Memorandum by Local Government Association
1. The Local Government Association (LGA)
is the representative body for all local authorities in England
and Wales. The LGA is committed to working closely with its member
authorities to support reform and improvement in local government.
The Association welcomes the announcement by the Urban Affairs
Sub-Committee of the House of Commons Select Committee on Transport,
Local Government and Regional Affairs, that it is to carry out
an inquiry into the need for a new European regeneration framework.
In the short time available, the LGA has invited local authorities,
to comment on the areas for investigation as set out in the Inquiry's
press release. This memorandum also draws on evidence submitted
to the LGA's current hearing into the barriers surrounding Brownfield
land re-development. This short memorandum follows the format
of the topics for investigation as outlined in the Committee's
press notice 23/2001-2, dated 11 December 2001.
NEW EU APPROVED
2. The outlawing of the previous Partnership
Investment Programme (PIP) "gap funding" scheme and
its replacement with five new land and property schemes has had
a major impact on "brownfield" re-development in England.
Some examples of impact on land and property regeneration of the
Commission's decision to outlaw the PIP scheme were included in
the LGAs evidence to the previous Inquiry by the Environment,
Transport and Regional Affairs Committee on the Implications of
the European Commission Ruling on Gap Funding Schemes for Urban
Regeneration in England carried out in 2000.
3. Although the evidence from the LGA's
member local authorities does not permit a detailed analysis of
the five replacement schemes to PIP, the Association would make
the following comments on the current situation.
4. Discussions between the LGA and the Government's
national regeneration agency, English Partnerships (EP) have indicated
that the level of funding directed towards brownfield land redevelopment
has substantially declined following the demise of PIP (previously
administered by EP). Information relayed to the LGA indicate that
whereas EP invested approximately £200 million per annum
through PIP, investment in land and property by the nine English
Regional Development Agencies has meant a substantial decline
in this figure (ie by around 90 per cent).
5. Another effect of the EC decision is
to allow a far more limited range of instruments available for
carrying out physical regeneration. More particularly, outside
areas eligible for State Aid within the UK "Assisted Areas"
map, to eliminate gap funding as a mechanism. Even within these
"Assisted Areas", use of public funds as gap funding
is limited to the Commission's state aid limits applying within
6. One issue raised by member authorities
is the inability of the replacement schemes to address the issue
of pockets of deprivation at ward level, often situated within
otherwise prosperous areas. An example of this in practice is
the Oxfordshire village of Berinsfield, which although falling
within the top quartile of wards in the index of multiple deprivation,
does not qualify for funding from the five replacement schemes.
7. There are also many areas such as historic
town centres, which may be in need of considerable physical regeneration,
but which are extremely unlikely to enjoy Assisted Area or ERDF
Objective 1 or 2 status. In such areas the prospects for employing
gap funding measures under the replacement schemes are likely
to be bleak.
8. Evidence from local authorities has indicated
that the main barriers to the redevelopment of brownfield sites
resulting from the new framework are fourfold:
Schemes involving a substantial amount
of housing in the end use are now ineligible for gap funding support.
This has had a major impact on many schemes for mixed-use development
or aimed at re-populating town centres, for example. Three schemes
implemented under the PIP scheme but unlikely to now qualify are
set out in an appendix to this memorandum.
The 15 per cent EU aid intensity
ceiling has effectively eliminated sites/buildings which require
a higher level of public support to be viable.
Brownfield sites situated outside
Assisted Areas but requiring public subsidy to become viable no
longer qualify for gap funding. While this could be seen as a
rightful consequence of the desire to target gap funding aid to
areas most in need, it wholly ignores the argument that many people
living in Assisted Areas may rely on employment or other services
situated within adjoining non-assisted areas. Gap funding assistance
may therefore be required for these sites to enable them to play
this strategic role.
Administration of the five replacement
schemes is now by the RDAs who have a tendency to support regionally
significant developments to the detriment of sites which, although
not of regional significance, may be able to bring major local
|ST GEORGE'S WAREHOUSE, HUDDERSFIELD|
The St George's Warehouse is a five storey vacant/derelict listed building situated in the centre of Huddersfield next to the town's railway station. It has the potential to provide a mix of uses to help regeneration that would be sustainable due to good access for rail travel and contribute to an improved environment. It has been bought by a developer but requires grant subsidy to make it viable. However, because the barriers outlined above the current gap funding schemes cannot help.
9. The impact of the five replacement gap funding schemes
as outlined above could have major consequences for the achievement
of the Government's urban renaissance objectives. In particular,
the national target of achieving a minimum of 60 per cent of new
housing development on brownfield land does not sit well with
the very restrictive limits placed on housing as an end use by
the rules governing the replacement schemes. Also small pockets
of deprivation, although in need of an urban renaissance, will
not benefit from the funding available through the five replacement
schemes. Broadly, far fewer brownfield land and buildings in dire
need of regeneration will benefit from funding available under
the replacement schemes, than did so under the previous PIP strand.
10. From the examples provided by local authorities and
from the evidence submitted to the LGAs Brownfield Land Inquiry
it is clear that the five new PIP-replacement schemes have left
a noticeable void in the range of incentives to bring about the
sustainable regeneration of previously used land and property
in England. The recent DTLR funded evaluation into Urban Regeneration
Companies has also concluded that in addition to the PIP replacement
schemes there is a need for: "a comprehensive package of
interventions of which fiscal incentives should be a part."
It is clear that the current situation is not sustainable in the
long-term and that the awaited new European-wide regeneration
framework should be introduced as soon as possible. Such a new
framework must meet certain requirements as set out in the next
11. Any new European regeneration framework needs to
link with other policy initiatives eg the development of EU-wide
"balanced development" policy within which urban and
rural areas can formulate mutually supportive plans. A future
regeneration framework also needs to be able to take into account
of needs at neighbourhood and ward level in order to address the
issue of "pockets" of deprivation as outlined above.
12. In terms of increasing the amount of housing possible
in any scheme while not jeopardising receipt of EU-approved gap
funding, any future regeneration framework could include a suitable
"claw-back" mechanism whereby any increases in land
value due to new housing development over the short-medium term
could be reclaimed.
13. The LGA also agrees with the following list of characteristics
of a new regeneration framework as outlined by the RICS.
Any long-term European framework for urban regeneration funding
a strategic policy framework that is supported
at national and regional level and is fully understood by a full
range of public and private sector partners;
application to a range of themes and spatial priority
areas, including non-Assisted areas;
an outcome-driven approach linked specifically
to RDA strategic objectives and outcomes;
co-ordinated funding bringing together, as a minimum,
the RDAs land and property budget and English Partnership programmes
into a single scheme; and
competitive procurement processes to enable the
public sector to intervene at the level necessary to achieve the
required outputs via private sector partners at "best value"
and thus be compatible with State Aid restrictions.
LGA Memorandum to the House of Commons Environment, Transport
and Regional Affairs Committee, 2001. Back
Urban Regeneration Companies: Learning the Lessons', DTLR (2001). Back
Alternatives to the Partnership Investment Programme, RICS, February