and the environmental needs. You are looking at the whole gambit of issues and having a co-ordinated strategy that came from the community-that the local people actually buy into it. That was the example I was referring to earlier where it worked particularly well.

Keith Burge: My day job is in economic consultancy, and I have been involved in evaluating many of these programmes. The thing about them is that they are so different. Within the New Deal for Communities there were 39 different programmes, with each and every one of them being delivered in a different way by different people in different contexts. Some of them that we looked at were absolutely fabulous and some were absolutely dreadful. It would take a long time to explain all the reasons behind that.

The same applies to pretty much all the other things we have looked at: the Neighbourhood Renewal Fund, Single Regeneration Budget and so on. Again one of the subtexts for this document is the localism agenda and getting local people to be more involved. One of the things that has hampered some of these programmes, and certainly the succession strategy that they have sought to deploy, is the problem of building local capacity. It is all very well talking about the principle of localism where you have motivated people who are used to taking on responsibility. That is all well and good, but in many more deprived communities the thought of managing a multi-million-pound property portfolio scares people half to death.

Q86 Heidi Alexander: This is the final question from me for now. The Government seems to be assuming that the private sector will step in to fill the gap where there may previously have been public funding. Do you think that is going to happen? In the areas where there is a huge regeneration need, both in terms of physical redevelopment and economic and social progress being made, do you think the private sector is going to step in and fill that gap? If you do not, what do you think the Government should be doing to encourage it?

Kieran McNamara: I will let you go first this time, Keith.

Keith Burge: Why would the private sector step in any more now than it has in the past? It will step in where it perceives a decent return on its investment and where there is an acceptable level of risk. The public sector has a role to play in facilitating private-sector investment. There are a number of things in the document that are possibly seeking to do that, but I am not sure that it goes far enough. The private sector is the private sector; it is there to get a return on its investment. You mentioned the social outcomes. It may be that what suits the private sector does not actually serve the public good and the social good. So I think there has to be some care taken that we do not get unfettered private-sector development, which has negative impacts for local communities.

Kieran McNamara: I think the reality is that the private sector will only invest in those areas where it will see a return, and one of the roles that public-sector bodies like local authorities can play is to facilitate conditions to enable them to come forward and derisk development, which may involved a degree of pump-priming. The pumppriming element that we are referring to seems to be evaporating.

Keith Burge: The other aspect, which I am sure is close to your heart, Kieran, as it is to mine, is: who is it within the public sector that is going to be facilitating this private-sector involvement? The economic development has been so denuded by the cuts that have taken place that there are not the staff within the local authorities and other organisations who can do the work with the private sector to get this development under way.

Q87 David Heyes: My constituency is one of the very few to benefit from round one of the Regional Growth Fund. We have £5 million going in, which is going to safeguard 200 jobs and generate another 100 jobs in a high-tech, high-skill, exportbased local firm, and that is really welcome. But that is the only good news on a pretty bleak horizon in the north-west of England. It goes way beyond my constituency. All the other areabased funding initiatives that we have referred to already have either gone or have big question marks hanging over them.

The Government’s document, Regeneration to Enable Growth, really talks about major capital schemes, as you said. They refer to Crossrail, High Speed 2 and the Olympic Park, and those seem very distant from my part of the world. I am not able to see how the north-west of England, and I guess other places, will benefit from that. What are your views on that?

Kieran McNamara: I am not sure that I would necessarily disagree with you. I come from a part of the country in the south-east where we have had no RGF successes at all. Yet in my county we have one of the most deprived communities in the country. Hastings is one of the most deprived, yet no success on RGF. There is very little in the list of projects in the paper that have any direct benefit to our communities, as far as I can see. However, there are instruments the Government are bringing forward that we could potentially benefit from, but we need to see the details and the details seem to be being delayed. So in there is a lot of interest in tax increment financing for example, particularly from CEDOS authority members. They want to know how that might work and how they could benefit from that. But the timetable for that has just been put back, and I believe the Bill is not going to be out until December instead of early this year. So there is a lot of uncertainty. Coming back to the question about private-sector engagement, they need certainty and clarity about a range of things: about mechanisms that might be there to support them. If that is clarity is not there, that will dissuade them from investing.

Keith Burge: Again, I would agree with that. The beneficial impacts of investments proposed will depend on who you are and where you are, and there are large swathes of the country where affordable housing perhaps is not that much of an issue. They certainly are not going to benefit from High Speed 2 and indeed may suffer from High Speed 2 if they are areas that are seen to be disadvantaged in competitive terms. If they are outside of London, Crossrail and the Olympic legacy simply do not apply. So this certainly does not appear as a strategy, I think we have been fairly clear on that, and it certainly is not a national strategy.

Q88 David Heyes: You mentioned the cost of the New Homes Bonus earlier. Again, in my part of the world one of the reasons we have been a Pathfinder area for the housing market is that large amounts of clearance need to take place. We have got through that to some extent and a small amount of new housing is coming through, but we are a long way off from seeing any potential benefit from the New Homes Bonus. What do you think might be done to ensure that that does not redistribute money away from deprived areas, like the one I represent?

Kieran McNamara: As it is currently constructed, an area like yours will be disadvantaged. The CEDOS evidence cited Hampshire and Hull as two of our members disadvantaged by the process you have described-quite a large number of clearances and new homes coming in. I think there are other issues with the New Homes Bonus, including the way it is distributed, in particular the split into two tier areas and the percentage that goes to upper or lower tier authorities. There are a number of issues with that particular mechanism.

The other issue is whether it is actually additional money at all. Our evidence highlighted that eventually it is going to be topsliced, so where is the additionality? There are inevitably going to be winners and losers in relation to that particular resource allocation process.

Keith Burge: I have nothing really to add to that.

Q89 David Heyes: Can I just tease out a little more about the two tier issue? What is the problem with that and what might be done about it?

Kieran McNamara: Under the two tier issue, the districts get about 80% and the upper tier authorities get 20%, yet the highest level of infrastructure costs in terms of service provision inevitably comes at a county level. There is a disproportionate distribution of the funding, as a CEDOS society would see it.

Q90 George Hollingbery: I am a Hampshire MP and I think Hampshire’s estimate of next year is that they will take maybe £6 million. That is in Hampshire across upper tier and lower tier authorities. In relative terms we are not talking about significant amounts of money. It is also true to say that the upper tier authorities will be funding the lower tier authorities.

Kieran McNamara: I have to say, from an economic development practitioner’s point of view, from a CEDOS society point of view, that is not small beer.

David Heyes: I would welcome that £6 million.

Q91 George Hollingbery: But that is across 1.3 million people. Hampshire has 1.3 million people in it; it is a big place. To move on, you have already covered quite a few of the mechanisms that the Government is proposing to draw down money to some of the more difficult and disadvantaged areas and places that need regeneration-TIF and the EZs and so on and so forth. In your submission in particular, Keith, you developed some other ideas for ways these things could be leveraged and used more creatively. Could you just develop that a little further for evidence? Perhaps both of you could give a general evaluation of these different things and where you think they sit in panoply of mechanisms.

Keith Burge: I think that what lay behind it was a concern that mechanisms that appear at the moment are not necessarily going to help more disadvantaged areas. It might be argued that things like TIF might actually work better in the more prosperous areas, where there are greater opportunities for the private sector to get a return. So what is going to happen to facilitate development in more disadvantaged areas?

So we were thinking of alternative streams of finance. Perhaps areabased bonds, such as those that exist at the moment in Auckland in New Zealand in advance of the Rugby World Cup, where there is a levy for a particular period of time, is another option. Some credit unions have some quite significant resources but memorandum and articles of association require them to operate in particular ways and not to invest in regeneration schemes as such. They are perhaps the kinds of organisation that are wedded to regenerative principles that most people would understand, and organisations like that may have resources that might be teased out into local regeneration schemes.

Kieran McNamara: From our perspective we do see some merit in the schemes that are being put forward. The issue for us is that the detail is not yet available, particularly in relation to TIF and how it is going to operate in a practical way. The other interesting issue is the local government resource review and what is going to happen about the relocalisation of business rates. How are they going to manage the winners and losers?

For me it seems to be a drive towards encouraging a greater emphasis on economic development activity from a planning perspective rather than just houses. From our perspective that is to be welcomed. Clearly, if you drive up your business rate activity, you generate additional income to be used by the authority. That would be a very positive step if that is then utilised to reinvest in regenerative projects.

Keith Burge: Again on that point, it is all well and good saying that you can retain business rates for a period of time, provided you are generating those additional business rates to benefit from their retention. If you are in a disadvantaged area and you have not got LEGI any more and are struggling to promote enterprise, the business support infrastructure has been dismantled and so on, then it is going to be very much more difficult for you as a local area to benefit in the same way more prosperous areas benefit.

Q92 George Hollingbery: Presumably as we move to a situation where business rates are retained locally to fund local authority funding anyway, as hinted by DCLG, if you have authorities where you have areas within a relatively welloff area, and Hastings would be a classic example, you may well have full funding for business rates anyway. So however much you retain, what you make locally is not going to make a lot of difference. It is going to be redistributed somewhere else anyway, isn’t it?

Kieran McNamara: Again, I think it highlights the lack of clarity that I referred to about how these mechanisms are going to work in practice. We still do not know the detail in relation to TIF. The local government resources review has hinted at exactly that-local authorities will effectively be funded through the business rate pool. What benefits those areas that Keith alluded to who do not currently get a net benefit from business rates? The other issue in areas with elderly populations, such as the county I work in, East Sussex, is the ability to generate new business activity is pretty limited due to the population base. It could potentially perpetuate the local government finance settlement that is currently in place. There is a lack of clarity about how this whole process is going to work, frankly.

Keith Burge: To reinforce a point Kieran made there, the ability to retain that and spend it on economic development and regeneration activities, rather than it being used to plug holes elsewhere in local authority finance, is another important point.

Q93 George Hollingbery: Is that not also the case with the New Homes Bonus? It was originally sold to us as compensation for loss of amenity to local people so they would take new homes and new houses and so on and so forth, but actually it is just an un-ring-fenced grant to local government to use for absolutely anything, not for economic development. Is that not right?

Kieran McNamara: That is right.

Q94 George Hollingbery: We were curious about RDA assets. Do you have any comments on those?

Keith Burge: We think it is extremely disappointing that there has not been at the very least a more transparent process by which the thinking has developed in terms of RDA assets. Clearly there are LEPs and collections of LEPs that might have liked to see RDA assets retained within regions, or at the very least the income that they generate being used to support economic development and regeneration activity in the regions in which those assets are based. Yet that does not appear to be how things are going to pan out-that those assets are going to be disposed of or realised and ultimately disposed of for the benefit of the public purse essentially. Obviously we understand there is a commitment or an obligation to get value for the taxpayer, but perhaps there is a lack of appreciation again of the implications in economic development and regeneration terms.

Kieran McNamara: I would agree wholeheartedly with that.

Q95 Heidi Alexander: Can I just return to something that you said, Kieran, about the current changes possibly being a way of providing more buildings where you can carry out wealth-creating activities? This is not just about homes but about businesses. This always puzzles me somewhat. Do you think there is a lack of commercial space within the UK, and is that holding back UK prosperity and wealth creation?

Kieran McNamara: I do not know about the UK specifically. From surveys that we have done in the particular geographical location where I operate, I know there is an undersupply of business land. I think it is an element of the planning process in that the focus inevitably is around the numbers of houses, where they are going to be built and the impact. There seems to be less of an emphasis on the amount of floor space available for business use and so on than there has been historically. That is an inevitable process around the feelings that are engendered by the need to accommodate more housing. There is not the same rigour in terms of reporting that there is with housing. So housing numbers have to be reported back to DCLG on a fairly regular basis, with numbers of new starts and so on, but that is not the case with commercial floor space at all. So I think there is a weakness there.

Keith Burge: If you look at the headline numbers in relation to commercial floor space you would wonder why anything else needed to be built, given the amount of vacant property that there is. If you ring up any agent anywhere in the country, they will say they have plenty of it. The problem is that all too often it is of the wrong quality in the wrong place. Business needs have changed over the years, and people do not want some of the stock that exists or some of the sites are simply not attractive in development terms. There needs to be a real understanding of what the business needs are and what the occupier needs are in relation to what the market can supply.

Q96 Bob Blackman: It could be argued that Governments of all persuasions have spent billions of pounds on regeneration, particularly on areas of deprivation. Yet after all these billions of pounds have been spent, the same areas are still deprived, have relatively high unemployment, low incomes and potentially serious problems. The Government’s approach seems to be to look at areabased, communityled regeneration. What are the risks with that approach? Are we going to get the regeneration in the right sort of areas or are there going to be areas being ignored that need investment?

Keith Burge: You are quite right in your opening statement, but none of that analysis appears in here or indeed anywhere else that I have seen. If all of that has been a complete failure, then let’s see that is has been a complete failure and the reasons behind that. I do not believe that it all has failed.

Q97 Bob Blackman: I did not say that it all has. I said that is what critics might say.

Keith Burge: That is fair enough. In terms of going forward, it may be that the risk is that things will happen in those local areas where there is the capacity to respond to the opportunities, and nothing will happen in those areas where it does not exist. Rather crudely, it may be that that lack of capacity is more prevalent in more disadvantaged areas.

Kieran McNamara: I think that one of the most disappointing aspects of the document is the lack reference to an evidence base of what has and has not worked. Certainly an awful lot of work has been done to identify what has and what has not worked in the past. I think that is a major weakness in the document the Government has produced. There is a danger that places will become even more marginalised with the approach that is highlighted in this document. Those areas most in need may well find themselves increasingly deprived rather than improving in any way, shape or form.

There are examples of places that have benefited from the areabased initiative approach. I alluded to a couple of those earlier and so did Keith. I do not think the critics who say the process does not work are right. I have to say that the weakness in this document for me is a lack of evidence about why the approach that is being adopted in here is the right one and on what evidence that has been based. We are always encouraged to operate on an evidence-based basis, I think that is right, but there is not an evidence base to support what is in this document at the moment.

Q98 Bob Blackman: In your written evidence you talk about nimbyism creeping in. What are the risks there for this strategy as it stands?

Keith Burge: It certainly appeared in ours; it may well have appeared in yours.

Bob Blackman: I am not sure if it was in both, but it was certainly in one of them.

Keith Burge: Once you get down to a local level there is the danger that there is a lack of a strategic overview. What might be good for a very local area is not necessarily good for a sub-region or, dare I use the word, region. Perhaps there is a need to take that broader perspective at times. People will have very particular interests, but whose interests are they representing? Is it a local community who like the way their area is and do not want industrial development that might provide employment for other members of the community or neighbouring communities or whatever? Localism is all well and good, but again there is a lack of clarity in terms of exactly how that is going to work and who the decision makers are.

Kieran McNamara: From CEDOS’s perspective, there definitely was a reference to nimbyism and that was a reference to the Localism Bill, neighbourhood planning and the potential danger we see of people being anti-development. This applies particularly in those communities that perhaps do not feel they need any development for the future, but development in that particular community might be appropriate for a neighbouring community. So this is building in a potential disconnect between communities that might be in the same area. I do not think it is even necessary to look at a subregional level, as even within the same town you could have conflicts building up. I think that is not necessarily a positive development.

Q99 Bob Blackman: Turning to the LEPs, do you think they can provide the leadership to enable this area-based regeneration to take place?

Kieran McNamara: Can I kick off on that? I am involved in a rather large LEP. It is about the size of Belgium: Kent, East Sussex and Essex.

Chair: Does it work better than Belgium?

Kieran McNamara: From our perspective we want to be very strategic as a LEP. That is speaking on behalf of the LEP, and I should not do that, but my perspective is that we want to be very strategic and only focus on two or three key things. Getting into the nitty-gritty, areabased regeneration would not be one of them. A focus on coastal regeneration and wanting to see local communities on the coast work together to develop a solution is something that we would be very interested in. But at that scale, in our context I do not think it is right for a LEP to be that engaged.

A colleague in Oxford has developed a phrase about rowing, steering and cheering. For a LEP there are a certain, limited number of things that they can row and actually be in charge of. There are things they might want to steer along the way, and quite a lot of things they will want to cheer from the sidelines. Area-based regeneration in my experience works when it is locally focused and locally driven. I am not sure that is necessarily right at a LEP level.

Keith Burge: One important point that we make in our submission that I would like to reiterate is this idea that LEPs relate to functional economic areas. That is an absolute myth. I doubt very much whether there is a single LEP in the country that relates to a functional economic area, and I have certainly never seen any evidence put forward by any of them to support that. I think that yours is possibly the only LEP that crosses a regional boundary.

Chair: Sheffield City Region LEP.

Keith Burge: Yes, in terms of the old RDA type boundaries there is not much crossborder activity, although there are little bits here and there. Certainly nobody has provided evidence for that at all. Essentially there were chats between chief executives and leaders of local authorities, who got together and formed LEPs. That is fine, but let’s not kid ourselves that they are anything other than a political construct; they are not based on any evidence.

Kieran is absolutely right. In terms of communityled regeneration, they have a very limited role and I think they are really looking at big picture stuff and more private sector related activities, and perhaps they do not have a huge amount of relevance within this particular context.

Q100 Bob Blackman: We have mentioned High Speed 2 as a capital project that the Government would encourage and may lead to regeneration. The Government’s view would no doubt be that introducing High Speed 2 would create hubs around the stations and termini to enable the private sector to invest. Do you think that is going to work?

Keith Burge: That may well be an effect that comes about. I am not sure how additional that is or whether it is simply sucking activity from areas that are less well connected. It may well be the enterprise zone effect in another form. Again, there is a distinct lack of real hard evidence to suggest that the purported headline economic benefits will genuinely flow.

Kieran McNamara: I think the answer is that we will have to wait and see what transpires. I would put that sort of development in a different box actually. I would not say that it is necessarily about regeneration; it is about infrastructure improvement to the country. I would not necessarily try to badge it as regeneration.

Q101 Steve Rotheram: As somebody who is pretty new to this process, I have found this absolutely fascinating, really interesting and informative. Unfortunately, as I have the last question, a lot of what I wanted to say has already been touched on, certainly in question two. I think I know the answer to this, but I have been given the task of asking it anyway. With regard to the impact of its approach to regeneration, do you think the Government has made adequate provision or should it be doing more? If it should be doing more, what more should it be doing?

Keith Burge: In a sense I will say some of the same things again. A lot of what is in this document is not what a lot of people, certainly our members, would regard as regeneration. As Kieran said, they are physical infrastructure projects. Another disappointment here is how you make things work for local economies, how you connect local people to some of the benefits that may well flow from some of these things, but they are not articulated in this document and I have not seen them anywhere else. The impacts will vary significantly depending on who you are and where you are. Much more needs to be done to maximise the impacts and connect people, especially in disadvantaged communities, to some of the benefits that might flow from some of these proposals.

Kieran McNamara: From CEDOS’s perspective, we would say this is a position statement. What is actually required is a somewhat more detailed strategy for regeneration for the country. This document does not do it, so I think the first step is a proper analysis of what has worked and what has not worked in the past, a very, very strong evidence base and then suggesting appropriate mechanisms for local communities to take forward themselves.

Q102 Chair: One thing we have not touched on at all is ERDF funding. I understand that there is quite a bit of it floating around the system somewhere because of the change in the value of the pound against the euro. Are you aware of any possibilities that that might now be applied, or is it the fact that the matched funding has gone away, so we cannot have the ERDF funding either.

Kieran McNamara: The evidence from our members is that it is a matched funding issue. The funding has just disappeared to match fund with the available finance. It is not just an issue of currency exchange fluctuations.

Keith Burge: It seems curious at the very least to our members that there are areas of the country where the Government can double its money with EU assistance, and through withdrawal of its spending it is missing out on the opportunity to leave that additional resource in.

Q103 Chair: Have you any assessment of how much money might be unused that could be used?

Keith Burge: Actually we have not, no.

Kieran McNamara: We have not. I may be able to get it from our members if you would like me to.

Chair: That I think would be quite interesting, thank you.

George Hollingbery: I would just like to come back because I feel that we have been a little more brief with you than we meant to be. The questions feel very similar to the ones we asked last week, although there was a different set of experts of course. I just want to ask: are you going to go out of that door now and say, "I cannot believe we got out of there without them asking x"? I want to know what "x" is.

Steve Rotheram: What is that difficult question that we did not ask you?

George Hollingbery: Nothing? Good.

Q104 Chair: Just finally before you go, and we will probably ask the next witnesses, who are planners, this same question, but is it all the planners’ fault that things have not worked in the past?

Keith Burge: How quickly can we get out?

Kieran McNamara: I would not necessarily blame the planners. I would describe it as there being some disconnects in the system, such as in terms of some of the examples I gave earlier about the emphasis on housing as opposed to economic development activity. I think there is a real issue around a disconnect between Government and national policy framework down to just a local ERDF framework, and ADEPT would say this as well in our joint submission of evidence. There is a missing link there cutting across boundaries, if you like at a sub-regional level, what might be called the county structure plan process. I think that is the missing link. It is not a very popular thing to say, but I do think that is a major issue.

Keith Burge: We certainly would not blame the planners and, by implication, do not see all the remedies within the planning system. Again, there seems to be an assumption that, if we relax planning rules, the private sector will dive straight in there, create all these jobs and regenerate these communities. I think that is a rather naive assumption.

Chair: Thank you very much for your evidence.

Examination of Witnesses

Witnesses: Dr Hugh Ellis, Chief Planner, Town and Country Planning Association, Paul Evans, Director, UK Regeneration, and Richard Summers, President, Royal Town Planning Institute, gave evidence.

Q105 Chair: Good afternoon and welcome. Thank you for coming to give evidence this afternoon and for the evidence you have already given us. For the sake of our records, could you just say who you are and the organisation you represent?

Richard Summers: I am Richard Summers, President of the Royal Town Planning Institute.

Dr Ellis: I am Hugh Ellis, Chief Planner of the TCPA.

Paul Evans: Paul Evans, Director of UK Regeneration.

Q106 Chair: Thank you very much indeed. You probably have a slightly different emphasis on this in the evidence you have submitted to us, but to what extent do you welcome the proposals the Government has put forward in Regeneration to Enable Growth?

Richard Summers: I think it is welcome that there is a document addressing this vitally important issue. Like some of the previous witnesses, we do not think there is enough substance to it. I would say that it is a bit like a truck that is nearly running on empty and the drive shaft is about to get disconnected. There are too many linkages that were working to enable regeneration to happen that have now fallen away or been removed or absorbed. Of course the economy and public spending cuts have reduced many of the resources that are available to achieve regeneration.

Dr Ellis: From our point of view we remain extremely reserved about it, particularly in relation to the evidence base. There is a great benefit to encouraging local participation in regeneration but the issues really are pragmatic and about workability and ultimately about resources. Our judgment at the moment is that we would need a great deal more reassurance that this framework was actually workable and effective.

Paul Evans: You will see from our evidence that we were a little more positive. Indeed it was the wonder that we had the document at all that encouraged us. There was a clear sense that, for the last 18 months, regeneration was in danger of being forgotten about entirely. We thought that even four pages were better than nothing.

There is also a logic to the proposition that, if you are going to adopt a policy of localism, you do not prescribe too much how you intend it to happen. At the time of the publication of the document, we said that there was a continuing challenge to Government, and we will come on to some specific challenges, which was that they had not articulated quite a number of the levels of detail that were needed to understand some of the critical issues.

There was also a more or less explicit challenge to all of us who had been involved in regeneration to pick up the baton that we had been longing to grab for so long and get on with things without the degree of central direction that we had chafed against for many years.

Q107 Chair: Would it be an unfair criticism to say that regeneration appears as the first word of the document but not much afterwards?

Richard Summers: It is either a combination of the word regeneration or its absence and the word communityled. I think a huge opportunity has been missed here in the proposals for localism and the way they are being translated into regeneration. There is an enormous disconnect between the proposals for local economic partnerships that are businessled at a sub-regional level and the new proposals for neighbourhood planning that until recently were proposed to be mainly resident-led at the less than local level.

There are a couple of areas in the country where planners and economic development specialists are beginning to find ways of joining things up. I speak of Greater Manchester and the West Midlands amongst others. The new local enterprise partnership for each area is producing an economic development and regeneration strategy. The local planning authorities, the constituent parts of the LEP area, are producing a joint strategy or joint core strategies for spatial planning so that there are opportunities for vertical and lateral connection, which can then feed through and feed up from neighbourhoods that are preparing their neighbourhood plans. Without that leadership in the legislation, I think there is a risk that the elements we have will fail to come together to achieve results.

Paul Evans: I would agree with you about the word regeneration, Chair. We spent some time doing word searches on Government documents to see whether it appeared, and very frequently it does not. In our evidence we said that they may have got the title the wrong way around. It should be How Economic Growth Supports Regeneration. One of the key points we have made, as colleagues have made before, is that the commonly accepted definition of regeneration is that it deals with improving the social, economic and physical conditions of those people who have the least quality of life in those aspects. That may be largely as areabased approaches, but it can also apply to individuals as well.

One of the things we are arguing for is that there needs to be that explicit statement that regeneration, which the Olympic Boroughs, for example, described as being about convergence, is an objective that we are all trying to achieve through whatever tools we have in the toolkit.

Dr Ellis: From our point of view it is about pursuing the scale of the risk. As TCPA is such an old organisation, it has the luxury of looking at things historically. I do not think there has been as much of a scale of risk post-war in the way that we organise regeneration and the impact it might have on regional inequalities for example. It is not necessarily that the document is in any way wrong; it is simply that, without any piloting of some of the core elements of it, there is a risk that mechanisms that have more or less attempted to combat deprivation and regional inequalities, with varying degrees of effectiveness, are now placed into reverse. The consequences of that could be extremely serious.

Q108 Heidi Alexander: In the last couple of months we have heard some quite senior Government Ministers refer to planners as a "particular impediment to growth", as the Business Secretary said. The Prime Minister refers to planners as "enemies of enterprise". Are they right?

Richard Summers: Chairman, we have publically taken exception to these comments about professional planners. We think they are entirely out of place. We are more than happy to discuss criticisms about the planning system, failures that it may have and ways of improving its operation.

Planners are not the enemies of enterprise. They are not the Town Hall bureaucrats who obstruct economic growth. On the contrary, they provide policies that are integrated across areas to promote both growth and regeneration. They provide land allocations to enable commercial and industrial uses to be developed where they are needed. They also provide a basis for co-ordinating delivery to make sure that things happen, so I reject the criticism. We are only too happy to continue our engagement with Government to help to make the planning system work better than it does and also to help its effective integration with economic development. I speak with 40 years of professional experience in both spatial planning and economic development in the public sector and the private sector.

Dr Ellis: We would support that. Planners have been accused of lacking charisma, and I may be the living embodiment of that principle.

Chair: Surely not.

Dr Ellis: Absolutely. The issue I see is very profound. What has happened is that we have got into reform by mythology. If you look across Europe, and at successful economies in north-west Europe in particular, they have systems of regulation at least as robust as ours if not more. If you look at the economies that are failing, their planning systems are more or less dysfunctional.

The planning process comes from a smart move to attempt to make economies work better. That is where we came from in the 1930s, and that conclusion stands the test of time. We have made mistakes, but the contribution of the planning process post-war has been outstanding to this nation in a whole variety of ways.

So the planning process and the planning ideals that lie behind it are still fundamental to a successful economy. More importantly they try to do something that is vital, and that is the mediation of competing interests and objectives in this nation in a way that is in the wider public interest. So planning will be fundamental to this nation. Unfortunately the position we are in now is that we are the only country in north-west Europe without an effective strategic plan for the nation of England at either national or regional level. I spent plenty of time reflecting on that from a totally non-partisan point of view, and every time I think about it it is a breathtaking conclusion, particularly in relation to housing, economic regeneration and, perhaps more importantly, the imminent threat of climate change.

Paul Evans: I am probably the only one at this table who is not a planner, although my daughter is, and I would endorse the comments my colleagues have made. In the end, planning is a tool by which the community, through its political representatives, decides what it wants to do. If it is decided that it does not want any houses built in that village, that is fine and the planning system will arrange it thus. But it is not planners who do that; it is the people who agree and determine the plans who do that-the community.

Q109 Heidi Alexander: There are quite a number of changes that the Government are making to the planning system, whether it be through the Localism Bill or references made to planning in the Regeneration to Enable Growth document. What do you think the accumulative effect of these changes will be on regeneration in some of the most deprived parts of the country?

Richard Summers: I am very concerned that, if you look at the different proposals being brought forward and the measures and organisations being taken out, the financial incentives and the sources of funding now being proposed through the localism process will work in favour of areas of prosperity where there is a property market. They will not work in favour of areas without an operating property market, where values have fallen or demand has fallen away. The consequence will be that, if you take New Homes Bonus as an example, and this also applies to enterprise zones, the areas where there is property market demand will be able to undertake the housing development or the commercial development, and that will attract the funding. The areas of market failure that need regeneration in its truest sense, and we can perhaps reflect on the definition of that, will almost by definition not be able to attract that funding because they cannot support the development.

Q110 George Hollingbery: That is not really true of TIF, is it?

Richard Summers: To some extent I think.

Q111 George Hollingbery: There are many different ways of skinning an economic cat. The rest of what you have said makes a great deal of sense, but with TIF there are different ways you can generate money through that than just through housing and the affordability of housing surely?

Richard Summers: The fundamental point I am making is that, taken across the board, the proposals that have been brought forward and the mechanisms that have been taken out are likely to operate in favour of more prosperous areas and not operate in the favour of disadvantaged areas.

Dr Ellis: The study that we commissioned in conjunction with the Joseph Rowntree Foundation of the New Homes Bonus, housing benefit and housing policy reform supports Richard’s point very strongly. It made comparisons for example between Liverpool and South Cambridgeshire on New Homes Bonus, both of which now yield the same amount of money. The New Homes Bonus is also being very thinly sliced; in announcements it is being identified across a variety of issues to support everything from social housing to paying for playing fields.

New Homes Bonus and Community Infrastructure Levy in section 106 are financially regressive mechanisms. They yield most in high development value areas. Now they always have done so in relation to 106, but the institutionalisation of that principle in the New Homes Bonus is very problematic. Again, as the previous witnesses said, it is topsliced so there is no additional money here, apart from £200 million from CLG that was in support of planning up until this year. So that is very difficult.

What worries me again, looking back, is that from the moment we instituted urban policy in the 1960s, we have never reached a point where we have created financial mechanisms that risk reinforcing those structural inequalities that have existed in the nation for the last 80 to 90 years. We have always attempted to mediate those conditions. If this is a grand experiment, the potential impact on northern cities in particular and low-demand areas is profound. What worries me in regeneration terms is that the lesson seems to be that regeneration is a long-haul, long-term investment in communities. The damage that could be done in five to 10 years by a lack of investment could take 20 years to put right.

Paul Evans: We have urged the Government that it needs to add up these numbers. I agree with colleagues there is a tendency for a winnertakesall process to emerge from this. We need to understand, because the residual role that the Government is holding to itself in this process is really two-fold, one of which-the metaphor it likes to use is a toolkit-is it is going to create all the tools, so there will be things that you can do in many places according to the local circumstances as you desire. The principal thing that lies behind that is that they have the ability, through their different mechanisms-including, most significantly, the Local Government Resource Review-to decide how much financial capacity those areas will have to get out their spanners. So it is no good having a toolkit of nice shiny spanners if you have no mechanics to get hold of them and use them.

Those of us who have been engaged with questions of local government finance for too many years, as I have, know that there is a deep and wondrous trap opening up in which there will be a review, and the answer will be that it is too difficult, because that is what it usually is. The consequences will come when you take the distribution of the special purpose funds, which by and large are being withdrawn and to some degree replaced with one or two items, and in the way in which all these mechanisms will work. There is a question of whether we are about to support development and growth, and therefore economic growth, in those areas where economic growth is most likely to happen, and whether that will produce increasing disparities. Now there are ways of doing something about that, but they are quite complicated and people need to understand the forces that are going on and take an overall view of them.

Q112 Heidi Alexander: In terms of the neighbourhood element of changes to the planning system, such as neighbourhood forums and neighbourhood plans, what is your assessment of those in relation to getting comprehensive regeneration schemes off the ground? Do you think it is going to make it easier or harder?

Richard Summers: Initially the idea of a neighbourhood forum was that it would be a group of people who live or want to live in a particular neighbourhood area. It started out being roughly the size of a parish council area. More recently there has been a response to calls from the RTPI and from others to include businesses in local neighbourhood forums.

These groups do not have the skills, experience and resources to produce neighbourhood plans for themselves. The Royal Town Planning Institute’s Planning Aid England service has recently been successful in bidding for the new fund to provide support to the preparation of neighbourhood plans. That will help areas and individuals that do not have the resources to bring in professional support.

I think it will be very difficult for people to grapple with the enormous complexities of regeneration projects at a local level through that means. They will need support from local authorities, planning aid and local enterprise partnerships. The point I made earlier is that those elements are not properly joined up to provide the support at the moment.

Dr Ellis: I would add that the drive for community planning is an aspiration that we have had in the planning process for a very long time, and we have delivered some of it as well. The difficulty with the neighbourhood planning process outside parished areas is that, even with the amended Localism Bill, it is still essentially dysfunctional for a couple of reasons. First of all, because it is not democratically accountable it has no corporate entity and it cannot spend any money in unparished areas. So how would it manage regeneration, how would it spend CIL assuming it was there to spend? If it did begin to try to spend money, it would then have a burden placed upon it about whether or not it is accountable, and whether or not anyone has voted for anyone on these forums becomes even more of an acute question. That really does need to be solved. The fundamental question about local regeneration should have been: what is the lowest tier of local democracy we want across England? Sound plans for good community planning and regeneration are then built upon that.

Paul Evans: I would only add one thing to that, which is to reiterate something that Michael Gahagan said to you last time, which is that there is very little experience that formal land use planning has ever got in the way of regeneration processes. My experience is that, when people in a local community are pretty clear that something has to be done, they hate the fact that you have to go through two, three, four or five years to write a plan to do it; they just want it done basically. Whether this will provide a vehicle where people can get together and, as it were, make it so rather quicker, I do not know. I would caution against making that a key issue in relation to estate regeneration or small scale areabased regeneration. There are other issues about neighbourhood plans and how they work I am sure, but I would not make that a major point.

Q113 Heidi Alexander: Okay, my last question is to Dr Ellis. In either your evidence or in the Joseph Rowntree report that you referred to, you referred to some specific concerns about Housing Benefit reform and the Affordable Rent initiative. I just wondered if you could just explain to us what your concerns are about that.

Dr Ellis: As I said, the report tried to put together the potential changes there are in reductions of benefits, reductions to investment in social housing, and whether or not that created a demographic change. A very quick summary of it, particularly in London, is that the reduction of affordability of boroughs falls from about 70% being affordable now to 40% or 50% next year as a result of benefit changes and then, beyond that, it becomes more acute. One of the important joining-ups on regeneration that the report really highlights is that, if you create major affordability problems through benefit changes on housing, those people will then live in the lower rent areas they can find. That potentially creates an amalgamation of poverty and social exclusion. Every attempt, as a principle of regeneration and planning, has been to try to create mixed communities where there is opportunity for social mobility.

Those kinds of changes are not just in London. They spread out from London, and there is also the issue of where people displaced from London might live. I think we can rightly say that we are desperately worried about the consequences of that in the absence of strategic planning. We are worried about which authorities have to act as receptors for those displaced communities and about the shape of the future of urban regeneration. That is partly because, as I say, we have spent all our efforts since the 1960s trying to avoid that outcome.

Richard Summers: May I just add something to that? I have worked on a number of regeneration projects on the south and east coast of England where there was clear evidence that disadvantaged people were being moved out of London either to bed-and-breakfast accommodation or other accommodation in old holiday towns. This was actually adding to the problems of regeneration in those areas. So it might have made things easier in the source area, but it was making things worse in the destination area.

Q114 David Heyes: Earlier you made the entirely logical point that, if the Government believe in localism, it is right that they do not prescribe too much about how it should happen. Given that, how can the Government ensure their localist approach delivers effective regeneration?

Paul Evans: We have been very clear about this. If you subscribe to the tenets of localism, you subscribe to the view that things will happen in different ways, to different degrees of success in lots of localities. At one stage we said to Government that they must not allow people to utter the words "postcode lottery" any more. That is the antithesis of saying that people have made genuinely different choices about the way they want to do things. That is fine when we are saying: let us use this particular tool to tackle this particular problem as we perceive it, and we are better at understanding it in our locality than you in Whitehall or in the region would be. Where it is less satisfactory is that Government must not abandon their role to understand whether both the financial and other capacities of that locality are up to the challenges of dealing with the problems that it faces.

Q115 David Heyes: That would be much wider than the DCLG, and localism is their creature, isn’t it? The amount of signup from other Government Departments is an issue that could be debated.

Paul Evans: It is quite notable that in the evidence they sent to you, they said that other Departments subscribed to this. I just observe.

Q116 David Heyes: Okay, the way you said it was good, but expand on the point.

Paul Evans: As with some of your other witnesses, I have had experience of almost all variants of internal organisation of Government in relation to regeneration. Mostly it lived in CLG and its predecessors. Occasionally, when the Prime Minister was feeling really stern about things, it would be dragged towards the Cabinet Office a little and every other Department was then beaten up by the Cabinet Office and the forces of Number 10 to subscribe to all sorts of things. That led to very, very, very long documents, in which every Department would lay out all of its policies with the word regeneration inserted at strategic intervals throughout. I speak feelingly, having had to be the editor of one of these. That is fine because there is a sense of cohesion around these things.

The real trick is that you cannot trade off at the level in Whitehall between those policies. You can do certain things that prevent them from being antagonistic to each other and you can prevent them from being straightforwardly at cross purposes or doing the wrong thing, but you cannot at that stage decide that in Sheffield or Hampshire the particular combination of those things coming together should be like this. Various other things were done, but it is critically necessary that the Department of Geography, which is what I used to call CLG, and the Department of People, which is DWP, and the Department for Education, which only ever believes in centralisation, should all at the very minimum come together and understand how far they are releasing the boundaries. If you believe that you are instituting localism, in which you are putting your local players in those policy areas into a room and saying, "Sort it out amongst yourselves," and one or other bits of the central machinery says they can only do it within this framework and report on these 35 measures, then you have lost the plot.

What has to happen is that you have to take a very deep breath and let go, and you do not get any credit at Central Government level for the successes. So that is why the politics get a bit messy.

Q117 David Heyes: Your colleagues will want to add to that.

Richard Summers: I am afraid that there is a fundamental difficulty here that the Department for Communities and Local Government and the Department for Business, Innovation and Skills do not speak the same language-it is like Latin and Aramaic-because they come from such completely different points of view. The reason for my comment earlier was to suggest a way in which the present proposals could be joined up, and that was to enable them to dance together more effectively than they do.

The previous witnesses were saying that the planners are only concerned about housing and the economic development specialists are only concerned about business. That tells the story for you. There are ways in which these can be joined up and it has been shown successfully in many areas, both at the old regional level, at sub-regional level and particularly at local level. If the local enterprise partnerships were put in a position where they were obliged to consult with the local planning authorities in the area, and vice versa, they could come to strategies and policies that would fit together. They could promote and support projects in chosen parts of the areas and work with the local communities to make it happen. At the moment it is not joined up.

Dr Ellis: I would just add a quick practical example to that. The drive to localism has been clearly set out in the world of planning, but there are some quite extraordinary contradictions appearing. One of these is the consultation on change of use, which removes from local control a vast variety of very, very important planning decisions from local people. That contradiction is in the plan for growth and that desperately needs to be sorted out with the provisions of localism in the way it has been described. What is also interesting about the role of planning in that is that DCLG’s own figures indicate that we have some of the highest rates of lack of occupancy of commercial premises in north-west Europe. In other words, we have plenty of premises out there, so the planning process certainly cannot be blamed for that.

Q118 David Heyes: Earlier you touched on the question of legitimacy of voluntary and community groups getting involved in delivery. Can I get you to expand beyond that, and discuss the broader issue of capacity of the voluntary and community sector to play a bigger role in this?

Dr Ellis: I have to be careful here because the evidence is very variable, and capacity will be a major issue in many of the ex-industrial communities of the north. There is a fundamental issue with parish councils; as an ex-parish councillor, you can love them or hate them, but they are constituted with a chequebook and a constitution and with certain duties. That means that they could take these functions if they wanted to, and indeed the Localism Bill will give them quasiplanning powers of a very powerful kind.

For other communities the only real change that has happened in the Localism Bill is that it is no longer three people in a neighbourhood forum; 21 people now need to be in a neighbourhood forum. I come back to this point without having an answer to it, but urban regeneration and urban life is extraordinarily complex, and applying simplistic lines to it is dangerous. Localism has an element of that problem built into it. If 21 people come together in a highly complex area in London with competing groups, how would that group be recognised as legitimate versus four other different community groups who also wish to take that role? Local government is charged with sorting that out and judging between these varying, competing groups and anointing one as a neighbourhood forum. That is fraught with hazard. The great thing about the electoral process is that it would resolve that problem.

Paul Evans: There have been some examples of that in special purpose regeneration programmes, where there has been huge debate as you get to a local area, particularly for something like the New Deal for Communities areas, about what the legitimate representation of the individuals there is. A lot of effort was put in to try to ensure that, whether by election or by other sorts of methods, people had to come forward in a way that to some degree was representative. It has proved very difficult and I have certainly sat alongside local councillors who say, "Isn’t that what I am for, because people voted for me?" You have to have some feeling for that in that they do actually lay out a programme, or at least their party lays out a programme, which tries to set out what they want to do for the area, rather than having a potentially-and this is where nimbyism comes in-oppositionalist view to something that is being proposed in a particular patch.

Richard Summers: May I add briefly to that? We are led to believe, although it is not clear in the wording of the Localism Bill as it currently drafted, that neighbourhood plans should be in conformity with the local plan-the local development framework-and that they should also only propose development that is additional to the development that is proposed in the local plan.

The Royal Town Planning Institute wants the wording of the Localism Bill to be tightened in those and other respects. That is an example of how greater clarity is needed to enable these arrangements to work. Another one is to make sure that the neighbourhood fora consult everybody in their area, their adjoining neighbourhoods and the local authority in whose area they are operating to make sure that they are working, if not all on the same wavelength, at least not in opposition to one another.

Paul Evans: One of the striking things in quite a number of regeneration programmes is the extent to which local effective activity has been mobilised by saying to people that it is their patch and they need to do something about it. Groups of people come together and some strikingly successful individuals have emerged from that process, demonstrating that there is capacity to be found in these places on all sorts of occasions. That does not quite deal with the legitimacy and accountability point, but I think there are surprising levels of capacity to be found in some areas about tackling some problems.

Q119 Chair: That leads nicely on to the issue of skills and capacity. Last Parliament we did an inquiry into planning skills and concerns over those. Also reference was made to the fact that, in a fairly short period of time, you are undoing years of work and it may take another 20 years in regeneration terms to recover from that. Is there a concern now over the people skills in the regeneration business, both in the public and private sector? We might lose what has been built up over a period of time and it would take an awfully long time to recover.

Richard Summers: Mr Chairman, there is very serious concern about that. We are seeing the experience and skills of the people who worked for the Regional Development Agencies unravelling in the same way that we have seen the strategic skills of the people who worked for the Regional Assemblies unravelling. It will be difficult to find those skills and bring them together again. I am sure people will come forward if the need arises, but there is a great depth and richness of experience across the country dealing with the whole range of issues that we have been discussing, not just the development aspects of spatial planning, not just the economic growth aspects of regeneration but a whole range of issues including skills, local community wishes, environmental concerns, climate change and the rest. There is no way I can see that the majority of those skills will be retained or their experience fed into the arrangements for the new local enterprise partnerships and the new neighbourhood fora.

Dr Ellis: We are equally worried about the loss of skills, particularly when funding becomes even more challenging. An example of that would be that, if you are serious about significant regeneration or trying to put in CIL, 106, New Homes Bonus, or matched funding perhaps for a regional project or another third sector source, that seems to require almost the highest possible skills base in those places that need it. From everything that we are seeing that is being lost at quite a breathtaking rate.

Paul Evans: We recognised this and made some comments on it in our evidence. I would slightly change the terminology because yes, there are skills and there are people and they are valuable and they know stuff. But there is also a substantial body of semiformal experience and knowledge that is at risk of being lost. Partly that is because of the speed of change, partly because of the fact that many of the bodies were not fully within the public system and subject to the normal statutory duties about retaining information and so on. We have taken some steps and will be talking to colleagues across the sector further about whether we can provide some places, and particularly electronic resources, where people can bring this knowledge and skill together.

We do have to find ways to make use of individuals’ skills, because as well as this being a moment when there are significant shocks in the system, it would in any event have been something of a generational change. Perhaps that is simplistic, but the urban regeneration community is building itself up over roughly 30 years as a working lifetime and quite a lot of people, even without these changes, would probably have moved on. We know from the work that was done previously that there has not perhaps been a build up of those replacement skills in younger people and people who are learning their trade as they go along. Again that would be more difficult, but it is something that we all have to look at to see how we can make contributions to capture particularly the best practice, and even the worst practice occasionally, and transmitting it.

Q120 Chair: Is this problem part of the private sector as well? Is there any evidence that we are losing these sorts of skills in the private sector as well as in the public sector?

Richard Summers: Certainly. It goes without saying that in a recession where the rate of development and the property market is contracting that there is less work around for consultants to do, and the consequence of that is that the consultants are losing their jobs and the same kinds of problems apply. Regional Development Agencies and Regional Assemblies were significant sources of consultancy commissions for the private sector. They no longer exist and the funds in the programmes are no longer available to commission that work.

Dr Ellis: I agree with that.

Paul Evans: I think the development industry is more used to mobilising skills around projects. Typically in a development company you would have a relatively small core, which is then brought together with expertise from elsewhere. Clearly, if that wider network of expertise is thinning out, that would be more difficult, but in terms of project focus, given that there is less to do, there would probably be enough people to do it. But that is not a good recipe for the future; we should have a much more solid base of knowledge and experience that is maintained.

Q121 Bob Blackman: The Government will be saying that the New Homes Bonus will lead to the development of more housing, that the Community Infrastructure Levy will enable the structure that we need for regeneration to occur and that the possible retention of business rates will encourage local authorities to develop businesses. Taken overall, what do you think the impact of these three particular possibilities is going to be on regeneration?

Richard Summers: I do not think that the impact will be sufficient to deliver the scale and complexity of regeneration that will be needed. I think that need is going to get more important as the recession continues and as public spending cuts bite. There is a logical non sequitur in these propositions, which goes back to the criticisms of the planning system. There have been claims that the rate of house building, and more recently the rate of construction of commercial and industrial premises, has slowed down as a result of the complications of planning policies and planning control. Actually, we are in a recession; the development industry is in slack, so no wonder there is a slower rate of development. As I said before, that applies to many of these mechanisms that are now being proposed. If development projects are not coming forward because there is a lack of demand, there will not be the Community Infrastructure Levy contributions, there will not be the section 106 planning agreements and the other sources of funding. I remain to be convinced that the New Homes Bonus will have a sufficient effect on bringing forward development if the market is not there.

Dr Ellis: For reasons that I covered earlier, I think the New Homes Bonus is very problematic. Fundamentally neither the New Homes Bonus nor any of those other measures have any direct relationship with regeneration necessarily. They are all funds that could be used for anything. The New Homes Bonus is much more likely, certainly in those authorities that are struggling, to be used to support core services than it is to be used for regeneration. So far I know of only one example, in Blackpool, of New Homes Bonus being used as a regeneration initiative. It may well be that there are others but the yield from both of them, as we have already established, is regressive. So in that sense the scale of the challenge is going to be difficult. Liverpool lost £110 million housing market renewal in areabased grants, it loses a top slice off its direct grant and receives back by year six only £5.2 million.

Now, if you look at some of the other places, like South Cambridgeshire, they will see the New Homes Bonus as a very powerful driver and they will be able to do some very positive things with it. But it will not be regeneration, and that will be the issue. In terms of CIL and 106, we are also quite worried about that. Those are partly regressive as well, but we also need to ask what the purpose of Community Infrastructure Levy is. Is it providing new infrastructure for new development? Is it an incentive to get communities to accept development? The Government seems to be evolving CIL into creating a percentage to come from that. I certainly know the private sector is concerned that, if you slice too much off CIL, you cannot produce the infrastructure that you need in the first place.

The additionality question is important, which was a point made powerfully by your previous witnesses, but it is also very important to us. If communities want to accept development, the idea was that their public services would be sustained and enhanced through new and additional money. If none of this is new or additional money but money removed and reallocated, where is the additionality that might help people change? So you even face the potential perverse outcome that southern authorities could build less housing and get more out of the New Homes Bonus. The New Homes Bonus is not related to strategic planning at any point; it does not connect to the planning anywhere. So all that Liverpool can do is walk away from urban regeneration and look to greenfield sites on its periphery, hypothetically, in order to maximise its receipts from the New Homes Bonus to spend on core services. Now that may be a nightmare scenario, it certainly is for me personally, but that would set regeneration ideas back almost 60 years.

Paul Evans: The impact assessment on the New Homes Bonus suggests that it would make a difference of less than 10% in the total volume of house building in the country, as I remember. It is about growth and development; it is not really about regeneration as we began to define it at the beginning of this conversation. There will be conjunctions, whether it is Blackpool or somewhere else, I do not know, where new development is possible and desirable and then generates some money that can be devoted to things that we would call regeneration.

This is why I go back to the point I made earlier, which is that the sum of all of these effects needs to be mapped and modelled so that we understand what is going to happen and where the benefits are going to come about. Leaving aside the shock to the system from the deficit reduction programme, if you were drawing in a straight line along from future funding we need to see whether those things will allow people to take decisions that they can then see are in the benefit of their areas and do produce some money to deliver services. The problem is that, however you make the system come out with rather difficult regulations and complications, it is all fuelled by the growth of the land value underneath the developments that you are promoting. If there is no growth in the land value underneath the developments you are promoting, it does not matter how many ways you call it or cut it, you have not got anything.

Q122 Bob Blackman: In your written evidence you are calling for much more assessment to take place. What sort of assessment and how detailed do you think this has to be?

Paul Evans: I would just like a little table really that says: in year two, beyond where we are now, there would have been this much to start with; now we have added these things, and there is this much. I have been trying to do some of it, and if you do some calculations on the New Homes Bonus, what effectively happens is that a small number of places where a very large number of homes were built a couple of years ago win very big, and a large number of places lose relatively small. That is the nature of the arithmetic; one gets a lot and it gets topsliced off lots of other people.

Now in the big scheme of things, with the numbers you were quoting about other sources going away, maybe we are worrying too much about this and dancing on the heads of pins. But it is one of the key tools that has been offered. Maybe we should just accept that it is an incentive to build more new houses in places where more new houses are needed and that will not necessarily produce estate regeneration in Middlesbrough or wherever.

Now, you may be coming on to this but it comes out at this point: we need to understand the total picture on housing much more clearly than we do at the moment. There are two or three major things, which colleagues have partly referred to, in relation to the changing of the social housing structures and the changing of the social housing funding. I do not see how it all comes together into a picture that will deliver estate regeneration and separately a share of a local social landlord. We were lucky; we got the HCA to put the money in the bank the day before the financial year before the change of Government. If we were trying to do it now, we would be in much more difficulty because the models are in some difficulty. You can take a political view, as no doubt some of you will take, as to deficit reduction trumping regeneration need, or whatever the balance is that is going to be struck, but I think it should be much sharper and clearer as to what the choices are.

Q123 Bob Blackman: I visited Liverpool quite recently and I saw large areas of housing that might be useable-I do not know. I do not pretend to be an expert on those houses, but clearly they are boarded up and not being used and there is a problem there. Do you think the Government has it right in this respect? What changes need to be taken to get those houses either cleared and replacement housing put in place or brought back into use if it is possible?

Dr Ellis: The structural problems that Liverpool faces require large-scale, comprehensive redevelopment. There is no reason why the governance of that cannot be strongly community based but it requires major public investment and major public-private partnerships. Whether you think the previous attempts at regeneration were wrong or right, the attempt to understand housing markets and restructure housing markets was an attempt to solve that problem. If you turn that process off halfway through, the grating of the gears in places like Liverpool, where the money is essentially very quickly largely withdrawn at the end of the financial year, creates a dilemma for what we now do with those places. Because of the lack of overall money and the lack of a narrative about how you might deal with that scale of challenge, it seems to me that the future of those places is potentially very bleak.

Q124 Bob Blackman: Okay. I just want to move on to the private-sector investment. The Government would say that they are creating an environment through tax increment planning and the LEPs where the private sector will come and invest. Is that sufficient to make the private sector invest? What else have the Government got to do?

Dr Ellis: If you take Liverpool as a case study, the previous witnesses talked about basics. There are basics in Liverpool about infrastructure provision that you would need to get right that require strong investment. TransPennine Express, rail grades to the port, all sorts of investment that is really basic in terms of the operating of England as an effective place. All of that needs to happen, as well as the kind of market restructuring that you would need to make to put that in place. Liverpool is quite a success story up until now at achieving quite a lot of that, as you can see from the regeneration that has already taken place. I honestly cannot see-not because it is not there but the evidence might not be there-that what we have lying on the table right now on locally based regeneration deals with any of that, or that there is an overall narrative across Government Departments that that investment would take place, and that requires a narrative for England. That requires a whole range of infrastructure plans and different programmes to be joined up to create a vision for England at least over a 50-year period and a spatial plan to back it up and deliver that kind of change. The one point that is really important, and was nailed by the Royal Commission on Environmental Pollution before it was abolished earlier this year, is that, even if you think it is a good idea to build and concentrate new development in the south east of England around the golden arc of economic growth, you have a problem. That is that, for example, you do not have enough water; you do not have enough basic infrastructure; and you do not have enough environmental capacity to do it without limit. You can certainly do it to some extent, but you cannot do it without limit. So putting all that together means that we have to make England work as a whole.

Richard Summers: Can I add to this about the Government’s proposals for a national planning policy framework? The RTPI has been campaigning for a national spatial plan for a long time, and we are very pleased to see something beginning to appear. We are concerned on a number of points, two of which are foremost. One is that it may not turn out to be spatial-the geography of where activities and investment need to happen in relation to one another, so that you have houses and jobs occurring in the right place and transport joining them up. We are also concerned that there will be a less-than-comprehensive spread, and Hugh was quite rightly talking about the economic dimension of this. If it is only a national planning policy framework in the way that Government thinks about it-putting it in separate boxes-then there is not any indication at the moment that it will be connected to the idea of rebalancing the economy in areas that we used to call regions, dealing with the issues of social equity and disparity. There is huge opportunity here that could be taken to make those connections to set the context for what the Government sees happening at the local and neighbourhood levels. I hope the Government seizes that opportunity and takes it forward.

Paul Evans: I would subscribe to some of that, although I would not necessarily say that it has to be captured in a single national plan. If you characterise both planning and regeneration as in effect trying to stop the market doing what the market wants to do and make it do it somewhere else, which broadly speaking is what we are about, the fact that you have written a rather nice plan with some diagrams that show that you would rather have things in the north of England rather than the south does not necessarily cut it.

As I am very old I keep teasing people by using words like industrial development certificates and office development permits and things, but I do not get any traction on that. What is it that would actually mean that we would get a genuinely different approach to the attractiveness of places for investment in different parts of the country? I think there are very deep-seated issues around that, and there are very deep-seated issues around the fact that we are an astonishingly slow country in terms of refreshing and renewing both our public and our private infrastructure. I depress myself sometimes by doing calculations that show that, at the current rate of building, every house that we all live in has to have a life in excess of 1,500 years, because that is the rate of rebuilding that we are into.

On the other hand we are capable of making very radical moves on some occasions. The new towns were perhaps one of the great triumphs of TIFs before their time almost, because they paid off their money 35 years early. There are bold steps that could be taken that might make these larger geographical differences. I notice that Julian Dobson did pose the very hard questions that most regenerators get to at some stage about whether there are some places that you cannot actually get to. He quite reasonably said that there are no such places, but you have to recreate and link them to a different way of thinking about economic change, development and localising the growth. So it is not about relocating large steel plants; it is about making sure that the local economy of these places works much more effectively.

Q125 Bob Blackman: I have one final question. There was a challenge at the beginning about whether planners were in the way or not. Richard and Hugh, could you give me one example where planners have aided and abetted a regeneration scheme and made it happen, to demonstrate that planning is important in this process?

Richard Summers: Just to take one scheme off the rack, I would think of Hartlepool in the north-east, where significant regeneration was achieved in an area where basic industries, including shipping and port activities, were declining extremely fast. The private sector worked with the public sector through the regeneration mechanisms and the planning mechanisms of the time to secure redevelopment and renewal of the city centre and the harbour area. That was almost against the economic trends of the time. So it can be achieved, and I could suggest a number of other examples too. Hugh has probably a string of them.

Dr Ellis: Well there are certainly many inner-city regeneration schemes in places such as central Birmingham that are real tributes to regeneration and planning working together. Let me make one point about the divided nation. We essentially have two planning systems in the UK: one for the south-east and one for the rest. I remember with planning in the north you could almost get planning permission for anything anywhere in most of the ex-industrial north. One example would be the MEGZ just south of Sheffield in north Derbyshire, which is a huge inward investment site that is largely still unoccupied. Planning is not in the way; it is sitting there saying that it has allocated all of this, there is nothing on it that is a restraint, most of it has been decontaminated and there are still issues about development.

What we have to deal with is the fact that, while we are struggling with all sorts of other issues in the south-east about congestion, we have all this opportunity. It is very positive opportunity and would also solve all sorts of other very profound social justice issues. You could happily build five new towns to a very high standard, and I can think of places to do it. As you rightly say, they do not cost the state anything as they pay for themselves. All it requires is to have a vision for England that makes it happen.

Paul Evans: I would not easily separate out the contribution of the wider regeneration processes and planning in those places being successful. I would say that we should not be too downbeat about the fact that over a period there have been successes in a number of places.

The history of regeneration policy is by and large that we have tackled the last shock and maybe we have tended now to be in a position of fighting the last war rather than fighting the next one. In the end, things like UDCs did actually mean that quite large blank areas of land or Schedule 4 areas of land that were decaying did gradually come back into use. It takes a long time; it never happens as quickly as people think it should. We looked at a number of SRB projects, and they made some impact, particularly on the social and economic quality of life in some places. I think we are worried about these larger forces at the moment. If you have a reasonably prosperous town and you have one place in it that you think you need to do something about, the chances are that you will still be able to do something sensible about it. It is when you are fighting both the local and the more spatially widespread, ranging up to national forces, that you are really going to be fighting a difficult battle.

Q126 Steve Rotheram: Without that vision or that strategic plan that you just touched on, how do we address the demonstrable mark of failures in areas such as Liverpool? You mentioned the HMRI programme, Bob, and I know you went to see it but it is good to actually tease out a case study, because you can physically go and see the result of the policy the Government are introducing on areas like Anfield and Breckfield. How do we address that when the private sector simply will not take the risk?

Dr Ellis: It is very difficult, and I return to the answer I gave earlier: you cannot redress that market failure without a very strong partnership with a public-sector initiative. It would be great to be able to find a get out of jail free card for the current environment that said that there was another option, but the private sector has removed itself from Liverpool for various reasons and the public sector has filled that gap to some degree.

It seems to me that drawing down the public sector in that environment creates what I would regard as an element of US-style policy. That is the ultimate fear: you end up with the hollowing out of cities. In the 1960s that was a very real fear here and there is a lot of literature about it. I am not suggesting that you end up in Detroit, where you reintroduce agriculture to the central area of a major urban city, but they have lost upwards of 50% of their population. In an area as confined and small as England, you cannot afford for that to happen. There cannot be anyone left up the mountain. All urban areas have to be made to work. That is not just from a social justice perspective but just from a workability, pragmatic and economic perspective about how England operates. So unfortunately at some point we will have to have a return to the issue of large-scale regeneration in Liverpool.

Q127 Steve Rotheram: There is a very good book by somebody called Michael Parkinson that I would recommend.

Richard Summers: We have some very serious questions about funding these regeneration projects, whether they are small and local or large and complicated like Hugh has been mentioning just now. I saw reference in the proceedings of the Committee previously about gap-funding. That helped to bridge the gap between what was viable for a developer and what funding was available from the value of the land and the cost of the development. That mechanism was narrowed by the state aid rules of the European Commission for good reasons but with difficult consequences. Some of the Regional Development Agencies in recent years have begun to find ways of forming the publicprivate partnerships Hugh was referring to that would help to bridge the gap without crossing the state aid rules. We need the financial resources to do that, we need the mechanisms to do that and we also need the professional skills to make it happen.

Paul Evans: I just want to say that, if there was a magic bullet, I think we would have all been very pleased to have found it by now. I would go back to my point about adaptation. The skill we have to acquire is to get the rate of adaptation of places to either short-term economic shocks, such as the coalfields and the ports, or to these long-term twists of the economic fortune of places, so that we get the adaptation to work continuously. We tend to think that regeneration is a thing that you do and then it is done, and it is actually the permanent business of adapting places successfully.

Richard Summers: Good point.

Q128 Chair: Putting yourself in the place of a tabloid editor, if you had one short phrase to attract your readers’ attention to describe the Government’s regeneration document, what would it be?

Richard Summers: It is not joined up.

Paul Evans: It is a work in progress and they need all the help they can get.

Dr Ellis: I would support that view.

Chair: Okay. Thank you very much indeed. It has been a very interesting session.

Prepared 1st June 2011