Examination of Witnesses (Questions 200-219)|
TUESDAY 5 MARCH 2002
200. Regions differ, do they not? Do you think
gap funding is needed more in some regions than in others?
(Mr Smith) Yes, undoubtedly.
201. Which ones?
(Mr Smith) The North East; the North West; Yorkshire
and Humberside; West Midlands; bits of the East Midlands which
do not qualify such as Leicester at the moment, which is not an
Assisted Area; bits of the South West. Actually, gap funding tends
to be needed in very localised areas. Although you can generalise
and say the South East by and large does not need much in the
way of gap funding, and the South West does not either, there
are pockets of deprivation. In fact, there is one huge area called
Cornwall, there are places like St Paul's in Bristol, and there
is the whole of Leicester. So although you can make sweeping generalisations
as far as some regions need more gap funding than others, the
gap funding issue is a much more fine-grained issue than regions,
and it is much more fine-grained than Assisted Areas.
202. Given this different level of need across
regions, do you think the RDAs should be given discretion as to
which schemes they operate in which area?
(Mr Smith) I do not think that the RDAs should be
operating this scheme. If you are saying should they be
given discretion, if you are talking about this particular scheme,
I do not think the scheme is good enough. They should be given
discretion, but to operate a much more flexible and generous scheme.
203. Do you think there should be an element
of democratic accountability? Are they in a position to make up
their own minds?
(Mr Smith) They can make up their own minds as RDAs
with or without accountability as far as their target areas are
concerned, their broad strategy as to which areas they want to
assist and which areas they do not want to assist. It is beyond
our remit to say whether RDAs should be democratically accountable
or not, but having gone for those areas, I think they ought to
have a flexible scheme within those and permit everything that
fulfils their criteria coming forward.
204. Your memorandum mentioned something called
"value engineering", which is a new term to most of
(Mr Smith) It is a horrible term! Management consultants
205. Can you describe what it is and why you
think it is harmful?
(Mr Smith) Bending a scheme to fit a grant regime
or whatever other regime is about. For example, a local authority
might, if it wants a scheme to come forward, be persuaded to grant
planning for a scheme it did not really want in order to increase
the profitability, shall we say retail to subsidise employment
space. Under the old PIP scheme, they could have just said, "No.
It is employment space and we will give you a grant."
206. Under any scheme certain parameters have
to be met. Are you not just complaining about something that would
always be there in one form or another?
(Mr Smith) Because the rules are tighter, the need
for value engineering, where we are bending the scheme, is going
to be that much greater.
207. Is the true point that you are making then
that the range of schemes you can produce has actually been severely
(Mr Smith) No. That is something else. The range of
schemes that you can produce profitably and that you will produce
has been severely curtailed.
208. You made the comment earlier that the RDAs
were now looking more to economic development than urban regeneration,
but do you not think that the main purpose of RDAs is economic
(Mr Brown) Yes, I think that is right. I think that
is what they are for, and that leaves a big gap. Who is going
to do urban regeneration if it is not the RDAs? We are awaiting
with interest the review of English Partnerships, because we have
identified this gap, a government agency to enable the process
of urban regeneration, and we feel the review of English Partnerships
gives government the ability to think about that gap and how best
to address it.
209. Do you not feel that if English Partnerships
were given a new remit, that would distract from the integrated
approach the RDAs are charged with developing?
(Mr Brown) I would much rather the RDAs were doing
it. I was a big advocate of RDAs in the first place. I believe
they should be democratically accountable, as it happens. I would
like to see strong regional government with a strong executive
and the ability to do urban regeneration properly, but it is not
happening, and I regret that it is not happening. But because
it is not happening, I think we have to do something about it.
210. But you are also implying that in fact
they have so much to do that it is not going to happen.
(Mr Brown) Absolutely, yes.
211. Is it really also right to refer to strong
regional government? Is there not a problem in this that the RDAs
themselves at the moment are too remote? Surely, if you are going
to do urban regeneration within, say, Liverpool or Manchester,
it should be run by Greater Manchester or Liverpool rather than
run by a nebulous north-western regional government?
(Mr Brown) In practice, that is what is happening.
Those are two good examples of where the RDAs are getting involved
in urban regeneration, and they are doing that primarily by supporting
the local authority in both cases through an urban regeneration
company. That is their main way of getting into the process.
212. Would you say that there are sufficient
mechanisms in place now to deliver the government's targets on
reclamation of brownfield sites?
(Mr Smith) The mechanisms are there. The skills and
the financial resources are not, and perhaps a will.
(Mr Hood) I would doubt whether the current gap funding
grant system is going to help the Government at all in meeting
its brownfield targets. Many of these brownfield sites are outside
the Tier 1 and Tier 2 areas and cannot be given any assistance.
These brownfield sites have problems of the abnormal costs of
developing and cleaning up the site. It is also a market failure,
where the value just is not within the area. So there is a need
to gap fund in order to get the market going in that area. I do
not think the current grant system will help that at all.
(Mr Smith) If I can add to my reply, in those circumstances
the RDA could use Direct Development. The problem is getting hold
of the land, and compulsory purchase is a big issue that needs
addressing very quickly. At the moment it is cumbersome, RDAs
are very reluctant to use compulsory purchase, some local authorities
are very reluctant, others less so, but it is a real mess and
it needs sorting.
213. Are the new proposals for compulsory purchase
going to remedy that situation?
(Mr Smith) They will go a long way to help, and the
sooner somebody pushes this along, the better.
214. I have been listening very carefully to
your comments and responses to questions, and it does appear that
you are quite scathing about the role of the Department. How do
you see the way forward?
(Mr Smith) I think there are at least two schemes
to be moved forward. One which needs to be moved forward quickly
is a housing scheme, and I do not think from the messages we get
back that we would have any problem from Europe on that, but we
just are not moving it quickly enough.
215. Are you talking about a specific scheme
(Mr Smith) No, a general gap funding, grant regime.
216. What do you think the general problem is
with the Department?
(Mr Smith) If I can go back historically, the problem
hereand I would invite you to see, if you have not done
it, the submission to Europe for the PIP replacement scheme, the
European response and the early guidance issued to the RDAsis
that, as far as we can make out, at no time in that process was
it tainted by the opinion of anyone who knew anything about property.
Mrs Dunwoody: We did isolate that in the intellectual
exchange we had with the Minister at the time.
217. Are you basically saying that the scheme
is a mess?
(Mr Smith) Yes, a mess. Perhaps up north you would
use even stronger language.
218. Can I be clear? What you are really saying
is that the emphasis of the RDAs on economic development could
well mean that in somewhere like Liverpool they get everybody
a good job in Liverpool and therefore everybody moves out of Liverpool
to live in Chester or somewhere like that, and actually makes
urban regeneration in Liverpool worse? Is that fair?
(Mr Brown) Yes, I would say that is fair. The North
West is in a way a bad example of this, because it is run by someone
who has very strong background in urban regeneration, the former
chief executive of a development corporation. But they are in
my view more interested in schemes, for example, to develop work
space on greenfield sites next to motorway junctions where they
believe they will attract businesses than they are to do urban
regeneration. You cannot do urban regeneration unless the economy
you are in is prospering. But getting that balance right is the
key, and I am not sure they are getting it right at the moment.
219. To come back to the housing and mixed use
issue, eventually the objective is to get a new EU regeneration
framework, but you are saying in the mean time you think we desperately
need a scheme for housing and mixed use.
(Mr Smith) Yes.