Memorandum by Urban Splash (ERF 01)
I am submitting this evidence because I feel
that it is absurd that the European Commission has ruled out Government
Funding for Urban Regeneration sites.
The old form of Gap Funding, PIP, was able to
support all sorts of commercial mixed uses and purely residential
development schemes in all deprived areas of the country. As I
understand it, the new scheme is severely limited in many parts
of the country and cannot support primarily residential schemes.
The old Gap Funding was the Government's principal
weapon in its urban regeneration armory, and was the catalyst
for regenerating most of the significant schemes in the late 80s
Thanks largely to Gap Funding most of our City
Centres have seen tremendous improvements over the last ten years,
and are now sustainable and regenerating themselves.
However, many of the outlining areas, the doughnut
around the City Centre along with satellite towns, are suffering
from tremendous deprivation and we do not have the tools to fix
An example we are attempting is Manningham Mills
in Bradford. This Mill was the world's biggest silk mill, at one
time employing almost 10,000 people. It is still regarded by many
as the finest collection of Mills in the UK. Sadly since the closure
of the Mill some ten years ago, the building has become derelict
and requires major investment to up-grade it and make it suitable
for modern uses. The Mills lie in the heart of Manningham which
is plagued by large scale unemployment and severe racial tensions
which have recently erupted locally.
Urban Splash acquired the building almost two
years ago. We are willing to commit large scale private resources
(c £10 million) to support the process of regeneration in
this forlorn community. Our scheme will deliver the conversion
of the Mills (some 800,000 sq ft of space), large scale job creation
(up to 1,500 jobs, perhaps significantly more), and new residential
accommodation. All of this would help transform the local environment
and directly create new employment opportunities for people who
face severe social exclusion. This is a scheme that would bring
back confidence to the area, new private and shared ownership
housing, managed workspace and community facilities.
The costs of converting this derelict mill are
enormous and values in Bradford and Manningham, to put it mildly,
are rock bottom. As a consequence the viability gap is very large.
To deliver the first phase of regeneration would cost almost £20
million, of which there is a funding gap of £9-£11 million.
Later phases would become viable once confidence has been restored
by judicious pump-priming to tackle the problems of the site.
The new State Aid rules prohibit an intervention
at this level. Apparently due to European Commission legislation,
Yorkshire Forward are having difficulty with funding this scheme
for fear of falling foul of the state aid rules. The intervention
rate for Manningham in Bradford is only at a possible level up
to 7.5 per cent of total development costs (because we are SME
and the scheme is in a non-assisted area). The residential elements
of this mixed-use scheme are not eligible.
Under the old PIP scheme this scheme could have
been supported. The public agencies could have taken a holistic
view to encourage a wide range of activities which would breath
new life into these Mills and the surrounding community.
The new EU approved schemes prevent such an
intervention and this leaves Urban Splash, the public agencies
and the local community facing a very unclear future as regards
the prospects for these Mills.
Any new European Regeneration Framework must
recognise the particular local circumstances (eg derelict listed
buildings, deprived local communities, ethnic tension). It should
be able to support a wide range of activities (housing, commercial,
community) and it must be at an intervention rate which allows
private sector investment to tackle the problems of brownfield
sites (contamination, dereliction, low initial values etc.)
The Manningham Mills example graphically highlights
the shortcomings of the new EU schemes. The Mills are of the highest
architectural quality, they have been allowed to deteriorate for
many years when the buildings were held in receivership. The local
community urgently needs sustained support (see Ouseley et
al), the Mills have the potential to create large scale job
creation and new residential opportunities, the public sector
is extremely supportive and a private sector developer, Urban
Splash, is a willing player. The one weakness is the inadequacy
of the new regulations to accommodate gap funding at a realistic